Document:

exv10w35

Exhibit 10.35

Armstrong Energy, Inc.

2011 Long-Term Incentive Plan

     Section 1. Purpose. The purpose of this Plan is to advance the interests of Armstrong Energy,
Inc. and its stockholders by providing incentives to certain Eligible Persons who contribute
significantly to the strategic and long-term performance objectives and growth of the Company.

     Section 2. Definitions. Certain capitalized terms applicable to this Plan are set forth in
Appendix A.

     Section 3. Administration. This Plan shall be administered by the Committee. The Committee
shall have all the powers vested in it by the terms of this Plan, such powers to include, but not
limited to, exclusive authority to select the Eligible Persons to be granted Awards under this
Plan, to determine the type, size, terms and conditions of the Award to be made to each Eligible
Person selected, to modify or waive the terms and conditions of any Award that has been granted, to
determine the time when Awards will be granted, to establish performance objectives, to make any
adjustments necessary or desirable as a result of the granting of Awards to Eligible Persons
located outside the United States, to prescribe the form of the agreements evidencing Awards made
under this Plan, and to incorporate clawback or other recoupment provisions to Awards granted
hereunder that would protect the Company and its stockholders from actions such as fraudulent
activities in connection with financial restatements and/or due to ethical misconduct. Awards may,
in the discretion of the Committee, be made under this Plan in assumption of, or in substitution
for, outstanding Awards previously granted by (i) the Company, (ii) any predecessor of the Company,
or (iii) a company acquired by the Company or with which the Company combines. The number of Common
Shares underlying such substitute awards shall be counted against the aggregate number of Common
Shares available for Awards under this Plan.

     The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to
establish, amend and rescind any rules and regulations relating to this Plan, and to make any other
determinations that it deems necessary or desirable for the administration of this Plan. The
Committee may correct any defect or omission or reconcile any inconsistency in this Plan or in any
Award in the manner and to the extent the Committee deems necessary or desirable to carry it into
effect. Any decision of the Committee in the interpretation and administration of this Plan, as
described in this Plan, shall lie within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned (including, but not limited to, Participants and
their Beneficiaries or Permitted Transferees). The Committee may act only by a majority of its
members, except that the members thereof may authorize any one or more of their members or any
officer of the Company to execute and deliver documents or to take any other ministerial action on
behalf of the Committee with respect to Awards made or to be made to Participants.

     No member of the Committee and no officer of the Company shall be liable for anything done or
omitted to be done by such member or officer, by any other member of the Committee or by any other
officer of the Company in connection with the performance of duties under this

 

 

Plan, except for his or her own willful misconduct or as expressly provided by statute. In
addition to all other rights of indemnification and reimbursement to which a member of the
Committee and an officer of the Company may be entitled, the Company shall indemnify and hold
harmless each such member or officer who was or is a party or is threatened to be made a party to
any threatened, pending or completed proceeding or suit in connection with the performance of
duties under this Plan against expenses (including reasonable attorneys’ fees), judgments, fines,
liabilities, losses and amounts paid in settlement actually and reasonably incurred by him or her
in connection with such proceeding or suit, except for his or her own willful misconduct or as
expressly provided otherwise by statute. Expenses (including reasonable attorneys’ fees) incurred
by such a member or officer in defending any such proceeding or suit shall be paid by the Company
in advance of the final disposition of such proceeding or suit upon receipt of a written
affirmation by such member or officer of his or her good faith belief that he or she has met the
standard of conduct necessary for indemnification and a written undertaking by or on behalf of such
member or officer to repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company as authorized in this Section.

     Section 4. Participation. Consistent with the purposes of this Plan, the Committee shall have
exclusive power to select the Eligible Persons who may participate in this Plan and be granted
Awards under this Plan. Eligible Persons may be selected individually or by groups or categories,
as determined by the Committee in its discretion.

     Section 5. Awards under this Plan.

     (a) Types of Awards. Awards under this Plan may include, but need not be limited to,
one or more of the following types, either alone or in any combination thereof: (i) Stock
Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Restricted Stock
Units, (v) Performance Grants and (vi) any other type of Award deemed by the Committee in
its discretion to be consistent with the purposes of this Plan (including, but not limited
to, Other Share-Based Awards, and Awards to be made to Participants who are foreign
nationals or are employed or performing services outside the United States).

     (b) Maximum Number of Common Shares that May be Issued. The maximum aggregate number
of Common Shares available for issuance under Awards granted under this Plan, including
Incentive Stock Options, shall be 3,500,000. No Eligible Person may receive: (i) Stock
Options or Stock Appreciation Rights under this Plan for more than 300,000 Common Shares in
any one fiscal year of the Company; (ii) Performance Grants (denominated in Common Shares)
for more than 300,000 Common Shares in any one fiscal year of the Company and (iii)
Performance Grants (denominated in cash) for more than $7,500,000 in any one fiscal year of
the Company. The foregoing limitations shall be subject to adjustment as provided in Section
16, but only to the extent that any such adjustment will not affect the status of: (i) any
Award intended to qualify as performance-based compensation under Section 162(m) of the
Code; (ii) any Award intended to qualify as an Incentive Stock Option or (iii) any Award
intended to comply with, or qualify for an exception to, Section 409A of the Code. Common
Shares issued pursuant to this Plan may be either authorized but unissued shares, treasury
shares,

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reacquired shares or any combination thereof. If any Common Shares covered by an
award terminate, lapse, are forfeited or cancelled, or such Award is otherwise settled
without the delivery of the full number of Common Shares underlying the Award, including
Common Shares withheld to satisfy tax withholding obligations, then such Common Shares to
the extent of any such forfeiture, termination, lapse, cancellation, payment, etc., shall
again be, or shall become available for issuance under this Plan; provided, however, that
Common Shares (i) delivered in payment of the exercise price of a Stock Option, (ii) not
issued upon the net settlement or net exercise of Stock Appreciation Rights, or (iii)
delivered to or withheld by the Company to pay withholding taxes related to a Stock Option
or Stock Appreciation Right, shall not become available again for issuance under this Plan.

     (c) Rights with Respect to Common Shares and Other Securities. Except as provided in
subsection 8(c) with respect to Awards of Restricted Stock and unless otherwise determined
by the Committee in its discretion, a Participant to whom an Award is made (and any Person
succeeding to such a Participant’s rights pursuant to this Plan) shall have no rights as a
stockholder with respect to any Common Shares or as a holder with respect to other
securities, if any, issuable pursuant to any such Award until the date a stock certificate
evidencing such Common Shares or other evidence of ownership is issued to such Participant
or until Participant’s ownership of such Common Shares shall have been entered into the
books of the registrar in the case of uncertificated shares.

     Section 6. Stock Options. The Committee may grant Stock Options; provided that an Incentive
Stock Option may be granted only to Eligible Persons who are employees of Armstrong Energy, Inc. or
any parent or subsidiary of Armstrong Energy, Inc. within the meaning of Code Sections 424(e) and
(f), including a subsidiary which becomes such after adoption of the plan. Each Stock Option
granted or sold under this Plan shall be evidenced by an agreement in such form as the Committee
shall prescribe from time to time in accordance with this Plan and shall comply with the applicable
terms and conditions of this Section and this Plan, and with such other terms and conditions,
including, but not limited to, restrictions upon the Stock Option or the Common Shares issuable
upon exercise thereof, as the Committee, in its discretion, shall establish.

     (a) The exercise price of a Stock Option shall not be less than the Fair Market Value
of the Common Shares subject to such Stock Option on the date of grant, as determined by the
Committee; provided, however, if an Incentive Stock Option is granted to a Ten Percent
Employee, such exercise price shall not be less than 110% of such Fair Market Value at the
time the Stock Option is granted.

     (b) The Committee shall determine the number of Common Shares to be subject to each
Stock Option.

     (c) Any Stock Option may be exercised during its term only at such time or times and in
such installments as the Committee may establish.

     (d) A Stock Option shall not be exercisable:

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     (i) in the case of any Incentive Stock Option granted to a Ten Percent
Employee, after the expiration of five years from the date it is granted, and, in
the case of any other Stock Option, after the expiration of ten years from the date
it is granted; and

     (ii) no shares shall be issued unless payment in full is made for the shares
being acquired under such Stock Option at the time of exercise as provided in
subsection 6(h).

     (e) The Committee shall determine in its discretion and specify in each agreement
evidencing a Stock Option the effect, if any, the termination of the Participant’s
employment with or performance of services for the Company shall have on the exercisability
of the Stock Option; provided, however, that an Incentive Stock Option that is exercised at
a time that is beyond the time an Incentive Stock Option may be exercised in order to
qualify as such under the Code shall cease to be an Incentive Stock Option.

     (g) It is the intent of Armstrong Energy, Inc. that Nonqualified Stock Options granted
under this Plan not be classified as Incentive Stock Options, that the Incentive Stock
Options granted under this Plan be consistent with and contain or be deemed to contain all
provisions required under Section 422 and the other appropriate provisions of the Code and
any implementing regulations (and any successor provisions thereof), and that any
ambiguities in construction shall be interpreted in order to effectuate such intent. If a
Stock Option is intended to be an Incentive Stock Option, and if for any reason such Stock
Option (or portion thereof) shall not qualify as an Incentive Stock Option, then, to the
extent of such nonqualification, such Stock Option (or portion thereof) shall be regarded as
a Nonqualified Stock Option granted under this Plan; provided that such Stock Option (or
portion thereof) otherwise complies with this Plan’s requirements relating to Nonqualified
Stock Options. In no event shall any member of the Committee or the Company (or its
employees, officers or directors) have any liability to any Participant (or any other
Person) due to the failure of a Stock Option to qualify for any reason as an Incentive Stock
Option.

     (h) For purposes of payments made to exercise Stock Options, such payment shall be made
in such form (including, but not limited to, cash, Common Shares, the surrender of another
outstanding Award under this Plan, broker assisted cashless exercise or any combination
thereof) as the Committee may determine in its discretion.

     Section 7. Stock Appreciation Rights. The Committee may grant Stock Appreciation Rights. Each
Award of Stock Appreciation Rights granted under this Plan shall be evidenced by an agreement in
such form as the Committee shall prescribe from time to time in accordance with this Plan and shall
comply with the applicable terms and conditions of this Section and this Plan, and with such other
terms and conditions, including, but not limited to, restrictions upon the Award of Stock
Appreciation Rights or the Common Shares issuable upon exercise thereof, as the Committee, in its
discretion, shall establish.

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     (a) The Committee shall determine the number of Common Shares to be subject to each
Award of Stock Appreciation Rights.

     (b) Any Stock Appreciation Right may be exercised during its term only at such time or
times and in such installments as the Committee may establish and shall not be exercisable
after the expiration of ten years from the date it is granted.

     (c) The Committee shall determine in its discretion and specify in each agreement
evidencing an Award of Stock Appreciation Rights the effect, if any, the termination of the
Participant’s employment with or performance of services for the Company shall have on the
exercisability of the Award of Stock Appreciation Rights.

     (d) An Award of Stock Appreciation Rights shall entitle the holder to exercise such
Award and to receive from Armstrong Energy, Inc. in exchange thereof, without payment to
Armstrong Energy, Inc., that number of Common Shares having an aggregate value equal to the
excess of the Fair Market Value of one Common Share, at the time of such exercise, over the
exercise price, times the number of Common Shares subject to the Award, or portion thereof,
that is so exercised or surrendered, as the case may be. Stock Appreciation Rights shall
have an exercise price no less than the Fair Market Value of the Common Shares covered by
the right on the date of grant.

     (e) A Stock Appreciation Right may provide that it shall be deemed to have been
exercised at the close of business on the business day preceding the expiration date of the
Stock Appreciation Right, or such other date as specified by the Committee, if at such time
such Stock Appreciation Right has a positive value. Such deemed exercise shall be settled or
paid in the same manner as a regular exercise thereof as provided in subsection 7(d) of this
Agreement.

     Section 8. Restricted Stock and Restricted Stock Units. The Committee may grant Awards of
Restricted Stock and Restricted Stock Units. Each Award of Restricted Stock or Restricted Stock
Units under this Plan shall be evidenced by an agreement in such form as the Committee shall
prescribe from time to time in accordance with this Plan and shall comply with the applicable terms
and conditions of this Section and this Plan, and with such other terms and conditions as the
Committee, in its discretion, shall establish.

     (a) The Committee shall determine the number of Common Shares to be issued to a
Participant pursuant to the Award of Restricted Stock or Restricted Stock Units, and the
extent, if any, to which they shall be issued in exchange for cash, other consideration, or
both.

     (b) Until the expiration of such period as the Committee shall determine from the date
on which the Award is granted and subject to such other terms and conditions as the
Committee, in its discretion, shall establish (the “Restricted Period”), a Participant to
whom an Award of Restricted Stock is made shall be issued, but shall not be entitled to the
delivery of, a stock certificate or other evidence of ownership representing the

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Common Shares subject to such Award. The standard vesting schedule applicable to
Awards of Restricted Stock and Restricted Stock Units shall provide for vesting of such
Awards, in one or more increments, over a service period of no less than three years (not
including special vesting terms set forth therein); provided, however, this limitation shall
not apply to Awards granted to non-employee directors of the Board that are received
pursuant to the Company’s compensation program applicable to non-employee directors of the
Board, or adversely affect a Participant’s rights under another plan or agreement with the
Company.

     (c) Unless otherwise determined by the Committee in its discretion, a Participant to
whom an Award of Restricted Stock has been made (and any Person succeeding to such a
Participant’s rights pursuant to this Plan) shall have, after issuance of a certificate for
the number of Common Shares awarded (or after the Participant’s ownership of such Common
Shares shall have been entered into the books of the registrar in the case of uncertificated
shares) and prior to the expiration of the Restricted Period, ownership of such Common
Shares, including the right to vote such Common Shares and to receive dividends or other
distributions made or paid with respect to such Common Shares, provided that, such Common
Shares, and any new, additional or different shares, or Other Armstrong Energy Securities or
property, or other forms of consideration that the Participant may be entitled to receive
with respect to such Common Shares as a result of a stock split, stock dividend or any other
change in the corporation or capital structure of Armstrong Energy, Inc., shall be subject
to the restrictions set forth in the Award and this Plan.

     (d) The Committee shall determine in its discretion and specify in each agreement
evidencing an Award of Restricted Stock or Restricted Stock Units the effect, if any, the
termination of the Participant’s employment with or performance of services for the Company
during the Restricted Period shall have on such Award.

     (e) The Committee may grant Dividend Equivalents to Participants in connection with
Awards of Restricted Stock Units. The Committee may provide, at the date of grant or
thereafter, that Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Common Shares, or other investment vehicles as
the Committee may specify; provided that, unless otherwise determined by the Committee,
Dividend Equivalents shall be subject to all conditions and restrictions of the underlying
Restricted Stock Units to which they relate.

     Section 9. Performance Grants.

     (a) Grant. Subject to the limitations set forth in Section 5(b), the Committee may
grant a Performance Grant which shall consist of a right that is (i) denominated in cash,
Common Shares or any other form of Award issuable under this Plan (or any combination
thereof), (ii) valued, as determined by the Committee, in accordance with the achievement of
such performance goals applicable to such performance periods as the Committee shall
establish and (iii) payable at such time and in such form as the Committee shall determine.
Unless otherwise determined by the Committee, any such

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Performance Grant shall be evidenced
by an Award agreement containing the terms of
the Award, including, but not limited to, the performance criteria and such terms and
conditions as may be determined, from time to time, by the Committee, in each case, not
inconsistent with this Plan. In relation to any Performance Grant, the performance period
may consist of one or more calendar years or other fiscal period of at least 12 months in
length for which performance is being measured.

     (b) Terms and Conditions. For Awards intended to be performance-based compensation
under Section 162(m) of the Code, Performance Grants shall be conditioned upon the
achievement of pre-established goals relating to one or more of the following performance
measures, as determined in writing by the Committee and subject to such modifications as
specified by the Committee: cash flow; cash flow from operations; earnings (including, but
not limited to, earnings before interest, taxes, depreciation and amortization or some
variation thereof); earnings per share, diluted or basic; earnings per share from continuing
operations; net asset turnover; inventory turnover; capital expenditures; debt; debt
reduction; working capital; return on investment; return on sales; net or gross sales;
market share; economic value added; cost of capital; change in assets; expense reduction
levels; productivity; delivery performance; safety record and/or performance; stock price;
return on equity; total or relative increases to stockholder return; return on invested
capital; return on assets or net assets; revenue; income or net income; operating income or
net operating income; operating profit or net operating profit; gross margin, operating
margin or profit margin; and completion of acquisitions, business expansion, product
diversification, new or expanded market penetration, and other non-financial operating and
management performance objectives. To the extent consistent with Section 162(m) of the Code,
the Committee may determine, at the time the performance goals are established, that certain
adjustments shall apply, in whole or in part, in such manner as determined by the Committee,
to exclude the effect of any of the following events that occur during a performance period:
the impairment of tangible or intangible assets; litigation or claim judgments or
settlements; the effect of changes in tax law, accounting principles or other such laws or
provisions affecting reported results; business combinations, reorganizations and/or
restructuring programs, including, but not limited to, reductions in force and early
retirement incentives; currency fluctuations; and any extraordinary, unusual, infrequent or
non-recurring items, including, but not limited to, such items described in management’s
discussion and analysis of financial condition and results of operations or the financial
statements and notes thereto appearing in Armstrong Energy, Inc.’s annual report for the
applicable period. Performance measures may be determined either individually, alternatively
or in any combination, applied to either the Company as a whole or to a business unit or
subsidiary entity thereof, either individually, alternatively or in any combination, and
measured over a period of time including any portion of a year, annually or cumulatively
over a period of years, on an absolute basis or relative to a pre-established target, to
previous fiscal years’ results or to a designated comparison group, in each case as
specified by the Committee.

     (c) Pre-established Performance Goals. For Awards intended to be performance-based
compensation under Section 162(m) of the Code, performance goals

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relating to the performance
measures set forth above shall be pre-established in writing
by the Committee, and achievement thereof certified in writing prior to payment of the
Award, as required by Section 162(m) and Treasury Regulations promulgated thereunder. All
such performance goals shall be established in writing no later than ninety (90) days after
the beginning of the applicable performance period. In addition to establishing minimum
performance goals below which no compensation shall be payable pursuant to a Performance
Grant, the Committee, in its sole discretion, may create a performance schedule under which
an amount less than or more than the target award may be paid so long as the performance
goals have been achieved.

     (d) Additional Restrictions/Negative Discretion. The Committee, in its sole
discretion, may also establish such additional restrictions or conditions that must be
satisfied as a condition precedent to the payment of all or a portion of any Performance
Grants. Such additional restrictions or conditions need not be performance-based and may
include, among other things, the receipt by a Participant of a specified annual performance
rating, the continued employment by the Participant and/or the achievement of specified
performance goals by the Company, business unit or Participant. Furthermore, and
notwithstanding any provision of this Plan to the contrary, the Committee, in its sole
discretion, may retain the discretion to reduce the amount of any Performance Grant to a
Participant if it concludes that such reduction is necessary or appropriate based upon: (i)
an evaluation of such Participant’s performance; (ii) comparisons with compensation received
by other similarly-situated individuals working within the Company’s industry; (iii) the
Company’s financial results and conditions or (iv) such other factors or conditions that the
Committee deems relevant; provided, however, the Committee shall not use its discretionary
authority to increase any Award that is intended to be performance-based compensation under
Section 162(m) of the Code.

     (e) Payment of Performance Awards. Performance Grants may be paid in a lump sum or in
installments following the close of the performance period or, in accordance with procedures
established by the Committee, on a deferred basis.

     Section 10. Other Share-Based Awards. The Committee may grant Other Share-Based Awards, which
shall consist of any right that is (i) not an Award described in Sections 6 through 9 above and
(ii) an Award of Common Shares or an Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Common Shares (including, without limitation,
securities convertible into Common Shares), as deemed by the Committee to be consistent with the
purposes of this Plan. Subject to the terms of this Plan and any applicable Award agreement, the
Committee shall determine the terms and conditions of any such Other Share-Based Award. The
standard vesting schedule applicable to Other Share-Based Awards granted under this Section 10
shall provide for vesting of such Awards, in one or more increments, over a service period of no
less than three years (not including special vesting terms set forth therein); provided, however,
this limitation shall not apply to Awards granted to non-employee directors of the Board that are
received pursuant to the Company’s compensation program applicable to non-employee directors of the
Board, or adversely affect a Participant’s rights under another plan or agreement with the Company.

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     Section 11. Section 409A. Notwithstanding any provision of the Plan or an Award agreement to
the contrary, if any Award or benefit provided under this Plan is subject to the provisions of
Section 409A, the provisions of the Plan and any applicable Award agreement shall be administered,
interpreted and construed in a manner necessary in order to comply with Section 409A or an
exception thereto (or disregarded to the extent such provision cannot be so administered,
interpreted or construed), and the following provisions shall apply, as applicable:

     (a) If a Participant is a Specified Employee for purposes of Section 409A and a payment
subject to Section 409A (and not excepted therefrom) to the Participant is due upon
Separation from Service, such payment shall be delayed for a period of six (6) months after
the date the Participant Separates from Service (or, if earlier, the death of the
Participant). Any payment that would otherwise have been due or owing during such six-month
period will be paid immediately following the end of the six-month period unless another
compliant date is specified in the applicable agreement.

     (b) For purposes of Section 409A, and to the extent applicable to any Award or benefit
under the Plan, it is intended that distribution events qualify as permissible distribution
events for purposes of Section 409A and shall be interpreted and construed accordingly.
Whether a Participant has Separated from Service will be determined by the Committee based
on all of the facts and circumstances and, to the extent applicable to any Award or benefit,
in accordance with the guidance issued under Section 409A. For this purpose, a Participant
will be presumed to have experienced a Separation from Service when the level of bona fide
services performed permanently decreases to a level less than twenty percent (20%) of the
average level of bona fide services performed during the immediately preceding thirty-six
(36) month period or such other applicable period as provided by Section 409A.

     (c) The grant of Nonqualified Stock Options, Stock Appreciation Rights and other stock
rights subject to Section 409A shall be granted under terms and conditions consistent with
Treas. Reg. § 1.409A-1(b)(5) such that any such Award does not constitute a deferral of
compensation under Section 409A. Accordingly, any such Award may be granted to Eligible
Persons of Armstrong Energy, Inc. and its subsidiaries and affiliates in which Armstrong
Energy, Inc. has a controlling interest. In determining whether Armstrong Energy, Inc. has
a controlling interest, the rules of Treas. Reg. § 1.414(c)-2(b)(2)(i) shall apply; provided
that the language “at least 50 percent” shall be used instead of “at least 80 percent” in
each place it appears; provided, further, where legitimate business reasons exist (within
the meaning of Treas. Reg. § 1.409A-1(b)(5)(iii)(E)(i)), the language “at least 20 percent”
shall be used instead of “at least 80 percent” in each place it appears. The rules of
Treas. Reg. §§ 1.414(c)-3 and 1.414(c)-4 shall apply for purposes of determining ownership
interests.

     (d) In no event shall any member of the Committee or the Company (or its employees,
officers or directors) have any liability to any Participant (or any other Person) due to
the failure of an Award to satisfy the requirements of Section 409A.

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     Section 12. Deferred Payment of Awards. The Committee, in its discretion, may specify the
conditions under which the payment of all or any portion of any cash compensation, or Common Shares
or other form of payment under an Award, may be deferred until a later date. Deferrals shall be for
such periods or until the occurrence of such events, and upon such terms and conditions, as the
Committee shall determine in its discretion, in accordance with the provisions of Section 409A;
provided, however, that no deferral shall be permitted with respect to Options or Stock
Appreciation Rights.

     Section 13. Transferability of Awards. A Participant’s rights and interest under this Plan or
any Award may not be assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise, including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge, bankruptcy or in any other manner; provided, however, the
Committee may permit such transfer to a Permitted Transferee; and provided, further, that, unless
otherwise permitted by the Code, any Incentive Stock Option granted pursuant to this Plan shall not
be transferable other than by will or by the laws of descent and distribution, and shall be
exercisable during the Participant’s lifetime only by Participant or by such Permitted Transferee.

     Section 14. Amendment or Substitution of Awards under this Plan. The terms of any outstanding
Award under this Plan may be amended or modified from time to time after grant by the Committee in
its discretion in any manner that it deems appropriate (including, but not limited to, acceleration
of the date of exercise of any Award and/or payments under any Award) in accordance with the terms
of the Plan; provided that no such amendment or modification shall: (i) accelerate the vesting or
exercisability of any Awards other than in connection with a Participant’s death, disability,
retirement or a change in control or other transaction contemplated by Section 16 hereof; provided
further, the foregoing limitation shall not apply to (A) Awards for up to five percent (5%) of the
aggregate number of Common Shares authorized for issuance under the Plan, or (B) any Performance
Grant the payment of which remains contingent upon the attainment of the performance goal; or (ii)
adversely affect in a material manner any right of a Participant under the Award without his or her
written consent. Notwithstanding the foregoing or any provision of an Award to the contrary, the
Committee may at any time (without the consent of any Participant) modify, amend or terminate any
or all of the provisions of an Award to the extent necessary to conform the provisions of the Award
with Section 162(m), Section 409A or any other provision of the Code or other applicable law, the
regulations issued thereunder or an exception thereto, regardless of whether such modification,
amendment or termination of the Award shall adversely affect the rights of a Participant. The
Committee may, in its discretion, permit holders of Awards under this Plan to surrender outstanding
Awards in order to exercise or realize the rights under other Awards, or in exchange for the grant
of new Awards, or require holders of Awards to surrender outstanding Awards as a condition
precedent to the grant of new Awards under this Plan. Except in connection with a corporate
transaction involving the Company (including, without limitation, any stock dividend, distribution
(whether in the form of cash, Common Shares, Other Armstrong Energy Securities or other property),
stock split, extraordinary cash dividend, recapitalization, change in control, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Shares or
Other Armstrong Energy, Inc. Securities, or similar transaction(s)), the terms of outstanding
Options or SARs may not be amended to reduce

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the exercise price of such
outstanding Options or SARs or cancel outstanding Options or SARs in exchange for Options or
SARs or cash or similar securities like stock awards with an exercise price that is less than the
exercise price of the original Options or SARs without obtaining stockholder approval.

     Section 15. Termination of a Participant. For all purposes under this Plan, the Committee
shall determine whether a Participant has Separated from Service, terminated employment with, or
the performance of services for, the Company; provided, however, an absence or leave approved by
the Company, to the extent permitted by applicable provisions of the Code, shall not be considered
an interruption of employment or performance of services for any purpose under this Plan.

     Section 16. Dilution and Other Adjustments. In the event a dividend (other than a regular
cash dividend) or other distribution (whether in the form of cash, Common Shares, Other Armstrong
Energy Securities or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of
Common Shares or Other Armstrong Energy, Inc. Securities, issuance of warrants or other rights to
purchase Common Shares or Other Armstrong Energy Securities or other similar corporate transaction
or event affects the Common Shares such that an adjustment is determined by the Committee to be
necessary in order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under this Plan, then the Committee shall, in an equitable manner,
(i) adjust any or all of (a) the aggregate maximum number of Common Shares or Other Armstrong
Energy Securities (or number and kind of other securities or property) with respect to which Awards
may be granted under this Plan pursuant to Section 5(b), (b) the individual maximum number of
Common Shares that may be granted as Stock Options, Stock Appreciation Rights and Performance
Grants (denominated in Common Shares) to a Participant pursuant to Section 5(b) of this Plan, (c)
the number of Common Shares or Other Armstrong Energy Securities (or number and kind of other
securities or property) subject to outstanding Awards and (d) the grant or exercise price with
respect to any outstanding Award; (ii) if deemed appropriate, provide for an equivalent Award or
substitute Award in respect of securities of the surviving entity of any merger, consolidation or
other transaction or event having a similar effect; or (iii) if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award; provided, that, in each case, any such
adjustment shall be performed in accordance with the applicable provisions of Code and the Treasury
Regulations issued thereunder so as to not affect the status of: (A) any Award intended to qualify
as performance-based compensation under Section 162(m) of the Code; (B) any Award intended to
qualify as an Incentive Stock Option under Section 422 of the Code or (C) any Award intended to
comply with, or qualify for an exception to, Section 409A of the Code. Unless otherwise provided by
the Committee, all outstanding Awards shall terminate immediately prior to the consummation of any
dissolution or liquidation of the Company. Any such termination or adjustment made by the Committee
will be final, conclusive and binding for all purposes of this Plan.

     Section 17. Designation of Beneficiary by Participant. A Participant may name a beneficiary
to receive any payment to which such Participant may be entitled with respect to any Award under
this Plan in the event of his or her death, on a written form to be provided by and filed with the
Committee, and in a manner determined by the Committee in its discretion (a

11

 

“Beneficiary”). The
Committee reserves the right to review and approve Beneficiary
designations. A Participant may change his or her Beneficiary from time to time in the same
manner, unless such Participant has made an irrevocable designation. Any designation of a
Beneficiary under this Plan (to the extent it is valid and enforceable under applicable law) shall
be controlling over any other disposition, testamentary or otherwise, as determined by the
Committee in its discretion. If no designated Beneficiary survives the Participant and is living on
the date on which any amount becomes payable to such a Participant’s Beneficiary, such payment will
be made to the legal representatives of the Participant’s estate, and the term “ Beneficiary ” as
used in this Plan shall be deemed to include such Person or Persons. If there are any questions as
to the legal right of any Beneficiary to receive a distribution under this Plan, the Committee in
its discretion may determine that the amount in question be paid to the legal representatives of
the estate of the Participant, in which event the Company, the Board, the Committee, the Designated
Administrator (if any), and the members thereof, will have no further liability to anyone with
respect to such amount.

     Section 18. Miscellaneous Provisions.

     (a) Any proceeds from Awards shall constitute general funds of Armstrong Energy, Inc.

     (b) No fractional shares may be delivered under an Award, but in lieu thereof a cash or
other adjustment may be made as determined by the Committee in its discretion.

     (c) No Eligible Person or other Person shall have any claim or right to be granted an
Award under this Plan. Determinations made by the Committee under this Plan need not be
uniform and may be made selectively among Eligible Persons under this Plan, whether or not
such Eligible Persons are similarly situated. Neither this Plan nor any action taken under
this Plan shall be construed as giving any Eligible Person any right to continue to be
employed by or perform services for the Company, and the Company specifically reserves the
right to terminate the employment of or performance of services by Eligible Persons at any
time and for any reason.

     (d) No Participant or other Person shall have any right with respect to this Plan, the
Common Shares reserved for issuance under this Plan or in any Award, contingent or
otherwise, until written evidence of the Award shall have been delivered to the Participant
and all the terms, conditions and provisions of this Plan and the Award applicable to such
Participant (and each Person claiming under or through such him or her) have been met.

     (e) Notwithstanding anything to the contrary contained in this Plan or in any Award
agreement, each Award shall be subject to the requirement, if at any time the Committee
shall determine, in its sole discretion, that such requirement shall apply, that the
listing, registration or qualification of any Award under this Plan, or of the Common
Shares, Other Armstrong Energy Securities or property or other forms of payment issuable
pursuant to any Award under this Plan, on any stock exchange or other market quotation
system or under any federal or state law, or the consent or approval of any

12

 

government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Award or the exercise or settlement thereof, such Award
shall not be granted, exercised or settled in whole or in part until such listing,
registration, qualification, consent or approval shall have been effected, obtained and
maintained free of any conditions not acceptable to the Committee. Notwithstanding anything
to the contrary contained in this Plan or in any Award agreement, no Common Shares, Other
Armstrong Energy Securities or property or other forms of payment shall be issued under this
Plan with respect to any Award unless the Committee shall be satisfied that such issuance
will be in compliance with applicable law and any applicable rules of any stock exchange or
other market quotation system on which such Common Shares are listed. If the Committee
determines that the exercise of any Stock Option or Stock Appreciation Right would fail to
comply with any applicable law or any applicable rules of any stock exchange or other market
quotation system on which Common Shares are listed, the Participant holding such Stock
Option or Stock Appreciation Right shall have no right to exercise such Stock Option or
Stock Appreciation Right until such time as the Committee shall have determined that such
exercise will not violate any applicable law or any such applicable rule, provided that such
Stock Option or Stock Appreciation Right shall not have expired prior to such time.

     (f) It is the intent of Armstrong Energy, Inc. that this Plan and Awards hereunder
comply in all respects with Rule 16b-3 and Sections 162(m), 409A and 422, and (i) the
provisions of the Plan shall be administered, interpreted and construed in a manner
necessary to comply with Rule 16b-3 and Sections 162(m), 409A and 422, the regulations
issued thereunder or an exception thereto (or disregarded to the extent the Plan cannot be
so administered, interpreted or construed); and (ii) in no event shall any member of the
Committee or the Company (or its employees, officers or directors) have any liability to any
Participant (or any other Person) due to the failure of an Award to satisfy the requirements
of Rule 16b-3 and Sections 162(m), 409A and 422.

     (g) The Company shall have the right to deduct from any payment made under this Plan
any federal, state, local or foreign income or other taxes required by law to be withheld
with respect to such payment. It shall be a condition to the obligation of Armstrong Energy,
Inc. to issue Common Shares, Other Armstrong Energy Securities or property, other securities
or property, or other forms of payment, or any combination thereof, upon exercise,
settlement or payment of any Award under this Plan, that the Participant (or any Beneficiary
or Person entitled to act) pay to Armstrong Energy, Inc., upon its demand, such amount as
may be required by the Company for the purpose of satisfying any liability to withhold
federal, state, local or foreign income or other taxes. If the amount requested is not paid,
Armstrong Energy, Inc. may refuse to issue Common Shares, Other Armstrong Energy Securities
or property, other securities or property, or other forms of payment, or any combination
thereof. Notwithstanding anything in this Plan to the contrary, the Committee may, in its
discretion, permit an Eligible Person (or any Beneficiary or Person entitled to act) to
elect to pay a portion or all of the amount requested by the Company for such taxes with
respect to such Award, at such time and in such manner as the Committee shall deem to be
appropriate (including, but not limited to, by authorizing Armstrong Energy, Inc. to
withhold, or agreeing to surrender to

13

 

Armstrong Energy, Inc. on or about the date such tax
liability is determinable, Common
Shares, Other Armstrong Energy Securities or property, other securities or property, or
other forms of payment, or any combination thereof, owned by such Person or a portion of
such forms of payment that would otherwise be distributed, or have been distributed, as the
case may be, pursuant to such Award to such Person, having a market value equal to the
amount of such taxes); provided, however, that any broker-assisted cashless exercise shall
comply with the requirements of Financial Accounting Standards Board, Accounting Standards
Codification, Topic 718 and any withholding satisfied through a net-settlement shall be
limited to the minimum statutory withholding requirements.

     (h) The expenses of this Plan shall be borne by the Company; provided, however, the
Company may recover from a Participant or his or her Beneficiary, heirs or assigns any and
all damages, fees, expenses and costs incurred by the Company arising out of any actions
taken by a Participant in breach of this Plan or any agreement evidencing such Participant’s
Award.

     (i) This Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure the payment of
any Award under this Plan, and rights to the payment of Awards shall be no greater than the
rights of the Company’s general creditors.

     (j) By accepting any Award or other benefit under this Plan, each Participant (and each
Person claiming under or through him or her) shall be conclusively deemed to have indicated
his or her acceptance and ratification of, and consent to, any action taken under this Plan
by the Company, the Board, the Committee or the Designated Administrator (if applicable).

     (k) The appropriate officers of the Company shall cause to be filed any reports,
returns or other information regarding Awards under this Plan or any Common Shares issued
pursuant to this Plan as may be required by applicable law and any applicable rules of any
stock exchange or other market quotation system on which Common Shares are listed.

     (l) The validity, construction, interpretation, administration and effect of this Plan,
and of its rules and regulations, and rights relating to this Plan and to Awards granted
under this Plan, shall be governed by the substantive laws, but not the choice of law rules,
of the State of Delaware.

     (m) Records of the Company shall be conclusive for all purposes under this Plan or any
Award, unless determined by the Committee to be incorrect.

     (n) If any provision of this Plan or any Award is held to be illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining provisions of this Plan
or any Award, but such provision shall be fully severable, and this Plan or Award, as
applicable, shall be construed and enforced as if the illegal or invalid provision had never
been included in this Plan or Award, as applicable.

14

 

     (o) The terms of this Plan shall govern all Awards under this Plan and in no event
shall the Committee have the power to grant any Award under this Plan that is contrary to
any of the provisions of this Plan.

     (p) For purposes of interpretation of this Plan, the masculine pronoun includes the
feminine and the singular includes the plural wherever appropriate.

     Section 19. Plan Amendment or Suspension. This Plan may be amended or suspended in whole or
in part at any time from time to time by the Committee; provided that no such change or amendment
shall be made without stockholder approval if such approval is necessary to qualify for or comply
with any tax or regulatory requirement or other applicable law for which the Committee deems it
necessary or desirable to qualify or comply. No amendment of this Plan shall adversely affect in a
material manner any right of any Participant with respect to any Award previously granted without
such Participant’s written consent, except as permitted under Section 14. Notwithstanding the
foregoing or any provision of the Plan to the contrary, the Committee may at any time (without the
consent of any Participant) modify, amend or terminate any or all of the provisions of the Plan to
the extent necessary to conform the provisions of the Plan with Section 162(m), Section 409A or any
other provision of the Code or other applicable law, the regulations issued thereunder or an
exception thereto, regardless of whether such modification, amendment or termination of the Plan
shall adversely affect the rights of a Participant.

     Section 20. Plan Termination. This Plan shall terminate upon the earlier of the following
dates or events to occur:

          (a) upon the adoption of a resolution of the Board terminating this Plan; or

          (b) the tenth anniversary of the Effective Date.

     Section 21. Effective Date. This Plan shall be effective on [ ] (the “ Effective Date ”),
subject to its approval by the stockholders of Armstrong Energy, Inc.; provided that, no
Incentive Stock Options shall be exercisable under the Plan unless the stockholders of Armstrong
Energy, Inc. approve the Plan within twelve (12) months after the Effective Date of this amendment
and restatement; provided, further, no award that is intended to be performance-based
within the meaning of Section 162(m) shall be paid prior to stockholder approval of the material
terms of the Plan.

     Section 22. Governing Law. This Plan and any Award granted under this Plan as well as any
determinations made or actions taken under this Plan shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Delaware without regard to its
choice or conflicts of laws principles.

15

 

APPENDIX A

The following terms shall have the meaning indicated:

     “Armstrong Energy, Inc.” shall mean Armstrong Energy, Inc., a Delaware corporation.

     “Award” shall mean an award of rights to an Eligible Person under this Plan.

     “Beneficiary” has the meaning set forth in Section 16.

     “Board” shall mean the board of directors of Armstrong Energy, Inc.

     “Code” shall mean the Internal Revenue Code of 1986, as it now exists or may be amended from
time to time, and the rules and regulations promulgated thereunder, as they may exist or may be
amended from time to time.

     “Committee” shall mean the person or persons responsible for administering this Plan. The
Board shall constitute the Committee until the Board appoints a Board Committee, after which time
the Board Committee shall constitute the Committee, provided, however, that at any time the Board
may designate itself as the Committee or designate itself to administer certain of the Committee’s
authority under this Plan, including administering certain Awards under this Plan; provided,
however, that the Board must approve Awards granted to non-employee directors of the Board. The
Board or the Board Committee may designate a Designated Administrator to constitute the Committee
or to administer certain of the Committee’s authority under this Plan, including administering
certain Awards under this Plan, subject to the right of the Board or the Board Committee, as
applicable, to revoke its designation at any time and to make such designation on such terms and
conditions as it may determine in its discretion. For purposes of this definition, the “Board
Committee” shall mean a committee of the Board designated by the Board to administer this Plan. The
Board Committee (i) shall be comprised of not fewer than three directors, (ii) shall meet any
applicable requirements under Rule 16b-3, including any requirement that the Board Committee
consist of “Non-Employee Directors” (as defined in Rule 16b-3), (iii) shall meet any applicable
requirements under Section 162(m), including any requirement that the Board Committee consist of
“outside directors” (as defined in Treasury Regulation §1.162-27(e)(3)(i) or any successor
regulation), and (iv) shall meet any applicable requirements of any stock exchange or other market
quotation system on which Common Shares are listed. For purposes of this definition, the
“Designated Administrator” shall mean one or more Company officers and/or directors designated by
the Board or a Board Committee to act as a Designated Administrator pursuant to this Plan in
compliance with applicable law or rule.

     “Company” shall mean Armstrong Energy, Inc. and any parent, affiliate or subsidiary of
Armstrong Energy, Inc., including any affiliates or subsidiaries which become such after adoption
of this Plan.

16

 

     “Common Shares” shall mean shares of common stock, par value $0.01 per share, of Armstrong
Energy, Inc. and stock of any other class into which such shares may thereafter be changed.

     “Dividend Equivalents” shall mean an Award of cash or other Awards with a Fair Market Value
equal to the dividends which would have been paid on the Common Shares underlying an outstanding
Award of Restricted Stock Units had such Common Shares been outstanding.

     “Effective Date” has the meaning set forth in Section 21.

     “Eligible Person(s)” shall mean those persons who are full or part-time employees of the
Company or other individuals who perform services for the Company, including, without limitation,
directors who are not employees of the Company and consultants and independent contractors who
perform services for the Company.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as it now exists or may be
amended from time to time, and the rules promulgated thereunder, as they may exist or may be
amended from time to time.

     “Fair Market Value ” shall mean (i) with respect to the Common Shares, as of any date (A) if
the Company’s Common Shares are listed on any established stock exchange, system or market, the
closing market price of the Common Shares as quoted in such exchange, system or market on such date
as reported in the Wall Street Journal or such other source as the Committee deems reliable or (B)
in the absence of an established market for the Common Shares, as determined in good faith by the
Committee or (ii) with respect to property other than Common Shares, the value of such property, as
determined by the Committee, in its sole discretion.

     “Incentive Stock Option” shall mean a Stock Option that is an incentive stock option as
defined in Section 422 of the Code. Incentive Stock Options are subject, in part, to the terms,
conditions and restrictions described in Section 6.

     “Nonqualified Stock Option” shall mean a Stock Option that is not an incentive stock option as
defined in Section 422 of the Code. Nonqualified Stock Options are subject, in part, to the terms,
conditions and restrictions described in Section 6.

     “Other Armstrong Energy Securities” shall mean Armstrong Energy, Inc. securities (which may
include, but need not be limited to, unbundled stock units or components thereof, debentures,
preferred stock, warrants, securities convertible into Common Shares or other property) other than
Common Shares.

     “Participant” shall mean an Eligible Person to whom an Award has been granted under this Plan.

     “Performance Grant” shall mean an Award, subject, in part, to the terms, conditions and
restrictions described in Section 9, pursuant to which the recipient may become entitled to

17

 

receive cash, Common Shares, Other Armstrong Energy Securities any other form of award
issuable under this Plan, or any combination thereof, as determined by the Committee.

     “Permitted Transferee” means (i) any person defined as an employee in the Instructions to
Registration Statement Form S-8 promulgated by the Securities and Exchange Commission, as such Form
may be amended from time to time, which persons include, as of the date of adoption of this Plan,
executors, administrators or beneficiaries of the estates of deceased Participants, guardians or
members of a committee for incompetent former Participants, or similar persons duly authorized by
law to administer the estate or assets of former Participants, and (ii) Participants’ family
members who acquire Awards from the Participant other than for value, including through a gift or a
domestic relations order. For purposes of this definition, “family member” includes any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the Participant’s household
(other than a tenant or employee), a trust in which these persons have more than fifty percent of
the beneficial interest, a foundation in which these persons (or the Participant) control the
management of assets, and any other entity in which these persons (or the Participant) own more
than fifty percent of the voting interests. For purposes of this definition, neither (i) a transfer
under a domestic relations order in settlement of marital property rights, nor (ii) a transfer to
an entity in which more than fifty percent of the voting or beneficial interests are owned by
family members (or the Participant) in exchange for an interest in that entity is considered a
transfer for “value”.

     “Person” means any individual, firm, corporation, partnership, limited liability company,
trust, incorporated or unincorporated association, joint venture, joint stock company, governmental
body or other entity of any kind.

     “Plan” shall mean this Armstrong Energy, Inc. 2011 Long-Term Incentive Plan.

     “Restricted Period” has the meaning set forth in subsection 8(b).

     “Restricted Stock” shall mean an Award of Common Shares that are issued subject, in part, to
the terms, conditions and restrictions described in Section 8.

     “Restricted Stock Units” shall mean an Award of the right to receive either (as the Committee
determines) Common Shares or cash equal to the Fair Market Value of a Common Share, issued subject,
in part, to the terms, conditions and restrictions described in Section 8.

     “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under
the Exchange Act and any successor rule.

     “Section 162(m)” shall mean §162(m) of the Code, any rules or regulations promulgated
thereunder, as they may exist or may be amended from time to time, or any successor to such
section.

18

 

     “Section 409A” shall mean §409A of the Code, any rules or regulations promulgated thereunder,
as they may exist or may be amended from time to time, or any successor to such section.

     “Section 422” shall mean §422 of the Code, any rules or regulations promulgated thereunder, as
they may exist or may be amended from time to time, or any successor to such section.

     “Separation from Service” and “Separate from Service” shall mean the Participant’s death,
retirement or other termination of employment or service with the Company (including all persons
treated as a single employer under Section 414(b) and 414(c) of the Code) that constitutes a
“separation from service” (within the meaning of Section 409A). For purposes hereof, the
determination of controlled group members shall be made pursuant to the provisions of Section
414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used
instead of “at least 80 percent” in each place it appears in Section 1563(a)(1), (2) and (3) of the
Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist
(within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language “at least 20 percent” shall be
used instead of “at least 80 percent” in each place it appears.

     “Specified Employee” means a key employee (as defined in Section 416(i) of the Code without
regard to paragraph (5) thereof) of the Company as determined in accordance with Section 409A and
the procedures established by the Company.

     “Stock Appreciation Right” shall mean an Award of a right to receive (without payment to
Armstrong Energy, Inc.) cash, Common Shares, Other Armstrong Energy Securities or property, or
other forms of payment, or any combination thereof, as determined by the Committee, based on the
increase in the value of the number of Common Shares specified in the Stock Appreciation Right.
Stock Appreciation Rights are subject, in part, to the terms, conditions and restrictions described
in Section 7.

     “Stock Option” shall mean an Award of a right to purchase Common Shares. The term Stock Option
shall include Nonqualified Stock Options and Incentive Stock Options.

     “Ten Percent Employee” shall mean an employee of Armstrong Energy, Inc. or any parent or
subsidiary of Armstrong Energy, Inc. who owns stock representing more than ten percent of the
voting power of all classes of stock of Armstrong Energy, Inc. or any parent or subsidiary of
Armstrong Energy, Inc. within the meaning of Code Sections 424(e) and (f).

     “Treasury Regulation” shall mean a final, proposed or temporary regulation of the Department
of Treasury under the Code and any successor regulation.

19exv10w36

Exhibit 10.36

ARMSTRONG LAND COMPANY, LLC

RESTRICTED UNIT AWARD AGREEMENT

     This Restricted Unit Award Agreement (the “Agreement”) is made this 1st day of June, 2011
(the “Effective Date”), between ARMSTRONG LAND COMPANY, LLC, a
Delaware limited liability company (the “Company”), and David Cobb, an employee of the
Company (“Employee”).

     WHEREAS, the Company desires to afford Employee the opportunity to obtain Units of Membership
Interest in the Company valued at $100.00 per Unit; and

     WHEREAS, capitalized terms used herein and not otherwise defined shall have those meanings
assigned to them in the Company’s Amended and Restated Limited Liability Company Agreement dated
March 7, 2007, as amended, as amended by Amendment No. 1 thereto dated as of May 31, 2007,
Amendment No. 2 thereto dated as of March 31, 2008, Amendment No. 3 thereto dated as of June 6,
2008, the Addendum Agreement thereto dated October 1, 2008 and Amendment No. 4 thereto dated May 6,
2009 including all exhibits thereto (the “LLC Agreement”)

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties hereto agree as follows:

     1. Grant of Award. Subject to Employee’s execution of the Addendum Agreement (as
defined in the LLC Agreement), and if applicable, Employee’s spouse’s execution of the Spousal
Consent (as set forth in the LLC Agreement), the Company hereby grants to Employee as of the
Effective Date an aggregate of 2,000 Units, such number of Units being subject to adjustment as
provided in Paragraph 7 hereof, and on the terms and conditions herein set forth. The Units granted
pursuant to this Agreement are granted as restricted membership units and are subject to vesting
and forfeiture as provided herein (the “Restricted Units”).

     2. Restricted Period. Except as otherwise provided in Paragraph 6, 100% of the
Restricted Units shall vest on April 1, 2013; provided that Employee is continually employed by the
Company or any of its Affiliates commencing on the Effective Date through April 1, 2013.

     3. Notation of Units. The Units are uncertificated. The Restricted Units will be
recorded on the books and records of the Company and are considered as held by the Company in
escrow for Employee’s benefit until such time as the Restricted Units are either forfeited by
Employee to the Company or the restrictions thereon terminate as set forth in this Agreement. If
the restrictions terminate as set forth in this Agreement, the books and records of the Company
will be changed to reflect the release of the Restricted Units from escrow to Employee.

     4. Forfeiture. All Restricted Units granted pursuant to this Agreement that have not
vested in accordance with Paragraph 2 or Paragraph 6, as the case may be, shall be forfeited to the
Company upon the date Employee is no longer employed by the Company or any of its Affiliates, and
such forfeiture shall be reflect on the books and records of the Company.

 

 

	5.	 	Taxes.
	 
	(a)	 	Participant may elect, within 30 days of the Effective Date and on notice to the
Company, to realize income for federal income tax purposes equal to the fair
market value of the Restricted Units on the Effective Date by making an election
under Section 83(b) of the Internal Revenue Code of 1986, as amended. In such
event, Employee shall make arrangements satisfactory to the Company to pay at
the time required by applicable law any federal, state or local taxes required to be
withheld with respect to such Restricted Units.
	 
	(b)	 	If no election is made by Employee pursuant to Paragraph 5(a) hereof, then upon
vesting of the Restricted Units, Employee (or in the event of Employee’s death,
the administrator or executor of Employee’s estate) will pay to the Company, or
make arrangements satisfactory to the Company regarding payment of, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the Restricted Units.
	 
	(c)	 	Any provision of this Agreement to the contrary notwithstanding, if Employee
does not satisfy his obligations under subparagraphs (a) or (b) of this Section, the
Company shall, to the extent permitted by law, have the right to deduct from any
payments made under this Agreement or the LLC Agreement, including the
withholding of Restricted Units, regardless of the form of such payment, or from
any other compensation payable to Employee, whether or not pursuant to this
Agreement or the LLC Agreement and regardless of the form of payment, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the Restricted Units.
	 
	6.	 	Acceleration of Vesting Date.
	 
	(a)	 	Notwithstanding the provisions of Paragraph 2 above relating to the vesting period, all of
the Restricted Units shall be fully vested upon (i) a Change of Control; provided that
Employee has remained continually employed by the Company or any of its Affiliates commencing
on the Effective Date through the effective date of the Change of Control, or (ii) the
involuntary termination of Employee’s employment by the Company for reason other than Cause.
	 
	(b)	 	For purposes of this Agreement a “Change of Control” shall mean any person or
group of persons (as defined in Rule 13d-5 under the Securities Exchange Act of
1934, as amended) together with such person or its Affiliates, becoming the
owner, directly or indirectly, of 51% or more of the total fair market value or total
voting power of the Company; provided that if one or more persons acting as a
group currently owns more than 51% of the Company, the acquisition of
additional Units by the same person or persons is not considered to cause a
Change in Control.
	 
	(c)	 	For purposes of this Agreement, “Cause” shall mean:

2

 

	 	(i)	 	the failure by Employee to substantially perform his duties as an officer
of
the Company (other than any such failure resulting from Employee’s
Disability);
	 
	 	(ii)	 	any misconduct in the course and scope of Employee’s employment,
including but not limited to dishonesty, disloyalty, disorderly conduct,
insubordination, harassment of other employees or third parties, abuse of
alcohol or controlled substances or other violations of the Company’s
rules;
	 
	 	(iii)	 	Employee’s conviction of a felony or other crime involving moral
turpitude; or
	 
	 	(iv)	 	any material breach or violation of any agreement between Employee and
the Company including, without limitation, the LLC Agreement.

	(d)	 	For purposes of this Agreement, a “Disability” shall be deemed to have occurred
when:

	 	(i)	 	Employee is determined to be eligible to receive long-term disability
benefits under either Social Security or the Company’s long-term
disability plan, if any;
	 
	 	(ii)	 	the Board of Managers of the Company (the “Board”), upon the written
report of a qualified physician designated by the Board or its insurers,
shall have determined (after a complete physical examination of Employee
at any time after he has been absent from the Company for a period of at
least 120 calendar days since the date of this Agreement), that Employee
has become physically and/or mentally incapable of performing his
essential job functions with or without reasonable accommodation as
required by law; or
	 
	 	(iii)	 	Employee is otherwise unable for a continuous period of 180 calendar
days to perform his essential job functions with or without reasonable
accommodation as required by law due to injury, illness, or other
incapacity (physical or mental).

	(e)	 	The determination of whether Cause or a Disability exists shall be made by the
Board in its good faith and sole discretion and shall be conclusive. If the Board
believes that Cause exists for terminating Employee’s employment and forfeiting
all unvested Restricted Units, it shall give Employee written notice of the acts or
omissions constituting Cause, and no termination of employment and related
forfeiture of unvested Restricted Units shall be effective unless and until
Employee fails to cure such acts or omissions within 10 calendar days after
receiving such notice, unless such acts or omissions cannot reasonably be cured
within such 10 day period.

3

 

     7. Adjustments of Units Subject to Award. If any Units shall at any time be
changed or exchanged by reason of reorganization, merger, consolidation or recapitalization, then
the aggregate number of Restricted Units subject to this Agreement shall be automatically adjusted
such that Employee’s proportionate interest shall be maintained as before the occurrence of such
event. The determination of any such adjustment by the Company shall be final, binding and
conclusive. Units distributed in connection with or resulting from any such adjustment with respect
to Restricted Units that have not yet vested shall enjoy the same privileges and be subject to the
same restrictions pursuant to this Agreement that are applicable to the related Restricted Units.

     8. No Contract for Employment. Notwithstanding anything to the contrary contained
herein, this Agreement does not constitute a contract for employment and shall not affect the right
of the Company to terminate Employee’s employment for any reason whatsoever or for no reason.

     9. Restrictions on Transfer. None of the Restricted Units may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of prior to vesting. Upon vesting, the
Restricted Units are subject to the restrictions on transfer set forth in the LLC Agreement, the
terms of which are incorporated herein by reference.

     10. Rights as Member. Employee shall be the record owner of the Restricted Units until
or unless such Restricted Units are forfeited pursuant to Paragraph 4 hereof, and as record owner
shall be entitled to the rights and subject to all of the obligations of a member of the Company
subject to the terms and conditions of the LLC Agreement. Without limiting the generality of the
foregoing, prior to vesting (i) Employee shall not be entitled to any voting rights with respect to
the Restricted Units, and (ii) the Restricted Units shall be subject to the limitations on transfer
set forth in Paragraph 9 hereof.

     11. Restriction on Issuance of Units. The Company shall not be required to issue Units
covered by this Agreement prior to the obtaining of any approval from any governmental agency that
the Company shall, in its sole discretion, determine to be necessary or advisable, and the
completion of any registration or other qualification of such Units or their offering or sale under
any state or federal law or ruling or regulations of any governmental body that the Company
shall, in its sole discretion, determine to be necessary or advisable. In addition, if the offering
and sale of Units reserved for issuance pursuant to this Agreement shall not then be registered
under the Securities Act of 1933, as amended, the Company may, upon Employee’s receipt of Units
issued pursuant to this Agreement, require Employee or his permitted transferee to represent in
writing that the Units being acquired are for investment and not with a view to distribution.

     12. Acknowledgment. Employee acknowledges that Thompson & Knight LLP has not
represented such Employee in connection with the preparation and negotiation of this Agreement, and
such counsel shall owe no duties directly to Employee. Employee confirms that Employee has been
advised to consult with Employee’s own attorney regarding legal matters concerning the Company and
to consult with independent tax advisors regarding the tax consequences of receiving the Restricted
Units.

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     13. Binding Effect. This Agreement shall be binding upon the heirs, executors,
administrators, and successors of the parties hereto.

     14. Modification. No change or modification of this Agreement shall be valid or
binding upon the parties unless the change or modification is in writing and signed by the parties;
provided, however, that the Company may change or modify this Agreement without Employee’s consent
or signature if the Company determines, in its sole discretion, that such change or modification is
necessary or desired for purposes of compliance with or exemption from the requirements of Section
409A of the Internal Revenue Code of 1986, as amended, or any regulations or other guidance issued
thereunder.

     15. Governing Instrument and Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to its conflict of laws principles.

[Remainder of this Page Intentionally Left Blank]

[Signature Page Follows]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

	 	 	 	 	 
	 	
ARMSTRONG LAND COMPANY, LLC

 	 
	 	By:  	/s/ Martin D. Wilson
 	 
	 	 	Martin D. Wilson, President 	 
	 	 	 	 
	 	EMPLOYEE:

 	 
	 	/s/ David Cobb
 	 
	 	David Cobb 	 
	 	 	 
	 

Restricted Unit Award Agreement

Signature Page

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