Document:

Exhibit 10.4

 

For 2018 Awards

 

CLOUD PEAK ENERGY INC.

2009 LONG TERM INCENTIVE PLAN

(As Amended and Restated Effective March 3, 2017)

 

FORM OF

RESTRICTED STOCK UNIT AGREEMENT

 

THIS AGREEMENT is made as of the 2nd day of March 2018 (the “Grant Date”), between Cloud Peak Energy Inc., a Delaware corporation (the “Company”), and            (the “Grantee”).

 

WHEREAS, the Company has adopted the Cloud Peak Energy Inc. 2009 Long Term Incentive Plan (As Amended and Restated Effective March 3, 2017), as the same may be further amended and restated from time to time (the “Plan”), in order to provide an additional incentive to certain employees and directors of the Company and its Subsidiaries; and

 

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

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.                                      Grant of Restricted Stock Units.

 

1.1.                            The Company hereby grants to the Grantee, and the Grantee hereby accepts from the Company, an award of               Restricted Stock Units subject to, and in accordance with, the terms and conditions set forth in this Agreement (the “Award”).  Each Restricted Stock Unit corresponds to one Share. This Award shall be settled in accordance with Section 6 of this Agreement.

 

1.2.                            This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of which are incorporated herein by reference); and, except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.

 

2.                                      Dividend Equivalent Rights.

 

During the period that the Restricted Stock Units are outstanding, the Grantee shall be entitled to Dividend Equivalent Rights with respect to the Restricted Stock Units, in an amount equivalent to the dividends paid by the Company on a corresponding number of Shares. Dividend Equivalent Right amounts credited to the Grantee will be deemed to be reinvested in additional Shares based on the Fair Market Value of a Share on the date the dividend is paid (with any fractional Share resulting therefrom rounded up to a whole Share), and a corresponding additional number of Restricted Stock Units will be subject to the Award hereunder.  Such additional Restricted Stock Units will be subject to the same vesting conditions

 

1

 

and settled at the same time and in the same manner as the Restricted Stock Units to which the Dividend Equivalent Rights relate.

 

3.                                      Vesting and Lapse of Restrictions.

 

The Grantee may not sell, transfer, assign, exchange, pledge, encumber or otherwise dispose of any Restricted Stock Units or any Shares underlying such Restricted Stock Units prior to the Vesting Date (defined below) except as may otherwise be set forth within this Agreement, and the Restricted Stock Units are also restricted and may be forfeited to the Company as provided herein (together, the “Restrictions”).  Subject to Sections 4 and 5 hereof, provided that the Grantee continues to serve as an employee of the Company or any of its Subsidiaries, all Restrictions shall lapse and the Restricted Stock Units shall vest on the third anniversary of the Grant Date (such date, the “Vesting Date”).

 

4.                                      Effect of Certain Terminations of Employment.

 

4.1.                            Termination—Generally.  Except in the case of a termination described in Sections 4.2, 4.3 or 5 hereof, in the event the Grantee’s employment with the Company and its Subsidiaries, as applicable, is terminated on or after the Grant Date and prior to the Vesting Date, all Restricted Stock Units on which the Restrictions have not yet lapsed shall immediately be forfeited to the Company in their entirety without payment of consideration therefor to the Grantee.

 

4.2.                            Qualifying Terminations.  If the Grantee’s employment with the Company and its Subsidiaries, as applicable, is terminated for any of the reasons set forth below (and subject to Section 5 hereof), in each case if such termination occurs on or after the Grant Date and prior to the Vesting Date, a Pro Rata Portion (as defined below) of the Restricted Stock Units shall vest, and the Restrictions on such Restricted Stock Units shall lapse, as of the date of such termination, and the remaining Restricted Stock Units on which the Restrictions have not yet lapsed shall immediately be forfeited to the Company in their entirety without payment of consideration therefor to the Grantee.  The “Pro Rata Portion” shall mean the total number of Restricted Stock Units 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 1,096.

 

(a)                                 Death

 

(b)                                 Disability (as defined in the Plan)

 

(c)                                  Redundancy (as defined below)

 

(d)                                 If the Grantee is not subject to an Employment Agreement (as defined below), 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.

 

2

 

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

 

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

 

4.3.                            Retirement.  If the Grantee’s employment with the Company and its Subsidiaries, as applicable, is terminated due to the Grantee’s Retirement (as defined below, and subject to Section 4.2 and Section 5 hereof) on or after the Grant Date and prior to the Vesting Date, a portion (as calculated below) of the Restricted Stock Units shall vest as of the date of such termination, and the remaining Restricted Stock Units on which the Restrictions have not yet lapsed shall immediately be forfeited to the Company in their entirety without payment of consideration therefor to the Grantee.  Solely for purposes of determining which portion of the Restricted Stock Units will vest upon the Grantee’s termination of employment due to a Retirement, the Restricted Stock Units will be divided into three separate tranches and service periods as set forth in the table below; provided, however, that the table below is not intended to modify the original Vesting Date set forth in Section 3 above:

 

	
 
    	
 
    	
Percentage of Restricted Stock 
   Units Assigned to Tranche
    	
 
    	
Period of Service 
   Assigned to
   Restricted Stock Units
    	
 
    	
“Date of 
   Nonforfeitability” 
   for Tranche
    	
 
    
	
Tranche 1
    	
 
    	
One-Third (1/3)
    	
 
    	
Grant Date to 3/1/2019
    	
 
    	
3/2/2019
    	
 
    
	
Tranche 2
    	
 
    	
One-Third (1/3)
    	
 
    	
3/2/2019 to 3/1/2020
    	
 
    	
3/2/2020
    	
 
    
	
Tranche 3
    	
 
    	
One-Third (1/3)
    	
 
    	
3/2/2020 to 3/1/2021
    	
 
    	
3/2/2021
    	
 
    

 

If the Grantee’s employment with the Company and its Subsidiaries, as applicable, is terminated due to the Grantee’s Retirement prior to any Date of Nonforfeitability for a tranche set forth above, the Restricted Stock Units assigned to that tranche shall be forfeited to the Company in its entirety without payment of consideration to the Grantee.  If the Grantee’s employment with the Company or any of its Subsidiaries is terminated due to the Grantee’s Retirement on or following the Date of Nonforfeitability for a tranche set forth above, the Restricted Stock Units assigned to the tranche will become immediately vested and all Restrictions on such Restricted Stock Units shall lapse.

 

For example, if the Grantee terminates his employment due to a Retirement on March 31, 2020, he will become immediately vested in Tranche 1 and Tranche 2 of his Restricted Stock Units.  All Restricted Stock Units assigned to Tranche 3 will be forfeited.

 

By accepting the Restricted Stock Units, the Grantee acknowledges his understanding that if the Grantee becomes Retirement-eligible prior to the Vesting Date, the Retirement provisions within this Section 4.3 may result in one or more tranches of the Restricted Stock Units being deemed to have vested for certain tax purposes prior to the time that this Agreement contractually vests the Restricted Stock Units.

 

3

 

4.4.                            Definitions.  For purposes of this Agreement:

 

(a)                                 “Employment Agreement” means an effective, written employment agreement between the Grantee and the Company or any of its Subsidiaries, and also includes any executive severance policy, change in control agreement or similar written policies and agreements applicable to the Company’s Chief Executive Officer (“CEO”) and/or direct reports to the CEO, regardless of the specific title for any such policies or agreements. Notwithstanding any provision herein to the contrary, in the event of any inconsistency between this Section 4 or Section 5 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 or any of its Subsidiaries.

 

5.                                      Effect of a Termination Following a Change in Control.

 

If, within the two (2) year period following a Change in Control (as defined in the Plan), the Grantee’s employment with the Company and its Subsidiaries, or the surviving or successor entity thereto, as applicable, is terminated (a) by the Company and its Subsidiaries, or the surviving or successor entity thereto, as applicable, without Cause (as defined in the Plan or, if applicable, an Employment Agreement) or (b) if the Grantee is subject to an Employment Agreement, by the Grantee for Good Reason as defined therein, all outstanding Restricted Stock Units which have not become vested in accordance with Section 3 hereof shall vest, and the Restrictions on such Restricted Stock Units shall lapse in their entirety as of the date of such termination.

 

6.                                      Settlement of Restricted Stock Units.

 

6.1.                            Except as otherwise provided within this Agreement, not more than thirty (30) days after the Vesting Date (or such earlier date of vesting as described in Sections 4 or 5 above, if applicable), the Company will pay or deliver to the Grantee (or in the case of the Grantee’s death, the Grantee’s Beneficiary or, if none, the Grantee’s estate), in the Committee’s sole discretion, with respect to each vested Restricted Stock Unit subject to this Agreement, and subject to the satisfaction of Section 11 below: (a) one Share, (b) an amount of cash equal to the Fair Market Value of one Share on the Vesting Date (or such earlier date of vesting), or (c) any combination of the foregoing. The value of any fractional Restricted Stock Units, if any, shall be rounded down at the time Shares or cash payments are issued or paid to the Grantee in connection with the vested Restricted Stock Units.  No fractional Shares, nor the cash value of any fractional Shares, will be issuable or payable to the Grantee pursuant to this Agreement.  Neither this Section 6 nor any action taken pursuant to or in accordance with this Section 6 shall

 

4

 

be construed to create a trust or a funded or secured obligation of any kind.

 

6.2.                            Notwithstanding any provision of this Agreement to the contrary, the issuance of Shares, if any, pursuant to this Agreement will be subject to compliance with all applicable requirements of federal, state, or foreign law with respect to such securities and with the requirements of any stock exchange or market system upon which the Shares may then be listed, including any shareholder approval requirements necessary to issue the Shares (the “Share Issuance Restrictions”).    No Shares will be issued if such issuance would constitute a violation of any applicable federal, state, or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed.  In addition, Shares will not be issued unless (a) a registration statement under the Securities Act is at the time of issuance in effect with respect to the shares issued or (b) in the opinion of legal counsel to the Company, the Shares issued may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any Shares subject to the Restricted Stock Units will relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority has not been obtained.  As a condition to any issuance, the Company may require the Grantee to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company.  From time to time, the Board and appropriate officers of the Company are authorized to take the actions necessary and appropriate to file required documents with governmental authorities, stock exchanges, and other appropriate persons to make Shares available for issuance.  If the issuance of any Shares hereunder is not permissible under the Share Issuance Restrictions or for any other reason described above, then the Committee may, in its sole discretion, take any of the following actions: (i) pay to the Grantee, with respect to one or more Shares subject to this Agreement, an amount of cash equal to the Fair Market Value of such Share(s), (ii) cancel this Award or any portion thereof, (iii) provide to the Grantee any alternative compensation in lieu of any or all of the Shares, (iv) any combination of the foregoing, or (v) elect any other response that it deems appropriate to respond to the Share Issuance Restrictions or other reasons described above as the Committee may determine in its sole discretion.

 

6.3.                            The Grantee may receive, hold, sell or otherwise dispose of any Shares delivered to him or her pursuant to this Section 6 free and clear of the Restrictions, but subject to compliance with all federal, state and other similar securities laws and the Company’s insider trading policies and stock ownership requirements.

 

6.4.                            The Company intends that payments under this Agreement be exempt from or comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance and regulations promulgated thereunder (“Section 409A”).  This Agreement shall be operated and interpreted consistent with the foregoing intent; provided, that the Company makes no representation that the Agreement complies with Section 409A and shall have no liability to the Grantee for any failure to comply with Section 409A.  Notwithstanding Section 6.1 of this Agreement, and to the extent required by Section 409A, if the Grantee is a “specified employee” as defined under Section 409A  and would be eligible to receive Shares or cash in settlement of Restricted Stock Units granted hereunder that are subject to Section 409A

 

5

 

upon his or her “separation from service” (within the meaning of Treasury Regulation § 1.409A-1(h)), such settlement may not be made before the date which is six months after the date of the specified employee’s separation from service (or if earlier, upon the specified employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short term deferral exemption or otherwise.  Upon the expiration of the applicable Section 409A deferral period described in the foregoing sentence, settlement of the Restricted Stock Units will be made in cash or Shares (or otherwise as described in Sections 6.1 and 6.2) in a lump sum as soon as practicable, but in no event later than thirty (30) days following such expired period.

 

7.                                      Rights of the Grantee.

 

The Grantee shall have no rights as a stockholder of the Company with respect to any Shares covered by this Agreement until the Restricted Stock Units vest and Shares, if any, are issued by the Company and deposited in the Grantee’s account at a transfer agent or other custodian selected by the Committee, or are issued to the Grantee upon settlement of the vested Restricted Stock Units granted under this Agreement.  The Grantee’s rights in respect of the unvested Restricted Stock Units shall be limited to those of a general unsecured creditor of the Company.

 

8.                                      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.

 

9.                                      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. For the avoidance of doubt, nothing herein is intended to modify the terms and provisions of any Employment Agreement applicable to the Grantee.

 

10.                               Clawback Policies.

 

This Agreement is subject to any written clawback policies the Company, with the approval of the Board, may adopt.  These clawback policies may subject the Grantee’s rights and benefits under this Agreement to reduction, cancellation, forfeiture or recoupment if certain specified events and wrongful conduct occur, including, but not limited to, an accounting restatement due to the Company’s material noncompliance with financial reporting regulations or other events and wrongful conduct specified in any such clawback policies adopted by the Company, with the approval of the Board, and that the Company determines should apply to this Agreement.

 

6

 

11.                               Withholding of Taxes.

 

To the extent that the receipt of the Restricted Stock Units or the lapse of any Restrictions and payment in connection therewith results in compensation income or wages to the Grantee for federal, state or local tax purposes, the Grantee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its withholding obligations under applicable tax laws or regulations, and if the Grantee fails to do so, the Company is authorized to and shall withhold from any cash or stock remuneration (including withholding any Shares distributable to the Grantee under this Agreement) then or thereafter payable to the Grantee any tax required to be withheld by reason of such resulting compensation income or wages.  The Grantee acknowledges and agrees that the Company is making no representation or warranty as to the tax consequences to the Grantee as a result of the receipt of the Restricted Stock Units, the lapse of any Restrictions, or the forfeiture of any Restricted Stock Units pursuant to the Restrictions.

 

12.                               Signatures in Counterparts.

 

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. Electronic acceptance and signatures shall have the same force and effect as original signatures.

 

13.                               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 or as otherwise provided in the Plan.  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.

 

14.                               Severability.

 

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

 

15.                               Governing Law.

 

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

 

16.                               Notice.

 

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

 

7

 

writing. For Grantees who are employees or former employees, the Company shall be entitled to rely on the most recent address provided to the Company by such Grantee or otherwise verified by such Grantee as being the current mailing address for such Grantee.

 

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.                               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 Grantee’s rights to pursue and protect the Grantee’s legal rights in a court of competent jurisdiction.

 

19.                               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.

 

8

 

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

 

	
CLOUD   PEAK ENERGY INC.
    	
 
    	
GRANTEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:  Colin Marshall
    	
 
    	
Print   Name:
    
	
Title:  President, Chief Executive Officer and Chief   Operating Officer
    	
 
    	
 
    

 

9Exhibit

LCI Industries
2018 Annual Incentive Program
Establishment and Effective Date
The 2018 Annual Incentive Program (the “Program”) is hereby established to provide for the grant of Annual Incentive Awards under the LCI Industries Equity Award and Incentive Plan (as Amended and Restated) (the “Plan”). The Program shall be deemed effective as of January 1, 2018. The Program shall operate on the basis of a program year that begins on January 1, 2018 and ends on December 31, 2018 (“Program Year”). Payout will be based on Program Year performance results, except as otherwise provided herein.
Purpose
The purpose of the Program is to provide annual incentive compensation to:

		
	•
	Recognize the performance of key employees in achieving the financial and operating objectives of LCI Industries (“LCII”) and its key subsidiaries (collectively referred to as the “Company”); and 

		
	•
	Focus key executives on assisting the Company in achieving objectives key to its success.

Payouts for Program participants will be determined based on the Program provisions and the results of Company performance measurements, subject to adjustment (to the extent that any such adjustment is consistent with the terms and conditions of the Program and/or the Plan) by the Compensation Committee of LCII’s Board of Directors (the “Committee”).
Eligibility
Eligibility for Program participation will be limited to employees who: (1) are employed in executive positions that have ultimate responsibility for the financial and operating performance of the Company, and (2) have been specifically identified by the Company as being eligible for Program participation as likely to be a Covered Employee (as defined in the Plan). However, employees who participate in another short-term Company incentive plan (other than a plan that compensates the employee on a commission basis) are not eligible to participate in this Program with respect to the portion of the Program Year that is also covered under such other plan. Names of approved Program participants are identified in the Program Appendix.

Any employee who first becomes eligible and is added to the Program after the start of the Program Year will be eligible to participate with respect to that Program Year, but prorated to reflect the period of the Program Year for which the employee was employed in an eligible classification.

Except as provided in the Employment Termination section below, employees must be actively employed through December 31, 2018 to be eligible for a payout under the Program with respect to the Program Year. Except as provided herein, those who are not actively employed through December 31, 2018 for reasons other than disability, approved leave of absence, or death will not be eligible to receive a payout under the Program. An employee does not earn a right to a Program payment (whether on a pro rata basis or otherwise) based upon length of service or mere completion of service during the Program Year. Rather, a payout is earned based upon the achievement by the Company of pre-determined performance goals measured over the course of the entire Program Year as a result of the efforts of eligible employees who contribute toward achievement of such goals. An employee’s participation in the Program, and the opportunity to earn a payout in accordance with the terms and conditions of the Program, does not represent an unequivocal promise on the part of the Company to pay incentive compensation other than to the extent that applicable performance goals have been satisfied, the employee satisfies the eligibility conditions specified herein, and the Committee has authorized a payout to the employee after completion of the Program Year.
Employment Termination
Termination of employment at any time during the Program Year will disqualify the participant from receiving a payout under the Program, except as provided below:

If the participant’s employment is terminated at any time during the Program Year (1) by the Company without cause, or (2) by the participant for good reason, the participant will receive a payout of any award that has otherwise been earned and approved by the Committee, but prorated to reflect the period of the Program Year for which the participant was employed.

Absence from active employment during the Program Year on account of disability or approved unpaid leave of absence will not disqualify the participant from receiving a payout of any award that has otherwise been earned and approved by the Committee.

Similarly, if termination of employment occurs during the Program Year due to death, the participant will receive a payout of any award that has otherwise been earned and approved by the Committee.

The word “cause” means participant’s (a) willful and continued failure to follow the Company’s reasonable direction or to perform any duties reasonably required of participant (other than any such failure resulting from his disability or from termination by participant for good reason, if applicable), after written demand for substantial performance is delivered to participant specifying in reasonable detail the manner in which participant has not performed, and participant has not remedied such failure within 30 days after notice thereof, (b) material violation of, or failure to act upon or report known or suspected violations of, the Company’s Guidelines for Business Conduct, as amended from time to time, (c) conviction of, or a plea of nolo contendere with respect to, any felony, (d) commission of any criminal, fraudulent, or dishonest act in connection with participant’s employment, (e) material breach of participant’s employment agreement which, if capable of remedy, continues for a period of 30 days without remedy thereof by participant after notice thereof, or two or more such breaches in any two month period, or (f) one or more instances of willful misconduct or gross negligence that, individually or in the aggregate, is materially detrimental to the Company’s interests.

The word “good reason” shall have the meaning set forth in the participant’s employment agreement with Lippert Components, Inc.

The word “disability” means the participant’s active service has been terminated as a result of physical or mental disability that renders the participant incapable of performing the essential functions of the participant’s job, with or without reasonable accommodation, and which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as determined in good faith by the Company.

In all cases, eligibility for any earned payout is based upon the employee’s being employed during the Program Year in an eligible classification.

Any approved Program payout to or on behalf of a participant who was terminated by the Company without cause during the Program Year or who terminated employment during the Program Year for good reason or on account of disability or death, or who is absent from active service on account of disability or an approved unpaid leave of absence, will be paid at the same time as payment is made to active employees whose employment with the Company has continued. In the event of a participant’s death, any approved Program payout will be distributed at such time in a lump sum to the participant’s estate.  In order to receive any approved Program payout following termination by the Company without cause or by the participant for good reason, or on account of disability, the participant must timely sign and not revoke a separation agreement and release of claims in a form acceptable to and determined by the Company in its sole discretion. 
Program Performance Measures
The Program design includes financial measures that are approved by the Committee. Measurement performance levels will be monitored throughout the Program Year. Following the end of the Program Year, results will be presented to the Company’s Chief Executive Officer (“CEO”) and Committee for approval. The performance measures can be specific to an individual or apply to a group, and may include operational and/or financial measures as approved by the Committee. Weightings can vary by eligible executive as approved by the Committee.

The following provides a general description of each of the financial performance measures for the Program Year. Measures reflect operations of the Company and will apply to one or more Program participants. The Committee may at any time exercise negative discretion to adjust the performance measures (or any amount payable upon satisfaction of one or more performance measures) to reflect the effects of extraordinary items, non-recurring items, or any other items that the Committee feels should be considered in determining performance results if the result is to reduce the amount payable relative to the performance measures as originally approved. 
Financial Measures
Return on Invested Capital or “ROIC” shall mean for purposes of the Program: Operating Profit/Average Invested Capital, where

Operating Profit is the Company’s fiscal year consolidated operating profit, as detailed in the Company’s financial statements filed with the U.S Securities and Exchange Commission (“SEC”); and

Average Invested Capital is the average of the prior year end and current year quarterly (Total Stockholders Equity + Indebtedness) - (Cash, Cash Equivalents and Short-Term Investments), where:

Total Stockholders’ Equity is the Company’s total stockholders’ equity as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC;

Indebtedness is the Company’s indebtedness as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC; and

Cash, Cash Equivalents and Short-Term Investments is the sum of the cash, cash equivalents and short-term investments as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC.

Gross Margin Improvement shall mean for purposes of the Program:  the increase, if any, in the Company’s overall gross margin for the Program Year compared to the Company’s overall gross margin for the immediately preceding fiscal year. 

Adjustments
Notwithstanding the above definitions, the following adjustments shall be taken into account in the calculation of ROIC for determining final payouts under the Program:

The effects of: 

(a)    accretion expense;
(b)    goodwill impairment;
(c)    charges for reorganizing and restructuring; 
(d)    charges from asset write-downs;
		
	(e)
	gains or losses on the disposition of a business or business segment or arising from the sale of assets outside the ordinary course of business; 

		
	(f)
	the cumulative effect of changes in tax or accounting rules, regulations, or laws; and

		
	(g)
	extraordinary, unusual, transition, one-time and/or non-recurring items of gain or loss determined in accordance with generally accepted accounting principles, 

provided that, for each of the items (a) through (g), the Company shall have identified that it anticipates it will reflect such adjustments for investors in its audited financial statements (including footnotes), its earnings release, or in its management discussion and analysis section of the Company’s Form 10-K for fiscal year 2018.
Payout Governor
Notwithstanding anything to the contrary, no payout will be made under the Program if the annual LCII ROIC (as defined above) for 2018 does not exceed the threshold requirement established by the Committee. This is referred to as the Overall Threshold Requirement. If the Overall Threshold Requirement is not exceeded, there will be no payout under the Program.
Program Payouts
Following the close of the Program Year and after the audited financial results are available, the Committee will meet and certify the extent to which the performance measures have been satisfied (including application of the payout governor) and will authorize Program payouts. Payouts, less tax withholdings and other required or authorized deductions, will be paid no later than March 15, 2019. 
An employee who during the Program Year changes employment status from one eligible status to another eligible status, other than a change that the Company determines to be a short-term or temporary assignment that does not represent a long-term change in the employee’s regular role, will be subject, with respect to employment on or after the date the change in employment status is reflected in the Company’s books and records (“Change in Status Date”), to the incentive measures applicable to the employment status into which the employee has transferred. Any payout applicable to eligible employment during the Program Year prior to the Change in Status Date will be based upon the employee’s incentive measures applicable to the employee prior to the Change in Status Date. Any payment applicable 

to eligible employment during the Program Year but on or after the Change in Status Date will be based upon the employee’s incentive measures applicable to the employee on or after the Change in Status Date. Short-term or temporary assignments (as determined by the Company) will not change the incentive plan that an employee is assigned to. The employee will remain in his or her regular role for payout calculation purposes.
Any Program payout is subject to any recoupment or clawback policy that may be adopted by the Company from time to time and to any requirement of applicable law, regulation, or listing standard that requires the Company to recoup or claw back compensation paid pursuant to the Program.
Relationship to Other Company Plans
Employees who participate in another short-term incentive plan (other than a plan that compensates the employee on a commission basis) are not eligible to participate in this Program until the time their participation in the other short-term incentive plan terminates.
Rights of Participants and Forfeiture
Nothing in this Program shall:
		
	•
	Confer upon any employee any right with respect to continuation of employment with the Company;

		
	•
	Interfere in any way with the right of the Company to terminate his/her employment at any time; or

		
	•
	Confer upon any employee or any other person any claim or right to any distribution under the Program except to the extent that a payment has been earned based upon the achievement of the measures applicable to the employee, the employee otherwise satisfies the eligibility requirements of the Program, and the Committee has authorized the payment of a payout to the employee.

No right or interest of any employee in the Program shall, prior to actual payment or distribution to the employee, be assignable or transferable in whole or in part, either voluntarily or by operation of law or otherwise, or be subject to payment of debts of any employee by execution, levy, garnishment, attachment, pledge, bankruptcy, or in any other manner.

Notwithstanding any provision of this Program to the contrary, no Program payout shall be made to any participant if he or she has engaged in any “detrimental activity” (as hereinafter defined) at any time prior to or during the six months after the Program payout has been delivered to him or her.  In such event, the entire Program payout may be rescinded by the Company within one (1) year after the Company becomes aware of such detrimental activity, and the Company shall notify the participant in writing of any such rescission within such one-year period.  Within ten (10) days after receiving such notice of rescission, the participant shall pay to the Company the entire amount of the Program payout previously paid to him or her, in such manner and on such terms and conditions as may be required by the Company, including, without limitation, payment in cash and/or by returning to the Company the number of shares of stock that the participant received under the Program.

The word “detrimental activity” means (i) the unauthorized rendering of services for any organization or engaging, directly or indirectly, in any business which is competitive with the business of the Company; (ii) the disclosure to any person or entity outside the Company, or use in other than the Company’s business, without prior written authorization from the Company, of any “confidential information,” as hereinafter defined or material relating to the business of the Company; (iii) activity that results in termination of the participant’s employment by the Company for cause; or (iv) any other conduct or act reasonably determined by the Company to be injurious, detrimental, or prejudicial to any interest of the Company.

The words “confidential information” include any business, financial, and other sensitive, confidential, proprietary, and trade secret information which is of unique value to the Company. Examples of confidential information include: inventions, improvements, and designs; new product or marketing plans; business strategies and plans; merger and acquisition targets; financial and pricing information; computer programs, source codes, models, and databases; analytical models; human resources strategies; customer lists and information; supplier and vendor lists; and other information which is not generally available to the public.
Administration
The Committee is responsible for the establishment of the Program, and the Committee (or the LCII Board of Directors) has the right to amend or terminate the Program at any time, as it deems appropriate. Further, the Committee is 

authorized to: (1) interpret and apply the Program’s terms and conditions; (2) determine who will participate in the Program and the level of participation; (3) approve the performance measures that are applicable to a “covered executive’s” participation; and (4) approve payments for participants covered by the Program. The Committee will report to the Board substantive actions taken.

Any authority granted to the Committee may also be exercised by the Board. To the extent that any permitted action taken by the Board conflicts with any action taken by the Committee, the Board action shall control.

This Program shall not be terminated, voluntarily or involuntarily, by the liquidation or dissolution of LCII or by the merger or consolidation of LCII with or into another corporation.  Any successor to LCII will be deemed to be the Company under this Program.
If any provision of this Program, or any portion thereof, shall be held to be illegal, invalid, or unenforceable, the remainder of the Program or such provision shall not thereby be affected and shall be given full force and effect, without regard to the invalid portion.

Program Appendix
ROIC Goals for Program Year (CEO and President)
	
			
	 
	ROIC Achieved
	Multiple of Base Salary

	Below Threshold
	<20%
	0

	Overall Threshold
	20%
	0.25x

	 
	25%
	0.50x

	 
	30%
	1.0x

	 
	35%
	2.0x

	Maximum
	40%
	3.0x

To the extent that the Overall Threshold is achieved or exceeded, the “Bonus Payment” for the CEO and President shall equal a multiple of base salary for the Program Year, as set forth in the table above.  When ROIC performance is between inflection points set forth above, linear interpolation will be used to determine cash bonus payouts. Once the Bonus Payment is determined, if any, the Bonus Payment shall be paid out in cash.

ROIC Goals for Program Year (Other Participants)
	
			
	 
	ROIC Achieved
	Multiple of Target Cash

	Below Threshold
	<20%
	0

	Overall Threshold
	20%
	0.25x

	 
	25%
	0.50x

	 
	30%
	1.0x

	 
	35%
	2.0x

	Maximum
	40%
	3.0x

To the extent that the Overall Threshold is achieved or exceeded, the “TC Bonus Payment” for each eligible Participant shall equal a multiple of his or her Target Cash established for the Program Year, as set forth in the table above.  Each Participant’s “Target Cash” is established as a percentage of his or her base salary (ranging from 35% to 65%). When ROIC performance is between inflection points set forth above, linear interpolation will be used to determine cash bonus payouts. Once the TC Bonus Payment is determined, if any, the TC Bonus Payment shall be paid out in cash.

Target Cash
	
		
	Executive
	Target Cash (Percentage of Base Salary)

	Brian Hall
	39%

	Jamie Schnur
	62%

	Andrew Namenye 
	46%

	Nick Fletcher
	35%

Gross Margin Improvement Goals for Program Year (Executive Officers)
With respect to the Participants listed below, once the Bonus Payment is determined, if any, the Bonus Payment shall be paid out in cash; provided, however, up to 10% of the Bonus Payment shall be subject to the additional performance goal(s) set forth below and shall be paid only if the additional performance goal(s) set forth below is(are) also achieved in 2018:

	
		
	Gross Margin Improvement
	Bonus Payment % Paid

	<0.085%
	90%

	0.085%
	91%

	0.170%
	92%

	0.225%
	93%

	0.340%
	94%

	0.425%
	95%

	0.510%
	96%

	0.595%
	97%

	0.680%
	98%

	0.765%
	99%

	0.850%
	100%

Participants Subject to Gross Margin Goal
	
				
	Executive
	 
	 
	 

	Jason Lippert
	 
	 
	 

	Scott Mereness
	 
	 
	 

	Brian Hall
	 
	 
	 

	Jamie Schnur
	 
	 
	 

	Andrew Namenye
	 
	 
	 

	Nick Fletcher

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00280-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00280-of-00352.parquet"}]]