Exhibit 10.3

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT is entered into and effective this 25th day of November,
2009 by and among SunTrust Bank (“Escrow Agent” or “Bank”), Rio Tinto Energy
America Inc., a Delaware corporation (“RTEA”), and Cloud Peak Energy Resources
LLC, a Delaware limited liability company (“CPE”) (collectively the “Parties”);

 

WHEREAS,

 

The Parties hereto desire for the Escrow Agent open an account (the “Escrow
Account”) into which CPE will deposit funds to be held and invested by the
Escrow Agent in accordance with this agreement for the benefit of RTEA.

 

NOW, THEREFORE, in consideration of the premises herein, the parties hereto
agree as follows:

 

I.                                       Terms and Conditions

 

1.1.                              The Parties hereby appoint the Bank as their
Escrow Agent and the Bank hereby accepts its duties as provided herein.

 

1.2                                 CPE shall remit funds to the Escrow Agent to
be held by the Escrow Agent and invested as provided in this agreement for the
benefit of RTEA.

 

1.3.                              Within two business days of receipt of written
instructions, signed only by an authorized representative of RTEA (as identified
in Exhibit A), the Escrow Agent shall disburse funds from the Escrow Account as
provided in such written instructions, but only to the extent that funds are
collected and available.  Notwithstanding anything in this Agreement to the
contrary, the Escrow Agent shall only release funds from the Escrow Account
solely upon the written instructions of RTEA and shall take no instruction, nor
comply with any request, from CPE or any other person or entity.

 

II.                                   Provisions as to Escrow Agent

 

2.1.                              This Escrow Agreement expressly and
exclusively sets forth the duties of Escrow Agent with respect to any and all
matters pertinent hereto and no implied duties or obligations shall be read into
this Escrow Agreement against Escrow Agent.

 

2.2.                              Escrow Agent acts hereunder as a depository
only, and is not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of the subject matter of the
Escrow Agreement or any part thereof, or of any person executing or depositing
such subject matter.

 

2.3.                              This Escrow Agreement constitutes the entire
agreement between the Escrow Agent and the other parties hereto in connection
with the subject matter of this Escrow Account, and no other agreement entered
into between the parties, or any of them, shall be considered as adopted or
binding, in whole or in part, upon the Escrow Agent notwithstanding that any
such other agreement may be deposited with Escrow Agent or the Escrow Agent may
have knowledge thereof.

 

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2.4.                              Escrow Agent shall in no way be responsible
for nor shall it be its duty to notify any party hereto or any other party
interested in this Escrow Agreement of any payment required or maturity
occurring under this Escrow Agreement or under the terms of any instrument
deposited therewith unless such notice is explicitly provided for in Escrow
Agreement.

 

2.5.                              Escrow Agent shall be protected in acting upon
any written notice, request, waiver, consent, certificate, receipt,
authorization, power of attorney or other paper or document which Escrow Agent
in good faith believes to be genuine and what it purports, to be, including, but
not limited to, items directing investment or non-investment of funds, items
requesting or authorizing release, disbursement or retainage of the subject
matter of Escrow Agreement and items amending the terms of the Escrow Agreement.

 

2.6.                              Escrow Agent may consult with legal counsel in
the event of any dispute or question as to the construction of any of the
provisions hereof or its duties hereunder, and it shall incur no liability and
shall be fully protected in acting in accordance with the advice of such
counsel.

 

2.7.                              In the event of any disagreement between any
of the parties to this Escrow Agreement, or between any of them and any other
party, resulting in adverse claims or demands being made in connection with the
matters covered by this Escrow Agreement, or in the event that Escrow Agent, in
good faith, be in doubt as to what action it should take hereunder, Escrow Agent
may, at its option, refuse to comply with any claims or demands on it, or refuse
to take any other action hereunder, so long as such disagreement continues or
such doubt exists, and in any such event, Escrow Agent shall not be or become
liable in any way or to any party for its failure or refusal to act, and Escrow
Agent shall be entitled to continue to refrain from acting until (i) the rights
of all interested parties shall have been fully and finally adjudicated by a
court of competent jurisdiction, or (ii) all differences shall have been
adjudged and all doubt resolved by agreement among all of the interested
parties, and Escrow Agent shall have been notified thereof in writing signed by
all such parties.  Notwithstanding the preceding, Escrow Agent may in its
discretion obey the order, judgment, decree or levy of any court, whether with
or without jurisdiction, or of an agency of the United States or any political
subdivision thereof, or of any agency of the State/Commonwealth of New York or
of any political subdivision thereof, and Escrow Agent is hereby authorized in
its sole discretion, to comply with and obey any such orders, judgments, decrees
or levies.  The rights of Escrow Agent under this sub-paragraph are cumulative
of all other rights which it may have by law or otherwise.

 

2.8.                              Escrow Agent shall be indemnified and held
harmless from anything which it may do or refrain from doing in connection
herewith, or for any claims, demands or losses, or for any damages made or
suffered by any party to this Escrow Agreement, excepting such as may arise
through or be caused by Escrow Agent’s willful misconduct or gross negligence.

 

2.9.                              In the event that any controversy should arise
among the parties with respect to the Escrow Agreement or should the Escrow
Agent resign and the parties fail to select another Escrow Agent to act in its
stead, the Escrow Agent shall have the right to institute a bill of interpleader
in any court of competent jurisdiction to determine the rights of the parties.

 

III.                               Compensation of Escrow Agent

 

3.1.                              Escrow Agent shall be entitled to reasonable
compensation as well as reimbursement for its reasonable costs and expenses
incurred in connection with the performance by it of services under this Escrow
Agreement (including reasonable fees and expenses of Escrow Agent’s counsel). 
CPE

 

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binds and obligates itself to pay to Escrow Agent the compensation and
reimbursement to which it is entitled and further agrees that Escrow Agent shall
have a lien on the assets of the Escrow Account for payment of its fees and
expense from the assets of the Escrow Account if they are not otherwise paid and
without judicial action to foreclose the said lien.  Escrow Agent’s fee is as
provided in Exhibit B to this agreement.

 

IV.                              Miscellaneous

 

4.1.                              If money is a part of the subject matter of
this Escrow Agreement, then Escrow Agent shall make no disbursement, investment
or other use of funds until and unless it has collected funds.  Escrow Agent
shall not be liable for collection items until the proceeds of the same in
actual cash have been received or the Federal Reserve has given Escrow Agent
credit for the funds.

 

4.2.                              If money is a part of the subject matter of
this Escrow Agreement, said funds shall be invested as directed by RTEA in its
sole discretion, who hereby directs the Escrow Agent to invest in one or more of
the investments listed on Exhibit C.  The investments made under this agreement
are to be made by the Escrow Agent, as directed, and the Escrow Agent shall not
be liable to any party for any loss incurred in connection with any such
investment.  The Escrow Agent shall make its best effort to invest funds on a
timely basis upon receipt of such funds.  However, the Escrow Agent shall not be
liable for compensation to any party relate to funds which are held uninvested
or funds which are not invested timely.

 

4.3                                 The Escrow Agent shall provide monthly
reports of transactions and holding to the Parties as of the end of each month,
at the address provided by the Parties.  The Escrow Agent shall not be
responsible for providing any IRS tax reporting or any other tax reporting,
including any 1099 tax reporting related to this Escrow Agreement.

 

4.4.                              Any notice, request for consent, report, or
any other communication required or permitted in this Escrow Agreement shall be
in writing and shall be deemed to have been given when personally delivered to
the party specified or when placed in the United States mail, registered or
certified, with return receipt requested, postage prepaid and addressed as
follows:

 

If to Escrow Agent:

SunTrust Bank

 

Mail Code HDQ-5307

 

919 E. Main Street, 7th Floor

 

Richmond, VA 23219

 

Phone: (804) 782-7610

 

Fax #: (804) 782-5858

 

 

Tel.

 

If to RTEA:

Rio Tinto

 

Bernd Beyer

 

1188 Sherbrooke Street West,

 

Montreal, Quebec, H3A 3G2, Canada

 

Phone: (514) 848-8049

 

Fax #: (514) 848 1571

 

With a copy to (which shall not constitute notice):

 

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Legal Department

 

Rio Tinto Services Inc.

 

4700 Daybreak Parkway

 

South Jordan, Utah 84095

 

(801) 204-2000

 

Fax: (801) 204-2892

 

 

If to CPE:

Cloud Peak Energy

 

Oscar Martinez

 

VP and Treasurer

 

8051 E Maplewood Avenue, Building 4

 

Greenwood Village, CO 80111

 

Phone: (303) 713-5631

 

Fax #:

 

 

With a copy to (which shall not constitute notice):

 

 

 

Cloud Peak Energy Inc.

 

General Counsel

 

505 S. Gillette Avenue

 

Gillette, Wyoming 82716

 

(307) 687-6000

 

Fax: (307) 687-6059

 

Any party may unilaterally designate a different address by giving notice of
each change in the manner specified above to each other party.

 

4.5.                              This Escrow Agreement is being made in and is
intended to be construed according to the laws of the State of New York.  It
shall inure to and be binding upon the parties hereto and their respective
successors, heirs and assigns.  All representations, covenants, and
indemnifications contained in this Agreement shall survive the termination of
this Escrow Agreement.

 

4.6.                              The terms of this Escrow Agreement may be
altered, amended, modified or revoked only by an instrument in writing signed by
all the parties hereto.

 

4.7.                              If any provision of this agreement shall be
held or deemed to be or shall in fact, be illegal, inoperative or unenforceable,
the same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative or unenforceable to any extent whatsoever.

 

4.8.                              The Escrow Agent may resign at any time from
its obligations under this Escrow Agreement by providing written notice to the
parties hereto.  Such resignation shall be effective not later than thirty (30)
days after such written notice has been given.  The Escrow Agent shall have no
responsibility for the appointment of a successor Escrow agent.  This Escrow
Agreement shall remain in full force and effect until such time as (x) the
Escrow Agent resigns pursuant to this Section 4.8 or (y) RTEA notifies the
Escrow Agent in writing that this Escrow Agreement has been

 

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terminated.  Notwithstanding the provisions of this Section 4.8, on the date the
Escrow Account balance is zero and all the fees of the Escrow Agent accrued and
owing to such date have been paid in full, this Escrow Agreement shall
automatically terminate and be of no further force and effect.

 

4.9.                              All titles and headings in this Agreement are
intended solely for convenience of reference and shall in no way limit or
otherwise affect the interpretation of any of the provisions hereof.

 

4.10.                        This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.  Delivery of an executed
counterpart of a signature page to this Escrow Agreement by telecopy or by .pdf
by electronic mail will be effective as delivery of a manually executed
counterpart of this Agreement.  This Agreement may be executed by electronic
transmission, including by facsimile or electronic mail, by each Party hereto of
a signed signature page hereof to the other Parties hereto.

 

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the date and year first above written.

 

 

 

SunTrust Bank, as Escrow Agent

 

 

 

 

 

 

 

By:

/s/ Nickida Colbert

 

Title:

Trust Officer

 

 

 

 

 

 

 

Rio Tinto Energy America Inc.

 

 

 

 

 

 

 

By:

/s/ James P. Berson

 

Title:

Authorized Agent

 

 

 

 

 

 

 

Cloud Peak Energy Resources LLC

 

 

 

 

 

 

 

By:

/s/ Oscar Martinez

 

Title:

VP & Treasurer

 

[Signature page for Escrow Agreement]

 

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