Exhibit 10.2

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT dated as of April 21, 2008 (this “Agreement”), is
between Intrepid Potash, Inc., a Delaware corporation (“Intrepid Potash”), and
Intrepid Mining LLC, a Delaware limited liability company (“Intrepid Mining”).
Certain terms used in this Agreement are defined in Section 1.1.

RECITALS

A. Intrepid Potash is contemplating an offer and sale of its Common Stock to the
public in an underwritten initial public offering (the “IPO”).

B. As of the date hereof, Intrepid Mining owns all 1,000 of the issued and
outstanding shares of Common Stock of Intrepid Potash.

C. Intrepid Mining wishes to assign all of its assets (other than cash) to
Intrepid Potash, and Intrepid Potash wishes to accept such assignment of assets
in exchange for a portion of the net proceeds of the IPO, shares of Intrepid
Potash’s Common Stock and the assumption of (i) a portion of Intrepid Mining’s
liability under the Credit Agreement (as defined below) and (ii) substantially
all other liabilities and obligations of Intrepid Mining, (collectively, the
“Exchange”).

D. In connection with the Exchange, Intrepid Potash intends to declare a
dividend with respect to the 1,000 shares of its Common Stock currently issued
and outstanding (the “Formation Distribution”), which will be paid in shares of
Common Stock; provided, however, that for each share of Common Stock purchased
by the underwriters pursuant to the over-allotment option granted in connection
with the IPO, the number of shares payable pursuant to the Formation
Distribution will be reduced, one-for-one, and in lieu of such shares, Intrepid
Potash will pay cash in an amount equal to the net proceeds, before offering
expenses but after underwriting discounts and commissions, it receives from the
exercise of the underwriters’ over-allotment option.

AGREEMENT

In consideration of the covenants and agreements contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Intrepid Potash and Intrepid Mining agree as follows:

1. Definitions.

1.1 Certain Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified in this Section 1.1:

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“Accountants” means the Denver, Colorado office of a mutually acceptable
nationally or regionally recognized firm of independent certified public
accountants that has not provided material services to either Intrepid Mining or
Intrepid Potash or their respective Affiliates in the preceding three years.

“Affiliate” means with respect to any Person, any Person that directly or
indirectly, through one or more intermediaries Controls, is Controlled by or is
under common Control with such Person.

“Common Stock” means the common stock, par value $0.001 per share, of Intrepid
Potash.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.

“Credit Agreement” means the Third Amended and Restated Credit Agreement dated
as of March 9, 2007, by and among Intrepid Mining, Intrepid New Mexico, Intrepid
Moab, Intrepid Wendover, U.S. Bank National Association and the lenders named
therein, as amended.

“Fourth Amendment” means the Fourth Amendment to the Credit Agreement dated as
of the Closing Date and among Intrepid Potash, Intrepid Mining, Intrepid New
Mexico, Intrepid Moab, Intrepid Wendover, U.S. Bank National Association and the
lenders named therein.

“Income Taxes” or “Income Tax” means any and all federal, state, local, foreign
and other Taxes imposed on, or measured by, income, franchise, profits or gross
receipts, and includes alternative minimum Taxes and estimated Taxes.

“Losses” means any and all losses, claims, fines, penalties, fees, deficiencies,
damages, liabilities, joint or several, or Proceedings (whether commenced or
threatened) and costs and expenses (including interest, court costs, reasonable
fees of attorneys, accountants and other experts, reasonable expenses of
investigation, and other expenses of litigation or other proceedings).

“Person” means a natural person, corporation, joint venture, partnership,
limited liability partnership, limited partnership, limited liability limited
partnership, limited liability company, trust, estate, business trust,
association, governmental authority or any other entity.

“Proceeding” means any action, arbitration, audit, hearing, investigation,
litigation, suit, or other proceeding, including those of a judicial,
regulatory, governmental entity or agency, or administrative nature.

 

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“Tax Return” means any return, report, exhibit, schedule, information return, or
statement and other documentation (including any additional or supporting
material, attachment, amendment or supplement thereto) filed or maintained, or
required to be filed or maintained, in connection with the calculation,
determination, assessment, or collection of any Tax, and shall include an
amended return or claim for refund.

“Taxes” or “Tax” means any and all federal, state, local, foreign and other
taxes, levies, fees, imposts and duties of whatever kind (including any
interest, penalties or additions to the tax imposed in connection therewith or
with respect thereon), including taxes imposed on, or measured by, income,
franchise, profits or gross receipts, alternative minimum taxes, estimated taxes
and also including ad valorem, value added, sales, use, service, real or
personal property, capital stock, business license, payroll, withholding,
employment, social security, workers’ compensation, unemployment, severance,
production, excise, stamp, occupation, premium, windfall profits, real estate
transfer, and customs tariffs, imposts, assessments, obligations, and charges,
and including any liability for any of the foregoing items that arises by reason
of a contract, assumption, transferee or successor liability, operation of law,
or otherwise.

“Underwriting Agreement” means the underwriting agreement to be entered into
among Intrepid Potash and the managing underwriters for the IPO.

1.2 Additional Terms. In addition to defined terms identified in Section 1.1,
the following terms have the meanings assigned in the Sections referred to in
the table below:

 

Term

  

Section

  

Term

  

Section

Agreement

   Preamble    Intrepid Aviation    2.1(f)

Assumed Liabilities

   2.3    Intrepid Mining    Preamble

Breakage Costs

   2.3(a)    Intrepid Moab    2.1(b)

Cash Portion

   2.5(a)    Intrepid New Mexico    2.1(a)

Closing

   3.1    Intrepid Potash    Preamble

Closing Date

   3.1    Intrepid Wendover    2.1(c)

Exchange

   Recitals    IPO    Recitals

Exchange Consideration

   2.5    Moab Pipeline    2.1(e)

Exchanged Assets

   2.1    Retained Liabilities    2.4

Excluded Assets

   2.2    Stock Portion    2.5(b)

Formation Distribution

   Recitals      

HB Potash

   2.1(d)      

Indemnified Parties

   8.1      

 

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2. Exchange Transaction.

2.1 Exchanged Assets. Upon the terms and subject to the conditions contained in
this Agreement, at the Closing, Intrepid Mining shall contribute, assign,
transfer and convey to Intrepid Potash, and Intrepid Potash shall acquire and
accept from Intrepid Mining, all right, title and interest of Intrepid Mining in
and to the properties, assets and rights of every nature, kind and description,
owned or held, directly or indirectly, by Intrepid Mining, other than the
Excluded Assets (the “Exchanged Assets”), and subject to the Assumed
Liabilities. The Exchanged Assets include the following assets and properties:

(a) all outstanding membership interests of Intrepid Potash – New Mexico, LLC, a
New Mexico limited liability company (“Intrepid New Mexico”);

(b) all outstanding limited liability company interests of Intrepid Potash –
Moab, LLC, a Delaware limited liability company (“Intrepid Moab”);

(c) all outstanding membership interests of Intrepid Potash – Wendover, LLC, a
Colorado limited liability company (“Intrepid Wendover”);

(d) all outstanding membership interests of HB Potash LLC, a New Mexico limited
liability company (“HB Potash”);

(e) all outstanding membership interests of Moab Gas Pipeline LLC, a Colorado
limited liability company (“Moab Pipeline”);

(f) all outstanding membership interests of Intrepid Aviation LLC, a Colorado
limited liability company (“Intrepid Aviation”);

(g) all employees of Intrepid Mining; and

(h) all other assets, property (whether real, personal or mixed, tangible or
intangible), leasehold interests, equipment, contract rights, and other rights
owned or held by Intrepid Mining, other than the Excluded Assets.

2.2 Excluded Assets. Intrepid Mining will retain ownership of (a) all of its
cash as of the Closing Date, (b) any receivable that constitutes a credit in the
form of a personal loan to or for any person who is or is expected to become a
director or executive officer of Intrepid Potash, (c) the 1,000 shares of Common
Stock of Intrepid Potash currently issued and outstanding to Intrepid Mining,
(d) all of its rights and interests under this Agreement and any documents and
instruments executed and delivered at the Closing pursuant to Section 3.2, and
(e) all of its rights and interests in and to any of the Exchange Consideration
(the “Excluded Assets”).

 

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2.3 Assumed Liabilities. Subject to the terms and conditions set forth herein,
at the Closing, Intrepid Potash shall assume and agree to pay, honor and
discharge when due the Assumed Liabilities. “Assumed Liabilities” shall mean:

(a) (i) pursuant to the Fourth Amendment, any and all amounts in excess of $18.9
million of the amounts outstanding on the Closing Date under the Credit
Agreement, and (ii) the obligation to pay all breakage costs for the termination
of any interest rate swaps or hedging agreements (“Breakage Costs”) in
connection with the repayment of the amounts described in clause “(i)” by
Intrepid Potash or the repayment by Intrepid Mining of the amounts described in
Section 2.4(a);

(b) any and all liabilities set forth on Intrepid Mining’s Closing Date balance
sheet (which balance sheet shall be prepared after the Closing Date by Intrepid
Potash in accordance with United States generally accepted accounting principles
applied in a manner consistent with the balance sheet of Intrepid Mining
included in Intrepid Mining’s financial statements as of and for the year ended
December 31, 2007, and shall be provided to Intrepid Mining within 30 days after
the Closing Date);

(c) any and all liabilities and obligations existing as of the Closing Date,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including, without limitation, any and all
indemnification obligations of Intrepid Mining; and

(d) any and all liabilities and obligations arising after the Closing Date in
connection with facts, events, conditions, actions or omissions existing or
occurring on or before the Closing Date, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due.

2.4 Retained Liabilities. Intrepid Potash shall not assume and Intrepid Mining
shall promptly satisfy the following liabilities and obligations (the “Retained
Liabilities”):

(a) pursuant to the Fourth Amendment, $18.9 million outstanding on the Closing
Date under the Credit Agreement, together with all unpaid interest accrued
thereon and any fees, charges and other costs owed to the lenders under the
Credit Agreement with respect thereto (but not any Breakage Costs), and

(b) the liabilities in respect of Taxes retained by Intrepid Mining from and
after the Closing pursuant to Article 7.

 

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2.5 Exchange Consideration. The consideration for the Exchanged Assets (the
“Exchange Consideration”) shall be:

(a) $757,395,087 in cash (the “Cash Portion”);

(b) 40,339,000 shares of Common Stock of Intrepid Potash (the “Stock Portion”);
and

(c) assumption by Intrepid Potash of the Assumed Liabilities.

3. Closing.

3.1 Time and Place of Closing. The closing (the “Closing”) of the transactions
contemplated hereby shall be held at the offices of Holme Roberts & Owen LLP,
1700 Lincoln Street, Suite 4100, Denver, Colorado 80203 at the time and date on
which all the conditions set forth in Section 4 have been satisfied or waived,
or at such later time and date as Intrepid Potash and Intrepid Mining shall
agree in writing (such time and date, the “Closing Date”).

3.2 Closing Deliverables.

(a) Intrepid Mining shall deliver, or cause to be delivered, the following to
Intrepid Potash at Closing:

(i) instruments of transfer conveying the outstanding membership interests of
each of Intrepid New Mexico, Intrepid Moab, Intrepid Wendover, HB Potash, Moab
Pipeline and Intrepid Aviation;

(ii) an executed copy of the Fourth Amendment;

(iii) all documents, certificates and agreements necessary to transfer the
Exchanged Assets to Intrepid Potash, including:

(1) bills of sale, transfers of title, assignments and general conveyances, in
form and substance reasonably satisfactory to Intrepid Potash, dated the Closing
Date; and

(2) assignments of all contracts, intellectual property, permits and any other
agreements and instruments constituting Exchanged Assets, dated the Closing
Date, assigning to Intrepid Potash all of Intrepid Mining’s right, title and
interest therein and thereto; and

 

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(iv) such other documents, instruments or certificates, in form and substance
reasonably satisfactory to Intrepid Potash, as Intrepid Potash may reasonably
request in order to effect and evidence the contribution, assignment, transfer
and conveyance of the Exchanged Assets to Intrepid Potash and the other
transactions contemplated by this Agreement.

(b) Intrepid Potash shall deliver, or cause to be delivered, the following to
Intrepid Mining at Closing:

(i) the Cash Portion of the Exchange Consideration by wire transfer of
immediately available funds to an account designated by Intrepid Mining;

(ii) an executed copy of the Fourth Amendment;

(iii) one or more stock certificates in the name of Intrepid Mining representing
the Stock Portion of the Exchange Consideration; and

(iv) instruments of assumption and such other documents, in form and substance
reasonably satisfactory to Intrepid Mining, as Intrepid Mining may reasonably
request in order to effect and evidence Intrepid Potash’s assumption of the
Assumed Liabilities and the other transactions contemplated by this Agreement.

4. Conditions to Closing.

4.1 Conditions to the Obligations of All Parties. The obligations of the parties
under this Agreement are subject to the fulfillment or waiver of the following
conditions:

(a) There shall not have been issued and be in effect any order, decree or
judgment of, or in, any court, tribunal of competent jurisdiction or
governmental authority which makes the transactions contemplated by this
Agreement illegal or invalid; and

(b) Intrepid Potash shall have entered into the Underwriting Agreement with
respect to the IPO and all conditions to the consummation thereof shall have
been, or will contemporaneously be, satisfied, except for conditions to be
satisfied at the Closing under the Underwriting Agreement or this Agreement.

4.2 Condition to Obligations of Intrepid Potash. In addition to the conditions
specified in Section 4.1, the obligations of Intrepid Potash under this
Agreement are subject to the fulfillment or waiver of the following conditions:

 

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(a) all covenants, agreements and conditions contained in this Agreement to be
performed by Intrepid Mining on or prior to the Closing shall have been
performed or complied with in all material respects; and

(b) Intrepid Mining shall have delivered, or caused to be delivered, to Intrepid
Potash each of the deliverables identified in Section 3.2(a).

4.3 Conditions to the Obligations of Intrepid Mining. In addition to the
conditions specified in Section 4.1, the obligations of Intrepid Mining under
this Agreement are subject to the fulfillment or waiver of the following
conditions:

(a) all covenants, agreements and conditions contained in this Agreement to be
performed by Intrepid Potash on or prior to the Closing shall have been
performed or complied with in all material respects; and

(b) Intrepid Potash shall have delivered, or caused to be delivered, to Intrepid
Mining each of the deliverables identified in Section 3.2(b).

5. Termination. If the conditions set forth in Section 4 are not satisfied or
waived on or before May 25, 2008, or if the registration statement with respect
to the IPO is withdrawn for any reason prior to that date, this Agreement shall
become null and void and be of no further force or effect whatsoever and neither
Intrepid Mining nor Intrepid Potash shall have any further obligations hereunder
or with respect hereto.

6. Covenants.

6.1 Intrepid Mining and Intrepid Potash agree (a) to furnish or cause to be
furnished, upon request to each other such further information; (b) to execute
and deliver to each other such other documents; and (c) to do such other acts
and things, all as the other party may reasonably request for the purpose of
carrying out the intent of this Agreement. Without limiting the generality of
the foregoing, from and after the Closing Date, Intrepid Mining shall promptly
remit to Intrepid Potash any funds that are received by Intrepid Mining and that
are included in, or that represent payment of receivables included in, the
Exchanged Assets.

6.2 Intrepid Mining (a) hereby irrevocably authorizes Intrepid Potash, at all
times on and after the Closing Date, to endorse in the name of Intrepid Mining
any check or other instrument that is made payable to Intrepid Mining and that
represents funds included in, or that represents the payment of any receivable
included in, the Exchanged Assets; (b) hereby irrevocably nominates, constitutes
and appoints Intrepid Potash as the true and lawful attorney-in-fact of Intrepid
Mining (with full power of substitution) effective as of the Closing Date; and
(c) hereby authorizes Intrepid Potash, in the name of and on behalf of Intrepid
Mining, to execute, deliver, acknowledge, certify, file and record any document,
to institute and prosecute any Proceeding and to take any other

 

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action (on or at any time after the Closing Date) that Intrepid Potash may deem
appropriate for the purpose of (i) collecting, asserting, enforcing or
perfecting any claim, right or interest of any kind that is included in or
relates to any of the Exchanged Assets, (ii) defending or compromising any
claim, right, audit, investigation or Proceeding relating to any of the
Exchanged Assets, or (iii) otherwise carrying out or facilitating any of the
transactions contemplated hereby. The power of attorney referred to in the
preceding sentence is and shall be coupled with an interest and shall be
irrevocable, and shall survive the dissolution or insolvency of Intrepid Mining.

7. Tax Matters.

7.1 Transfer Taxes. Intrepid Potash shall pay all sales, use, transfer and other
similar Taxes and fees (collectively, “Transfer Taxes”) arising out of or in
connection with the transactions provided for in this Agreement, and all such
Transfer Taxes shall constitute Assumed Liabilities from and after the Closing.
Intrepid Potash shall prepare (or cause to be prepared) and timely file (or
cause to be filed) all necessary documentation and Tax Returns with respect to
any such Transfer Taxes.

7.2 Pre-Closing Returns.

(a) Intrepid Mining shall prepare (or cause to be prepared) and timely file (or
cause to be filed) all Tax Returns that are required to be filed (giving effect
to extensions) by Intrepid Mining or any of Intrepid New Mexico, Intrepid Moab,
Intrepid Wendover, HB Potash, Moab Pipeline, or Intrepid Aviation (collectively,
the “Subsidiaries”) on or before the Closing Date (each a “Pre-Closing Return”)
and shall timely pay (or cause to be paid) all Taxes shown as due on such
Pre-Closing Returns.

(b) All liabilities of Intrepid Mining for Income Taxes that result from or are
attributable to the ownership or operations of the Subsidiaries for any taxable
period covered by a Pre-Closing Return shall constitute Retained Liabilities
from and after the Closing; all other liabilities for Taxes for the taxable
periods covered by Pre-Closing Returns and not paid by Intrepid Mining on or
before the Closing Date shall constitute Assumed Liabilities from and after the
Closing.

(c) Intrepid Mining shall be entitled to receive, credit and apply in its
discretion any refund or overpayment with respect to a taxable period covered by
a Pre-Closing Return (i) that is received, credited or applied on or before the
Closing Date or (ii) that is received, credited or applied after the Closing
Date and represents an amount which, if payable as a liability after the
Closing, would constitute a Retained Liability. To the extent that Intrepid
Mining actually realizes a benefit from a refund or overpayment with respect to
a taxable period covered by a Pre-Closing Return that is received, credited or
applied after the Closing Date and represents an amount which, if payable as a
liability after the Closing, would constitute an Assumed Liability, Intrepid

 

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Mining shall pay to Intrepid Potash, without interest, the amount of the
realized benefit promptly following the date it is realized.

7.3 Mining Post-Closing Returns.

(a) Except as provided in Section 7.1, Intrepid Mining shall prepare (or cause
to be prepared) and timely file (or cause to be filed) all Tax Returns that are
required to be filed (giving effect to extensions) by Intrepid Mining after the
Closing Date (each a “Mining Post-Closing Return”) and shall timely pay (or
cause to be paid) all Taxes shown as due on such Mining Post-Closing Returns;
provided that Intrepid Potash shall reimburse Intrepid Mining (i) for all
liabilities of Intrepid Mining and any direct or indirect owner (for Income Tax
purposes) of Intrepid Mining for Income Taxes related to a Mining Post-Closing
Return that result from or are attributable to the ownership or operation of
Exchanged Assets (including the operations of the Subsidiaries) or otherwise
with respect to the Assumed Liabilities, to the extent attributable to the
portion of any taxable period covered by a Mining Post-Closing Return that
begins after the Closing Date (each a “Potash Post-Closing Income Tax
Liability”) (such liabilities being determined by treating the Closing Date as
the end of a taxable period) and (ii) for all Taxes other than Income Taxes
shown as due on a Mining Post-Closing Return to the extent that such Taxes other
than Income Taxes result from or are attributable to the ownership or operation
of Exchanged Assets (including the operations of the Subsidiaries) or otherwise
with respect to the Assumed Liabilities, for any taxable period (each a “Potash
Post-Closing Non-Income Tax Liability”). If Intrepid Mining intends to assert a
reimbursement claim against Intrepid Potash for any amount described in clause
(i) or clause (ii) of the preceding sentence with respect to a Mining
Post-Closing Return, then Intrepid Mining shall, at least 45 days prior to the
due date (including extensions) of such Mining Post-Closing Return, deliver a
copy of the Mining Post-Closing Return to Intrepid Potash, together with a
written notice setting forth the due date of such return, an explanation of the
basis for the reimbursement, in reasonable detail, and a calculation of the
Potash Post-Closing Income Tax Liability and/or the Potash Post-Closing
Non-Income Tax Liability, as applicable, and Intrepid Potash shall pay such
amount(s) to Intrepid Mining (by wire transfer of immediately available funds)
at least 5 days prior to the due date of such return. If Intrepid Potash
disputes the amount of the Potash Post-Closing Income Tax Liability and/or the
Potash Post-Closing Non-Income Tax Liability with respect to a Mining
Post-Closing Return, Intrepid Potash shall notify Intrepid Mining at least 30
days prior to the due date of such return and the parties shall submit the
dispute to binding arbitration to be conducted in accordance with the following
procedures by the Accountants as the sole arbitrator. Each party shall submit to
the Accountants, at least 20 days prior to the due date of the applicable
return, its explanation of the basis for the reimbursement, if any, and a
calculation of the Potash Post-Closing Income Tax Liability and/or the Potash
Post-Closing Non-Income Tax Liability, if any, and shall reasonably cooperate
with the Accountants in connection with the arbitration. The Accountants shall
use commercially reasonable efforts to render their written

 

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decision specifically establishing the amount(s) of the Potash Post-Closing
Income Tax Liability and/or the Potash Post-Closing Non-Income Tax Liability, as
applicable, prior to the due date of the applicable Tax Return, but in all
events shall render such decision within 30 days after the parties initiate the
arbitration proceeding. The fees and other costs of the arbitration and the
reasonable attorney fees, expert witness fees, and costs, if any, of Intrepid
Mining shall be borne by Intrepid Potash unless the sum of any Potash
Post-Closing Income Tax Liability plus any Potash Post-Closing Non-Income Tax
Liability asserted by Intrepid Mining with respect to the Mining Post-Closing
Return exceeds the sum of such amounts established by the Accountants by at
least 20%, in which case, the fees and other costs of the arbitration and the
reasonable attorney fees, expert witness fees, and costs, if any, of Intrepid
Potash shall be borne by Intrepid Mining. The Accountants’ decision shall
include an award of such fees and costs provided by this Section 7.3(a). The
decision may be filed in any court of competent jurisdiction and may be enforced
by any party as a final judgment of such court. Without the consent of Intrepid
Mining and Intrepid Potash, the arbitration shall not determine any issues other
than those set forth in this Section 7.3(a); all other disputes shall be handled
pursuant to the provisions of Article 8. For purposes of determining any
liability of any direct or indirect owner (for Income Tax purposes) of Intrepid
Mining for Income Taxes described in clause (i) above, the tax rate applicable
to any income or gain allocable to such direct or indirect owner shall be deemed
to be the highest rate applicable to an individual with respect to income or
gain of such character in the applicable jurisdiction.

(b) All liabilities of Intrepid Mining and any direct or indirect owner (for
Income Tax purposes) of Intrepid Mining for Income Taxes that result from or are
attributable to the ownership or operation of Exchanged Assets (including the
operations of the Subsidiaries) or otherwise with respect to the Assumed
Liabilities, to the extent attributable to the portion of any taxable period
covered by a Mining Post-Closing Return that begins after the Closing Date,
shall constitute Assumed Liabilities from and after the Closing; all liabilities
for Taxes other than Income Taxes that result from or are attributable to the
ownership or operation of Exchanged Assets (including the operations of the
Subsidiaries) or otherwise with respect to the Assumed Liabilities, to the
extent attributable to any taxable period covered by a Mining Post-Closing
Return, shall constitute Assumed Liabilities from and after the Closing; and,
subject to Section 7.1, all other liabilities with respect to Taxes of the type
and for the taxable periods covered by Mining Post-Closing Returns shall
constitute Retained Liabilities from and after the Closing.

(c) Intrepid Mining shall be entitled to receive, credit and apply in its
discretion any refund or overpayment with respect to a taxable period covered by
a Mining Post-Closing Return; provided, however, that to the extent that
Intrepid Mining actually realizes a benefit from such a refund or overpayment
that represents an amount which, if payable as a liability after the Closing,
would constitute an Assumed Liability,

 

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Intrepid Mining shall pay to Intrepid Potash, without interest, the amount of
the realized benefit promptly following the date it is realized.

7.4 Potash Post-Closing Returns. Except with respect to Mining Post-Closing
Returns, Intrepid Potash shall prepare (or cause to be prepared) and timely file
(or cause to be filed) all Tax Returns that are required to be filed (giving
effect to extensions) by the Subsidiaries or with respect to the ownership or
operation of Exchanged Assets (including the operations of the Subsidiaries) or
otherwise with respect to the Assumed Liabilities, after the Closing Date (each
a “Potash Post-Closing Return”) and shall timely pay (or cause to be paid) all
Taxes shown as due on such Potash Post-Closing Returns.

(a) All liabilities with respect to Taxes of the type and for the taxable
periods covered by Potash Post-Closing Returns shall constitute Assumed
Liabilities from and after the Closing.

(b) Intrepid Potash shall be entitled to receive, credit and apply in its
discretion any refund or overpayment with respect to a period covered by a
Potash Post-Closing Return.

7.5 Access to Information and Personnel.

(a) From and after the Closing, Intrepid Potash shall grant (and shall cause its
Affiliates to grant) to Intrepid Mining (or Intrepid Mining’s designees) access
at all reasonable times to the books and records of, and all other information
regarding, the ownership and operation of Exchanged Assets (including the
operations of the Subsidiaries) and the Assumed Liabilities, which information
is within the possession of Intrepid Potash or the Subsidiaries or their
respective Affiliates (including work papers and correspondence with taxing
authorities, but excluding work product of and attorney-client communications
with any of Intrepid Potash’s legal counsel), and shall afford Intrepid Mining
(or Intrepid Mining’s designees) the right (at Intrepid Mining’s expense) to
take extracts therefrom and to make copies thereof, to the extent reasonably
necessary to permit Intrepid Mining (or Intrepid Mining’s designees) to prepare
Tax Returns, to conduct negotiations with Tax authorities, and to implement the
provisions of, or to investigate or defend any claims between the parties
arising under, this Agreement.

(b) Notwithstanding any provision of this Agreement to the contrary, none of
Intrepid Potash, any Affiliate or designee of Intrepid Potash, any of the
Accountants, or any arbitrator or other person under this Agreement shall be
entitled to any access to (or be permitted to extract or make copies of) any Tax
Return or any other information regarding the Taxes or Tax Returns of any direct
or indirect owner of Intrepid Mining.

 

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(c) Intrepid Potash will preserve and retain (or cause to be preserved and
retained) all Tax Returns, schedules, work papers, and other documents relating
to (i) any Tax Return of a Subsidiary, (ii) any Taxes with respect to the
ownership or operation of the Exchanged Assets (including the operations of the
Subsidiaries) or otherwise with respect to the Assumed Liabilities, or (iii) any
Tax claims, audits, or other proceedings affecting the Exchanged Assets
(including the operations of the Subsidiaries) or the Assumed Liabilities, until
the later to occur of (x) the seventh anniversary of the Closing Date, (y) the
expiration of the statute of limitations (including extensions) applicable to
the taxable period to which such documents relate, or (iii) the final
determination of any controversy with respect to such taxable period and the
final determination of any payment that may be required with respect to such
taxable period under this Agreement.

(d) At Intrepid Mining’s request, Intrepid Potash shall provide reasonable
access to its and its Affiliates’ (including the Subsidiaries’) personnel who
have knowledge of the information described in this Section 7.5, and Intrepid
Potash shall reasonably cooperate (and shall cause its Affiliates(including the
Subsidiaries) to reasonably cooperate) with Intrepid Mining with respect to the
matters covered by this Section 7.6.

7.6 Employment Tax Withholding. Intrepid Potash shall effect all employment-Tax
related withholdings in accordance with the Forms W-4 and W-5 transferred by
Intrepid Mining to Intrepid Potash with respect to all transferred employees.
Intrepid Potash shall report all wages paid and taxes withheld by Intrepid
Potash and Intrepid Mining for the calendar year in which the Closing Date
occurs. Intrepid Potash and Intrepid Mining shall each attach the information
required by Revenue Procedure 2004-53 to the Form 941 filed by each for the year
in which the Closing Date occurs. Intrepid Potash and Intrepid Mining agree to
comply with all requirements of Revenue Procedure 2004-53 and to cooperate with
each other in complying with such requirements.

7.7 Consistent Tax Treatment. Intrepid Mining and Intrepid Potash each covenant
and agree, for all applicable Tax purposes, to treat the IPO, the Exchange, and
the Formation Distribution as one integrated transaction in which the purchasers
of the Common Stock in the IPO and Intrepid Mining are transferors to a
controlled corporation (Intrepid Potash) in an exchange described by
section 351(a) of the Internal Revenue Code of 1986, as amended (the “Code”),
and in which Intrepid Mining receives “boot” in an amount equal to the sum of
the Cash Portion and the cash amount of the Formation Distribution. Intrepid
Mining and Intrepid Potash each covenant and agree (i) that it will not take or
assert any position that is contrary to the treatment described in the preceding
sentence on any Tax Return or in connection with any audit or other examination
of any Tax Return (unless required by or pursuant to a closing agreement with
the Internal Revenue Service (the “IRS”) or applicable state or local
governmental authority, an

 

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agreement contained in IRS Form 870-AD or other similar form, an agreement that
constitutes a determination under section 1313(a)(4) of the Code or a comparable
provision of applicable state or local law, or a decision of any court of
competent jurisdiction that is not subject to appeal or as to which the period
for appeal has expired) and (ii) that it will reasonably cooperate with the
other party to report the transactions contemplated by this Agreement in a
manner that is consistent, as between the parties, for Tax purposes.

8. Indemnification.

8.1 Right to Indemnification. Intrepid Potash shall indemnify, defend and save
and hold harmless Intrepid Mining, its members and managers, and their
respective officers, directors, members, managers, employees, consultants,
representatives, agents and Affiliates (the “Indemnified Parties”), for,
against, from and in respect of any and all Losses which may be sustained or
suffered by any of them arising out of or resulting from or pertaining to:

(a) any failure of Intrepid Potash to perform any covenant or agreement or
fulfill any other obligation in respect hereof; or

(b) any of the Assumed Liabilities.

8.2 Procedure for Indemnification.

(a) Promptly after receipt by an Indemnified Party hereunder of written notice
of the commencement of any Proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 8, such Indemnified Party
will, if a claim in respect thereof is to be made against Intrepid Potash, give
written notice to Intrepid Potash of the commencement of such Proceeding;
provided, however, that the failure of the Indemnified Party to give notice as
provided herein shall not relieve Intrepid Potash of its obligations under this
Section 8, except to the extent that Intrepid Potash is materially prejudiced by
such failure to give notice.

(b) In case any such Proceeding is brought against an Indemnified Party, unless
in such Indemnified Party’s reasonable judgment (after consultation with legal
counsel) a bona fide conflict of interest between such Indemnified Party and
Intrepid Potash may exist in respect of such Proceeding, Intrepid Potash will be
entitled to participate in and to assume the defense thereof (at its expense)
with counsel reasonably satisfactory to such Indemnified Party, and after notice
from Intrepid Potash to such Indemnified Party of its election so to assume the
defense thereof, Intrepid Potash will not be liable to such Indemnified Party
for any legal or other expenses subsequently incurred by the Indemnified Party
in

 

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connection with the defense thereof other than reasonable costs of
investigation; provided, however, in the event Intrepid Potash declines or fails
to assume the defense of the Proceeding or to employ counsel reasonably
satisfactory to the Indemnified Party, in either case within a 30-day period, or
if a court of competent jurisdiction determines that Intrepid Potash is not
vigorously defending such Proceeding, or if there is a bona fide conflict of
interest between Intrepid Potash and the Indemnified Party, then such
Indemnified Party may employ counsel to represent or defend it in any such
Proceeding and Intrepid Potash shall pay the reasonable fees and disbursements
of such counsel or other representative as incurred; provided, further, however,
that Intrepid Potash shall not be required to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any jurisdiction in any
single Proceeding.

(c) Intrepid Potash will not settle any such Proceeding or consent to the entry
of any judgment without the prior written consent of the Indemnified Party,
unless such settlement or judgment (i) includes as an unconditional term thereof
the giving by the claimant or plaintiff of a release to such Indemnified Party
from all liability in respect of such Proceeding and (ii) does not involve the
imposition of equitable remedies or the imposition of any obligations on such
Indemnified Party and does not otherwise adversely affect such Indemnified
Party, other than as a result of the imposition of financial obligations for
which such Indemnified Party will be indemnified hereunder. No Indemnified Party
will settle any such Proceeding or consent to the entry of any judgment without
the prior written consent of Intrepid Potash (such consent not to be
unreasonably withheld).

9. Miscellaneous

9.1 Governing Law. This Agreement shall be governed by and construed in all
respects in accordance with the laws of the State of Delaware without giving
effect to principles of conflicts of law.

9.2 Notices. All notices, demands or other communications to be given under or
by reason of this Agreement shall be in writing and shall be deemed to have been
received when delivered personally, or when transmitted by overnight delivery
service, addressed as follows:

 

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If to Intrepid Potash:    If to Intrepid Mining:

Intrepid Potash, Inc.

700 17th Street, Suite 1700

Denver, CO 80202

Attention: Chief Financial Officer

  

Intrepid Mining LLC

700 17th Street, Suite 1700

Denver, CO 80202

Attention: Chief Financial Officer

Any party to this Agreement may change its address for notices, demands and
other communications under this Agreement by giving notice of such change to the
other party hereto in accordance with this Section 9.2.

9.3 Survival. The representations, warranties, covenants and agreements made
herein shall survive any investigation made by any of the parties hereto and the
Closing of the transactions contemplated hereby.

9.4 Benefit of Parties; Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, the other Indemnified Parties,
and their respective successors, legal representatives and permitted assigns.
This Agreement may not be assigned by either Intrepid Potash or Intrepid Mining
except with the prior written consent of Intrepid Mining, in the case of an
assignment by Intrepid Potash, or Intrepid Potash, in the case of an assignment
by Intrepid Mining. Nothing herein contained shall confer or is intended to
confer on any third party or entity that is not a party to this Agreement, other
than the Indemnified Parties, any rights under this Agreement.

9.5 Amendment. This Agreement may not be amended, modified, altered or
supplemented except by means of a written instrument executed on behalf of each
of Intrepid Potash and Intrepid Mining.

9.6 Waiver. No failure on the part of either party hereto to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of
either party hereto in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver thereof; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or of any other power, right, privilege or remedy.

9.7 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

 

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9.8 Entire Agreement. This Agreement sets forth the entire understanding of
parties hereto and supersedes all other agreements and understandings between
the parties hereto relating to the subject matter hereof.

9.9 Counterparts and Facsimiles. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other. The parties hereto may execute the
signature pages hereof and exchange such signature pages by facsimile
transmission.

9.10 Interpretation of Agreement.

(a) As used in this Agreement, the words “include” and “including,” and
variations thereof, shall not be deemed to be terms of limitation, and shall be
deemed to be followed by the words “without limitation.”

(b) Unless otherwise specified, references in this Agreement to “Sections” are
intended to refer to Sections of this Agreement.

(c) The Section headings contained in this Agreement are solely for the purpose
of reference, are not part of the agreement of the parties and shall not in any
way affect the meaning or interpretation of this Agreement.

(d) Each party hereto and its counsel cooperated in drafting and preparation of
this Agreement and the documents referred to in this Agreement. Any rule of law
or any legal decision that would require interpretation of any ambiguities in
this Agreement against the party that drafted it is of no application and is
hereby expressly waived.

[Signature page to follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.

 

INTREPID POTASH: Intrepid Potash, Inc. By:   /s/ Rodney D. Gloss

Name:   Rodney D. Gloss Title:   Controller and VP

 

INTREPID MINING: Intrepid Mining LLC By:  

IPC Management LLC

Manager

By:   /s/ Robert P. Jornayvaz III

Name:   Robert P. Jornayvaz III Title:   Manager

[Signature page of Exchange Agreement]