Exhibit 10.1


 


EXECUTION COPY


 


MASTER SEPARATION AGREEMENT


 


by and among


 


RIO TINTO AMERICA INC.,


 


RIO TINTO ENERGY AMERICA INC.,


 


KENNECOTT MANAGEMENT SERVICES
COMPANY,


 


CLOUD PEAK ENERGY INC.,


 


CLOUD PEAK ENERGY RESOURCES LLC


 


and


 


the subsidiaries listed on the
signature pages hereto


 


 


Dated November 19, 2009


 

















 


TABLE OF
CONTENTS


 


	
  ARTICLE I DEFINITIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1.

  	
  Defined Terms

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  1.2.

  	
  Construction

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II STRUCTURING AND RELATED TRANSACTIONS

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1.

  	
  Termination of Intercompany Agreements

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  2.2.

  	
  Continuance of Surety Bonds

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  2.3.

  	
  Continuance of Insurance

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  2.4.

  	
  Jacobs Ranch Matters

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5.

  	
  Representations and Warranties of CPE

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  2.6.

  	
  DISCLAIMER OF REPRESENTATIONS AND WARRANTIES

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  2.7.

  	
  Delivery of Cloud Peak Reliance Letter

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III INTERCOMPANY TRANSACTIONS AS OF THE
  CLOSING DATE

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1.

  	
  Time and Place of Closing

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  3.2.

  	
  Closing Transactions

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  3.3.

  	
  Amended and Restated Certificate of Incorporation and
  Amended and Restated Bylaws

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  3.4.

  	
  Transfers of Assets and Assumption of Liabilities

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  3.5.

  	
  The Initial Public Offering, the Concurrent Offering
  and the Cloud Peak Financing

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  3.6.

  	
  Cancellation of RTA Share of CPE Common Stock

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  3.7.

  	
  Rescission

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  3.8.

  	
  Tax Matters

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  3.9.

  	
  Working Capital Adjustment

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV DISCLOSURE OF INFORMATION

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1.

  	
  Restrictions on Disclosure of Information

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  4.2.

  	
  Legally Required Disclosure of Information

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V MUTUAL RELEASES

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1.

  	
  Release of Liability

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  5.2.

  	
  RTEA Obligations Not Affected

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  5.3.

  	
  No Cloud Peak Claims

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  5.4.

  	
  No RTEA Claims

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  5.5.

  	
  Subsidiary Releases and Other Actions

  	
   

  	
  33

  



 


i

















 


	
  ARTICLE VI INDEMNIFICATION

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1.

  	
  Indemnification by Cloud Peak

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  6.2.

  	
  Guaranty

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  6.3.

  	
  Indemnification by Rio Tinto

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  6.4.

  	
  Registration Statement and Other Related
  Indemnification and/or Contribution

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  6.5.

  	
  Claim Procedure

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  6.6.

  	
  Survival;
  Limitations; Insurance

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII FINANCIAL AND OTHER INFORMATION

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1.

  	
  Financial Information

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  7.2.

  	
  Corporate Reserves Data

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  7.3.

  	
  Other Financial Information

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  7.4.

  	
  Other Agreements

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  7.5.

  	
  Rio Tinto Public Filings

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  7.6.

  	
  Accounting Matters

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  7.7.

  	
  Agreement for Exchange of Information; Archives

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  7.8.

  	
  Ownership of Information

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  7.9.

  	
  Compensation for Providing Information

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  7.10.

  	
  Record Retention

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  7.11.

  	
  Accuracy of Information

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  7.12.

  	
  Other Agreements Providing for Exchange of
  Information

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  7.13.

  	
  Production of Witnesses; Records; Cooperation

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  7.14.

  	
  Preservation of Legal Privileges

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII ADDITIONAL COVENANTS

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1.

  	
  Further Assurances

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  8.2.

  	
  Rio Tinto Group Non-Competition

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  8.3.

  	
  Non-Solicitation of Employees

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  8.4.

  	
  Payment of Expenses

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  8.5.

  	
  Provision of Additional Services

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  8.6.

  	
  Governmental Approvals

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  8.7.

  	
  Covenants Against Taking Certain Actions Affecting
  RTEA

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  8.8.

  	
  No Violations

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  8.9.

  	
  Receipt of Notices

  	
   

  	
  60

  



 


ii

















 


	
  ARTICLE IX MISCELLANEOUS

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1.

  	
  Corporate Power

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  9.2.

  	
  Assignment

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  9.3.

  	
  Public Announcements

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  9.4.

  	
  Survival of Covenants

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  9.5.

  	
  Notices

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  9.6.

  	
  Governing Law; Submission to Jurisdiction; Waiver of
  Jury Trial

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  9.7.

  	
  Severability

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  9.8.

  	
  Amendment

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  9.9.

  	
  Counterparts and Signature

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  9.10.

  	
  Dispute Resolution

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  9.11.

  	
  No Third-Party Beneficiaries

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  9.12.

  	
  Waiver

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  9.13.

  	
  Entire Agreement

  	
   

  	
  67

  



 


SCHEDULE A — LIST OF SUBSIDIARIES


SCHEDULE B — CLOUD PEAK DISCONTINUED BUSINESSES


SCHEDULE C — CLOUD PEAK LIABILITIES


SCHEDULE D — RTEA LIABILITIES


SCHEDULE 2.1 — INTERCOMPANY AGREEMENTS


SCHEDULE 2.2 — EXISTING SURETY ARRANGEMENTS


SCHEDULE 2.3 — THREE CROWNS POLICIES


SCHEDULE 2.5 — STATEMENTS RELATING EXCLUSIVELY TO RIO TINTO


SCHEDULE 5.1 — PARTIES NOT RELEASED


SCHEDULE 6.4 — STATEMENTS RELATING EXCLUSIVELY TO RIO TINTO
plc


SCHEDULE 6.5 — EXISTING THIRD PARTY CLAIMS


SCHEDULE 7.1 — CORPORATE REPORTING DATA


SCHEDULE 7.2 — CORPORATE RESERVE DATA


SCHEDULE 7.4(d) — RIO TINTO PUBLIC RELEASES


SCHEDULE 8.4 — POST-CLOSING EXPENSES PAYABLE BY RTEA


SCHEDULE 8.7 — CONTRACTS AFFECTING RTEA/KMS


SCHEDULE 8.8 — NO VIOLATIONS


 


EXHIBIT A — Jacobs Ranch MIPA Exhibit


EXHIBIT B — CPE Promissory
Note


EXHIBIT C — Map of Powder River Basin


EXHIBIT D —Charter


EXHIBIT E — Bylaws


EXHIBIT F — Estimated Closing Date Working Capital


 


iii
















 


MASTER SEPARATION AGREEMENT


 


This Master Agreement (this
“Agreement”)
is made and entered into as of November 19, 2009 by and among Rio Tinto
America Inc., a Delaware corporation (“RTA”), Rio Tinto Energy America
Inc., a Delaware corporation (“RTEA”), Kennecott Management Services Company, a
Delaware corporation (“KMS”), Cloud Peak Energy Inc., a Delaware corporation (“CPE”), Cloud
Peak Energy Resources LLC, a Delaware limited liability company (the “Company”),
and each of the subsidiaries named on Schedule A hereto (the “Company  Subsidiaries,” and, together
with the Company and any other Subsidiaries (as defined below) of the Company,
collectively, “CPE
LLC”).  RTEA, KMS, CPE and
CPE LLC are sometimes referred to herein separately as a “Party” and
together as the “Parties.”  Certain terms used in this Agreement are
defined in Section 1.1.


 


RECITALS


 


WHEREAS, through a series of
structuring
transactions (the “Structuring
Transactions”), RTEA contributed RTA’s non-Colorado
Western United States coal mining business (other than the Colowyo mine) (the “Coal Business”)
to the Company;


 


WHEREAS, concurrent with the
execution of this Agreement, (i) CPE and RTEA will enter into the
Acquisition Agreement pursuant to which CPE will purchase a portion of RTEA’s
interest in the Coal Business (the “Acquisition”) and, as consideration,
will issue the Cloud Peak Promissory Note, (ii) CPE, RTEA and KMS will
enter into the Third Amended and Restated Limited Liability Company Agreement
of the Company (the “LLC Agreement”) and (iii) CPE, CPE LLC, RTEA,
KMS and/or their respective Affiliates will enter into the Transaction
Documents, including the Tax Receivable Agreement; and


 


WHEREAS, CPE has been incorporated solely for the
purposes set forth above and has not engaged in material activities except in
preparation for and in connection with the Structuring Transactions, the
Initial Public Offering and the Concurrent Offering;


 


WHEREAS, it is appropriate and desirable, for the
benefit of the Parties, to set forth the principal corporate transactions
required to effect certain of the Structuring Transactions and certain other
agreements that will, following the consummation of the Initial Public Offering
and the Concurrent Offering, govern certain matters related to the relationship
and rights and obligations of the Rio Tinto Parties (as defined below), on the
one hand, and the Cloud Peak Parties (as defined below), on the other hand, and
their respective Subsidiaries.


 


NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and agreements set
forth below, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Parties hereby agree as follows:


 

















 


ARTICLE I

DEFINITIONS


 


1.1.          Defined Terms.  As used in this Agreement, the following
terms shall have the following meanings:


 


“430A Information”
with respect to any registration statement, means information included in a
prospectus and retroactively deemed to be a part of such registration statement
pursuant to Rule 430A(b) under the Securities Act.


 


“430C Information”
with respect to any registration statement, means information included in a
prospectus then deemed to be a part of such registration statement pursuant to Rule 430C
under the Securities Act.


 


“Acquired U.S. Coal
Businesses” means any and all existing and prior businesses and
operations conducted by CPESC and RTEA and its Subsidiaries, including CPE LLC,
prior to the Closing Date that will be owned and operated by CPE LLC following
the Initial Public Offering (including the 50% interest through CPE LLC’s
wholly-owned Subsidiary in the Decker mine), other than those terminated
Intercompany Agreements as set forth in Section 2.1(a).  For the avoidance of doubt, the term “Acquired U.S. Coal Businesses”
shall not include the business and operations relating to the Colowyo and
Jacobs Ranch mines, Sweetwater and L-Bar.


 


“Acquisition”
is defined in the recitals to this Agreement.


 


“Acquisition Agreement”
means the Acquisition Agreement dated as of the date hereof between RTEA and
CPE, as the same may be amended, restated, supplemented or otherwise modified
from time to time.


 


“Action”
means any suit, arbitration, inquiry, proceeding or investigation (whether
civil, criminal, administrative, investigative or informal) by or before any
court, governmental or other regulatory or administrative agency or commission
or any arbitration tribunal asserted by a Person.


 


“Additional Registration
Statement” means the Rule 462(b) registration
statement covering the registration of any offered securities in the Initial
Public Offering, as amended at its Effective Time, including the contents of
the applicable Registration Statement incorporated by reference therein and
including all 430A Information and all 430C Information, that in any case has
not then been superseded or modified.


 


“Additional Services”
is defined in Section 8.5.


 


“Affiliate”
of any specified Person means any other Person directly or indirectly
“controlling,” “controlled by” or “under common control with” (within the meaning
of Rule 405 under the Securities Act), such specified Person; provided,
however, that for purposes of the Transaction Documents, except to the
extent expressly provided otherwise the determination of 


 


2

















 


whether
a Person is an Affiliate of another Person shall be made assuming that no
member of the Rio Tinto Group is an Affiliate of any member of the Cloud Peak
Group and vice versa; provided, further, that, notwithstanding
the foregoing, and except as otherwise expressly provided in this Agreement,
(i) no Member of CPE LLC shall be deemed an Affiliate of CPE LLC or its
Subsidiaries, (ii) CPE LLC shall not be deemed an Affiliate of any Member,
(iii) no Member shall be deemed an Affiliate of any other Member solely by
virtue of the ownership of Common Membership Units and (iv) no officer,
director, manager or stockholder of any Person shall be considered an Affiliate
of such Person solely as a result of serving
such capacity or being a stockholder of such Person.  The foregoing proviso shall also apply to any
successor entities whether by merger, transfer of stock or assets or
otherwise.  For purposes of this
Agreement, CPE shall be deemed to be an Affiliate of CPE LLC.


 


“Agency Agreement”
means the Agency Contract dated as of the date hereof by and between the
Company and RTEA as the same may be amended, restated, supplemented or
otherwise modified from time to time.


 


“Agreement”
is defined in the preamble to this Agreement.


 


“Applicable
Materiality Threshold” is defined in Section 7.5.


 


“Applicable Time”
means 5:30 p.m. (Eastern time) on the date of the Underwriting Agreement.


 


“Assets”
means assets, properties and rights (including goodwill and rights arising
under Contracts), wherever located (including in the possession of vendors,
other Persons or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person.


 


“Auditor”
means the independent registered public accountant of any Person.


 


“Business Day”
means, except as otherwise provided with respect to the Corporate Reporting
Data and the Corporate Reserves Data on Schedule 7.1(a) and Schedule
7.2(a), respectively, a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by Law
to close.


 


“Business Entity”
means any corporation, general or limited partnership, limited liability
company, trust, joint venture, trust, unincorporated organization or other
entity.


 


“Bylaws” is
defined in Section 3.3.


 


“CERCLA”
means Comprehensive, Environmental Response, Compensation and Liability Act, 42
U.S.C. § 9601 et seq., as amended, and the rules and regulations
promulgated thereunder.


 


“Charter” is
defined in Section 3.3.


 


3

















 


“Claim”  means any Action,
proceeding, arbitration, suit (whether civil, criminal, administrative,
investigative or informal), complaint, charge or investigation pending or, to
the Person’s knowledge, threatened against the Person or any of its
Representatives.


 


“Claim Notice”
is defined in Section 6.5(a).


 


“Claimed Amount”
is defined in Section 6.5(a).


 


“Closing” is
defined in Section 3.1.


 


“Closing Date”
is defined in Section 3.1.


 


“Closing Date Balance Sheet”
is defined in Section 3.9(b)(ii)(A).


 


“Closing Date Working
Capital” is defined in Section 3.9(b)(iv).


 


“Cloud Peak”
means, collectively, CPE and CPE LLC.


 


“Cloud Peak Assets”
means any and all Assets that are used or held for use in the Cloud Peak
Business.


 


“Cloud Peak Auditors”
is defined in Section 7.3(a).


 


“Cloud Peak Business”
means (1) the businesses and operations of the Acquired U.S. Coal
Businesses prior to the Closing Date and (2) the business and operations
conducted by the Cloud Peak Group after the Closing Date including, without
limitation, the businesses and operations of the Acquired U.S. Coal Businesses.


 


“Cloud Peak Discontinued
Business” means the businesses and operations and mining
properties of RTEA (or any predecessor or Subsidiary of RTEA) that have been
sold, discontinued or merged out of existence prior to the Closing Date (other
than the Jacobs Ranch mine or the Retained U.S. Coal Business), including those
businesses, operations and mining assets set forth on Schedule B hereto.


 


“Cloud Peak Financing”
means the revolving credit facility to be entered into by CPE LLC.


 


“Cloud Peak General
Indemnities” is defined in Section 6.1(a).


 


“Cloud Peak Group”
means CPE, CPE LLC and their respective Affiliates.


 


“Cloud Peak Indemnified
Persons” means each member of the Cloud Peak Group and its
respective Representatives.


 


“Cloud Peak Information”
is defined in Section 7.4(d).


 


4

















 


“Cloud Peak Liabilities”
means the following:


 


(a)   any and all Liabilities (whether actual or contingent) to the
extent arising out of or relating to the Acquired U.S. Coal Businesses, the
Cloud Peak Business or the Cloud Peak Assets, in each case whether such
Liabilities arise or accrue prior to, on or after the Closing Date (including
whether or not relating to matters or conditions of the Acquired U.S. Coal
Businesses, the Cloud Peak Business or the Cloud Peak Assets existing prior to,
on or after the Closing Date) whether or not included in clause (b) or (c) below;


 


(b)   any and all Liabilities that are expressly listed, scheduled or
otherwise described in any Transaction Document as Liabilities for which CPE,
CPE LLC or any other member of the Cloud Peak Group is to be responsible,
including those set forth on Schedule C hereto;


 


(c)   any and all Liabilities arising out of or relating to the Existing
Surety Arrangements;


 


(d)   any and all Liabilities of the Rio Tinto Group in respect of
claims made by any member of the Cloud Peak Group under any Terminated RTEA
Policy, except for any and all Liabilities arising out of a claim by any
officer, director or employee of CPE or CPE LLC under the Rio Tinto D&O
Policy to the extent the circumstances giving rise to such claim occur prior to
the IPO Closing Date, or Three Crowns Policy;


 


(e)   any and all Liabilities of the Cloud Peak Group set forth on Exhibit A
arising out of or related to the Jacobs Ranch Membership Interest Purchase
Agreement, whether such Liabilities arise or accrue prior to, on or after the
Closing Date;


 


(f)    any and all Liabilities related to the Cloud Peak Discontinued
Businesses; and


 


(g)   all obligations of the Cloud Peak Group under or pursuant to this
Agreement and any Transaction Document or any other instrument entered into in
connection herewith or therewith.


 


For the avoidance of doubt, the term “Cloud Peak Liabilities” shall
include any and all Liabilities arising under CERCLA relating to the Acquired
U.S. Coal Businesses but shall not include any Liabilities relating to or
arising from the Retained U.S. Coal Business (including (i) the business
and operations of the Colowyo mine, Sweetwater and L-Bar, (ii) any
Liabilities for which RTA and RTEA expressly assume or retain responsibility
under the Employee Matters Agreement and (iii) any and all Liabilities
that are expressly listed on Schedule D hereto).


 


“Cloud Peak Notes”
means the Senior Notes issued by CPE LLC.


 


“Cloud Peak Parties”
means CPE and CPE LLC.


 


“Cloud Peak Promissory Note” means the $433,755,000
million Promissory Note payable by CPE to RTEA, in the form attached hereto as Exhibit B.


 


5

















 


“Cloud Peak Public Filings”
is defined in Section 7.4(c).


 


“Cloud Peak Special
Indemnities” is defined in Section 6.1(b).


 


“Coal Business” is defined in the recitals to this
Agreement.


 


“Common Stock” means the common stock, $0.01 par value
per share, of CPE.


 


“Company” is defined in the preamble to this Agreement.


 


“Company Subsidiaries”
is defined in the preamble to this Agreement.


 


“Competitive Business”
is defined in Section 8.2(b)(iii).


 


“Concurrent Offerings”
means any other public or private offerings of securities, including the Debt
Offering, such offerings to be made concurrently with the Initial Public
Offering.


 


“Contract”
means any contract, agreement, document, lease, license, sales order, purchase
order, instrument or other commitment that is binding on any Person or any part
of its property under applicable Law.


 


“Controlling Party”
is defined in Section 6.5(c)(ii).


 


“Corporate Reporting Data”
means the submissions and data requirements as set forth in detail on Schedule
7.1(a), as such schedule may be amended by the Rio Tinto Group from time to
time as set forth in Section 7.1(a).


 


“Corporate Reserves Data”
means the submissions and data requirements as set forth in detail on Schedule
7.2(a), as such schedule may be amended by the Rio Tinto Group from time to
time as set forth in Section 7.2(a).


 


“CPE” is defined
in the preamble to this Agreement.


 


“CPE LLC” is
defined in the preamble to this Agreement.


 


“CPESC” means
Cloud Peak Energy Services Company, a Delaware corporation.


 


“Debt
Applicable Time” shall have the meaning ascribed to the term
“Applicable Time” in the Purchase Agreement.


 


“Debt
General Disclosure Package” shall have the meaning ascribed to
the term “General Disclosure Package” in the Purchase Agreement.


 


“Debt Offering”
means the offer and sale by CPE LLC of the Cloud Peak Notes.


 


6

















 


“Debt Offering Memorandum”
means the offering memorandum relating to the offering of the Cloud Peak Notes
under Rule 144A of the Securities Act.


 


“Debt
Offering Closing Date” means the date and time of the closing of
the Debt Offering.


 


“Disagreement
Notice” is defined in Section 3.9(b)(iv).


 


“Disclosing Party”
is defined in Section 4.2.


 


“Dispute”  is defined in Section 9.10.


 


“Disputing Party”
is defined in Section 9.10(a).


 


“Drawing
Request” is defined in Section 2.2(b)(5).


 


“Effective Date”
with respect to the IPO Registration Statement or, if filed prior to the
execution and delivery of the Underwriting Agreement, the Additional
Registration Statement, means the date and time as of which such registration
statement was declared effective by the SEC or has become effective upon filing
pursuant to Rule 462(c).  If an
Additional Registration Statement has not been filed prior to the execution and
delivery of the Underwriting Agreement but CPE has advised the representatives
that it proposes to file one, “Effective Date”
with respect to such Additional Registration Statement means the date and time
as of which such Additional Registration Statement is filed and becomes
effective pursuant to Rule 462(b).


 


“Employee Matters Agreement”
means the Employee Matters Agreement dated as of the date hereof between CPE,
CPE LLC, Rio Tinto, Rio Tinto Limited, RTA, RTEA and CPESC, as the same may be
amended, restated, supplemented or otherwise modified from time to time.


 


“Equity
General Disclosure Package” is defined in Section 2.5(c).


 


“Escrow
Account”  means the
escrow account maintained at Sun Trust Bank (or with another successor Escrow
Agent reasonably acceptable to RTEA) that was established and is governed by
the terms and conditions of the Escrow Agreement.


 


“Escrow
Agent” means Sun Trust Bank, in its capacity as escrow agent
under the Escrow Agreement, and any successor Escrow Agent reasonable
acceptable to RTEA.


 


“Escrow
Agreement” means the Escrow Agreement dated as of the IPO
Closing Date between CPE LLC, RTEA and SunTrust Bank, as the same may be
amended, restated, supplemented, replaced or otherwise modified from time to
time.


 


“Estimated
Closing Date Working Capital” is defined in Section 3.9(b)(i).


 


7

















 


“Exchange Act”
means the Securities Exchange Act of 1934, as amended together with the rules and
regulations promulgated thereunder.


 


“Existing Authority”
is defined in Section 8.6.


 


“Existing Surety
Arrangements” is defined in Section 2.2(a).


 


“Existing
Surety Arrangement Obligations” is defined in Section 2.2(b)(2).


 


“Final Offering Memorandum”
means the Debt Offering Memorandum that discloses the offering price of the
Cloud Peak Notes.


 


“Final Prospectus”
means the Statutory Prospectus included in
a Registration Statement that discloses the public offering price, other 430A
Information and other final terms of the offered securities and otherwise
satisfies Section 10(a) of the Exchange Act.


 


“Financing Documents”
means the financing documents related to
the Cloud Peak Financing.


 


“Firm Public Offering Shares” means the Common Stock sold
in the Initial Public Offering, other than Common Stock sold as a result of
exercise of the Over-Allotment Option by the Underwriters.


 


“GAAP” means
United States generally accepted accounting principles.


 


“General
Disclosure Package” means the Equity General Disclosure Package
and the Debt General Disclosure Package.


 


“General
Indemnity Amount” is defined in Section 6.1(b).


 


“General
Use Issuer Free Writing Prospectus” means any Issuer Free
Writing Prospectus that is intended for general distribution to prospective
investors, as evidenced by its being so specified in Schedule B to the
Underwriting Agreement.


 


“Good
Faith Surety Bond Condition” means the occurrence of all of the
following conditions: (i) CPE LLC shall have arranged in good faith for
the issuance of Replacement Surety Arrangements for all of the Existing Surety
Arrangements on terms and conditions reasonably satisfactory to RTEA and shall
have provided RTEA with reasonably satisfactory evidence of completion of the
foregoing on or prior to the 60th day after the
IPO Closing Date, (ii) all such Replacement Surety Arrangements have been
satisfactorily lodged and/or deposited with the relevant Governmental
Authorities on or prior to the 60th day after the
IPO Closing Date and (iii) the relevant Governmental Authorities have not
yet fully released RTEA or any member of the Rio Tinto Group from all
obligations and liabilities under the Existing Surety Arrangements at such
time.


 


“Good
Faith Trigger Date” is defined in Section 2.2(b)(4).


 


8

















 


“Guarantor(s)” is defined in Section 6.2(a).


 


“Guaranty”
is defined in Section 6.2(a).


 


“Governmental
Approvals” means any notices, reports or other filings to be
made, or any consents, registrations, approvals, permits or authorizations to
be obtained from, any Governmental Authority.


 


“Governmental
Authority” means any United States federal, state or local or
any foreign government, supranational, governmental, regulatory or
administrative authority, instrumentality, agency or commission, political
subdivision, self-regulatory organization or any court, tribunal or judicial or
arbitral body or other governmental authority.


 


“Group”
means either the Rio Tinto Group or the Cloud Peak Group, as the context
requires.


 


“IFRS”
means International Financial Reporting Standards as adopted by the European
Union.


 


“Indemnified
Party” is defined in Section 6.5(a).


 


“Indemnified Person”  means, as applicable, a
Cloud Peak Indemnified Person or a RTEA Indemnified Person.


 


“Indemnifying
Party” is defined in Section 6.5(a).


 


“Independent
Accountants” is defined in Section 3.9(b)(v).


 


“Information”
means information, whether or not patentable or copyrightable, in written,
oral, electronic or other tangible or intangible forms, stored in any medium,
including studies, reports, records, books, contracts, instruments, surveys,
discoveries, ideas, concepts, know-how, techniques, designs, specifications,
drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data,
computer data, disks, diskettes, tapes, geological information, computer
programs or other software, marketing plans, customer names, communications by
or to attorneys (including attorney-client privileged communications),
memoranda and other materials prepared by attorneys or under their direction
(including attorney work product), and other technical, financial, employee or
business information or data.


 


“Initial
Public Offering” means the initial public offering registered
under the Securities Act of the Common Stock of CPE.


 


“Initial
Purchasers” means the several initial purchasers of the
Concurrent Offering named in the Purchase Agreement.


 


“Initial
Unrestricted Cash Position” is defined in Section 3.9(a).


 


9
















 


“Insurance
Proceeds” means those monies: (a) received by an insured
from a Third Party Insurance Carrier; (b) paid by a Third Party Insurance
Carrier on behalf of the insured; or (c) received (including by way of set
off) from any third party in the nature of insurance, contribution or
indemnification in respect of any Liability; in any such case net of applicable
premium adjustments (including reserves and retrospectively rated premium
adjustments) and net of any costs or expenses incurred in the collection
thereof.


 


“Intercompany
Agreements” is defined in Section 2.1(a).


 


“IPO
Closing Date” is defined in Section 3.9(a).


 


“IPO
Registration Statement” means the registration statement on Form S-1
(SEC File No. 333-161293), including the prospectus related thereto, filed
by CPE with the SEC in connection with the Initial Public Offering, together
with all amendments and supplements thereto.


 


“Issuer
Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act relating to
the shares of CPE Common Stock to be offered in any Concurrent Offering in the
form filed or required to be filed with the SEC or, if not required to be
filed, in the form retained in CPE’s records pursuant to Rule 433(g) under
the Securities Act.


 


“Issuing
Bank” is defined in Section 2.2(b)(5).


 


“Jacobs
Ranch Membership Interest Purchase Agreement” means the
Membership Interest Purchase Agreement between Rio Tinto Sage LLC and Arch Coal, Inc.
dated as of March 8, 2009.


 


“JAMS”
is defined in Section 9.10(b).


 


“JORC”
means the Australian Joint Ore Reserves Committee.


 


“KMS”
is defined in the preamble to this Agreement.


 


“Law”
means any law (statutory, common or otherwise), constitution, ordinance, code,
rule, regulation, executive order or other similar authority enacted, adopted,
promulgated or applied by any Governmental Authority, each as amended from time
to time.


 


“Liability”
means all damages, losses, liabilities or obligations, payments, amounts paid
in settlement, obligations, fines, penalties, costs of burdens associated with
performing injunctive relief and other costs (including reasonable fees and
expenses of outside attorneys, accountants and other professional advisors, and
of expert witnesses and other costs of investigation, preparation and
litigation in connection with any action, appeal, petition, plea, charge,
complaint, claim, suit, demand, litigation, arbitration, mediation, hearing,
inquiry, investigation or similar matter or proceeding) of any kind or nature
whatsoever, whether known or unknown, asserted or 


 


10

















 


unasserted, absolute, contingent or vested,
accrued or unaccrued, liquidated or unliquidated, or matured or unmatured.


 


“Limited
Use Issuer Free Writing Prospectus” means any Issuer Free
Writing Prospectus that is not a General Use Issuer Free Writing Prospectus.


 


“LLC Act”
means the Delaware Limited Liability Company Act, 6 Del. C.
§§ 18-101, et seq., as it may be
amended from time to time, and any successor to such statute.


 


“LLC
Agreement” is defined in the recitals to this Agreement.


 


“L-Bar”
means the assets that are held within Sohio Western Mining Company, a Delaware
corporation.


 


“Management
Services Agreement” means the
Management Services Agreement dated as of the date hereof by and between the
Company and CPE, as the same may be amended, restated, supplemented or
otherwise modified from time to time.


 


“Member” means each Person that is or becomes a member, as
contemplated in the LLC Act, of CPE LLC in accordance with the provisions of
the LLC Agreement and is listed on Exhibit A to the LLC Agreement
(as such Exhibit may be amended or modified from time to time) and has not
ceased to be a Member as provided in Section 3.1(d) of the LLC
Agreement, and each of such Member’s transferees, if applicable.


 


“New
York Courts” is defined in Section 9.6(b).


 


“Non-Compete
Period” is defined in Section 8.2.


 


“Non-Controlling
Party” is defined in Section 6.5(c)(ii).


 


“Offering
Closing Date” means the date and time of the closing of each of
the Initial Public Offering, including the closing for the Over-Allotment
Option, if any, and the Concurrent Offering.


 


“Over-Allotment
Option” means the over-allotment option that may be exercised by
the Underwriters of the Initial Public Offering pursuant to the Underwriting
Agreement relating to the Initial Public Offering.


 


“Owning
Party” is defined in Section 4.2.


 


“Party”  or  “Parties” is defined in the preamble to this
Agreement.


 


“Person”
means any individual or Business Entity.


 


“Powder River Basin” means the
coal producing area located in northeastern Wyoming and southeastern Montana,
as shown generally on the map attached as Exhibit C.


 


11

















 


“Preliminary
Closing Date Working Capital” is defined in Section 3.9(b)(ii).


 


“Preliminary
Working Capital Adjustment” is defined in Section 3.9(b)(ii).


 


“Privilege” is defined in Section 7.14(a).


 


“Proceeding”
means:  (i) any past, present or
future suit, countersuit, action, arbitration, mediation, alternative dispute
resolution process, claim, counterclaim, demand, proceeding; (ii) any
inquiry, proceeding or investigation by or before any Governmental Authority;
or (iii) any arbitration or mediation tribunal.


 


“Purchase
Agreement” means the Purchase Agreement to be entered into by
and between CPE LLC and the Initial Purchasers in connection with the offering
of the Cloud Peak Notes in the Concurrent Offering.


 


“Registration
Indemnified Parties” is defined in Section 6.4(a)(i).


 


“Registration
Rights Agreement” means the Registration Rights Agreement dated
as of the date hereof between RTEA, KMS, CPE and CPE LLC, as the same may be
amended, restated, supplemented or otherwise modified from time to time.


 


“Registration
Statement” means the IPO Registration Statement, including the
Statutory Prospectus, Final Prospectus and any Issuer Free Writing Prospectus
related thereto, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all materials incorporated
by reference in such Registration Statement, Statutory Prospectus, Final
Prospectus or Issuer Free Writing Prospectus.


 


“Rejected
RTEA Exposure Amount” is defined in Section 2.2(b)(4).


 


“Rejected
RTEA Fee” is defined in Section 2.2(b)(4).


 


“Rejected
Replacement Surety Arrangements” means, if CPE LLC lodges and/or
deposits Replacement Surety Arrangements in connection with the satisfaction of
the Good Faith Surety Bond Condition, those Replacement Surety Arrangements
that are rejected as being inadequate for any reason by the relevant Government
Authority at any time.


 


“Release
Notice” is defined in Section 2.2(b)(2).


 


“Replacement
Letter of Credit” is defined in Section 2.2(b)(5).


 


“Replacement
Surety Arrangements” is defined in Section 2.2(b)(1).


 


“Report”
is defined in Section 3.9(b)(v).


 


“Representatives”
means, with respect to any Person, any of such Person’s directors, officers,
members, partners, managers and employees.


 


12

















 


“Restricted
Cash Amount” is defined in Section 2.2(b)(1).


 


“Retained
U.S. Coal Business” means the Colowyo mine, Sweetwater and L-Bar
to be retained by the Rio Tinto Group in connection with the Initial Public
Offering.


 


“Rio Tinto”
means Rio Tinto plc, a public limited company incorporated under the laws of
England and Wales.


 


“Rio Tinto
Annual Report” means the Rio Tinto Annual Report and related
financial statements prepared on an annual basis for the most recently
completed fiscal year.


 


“Rio Tinto
Auditors” is defined in Section 7.3(a).


 


“Rio Tinto
D&O Policy” is defined in Section 2.1(a).


 


“Rio Tinto
Group” means RTEA, KMS and their respective Affiliates,
including RTA.


 


“Rio Tinto
Limited” means Rio Tinto Limited, an Australian corporation.


 


“Rio Tinto
Parties” means RTEA and KMS.


 


“Rio Tinto
Public Filings” is defined in Section 7.5.


 


“RTA”
is defined in the preamble to this Agreement.


 


“RTEA” is defined in the preamble
to this Agreement.


 


“RTEA Coal Supply Agreement”
means the Rio Tinto Energy America Coal Supply Agreement dated as of the date
hereof by and between the Company and RTEA as the same may be amended,
restated, supplemented or otherwise modified from time to time.


 


“RTEA Exposure Amount”
is defined in Section 2.2(b)(3).


 


“RTEA Fee”
is defined in Section 2.2(b)(3).


 


“RTEA
Indemnified Persons” means each member of the Rio Tinto Group
and its respective Representatives.


 


“RTEA L/C”
is defined in Section 2.2(b)(5).


 


“RTEA L/C
Amount” is defined in Section 2.2(b)(5).


 


“RTEA L/C
Reduction Notice” is defined in Section 2.2(b)(5).


 


“RTEA
Liabilities” means (i) any and all Liabilities to the
extent arising out of or relating to the Retained U.S. Coal Business, whether
such Liabilities arise or accrue prior to, on or after the Closing Date, (ii) any
and all Liabilities of the Rio Tinto Group set forth on Exhibit A  


 


13

















 


arising out of or relating to the Jacobs
Ranch Membership Interest Purchase Agreement, whether such Liabilities arise or
accrue prior to, on or after the Closing Date, and (iii) any and all
Liabilities that are expressly listed on Schedule D hereto.


 


“SEC”
means the United States Securities and Exchange Commission.


 


“Securities
Act” means the Securities Act of 1933, as amended, together with
the rules and regulations promulgated thereunder.


 


“Software
License Agreement” means the Software License Agreement dated as
of the date hereof between RTEA and CPE LLC, as the same may be amended,
restated, supplemented or otherwise modified from time to time.


 


“Statutory
Prospectus” with reference
to a particular time means the prospectus included in a Registration Statement
immediately prior to that time, including any 430A Information or 430C
Information with respect to such Registration Statement.  For purposes of the foregoing definition,
430A Information shall be considered to be included in the Statutory Prospectus
as of the actual time that form of prospectus is filed with the SEC pursuant to
Rule 424(b) or Rule 462(c) under the Securities Act and not
retroactively.


 


“Structuring
Transactions” is defined in the recitals
to this Agreement.


 


“Subsidiary”
of any Person means another Business Entity that is directly or indirectly
controlled by such Person.  As used
herein, “control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Business
Entity, whether through ownership of voting securities or other interests, by
contract or otherwise.  For purposes of
this Agreement, CPE LLC shall be deemed to be a Subsidiary of RTEA prior to the
Closing Date and shall be deemed to be a Subsidiary of Cloud Peak as of and
from the Closing Date.


 


“Sweetwater”
means the uranium mining venture being retained by the Rio Tinto Group in
connection with the Initial Public Offering.


 


“Tax”
means all U.S. federal, state, local and foreign taxes, assessments or similar
charges measured with respect to net income or profits and any interest related
to such Tax.


 


“Tax
Receivable Agreement” means the Tax Receivable Agreement dated
as of the date hereof among RTEA and CPE, as the same may be amended, restated,
supplemented or otherwise modified from time to time.


 


“Terminated
RTEA Policies” is defined in Section 2.1(a).


 


“Third
Party Claim” is defined in Section 6.5(c)(i).


 


“Third
Party Insurance Carrier” means any insurance provider other than
a Person’s captive insurer.


 


14

















 


“Three
Crowns Policies” is defined in Section 2.3.


 


“Trademark
Assignment Agreement” means the Trademark Assignment Agreement
dated as of the date hereof by and between RTEA and the Company, as the same
may be amended, restated, supplemented or otherwise modified from time to time.


 


“Trademark License
Agreement” means the Trademark License Agreement dated as of the
date hereof between RTEA and CPE LLC.


 


“Transaction
Documents” is defined in Section 3.2.


 


“Transactions”
means, collectively, (i) the Structuring Transactions, (ii) the
Initial Public Offering and the Concurrent Offerings, (iii) any other debt
financing to be undertaken by Cloud Peak, including the Cloud Peak Financing,
and (iv) all other transactions contemplated by this Agreement or any
Transaction Document.


 


“Transfer
Documents” is defined in Section 3.4.


 


“Transition Services Agreement” means the Transition
Services Agreement dated as of the date hereof between Rio Tinto Services Inc.,
CPE and CPE LLC, as the same may be amended, restated, supplemented or
otherwise modified from time to time.


 


“Trigger Date”
is defined in Section 2.2(b)(3).


 


“Underwriters” means the several
underwriters of the Initial Public Offering named in the Underwriting
Agreement.


 


“Underwriting
Agreement” means the underwriting agreement entered into among
CPE and the Underwriters for the Initial Public Offering.


 


“Working
Capital Adjustment” is defined in Section 3.9(b)(vii).


 


1.2.          Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. 
If an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any Party
because of the authorship of any provision of this Agreement. Any reference to
any federal, state, provincial, local or foreign law shall be deemed also to
refer to such law as amended and all rules and regulations promulgated
thereunder, unless the context requires otherwise.  Any reference to any contract or agreement
(including schedules, exhibits and other attachments thereto), including this
Agreement, shall be deemed also to refer to such contract or agreement as
amended, restated or otherwise modified, unless the context requires otherwise.
The words “include,” “includes” and “including” shall be deemed to be followed
by “without limitation.”  Pronouns in
masculine, feminine and neuter genders shall be construed to include any other
gender, and words in the singular form shall be construed to include the plural
and vice versa, unless the context requires otherwise. The words “this
Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar
import refer to 


 


15

















 


this
Agreement as a whole and not to any particular subdivision unless expressly so
limited. Where this Agreement states that a Party “will” or “shall” perform in
some manner or otherwise act or omit to act, it means that such Party is
legally obligated to do so in accordance with this Agreement.  The captions, titles and headings included in
this Agreement are for convenience only and do not affect this Agreement’s
construction or interpretation.  Any
reference to an Article, Section or Schedule in this Agreement shall refer
to an Article or Section of, or Schedule to, this Agreement, unless
the context otherwise requires.  This
Agreement is for the sole benefit of the Parties (and, solely for purposes of Article VI,
RTEA Indemnified Persons and Cloud Peak Indemnified Persons) and does not, and
is not intended to, confer any rights or remedies in favor of any Person
(including any employee or shareholder or equity owner of RTEA or Cloud Peak)
other than the Parties.  Exhibit A
and the schedules identified in this Agreement are incorporated herein by
reference and made part hereof.


 


ARTICLE II

STRUCTURING AND RELATED TRANSACTIONS


 


2.1.          Termination of
Intercompany Agreements.


 


(a)   Except as set forth in clauses (b) and (c) of this Section 2.1,
and in Section 2.2, the Cloud Peak Parties and each other member of
the Cloud Peak Group, on the one hand, and the Rio Tinto Parties and each other
member of the Rio Tinto Group, on the other hand, hereby (i) terminate any
and all agreements, Contracts, arrangements, commitments or understandings,
whether or not in writing, between or among CPE, CPE LLC or any other member of
the Cloud Peak Group, on the one hand, and RTEA, KMS or any other member of the
Rio Tinto Group, on the other hand, effective as of the Closing Date, (ii) cancel
any outstanding indebtedness for borrowed money payable by (x) any member
of the Cloud Peak Group to any member of the Rio Tinto Group or (y) any
member of the Rio Tinto Group to any member of the Cloud Peak Group and (iii) terminate
the coverage with respect to (A) CPE under any and all insurance policies
of RTEA or any member of the Rio Tinto Group, whether from Third Party
Insurance Carriers or any captive insurance carried and (B) CPE LLC and
any other member of the Cloud Peak Group or their Representatives under any and
all automobile, directors and officers and worker’s compensation insurance
policies of RTEA or any member of the Rio Tinto Group, whether from Third Party
Insurance Carriers or any captive insurance carrier ((A) and (B),
collectively, the “Terminated RTEA Policies”)
and with respect to CPE, CPE LLC or any member of the Cloud Peak Group or their
Representatives such Terminated RTEA Policies shall be deemed to be cancelled
and CPE and CPE LLC for themselves and any other members of the Cloud Peak
Group hereby waive any and all right to make a claim from and after the Closing
Date under any such Terminated RTEA Policy (irrespective of whether the
circumstances giving rise to such claim occurred prior to the Closing Date); provided,
however, that (x) the termination of coverage for directors,
officers and employees of CPE and CPE LLC under the Rio Tinto Directors’ and
Officers’ Liability and Corporate Liability Insurance (the “Rio Tinto D&O Policy”) shall be
effective upon the IPO Closing Date, (y) the termination of such coverage
shall not apply to the extent the circumstances giving rise to a claim occurred
prior to the IPO Closing Date and (z) no right of any officer, director or
employee to make a claim under such coverage in effect prior to the IPO Closing
Date is waived hereby ((i), (ii) and 


 


16

















 


(iii) collectively,
the “Intercompany
Agreements”), including, but not limited to those Intercompany
Agreements set forth on Schedule 2.1(a). 
No such terminated agreement, arrangement, commitment or understanding
(including any provision thereof which purports to survive termination) shall
be of any further force or effect after the Closing Date, and no member of the
Cloud Peak Group or any of its Representatives shall be entitled to recovery of
any amounts under the Terminated RTEA Policies after the Closing Date
(including for any claims or occurrences arising prior to the Closing Date and
for which a claim under such Terminated RTEA Policies had not been made prior
to the Closing Date).  Each Party shall,
at the reasonable request of the other Party or Parties, take, or cause to be
taken, such other actions as may be necessary to effect the foregoing.


 


(b)   The provisions of Section 2.1(a) shall not apply
to any of the following agreements, arrangements, commitments or understandings
(or to any of the provisions thereof):


 


(i)            this
Agreement, including Exhibit A and the schedules hereto, and the
other Transaction Documents (and each other agreement or instrument expressly
contemplated by this Agreement or any other Transaction Documents to be entered
into or continued by any of the Parties hereto or any of the members of their
respective Groups);


 


(ii)           the
agreements, arrangements, commitments and understandings listed or described on
Schedule 2.1(b)(ii);


 


(iii)          any
agreements, arrangements, commitments or understandings to which any non-wholly
owned Subsidiary of the Parties is a party, (it being understood that
directors’ qualifying shares or similar interests will be disregarded for
purposes of determining whether a Subsidiary is wholly owned); and


 


(iv)          any
other agreements, arrangements, commitments or understandings that this
Agreement or any other Transaction Document expressly contemplates will survive
the Closing Date.


 


(c)   Notwithstanding Section 2.1(a), (i) any
outstanding purchase orders or other purchase commitments under any of the
agreements set forth on Schedule 2.1(c) as of the Closing Date
shall continue to be in effect after the Closing Date and (ii) any rights,
obligations or privileges in respect of such purchase orders or commitments
under any such agreements shall not terminate but shall continue in full force
and effect after the Closing Date.


 


2.2.          Continuance of Surety
Bonds.


 


(a)   Notwithstanding Section 2.1(a), the existing surety
bonds, letters of credit and other guarantees or credit arrangements of RTEA or
any other member of the Rio Tinto Group with respect to the surety bonds or to
secure the reclamation obligations for the Cloud Peak Business (as further
described on Schedule 2.2 hereto, the “Existing Surety Arrangements”)
shall not terminate, but will continue following the Closing Date as set forth
in this Section 2.2.  Subject
to the provisions of clause (b) of this Section 2.2, the Cloud
Peak Parties hereby agree to 


 


17

















 


use
their commercially reasonable efforts to obtain new surety bonds, letters of
credit or other credit arrangements in support of the Cloud Peak Business and
to obtain a full release of RTEA and any other member of the Rio Tinto Group  from any and all Liability and obligations
with respect to such Existing Surety Arrangements, letters of credit and other
guarantees or credit arrangements with respect to such Existing Surety
Arrangements.  Without limiting the
foregoing, following the Closing Date, CPE LLC hereby undertakes, assumes and
agrees to perform, pay and discharge all such Existing Surety Arrangements
until such time as RTEA and any other member of the Rio Tinto Group is released
from any and all Liability and obligations thereunder, including any and all
costs in respect of the Existing Surety Arrangements (including any calls
against any letters of credit or similar arrangements).  Without limiting or modifying any of RTEA’s
or any other member of the Rio Tinto Group’s rights under this Agreement,
beginning on December 1, 2009, at the beginning of each month, for so long
as RTEA or any member of the Rio Tinto Group remains obligated or has any
Liability in respect of any Existing Surety Arrangement, RTEA shall send CPE
LLC an invoice setting forth any and all letter of credit fees, surety bond
fees or other similar costs incurred by RTEA or any member of the Rio Tinto
Group following the Closing Date with respect to the maintenance of any of the
Existing Surety Arrangements in reasonably satisfactory detail and with
supporting documentation if such supporting documentation is requested by CPE
LLC.  Within thirty (30) days after the
transmittal of such notice to CPE LLC, CPE LLC shall pay to RTEA for itself and
for the benefit of any member of the Rio Tinto Group the amounts stated to be
paid in such invoice. Notwithstanding the foregoing, the failure by RTEA to
send any such invoice shall not prejudice any of its rights under this
Agreement or modify any of the obligations of CPE LLC or the Cloud Peak
Parties. The Cloud Peak Parties hereby acknowledge that, in using their
commercially reasonably efforts to obtain new surety bonds, letters of credit
or other credit arrangements in support of the Cloud Peak Business, such new
bonds, letters of credit or other credit arrangements may be more expensive
than the corresponding arrangements under the Existing Surety Arrangements.


 


(b)   Notwithstanding Section 2.2(a),


 


(1)       The Cloud Peak Parties hereby acknowledge that certain of the
Existing Surety Arrangements are collateralized by guarantees by members of the
Rio Tinto Group and/or letters of credit issued by members of the Rio Tinto
Group.  On the IPO Closing Date, the
Cloud Peak Parties hereby agree to enter into the Escrow Agreement, pursuant to
which $80,179,794 million (the “Restricted Cash Amount”)  will be placed in escrow for the benefit of the Rio Tinto
Group with respect to the Existing Surety Arrangements.  The Restricted Cash Amount shall be released
from time to time to CPE LLC pursuant to the terms of this Section 2.2
as the Existing Surety Arrangements are replaced with new surety bonds, letters
of credit or other credit arrangements (the “Replacement
Surety Arrangements”) in amounts, as needed, to secure such
Replacement Surety Arrangements.  The
Escrow Agreement and Escrow Account shall remain in full force and effect until
the earlier of (x) such time as all Existing Surety Arrangements have been
replaced with Replacement Surety Arrangements and RTEA or any members of the
Rio Tinto Group are fully released from all obligations and Liabilities with
respect to the Existing Surety Arrangements being so replaced and (y) no
cash or any investments remain in the Escrow Account.  On the 120th day after the
IPO Closing Date, in the 


 


18

















 


event
that (x) any Existing Surety Arrangements remain outstanding or RTEA or
any members of the Rio Tinto Group retain any obligations and/or Liabilities
with respect to any such Existing Surety Arrangements and (y) any amounts
remain in the Escrow Account, CPE LLC shall promptly (but in any event within
five (5) Business Days of such date) grant a perfected first priority
security interest in the Escrow Account and all cash and assets in or otherwise
credited to the Escrow Account to RTEA for its benefit and the benefit of the
Rio Tinto Group to secure all of CPE LLC’s obligations under this Section 2.2
and any related indemnification obligations under Section 6.1, on
terms and conditions reasonably acceptable to RTEA; provided, however,
that notwithstanding the foregoing, if the Good Faith Surety Bond Condition
occurs, CPE shall be required to grant such perfected first priority security
interest on the Good Faith Trigger Date.


 


(2)       Funds shall be released from the Escrow Account solely upon
the written instruction of RTEA (and without any other term, condition or
instruction from CPE LLC) to the Escrow Agent under the Escrow Agreement for
the purpose of (x) releasing funds to a surety bond provider for a
Replacement Surety Arrangement, (y) releasing funds to CPE LLC in
connection with the deposit by CPE LLC of unrestricted cash into an escrow
account or otherwise for the benefit of a surety bond provider in connection
with collateralizing a Replacement Surety Arrangement or (z) releasing
funds to RTEA in order for RTEA or any member of the Rio Tinto Group to satisfy
any obligations that have come due and payable under the Existing Surety
Arrangements (the “Existing Surety
Arrangement Obligations”). 
In order to release funds for a Replacement Surety Arrangement, CPE LLC
shall submit a written request (a “Release Notice”)
to RTEA identifying in reasonable detail: (i) the amount to be released
from the Escrow Account, which in any event, shall be equal to the amount that
is either required by such surety bond provider in respect of any such
Replacement Surety Arrangement or the actual amount expended by CPE LLC in
connection with collateralizing such Replacement Surety Arrangement, (ii)(a) the
name and account information of the surety bond provider to which funds should
be transferred for such Replacement Surety Arrangement or (b) the name and
account information for CPE LLC to which funds should be transferred to
reimburse CPE LLC for the amount of unrestricted cash that CPE LLC has
deposited in an escrow account or otherwise deposited with a surety bond
provider in connection with a Replacement Surety Arrangement, (iii) the
proposed date of the transfer of such funds (which shall be no earlier than
three (3) Business Days after the date of such notice), and (iv) a
representation and warranty that CPE LLC has satisfied all of the relevant
collateral requirements for each surety bond provider, letter of credit issuer
or other existing surety arrangement provider that is, as of such date,
providing a Replacement Surety Arrangement, that such funds are being solely
used in connection with such Replacement Surety Arrangements and that it has
otherwise complied with the requirements of this Section 2.2. Upon
satisfaction by CPE LLC of the terms and conditions of the immediately
foregoing sentence, RTEA shall provide written instruction to the Escrow
Agreement, with a copy to CPE LLC, in accordance with the Escrow Agreement, to
release the funds requested by CPE LLC in the Release Notice to the account
designated in such Release Notice. In the event that any Existing Surety
Arrangement Obligations become due and owing, RTEA shall submit a written
instruction, with a copy to CPE LLC, instructing the Escrow Agent to release
funds to RTEA for its own benefit and/or the benefit of the relevant Rio Tinto
Group member in amounts necessary to satisfy the Existing Surety Arrangement
Obligations.


 


19




















 


(3)       If all the Existing Surety Arrangements are not replaced with
Replacement Surety Bonds and RTEA and members of the Rio Tinto Group are
not fully released from liability under all such Existing Surety Arrangements,
in each case, within 120 days following the IPO Closing Date (the “Trigger Date”), a monthly fee shall
be payable to RTEA in an amount equal to 4% per annum (the “RTEA Fee”) of (x) 39.77% of
the total face amount of all Existing Surety Arrangements (other than the
Existing Surety Arrangements identified on Schedule 2.2 as “Decker
Collateral LC (for Travelers)” and “Decker Reclamation Trust (US Bank National
Association)”) and (y) 100% of the total face amount of the Existing
Surety Arrangements identified on Schedule 2.2 as “Decker Collateral LC
(for Travelers)” and “Decker Reclamation Trust (US Bank National Association)”;
in each case not released and then still outstanding as of the beginning of
each month (such amount, at any time of determination, being the “RTEA Exposure Amount”).  In the event that the Trigger Date occurs,
the RTEA Fee on the RTEA Exposure Amount then in effect on the Trigger
Date   shall begin to accrue at such
time.  The RTEA Fee shall be due and
payable to RTEA monthly and calculated on the average outstanding RTEA Exposure
Amount during such month.  CPE LLC shall
pay the RTEA Fee then due and owing on the fifth (5th) Business Day after the end of each month. RTEA and
CPE LLC hereby agree that for the avoidance of doubt the initial RTEA Exposure
Amount as of the IPO Closing Date shall equal $ 230,179,794.  Notwithstanding the foregoing, if the Good
Faith Surety Bond Condition occurs, no RTEA Fee shall be due and payable on the
RTEA Exposure Amount then in effect.


 


(4)       In the event that the Good Faith Surety Bond Condition is
satisfied but some or all of the Replacement Surety Arrangements are Rejected
Replacement Surety Arrangements, then if all the Existing Surety Arrangements
are not replaced with Replacement Surety Bonds and RTEA and members of
the Rio Tinto Group are not fully released from all obligations and  Liabilities under such Existing Surety
Arrangements within 180 days following the IPO Closing Date (the “Good Faith Trigger Date”), a
monthly fee shall be payable to RTEA in an amount equal to 4% per annum (the “Rejected RTEA Fee”) of (x) 39.77%
of the total face amount of all Rejected Replacement Surety Arrangements (other
than the Existing Surety Arrangements identified on Schedule 2.2 as
“Decker Collateral LC (for Travelers)” and “Decker Reclamation Trust (US Bank
National Association)”) and (y) 100% of the total face amount of all
Rejected Surety Arrangements identified on Schedule 2.2 as “Decker
Collateral LC (for Travelers)” and “Decker Reclamation Trust (US Bank National
Association)”; in each case not released and then still outstanding as of the
beginning of each month (such amount, at any time of determination, being the “Rejected RTEA Exposure Amount”).
The Rejected RTEA Fee on the Rejected RTEA Exposure Amount then in effect on
the Good Faith Trigger Date shall begin to accrue at such time.  The Rejected RTEA Fee shall be due and
payable to RTEA monthly and calculated on the average outstanding Rejected RTEA
Exposure Amount during such month. CPE LLC shall pay the Rejected RTEA Fee then
due and owing on the fifth (5th) Business Day after the end of each month.


 


(5)           (i)  In addition to the RTEA Fees payable pursuant to
Section 2.2(b)(3) and the Rejected RTEA Fee payable pursuant
to Section 2.2(b)(4) above, if the Trigger Date occurs, CPE
LLC shall promptly (but in any event within five (5) Business Days of the 


 


20





















 


Trigger
Date) arrange for the issuance of a letter of credit (the “RTEA L/C”)
for the benefit of RTEA (for its benefit and the benefit of the members of the
Rio Tinto Group) in an amount equal to the RTEA Exposure Amount (calculated as
of the date of issuance of the RTEA L/C less the amount of cash then
credited to the Escrow Account (the “RTEA L/C Amount”);
provided, however that if the Good Faith Surety Bond Condition
occurs, CPE LLC shall be required to arrange for the issuance of the RTEA L/C
within five (5) Business Days of the occurrence of the Good Faith Trigger
Date.  Drawings shall be made under the
RTEA L/C solely upon the submission by RTEA of a drawing certificate to the
issuing bank (the “Issuing Bank”)
that issued the RTEA L/C (and without any other term, condition or instruction
from CPE LLC).  The RTEA L/C and any
replacement letter of credit therefor shall remain in place for the benefit of
RTEA (for its benefit and the benefit of the members of the Rio Tinto Group)
for so long as any Existing Surety Arrangements remain outstanding and RTEA or
any member of the Rio Tinto Group has any obligation or Liability thereunder.  In the event that any Existing Surety
Arrangement Obligations become due and owing, RTEA shall be entitled to submit
a drawing certificate to the Issuing Bank (and without any other term,
condition or instruction from CPE LLC) to draw funds under the RTEA L/C (a “Drawing Request”) for its own
benefit and/or the benefit of the relevant Rio Tinto Group member in amounts
necessary to satisfy the Existing Surety Arrangement Obligations that are then
due and owing.  Notwithstanding anything
in this Section 2.2 to the contrary, RTEA shall be entitled to
elect in its sole discretion whether to make a Release Notice pursuant to
clause (2) above or a Drawing Request pursuant to this clause (5) in
respect of satisfying any Existing Surety Arrangement Obligation.


 


(ii)       In the event that on
any date after the issuance of the RTEA L/C, (x) RTEA and/or any member of
the Rio Tinto Group, as applicable, are fully released from all Liability and
obligations under an Existing Surety Arrangement and (y) CPE LLC has
arranged for a Replacement Surety Arrangement to be issued with respect to such
Existing Surety Arrangement, CPE LLC shall submit a reasonably detailed written
notice (each an “RTEA L/C Reduction Notice”)
to RTEA setting forth: (w) the face amount of the Existing Surety Arrangement
that RTEA and/or any member of the Rio Tinto Group is being released from, (x) the
amount equal to 39.77% (but 100% in the case of Existing Surety Arrangements
identified on Schedule 2.2 as “Decker Collateral LC (for Travelers)” and
“Decker Reclamation Trust (US Bank National Association)”) of the face amount
of such Existing Surety Arrangement (the “L/C Reduction Amount”),
(y) attaching reasonably satisfactory evidence to RTEA that RTEA or the
applicable member of the Rio Tinto Group has been fully released from all
obligations and Liabilities with respect to the Existing Surety Arrangement
being so replaced and (z) a representation and warranty that CPE LLC has
satisfied all of the relevant collateral requirements for each surety bond
provider, letter of credit issuer or other existing surety arrangement provider
that is as of such date providing a Replacement Surety Arrangement and has
otherwise complied with the requirements of this Section 2.2.  Upon satisfaction of the conditions in the
immediately foregoing sentence, RTEA shall promptly (but in any event within
five (5) Business Days of the date of receipt of such RTEA L/C Reduction
Notice) submit a written notice to the Issuing Bank requesting that the amounts
available to be drawn under the RTEA L/C be reduced by an amount equal to the
L/C Reduction Amount referenced in such RTEA L/C Reduction Notice.


 


21





















 


(c)       CPE LLC and any other member of the Cloud Peak Group shall
indemnify and hold harmless RTEA or any other member of the Rio Tinto Group and
each RTEA Indemnified Person with respect to any and all Liabilities arising
out of or relating to any such Existing Surety Arrangements as set forth in Section 6.1(b)(iii).


 


2.3.          Continuance of Insurance.  Notwithstanding Section 2.1(a),
the existing insurance policies of CPE LLC under the Rio Tinto Group’s captive
insurance carrier set forth on Schedule 2.3 (the “Three
Crowns Policies”) shall not terminate, but will continue
following the Closing Date until the applicable expiration date for such policy
as set forth on Schedule 2.3, unless earlier terminated by the
applicable member(s) of the Rio Tinto Group upon at least sixty (60) days
prior written notice to CPE LLC.  Upon
the expiration of the applicable policies (or the termination, if earlier
terminated by the Rio Tinto Group), such policy shall be deemed to be cancelled
and CPE LLC for itself and any other members of the Cloud Peak Group hereby
waive any and all right to make a claim from and after such expiration date (or
termination date, if applicable) (irrespective of whether the circumstances
giving rise to such claim occurred prior to the expiration date (or termination
date, if applicable)).  CPE LLC hereby agrees
to pay any applicable deductibles or other payments following the Closing Date
with respect to the Three Crowns Policies. 
For the avoidance of doubt, the insurance policies of CPE under the Rio
Tinto Group’s captive insurance carrier shall terminate effective as of the
Closing Date pursuant to Section 2.1(a).


 


2.4.          Jacobs Ranch Matters.


 


(a)   Exhibit A hereto sets forth the rights, obligations
and Liabilities of RTEA that have been assigned to RTEA by CPE LLC with respect
to the Jacobs Ranch Membership Interest Purchase Agreement.  The Parties hereto agree to comply, and agree
to cause the respective members of their Group to comply, with the terms of Exhibit A.


 


(b)   Without limiting the provisions of Section 8.1 of this
Agreement, the Cloud Peak Parties agree to, and will cause the members of the
Cloud Peak Group to, fully and promptly cooperate with the Rio Tinto Parties,
and any member of the Rio Tinto Group, with respect to the matters contemplated
in Exhibit A, including any obligations of RTEA set forth therein.
The Cloud Peak Parties further agree to execute and deliver, and will cause the
members of the Cloud Peak Group to execute and deliver, such documents and
instruments, assist in obtaining any necessary approvals and take such other
action as may be necessary or advisable, including actions that are not
expressly provided for, in furtherance of the Jacobs Ranch Membership Interest
Purchase Agreement, Exhibit A and the rights, obligations and
agreements contemplated therein.  In
addition, the Cloud Peak Parties agree to, (i) upon the reasonable request
of any member of the Rio Tinto Group, provide any member of the Rio Tinto Group
access to all relevant accounting, land management and other records and
compilations of data related to the Jacobs Ranch mine and (ii) for a
period of two years following the date hereof, provide to the Rio Tinto Group
copies of any documents or Information related to the Jacobs Ranch Mine which
are subject to attorney-client privilege or attorney work product in such a
manner as directed by the Rio Tinto Parties to protect the attorney-client
privilege.


 


22





















 


2.5.          Representations and Warranties of CPE.  CPE
and CPE LLC (including the Subsidiaries listed on Schedule A
hereto) hereby represent and warrant, on a joint and several basis, to RTEA
that:


 


(a)   on its date, at the time of filing of the Final Prospectus
pursuant to Rule 424(b) or (if no such filing is required) at the
Effective Date of the Additional Registration Statement in which the Final
Prospectus is included, and on each Offering Closing Date, the Final Prospectus
will not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading;


 


(b)   on its date and on the Debt Offering Closing Date, the Final
Offering Memorandum will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;


 


(c)   as of the Applicable Time, neither (i) the General Use Issuer
Free Writing Prospectus(es) issued at or prior to the Applicable Time and the
preliminary prospectus, dated November 9, 2009 (which is the most recent
Statutory Prospectus distributed to investors generally) and the other
information, if any, stated in Schedule C to the Underwriting Agreement,
all considered together (collectively, the “Equity
General Disclosure Package”), nor (ii) any individual
Limited Use Issuer Free Writing Prospectus, when considered together with the
Equity General Disclosure Package, included any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;


 


(d)   as of the Debt Applicable Time, neither (i) the Debt General
Disclosure Package, nor any individual Supplemental Marketing Material (as such
term is defined in the Purchase Agreement), when considered together with the
Debt General Disclosure Package, will include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made
not misleading;


 


(e)   the information required to be delivered to prospective purchasers
of the Cloud Peak Notes in accordance with Rule 144A(d)(4) does not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and


 


(f)    the representations and warranties contained in the Underwriting
Agreement and the Purchase Agreement, as of the date thereof and as of the
Offering Closing Date, are and will be true and correct.


 


23

















 


Notwithstanding
the foregoing, the preceding clauses (a) through (e) of this Section 2.5
do not apply to statements in or omissions from any such document that relate
exclusively to Rio Tinto and as set forth on Schedule 2.5.


 


2.6.          DISCLAIMER OF REPRESENTATIONS AND WARRANTIES.  EACH OF CPE AND CPE LLC (ON BEHALF OF
THEMSELVES AND EACH MEMBER OF THE CLOUD PEAK GROUP) AND RTEA AND KMS (ON BEHALF
OF THEMSELVES AND EACH MEMBER OF THE RTEA GROUP) UNDERSTANDS AND AGREES THAT,
EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY TRANSACTION DOCUMENT, NO PARTY
TO THIS AGREEMENT, ANY TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT OR DOCUMENT
CONTEMPLATED BY THIS AGREEMENT, ANY TRANSACTION DOCUMENT OR OTHERWISE, IS
REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR
LIABILITIES ACQUIRED AS CONTEMPLATED HEREBY OR THEREBY AND EXPRESSLY DISCLAIMS
ANY WARRANTY OF MERCHANTABILITY FOR FITNESS FOR ANY PARTICULAR PURPOSE.  EXCEPT AS MAY EXPRESSLY BE SET FORTH
HEREIN OR IN ANY TRANSACTION DOCUMENT, ALL SUCH ASSETS ARE BEING ACQUIRED ON AN
“AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A
QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE ACQUIRORS
SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL
PROVE TO BE INSUFFICIENT TO VEST IN THE ACQUIROR GOOD TITLE, FREE AND CLEAR OF
ANY SECURITY INTEREST OR OTHER ENCUMBRANCE AND (II) ANY NECESSARY CONSENTS
OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR
JUDGMENTS ARE NOT COMPLIED WITH.


 


2.7.          Delivery of Cloud Peak Reliance Letter.  On each Offering Closing Date, the officers
of CPE shall deliver a reliance letter providing that the Rio Tinto Parties may
rely on any and all closing certificates delivered to the Underwriters and/or
the Initial Purchasers, as applicable, to the same extent as if directly
addressed to the Rio Tinto Parties.


 


ARTICLE III

INTERCOMPANY TRANSACTIONS AS OF THE CLOSING DATE


 


3.1.          Time and Place of Closing.   Subject to the terms and conditions of this
Agreement, all transactions contemplated by this Agreement shall be consummated
at a closing (the “Closing”) to be held at the offices of Fried, Frank,
Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York
10004, on the date on which (and immediately after) the Underwriting Agreement
is executed and delivered by each of the parties thereto or at such other place
or at such other time or on such other date as RTEA, KMS, CPE and CPE LLC may
mutually agree upon in writing (the day on which the Closing takes place being
the “Closing
Date”).


 


24

















 


3.2.          Closing Transactions.  In each case subject to Section 3.7
after the execution and delivery of the Underwriting Agreement by all parties
thereto, at the Closing (except with respect to the Escrow Agreement which
shall be entered into on the IPO Closing Date) the appropriate Parties hereto
shall enter into, and (as necessary) shall cause their respective Subsidiaries
and/or Affiliates to enter into, the agreements set forth below (collectively, the “Transaction
Documents”):


 


(i)            this
Agreement;


 


(ii)           the
Acquisition Agreement;


 


(iii)          the
Agency Agreement;


 


(iv)          the Cloud Peak
Promissory Note;


 


(v)           the
Employee Matters Agreement;


 


(vi)          the
Escrow Agreement;


 


(vii)         the
LLC Agreement;


 


(viii)        the
Management Services Agreement;


 


(ix)           the
Registration Rights Agreement;


 


(x)            the
RTEA Coal Supply Agreement;


 


(xi)           the
Software License Agreement;


 


(xii)          the
Tax Receivable Agreement;


 


(xiii)         the
Trademark Assignment Agreement;


 


(xiv)        the
Trademark Licence Agreement; and


 


(xv)         the
Transition Services Agreement.


 


3.3.          Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws. 
At or prior to the Closing, RTEA and CPE shall each take all necessary
actions that may be required to provide for the adoption by CPE of the Amended
and Restated Certificate of Incorporation of CPE in the form attached hereto as
Exhibit D (the “Charter”), and the Amended and Restated Bylaws of CPE in
the form attached hereto as Exhibit E (the “Bylaws”).


 


3.4.          Transfers of Assets and Assumption of Liabilities.  On the Closing Date (i) the Rio Tinto
Parties shall execute and deliver such stock certificates and related, stock
powers, and 


 


25

















 


any
other instruments of transfer, conveyance and assignment as and to the extent
necessary to evidence the Structuring Transactions and (ii) CPE LLC shall
execute and deliver such assumptions of contracts and other instruments of
assumption as and to the extent necessary to evidence the valid and effective
assumption of the Cloud Peak Liabilities by CPE LLC.  All of the foregoing documents contemplated
by this Section 3.4 shall be referred to collectively herein as the
“Transfer
Documents.”


 


3.5.          The Initial Public Offering, the Concurrent Offering
and the Cloud Peak Financing. 
The Cloud Peak Parties shall consult with, and cooperate in all respects
with, RTEA and its Affiliates in connection with the Transactions and, at the
request of RTEA, promptly take any and all actions necessary or desirable in
connection with the Initial Public Offering, the Concurrent Offering and the
Cloud Peak Financing as contemplated by the IPO Registration Statement, the
Debt Offering Memorandum, the Underwriting Agreement, the Purchase Agreement
and the Financing Documents.


 


3.6.          Cancellation of RTA Share of CPE Common Stock.  Immediately after the Offering Closing
Date for the Initial Public Offering, CPE shall cause the outstanding share of
Common Stock of CPE held by RTA to be cancelled.


 


3.7.          Rescission.  Notwithstanding anything to the contrary set
forth in this Agreement, if delivery of the Firm Public Offering Shares to the
Underwriters against payment therefor is not complete by 5:00 p.m.on November 25,
2009 or as otherwise agreed upon by the Parties, all transactions theretofore
completed under this Agreement or any of the Transaction Documents shall
immediately be rescinded in all respects and shall be null and void and this
Agreement and all of the Transaction Documents shall terminate.  In such event, the Parties agree to take all
action required to reverse, cancel or otherwise undo the effect of the Structuring
Transactions and any other Transaction occurring prior to, on or after the
Closing Date, to effect the rescission of the Transaction Documents and to
execute and deliver any consents necessary to amend or restate CPE’s Charter or
Bylaws and to execute and deliver such other consents, instruments or other
documents as are reasonably required in connection therewith.


 


3.8.          Tax Matters.


 


(a)   RTEA and CPE have entered into the Tax Receivable Agreement
contemporaneously with the execution of the Underwriting Agreement.  To the extent that any representations,
warranties, covenants and agreements between the Parties with respect to Tax
matters are set forth in the Tax Receivable Agreement and the tax sharing
agreements and arrangements specifically identified therein, such Tax matters
shall be governed exclusively by the Tax Receivable Agreement and not by this
Agreement.


 


3.9.          Working Capital Adjustment


 


(a)   Initial Cash Position. The Parties hereby agree that on the
closing date for the Initial Public Offering (the “IPO
Closing Date”), $181 million of unrestricted proceeds from the
Transactions will be retained by CPE LLC (the “Initial
Unrestricted Cash Position”).


 


26





















 


(b)   Initial Cash Adjustments.


 


(i)            The
Parties hereby acknowledge that the Cloud Peak Parties have delivered to the
Rio Tinto Parties a good faith estimate of CPE LLC’s expected working capital
balance as of the Closing Date (the “Estimated Closing Date
Working Capital”).  The
Estimated Closing Date Working Capital is attached as Exhibit F and
includes those categories of current assets and current liabilities and line
items as agreed to by the Parties.  The
Cloud Peak Parties have delivered to the Rio Tinto Parties supporting
documentation and data for the Estimated Closing Date Working Capital.


 


(ii)           Exhibit F
to this Agreement sets forth a sample formula and the mechanics and methodology
against which any adjustment will be made to the Initial Unrestricted Cash
Position.  As promptly as possible and in
any event no later than fifteen (15) Business Days following the IPO Closing
Date, the Cloud Peak Parties will provide to the Rio Tinto Parties:


 


(A)          the
closing date balance sheet which shall be prepared for purposes of showing the
actual working capital (calculated in accordance with Exhibit F) as
of the Closing Date (the “Closing Date Balance Sheet”);
and


 


(B)           a
written statement setting forth its detailed determination of the net working
capital as of the Closing Date (the “Preliminary Closing Date
Working Capital”), and of the adjustments to the Net Working
Capital based on changes to the Net Working Capital between the Estimated
Closing Date Working Capital and the Preliminary Closing Date Working Capital
derived from the Closing Date Balance Sheet, in each case calculated based on
the sample formula and general methodology set forth on Exhibit F
(the “Preliminary Working Capital Adjustment”).


 


(iii)          From
the Closing Date until the determination of the Working Capital Adjustment (as
defined below), the Rio Tinto Group, including its Representatives, and the Rio
Tinto Auditors, shall have reasonable access, during normal business hours and
upon no less than one (1) day advance notice, to the Cloud Peak Parties
and their books, records and employees who are responsible for financial
matters, in order to assist in evaluating the Closing Date Balance Sheet and/or
the Preliminary Working Capital Adjustment. 
The Cloud Peak Parties shall provide, and shall cause the Cloud Peak
Auditors to provide, any assistance reasonably requested by the Rio Tinto Group
in connection with the foregoing. 
Notwithstanding the above, the Cloud Peak Parties may limit access to
the extent it reasonably deems necessary to avoid unreasonable disruption of
the business or to comply with Law.


 


(iv)          If
the Rio Tinto Parties disagree with the Closing Date Balance Sheet and/or the
Preliminary Working Capital Adjustment, they shall, within fifteen (15)
calendar days after the receipt of the Closing Date Balance Sheet and the
Preliminary Working Capital Adjustment, deliver a Notice to the Cloud Peak
Parties (the “Disagreement Notice”), setting
forth their calculation of the Closing Date Working Capital and the Preliminary
Working Capital Adjustment, and specifying, in reasonable detail, those items
or amounts in the Closing 


 


27





















 


Date
Balance Sheet and/or the Preliminary Working Capital Adjustment as to which the
Rio Tinto Parties disagree and the reasons for such disagreement. The Rio Tinto
Parties shall be deemed to have agreed with all items and amounts contained in
the Closing Date Balance Sheet and the Preliminary Working Capital Adjustment
other than those specified in a timely Disagreement Notice. If the Rio Tinto
Parties do not deliver a Disagreement Notice to the Cloud Peak Parties within
such 15-day period, the Rio Tinto Parties shall be deemed to have accepted the
Closing Date Balance Sheet and the Preliminary Working Capital Adjustment,
whereupon the Preliminary Closing Date Working Capital shall become the “Closing Date Working Capital”.


 


(v)           If
the Rio Tinto Parties timely deliver a Disagreement Notice to the Cloud Peak
Parties, the Parties shall use their good faith efforts to reach agreement on
the disputed items or amounts in order to determine the Closing Date Working
Capital, which in no event shall be more favorable to the Cloud Peak Parties
than reflected in the Preliminary Working Capital Adjustment, nor more
favorable to the Rio Tinto Parties than shown in the calculations delivered by
the Rio Tinto Parties pursuant to the Disagreement Notice. If the Parties do
not resolve all disputed items or amounts within seven (7) Business Days
after delivery of the Disagreement Notice, this Agreement and the disputed
items and amounts will be submitted to a nationally recognized public
accounting firm in the United States mutually agreeable to the Rio Tinto
Parties and the Cloud Peak Parties (the “Independent Accountants”),
for determination of the appropriate Final Adjustment pursuant to this Section 3.9.  The fees and expenses of the Independent
Accountants shall be borne equally by the Rio Tinto Parties and the Cloud Peak
Parties. The written report of the Independent Accountants (the “Report”) shall be delivered to the
Rio Tinto Parties and the Cloud Peak Parties promptly, but in no event later
than fifteen (15) days after such disputed items are submitted to the
Independent Accountants, and shall be final, conclusive, and binding upon the
Parties.


 


(vi)          Notwithstanding
Section 9.10 of this Agreement, in the absence of fraud, the
foregoing procedures for resolution of disputes concerning calculation of the
Closing Date Balance Sheet and the Preliminary Working Capital Adjustment set
forth in this Section 3.9 shall be final and the exclusive means of
calculating and resolving the same.  No
Party shall challenge or be entitled to bring any Claim pertaining to such
calculation or resolution; provided, that if a Party fails to make the
payment required within the time period set forth in Section 3.9(vii),
such procedures shall not preclude the Party to whom such payment is owed from
bringing any necessary action to collect such amount.


 


(vii)         The
“Working Capital Adjustment” shall
equal the following: (A) if the Closing Date Working Capital exceeds the
Estimated Closing Date Working Capital, the positive amount by which Closing
Date Working Capital exceeds the Estimated Closing Date Working Capital; or (B) if
the Estimated Closing Working Capital exceeds the Closing Date Working Capital,
the positive amount by which Estimated Closing Working Capital exceeds the
Closing Date Working Capital.  If the
Working Capital Adjustment, as so calculated, is a positive number pursuant to
clause (A), then CPE LLC shall pay to RTEA on a dollar-for-dollar basis the
amount of the Working Capital Adjustment, and if the Working Capital
Adjustment, as so calculated, is a positive number pursuant to clause (B), then
RTEA shall pay to CPE LLC on a 


 


28





















 


dollar-for-dollar
basis the amount of the Working Capital Adjustment.  Notwithstanding anything contained in this Section 3.9(vii) to
the contrary, no amounts shall be payable to RTEA or CPE LLC in respect of the
Working Capital Adjustment pursuant to this Section 3.9(vii) unless
the Working Capital Adjustment exceeds $500,000, in which case the entire
amount of such Working Capital Adjustment shall be payable.  Within five (5) Business Days after the
final determination of the Working Capital Adjustment, RTEA shall pay CPE LLC
or CPE LLC shall pay RTEA, as the case may be, a sum of money equal to the
Working Capital Adjustment. Any amount payable pursuant to this
Section 3.9(vii) will be made in immediately available federal funds,
by wire transfer to an account or accounts designated by the Party receiving
such payment.


 


ARTICLE IV

DISCLOSURE OF INFORMATION


 


4.1.          Restrictions on
Disclosure of Information. 
From and after the Closing Date:


 


(a)   Generally.  Without
limiting any rights or obligations under any other existing agreement between
the Parties and/or any other members of their respective Group relating to
confidentiality, for a period of three (3) years following the date of
receipt of any confidential and/or proprietary Information, each Party shall,
and each Party shall cause its respective Group members and its Representatives
to, hold in confidence, in accordance with no less than the standards of
confidentiality that it uses with respect to its own confidential Information,
and in no event less than a reasonable standard of care, all confidential and
proprietary Information concerning the other Group that is either in its
possession as of the Closing Date or furnished by the other Group or its
respective Representatives at any time pursuant to this Agreement or any other
Transaction Document or the transactions contemplated hereby or thereby.  Notwithstanding the foregoing, each Party,
its respective Group members and each of their respective Representatives may
disclose such Information to or by the extent that such Person can demonstrate
that such Information is or was (i) generally available to the public
other than by the breach of this Agreement or by breach of any other agreement
between or among the Parties and/or any of their respective Group members
relating to confidentiality, or (ii) lawfully acquired from a third Person
on a non-confidential basis or independently developed by, or on behalf of,
such Person by Persons who do not have access to, or descriptions of, any such
Information.  Notwithstanding the
foregoing, each Party, its respective Group members and each of their
respective Representatives may disclose such Information to the extent that
such Person reasonably believes it is legally compelled to disclose such
Information to or by any tribunal, agency, Governmental Authority or self
regulatory organization, including, but not limited to, the New York Stock
Exchange, or else stand liable for contempt or suffer other censure or
financial penalty or is otherwise required by Law to disclose such Information.  Each Party shall maintain, and shall cause
its respective Group members and Representatives to maintain, policies and
procedures, and develop such further policies and procedures as shall from time
to time become necessary or appropriate, to ensure compliance with this Section 4.1.  Nothing contained in this Section 4.1
shall be deemed to limit the disclosure by a Party of its own confidential
Information.


 


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(b)   Disclosure of Third Person Information.  Each Party acknowledges that it and other
members of its Group may have in its or their possession confidential or
proprietary Information of third Persons that was received under a
confidentiality or non-disclosure agreement between a member of the other Group
and such third Person prior to the Closing Date.  Each Party shall (and shall cause its
respective Group members and Representatives to) hold in strict confidence the
confidential and proprietary Information of third Persons to which any member
of its Group has access, in accordance with the terms of any agreements entered
into prior to the Closing Date between members of the other Group and such
third Persons.


 


(c)   Disclosure of Confidential Information within a Group. Once
confidential Information has been disclosed to a Group, the members of such
Group may disclose it to their individual employees subject to the obligations
of confidentiality set forth in this Section 4.1.  Such Group members may also disclose such
confidential Information to its Representatives. Such Group members shall
advise each recipient of the confidential nature of such confidential
Information, and shall instruct each such recipient to comply with the
confidentiality obligations contained herein; and the Party responsible for
such Group member shall be responsible for the failure of any such recipient to
do so.  Upon a Party’s request, the Party
receiving confidential Information shall require its recipients of such
Information to sign an agreement of confidentiality and nondisclosure
satisfactory to the requesting Party. 
The obligations of the receiving Party with respect to such recipient
apply regardless of whether such recipient is an employee of such Party.


 


(d)   Use of Material, Non-Public Information.  Each Party acknowledges that it is aware that
the Information may constitute material, non-public information of another
Party.  Each Party acknowledges and
agrees to advise its Representatives, the members of its Group and their
respective Representatives who are provided the Information pursuant to Section 4.1(c) to
keep the Information confidential (and that the United States securities laws
may prohibit any person who has material, non-public information about a
company from purchasing or selling securities of such company or from
communicating such Information while the Information is material to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities).


 


4.2.          Legally Required Disclosure of Information.
If any Party or any of its respective Group members or Representatives believes
it is legally required to disclose any Information (the “Disclosing Party”)
that it is otherwise obligated to hold in confidence pursuant to Section 4.1
(including as reasonably determined by the Disclosing Party under applicable
securities or tax laws and regulations or applicable rules and regulations
of the New York Stock Exchange or any other stock exchange on which the
securities of Cloud Peak are then traded), such Party shall promptly notify the
Person that owns or has a duty not to disclose the Information (the “Owning Party”),
provide the Owning Party with the text of the proposed disclosure as far in
advance of its disclosure as is reasonably practicable and use all reasonable
best efforts to cooperate with and otherwise support the Owning Party so that
the Owning Party may seek a protective order or other appropriate protective
remedy and/or waive compliance with this Section 4.2.  All expenses reasonably incurred by the
Disclosing Party in seeking a protective order or other remedy shall be borne
by the Owning Party.  If such protective
order or 


 


30

















 


other
remedy is not obtained, or if the Owning Party waives compliance with this Section 4.2,
the Disclosing Party shall (a) disclose only that portion of the
Information that the Disclosing Party’s legal counsel advises it is compelled
to disclose, (b) consult with the Owning Party in advance as to the
proposed form, nature and purpose of the disclosure, (c) use reasonable
best efforts to obtain reliable assurance requested by the Owning Party that
confidential treatment shall be accorded such Information, and (d) promptly
provide the Owning Party with a copy of the Information so disclosed, in the
same form and format so disclosed, together with a list of all Persons to whom
such Information was disclosed.  In no
event will the Disclosing Party oppose action by the Owning Party to obtain a
protective order or other relief to prevent the disclosure of any Information
or to obtain reliable assurance that confidential treatment will be afforded
the Information.


 


ARTICLE V

MUTUAL RELEASES


 


5.1.          Release of Liability.


 


(a)   Subject to Article VI and except as provided in this Article V,
effective as of the Closing Date, CPE and CPE LLC do hereby, for themselves,
and will cause each of their respective Subsidiaries to, and their respective
successors and assigns to, relinquish, release and forever discharge:  (1) RTEA, KMS and the other members of
the Rio Tinto Group and each of their respective Subsidiaries and successors
and assigns and (2) all Persons who at any time prior to the Closing Date
are or have been shareholders, directors, officers, agents, representatives,
counsel or employees of any member of the Rio Tinto Group (in each case, in
their respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, in each such case from all Liabilities
to CPE, CPE LLC and their respective Affiliates arising out of or relating to
the Cloud Peak Business, whether arising prior to, on or after the Closing Date
and whether arising under any contract or agreement, by operation of Law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Closing Date, including in
connection with the Transactions and all other activities to implement the
Structuring Transactions, the Initial Public Offering and any of the other
transactions contemplated hereunder and under the Transactions Documents,
except to the extent such Liabilities arise from the fraud, gross negligence or
willful misconduct of any Person listed on Schedule 5.1(a) hereto; provided,
however, that nothing in this Section 5.1(a) shall
relieve the Persons released in this Section 5.1(a) from:  (x) any Liability expressly allocated to
RTEA, KMS or any Subsidiary of RTEA or KMS under this Agreement (including any
RTEA Liability and/or the indemnification obligations in Section 6.3),
or any document entered into in connection with or related to the Transactions;
(y) any amounts owed or other Liabilities arising under Section 2.1(c);
or (z) any Liability the release of which would result in the release of
any Person other than the Persons released in this Section 5.1(a);


 


(b)   Subject to Article VI and except as provided in Article V,
effective as of the Closing Date, RTEA and KMS do hereby, for themselves, and
will cause each of their respective Subsidiaries to, and their respective
successors and assigns to, relinquish, release and forever 


 


31





















 


discharge:
(1) CPE, CPE LLC and each of their respective Subsidiaries, successors and
assigns and (2) all Persons who at any time prior to the Closing Date are
or have been shareholders, directors, officers, agents, representatives,
counsel or employees of any member of the Cloud Peak Group or any Subsidiary of
Cloud Peak (in each case, in their respective capacities as such), and their
respective heirs, executors, administrators, successors and assigns, in each
such case from all Liabilities to RTEA, KMS and their respective Affiliates
whether arising prior to, on or after the Closing Date and whether arising
under any contract or agreement, by operation of Law or otherwise, existing or
arising from any acts or events occurring or failing to occur or alleged to
have occurred or to have failed to occur or any conditions existing or alleged
to have existed on or before the Closing Date, including in connection with the
Transactions and all other activities to implement the Structuring
Transactions, the Initial Public Offering and any of the other transactions
contemplated hereunder and under the Transaction Documents, except to the
extent such Liabilities arise from the fraud, gross negligence or willful
misconduct of any Person listed on Schedule 5.1(b) hereto; provided,
however, that nothing in this Section 5.1(b) shall
relieve the Persons released in this Section 5.1(b) from:  (x) any Liability expressly allocated to
any member of the Cloud Peak Group under this Agreement (including any Cloud
Peak Liability and/or the indemnification obligations in Section 6.1),
or any document entered into in connection with or related to the Transactions;
(y) any amounts owed or other Liabilities arising under Section 2.1(c);
or (z) any Liability the release of which would result in the release of
any Person other than the Persons released in this Section 5.1(b).


 


(c)   Nothing contained in Section 5.1(a) or Section 5.1(b) shall
impair any right of any Person to enforce or release any Person from any
Liability related to, this Agreement, any Transaction Document or any
agreements, arrangements, commitments or understandings that are specified in Section 2.1(b) or
the applicable Schedules thereto not to terminate as of the Closing Date, in
each case in accordance with its terms. 
Nothing contained in Section 5.1(a) or Section 5.1(b) shall
release any Person from any Liability for the sale, lease, construction or
receipt of goods, property or services purchased, obtained or used in the
ordinary course of business by a member of one Group from a member of the other
Group prior to the Closing Date.


 


5.2.          RTEA Obligations Not Affected.  Nothing contained in this Article V
shall release RTEA or any Subsidiary of RTEA from honoring existing
obligations, if any:  (i) to
indemnify any director, officer or employee of RTEA or any of its Subsidiaries
who was a director, officer or  employee
of RTEA or any Subsidiary of RTEA prior to the Closing Date, to the extent such
director, officer or employee was entitled to such indemnification pursuant to
then-existing obligations or (ii) to provide any employment,
post-employment or retirement benefits to any officer or employee of CPE or CPE
LLC or any of their respective Subsidiaries as provided for under the Employee
Matters Agreement, including for those officers or employees who had retired
from RTEA or any Subsidiary of RTEA as of the Closing Date, to the extent such
officer or employee was entitled to such benefits pursuant to then-existing
obligations.


 


5.3.          No Cloud Peak Claims.  CPE and CPE LLC shall not make, and shall not
permit any of their respective Subsidiaries to make, any claim or demand, or
commence any Proceeding asserting any claim or demand, including any claim of
contribution or indemnification, against 


 


32

















 


RTEA,
KMS or any of their respective Subsidiaries or any other Person released
pursuant to Section 5.1(a), with respect to any Liabilities
released pursuant to Section 5.1(a).


 


5.4.          No RTEA Claims.  RTEA and KMS shall not make, and shall not
permit any of their respective Subsidiaries to make, any claim or demand, or
commence any Proceeding asserting any claim or demand, including any claim of
contribution or indemnification, against CPE, CPE LLC or any of their
respective Subsidiaries or any other Person released pursuant to Section 5.1(b),
with respect to any Liabilities released pursuant to Section 5.1(b).


 


5.5.          Subsidiary Releases and Other Actions.  At any time, at the request of any Party, the
other Parties shall cause its Subsidiaries to execute and deliver releases,
provide indemnification, or take such other actions as necessary or appropriate
to reflect the provisions hereof.


 


ARTICLE VI

INDEMNIFICATION


 


6.1.          Indemnification by Cloud Peak.  Subject to Section 6.6, CPE LLC
hereby agrees to provide the indemnities set forth in clauses (a) and (b) of
this Section 6.1 on behalf of CPE and CPE LLC.  CPE LLC further agrees to pay any
indemnification obligations of CPE LLC pursuant to the Transaction Documents
and as set forth in this Section 6.1.  To the extent that the provisions of any
other Transaction Document conflict with any provisions specifically covered by
this Section 6.1, the provisions of this Section 6.1
shall supersede the provisions set forth therein.


 


(a)   CPE LLC shall indemnify and hold harmless each RTEA Indemnified
Person from and against any and all Liabilities of the RTEA Indemnified Person
arising out of or relating to the following, whether such Liabilities arise or
accrue prior to, on or following the Closing Date (those items set forth under
clauses (i) through (vii) of this Section 6.1(a) collectively,
the “Cloud Peak General Indemnities”):


 


(i)            all
Cloud Peak Liabilities and Claims arising out of or relating to the Cloud Peak
Business conducted prior to the Closing Date, including with respect to any
pending or threatened litigation related to the Decker mine or as a result of
the failure of CPE, CPE LLC or any other member of the Cloud Peak Group or any
other Person to pay, perform or otherwise promptly discharge any such Cloud
Peak Liabilities in accordance with its respective terms, whether prior to, on
or after the Closing Date;


 


(ii)           all
Liabilities and Claims of the Cloud Peak Group set forth on Exhibit A
arising out of or relating to the Jacobs Ranch Membership Interest Purchase
Agreement, whether such Liabilities arise before, on or after the Closing Date;


 


(iii)          all
Liabilities of the Cloud Peak Group arising out of or relating to the Working
Capital Adjustment pursuant to Section 3.9;


 


33





















 


(iv)          all
Liabilities of the Rio Tinto Group resulting from any Claims related to the
Cloud Peak Business made after the Closing Date by Cloud Peak, any member of
the Cloud Peak Group or any other Person under any Terminated RTEA Policy,
except for any and all Liabilities arising out of a claim by any officer,
director or employee of CPE or CPE LLC under the Rio Tinto D&O Policy to
the extent the circumstances giving rise to such claim occur prior to the IPO
Closing Date;


 


(v)           all
Liabilities of the Rio Tinto Group resulting from any Claims related to the
Cloud Peak Business made after the applicable expiration date or termination
date, if earlier terminated, by Cloud Peak, any member of the Cloud Peak Group
or any other Person under any Three Crowns Policy;


 


(vi)          except
as otherwise provided in clause (b) of this Section 6.1, any
breach by any member of the Cloud Peak Group of this Agreement arising under or
relating to the Cloud Peak Business conducted prior to the Closing Date, the
Underwriting Agreement, the Purchase Agreement or any of the Transaction
Documents (other than those Transaction Documents set forth in clause (a)(iv) of
this Section 6.1) or the representations and warranties contained
herein (other than the representations and warranties related to any
Information provided under Article VII of this Agreement) or
therein; and


 


(vii)         any
breach by any member of the Cloud Peak Group of the Agency Agreement or the
RTEA Coal Supply Agreement, in each case, to the extent that such breach does
not result from the gross negligence or willful misconduct of any member of the
Cloud Peak Group.


 


(b)   CPE LLC shall indemnify and hold harmless each RTEA Indemnified
Person from and against any and all Liabilities of the RTEA Indemnified Person
arising out of or relating to the following, whether such Liabilities arise or
accrue prior to, on or following the Closing Date (those items set forth under
clauses (i) through (vii) of this Section 6.1(b) collectively,
the “Cloud Peak Special Indemnities”):


 


(i)            all
Cloud Peak Liabilities and Claims arising out of or relating to the Cloud Peak
Business conducted after the Closing Date, including with respect to any
litigation related to the operation of the Decker mine after the Closing Date
or as a result of the failure of CPE, CPE LLC or any other member of the Cloud
Peak Group or any other Person to pay, perform or otherwise promptly discharge
any such Cloud Peak Liabilities in accordance with its respective terms;


 


(ii)           all
Liabilities and Claims arising out of or relating to or resulting from the use
by any member of the Rio Tinto Group of any Information provided by CPE or CPE
LLC under Article VII of this Agreement or arising out of or
relating to any breach of the representations and warranties related to any
Information provided under Article VII of this Agreement;


 


34





















 


(iii)          all
Claims or demands of, or Liabilities with respect to, all or any of the
Existing Surety Arrangements, including the costs related thereto, in the event
that any or all obligations of RTEA or any member of the Rio Tinto Group with
respect to such Existing Surety Arrangements have not been released and/or
terminated in full or otherwise transferred to become the sole obligation of
Cloud Peak prior to the Closing Date;


 


(iv)          any
Liabilities, including Liabilities to any member of the Rio Tinto Group with
respect to any indemnification obligations, of any member of the Cloud Peak
Group arising under or relating to the LLC Agreement or the Registration Rights
Agreement or the representations and warranties contained therein;


 


(v)           any
breach by any member of the Cloud Peak Group of the Agency Agreement or the
RTEA Coal Supply Agreement, in each case, resulting from the gross negligence
or willful misconduct of any member of the Cloud Peak Group;


 


(vi)          any
breach by any member of the Cloud Peak Group of this Agreement (arising out of
or relating to the Cloud Peak Business conducted after to the Closing Date); and


 


(vii)         all
Liabilities for which CPE LLC has agreed to provide indemnification under Section 6.4(a)(i) and
Section 6.4(b)(i) of this Agreement.


 


CPE
LLC further agrees that with respect to any of the Cloud Peak Special
Indemnities pursuant to this Section 6.1(b), CPE LLC shall pay to
each RTEA Indemnified Person an aggregate amount equal to the sum of (i) the
total amount of the Liability payable to the RTEA Indemnified Person (or, in
the case of Section 6.4(a)(i), the Registration Indemnified
Parties) with respect to such Cloud Peak Special Indemnity (the “General Indemnity Amount”) plus (ii) an amount equal to (A) the General
Indemnity Amount multiplied by (B) a fraction equal to (1) the
aggregate number of common membership units in CPE LLC held by the Rio Tinto
Group divided by (2) the total number of common membership units in CPE
LLC then outstanding at the time such Cloud Peak Special Indemnity is payable
to the RTEA Indemnified Person.


 


6.2.          Guaranty.


 


(a) Each
of the Subsidiaries listed on Schedule A hereto (each a “Guarantor” and together, the “Guarantors”), hereby, jointly and
severally, fully and unconditionally guarantees to (i) each RTEA
Indemnified Person, due and punctual payment of all obligations of CPE LLC and
its successors and assigns to each RTEA Indemnified Person pursuant to Section 6.1
and Section 6.4, whether arising or accruing prior to, on or
following the Closing Date and (ii) each of the Rio Tinto Parties, due and
punctual payment of all reimbursements owed by the Cloud Peak Parties and their
successors and assigns pursuant to Section 7.6 and Section 7.7
(each such Guarantor’s obligations pursuant to subclauses (i) and (ii) above,
the “Guaranty”).


 


(b) Each
Guarantor agrees that the Guaranty is an absolute, unconditional, present and
continuing guarantee of payment, not of collection, and it being agreed by each
Guarantor 


 


35

















 


that its obligations under the Guaranty
shall not be discharged until the indefeasible payment in full of all of the
obligations pursuant to Section 6.1, Section 7.6 and Section 7.7
by CPE LLC or the Cloud Peak Parties, as applicable, or one or more of the
Guarantors. Each Guarantor expressly waives all rights it may have now or in
the future under any statute, or at common law, or at law or in equity, or
otherwise, to compel any RTEA Indemnified Person or any Rio Tinto Party to
proceed in respect of the obligations of CPE LLC or the Cloud Peak Parties
pursuant to Section 6.1, Section 7.6 and Section 7.7,
as applicable, against CPE LLC or the Cloud Peak Parties or any other party or
against any security for the payment and performance of the obligations of CPE
LLC pursuant to Section 6.1 or of the Cloud Peak Parties pursuant
to Section 7.6 or Section 7.7, as applicable, before
proceeding against, or as a condition to proceeding against, such Guarantor. In
no event shall a RTEA Indemnified Person or a Rio Tinto Party have any
obligation (provided that it is
entitled, at its option) to proceed against CPE LLC or the Cloud Peak Parties,
as applicable, before seeking satisfaction from Guarantor. The obligations of
each Guarantor under the Guaranty are independent of the obligations guaranteed
by each other Guarantor hereunder, and a separate action or actions may be brought
and prosecuted by an RTEA Indemnified Person or a Rio Tinto Party, as
applicable, subject to the terms and conditions set forth in this Agreement,
against any Guarantor to enforce the Guaranty, irrespective of whether any
action is brought against CPE LLC or the Cloud Peak Parties, as applicable, or
whether CPE LLC or the Cloud Peak Parties are joined in any such action or
actions.


 


(c) Each
Guarantor unconditionally waives, to the fullest extent permitted by Law, (i) notice
of any matters described in Section 6.1, Section 7.6
and Section 7.7, (ii) all notices which may be required by
statute, rule or Law to preserve intact any rights against such Guarantor,
including, without limitation, any demand, presentment and protest, proof of
notice of nonpayment and notice of default or any failure of CPE LLC and its
permitted successors and assigns and the Cloud Peak Parties and their permitted
successors and assigns to perform or comply with Section 6.1, Section 7.6
and Section 7.7, respectively, (iii) any requirement of
diligence or to exhaust any remedies or to mitigate damages resulting from CPE
LLC’s default under Section 6.1 or the Cloud Peak Parties’ default
under Section 7.6 or Section 7.7, and (iv) any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge, release or defense of a guarantor or surety or which might
otherwise limit recourse against such Guarantor. The provisions of this Section 6.2
are for the benefit of each RTEA Indemnified Person and the Rio Tinto Parties,
respectively, and nothing in this Section 6.2 shall impair (x) as
between CPE LLC and each of RTEA Indemnified Person, the obligations of CPE LLC
under Section 6.1 and (y) as between the Cloud Peak Parties
and each of the Rio Tinto Parties, the obligations of the Cloud Peak Parties
under Section 7.6 and Section 7.7.


 


(d) With
respect to each Guarantor’s obligations related to Section 6.1, the
Guaranty of each Guarantor shall remain in full force and effect and continue
to be effective (i) in the event CPE LLC or such Guarantor becomes
insolvent or makes an assignment for the benefit of creditors, (ii) in the
event a receiver or trustee is appointed for all or any significant part of CPE
LLC’s or such Guarantor’s assets; and shall continue to be effective or be
reinstated, as the case may be, if at any time payment pursuant to Section 6.1
is rescinded or reduced in 


 


36

















 


amount, or must otherwise be restored or
returned by an RTEA Indemnified Person, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or
performance had not been made.


 


(e) With
respect to each Guarantor’s obligations related to Section 7.6 or Section 7.7,
the Guaranty of each Guarantor shall remain in full force and effect and
continue to be effective (i) in the event any of the Cloud Peak Parties or
such Guarantor becomes insolvent or makes an assignment for the benefit of
creditors, (ii) in the event a receiver or trustee is appointed for all or
any significant part of any of the Cloud Peak Parties’ or such Guarantor’s
assets; and shall continue to be effective or be reinstated, as the case may
be, if at any time payment pursuant to Section 7.6 or Section 7.7
is rescinded or reduced in amount, or must otherwise be restored or returned by
a Rio Tinto Party, whether as a “voidable preference,” “fraudulent conveyance,”
or otherwise, all as though such payment or performance had not been made.


 


(f) In
the event that any payment pursuant to this Section 6.2, or any
part thereof, is rescinded, reduced, restored or returned, the obligations
pursuant to this Section 6.2 shall be reinstated and deemed reduced
only by such amount paid or performed and not so rescinded, reduced, restored
or returned.


 


(g) Each Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire against CPE
LLC, the Cloud Peak Parties or any other Guarantor that arise from the
existence, payment, performance or enforcement of its obligations under this Section 6.2
or Section 7.6 or Section 7.7, as applicable, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
of an RTEA Indemnified Person against CPE LLC or of a Rio Tinto Party against
the Cloud Peak Parties or any Guarantor or any collateral which any such RTEA
Indemnified Person or Rio Tinto Party, as applicable, hereafter acquires,
whether or not such claim, remedy or right arises in equity, or under contract,
statute or common law, including, without limitation, the right to take or
receive from CPE LLC, the Cloud Peak Parties or a Guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights.


 


6.3.          Indemnification by Rio Tinto.  Subject to Section 6.6, RTA shall
indemnify and hold harmless each Cloud Peak Indemnified Person from and against
any and all Liabilities of the Cloud Peak Indemnified Person arising out of or
relating to the following, whether such Liabilities arise or accrue prior to,
on or following the Closing Date:


 


(a)   all RTEA Liabilities, including the failure of RTEA, KMS or any
other member of the Rio Tinto Group or any other Person to pay, perform or
otherwise promptly discharge any RTEA Liabilities in accordance with its
respective terms, whether prior to, on or after the Closing Date;


 


37





















 


(b)   all Claims arising out of or relating to the Retained U.S. Coal
Business, including with respect to any pending or threatened litigation
related to the Colowyo mine;


 


(c)   any breach by any member of the Rio Tinto Group of this Agreement
or any of the Transaction Documents or the representations and warranties
contained herein or therein; and


 


(d)   all Liabilities of the Cloud Peak Group resulting from any actions
taken by any member of the Rio Tinto Group after the Closing Date on behalf of
any member of the Cloud Peak Group constituting gross negligence or willful
misconduct.


 


6.4.          Registration Statement
and Other Related Indemnification and/or Contribution.


 


(a)   IPO Registration Statement Indemnification.


 


(i)            CPE
LLC agrees to indemnify and hold harmless the RTEA Indemnified Persons, each of
their Affiliates and each of their officers, employees, agents, affiliates and
each person, if any, who controls any member of the Rio Tinto Group within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the “Registration Indemnified
Parties”), from and against any and all Liabilities, joint or
several, to which such Registration Indemnified Party may become subject, under
the Securities Act, the Exchange Act, other federal or state statutory law or
regulation or otherwise, insofar as such losses, claims, damages or Liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement or any material fact contained in any
part of the Registration Statement, any Statutory Prospectus, any General
Disclosure Package, Final Prospectus or Issuer Free Writing Prospectus, or the
Final Offering Memorandum or Supplemental Marketing Material or arise out of or
are based upon the omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such Liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information set forth in the IPO Registration Statement or the Debt
Offering Memorandum relating exclusively to Rio Tinto and as set forth on Schedule
6.4(a)(i).  Nothing in this Section 6.4(a)(i) shall
relieve RTEA from honoring its existing obligations set forth in Section 5.2.


 


(ii)           RTA
agrees to indemnify and hold harmless the Cloud Peak Indemnified Parties, each
of their Affiliates and each of their officers who sign any Registration
Statement, and any person who controls CPE within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from Cloud Peak to each Registration Indemnified
Party, but only with respect to the information set forth in the IPO
Registration Statement or the Debt Offering Memorandum relating exclusively to
Rio Tinto and as set forth on Schedule 6.4(a)(i).  For purposes of this Section 6.4(a)(ii),
the information relating to any underwriter that is contained in the
Registration Statement, Statutory 


 


38





















 


Prospectus,
Final Prospectus, any Issuer Free Writing Prospectus, the General Disclosure
Package or the Final Offering Memorandum or Supplemental Marketing Material as
set forth on Schedule 6.4(a)(ii) shall not be deemed to be
information relating to Rio Tinto.


 


(b)   Other Public Filings.


 


(i)            CPE LLC agrees to indemnify and hold
harmless each RTEA Indemnified Person from and against any and all Liabilities,
joint or several, to which any RTEA Indemnified Person may become subject
arising out of, based upon or relating to Information included in any Rio Tinto
Public Filing relating exclusively to CPE, CPE LLC or any other members of the
Cloud Peak Group furnished to any of the RTEA Indemnified Persons by any member
of the Cloud Peak Group pursuant to this Agreement, including such losses, claims,
damages or Liabilities (or actions in respect thereof) that arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in any Rio Tinto Public Filing or any other document filed with the
SEC or any other Governmental Authority by any member of the Rio Tinto Group
pursuant to applicable Law, including the Securities Act and the Exchange Act,
or arise out of or are based upon the omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, insofar as such Liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with Information relating exclusively to CPE,
CPE LLC or any other member of the Cloud Peak Group furnished to any of the
RTEA Indemnified Persons by any member of the Cloud Peak Group pursuant to this
Agreement.


 


(ii)           RTA
agrees to indemnify and hold harmless each Cloud Peak Indemnified Persons from
and against any and all Liabilities, joint or several, to which any Cloud Peak
Indemnified Person may become subject arising out of, based upon or relating to
Information included in any Cloud Peak Filing relating exclusively to RTEA, KMS
or any other member of the Rio Tinto Group furnished to any of the Cloud Peak
Indemnified Persons by any member of the Rio Tinto Group pursuant to this
Agreement, including such losses, claims, damages or Liabilities (or actions in
respect thereof) that arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Cloud Peak
Public Filing or any other document filed with the SEC or any other
Governmental Authority by any member of the Cloud Peak Group pursuant to
applicable Law, including the Securities Act and the Exchange Act, or arise out
of or are based upon the omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, insofar
as such Liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
which has been made therein or omitted therefrom in reliance upon and in
conformity with Information relating exclusively to RTEA, KMS or any other
member of the Rio Tinto Group furnished to any of the Cloud Peak Indemnified
Persons by any member of the Rio Tinto Group pursuant to this Agreement.


 


39




















 


(c)   Contribution.


 


(i)            If
the indemnification provided for in this Section 6.4 is unavailable
to, or insufficient to hold harmless, an Indemnified Party with respect to the
enumerated Liabilities, then each Indemnifying Party shall contribute to the
amount paid or payable by such Indemnified Party as a result of such
Liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the actions which resulted in Liabilities
as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information concerning
or related to such Indemnifying Party or Indemnified Party, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  For
the purposes of this Section 6.4(c), the information set forth in
the Registration Statement, Statutory Prospectus, any General Disclosure
Package, Final Prospectus, any Issuer Free Writing Prospectus, the General
Disclosure Package or the Final Offering Memorandum as set forth on Schedule
6.4(a)(i) shall be the only “information supplied by” such
Registration Indemnified Parties.


 


(ii)           The
Parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6.4(c) were determined by a pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (c)(i) above.  The amount paid or payable by an Indemnified
Party as a result of the Liabilities referred to in paragraph (c)(i) above,
shall be deemed to include, subject to the limitations set forth above, any
legal or other fees or expenses reasonably incurred by such Indemnified Party
in connection with investigating any claim or defending any Action.  Notwithstanding the provisions of this Section 6.4(c),
a Registration Indemnified Party shall not be required to contribute any amount
in excess of the amount by which the proceeds to such Registration Indemnified
Party exceeds the amount of any damages which such Registration Indemnified
Party has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.


 


6.5.          Claim Procedure.


 


(a)   Claim Notice. A Party that seeks indemnity under this Article VI
or under Section 2.2 (an “Indemnified Party”) shall give
written notice (a “Claim Notice”) to the Party from whom indemnification is
sought (an “Indemnifying
Party”), whether the Liabilities sought arise from matters
solely between the Parties or from Third Party Claims.  The Claim Notice must contain (i) a
description and, if known, the estimated amount (the “Claimed Amount”)
of any Liabilities incurred or reasonably expected to be incurred by the
Indemnified Party, (ii) a reasonable explanation of the facts constituting
the basis for the Claim Notice to the extent of facts then known by the
Indemnified Party and (iii) a demand for payment and/or assumption of
responsibility, as the case may be, of those Liabilities.  No delay or deficiency on the part of the
Indemnified Party in so notifying the Indemnifying Party shall relieve the
Indemnifying Party of 


 


40





















 


any
Liability or obligation hereunder except to the extent of any Liabilities caused
by or arising solely out of such delay or deficiency.


 


(b)   Response to Notice of Claim. (i) Except with respect
to Claims arising under Section 6.1(b)(iii), within thirty
(30) days after delivery of a Claim Notice, the Indemnifying Party shall
deliver to the Indemnified Party a written response in which the Indemnifying
Party shall either: (i) agree that the Indemnified Party is entitled to
receive all of the Claimed Amount and, in which case, the Indemnifying Party
shall pay the Claimed Amount (or agree to pay the Claimed Amount if, as and
when incurred) using a payment method reasonably acceptable to the Indemnified
Party; or (ii) dispute that the Indemnified Party is entitled to receive
all or any portion of the Claimed Amount, in which case, the Parties shall
resort to the dispute resolution procedures set forth in Section 9.10.


 


(ii)  For all Claims arising under Section 6.1(b)(iii),
and notwithstanding the provisions of Section 6.5(b)(i), Cloud Peak
shall, within ten (10) Business Days after receipt by Cloud Peak of a
Claim Notice from RTEA or any other member of the Rio Tinto Group of a Claim
for indemnification hereunder fully indemnify the RTEA Indemnified Person with
respect to all Liabilities arising out of or relating to such Claim.


 


(c)   Third Party Claims.


 


(i)            Without
limiting the provisions of Section 6.5(a), if the Indemnified Party
receives notice or otherwise learns of the assertion by a Person who is not a
member of either Group of any claim or the commencement of any Action (in each
case, a “Third
Party Claim”) with respect to which the Indemnifying Party may
be obligated to provide indemnification under this Article VI, the
Indemnified Party shall give a Claim Notice as provided in Section 6.5
to the Indemnifying Party of the Third Party Claim.  Such Claim Notice shall be given within
fifteen (15) Business Days after receipt by the Indemnified Party of notice of
such Third Party Claim and shall be accompanied by reasonable supporting
documentation submitted by such third party (to the extent then in the
possession of the Indemnified Party). 
Within thirty (30) days
after delivery of such Claim Notice, the Indemnifying Party (if it agrees that
the Third Party Claim is subject to indemnification under this Agreement) may,
upon written notice thereof to the Indemnified Party, assume control of the
defense of such Third Party Claim with counsel reasonably satisfactory to the
Indemnified Party.  During any period in
which the Indemnifying Party has not so assumed control of such defense, the
Indemnified Party shall control such defense. 
Notwithstanding the foregoing, no Claim Notice need be given with
respect to Third Party Claims existing as of the date of this Agreement.  Except for those Third Party Claims set forth
on Schedule 6.5(c)(i), all Third Party Claims existing as of the date of
this Agreement shall be a Cloud Peak Liability and Cloud Peak shall assume
control of the defense related to all such claims.


 


(ii)           The
Party not controlling such defense (the “Non-Controlling Party”) may participate
therein at its own expense; provided, however, that if the
Indemnifying Party assumes control of such defense and the Indemnified Party
reasonably concludes that the Indemnifying Party and the Indemnified Party have
materially conflicting interests or materially 


 


41





















 


different
defenses available with respect to such Third Party Claim, the reasonable fees
and expenses of separate counsel to the Indemnified Party shall be considered
“Liabilities” for purposes of this Agreement; provided, further,
that the Indemnifying Party shall only be responsible for the fees or expenses
of not more than one separate legal firm (in addition to any fees or expenses
for any local counsel), unless otherwise agreed to, for all of the Indemnified
Parties; provided, however, that in the event that such legal
firm is conflicted amongst the Indemnified Parties, then the Indemnifying Party
shall be responsible for the fees or expenses of up to two legal firms in any
single jurisdiction for all of the Indemnified Parties. The Party controlling
such defense (the “Controlling Party”) shall keep the Non-Controlling Party
reasonably advised of the status of such Third Party Claim and the defense
thereof and shall consider in good faith recommendations made by the
Non-Controlling Party with respect thereto. The Non-Controlling Party shall
furnish the Controlling Party with such Information as it may have with respect
to such Third Party Claim (including copies of any summons, complaint or other
pleading that may have been served on such Party and any written claim, demand,
invoice, billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the Controlling Party in the defense of
such Third Party Claim.  If the
Indemnifying Party has elected to assume the defense of the Third Party Claim
but has specified, and continues to assert, any reservations or exceptions in
such notice to the Indemnified Party, then, in any such case, the reasonable
fees and expenses of one separate counsel for all Indemnified Parties shall be
borne by the Indemnifying Party, but the Indemnifying Party shall be entitled
to reimbursement by the Indemnified Party for payment of any such fees and
expenses to the extent that it establishes that such reservations and
exceptions were proper.


 


(iii)          If
an Indemnifying Party elects not to assume responsibility for defending a Third
Party Claim, or fails to notify an Indemnified Party of its election as
provided in Section 6.5(c)(i), the cost and expense of the
Indemnified Party incurred in defending such Third Party Claim shall be
additional indemnified Liabilities.


 


(iv)          The
Indemnifying Party shall not agree to any settlement of, or the entry of any
judgment arising from, any such Third Party Claim without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that the consent of the
Indemnified Party shall not be required if (A) the Indemnifying Party agrees
in writing to pay any amounts payable pursuant to such settlement or judgment, (B) such
settlement or judgment includes a full, complete and unconditional release of
the Indemnified Party from further Liability, (C) such settlement does not
create any financial or other obligation on the part of the Indemnified Party
and (D) such settlement does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of an
Indemnified Party.  Unless the
Indemnifying Party has failed to assume the defense of the Third Party Claim in
accordance with the terms of this Agreement the Indemnified Party shall not
agree to any settlement of, or the entry of any judgment arising from, any such
Third Party Claim without the prior written consent of the Indemnifying Party.


 


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6.6.          Survival;
Limitations; Insurance.


 


(a)   Except to the
extent expressly set forth in this Agreement or any other Transaction Document,
all covenants and agreements of the Parties contained in this Agreement and in
the Transaction Documents shall survive the Closing until, with respect to any particular claim
to which a statute of limitations is applicable, the expiration of such
applicable statute of limitations, unless a Claim Notice was given under Section 6.5
(or a Claim Notice is not otherwise required to be given pursuant to this
Agreement) prior to the expiration of the statute of limitations applicable to
such Claim. The rights and obligations of the Parties and each of their
respective Indemnified Persons under this Agreement shall survive the direct or
indirect sale, assignment or other transfer by any Party of any of their
respective Assets or Liabilities.


 


(b)   The amount of any Liabilities for which indemnification is
provided under this Agreement shall be net of any amounts actually recovered by
the Indemnified Party from any third Person (including amounts actually
recovered under insurance policies) with respect to such Liabilities.  Any Indemnifying Party hereunder shall be
subrogated to the rights of the Indemnified Party upon payment in full of the
amount of the relevant indemnifiable Liabilities.  A Third Party Insurance Carrier who would
otherwise be obligated to pay any Claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provision hereof, have any subrogation rights with respect thereto.  No Indemnifying Party shall be entitled to
withhold or delay making any indemnification payment merely because of the
existence of any actual or potential insurance from a Third Party Insurance
Carrier or other third Person recovery. 
If any Indemnified Party recovers an amount from a third Person,
including Insurance Proceeds, in respect of Liabilities for which
indemnification is provided in this Agreement after the full amount of such
indemnifiable Liabilities has been paid by an Indemnifying Party or after an
Indemnifying Party has made a partial payment of such indemnifiable Liabilities
and the amount received from the third Person, including Insurance Proceeds,
exceeds the remaining unpaid balance of such indemnifiable Liabilities, then
the Indemnified Party shall promptly remit to the Indemnifying Party the excess
(if any) of (X) the sum of the amount theretofore paid by such
Indemnifying Party in respect of such indemnifiable Liabilities plus the amount
received from the third Person in respect thereof, less (Y) the full
amount of such indemnifiable Liabilities.


 


(c)   If insurance for any indemnified Liabilities is or may be
available from a Third Party Insurance Carrier, the Indemnified Party shall
take reasonable steps to provide appropriate and timely notice to the Third
Party Insurance Carrier and to pursue such insurance recovery including, if
reasonably requested by the Indemnifying Party and at the Indemnifying Party’s
expense, the commencement of coverage litigation.  Notwithstanding the foregoing, nothing in
this subsection (c) shall be deemed to affect the termination of the
Terminated RTEA Policies or the Three Crowns Policies (upon expiration or
earlier termination), and the waiver by Cloud Peak under Section 2.1(a) or
Section 2.3, as applicable, of the right to assert any claims after
the Closing Date under any Terminated RTEA Policy or after the expiration date
(or earlier termination date) under any Three Crowns Policy.


 


43





















 


(d)   Notwithstanding the foregoing, any indemnification obligations of
Cloud Peak pursuant to Section 6.1(b)(iii) shall not be
subject to any limitations on liability set forth in this Article VI.


 


ARTICLE VII

FINANCIAL AND OTHER INFORMATION


 


7.1.          Financial Information.


 


(a)   CPE and CPE LLC agree that, unless otherwise agreed in writing by
the Parties, if members of the Rio Tinto Group own (beneficially or otherwise),
in the aggregate, on any date during a fiscal year more than twenty percent
(20%) of the then outstanding common membership units in CPE LLC or,
notwithstanding such percentage, if any member of the Rio Tinto Group is
required, in the Rio Tinto Parties’ sole judgment, during any fiscal year, in
accordance with IFRS and/or GAAP, to account for its investment in CPE or CPE
LLC on a consolidated basis or under the equity method of accounting, then CPE
and CPE LLC shall deliver to the applicable member(s) of the Rio Tinto
Group the Corporate Reporting Data set forth on Schedule 7.1(a) within
the time periods specified for delivery of such Corporate Reporting Data set
forth therein, as amended from time to time.  The Corporate Reporting Data set forth on Schedule
7.1(a) may be amended or modified by the applicable member(s) of
the Rio Tinto Group as necessary or advisable from time to time as set forth in
Section 7.1(b) below, including as may be necessary or appropriate
for any member of the Rio Tinto Group to account for its investment in CPE and
CPE LLC on a consolidated basis.


 


(b)   All information provided by CPE, CPE LLC or any of their
respective Subsidiaries to the applicable member(s) of the Rio Tinto Group
pursuant to this Article VII, including the Corporate Reporting
Data set forth on Schedule 7.1(a), shall, unless otherwise provided on Schedule
7.1(a) or as otherwise agreed in writing by the Parties, be prepared
consistent in terms of format and detail and otherwise with the procedures and
practices in effect prior to the Closing Date with respect to the provision of
such financial and other information by RTEA to RTA or its Affiliates (and
where appropriate, as presently presented in financial and other reports
delivered to the board of directors of RTEA or its Affiliates), with such
changes therein as may be necessary to report such information in accordance
with IFRS and/or GAAP or as may be reasonably requested by RTEA or its
Affiliates from time to time, and any changes in such procedures or practices
that are required in order to comply with the rules and regulations of any
applicable Governmental Authority, including the SEC and any other Governmental
Authorities located in Australia, the United Kingdom or the United States of
America, as applicable.  CPE, CPE LLC and
their respective Affiliates hereby agree to cooperate with the applicable
members of the Rio Tinto Group in identifying and assessing any differences
between IFRS and GAAP that will impact the Corporate Reporting Data.  In the event that any member of the Rio Tinto
Group requests any such amendment or modification, such member of the Rio Tinto
Group shall deliver in writing no later than forty-five (45) days prior to the
time any such amendment or modification is to be in effect an updated version
of Schedule 7.1(a), which updated version shall replace in its entirety
any previously delivered versions of such schedule.


 


44





















 


(c)   For purposes of determining the ownership percentage of the Rio
Tinto Group pursuant to this Article VII, the Rio Tinto Group’s
ownership of common membership units shall be calculated to include (i) all
shares of CPE Common Stock owned by the Rio Tinto Group as a result of (x) the
exercise by any member of the Rio Tinto Group of the Redemption Right (as such
term is defined in the LLC Agreement) and (y) the exercise by CPE LLC of
the CPE Redemption Right (as such term is defined in the LLC Agreement) and (ii) any
shares of CPE Common Stock acquired from another member of the Rio Tinto Group
provided that such other member of the Rio Tinto Group acquired such shares of
CPE Common Stock in a transaction described in clause (i) above, but
excluding (x) any shares of CPE Common Stock otherwise acquired by the Rio
Tinto Group and (y) any common membership units issued to CPE by CPE LLC
pursuant to Section 8.3 or Section 9.1 of the LLC
Agreement in connection with the exercise of the Redemption Right or the CPE
Redemption Right (unless the Rio Tinto Group has disposed of any of the shares
of CPE Common Stock received in connection with the exercise of the Redemption
Right or the CPE Redemption Right (other than to another member of the Rio
Tinto Group in a transaction described in clause (ii) above), in which
case a number of common membership units issued to CPE by CPE LLC pursuant to Section 8.3
or Section 9.1 of the LLC Agreement in connection with such
exercise of the Redemption Right or the CPE Redemption Right equal to the number
of shares of CPE Common Stock disposed of by the Rio Tinto Group shall be
included in determining the Rio Tinto Group’s ownership interest in CPE LLC).


 


7.2.          Corporate Reserves Data.


 


(a)   CPE and CPE LLC agree that, unless otherwise agreed in writing by
the Parties, if members of the Rio Tinto Group own (beneficially or otherwise),
in the aggregate, on any date during a fiscal year more than twenty percent
(20)% of the then outstanding common membership units in CPE LLC
(calculated in accordance with Section 7.1(c) or,
notwithstanding such percentage, if any member of the Rio Tinto Group is
required, in the Rio Tinto Parties’ sole judgment, during any fiscal year, in
accordance with IFRS and/or GAAP to account for its investment in CPE or CPE
LLC on a consolidated basis or under the equity method of accounting, then CPE
and CPE LLC shall deliver to the applicable member(s) of the Rio Tinto
Group the Corporate Reserves Data with respect to the Cloud Peak Business as
set forth on Schedule 7.2(a), including for purposes of this Section 7.2
reserve information related to the Decker mine. 
CPE and CPE LLC shall deliver the reserves data and related schedules,
reports, or internal memoranda comprising such Corporate Reserve Data within
the time periods specified on Schedule 7.2(a).  The Corporate Reserves Data shall include all
statistical, geological or other information necessary for inclusion in any Rio
Tinto Group member’s filings or other reports with any Governmental Authority.  The Corporate Reserves Data set forth on Schedule
7.2(a) may be amended or modified by the applicable member(s) of
the Rio Tinto Group as necessary or advisable from time to time as set forth in
Section 7.2(c) below.


 


(b)   The Corporate Reserves Data provided under Section 7.2(a) shall
be reported using such pricing and other information as determined by CPE LLC
in its reasonable best judgment under JORC or SEC Industry Guide 7 standards as
set forth on Schedule 7.2(a), unless otherwise indicated on Schedule
7.2(a).  The appropriate competent
person at CPE LLC shall certify the Corporate Reserves Data provided as of December 31
of each fiscal year to the 


 


45





















 


applicable
member of the Rio Tinto Group under this Section 7.2 consistent with
the nature, type and detail of certification provided to the applicable members
of the Rio Tinto Group prior to the Closing.


 


(c)   All information provided by CPE and CPE LLC or any of their
respective Subsidiaries to the applicable member(s) of the Rio Tinto Group
pursuant to this Article VII, including the Corporate Reserves Data
set forth on Schedule 7.2(a), shall, unless otherwise provided on Schedule
7.1(a) or as otherwise agreed in writing by the Parties, be prepared
consistent in terms of format and detail and otherwise with the procedures and
practices in effect prior to the Closing Date with respect to the provision of
such information by RTEA to RTEA or its Affiliates (and where appropriate, as
presently presented in financial and other reports delivered to the board of
directors of RTEA or its Affiliates), with such changes therein as may be
necessary to report such information in accordance with JORC and/or SEC
Industry Guide 7 or as may be reasonably requested by RTEA or its Affiliates
from time to time, and any changes in such procedures or practices that are
required in order to comply with the rules and regulations of any
applicable Governmental Authority, including the SEC and any other Governmental
Authorities located in Australia, the United Kingdom or the United States of
America, as applicable.  In the event
that any member of the Rio Tinto Group requests any such amendment or
modification, such member of the Rio Tinto Group shall deliver in writing no
later than forty-five (45) days prior to the time any such amendment or
modification is to be in effect an updated version of Schedule 7.2(a),
which updated version shall replace in its entirety any previously delivered
versions of such schedule.


 


(d)   The Rio Tinto Parties shall have the right to review and audit the
Corporate Reserves Data provided pursuant to this Section 7.2.  The Cloud Peak Parties hereby agree to
provide to the Rio Tinto Parties or any Representative of the Rio Tinto Parties
such records and other Information and access to Cloud Peak personnel as may be
required in connection with any such review or audit pursuant to this Section 7.2(d).  The Rio Tinto Parties hereby agree to
reimburse the Cloud Peak Parties for the reasonable out-of-pocket costs, if
any, for the provision of such Information or access.


 


7.3.          Other Financial
Information.  For so long
as CPE and CPE LLC are required to provide Information to any member of the Rio
Tinto Group pursuant to Section 7.1 or Section 7.2:


 


(a)   CPE and CPE LLC shall provide to the applicable member(s) of
the Rio Tinto Group upon request such other financial information and analyses
of CPE, CPE LLC and their respective Subsidiaries that may be necessary for any
member of the Rio Tinto Group or as is reasonably requested by any member of
the Rio Tinto Group to (1) comply with applicable financial reporting
requirements or its customary financial reporting practices or (2) respond
in a timely manner to any reasonable requests for information regarding CPE,
CPE LLC and their respective Subsidiaries received by any member of the Rio
Tinto Group from investors, financial analysts or any Governmental Authority; provided,
however, that neither RTEA nor any member of the Rio Tinto Group shall
disclose any material, non-public information of CPE or CPE LLC except (i) pursuant
to policies and procedures mutually agreed upon by the applicable member(s) 


 


46





















 


of
the Rio Tinto Group and the Cloud Peak Group for the disclosure of such
information or (ii) as otherwise required by applicable Law.  In
connection therewith, CPE and CPE LLC shall also permit any member of the Rio
Tinto Group, the independent registered public accountants of the applicable
member(s) of the Rio Tinto Group (the “Rio Tinto
Auditors”) and other Representatives or advisors of the Rio
Tinto Group (including legal counsel) to discuss the affairs, finances and
accounts of any member of the Cloud Peak Group with the officers of CPE and CPE
LLC and the independent registered public accountants of CPE (the “Cloud Peak Auditors”), all at such
times and as often as the applicable member(s) of the Rio Tinto Group may
reasonably request upon reasonable notice during normal business hours.


 


(b)   CPE, CPE LLC and their respective Representatives shall undertake
to answer any questions related to the Information provided to the applicable
member(s) of the Rio Tinto Group pursuant to this Article VII
and to provide, on a timely basis, any additional information reasonably
requested by the applicable member(s) of the Rio Tinto Group.


 


7.4.          Other Agreements.  CPE and CPE LLC agree that, for so long as
CPE and CPE LLC are required to provide Information to any member of the Rio
Tinto Group pursuant to Section 7.1 or Section 7.2:


 


(a)   Maintenance of Books and Records.  CPE and CPE LLC shall, and shall cause each
of their respective consolidated Subsidiaries to, (i) make and keep books,
records and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of CPE and CPE LLC and
such Subsidiaries and (ii) devise and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (x) transactions
are executed in accordance with management’s general or specific authorization,
(y) transactions are recorded as necessary (1) to permit preparation
of financial statements in conformity with GAAP or any other criteria
applicable to such statements and (2) to maintain accountability for
assets and (z) access to assets is permitted only in accordance with
management’s general or specific authorization.


 


(b)   Fiscal Year.  CPE and
CPE LLC shall, and shall cause each of their respective consolidated
Subsidiaries to, maintain a fiscal year which commences on January 1 and
ends on December 31 of each calendar year; provided that, if on the
Closing Date any consolidated Subsidiary of CPE or CPE LLC has a fiscal year
which ends on a date other than December 31, CPE and CPE LLC shall use
their reasonable best efforts to cause such Subsidiary to change its fiscal
year to one which ends on December 31 if such change is reasonably
practicable.


 


(c)   Public Information and SEC Reports.  CPE shall, and
shall cause each of its Subsidiaries that files information with the SEC to,
cooperate with the applicable member(s) of the Rio Tinto Group in
preparing reports, notices and proxy and information statements to be sent or
made available by CPE or such Subsidiaries to their security holders, all
regular, periodic and other reports filed under Sections 13, 14 and 15 of the
Exchange Act by CPE or such Subsidiaries and all registration statements and
prospectuses to be filed by CPE or such Subsidiaries with the SEC or any
national securities exchange pursuant to the listed company manual (or similar
requirements) of such exchange (collectively, “Cloud Peak Public Filings”) 


 


47





















 


and
deliver to RTEA, no later than the date the same are printed for distribution
to its shareholders, sent to its shareholders or filed with the SEC, whichever
is earliest, final copies of all Cloud Peak Public Filings, provided, however,
that CPE shall use commercially reasonable efforts to deliver to RTEA the final
form of its Annual Report on Form 10-K, together with all certifications
required by applicable Law by each of the chief executive officer and chief
financial officer of CPE and an opinion thereon by CPE’s independent registered
public accountants, no later than 9:00 a.m., New York city time, on the
second day prior to the day CPE is required to file its Annual Report on
Form 10-K with the SEC.  CPE and CPE
LLC shall cooperate with the applicable member(s) of the Rio Tinto Group
in preparing all press releases and other statements to be made available by
CPE and CPE LLC or any of their respective Subsidiaries to the public,
including, without limitation, information concerning material developments in
the business, properties, results of operations, financial condition or
prospects of CPE and CPE LLC or any of their respective Subsidiaries.  The
Rio Tinto Group shall have the right to review, if practicable, reasonably in
advance of the public release or release to financial analysts or investors
(1) all press releases and other written statements to be made available
by CPE and CPE LLC or any of their respective Subsidiaries to the public
(excluding press releases or written statements that relate primarily to trade
matters), (2) all reports and other information prepared by CPE and CPE
LLC or any of their respective Subsidiaries for release to financial analysts
or investors and (3) all Cloud Peak Public Filings; provided, however,
that the applicable member(s) of the Cloud Peak Group shall have the sole
right to determine the timing of all such releases, and provided, further,
that neither RTEA nor any member of the Rio Tinto Group shall disclose any
material, non-public information of CPE or CPE LLC except (i) pursuant to
policies and procedures mutually agreed upon by RTEA and CPE and CPE LLC for
the disclosure of such information and (ii) as required by applicable
Law.  No press release, report,
registration, information or proxy statement, prospectus or other document
which refers, or contains information with respect, to any member of the Rio
Tinto Group shall be filed with the SEC or otherwise made public or released to
any financial analyst or investor by CPE or CPE LLC, and CPE and CPE LLC shall
not permit any of their respective Subsidiaries to file or otherwise make
public or release such information, without the prior written consent of the
applicable member(s) of the Rio Tinto Group with respect to those portions
of such document that contain information with respect to any member of the Rio
Tinto Group except as may be required by applicable Law (in such cases CPE and
CPE LLC shall use their reasonable best efforts to notify the relevant member
of the Rio Tinto Group and to obtain such member’s consent before making such a
filing with the SEC or otherwise making any such information public).


 


(d)   Earnings Releases.  Except with respect to the public
release of financial information set forth on Schedule 7.4(d), the Rio
Tinto Group agrees that, unless required by Law or unless CPE and CPE LLC shall
have consented thereto, no member of the Rio Tinto Group will publicly release
any financial information of CPE, CPE LLC or any of their respective
Subsidiaries (“Cloud
Peak Information”) delivered to the applicable member(s) of
the Rio Tinto Group pursuant to this Article VII prior to the time
that the applicable member(s) of the Cloud Peak Group publicly releases
financial information for the relevant period. 
The applicable member(s) of the Rio Tinto Group will consult with
CPE and CPE LLC, and CPE and 


 


48





















 


CPE
LLC will cooperate with the applicable member(s) of the Rio Tinto Group in
coordinating the timing of any public release of any Cloud Peak Information.


 


(e)   Suspension of Information Requirements.  CPE and CPE LLC agree that the Rio Tinto
Parties or any other member(s) of the Rio Tinto Group may temporarily or
permanently suspend any of the requirements of CPE and CPE LLC to deliver
Information to the applicable member(s) of the Rio Tinto Group pursuant to
this Article VII upon three (3) days prior notice to CPE and CPE
LLC.


 


(f)    Cooperation.  In
addition to CPE and CPE LLC’s obligations pursuant to Section 7.1
or Section 7.2, CPE and CPE LLC will use their commercially
reasonable efforts to provide to the applicable member(s) of the Rio Tinto
Group on a timely basis all Information that the applicable member(s) of
the Rio Tinto Group reasonably require for any Rio Tinto Public Filings,
including, as available, preliminary financial information and Information
that, in the judgment of the applicable member(s) of the Rio Tinto Group’s
legal department, is required to be disclosed therein under any Law.  CPE and CPE LLC further agree to provide
to the applicable member(s) of the Rio Tinto Group such information,
including any required IFRS and/or GAAP financial information with respect to
CPE and CPE LLC and their consolidated Subsidiaries, with sufficient and
reasonable time in advance and in sufficient detail to permit the Rio Tinto
Auditors to take all steps and perform all review necessary to provide
sufficient assistance to the Rio Tinto Auditors with respect to information to
be included or contained in the Rio Tinto Public Filings.  CPE and CPE LLC agree to use their respective
commercially reasonable efforts to provide such Information in a timely manner
to enable the applicable member(s) of the Rio Tinto Group to prepare,
print and release such Rio Tinto Public Filings on such date as the applicable
member(s) of the Rio Tinto Group shall determine.  CPE and CPE LLC further agree to use their
respective commercially reasonable efforts to provide any other Information in
a timely manner that is reasonably requested by any member of the Rio Tinto
Group in connection with any acquisition, divestiture, public or private
offering or other similar transaction by such member of the Rio Tinto Group.


 


7.5.          Rio Tinto Public Filings.  For so long as CPE and CPE LLC are required
to provide Information to any member of the Rio Tinto Group pursuant to Section 7.1
or Section 7.2, CPE and CPE LLC shall cooperate, and cause its
accountants to cooperate, with the applicable member(s) of Rio Tinto Group
to the extent reasonably requested by the applicable member(s) of the Rio
Tinto Group in the preparation of Rio Tinto’s, Rio Tinto Limited’s or their
respective Affiliates’ press releases, public earnings releases and any other
filings or other reports (including reports containing historical financial
information of RTEA) made by any member of the Rio Tinto Group or any of its
Affiliates with any Governmental Authority, any national securities exchange or
otherwise made publicly available (collectively, “Rio Tinto Public Filings”).  If and to the extent reasonably requested by
the applicable member(s) of the Rio Tinto Group, CPE and CPE LLC shall
diligently and promptly review all drafts of such Rio Tinto Public Filings and
prepare in a diligent and timely fashion any portion of such Rio Tinto Public
Filing pertaining to CPE, CPE LLC or their respective Subsidiaries.  Prior
to any printing or public release of any Rio Tinto Public Filing, an
appropriate executive officer of CPE or CPE LLC, shall, if requested by the
applicable member(s) of the Rio Tinto Group, certify and 


 


49

















 


represent
to any such member(s) of the Rio Tinto Group that the information provided
by CPE and CPE LLC relating to CPE and CPE LLC, in such Rio Tinto Public Filing
does not contain any untrue statement of material fact or omit to state a
material fact, in each case as determined based on a level of materiality
applicable to a company with annual revenues equal to two times the annual
revenues of CPE LLC (the “Applicable Materiality
Threshold”), required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made,
not misleading.  CPE and CPE LLC may
publicly release financial or other information which conflicts with the
information with respect to CPE and CPE LLC, any Affiliate of CPE or CPE LLC,
or the Cloud Peak Group that is provided by CPE or CPE LLC for any Rio Tinto
Public Filing only to the extent that such conflicting information
(a) relates to Corporate Reserves Data which is calculated on a different
basis than that contained in the Rio Tinto Public Filing, (b) is required
by Law or (c) is otherwise consented to by RTEA.


 


7.6.          Accounting Matters.  For so long as the Cloud
Peak Parties are required to provide Information to any member of the Rio Tinto
Group pursuant to Section 7.1 or Section 7.2:


 


(a)   Provision of Information. 
The Rio Tinto Parties and the Cloud Peak Parties hereby agree to provide
such records and other Information to the other Parties to enable (i) the
other Party’ Auditor to conduct reasonable audits relating to the financial
statements of such Parties and (ii) the other Parties’ management and
Auditor to conduct an assessment of such Parties’ internal control over
financial reporting as required by applicable Law.


 


(b)   Access to Personnel and Working Papers.  The Rio Tinto Parties and the Cloud Peak
Parties will request that the Rio Tinto Auditors and the Cloud Peak Auditors,
respectively, (i) make available to the other Parties’ Auditors both the
personnel who performed or are performing the annual audits of any member of
the Cloud Peak Group or Rio Tinto Group, respectively, and (ii) consistent
with customary professional practice and courtesy of the Rio Tinto Auditors and
the Cloud Peak Auditors, respectively, with respect to the furnishing of work
papers, work papers related to the annual audits of any member of the Cloud
Peak Group or Rio Tinto Group, respectively, in all cases within a reasonable
time prior to the opinion date for the other Parties’ Auditors, so that such
Auditors are able to perform the procedures they consider necessary to take
responsibility for the work of the other Parties’ Auditors, all within
sufficient time to enable the applicable member(s) of the respective
Groups to meet its timetable for the printing, filing and public dissemination
of any public filing required by applicable Law (including the Rio Tinto Annual
Report).


 


(c)   Accountants’ Report. 
Promptly, but in no event later than five (5) Business Days
following the receipt thereof, the Cloud Peak Parties shall deliver to the
applicable member(s) of the Rio Tinto Group copies of all reports
submitted to CPE and CPE LLC or any of their respective Subsidiaries by their
independent registered public accountants, including, without limitation, each
report submitted to CPE and CPE LLC or any of their respective Subsidiaries
concerning its accounting practices and systems and any comment letter
submitted to management in connection with their annual audit and all responses
by management to such reports and letters.


 


50
















 


(d)         Compensation.  The Party requesting Information or access to
personnel and work papers pursuant to this Section 7.6 agrees to
reimburse the other Party for the reasonable out-of-pocket costs, if any, of
providing such Information or access.


 


7.7.                              Agreement for Exchange
of Information; Archives.


 


(a)          Each of the Rio Tinto
Parties, on the one hand, and the Cloud Peak Parties, on the other hand, agrees
to provide, or cause to be provided, to the other Group, at any time before or
after the Closing Date, as soon as reasonably practicable after written request
therefor, any Information in the possession or under the control of such
respective Group which the requesting party reasonably needs (i) to comply
with reporting, disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities or Tax Laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative, tax or other proceeding
or in order to satisfy audit, accounting, claims, regulatory, litigation, tax
or other similar requirements, in each case other than claims or allegations
that one Party to this Agreement has against the other, or (iii) subject
to the foregoing clause (ii), to comply with its obligations under this
Agreement or any Transaction Document; provided, however, that in
the event that any Party determines that any such provision of Information
could be commercially detrimental, violate any Law or agreement, or waive any
attorney-client privilege, the Parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.  Each of RTEA and
KMS, on the one hand, and CPE and CPE LLC, on the other hand, agrees to cause
the respective members of their respective Groups to comply with this Section 7.7(a).


 


(b)         After the Closing Date, CPE
and CPE LLC shall have access during regular business hours (as in effect from
time to time) to the documents and objects of historic significance that relate
to the Cloud Peak Business that are located in archives retained or maintained
by any member of the Rio Tinto Group.  CPE and CPE LLC may obtain copies
(but not originals unless it is a Cloud Peak Asset) of documents for bona fide
business purposes and may obtain objects for exhibition purposes for
commercially reasonable periods of time if required for bona fide business
purposes, provided that CPE and CPE LLC shall cause any such objects to be
returned promptly in the same condition in which they were delivered to CPE and
CPE LLC and CPE and CPE LLC shall comply with any rules, procedures or other
requirements, and shall be subject to any restrictions (including prohibitions
on removal of specified objects), that are then applicable to RTEA.  CPE
and CPE LLC shall pay the applicable fee or rate per hour for archives research
services (subject to increase from time to time to reflect rates then in effect
for RTEA generally).  Nothing herein shall be deemed to restrict the
access of any member of the Rio Tinto Group to any such documents or objects or
to impose any liability on any member of the Rio Tinto Group if any such
documents or objects are not maintained or preserved by RTEA.


 


(c)          After the Closing Date, the
Rio Tinto Parties shall have access during regular business hours (as in effect
from time to time) to the documents and objects of historic significance that
relate to the businesses of any member of the Rio Tinto Group that are located
in archives retained or maintained by any member of the Cloud Peak Group.  The Rio Tinto 


 


51





















 


Parties may obtain copies (but not originals
unless it is not a Cloud Peak Asset) of documents for bona fide business
purposes and may obtain objects for exhibition purposes for commercially
reasonable periods of time if required for bona fide business purposes,
provided that the Rio Tinto Parties shall cause any such objects to be returned
promptly in the same condition in which they were delivered to the Rio Tinto
Parties and the Rio Tinto Parties shall comply with any rules, procedures or
other requirements, and shall be subject to any restrictions (including
prohibitions on removal of specified objects), that are then applicable to CPE
or CPE LLC.  The Rio Tinto Parties shall
pay the applicable fee or rate per hour for archives research services (subject
to increase from time to time to reflect rates then in effect for CPE or CPE
LLC generally).  Nothing herein shall be deemed to restrict the access of
any member of the Cloud Peak Group to any such documents or objects or to
impose any liability on any member of the Cloud Peak Group if any such
documents or objects are not maintained or preserved by CPE or CPE LLC.


 


(d)         The Party requesting
Information pursuant to this Section 7.7 agrees to reimburse the
other Party for the reasonable out-of-pocket costs, if any, of providing such
Information.


 


7.8.                              Ownership of Information. 
Any Information owned by one Group that is provided to a requesting
party pursuant to Section 7.7 shall be deemed to remain the
property of the providing party.  Unless
specifically set forth herein, nothing contained in this Agreement shall be
construed as granting or conferring rights of license or otherwise in any such
Information.


 


7.9.                              Compensation for Providing
Information.  As compensation for CPE or CPE LLC providing
Information pursuant to this Article VII, RTEA agrees to promptly
reimburse CPE and CPE LLC for the reasonable out-of-pocket costs, if any, reasonably
incurred in providing such Information. 
RTEA also agrees to pay to CPE LLC on a quarterly basis $ 14,025 as
compensation for the reasonable internal costs incurred by CPE or CPE LLC in
providing information pursuant to this Article VII.  On a quarterly basis, the
Parties shall review the amount of the quarterly fee and make such changes as
may reasonably be necessary to ensure neither party is unduly burdened or
unduly benefited by such fee.


 


7.10.                        Record Retention. 
To facilitate the possible exchange of Information pursuant to this Article VII
and other provisions of this Agreement after the Closing Date, the Parties
agree to use their reasonable best efforts to, and to cause their Subsidiaries
to, retain all Information in their respective possession or control in
accordance with the policies of Rio Tinto as in effect on the Closing Date or
such other policies as may be reasonably adopted by the appropriate Party after
the Closing Date.  No Party will destroy, or permit any of its Subsidiaries
to destroy, any Information which the other Party may have the right to obtain
pursuant to this Agreement prior to the third anniversary of the date hereof
without first using its reasonable best efforts to notify the other Party of
the proposed destruction and giving the other Party the opportunity to take
possession of such Information prior to such destruction; provided, however,
that in the case of any Information relating to Taxes or employee benefits,
such period shall be extended to the expiration of the applicable statute of
limitations (giving effect to any extensions thereof); 


 


52

















 


provided  further, however, no Party
will destroy, or permit any of its Subsidiaries to destroy, any Information
required to be retained by applicable Law.


 


7.11.                        Accuracy of Information.


 


(a)          CPE and CPE LLC, jointly and
severally, represent and warrant that any Information provided to any member of
the Rio Tinto Group under this Article VII will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, and, with respect to
any financial Information, will fairly present in all material respects the
Information contained therein, in each case as determined based on the
Applicable Materiality Threshold.


 


(b)         Notwithstanding Section 7.11(a),
no Party shall have any liability to any other Party in the event that any
Information exchanged or provided pursuant to this Agreement which is
delineated as an estimate or forecast, or which is based on an estimate or
forecast, is found to be inaccurate in the absence of willful misconduct by the
Party providing such Information. No Party shall have any liability to any
other Party if any Information is destroyed after reasonable best efforts by
such Party to comply with the provisions of Section 7.10.


 


(c)          Notwithstanding any other
provision of this Agreement, and with respect to any and all Claims (whether
for breach or nonperformance of contract, negligence, indemnification, or any
other theory of liability), neither CPE nor CPE LLC shall be liable to the Rio
Tinto Parties for any damages, including punitive, incidental, consequential,
indirect or special damages (including lost profits, lost revenues and loss of
business), whether foreseeable or not, arising out of any untrue statement of
material fact contained in any Information provided by Rio Tinto Services Inc.
to CPE LLC pursuant to the Transition Services Agreement if (i) such
Information was used to prepare any Information provided to the Rio Tinto Group
pursuant to this Article VII and (ii) such Information was the
sole cause of such damages.


 


7.12.                        Other Agreements Providing for
Exchange of Information.


 


(a)          The rights and obligations granted under this Article VII
are subject to any specific limitations, qualifications or additional
provisions on the sharing, exchange, retention or confidential treatment of
Information set forth in any Transaction Document.


 


(b)         When any Information provided by one Group to the
other (other than Information provided pursuant to Section 7.10) is
no longer needed for the purposes contemplated by this Agreement or any other
Transaction Document or is no longer required to be retained by applicable Law,
the receiving party will promptly after request of the other party either
return to the other party all Information in a tangible form (including all
copies thereof and all notes, extracts or summaries based thereon) or certify
to the other party that it has destroyed such Information (and such copies
thereof and such notes, extracts or summaries based thereon).


 


53

















 


7.13.                        Production of Witnesses;
Records; Cooperation.


 


(a)          After the Closing Date, with respect to any Claim
(including a Third Party Claim) and except in the case of an adversarial Action
by one Party against another Party, each Party hereto shall cooperate and
consult to the extent reasonably necessary with respect to any Claim with each
other Party and use its reasonable best efforts to make available to each other
Party, upon written request, the former, current and future directors,
officers, employees, other personnel and agents of the members of its
respective Group as witnesses and any books, records or other documents within
its control or which it otherwise has the ability to make available, to the
extent that any such person (giving consideration to business demands of such
directors, officers, employees, other personnel and agents) or books, records
or other documents may reasonably be required in connection with any Claim in
which the requesting party may from time to time be involved, regardless of
whether such Claim is a matter with respect to which indemnification may be
sought hereunder.  The requesting party shall bear all costs and expenses
in connection therewith.


 


(b)         In connection with any matter contemplated by this Section 7.13,
the Parties will maintain to the extent practicable any applicable
attorney-client privilege, work product immunity or other applicable privileges
or immunities of any member of any Group, and will, to the extent necessary and
desirable, enter into a joint defense or common interest agreement.


 


7.14.                        Preservation of Legal Privileges.


 


(a)          The Rio Tinto Parties, on
the one hand, and the Cloud Peak Parties, on the other hand, recognize that the
members of their respective Groups possess and will possess information and
advice that has been previously developed but is legally protected from
disclosure under legal privileges, such as the attorney-client privilege or
work product exemption and other concepts of legal protection (“Privilege”).  The Rio Tinto Parties, on the one hand, and
the Cloud Peak Parties, on the other hand, recognize that they shall be jointly
entitled to the Privilege with respect to such privileged information and that
each shall be entitled to maintain, preserve and assert for its own benefit all
such information and advice, but both Parties shall ensure that such
information is maintained so as to protect the Privileges with respect to the
other Party’s interest.  To that end,
neither the Rio Tinto Parties, on the one hand, nor the Cloud Peak Parties, on
the other hand, will knowingly waive or compromise any Privilege associated
with such information and advice without the prior written consent of the Rio
Tinto Parties, on the one hand, or the Cloud Peak Parties, on the other hand,
as applicable.  In the event that privileged
information is required to be disclosed to any arbitrator or mediator in
connection with a dispute between the Rio Tinto Parties, on the one hand, and
the Cloud Peak Parties, on the other hand, such disclosure shall not be deemed
a waiver of Privilege with respect to such information, and any Party receiving
it in connection with a proceeding shall be informed of its nature and shall be
required to safeguard and protect it.


 


(b)         The provision of any information pursuant to this Article VII
shall not be deemed a waiver of any Privilege. 
Following the Closing Date, neither CPE nor CPE LLC, on the one hand,
nor RTEA nor KMS, on the other hand, nor their respective Subsidiaries will be 


 


54

















 


required to provide any information pursuant to this Article VII
if the provision of such information would serve as a waiver of any Privilege
afforded such information.


 


(c)          The rights and obligations
created by this Section 7.14 shall apply to all information
relating to the Cloud Peak Business as to which, prior to the Closing, any
Party would have been entitled to assert or did assert the protection of a
Privilege, including (i) any and all information generated prior to the
Closing Date but which, after the Closing, is in the possession of any Party
and (ii) all information generated, received or arising after the Closing
Date that reflects or incorporates information described in the preceding
clause (i).


 


(d)         Upon receipt by any Party of
any subpoena, discovery or other request that may call for the production or
disclosure of information that is the subject of a Privilege, or if a Party
obtains knowledge that any current or former employee of a Party has received
any subpoena, discovery or other request that may call for the production or
disclosure of such information, such Party shall provide the other Parties a
reasonable opportunity to review the information and to assert any rights it
may have under this Section 7.14 or otherwise to prevent the
production or disclosure of such information. 
Absent receipt of written consent from the Rio Tinto Parties, on the one
hand, or the Cloud Peak Parties, on the other hand, as applicable, to the
production or disclosure of information that may be covered by a Privilege,
each Party agrees that it will not produce or disclose any information that may
be covered by a Privilege unless a court of competent jurisdiction has entered
a final, nonappealable order finding that the information is not entitled to
protection under any applicable Privilege.


 


ARTICLE VIII

ADDITIONAL COVENANTS


 


8.1.                              Further
Assurances.


 


(a)          The Parties shall (or shall
cause their appropriate Group members or Representatives, as appropriate, to)
execute and deliver such other agreements, instruments and documents as may be
necessary or desirable in order to effect the transactions contemplated by this
Agreement and the other Transaction Documents. At the request of CPE or CPE
LLC, RTEA, KMS or any other member of the Rio Tinto Group shall (and shall
cause applicable members of the Rio Tinto Group to) execute and deliver to CPE
and CPE LLC and/or the applicable members of the Cloud Peak Group such other
instruments of transfer, conveyance, assignment, substitution and confirmation
and take such other actions as CPE and CPE LLC may reasonably deem necessary or
desirable in order (a) to transfer, convey and assign to CPE or CPE LLC
and the other members of the Cloud Peak Group, as applicable, the Cloud Peak
Assets, (b) to put CPE and CPE LLC and the other members of the Cloud Peak
Group, as applicable, in actual possession and operating control thereof
(subject to any necessary governmental consents, permits and licenses, which
shall be the responsibility of CPE and CPE LLC), and (c) to permit CPE and
CPE LLC and the other members of the Cloud Peak Group, as applicable, to
exercise all rights with respect thereto. 
At the request of RTEA or KMS, CPE and CPE LLC shall (and shall cause
applicable members of the Cloud Peak Group to) execute and deliver to RTEA or
KMS and/or the applicable members of the Rio Tinto Group all instruments, 


 


55

















 


assumptions, novations, undertakings,
substitutions or other documents and take such other action as RTEA may
reasonably deem necessary or desirable in order to ensure that CPE and CPE LLC
and the other members of the Cloud Peak Group fully and unconditionally assume
and discharge the Cloud Peak Liabilities as contemplated under this Agreement,
the other Transaction Documents or any document in connection herewith or
therewith, and relieve the Rio Tinto Group of any Liability with respect
thereto and evidence the same to third Persons. 
Each Party hereby agrees to pay their respective out-of-pocket costs,
expenses and fees in connection with its obligations under this Section 8.1,
including any attorneys’ fees, recording, assignment or other similar fees.


 


(b)         On or prior to the Closing Date, RTEA, KMS, CPE and
CPE LLC, in their capacity as direct and indirect stockholders of their
respective Subsidiaries, shall each ratify and/or cause any actions that are
reasonably necessary or desirable to be taken by RTEA, KMS, CPE, CPE LLC or any
other Subsidiary of RTEA, KMS, CPE or CPE LLC, as the case may be, to effectuate the
transactions contemplated by this Agreement. 
On or prior to the Closing Date, CPE shall take all actions as may be
necessary to approve the stock-based employee benefit plans of CPE in order to
satisfy the requirements of Rule 16b-3 under the Exchange Act and the
applicable rules and regulations of The New York Stock Exchange.


 


(c)          The Parties agree to use their commercially reasonable
efforts to ensure that any amounts erroneously paid following the Closing Date
by a third party to the other Party pursuant to the Agency Agreement, the RTEA
Coal Supply Contract or any other customer contract shall be promptly remitted
to the other Party upon notice of such error by either Party.


 


8.2.                              Rio Tinto
Group Non-Competition.  For
a period of 12 months following the IPO Closing Date (the “Non-Compete Period”)
no member of the Rio Tinto Group shall, directly or indirectly, engage in any
Competitive Business or associate (including but not limited to association as
a sole proprietor, owner, employer, principal, investor, joint venturer, shareholder,
associate, employee, member, consultant, contractor or otherwise) with any
Business Entity engaging in any Competitive Business with respect to such
Competitive Business.  For the avoidance
of doubt, nothing in this Section 8.2 shall prohibit any member of
the Rio Tinto Group from:


 


(a)          owning securities in any
Competitive Business, but only to the extent that the Rio Tinto Group does not
own, of record or beneficially, more than 5% of the outstanding beneficial
ownership of such Competitive Business (other than ownership in CPE or CPE
LLC); or


 


(b)         engaging in:


 


(i)                                     any other business or
operation that is not a Competitive Business, including, any production
business or other production operation related to the Colowyo mine (or any
expansion of the mine’s business) or not located in the Power River Basin,
whether or not involving the production of coal of any kind;


 


56

















 


(ii)                                  any Competitive Business
following the expiration of the Non-Compete Period; or


 


(iii)                               selling coal or other goods
produced outside of the Powder River Basin to customers located in the Powder
River Basin or who are otherwise customers of Cloud Peak.


 


Each
Party acknowledges that no member of the Rio Tinto Group, or any of its executive
officers or directors, shall be liable to CPE or any of its shareholders or CPE
LLC or any of its members for breach of fiduciary or other duty by reason of
the fact that the Rio Tinto Group engaged in any activity set forth in clause (a) or
(b) above; unless, however, such activity was presented to a Person who
was also a director or officer of CPE or CPE LLC solely in his or her capacity
as such.  For purposes of this Section 8.2,
“Competitive
Business” means any coal mining or coal production business or
other coal production operation in the coal industry within the Powder River
Basin which is competitive with the Cloud Peak Business, other than the Cloud
Peak Business.  For the avoidance of
doubt, any business or operation of the Rio Tinto Group in respect of the
matters provided for in the Agency Agreement, the RTEA Coal Supply Agreement or
any other agreement in writing between the Parties or the expansion of any
existing business or operation (including, but not limited to, the Colowyo
mine) shall not be deemed a Competitive Business for purposes of this Section 8.2.


 


8.3.                              Non-Solicitation
of Employees.  For a
period of 12 months following the Closing Date, no member of the Cloud Peak
Group or the Rio Tinto Group shall, directly or indirectly, solicit or assist
any other individual, person, firm or other entity in soliciting, any employee
of the other Party’s Group without such other Party’s written consent.  Notwithstanding the foregoing, the following
shall not be deemed to be a violation of this Section 8.3:  (a) a general solicitation of employment
made by or on behalf of any member of the Cloud Peak Group or Rio Tinto Group
that is not specifically directed towards employees of the other Group, (b) the
employment of any individual who, after the Closing Date, initiates on its own
accord contact with any member of the other Group for purposes of seeking
employment or (c) the hiring by a Group of any Person from the other Group
whose employment has been terminated or who has been demoted to a position with
responsibilities or remuneration substantially less than such Person’s current
position without the prior consent of such Person by such other Group.  For purposes of this Section 8.3,
“solicit”
means to have any direct or indirect communication of any kind whatsoever,
regardless of by whom initiated, inviting, advising, encouraging or requesting
any person or entity, in any manner, to terminate their employment with any
member of the applicable Group, or recommending or suggesting (including by identifying
a person or entity to a third party) that a third party take any of the
foregoing actions.


 


8.4.                              Payment of
Expenses. Except as otherwise provided in this Agreement,
the other Transaction Documents or any other agreement between the Parties relating
to the Initial Public Offering or the Transactions, all out-of-pocket costs and
expenses of the Parties hereto (including, but not limited to, the fees, costs
and expenses of the Cloud Peak Auditor) in connection with the preparation of
this Agreement and the other Transactions Documents, the Initial Public
Offering and the Transactions, including all direct costs incurred in
connection with 


 


57

















 


the Initial Public Offering and the Transactions (other than
underwriting or Initial Purchasers’ fees, discounts and commissions in
connection with the Initial Public Offering, Debt Offering and the Cloud Peak
Financing) through the IPO Closing Date, shall be paid by RTEA or any other
member of the Rio Tinto Group.  RTEA
shall also pay those fees, costs or expenses incurred after the IPO Closing
Date expressly listed on Schedule 8.4. 
Notwithstanding the foregoing, neither RTEA nor any other member of the
Rio Tinto Group shall be responsible for (i) reimbursing CPE or CPE LLC
for the salaries of any CPE or CPE LLC employee in connection with the
Transactions or (ii) paying the fees, costs or expenses of any Cloud Peak
Public Filing.


 


8.5.                              Provision of Additional Services.  The Parties agree that if any Party needs
services in addition to the services provided for in this Agreement and the
other Transaction Documents (“Additional Services”)
to comply with commercially applicable Laws, the other Parties will upon
request take reasonable actions to provide such Additional Services at the cost
of the Party receiving such Additional Services; provided, that the
Party providing such Additional Services will not have to pay any costs or
incur any Liabilities that are not reimbursed by the Party receiving such
Additional Services.


 


8.6.                              Governmental
Approvals.  The Parties
acknowledge that certain of the transactions contemplated by this Agreement and
the other Transaction Documents may be subject to certain conditions
established by applicable government regulations, orders, and approvals (“Existing Authority”).  To the extent that any of the transactions
contemplated by this Agreement or any other Transaction Document require any
Governmental Approvals, the Parties will use their reasonable best efforts to
obtain any such Governmental Approvals.


 


8.7.                              Covenants Against Taking
Certain Actions Affecting RTEA.


 


(a)          CPE and CPE LLC hereby covenant and agree that they
shall not, without the prior written consent of RTEA and KMS (which it may
withhold in its sole and absolute discretion) take, or cause to be taken,
directly or indirectly, any action, including making or failing to make any
election under the Law of any state, which has the effect, directly or
indirectly, of restricting or limiting the ability of RTEA, KMS or any of their
Affiliates to freely sell, transfer, assign, pledge or otherwise dispose of
shares of CPE Common Stock or the common membership units of CPE LLC.  Without limiting the generality of the
foregoing, CPE and CPE LLC shall not, without the prior written consent of RTEA
and KMS (which they may withhold in their sole and absolute discretion), take
any action, or recommend to its stockholders any action, which would among
other things, limit the legal rights of, or deny any benefit to, RTEA or KMS as
a CPE stockholder, as applicable, in a manner not applicable to CPE
stockholders generally.


 


(b)         With respect to those contracts and arrangements set
forth on Schedule 8.7(b), CPE and CPE LLC shall not take, and shall
cause each other member of the Cloud Peak Group not to take, any actions that
reasonably could result in any member of the Rio Tinto Group being in breach of
or in default under any such contract or agreement; provided, that,
except as set forth in any Transaction Document or otherwise agreed to in writing
by any member of the 


 


58





















 


Cloud Peak Group, the foregoing shall not obligate any member of the
Cloud Peak Group to satisfy any volume assumptions or targets in any such
contracts or agreements that are not specifically applicable to such member of
the Cloud Peak Group in such contracts or agreements.  CPE and CPE LLC hereby acknowledge and agree
that RTEA and KMS have made available to Cloud Peak copies of each contract or
agreement (or the relevant portion thereof) described on Schedule 8.7(b).  The Parties acknowledge and agree that, after
the date hereof, RTEA and KMS may in good faith (and not solely with the
intention of imposing restrictions on CPE or CPE LLC pursuant to this covenant)
amend the referenced agreements; provided that RTEA and KMS shall use
their reasonable best efforts to notify and consult with CPE and CPE LLC prior
to entering into any such amendments or additional contracts or agreements to
the extent that compliance therewith (i) could reasonably be expected to
have a material adverse effect on any member of the Cloud Peak Group or (ii) would
discriminate in an adverse way in the treatment of members of the Cloud Peak
Group as compared with RTEA or KMS and their other Affiliates, and shall make
available to CPE and CPE LLC copies of such amendments or additional contracts
or agreements.


 


(c)          CPE and CPE LLC shall not, without RTEA’s and KMS’
prior written consent, enter into any agreement or arrangement that, directly
or indirectly, binds or purports to bind any member of the Rio Tinto Group.


 


8.8.                              No
Violations.


 


(a)          CPE and CPE LLC covenant and agree that they shall
not, and shall cause their respective Subsidiaries not to, take any action or
enter into any commitment or agreement that CPE or CPE LLC knows or should have
known may reasonably be anticipated to result, with or without notice and with
or without lapse of time or otherwise, in a contravention or event of default
by any member of the Rio Tinto Group of: 
(i) any provisions of applicable Law; (ii) any provision of
the organizational documents of any member of the Rio Tinto Group in effect as
of the Closing Date; (iii) any credit agreement or other material
instrument listed on Schedule 8.8(a); or (iv) any judgment, order
or decree of any Governmental Authority having jurisdiction over any member of
the Rio Tinto Group or any of its respective assets.  For the avoidance of doubt, the entry into
this Agreement and the other Transaction Documents, and any actions of CPE and/or
CPE LLC in accordance with this Agreement or the other Transaction Documents,
shall not constitute a violation of this Section 8.8(a).


 


(b)         RTEA and KMS covenant and agree that they shall not,
and shall cause their respective Subsidiaries not to, take any action or enter
into any commitment or agreement that RTEA or KMS knows or should have known
may reasonably be anticipated to result, with or without notice and with or
without lapse of time or otherwise, in a contravention or event of default by
any member of the Cloud Peak Group of: (i) any provisions of applicable
Law; (ii) any provision of the organizational documents of CPE or CPE LLC;
(iii) any credit agreement or other material instrument listed on Schedule
8.8(b); (iv) the Cloud Peak Financing and the Cloud Peak Notes; or (v) any
judgment, order or decree of any Governmental Authority having jurisdiction
over CPE or CPE LLC or any of their respective Assets.  For the avoidance of doubt, the entry into
this Agreement and the other Transaction Documents, and any actions of 


 


59

















 


RTEA and/or KMS in accordance with this Agreement or the other
Transaction Documents, shall not constitute a violation of this Section 8.8(b).


 


(c)          CPE and CPE LLC, on the one hand, and RTEA and KMS, on
the other hand, agree to provide to the other Parties any Information and
documentation reasonably requested by the other for the purpose of evaluating
and ensuring compliance with Sections 8.8(a) and Section 8.8(b) hereof.


 


(d)         Notwithstanding Section 8.8(b), nothing in
this Agreement is intended to limit or restrict in any way RTEA’s, KMS’ or
their respective Affiliates’ rights, if any, as stockholders of CPE.


 


8.9.                              Receipt of
Notices.  If a Party
receives a notice or other communication from any Governmental Authority or
third party, or otherwise becomes aware of any fact or circumstance after the
Closing Date relating to an Asset, contract or ownership interest transferred
to the other Party or Liability assumed by the other Party, it will promptly
forward the notice or other communication to the other Party or give notice to
the other Party of such fact or circumstance of which it has become aware.  Each of RTEA and KMS, on the one hand, and
CPE and CPE LLC, on the other hand, will comply, and will cause members of
their respective Groups to comply, with this Section 8.9.


 


ARTICLE IX

MISCELLANEOUS


 


9.1.                              Corporate Power.  RTA,
RTEA and KMS represent on behalf of themselves, and each of CPE, CPE LLC and
the Subsidiaries named on Schedule A represents on behalf of themselves,
as follows:


 


(a)          each such Person has the
requisite corporate or other power and authority and has taken all corporate or
other action necessary in order to execute, deliver and perform each of this
Agreement and each other Transaction Document to which it is a party and to
consummate the transactions contemplated hereby and thereby; and


 


(b)         this Agreement and each
Transaction Document to which it is a party has been duly executed and
delivered by it and constitutes a valid and binding agreement of it enforceable
in accordance with the terms thereof.


 


9.2.                              Assignment. No Party
shall assign, transfer or otherwise alienate any or all of its rights or
interest under this Agreement, other than to an Affiliate, without the express
prior written consent of each of the other Parties, which consent may be
granted or withheld in such other Party’s sole discretion. Any attempted
transfer in violation of the previous sentence shall be invalid and ineffective
ab initio.  Notwithstanding the foregoing, nothing in
this Agreement, express or implied, is intended to restrict any Party from
selling any of its Assets after the Closing Date to another Person.


 


60
















 


9.3.                              Public Announcements.  The Rio Tinto Parties and the Cloud Peak Parties shall
consult with each other before issuing, and give each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement and the Transaction
Documents, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
Law, court process or by obligations pursuant to any listing agreement with any
national securities exchange or national securities quotation system.


 


9.4.                              Survival of
Covenants.  Except as expressly set forth in any
Transaction Document, the covenants and other agreements contained in this Agreement
and each Transaction Document, and liability for the breach of any obligations
contained herein or therein, shall survive each of the Closing and the
Transactions and shall remain in full force and effect.


 


9.5.                              Notices.  Any notice, instruction, direction or demand
required under the terms of this Agreement shall be in writing and shall be
duly given upon delivery, if delivered by hand, facsimile transmission or mail
(with postage prepaid), to the following addresses:


 


(a)          If to a member of the Cloud
Peak Group, to:


 


Cloud Peak Energy Inc.

General Counsel

505 S. Gillette Avenue

Gillette, Wyoming 82716

(307) 687-6000

Fax: (307) 687-6059




 


(b)         If to a member of the Rio
Tinto Group, to:


 


Rio Tinto Energy
America Inc.


c/o Chief Executive
Officer


4700 Daybreak
Parkway

South Jordan, Utah  84095

(801) 204-2000

Fax: (801) 204-2892




61

















 


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


 


Legal Department

Rio Tinto Services Inc.

4700 Daybreak Parkway

South Jordan, Utah  84095

(801) 204-2000

Fax:  (801) 204-2892




or to
such other addresses or telecopy numbers as may be specified by like notice to
the other Parties.


 


9.6.                              Governing
Law; Submission to Jurisdiction; Waiver of Jury Trial.


 


(a)          This Agreement and, unless
expressly provided therein, each other Transaction Document, is to be construed
in accordance with and governed by the internal laws of the State of New York
without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of New York to the rights and duties of the Parties.


 


(b)         Each Party hereby
irrevocably and unconditionally consents to submit to the sole and exclusive
jurisdiction of the United States District Court for the Southern District of
New York or, if such court does not have subject matter jurisdiction, the
Supreme Court of the State of New York sitting in New York County (the “New York Courts”) for any legal
action or other legal proceeding arising out of or relating to this Agreement,
or the negotiation, validity or performance of this Agreement, or the
transactions contemplated thereby (and agrees not to commence any legal action
or other legal proceeding relating thereto except in such courts, including to
enforce any settlement, order or award). 
Each Party hereto:


 


(i)                                     consents to service of
process in any such proceeding in any manner permitted by the laws of the State
of New York, and also agrees that service of process by registered or certified
mail, return receipt requested, at its address specified pursuant to Section 9.5
is sufficient and reasonably calculated to give actual notice;


 


(ii)                                  agrees that the New York
Courts shall be deemed to be a convenient forum; and


 


(iii)                               waives and agrees not to
assert (by way of motion, as a defense or otherwise), in any such legal
proceeding commenced in the New York Courts that such Party is not subject
personally to the jurisdiction of such court, that such legal proceeding has
been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter hereof or thereof may not
be enforced in or by such court.


 


62

















 


(c)          Except as otherwise set
forth in Section 9.10(b)(iv), in the event of any action or other
proceeding relating to this Agreement or the enforcement of any provision of
this Agreement, the prevailing party (as determined by the court) shall be
entitled to payment by the non-prevailing party of all costs and expenses
(including reasonable attorneys’ fees) incurred by the prevailing party,
including any costs and expenses incurred in connection with any challenge to
the jurisdiction or the convenience or propriety of venue of proceedings before
the New York Courts.


 


(d)         Each of the Parties hereto
hereby waives to the fullest extent permitted by applicable Law any right it
may have to a trial by jury with respect to any legal action or other legal
proceeding directly or indirectly arising out of, under or in connection with
this Agreement, the Transaction Documents or the transactions contemplated
hereby or thereby.  Each of the Parties
hereto (a) certifies that no Representative, agent or attorney of any
other Party has represented, expressly or otherwise, that such other Party
would not, in the event of litigation, seek to enforce that foregoing waiver
and (b) acknowledges that it and the other Parties hereto have been
induced to enter into this Agreement and the transactions contemplated by this
Agreement, as applicable, by, among other things, the mutual waivers set forth
in this Section 9.6(d).


 


9.7.                              Severability.  If
any terms or other provision of this Agreement shall be determined by a court,
administrative agency or arbitrator to be invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability shall not render the entire
Agreement invalid. Rather, this Agreement shall be construed as if not
containing the particular invalid, illegal or unenforceable provision, and all other
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to either Party. Upon
such determination that any term or other provision is invalid, illegal or
unenforceable, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to the fullest
extent permitted under applicable Law.


 


9.8.                              Amendment.  This Agreement may only be amended by a
written agreement executed by the Parties.


 


9.9.                              Counterparts
and Signature.  This
Agreement may be executed in separate counterparts, each of which shall be
deemed an original and all of which, when taken together, shall constitute one
and the same 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
Party.


 


9.10.                        Dispute
Resolution.  Unless
otherwise agreed to in writing by the Parties, any controversy or Claim,
whether based on contract, tort, statute or other legal or equitable theory
(including any Claim of fraud, misrepresentation or fraudulent inducement or
any question of validity or effect of this Agreement, other than with respect
to Section 3.9, including this Section 9.10) (in each
such case, a “Dispute”)
arising out of or related to this Agreement, or any 


 


63

















 


Transaction Document other than the Tax Receivable Agreement (it being
understood that disputes arising under the Tax Receivable Agreement shall be
resolved by reference to the dispute resolution mechanisms contained therein),
or the breach or termination thereof, shall be resolved in accordance with this
Section 9.10.  All
communications between the Parties or their Representatives in connection with
the attempted resolution of any Dispute shall be deemed to have been delivered
in furtherance of a Dispute settlement and shall be exempt from discovery and
production, and shall not be admissible in evidence for any reason (whether as
an admission or otherwise), in any arbitral or other proceeding for the
resolution of the Dispute.


 


(a)          Direct Negotiation. First, the
Party making a Claim shall provide notice thereof to the Party against which
such Claim is asserted pursuant to Section 9.5 of this Agreement,
and the Parties in Dispute (each, a “Disputing Party”)
shall promptly (but no later than ten (10) Business Days after the date of
such notice) meet (whether by phone or in person) in a good faith attempt to
resolve the Dispute.  Second, if the
Dispute is still unresolved after the date of such good faith attempt, within
fifteen (15) Business Days following the commencement of such good faith
attempt, an officer of each Group with full authority to resolve such Dispute
shall meet (whether by phone or in person) in a good faith attempt to resolve
the Dispute.  Third, if the Dispute is
still unresolved after the date of such second good faith attempt, then such
Dispute shall be submitted to mediation in accordance with Section 9.10(b).


 


(b)         Mediation. If the
Dispute is to be submitted to mediation in accordance with Section 9.10(a),
the mediator will be selected by mutual agreement of the Groups, which
agreement shall be reached in good faith and on a timely basis (but no later
than ten (10) Business Days after the date of the second good faith
attempt).  If they are unable to agree on a mediator, then the mediator
shall be selected by Judicial Arbitration and Mediation Services, Inc., or
its successor (“JAMS”), or
if JAMS is no longer able to supply the mediator, such mediator shall be
selected from the American Arbitration Association.


 


(i)                                     Mediation Procedure. The mediation
will be conducted pursuant to the rules generally used by the mediator in
the mediator’s practice, subject to the following:


 


(A)                              The mediator will act as an
advocate for resolution and will use his or her best efforts to assist the
Parties in reaching a mutually acceptable settlement. The mediator may suggest
ways of resolving the Dispute, but may not impose his or her own judgment on
the issues or that of the Parties.  The
mediator will not have the authority to decide any issue for the Parties, but
will attempt to facilitate the voluntary resolution of the Dispute by the
Parties.


 


(B)                                Each Person participating in
the mediation will have authority to settle, and all Persons necessary to the
decision to settle will be present during the entire mediation session or
sessions.


 


(C)                                The mediation will take
place at a time and convenient location agreeable to the mediator and the
Parties, as the mediator will determine, but such 


 


64

















 


mediation will take place no later than sixty (60) Business Days after
the selection of the mediator under Section 9.10(b) and will
take place over two (2) consecutive days.


 


(D)                               Mediation sessions will be
private, and only the Parties and their representatives may attend the
mediation sessions.  Other Persons may
attend the mediation sessions only with the permission of the Parties and with the
consent of the mediator.


 


(E)                                 There will be no
stenographic record of the mediation process, and no Person will tape record
any portion of the mediation sessions.


 


(F)                                 No subpoenas, summons,
complaints, citations, writs, or other process may be served at or away from
the site of any mediation session upon any Person who then is entering, on the
way to, in attendance or leaving the session.


 


(G)                                The Parties will participate
in the mediation proceeding in good faith with the intention to settle.


 


(H)                               No later than
five (5) days prior to the mediation, each Party will deliver to the
mediator information reasonably required for the mediator to understand the
issues presented, which may include a confidential memorandum setting forth the following:


 


(1)                                  identification of the
matters in dispute;


 


(2)                                  concise statement of points
(factual, legal, practical) that such Party believes enhances its chance of
achieving a favorable outcome of the Dispute; and


 


(3)                                  history of settlement
discussions and outstanding offers of settlement.


 


(I)                                    The above rules may be
modified or amended with the Parties’ written consent.


 


(ii)                                  Release. The mediator
will not be a necessary or proper party in any Action relating to the
mediation. Neither the mediator, the Person employing the mediator, nor the
Person providing the mediator will be liable to any Party for any acts or
omissions in connection with any mediation conducted pursuant to this Section 9.10.


 


(iii)                               Compromise Negotiation. The mediation
is a compromise negotiation for purposes of the applicable rules of evidence
and is an alternative dispute resolution procedure subject to the laws chosen
to govern this Agreement. The entire procedure is and will be
confidential.  All conduct, statements,
promises, offers, views and opinions, whether oral or written, made in the
course of the mediation by any of the Parties, their agents, employees or other
representatives and by the mediator, who is the Parties’ joint agent for
purposes of these compromise negotiations, are confidential and will, in
addition where appropriate, be deemed to be work product and privileged.  Such conduct, statements, promises, 


 


65

















 


offers, views and opinions will not be discoverable or admissible for
any purposes, including impeachment, if any litigation or other proceedings
involve the Parties and will not be disclosed to anyone not an agent, employee,
expert or other representative for any of the Parties.  Evidence otherwise discoverable or admissible
is not excluded from discovery or admission as a result of its use in the
mediation.  Confidential Information
disclosed to the mediator by the Parties or by witnesses in the course of the
mediation will not be divulged by the mediator. 
All records, reports or other documents received by the mediator while
serving in that capacity will be confidential. 
The mediator will not be compelled to divulge such records or to testify
with regard to the mediation in any adversary proceeding or judicial forum.


 


(iv)                              Costs of Mediation. The Parties
will bear their respective costs incurred in connection with the mediation
described in this Section 9.10, except that the Parties will share
equally the fees and expenses of the mediator, the costs of obtaining the
facility for the mediation, and the fees and expenses of any experts employed
at the mediator’s request.


 


(v)                                 Termination of Mediation. The mediation
will be terminated upon the first to occur of the following:


 


(A)                              by the execution of a
settlement agreement resolving the dispute by the Parties;


 


(B)                                by a declaration of the
mediator to the effect that further efforts at mediation are no longer
worthwhile; or


 


(C)                                after the completion of two (2) full
days of mediation sessions, by declaration of a Party or Parties to the effect
that mediation proceedings are terminated.


 


(vi)                              Litigation. No Party may
bring (or have brought) any Action in any forum with respect to any Dispute
arising out of or related to this Agreement or any Transaction Document, or the
breach or termination thereof, until such Party has fully complied with Sections 9.10(a) and
(b) with respect to such Dispute, except with respect to:


 


(A)                              any Dispute relating to
RTEA’s or KMS’ rights as a stockholder of CPE or a Member of CPE LLC pursuant
to applicable Law, CPE’s Charter or Bylaws or the LLC Agreement; and


 


(B)                                any Dispute for which a
Party is seeking injunctive relief if time is of the essence and irreparable
harm will result in the absence of such injunctive relief.


 


9.11.                        No
Third-Party Beneficiaries.  This Agreement shall inure to the benefit of,
and be binding upon, the Parties hereto, their Affiliates and their respective
legal representatives, successors and assigns. 
Except as otherwise provided in this Agreement, nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.


 


66

















 


9.12.                        Waiver. A provision
of this Agreement may be waived only by a writing signed by the Party intended
to be bound by the waiver. A Party is not prevented from enforcing any right,
remedy or condition in the Party’s favor because of any failure or delay in
exercising any right or remedy or in requiring satisfaction of any condition,
except to the extent that the Party specifically waives the same in
writing.  A written waiver given for one
matter or occasion is effective only in that instance and only for the purpose
stated.  A waiver once given is not to be
construed as a waiver for any other matter or occasion.  Any enumeration of a Party’s rights and
remedies in this Agreement is not intended to be exclusive, and a Party’s
rights and remedies are intended to be cumulative to the extent permitted by
Law and include any rights and remedies authorized in Law or in equity.


 


9.13.                        Entire Agreement. This Agreement and the
other Transaction Documents constitute the entire agreement between the Parties
with respect to the subject matter hereof and thereof and supersede (a) all
prior oral or written proposals or agreements, (b) all contemporaneous oral proposals or
agreements and (c) all previous negotiations and all other communications
or understandings between the Parties, in each case with respect to the subject
matter hereof and thereof.  To the extent
any portion of this Agreement conflicts with any of the Transaction Documents,
this Agreement shall control; provided, however, that any
specific provision in the Tax Receivable Agreement shall control with respect
to any Tax matter.


 


67
















 


IN WITNESS WHEREOF, the
Parties have caused this Master Agreement to be signed by their duly authorized
representatives.


 


 


	
   

  	
  Rio Tinto America Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Berson

  
	
   

  	
  Name:

  	
  James P. Berson

  
	
   

  	
  Title:

  	
  Authorized Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Rio Tinto Energy America Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Berson

  
	
   

  	
  Name:

  	
  James P. Berson

  
	
   

  	
  Title:

  	
  Authorized Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Kennecott Management Services Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Berson

  
	
   

  	
  Name:

  	
  James P. Berson

  
	
   

  	
  Title:

  	
  Authorized Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cloud Peak Energy Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  
	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cloud Peak Energy Resources LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  
	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Antelope Coal LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  



 


68

















 


	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Caballo Rojo Holdings LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  
	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Caballo Rojo LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  
	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cloud Peak Energy Services Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  
	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cloud Peak Energy Finance Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  
	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cordero Mining Holdings LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  
	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Cordero Mining LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Colin Marshall

  
	
   

  	
  Name:

  	
  Colin Marshall

  
	
   

  	
  Title:

  	
  President and CEO

  



 


69

















 


	
   

  	
  Kennecott Coal Sales LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NERCO Coal LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NERCO Coal Sales LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NERCO LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northern Coal Transportation LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Prospect Land and Development LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  



 


70

















 


	
   

  	
  Resource Development LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Sequatchie Valley Coal Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Spring Creek Coal LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Western Minerals LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Barrett

  
	
   

  	
  Name:

  	
  Michael Barrett

  
	
   

  	
  Title:

  	
  CFO

  



 


71
















 


EXHIBIT A


 


Jacobs
Ranch MIPA Exhibit


 


The
following Exhibit sets forth certain rights, obligations and liabilities
of RTEA and the Cloud Peak Group with respect to the MIPA.  For the avoidance of doubt, any obligations
and liabilities under the MIPA that are not assigned or allocated to or assumed
by CPE LLC under this Exhibit A shall be deemed to be assigned or
allocated to and assumed by RTEA and shall be the obligations and liabilities
of RTEA.  Unless otherwise indicated, all
capitalized terms used herein shall have the meanings set forth in the Master
Separation Agreement.  For the avoidance
of doubt, the Agency Agreement between CPE LLC and RTEA constitutes a separate
obligation between CPE LLC and RTEA and shall not be governed by this Exhibit A.  The Cloud Peak Group further acknowledges
RTEA’s obligations under the Tire Allocation Agreement (as defined in the
MIPA).


 


1.               Except as provided in this Exhibit, CPE
LLC hereby assigns, transfers and delegates all rights and obligations arising
in connection with the MIPA to RTEA and RTEA hereby accepts and assumes such
rights and obligations.


 


2.               Notwithstanding the foregoing provisions
of Section 1 of this Exhibit A, with respect to Article II
of the MIPA:


 


2.1.           CPE LLC shall fully and promptly
cooperate with RTEA in the performance of any actions under Section 2.4
of the MIPA, including by reviewing information provided by the Buyer (as
defined in the MIPA), promptly forwarding all information provided by the Buyer
to RTEA and providing RTEA with full access at reasonable times to any books,
records or other information in the possession of CPE LLC and its Affiliates as
necessary for RTEA to satisfy its obligations. 
RTEA shall have sole discretion with respect to any determinations to be
made under Section 2.4 of the MIPA.


 


2.2.           CPE LLC shall fully and promptly
cooperate with RTEA in the performance of any actions under Section 2.5(b),
including by preparing the documents referred to in Section 2.5(b) if
so directed by RTEA, reviewing such documents and other information as
requested by RTEA, and providing RTEA with full access at reasonable times to
any books, records or other information in the possession of CPE LLC and its
Affiliates as necessary for RTEA to satisfy its obligations. RTEA shall have
sole discretion with respect to any determinations to be made under Section 2.5(b) of
the MIPA.


 


2.3.           Upon request from RTEA, CPE LLC shall
obtain and provide to RTEA any information that may be obtained under Section 2.5(c) of
the MIPA and request of the Buyer, on RTEA’s behalf, any information or
assistance that Seller is permitted to request and receive under Section 2.5(c).


 


2.4.           CPE LLC agrees to promptly forward to
RTEA any notices received from the Buyer under Section 2.5(e) of
the MIPA.


 


2

















 


2.5.           CPE LLC shall fully and promptly
cooperate with RTEA in the performance of any actions required of CPE LLC (but
assigned and delegated to RTEA hereunder) under Section 2.5(f) of
the MIPA, including by reviewing information provided by the Buyer, promptly
forwarding all information provided by the Buyer to RTEA, providing RTEA with
full access at reasonable times to any books, records or other information in
the possession of CPE LLC necessary for RTEA to satisfy its obligations.  RTEA shall have sole discretion with respect
to any determinations to be made under Section 2.5(f) of the
MIPA.


 


2.6.           Upon request from RTEA, CPE LLC shall
bring a Claim (as defined in the MIPA) against the Buyer as contemplated by Section 2.5(g) of
the MIPA, on RTEA’s behalf.  RTEA shall
bear all expenses of, and shall solely control all litigation relating to, any
such Claim and be entitled to any benefits resulting from such Claim.  RTEA shall have sole discretion with respect
to any determinations to be made under Section 2.5(g) of the
MIPA.


 


2.7.           RTEA shall be responsible for any payment
required to be made by CPE LLC and entitled to any payment to be received by
CPE LLC under Section 2.5(h) of the MIPA.  CPE LLC shall promptly forward to RTEA any
payments received under Section 2.5(h) of the MIPA.


 


3.               Notwithstanding the foregoing provisions
of Section 1, with respect to Article V of the MIPA:


 


3.1.           RTEA shall have all the rights and
benefits of Section 5.3 of the MIPA.  CPE LLC agrees to promptly forward to RTEA
payments received under Section 5.3 of the MIPA.


 


3.2.           RTEA shall have all the rights and
benefits of Section 5.4 of the MIPA.  CPE LLC agrees to promptly forward to RTEA
payments received under Section 5.4 of the MIPA.


 


3.3.           RTEA shall have all the rights and
benefits of Section 5.7 of the MIPA.  CPE LLC agrees to promptly forward to RTEA
payments received under Section 5.7 of the MIPA.


 


3.4.           RTEA shall have all the rights and
benefits of Section 5.8 of the MIPA.


 


3.5.            CPE LLC on behalf of every other member
of the Cloud Peak Group, hereby agrees to comply with (and cause each of the
other members of the Cloud Peak Group to comply with) Section 5.10(a) of
the MIPA.  For avoidance of doubt, CPE
LLC, on behalf of every other member of the Cloud Peak Group, hereby agrees to
maintain in confidence, and cause each of the other members of the Cloud Peak
Group to maintain in confidence, all material written, oral, or other
information obtained in confidence from RTEA in connection with the MIPA or the
Acquisition, in accordance with the terms of Section 5.10(a) of
the MIPA and subject to the same qualifications set forth in Section 5.10(c) of
the MIPA.  CPE LLC, on behalf of every
other member of the Cloud Peak Group, acknowledges Section 5.10(e) of
the MIPA and that RTEA shall be entitled to the relief 


 


3

















 


described in Section 5.10(e) of
the MIPA for any violation of this Section 3.5 of Exhibit A
by CPE LLC and each other member of the Cloud Peak Group.


 


3.6.           RTEA shall have all the rights and
benefits of Section 5.13 of the MIPA.


 


3.7.           CPE LLC shall fully and promptly
cooperate with RTEA in the performance of any actions under Section 5.14
of the MIPA, including by providing RTEA with full access at reasonable times
to any books, records or other information in the possession of CPE LLC and its
Affiliates as necessary for RTEA to satisfy its obligations.  RTEA shall have sole discretion with respect
to any determinations to be made under Section 5.14 of the MIPA.
CPE LLC will promptly forward any notice or other information received from
Buyer pursuant to Section 5.14 of the MIPA to RTEA and, upon the
request of RTEA, will promptly forward any notice or other information from
RTEA to Buyer.


 


3.8.           CPE LLC hereby undertakes to perform all
obligations (and the same are not assigned or delegated to RTEA hereunder)
pursuant to Section 5.16 of the MIPA, as follows.  With respect to any property identified under
Section 5.16(b) of the MIPA as being part of Jacobs Ranch (as
defined in the MIPA), the Subsidiary (as defined in the MIPA) or the Mine (as
defined in the MIPA), that was to have been conveyed to the Buyer or Jacobs
Ranch pursuant to the MIPA, but which was not, and which is requested by RTEA or
the Buyer pursuant to Section 5.16 of the MIPA, to the extent that
such property was held by any member of the Cloud Peak Group as of the Closing
Date of the IPO, CPE LLC shall effect the conveyance to the Buyer of any such
property at no cost to RTEA.  To the
extent that such property was not held by any member of the Cloud Peak Group as
of the Closing Date of the IPO, at the request of RTEA, CPE LLC shall use all
reasonable best efforts, short of litigation, to obtain and effect a transfer
of such property to the Buyer, but RTEA shall bear the reasonable out-of-pocket
expenses incurred by CPE LLC to obtain such property and effect such conveyance
and the Parties shall cooperate with respect to the acquisition and conveyance
of the same.  CPE LLC agrees to forward
any payments collected pursuant to Section 5.16(c) of the MIPA
to the Buyer in accordance with the requirements of Section 5.16(c) of
the MIPA only with the prior consent of RTEA.


 


4.               Notwithstanding the foregoing provisions
of Section 1, with respect to Article VIII of the MIPA:


 


4.1.           RTEA hereby acknowledges that it shall
satisfy any indemnification obligations of CPE LLC arising under Sections
8.1(a) and 8.1(d) or out of Section 8.1(b) of
the MIPA to the extent the same is designated as an obligation of RTEA under
this Exhibit A; provided further, however, that RTEA shall have no
obligations under this Section 4.1 of Exhibit A, and the same
are excluded from the assignment and delegation to RTEA under Section 1,
for Liability (as defined in the MIPA) to the extent such Liability arises due
to gross negligence or willful misconduct of any member of the Cloud Peak
Group, or any of its officers or employees (including any such gross negligence
or willful misconduct by any of 


 


4

















 


such officers or
employees while such officer or employee was an employee of the Rio Tinto
Group, including CLE LLC, prior to the IPO); provided, further, that the
liabilities, if any, arising under the Agency Agreement shall be as set forth
in the Agency Agreement.


 


4.2.           CPE LLC shall fully indemnify RTEA for,
and the same are excluded from the assignment and delegation to RTEA (i) any
payments required to be made by a member of RTEA pursuant to the Seller
Affiliate Guaranty (as defined in the MIPA) for any Liability arising out of
any violation of Sections 8.1(c), 5.6 and 5.10 of the MIPA
by any member of the Cloud Peak Group, or any of its officers or employees
(including any such violations of such Sections by any such officer or employee
while such officer or employee was an employee of the Rio Tinto Group,
including CLE LLC, prior to the IPO); and (ii) any Liabilities arising due
to gross negligence or willful misconduct of any member of the Cloud Peak
Group, or any of its officers or employees (including while such officer or
employee was an employee of the Rio Tinto Group, including CLE LLC, prior to
the IPO).


 


4.3.           RTEA shall have all the rights and
benefits of Section 8.2 of the MIPA and CPE LLC shall promptly
forward to RTEA any payments received pursuant to Section 8.2 of
the MIPA.


 


4.4.           With respect to those matters for which
RTEA has assumed indemnification obligations under Article VIII of
the MIPA, the performance of any actions required to be taken under Section 8.3
of the MIPA shall be, and the same hereby is, assigned and delegated to, the
obligation of RTEA.  CPE LLC shall fully
and promptly cooperate with RTEA in the performance of any actions required of
CPE LLC under Section 8.3 of the MIPA (but assigned and delegated
to RTEA hereunder), including by participating in any legal or governmental
proceeding arising in connection with such performance, promptly forwarding all
notices or other information provided by the Buyer or any third-party to RTEA
and providing RTEA with full access at reasonable times to any books, records
or other information in the possession of CPE LLC as necessary for RTEA to
satisfy its obligations.  RTEA shall have
sole discretion with respect to any determinations to be made under Section 8.3
of the MIPA.  RTEA shall have all the
rights and benefits of Section 8.3 of the MIPA.


 


4.5.           RTEA shall have all the rights and
benefits of Section 8.4 of the MIPA.


 


4.6.           Without limiting the obligation of RTEA
to mitigate as contemplated in Section 8.5 of the MIPA, and
assigned and delegated to RTEA hereunder, CPE LLC hereby also agrees to make
Commercially Reasonable Efforts (as defined in the MIPA) to mitigate any
Liability, including availing itself of any defenses, limitations, rights of
contribution, claims against third parties and other rights at law or in
equity, and shall provide evidence and documentation of the nature and extent
of the Liability, in each case within CPE LLC’s ability to control, as it
relates to any indemnification obligation to Buyer or its Affiliates under the 


 


5

















 


MIPA, that have been
assigned to or assumed by RTEA hereunder, as the same were contemplated in Section 8.5
of the MIPA.


 


5.               Notwithstanding the foregoing provisions
of Section 1, with respect to Article IX of the MIPA:


 


5.1.           CPE LLC hereby agrees to provide RTEA as
promptly as practicable with all notices, requests, demands, waivers and other
communications given by the Buyer related to any of the rights or obligations
that have been assigned or assumed by RTEA pursuant to this Exhibit A.


 


5.2.           CPE LLC hereby acknowledges that RTEA
shall be entitled to the rights and benefits of all provisions of Article IX
of the MIPA.


 


6.               Miscellaneous


 


6.1.           CPE LLC hereby agrees that it will not
agree to any amendment to the MIPA without the prior written consent of RTEA,
which may be granted in the sole discretion of RTEA.


 


6.2.           To the extent that any information to be
provided, or duties performed by, CPE LLC hereunder is not in the possession or
control of, or is unable to be performed by CPE LLC, but is in the possession
of, or ability to perform by, any other member of the Cloud Peak Group, then
Cloud Peak Energy Inc., shall fully cooperate with RTEA cause such information
to be provided and performance rendered by such member of the Cloud Peak Group
that is able to provide or perform the same.


 


6