Exhibit
10.6


 


EXECUTION COPY


 


ACQUISITION AGREEMENT


 


THIS
ACQUISITION AGREEMENT dated as of November 19, 2009 (this “Agreement”),
is between Cloud Peak Energy Inc., a Delaware corporation (“Cloud Peak”), and Rio Tinto Energy
America Inc., a Delaware corporation (“RTEA”).  Certain terms used in this Agreement are
defined in Section 1.1.  Except as otherwise specified in this Agreement, all capitalized terms
used herein that are defined in the Master Separation Agreement (as defined
below) have the respective meanings specified therein.


 


RECITALS


 


WHEREAS,
through a series of structuring transactions, RTEA contributed the non-Colorado
Western United States coal mining business (other than the Colowyo mine) (the “Coal Business”) of Rio Tinto
America Inc., a Delaware corporation (“RTA”) to
Cloud Peak Energy Resources LLC, a Delaware limited liability company (“CPE  LLC”);


 


WHEREAS,
prior to the completion of the transactions contemplated in this Agreement,
RTEA and Kennecott Management Services Company, a Delaware corporation (“KMS”) owned all of the outstanding
Common Membership Units (as defined below) of CPE LLC;


 


WHEREAS,
concurrent with the execution of this Agreement, (i) RTA, RTEA, KMS, Cloud
Peak, CPE LLC and certain subsidiaries of CPE LLC will enter into a Master
Separation Agreement, (ii) Cloud Peak, RTEA and KMS will enter into the Third
Amended and Restated Limited Liability Company Operating Agreement of CPE LLC
(the “LLC  Agreement”)
and (iii) Cloud Peak, RTEA and KMS and/or their respective Affiliates will
enter into the Transaction Documents, including the Tax Receivable Agreement;


 


WHEREAS,
Cloud Peak desires to acquire a portion of RTEA’s interest in the Coal Business
through the acquisition from RTEA of Common Membership Units (as defined below)
in CPE LLC, and, as consideration, will issue to RTEA the CPE Note (as defined
below);


 


WHEREAS,
the Underwriters have required, as a condition to their entering into the
Underwriting Agreement, that Cloud Peak grant the Underwriters an option (the “Overallotment  Option”) to purchase up to an additional 4,590,000
shares of Common Stock from Cloud Peak to cover overallotments of shares in the
Initial Public Offering (the “Overallotment”);
and


 


WHEREAS,
upon the exercise of the Overallotment Option, Cloud Peak desires to acquire an
additional portion of RTEA’s interest in the Coal Business through the
acquisition from RTEA of additional Common Membership Units in CPE LLC.


 


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, Cloud Peak and RTEA hereby agree as
follows:


 

















 


ARTICLE 1


 


DEFINITIONS


 


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


 


“Code”
means the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute and the rules and
regulations thereunder in effect from time to time.  Any reference herein to a specific provision
of the Code shall mean, where appropriate, the corresponding provision in any
successor statute.


 


“Common
Membership Units” means the limited liability company common
membership units of CPE LLC as described in the LLC Agreement.


 


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


 


“Encumbrance” means, with respect to
any specified asset, any security interest, lien, mortgage, claim, charge,
pledge, restriction, option, reservation, equitable interest, deed of trust,
right of first refusal, easement, servitude or encumbrance of any nature.


 


“First
Closing Date” has the meaning set forth in Section 3 of the
Underwriting Agreement.


 


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


 


“Optional
Closing Date” has the meaning set forth in Section 3 of the
Underwriting Agreement.


 


“Master
Separation Agreement” means the Master Separation Agreement
dated as of the date hereof among RTA, RTEA, KMS, Cloud Peak, CPE LLC and
certain subsidiaries of CPE LLC.


 


“Underwriters”
means the several underwriters of the offering named in the Underwriting
Agreement.


 


“Underwriting
Agreement” means the underwriting agreement to be entered into
among Cloud Peak and the Underwriters for the Initial Public Offering.


 


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


 


	
  Term

  	
   

  	
  Section

  
	
  Acquisition Closing

  	
   

  	
  2.4

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Business Day

  	
   

  	
  Master Separation
  Agreement

  
	
  Cloud Peak

  	
   

  	
  Preamble

  
	
  Coal Business

  	
   

  	
  Recitals

  



 


2

















 


	
  CPE LLC

  	
   

  	
  Recitals

  
	
  CPE Note

  	
   

  	
  2.2

  
	
  KMS

  	
   

  	
  Recitals

  
	
  Law

  	
   

  	
  Master Separation
  Agreement

  
	
  LLC Agreement

  	
   

  	
  Recitals

  
	
  New York Courts

  	
   

  	
  5.3

  
	
  Overallotment

  	
   

  	
  Recitals

  
	
  Overallotment
  Acquisition Closing

  	
   

  	
  3.3

  
	
  Overallotment Option

  	
   

  	
  Recitals

  
	
  RTA

  	
   

  	
  Recitals

  
	
  RTEA

  	
   

  	
  Preamble

  
	
  Tax Receivable
  Agreement

  	
   

  	
  Master Separation Agreement

  
	
  Transaction Documents

  	
   

  	
  Master Separation
  Agreement

  
	
  Unit(s)

  	
   

  	
  2.1

  
	
  Unit Price

  	
   

  	
  2.2

  



 


ARTICLE 2


 


ACQUISITION OF UNITS


 


2.1.                                    Acquisition.  RTEA hereby agrees to sell to Cloud Peak and
Cloud Peak hereby agrees to acquire from RTEA a portion of RTEA’s interest in
the Coal Business through the acquisition of 30,600,000 Common Membership Units
(each a “Unit” and collectively, the “Units”),
free and clear of all Encumbrances.


 


2.2.                                    Unit Price.  The price of each Unit shall
equal $14.175 (the “Unit Price”).
As consideration for the Units, Cloud Peak shall issue a promissory note (the “CPE  Note”)
in a principal amount equal to the number of Units multiplied by the Unit
Price, in the form attached hereto as Exhibit A.


 


2.3.                                    Payment of Note.  Cloud Peak hereby agrees to use all of the
net proceeds of the Initial Public Offering to pay the CPE Note in full as
promptly as practicable by wire transfer of immediately available funds to an
account designated by RTEA in writing in accordance with the requirements of the
CPE Note.  The failure by Cloud Peak to
pay the CPE Note shall constitute a breach of this Agreement.


 


2.4.                                    Acquisition Closing.  The closing of the transactions contemplated
in this Article 2 (the “Acquisition Closing”) shall take place on the
date hereof.


 


2.5.                                    FIRPTA
Certificate.  Prior to
the Acquisition Closing, RTEA shall provide Cloud Peak with a FIRPTA
certificate, in the form attached hereto as Exhibit B, duly executed by
an officer of RTEA.


 


2.6.                                    Transfer Taxes and Fees.  Cloud Peak shall be responsible for any
documentary, transfer, sales or other taxes, if any, imposed by reason of the
sale of the Units under this Agreement and any deficiency, interest or penalty
asserted with respect thereto.


 


3

















 


ARTICLE 3


 


ACQUISITION OF OVERALLOTMENT UNITS


 


3.1.                                    Overallotment Acquisition.  In the event the Underwriters exercise the
Overallotment Option and the transactions related to the Overallotment Option
set forth in the Underwriting Agreement are consummated, RTEA hereby agrees to
sell to Cloud Peak and Cloud Peak hereby agrees to acquire from RTEA a portion
of RTEA’s interest in the Coal Business through the acquisition of a number of
Common Membership Units, free and clear of all Encumbrances, equal to the number
of shares of Common Stock sold by Cloud Peak pursuant to the Overallotment
Option (each an “Overallotment
Unit” and collectively, the “Overallotment  Units”), which may be up to 4,590,000 shares of Common
Stock.


 


3.2.                                    Overallotment Unit Price.  The price of each
Overallotment Unit shall equal the Unit Price. Cloud Peak shall pay to RTEA an
amount equal to the number of Overallotment Units multiplied by the Unit Price
by wire transfer of immediately available funds to an account designated by
RTEA in writing at the Overallotment Acquisition Closing (as defined below).


 


3.3.                                    Overallotment Acquisition Closing.  The closing of the
transactions contemplated in this Article 3 (the “Overallotment
Acquisition Closing”) shall take place no later than 1 P.M. EST,
on the Business Day following the Optional Closing Date.


 


3.4.                                    Transfer Taxes and Fees.  Cloud Peak shall be responsible for any
documentary, transfer, sales or other taxes, if any, imposed by reason of the
sale of the Overallotment Units under this Agreement and any deficiency,
interest or penalty asserted with respect thereto.


 


3.5.                                    Conditions to
Overallotment Acquisition Closing.  The obligations of both Cloud Peak and RTEA
under this Article 3 are subject to the fulfillment or waiver of the following
conditions:


 


3.5.1.                          The
Underwriters shall have exercised their Overallotment Option and the
transactions related to the Overallotment Option set forth in the Underwriting
Agreement are consummated; and


 


3.5.2.                          There shall not
have been issued and be in effect any order, decree or judgment of, or in, any
court, tribunal of competent jurisdiction or governmental authority which makes
the issue and sale of the Overallotment Units or any of the other transactions
contemplated by this Agreement illegal or invalid.


 


4

















 


ARTICLE 4


 


REPRESENTATIONS AND WARRANTIES


 


4.1.                                  Representations and Warranties of RTEA.  RTEA represents and warrants to Cloud Peak as
follows:


 


4.1.1.                         Organization; Good Standing; Qualification of RTEA.  RTEA is a Delaware
corporation, duly organized and validly existing under the laws of the State of
Delaware and is in good standing under such laws.  RTEA has the requisite power and authority to
own its properties and to conduct its business in all material respects.  RTEA is in good standing and qualified to do
business in every jurisdiction where the failure to so qualify would have a
material adverse effect on its business or financial condition or on RTEA’s
ability to enter into this Agreement or to consummate the transactions
contemplated hereby.


 


4.1.2.                         Organization; Good Standing; Qualification of CPE LLC.  CPE LLC is a limited
liability company, duly organized and validly existing under the laws of the
State of Delaware and is in good standing under such laws.  CPE LLC has the requisite power and authority
to own its properties and to conduct its business in all material
respects.  CPE LLC is in good standing
and qualified to do business in every jurisdiction where the failure to so
qualify would have a material adverse effect on its business or financial
condition or on RTEA’s ability to enter into this Agreement or to consummate
the transactions contemplated hereby.


 


4.1.3.                         Authorization.  The execution, delivery and
performance of this Agreement and the sale of the Units and the Overallotment
Units is within the power of and has been duly authorized by RTEA.  This Agreement constitutes the legal, valid
and binding obligation of RTEA enforceable against RTEA in accordance with its
terms, except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting
the enforcement of creditors’ rights generally and (ii) the effect of rules of
law governing the availability of equitable remedies.


 


4.1.4.                         Title to the Membership Units.  RTEA owns, and has good and
marketable title to the Units and the Overallotment Units it has agreed to sell
pursuant to the terms of this Agreement. 
Except for any restrictions set forth in the LLC Agreement, RTEA holds
such Units and the Overallotment Units free and clear of any Encumbrance.


 


4.1.5.                         Consents.  Except as have been previously obtained or
made, no consent, approval or authorization of, or designation, declaration
or filing with, any governmental authority or other third party on the part of
CPE LLC or RTEA is required in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.


 


4.2.                                  Representations and Warranties of Cloud Peak.  Cloud Peak hereby represents
and warrants to RTEA as follows:


 


4.2.1.                         Organization; Good Standing;
Qualification.  Cloud Peak is a corporation, duly 


 


5

















 


organized and validly existing under the laws of the
State of Delaware and is in good standing under such laws.  Cloud Peak has the requisite power and
authority to conduct its business in all material respects.  Cloud Peak is in good standing and qualified
to do business in every jurisdiction where the failure to so qualify would have
a material adverse effect on its business or financial condition or on its
ability to enter into this Agreement or to consummate the transactions
contemplated hereby.


 


4.2.2.                         Authorization.  The execution, delivery and
performance of this Agreement and the CPE Note and the purchase of the Units
and Overallotment Units are within the powers of and have been duly authorized
by Cloud Peak.  Both this Agreement and,
when duly executed, the CPE Note, constitute legal, valid and binding
obligations of Cloud Peak enforceable against Cloud Peak in accordance with
their terms, except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting
the enforcement of creditors’ rights generally and (ii) the effect of rules of
law governing the availability of equitable remedies.


 


4.2.3.                         Consents.  Except as have been previously obtained or
made, no consent, approval or authorization of, or designation, declaration
or filing with, any governmental authority or other third party on the part of
Cloud Peak is required in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.


 


ARTICLE 5


 


MISCELLANEOUS


 


5.1.                                  Further
Assurances.  From time
to time after the date hereof, each of the parties to this Agreement shall
deliver or cause to be delivered to the other party hereto such further
documents and instruments and shall do and cause to be done such further acts as
each party shall reasonably request to carry out more effectively the
provisions and purposes of this Agreement.


 


5.2.                                  Assignment. Neither party to this Agreement shall assign,
transfer or otherwise alienate any or all of its rights, obligations or interest
under this Agreement, without the express prior written consent of the other
party, 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.


 


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


 


5.3.1.                         This Agreement
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.


 


5.3.2.                         Each Party
hereby irrevocably and unconditionally consents to submit to the sole and exclusive
jurisdiction of the United States District Court for the Southern 


 


6

















 


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:


 


5.3.2.1.               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 5.5 is sufficient and reasonably calculated to give actual
notice;


 


5.3.2.2.               agrees that the
New York Courts shall be deemed to be a convenient forum; and


 


5.3.2.3.               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.


 


5.3.3.                         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.


 


5.3.4.                         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 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 5.3.4.


 


5.4.                                  Specific
Performance. Each of the Parties hereto acknowledges and
agrees that the other Party would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with their
specific terms and that any breach of this Agreement by a Party could not be
adequately compensated in all cases by monetary damages alone.  Accordingly, in addition to any other right
or remedy to which each Party may be entitled, at law 


 


7

















 


or at equity, each Party shall be entitled to enforce any provision of
this Agreement by a decree of specific performance and to temporary,
preliminary and permanent injunctive relief to prevent breaches or threatened
breaches of any provisions of this Agreement, without posting any bond or other
undertaking.


 


5.5.                                  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:


 


If to Cloud Peak, to:


 


Cloud Peak Energy Inc.

General Counsel

505 S. Gillette Avenue

Gillette, Wyoming 82716

(307) 687-6000

Fax: (307) 687-6059


 


If to RTEA, to:


 


Rio
Tinto Energy America Inc.

Legal Department

4700 Daybreak Parkway

South Jordan, Utah 84095

(801) 204-2000

Fax: (801) 204-2892


 


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


 


Craig Johnson, Esq.

Rio Tinto Services Inc.

224 North 2200 West

Salt Lake City, Utah 84116

(801) 238-2400

Fax: (801) 238-2473


 


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


 


5.6.                                  Survival.  The covenants and other agreements contained in this
Agreement, and liability for the breach of any obligations contained herein,
shall survive each of the Acquisition Closing, the Overallotment Acquisition
Closing and the Transactions and shall remain in full force and effect.


 


8

















 


5.7.                                  No Third-Party Beneficiaries.  This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective legal
representatives, successors and assigns. 
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.


 


5.8.                                  Amendment.  This Agreement may be
amended only by a written agreement executed by the parties hereto.


 


5.9.                                  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.


 


5.10.                            Severability.  If any term 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.


 


5.11.                            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 instrument.  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.


 


5.12.                            Characterization.  It is intended by the parties hereto that
each of the acquisitions of Common Membership Units pursuant to Sections 2.1
and 3.1 of this Agreement be characterized as the purchase of interests
in an entity treated as a partnership for U.S. federal income tax purposes and
subject thereby to Section 743 of the Code.  Each of RTEA and Cloud Peak agrees, unless
otherwise required by a change in law, regulation, written interpretation
thereof or as may be required by a “determination” as defined in Section 1313(a)
of the Code following the date of this Agreement, to file tax returns and
reports consistent with such characterization.


 


9

















 


5.13.                           Interpretation of Agreement.


 


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


 


5.13.2.                  Unless
otherwise specified, references in this Agreement to “Articles”, “Sections” and
“Exhibits” are intended to refer to Articles of, Sections of, and Exhibits to,
this Agreement.


 


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


 


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


 


[Signature page to follow]


 


10

















 


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


 


 


	
   

  	
  CLOUD PEAK ENERGY INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Colin Marshall

  
	
   

  	
  Name:

  	
  Colin
  Marshall

  
	
   

  	
  Title:

  	
  President
  and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RIO TINTO ENERGY AMERICA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James P. Berson

  
	
   

  	
  Name:

  	
  James
  P. Berson

  
	
   

  	
  Title:

  	
  Authorized
  Agent

  



 


 


[Acquisition Agreement Signature
Page]