Exhibit 10.7


 


PROMISSORY
NOTE


 


	
  $433,755,000

  	
   

  	
  November
  19, 2009                    

  



 


FOR VALUE RECEIVED, the undersigned, Cloud Peak
Energy Inc., a Delaware corporation (the “Payor”), hereby promises to pay to
the order of Rio Tinto Energy America Inc., a Delaware corporation (the “Payee”),
at the Payee’s office at 4700 Daybreak Parkway, South Jordan, Utah 84095 (or at
such other place of payment as the Payee may from time to time specify to the
Payor in writing), on the Payment Date (as defined below), the principal sum of
Four Hundred Thirty-Three Million, Seven Hundred Fifty-Five Thousand Dollars
($433,755,000), without interest (the “Principal Amount”) in lawful money of
the United States of America. Upon final indefeasible payment of all amounts
due under this Note, it shall be surrendered for cancellation.


 


Except as otherwise
defined herein, all capitalized terms used herein shall have the meaning
specified in that certain Acquisition Agreement dated November 19, 2009 between
the Payor and the Payee.


 


The outstanding Principal Amount shall become due
and payable upon demand by the Payee (such date, the “Payment Date”), but no
earlier than the First Closing Date; provided, however, that the
outstanding Principal Amount shall become due and payable on the Payment Date
only if the transactions contemplated to have occurred on the First Closing
Date by the Underwriting Agreement have occurred.


 


The Payor hereby expressly waives demand,
presentment, protest, notice of dishonor, diligence in collection and any other
notice of any kind.  No delay by the
Payee in the exercise of any right or remedy shall operate as a waiver thereof,
and no single or partial exercise by the Payee of any right or remedy shall
preclude any other or further exercise thereof or the exercise of any other
right or remedy.


 


In the event that Payor breaches the obligations
under this Note, the Payor agrees to pay to the Payee all expenses incurred or
paid by the Payee in connection with the collection of this Note, including,
without limitation, reasonable attorneys’ fees and court costs. Notwithstanding
the first paragraph of this Note, in the event the Payor fails
to make any payment due pursuant to this Note on or prior to the date on which
such payment becomes due and payable, whether at maturity or by acceleration or
on any other date, such unpaid amount shall accrue interest from the date on
which such payment was due until the date on which such payment is made at a
rate of interest of 10.0% (ten percent) per annum.


 


This Note shall inure to the benefit of and be
binding upon the Payor and the Payee and their respective successors and
assigns; provided that the Payor may not assign any of its rights or
obligations hereunder without the prior written consent of the other party
hereto.


 


THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICTS OF LAW RULES THEREOF.


 


This Note may be amended,
and any provisions under the Note waived, only by a written agreement executed
by the Payee and the Payor.


 

















 


If any terms or other
provision of this Note 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 Note invalid.  Rather, this Note shall be construed as if
not containing the particular invalid, illegal or unenforceable provision, and
all other provisions of this Note shall remain in full force and effect in
accordance with its terms.


 


2

















 


IN WITNESS THEREOF, the Payor has caused this Note
to be executed on its behalf by its duly authorized officer.


 


	
   

  	
  CLOUD
  PEAK ENERGY INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Colin Marshall

  
	
   

  	
   

  	
  Name:

  	
  Colin
  Marshall

  
	
   

  	
   

  	
  Title:

  	
  President and CEO

  



 


 


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Promissory Note Signature Page]