Exhibit 10.11


 


EXECUTION VERSION


 


TAX RECEIVABLE AGREEMENT


 


 


dated as of


 


November 19, 2009


 

















 


Table of Contents


 


	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS

  
	
  Section 1.01. Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  
	
  DETERMINATION OF EXCHANGE BASIS
  SCHEDULE AND REALIZED TAX BENEFIT

  
	
  Section 2.01. Basis Adjustment

  	
   

  	
  9

  
	
  Section 2.02. Duff & Phelps Schedule

  	
   

  	
  10

  
	
  Section 2.03. Exchange Basis Schedule

  	
   

  	
  10

  
	
  Section 2.04. Tax Benefit Schedule

  	
   

  	
  10

  
	
  Section 2.05. Procedures, Amendments

  	
   

  	
  10

  
	
  Section 2.06. Costs and Expenses

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  TAX BENEFIT PAYMENTS

  
	
  Section 3.01. Payments

  	
   

  	
  11

  
	
  Section 3.02. No Duplicative Payments

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  
	
  TERMINATION AND CHANGE OF
  CONTROL

  
	
  Section 4.01. Early Termination and Breach of Agreement

  	
   

  	
  12

  
	
  Section 4.02. Early Termination Notice

  	
   

  	
  12

  
	
  Section 4.03. Payment upon Early Termination

  	
   

  	
  12

  
	
  Section 4.04. Transfers of Assets, Change of Control, Change of
  Structure

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  
	
  LATE PAYMENTS

  
	
  Section 5.01. Late Payments

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  
	
  PARTICIPATION; CONSISTENCY;
  COOPERATION

  
	
  Section 6.01. Participation in Buyer’s Tax Matters

  	
   

  	
  14

  
	
  Section 6.02. Consistency

  	
   

  	
  15

  
	
  Section 6.03. Cooperation

  	
   

  	
  15

  
	
  Section 6.04. Section 754 Elections

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
  Section 7.01. Notices

  	
   

  	
  15

  
	
  Section 7.02. Counterparts

  	
   

  	
  16

  
	
  Section 7.03. Entire Agreement; No Third Party Beneficiaries

  	
   

  	
  16

  
	
  Section 7.04. Governing Law

  	
   

  	
  16

  
	
  Section 7.05. Severability

  	
   

  	
  17

  
	
  Section 7.06. Successors; Assignment; Amendments; Waivers

  	
   

  	
  17

  
	
  Section 7.07. Titles and Subtitles

  	
   

  	
  18

  
	
  Section 7.08. Resolution of Disputes

  	
   

  	
  18

  
	
  Section 7.09. Reconciliation

  	
   

  	
  18

  
	
  Section 7.10. Withholding

  	
   

  	
  18

  
	
  Section 7.11. Present and Future Values

  	
   

  	
  19

  
	
  Section 7.12. Confidentiality

  	
   

  	
  19

  
	
  Section 7.13. Non-Effect of Other Tax
  Receivable Agreements

  	
   

  	
  19

  



 


i

















 


This
TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”),
dated as of November 19, 2009, is hereby entered into by and among Cloud
Peak Energy Inc., a Delaware corporation (“Buyer”) and Rio Tinto Energy
America, Inc., a Delaware corporation (“RTEA”).


 


RECITALS


 


WHEREAS, RTEA and its
Affiliates hold membership units of Cloud Peak Energy Resources LLC, a Delaware
limited liability company (“CPE LLC”), and RTEA is selling some of its
membership units to Buyer (including any exercise by the underwriter of its
overallotment option, the “Initial Sale”) as described in the
Registration Statement;


 


WHEREAS, CPE LLC and
several of its Subsidiaries are Partnerships;


 


WHEREAS, after the
Initial Sale, Buyer will be the managing member of CPE LLC, and will therefore
have Control of CPE LLC and its Subsidiaries, and CPE LLC and its Subsidiaries
will become Subsidiaries of Buyer;


 


WHEREAS, the RTEA
Units are redeemable, at the option of their holders, for cash from CPE LLC,
and upon the exercise of such redemption right, Buyer will have the right to
assume the rights and obligations of CPE LLC with respect to the RTEA Units
being redeemed (the “Buyer Assumption Right”) and to thereby acquire
such RTEA Units in exchange for cash or common stock of Buyer;


 


WHEREAS, Buyer
will take a “cost” tax basis in the RTEA Units acquired in the Initial Sale,
and Buyer’s tax basis in the RTEA Units acquired in the Initial Sale is
expected to exceed RTEA’s tax basis in such RTEA Units prior to the Initial
Sale;


 


WHEREAS, pursuant
to the Third Amended and Restated Limited Liability Company Agreement of CPE
LLC, dated November 19, 2009 (the “CPE LLC Agreement”), CPE LLC and each
of its Subsidiaries that is a Partnership will have in effect or make an
election under Section 754 (a “Section 754 Election”) of the
Internal Revenue Code of 1986, as amended (the “Code”), for the Taxable
Year in which the Initial Sale occurs and for each Taxable Year in which an
Exchange occurs;


 


WHEREAS, the
structure of the Initial Sale and the Section 754 Elections of CPE LLC and
each of its Subsidiaries that is a Partnership are intended generally to result
in an adjustment (with respect to the Section 754 Elections, such
adjustment will be solely with respect to Buyer) to the tax basis of the
Adjustable Assets as a result of the Initial Sale, of any subsequent Exchange,
or of the receipt of payments under this Agreement;


 


WHEREAS, the
income, gain, loss, expense and other Tax items of (i) CPE LLC solely with
respect to Buyer may be affected by the Basis Adjustment and (ii) Buyer
may be affected by the Basis Adjustment and the Imputed Interest; and


 


WHEREAS, the
parties to this Agreement desire to make certain arrangements with respect to
the effect of the Basis Adjustment and Imputed Interest on the actual liability
for Taxes of the Buyer;


 


NOW, THEREFORE, in
consideration of the foregoing and the respective covenants and agreements set
forth herein, and intending to be legally bound hereby, the parties hereto agree
as follows:


 


ARTICLE I




DEFINITIONS


 


Section 1.01.                       Definitions.  As used in
this Agreement, the terms set forth in this Article I shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined).


 


“Accelerated
RTEA Gain” is defined in Section 4.04(a)(4).


 


1

















 


“Accounting Firm” means a nationally recognized, independent
accounting firm, selected by RTEA, with experience in natural resource taxation
matters.


 


“Actual/Modified
Payment Difference” means, with respect to a Taxable Year, (i) the
payments RTEA actually received under this Agreement with respect to such
Taxable Year pursuant to Section 3.01(a) (excluding any Interest
Amounts received, and any interest received pursuant to Section 5.01);
minus (ii) the payments that Buyer actually received under this Agreement
with respect to such Taxable Year pursuant to Section 3.01(a) (excluding
any Interest Amounts received, and any interest received pursuant to Section 5.01);
minus (iii) the net payment that the Projected Tax Benefit Schedule
predicted that Buyer would have made to RTEA for such Taxable Year (without
regard to the Assumed Administrative Cost for such Taxable Year).  For the avoidance of doubt, the
Actual/Modified Payment Difference may be a negative number.


 


“Actual
Buyer Tax Liability” for any Taxable Year means the total liability for
Taxes of Buyer, as indicated on the Tax Returns filed by Buyer (including any
consolidated return in which Buyer joins) for such Taxable Year, taking into
account any Determinations and adjusted to reflect U.S. federal income tax
rates that are one percent higher than the actual U.S. federal income tax rates
to which Buyer is subject for such Taxable Year. Notwithstanding the foregoing,
the Actual Buyer Tax Liability for any Taxable Year shall also include any
corollary adjustments to reflect any tax items for such Taxable Year that Buyer
would have incurred as a result of any transactions deemed to occur by virtue
of Section 4.04(a) or Section 4.04(b).


 


“Adjustable
Asset” means the RTEA Units and any asset other than cash owned by CPE LLC,
either directly or indirectly through one or more Partnerships or entities that
are disregarded for U.S. federal income tax purposes.


 


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


 


“Agreed
Rate” means LIBOR plus 100 basis points.


 


“Agreement”
is defined in the Recitals of this Agreement.


 


“Alternative
Tax Benefit Payment” means, with respect to a Taxable Year and a particular
Adjustable Asset that has been transferred in a Non-Exempted Transfer that was not
currently fully taxable, the Tax Benefit Payment that would be due in that
Taxable Year if, starting in the Taxable Year in which such transfer took
place, such Adjustable Asset had produced the tax items it would have produced
had such transfer not occurred instead of the tax items that it actually
produced.


 


“Amended
Schedule” is defined in Section 2.05(b).


 


“Assumed
Administrative Cost” means the average cost incurred by RTEA pursuant to Section 2.06,
calculated with respect to the most recent three Taxable Years preceding an
Early Termination Notice Date for which a Tax Benefit Schedule has become final
pursuant to Section 2.05(a).  If an
Early Termination Notice Date occurs prior to the finalization of Tax Benefit
Schedules pursuant to Section 2.05(a) with respect to three Taxable
Years, then the Assumed Administrative Cost shall be $25,500.


 


“Average
Maximum RTEA Tax Rate” means, as of any given date, the arithmetic mean of
the various Maximum RTEA Tax Rates to which RTEA has been subject during the
course of this Agreement through such date, weighted by the amount of
Accelerated RTEA Gain that RTEA has recognized while subject to each such
Maximum RTEA Tax Rate.


 


“Basis
Adjustment” means the adjustment to the tax basis of an Adjustable Asset
under any provision of the Code, including Section 732 of the Code (in
situations where, as a result of one or more Exchanges, CPE LLC becomes an
entity that is disregarded as separate from its owner for tax purposes), Section 1012
of the Code, or Sections 743(b) and 754 of the Code (in situations where,
following an Exchange, CPE LLC remains in existence as an entity for tax
purposes) as a result, in each case, of an Exchange, the Distribution, and/or payments
made 


 


2

















 


pursuant to this Agreement. For the avoidance of doubt, payments made
under this Agreement shall not be treated as resulting in a Basis Adjustment to
the extent that such payments are treated as Imputed Interest. Notwithstanding
any other provision of this Agreement, the amount of any Basis Adjustment
resulting from an Exchange of one or more RTEA Units shall be determined
without regard to any Pre-Exchange Transfer of such RTEA Units and as if any
such Pre-Exchange Transfer had not occurred.


 


“Business
Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the
State of New York shall not be regarded as a Business Day.


 


“Buyer”
is defined in the Recitals of this Agreement.


 


“Buyer
Assumption Right” is defined in the Recitals of this Agreement.


 


“Buyer
Audit” means any audit or other judicial or administrative proceeding of
Buyer, any of its Subsidiaries, or of any consolidated group of which Buyer is
a member, brought by a Taxing Authority.


 


“Change
of Control” means, with respect to any entity, (1) any acquisition,
merger or consolidation of such entity with or into any other entity or any
other similar transaction, whether in a single transaction or series of related
transactions, where (A) the members, partners, or shareholders of such
entity immediately prior to such transaction in the aggregate cease to own more
than 50% of the general voting power of the entity surviving or resulting from
such transaction (or the owners, partners, or members of such entity) or (B) any
Person or Group becomes the beneficial owner of more than 50% of the general
voting power of the entity surviving or resulting from such transaction (or the
owners, partners, or members of such entity), (2) any transaction or
series of related transactions or open market purchases or tenders in which
more than 50% of such entity’s general voting power is transferred to or
acquired by any other Person or Group, or (3) the sale or transfer by such
entity of all or substantially all of its assets; provided, however, that, in determining whether a Change of
Control of Buyer or CPE LLC has occurred, common stock of Buyer and RTEA Units (A) acquired
pursuant to the exercise by RTEA of its redemption right (including such an
exercise in which Buyer exercises the Buyer Assumption Right) or (B) transferred
to any Affiliate of RTEA or (C) transferred by RTEA shall not constitute
an event which could cause a Change of Control.


 


“Change
of Control Date” means the date of a Change of Control of Buyer.


 


“Change
of Control Payment Modifier” means, as of a Change of Control Date, 100%
minus a fraction (expressed as a percentage) equal to (i) the Total
Actual/Modified Payment Difference as of such date divided by (ii) the
present value, as of such date, of all future payments that the Projected Tax
Benefit Schedule provides that RTEA should receive from Buyer pursuant to this
Agreement, using the Early Termination Rate as a discount rate.


 


“Change
of Structure” is defined in Section 4.04(d).


 


“Code”
is defined in the Recitals of this Agreement.


 


“Control”
(including the terms “Controlled by” and “under common Control with”),
with respect to the relationship between or among two or more Persons, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting Equity Interests, as trustee or executor, by contract or
otherwise.


 


“CPE
LLC” is defined in the Recitals of this Agreement.


 


“CPE
LLC Agreement” is defined in the Recitals of this Agreement.


 


“Cumulative
Net Realized Tax Benefit” for a Taxable Year (the “Current Taxable Year”)
means the difference between (x) the sum of the Realized Tax Benefits for
all Taxable Years of Buyer, up to and including the Current Taxable Year; and (y) the
sum of the Realized Tax Detriments for such Taxable Years of Buyer. The 


 


3

















 


Realized Tax Benefit and Realized Tax Detriment for each Taxable Year
shall be determined based on (i) in the case of the Current Taxable Year,
the final Tax Benefit Schedule for the Current Taxable Year and (ii) in
the case of each prior Taxable Year, the final Tax Benefit Schedule or, if
applicable, the most recent Amended Schedule for such prior Taxable Year in
existence as of the date that the Tax Benefit Schedule for the Current Taxable
Year becomes final.


 


“Default
Rate” means LIBOR plus 500 basis points.


 


“Deferred
Basis Reduction” means, with respect to any Adjustable Asset at the time of
an Exchange, the smaller of (i) the tax basis of CPE LLC (or of any
Partnership through which CPE LLC holds its interest in such Adjustable Asset)
in such Adjustable Asset immediately prior to the Exchange and (ii) an amount
equal to (A / B) * (C / D), where A is the
Notional Loan Repayment Amount; B is the Average Maximum RTEA Tax Rate; C is
the fair market value of CPE LLC’s interest in such Adjustable Asset; and D is
the sum of the fair market values of CPE LLC’s ownership interests in all
Adjustable Assets (ignoring any value attributable to cash).  For purposes of calculating the Hypothetical
Buyer Tax Liability, the Deferred Basis Reduction with respect to CPE LLC’s
direct or indirect interest in any Adjustable Asset (and the interest of any
Partnership through which CPE LLC holds its interest in such Adjustable Asset)
shall be allocated solely to CPE LLC (or such Partnership).


 


“Deferred
Partnership Interest Basis Reduction” means, with respect to any
Partnership interest with respect to an Exchange, the extent, if any, by which
the sum of the Deferred Basis Reductions with respect to the Adjustable Assets
owned by such Partnership exceeds the Deferred Basis Reduction with respect to
such Partnership interest.  For the
avoidance of doubt, the Deferred Partnership Interest Basis Reduction shall not
be a negative number.


 


“Determination”
shall have the meaning ascribed to such term in Section 1313(a) of
the Code or similar Tax Law, as applicable, or any other event (including the
execution of a Form 870-AD) that finally and conclusively establishes the
amount of any liability for Tax.


 


“Distribution”
means the distribution of cash or property from CPE LLC to RTEA pursuant to Section 5.4(e) of
the CPE LLC Agreement.


 


“Duff &
Phelps Schedule” is defined in Section 2.02.


 


“Early
Termination Notice Date” means the date of an Early Termination Notice.


 


“Early
Termination Notice” is defined in Section 4.02.


 


“Early
Termination Objection Notice” is defined in Section 4.02.


 


“Early
Termination Payment” is defined in Section 4.03(b).


 


“Early
Termination Payment Date” means the date on which any Early Termination
Schedule becomes final and binding pursuant to Section 4.02.


 


“Early
Termination Rate” means 7%.


 


“Early
Termination Schedule” is defined in Section 4.02.


 


“Exchange”
means a redemption of RTEA Units pursuant to an exercise by RTEA of its right
to have its units in CPE LLC redeemed, or any acquisition of RTEA Units by
Buyer, whether acquired in the Initial Sale, by Buyer exercising the Buyer
Assumption Right with respect to RTEA Units being redeemed by RTEA, or
otherwise.


 


“Exchange
Basis Schedule” is defined in Section 2.03.


 


“Exchange
Date” means the closing date of any Exchange.


 


4

















 


“Exchanging
Fraction” means, with respect to an Exchange, the number of RTEA Units
being Exchanged divided by the number of RTEA Units that had not been Exchanged
immediately before such Exchange.


 


“Exempted
Transfer” means a transfer by Buyer, or any of its Subsidiaries, of one or
more Adjustable Assets to any Person (i) in which the total gross value of
the Adjustable Assets transferred is less than $10 million; (ii) that is
made in the ordinary course of business; (iii) in which the transferee is
a Pass-Through Buyer Subsidiary; (iv) that qualifies under Section 1031
of the Code; or (v) that qualifies under Section 368(a)(1)(F) of
the Code.  For purposes of this
definition, any series of related transfers shall be treated as a single
transfer.


 


“Expert”
is defined in Section 7.09.


 


“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 of Persons” means any group of Persons which would
constitute a “group” for purposes of Section 13(d) of the Securities
and Exchange Act of 1934, or any successor provisions thereto, excluding any
such group that includes RTEA or any of its Affiliates.


 


“Hypothetical
Buyer Tax Liability” means, with respect to any Taxable Year, the total
liability for Taxes of the Buyer, or any consolidated group of which Buyer is a
member, as would be shown on its Tax Return (including any consolidated return
in which Buyer joins) if all items of income, gain, loss, and deduction and
credit (and all methods, elections, conventions and practices) were the same as
reflected in the Tax Return actually filed for such Taxable Year except that (1) it
shall be adjusted to reflect U.S. federal income tax rates that are one percent
higher than the actual U.S. federal income tax rates to which Buyer is subject;
(2) amortization, depletion, depreciation, and gain and loss with respect
to the Adjustable Assets (including, with respect to Adjustable Assets that are
Partnership interests, each Partner’s distributive share of such items) shall
be the same as though there had been no Basis Adjustments and, with respect to
any Adjustable Assets that pertain to the period of time before the Initial
Sale, no Determinations, but shall be reduced (or, in the case of gain,
increased) with respect to each Adjustable Asset to reflect the amount of all
Deferred Basis Reductions with respect to that asset with respect to all
Exchanges that have occurred as of the end of that Taxable Year; (3) Reclamation
Costs and LBA Payments shall be the same as though there had been no Basis
Adjustments, but shall be reduced to reflect the amount of all Deferred Basis
Reductions with respect to all Adjustable Assets with respect to all Exchanges
that have occurred as of the end of that Taxable Year; (4) correlative
changes flowing directly from the exceptions of clauses (2) and (3) of
this definition shall be taken into account (e.g., adjustments to the Section 199
credit or minimum tax credits); (5) no deduction for Imputed Interest
shall be taken into account with respect to payments pursuant to this
Agreement; and (6) it shall include any corollary adjustments to reflect
any tax items for such Taxable Year that Buyer, or any consolidated group of
which Buyer is a member, would have incurred for such Taxable Year as a result
of any transactions deemed to occur by virtue of Section 4.04(a) or Section 4.04(b).


 


“Imputed
Interest” shall mean any interest imputed under Section 1272, 1274 or
483 or other provision of the Code and any similar provision of Tax Law with
respect to Buyer’s payment obligations under this Agreement.


 


“Incalculable
Year” is defined in Section 4.04(a)(3).


 


“Initial
Duff & Phelps Schedule” is defined in Section 2.02.


 


“Initial
Sale” is defined in the Recitals of this Agreement.


 


“Interest
Amount” is defined in Section 3.01(b).


 


“Irreducible
Basis Amount” means, with respect to an Exchange, (i) the Notional
Loan Repayment Amount with respect to such Exchange divided by the Average RTEA
Maximum Tax Rate as of the Exchange Date, plus (ii) the sum of the
Deferred Partnership Interest Basis Reductions with respect to such Exchange,
minus (iii) the sum of 


 


5

















 


the Deferred Basis Reductions with respect to such Exchange with
respect to all Adjustable Assets that are not Partnership interests.  For the avoidance of doubt, the Irreducible
Basis Amount shall not be a negative number.


 


“Irreducible
Basis Amount Payment” means, with respect to an Exchange, the product of (i) 85%;
(ii) the highest marginal U.S. federal income tax rate to which Buyer is
subject for the Taxable Year containing the Exchange Date plus one percent; and
(iii) the Irreducible Basis Amount.


 


“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.


 


“LBA
Payments” means any payment made by Buyer or its Subsidiaries in connection
with the acquisition of a mineral lease in effect on the date of the Initial
Sale that was (or is) required to be capitalized for U.S. federal income tax
purposes into the tax basis of the lease and amortized as a reduction to the
gross income from mining from that mineral property.


 


“LIBOR”
means for each month (or portion thereof) during any period, an interest rate
per annum equal to the rate per annum reported, on the date two calendar days
prior to the first calendar day of such month, on the Telerate Page 3750
(or if such screen shall cease to be publicly available, as reported on Reuters
Screen page “LIBO” or by any other publicly available source of such
market rate) for London interbank offered rates for U.S. dollar deposits for
such month (or portion thereof).


 


“Life
of Mine Tax Model” means the model, prepared in conjunction with the most
recent Exchange (including the Initial Sale) to predict the future economic
performance of Buyer and its Subsidiaries after such Exchange and certain
corollary tax consequences.  The Life of
Mine Tax Model shall be consistent with the information that is provided by CPE
LLC to third parties in connection with its business (including any information
provided to third-party lenders, for purposes of obtaining and negotiating
financing or otherwise).  RTEA shall prepare
the Life of Mine Tax Model with respect to the Initial Sale, and Buyer shall
prepare the Life of Mine Tax Model with respect to subsequent Exchanges.  Models produced by Buyer shall be
susbtantially identical in form, methodology and content to the model produced
by RTEA with respect to the Initial Sale. 
In each case, the Life of Mine Tax Model shall be prepared in a manner
that is consistent with the methodology used to produce, and shall reflect the
information and assumptions contained in, the Duff & Phelps Schedule
and the Exchange Basis Schedule with respect to such Exchange.  An example of the form, methodology and
content to be reflected in the Life of Mine Tax Model is attached as Exhibit A
to this Agreement.


 


“Master
Separation Agreement” means the Master Separation Agreement by and among
Rio Tinto America, Inc., RTEA, Kennecott Management Services Company,
Buyer and CPE LLC dated November 19, 2009.


 


“Maximum
RTEA Tax Rate” means, at any given time, the highest combined marginal U.S.
federal, state, and local income tax rates to which RTEA is subject.


 


“Net Benefits Already Paid” is defined in Section 3.01(b).


 


“Net
Tax Benefit” is defined in Section 3.01(b).


 


“New
York Courts” is defined in Section 7.04(b).


 


“Non-Exempted
Transfer” means a transfer by Buyer, or any of its Subsidiaries, of one or
more Adjustable Assets to any Person that is not an Exempted Transfer.


 


“Notional
Interest Rate” shall mean RTEA Cost of Borrowing divided by four (4).


 


“Notional Loan Balance” means an amount initially equal to zero
and increased as provided in Section 4.04(a)(4) and decreased as
provided in Section 4.04(a)(5).


 


6

















 


“Notional
Loan Repayment Amount” means, with respect to any Exchange, an amount equal
to the product of (x) the Exchanging Fraction; and (y) the Notional
Loan Balance.


 


“Objection
Notice” is defined in Section 2.05(a).


 


“Partner”
means, with respect to any Partnership, a Person that is a partner in such
Partnership for U.S. federal income tax purposes.


 


“Partnership”
means any entity that is treated as partnership for U.S. federal income tax
purposes.


 


“Pass-Through
Buyer Subsidiary” means CPE LLC, or an entity that is wholly owned by CPE
LLC, directly or indirectly, and that is not (i) treated as a corporation
for U.S. federal income tax purposes or (ii) indirectly owned by CPE LLC,
in whole or in part, through an entity that is treated as a corporation for
U.S. federal income tax purposes.


 


“Payment
Date” means any date on which a payment is required to be made pursuant to
this Agreement.


 


“Person”
means any individual, corporation, firm, partnership, joint venture, limited
liability company, estate, trust, business association, organization,
governmental entity or other entity.


 


“Pre-Exchange
Transfer” means any transfer of one or more RTEA Units that occurs prior to
an Exchange of such RTEA Units.


 


“Projected
Tax Benefit Schedule” means, as of the Early Termination Notice Date or a
Change of Control Date, as applicable (the “Freeze Date”), a model, prepared by
an Accounting Firm, designed to predict all payments required to be made
pursuant to this Agreement beginning at the last Exchange Date, based on the
Life of Mine Tax Model and (i) taking into account all changes to U.S.
federal tax law, including, but not limited to, changes in tax rates, the rules governing
percentage and cost depletion, and the Section 199 Rules enacted or
promulgated after the date of the Life of Mine Tax Model and on or before the
Freeze Date (including any such changes that are not scheduled to take effect
until after the Freeze Date); (ii) incorporating the assumption that all
non-amortizable, non-depletable, non-depreciable Adjustable Assets will be
deemed to be disposed of, at a price equal to their tax basis, on the later of
the Freeze Date and the fifteenth anniversary of the date of the Initial Sale
and (iii) if a carryback from a Taxable Year gives rise to a refund with
respect to a prior Taxable Year, such refund shall, for purposes of computing
payments required to be made pursuant to this Agreement, be treated as an
offset to the tax liability for the Taxable Year in which the carryback arises
(and if the refund exceeds such tax liability, a negative tax liability for
such year) and not as an adjustment to the tax liability of the prior Taxable
Year.  For the avoidance of doubt, if, in
any year projected, there is calculated to be a greater actual tax liability
than hypothetical tax liability (or if both actual and hypothetical tax
liabilities are negative, a lesser negative actual tax liability than negative
hypothetical tax liability), then pursuant to Sections 4.03(b)(i) and
4.04(c)(iii), the Projected Tax Benefit Schedule shall show a payment due from
RTEA to CPE of zero for such projected year. 
Further, in the case of an early termination, the Projected Tax Benefit
Schedule: (i) shall treat all RTEA Units that have not yet been Exchanged as
being Exchanged on the Early Termination Notice Date for the cash purchase
price Buyer would have paid under the Buyer Assumption Right had such Exchange
actually occurred on the Early Termination Notice Date; (ii) shall
subtract from each taxable year for which the model predicts a payment an
amount equal to the Assumed Administrative Cost; and (iii) shall not
reflect any adjustments for inflation with respect to any factual input.


 


“Realized
Tax Benefit” means, for a Taxable Year, the excess, if any, of the
Hypothetical Buyer Tax Liability over the Actual Buyer Tax Liability. If all or
a portion of the Actual Buyer Tax Liability for the Taxable Year arises as a
result of a Buyer Audit, such liability shall not be included in determining
the Realized Tax Benefit unless and until there has been a Determination.


 


“Realized
Tax Detriment” means, for a Taxable Year, the excess, if any, of the Actual
Buyer Tax Liability over the Hypothetical Buyer Tax Liability. If all or a
portion of the Actual Buyer Tax Liability for the Taxable Year arises as a
result of a Buyer Audit, such liability shall not be included in determining
the Realized Tax Detriment unless and until there has been a Determination.


 


7

















 


“Reclamation
Costs” means obligations assumed by CPE LLC as part of the liabilities
assumed (pursuant to Treasury Regulation 1.752-1(a)(4)(ii)) that may not be
accrued for U.S. federal income tax purposes as they fail to meet the all
events and economic performance requirements of Treasury Regulation
1.446-1(c)(1)(ii) and Treasury Regulation 1.461-1(a)(2) as of the
date of this Agreement, and which are added to the tax basis of the Adjustable
Assets when they are paid or otherwise meet the all events and economic
performance tests (see Treasury Regulation 1.461-4). For this purpose, the
obligation assumed by the Buyer or CPE LLC for the closure of the mines is
assumed to meet the all events and economic performance tests when the mines
are closed. The current cost to reclaim acreage disturbed as of the transaction
date is assumed to meet the all events and economic performance tests as those
acres are reclaimed.


 


“Reconciliation
Dispute” is defined in Section 7.09.


 


“Reconciliation
Procedures” shall mean the reconciliation procedures set forth in Section 7.09
of this Agreement.


 


“Registration
Statement” means the Form S-1 (SEC File No. 333-161293),
including the prospectus related thereto, filed by Buyer with the SEC, together
with all amendments and supplements thereto.


 


“Restricted
Transfer” means any Non-Exempted Transfer (i) that is not fully
taxable to the transferor; and (ii) in which the transferee is either (x) treated
as a corporation for U.S. federal income tax purposes; or (y) owned by CPE
LLC, directly or indirectly, wholly or partly through any entity that is
treated as a corporation for U.S. federal income tax purposes.  For the avoidance of doubt, (i) the
granting of any lien on any Adjustable Asset or the pledging of any Adjustable
Asset shall not constitute a Restricted Transfer so long as such pledge or lien
is permitted under the terms of the CPE LLC Agreement; and (ii) a transfer
to any entity owned directly or indirectly in part by Cloud Peak Energy
Services, Inc. (“CPESC”) shall not constitute a Restricted Transfer so
long as CPESC holds (taking into account both direct and indirect interests),
less than a 1% interest in the capital of such entity and less than a 1%
interest in the profits and losses (and each item thereof) of such entity.


 


“RTEA”
is defined in the Recitals of this Agreement.


 


“RTEA Units” shall mean any membership units in CPE LLC that
were owned by RTEA or its Affiliate prior to the Initial Sale.


 


“Schedule”
means any Exchange Basis Schedule, Tax Benefit Schedule, Amended Schedule or
Tax Benefit Computation Schedule.


 


“Section 199
Rules” means, as of a given date, Section 199 of the Code, any
successor provisions, the Treasury Regulations thereunder, and similar
provisions of Tax Law as of such date.


 


“Section 754
Election” is defined in the Recitals of this Agreement.


 


“Subsidiary”
means, as of any date of determination, any other Person as to which Buyer owns,
directly or indirectly, or otherwise controls, 50% or more of (x) the
voting power or other similar rights, or (y) the general partner interests
or managing member or similar interests.


 


“Surviving
Entity” is defined in Section 4.04(c).


 


“Tax
Benefit Computation Schedule” is defined in Section 2.04.


 


“Tax
Benefit Payment” is defined in Section 3.01(b).


 


“Tax
Benefit Schedule” is defined in Section 2.04.


 


“Tax
Law” means the Code, Treasury Regulations, applicable state, local and
foreign taxing statutes and regulations, and other published guidance
thereunder.


 


8

















 


“Tax
Return” means a return, declaration, report or similar statement required
to be filed with respect to U.S. federal income taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated U.S. federal income tax.


 


“Taxable
Year” means a taxable year as defined in Section 441(b) of the
Code or comparable section, as applicable, (and, therefore, for the avoidance
of doubt, may include a period of less than 12 months for which a Tax Return is
made) ending on or after the date of the Initial Sale.


 


“Taxes”
means U.S. federal income taxes and any interest related thereto.


 


“Taxing
Authority” shall mean any domestic, foreign, federal, national, state,
county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising regulatory authority with
respect to any and all U.S. federal, state, local and foreign taxes,
assessments or similar charges measured by or with respect to net income or
profits, in whole or in part, whether as an exclusive or on an alternative
basis, and any interest related thereto.


 


“Total
Actual/Modified Payment Difference” means:


 


(i) as of an
Early Termination Notice Date, the sum of the future values (and, if the Early
Termination Payment Date is after the end of a Taxable Year but before the due
date (without extensions) for filing the U.S. federal income tax return of the
Buyer with respect to such Taxable Year, the present value) to the Early
Termination Payment Date of the Actual/Modified Payment Differences for all
Taxable Years ending on or before the Early Termination Notice Date but on or
after the most recent Exchange Date, calculated using the Early Termination
Rate as a discount rate and assuming for purposes of computing such future (or
present) values that the Actual/Modified Payment Difference with respect to
Taxes for each Taxable Year accrues on the due date (without extensions) for
filing the U.S. federal income tax return of Buyer with respect to such Taxable
Year; or


 


(ii) as of a Change
of Control Date, the sum of the future values (and, if the Change of Control
Date is after the end of a Taxable Year but before the due date (without
extensions) for filing the U.S. federal income tax return of the Buyer with
respect to such Taxable Year, the present value) to the Change of Control Date
of the Actual/Modified Payment Differences for all Taxable Years ending on or
before the Change of Control Date but on or after the most recent Exchange
Date, calculated using the Early Termination Rate as a discount rate and
assuming for purposes of computing such future (or present) values that the
Actual/Modified Payment Difference with respect to Taxes for each Taxable Year
accrues on the due date (without extensions) for filing the U.S. federal income
tax return of Buyer with respect to such Taxable Year.


 


“Treasury
Regulations” means the final, temporary and proposed regulations under the
Code promulgated from time to time (including corresponding provisions and
succeeding provisions) as in effect for the relevant taxable period.


 


ARTICLE II




DETERMINATION OF
EXCHANGE BASIS SCHEDULE AND REALIZED TAX BENEFIT


 


Section 2.01.                       Basis Adjustment.  Buyer and
RTEA acknowledge that, as a result of an Exchange, Buyer’s tax basis in the
applicable Adjustable Assets shall be adjusted to reflect a Basis Adjustment,
if any.  The parties hereby acknowledge
that, generally, Buyer’s tax basis in the applicable Adjustable Assets shall be
increased by the excess, if any, of (i) the sum of (x) the amount of
cash or other consideration transferred to RTEA, its Affiliate, or any direct
or indirect successor pursuant to the Exchange as payment for the redeemed or
transferred RTEA Units (including the fair market value of any Buyer common
stock, if applicable), plus (y) the amount of payments made pursuant to
this Agreement with respect to such Exchange plus (z) the amount of debt
allocated to the RTEA Units acquired pursuant to such Exchange over (ii) RTEA’s
(or its Affiliate’s) share of the tax basis of the Adjustable Assets immediately
prior to the Exchange attributable to the RTEA Units Exchanged.


 


9




















 


Section 2.02.        Duff &
Phelps Schedule.  Within 30 calendar
days after any Exchange Date, Buyer shall cause Duff & Phelps LLC, or
another Person that has nationally recognized expertise in valuation matters
and that is acceptable to both RTEA and Buyer, to prepare and deliver to Buyer
and RTEA a schedule (the “Duff & Phelps Schedule”) that
allocates the purchase price of the RTEA Units being acquired by CPE or
redeemed by CPE LLC in such Exchange among the various assets that CPE LLC
owns, directly and indirectly.  Buyer and
RTEA shall agree on the methodology to be used in the preparation of the Duff &
Phelps Schedule with respect to the Initial Sale (the “Initial Duff &
Phelps Schedule”).  The Duff &
Phelps Schedule with respect to all subsequent Exchanges shall be prepared in a
manner that is consistent with the methodology used to produce the Initial Duff &
Phelps Schedule.  If Buyer and RTEA
cannot agree as to whether a Duff & Phelps Schedule was produced
consistently with the methodology used to produce the Initial Duff &
Phelps Schedule within 60 days after an Exchange, the parties shall employ the
Reconciliation Procedures.


 


Section 2.03.        Exchange
Basis Schedule.  Within 45 calendar
days after Buyer and RTEA receive the Duff & Phelps Schedule, a
schedule (the “Exchange Basis Schedule”) shall be produced that shall
show, for purposes of Taxes, (i) the actual unadjusted tax basis of the
Adjustable Assets as of each applicable Exchange Date, (ii) the amount by
which each Adjustable Asset’s tax basis is reduced pursuant to the Deferred
Basis Reduction, (iii) the Basis Adjustment with respect to the Adjustable
Assets as a result of the Exchange, (iv) the Irreducible Basis Amount with
respect to the Exchange, (v) the period or periods, if any, over which the
Adjustable Assets are amortizable and/or depreciable, and (vi) the period
or periods, if any, over which each Basis Adjustment is amortizable and/or
depreciable.  The Exchange Basis Schedule
shall be prepared in accordance with the information and assumptions contained
in the Duff & Phelps Schedule, as well as Sections 743 and 755 of the
Code, the Treasury Regulations thereunder, and any similar provisions of Tax
Law, as appropriate.  RTEA shall prepare
the Exchange Basis Schedule with respect to the Initial Sale, and Buyer shall
prepare the Exchange Basis Schedule with respect to each subsequent Exchange.


 


Section 2.04.        Tax
Benefit Schedule.  Within the later
of 45 calendar days after the filing of the U.S. federal income tax return of
Buyer for any Taxable Year and 15 calendar days after the receipt by Buyer of
the last Exchange Basis Schedule with respect to any Taxable Year, Buyer shall
provide to RTEA (i) a schedule showing the calculation of the Realized Tax
Benefit or Realized Tax Detriment for such Taxable Year (a “Tax Benefit
Schedule”); (ii) a certification signed by the CFO of Buyer stating
that the Tax Benefit Schedule is consistent with the Tax Returns of Buyer and
each of its Subsidiaries, and that the Tax Benefit Schedule was prepared using
the same standard of care as the Tax Returns of Buyer and each of its
Subsidiaries; and (iii) a calculation of the Tax Benefit Payment due with
respect to such Taxable Year, if any, with an estimate of the Interest Amount
based on the expected payment date (a “Tax Benefit Computation Schedule”).
The Tax Benefit Schedule and Tax Benefit Computation Schedule will become final
as provided in Section 2.05(a) and may be amended as provided in Section 2.05(b) (subject
to the procedures set forth in Section 2.05(b)).


 


Section 2.05.        Procedures,
Amendments.


 


(a)     Procedure.  Every time Buyer delivers to RTEA a Tax
Benefit Schedule or an Amended Schedule pursuant to Section 2.05(b), Buyer
shall also (x) deliver to RTEA schedules and work papers providing
reasonable detail regarding the preparation of such Schedule and (y) allow
RTEA reasonable access, at no cost to RTEA, to the appropriate representatives
at Buyer, or any Affiliate of Buyer, in connection with a review of such
Schedule. Buyer shall also allow RTEA reasonable access to third parties
retained by Buyer or its Affiliates, and the costs of RTEA’s access to such
third parties shall be borne 85% by RTEA and 15% by Buyer.  Any Schedule received by RTEA shall become
final and binding on all parties unless RTEA, within 30 calendar days after
receiving such Schedule, provides Buyer with notice of a reasonable objection
to such Schedule (“Objection Notice”) made in good faith. If the
parties, for any reason, are unable to successfully resolve the issues raised
in such notice within 30 calendar days of receipt by Buyer of an Objection
Notice, Buyer and RTEA shall employ the Reconciliation Procedures.


 


(b)     Amended
Schedule.  Any Exchange Basis
Schedule (or amended Exchange Basis Schedule) or applicable Tax Benefit
Schedule (or amended Tax Benefit Schedule) and its corresponding Tax Benefit
Computation Schedule for any Taxable Year shall be amended from time to time by
Buyer (such Schedule, an “Amended Schedule”) (i) in connection with
a Determination affecting such Schedule, (ii) to correct inaccuracies in
the Schedule identified as a result of the receipt of additional factual
information relating to a Taxable Year after the date the Schedule was provided
to RTEA, (iii) to comply with the Expert’s determination under the Reconciliation



 


10

















 


Procedures, (iv) to reflect a change in the
Realized Tax Benefit or Realized Tax Detriment for such Taxable Year
attributable to a carryback or carryforward of a loss or other tax item to such
Taxable Year, or (v) to reflect a change in the Realized Tax Benefit or
Realized Tax Detriment for such Taxable Year attributable to an amended Tax
Return filed for such Taxable Year or pursuant to a Determination for such
Taxable Year. Upon the amendment of any Exchange Basis Schedule (or amended
Exchange Basis Schedule) or any Tax Benefit Schedule (or amended Tax Benefit
Schedule), the corresponding Duff & Phelps Schedule (or amended Duff &
Phelps Schedule) shall be amended in a consistent manner.


 


Section 2.06.        Costs
and Expenses.  All reasonable
third-party out of pocket costs and expenses incurred by RTEA and Buyer to
produce, evaluate, or resolve any disagreement with respect to the Duff &
Phelps Schedule, the Life of Mine Model, the Projected Tax Benefit Schedule, or
any Schedule required to be produced under this Agreement that would not have
been incurred by RTEA or Buyer, respectively, if RTEA and Buyer had not entered
into this Agreement, shall be borne 85% by RTEA and 15% by Buyer unless otherwise
explicitly provided under this Agreement. 
For the avoidance of doubt, such costs or expenses shall not include
time or resources spent by employees of RTEA, Buyer, or any of their respective
Affiliates.


 


ARTICLE III




TAX BENEFIT PAYMENTS


 


Section 3.01.        Payments.


 


(a)     Payments.  Within five (5) calendar days of a Tax
Benefit Schedule and the corresponding Tax Benefit Computation Schedule
delivered to RTEA becoming final in accordance with Section 2.05(a), Buyer
shall pay to RTEA the Tax Benefit Payment (if the Tax Benefit Payment is a
positive number) or RTEA shall pay to Buyer the Tax Benefit Payment (if the Tax
Benefit Payment is a negative number) for such Taxable Year, determined
pursuant to Section 3.01(b). Each such Tax Benefit Payment shall be made
by wire transfer of immediately available funds to a bank account of RTEA
previously designated by RTEA to Buyer, to a bank account of Buyer previously
designated by Buyer to RTEA, or as otherwise agreed by Buyer and RTEA. For the
avoidance of doubt, no Tax Benefit Payment shall be made in respect of
estimated tax payments and no Tax Benefit Payment shall be made in respect of
an Amended Schedule except in accordance with Section 3.01(b). At the same
time that the Tax Benefit Payment is paid, the payor shall provide
documentation to the recipient illustrating the payor’s calculation of the
Interest Amount with respect to such Tax Benefit Payment.


 


(b)     A “Tax
Benefit Payment” with respect to a Taxable Year means an amount equal to
85% of the sum of the Net Tax Benefit and the Interest Amount for that Taxable
Year. The “Net Tax Benefit” for each Taxable Year shall be an amount
equal to the difference of (i) the Cumulative Net Realized Tax Benefit for
such Taxable Year and (ii) the total amount of net payments previously
made from Buyer to RTEA under this Section 3.01, excluding all payments
attributable to Interest Amount (the “Net Benefits Already Paid”).  The “Interest Amount” for each Taxable
Year shall equal the interest on the Net Tax Benefit for such Taxable Year
calculated at the Agreed Rate, compounded monthly, from the due date (without
extensions) for filing the U.S. federal income tax return of Buyer with respect
to Taxes for such Taxable Year until the Payment Date.  For the avoidance of doubt, each of the Net
Tax Benefit, the Interest Amount, and the Tax Benefit Payment with respect to a
given Taxable Year may be a negative number. 
Notwithstanding any other provisions of this Agreement, distributions
and payments made pursuant to Section 5.4(f) of the CPE LLC Agreement
shall not be taken into account in calculating amounts due under this Section 3.01
or any other provision of this Agreement.


 


(c)     Upon
delivery of an Exchange Basis Schedule as described in Section 2.03, Buyer
shall pay to RTEA an amount equal to the Irreducible Basis Amount Payment, if
any.


 


(d)     Within
ten (10) calendar days of December 31, March 31, June 30,
and September 30 of each year, Buyer shall pay to RTEA an amount equal to
the product of (i) the Notional Loan Balance as of the first day of the
quarter ending on such date and (ii) the Notional Interest Rate.


 


Section 3.02.        No
Duplicative Payments.  It is intended
that the above provisions of this Agreement will not result in duplicative
payment of any amount (including interest) required under this Agreement. It is
also 


 


11

















 


intended that the
provisions of this Agreement provide that Buyer shall pay to RTEA 85% of the
Cumulative Net Realized Tax Benefit and Interest Amount and that RTEA pay to
Buyer any excess over 85% of the Cumulative Net Realized Tax Benefit and
Interest Amount that RTEA may have received. The provisions of this Agreement
shall be construed in the appropriate manner in order to realize such
intentions.


 


ARTICLE IV




TERMINATION AND CHANGE
OF CONTROL


 


Section 4.01.        Early
Termination and Breach of Agreement.


 


(a)     Subject
to Section 4.03, Buyer may terminate this Agreement at any time by paying
to RTEA the Early Termination Payment after the Early Termination Payment Date;
provided, however, that this Agreement shall only terminate upon the receipt of
the Early Termination Payment, and provided, further, that Buyer may withdraw
any notice to execute its termination rights under this Section 4.01(a) prior
to the Early Termination Payment Date. Upon payment of the Early Termination
Payment by Buyer, neither RTEA nor Buyer shall have any further payment
obligations under this Agreement, other than for any unpaid Tax Benefit Payment
with respect Taxable Years ending on or before the Early Termination Notice
Date.


 


(b)     In the
event that Buyer materially breaches this Agreement, whether as a result of
failure to make any payment when due, failure to honor any other material
obligation required hereunder (including the provisions of Section 4.04(a)(2)),
by operation of law as a result of the rejection of this Agreement in a case
commenced under the Bankruptcy Code, or otherwise, then all of Buyer’s
obligations hereunder shall be accelerated and such obligations shall be calculated
as if an Early Termination Notice had been delivered on the date of such breach
and shall include, but not be limited to, (1) the Early Termination
Payment calculated as if an Early Termination Notice had been delivered on the
date of a breach, and (2) any Tax Benefit Payment due and payable but
unpaid as of the date of a breach. Notwithstanding the foregoing, in the event
that Buyer materially breaches this Agreement, RTEA shall be entitled to elect
to receive the amounts set forth in (1) and (2) above or to seek
specific performance of the terms hereof. The parties agree that the failure to
make any payment due pursuant to this Agreement within 45 calendar days of the
date such payment is due shall be deemed to be a material breach under this
Agreement for all purposes of this Agreement, and that it will not be
considered to be a breach of a material obligation under this Agreement to make
a payment due pursuant to this Agreement within 45 calendar days of the date
such payment is due.  Buyer and RTEA
specifically agree that the remedies provided in this Section are not
intended as a penalty.


 


(c)     Buyer and
RTEA agree that the aggregate fair market value of the Tax Benefit Payments
cannot be ascertained with any reasonable certainty for U.S. federal income tax
purposes.


 


Section 4.02.        Early
Termination Notice.  If Buyer chooses
to exercise its right of early termination under Section 4.01 above, Buyer
shall deliver to RTEA notice of such intention to exercise such right (“Early
Termination Notice”) together with a schedule (the “Early Termination
Schedule”) showing, in reasonable detail, the calculation of the Early
Termination Payment. The applicable Early Termination Schedule shall become
final and binding on all parties unless RTEA, within 30 calendar days after
receiving the Early Termination Schedule, provides Buyer with notice of a
reasonable objection to such Early Termination Schedule made in good faith (“Early
Termination Objection Notice”). If the parties, for any reason, are unable
to successfully resolve the issues raised in such notice within 30 calendar
days after receipt by Buyer of the Early Termination Objection Notice, Buyer
and RTEA shall employ the Reconciliation Procedures.  If RTEA provides an Early Termination
Objection Notice objection, the Early Termination Schedule shall become final
upon the earlier of an agreement between the parties or the resolution of a
Reconciliation Dispute pursuant to Section 7.09.


 


Section 4.03.        Payment
upon Early Termination.


 


(a)     Date
Payment Due.  Within three calendar
days after agreement between RTEA and Buyer with respect to the Early
Termination Schedule, Buyer shall pay to RTEA an amount equal to the Early
Termination Payment.  Such payment shall
be made by wire transfer of immediately available funds to a bank account
designated by RTEA or as otherwise agreed by Buyer and RTEA.  Failure by Buyer to pay the Early Termination
Payment pursuant to this Section 4.03 shall in no event be treated as a
material breach of this Agreement but the Early 


 


12

















 


Termination Notice and the Early Termination Schedule
finalized pursuant to Section 4.02 given with respect to such notice shall
be void.


 


(b)     Early
Termination Payment.  The “Early
Termination Payment” shall equal the excess, if any, of (i) the sum of
(x) the present value, as of the Early Termination Payment Date, of all
payments that the Projected Tax Benefit Schedule as of the Early Termination
Notice Date provides that RTEA should receive from Buyer with respect to all
Taxable Years ending after the Early Termination Notice Date and that are due
after the Early Termination Payment Date and (y) the future value, as of
the Early Termination Payment Date, of all payments that the Projected Tax
Benefit Schedule as of the Early Termination Notice Date provides that RTEA
should receive from Buyer with respect to all Taxable Years ending after the
Early Termination Notice Date and that are due before the Early Termination
Payment Date, in both cases using the Early Termination Rate as a discount rate
(or interest rate), over (ii) the Total Actual/Modified Payment Difference
as of the Early Termination Notice Date. For purposes of computing such present
value (or future value), any payment that the Projected Tax Benefit Schedule
provides that RTEA should receive from Buyer with respect to Taxes of a Taxable
Year shall be treated as payable on the due date (without extensions) for
filing the U.S. federal income tax return of Buyer with respect to such Taxes
for such Taxable Year.  For the avoidance
of doubt, a negative Total Actual/Modified Payment Difference shall be added to
the amount calculated in clause (i) of this Section 4.03(b).


 


Section 4.04.        Transfers
of Assets, Change of Control, Change of Structure.


 


(a)     Transfers
of Assets.  The provisions of this
section 4.04(a) shall apply to any transfer that is deemed to occur for
U.S. federal income tax purposes, including any transfer that is deemed to
occur under the provisions of Treasury Regulation 301.7701-3.


 


(1)  Generally.  Buyer shall
give RTEA at least 30 days’ written notice prior to any Non-Exempted Transfer.


 


(2)  Restricted Transfers. 
Buyer shall not, and shall not cause any of its Subsidiaries to,
transfer any Adjustable Assets in a Restricted Transfer.


 


(3)  Asset Transfers.  If
Buyer, or a Subsidiary of Buyer, transfers any Adjustable Assets in a
Non-Exempted Transfer that is not currently fully taxable for U.S. federal
income tax purposes, then, for purposes of that Taxable Year and all subsequent
Taxable Years, if the Alternative Tax Benefit Payment calculated with respect
to such Adjustable Assets for a Taxable Year is larger than the Tax Benefit
Payment for that Taxable Year, Section 3.01 shall be applied to such
Taxable Year as if all references to the Tax Benefit Payment were instead
references to the Alternative Tax Benefit Payment calculated with respect to
such Adjustable Assets, but leaving the Net Benefits Already Paid
unchanged.  If the foregoing sentence
cannot be applied because Buyer is not able to calculate either the Tax Benefit
Payment or the Alternative Tax Benefit Payment with respect to such Adjustable
Assets for a relevant Taxable Year (the “Incalculable Year”), then for
purposes of applying Section 3.01 to the Incalculable Year and all
subsequent Taxable Years, (i) Buyer or such Subsidiary shall be treated as
having disposed of such Adjustable Asset in a fully taxable transaction on the
first day of the Incalculable Year and (ii) the consideration deemed to be
received by Buyer or such Subsidiary shall be equal to the gross fair market
value of such Adjustable Asset.  For the
avoidance of doubt, each Non-Exempted Transfer of an Adjustable Asset will be
subject to this Section 4.04(a)(3) to the extent that it is not
currently taxable and to Section 4.04(a)(4) to the extent that it is
currently taxable.


 


(4)  Increases to Notional Loan Balance.  If Buyer, or a Subsidiary of Buyer, transfers
any Adjustable Asset with a gross value greater than $10 million in a transfer
that is taxable in whole or in part and is made outside the ordinary course of
business, the Notional Loan Balance shall be increased on such date by an
amount equal to the product of (i) the taxable gain (excluding any gain
attributable to any increase in the fair market value between the date of such
transfer and the most recent Exchange Date) allocated to RTEA with respect to
such transfer (the “Accelerated RTEA Gain” with respect to such
transaction) and (ii) the Maximum RTEA Tax Rate.  Following any such transaction, Buyer shall
promptly (but in no case more than forty-five (45) days following the date of
the transaction) compute the increased Notional Loan Balance and provide RTEA
with written notice thereof.  For the
avoidance of doubt, each Non-Exempted Transfer of an Adjustable Asset will be
subject to Section


 


13





















 


4.04(a)(3) to
the extent that it is not currently taxable and to this Section 4.04(a)(4) to
the extent that it is currently taxable.


 


(5)  Decreases to Notional Loan Balance.  Upon each Exchange Date, the Notional Loan
Balance shall be reduced by the Notional Loan Repayment Amount.  Following any such transaction, Buyer shall
promptly (but in no case more than forty-five (45) days following the date of
the transaction) compute the decreased Notional Loan Balance and provide RTEA
with written notice thereof.


 


(b)     Change
of Control of Subsidiary of Buyer. 
If there is a Change of Control with respect to any Subsidiary of Buyer,
other than CPE LLC, in any Taxable Year (other than as a result of a Change of
Control of Buyer or CPE LLC), such Subsidiary shall be treated as having
disposed of all of its Adjustable Assets immediately before such Change of
Control in transactions that are taxable to the same extent that the
disposition of the Subsidiary is taxable, and the provisions of Section 4.04(a) shall
apply to such deemed dispositions.


 


(c)     Change
of Control of Buyer or of CPE LLC. 
In the event of a Change of Control of Buyer or CPE LLC, with respect to
the Taxable Year of such Change of Control and subsequent Taxable Years, (i) no
payments will be due under Section 3.01(a) with respect to Taxable
Years ending after the Change of Control Date; (ii) Buyer or, if
applicable, its successor (Buyer or such entity, as appropriate, the “Surviving
Entity”) shall not be obligated to make any payments under Section 3.01(c);
and (iii) the Surviving Entity shall be obligated to make payments to RTEA
in the amounts and on the dates provided in the Projected Tax Benefit Schedule
with respect to Taxable Years ending after such Change of Control Date, except
that each such payment shall be multiplied by the Change of Control Payment
Modifier as of such Change of Control Date. 
Notwithstanding the foregoing, if RTEA owns RTEA Units or common stock
of the Surviving Entity 180 calendar days after the Change of Control of Buyer
or CPE LLC, this Agreement shall continue as if there had been no Change of
Control of Buyer or CPE LLC, as applicable. 
In the event that, after such Change of Control, the credit rating of
the Surviving Entity is lower than Buyer’s credit rating prior to the events
giving rise to the Change of Control, and this Agreement has not been
terminated by the Surviving Entity exercising its right to terminate this
Agreement pursuant to Section 4.01(a), the Surviving Entity shall obtain
credit support (which credit support may consist of a pledge of its assets to
RTEA to secure payments under this Agreement) sufficient to cause the remaining
payments under this Agreement to have a credit rating at least as high as the
rating on the most subordinated outstanding bona fide debt of CPE LLC prior to
the events giving rise to the Change of Control.  In the event of a dispute arising under this Section 4.04(c),
Buyer and RTEA shall employ the Reconciliation Procedures.  In the event of a Change of Control, all
references to Buyer herein shall be read as references to the Surviving Entity.


 


(d)     Change
of Structure.  If Buyer changes the
structure of CPE LLC or its interest therein in a manner that diminishes the
benefits allocable to RTEA under this Agreement (a “Change of Structure”),
including, without limitation, a sale of Adjustable Assets to a Subsidiary that
is treated as a corporation for U.S. federal income tax purposes, then, notwithstanding
anything to the contrary herein, the calculation of the payments to be made to
RTEA pursuant to this Agreement shall be made as if no such Change of Structure
had occurred.


 


ARTICLE V




LATE PAYMENTS


 


Section 5.01.        Late
Payments.  The amount of all or any
portion of any payment or advance not made when due under the terms of this
Agreement, including any Tax Benefit Payment not made to RTEA or Buyer, shall
be payable together with any interest thereon, computed at the Default Rate,
compounded monthly, and commencing from the date on which such payment was due
and payable; provided, that such additional interest shall not be deemed
liquidated damages and the party that is owed payment shall retain its remedies
hereunder.


 


ARTICLE VI




PARTICIPATION;
CONSISTENCY; COOPERATION


 


Section 6.01.        Participation
in Buyer’s Tax Matters.  Except as
otherwise provided herein, Buyer shall have full responsibility for, and sole
discretion over, all tax matters concerning Buyer and its Subsidiaries,
including, 


 


14





















 


without
limitation, the preparation, filing or amending of any U.S. federal, state, or
local or non-U.S. tax return and the defending of any issues pertaining to
taxes, subject to a requirement that Buyer act in good faith in connection with
its control of any matter which is reasonably expected to affect RTEA’s rights
and obligations under this Agreement. Further, the Buyer shall promptly notify
RTEA in writing of and keep RTEA reasonably informed with respect to the
portion of any Buyer Audit the outcome of which is reasonably expected to
affect RTEA’s rights and obligations under this Agreement, and shall provide
RTEA reasonable opportunity to provide information and other input to Buyer,
its Subsidiaries, any consolidated group of which Buyer is a member, and their
respective advisors concerning the conduct of any such portion of such Buyer
Audit. RTEA shall have the right to attend in person or by telephone (but not
participate in) any Buyer Audit the outcome of which could reasonably be
expected to affect the amount of net payments that RTEA is expected to receive
under this Agreement by $10 million. 
Buyer shall not settle or fail to contest any issue pertaining to taxes
that is reasonably expected to affect RTEA’s rights and obligations under this
Agreement without RTEA’s consent, such consent not to be unreasonably withheld.


 


Section 6.02.        Consistency.  Unless there has previously been a
Determination to the contrary, RTEA, Buyer, and Buyer’s Subsidiaries agree to
report and cause to be reported for all purposes, including U.S. federal,
state, local and foreign tax purposes and financial reporting purposes, all
tax-related items, in a manner consistent with this Agreement, including,
without limitation, (1) any allocation shown on any Exchange Basis
Schedule, (2) the Section 754 Elections made with respect to any
applicable Subsidiaries of Buyer (including that each such election was validly
and timely made, whether or not the electing entity was a Subsidiary of Buyer
at the time of such election), and (3) the treatment of any payment made
pursuant to Section 3 or Section 4 of this Agreement.  Furthermore, the parties agree to treat any
payment made pursuant to Section 3 or Section 4 or this Agreement, other
than payments of Imputed Interest, as an adjustment to the purchase price of
the RTEA Units acquired in an Exchange.


 


Section 6.03.        Cooperation.  (a) Each of RTEA and Buyer shall (1) furnish
to the other party in a timely manner such information, documents and other
materials as the other party may reasonably request for purposes of making any
determination or computation necessary or appropriate under this Agreement,
preparing any financial statement, preparing any tax return or contesting or
defending any audit, examination or controversy with any Taxing Authority, (2) make
itself available to the other party and its representatives to provide
explanations of documents and materials and such other information as the other
party or its representatives may reasonably request in connection with any of
the matters described in clause (1) above, and (3) reasonably
cooperate in connection with any such matter.


 


(b)     RTEA and
Buyer will promptly provide to the other a copy of any written communication
from or with the IRS or any other Taxing Authority that relates in any respect
to this Agreement or to the treatment of any Exchange or related transaction
(including any communication that relates to the allocation shown on any
Exchange Basis Schedule).


 


Section 6.04.        Section 754
Elections.  If, at any point, any
Subsidiary of Buyer that is a Partnership does not have a Section 754
Election in effect, Buyer shall cause such Subsidiary of Buyer to make a valid Section 754
Election at the time that such Subsidiary files its Tax Return for such Taxable
Year.


 


ARTICLE VII




MISCELLANEOUS


 


Section 7.01.        Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed duly
given and received (a) on the date of delivery if delivered personally, or
by facsimile upon confirmation of transmission by the sender’s fax machine if
sent on a Business Day (or otherwise on the next Business Day) or (b) on
the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service. All notices hereunder shall be delivered
as set forth below, or pursuant to such other instructions as may be designated
in writing by the party to receive such notice:


 


If to
Buyer, to:


 


15

















 


Cloud Peak Energy Inc.

General Counsel

505 S. Gillette Avenue

Gillette, WY 82716

(307) 687-6000

Fax: (307) 687-6059


 


If to
RTEA, to:


 


Legal
Department


4700
Daybreak Parkway


South
Jordan, UT 84095


(801)
204-2000


Fax: (801)
204-2892


 


with a
copy to:


 


Fried,
Frank, Harris, Shriver & Jacobson LLP


Attn:
Robert Cassanos


One
New York Plaza


New
York, NY 10004


(212)
859-8000


Fax:
(212) 859-4000


 


Any
party may change its address or fax number by giving the other party written
notice of its new address or fax number in the manner set forth above.


 


Section 7.02.        Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.


 


Section 7.03.        Entire
Agreement; No Third Party Beneficiaries. 
This Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.


 


Section 7.04.        Governing
Law.  (a) 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.


 


(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). 
Furthermore, each party:


 


(i)            expressly
and irrevocably consents and submits to the jurisdiction of the New York Courts
in connection with any such legal proceeding, including to enforce any
settlement, order or award;


 


16





















 


(ii)           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 7.01 is sufficient and reasonably calculated
to give actual notice;


 


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


 


(iv)          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; and


 


(c)         Except
as otherwise set forth in Section 7.09, 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.  Each of
the parties hereto (i) 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 (ii) 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 7.04(d).


 


Section 7.05.        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.


 


Section 7.06.        Successors;
Assignment; Amendments; Waivers.


 


(a)     RTEA may
assign its rights and obligations under this Agreement without the prior
written consent of Buyer and may pledge or assign its rights under this
Agreement in connection with a financing and the enforcement of the lender’s
rights thereunder.  Notwithstanding the
foregoing, if RTEA assigns its rights and obligations under this Agreement to
any Person that is not an Affiliate of RTEA, such assignee shall not have the
right to attend certain Buyer Audits that Section 6.01 provides to RTEA;
however, a nationally recognized accounting or law firm retained by such
assignee shall have the same right to attend Buyer Audits that Section 6.01
provides to RTEA.


 


(b)     This
Agreement may only be amended in a writing signed by both Buyer and RTEA. No
provision of this Agreement may be waived unless such waiver is in writing and
signed by the party against whom the waiver is to be effective.


 


(c)     All of
the terms and provisions of this Agreement shall be binding upon, shall inure
to the benefit of and shall be enforceable by the parties hereto and their
respective successors and permitted assigns. Buyer shall, by written agreement,
require and cause any direct or indirect successor to all or substantially all
of the Adjustable Assets or the business or assets of Buyer (whether by
purchase, merger, consolidation or otherwise) expressly to


 


17





















 


assume and agree to perform this Agreement in the same
manner and to the same extent that Buyer would be required to perform if no
such succession had taken place.  If
Buyer does not acquire such a written agreement and present it to RTEA before
such direct or indirect successor of Buyer succeeds to all or substantially all
of the Adjustable Assets or the business or assets of Buyer, the Surviving
Entity shall become obligated to immediately pay to RTEA an amount equal to the
present value of all future payments owed to RTEA under this Agreement,
discounted at the Early Termination Rate.


 


Section 7.07.        Titles
and Subtitles.  The titles of the
sections and subsections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.


 


Section 7.08.        Resolution
of Disputes.  Other than those
disputes that are subject to Section 7.09, any and all disputes arising
out of or relating to this Agreement (including any claim of fraud,
misrepresenation or fraudulent inducement or any question of validity or
effectof this Agreement) shall be resolved in accordance with Section 9.10
of the Master Separation Agreement.


 


Section 7.09.        Reconciliation.  In the event that Buyer and RTEA are unable
to resolve a disagreement with respect to the matters governed by Sections
2.01, 2.02, 2.03, 2.04, 2.05, 4.02, and 4.04 within the relevant period
designated in this Agreement (“Reconciliation Dispute”), the
Reconciliation Dispute shall be submitted for determination to a nationally
recognized expert (the “Expert”) in the particular area of disagreement
mutually acceptable to both parties. The Expert shall be a partner in a
nationally recognized accounting firm or law firm, and the Expert shall not,
and the firm that employs the Expert shall not, have any material relationship
with Buyer, RTEA or other actual or potential conflict of interest. If the
parties are unable to agree on an Expert within fifteen (15) calendar days
of receipt by the respondent(s) of written notice of a Reconciliation
Dispute, the Expert shall be appointed by JAMS (formerly Judicial Aribtration
and Mediation Services, Inc.). The Expert shall resolve any matter
relating to an Exchange Basis Schedule or an amendment thereto or the Early
Termination Schedule or an amendment thereto within 30 calendar days and shall
resolve any matter relating to a Tax Benefit Schedule or an amendment thereto
within 15 calendar days or as soon thereafter as is reasonably practicable, in
each case after the matter has been submitted to the Expert for resolution.
Notwithstanding the preceding sentence, if the matter is not resolved before
any payment that is the subject of a disagreement is due or any Tax Return
reflecting the subject of a disagreement is due, such payment shall be made on
the date prescribed by this Agreement and such Tax Return may be filed as
prepared by Buyer, subject to adjustment or amendment upon resolution.  Each of Buyer and RTEA, respectively, shall
be entitled to reimbursement for the reasonable out-of-pocket costs and expenses
that it incurs in connection with such proceeding (including third-party out of
pocket costs and expenses relating to the engagement of such Expert or amending
any Tax Return) from the other party to the extent that the result reached by
the Expert reflects the position advocated by Buyer or RTEA, respectively.  By way of example, if RTEA asserts that it is
entitled to a Tax Benefit Payment of $200 with respect to a particular Taxable
Year and Buyer asserts that RTEA is entitled to a Tax Benefit Payment of $100
with respect to such Taxable Year, and the Expert concludes that RTEA is
entitled to a Tax Benefit Payment of $180 with respect to such Taxable Year,
RTEA shall be entitled to reimbursement of 80% of the reasonable out-of-pocket
costs and expenses that it incurred in connection with such proceeding and
Buyer shall be entitled to reimbursement of 20% of the reasonable out-of-pocket
costs and expenses that it incurred in connection with such proceeding.  Each party may offset its payment obligations
pursuant to the previous two sentences against the payment that it is entitled
to receive pursuant to the previous two sentences.  Notwithstanding the foregoing, if there is a
dispute under Section 4.02 subject to these Reconciliation Procedures and
the Early Termination Notice and Early Termination Schedule are voided pursuant
to Section 4.03(a), Buyer shall pay all out-of-pocket costs and expenses
incurred by RTEA in engaging the Expert and all other reasonable out-of-pocket
costs and expenses incurred by RTEA in connection with the proceeding
hereunder.  Any dispute as to (i) whether
a dispute is a Reconciliation Dispute within the meaning of this Section 7.09,
(ii) the extent that the result reached by the Expert reflects the
positions advocated by Buyer and RTEA, respectively, or (iii) the amount
of the reasonable costs and expenses incurred in connection with such
proceeding, shall be decided by the Expert. The Expert shall finally determine
any Reconciliation Dispute and the determinations of the Expert pursuant to
this Section 7.09 shall be binding on Buyer and RTEA and may be entered
and enforced in any court having jurisdiction.


 


Section 7.10.        Withholding.  Buyer shall be entitled to deduct and
withhold from any payment payable pursuant to this Agreement such amounts as
Buyer is required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of Tax Law. To the extent that amounts
are so withheld and paid 


 


18





















 


over to the
appropriate Taxing Authority by Buyer, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to RTEA.


 


Section 7.11.        Present
and Future Values.  Present and
future values shall be computed on the basis of annual compounding (with
compounding occurring on the last calendar day of each year).


 


Section 7.12.        Confidentiality.  RTEA agrees to keep information that it
learns about CPE’s business and tax matters by virtue of this Agreement
confidential.  RTEA shall have no
obligation to keep any information confidential to the extent that (i) any
such information is or becomes publicly available (except as a result of an act
of RTEA in violation of this Agreement) or is generally known to the business
community or (ii) RTEA reasonably believes that it is legally compelled to
disclose such information to 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.
Notwithstanding anything to the contrary herein, RTEA may disclose to any and
all Persons, without limitation of any kind, the tax treatment and tax
structure of Buyer and its Subsidiaries and any of its transactions, and all
materials of any kind (including opinions or other tax analyses) that are
provided to RTEA relating to such tax treatment and tax structure.


 


Section 7.13.        Non-Effect
of Other Tax Receivable Agreements. 
RTEA and Buyer agree that if Buyer or any of its Subsidiaries enters
into any other agreement that obligates Buyer or any of its Subsidiaries to
make payments to another party in exchange for tax benefits conferred upon Buyer
or any of its Subsidiaries, such tax benefits and such payments shall be
ignored for all purposes of this Agreement, including for purposes of
calculating the Actual Buyer Tax Liability and the Hypothetical Buyer Tax
Liability.


 


[Remainder of Page Intentionally Left Blank]


 


19

















 


IN WITNESS WHEREOF, Buyer
and RTEA have duly executed this Agreement as of the date first written above.


 


	
  RIO TINTO ENERGY AMERICA INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  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

  	
   

  



 


[Signature page for Tax Receivable Agreement]