Exhibit 10.3


 


ESCROW AGREEMENT


 


THIS
ESCROW AGREEMENT is entered into and effective this 25th day of November, 2009
by and among SunTrust Bank (“Escrow Agent” or “Bank”), Rio Tinto Energy America
Inc., a Delaware corporation (“RTEA”), and Cloud Peak Energy Resources
LLC, a Delaware limited liability company (“CPE”) (collectively the “Parties”);


 


WHEREAS,


 


The
Parties hereto desire for the Escrow Agent open an account (the “Escrow
Account”) into which CPE  will deposit funds to be held and invested
by the Escrow Agent in accordance with this agreement for the benefit of RTEA.


 


NOW,
THEREFORE, in consideration of the premises herein, the parties hereto agree as
follows:


 


I.                                       Terms
and Conditions


 


1.1.                              The Parties
hereby appoint the Bank as their Escrow Agent and the Bank hereby accepts its
duties as provided herein.


 


1.2                                 CPE shall remit
funds to the Escrow Agent to be held by the Escrow Agent and invested as
provided in this agreement for the benefit of RTEA.


 


1.3.                              Within two business days of
receipt of written instructions, signed only by an authorized representative of
RTEA (as identified in Exhibit A),
the Escrow Agent shall disburse funds from the Escrow Account as provided in
such written instructions, but only to the extent that funds are collected and
available.  Notwithstanding anything in
this Agreement to the contrary, the Escrow Agent shall only release funds from
the Escrow Account solely upon the written instructions of RTEA and shall take
no instruction, nor comply with any request, from CPE or any other person or
entity.


 


II.                                   Provisions
as to Escrow Agent


 


2.1.                              This Escrow Agreement
expressly and exclusively sets forth the duties of Escrow Agent with respect to
any and all matters pertinent hereto and no implied duties or obligations shall
be read into this Escrow Agreement against Escrow Agent.


 


2.2.                              Escrow Agent acts hereunder
as a depository only, and is not responsible or liable in any manner whatsoever
for the sufficiency, correctness, genuineness or validity of the subject matter
of the Escrow Agreement or any part thereof, or of any person executing or
depositing such subject matter.


 


2.3.                              This Escrow Agreement
constitutes the entire agreement between the Escrow Agent and the other parties
hereto in connection with the subject matter of this Escrow Account, and no
other agreement entered into between the parties, or any of them, shall be
considered as adopted or binding, in whole or in part, upon the Escrow Agent
notwithstanding that any such other agreement may be deposited with Escrow
Agent or the Escrow Agent may have knowledge thereof.


 


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2.4.                              Escrow Agent shall in no way
be responsible for nor shall it be its duty to notify any party hereto or any
other party interested in this Escrow Agreement of any payment required or
maturity occurring under this Escrow Agreement or under the terms of any
instrument deposited therewith unless such notice is explicitly provided for in
Escrow Agreement.


 


2.5.                              Escrow Agent shall be
protected in acting upon any written notice, request, waiver, consent,
certificate, receipt, authorization, power of attorney or other paper or
document which Escrow Agent in good faith believes to be genuine and what it
purports, to be, including, but not limited to, items directing investment or
non-investment of funds, items requesting or authorizing release, disbursement
or retainage of the subject matter of Escrow Agreement and items amending the
terms of the Escrow Agreement.


 


2.6.                              Escrow Agent may consult
with legal counsel in the event of any dispute or question as to the
construction of any of the provisions hereof or its duties hereunder, and it
shall incur no liability and shall be fully protected in acting in accordance
with the advice of such counsel.


 


2.7.                              In the event of any
disagreement between any of the parties to this Escrow Agreement, or between
any of them and any other party, resulting in adverse claims or demands being
made in connection with the matters covered by this Escrow Agreement, or in the
event that Escrow Agent, in good faith, be in doubt as to what action it should
take hereunder, Escrow Agent may, at its option, refuse to comply with any
claims or demands on it, or refuse to take any other action hereunder, so long
as such disagreement continues or such doubt exists, and in any such event,
Escrow Agent shall not be or become liable in any way or to any party for its
failure or refusal to act, and Escrow Agent shall be entitled to continue to
refrain from acting until (i) the rights of all interested parties shall
have been fully and finally adjudicated by a court of competent jurisdiction,
or (ii) all differences shall have been adjudged and all doubt resolved by
agreement among all of the interested parties, and Escrow Agent shall have been
notified thereof in writing signed by all such parties.  Notwithstanding the preceding, Escrow Agent
may in its discretion obey the order, judgment, decree or levy of any court,
whether with or without jurisdiction, or of an agency of the United States or
any political subdivision thereof, or of any agency of the State/Commonwealth
of New York or of any political subdivision thereof, and Escrow Agent is
hereby authorized in its sole discretion, to comply with and obey any such
orders, judgments, decrees or levies. 
The rights of Escrow Agent under this sub-paragraph are cumulative of
all other rights which it may have by law or otherwise.


 


2.8.                              Escrow Agent shall be
indemnified and held harmless from anything which it may do or refrain from
doing in connection herewith, or for any claims, demands or losses, or for any
damages made or suffered by any party to this Escrow Agreement, excepting such
as may arise through or be caused by Escrow Agent’s willful misconduct or gross
negligence.


 


2.9.                              In the event that any
controversy should arise among the parties with respect to the Escrow Agreement
or should the Escrow Agent resign and the parties fail to select another Escrow
Agent to act in its stead, the Escrow Agent shall have the right to institute a
bill of interpleader in any court of competent jurisdiction to determine the
rights of the parties.


 


III.                               Compensation
of Escrow Agent


 


3.1.                              Escrow Agent shall be
entitled to reasonable compensation as well as reimbursement for its reasonable
costs and expenses incurred in connection with the performance by it of
services under this Escrow Agreement (including reasonable fees and expenses of
Escrow Agent’s counsel).  CPE 


 


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binds and obligates itself to pay to Escrow Agent
the compensation and reimbursement to which it is entitled and further agrees
that Escrow Agent shall have a lien on the assets of the Escrow Account for
payment of its fees and expense from the assets of the Escrow Account if they
are not otherwise paid and without judicial action to foreclose the said
lien.  Escrow Agent’s fee is as provided
in Exhibit B to this agreement.


 


IV.                              Miscellaneous


 


4.1.                              If money is a
part of the subject matter of this Escrow Agreement, then Escrow Agent shall
make no disbursement, investment or other use of funds until and unless it has
collected funds.  Escrow Agent shall not
be liable for collection items until the proceeds of the same in actual cash
have been received or the Federal Reserve has given Escrow Agent credit for the
funds.


 


4.2.                              If money is a part of the
subject matter of this Escrow Agreement, said funds shall be invested as
directed by RTEA in its sole discretion, who hereby directs the Escrow
Agent to invest in one or more of the investments listed on Exhibit C.  The
investments made under this agreement are to be made by the Escrow Agent, as
directed, and the Escrow Agent shall not be liable to any party for any loss
incurred in connection with any such investment.  The Escrow Agent shall make its best effort
to invest funds on a timely basis upon receipt of such funds.  However, the Escrow Agent shall not be liable
for compensation to any party relate to funds which are held uninvested or
funds which are not invested timely.


 


4.3                                 The Escrow Agent shall
provide monthly reports of transactions and holding to the Parties as of the
end of each month, at the address provided by the Parties.  The Escrow Agent shall not be responsible for
providing any IRS tax reporting or any other tax reporting, including any 1099
tax reporting related to this Escrow Agreement.


 


4.4.                              Any notice, request for
consent, report, or any other communication required or permitted in this
Escrow Agreement shall be in writing and shall be deemed to have been given
when personally delivered to the party specified or when placed in the United
States mail, registered or certified, with return receipt requested, postage
prepaid and addressed as follows:


 


	
  If to Escrow Agent:

  	
  SunTrust Bank

  
	
   

  	
  Mail Code HDQ-5307

  
	
   

  	
  919 E. Main Street, 7th Floor

  
	
   

  	
  Richmond, VA 23219

  
	
   

  	
  Phone: (804) 782-7610

  
	
   

  	
  Fax #: (804) 782-5858

  
	
   

  	
   

  
	
  Tel.

  	
   

  
	
  If to RTEA:

  	
  Rio Tinto

  
	
   

  	
  Bernd Beyer

  
	
   

  	
  1188 Sherbrooke Street West,

  
	
   

  	
  Montreal, Quebec, H3A 3G2, Canada

  
	
   

  	
  Phone: (514) 848-8049

  
	
   

  	
  Fax #: (514) 848 1571

  
	
   

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

  



 


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  Legal Department

  
	
   

  	
  Rio Tinto Services Inc.

  
	
   

  	
  4700 Daybreak Parkway

  
	
   

  	
  South Jordan, Utah 84095

  
	
   

  	
  (801) 204-2000

  
	
   

  	
  Fax: (801) 204-2892

  
	
   

  	
   

  
	
  If to CPE:

  	
  Cloud Peak Energy

  
	
   

  	
  Oscar Martinez

  
	
   

  	
  VP and Treasurer

  
	
   

  	
  8051 E Maplewood Avenue, Building 4

  
	
   

  	
  Greenwood Village, CO 80111

  
	
   

  	
  Phone: (303) 713-5631

  
	
   

  	
  Fax #:

  
	
   

  	
   

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

  
	
   

  	
   

  
	
   

  	
  Cloud Peak Energy Inc.

  
	
   

  	
  General Counsel

  
	
   

  	
  505 S. Gillette Avenue

  
	
   

  	
  Gillette, Wyoming 82716

  
	
   

  	
  (307) 687-6000

  
	
   

  	
  Fax:
  (307) 687-6059

  



 


Any party may unilaterally designate a different
address by giving notice of each change in the manner specified above to each
other party.


 


4.5.                              This Escrow Agreement is
being made in and is intended to be construed according to the laws of the
State of New York.  It shall inure
to and be binding upon the parties hereto and their respective successors,
heirs and assigns.  All representations,
covenants, and indemnifications contained in this Agreement shall survive the
termination of this Escrow Agreement.


 


4.6.                              The terms of this Escrow
Agreement may be altered, amended, modified or revoked only by an instrument in
writing signed by all the parties hereto.


 


4.7.                              If any provision of this
agreement shall be held or deemed to be or shall in fact, be illegal,
inoperative or unenforceable, the same shall not affect any other provision or
provisions herein contained or render the same invalid, inoperative or
unenforceable to any extent whatsoever.


 


4.8.                              The Escrow Agent may resign
at any time from its obligations under this Escrow Agreement by providing
written notice to the parties hereto. 
Such resignation shall be effective not later than thirty (30) days
after such written notice has been given. 
The Escrow Agent shall have no responsibility for the appointment of a
successor Escrow agent.  This Escrow
Agreement shall remain in full force and effect until such time as (x) the
Escrow Agent resigns pursuant to this Section 4.8 or (y) RTEA
notifies the Escrow Agent in writing that this Escrow Agreement has been 


 


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terminated. 
Notwithstanding the provisions of this Section 4.8, on the date the
Escrow Account balance is zero and all the fees of the Escrow Agent accrued and
owing to such date have been paid in full, this Escrow Agreement shall
automatically terminate and be of no further force and effect.


 


4.9.                              All titles and headings in
this Agreement are intended solely for convenience of reference and shall in no
way limit or otherwise affect the interpretation of any of the provisions
hereof.


 


4.10.                        This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.  Delivery of an executed counterpart of a
signature page to this Escrow Agreement by telecopy or by .pdf by
electronic mail will be effective as delivery of a manually executed
counterpart of this Agreement.  This
Agreement may be executed by electronic transmission, including by facsimile or
electronic mail, by each Party hereto of a signed signature page hereof to
the other Parties hereto.


 


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IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be duly executed as of the date and year first above written.


 


 


	
   

  	
  SunTrust Bank, as Escrow Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nickida Colbert

  
	
   

  	
  Title:

  	
  Trust Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Rio Tinto Energy America Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Berson

  
	
   

  	
  Title:

  	
  Authorized Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Cloud Peak Energy Resources LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Oscar Martinez

  
	
   

  	
  Title:

  	
  VP & Treasurer

  



 


[Signature
page for Escrow Agreement]