Document:

Exhibit 10.1

 

Execution Version

 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT, dated as of October 24, 2019 (this “Agreement”), is by and among Navajo Transitional Energy Company, LLC, a Navajo Nation limited liability company (“Purchaser”), Cloud Peak Energy Inc., a Delaware corporation (the “Company” or the “Seller”, and collectively with each Additional Seller, the “Sellers”). The Service Recipient (as defined below) and the Service Provider (as defined below) are sometimes hereinafter individually referred to as a “Party” and collectively as the “Parties.” Capitalized but undefined terms used herein shall have the meaning ascribed to them in the Asset Purchase Agreement, dated as of August 19, 2019, between the Purchaser and the Sellers (as such agreement may be amended from time to time, the “Purchase Agreement”).

 

WITNESSETH:

 

WHEREAS, the Purchaser and the Sellers have entered into the Purchase Agreement pursuant to which, among other things, the Sellers have agreed to sell to Purchaser all of the Purchased Assets and to assign to Purchaser the Assumed Liabilities, and Purchaser has agreed to purchase from the Sellers all of the Purchased Assets and to assume from the Sellers the Assumed Liabilities, as more fully described in the Purchase Agreement; and

 

WHEREAS, in connection with the consummation of the transactions contemplated by the Purchase Agreement, the Parties will enter into this Agreement pursuant to which Purchaser (the “Service Provider”) will provide certain transition services to the Company (the “Service Recipient”).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, the Sellers and the Purchaser agree as follows:

 

ARTICLE I
 AGREEMENT TO PROVIDE SERVICES

 

1.1.                            Provision of Services.

 

(a)                                 On the terms and subject to the conditions set forth in this Agreement, from the date of this Agreement until the expiration of the applicable Term (as defined below) or as otherwise agreed to by the Parties, the Service Provider shall provide, or cause to be provided pursuant to Section 1.2, to the Service Recipient the services set forth in Schedule A hereto (each, a “Service”) in accordance with Section 2.1. A description of each Service and the Term of such Service is set forth in Schedule A. The Service Provider agrees to adhere to any conditions or policies applicable to its delivery of the Services as set forth in this Agreement or in Schedule A hereto, or as mutually agreed to by the Parties in writing.

 

(b)                                 During the Term (as defined below), the Service Provider shall consider any reasonable requests of the Service Recipient for the provision of additional transition services, including the expansion of the scope of any existing Services, that are reasonably necessary for the operation of the Company to provide the continued administration of the Sellers’ bankruptcy estates and the Company’s remaining assets (the “Additional Services”). If the Parties, acting reasonably and in good faith, mutually agree that such Additional Services shall be provided, the

 

 

Parties hereto shall mutually agree, acting reasonably and in good faith, on the terms upon which the Service Provider would provide such Additional Services; provided that, the Service Charge (as defined below) of such Additional Services shall be based on Costs incurred by the applicable Seller with respect to such Additional Services prior to the Closing Date or as may be mutually agreed by both parties. In the event that any such Additional Services are mutually agreed among the Parties, the Parties will enter into an amendment to this Agreement amending Schedule A to reflect such Additional Services.

 

(c)                                  The Service Provider shall provide, and the Service Recipient shall receive, each Service to be provided by the Service Provider for such period as is specified for such Service in Schedule A (each such period, a “Term”). The Term for each Service may be extended or shortened by written mutual agreement of the Parties; provided that the Service Recipient for each Service may, in its sole discretion, terminate such Service at any time prior to the expiration of the applicable Term by providing thirty (30) days’ written notice to the Service Provider with respect to such Service.

 

1.2.                            Personnel and Resources. In providing, or otherwise making available, a Service to the Service Recipient, the Service Provider may (a) provide such Service directly or through one or more of its Affiliates and/or (b) employ the services of contractors, subcontractors, vendors or other third-party providers; provided that the Service Provider shall remain responsible for the performance of all of its obligations hereunder. The Service Provider will have the right, in its reasonable discretion, to designate which personnel will be assigned to perform the Services, including the right to remove and replace any such personnel at any time; provided, however, that the personnel performing the Services shall have substantially the same expertise as the personnel performing such Services (or similar Services) for the Service Provider’s own businesses at such time.

 

1.3.                            Cooperation; Relationship Management; Dispute Resolution. The Parties shall cooperate with each other in good faith in all matters relating to the provision of Services, and take or cause to be taken all appropriate actions reasonably necessary, proper or advisable under applicable law, and execute and deliver such documents as may be required or appropriate to carry out the provisions of this Agreement. Without limiting the generality of the foregoing, (i) the Service Provider shall (x) use commercially reasonable efforts, at Service Provider’s sole expense, to negotiate and obtain any and all waivers, permits, approvals, consents, licenses and sublicenses that may be required (including under the terms of any agreements with third parties) for the Service Provider and any and all service providers to provide the Services, and for the Service Recipient to receive and enjoy the full benefit of the Services and to use any deliverables in connection therewith (“Third Party Consents”), and (y) provide the Service Recipient with equivalent substitute services or deliverables in the event any Third Party Consents are not obtained (for which the Service Provider shall provide prompt notice to the Service Recipient) (“Alternative Arrangements”), and (ii) the Service Recipient shall reasonably assist the Service Provider, at the Service Provider’s reasonable request and sole expense, in the Service Provider’s efforts to obtain any Third Party Consents. Upon the Service Recipient’s request, the Service Provider shall provide the Service Recipient with copies of any purchase orders, proofs of payment and vendor invoices concerning such Third Party Consents in reasonably sufficient detail to verify the terms of such Third Party Consents. All fees and costs associated with implementing such Alternative Arrangements (“Alternative Arrangement Costs”) shall be borne solely by the

 

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Service Provider. For the avoidance of doubt, with respect to any Services which are subject to any Alternative Arrangement and for which Service Charge is based on Cost, such Service Charge shall not include Alternative Arrangement Costs. Nothing contained herein shall require the Service Provider to provide a Service for which a Third Party Consent is required but has not been obtained.

 

1.4.                            Books and Records. Service Provider shall keep books and records of the Services provided and reasonable supporting documentation of all charges and expenses incurred in providing such Services and shall produce written records that verify the dates and times during which the Services were performed. Service Provider shall make such books and records available to the other Party, upon reasonable notice.

 

ARTICLE II
 SERVICES; PAYMENT

 

2.1.                            Performance Standard.

 

(a)                                 Unless otherwise agreed in writing by the Parties, the Services shall be performed by the Service Provider (or such other provider pursuant to Section 1.2) for the Service Recipient (or in the case of Services not provided in that period, with a commercially reasonable standard of care).  Service Provider shall comply with applicable laws in connection with the provision of the Services.

 

(b)                                 EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE PURCHASE AGREEMENT, THE SERVICE PROVIDER AND THE SERVICE RECIPIENT HEREBY EXPRESSLY DISCLAIM ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES.

 

(c)                                  In the event of any breach of this Agreement by the Service Provider with respect to any error in the provision of any Service, the Service Provider shall promptly notify the Service Recipient and, at the Service Recipient’s request, promptly correct such error or re-perform or re-deliver the work capable of being re-performed or re-delivered in accordance with the requirements of Schedule A at no charge.

 

(d)                                 The Service Provider shall have the right to shut down temporarily for routine maintenance or similar purposes the operation of the facilities, networks and/or systems providing any Service whenever in its judgment, reasonably exercised, such action is necessary. In the event such shutdown is nonscheduled, the Service Provider shall notify the Service Recipient as much in advance as reasonably practicable that such shutdown is required. Unless not feasible under the circumstances, this notice shall be given in writing. Where written notice is not feasible, the Service Provider shall give prompt oral notice, which notice shall be promptly confirmed in writing by the Service Provider. The Service Provider shall be relieved of its obligations to provide the Services affected by such maintenance only for the period of time that its facilities, networks and/or systems are so shut down but shall use commercially reasonable efforts to minimize each period of shutdown for such purpose and to schedule such shutdown so as not to inconvenience or disrupt

 

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the conduct of business by the Service Recipient. The Service Provider shall consult with the Service Recipient prior to temporary shutdowns to the extent reasonably practicable or, if not reasonably practicable, immediately thereafter in order to establish alternative sources for such Services. The Service Provider shall use commercially reasonable efforts to perform Services related to network or computer related migration to avoid any network downtime.

 

2.2.                            Costs.

 

(a)                                 As consideration for providing the Services, the Service Recipient shall pay to the Service Provider the amount specified next to each Service set forth in Schedule A or, if no amount is provided in Schedule A, an amount equal to the reasonably documented, actual direct out-of-pocket cost (“Cost”) of providing such Services (with respect to a Service, the “Service Charge” for such Service). Each month’s Service Charges (pro-rated if applicable to less than a full calendar month) shall be payable in arrears, unless otherwise specified for each Service in Schedule A, to the Service Provider within thirty (30) days following receipt of an invoice from the Service Provider.

 

(b)                                 The Service Provider shall be entitled to charge and collect from the Service Recipient an additional amount equal to all applicable state, local and/or foreign sales tax, or any other similar tax, with respect to the provision of any Services provided hereunder and shall timely remit such taxes to the appropriate tax authorities. For the avoidance of doubt, this Section 2.2(b) does not pertain to taxes in the nature of items identified in Schedule 1.1(f) of the Purchase Agreement and shall not limit the Service Provider’s obligations under the Purchase Agreement in respect of such items.

 

(c)                                  The Service Recipient shall pay to the Service Provider the full amount of Service Charges and other amounts required to be paid by the Service Recipient under this Agreement (except for such periods during which the Services are suspended as described in Section 2.1(d) or Section 5.9).  In the event the Service Recipient does not timely pay any amounts owed under this Agreement, Service Provider may set-off, counterclaim or otherwise withhold a corresponding amount from any amounts owed to Service Recipient pursuant to the Purchase Agreement.

 

(d)                                 The Service Recipient shall compensate the Service Provider only for Services actually received. The Service Recipient shall not make, or shall receive an appropriate credit with respect to, payment for Services that are not provided to the Service Recipient for any reason.

 

(e)                                  During the Term, and for a period of six (6) months thereafter, the Service Recipient shall have the right, at its own cost and expense, to conduct or cause to be conducted, a reasonable audit of the data, books and records and other pertinent information of the Service Provider concerning the provision of Services hereunder, including without limitation, for purposes of disputing the calculation of any fees charged under this Agreement or for preparing financial statements.  All books and records created by Service Provider in connection with the provision of the Services that would be necessary for, or useful to, Service Recipient after the Term will be delivered to Service Recipient promptly after the end of the Term.

 

2.3.                            Use of Services. The Service Provider shall be required to provide Services only to the Service Recipient and its subsidiaries. Except to/for any subsidiary of Service Recipient, the

 

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Service Recipient shall not, and shall not permit its employees, agents or Affiliates to, assign, resell or otherwise transfer any Services to any person whatsoever or permit the use of the Services by any person.

 

ARTICLE III
 TERM OF SERVICES

 

3.1.                            Effective Date and Final Term. This Agreement shall become effective and the provision of Services shall commence as of the date hereof and, unless terminated earlier pursuant to Section 3.2 below, shall remain in full force and effect with respect to each Service until the end of the Term for such Service.

 

3.2.                            Termination. This Agreement (and all Services required to be provided hereunder) shall terminate on the earliest to occur of (i) the latest date on which any Service is to be provided as indicated on Schedule A (the “Expiration Date”), (ii) the date on which this Agreement is terminated pursuant to Section 3.3, and (iii) the mutual written agreement of the Parties.

 

3.3.                            Breach of Agreement. If any Party shall cause or suffer to exist any material breach of any of its obligations under this Agreement, including any failure to perform any Services or to make payments when due, and such Party does not cure such breach within twenty (20) days after receiving written notice thereof from the non-breaching Party, the non-breaching Party may (i) immediately terminate this Agreement by providing written notice of termination or (ii) in the event of a breach by the Service Provider, leverage existing, or procure or retain, services that are, in Service Recipient’s reasonable discretion, required to achieve the applicable level of service for each of the Services for which there is or has been a breach (such right, the “Self-Help Right”). The Service Recipient shall have the right to set-off its reasonable and documented out-of-pocket costs and expenses incurred to remedy in the exercise of the Self-Help Right against Service Charges owed to the Service Provider. The failure of a Party to exercise its rights hereunder with respect to a breach by the other Party shall not be construed as a waiver of such rights nor prevent such Party from subsequently asserting such rights with regard to the same or similar defaults.

 

3.4.                            Sums Due. In the event of a termination of this Agreement for reasons other than a breach by the Service Provider including any non-conformance to the standards of performance in Section 2.1(a), the Service Provider shall be entitled to all outstanding amounts due from the Service Recipient for the provision of Services actually rendered prior to the date of termination.

 

3.5.                            Effect of Termination. If a notice of termination is delivered by any Party pursuant to this ARTICLE III, this Agreement shall forthwith become wholly void and be of no further force and effect and all further obligations of the Parties hereunder shall terminate and there shall be no liability on the part of any Party to the other Party under this Agreement, (i) except for charges accrued but unpaid as of the date of such termination in accordance with Section 3.4, (ii) except that the provisions of this Section 3.5 and ARTICLE V shall remain in full force and effect and the Parties shall remain bound by and continue to be subject to the provisions thereof and (iii) no termination will release any Party for any liability arising from any breach of this Agreement by such Party prior to the date of termination.  The Service Recipient and/or the Service Provider shall promptly, upon the written request of the other Party, return or destroy all “Confidential

 

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Information” (as defined in the Confidentiality Agreement) exchanged in connection with the Services or certify the destruction of the same.

 

ARTICLE IV
 LIMITATION OF LIABILITY

 

4.1.                            Maximum Liability.

 

(a)                                 In no event shall the Service Provider’s or its respective representatives’ and Affiliates’ total liability to the Service Recipient or any other person hereunder for any action, regardless of the form of action, whether in tort, contract, breach of warranty, strict liability, indemnification or otherwise, arising under this Agreement exceed an amount equal to the total amount payable by the Service Recipient for the applicable Service; provided that the foregoing shall not (a) impair the ability of the Service Recipient to seek any remedy of injunctive relief or specific performance against the Service Provider or (b) limit any claims for fraud, gross negligence or willful breach or misconduct by the Service Provider.

 

(b)                                 NO PARTY NOR ANY OF ITS AFFILIATES NOR ANY OF THEIR RESPECTIVE REPRESENTATIVES SHALL BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES, OR LOST PROFITS, DIMINUTION IN VALUE, LOSSES CALCULATED BY REFERENCE TO ANY MULTIPLE OF EARNINGS (OR ANY OTHER VALUATION METHODOLOGY), DAMAGE TO REPUTATION OR LOSS TO GOODWILL, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND WHETHER OR NOT ARISING FROM THE OTHER PARTY’S OR ANY OF ITS AFFILIATES’ NOR ANY OF THEIR RESPECTIVE REPRESENTATIVES’ SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT.

 

(c)                                  IN NO EVENT SHALL THE SERVICE PROVIDER BE LIABLE TO MORE THAN ONE SERVICE RECIPIENT FOR THE SAME BREACH UNDER THIS AGREEMENT.

 

4.2.                            Indemnity. Subject to Section 4.1, each Party hereby indemnifies the other Party, its Affiliates and its representatives (together with their respective successors and permitted assigns) (collectively, the “Indemnified Parties”) against, and agrees to defend and hold them harmless from, any and all losses suffered by any of them arising out of, resulting from or related to the rendering of a Service or any failure to provide a Service in accordance with the terms and conditions set forth herein solely to the extent that such losses are caused by the willful misconduct or gross negligence of such Party, any of its Affiliates or any of its or their representatives. A Party’s right to indemnification under this Section 4.2 shall survive the end of the applicable Term with respect to the applicable Service. The Service Provider agrees to indemnify the Service Recipient, its Affiliates and its representatives from any and all losses resulting from any claim that the Services provided by the Service Provider infringe, misappropriate or otherwise violate the intellectual property of any third party.

 

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ARTICLE V
 MISCELLANEOUS

 

5.1.                            Independent Contractor Status. The Service Provider shall be deemed for all purposes to be an independent contractor of the applicable Service Recipient. Nothing in this Agreement shall establish an agency, partnership or joint venture relationship between the Service Provider and the Service Recipient, and the Service Provider shall not be authorized to bind the Service Recipient contractually or otherwise. Each Party acknowledges and agrees that it is acting solely in the capacity of an arm’s length contractual counterparty with respect to the Services and the transactions contemplated herein and not as a financial advisor, legal counsel or fiduciary to the other Party or any of its Affiliates or representatives. All employees and representatives providing the Services shall be under the direction, control and supervision of the Service Provider (and not of the Service Recipient), and the Service Provider shall have the sole right to exercise all authority with respect to such employees and representatives and in no event shall such employees and representatives be deemed to be employees or agents of the Service Recipient.

 

5.2.                            Notices. Any notice, notification, demand or request provided for in this Agreement, or served, given or made in connection with it, shall be in writing and shall be deemed properly served, given or made if delivered by electronic mail, in person or sent by registered or certified mail, postage prepaid, or by a nationally recognized overnight courier service that provides a receipt of delivery, in each case, to the Parties at the addresses specified below:

 

If to the Sellers, to:

 

Cloud Peak Energy Inc.

385 Interlocken Crescent, Suite 400

Broomfield, Colorado 80021 
 Attention: Bryan J. Pechersky
 Email: bryan.pechersky@cldpk.com

 

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

 

Vinson & Elkins LLP

666 Fifth Avenue, 26th Floor

New York, New York 10103

Attention: David S. Meyer, John A. Kupiec

Email: dmeyer@velaw.com, jkupiec@velaw.com

 

and

 

Vinson & Elkins LLP

2001 Ross Avenue, Suite 3900

Dallas, Texas 75201

Attention: Paul E. Heath

Email: pheath@velaw.com

 

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If to Purchaser, to:

 

Navajo Transitional Energy Company, LLC
 4801 N. Butler Ave., Bldg. 200
 Farmington, New Mexico 87401
 Attention: Clark Moseley, Chief Executive Officer
 Email: clark.moseley@navajo-tec.com

 

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

 

Navajo Transitional Energy Company, LLC
 P.O. Box 11
 Farmington, New Mexico 87499-11
 Attention: Clark Moseley, Chief Executive Officer

 

and

 

Parsons Behle & Latimer
 201 South Main Street, Suite 1800
 Salt Lake City, Utah 84111
 Attention: Nora Pincus
 Email: npincus@parsonsbehle.com

 

5.3.                            Entire Agreement; Amendment. This Agreement (including Schedule A attached hereto) constitutes the entire agreement of the Parties hereto with respect to the subject matter contained herein and supersedes all prior agreements, undertakings and understandings, both written and oral among the Parties with respect to the subject matter contained herein. No provision of this Agreement may be amended, supplemented or modified except by a written instrument making specific reference hereto or thereto signed by all the Parties.

 

5.4.                            Rights and Waivers. All rights and remedies of the Parties are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to be to the exclusion of any other rights or remedies or shall be deemed to limit or prejudice any other legal or equitable rights or remedies which any Party hereto may have. No Party shall be deemed to waive any rights or remedies under this Agreement unless such waiver is in writing and signed by such Party. No delay or omission on the part of any Party in exercising any right or remedy shall operate as a waiver of such right or remedy or any other rights or remedies. A waiver on any one occasion shall not be construed as a bar to or a waiver of any right or remedy on any future occasion.

 

5.5.                            Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any law or as a matter of public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Notwithstanding the foregoing, upon such determination that any term or provision is invalid, illegal or incapable of being enforced, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision so as to effect the original intent of the Parties as closely as possible in order that the transactions hereby be consummated as originally contemplated to the greatest extent possible.

 

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5.6.                            Governing Law; Jurisdiction. The Parties acknowledge and agree that this Agreement is bound by the terms of governing law and jurisdiction pursuant to the Purchase Agreement. The terms of Sections 11.3, 11.4, 11.5, and 11.7 of the Purchase Agreement are hereby incorporated by reference, and the Parties acknowledge and agree that both the terms of this Agreement and any dispute that arises under this Agreement are subject to the terms of Sections 11.3, 11.4, 11.5, and 11.7 of the Purchase Agreement. In accordance therewith, the Parties agree to consent to submit to the executive personal jurisdiction of the United States District Court for the Southern District of New York and of any New York state court, in each case, sitting in New York, New York, and appellate courts therefrom, and that this Agreement shall in all respects be covered by and construed in accordance with the Laws of the State of New York, without giving effect to any conflict or choice of law provision that would result in the imposition of another state’s Law.

 

5.7.                            Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. This Agreement shall not be assigned or transferred by operation of law or otherwise without the prior written consent of each of the Parties, except that the Purchaser may assign in whole or in part this Agreement and its rights and obligations hereunder to any of its Affiliates or subsidiaries or in connection with a merger or consolidation involving the Purchaser or in connection with a sale of stock (or other ownership interests) or assets of the Purchaser or other disposition of all or any portion of the Business; provided, however, that no such assignment shall relieve the Purchaser of its obligations hereunder.

 

5.8.                            No Third Party Beneficiaries. Except as provided in ARTICLE IV (which shall also be for the benefit of the Parties’ respective representatives and Affiliates), this Agreement is for the sole benefit of the Parties and their permitted successors and assigns, and nothing in this Agreement expressed or implied is intended or shall be construed to confer upon or give to any person, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

5.9.                            Force Majeure. No Party shall be liable for any interruption, delay or failure to perform any obligation hereunder to the extent such interruption, delay or failure results from causes beyond its reasonable control, including any strikes, acts of any government, acts of terrorism, acts of public enemy, war, rebellion, sabotage, riot, insurrection or other hostilities, fire, storm, flood, earthquake, hurricane, explosion, accident, epidemic, quarantine restrictions, strikes, labor disputes, transportation embargoes or delays or other acts of God or natural disasters (a “Force Majeure Event”); provided that such Party shall have exercised commercially reasonable efforts to minimize the impact of such Force Majeure Event. In any such event, such Party’s obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account thereof. Each Party will promptly notify the other upon learning of the occurrence of such Force Majeure Event. Upon the cessation of the Force Majeure Event, each Party will use commercially reasonable efforts to resume its performance with the least possible delay.

 

5.10.                     Headings. The headings contained in this Agreement are for reference only and shall not affect in any way the meaning or interpretation of this Agreement.

 

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5.11.                     Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Any facsimile or pdf copies hereof or signature hereon shall, for all purposes, be deemed originals.

 

5.12.                     Schedules. Schedule A attached hereto shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. In the event of any inconsistency between the terms of Schedule A and the terms set forth in the main body of this Agreement, the terms of this Agreement shall govern unless expressly stated otherwise in Schedule A.

 

5.13.                     Relationship to Other Agreements. For the avoidance of doubt, nothing herein shall limit any rights or obligations of any Party under the Purchase Agreement.

 

[Remainder of Page Intentionally Blank]

 

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IN WITNESS WHEREOF, each party below has caused this Agreement to be executed by its duly authorized officer, in each case as of the date first above written.

 

	
 
    	
SERVICE PROVIDER:
    
	
 
    	
 
    
	
 
    	
NAVAJO   TRANSITIONAL ENERGY COMPANY, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Clark Moseley
    
	
 
    	
Name:
    	
Clark   Moseley
    
	
 
    	
Title:
    	
Chief   Executive Officer
    

 

[Signature Page to Transition Services Agreement]

 

 

	
 
    	
SERVICE RECIPIENT:
    
	
 
    	
 
    
	
 
    	
CLOUD   PEAK ENERGY INC.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Heath A. Hill
    
	
 
    	
 
    	
Name:
    	
Heath A. Hill
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and Chief Financial Officer
    

 

[Signature Page to Transition Services Agreement]

 

 

TRANSITION SERVICES: SCHEDULE A

 

Transition Services

 

	
Category
    	
 
    	
Description
    	
 
    	
Fee
    	
 
    	
Term
    	
 
    
	
Final Close Process
    	
 
    	
- Approximately two weeks to a month depending on   position (12 finance professionals)

- Complete final financial statements and   closing/opening balance sheet
    	
 
    	
$
    	
75,000
    	
 
    	
Through Plan Effectiveness
    	
 
    
	
Employee Wages
    	
 
    	
- Final payroll for CPE employees retained by NTEC

- Accrued wages and benefits for those not retained   by NTEC and off-cycle bonus payments

- Bi-weekly payroll processing and payments for the   retained executives/directors from closing date to the date of Plan   effectiveness (for the avoidance of doubt, the liability for such salary and   other payments shall remain with CPE)
    	
 
    	
$
    	
1,500
    	
 
    	
Through Plan Effectiveness
    	
 
    
	
Customers
    	
 
    	
- Reconcile tonnage delivered at close date and   generate final invoices to CPE customers

- Generate account receivable at closing date for   the estate
    	
 
    	
$
    	
1,000
    	
 
    	
3 months
    	
 
    
	
Vendors
    	
 
    	
- Input all remaining vendor invoices to determine   final account payable balance

- Process and post payments for accurate   post-petition liability
    	
 
    	
$
    	
3,000
    	
 
    	
3 months
    	
 
    
	
Year-End Process
    	
 
    	
- Employee W2 processing

- Contractors 1099 processing
    	
 
    	
$
    	
10,000
    	
 
    	
Through January 31, 2020
    	
 
    
	
Securities Filings
    	
 
    	
- Preparation for financial review for 10-Q

- Assistance from relevant former CPE employees as   needed to prepare filings
    	
 
    	
$
    	
30,000
    	
 
    	
Through Plan Effectiveness
    	
 
    
	
Office Space
    	
 
    	
- Provide continuing CPE employees and advisors with   existing office space and computer/network systems and phone access until   Plan effectiveness, subject to reasonable extension if needed
    	
 
    	
$
    	
—
    	
 
    	
Through Plan Effectiveness
    	
 
    
	
Legal
    	
 
    	
- Eric Pearson to provide legal advice on CPE issues   as reasonably necessary
    	
 
    	
$
    	
—
    	
 
    	
n/a
    	
 
    

 

A-1Exhibit 10.2

 

TERM ROYALTY AGREEMENT

 

THIS TERM ROYALTY AGREEMENT (this “Agreement”) is made and entered into this 24th day of October, 2019 (the “Effective Date”) by and between Navajo Transitional Energy Company, LLC, a limited liability company formed under the laws of the Navajo Nation and having a mailing address of 4801 N. Butler Ave., Bldg. 200, Farmington, New Mexico 87401 (“NTEC” or “Payor”), to Cloud Peak Energy Resources LLC, a limited liability company formed under the laws of Delaware and having a mailing address of 385 Interlocken Crescent, Suite 400, Broomfield, Colorado 80021 (“Payee”). Payor and Payee may be collectively referred to herein as the “Parties” or individually as a “Party.”

 

RECITALS

 

A.                                    Payor and Payee, together with certain subsidiaries of Payee, are parties to that certain Asset Purchase Agreement dated August 19, 2019, as amended by that certain First Amendment to Asset Purchase Agreement dated September 30, 2019 (as amended, the “Asset Purchase Agreement”).  Capitalized terms not defined in this Agreement shall have the definitions set forth in the Asset Purchase Agreement;

 

B.                                    Pursuant to the Asset Purchase Agreement, Payor agreed to pay to Payee a five-year term production royalty interest on certain Tons (as defined herein) produced and Sold from the Antelope Mine, the Cordero Rojo Mine, and the Spring Creek Mine (each as defined herein); and

 

C.                                    The Parties wish to enter into this Agreement as partial satisfaction of the Parties’ obligations under the Asset Purchase Agreement.

 

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

 

AGREEMENT

 

1.                                      Definitions.  In addition to the defined terms set forth in the Asset Purchase Agreement, the following terms shall be defined as set forth below:

 

(a)                                 “Affiliate” means with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person.

 

(b)                                 “Agreement” has the definition set forth in the Preamble, and includes any Schedules and Exhibits attached hereto.

 

(c)                                  “Antelope Mine” means the real property and associated coal mining operation situated in Campbell County, Wyoming and located on the lands described or otherwise contained within the areas depicted more specifically in Exhibit A hereto, as such depiction may be deemed modified from time to time as set forth in Section 3(c).

 

 

(d)                                 “Antelope Reserves” means all coal resources located within or mined as part of the mining operation of the Antelope Mine.

 

(e)                                  “Antelope Royalty” means the production royalty on certain Tons produced and Sold by Payor, its Affiliates, or its or their contractors or the successors or assigns of any of the foregoing from the Antelope Reserves, calculated and payable as set forth in Section 2(a) and Sections 3-4 of this Agreement.

 

(f)                                   “Asset Purchase Agreement” has the definition set forth in Recital A of this Agreement.

 

(g)                                  “Assumption Agreement” has the definition set forth in Section 9 of this Agreement

 

(h)                                 “Commencement Date” has the definition set forth in Section 2 of this Agreement.

 

(i)                                     “Control” means (a) when used as a verb, (i) with respect to an entity, the ability, directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of the entity through the legal or beneficial ownership of voting securities or the right to appoint managers, directors or corporate management, or by contract, operating agreement, voting trust or otherwise, and (ii) with respect to a natural person, the actual or legal ability to control the actions of another, through family relationship, agency, contract or otherwise, and (b) when used as a noun, an interest that gives the holder the ability to exercise any of the powers described in clause (a).

 

(j)                                    “Cordero Rojo Mine” means the real property and associated coal mining operation situated in Campbell County, Wyoming and located on the lands described or otherwise contained within the areas depicted more specifically in Exhibit B hereto, as such depiction may be deemed modified from time to time as set forth in Section 3(c).

 

(k)                                 “Cordero Rojo Reserves” means all coal resources located within or mined as part of the mining operation of the Cordero Rojo Mine.

 

(l)                                     “Cordero Rojo Royalty means the production royalty on certain Tons produced and Sold by Payor, its Affiliates, or its or their contractors or the successors or assigns of any of the foregoing from the Cordero Rojo Reserves, calculated and payable as set forth in Section 2(b) and Sections 3-4 of this Agreement.

 

(m)                             “Effective Date” has the definition set forth in the Preamble of this Agreement.

 

(n)                                 “NTEC” has the definition set forth in the Preamble of this Agreement.

 

(o)                                 “Party” or “Parties” has the definition set forth in the Preamble of this Agreement.

 

(p)                                 “Payee” has the definition set forth in the Preamble of this Agreement, and

 

 

includes the successors and assigns thereof.

 

(q)                                 “Payment Period” has the definition set forth in Section 3 of this Agreement.

 

(r)                                    “Payment Due Date” has the definition set forth in Section 3 of this Agreement.

 

(s)                                   “Payor” has the definition set forth in the Preamble of this Agreement, and includes the successors and assigns thereof.

 

(t)                                    “Person” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

 

(u)                                 “Property Sale” has the definition set forth in Section 9 of this Agreement.

 

(v)                                 “Property Transferee” has the definition set forth in Section 9 of this Agreement.

 

(w)                               “Proposed Sale Notice” has the definition set forth in Section 9 of this Agreement.

 

(x)                                 “Royalty Payment” has the definition set forth in Section 3 of this Agreement.

 

(y)                                 “Sale Notice” has the definition set forth in Section 9 of this Agreement.

 

(z)                                  “Saleable Product” means all coal and other bituminous material produced  from each of the Subject Reserves.

 

(aa)                          “Sold”  means and includes, with respect to any Saleable Product, both the sale of such Saleable Product to another party (including an Affiliate) or the commercial use or consumption of such Saleable Product without a sale, whether by a Person that owns or controls the respective Subject Reserves or Subject Mine, produces the coal therefrom, or any Affiliate of any of the foregoing.

 

(bb)                          “Spring Creek Mine” means the real property and associated coal mining operation situated in Big Horn County, Montana and located on the lands described or otherwise contained within the areas depicted more specifically in Exhibit C hereto, as such depiction may be deemed modified from time to time as set forth in Section 3(c).

 

(cc)                            “Spring Creek Reserves” means all coal resources located within or mined as part of the mining operation of the Spring Creek Mine.

 

(dd)                          “Spring Creek Royalty” means the production royalty on certain Tons produced and Sold by Payor, its Affiliates, or its or their contractors or the successors or assigns

 

 

of any of the foregoing from the Spring Creek Reserves, calculated and payable as set forth in Section 2(c) and Sections 3-4 of this Agreement.

 

(ee)                            “Subject Mines” means, collectively, the Antelope Mine, the Cordero Rojo Mine and the Spring Creek Mine.

 

(ff)                              “Subject Reserves” means, collectively, the Antelope Reserves, the Cordero Rojo Reserves and the Spring Creek Reserves.

 

(gg)                            “Ton” means two thousand (2,000) pounds avoirdupois of Saleable Product.

 

(hh)                          “Term” has the definition set forth in Section 2 of this Agreement.

 

(ii)                                  “Term Royalty” means, collectively, the Antelope Royalty, the Cordero Rojo Royalty and the Spring Creek Royalty.

 

2.                                      Term Royalty.  For all Saleable Product Sold during the period commencing on January 1, 2020 at 12:01 a.m. local time (the “Commencement Date”) and ending on December 31, 2024 at 11:59 p.m. local time (the “Term”), Payor covenants and agrees to pay the Term Royalty to Payee as follows:

 

(a)                                 Antelope Royalty: $0.15 per Ton on all Tons Sold during the Term from the Antelope Reserves.

 

(b)                                 Cordero Rojo Royalty: $0.15 per Ton on all Tons in excess of 10 million Tons Sold during the Term from the Cordero Rojo Reserves.

 

(c)                                  Spring Creek Royalty: $0.15 per Ton on all Tons Sold during the Term from the Spring Creek Reserves.

 

3.                                      Payment of Term Royalty.

 

(a)                                 All payments due from Payor to Payee under this Agreement (each, a “Royalty Payment”) shall be calculated on a calendar quarter basis (each, a “Payment Period”) and shall be payable by Payor to Payee by wire transfer of immediately available funds no later than 60 calendar days after the end of each Payment Period (each, a “Payment Due Date”).  If any Payment Due Date falls on a date on which the commercial banks in the State of New York are closed, the Payment Due Date shall be the first date thereafter on which such banks are open.  Any amounts due and owing with respect to a Royalty Payment not paid as of the applicable Payment Due Date shall be due and payable with interest on the unpaid amount accruing from the Payment Due Date at the rate of 12.0% per annum.

 

(b)                                                    All Royalty Payments shall be accompanied by a written statement setting forth, on a mine-by-mine basis:

 

(i)                                     The total Tons, if any, Sold from the Subject Reserves during the relevant Payment Period;

 

 

(ii)                                  The dates of all sales of Saleable Product, if any, from the Subject Reserves during the relevant Payment Period; and

 

(iii)                               The portion of the total Royalty Payment attributable to each of the Subject Mines.

 

(c)                                  In the event the boundary of any permit depicted on Exhibit A, B or C, respectively, is revised to include any additional acreage, or any additional permit is issued for mining to occur on adjacent, contiguous or nearby lands in conjunction with, as a continuation of, or otherwise as part of, the mining or processing operations occurring within the pre-existing areas depicted Exhibit A, B or C,  then the respective area depicted on Exhibit A, B or C, as applicable, shall automatically be deemed expanded to include such additional lands as are contained within the revised or additional permit area.

 

4.                                      Calculation of Tonnage.

 

(a)                                 The final determination as to the Tons produced and Sold from each of the Subject Reserves, if any, during the relevant Payment Period (the “Tonnage Determination”) shall be made by weight as determined via certified scales at the time Saleable Product is loaded onto railcar or other mode of transportation for shipment at each of the Subject Mines or otherwise Sold. Payor shall use the Tonnage Determinations to calculate each Royalty Payment in accordance with Section 2(a)(i)-(iii).

 

(b)                                 Payor shall cause, at Payor’s expense, all scales used in the Tonnage Determinations to be certified not less frequently than every six (6) months and shall be responsible for the accuracy thereof.  Payee or a designee thereof shall have the right, at Payor’s commercially reasonable expense, to observe such certification and receive all certification reports with respect thereto.  Payee or its designee shall also have the right to be present at each weighing of Saleable Product, at Payor’s commercially reasonable expense. Payee shall cause such representative or designee to comply with all health and safety policies of Payor at all times that such representative or designee is on property owned, operated or controlled by Payor.

 

5.                                      Representations and Warranties of Payor. Payor hereby represents and warrants to Payee:

 

(a)                                 Payor is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was formed.

 

(b)                                 Payor has the full limited liability company power and authority to enter into and perform this Agreement. The execution and delivery of this Agreement by Payor and the performance by Payor of all obligations under this Agreement, have been duly authorized and approved by Payor.  This Agreement has been duly executed and delivered by an authorized officer or representative Payor.

 

(c)                                  This Agreement constitutes the legal, valid and binding obligation of Payor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general

 

 

application referring to or affecting the enforcement of creditors’ rights, or by general equitable principles.

 

(d)                                 The execution and delivery of this Agreement by Payor and the performance by Payor of all obligations under the Agreement will not conflict with or result in a breach of any of the terms, conditions or provisions of its certificate of formation or limited liability company agreement, any law applicable to it or any of its properties or assets, or any order, writ, injunction, judgment or decree of any governmental authority or any arbitration award applicable to it or any of its properties or assets.

 

(e)                                  The execution and delivery of this Agreement by Payor and the performance by Payor of all obligations under this Agreement will not conflict with or result in a breach of or give rise to a default or violation on its part under any obligation, lease, license, agreement, contract, plan, or other arrangement to which it is a party or by which it is bound.

 

(f)                                   There is no action, suit or proceeding pending or, to the knowledge of Payor, threatened against or affecting Payor, its subsidiaries or affiliates, or any of its properties or assets, at law or in equity, or before any governmental authority, which would be reasonably likely to interfere with its ability to consummate this Agreement or the transactions contemplated hereby.

 

(g)                                  Exhibits A, B and C accurately depict the existing boundaries of all permits issued pursuant to the Surface Mining Control and Reclamation Act of 1977, as amended, 30 U.S.C. Chapter 25, Section 1201 et seq. and comparable state laws with respect to the mining operations commonly referred to as Antelope, Cordero Rojo and Spring Mill, respectively.

 

6.                                      Representations and Warranties of Payee. Payee hereby represents and warrants to Payor:

 

(a)                                 Payee is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was formed.

 

(b)                                 Payee has the full limited liability company power and authority to enter into and perform this Agreement. The execution and delivery of this Agreement by Payee and the performance by Payee of all obligations under this Agreement, have been duly authorized and approved by Payee.  This Agreement has been duly executed and delivered by an authorized officer or representative Payee.

 

(c)                                  This Agreement constitutes the legal, valid and binding obligation of Payee, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application referring to or affecting the enforcement of creditors’ rights, or by general equitable principles.

 

(d)                                 The execution and delivery of this Agreement by Payee and the performance by Payee of all obligations under the Agreement will not conflict with or result in a breach of any of the terms, conditions or provisions of its certificate of formation or limited liability company agreement, any law applicable to it or any of its properties or assets, or any order, writ,

 

 

injunction, judgment or decree of any governmental authority or any arbitration award applicable to it or any of its properties or assets.

 

(e)                                  The execution and delivery of this Agreement by Payee and the performance by Payee of all obligations under the Agreement will not conflict with or result in a breach of or give rise to a default or violation on its part under any obligation, lease, license, agreement, contract, plan, or other arrangement to which it is a party or by which it is bound.

 

(f)                                   There is no action, suit or proceeding pending or, to the knowledge of Payee, threatened against or affecting Payee, its subsidiaries or affiliates, or any of its properties or assets, at law or in equity, or before any governmental authority, which would be reasonably likely to interfere with its ability to consummate this Agreement.

 

7.                                      Disclaimer of Certain Representations and Warranties.  EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, PAYOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, (AND HEREBY DISCLAIMS ANY SUCH REPRESENTATIONS OR WARRANTIES) WITH RESPECT TO (A) THE VOLUME OF SALEABLE PRODUCT TO BE PRODUCED FROM THE SUBJECT RESERVES,  (B) THE AMOUNT OF SALEABLE PRODUCT, IF ANY, EXISTING AT ANY OF THE SUBJECT RESERVES OR TO BE PRODUCED AND SOLD THEREFROM OR (C) THE AMOUNT OF ROYALTY PAYMENTS, IF ANY, THAT PAYEE MAY RECEIVE PURSUANT TO THIS AGREEMENT.

 

8.                                      Covenant of Reasonable Commercial Mining.  Payor shall use commercially reasonable efforts to diligently mine, develop, and sell Saleable Product from the Subject Reserves; provided, however that Payee acknowledges and agrees that Payor shall have no obligation to produce or sell Saleable Product from the Subject Reserves if such production or sale would be commercially unreasonable or result in financial loss to Payor.

 

9.                                      Sale of Subject Reserves.  In the event that Payor proposes to convey record title or operating rights to the Antelope Mine, the Cordero Rojo Mine or the Spring Creek Mine, or any portion thereof (each, a “Property Sale”), to another party including an Affiliate (each, a “Property Transferee”) during the Term, Payor shall provide notice (each, a “Proposed Sale Notice”) of such proposed Property Sale to Payee no later than 30 days prior to the consummation of such Property Sale identified the assets to be conveyed and the identity of the Property Transferee.  No Property Sale may be consummated unless Payor shall cause such Property Transferee in connection with the closing of such Property Sale to assume in writing all obligations of Payor under this Agreement applicable to the Subject Reserves for which record title or operating rights are to be conveyed, pursuant to an assumption agreement in a form reasonably acceptable to Payee (each, an “Assumption Agreement”).  Upon consummation of such Property Sale, Payor shall provide to Payee immediate notice (each, a “Sale Notice”) of such Property Sale.  The Sale Notice shall contain (x) a copy of the original instrument or instruments evidencing such Property Sale and (y) a duly executed copy of the Assumption Agreement.  As between Payor and Payee, no Property Sale shall relieve Payee of its obligations hereunder, except to the extent, and only to the extent, such obligations are timely discharged thereafter by the Property Transferee.  The foregoing shall not preclude, however, Payee from enforcing the terms of this Agreement

 

 

against the Property Transferee to the extent they pertain to the properties conveyed in the Property Sale.

 

10.                               Audit and Information Rights; Objection; Finality of Payments.

 

(a)                                 Payee shall have the right to perform or cause to be performed not more frequently than once annually following the close of each calendar year, an inspection or audit of Payor’s books and records relating to the Term Royalty, including without limitation sales and shipment records and weight records, the commercially reasonable costs of which inspection or audit shall be borne by Payor.  Any inspection or audit performed pursuant to this Section 10 shall be for a reasonable length of time during regular business hours, at a mutually convenient time, upon at least ten business days’ prior written notice by Payee.

 

(b)                                 In the absence of fraud or intentional misrepresentation, all Royalty Payments shall be considered final and in full accord and satisfaction of all obligations of Payor upon a date that is eighteen (18) months after the date Payor made such Royalty Payment to Payee, unless (x) Payee gives written notice describing and setting forth a specific objection to the calculation thereof within eighteen (18) months following the date on which Payor made such payment to Payee (or should have made such payment to Payee pursuant to the terms hereof) or (y) any audit as provided for herein is ongoing.

 

11.  Lease Extension, Renewal, Replacement.  During the Term, the Term Royalty  shall apply to all owned or leased real property interests and every extension, renewal, replacement, or modification of any lease on or to lands within the Subject Reserves, or any portion thereof, taken by Payor, its successors or assigns, and to any new lease taken by any Payor, its successors or assigns on the lands within the Subject Reserves, or any portion thereof; provided, however, that Payee acknowledges and agrees that nothing in this Section 11 shall be deemed to enlarge the Term Royalty to apply to any reserves or lands other than Subject Reserves as depicted and described in Exhibits A, B and C to this Agreement.  For the avoidance of doubt, (a) Payee shall not be entitled to any royalty on any new coal reserves purchased or leased by a Payor after the January 1, 2020 that are not located within the boundary of the Subject Reserves; and (b) Payor shall not be obligated to pay royalty on Saleable Product that is first Sold after December 31, 2024 at 11:59 p.m., prevailing Mountain time.

 

12.                               General Provisions.

 

(a)              Successors and Assigns; Agreement.  This Agreement shall be binding upon, and shall inure to the benefit of the Parties and their respective successors and permitted assigns.  Payee may only assign its rights under this Agreement, in whole and not in part.  Payor may not assign this Agreement except in accordance with Section 9 of this Agreement.

 

(b)              Notices.  All notices, payments and other communications to the Parties under this Agreement must be in writing, and shall be addressed respectively as follows:

 

Payee:                                                                                                           Cloud Peak Energy Resources LLC

385 Interlocken Crescent, Suite 400

Broomfield, Colorado 80021

 

 

Attn: Bryan J. Pechersky

Email: bryan.pechersky@cldpk.com

 

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

 

Davis Polk & Wardwell LLP

Attn: William L. Taylor

450 Lexington Ave.

New York, NY 10017

Email: william.taylor@davispolk.com

 

and

 

Jackson Kelly PLLC

Attn: Charles A. Compton

221 N.W. Fifth Street

Evansville, Indiana 47708

Email: charles.compton@jacksonkelly.com

 

Payor:                                                                                                            Navajo Transitional Energy Company, LLC

4801 N. Butler Ave., Bldg. 200

Farmington, New Mexico 87401

Attn: Clark Moseley, Chief Executive Officer

Email: clark.moseley@navajo-tec.com

 

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

 

Parsons Behle & Latimer

Attn: Nora Pincus

201 South Main Street, Suite 1800

Salt Lake City, Utah 84111

Email:  npincus@parsonsbehle.com

 

All notices shall be given (1) by personal delivery to the Party, (2) by e-mail transmission with a copy to follow via overnight, certified or registered mail, return receipt requested, but only if receipt of the e-mail transmission is not acknowledged, or (3) overnight mail or certified or registered mail, return receipt requested.  All notices shall be effective and shall be deemed delivered (i) if by personal delivery, e-mail delivery or overnight delivery, on the date of delivery, and (ii) if by certified or registered mail, on the date delivered to the United States Postal Service as shown on the receipt.  A Party may change its address from time to time by notice to the other Party.

 

(c)               Amendments.  This Agreement may be amended or supplemented at any time only by an additional written agreement executed by all of the Parties.

 

 

(d)              Relationship of the Parties.   This Agreement does not grant to Payee any right to participate or influence management or decision-making regarding operation of the Subject Leases, nor shall it obligate Payee to assume any responsibilities for, or costs of, any Payor’s operation of the Subject Leases or any liabilities resulting therefrom.

 

(e)               Further Assurances.  Each of the Parties shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the matters set forth in this Agreement.

 

(f)                Conflict of Terms.  In the event of any inconsistency or conflict between the provisions of this Agreement and the terms of the Asset Purchase Agreement, the terms of this Agreement shall prevail and govern.

 

(g)               Applicable Law; Forum.  This Agreement shall be governed by and construed in accordance with the substantive laws of the State of New York to the maximum extent permissible, without giving effect to the principles of conflict of laws thereof.  Any legal suit, action or proceeding arising out of or based on this Agreement shall be instituted in the federal courts located in the Borough of Manhattan, State of New York, provided that if jurisdiction cannot be established in the federal courts, then in the state courts located in the Borough of Manhattan, State of New York, and each Party irrevocably submits to the exclusive jurisdiction of such courts.

 

(h)              Limited Waiver of Sovereign Immunity.

 

i.             Payor irrevocably agrees that, to the extent that it has or hereafter may acquire any right of immunity against Payee or its respective successors and permitted assigns, whether characterized as sovereign immunity or otherwise, from any legal proceedings, whether in the courts of the United States of America, any state of the United States of America, in the courts of the Navajo Nation, in an arbitration proceeding, or elsewhere, to enforce or collect upon this Agreement, including immunity from service of process, immunity from jurisdiction or judgment of any court or tribunal, immunity from execution of judgment and immunity of any of its property from attachment prior to entry of judgment, or from attachment in aid of execution upon a judgment, Payor expressly, unconditionally and irrevocably waives any such immunity and consents and submits to the laws and jurisdiction set forth in Section 12(g) to resolve any dispute arising out of, under or in connection with this Agreement.

 

ii.          Payor hereby expressly, unconditionally and irrevocably waives any immunity described in Section 12(h)(i) and any right of exhaustion of tribal remedies with respect to any suit action or other proceeding brought in the courts set forth in Section 12(g) in connection with any dispute of any kind or nature between the Parties arising out of, under, or in connection with this Agreement and consents to the jurisdiction of the courts set forth in Section 12(g) for such purposes. Payor hereby waives and agrees not to assert by way of motion or as a defense or otherwise in any such dispute (a) any claim that it is not subject to the personal jurisdiction of such courts, and (b) that such dispute is brought in an inconvenient forum or that venue is improper. In the event that the court set forth in Section 12(g) determines that it does not have jurisdiction over such matters brought before it,

 

 

Payor hereby expressly, unconditionally and irrevocably waives any immunity described in Section 8(h)(i) with respect to an action or other proceeding in the courts of the State of New York located in New York County, and consents to the jurisdiction of such courts for such purpose.

 

iii.       Nothing in this Agreement, and no waiver of Payor’s sovereign immunity pursuant to this Agreement shall be construed as a waiver of the sovereign immunity or exhaustion of tribal remedies by the Navajo Nation or any other instrumentality of the Navajo Nation, and no such waiver by Payor shall create any liability on the part of the Navajo Nation or any other instrumentality of the Navajo Nation for the debts and obligations of Payor, or shall be construed as a consent to the encumbrance or attachment of any property of the Navajo Nation or any other instrumentality of the Navajo Nation based on any action, adjudication or other determination of liability of any nature incurred by Payor.  The acts and omissions of Payor, its directors, officers, employees, and agents shall not create any liability, obligation, or indebtedness either of the Navajo Nation or payable out of assets, revenues or income of the Navajo Nation.

 

(i)                  Third Parties.  Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person or entity other than the Parties hereto and their successors and assigns any right or remedies by reason of this Agreement as a third-party beneficiary or otherwise.

 

(j)                 Titles and Headings.  Titles and headings to paragraphs herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

(k)              Attorneys’ Fees.  In the event a suit or action is instituted by Payee or its successor or permitted assign to enforce the terms of this Agreement, the substantially prevailing Party shall be entitled to recover from Payor such sum as the court may adjudge reasonable as attorneys’ fees at trial, on any appeal, and on any petition for review, and in any bankruptcy proceedings related to this Agreement, in addition to all other sums provided by law.

 

(l)                  Entire Agreement.  This Agreement is delivered pursuant to, and as part of the consideration under, the Asset Purchase Agreement in furtherance of the Closing thereunder and (i) supersedes any other agreements, whether written or oral, that may have been made or entered into by any of the Parties hereto (or by any director, officer, or representative of such parties) on the specific matters expressly set forth herein; and (ii) constitutes the entire agreement by and between the Parties hereto with respect to the specific matters expressly set forth herein, and except as set forth herein or in the Asset Purchase Agreement or the other agreements, documents or instruments delivered in connection with the Closing under the Asset Purchase Agreement there are no representations, warranties, covenants, agreements, or commitments except as expressly set forth herein or therein.

 

(m)          Severability.  Any provision of this Agreement which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, which provisions shall be enforced to the maximum extent permitted by law and construed so as best to effectuate the

 

 

provisions hereof, and any such prohibition or unenforceability shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

(n)              JURY WAIVER.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 

(o)              Execution and Counterparts.  This Agreement may be executed in two or more counterparts, each which shall be deemed an original, but all of which together shall constitute one and the same agreement.

 

[Signatures on Following Pages]

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the Effective Date by their duly authorized representatives.

 

	
 
    	
PAYOR:
    
	
 
    	
 
    
	
 
    	
NAVAJO   TRANSITIONAL ENERGY COMPANY, LLC
    
	
 
    	
a   Navajo Nation limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Clark Moseley
    
	
 
    	
By:
    	
Clark Moseley
    
	
 
    	
Its:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PAYEE:
    
	
 
    	
 
    
	
 
    	
CLOUD   PEAK ENERGY RESOURCES, LLC
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Heath A. Hill
    
	
 
    	
By:
    	
Heath A. Hill
    
	
 
    	
Its:
    	
Executive Vice   President and Chief Financial Officer
    

 

 

Exhibit A

 

Real Property and Associated Coal Mining Operation Known as Antelope Mine Situated in Campbell County, Wyoming

 

[See Following Page]

 

 

Exhibit B

 

Real Property and Associated Coal Mining Operation Known as Cordero Rojo Mine Situated in Campbell County, Wyoming

 

[See Following Page]

 

 

Exhibit C

 

Real Property and Associated Coal Mining Operation Known as Spring Creek Mine Situated in Big Horn County, Montana

 

[See Following Page]

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