UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 19, 2009
Cloud Peak Energy Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
001-34547 |
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26-3088162 |
(Commission File Number) |
|
(IRS Employer Identification No.) |
505 S. Gillette Ave. |
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Gillette, WY |
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82716 |
(Address of Principal Executive Offices) |
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(Zip Code) |
(307) 687-6000
(Registrants Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement .
Underwriting Agreement
On November 19, 2009, Cloud Peak Energy Inc. (the Company) entered into the Underwriting Agreement, by and among the Company, Cloud Peak Energy Resources LLC (CPE LLC) and Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated and RBC Capital Markets Corporation, as representatives of the several underwriters (the Representatives) (the Underwriting Agreement), pursuant to which the Company agreed to sell to the underwriters the 30,600,000 shares of common stock to be sold in the Companys initial public offering of common stock of the Company, $0.01 par value per share (the IPO).
Per the over-allotment option, the Company has granted to the underwriters a 30-day option to purchase up to 4,590,000 additional shares from the Company at the IPO price less the underwriting discounts and commissions.
The Underwriting Agreement provides for a lock-up period of 180 days, subject to customary exceptions and extensions, during which the Company agreed that it will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the United States Securities and Exchange Commission (SEC) a registration statement under the Securities Act of 1933, as amended (the Securities Act) relating to, any shares of the Companys common stock or securities convertible into or exchangeable or exercisable for any shares of the Companys common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of the Representatives. The Companys officers and directors and Rio Tinto Energy America Inc. (RTEA) and Kennecott Management Services Company (KMS) also agreed to a lock-up period of 180 days, subject to customary exceptions and extensions, during which they agreed that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of the Companys common stock or securities convertible into or exchangeable or exercisable for any shares of the Companys common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Companys common stock, whether any of these transactions are to be settled by delivery of the Companys common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of the Representatives.
The underwriters reserved for sale at the IPO price up to 1,530,000 shares of the common stock for employees and directors who expressed an interest in purchasing common stock in the IPO. The number of shares available for sale to the general public in the IPO is reduced to the extent these persons purchase the reserved shares.
The Underwriting Agreement includes customary representations, warranties and covenants by the Company. The Company and CPE LLC have also agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.
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A copy of the Underwriting Agreement is attached hereto as Exhibit 1.1 and incorporated herein by reference. The foregoing summary description of the Underwriting Agreement is qualified in its entirety by reference to the Underwriting Agreement filed as Exhibit 1.1.
Purchase Agreement
On November 20, 2009, CPE LLC, Cloud Peak Energy Finance Corp. and Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated and RBC Capital Markets Corporation, as private placement agents, entered into the Purchase Agreement in connection with the offering of $300 million of 8.25% senior notes due 2017 and $300 million of 8.50% senior notes due 2019. The notes are guaranteed by all of CPE LLCs existing and future restricted subsidiaries that will guarantee CPE LLCs debt under CPE LLCs credit agreement.
The notes are to be offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in accordance with Regulation S under the Securities Act. The notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
Master Separation Agreement
On November 19, 2009, the Company entered into the Master Separation Agreement, by and among the Company, CPE LLC (and its subsidiaries listed on the signature page thereto), Rio Tinto America Inc. (Rio Tinto America), RTEA and KMS (the Master Separation Agreement). The Master Separation Agreement sets forth the agreements relating to the separation of the Company from Rio Tinto America, RTEA and their affiliates (collectively, Rio Tinto) and governing the Companys relationship following the completion of the IPO. Certain terms of the Master Separation Agreement are discussed below.
Intercompany Agreements . The Master Separation Agreement generally provides that all existing agreements or arrangements between the Company or CPE LLC and Rio Tinto and its affiliates are terminated, except for the certain agreements or arrangements relating to certain insurance policies and existing surety bonds and other support arrangements.
Financial Information . The Company and CPE LLC agreed to provide certain financial information related to the Companys business and information regarding the Companys reserves to Rio Tinto or its affiliates for so long as RTEA or its affiliates own more than 20% of the outstanding common membership units in CPE LLC or, notwithstanding this ownership percentage, are required to account for their investment in the Company on a consolidated basis or under the equity method of accounting, unless otherwise agreed by the Company and Rio Tinto.
Exchange of Other Information . The Master Separation Agreement also provides for the mutual sharing of information between the Company, CPE LLC and Rio Tinto and its affiliates in order to comply with reporting, filing, audit or tax requirements, for use in judicial proceedings. The
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Company and CPE LLC also agreed with Rio Tinto and its affiliates to provide mutual access to historical records relating to CPE LLCs or Rio Tintos businesses that have been retained or maintained by the other party.
Release . Except for each partys obligations under the Master Separation Agreement, the other structuring-related agreements and certain other specified liabilities, the Company, CPE LLC and Rio Tinto release and discharge each other and each of the parties respective affiliates from all liabilities existing or arising between the Company and CPE LLC and all liabilities existing or arising between Rio Tinto and its affiliates on or before the completion of the IPO, except to the extent the liabilities arise from the fraud, gross negligence or willful misconduct of certain of the respective directors and officers. The release does not include obligations or liabilities under any agreements among the Company, CPE LLC and Rio Tinto or affiliates of Rio Tinto that remain in effect.
Indemnification . The Master Separation Agreement sets forth various indemnification obligations of CPE LLC and Rio Tinto.
CPE LLC will indemnify Rio Tinto and its affiliates for certain liabilities related to CPE LLCs historical business and the ordinary course operation of the Companys business, as well as for other liabilities related to the Companys business following the IPO and certain of the structuring-related agreements. All indemnification obligations of CPE LLC are fully and unconditionally guaranteed by CPE LLCs wholly-owned subsidiaries. The indemnification obligations set forth in the various other structuring-related agreements provide that any indemnification obligations are payable as set forth in the Master Separation Agreement. CPE LLC will indemnify Rio Tinto and its affiliates on a dollar-for-dollar basis with respect to certain general indemnities and on a dollar-for-dollar basis plus a fraction of a dollar equal to the ownership interest of Rio Tinto and its affiliates in CPE LLC at the relevant time with respect to certain special indemnities.
Rio Tinto America will indemnify the Company for liabilities related to the Colowyo mine and the uranium mining venture, which were not contributed to CPE LLC, and, subject to certain limitations set forth in the Master Separation Agreement, liabilities related to the Jacobs Ranch mine arising under the membership interest purchase agreement, dated as of March 8, 2009, by and between Rio Tinto Sage LLC and Arch Coal, Inc., other than certain liabilities related to the Jacobs Ranch mine that will be retained by the Company and CPE LLC (including liabilities arising due to the gross negligence or willful misconduct of the Company or its officers or employees). Rio Tinto America will also indemnify the Company for any breach by Rio Tinto of the Master Separation Agreement or any other structuring-related agreement and for all liabilities resulting from actions taken by Rio Tinto after the completion of the IPO on the Companys behalf constituting gross negligence or willful misconduct. Rio Tinto America will indemnify the Company on a dollar-for-dollar basis for all of its indemnification obligations owed to the Company and CPE LLC.
Expenses of the IPO and Debt Financing Transactions . Rio Tinto or an affiliate of Rio Tinto will pay all of the Companys out-of pocket costs and expenses incurred in connection with the
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structuring transactions, the IPO and the debt financing transactions (other than fees, discounts and commissions in connection with the IPO and the debt financing transactions).
Corporate Opportunities . Rio Tinto will continue to hold certain coal assets in the U.S. and abroad following the completion of the IPO. The Colowyo mine in Colorado was not contributed to CPE LLC and, therefore, will not be owned by CPE LLC and may compete with the Companys continuing business. Rio Tinto may expand, through development of its remaining coal business, acquisitions or otherwise, its operations that directly or indirectly compete with the Company. The Master Separation Agreement provides that, except as otherwise agreed between the Company and Rio Tinto, for one year following the completion of the IPO, RTEA or its affiliates will not pursue any competitive activity or acquisition in the coal industry within the powder-river basin (PRB) (other than activities related to the Jacobs Ranch mine in connection with the Jacobs Ranch sale). Rio Tinto and its affiliates will not be prohibited from pursuing any competitive activity or acquisition outside of the PRB.
Following the completion of the IPO, if a corporate opportunity is offered to Rio Tinto or its affiliates or one or more of Rio Tintos or its affiliates executive officers or directors that relates to any competitive activity or acquisition in the coal industry:
· within the PRB after the one-year period referred to above; or
· outside of the PRB,
no such person shall be liable to the Company or any of its shareholders or CPE LLC or any of its members for breach of any fiduciary or other duty by reason of the fact that the person, including Rio Tinto and its affiliates, pursues or acquires the business opportunity, directs the business opportunity to another person or fails to present the business opportunity, or information regarding the business opportunity, to the Company or CPE LLC, unless, in the case of any person who is a director or officer of the Company or CPE LLC, the business opportunity is expressly offered to the director or executive officer in his or her capacity as an executive officer or director of the Company or CPE LLC.
Continuance of Surety Bonds, Letters of Credit and Other Arrangements . The Companys existing surety bonds, letters of credit and other guarantees or credit arrangements, including with respect to the Companys reclamation obligations, have been provided historically by Rio Tinto and its affiliates. These arrangements will not terminate upon completion of the IPO. The Company and CPE LLC agreed to use commercially reasonable efforts to obtain new surety bonds, letters of credit or other credit arrangements and to obtain the full release of Rio Tinto and its affiliates with respect to any existing surety bonds, letters of credit and other guarantees or credit arrangements. The Company, CPE LLC and their respective affiliates agreed to indemnify Rio Tinto and its affiliates for all liabilities arising out of or relating to any such existing surety bonds, letters of credit and other guarantees or credit arrangements that remain in place following the completion of the IPO.
Certain of the Companys existing reclamation obligations are secured by letters of credit issued under Rio Tintos pre-existing credit facilities. As part of the transition to the Companys own surety bond arrangements, the Company and CPE LLC placed approximately $80.2 million in
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escrow for the benefit of Rio Tinto with respect to Rio Tintos liabilities under the existing surety arrangements. If any payment obligation is triggered under any of these arrangements prior to the time that Rio Tinto and its affiliates are fully released with respect to these obligations, any amounts payable by Rio Tinto will be released to Rio Tinto from escrow. As the Company obtains new surety bonds to replace its existing surety arrangements, this restricted cash amount will be released from escrow from time to time to the Companys surety bond providers, as needed, to secure the Companys new surety bond arrangements. If the Company uses unrestricted cash as collateral to secure its new surety bond arrangements, a comparable amount of restricted cash will be released to the Comopany from escrow.
If the Companys existing surety arrangements are not replaced with new surety bonds, letters of credit or other credit arrangements and Rio Tinto and its affiliates are not fully released within 120 days following the completion of the IPO, CPE LLC will pay to Rio Tinto a monthly fee equal to 4% per annum of the Rio Tinto exposure amount, which amount is equal to (i) approximately 40% of the amount of the Companys existing surety arrangements that remain outstanding (other than certain arrangements with respect to the Decker mine) and (ii) 100% of the total face amount of certain of the Companys arrangements that remain outstanding with respect to the Decker mine. In addition, if any of the Companys existing surety arrangements remain outstanding after 120 days following the completion of the IPO, the Company will be required to arrange for the issuance of a letter of credit for the benefit of Rio Tinto in an amount equal to the Rio Tinto exposure amount. The amount of this letter of credit will be reduced as the Company obtains replacement surety arrangements. Notwithstanding the foregoing, if the Company deposits in good faith the full amount of the replacement surety bond arrangements needed to secure its reclamation obligations with the applicable regulatory authorities within 60 days following the completion of the IPO, the Company will have 180 days from the completion of the IPO to obtain the full release of Rio Tinto and its affiliates under the Companys existing surety arrangements. If Rio Tinto and its affiliates are not released within this 180-day period, the Company will be required to arrange for the issuance of a letter of credit for the benefit of Rio Tinto in an amount equal to the Rio Tinto exposure amount. The Company will not, however, be required to pay the 4% fee unless certain of the Companys replacement surety arrangements are rejected by the applicable regulatory authority and the Company is unable to arrange for a replacement surety bond arrangement and obtain the full release of Rio Tinto and its affiliates within 180 days following the completion of the IPO. If this occurs, the 4% fee will be payable on the Rio Tinto exposure amount with respect to the rejected surety bond arrangements.
Working Capital Adjustment . Under the Master Separation Agreement, the Company and Rio Tinto agreed that upon completion of the IPO, $181 million of unrestricted proceeds from the senior notes offering will remain with CPE LLC, subject to final adjustments post-closing based on the Companys final working capital amounts. This adjustment will occur no later than 15 business days following the completion of the structuring transactions unless there is a disagreement between the Company and Rio Tinto with respect to the amount of the adjustment. After the pricing of the IPO, the Company and CPE LLC entered into a short-term revolving loan agreement for up to $10 million with Rio Tinto to advance funds to the Company and CPE LLC to make certain payments prior to the closing of the IPO. Any amounts drawn on the loan will be repaid out of the proceeds of the senior notes offering.
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Non-Solicitation . The Company agreed with Rio Tinto and its affiliates that for a period of 12 months following the completion of the IPO, neither the Company nor CPE LLC, nor Rio Tinto nor its affiliates will solicit any employee of the other company, subject to certain exceptions.
Other Provisions . The Master Separation Agreement also contains covenants among the Company, CPE LLC and Rio Tinto and its affiliates with respect to, among other covenants:
· confidentiality of the Companys, CPE LLCs and Rio Tintos proprietary information;
· restrictions on the Companys ability to take any action that limits Rio Tintos or any of its affiliates ability to freely sell, transfer, assign, pledge or otherwise dispose of the Companys stock; and
· cooperation with respect to litigation.
A copy of the Master Separation Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference. The foregoing summary description of the Master Separation Agreement is qualified in its entirety by reference to the Master Separation Agreement filed as Exhibit 10.1.
Transition Services Agreement
On November 19, 2009, the Company entered into the Transition Services Agreement, by and among the Company, CPE LLC and Rio Tinto Services Inc. (RTS) (the Transition Services Agreement). Historically, Rio Tinto has provided key services to the Company, including services related to treasury, accounting, procurement, legal services, information technology, employee benefit and welfare plans, among other services. Pursuant to the Transition Services Agreement, RTS agreed to continue to provide CPE LLC with certain of these key services for a transition period generally of nine months with the exception of certain benefit administration services, which will continue through December 31, 2009.
Pursuant to the Transition Services Agreement, RTS will provide services to CPE LLC, including certain:
· treasury, accounts payable and other financial related services;
· data management and transactional purchasing procurement services;
· benefit administration related services; and
· information technology, network and related services.
CPE LLC has agreed to pay RTS for such services as set forth in the Transition Services Agreement. It is expected that the total amounts paid to RTS under the Transition Services Agreement on behalf of CPE LLC (assuming no extensions of the services) could be up to approximately $3.1 million. Payments for services will be made on a monthly basis and CPE LLC will also reimburse RTS for all reasonable out-of-pocket expenses. Any amounts owed by CPE LLC to RTS under the Transition Services Agreement that are not paid when due will bear interest at a rate of 10% per annum compounded annually from the time the payment was due until paid. However, if the term of any service provided under the agreement is extended or if
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there is a material change in the assumptions originally used by the Company or CPE LLC and RTS in determining the costs to be charged for the service, the amounts payable to RTS will be adjusted accordingly as mutually agreed to by CPE LLC and RTS.
A copy of the Transition Services Agreement is attached hereto as Exhibit 10.2 and incorporated herein by reference. The foregoing summary description of the Transition Services Agreement is qualified in its entirety by reference to the Transition Services Agreement filed as Exhibit 10.2.
Registration Rights Agreement
On November 19, 2009, the Company entered into the Registration Rights Agreement, by and among the Company, CPE LLC, Rio Tinto America, RTEA and KMS (the Registration Rights Agreement). Subject to several exceptions, Rio Tinto America will have the right to require the Company to register for public resale under the Securities Act all registrable securities that are held by RTEA and KMS and that Rio Tinto America requests be registered at any time after the expiration or waiver of the lock-up period following the IPO. Registrable securities subject to the Registration Rights Agreement are shares of the Companys common stock issued or issuable in exchange for common membership units and any other shares of the Companys common stock held by RTEA, KMS and any of their transferees. Rio Tinto America, RTEA and KMS may each assign their rights under the Registration Rights Agreement to any person that acquires registrable securities subject to the agreement and who agrees to be bound by the terms of the agreement.
Rio Tinto America may require the Company to use reasonable best efforts to register under the Securities Act all or any portion of these registrable securities upon a demand request. The demand registration rights are subject to certain limitations.
The Registration Rights Agreement will include customary blackout and suspension periods. In addition, Rio Tinto America may require the Company to file a registration statement on Form S-3 for the resale of their registrable securities if the Company is eligible to use Form S-3 at that time.
Holders of registrable securities also have piggyback registration rights, which means that these holders may include their respective shares in any future registrations of the Companys equity securities, whether or not that registration relates to a primary offering by the Company or a secondary offering by or on behalf of any of the Companys stockholders. During the first three years following the completion of the IPO, RTEA and/or KMS have priority over the Company and any other of the Companys stockholders in any registration that is an underwritten offering.
The Company and RTEA and/or KMS would share responsibility for the expenses of any demand registration (other than underwriters discounts or commissions) with the Company covering 25% of the expenses and RTEA and/or KMS covering 75% of the expenses. The Company bears the expenses of any piggyback registration. RTEA and KMS are responsible for any underwriters discount or commission in an offering by them pursuant to a demand registration and their pro rata share of any underwriters discount or commission in any
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piggyback registration and the Company will be responsible for any underwriters discount or commission for shares the Company sells even if the proceeds are intended to be used to redeem RTEAs or KMSs common membership units in CPE LLC. CPE LLC also agreed to indemnify holders with respect to liabilities resulting from untrue statements or omissions in any registration statement used in any such registration, other than untrue statements or omissions resulting from information furnished to the Company for use in the registration statement by a holder.
A copy of the Registration Rights Agreement is attached hereto as Exhibit 10.3 and incorporated herein by reference. The foregoing summary description of the Registration Rights Agreement is qualified in its entirety by reference to the Registration Rights Agreement filed as Exhibit 10.3.
Employee Matters Agreement
On November 19, 2009, the Company entered into the Employee Matters Agreement, by and among the Company, CPE LLC, Rio Tinto America, RTEA, Cloud Peak Energy Services Company and, for a limited purpose, Rio Tinto plc and Rio Tinto Limited (the Employee Matters Agreement) to govern certain compensation and employee benefit obligations with respect to those employees being transferred to the Company and CPE LLC from Rio Tinto. The Employee Matters Agreement allocates liabilities and responsibilities relating to certain employee compensation and benefit plans and programs and related matters in connection with the separation, including, among other things, health and welfare benefit obligations, the treatment of outstanding annual bonus awards and long-term incentive awards, deferred compensation obligations and retirement plans.
A copy of the Employee Matters Agreement is attached hereto as Exhibit 10.4 and incorporated herein by reference. The foregoing summary description of the Employee Matters Agreement is qualified in its entirety by reference to the Employee Matters Agreement filed as Exhibit 10.4.
Third Amended and Restated Limited Liability Company Agreement of Cloud Peak Energy Resources LLC
On November 19, 2009, the Company entered into the Third Amended and Restated Limited Liability Company Agreement of Cloud Peak Energy Resources LLC, by and among the Company, RTEA and KMS (the LLC Agreement). Certain terms of the LLC Agreement are discussed below.
Appointment as Manager . Under the LLC Agreement, the Company became a member and the sole manager of CPE LLC. As the sole manager, the Company is able to control all of the day to day business affairs and decision-making of CPE LLC without the approval of any other member. As such, the Company, through its officers and directors, is responsible for establishing the strategy and business policies of CPE LLC and for all operational and administrative decisions of CPE LLC and the day to day management of CPE LLCs business. Furthermore, the Company can only be removed as manager of CPE LLC if it resigns or if it removes itself as manager. If this occurs, the Company must appoint a new manager and, if the Company continues to own common membership units in CPE LLC, the Company will become
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a non-managing member in CPE LLC. However, if the Company resigns or removes itself as manager, the Management Services Agreement (described below) with CPE LLC terminates.
Rio Tinto Approval Rights . In general, so long as Rio Tinto owns, directly or indirectly, at least 30% of the common membership units of CPE LLC outstanding as of completion of the IPO (treating for purposes of this calculation shares acquired upon exercise of the redemption rights and not disposed of by Rio Tinto as units), Rio Tintos consent is required prior to the Company and/or CPE LLC taking certain actions, including any of the following actions:
· approval of any transaction that would result in a change of control of CPE LLC or the Company or a change in the manager of CPE LLC;
· the merger, consolidation, dissolution or liquidation of CPE LLC or any merger, consolidation, dissolution or liquidation of any subsidiary of CPE LLC (with customary exceptions);
· the direct or indirect sale, transfer, lease or other disposition of property or assets (including capital stock of any subsidiary) of CPE LLC and its subsidiaries outside of the ordinary course of business in excess of $500 million (subject to adjustment for inflation); provided, however, that Rio Tintos consent is not required for the creation, incurrence or assumption of (or foreclosure or other realization with respect to) any lien created, incurred or assumed in connection with indebtedness assumed, incurred or issued in connection with the IPO, the debt financing transactions and the other transactions contemplated by the LLC Agreement or the other structuring-related agreements;
· any fundamental change outside of the ordinary course in the nature (but not size or methods) of CPE LLCs coal business as in effect upon completion of the IPO, but only insofar as such fundamental change does not relate to the normal operation or activities of CPE LLCs coal business or any business or operation reasonably related or ancillary to CPE LLCs business;
· the acquisition of any other business or asset that has a purchase price in excess of $500 million or that would result in the issuance of equity interests by the Company or CPE LLC in excess of $500 million (subject to adjustment for inflation);
· the assumption, incurrence or issuance of indebtedness in excess of 125% of the indebtedness amounts included in CPE LLCs operating plan (subject to adjustment for inflation), other than indebtedness to fund ordinary course business operations or to fund any capital expenditures which do not require Rio Tinto consent;
· making or committing to make in any calendar year period, capital expenditures outside the ordinary course of business; provided that the following capital expenditures (subject to adjustment for inflation) shall be deemed to be in the ordinary course of business (x) committed lease by applications (LBA) payments included in CPE LLCs operating plan and (y) the aggregate amount of all other capital expenditures not in excess of 125% of the sum of (1) uncommitted LBA payments included in CPE LLCs operating plan, (2) non-LBA capital payments included in CPE LLCs operating plan and (3) the cumulative amount by which the actual capital expenditures in preceding years
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for capital expenditures other than committed LBA payments is less than the sum of uncommitted LBA payments and non-LBA payments for the prior years; and
· except as otherwise set forth in any other structuring-related agreement, settling claims as to which Rio Tinto would have liability.
Tax Matters . The Company is the tax matters member of CPE LLC. If Rio Tinto owns any common membership units, CPE LLC is prohibited from making tax elections or taking positions on tax issues which would harm Rio Tinto if such election or position had not been made or taken. Rio Tinto also has a consent right over the Companys actions as tax matters member of CPE LLC, including initiating proceedings and extending statutes of limitations, if such action would have a significant adverse effect on Rio Tinto. In addition, CPE LLC must operate substantially all of its business through entities treated as partnerships or disregarded entities for U.S. federal income tax purposes.
Compensation . The Company is not entitled to compensation for its services as manager except as provided in the Management Services Agreement.
Distributions . The LLC Agreement provides that distributions of cash are made in the Companys discretion, as manager, pro rata among the members holding common membership units in accordance with their respective percentage interests in CPE LLC. It is intended that the distributions made are sufficient to enable the Company to satisfy any present or future tax, levy, import, duty, charge, assessment or fee of any nature (including interest, penalties, and additions thereto) that is imposed by any government or other taxing authority and to allow the Company to meet its obligations under the Tax Receivable Agreement (described below).
One-to-One Ratio . The LLC Agreement contains various provisions requiring that the Company and CPE LLC take certain actions in order to maintain, at all times, a one-to-one ratio between the number of common membership units held by the Company and the number of shares of its common stock outstanding. This one-to-one ratio must also be maintained in the event that the Company issues additional securities or incurs debt or issues any debt securities. If the Company redeems, repurchases, acquires, exchanges, cancels or terminates any shares of its common stock, this action must be accompanied by an immediately prior identical (including with respect to the appropriate consideration paid for such action) redemption, repurchase, acquisition, exchange, cancellation or termination of common membership units of CPE LLC held by the Company. In addition, in general, upon any consolidation or merger or combination to which the Company is a party or any sale or disposition of all or substantially all of the Companys assets to a third party, the Company is required to take all necessary action so that the common membership units held by any non-managing member are exchangeable on a per-common membership unit basis at any time or from time to time following such event into the kind and amount of shares of stock and/or other securities or property (including cash) receivable upon such event by holders of the Companys common stock. Upon the exercise of options the Company has issued or the issuance of other types of equity compensation (such as issuances of restricted or non-restricted stock, payment of bonuses in stock or settlement of stock appreciation rights in stock), the size of the Companys managing member interest in CPE LLC will increase by a number of common units equal to the number of the Companys shares being issued in
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connection with the exercise of options or the issuance of shares for other types of equity compensation.
Information . The LLC Agreement provides that the members of CPE LLC are entitled to certain information regarding CPE LLC. This information includes quarterly and annual information regarding CPE LLC, information required for certain tax matters and any other information required under Delaware law or as reasonably requested by a member.
Confidentiality . Each member agrees to maintain the confidentiality of any information received by the member or its affiliates and representatives in connection with the transactions contemplated by the LLC Agreement which the Company, as manager, notifies the member is confidential for a period of three years following the earlier of the date of dissolution of CPE LLC or the date such member ceases to be a member, with customary exceptions, including to the extent disclosure is required by law or judicial process.
Amendment . Unless otherwise required by law, the LLC Agreement may be amended only by the written consent of each of the Company, in the Companys capacity as manager, and the non-managing members; provided, however, that no amendment may be made without the consent of the holder if the amendment would adversely affect the rights of the holder other than on a pro rata basis with other holders of common membership units (it being understood that any amendment to the Rio Tinto approval rights prior to the date the approval rights terminate shall require Rio Tintos consent). In addition, the LLC Agreement also provides that any amendment to the Management Services Agreement that could materially adversely impact the economic interests of the members requires the consent of the non-managing members prior to the execution of the amendment by the Company, in its capacity as manager, on behalf of CPE LLC. The consent rights of the non-managing member with respect to any amendments shall terminate when the non-managing members cease to own in the aggregate at least 10% of the common membership units outstanding following the IPO.
Indemnification . The LLC Agreement provides for indemnification of the manager, members and officers of CPE LLC and their respective subsidiaries or affiliates from and against liabilities arising out of or relating to the business of CPE LLC, the LLC Agreement, any persons status as a manager, member, director or officer of CPE LLC or any action taken by any manager, member, director or officer of CPE LLC under the LLC Agreement or otherwise on behalf of CPE LLC, except that no person entitled to indemnification under the LLC Agreement will be entitled to indemnification if the liability results from the gross negligence or willful misconduct of such person.
Fiduciary Duties . Circumstances may arise in the future when the interests of the members in CPE LLC conflict with the interests of the Companys stockholders. As manager of CPE LLC, the Company owes fiduciary duties to the non-managing members of CPE LLC that may conflict with fiduciary duties the Companys officers and directors owe to the Companys stockholders.
A copy of the LLC Agreement is attached hereto as Exhibit 10.5 and incorporated herein by reference. The foregoing summary description of the LLC Agreement is qualified in its entirety by reference to the Third Amended and Restated Agreement filed as Exhibit 10.5.
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Acquisition Agreement
On November 19, 2009, the Company entered into the Acquisition Agreement, by and between the Company and RTEA (the Acquisition Agreement), pursuant to which the Company acquired a portion of RTEAs interest in Rio Tinto Americas western U.S. coal business (other than the Colowyo mine). Under the Acquisition Agreement, RTEA sold to the Company 30,600,000 common membership units of CPE LLC (the number of common membership units equal to the number of shares of the Companys common stock sold in the IPO).
A copy of the Acquisition Agreement is attached hereto as Exhibit 10.6 and incorporated herein by reference. The foregoing summary description of the Acquisition Agreement is qualified in its entirety by reference to the Acquisition Agreement filed as Exhibit 10.6.
Promissory Note
On November 19, 2009, as consideration for the common membership units acquired by the Company under the Acquisition Agreement, the Company issued a promissory note (the CPE Note) to RTEA in an amount equal to the purchase price for the units and are required to use the net proceeds from the IPO to immediately repay the CPE Note. The CPE Note is immediately payable following the completion of the IPO and does not bear interest unless the Company defaults on its repayment obligations, in which case interest accrues from the date the payment was due until the payment is made at a rate of 10% per annum. RTEA also agrees, in the event the underwriters exercise their over-allotment option, to sell to the Company a number of common membership units equal to the number of shares of the Companys common stock sold in the over-allotment. Assuming the underwriters exercise their over-allotment option in full, the Company will use the proceeds of the over-allotment to pay for those units and own approximately 59.26% of the common membership units of CPE LLC, taking into account the shares of restricted stock to be issued to the Companys directors and employees in connection with the IPO. The per unit purchase price the Company pays for the common membership units purchased pursuant to the Acquisition Agreement is generally equal to the per share purchase price that the Companys common stock is sold to the public pursuant to the IPO, less underwriting discounts and commissions.
A copy of the CPE Note is attached hereto as Exhibit 10.7 and incorporated herein by reference. The foregoing summary description of the CPE Note is qualified in its entirety by reference to the CPE Note filed as Exhibit 10.7.
Trademark Assignment Agreement
In addition to the Master Separation Agreement, on November 19, 2009, CPE LLC and Rio Tinto Energy America Inc. entered into the Trademark Assignment Agreement (the Trademark Assignment Agreement), among certain other intellectual property agreements, assigning to the Company certain trademarks used in the Companys business, allowing the Company to use the Rio Tinto trademarks on a transitional basis and licensing certain software.
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A copy of the Trademark Assignment Agreement is attached hereto as Exhibit 10.8 and incorporated herein by reference. The foregoing summary description of the Trademark Assignment Agreement is qualified in its entirety by reference to the Trademark Assignment Agreement filed as Exhibit 10.8.
Management Services Agreement
On November 19, 2009, the Company entered into the Management Services Agreement, by and between the Company and CPE LLC (the Management Services Agreement), pursuant to which the Company agreed to provide certain management services to CPE LLC. In exchange for the services, CPE LLC will reimburse the Company for compensation and other expenses of certain of the Companys officers and for reasonable out-of-pocket costs and expenses incurred by the Company for providing the management services, including legal, accounting and other third-party advisors and consultants, certain insurance costs and other items of corporate overhead and costs associated with the Companys maintenance of the Companys corporate existence and status as a reporting company under the federal securities laws, including costs related to the Registration Rights Agreement. CPE LLC will also provide reasonable administrative and support services to the Company, such as office facilities, equipment, supplies, payroll and accounting and financial reporting. The Management Services Agreement also provides that the Companys employees may participate in CPE LLCs benefit plans, and that CPE LLC employees may participate in the Companys equity incentive plan. CPE LLC agreed to indemnify the Company for any losses arising from its performance under the Management Services Agreement, except that the Company agreed to indemnify CPE LLC for any losses caused by its willful misconduct or gross negligence. In the event the Company ceases to serve as manager of CPE LLC, the Management Services Agreement automatically terminates.
A copy of the Management Services Agreement is attached hereto as Exhibit 10.9 and incorporated herein by reference. The foregoing summary description of the Management Services Agreement is qualified in its entirety by reference to the Management Services Agreement filed as Exhibit 10.9.
RTEA Coal Supply Agreement
On November 19, 2009, CPE LLC and RTEA entered into the RTEA Coal Supply Agreement (the Coal Supply Agreement), pursuant to which CPE LLC receives the economic benefits and risks of certain coal supply contracts previously entered into by RTEA or its affiliates that could not be assigned to the Company, CPE LLC or its subsidiaries. The coal to be delivered under the Coal Supply Agreement will be sourced from the Companys mines, which were previously held, operated and controlled by RTEA or its affiliates prior to the completion of the IPO. CPE LLC will agree to perform RTEAs obligations under certain coal supply contracts and will receive from RTEA the customer payments made under those agreements. As payment for the sale of coal by, and services of, CPE LLC, RTEA will pay CPE LLC a fee equal to all payments actually received by RTEA from the customers for the coal over the term of the Coal Supply Agreement. The Coal Supply Agreement will expire when the coal supply contracts, which cannot be assigned to the Company, expire. CPE LLC will indemnify RTEA for certain liabilities and failures of CPE LLC to perform its obligations under the agreement.
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A copy of the Coal Supply Agreement is attached hereto as Exhibit 10.10 and incorporated herein by reference. The foregoing summary description of the Coal Supply Agreement is qualified in its entirety by reference to the Coal Supply Agreement filed as Exhibit 10.10.
Tax Receivable Agreement
On November 19, 2009, the Company entered into a Tax Receivable Agreement, by and between the Company and RTEA (the Tax Receivable Agreement). The IPO and the related transactions, as well as subsequent acquisitions of RTEAs units in CPE LLC by the Company or CPE LLC, are expected to increase the Companys tax basis in the Companys share of CPE LLCs tangible and intangible assets, as well as the Companys basis in the equity of its subsidiaries and assets held by those subsidiaries. These increases in tax basis are expected to increase the Companys depreciation, amortization and cost depletion deductions and therefore to reduce the amount of tax that the Company would otherwise be required to pay in the future.
The Tax Receivable Agreement generally requires the Company to pay to RTEA approximately 85% of the amount of cash tax savings, if any, that the Company realizes as a result of the increases in tax basis that the Company expects to obtain in connection with the IPO and related transactions, subsequent acquisitions of RTEAs units in CPE LLC by the Company or CPE LLC, as well as payments made by the Company under the Tax Receivable Agreement. The Company expects to benefit from the remaining approximately 15% of cash tax savings, if any, that the Company realizes as a result of such tax basis step-up. For purposes of the Tax Receivable Agreement, cash savings in income tax are generally computed by comparing the Companys income tax liability to the tax liability that the Company would have had if it had structured the Companys transactions with Rio Tinto in a manner in which the Company did not receive the increases in tax basis referred to above. For administrative convenience, instead of calculating the exact amount of state and local income tax and franchise tax benefits that the Company receives, the Company will use an assumed federal income tax rate that is one percentage point higher than the actual federal income tax rate when calculating the Companys tax benefits, which is intended to approximate the amount of state and local tax savings that the Company actually realizes. The term of the Tax Receivable Agreement commences as of the consummation of the IPO and continues until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the Tax Receivable Agreement, as discussed below. Estimating the benefits of the Companys tax basis step-up and, accordingly, the amount of payments that may be made under the Tax Receivable Agreement is, by its nature, imprecise because the amount and timing of benefits and payments due under the Tax Receivable Agreement varies depending on a variety of factors, including the amount and timing of the Companys income. If, even without a tax basis step-up, the Company would not have had a tax liability in a taxable year, the Company generally will not be required to make payments under the Tax Receivable Agreement for that taxable year because the Company will not have realized tax savings for that year from the tax basis step-up. However, any tax benefits related to the Companys transactions with RTEA that do not result in realized tax savings in a given tax year will likely generate tax attributes that may be utilized to generate tax savings in previous or future tax years. The utilization of such tax attributes will result in payments under the Tax Receivable Agreement.
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Because of the potential size of the increases in tax basis referred to above, the Company expects to make substantial payments to RTEA under the Tax Receivable Agreement. Based on the tax basis of the Companys assets as of September 30, 2009 and CPE LLCs operating plan which takes into account only the Companys existing LBAs, the future payments under the Tax Receivable Agreement with respect to the controlling interest in CPE LLC that the Company acquired in the IPO and related transactions are estimated to be approximately $53.4 million in the aggregate and will be payable over the next 18 years (assuming no exercise of the underwriters over-allotment option). This estimate is based on assumptions related to the Companys business that could change and the actual payments could differ materially from this estimate. Payments would be significantly greater if the Company generates income significantly in excess of the amounts used in the Companys operating plan, for example, because the Company acquires additional LBAs beyond the Companys existing LBAs and as a result the Company realizes the full tax benefit of such increased tax basis (or an increased portion thereof). In addition, when the Company or CPE LLC acquire RTEAs remaining units in CPE LLC (or a significant portion thereof), the Company will likely receive a further step-up in the Companys tax basis based on the value the Company or CPE LLC pay for RTEAs units at such time and, accordingly, the Companys obligations under the Tax Receivable Agreement to pay RTEA 85% of any benefits the Company receives as a result of such further step-up would significantly increase. The Companys obligation may also increase if there are changes in law, including the increase of current corporate income tax rates. The Companys payment obligations under the Tax Receivable Agreement will not be conditioned upon RTEAs or its affiliates continued ownership of an interest in CPE LLC or the Companys available cash resources.
Distributions from CPE LLC . As managing member, the Company intends to cause CPE LLC to distribute cash to the Company sufficient to enable the Company to fulfill all of its obligations under the Tax Receivable Agreement. These distributions are made on a per-unit basis, meaning corresponding distributions are made to all holders of units in CPE LLC, including RTEA, in proportion to their percentage interests on the date of the distribution. Although distributions from CPE LLC to enable the Company to fulfill its obligations under the Tax Receivable Agreement will generally be permitted under the terms of the debt financing transactions, it is possible that certain payment obligations under the Tax Receivable Agreement may be limited.
Changes in Control . If the Company or CPE LLC undergoes a change in control other than a change in control caused by RTEA and within 180 days of such change in control RTEA no longer holds any units in CPE LLC, and the Company does not otherwise elect to terminate the Tax Receivable Agreement as discussed below, payments to RTEA under the Tax Receivable Agreement will continue on a yearly basis but will be based on an agreed upon set of assumptions. In this case, the Companys assumed cash tax savings, and consequently the Companys payments due under the Tax Receivable Agreement, could exceed the Companys actual cash tax savings each year by material amounts. If the Company undergoes such a change in control and the Companys credit rating is impaired, the Company will be required to provide credit support to Rio Tinto.
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Asset Sales . In addition to the Companys obligations to make payments to RTEA with respect to the Companys actual cash tax savings, if CPE LLC sells any asset with a gross value greater than $10 million outside the ordinary course of its business in a wholly or partially taxable transaction, the Company is required to make yearly payments to RTEA equal to RTEAs deemed cost of financing its accelerated tax liabilities with respect to such sale and after such asset sales the Company is required to make certain adjustments to the calculation of the Companys actual cash tax savings for taxable years following sales or redemptions of RTEAs units in CPE LLC. These adjustments could result in an acceleration of the Companys obligations under the Tax Receivable Agreement. In addition, the debt financing transactions contain limitations on CPE LLCs ability to make distributions, which could affect the Companys ability to meet these payment obligations. These limitations on CPE LLCs ability to make distributions may limit the Companys ability to engage in certain taxable asset sales or dispositions outside the ordinary course of the Companys business. The Company could also seek to obtain RTEAs consent to any such transaction which they would not be obligated to provide. Further, if CPE LLC transfers an asset outside the ordinary course of business in a wholly or partially tax-free transaction to an entity which does not provide the Company with sufficient information to calculate tax savings with respect to such asset, CPE LLC will be treated as having sold that asset in a taxable transaction for purposes of determining the Companys cash tax savings and this will result in an acceleration of the Companys obligations under the Tax Receivable Agreement.
Prohibited Transfers . In order to protect the value of the payments that RTEA expects to receive under the Tax Receivable Agreement, the Company is prohibited in certain cases from transferring assets to entities treated as (or entities owned by subsidiaries of CPE LLC treated as) corporations for U.S. federal income tax purposes in transfers which are not wholly-taxable if such transfer would be outside the ordinary course of the Companys business.
Early Termination and Default . If the Company breaches any of the Companys material obligations under the Tax Receivable Agreement, whether as a result of the Companys failure to make any payment when due (subject to a specified cure period), failure to honor any other material obligation under the Tax Receivable Agreement or by operation of law as a result of the rejection of the Tax Receivable Agreement in a case commenced under the Bankruptcy Code or otherwise, such default will permit RTEA to enforce its rights under the Tax Receivable Agreement, including by acceleration of the Companys obligations to an amount equal to the net present value of each future payment, based on an agreed upon set of assumptions. The Company has the right to terminate the Tax Receivable Agreement at any time and, if the Company so elects, its obligations under the Tax Receivable Agreement will be accelerated and calculated in the same manner as acceleration in default.
IRS Determinations . The Companys ability to achieve benefits from any tax basis increase, and therefore the payments expected to be made under the Tax Receivable Agreement, will depend upon a number of factors, as discussed above, including the timing and amount of the Companys future income. If the U.S. Internal Revenue Service were to subsequently challenge one or more of the Companys tax positions relevant to the Tax Receivable Agreement, and if such challenge were ultimately upheld, the terms of the Tax Receivable Agreement require RTEA to repay to the Company an amount equal to the prior payments made by the Company to
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RTEA in respect of any disallowed cash tax savings. Further, such a challenge could result in a decrease to the Companys tax benefits as well as the Companys future obligations under the Tax Receivable Agreement. The Company must obtain RTEAs consent prior to settlement of any such challenge if it may affect RTEAs rights and obligations under the Tax Receivable Agreement.
A copy of the Tax Receivable Agreement is attached hereto as Exhibit 10.11 and incorporated herein by reference. The foregoing summary description of the Tax Receivable Agreement is qualified in its entirety by reference to the Tax Receivable Agreement filed as Exhibit 10.11.
Item 1.02. Termination of a Material Definitive Agreement .
Item 1.01 of this report on Form 8-K is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets .
Item 1.01 of this report on Form 8-K is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant .
Item 1.01 of this report on Form 8-K is incorporated herein by reference.
Item 8.01. Other Events .
On November 19, 2009, the Companys Form S-1 Registration Statement, as amended (File No. 333-161293), was declared effective, and the Company entered into the structuring transactions as described therein. The Company issued a total of 30,600,000 shares of its common stock, par value $0.01 per share, in the IPO. In addition, the underwriters have the option to purchase up to an additional 4,590,000 shares pursuant to the exercise of their over-allotment option.
On November 20, 2009, the Company issued a press release announcing the pricing of its IPO. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
On November 20, 2009, CPE LLC and Cloud Peak Energy Finance Corp. announced the pricing of $300 million of 8.25% senior notes due 2017 and $300 million of 8.50% senior notes due 2019. The senior notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in accordance with Regulation S under the Securities Act in an offering with registration rights. The senior notes are guaranteed by all of CPE LLCs existing and future restricted subsidiaries that will guarantee CPE LLCs debt under CPE LLCs credit agreement. The senior notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
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On November 20, 2009, the Company issued a press release announcing the pricing of the senior notes offered by CPE LLC and Cloud Peak Energy Finance Corp. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits .
(d) Exhibits
1.1 Underwriting Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC and Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated and RBC Capital Markets Corporation, as representatives of the several underwriters
10.1 Master Separation Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC (and its subsidiaries listed on the signature page), Rio Tinto America Inc., Rio Tinto Energy America Inc. and Kennecott Management Services Company
10.2 Transition Services Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC and Rio Tinto Services Inc.
10.3 Registration Rights Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC, Rio Tinto America Inc., Rio Tinto Energy America Inc., and Kennecott Management Services Company
10.4 Employee Matters Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC, Rio Tinto America Inc., Rio Tinto Energy America Inc., Cloud Peak Energy Services Company and, for a limited purpose, Rio Tinto plc and Rio Tinto Limited
10.5 Third Amended and Restated Limited Liability Company Agreement of Cloud Peak Energy Resources LLC, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Rio Tinto Energy America Inc. and Kennecott Management Services Company
10.6 Acquisition Agreement, dated as of November 19, 2009, by and between Cloud Peak Energy Inc. and Rio Tinto Energy America Inc.
10.7 Promissory Note, dated as of November 19, 2009, by Cloud Peak Energy Inc. in favor of Rio Tinto Energy America Inc.
10.8 Trademark Assignment Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Resources LLC and Rio Tinto Energy America Inc.
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10.9 Management Services Agreement, dated as of November 19, 2009, by and between Cloud Peak Energy Inc. and Cloud Peak Energy Resources LLC
10.10 RTEA Coal Supply Agreement, dated as of November 19, 2009, by and between Cloud Peak Energy Resources LLC and Rio Tinto Energy America Inc.
10.11 Tax Receivable Agreement, dated as of November 19, 2009, by and between Cloud Peak Energy Inc. and Rio Tinto Energy America Inc.
99.1 Press release, dated November 20, 2009, issued by Cloud Peak Energy Inc.
99.2 Press release, dated November 20, 2009, issued by Cloud Peak Energy Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CLOUD PEAK ENERGY INC. |
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By: |
/s/ Amy J. Stefonick |
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Name: Amy J. Stefonick |
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Title: Corporate Secretary |
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Date: November 25, 2009 |
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EXHIBIT INDEX
Exhibit No. |
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Description |
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Paper (P) or
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1.1 |
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Underwriting Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC and Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated and RBC Capital Markets Corporation, as representatives of the several underwriters |
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E |
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10.1 |
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Master Separation Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC (and its subsidiaries listed on the signature page), Rio Tinto America Inc., Rio Tinto Energy America Inc. and Kennecott Management Services Company |
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E |
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10.2 |
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Transition Services Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC and Rio Tinto Services Inc. |
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E |
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10.3 |
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Registration Rights Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC, Rio Tinto America Inc., Rio Tinto Energy America Inc., and Kennecott Management Services Company |
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E |
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10.4 |
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Employee Matters Agreement, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Cloud Peak Energy Resources LLC, Rio Tinto America Inc., Rio Tinto Energy America Inc., Cloud Peak Energy Services Company and, for a limited purpose, Rio Tinto plc and Rio Tinto Limited |
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E |
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10.5 |
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Third Amended and Restated Limited Liability Company Agreement of Cloud Peak Energy Resources LLC, dated as of November 19, 2009, by and among Cloud Peak Energy Inc., Rio Tinto Energy America Inc. and Kennecott Management Services Company |
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E |
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10.6 |
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Acquisition Agreement, dated as of November 19, 2009, by and between Cloud Peak Energy Inc. and Rio Tinto Energy America Inc. |
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E |
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10.7 |
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Promissory Note, dated as of November 19, 2009, by Cloud Peak Energy Inc. in favor of Rio Tinto Energy America Inc. |
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E |
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10.8 |
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Trademark Assignment Agreement, dated as of November |
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E |
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19, 2009, by and among Cloud Peak Energy Resources LLC and Rio Tinto Energy America Inc. |
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10.9 |
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Management Services Agreement, dated as of November 19, 2009, by and between Cloud Peak Energy Inc. and Cloud Peak Energy Resources LLC |
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E |
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10.10 |
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RTEA Coal Supply Agreement, dated as of November 19, 2009, by and between Cloud Peak Energy Resources LLC and Rio Tinto Energy America Inc. |
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E |
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10.11 |
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Tax Receivable Agreement, dated as of November 19, 2009, by and between Cloud Peak Energy Inc. and Rio Tinto Energy America Inc. |
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E |
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99.1 |
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Press release, dated November 20, 2009, issued by Cloud Peak Energy Inc. |
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E |
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99.2 |
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Press release, dated November 20, 2009, issued by Cloud Peak Energy Inc. |
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E |
Exhibit 1.1
30,600,000 Shares
CLOUD PEAK ENERGY INC.
Common Stock, $0.01 par value
UNDERWRITING AGREEMENT
November 19, 2009
CREDIT SUISSE SECURITIES (USA) LLC
MORGAN STANLEY & CO. INCORPORATED
RBC CAPITAL MARKETS CORPORATION,
As Representative of the Several Underwriters,
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue,
New York, N.Y.10010-3629
Dear Sirs:
1. Introductory . Cloud Peak Energy Inc., a Delaware corporation ( Company ), agrees with the several Underwriters named in Schedule A hereto ( Underwriters ) to issue and sell to the several Underwriters 30,600,000 shares ( Firm Securities ) of its common stock, $0.01 par value per share ( Securities ), and also proposes to issue and sell to the Underwriters, at the option of the Underwriters, an aggregate of not more than 4,590,000 additional shares ( Optional Securities ) of its Securities as set forth below. The Firm Securities and the Optional Securities are herein collectively called the Offered Securities. As part of the offering contemplated by this Agreement, Morgan Stanley & Co. Incorporated (the Designated Underwriter ) has agreed to reserve out of the Firm Securities purchased by it under this Agreement, up to 1,530,000 shares, for sale to the Companys directors and employees (collectively, Participants ), as set forth in the Final Prospectus (as defined herein) under the heading Underwriting (the Directed Share Program ). The Firm Securities to be sold by the Designated Underwriter pursuant to the Directed Share Program (the Directed Shares ) will be sold by the Designated Underwriter pursuant to this Agreement at the public offering price. Any Directed Shares not subscribed for by the end of the business day on which this Agreement is executed will be offered to the public by the Underwriters as set forth in the Final Prospectus.
For the avoidance of doubt, it shall be understood and agreed by the parties hereto that any and all references in this Agreement to subsidiaries of the Company shall be deemed to include Cloud Peak Energy Resources LLC, a Delaware limited liability company ( CPE LLC ).
Any reference in this Agreement, to the extent the context requires, to the Structuring Transactions and the Debt Financing Transactions shall have the meanings ascribed thereto in the Prospectus (as defined below). Transaction Documents shall mean the following agreements to be entered into in connection with the Structuring Transactions: (i) the Acquisition Agreement to be entered into by and between the Company and Rio Tinto Energy America Inc. (the Acquisition Agreement ), (ii) the Master Separation Agreement to be entered into by and among the Company, CPE LLC, Rio Tinto America Inc., Rio Tinto Energy America Inc. and Kennecott Management Services Company, (iii) the Third Amended and Restated Limited Liability Company Agreement of CPE LLC to be entered into by and among the Company, Rio Tinto Energy America Inc. and Kennecott Management Services Company (the LLC Agreement ), (iv) the Transition Services Agreement to be entered into by and among the Company, CPE LLC and Rio Tinto Services Inc., (v) the Registration Rights Agreement to be entered into by and among the Company, CPE LLC, Rio Tinto America Inc., Rio Tinto Energy America Inc. and Kennecott Management Services Company, (vi) the Tax Receivable Agreement to be entered into by and between the Company and Rio Tinto Energy America Inc., (vii) the Trademark License Agreement to be entered into by and among the Company,
CPE LLC and Rio Tinto Energy America Inc., (viii) the Software License Agreement to be entered into by and among the Company, CPE LLC and Rio Tinto Energy America Inc., (ix) the Employee Matters Agreement to be entered into by and among the Company, CPE LLC, Cloud Peak Energy Services Company, Rio Tinto plc, Rio Tinto Limited, Rio Tinto America Inc. and Rio Tinto Energy America Inc., (x) the Management Services Agreement to be entered by and between the Company and CPE LLC, (xi) the Rio Tinto Energy America Coal Supply Agreement to be entered into by and between CPE LLC and Rio Tinto Energy America Inc. and (xii) the Promissory Note payable by the Company to Rio Tinto Energy America Inc.
2. Representations and Warranties of the Company . (a) Each of the Company and CPE LLC jointly and severally represents and warrants to, and agrees with, the several Underwriters that:
(i) Filing and Effectiveness of Registration Statement; Certain Defined Terms . The Company has filed with the Commission a registration statement on Form S-1 (No. 333-161293) covering the registration of the Offered Securities under the Act, including a related preliminary prospectus or prospectuses. This initial registration statement, as amended at its Effective Time, including all information contained in the registration statement (if any) pursuant to Rule 462(b) and then deemed to be a part of the initial registration statement, and all 430A Information and all 430C Information, that in any case has not then been superseded or modified, shall be referred to as the Initial Registration Statement . The Company may also have filed, or may file with the Commission, a Rule 462(b) registration statement covering the registration of Offered Securities. This Rule 462(b) registration statement, as amended at its Effective Time, including the contents of the Initial Registration Statement incorporated by reference therein and including all 430A Information and all 430C Information, that in any case has not then been superseded or modified, shall be referred to as the Additional Registration Statement .
As of the time of execution and delivery of this Agreement, the Initial Registration Statement has been declared effective under the Act and is not proposed to be amended. Any Additional Registration Statement has or will become effective upon filing with the Commission pursuant to Rule 462(b) and is not proposed to be amended. The Offered Securities all have been or will be duly registered under the Act pursuant to the Initial Registration Statement and, if applicable, the Additional Registration Statement.
For purposes of this Agreement:
430A Information , with respect to any registration statement, means information included in a prospectus and retroactively deemed to be a part of such registration statement pursuant to Rule 430A(b).
430C Information , with respect to any registration statement, means information included in a prospectus then deemed to be a part of such registration statement pursuant to Rule 430C.
Act means the Securities Act of 1933, as amended.
Applicable Time means 5:30 pm (Eastern time) on the date of this Agreement.
Closing Date has the meaning defined in Section 3 hereof.
Commission means the United States Securities and Exchange Commission.
Effective Date with respect to the Initial Registration Statement or the Additional Registration Statement (if any) means the date of the Effective Time thereof.
Effective Time with respect to the Initial Registration Statement or, if filed prior to the execution and delivery of this Agreement, the Additional Registration Statement means the date and time as of which such Registration Statement was declared effective by the Commission or has become effective upon filing pursuant to Rule 462(c). If an Additional Registration Statement has not been filed prior to the execution and delivery of this Agreement but the Company has advised the Representatives that it proposes to file one, Effective Time with respect to such
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Additional Registration Statement means the date and time as of which such Registration Statement is filed and becomes effective pursuant to Rule 462(b).
Exchange Act means the Securities Exchange Act of 1934, as amended.
Final Prospectus means the Statutory Prospectus that discloses the public offering price, other 430A Information and other final terms of the Offered Securities and otherwise satisfies Section 10(a) of the Act.
General Use Issuer Free Writing Prospectus means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being so specified in Schedule B to this Agreement.
Issuer Free Writing Prospectus means any issuer free writing prospectus, as defined in Rule 433, relating to the Offered Securities in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Companys records pursuant to Rule 433(g).
Limited Use Issuer Free Writing Prospectus means any Issuer Free Writing Prospectus that is not a General Use Issuer Free Writing Prospectus.
The Initial Registration Statement and the Additional Registration Statement are referred to collectively as the Registration Statements and individually as a Registration Statement . A Registration Statement with reference to a particular time means the Initial Registration Statement and any Additional Registration Statement as of such time. A Registration Statement without reference to a time means such Registration Statement as of its Effective Time. For purposes of the foregoing definitions, 430A Information with respect to a Registration Statement shall be considered to be included in such Registration Statement as of the time specified in Rule 430A.
Rules and Regulations means the rules and regulations of the Commission.
Securities Laws means, collectively, the Sarbanes-Oxley Act of 2002 ( Sarbanes-Oxley ), the Act, the Exchange Act, the Rules and Regulations, the auditing principles, rules, standards and practices applicable to auditors of issuers (as defined in Sarbanes-Oxley) promulgated or approved by the Public Company Accounting Oversight Board and, as applicable, the rules of the New York Stock Exchange and the NASDAQ Stock Market ( Exchange Rules ).
Statutory Prospectus with reference to a particular time means the prospectus included in a Registration Statement immediately prior to that time, including any 430A Information or 430C Information with respect to such Registration Statement. For purposes of the foregoing definition, 430A Information shall be considered to be included in the Statutory Prospectus as of the actual time that form of prospectus is filed with the Commission pursuant to Rule 424(b) or Rule 462(c) and not retroactively.
Unless otherwise specified, a reference to a rule is to the indicated rule under the Act.
(ii) Compliance with Securities Act Requirements . (i) (A) On their respective Effective Dates, (B) on the date of this Agreement and (C) on each Closing Date, each of the Initial Registration Statement and the Additional Registration Statement (if any) conformed and will conform in all material respects to the requirements of the Act, (ii) on its date, at the time of filing of the Final Prospectus pursuant to Rule 424(b) or (if no such filing is required) at the Effective Date of the Additional Registration Statement in which the Final Prospectus is included, and on each Closing Date, the Final Prospectus will conform in all respects to the requirements of the Act and the Rules and Regulations and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (iii) on the date of this Agreement, at their respective Effective Times or issue dates and on each Closing Date, each Registration Statement, the Final Prospectus, any Statutory Prospectus, any prospectus wrapper and any Issuer Free Writing Prospectus complied or when filed will comply in all material respects with the requirements of the Act. The preceding sentence
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does not apply to statements in or omissions from any such document based upon written information furnished to the Company by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 8(b) hereof.
(iii) Ineligible Issuer Status. (i) At the time of the initial filing of the Initial Registration Statement and (ii) at the date of this Agreement, the Company was not and is not an ineligible issuer, as defined in Rule 405, including (x) the Company or any other subsidiary in the preceding three years not having been convicted of a felony or misdemeanor or having been made the subject of a judicial or administrative decree or order as described in Rule 405 and (y) the Company in the preceding three years not having been the subject of a bankruptcy petition or insolvency or similar proceeding, not having had a registration statement be the subject of a proceeding under Section 8 of the Act and not being the subject of a proceeding under Section 8A of the Act in connection with the offering of the Offered Securities, all as described in Rule 405.
(iv) General Disclosure Package . As of the Applicable Time, neither (i) any General Use Issuer Free Writing Prospectus(es) issued at or prior to the Applicable Time and the preliminary prospectus, dated November 9, 2009 (which is the most recent Statutory Prospectus distributed to investors generally) and the other information, if any, stated in Schedule B to this Agreement to be included in the General Disclosure Package, all considered together (collectively, the General Disclosure Package ), nor (ii) any individual Limited Use Issuer Free Writing Prospectus, when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any Statutory Prospectus or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 8(b) hereof.
(v) Issuer Free Writing Prospectuses . Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Offered Securities or until any earlier date that the Company notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement or as a result of which such Issuer Free Writing Prospectus, if republished immediately following such event or development, would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (i) the Company has promptly notified or will promptly notify the Representatives and (ii) the Company has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
(vi) Good Standing of the Company. The Company has been duly incorporated and is existing and in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the General Disclosure Package; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing does not and would not, individually or in the aggregate, result in a material adverse effect on the condition (financial or otherwise), results of operations, business, properties or prospects of the Company and its subsidiaries taken as a whole ( Material Adverse Effect ).
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(vii) Subsidiaries. Each significant subsidiary of the Company (as such term is defined in Rule 1-02 of Regulation S-X) (each a subsidiary and, collectively, the subsidiaries) has been duly incorporated or formed and is existing and in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other, as applicable) to own its properties and conduct its business as described in the General Disclosure Package; and each subsidiary of the Company is duly qualified to do business as a foreign entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, in each case except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; all of the issued and outstanding equity interests of each subsidiary of the Company have been duly authorized and validly issued and, with respect to the corporate subsidiary of the Company, are fully paid and nonassessable; and the equity interests of each subsidiary owned by the Company, directly or through subsidiaries, are owned free from liens, encumbrances and defects, except where the existence of such liens, encumbrances or defects would not have a Material Adverse Effect and except for such liens or encumbrances arising under the Debt Financing Transactions. For the avoidance of doubt, Decker Coal Company shall not be considered a subsidiary of the Company for purposes of this Agreement.
(viii) Offered Securities . The Offered Securities and all other outstanding shares of capital stock of the Company have been duly authorized; the authorized equity capitalization of the Company is as set forth in the General Disclosure Package; all outstanding shares of capital stock of the Company are, and, when the Offered Securities have been delivered and paid for in accordance with this Agreement on each Closing Date, such Offered Securities will have been, validly issued, fully paid and nonassessable, will conform in all material respects to the description of such Offered Securities contained in the General Disclosure Package and the Final Prospectus; the stockholders of the Company have no preemptive rights with respect to the Securities and, except as contemplated by the LLC Agreement, after the Structuring Transactions the stockholders of the Company will have no preemptive rights or other similar rights with respect to the Securities; and none of the outstanding shares of capital stock of the Company have been issued in violation of any preemptive or similar rights of any security holder.
(ix) No Finders Fee. There are no contracts, agreements or understandings between the Company, CPE LLC and its affiliates and any person that would give rise to a valid claim against the Company or CPE LLC or any Underwriter for a brokerage commission, finders fee or other like payment in connection with this offering.
(x) Registration Rights. Except as disclosed in the General Disclosure Package, there are no contracts, agreements or understandings between the Company, CPE LLC or Rio Tinto America Inc. and its affiliates and any person granting such person the right to require the Company, CPE LLC or Rio Tinto America Inc. and its affiliates to file a registration statement under the Act with respect to any equity securities of the Company or CPE LLC owned or to be owned by such person or to require the Company, CPE LLC or Rio Tinto America Inc. and its affiliates to include such equity securities in the securities registered pursuant to a Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company, CPE LLC under the Act (collectively, registration rights), and any person to whom the Company, CPE LLC or Rio Tinto America Inc. and its affiliates has granted registration rights has agreed not to exercise such rights until after the expiration of the Lock-Up Period referred to in Section 5(j) hereof.
(xi) Listing. The Offered Securities have been approved for listing on The New York Stock Exchange, subject to notice of issuance.
(xii) Absence of Further Requirements. No consent, approval, authorization, or order of, or filing or registration with, any person (including any governmental agency or body or any court) is required to be obtained or made by the Company prior to the date hereof for the consummation of the transactions contemplated by this Agreement and the Structuring Transactions in connection with the issuance, offering and sale of the Offered Securities, except (x) such as have been obtained, or
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made or that will have been obtained, or made, prior to the Closing Date, (y) for those as to which the failure to obtain or make would not, individually or in the aggregate, have an adverse effect on the ability of the Company to execute, deliver and perform the transactions contemplated by this Agreement and the Structuring Transactions and (z) may be required under state securities laws.
(xiii) Title to Property . Except as disclosed in the General Disclosure Package and except for such liens or encumbrances arising in connection with the Debt Financing Transactions or that are considered Permitted Liens (as defined in the form of revolving credit facility filed as Exhibit 10.41 to the Registration Statement), (i) the Company, or one of its subsidiaries, has all the right, title and interest in leases or subleases under which such Company or subsidiary is the lessee (including without limitation, material coal leases) or good and valid title to the real properties and the facilities, buildings, structures, improvements, fixtures and tangible personal properties located thereon, that are necessary for the operation of CPE LLCs business as conducted as of the date hereof as described in the General Disclosure Package, in each case free from liens, charges, encumbrances and defects that would, individually or in the aggregate, have a Material Adverse Effect and, except as disclosed in the General Disclosure Package, the Company and its subsidiaries hold any leased real or personal property under valid and enforceable leases, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors rights and to general equity principles, with no terms or provisions that would, individually or in the aggregate, have a Material Adverse Effect.
(xiv) Absence of Defaults and Conflicts Resulting from Transaction. The execution, delivery and performance of this Agreement, the Transaction Documents and the issuance and sale of the Offered Securities in the manner and pursuant to the terms as herein and therein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default or, except as disclosed in the General Disclosure Package, a Debt Repayment Triggering Event (as defined below) under, or result in the imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of its subsidiaries, (ii) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (iii) any agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the properties of the Company or any of its subsidiaries is subject, except with respect to (ii) and (iii) above only for such breaches, violations or defaults or such liens, charges or encumbrances which are Permitted Liens or would not, individually or in the aggregate, have a Material Adverse Effect; a Debt Repayment Triggering Event means any event or condition that gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture, or other evidence of indebtedness (or any person acting on such holders behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.
(xv) Absence of Existing Defaults and Conflicts. Subject to compliance with various notice requirements and filings required to be made following the date hereof for the various permits, licenses and other governmental approvals, which the Company will use its best efforts to cause to be performed in the ordinary course, neither the Company nor any of its subsidiaries is (i) in violation of its respective charter, by-laws, limited liability agreement or certificate of formation, as applicable, or (ii) in default (or with the giving of notice or lapse of time would be in default) under any existing obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument to which any of them is a party or by which any of them is bound or to which any of the properties of any of them is subject, except in the case of (ii) for such defaults that would not, individually or in the aggregate, result in a Material Adverse Effect.
(xvi) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company and CPE LLC.
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(xvii) Possession of Licenses and Permits. The Company and its subsidiaries possess, and are in compliance with the terms of, all adequate certificates, authorizations, franchises, licenses and permits including, without limitation, any permits or approvals required by the United States Office of Surface Mining Reclamation and Enforcement and corresponding state agencies ( Licenses ) as are necessary or material to the conduct of the business now conducted or proposed in the General Disclosure Package to be conducted by them, except such possession and compliance that is not required prior to the Closing Date and that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and have not received any written notice of proceedings relating to the revocation or modification of any Licenses that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(xviii) Absence of Labor Dispute. No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company or CPE LLC, is imminent that would reasonably be expected to have a Material Adverse Effect.
(xix) Possession of Technology Rights. The Company and its subsidiaries own, have the right to use, possess or can acquire any know-how, patents, copyrights or other intellectual property rights in technology (collectively, Technology Rights ) necessary to the conduct of the business as currently conducted, except such failure as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, and the Company and its subsidiaries have not received any written notice of infringement of or conflict with asserted rights of others with respect to any Technology Rights that would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(xx) Environmental Laws. Except as disclosed in the General Disclosure Package, (a)(i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or non-U.S. statute, law, rule, regulation, ordinance, code, other requirement or rule of law (including common law), or decision or order of any domestic or foreign governmental agency, governmental body or court, relating to pollution, to the use, handling, transportation, treatment, storage, discharge, disposal or release of Hazardous Substances, to the protection or restoration of the environment or natural resources (including biota), to health and safety as such relates to exposure to Hazardous Substances, and to natural resource damages (collectively, Environmental Laws ), (ii) other than in the ordinary course of the business of the Company and its subsidiaries as currently conducted, neither the Company nor any of its subsidiaries is conducting or funding any investigation, remediation, remedial action or monitoring of actual or suspected Hazardous Substances in the environment, on real property owned or leased by the Company or any of its subsidiaries, (iii) neither the Company nor any of its subsidiaries is liable or allegedly liable for any release or threatened release of Hazardous Substances, including at or from any real property owned or leased by the Company or any of its subsidiaries or from any off-site treatment, storage or disposal site, (iv) neither the Company nor any of its subsidiaries has received written notice of any material claim by any governmental agency or governmental body or person relating to Environmental Laws or Hazardous Substances, and (v) subject to the exceptions noted in Section 2(xv) of this Agreement, the Company and its subsidiaries have received and are in compliance in all material respects with all, and have no liability under any, permits, licenses, authorizations, identification numbers or other approvals required under applicable Environmental Laws to conduct their respective businesses, except in each case covered by clauses (i) (v) such as would not individually or in the aggregate have a Material Adverse Effect; and (b) with respect to the business and operations of the Company and its subsidiaries, there are no facts or circumstances that would reasonably be expected to result in a violation by the Company or any of its subsidiaries of, liability under, or claim pursuant to any Environmental Law that would have a Material Adverse Effect. For purposes of this subsection Hazardous Substances means (A) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls, toxic mold, coal ash, coal combustion byproducts or waste, boiler slag, scrubber residue or flue desulphurization residue and (B) any other chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant, contaminant or waste under Environmental Laws.
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(xxi) Accurate Disclosure. The statements in the General Disclosure Package and the Final Prospectus under the headings (i) Material U.S. Federal Income Tax Considerations and Description of Capital Stock, insofar as such statement summarize legal matters or documents discussed herein, are accurate and fair summaries of such legal matters and documents and present the information required to be shown, and (ii) Structuring Transactions and Related Agreements and Environmental and Other Regulatory Matters, insofar as such statements relate to the legal matters, agreements and documents described therein, when considered as part of the overall General Disclosure Package, do not include any untrue statement of a material fact or omit to state any material fact necessary in order to make such statements, in the light of the circumstances under which they were made, not misleading.
(xxii) Absence of Manipulation . Neither the Company, CPE LLC nor Rio Tinto America Inc. has taken, directly or indirectly, any action that is designed to or that has constituted or that would reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company, CPE LLC or Rio Tinto America Inc. to facilitate the sale or resale of the Offered Securities.
(xxiii) Statistical and Market-Related Data. Any third-party statistical and third-party market-related data included in a Registration Statement, a Statutory Prospectus or the General Disclosure Package are based on or derived from governmental sources or other sources that the Company believes to be generally reliable, provided that the Company makes no representation or warranty regarding the underlying data used by such third parties in preparing published materials used by such sources.
(xxiv) Internal Controls and Compliance with the Sarbanes-Oxley Act. Except as set forth in the General Disclosure Package, the Company, its subsidiaries and the Companys Board of Directors (the Board ) are in compliance with Sarbanes-Oxley and all applicable Exchange Rules to the extent applicable to it. As of the First Closing Date, the Company will maintain a system of internal controls, including, but not limited to, disclosure controls and procedures, internal controls over accounting matters and financial reporting, an internal audit function and legal and regulatory compliance controls (collectively, Internal Controls ) that are designed to comply with the Securities Laws and are sufficient to provide reasonable assurances that (i) transactions are executed in accordance with managements general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted accounting principles when such financial statements are required to be due and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with managements general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Internal Controls are, or upon consummation of the offering of the Offered Securities will be, overseen by the Audit Committee (the Audit Committee ) of the Board in accordance with Exchange Rules. Except as disclosed in the General Disclosure Package, the Company has not publicly disclosed or reported to the Audit Committee or the Board, and within the next 135 days the Company does not reasonably expect to publicly disclose or report to the Audit Committee or the Board, a significant deficiency, material weakness, change in Internal Controls or fraud involving management or other employees who have a significant role in Internal Controls (each, an Internal Control Event ), any violation of, or failure to comply with, the Securities Laws, or any matter which, if determined adversely, would have a Material Adverse Effect.
(xxv) Absence of Accounting Issues. Except as set forth in the General Disclosure Package, the Audit Committee is not reviewing or investigating, and the Companys independent auditors have not recommended that the Audit Committee review or investigate, (i) adding to, deleting, changing the application of, or changing the Companys disclosure with respect to, any of the Companys material accounting policies; (ii) any matter which could result in a restatement of the Companys financial statements for any annual or interim period during the current or prior three fiscal years; or (iii) any Internal Control Event.
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(xxvi) Litigation . Except as disclosed in the General Disclosure Package and other than with respect to any permit acquisition, amendment or transfer, there are no pending actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) against or affecting the Company, any of its subsidiaries or any of their respective properties that would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, or would materially and adversely affect the ability of the Company or CPE LLC to perform its obligations under this Agreement; and no such actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) are to the Companys or CPE LLCs knowledge threatened.
(xxvii) Financial Statements. The financial statements, together with the related notes, included in each Registration Statement and the General Disclosure Package present fairly in all material respects the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and such financial statements, together with the related notes, have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis (except as is disclosed in such financial statements and the related notes) and the schedules included in each Registration Statement present fairly in all material respects the information required to be stated therein; and the assumptions used in preparing the pro forma financial statements included in each Registration Statement and the General Disclosure Package provide a reasonable basis for presenting the significant effects directly attributable to the transactions or events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma columns therein reflect in all material respects the disclosed application of those adjustments to the corresponding historical financial statement amounts.
(xxviii) No Material Adverse Change in Business. Except as disclosed in the General Disclosure Package, since the end of the period covered by the latest audited or unaudited financial statements included in the General Disclosure Package, (i) there has been no change, nor any development or event involving a prospective change, in the condition (financial or otherwise), results of operations, business, properties or prospects of the Company and its subsidiaries, taken as a whole, that is material and adverse, (ii) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock and (iii) there has been no material adverse change in the capital stock, short-term indebtedness, long-term indebtedness, net current assets or net assets of the Company and its subsidiaries.
(xxix) Investment Company Act. Neither the Company nor CPE LLC is and, after giving effect to the offering and sale of the Offered Securities and the Debt Financing Transactions and the application of the proceeds thereof as described in the General Disclosure Package, will be an investment company as defined in the Investment Company Act of 1940, as amended (the Investment Company Act ) registered or required to be registered under the Investment Company Act.
(xxx) Ratings. No nationally recognized statistical rating organization as such term is defined for purposes of Rule 436(g)(2) has provided any current indication in writing to the Company that it is considering any of the actions described in Section 7(c)(ii) hereof.
(xxxi) Taxes. The Company and its subsidiaries have filed all federal, state, local and non-U.S. tax returns that are required to be filed on or before the due date or have requested extensions thereof (except in any case in which the failure to so file would not reasonably be expected to have a Material Adverse Effect or which are required to be filed or paid by Rio Tinto Energy America Inc., a Delaware corporation, and its affiliates); and the Company and its subsidiaries have paid all taxes (including any assessments, fines or penalties) required to be paid by them, except for any such taxes, assessments, fines or penalties currently being contested in good faith or as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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(xxxii) Absence of Unlawful Influence . Neither the Company nor CPE LLC offered or sold, or caused the Underwriters to offer or sell, any Offered Securities to any person pursuant to the Directed Share Program with the specific intent to unlawfully influence (i) a customer or supplier of the Company or CPE LLC to alter the customers or suppliers level or type of business with the Company or (ii) a trade journalist or publication to write or publish favorable information about the Company, CPE LLC or their respective products.
(xxxiii) Insurance. (i) The Company and its subsidiaries are insured by insurers against such losses and risks and in such amounts as the Company reasonably considers adequate for the business in which they are engaged; (ii) all material policies of insurance and fidelity or surety bonds insuring the Company or any of its subsidiaries or their respective businesses, assets, employees, officers and directors which the Company believes are appropriate and are in full force and effect; and (iii) to the Companys knowledge, the Company and its subsidiaries are in compliance with the terms of such policies and instruments in all material respects, except (x) with respect to insurance for periods prior to the offering and (y) in the case of each of (i), (ii) and (iii), where such failure would not reasonably be expected to have a Material Adverse Effect.
(xxxiv) Transaction Documents. Each of the Transaction Documents to be entered into by the Company and CPE LLC, as applicable, in connection with the Structuring Transactions has been duly authorized and, when duly executed and delivered, will constitute the valid and legally binding obligation of Company and CPE LLC, as applicable, enforceable in accordance with its terms, (i) subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors rights and to general equity principles and (ii) with respect to provisions regarding indemnity, contribution and exculpation, except to the extent such provisions may not be enforceable due to applicable law or principles of public policy.
(xxxv) Other Laws. Each of the Company, its subsidiaries and any of their respective officers, directors, supervisors, managers, agents, or employees, has not violated, its participation in the offering will not violate, and it has instituted and maintains policies and procedures designed to ensure continued compliance each of the following laws: (a) anti-bribery laws, including but not limited to, any applicable law, rule, or regulation of any locality, including but not limited to any law, rule, or regulation promulgated to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt Practices Act of 1977 or any other law, rule or regulation of similar purpose and scope, (b) anti-money laundering laws, including but not limited to, applicable federal, state, international, foreign or other laws, regulations or government guidance regarding anti-money laundering, including, without limitation, Title 18 U.S. Code section 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international anti-money laundering principals or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur, all as amended, and any Executive order, directive, or regulation pursuant to the authority of any of the foregoing, or any orders or licenses issued thereunder or (c) laws and regulations imposing U.S. economic sanctions measures, including, but not limited to, the International Emergency Economic Powers Act, the Trading with the Enemy Act, the United Nations Participation Act, and the Syria Accountability and Lebanese Sovereignty Act, all as amended, and any Executive Order, directive, or regulation pursuant to the authority of any of the foregoing, including the regulations of the United States Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as amended, or any orders or licenses issued thereunder.
3. Purchase, Sale and Delivery of Offered Securities . On the basis of the representations, warranties and agreements and subject to the terms and conditions set forth herein, the Company agrees to sell to the several Underwriters, and each Underwriter agrees, severally and not jointly, to purchase from the Company at a purchase price of $14.175 per share, the Firm Securities set forth opposite the names of the Underwriters in Schedule A hereto.
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The Company will deliver the Firm Securities to or as instructed by the Representatives for the accounts of the several Underwriters in a form reasonably acceptable to the Representatives, against payment of the purchase price by the Underwriters in Federal (same day) funds by wire transfer to an account at a bank acceptable to the Representatives drawn to the order of the Company in the case of 30,600,000 shares of Firm Securities, at the office of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York, 10004, at 10:00 A.M., New York time, on November 25, 2009, or at such other time not later than seven full business days thereafter as the Representatives and the Company determine, such time being herein referred to as the First Closing Date . For purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the First Closing Date (if later than the otherwise applicable settlement date) shall be the settlement date for payment of funds and delivery of securities for all the Offered Securities sold pursuant to the offering. The Firm Securities so to be delivered or evidence of their issuance will be made available upon request for checking at the above office of Fried, Frank, Harris, Shriver & Jacobson LLP at least 24 hours prior to the First Closing Date.
In addition, upon written notice from the Representatives given to the Company from time to time not more than 30 days subsequent to the date of the Final Prospectus, the Underwriters may purchase all or less than all of the Optional Securities at the purchase price per Security to be paid for the Firm Securities. The Company agrees to sell to the Underwriters the number of shares of Optional Securities specified in such notice and the Underwriters agree, severally and not jointly, to purchase such Optional Securities. Such Optional Securities shall be purchased for the account of each Underwriter in the same proportion as the number of Firm Securities set forth opposite such Underwriters name bears to the total number of Firm Securities (subject to adjustment by the Representatives to eliminate fractions) and may be purchased by the Underwriters only for the purpose of covering over-allotments, if any, made in connection with the sale of the Firm Securities. No Optional Securities shall be sold or delivered unless (i) the Firm Securities previously have been, or simultaneously are, sold and delivered, and (ii) the Units (as defined in the Acquisition Agreement) have been, or simultaneously are, sold and delivered pursuant to the terms of the Acquisition Agreement. The right to purchase the Optional Securities or any portion thereof may be exercised from time to time and to the extent not previously exercised may be surrendered and terminated at any time upon notice by the Representatives to the Company.
Each time for the delivery of and payment for the Optional Securities, being herein referred to as an Optional Closing Date , which may be the First Closing Date (the First Closing Date and each Optional Closing Date, if any, being sometimes referred to as a Closing Date ), shall be determined by the Representatives but shall be not later than five full business days after written notice of election to purchase Optional Securities is given. The Company will deliver the Optional Securities being purchased on each Optional Closing Date to or as instructed by the Representatives for the accounts of the several Underwriters, in a form reasonably acceptable to the Representatives against payment of the purchase price therefore in Federal (same day) funds by wire transfer to an account at a bank acceptable to the Representatives drawn to the order of the Company, at the above office of Fried, Frank, Harris, Shriver & Jacobson LLP. The certificates for the Optional Securities being purchased on each Optional Closing Date or evidence of their issuance will be made available for checking at the above office of Fried, Frank, Harris, Shriver & Jacobson LLP at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters . It is understood that the several Underwriters propose to offer the Offered Securities for sale to the public as set forth in the Final Prospectus.
5. Certain Agreements of the Company and CPE LLC . The Company and CPE LLC agree with the several Underwriters that:
(a) Additional Filings. Unless filed pursuant to Rule 462(c) as part of the Additional Registration Statement in accordance with the next sentence, the Company will file the Final Prospectus, in a form approved by the Representatives, with the Commission pursuant to and in accordance with subparagraph (1) (or, if applicable and if consented to by the Representatives, subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the second business day following the execution and delivery of this Agreement or (B) the fifteenth business day after the Effective Date of the Initial Registration Statement. The Company will advise the Representatives promptly of
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any such filing pursuant to Rule 424(b) and provide satisfactory evidence to the Representatives of such timely filing. If an Additional Registration Statement is necessary to register a portion of the Offered Securities under the Act but the Effective Time thereof has not occurred as of the execution and delivery of this Agreement, the Company will use its reasonable efforts to file the additional registration statement or, if filed, will file a post-effective amendment thereto with the Commission pursuant to and in accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on the date of this Agreement or, if earlier, on or prior to the time the Final Prospectus is finalized and distributed to any Underwriter, or will make such filing at such later date as shall have been consented to by the Representatives, which consent shall not be unreasonably withheld or delayed.
(b) Filing of Amendments: Response to Commission Requests. The Company will promptly advise the Representatives of any proposal to amend or supplement at any time the Initial Registration Statement, any Additional Registration Statement or any Statutory Prospectus and will not effect such amendment or supplementation without the Representatives consent, which consent shall not be unreasonably withheld or delayed; and the Company will also advise the Representatives promptly of (i) the effectiveness of any Additional Registration Statement (if its Effective Time is subsequent to the execution and delivery of this Agreement), (ii) any amendment or supplementation of a Registration Statement or any Statutory Prospectus, (iii) any request by the Commission or its staff for any amendment to any Registration Statement, for any supplement to any Statutory Prospectus or for any additional information, (iv) the institution by the Commission of any stop order proceedings in respect of a Registration Statement or the threatening of any proceeding for that purpose, and (v) the receipt by the Company of any notification with respect to the suspension of the qualification of the Offered Securities in any jurisdiction or the institution or threatening of any proceedings for such purpose. The Company will use its commercially reasonable efforts to prevent the issuance of any such stop order or the suspension of any such qualification and, if issued, to obtain as soon as possible the withdrawal thereof.
(c) Continued Compliance with Securities Laws. If, at any time when a prospectus relating to the Offered Securities is (or but for the exemption in Rule 172 would be) required to be delivered under the Act by any Underwriter or dealer within 365 days of the date of this Agreement, any event occurs as a result of which the Final Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Registration Statement or supplement the Final Prospectus to comply with the Act, the Company will promptly notify the Representatives of such event and will, as promptly as commercially practicable under the circumstances, prepare and file with the Commission and furnish, at its own expense (and after such 365-day period, at the expense of the Underwriters), to the Underwriters and the dealers and any other dealers upon request of the Representatives, an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. Neither the Representatives consent to, nor the Underwriters delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 7 hereof.
(d) Rule 158. As soon as practicable, but not later than the Availability Date (as defined below), the Company will make generally available to its security holders an earnings statement covering a period of at least 12 months beginning after the Effective Date of the Initial Registration Statement (or, if later, the Effective Date of the Additional Registration Statement) which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. For the purpose of the preceding sentence, Availability Date means the 45th day after the end of the fourth fiscal quarter following the fiscal quarter that includes such Effective Date on which the Company is required to file its Form 10-Q for such fiscal quarter except that, if such fourth fiscal quarter is the last quarter of the Companys fiscal year, Availability Date means the 90th day after the end of such fourth fiscal quarter on which the Company is required to file its Form 10-K.
(e) Furnishing of Prospectuses. The Company will furnish to the Representatives upon request copies of each Registration Statement, each related Statutory Prospectus, and, so long as a prospectus
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relating to the Offered Securities is required to be delivered under the Act in connection with sales by any Underwriter or dealer, the Final Prospectus and all amendments and supplements to such documents, in each case in such quantities as the Representatives reasonably request. The Final Prospectus shall be so furnished on or prior to 5:00 P.M., New York time, on the second business day following the execution and delivery of this Agreement or as otherwise agreed to by the parties. All other such documents shall be so furnished as soon as available. The Company and CPE LLC will jointly and severally pay the expenses of printing and distributing to the Underwriters all such documents.
(f) Blue Sky Qualifications. The Company will use its reasonable efforts to seek to arrange for the qualification of the Offered Securities for sale under the laws of such jurisdictions as the Representatives may reasonably designate and will continue such qualifications in effect so long as required for the distribution of the Offered Securities by the Underwriters as contemplated hereby; provided, however , that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.
(g) Reporting Requirements. During the period of five years hereafter, the Company will furnish to the Representatives and, upon request, to each of the other Underwriters, as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Company will furnish to the Representatives (i) as soon as available, a copy of each report and any definitive proxy statement of the Company filed with the Commission under the Exchange Act or mailed to stockholders, and (ii) from time to time, such other information concerning the Company as the Representatives may reasonably request. However, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act and is timely filing reports with the Commission on its Electronic Data Gathering, Analysis and Retrieval system ( EDGAR ), it is not required to furnish such reports or statements to the Underwriters.
(h) Payment of Expenses. The Company and CPE LLC will jointly and severally pay all expenses incident to the performance of its obligations under this Agreement, including but not limited to any filing fees and other expenses (including fees and disbursements of counsel to the Underwriters) incurred in connection with qualification of the Offered Securities for sale under the laws of such jurisdictions as the Representatives reasonably designate and the preparation and printing of memoranda relating thereto, costs and expenses related to the review by the Financial Industry Regulatory Authority of the Offered Securities (including filing fees and the fees and expenses of counsel for the Underwriters relating to such review), costs and expenses relating to investor presentations or any road show in connection with the offering and sale of the Offered Securities including, without limitation, any travel expenses of the Companys or CPE LLCs officers and employees and any other expenses of the Company separately agreed between the Company and the Representatives, fees and expenses incident to listing the Offered Securities on the New York Stock Exchange fees and expenses in connection with the registration of the Offered Securities under the Exchange Act and expenses incurred in distributing preliminary prospectuses and the Final Prospectus (including any amendments and supplements thereto) to the Underwriters and for expenses incurred for preparing, printing and distributing any Issuer Free Writing Prospectuses to investors or prospective investors.
(i) Use of Proceeds. The Company intends to use the net proceeds received in connection with this offering and received in connection with the Debt Financing Transactions in the manner described in the Use of Proceeds section of the General Disclosure Package and the Company does not intend to use any of the proceeds from the sale of the Offered Securities hereunder to repay any outstanding debt owed to any affiliate of any Underwriter.
(j) Absence of Manipulation. The Company and Rio Tinto America Inc. and its affiliates will not take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, stabilization or manipulation of the price of any
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securities of the Company or Rio Tinto America Inc. to facilitate the sale or resale of the Offered Securities.
(k) Restriction on Sale of Securities. Except for the Structuring Transactions, for the period specified below (the Lock-Up Period ), the Company and CPE LLC will not, directly or indirectly, take any of the following actions with respect to its Securities or any securities convertible into or exchangeable or exercisable for any of its Securities ( Lock-Up Securities ): (i) offer, sell, issue, contract to sell, pledge or otherwise dispose of Lock-Up Securities, (ii) offer, sell, issue, contract to sell, contract to purchase or grant any option, right or warrant to purchase Lock-Up Securities, (iii) enter into any swap, hedge or any other agreement that transfers, in whole or in part, the economic consequences of ownership of Lock-Up Securities, (iv) establish or increase a put equivalent position or liquidate or decrease a call equivalent position in Lock-Up Securities within the meaning of Section 16 of the Exchange Act or (v) file with the Commission a registration statement under the Act relating to Lock-Up Securities (other than a registration statement on Form S-1 registering the resale of Securities by members of CPE, LLC, which resale shall occur more than 180 days after the date hereof or such earlier date that the Representatives consent to in writing), or publicly disclose the intention to take any such action, without the prior written consent of the Representatives, except (A) issuances of Securities pursuant to the conversion or exchange of convertible or exchangeable securities or the exercise of warrants or options, in each case outstanding on the date hereof, (B) grants, offers, sales, or issuances of Securities (including, without limitation, grants of restricted Securities) or options to acquire Securities pursuant to an employee benefit plan in effect on the date hereof, (C) issuances of Securities pursuant to the exercise of such options, (D) the filing of any registration statement on Form S-8 relating to securities described in clauses (A), (B) or (C) above or any other securities eligible to be covered by a Form S-8, and (E) offers, sales and issuances of up to 15% of the Securities outstanding at the time of the issuance as consideration or partial consideration for acquisitions of businesses or in connection with the formation of joint ventures; provided that such Lock-Up Securities so issued as contemplated in Section 7(k)(v)(E) are subject to the terms of an agreement having substantially the same terms as the lock-up letters described in Section 7(g) of this Agreement. The initial Lock-Up Period will commence on the date hereof and continue for 180 days after the date hereof or such earlier date that the Representatives consent to in writing; provided, however, that if (1) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or material news or a material event relating to the Company occurs or (2) prior to the expiration of the initial Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will be extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the occurrence of the material news or material event, as applicable, unless the Representatives waive, in writing, such extension. The Company will provide the Representatives with notice of any announcement described in clause (2) of the preceding sentence that gives rise to an extension of the Lock-Up Period.
(l) Transfer Restrictions . In connection with the Directed Share Program, the Company will take all reasonable steps to ensure that the Directed Shares will be restricted to the extent required by the Financial Industry Regulatory Authority, Inc. (the FINRA ) or the FINRA rules from sale, transfer, assignment, pledge or hypothecation for a period of three months following the date of the effectiveness of the Registration Statement. The Designated Underwriter will notify the Company as to which Participants will need to be so restricted. At the request of the Designated Underwriter, the Company will direct the transfer agent to place stop transfer restrictions upon such securities for such period of time, which shall be deemed to be all reasonable steps under the circumstances.
(m) Payment of Expenses Related to Directed Share Program . The Company and CPE LLC will jointly and severally pay all reasonable out-of-pocket fees and disbursements of counsel (including non-U.S. counsel if approved by the Company) incurred by the Underwriters in connection with the Directed Share Program and stamp duties, similar taxes or duties or other taxes, if any, incurred by the Underwriters in connection with the Directed Share Program up to $2,500.
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6. Free Writing Prospectuses . The Company represents and agrees that, unless it obtains the prior consent of the Representatives, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Offered Securities that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a free writing prospectus, as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by the Company and the Representatives is hereinafter referred to as a Permitted Free Writing Prospectus . The Company represents that it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an issuer free writing prospectus, as defined in Rule 433, and has complied and will comply with the requirements of Rules 164 and 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping. The Company represents that is has satisfied and agrees that it will satisfy the conditions in Rule 433 to avoid a requirement to file with the Commission any electronic road show.
7. Conditions of the Obligations of the Underwriters . The obligations of the several Underwriters to purchase and pay for the Firm Securities on the First Closing Date and the Optional Securities to be purchased on each Optional Closing Date will be subject to the accuracy of the representations and warranties of the Company and CPE LLC herein (as though made on such Closing Date), to the accuracy of the statements of Company and CPE LLC officers made pursuant to the provisions hereof, to the performance by the Company and CPE LLC of their respective obligations hereunder and to the following additional conditions precedent:
(a) Accountants Comfort Letter. The Representatives shall have received letters, dated, respectively, the date hereof and each Closing Date, of PricewaterhouseCoopers LLP in the form and substance reasonably acceptable to the Representatives.
(b) Effectiveness of Registration Statement. If the Effective Time of the Additional Registration Statement (if any) is not prior to the execution and delivery of this Agreement, such Effective Time shall have occurred not later than 10:00 P.M., New York time, on the date of this Agreement or, if earlier, the time the Final Prospectus is finalized and distributed to any Underwriter, or shall have occurred at such later time as shall have been consented to by the Representatives. The Final Prospectus shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) hereof. Prior to such Closing Date, no stop order suspending the effectiveness of a Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Company, CPE LLC or the Representatives, shall be contemplated by the Commission.
(c) No Material Adverse Change. Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or otherwise), results of operations, business, properties or prospects of the Company and its subsidiaries taken as a whole which, in the judgment of the Representatives, is material and adverse and makes it impractical or inadvisable to market the Offered Securities; (ii) any downgrading in the rating of any debt securities of the Company by any nationally recognized statistical rating organization (as defined for purposes of Rule 436(g)), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls the effect of which is such as to make it, in the judgment of the Representatives, impractical to market or to enforce contracts for the sale of the Offered Securities, whether in the primary market or in respect of dealings in the secondary market; (iv) any suspension or material limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum or maximum prices for trading on such exchange; (v) or any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (vi) any banking moratorium declared by any U.S. federal or New York authorities; (vii) any major disruption of settlements of securities, payment or clearance services in the United States or (viii) any attack on,
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outbreak or escalation of hostilities or act of terrorism involving the United States, any declaration of war by Congress or any other national or international calamity or emergency if, in the judgment of the Representatives, the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency is such as to make it impractical or inadvisable to market the Offered Securities or to enforce contracts for the sale of the Offered Securities.
(d) Opinion of Counsel and Internal Counsel for the Company. The Representatives shall have received (i) an opinion, dated such Closing Date, of Fried, Frank, Harris, Shriver & Jacobson LLP, special counsel for the Company, substantially in the form of Schedule C hereto, and (ii) an opinion, dated such Closing Date, from Amy Stefonick, internal counsel for the Company, in form and substance reasonably satisfactory to the Representatives.
(e) Opinion of Internal Counsel for Rio Tinto Energy America, Inc. The Representatives shall have received (i) an opinion, dated such Closing Date, from Kevin Baker, internal counsel for Rio Tinto Energy America Inc., in form and substance reasonably satisfactory to the Representatives.
(f) Opinion of Counsel for Underwriters. The Representatives shall have received from Davis Polk & Wardwell LLP, counsel for the Underwriters, such opinion or opinions, dated such Closing Date, with respect to such matters as the Representatives may require, and the Company shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters.
(g) Officers Certificate. The Representatives shall have received a certificate, dated such Closing Date, of an executive officer of the Company and CPE LLC and a principal financial or accounting officer of the Company and CPE LLC in which such officers shall state, in their capacity as an officer of the Company and not in their individual capacity, that: the representations and warranties of the Company and CPE LLC in this Agreement are true and correct; each of the Company and CPE LLC has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date; to the knowledge of such officer, no stop order suspending the effectiveness of any Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the best knowledge of such officer and after reasonable investigation, are threatened by the Commission; the Additional Registration Statement (if any) satisfying the requirements of subparagraphs (1) and (3) of Rule 462(b) was timely filed pursuant to Rule 462(b), including payment of the applicable filing fee in accordance with Rule 111(a) or (b) of Regulation S-T of the Commission; and, subsequent to the date of the most recent financial statements in the General Disclosure Package, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or otherwise), results of operations, business, properties or prospects of the Company and its subsidiaries taken as a whole except as set forth in the General Disclosure Package or as described in such certificate.
(h) Title to Property Certificate . The Representatives shall have received a certificate, dated such Closing Date, from Richard A. Turpin, Manager of Land Services of CPE LLC, substantially in the form of Schedule D hereto.
(i) Lock-Up Agreements. On or prior to the date hereof, the Representatives shall have received lock-up letters from Rio Tinto Energy America Inc., Kennecott Management Services Company and each of the executive officers and directors of the Company.
(j) Structuring Transactions . The Structuring Transactions intended to be completed as of such Closing Date or simultaneously with such Closing Date (as described in the General Disclosure Package) shall have been completed as of or will be completed simultaneously with such Closing Date.
(k) Debt Financing Transaction . The debt financing transaction intended to be completed as of such Closing Date or simultaneously with such Closing Date (as described in the General
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Disclosure Package) shall have been completed (or shall be completed simultaneously with the transactions contemplated by this Agreement) and the net proceeds to be received by CPE LLC and its affiliates in connection with the offering of Senior Notes as described in the General Disclosure Package shall have been received (or shall be received simultaneously with the receipt of the net proceeds payable hereunder) by CPE LLC or its applicable affiliate.
The Company and CPE LLC will furnish the Representatives with such conformed copies of such opinions, certificates, letters and documents as the Representatives reasonably request. The Representatives may in their sole discretion waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder, whether in respect of an Optional Closing Date or otherwise.
8. Indemnification and Contribution . (a) Indemnification of Underwriters. The Company and CPE LLC will jointly and severally indemnify and hold harmless each Underwriter, its partners, members, directors, officers, employees, agents, affiliates and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act (each an Indemnified Party ), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject, under the Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of any Registration Statement at any time, any Statutory Prospectus as of any time, the Final Prospectus or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission of a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and will reimburse each Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending against any loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Indemnified Party is a party thereto), whether threatened or commenced, and in connection with the enforcement of this provision with respect to any of the above as such expenses are incurred; provided, however, that the Company and CPE LLC will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company and CPE LLC by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in subsection (b) below.
The Company and CPE LLC agree to jointly and severally indemnify and hold harmless the Designated Underwriter and its affiliates and each person, if any, who controls the Designated Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act (the Designated Entities ), from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) (i) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the Company and CPE LLC for distribution to Participants in connection with the Directed Share Program or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) arising out of or based upon the failure of any Participant to pay for and accept delivery of Directed Shares that the Participant agreed to purchase; or (iii) arising out of, related to, or in connection with the Directed Share Program, other than losses, claims, damages or liabilities (or expenses relating thereto) that are finally judicially determined to have resulted from the willful misconduct or gross negligence of the Designated Entities.
(b) Indemnification of Company. Each Underwriter will severally and not jointly indemnify and hold harmless the Company and CPE LLC, their respective directors and each of its officers who signs a Registration Statement and each person, if any, who controls the Company or CPE LLC within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, (each, an Underwriter Indemnified Party ) against any losses, claims, damages or liabilities to which such Underwriter Indemnified Party may become subject, under the Act, the Exchange Act, or other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based
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upon any untrue statement or alleged untrue statement of any material fact contained in any part of any Registration Statement at any time, any Statutory Prospectus as of any time, the Final Prospectus or any Issuer Free Writing Prospectus or arise out of or are based upon the omission or the alleged omission of a material fact required to be stated therein or necessary in order to make the statements therein in the light of the circumstances under which they were made not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or CPE LLC by such Underwriter through the Representatives specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by such Underwriter Indemnified Party in connection with investigating or defending against any such loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Underwriter Indemnified Party is a party thereto), whether threatened or commenced, based upon any such untrue statement or omission, or any such alleged untrue statement or omission as such expenses are incurred, it being understood and agreed that the only such information furnished by any Underwriter consists of the following information in the Final Prospectus furnished on behalf of each Underwriter: the concession and reallowance figures appearing in the fourth paragraph under the caption Underwriting and the information contained in the seventh, eighteenth, nineteenth and twentieth paragraph under the caption Underwriting.
(c) Actions against Parties; Notification. Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding anything contained herein to the contrary, if indemnity may be sought pursuant to the last paragraph in Section 8(a) hereof in respect of such action or proceeding, then in addition to such separate firm for the indemnified parties, the indemnifying party shall be liable for the reasonable fees and expenses of not more than one separate firm (in addition to any local counsel) for the Designated Underwriter for the defense of any losses, claims, damages and liabilities arising out of the Directed Share Program, and all persons, if any, who control the Designated Underwriter within the meaning of either Section 15 of the Act of Section 20 of the Exchange Act. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party.
(d) Contribution. If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above although applicable in accordance with its terms, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and CPE LLC on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and CPE LLC on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted
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in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company and CPE LLC on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and CPE LLC bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and CPE LLC or the Underwriters and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. The Company, CPE LLC and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(d).
9. Default of Underwriters . If any Underwriter or Underwriters default in their obligations to purchase Offered Securities hereunder on either the First or any Optional Closing Date and the aggregate number of shares of Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total number of shares of Offered Securities that the Underwriters are obligated to purchase on such Closing Date, the Representatives may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Underwriters, but if no such arrangements are made by such Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters so default and the aggregate number of shares of Offered Securities with respect to which such default or defaults occur exceeds 10% of the total number of shares of Offered Securities that the Underwriters are obligated to purchase on such Closing Date and arrangements satisfactory to the Representatives and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 10 (provided that if such default occurs with respect to Optional Securities after the First Closing Date, this Agreement will not terminate as to the Firm Securities or any Optional Securities purchased prior to such termination). As used in this Agreement, the term Underwriter includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default.
10. Survival of Certain Representations and Obligations . The respective indemnities, agreements, representations, warranties and other statements of the Company, CPE LLC or their respective officers and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the Company, CPE LLC or any of their respective representatives, officers or directors or any controlling person, and, subject to all applicable statute of limitations, will survive delivery of and payment for the Offered Securities. If the purchase of the Offered Securities by the Underwriters is not consummated for any reason (a) other than any event specified in clause (iii), (iv), (vi), (vii) or (viii) of Section 7(c) of this Agreement or (b) because of the termination of this Agreement pursuant to Section 9 hereof, the Company and CPE LLC will jointly and severally reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities other than out-of-pocket expenses separately agreed between the Company and the Representatives
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that will not be reimbursable, and the respective obligations of the Company and the Underwriters pursuant to Section 8 hereof shall remain in effect. In addition, if any Offered Securities have been purchased hereunder, the representations and warranties in Section 2 and all obligations under Section 5 shall also remain in effect.
11. Notices . All communications hereunder will be in writing and, if sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed to the Representatives c/o Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: LCD-IBD, or, if sent to the Company or CPE LLC, will be mailed, delivered or telegraphed and confirmed to it at Cloud Peak Energy Inc., 505 S. Gillette Ave., Gillette, WY 82718, Attention: Michael Barrett, with a copy to (i) Stuart Gelfond c/o Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, NY 10004 and (ii) Michael Ryan c/o Cadwalader, Wickersham & Taft LLP, One World Financial Center, New York, NY 10281; provided, however, that any notice to an Underwriter pursuant to Section 8 will be mailed, delivered or telegraphed and confirmed to such Underwriter.
12. Successors . This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8, and no other person will have any right or obligation hereunder.
13. Representation . The Representatives will act for the several Underwriters in connection with the transactions contemplated by this Agreement, and any action under this Agreement taken by the Representatives will be binding upon all the Underwriters.
14. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.
15. Absence of Fiduciary Relationship. The Company and CPE LLC acknowledge and agree that:
(a) No Other Relationship. The Representatives have been retained solely to act as underwriters in connection with the sale of the Offered Securities and that no fiduciary, advisory or agency relationship between the Company and CPE LLC, on the one hand, and the Representatives, on the other, has been created in respect of any of the transactions contemplated by this Agreement or the Final Prospectus, irrespective of whether the Representatives have advised or are advising the Company or CPE LLC on other matters;
(b) Arms Length Negotiations. The price of the Offered Securities set forth in this Agreement was established by Company following discussions and arms-length negotiations with the Representatives and the Company is capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated by this Agreement;
(c) Absence of Obligation to Disclose. The Company and CPE LLC have been advised that the Representatives and their affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and CPE LLC and that the Representatives have no obligation to disclose such interests and transactions to the Company and CPE LLC by virtue of any fiduciary, advisory or agency relationship; and
(d) Waiver. The Company and CPE LLC waive, to the fullest extent permitted by law, any claims they may have against the Representatives for breach of fiduciary duty or alleged breach of fiduciary duty and agree that the Representatives shall have no liability (whether direct or indirect) to the Company or CPE LLC in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company or CPE LLC, including stockholders, employees or creditors of the Company and CPE LLC.
16. Applicable Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
20
The Company and CPE LLC hereby submit to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The Company and CPE LLC irrevocably and unconditionally waive any objection to the laying of venue of any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in Federal and state courts in the Borough of Manhattan in the City of New York and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit or proceeding in any such court has been brought in an inconvenient forum.
21
If the foregoing is in accordance with the Representatives understanding of our agreement, kindly sign and return to the Company and CPE LLC one of the counterparts hereof, whereupon it will become a binding agreement between the Company, CPE LLC and the several Underwriters in accordance with its terms.
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Very truly yours, |
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CLOUD PEAK ENERGY INC. |
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By |
/s/ Colin Marshall |
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Name: Colin Marshall |
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Title: President and CEO |
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CLOUD PEAK ENERGY RESOURCES LLC |
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By |
/s/ Michael Barrett |
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Name: Michael Barrett |
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Title: CFO |
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. |
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Acting on behalf of themselves and as the Representatives of the several Underwriters. |
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CREDIT SUISSE SECURITIES (USA) LLC |
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By: |
/s/ Davide Sala |
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Name: Davide Sala |
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Title: Director |
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MORGAN STANLEY & CO. INCORPORATED |
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By: |
/s/ Carl-Johan Nordberg |
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Name: Carl-Johan Nordberg |
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Title: Vice President |
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RBC CAPITAL MARKETS CORPORATION |
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By: |
/s/ Lance Tupper |
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Name: Lance Tupper |
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Title: Managing Director |
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22
SCHEDULE A
Underwriter |
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Number of
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Number of
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Credit Suisse Securities (USA) LLC |
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8,211,602 |
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1,231,740 |
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Morgan Stanley & Co. Incorporated |
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8,211,602 |
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1,231,740 |
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RBC Capital Markets Corporation |
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5,972,018 |
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895,803 |
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Calyon Securities (USA) Inc. |
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979,200 |
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146,880 |
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J.P. Morgan Securities Inc. |
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979,200 |
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146,880 |
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Scotia Capital (USA) Inc. |
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979,200 |
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146,880 |
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SG Americas Securities, LLC |
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979,200 |
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146,880 |
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Wells Fargo Securities, LLC |
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979,200 |
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146,880 |
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BMO Capital Markets Corp. |
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440,640 |
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66,096 |
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Citigroup Global Markets Inc. |
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440,640 |
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66,096 |
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ING Financial Markets LLC |
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440,640 |
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66,096 |
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Natixis Bleichroeder LLC |
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440,640 |
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66,096 |
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PNC Capital Markets LLC |
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440,640 |
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66,096 |
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Raymond James & Associates, Inc. |
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440,640 |
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66,096 |
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SunTrust Robinson Humphrey, Inc. |
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440,640 |
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66,096 |
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Capital One Southcoast, Inc. |
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224,298 |
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33,645 |
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|
|
|
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Total |
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30,600,000 |
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4,590,000 |
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23
SCHEDULE B
1. General Use Free Writing Prospectuses (included in the General Disclosure Package)
General Use Issuer Free Writing Prospectus includes each of the following documents:
1. None.
2. Other Information Included in the General Disclosure Package
The following information is also included in the General Disclosure Package:
1. The initial price to the public of the Offered Securities.
24
SCHEDULE C
FORM OF OPINION OF COMPANY COUNSEL
25
SCHEDULE D
FORM OF TITLE TO PROPERTY CERTIFICATE
26
Exhibit 10.1
EXECUTION COPY
MASTER SEPARATION AGREEMENT
by and among
RIO TINTO AMERICA INC.,
RIO TINTO ENERGY AMERICA INC.,
KENNECOTT MANAGEMENT SERVICES COMPANY,
CLOUD PEAK ENERGY INC. ,
CLOUD PEAK ENERGY RESOURCES LLC
and
the subsidiaries listed on the signature pages hereto
Dated November 19, 2009
TABLE OF CONTENTS
ARTICLE I DEFINITIONS |
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2 |
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1.1. |
Defined Terms |
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2 |
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1.2. |
Construction |
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15 |
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ARTICLE II STRUCTURING AND RELATED TRANSACTIONS |
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16 |
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2.1. |
Termination of Intercompany Agreements |
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16 |
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2.2. |
Continuance of Surety Bonds |
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17 |
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2.3. |
Continuance of Insurance |
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22 |
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2.4. |
Jacobs Ranch Matters |
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22 |
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2.5. |
Representations and Warranties of CPE |
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23 |
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2.6. |
DISCLAIMER OF REPRESENTATIONS AND WARRANTIES |
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24 |
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2.7. |
Delivery of Cloud Peak Reliance Letter |
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24 |
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ARTICLE III INTERCOMPANY TRANSACTIONS AS OF THE CLOSING DATE |
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24 |
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3.1. |
Time and Place of Closing |
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24 |
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3.2. |
Closing Transactions |
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25 |
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3.3. |
Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws |
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25 |
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3.4. |
Transfers of Assets and Assumption of Liabilities |
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25 |
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3.5. |
The Initial Public Offering, the Concurrent Offering and the Cloud Peak Financing |
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26 |
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3.6. |
Cancellation of RTA Share of CPE Common Stock |
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26 |
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3.7. |
Rescission |
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26 |
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3.8. |
Tax Matters |
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26 |
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3.9. |
Working Capital Adjustment |
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26 |
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ARTICLE IV DISCLOSURE OF INFORMATION |
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29 |
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4.1. |
Restrictions on Disclosure of Information |
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29 |
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4.2. |
Legally Required Disclosure of Information |
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30 |
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ARTICLE V MUTUAL RELEASES |
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31 |
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5.1. |
Release of Liability |
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31 |
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5.2. |
RTEA Obligations Not Affected |
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32 |
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5.3. |
No Cloud Peak Claims |
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32 |
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5.4. |
No RTEA Claims |
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33 |
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5.5. |
Subsidiary Releases and Other Actions |
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33 |
i
ARTICLE VI INDEMNIFICATION |
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33 |
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6.1. |
Indemnification by Cloud Peak |
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33 |
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6.2. |
Guaranty |
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35 |
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6.3. |
Indemnification by Rio Tinto |
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37 |
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6.4. |
Registration Statement and Other Related Indemnification and/or Contribution |
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38 |
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6.5. |
Claim Procedure |
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40 |
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6.6. |
Survival; Limitations; Insurance |
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43 |
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ARTICLE VII FINANCIAL AND OTHER INFORMATION |
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44 |
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7.1. |
Financial Information |
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44 |
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7.2. |
Corporate Reserves Data |
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45 |
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7.3. |
Other Financial Information |
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46 |
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7.4. |
Other Agreements |
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47 |
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7.5. |
Rio Tinto Public Filings |
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49 |
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7.6. |
Accounting Matters |
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50 |
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7.7. |
Agreement for Exchange of Information; Archives |
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51 |
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7.8. |
Ownership of Information |
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52 |
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7.9. |
Compensation for Providing Information |
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52 |
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7.10. |
Record Retention |
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52 |
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7.11. |
Accuracy of Information |
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53 |
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7.12. |
Other Agreements Providing for Exchange of Information |
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53 |
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7.13. |
Production of Witnesses; Records; Cooperation |
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54 |
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7.14. |
Preservation of Legal Privileges |
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54 |
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ARTICLE VIII ADDITIONAL COVENANTS |
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55 |
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8.1. |
Further Assurances |
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55 |
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8.2. |
Rio Tinto Group Non-Competition |
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56 |
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8.3. |
Non-Solicitation of Employees |
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57 |
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8.4. |
Payment of Expenses |
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57 |
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8.5. |
Provision of Additional Services |
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58 |
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8.6. |
Governmental Approvals |
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58 |
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8.7. |
Covenants Against Taking Certain Actions Affecting RTEA |
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58 |
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8.8. |
No Violations |
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59 |
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8.9. |
Receipt of Notices |
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60 |
ii
ARTICLE IX MISCELLANEOUS |
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60 |
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9.1. |
Corporate Power |
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60 |
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9.2. |
Assignment |
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60 |
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9.3. |
Public Announcements |
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61 |
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9.4. |
Survival of Covenants |
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61 |
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9.5. |
Notices |
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61 |
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9.6. |
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial |
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62 |
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9.7. |
Severability |
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63 |
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9.8. |
Amendment |
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63 |
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9.9. |
Counterparts and Signature |
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63 |
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9.10. |
Dispute Resolution |
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63 |
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9.11. |
No Third-Party Beneficiaries |
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66 |
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9.12. |
Waiver |
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67 |
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9.13. |
Entire Agreement |
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67 |
SCHEDULE A LIST OF SUBSIDIARIES
SCHEDULE B CLOUD PEAK DISCONTINUED BUSINESSES
SCHEDULE C CLOUD PEAK LIABILITIES
SCHEDULE D RTEA LIABILITIES
SCHEDULE 2.1 INTERCOMPANY AGREEMENTS
SCHEDULE 2.2 EXISTING SURETY ARRANGEMENTS
SCHEDULE 2.3 THREE CROWNS POLICIES
SCHEDULE 2.5 STATEMENTS RELATING EXCLUSIVELY TO RIO TINTO
SCHEDULE 5.1 PARTIES NOT RELEASED
SCHEDULE 6.4 STATEMENTS RELATING EXCLUSIVELY TO RIO TINTO plc
SCHEDULE 6.5 EXISTING THIRD PARTY CLAIMS
SCHEDULE 7.1 CORPORATE REPORTING DATA
SCHEDULE 7.2 CORPORATE RESERVE DATA
SCHEDULE 7.4(d) RIO TINTO PUBLIC RELEASES
SCHEDULE 8.4 POST-CLOSING EXPENSES PAYABLE BY RTEA
SCHEDULE 8.7 CONTRACTS AFFECTING RTEA/KMS
SCHEDULE 8.8 NO VIOLATIONS
EXHIBIT A Jacobs Ranch MIPA Exhibit
EXHIBIT B CPE Promissory Note
EXHIBIT C Map of Powder River Basin
EXHIBIT D Charter
EXHIBIT E Bylaws
EXHIBIT F Estimated Closing Date Working Capital
iii
MASTER SEPARATION AGREEMENT
This Master Agreement (this Agreement ) is made and entered into as of November 19, 2009 by and among Rio Tinto America Inc., a Delaware corporation ( RTA ), Rio Tinto Energy America Inc., a Delaware corporation ( RTEA ), Kennecott Management Services Company, a Delaware corporation ( KMS ), Cloud Peak Energy Inc., a Delaware corporation ( CPE ), Cloud Peak Energy Resources LLC, a Delaware limited liability company (the Company ), and each of the subsidiaries named on Schedule A hereto (the Company Subsidiaries , and, together with the Company and any other Subsidiaries (as defined below) of the Company, collectively, CPE LLC ). RTEA, KMS, CPE and CPE LLC are sometimes referred to herein separately as a Party and together as the Parties . Certain terms used in this Agreement are defined in Section 1.1 .
RECITALS
WHEREAS, through a series of structuring transactions (the Structuring Transactions ), RTEA contributed RTAs non-Colorado Western United States coal mining business (other than the Colowyo mine) (the Coal Business ) to the Company;
WHEREAS, concurrent with the execution of this Agreement, (i) CPE and RTEA will enter into the Acquisition Agreement pursuant to which CPE will purchase a portion of RTEAs interest in the Coal Business (the Acquisition ) and, as consideration, will issue the Cloud Peak Promissory Note, (ii) CPE, RTEA and KMS will enter into the Third Amended and Restated Limited Liability Company Agreement of the Company (the LLC Agreement ) and (iii) CPE, CPE LLC, RTEA, KMS and/or their respective Affiliates will enter into the Transaction Documents, including the Tax Receivable Agreement; and
WHEREAS, CPE has been incorporated solely for the purposes set forth above and has not engaged in material activities except in preparation for and in connection with the Structuring Transactions, the Initial Public Offering and the Concurrent Offering;
WHEREAS, it is appropriate and desirable, for the benefit of the Parties, to set forth the principal corporate transactions required to effect certain of the Structuring Transactions and certain other agreements that will, following the consummation of the Initial Public Offering and the Concurrent Offering, govern certain matters related to the relationship and rights and obligations of the Rio Tinto Parties (as defined below), on the one hand, and the Cloud Peak Parties (as defined below), on the other hand, and their respective Subsidiaries.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree as follows:
430A Information with respect to any registration statement, means information included in a prospectus and retroactively deemed to be a part of such registration statement pursuant to Rule 430A(b) under the Securities Act.
430C Information with respect to any registration statement, means information included in a prospectus then deemed to be a part of such registration statement pursuant to Rule 430C under the Securities Act.
Acquired U.S. Coal Businesses means any and all existing and prior businesses and operations conducted by CPESC and RTEA and its Subsidiaries, including CPE LLC, prior to the Closing Date that will be owned and operated by CPE LLC following the Initial Public Offering (including the 50% interest through CPE LLCs wholly-owned Subsidiary in the Decker mine), other than those terminated Intercompany Agreements as set forth in Section 2.1(a) . For the avoidance of doubt, the term Acquired U.S. Coal Businesses shall not include the business and operations relating to the Colowyo and Jacobs Ranch mines, Sweetwater and L-Bar.
Acquisition is defined in the recitals to this Agreement.
Acquisition Agreement means the Acquisition Agreement dated as of the date hereof between RTEA and CPE, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Action means any suit, arbitration, inquiry, proceeding or investigation (whether civil, criminal, administrative, investigative or informal) by or before any court, governmental or other regulatory or administrative agency or commission or any arbitration tribunal asserted by a Person.
Additional Registration Statement means the Rule 462(b) registration statement covering the registration of any offered securities in the Initial Public Offering, as amended at its Effective Time, including the contents of the applicable Registration Statement incorporated by reference therein and including all 430A Information and all 430C Information, that in any case has not then been superseded or modified.
Additional Services is defined in Section 8.5 .
Affiliate of any specified Person means any other Person directly or indirectly controlling, controlled by or under common control with (within the meaning of Rule 405 under the Securities Act), such specified Person; provided , however , that for purposes of the Transaction Documents, except to the extent expressly provided otherwise the determination of
2
whether a Person is an Affiliate of another Person shall be made assuming that no member of the Rio Tinto Group is an Affiliate of any member of the Cloud Peak Group and vice versa; provided , further , that, notwithstanding the foregoing, and except as otherwise expressly provided in this Agreement, (i) no Member of CPE LLC shall be deemed an Affiliate of CPE LLC or its Subsidiaries, (ii) CPE LLC shall not be deemed an Affiliate of any Member, (iii) no Member shall be deemed an Affiliate of any other Member solely by virtue of the ownership of Common Membership Units and (iv) no officer, director, manager or stockholder of any Person shall be considered an Affiliate of such Person solely as a result of serving such capacity or being a stockholder of such Person. The foregoing proviso shall also apply to any successor entities whether by merger, transfer of stock or assets or otherwise. For purposes of this Agreement, CPE shall be deemed to be an Affiliate of CPE LLC.
Agency Agreement means the Agency Contract dated as of the date hereof by and between the Company and RTEA as the same may be amended, restated, supplemented or otherwise modified from time to time.
Agreement is defined in the preamble to this Agreement.
Applicable Materiality Threshold is defined in Section 7.5 .
Applicable Time means 5:30 p.m. (Eastern time) on the date of the Underwriting Agreement.
Assets means assets, properties and rights (including goodwill and rights arising under Contracts), wherever located (including in the possession of vendors, other Persons or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person.
Auditor means the independent registered public accountant of any Person.
Business Day means, except as otherwise provided with respect to the Corporate Reporting Data and the Corporate Reserves Data on Schedule 7.1(a) and Schedule 7.2(a) , respectively, a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.
Business Entity means any corporation, general or limited partnership, limited liability company, trust, joint venture, trust, unincorporated organization or other entity.
Bylaws is defined in Section 3.3 .
CERCLA means Comprehensive, Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., as amended, and the rules and regulations promulgated thereunder.
Charter is defined in Section 3.3 .
3
Claim means any Action, proceeding, arbitration, suit (whether civil, criminal, administrative, investigative or informal), complaint, charge or investigation pending or, to the Persons knowledge, threatened against the Person or any of its Representatives.
Claim Notice is defined in Section 6.5(a) .
Claimed Amount is defined in Section 6.5(a) .
Closing is defined in Section 3.1 .
Closing Date is defined in Section 3.1 .
Closing Date Balance Sheet is defined in Section 3.9(b)(ii)(A).
Closing Date Working Capital is defined in Section 3.9(b)(iv) .
Cloud Peak means, collectively, CPE and CPE LLC.
Cloud Peak Assets means any and all Assets that are used or held for use in the Cloud Peak Business.
Cloud Peak Auditors is defined in Section 7.3(a) .
Cloud Peak Business means (1) the businesses and operations of the Acquired U.S. Coal Businesses prior to the Closing Date and (2) the business and operations conducted by the Cloud Peak Group after the Closing Date including, without limitation, the businesses and operations of the Acquired U.S. Coal Businesses.
Cloud Peak Discontinued Business means the businesses and operations and mining properties of RTEA (or any predecessor or Subsidiary of RTEA) that have been sold, discontinued or merged out of existence prior to the Closing Date (other than the Jacobs Ranch mine or the Retained U.S. Coal Business), including those businesses, operations and mining assets set forth on Schedule B hereto.
Cloud Peak Financing means the revolving credit facility to be entered into by CPE LLC.
Cloud Peak General Indemnities is defined in Section 6.1(a) .
Cloud Peak Group means CPE, CPE LLC and their respective Affiliates.
Cloud Peak Indemnified Persons means each member of the Cloud Peak Group and its respective Representatives.
Cloud Peak Information is defined in Section 7.4(d) .
4
Cloud Peak Liabilities means the following:
Cloud Peak Notes means the Senior Notes issued by CPE LLC.
Cloud Peak Parties means CPE and CPE LLC.
Cloud Peak Promissory Note means the $433,755,000 million Promissory Note payable by CPE to RTEA, in the form attached hereto as Exhibit B .
5
Cloud Peak Public Filings is defined in Section 7.4(c) .
Cloud Peak Special Indemnities is defined in Section 6.1(b) .
Coal Business is defined in the recitals to this Agreement.
Common Stock means the common stock, $0.01 par value per share, of CPE.
Company is defined in the preamble to this Agreement.
Company Subsidiaries is defined in the preamble to this Agreement.
Competitive Business is defined in Section 8.2(b)(iii) .
Concurrent Offerings means any other public or private offerings of securities, including the Debt Offering, such offerings to be made concurrently with the Initial Public Offering.
Contract means any contract, agreement, document, lease, license, sales order, purchase order, instrument or other commitment that is binding on any Person or any part of its property under applicable Law.
Controlling Party is defined in Section 6.5(c)(ii) .
Corporate Reporting Data means the submissions and data requirements as set forth in detail on Schedule 7.1(a) , as such schedule may be amended by the Rio Tinto Group from time to time as set forth in Section 7.1(a) .
Corporate Reserves Data means the submissions and data requirements as set forth in detail on Schedule 7.2(a) , as such schedule may be amended by the Rio Tinto Group from time to time as set forth in Section 7.2(a) .
CPE is defined in the preamble to this Agreement.
CPE LLC is defined in the preamble to this Agreement.
CPESC means Cloud Peak Energy Services Company, a Delaware corporation.
Debt Applicable Time shall have the meaning ascribed to the term Applicable Time in the Purchase Agreement.
Debt General Disclosure Package shall have the meaning ascribed to the term General Disclosure Package in the Purchase Agreement.
Debt Offering means the offer and sale by CPE LLC of the Cloud Peak Notes.
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Debt Offering Memorandum means the offering memorandum relating to the offering of the Cloud Peak Notes under Rule 144A of the Securities Act.
Debt Offering Closing Date means the date and time of the closing of the Debt Offering.
Disagreement Notice is defined in Section 3.9(b)(iv) .
Disclosing Party is defined in Section 4.2 .
Dispute is defined in Section 9.10 .
Disputing Party is defined in Section 9.10(a) .
Drawing Request is defined in Section 2.2(b)(5) .
Effective Date with respect to the IPO Registration Statement or, if filed prior to the execution and delivery of the Underwriting Agreement, the Additional Registration Statement, means the date and time as of which such registration statement was declared effective by the SEC or has become effective upon filing pursuant to Rule 462(c). If an Additional Registration Statement has not been filed prior to the execution and delivery of the Underwriting Agreement but CPE has advised the representatives that it proposes to file one, Effective Date with respect to such Additional Registration Statement means the date and time as of which such Additional Registration Statement is filed and becomes effective pursuant to Rule 462(b).
Employee Matters Agreement means the Employee Matters Agreement dated as of the date hereof between CPE, CPE LLC, Rio Tinto, Rio Tinto Limited, RTA, RTEA and CPESC, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Equity General Disclosure Package is defined in Section 2.5(c) .
Escrow Account means the escrow account maintained at Sun Trust Bank (or with another successor Escrow Agent reasonably acceptable to RTEA) that was established and is governed by the terms and conditions of the Escrow Agreement.
Escrow Agent means Sun Trust Bank, in its capacity as escrow agent under the Escrow Agreement, and any successor Escrow Agent reasonable acceptable to RTEA.
Escrow Agreement means the Escrow Agreement dated as of the IPO Closing Date between CPE LLC, RTEA and SunTrust Bank, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.
Estimated Closing Date Working Capital is defined in Section 3.9(b)(i) .
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Exchange Act means the Securities Exchange Act of 1934, as amended together with the rules and regulations promulgated thereunder.
Existing Authority is defined in Section 8.6 .
Existing Surety Arrangements is defined in Section 2.2(a) .
Existing Surety Arrangement Obligations is defined in Section 2.2(b)(2) .
Final Offering Memorandum means the Debt Offering Memorandum that discloses the offering price of the Cloud Peak Notes.
Final Prospectus means the Statutory Prospectus included in a Registration Statement that discloses the public offering price, other 430A Information and other final terms of the offered securities and otherwise satisfies Section 10(a) of the Exchange Act.
Financing Documents means the financing documents related to the Cloud Peak Financing.
Firm Public Offering Shares means the Common Stock sold in the Initial Public Offering, other than Common Stock sold as a result of exercise of the Over-Allotment Option by the Underwriters.
GAAP means United States generally accepted accounting principles.
General Disclosure Package means the Equity General Disclosure Package and the Debt General Disclosure Package.
General Indemnity Amount is defined in Section 6.1(b) .
General Use Issuer Free Writing Prospectus means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being so specified in Schedule B to the Underwriting Agreement.
Good Faith Surety Bond Condition means the occurrence of all of the following conditions: (i) CPE LLC shall have arranged in good faith for the issuance of Replacement Surety Arrangements for all of the Existing Surety Arrangements on terms and conditions reasonably satisfactory to RTEA and shall have provided RTEA with reasonably satisfactory evidence of completion of the foregoing on or prior to the 60 th day after the IPO Closing Date, (ii) all such Replacement Surety Arrangements have been satisfactorily lodged and/or deposited with the relevant Governmental Authorities on or prior to the 60 th day after the IPO Closing Date and (iii) the relevant Governmental Authorities have not yet fully released RTEA or any member of the Rio Tinto Group from all obligations and liabilities under the Existing Surety Arrangements at such time.
Good Faith Trigger Date is defined in Section 2.2(b)(4) .
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Guarantor(s) is defined in Section 6.2(a) .
Guaranty is defined in Section 6.2(a) .
Governmental Approvals means any notices, reports or other filings to be made, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.
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 means either the Rio Tinto Group or the Cloud Peak Group, as the context requires.
IFRS means International Financial Reporting Standards as adopted by the European Union.
Indemnified Party is defined in Section 6.5(a) .
Indemnified Person means, as applicable, a Cloud Peak Indemnified Person or a RTEA Indemnified Person.
Indemnifying Party is defined in Section 6.5(a) .
Independent Accountants is defined in Section 3.9(b)(v) .
Information means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, geological information, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.
Initial Public Offering means the initial public offering registered under the Securities Act of the Common Stock of CPE.
Initial Purchasers means the several initial purchasers of the Concurrent Offering named in the Purchase Agreement.
Initial Unrestricted Cash Position is defined in Section 3.9(a) .
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Insurance Proceeds means those monies: (a) received by an insured from a Third Party Insurance Carrier; (b) paid by a Third Party Insurance Carrier on behalf of the insured; or (c) received (including by way of set off) from any third party in the nature of insurance, contribution or indemnification in respect of any Liability; in any such case net of applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof.
Intercompany Agreements is defined in Section 2.1(a) .
IPO Closing Date is defined in Section 3.9(a) .
IPO Registration Statement means the registration statement on Form S-1 (SEC File No. 333-161293), including the prospectus related thereto, filed by CPE with the SEC in connection with the Initial Public Offering, together with all amendments and supplements thereto.
Issuer Free Writing Prospectus means any issuer free writing prospectus, as defined in Rule 433 under the Securities Act relating to the shares of CPE Common Stock to be offered in any Concurrent Offering in the form filed or required to be filed with the SEC or, if not required to be filed, in the form retained in CPEs records pursuant to Rule 433(g) under the Securities Act.
Issuing Bank is defined in Section 2.2(b)(5) .
Jacobs Ranch Membership Interest Purchase Agreement means the Membership Interest Purchase Agreement between Rio Tinto Sage LLC and Arch Coal, Inc. dated as of March 8, 2009.
JAMS is defined in Section 9.10(b) .
JORC means the Australian Joint Ore Reserves Committee.
KMS is defined in the preamble to this Agreement.
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.
Liability means all damages, losses, liabilities or obligations, payments, amounts paid in settlement, obligations, fines, penalties, costs of burdens associated with performing injunctive relief and other costs (including reasonable fees and expenses of outside attorneys, accountants and other professional advisors, and of expert witnesses and other costs of investigation, preparation and litigation in connection with any action, appeal, petition, plea, charge, complaint, claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry, investigation or similar matter or proceeding) of any kind or nature whatsoever, whether known or unknown, asserted or
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unasserted, absolute, contingent or vested, accrued or unaccrued, liquidated or unliquidated, or matured or unmatured.
Limited Use Issuer Free Writing Prospectus means any Issuer Free Writing Prospectus that is not a General Use Issuer Free Writing Prospectus.
LLC Act means the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101, et seq ., as it may be amended from time to time, and any successor to such statute.
LLC Agreement is defined in the recitals to this Agreement.
L-Bar means the assets that are held within Sohio Western Mining Company, a Delaware corporation.
Management Services Agreement means the Management Services Agreement dated as of the date hereof by and between the Company and CPE, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Member means each Person that is or becomes a member, as contemplated in the LLC Act, of CPE LLC in accordance with the provisions of the LLC Agreement and is listed on Exhibit A to the LLC Agreement (as such Exhibit may be amended or modified from time to time) and has not ceased to be a Member as provided in Section 3.1(d) of the LLC Agreement, and each of such Members transferees, if applicable.
New York Courts is defined in Section 9.6(b) .
Non-Compete Period is defined in Section 8.2 .
Non-Controlling Party is defined in Section 6.5(c)(ii) .
Offering Closing Date means the date and time of the closing of each of the Initial Public Offering, including the closing for the Over-Allotment Option, if any, and the Concurrent Offering.
Over-Allotment Option means the over-allotment option that may be exercised by the Underwriters of the Initial Public Offering pursuant to the Underwriting Agreement relating to the Initial Public Offering.
Owning Party is defined in Section 4.2 .
Party or Parties is defined in the preamble to this Agreement.
Person means any individual or Business Entity.
Powder River Basin means the coal producing area located in northeastern Wyoming and southeastern Montana, as shown generally on the map attached as Exhibit C .
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Preliminary Closing Date Working Capital is defined in Section 3.9(b)(ii) .
Preliminary Working Capital Adjustment is defined in Section 3.9(b)(ii) .
Privilege is defined in Section 7.14(a) .
Proceeding means: (i) any past, present or future suit, countersuit, action, arbitration, mediation, alternative dispute resolution process, claim, counterclaim, demand, proceeding; (ii) any inquiry, proceeding or investigation by or before any Governmental Authority; or (iii) any arbitration or mediation tribunal.
Purchase Agreement means the Purchase Agreement to be entered into by and between CPE LLC and the Initial Purchasers in connection with the offering of the Cloud Peak Notes in the Concurrent Offering.
Registration Indemnified Parties is defined in Section 6.4(a)(i) .
Registration Rights Agreement means the Registration Rights Agreement dated as of the date hereof between RTEA, KMS, CPE and CPE LLC, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Registration Statement means the IPO Registration Statement, including the Statutory Prospectus, Final Prospectus and any Issuer Free Writing Prospectus related thereto, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement, Statutory Prospectus, Final Prospectus or Issuer Free Writing Prospectus.
Rejected RTEA Exposure Amount is defined in Section 2.2(b)(4) .
Rejected RTEA Fee is defined in Section 2.2(b)(4) .
Rejected Replacement Surety Arrangements means, if CPE LLC lodges and/or deposits Replacement Surety Arrangements in connection with the satisfaction of the Good Faith Surety Bond Condition, those Replacement Surety Arrangements that are rejected as being inadequate for any reason by the relevant Government Authority at any time.
Release Notice is defined in Section 2.2(b)(2) .
Replacement Letter of Credit is defined in Section 2.2(b)(5) .
Replacement Surety Arrangements is defined in Section 2.2(b)(1) .
Report is defined in Section 3.9(b)(v) .
Representatives means, with respect to any Person, any of such Persons directors, officers, members, partners, managers and employees.
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Restricted Cash Amount is defined in Section 2.2(b)(1) .
Retained U.S. Coal Business means the Colowyo mine, Sweetwater and L-Bar to be retained by the Rio Tinto Group in connection with the Initial Public Offering.
Rio Tinto means Rio Tinto plc, a public limited company incorporated under the laws of England and Wales.
Rio Tinto Annual Report means the Rio Tinto Annual Report and related financial statements prepared on an annual basis for the most recently completed fiscal year.
Rio Tinto Auditors is defined in Section 7.3(a) .
Rio Tinto D&O Policy is defined in Section 2.1(a) .
Rio Tinto Group means RTEA, KMS and their respective Affiliates, including RTA.
Rio Tinto Limited means Rio Tinto Limited, an Australian corporation.
Rio Tinto Parties means RTEA and KMS.
Rio Tinto Public Filings is defined in Section 7.5 .
RTA is defined in the preamble to this Agreement.
RTEA is defined in the preamble to this Agreement.
RTEA Coal Supply Agreement means the Rio Tinto Energy America Coal Supply Agreement dated as of the date hereof by and between the Company and RTEA as the same may be amended, restated, supplemented or otherwise modified from time to time.
RTEA Exposure Amount is defined in Section 2.2(b)(3) .
RTEA Fee is defined in Section 2.2(b)(3) .
RTEA Indemnified Persons means each member of the Rio Tinto Group and its respective Representatives.
RTEA L/C is defined in Section 2.2(b)(5) .
RTEA L/C Amount is defined in Section 2.2(b)(5) .
RTEA L/C Reduction Notice is defined in Section 2.2(b)(5) .
RTEA Liabilities means (i) any and all Liabilities to the extent arising out of or relating to the Retained U.S. Coal Business, whether such Liabilities arise or accrue prior to, on or after the Closing Date, (ii) any and all Liabilities of the Rio Tinto Group set forth on Exhibit A
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arising out of or relating to the Jacobs Ranch Membership Interest Purchase Agreement, whether such Liabilities arise or accrue prior to, on or after the Closing Date, and (iii) any and all Liabilities that are expressly listed on Schedule D hereto.
SEC means the United States Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.
Software License Agreement means the Software License Agreement dated as of the date hereof between RTEA and CPE LLC, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Statutory Prospectus with reference to a particular time means the prospectus included in a Registration Statement immediately prior to that time, including any 430A Information or 430C Information with respect to such Registration Statement. For purposes of the foregoing definition, 430A Information shall be considered to be included in the Statutory Prospectus as of the actual time that form of prospectus is filed with the SEC pursuant to Rule 424(b) or Rule 462(c) under the Securities Act and not retroactively.
Structuring Transactions is defined in the recitals to this Agreement.
Subsidiary of any Person means another Business Entity that is directly or indirectly controlled by such Person. As used herein, control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Business Entity, whether through ownership of voting securities or other interests, by contract or otherwise. For purposes of this Agreement, CPE LLC shall be deemed to be a Subsidiary of RTEA prior to the Closing Date and shall be deemed to be a Subsidiary of Cloud Peak as of and from the Closing Date.
Sweetwater means the uranium mining venture being retained by the Rio Tinto Group in connection with the Initial Public Offering.
Tax means all U.S. federal, state, local and foreign taxes, assessments or similar charges measured with respect to net income or profits and any interest related to such Tax.
Tax Receivable Agreement means the Tax Receivable Agreement dated as of the date hereof among RTEA and CPE, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Terminated RTEA Policies is defined in Section 2.1(a) .
Third Party Claim is defined in Section 6.5(c)(i) .
Third Party Insurance Carrier means any insurance provider other than a Persons captive insurer.
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Three Crowns Policies is defined in Section 2.3 .
Trademark Assignment Agreement means the Trademark Assignment Agreement dated as of the date hereof by and between RTEA and the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Trademark License Agreement means the Trademark License Agreement dated as of the date hereof between RTEA and CPE LLC.
Transaction Documents is defined in Section 3.2 .
Transactions means, collectively, (i) the Structuring Transactions, (ii) the Initial Public Offering and the Concurrent Offerings, (iii) any other debt financing to be undertaken by Cloud Peak, including the Cloud Peak Financing, and (iv) all other transactions contemplated by this Agreement or any Transaction Document.
Transfer Documents is defined in Section 3.4 .
Transition Services Agreement means the Transition Services Agreement dated as of the date hereof between Rio Tinto Services Inc., CPE and CPE LLC, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Trigger Date is defined in Section 2.2(b)(3) .
Underwriters means the several underwriters of the Initial Public Offering named in the Underwriting Agreement.
Underwriting Agreement means the underwriting agreement entered into among CPE and the Underwriters for the Initial Public Offering.
Working Capital Adjustment is defined in Section 3.9(b)(vii) .
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this Agreement as a whole and not to any particular subdivision unless expressly so limited. Where this Agreement states that a Party will or shall perform in some manner or otherwise act or omit to act, it means that such Party is legally obligated to do so in accordance with this Agreement. The captions, titles and headings included in this Agreement are for convenience only and do not affect this Agreements construction or interpretation. Any reference to an Article, Section or Schedule in this Agreement shall refer to an Article or Section of, or Schedule to, this Agreement, unless the context otherwise requires. This Agreement is for the sole benefit of the Parties (and, solely for purposes of Article VI , RTEA Indemnified Persons and Cloud Peak Indemnified Persons) and does not, and is not intended to, confer any rights or remedies in favor of any Person (including any employee or shareholder or equity owner of RTEA or Cloud Peak) other than the Parties. Exhibit A and the schedules identified in this Agreement are incorporated herein by reference and made part hereof.
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(iii) collectively, the Intercompany Agreements ), including, but not limited to those Intercompany Agreements set forth on Schedule 2.1(a) . No such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Closing Date, and no member of the Cloud Peak Group or any of its Representatives shall be entitled to recovery of any amounts under the Terminated RTEA Policies after the Closing Date (including for any claims or occurrences arising prior to the Closing Date and for which a claim under such Terminated RTEA Policies had not been made prior to the Closing Date). Each Party shall, at the reasonable request of the other Party or Parties, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.
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use their commercially reasonable efforts to obtain new surety bonds, letters of credit or other credit arrangements in support of the Cloud Peak Business and to obtain a full release of RTEA and any other member of the Rio Tinto Group from any and all Liability and obligations with respect to such Existing Surety Arrangements, letters of credit and other guarantees or credit arrangements with respect to such Existing Surety Arrangements. Without limiting the foregoing, following the Closing Date, CPE LLC hereby undertakes, assumes and agrees to perform, pay and discharge all such Existing Surety Arrangements until such time as RTEA and any other member of the Rio Tinto Group is released from any and all Liability and obligations thereunder, including any and all costs in respect of the Existing Surety Arrangements (including any calls against any letters of credit or similar arrangements). Without limiting or modifying any of RTEAs or any other member of the Rio Tinto Groups rights under this Agreement, beginning on December 1, 2009, at the beginning of each month, for so long as RTEA or any member of the Rio Tinto Group remains obligated or has any Liability in respect of any Existing Surety Arrangement, RTEA shall send CPE LLC an invoice setting forth any and all letter of credit fees, surety bond fees or other similar costs incurred by RTEA or any member of the Rio Tinto Group following the Closing Date with respect to the maintenance of any of the Existing Surety Arrangements in reasonably satisfactory detail and with supporting documentation if such supporting documentation is requested by CPE LLC. Within thirty (30) days after the transmittal of such notice to CPE LLC, CPE LLC shall pay to RTEA for itself and for the benefit of any member of the Rio Tinto Group the amounts stated to be paid in such invoice. Notwithstanding the foregoing, the failure by RTEA to send any such invoice shall not prejudice any of its rights under this Agreement or modify any of the obligations of CPE LLC or the Cloud Peak Parties. The Cloud Peak Parties hereby acknowledge that, in using their commercially reasonably efforts to obtain new surety bonds, letters of credit or other credit arrangements in support of the Cloud Peak Business, such new bonds, letters of credit or other credit arrangements may be more expensive than the corresponding arrangements under the Existing Surety Arrangements.
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event that (x) any Existing Surety Arrangements remain outstanding or RTEA or any members of the Rio Tinto Group retain any obligations and/or Liabilities with respect to any such Existing Surety Arrangements and (y) any amounts remain in the Escrow Account, CPE LLC shall promptly (but in any event within five (5) Business Days of such date) grant a perfected first priority security interest in the Escrow Account and all cash and assets in or otherwise credited to the Escrow Account to RTEA for its benefit and the benefit of the Rio Tinto Group to secure all of CPE LLCs obligations under this Section 2.2 and any related indemnification obligations under Section 6.1 , on terms and conditions reasonably acceptable to RTEA; provided , however, that notwithstanding the foregoing, if the Good Faith Surety Bond Condition occurs, CPE shall be required to grant such perfected first priority security interest on the Good Faith Trigger Date.
Trigger Date) arrange for the issuance of a letter of credit (the RTEA L/C ) for the benefit of RTEA (for its benefit and the benefit of the members of the Rio Tinto Group) in an amount equal to the RTEA Exposure Amount (calculated as of the date of issuance of the RTEA L/C less the amount of cash then credited to the Escrow Account (the RTEA L/C Amount ); provided , however that if the Good Faith Surety Bond Condition occurs, CPE LLC shall be required to arrange for the issuance of the RTEA L/C within five (5) Business Days of the occurrence of the Good Faith Trigger Date. Drawings shall be made under the RTEA L/C solely upon the submission by RTEA of a drawing certificate to the issuing bank (the Issuing Bank ) that issued the RTEA L/C (and without any other term, condition or instruction from CPE LLC). The RTEA L/C and any replacement letter of credit therefor shall remain in place for the benefit of RTEA (for its benefit and the benefit of the members of the Rio Tinto Group) for so long as any Existing Surety Arrangements remain outstanding and RTEA or any member of the Rio Tinto Group has any obligation or Liability thereunder. In the event that any Existing Surety Arrangement Obligations become due and owing, RTEA shall be entitled to submit a drawing certificate to the Issuing Bank (and without any other term, condition or instruction from CPE LLC) to draw funds under the RTEA L/C (a Drawing Request ) for its own benefit and/or the benefit of the relevant Rio Tinto Group member in amounts necessary to satisfy the Existing Surety Arrangement Obligations that are then due and owing. Notwithstanding anything in this Section 2.2 to the contrary, RTEA shall be entitled to elect in its sole discretion whether to make a Release Notice pursuant to clause (2) above or a Drawing Request pursuant to this clause (5) in respect of satisfying any Existing Surety Arrangement Obligation.
(a) on its date, at the time of filing of the Final Prospectus pursuant to Rule 424(b) or (if no such filing is required) at the Effective Date of the Additional Registration Statement in which the Final Prospectus is included, and on each Offering Closing Date, the Final Prospectus will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
(b) on its date and on the Debt Offering Closing Date, the Final Offering Memorandum will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
(c) as of the Applicable Time, neither (i) the General Use Issuer Free Writing Prospectus(es) issued at or prior to the Applicable Time and the preliminary prospectus, dated November 9, 2009 (which is the most recent Statutory Prospectus distributed to investors generally) and the other information, if any, stated in Schedule C to the Underwriting Agreement, all considered together (collectively, the Equity General Disclosure Package ), nor (ii) any individual Limited Use Issuer Free Writing Prospectus, when considered together with the Equity General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
(d) as of the Debt Applicable Time, neither (i) the Debt General Disclosure Package, nor any individual Supplemental Marketing Material (as such term is defined in the Purchase Agreement), when considered together with the Debt General Disclosure Package, will include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made not misleading;
(e) the information required to be delivered to prospective purchasers of the Cloud Peak Notes in accordance with Rule 144A(d)(4) does not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and
(f) the representations and warranties contained in the Underwriting Agreement and the Purchase Agreement, as of the date thereof and as of the Offering Closing Date, are and will be true and correct.
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Notwithstanding the foregoing, the preceding clauses (a) through (e) of this Section 2.5 do not apply to statements in or omissions from any such document that relate exclusively to Rio Tinto and as set forth on Schedule 2.5 .
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any other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the Structuring Transactions and (ii) CPE LLC shall execute and deliver such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Cloud Peak Liabilities by CPE LLC. All of the foregoing documents contemplated by this Section 3.4 shall be referred to collectively herein as the Transfer Documents .
Date Balance Sheet and/or the Preliminary Working Capital Adjustment as to which the Rio Tinto Parties disagree and the reasons for such disagreement. The Rio Tinto Parties shall be deemed to have agreed with all items and amounts contained in the Closing Date Balance Sheet and the Preliminary Working Capital Adjustment other than those specified in a timely Disagreement Notice. If the Rio Tinto Parties do not deliver a Disagreement Notice to the Cloud Peak Parties within such 15-day period, the Rio Tinto Parties shall be deemed to have accepted the Closing Date Balance Sheet and the Preliminary Working Capital Adjustment, whereupon the Preliminary Closing Date Working Capital shall become the Closing Date Working Capital .
dollar-for-dollar basis the amount of the Working Capital Adjustment. Notwithstanding anything contained in this Section 3.9(vii) to the contrary, no amounts shall be payable to RTEA or CPE LLC in respect of the Working Capital Adjustment pursuant to this Section 3.9(vii) unless the Working Capital Adjustment exceeds $500,000, in which case the entire amount of such Working Capital Adjustment shall be payable. Within five (5) Business Days after the final determination of the Working Capital Adjustment, RTEA shall pay CPE LLC or CPE LLC shall pay RTEA, as the case may be, a sum of money equal to the Working Capital Adjustment. Any amount payable pursuant to this Section 3.9(vii) will be made in immediately available federal funds, by wire transfer to an account or accounts designated by the Party receiving such payment.
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other remedy is not obtained, or if the Owning Party waives compliance with this Section 4.2 , the Disclosing Party shall (a) disclose only that portion of the Information that the Disclosing Partys legal counsel advises it is compelled to disclose, (b) consult with the Owning Party in advance as to the proposed form, nature and purpose of the disclosure, (c) use reasonable best efforts to obtain reliable assurance requested by the Owning Party that confidential treatment shall be accorded such Information, and (d) promptly provide the Owning Party with a copy of the Information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such Information was disclosed. In no event will the Disclosing Party oppose action by the Owning Party to obtain a protective order or other relief to prevent the disclosure of any Information or to obtain reliable assurance that confidential treatment will be afforded the Information.
discharge: (1) CPE, CPE LLC and each of their respective Subsidiaries, successors and assigns and (2) all Persons who at any time prior to the Closing Date are or have been shareholders, directors, officers, agents, representatives, counsel or employees of any member of the Cloud Peak Group or any Subsidiary of Cloud Peak (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, in each such case from all Liabilities to RTEA, KMS and their respective Affiliates whether arising prior to, on or after the Closing Date and whether arising under any contract or agreement, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Closing Date, including in connection with the Transactions and all other activities to implement the Structuring Transactions, the Initial Public Offering and any of the other transactions contemplated hereunder and under the Transaction Documents, except to the extent such Liabilities arise from the fraud, gross negligence or willful misconduct of any Person listed on Schedule 5.1(b) hereto; provided , however , that nothing in this Section 5.1(b) shall relieve the Persons released in this Section 5.1(b) from: (x) any Liability expressly allocated to any member of the Cloud Peak Group under this Agreement (including any Cloud Peak Liability and/or the indemnification obligations in Section 6.1 ), or any document entered into in connection with or related to the Transactions; (y) any amounts owed or other Liabilities arising under Section 2.1(c) ; or (z) any Liability the release of which would result in the release of any Person other than the Persons released in this Section 5.1(b) .
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RTEA, KMS or any of their respective Subsidiaries or any other Person released pursuant to Section 5.1(a) , with respect to any Liabilities released pursuant to Section 5.1(a) .
CPE LLC further agrees that with respect to any of the Cloud Peak Special Indemnities pursuant to this Section 6.1(b) , CPE LLC shall pay to each RTEA Indemnified Person an aggregate amount equal to the sum of (i) the total amount of the Liability payable to the RTEA Indemnified Person (or, in the case of Section 6.4(a)(i) , the Registration Indemnified Parties) with respect to such Cloud Peak Special Indemnity (the General Indemnity Amount ) plus (ii) an amount equal to (A) the General Indemnity Amount multiplied by (B) a fraction equal to (1) the aggregate number of common membership units in CPE LLC held by the Rio Tinto Group divided by (2) the total number of common membership units in CPE LLC then outstanding at the time such Cloud Peak Special Indemnity is payable to the RTEA Indemnified Person.
(a) Each of the Subsidiaries listed on Schedule A hereto (each a Guarantor and together, the Guarantors ), hereby, jointly and severally, fully and unconditionally guarantees to (i) each RTEA Indemnified Person, due and punctual payment of all obligations of CPE LLC and its successors and assigns to each RTEA Indemnified Person pursuant to Section 6.1 and Section 6.4 , whether arising or accruing prior to, on or following the Closing Date and (ii) each of the Rio Tinto Parties, due and punctual payment of all reimbursements owed by the Cloud Peak Parties and their successors and assigns pursuant to Section 7.6 and Section 7.7 (each such Guarantors obligations pursuant to subclauses (i) and (ii) above, the Guaranty ).
(b) Each Guarantor agrees that the Guaranty is an absolute, unconditional, present and continuing guarantee of payment, not of collection, and it being agreed by each Guarantor
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that its obligations under the Guaranty shall not be discharged until the indefeasible payment in full of all of the obligations pursuant to Section 6.1 , Section 7.6 and Section 7.7 by CPE LLC or the Cloud Peak Parties, as applicable, or one or more of the Guarantors. Each Guarantor expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel any RTEA Indemnified Person or any Rio Tinto Party to proceed in respect of the obligations of CPE LLC or the Cloud Peak Parties pursuant to Section 6.1 , Section 7.6 and Section 7.7 , as applicable, against CPE LLC or the Cloud Peak Parties or any other party or against any security for the payment and performance of the obligations of CPE LLC pursuant to Section 6.1 or of the Cloud Peak Parties pursuant to Section 7.6 or Section 7.7 , as applicable, before proceeding against, or as a condition to proceeding against, such Guarantor. In no event shall a RTEA Indemnified Person or a Rio Tinto Party have any obligation (provided that it is entitled, at its option) to proceed against CPE LLC or the Cloud Peak Parties, as applicable, before seeking satisfaction from Guarantor. The obligations of each Guarantor under the Guaranty are independent of the obligations guaranteed by each other Guarantor hereunder, and a separate action or actions may be brought and prosecuted by an RTEA Indemnified Person or a Rio Tinto Party, as applicable, subject to the terms and conditions set forth in this Agreement, against any Guarantor to enforce the Guaranty, irrespective of whether any action is brought against CPE LLC or the Cloud Peak Parties, as applicable, or whether CPE LLC or the Cloud Peak Parties are joined in any such action or actions.
(c) Each Guarantor unconditionally waives, to the fullest extent permitted by Law, (i) notice of any matters described in Section 6.1 , Section 7.6 and Section 7.7 , (ii) all notices which may be required by statute, rule or Law to preserve intact any rights against such Guarantor, including, without limitation, any demand, presentment and protest, proof of notice of nonpayment and notice of default or any failure of CPE LLC and its permitted successors and assigns and the Cloud Peak Parties and their permitted successors and assigns to perform or comply with Section 6.1 , Section 7.6 and Section 7.7 , respectively, (iii) any requirement of diligence or to exhaust any remedies or to mitigate damages resulting from CPE LLCs default under Section 6.1 or the Cloud Peak Parties default under Section 7.6 or Section 7.7 , and (iv) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety or which might otherwise limit recourse against such Guarantor. The provisions of this Section 6.2 are for the benefit of each RTEA Indemnified Person and the Rio Tinto Parties, respectively, and nothing in this Section 6.2 shall impair (x) as between CPE LLC and each of RTEA Indemnified Person, the obligations of CPE LLC under Section 6.1 and (y) as between the Cloud Peak Parties and each of the Rio Tinto Parties, the obligations of the Cloud Peak Parties under Section 7.6 and Section 7.7 .
(d) With respect to each Guarantors obligations related to Section 6.1 , the Guaranty of each Guarantor shall remain in full force and effect and continue to be effective (i) in the event CPE LLC or such Guarantor becomes insolvent or makes an assignment for the benefit of creditors, (ii) in the event a receiver or trustee is appointed for all or any significant part of CPE LLCs or such Guarantors assets; and shall continue to be effective or be reinstated, as the case may be, if at any time payment pursuant to Section 6.1 is rescinded or reduced in
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amount, or must otherwise be restored or returned by an RTEA Indemnified Person, whether as a voidable preference, fraudulent conveyance, or otherwise, all as though such payment or performance had not been made.
(e) With respect to each Guarantors obligations related to Section 7.6 or Section 7.7 , the Guaranty of each Guarantor shall remain in full force and effect and continue to be effective (i) in the event any of the Cloud Peak Parties or such Guarantor becomes insolvent or makes an assignment for the benefit of creditors, (ii) in the event a receiver or trustee is appointed for all or any significant part of any of the Cloud Peak Parties or such Guarantors assets; and shall continue to be effective or be reinstated, as the case may be, if at any time payment pursuant to Section 7.6 or Section 7.7 is rescinded or reduced in amount, or must otherwise be restored or returned by a Rio Tinto Party, whether as a voidable preference, fraudulent conveyance, or otherwise, all as though such payment or performance had not been made.
(f) In the event that any payment pursuant to this Section 6.2 , or any part thereof, is rescinded, reduced, restored or returned, the obligations pursuant to this Section 6.2 shall be reinstated and deemed reduced only by such amount paid or performed and not so rescinded, reduced, restored or returned.
(g) Each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against CPE LLC, the Cloud Peak Parties or any other Guarantor that arise from the existence, payment, performance or enforcement of its obligations under this Section 6.2 or Section 7.6 or Section 7.7 , as applicable, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of an RTEA Indemnified Person against CPE LLC or of a Rio Tinto Party against the Cloud Peak Parties or any Guarantor or any collateral which any such RTEA Indemnified Person or Rio Tinto Party, as applicable, hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from CPE LLC, the Cloud Peak Parties or a Guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights.
Prospectus, Final Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or the Final Offering Memorandum or Supplemental Marketing Material as set forth on Schedule 6.4(a)(ii) shall not be deemed to be information relating to Rio Tinto.
any Liability or obligation hereunder except to the extent of any Liabilities caused by or arising solely out of such delay or deficiency.
different defenses available with respect to such Third Party Claim, the reasonable fees and expenses of separate counsel to the Indemnified Party shall be considered Liabilities for purposes of this Agreement; provided , further , that the Indemnifying Party shall only be responsible for the fees or expenses of not more than one separate legal firm (in addition to any fees or expenses for any local counsel), unless otherwise agreed to, for all of the Indemnified Parties; provided , however , that in the event that such legal firm is conflicted amongst the Indemnified Parties, then the Indemnifying Party shall be responsible for the fees or expenses of up to two legal firms in any single jurisdiction for all of the Indemnified Parties. The Party controlling such defense (the Controlling Party ) shall keep the Non-Controlling Party reasonably advised of the status of such Third Party Claim and the defense thereof and shall consider in good faith recommendations made by the Non-Controlling Party with respect thereto. The Non-Controlling Party shall furnish the Controlling Party with such Information as it may have with respect to such Third Party Claim (including copies of any summons, complaint or other pleading that may have been served on such Party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and shall otherwise cooperate with and assist the Controlling Party in the defense of such Third Party Claim. If the Indemnifying Party has elected to assume the defense of the Third Party Claim but has specified, and continues to assert, any reservations or exceptions in such notice to the Indemnified Party, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnified Parties shall be borne by the Indemnifying Party, but the Indemnifying Party shall be entitled to reimbursement by the Indemnified Party for payment of any such fees and expenses to the extent that it establishes that such reservations and exceptions were proper.
applicable member of the Rio Tinto Group under this Section 7.2 consistent with the nature, type and detail of certification provided to the applicable members of the Rio Tinto Group prior to the Closing.
of the Rio Tinto Group and the Cloud Peak Group for the disclosure of such information or (ii) as otherwise required by applicable Law. In connection therewith, CPE and CPE LLC shall also permit any member of the Rio Tinto Group, the independent registered public accountants of the applicable member(s) of the Rio Tinto Group (the Rio Tinto Auditors ) and other Representatives or advisors of the Rio Tinto Group (including legal counsel) to discuss the affairs, finances and accounts of any member of the Cloud Peak Group with the officers of CPE and CPE LLC and the independent registered public accountants of CPE (the Cloud Peak Auditors ), all at such times and as often as the applicable member(s) of the Rio Tinto Group may reasonably request upon reasonable notice during normal business hours.
and deliver to RTEA, no later than the date the same are printed for distribution to its shareholders, sent to its shareholders or filed with the SEC, whichever is earliest, final copies of all Cloud Peak Public Filings, provided , however , that CPE shall use commercially reasonable efforts to deliver to RTEA the final form of its Annual Report on Form 10-K, together with all certifications required by applicable Law by each of the chief executive officer and chief financial officer of CPE and an opinion thereon by CPEs independent registered public accountants, no later than 9:00 a.m., New York city time, on the second day prior to the day CPE is required to file its Annual Report on Form 10-K with the SEC. CPE and CPE LLC shall cooperate with the applicable member(s) of the Rio Tinto Group in preparing all press releases and other statements to be made available by CPE and CPE LLC or any of their respective Subsidiaries to the public, including, without limitation, information concerning material developments in the business, properties, results of operations, financial condition or prospects of CPE and CPE LLC or any of their respective Subsidiaries. The Rio Tinto Group shall have the right to review, if practicable, reasonably in advance of the public release or release to financial analysts or investors (1) all press releases and other written statements to be made available by CPE and CPE LLC or any of their respective Subsidiaries to the public (excluding press releases or written statements that relate primarily to trade matters), (2) all reports and other information prepared by CPE and CPE LLC or any of their respective Subsidiaries for release to financial analysts or investors and (3) all Cloud Peak Public Filings; provided , however , that the applicable member(s) of the Cloud Peak Group shall have the sole right to determine the timing of all such releases, and provided , further , that neither RTEA nor any member of the Rio Tinto Group shall disclose any material, non-public information of CPE or CPE LLC except (i) pursuant to policies and procedures mutually agreed upon by RTEA and CPE and CPE LLC for the disclosure of such information and (ii) as required by applicable Law. No press release, report, registration, information or proxy statement, prospectus or other document which refers, or contains information with respect, to any member of the Rio Tinto Group shall be filed with the SEC or otherwise made public or released to any financial analyst or investor by CPE or CPE LLC, and CPE and CPE LLC shall not permit any of their respective Subsidiaries to file or otherwise make public or release such information, without the prior written consent of the applicable member(s) of the Rio Tinto Group with respect to those portions of such document that contain information with respect to any member of the Rio Tinto Group except as may be required by applicable Law (in such cases CPE and CPE LLC shall use their reasonable best efforts to notify the relevant member of the Rio Tinto Group and to obtain such members consent before making such a filing with the SEC or otherwise making any such information public).
CPE LLC will cooperate with the applicable member(s) of the Rio Tinto Group in coordinating the timing of any public release of any Cloud Peak Information.
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represent to any such member(s) of the Rio Tinto Group that the information provided by CPE and CPE LLC relating to CPE and CPE LLC, in such Rio Tinto Public Filing does not contain any untrue statement of material fact or omit to state a material fact, in each case as determined based on a level of materiality applicable to a company with annual revenues equal to two times the annual revenues of CPE LLC (the Applicable Materiality Threshold ), required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. CPE and CPE LLC may publicly release financial or other information which conflicts with the information with respect to CPE and CPE LLC, any Affiliate of CPE or CPE LLC, or the Cloud Peak Group that is provided by CPE or CPE LLC for any Rio Tinto Public Filing only to the extent that such conflicting information (a) relates to Corporate Reserves Data which is calculated on a different basis than that contained in the Rio Tinto Public Filing, (b) is required by Law or (c) is otherwise consented to by RTEA.
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Each Party acknowledges that no member of the Rio Tinto Group, or any of its executive officers or directors, shall be liable to CPE or any of its shareholders or CPE LLC or any of its members for breach of fiduciary or other duty by reason of the fact that the Rio Tinto Group engaged in any activity set forth in clause (a) or (b) above; unless, however, such activity was presented to a Person who was also a director or officer of CPE or CPE LLC solely in his or her capacity as such. For purposes of this Section 8.2 , Competitive Business means any coal mining or coal production business or other coal production operation in the coal industry within the Powder River Basin which is competitive with the Cloud Peak Business, other than the Cloud Peak Business. For the avoidance of doubt, any business or operation of the Rio Tinto Group in respect of the matters provided for in the Agency Agreement, the RTEA Coal Supply Agreement or any other agreement in writing between the Parties or the expansion of any existing business or operation (including, but not limited to, the Colowyo mine) shall not be deemed a Competitive Business for purposes of this Section 8.2 .
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Cloud Peak Energy Inc.
General Counsel
505 S. Gillette Avenue
Gillette, Wyoming 82716
(307) 687-6000
Fax: (307) 687-6059
Rio Tinto Energy America Inc.
c/o Chief Executive Officer
4700 Daybreak
Parkway
South Jordan, Utah 84095
(801) 204-2000
Fax: (801) 204-2892
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With a copy to (which shall not constitute notice):
Legal Department
Rio Tinto Services Inc.
4700 Daybreak Parkway
South Jordan, Utah 84095
(801) 204-2000
Fax: (801) 204-2892
or to such other addresses or telecopy numbers as may be specified by like notice to the other Parties.
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IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be signed by their duly authorized representatives.
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Rio Tinto America Inc. |
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By: |
/s/ James P. Berson |
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Name: |
James P. Berson |
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Title: |
Authorized Agent |
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Rio Tinto Energy America Inc. |
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By: |
/s/ James P. Berson |
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Name: |
James P. Berson |
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Title: |
Authorized Agent |
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Kennecott Management Services Company |
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By: |
/s/ James P. Berson |
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Name: |
James P. Berson |
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Title: |
Authorized Agent |
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Cloud Peak Energy Inc. |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Cloud Peak Energy Resources LLC |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Antelope Coal LLC |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Caballo Rojo Holdings LLC |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Caballo Rojo LLC |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Cloud Peak Energy Services Company |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Cloud Peak Energy Finance Corp. |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Cordero Mining Holdings LLC |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Cordero Mining LLC |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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Kennecott Coal Sales LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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NERCO Coal LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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NERCO Coal Sales LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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NERCO LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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Northern Coal Transportation LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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Prospect Land and Development LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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Resource Development LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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Sequatchie Valley Coal Corporation |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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Spring Creek Coal LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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Western Minerals LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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EXHIBIT A
Jacobs Ranch MIPA Exhibit
The following Exhibit sets forth certain rights, obligations and liabilities of RTEA and the Cloud Peak Group with respect to the MIPA. For the avoidance of doubt, any obligations and liabilities under the MIPA that are not assigned or allocated to or assumed by CPE LLC under this Exhibit A shall be deemed to be assigned or allocated to and assumed by RTEA and shall be the obligations and liabilities of RTEA. Unless otherwise indicated, all capitalized terms used herein shall have the meanings set forth in the Master Separation Agreement. For the avoidance of doubt, the Agency Agreement between CPE LLC and RTEA constitutes a separate obligation between CPE LLC and RTEA and shall not be governed by this Exhibit A . The Cloud Peak Group further acknowledges RTEAs obligations under the Tire Allocation Agreement (as defined in the MIPA).
1. Except as provided in this Exhibit, CPE LLC hereby assigns, transfers and delegates all rights and obligations arising in connection with the MIPA to RTEA and RTEA hereby accepts and assumes such rights and obligations.
2. Notwithstanding the foregoing provisions of Section 1 of this Exhibit A , with respect to Article II of the MIPA:
2.1. CPE LLC shall fully and promptly cooperate with RTEA in the performance of any actions under Section 2.4 of the MIPA, including by reviewing information provided by the Buyer (as defined in the MIPA), promptly forwarding all information provided by the Buyer to RTEA and providing RTEA with full access at reasonable times to any books, records or other information in the possession of CPE LLC and its Affiliates as necessary for RTEA to satisfy its obligations. RTEA shall have sole discretion with respect to any determinations to be made under Section 2.4 of the MIPA.
2.2. CPE LLC shall fully and promptly cooperate with RTEA in the performance of any actions under Section 2.5(b) , including by preparing the documents referred to in Section 2.5(b) if so directed by RTEA, reviewing such documents and other information as requested by RTEA, and providing RTEA with full access at reasonable times to any books, records or other information in the possession of CPE LLC and its Affiliates as necessary for RTEA to satisfy its obligations. RTEA shall have sole discretion with respect to any determinations to be made under Section 2.5(b) of the MIPA.
2.3. Upon request from RTEA, CPE LLC shall obtain and provide to RTEA any information that may be obtained under Section 2.5(c) of the MIPA and request of the Buyer, on RTEAs behalf, any information or assistance that Seller is permitted to request and receive under Section 2.5(c) .
2.4. CPE LLC agrees to promptly forward to RTEA any notices received from the Buyer under Section 2.5(e) of the MIPA.
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2.5. CPE LLC shall fully and promptly cooperate with RTEA in the performance of any actions required of CPE LLC (but assigned and delegated to RTEA hereunder) under Section 2.5(f) of the MIPA, including by reviewing information provided by the Buyer, promptly forwarding all information provided by the Buyer to RTEA, providing RTEA with full access at reasonable times to any books, records or other information in the possession of CPE LLC necessary for RTEA to satisfy its obligations. RTEA shall have sole discretion with respect to any determinations to be made under Section 2.5(f) of the MIPA.
2.6. Upon request from RTEA, CPE LLC shall bring a Claim (as defined in the MIPA) against the Buyer as contemplated by Section 2.5(g) of the MIPA, on RTEAs behalf. RTEA shall bear all expenses of, and shall solely control all litigation relating to, any such Claim and be entitled to any benefits resulting from such Claim. RTEA shall have sole discretion with respect to any determinations to be made under Section 2.5(g) of the MIPA.
2.7. RTEA shall be responsible for any payment required to be made by CPE LLC and entitled to any payment to be received by CPE LLC under Section 2.5(h) of the MIPA. CPE LLC shall promptly forward to RTEA any payments received under Section 2.5(h) of the MIPA.
3. Notwithstanding the foregoing provisions of Section 1 , with respect to Article V of the MIPA:
3.1. RTEA shall have all the rights and benefits of Section 5.3 of the MIPA. CPE LLC agrees to promptly forward to RTEA payments received under Section 5.3 of the MIPA.
3.2. RTEA shall have all the rights and benefits of Section 5.4 of the MIPA. CPE LLC agrees to promptly forward to RTEA payments received under Section 5.4 of the MIPA.
3.3. RTEA shall have all the rights and benefits of Section 5.7 of the MIPA. CPE LLC agrees to promptly forward to RTEA payments received under Section 5.7 of the MIPA.
3.4. RTEA shall have all the rights and benefits of Section 5.8 of the MIPA.
3.5. CPE LLC on behalf of every other member of the Cloud Peak Group, hereby agrees to comply with (and cause each of the other members of the Cloud Peak Group to comply with) Section 5.10(a) of the MIPA. For avoidance of doubt, CPE LLC, on behalf of every other member of the Cloud Peak Group, hereby agrees to maintain in confidence, and cause each of the other members of the Cloud Peak Group to maintain in confidence, all material written, oral, or other information obtained in confidence from RTEA in connection with the MIPA or the Acquisition, in accordance with the terms of Section 5.10(a) of the MIPA and subject to the same qualifications set forth in Section 5.10(c) of the MIPA. CPE LLC, on behalf of every other member of the Cloud Peak Group, acknowledges Section 5.10(e) of the MIPA and that RTEA shall be entitled to the relief
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described in Section 5.10(e) of the MIPA for any violation of this Section 3.5 of Exhibit A by CPE LLC and each other member of the Cloud Peak Group.
3.6. RTEA shall have all the rights and benefits of Section 5.13 of the MIPA.
3.7. CPE LLC shall fully and promptly cooperate with RTEA in the performance of any actions under Section 5.14 of the MIPA, including by providing RTEA with full access at reasonable times to any books, records or other information in the possession of CPE LLC and its Affiliates as necessary for RTEA to satisfy its obligations. RTEA shall have sole discretion with respect to any determinations to be made under Section 5.14 of the MIPA. CPE LLC will promptly forward any notice or other information received from Buyer pursuant to Section 5.14 of the MIPA to RTEA and, upon the request of RTEA, will promptly forward any notice or other information from RTEA to Buyer.
3.8. CPE LLC hereby undertakes to perform all obligations (and the same are not assigned or delegated to RTEA hereunder) pursuant to Section 5.16 of the MIPA, as follows. With respect to any property identified under Section 5.16(b) of the MIPA as being part of Jacobs Ranch (as defined in the MIPA), the Subsidiary (as defined in the MIPA) or the Mine (as defined in the MIPA), that was to have been conveyed to the Buyer or Jacobs Ranch pursuant to the MIPA, but which was not, and which is requested by RTEA or the Buyer pursuant to Section 5.16 of the MIPA, to the extent that such property was held by any member of the Cloud Peak Group as of the Closing Date of the IPO, CPE LLC shall effect the conveyance to the Buyer of any such property at no cost to RTEA. To the extent that such property was not held by any member of the Cloud Peak Group as of the Closing Date of the IPO, at the request of RTEA, CPE LLC shall use all reasonable best efforts, short of litigation, to obtain and effect a transfer of such property to the Buyer, but RTEA shall bear the reasonable out-of-pocket expenses incurred by CPE LLC to obtain such property and effect such conveyance and the Parties shall cooperate with respect to the acquisition and conveyance of the same. CPE LLC agrees to forward any payments collected pursuant to Section 5.16(c) of the MIPA to the Buyer in accordance with the requirements of Section 5.16(c) of the MIPA only with the prior consent of RTEA.
4. Notwithstanding the foregoing provisions of Section 1 , with respect to Article VIII of the MIPA:
4.1. RTEA hereby acknowledges that it shall satisfy any indemnification obligations of CPE LLC arising under Sections 8.1(a) and 8.1(d) or out of Section 8.1(b) of the MIPA to the extent the same is designated as an obligation of RTEA under this Exhibit A ; provided further, however, that RTEA shall have no obligations under this Section 4.1 of Exhibit A, and the same are excluded from the assignment and delegation to RTEA under Section 1 , for Liability (as defined in the MIPA) to the extent such Liability arises due to gross negligence or willful misconduct of any member of the Cloud Peak Group, or any of its officers or employees (including any such gross negligence or willful misconduct by any of
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such officers or employees while such officer or employee was an employee of the Rio Tinto Group, including CLE LLC, prior to the IPO); provided, further, that the liabilities, if any, arising under the Agency Agreement shall be as set forth in the Agency Agreement.
4.2. CPE LLC shall fully indemnify RTEA for, and the same are excluded from the assignment and delegation to RTEA (i) any payments required to be made by a member of RTEA pursuant to the Seller Affiliate Guaranty (as defined in the MIPA) for any Liability arising out of any violation of Sections 8.1(c) , 5.6 and 5.10 of the MIPA by any member of the Cloud Peak Group, or any of its officers or employees (including any such violations of such Sections by any such officer or employee while such officer or employee was an employee of the Rio Tinto Group, including CLE LLC, prior to the IPO); and (ii) any Liabilities arising due to gross negligence or willful misconduct of any member of the Cloud Peak Group, or any of its officers or employees (including while such officer or employee was an employee of the Rio Tinto Group, including CLE LLC, prior to the IPO).
4.3. RTEA shall have all the rights and benefits of Section 8.2 of the MIPA and CPE LLC shall promptly forward to RTEA any payments received pursuant to Section 8.2 of the MIPA.
4.4. With respect to those matters for which RTEA has assumed indemnification obligations under Article VIII of the MIPA, the performance of any actions required to be taken under Section 8.3 of the MIPA shall be, and the same hereby is, assigned and delegated to, the obligation of RTEA. CPE LLC shall fully and promptly cooperate with RTEA in the performance of any actions required of CPE LLC under Section 8.3 of the MIPA (but assigned and delegated to RTEA hereunder), including by participating in any legal or governmental proceeding arising in connection with such performance, promptly forwarding all notices or other information provided by the Buyer or any third-party to RTEA and providing RTEA with full access at reasonable times to any books, records or other information in the possession of CPE LLC as necessary for RTEA to satisfy its obligations. RTEA shall have sole discretion with respect to any determinations to be made under Section 8.3 of the MIPA. RTEA shall have all the rights and benefits of Section 8.3 of the MIPA.
4.5. RTEA shall have all the rights and benefits of Section 8.4 of the MIPA.
4.6. Without limiting the obligation of RTEA to mitigate as contemplated in Section 8.5 of the MIPA, and assigned and delegated to RTEA hereunder, CPE LLC hereby also agrees to make Commercially Reasonable Efforts (as defined in the MIPA) to mitigate any Liability, including availing itself of any defenses, limitations, rights of contribution, claims against third parties and other rights at law or in equity, and shall provide evidence and documentation of the nature and extent of the Liability, in each case within CPE LLCs ability to control, as it relates to any indemnification obligation to Buyer or its Affiliates under the
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MIPA, that have been assigned to or assumed by RTEA hereunder, as the same were contemplated in Section 8.5 of the MIPA.
5. Notwithstanding the foregoing provisions of Section 1 , with respect to Article IX of the MIPA:
5.1. CPE LLC hereby agrees to provide RTEA as promptly as practicable with all notices, requests, demands, waivers and other communications given by the Buyer related to any of the rights or obligations that have been assigned or assumed by RTEA pursuant to this Exhibit A .
5.2. CPE LLC hereby acknowledges that RTEA shall be entitled to the rights and benefits of all provisions of Article IX of the MIPA.
6. Miscellaneous
6.1. CPE LLC hereby agrees that it will not agree to any amendment to the MIPA without the prior written consent of RTEA, which may be granted in the sole discretion of RTEA.
6.2. To the extent that any information to be provided, or duties performed by, CPE LLC hereunder is not in the possession or control of, or is unable to be performed by CPE LLC, but is in the possession of, or ability to perform by, any other member of the Cloud Peak Group, then Cloud Peak Energy Inc., shall fully cooperate with RTEA cause such information to be provided and performance rendered by such member of the Cloud Peak Group that is able to provide or perform the same.
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Exhibit 10.2
EXECUTION COPY
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this Agreement ), is made and entered into as of November 19, 2009 (the Effective Date ), between Rio Tinto Services Inc., a Delaware corporation ( RTS ), Cloud Peak Energy Resources LLC, a Delaware limited liability company ( CPE LLC ) and Cloud Peak Energy Inc., a Delaware corporation (together with its subsidiaries, CPE and, together with CPE LLC, the Company ). RTS, CPE LLC and CPE are sometimes referred to herein separately as a Party and together as the Parties .
RECITALS
WHEREAS, CPE is conducting an initial public offering of its common stock (the IPO );
WHEREAS, CPE LLC owns the western United States coal business (other than the Colowyo mine) of Rio Tinto America Inc., a Delaware corporation ( RTA ), an indirect wholly-owned subsidiary of Rio Tinto plc and its Affiliates (which, for purposes of this Agreement, means any entity that, directly or indirectly, controls, is controlled by, or is under common control with any specified entity or person; provided , however , that for purposes of this Agreement, except to the extent expressly provided for herein, the determination of whether an entity or person is an Affiliate shall be made assuming that Rio Tinto plc and its Affiliates and RTS are not Affiliates of the Company and vice versa);
WHEREAS, immediately prior to the IPO, CPE will acquire an interest in RTAs western United States coal business (other than the Colowyo mine) through the purchase of membership units of CPE LLC indirectly held by RTA;
WHEREAS, following the completion of the IPO, CPE will be a holding company, its sole asset will be its managing member interest in CPE LLC and its only business will be acting as the sole manager of CPE LLC; and
WHEREAS, CPE desires that RTS provide CPE LLC with certain agreed upon transitional services for a period following the consummation of the IPO, and RTS has agreed to provide such services on the terms and subject to the conditions set forth herein (CPE LLC is herein referred to as the ( Service Recipient ) in its capacity as the recipient of Transition Services (as defined below) and RTS is herein referred to as the ( Service Provider ) in its capacity as the provider of Transition Services).
AGREEMENT
NOW THEREFORE, for and in consideration of the respective covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
ARTICLE 1
DEFINITIONS; INTERPRETATION
1.1 Defined Terms . Capitalized terms shall have the meanings given them herein. Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Master Separation Agreement dated as of the date hereof by and among, RTEA, KMS, CPE, CPE LLC and the Subsidiaries named therein (the Master Separation Agreement ).
1.2 Interpretation . When a reference is made in this Agreement to Articles or Sections, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. Whenever the words include, includes, or including are used in this Agreement, they shall be deemed to be followed by the words without limitation, whether or not so stated. The words herein, hereof and hereunder and other words of similar import refer to this Agreement as a whole and not to a particular Article, Section or other subdivision. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The use of a particular gender in this Agreement is for convenience of reference only and shall not affect the interpretation of this Agreement. The titles, captions or headings of the Sections and Articles herein are for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. Annex A , Annex B and the schedules identified in this Agreement are incorporated herein by reference and made a part hereof.
ARTICLE 2
PROVISION OF TRANSITION SERVICES
2.1 Agreement . Upon the terms and subject to the conditions contained herein, the Service Provider agrees to provide or cause to be provided to the Service Recipient or its Affiliates the services listed on Annex A hereto at the locations that such transition services were provided to the Service Recipient or its predecessors immediately prior to the Effective Date (or at such locations as are otherwise agreed to by the Parties), together with any additional services that they may mutually agree to in writing (including the term of such services) from time to time (each a Transition Service and collectively the Transition Services ). For the avoidance of doubt, the Service Provider will use its commercially reasonable efforts to provide the Transition Services to the Service Recipient under the terms of this Agreement.
2.2 Transition Period . Subject to Section 2.3 , the Service Provider shall provide the Transition Services for a period shown for the applicable Transition Services on Annex A (each, a Transition Period ). The applicable Transition Period for any particular Transition Service, other than those identified as a P&OS function on Annex A , may be
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extended one time for a period of up to six months upon 30 calendar days written notice from the Service Recipient to the Service Provider unless the Parties otherwise agree to extend the Transition Period for such Transition Service by mutual written agreement and on mutually satisfactory terms. Any Transition Services identified with a finance function designation under Annex A will be automatically extended one time upon request of the Service Recipient to the Service Provider if the Transition Period for such Transition Services as set forth on Annex A will expire within (i) 30 calendar days of a fiscal period end or (ii) (30) calendar days of any applicable reporting deadline of the U.S. Securities and Exchange Commission (the Commission ) until, in the case of subclause (i), the report relating to such fiscal period is required to be filed with the Commission and in the case of subclause (ii), the expiration of such reporting deadline.
2.3 Term of Agreement; Early Termination of Transition Services . This Agreement shall commence on the Effective Date and continue for so long as any Transition Services are provided to the Service Recipient unless sooner terminated by the Parties or as otherwise provided in this Agreement. The Service Recipient may elect to terminate the provision of all or any portion of the Transition Services (or any Transition Service) prior to the expiration of the Transition Period by delivering written notice of such election to the Service Provider. Unless the Service Provider otherwise agrees in writing, and except as set forth below, any such termination shall be deemed to be effective no earlier than thirty (30) calendar days following the Service Providers receipt of such notice and the Transition Period for the affected Transition Services shall be deemed to terminate upon such effective date; provided, however, that if such termination would result in an obligation by the Service Provider to pay an early-termination or other similar fee to a third-party, such termination shall be deemed to be effective no earlier than sixty (60) calendar days following the Service Providers receipt of such notice and the Transition Period for the affected Transition Service shall be deemed to terminate upon such effective date. Upon the occurrence of a change in control of CPE or CPE LLC , this Agreement shall terminate effective upon the date of such change in control, unless the Service Provider otherwise agrees in writing. For purposes of this Agreement, the term change in control (i) with respect to CPE, shall have the meaning ascribed to the term Change in Control under the CPE 2009 Long-Term Incentive Plan or any similar successor equity incentive plan of Cloud Peak Energy Inc. and (ii) with respect to the Service Recipient, means a Change in Control as defined in the Third Amended and Restated Limited Liability Company Agreement of the Service Recipient. Each of the service level agreements with RTS set forth on Annex B hereto (each a Service Level Agreement ) shall terminate upon the termination of the relevant Transition Service.
2.4 Continuation of Certain Obligations and Duties. Neither the expiration of the Transition Period, nor the termination of this Agreement pursuant to Section 2.3 above, shall terminate or modify any duty or obligation of the Parties which are specifically intended to continue beyond the Transition Period or pursuant to any other agreement, including without limitation those duties and obligations of the Parties specified on Annex A hereto.
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2.5 Service Boundaries.
(a) The Service Provider shall be obligated to provide the Transition Services as set forth on Annex A . Any special specifications with respect to any Transition Services shall be set forth on Annex A . The Transition Services required to be provided by the Service Provider will be limited to providing services of personnel based on the maximum time per full time employee ( FTE ) per category of Transition Services, as specified in Annex A , whether or not required by the Service Recipient or needed to provide services at a requested level, unless the Parties otherwise agree. The Service Provider, unless otherwise agreed by the Parties, shall not be obligated to provide any Transition Services to relocate the corporate headquarters and personnel of the Company.
(b) The Service Recipient acknowledges that the personnel engaged in providing the Transition Services are engaged in other duties for the Service Provider and its Affiliates. Such personnel will seek to provide reasonable allocation of time during their normal daily work schedule based on their judgment to perform the Transition Services, but, except as otherwise expressly provided in the applicable Service Level Agreement, the Service Provider makes no guarantee of priority of service to the Service Recipient. If a conflict in priorities arises as determined by a Service Provider acting reasonably, the Service Provider shall be entitled to give priority to the requirements of the Service Provider and its Affiliates. Service Provider personnel shall not, absent prior agreement and under a separate cost schedule to be agreed in advance, provide Transition Services during non-business hours, weekends, holidays, or vacation periods, except for Priority 1 critical issues, as such term is defined in the IS&T Service Level Agreement attached hereto.
(c) Except as required to maintain the Transition Services as provided for in this Agreement, the Service Provider shall be under no obligation to obtain any third party consent or approval, purchase, lease, license or sublicense any additional equipment, software or other asset or to maintain any existing lease, license, sublicense or other asset. In the event that any equipment, software or asset is required, in the Service Providers reasonable judgment, to be purchased, leased or licensed for use in connection with the Transition Services, the Service Recipient shall be notified by the Service Provider in advance and in writing (including notification of the estimated related costs of such purchase, lease or license). The Service Provider, in its reasonable judgment, shall approve or reject such purchase, lease or license. The Service Recipient shall pay its pro rata share of the costs of such equipment, software or asset, as reasonably determined by the Service Provider.
(d) The Service Provider shall not be obligated to (i) perform any Transition Service it believes in good faith results or would result in (x) a violation of applicable Law, (y) a conflict of interest between the Parties or (z) a breach of contract or other obligation owed to a third party by the Service Provider or (ii) hire any additional employees (other than to replace existing employees) or maintain the employment of any specific employee.
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(e) The Service Provider will comply with substantially the same performance measurement metrics, if any, for Transition Services that it uses for its own operations, other than to the extent required by applicable Law. Where the Service Provider does not use similar services for its own operations, the Service Provider shall use commercially reasonable efforts to provide Transition Services in accordance with the Service Providers policies, procedures and practices in effect immediately prior to the Effective Date.
2.6 No Secondment. For the avoidance of doubt, the Service Provider is not under any obligation to second or procure the secondment to the Service Recipient of any employee or other personnel in connection with the provision of the Transition Services. The Parties agree that such individuals providing services are employees, contract employees or secondees of the Service Provider.
2.7 Compliance with Policies; Safety of Personnel . All Transition Services must be reasonably capable of being performed in a manner that is consistent with policies and procedures of the Service Provider, including those relating to compliance with all applicable competition, antitrust, health, safety and environmental laws. The Service Provider shall use commercially reasonable efforts to provide the Service Recipient with advance written notice in the event it believes any Transition Service is not consistent with such policies or procedures if it would materially impact the Transition Services to be provided. To the extent Transition Services are performed on site, the Service Provider will be permitted to withdraw any personnel providing Transition Services at that time if it believes that such personnel face any risk to their personal safety and prior notice (to the extent possible) has been given to the Service Recipient. The Service Provider and its personnel shall comply, in all material respects, with all applicable Laws in providing the Transition Services.
2.8 Responsibility for Errors . The Service Providers sole responsibility for errors or omissions committed by it in performing the Transition Services shall be to correct such errors or omissions in the Transition Services; provided, however, that the Service Recipient must as promptly as practicable under the circumstances advise the Service Provider of any such error or omission of which it becomes aware after having used commercially reasonable efforts to detect any such errors or omissions. NOTWITHSTANDING THE FOREGOING, AND AS SET FORTH IN SECTION 6.12 OF THIS AGREEMENT, THE SERVICE PROVIDER SPECIFICALLY EXCLUDES ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY TRANSITION SERVICES PROVIDED UNDER THIS AGREEMENT, AND EXCEPT AS OTHERWISE SET FORTH HEREIN, THE TRANSITION SERVICES ARE PROVIDED ON AN AS IS, WHERE IS BASIS.
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ARTICLE
3
PAYMENT FOR TRANSITION SERVICES
3.1 Payment Obligation. The Service Recipient shall pay the Service Provider for the Transition Services the amounts set forth in Annex A , in accordance with the terms set forth in Annex A . The Service Recipient shall also reimburse the Service Provider for all reasonable out-of-pocket expenses incurred in connection with the provision of the Transition Services to the Service Recipient. If the term of any Transition Service is extended or if there is any material change in the assumptions used by the Parties in originally determining the costs to be charged, the Service Recipient shall pay the Service Provider adjusted charges that are determined in a manner consistent with such changed assumptions and as mutually agreed in writing and in advance by the Service Provider and Service Recipient acting in good faith. If no agreement is reached, the Service Provider shall not be required to provide any Transition Services for any adjusted charges based on such changed assumptions. Any payments owed to the Service Provider as set forth in Annex A may be reduced commensurately on thirty (30) calendar days written notice by the Service Recipient to the Service Provider if the related Transition Services are terminated by the Service Recipient pursuant to Section 2.3 hereto.
3.2 Invoices; Payment Due Date . The Service Provider shall provide the Service Recipient on a monthly basis with a monthly invoice reflecting in reasonable detail (a) the Transition Services, and (b) fees owed for such Transition Services provided during the preceding month and all reasonable out-of-pocket expenses incurred. All amounts shall be due and payable within thirty (30) days after the date of the invoice. This Section shall survive any termination of this Agreement with respect to Transition Services performed pursuant to this Agreement for which the Service Provider has not yet been paid. The fees and charges payable under this Agreement and set forth on Annex A are exclusive of any sales tax or excise taxes or any customs or import charges or duties or any similar charges or duties.
3.3 Interest on Late Payment . Any amounts owed by the Service Recipient under this Agreement that are not paid when due shall bear interest, from the time the payment was due until the time paid, at a rate of 10% per annum compounded annually.
ARTICLE 4
RIO TINTO SERVICES PERSONNEL
4.1 Availability . During the entire Transition Period, the Service Provider shall use its commercially reasonable efforts to maintain the personnel necessary to provide the Transition Services from time to time; provided, however, there is no assurance that the same personnel as have been used to provide previous services will be available throughout any Transition Period.
4.2 Subcontractors . The Service Provider may engage a subcontractor (a Subcontractor ) to perform all or any of the Transition Services, provided that any such Subcontractor agrees in writing to be bound by confidentiality obligations at least as protective as terms of Section 6.8 regarding confidentiality and non-use of information, and provided further
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that the Service Provider remains responsible for the performance of such Subcontractor and for paying the Subcontractor.
ARTICLE 5
GOOD FAITH COOPERATION
5.1 Intent of the Parties . The intent of the Parties is (a) that the level and quality of the Transition Services provided by the Service Provider to the Service Recipient be maintained at and result in a quality and level of service that is reasonably equivalent to that performed by the Service Provider prior to the IPO and (b) that the Service Provider be fully and promptly paid in accordance with this Agreement for providing such Transition Services.
5.2 Cooperation . The Parties agree to cooperate in good faith in all matters relating to the provision and receipt of Transition Services. Each Party shall act in good faith to achieve the benefits expected and to resolve any problems that may occur in a commercially reasonable way. The Parties agree for this purpose as follows:
(a) Each Party agrees to appoint and maintain a coordinator with responsibility for ensuring that the overall intent of this Agreement is achieved. In that regard, RTS shall initially assign Brian Oldham as its coordinator and CPE and CPE LLC shall initially assign Tracy Breinholt as their coordinator.
(b) The Service Provider shall supervise the activities of its officers, employees and representatives with respect to the Transition Services in a manner reasonably consistent with past practice.
(c) The Service Provider shall maintain accurate and complete books and records concerning the provision and charges for the Transition Services and will make such books and records available to the Service Recipient, or its designated representatives for inspection and copying at any time during the Service Providers regular business hours.
(d) The Service Recipient shall provide all information and access reasonably required or requested by the Service Provider to perform its obligations under this Agreement and shall make available, as requested by the Service Provider, sufficient resources, access to the Service Recipients employees and timely decisions, approvals and acceptances in order that the Service Provider may perform its obligations hereunder in a timely manner.
(e) The Parties covenant and agree that they shall not knowingly take any action or enter into any commitment or agreement in connection with the transactions and activities contemplated hereunder that would result in a contravention of any provisions of applicable Law.
(f) The Parties agree to use commercially reasonable efforts in seeking to obtain all third party consents, licenses, sublicenses or approvals necessary to permit each
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Party to perform its obligations hereunder, including, rights to use third party software needed for the performance of Transition Services.
ARTICLE 6
GENERAL PROVISIONS
6.1 Mutual Representations . Each Party represents and warrants to the other that it has the corporate power and authority to enter into and perform its obligations under this Agreement and has taken all corporate and any other action necessary to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform its obligations hereunder.
6.2 Record Retention . To facilitate the possible exchange of information pursuant to this Agreement, the applicable Service Level Agreement or in accordance with applicable Law, the Parties agree to comply with the record retention requirements as set forth in Section 7.10 of the Master Separation Agreement.
6.3 Indemnification Against Third Party Claims .
(a) Subject to the limitations and other provisions in Sections 6.5 and 6.6 , the Service Recipient shall indemnify and hold harmless the Service Provider, its successors and Affiliates and their respective officers, directors, employees, and agents (the Service Providers Indemnified Parties ) from and against any claims, loss, damage, cost, liability, injury or expense (including reasonable attorneys fees) asserted by a third party (a Third Party Claim ) against the Service Providers Indemnified Parties if and only to the extent that such Third Party Claim arises out of or results from the acts or omissions of the Service Recipient related to the Transition Services provided under this Agreement.
(b) Subject to the limitations and other provisions in Sections 6.5 and 6.6 , the Service Provider shall indemnify and hold harmless the Service Recipient and its successors and Affiliates and their respective officers, directors, employees and agents (the Service Recipients Indemnified Parties ) with respect to any Third Party Claim asserted against the Service Recipients Indemnified Parties if and only to the extent that such Third Party Claim arises out of or results from the acts or omissions of the Service Provider related to the Transition Services provided under this Agreement.
(c) The obligations under this Section 6.3 shall survive expiration or earlier termination of this Agreement until fifteen (15) months after such expiration or termination.
6.4 Claim Procedure for Third Party Claims .
(a) If any party entitled to indemnification under Section 6.3 (an Indemnified Party ) receives notice or otherwise learns of the assertion of any Third Party Claim with respect to which the Service Recipient or Service Provider may be obligated to provide indemnification under Section 6.3 , the party entitled to
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indemnification shall promptly give written notice (but no later than thirty (30) calendar days after the circumstances giving rise to the claim first become known to the Indemnified Party or could, with reasonable diligence, have become known to the Indemnified Party) to the Party from whom indemnification is sought (and Indemnifying Party ) of the Third Party Claim. Such notice shall be accompanied by reasonable supporting documentation submitted by such third party (to the extent then in the possession of the Indemnified Party) and shall describe in reasonable detail (to the extent known by the Indemnified Party) the facts constituting the basis for such Third Party Claim and the amount of the claimed liabilities. Within twenty (20) days after delivery of such notification, the Indemnifying Party (if it agrees that the Third Party Claim is subject to indemnification under this Agreement) may, upon written notice thereof to the Indemnified Party, assume control of the defense of such Third Party Claim with counsel reasonably satisfactory to the Indemnified Party, such consent not to be unreasonably withheld, delayed or conditioned. During any period in which the Indemnifying Party has not so assumed control of such defense, the Indemnified Party shall control such defense.
(b) The party not controlling such defense (the Non-Controlling Party ) may participate therein at its own expense; provided, however, that if the Indemnifying Party assumes control of such defense and the Indemnified Party reasonably concludes that the Indemnifying Party and the Indemnified Party have material conflicting interests or different defenses available with respect to such Third Party Claim, the reasonable fees and expenses of separate counsel to the Indemnified Party shall be considered liabilities for purposes of this Agreement; provided, further, that the Indemnifying Party shall not be responsible for the fees or expenses of more than one legal firm in any single jurisdiction, unless otherwise agreed to, for all of the Indemnified Parties; provided, however, that in the event that such legal firm is conflicted amongst the Indemnified Parties, then the Indemnifying Party shall be responsible for the fees or expenses of up to two legal firms in any single jurisdiction for all of the Indemnified Parties. The party controlling such defense (the Controlling Party ) shall keep the Non-Controlling Party reasonably advised of the status of such Third Party Claim and the defense thereof and shall consider in good faith recommendations made by the Non-Controlling Party with respect thereto. The Non-Controlling Party shall furnish the Controlling Party with such information as it may have with respect to such Third Party Claim (including copies of any summons, complaint or other pleading that may have been served on such Party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and shall otherwise cooperate with and assist the Controlling Party in the defense of such Third Party Claim. If the Indemnifying Party has elected to assume the defense of the Third Party Claim, as set forth in Section 6.4(a) above, but has specified, and continues to assert, any reservations or exceptions in such notice to the Indemnified Party then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnified Parties shall be borne by the Indemnifying Party, but the Indemnifying Party shall be entitled to reimbursement by the
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Indemnified Party for payment of any such fees and expenses to the extent that it establishes that such reservations and exceptions were proper.
(c) If an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnified Party of its election as provided in Section 6.4(a) , the cost and expense of the Indemnified Party incurred in defending such Third Party Claim shall be additional indemnified liabilities.
(d) The Indemnifying Party shall not agree to any settlement of, or the entry of any judgment arising from, any such Third Party Claim without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that the consent of the Indemnified Party shall not be required if (i) the Indemnifying Party agrees in writing to pay any amounts payable pursuant to such settlement or judgment, (ii) such settlement or judgment includes a full, complete and unconditional release of the Indemnified Party from further liability, (iii) such settlement does not create any financial or other obligation on the part of the Indemnified Party and (iv) such settlement does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an Indemnified Party. Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim within the time periods required under this Agreement, the Indemnified Party shall not agree to any settlement of, or the entry of any judgment arising from, any such Third Party Claim without the prior written consent of the Indemnifying Party.
(e) The provisions of this Section 6.4 shall survive expiration or earlier termination of this Agreement until fifteen (15) months after such expiration or termination.
6.5 Limitations on Liability .
(a) Notwithstanding any other provision of this Agreement, and with respect to any and all claims (whether or not by a third party pursuant to Section 6.3 and whether or not for breach or nonperformance of contract, negligence, indemnification, or any other theory of liability) in no event shall the Service Providers aggregate liability to the Service Recipient or the Service Recipients Indemnified Parties exceed the aggregate payments made to the Service Provider by the Service Recipient under this Agreement except that this limitation shall not apply to liabilities caused solely by actions of the Service Provider constituting gross negligence or willful misconduct.
(b) Notwithstanding any other provision of this Agreement, and with respect to any and all claims (whether for breach or nonperformance of contract, negligence, indemnification, or any other theory of liability), neither the Service Provider nor the Service Recipient shall be liable to make any payment to the other in respect of any individual claim or series of related claims for losses in an amount which is less than $50,000 per claim or series of related claims unless and until the aggregate amount of such claims exceeds, in the aggregate, $200,000 (the Deductible ), in which event the Party requesting payment shall be entitled to
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recover all losses resulting from or arising out of such claims only to the extent the aggregate amount of such losses exceeds $200,000. However, claims for losses of more than $50,000 per claim or series of related claims shall not be subject to this limitation and shall not be counted toward satisfaction of the Deductible.
(c) Notwithstanding any other provision of this Agreement, and with respect to any and all claims (whether for breach or nonperformance of contract, negligence, indemnification, or any other theory of liability), in no event shall any damages or losses payable under this Agreement include, and no Party shall be liable to the other Parties for, any punitive, incidental, consequential, indirect or special damages (including lost profits, lost revenues and loss of business), whether foreseeable or not, whether occasioned by any failure to perform or the breach of any representation, warranty, covenant or other obligation under this Agreement for any cause whatsoever.
(d) Except as otherwise expressly provided herein, none of the remedies set forth in this Agreement is intended to be exclusive, and each Party shall have all other remedies now or hereafter existing at law or in equity or by statute or otherwise, and the election of any one or more remedies shall not constitute a waiver of the right to pursue other available remedies.
(e) The provisions of this Section 6.5 shall survive expiration or earlier termination of this Agreement.
6.6 Insurance. Each Party to this Agreement shall obtain and maintain at its own expense insurance of the type generally maintained by it in the ordinary course of business. Each Party further agrees with respect to any Third Party Claim for which indemnification is available from the other Party pursuant to Section 6.3 , to first seek payment for such Third Party Claim under such Partys available insurance policies prior to seeking indemnification under Section 6.3 of this Agreement. To the extent permitted by applicable Law, the Service Provider shall not be responsible for obtaining or maintaining professional liability insurance.
6.7 Notice of Breach and Termination . In the event of a material breach of this Agreement by a Party, the Party claiming the breach shall promptly give written notice (but no later than thirty (30) calendar days after such breach first become known to Party claiming the breach) of such breach to the other Parties, including the Party alleged to be in breach, which Party shall have fifteen (15) calendar days to cure such breach or, if such breach is capable of cure within a commercially reasonable period of time but cannot reasonably be expected to be cured within fifteen (15) calendar days, shall have fifteen (15) calendar days to undertake all available and appropriate action to begin the cure of the breach and shall proceed as promptly as possible thereafter to effect the cure. In the event of such cure, the notice of breach shall be rescinded. If, however, the breach is not cured as set forth herein, the Party claiming the breach may then pursue any and all remedies available to it based on such uncured breach, including the right to terminate this Agreement effective on a date of termination prior to the end of the relevant Transition
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Periods established by the non-breaching Party. Notwithstanding the foregoing provisions of this Section 6.7 , the Service Provider shall have the right to immediately terminate this Agreement if the Service Recipient fails to make any payment due to Service Provider hereunder within thirty (30) days after receipt of written notice of such failure, except with respect to amounts in issue that are subject to a bona fide dispute between the Parties.
6.8 Mutual Confidentiality Covenants.
(a) The Service Recipients Covenants . The Service Recipient acknowledges that, as a result of the Service Provider providing the Transition Services, the Service Recipient or its Affiliates may receive information that is confidential or that has been created, discovered or developed by the Service Provider or its Affiliates and/or in which property rights have been assigned or otherwise conveyed to the Service Provider or its Affiliates, which information has value to the Service Provider or its Affiliates, is not in the public domain and is not included in the assets of the Service Recipient (the Service Provider Proprietary Information ). The Service Provider Proprietary Information will be and remain the sole property of Service Provider or its Affiliates and its or their assigns and shall only be used on a royalty-free non-excusive basis in connection with the Transition Services. The Service Recipient hereby agrees that it and its Affiliates will use substantially the same degree of care which it normally uses to protect its own proprietary information to prevent disclosing to third parties the Service Provider Proprietary Information. The Service Recipient and its Affiliates will not make any use of the Service Provider Proprietary Information except as contemplated or required by the terms of this Agreement or any other Transaction Document or existing agreement or applicable Law.
(b) The Service Providers Covenants . The Service Provider acknowledges that, as a result of providing the Transition Services, the Service Provider or its Affiliates may receive information that is confidential or that has been created, discovered or developed by the Service Recipient or its Affiliates and/or in which property rights have been assigned or otherwise conveyed to the Service Recipient or its Affiliates, which information has value to the Service Recipient or its Affiliates, is not in the public domain and is not included in the assets of the Service Provider (the Service Recipient Proprietary Information ). The Service Recipient Proprietary Information will be and remain the sole property of the Service Recipient or its Affiliates and its or their assigns and shall only be used in connection with the Transition Services. The Service Provider hereby agrees that it and its Affiliates and the personnel providing Transition Services hereunder will use substantially the same degree of care which it normally uses to protect its own proprietary information to prevent disclosing to third parties the Service Recipient Proprietary Information. The Service Provider and its Affiliates will not make any use of Service Recipient Proprietary Information, except as contemplated or required by the terms of this Agreement or any other Transaction Document or existing agreement or applicable Law.
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6.9 Intellectual Property . To the extent the Service Provider uses any processes, technology, trade secrets or other intellectual property owned or licensed by the Service Provider or an Affiliate ( IP ) in providing Transition Services, such IP and any improvements to such IP shall remain the sole property of the Service Provider or its Affiliates. The Service Provider represents and warrants that, to its knowledge without any due inquiry, any IP used in connection with providing Transition Services hereunder will not infringe on any intellectual property rights of any other individual, partnership, limited liability company, corporation, trust, estate or other entity (a Person ). If it is determined that the same does infringe on the intellectual property rights of any other Person, then the Parties will negotiate how the affected Transition Services can be provided without use of the infringing IP and if the same cannot be so provided, then the Service Provider may, at its option, cancel the affected Transition Services without further liability.
6.10 Amendment and Waiver . This Agreement may not be altered or amended, nor may any rights hereunder be waived, except by an instrument in writing executed by each of the Parties hereto. No waiver of any terms, provision or condition of or failure to exercise or delay in exercising any rights or remedies under this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, provision, condition, right or remedy or as a waiver of any other term, provision or condition of this Agreement.
6.11 Relationship of the Parties . This Agreement does not create a partnership or joint venture between the Parties hereto and does not make any Party the agent of any other Party for any purpose whatsoever. No Party shall have the authority to commit any other Party to any binding obligation or to execute, on behalf of any other Party, any agreement, lease or other document creating legal obligations on the part of any other Party, and no Party shall represent to any third party that it has such authority.
6.12 Disclaimer of Warranties . EXCEPT AS OTHERWISE SET FORTH HEREIN, WITH RESPECT TO THE TRANSITION SERVICES, THE SERVICE PROVIDER MAKES NO EXPRESS, IMPLIED OR STATUTORY WARRANTIES OR REPRESENTATIONS AS TO THE QUANTITY OR QUALITY OF SERVICES AND SPECIFICALLY EXCLUDES ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. EXCEPT AS OTHERWISE SET FORTH HEREIN, THE TRANSITION SERVICES ARE PROVIDED ON AN AS IS, WHERE IS BASIS.
6.13 Assignment . Except as provided below, neither this Agreement nor any rights or obligations hereunder may be assigned by any Party without the prior written consent of each other Party hereto, except that (i) the Service Provider may assign its obligations under this Agreement to an Affiliate capable, in the Service Providers reasonable judgment, of undertaking any of the Transition Services and (ii) Service Recipient may assign its rights under this Agreement to any of its Affiliates. In the event written approval of an assignment is obtained, any transferee of this Agreement or any rights or obligations hereunder shall be bound by the terms and conditions of this Agreement. In
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addition, notwithstanding the foregoing, any assignment of rights or obligations under this Agreement shall not relieve the assigning Party of any of its obligations hereunder.
6.14 Notices . Any notice, request, demand or other communication which is required or permitted under this Agreement shall be in writing and shall be deemed to have been duly received (a) when actually received if personally delivered, (b) when transmitted if transmitted by telecopy transmission only during the recipients normal business hours unless arrangements have otherwise been made (with the consent of the recipient) to receive such telecopy outside of normal business hours or otherwise on the next business day after transmission, in each case with confirmation of successful transmission received by the sender, (c) the date of receipt as set forth on the tracking report, for next day delivery to a domestic address by recognized overnight delivery service (e.g., DHL, UPS or Federal Express); and (d) upon receipt, if sent by certified or registered mail, return receipt requested.
If to the Company:
General Counsel
Cloud Peak Energy Inc.
505 S. Gillette Avenue
Gillette, Wyoming 82716
(307) 687-6000
Fax: (307) 687-6059
If to RTS:
Legal Department
Rio Tinto Services Inc.
4700 Daybreak Parkway
South Jordan, Utah 84095
(801) 204-2000
Fax: (801) 204-2892
with a copy to (which shall not constitute notice):
Shane Orians, Esq.
Rio Tinto Services Inc.
4700 Daybreak Parkway
South Jordan, Utah 84095
(801) 204-2803
Fax: (801) 204-2892
6.15 Governing Law .
(a) This Agreement is to be construed in accordance with and governed by the internal laws of the State on New York without giving effect to any choice of law
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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 jurisdiction, the Supreme Court of the State of New York sitting in New York County (the New York Courts ) for any legal action or other legal proceeding arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated thereby (and agrees not to commence any legal action or other legal proceeding relating thereto except in such courts), including to enforce any settlement, order or award. Each party hereto:
(i) consents to service of process in any such proceeding in any manner permitted by the laws of the State of New York, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 6.14 is reasonably calculated to give actual notice;
(ii) agrees that the New York Courts shall be deemed to be a convenient forum; and
(iii) 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.
(c) 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 or the transactions contemplated hereby. Each of the parties hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the transactions contemplated by this Agreement, as applicable, by, among other things, the mutual waivers set forth in this Section 6.15(d) .
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6.16 Multiple Counterparts . 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. This Agreement may be executed by facsimile signature.
6.17 Invalidity . In the event that any one or more of the provisions contained in this Agreement or in any other agreement, certificate or instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.
6.18 No Third-Party Beneficiary . The provisions of this Agreement are for the benefit only of the Parties hereto, and their Affiliates, and no third party may seek to enforce, or benefit from, these provisions. The Parties specifically disavow any desire or intention to create any third party beneficiary hereunder, and specifically declare that no person, except for the Parties, and their Affiliates, and their respective successors, shall have any right hereunder nor any right of enforcement hereof.
6.19 Representation of Counsel; Mutual Negotiations . Each Party has had the opportunity to be represented by counsel of its choice in negotiating this Agreement. This Agreement shall therefore be deemed to have been negotiated and prepared at the joint request, direction, and construction of the Parties, at arms length, with the advice and participation of counsel, and will be interpreted in accordance with its terms without favor to any Party. The Parties respective counsel may not be disqualified from representing their clients in indemnification or other disputes arising out of this transaction by virtue of such counsels prior representation of the other Party in an unrelated matter.
6.20 Independent Contractor. The Transition Services will be provided by the Service Provider or its Affiliates as independent contractors and not as employees or seconded employees of the Service Recipient. It is specifically agreed that none of the personnel utilized by the Service Provider in connection with the Transition Services shall be or shall be considered, for any purpose, to be employees of the Service Recipient, and the Service Recipient and its Affiliates shall have no liability for salary, employee benefits, options, insurance, or tax withholding for such personnel of Service Provider.
6.21 Expenses. Except as otherwise specified in this Agreement, each Party hereto shall pay its own legal, accounting, out-of-pocket and other expenses incident to this Agreement and to any action taken by such Party in carrying this Agreement into effect.
6.22 Further Assurances . Each Party to this Agreement agrees to use commercially reasonable efforts to execute any and all documents and to perform such other acts as may be necessary or expedient to further the purposes of this Agreement and the relations contemplated hereby. Notwithstanding the foregoing, neither Party shall be required to provide or pay for any other Transition Services, except as otherwise contemplated hereby.
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6.23 Entire Agreement. This Agreement contains the entire understanding of the Parties and supersedes all prior agreements and understandings between the Parties relating to the subject matter hereof.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.
CLOUD PEAK ENERGY INC.: |
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CLOUD PEAK ENERGY RESOURCES LLC |
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RIO TINTO SERVICES INC.: |
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[Signature page for Transition Services Agreement]
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Exhibit 10.3
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this Agreement ), dated as of November 19, 2009, is entered into by and among Cloud Peak Energy Inc., a Delaware corporation (including its successors, the Company ), Cloud Peak Energy Resources LLC, a Delaware limited liability company( CPE LLC ), Rio Tinto America Inc., a Delaware corporation ( RTA ), Rio Tinto Energy America Inc., a Delaware corporation ( RTEA ) and Kennecott Management Services Company, a Delaware corporation ( KMS ). The Company, RTEA and KMS are parties to the Third Amended and Restated Limited Liability Company Agreement of CPE LLC.
Affiliate of any specified Person means any other Person directly or indirectly controlling, controlled by or under common control with (within the meaning of Rule 405 under the Securities Act), such specified Person; provided , however , the determination of whether a Person is an Affiliate of another Person shall be made assuming that no Holder is an Affiliate of the Company or CPE LLC solely by virtue of the ownership of Membership Units.
Common Stock shall mean the Companys common stock, par value $0.01 per share.
Equity Interests mean, with respect to the Company, any and all shares of capital stock in the Company or securities convertible into, or exchangeable or exercisable for, such shares, and options, warrants or other rights to acquire such shares. For purposes of this Agreement, Equity Interests shall include all issued and outstanding Membership Units.
Exchange Act means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations promulgated by the SEC thereunder.
Excluded Registration means a registration under the Securities Act of (i) securities pursuant to one or more Demand Registrations pursuant to Section 2.1 hereof, (ii) securities registered on Form S-8 or any similar successor form, and (iii) securities registered to effect the acquisition of, or combination with, another Person.
Holder means (i) RTEA, (ii) KMS and (iii) any Person to whom RTA, RTEA or KMS assigns rights under this Agreement pursuant to Section 2.9 , and who has agreed in writing to be bound by the terms of this Agreement.
Initial Public Offering means the initial public offering registered under the Securities Act of the Common Stock of the Company.
IPO Registration Statement means the Companys registration statement on Form S-1 (File No. 333-161293), as amended, filed with the SEC in connection with the Initial Public Offering.
Membership Units means the common membership units of CPE LLC.
Person or person means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof.
register , registered and registration refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.
Registrable Securities means the shares of the Companys Common Stock issued or issuable to any Holder in exchange for Membership Units or any other shares of Common Stock owned at any time by the Holders. As to any particular Registrable Securities, such Common Stock shall cease to be Registrable Securities when: (a) a registration statement with respect to the sale of such Common Stock shall have become effective under the Securities Act and such Common Stock shall have been disposed of in accordance with such registration statement; (b) such Common Stock shall have been sold to the public pursuant to Rule 144 under the Securities Act (or any successor provision); or (c) such Common Stock shall have ceased to be outstanding.
Requesting Holders shall mean any Holder(s) requesting to have its (their) Registrable Securities included in any Demand Registration or Shelf Registration.
SEC means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
Securities Act means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations promulgated by the SEC thereunder.
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Agreement |
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Blackout Period |
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Demand Request |
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New York Courts |
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Required Filing Date |
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RTA |
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RTEA |
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Shelf Registration |
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Suspension Notice |
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Suspension Period |
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(1) a term has the meaning assigned to it;
(2) words in the singular include the plural, and words in the plural include the singular; and
(3) herein, hereof and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.
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If indemnification is available under this Section 2.8 , the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 2.8.1 and Section 2.8.2 without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 2.8.4 subject, in the case of the Holders, to the limited dollar amounts set forth in Section 2.8.2 .
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Cloud Peak Energy Inc.
General Counsel
505 S. Gillette Avenue
Gillette, Wyoming 82716
(307) 687-6000
Fax: (307) 687-6059
Rio Tinto America Inc.
Legal Department
4700 Daybreak Parkway
South Jordan, Utah 84095
(801) 204-2000
Fax: (801) 204-2892
With a copy to (which shall not constitute notice):
Chief Executive Officer
4700 Daybreak Parkway
South Jordan, Utah 84095
(801) 204-2000
Fax: (801) 204-2892
or to such other addresses or telecopy numbers as may be specified by like notice to the other parties.
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If to any other Holder, the address indicated for such Holder in the Companys stock transfer records with copies, so long as RTEA or KMS owns any Registrable Securities or Membership Units, to RTA as provided above.
Any notice or communication hereunder shall be deemed to have been given or made as of the date so delivered if personally delivered; when answered back, if telexed; when receipt is acknowledged, if telecopied; and five (5) calendar days after mailing if sent by registered or certified mail (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).
Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.
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CLOUD PEAK ENERGY INC. |
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CLOUD PEAK ENERGY RESOURCES LLC |
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RIO TINTO AMERICA INC. |
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RIO TINTO ENERGY AMERICA INC. |
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KENNECOTT MANAGEMENT SERVICES COMPANY |
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[Signature page for Registration Rights Agreement (Equity)]
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Exhibit 10.4
EXECUTION COPY
EMPLOYEE MATTERS AGREEMENT
THIS EMPLOYEE MATTERS AGREEMENT (this Agreement ) is made and entered into as of November 19, 2009 by and among CLOUD PEAK ENERGY RESOURCES LLC ( CPE LLC ), a Delaware limited liability company, CLOUD PEAK ENERGY SERVICES COMPANY, a Delaware corporation ( CPESC , and together with CPE LLC and their respective subsidiaries, the CPE GROUP), CLOUD PEAK ENERGY INC., a Delaware corporation ( CPE ), RIO TINTO AMERICA INC, a Delaware corporation ( RTA ), and RIO TINTO ENERGY AMERICA INC., a Delaware corporation ( RTEA ) (RTA and RTEA, each a Company and collectively, the Companies ) and, solely for purposes of Section 3.2 of this Agreement, RIO TINTO PLC, a corporation incorporated in England and Wales ( RIO ) and RIO TINTO LIMITED ( RIO LTD ), an Australian corporation. CPE LLC, CPESC, CPE, each Company, RIO and RIO LTD are sometimes referred to herein separately as a Party and together as the Parties .
RECITALS
WHEREAS , as contemplated by the terms of the Limited Liability Company Operating Agreement of CPE LLC dated as of , 2009 (the LLC Agreement ), the Companies, CPE, CPESC and the members of the CPE Group have approved this Agreement; and
WHEREAS , the Parties have agreed to enter into this Agreement to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, benefit plans and programs, and certain employment matters with respect to their employees.
NOW, THEREFORE , in consideration of the covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Definitions .
The following terms shall have the indicated meaning:
Affiliate means with respect to a Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. As used in this definition, the word control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. For purposes of clarity, neither CPE nor any member of the CPE Group shall be considered an Affiliate of any of the Companies and none of the Companies or RIO or RIO LTD shall be considered an Affiliate of CPE or any member of the CPE Group.
Agreement is defined in the introductory paragraph.
Benefit Plans means, with respect to an entity, any employee pension benefit plan (as defined in Section 3(2) of ERISA), employee welfare benefit plan (as defined in Section 3(1) of ERISA) and any other plan or arrangement of any kind, whether qualified or non-qualified,
relating to stock options, incentive compensation, bonus, profit sharing, retirement, pension, deferred compensation, severance benefits, leave of absence, vacation, life, health, accident, disability, sick pay, workers compensation or other insurance severance, separation, fringe or any other benefits.
COBRA means the continuation coverage requirements for group health plans under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
Code means the Internal Revenue Code of 1986, as amended.
Common Stock means the common stock, $0.01 par value per share, of CPE.
Companies is defined in the introductory paragraph.
CPE is defined in the introductory paragraph.
CPE Group is defined in the introductory paragraph.
CPE LLC is defined in the introductory paragraph.
CPESC is defined in the introductory paragraph.
Effective Date means the date on which the Underwriting Agreement is executed and delivered by each of the Parties thereto.
Employment Related Obligations means all claims, liabilities and obligations, whether contingent or otherwise, fixed or absolute, known or unknown, present or future or otherwise, arising from an employment relationship or an alleged employment relationship relating to the Executive Employees and the Transferred Employees, including compensation for services (and related employment and withholding taxes), workers compensation or similar benefits and payments on account of occupational illnesses and injuries, provision of leave under the Family and Medical Leave Act or similar Law, and claims, liabilities and obligations arising out of any such Executive Employees or Transferred Employees employment, terms of employment, transfers, compensation, termination of employment, harassment or employee benefits.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate means, with respect to any Person, each business or entity that is a member of a controlled group of corporations, under common control or a member of the affiliate service group with such Person within the meaning of Section 414(b), (c) or (m) of the Code or required to be aggregated with such Person under Section 414(o) of the Code or under common control with such Person within the meaning of Section 4001(a)(14) of ERISA.
Executive Employees is defined in Section 2.1(a).
FSA Cost Invoice is defined in Section 4.11.
Health and Welfare Plans is defined in Section 4.1.
Health Plan Continuation Period is defined in Section 4.1.
Health Plan Cost Invoice is defined in Section 4.3.
HIPAA shall mean the Health Insurance Portability and Accountability Act of 1996, as amended.
Initial Public Offering means the initial public offering registered under the Securities Act of the Common Stock.
Law or Laws means all applicable federal, state, tribal and local laws (statutory or common), rules, ordinances, regulations, grants, concessions, franchises, licenses, orders, directives, judgments, decrees, restrictions and other similar requirements, whether legislative, municipal, administrative or judicial in nature.
LLC Agreement is defined in the Recitals.
Option One Benefits is defined in Section 4.9.
Person means an individual, corporation, joint venture, partnership, limited partnership, limited liability company, trust, estate, business trust, association, governmental authority or any other entity.
RIO is defined in the introductory paragraph.
RIO LTD is defined in the introductory paragraph.
Rio Tinto Equity Compensation Plans means the (i) Rio Tinto plc Share Option Plan 2004, (ii) Rio Tinto Limited Share Option Plan 2004, (iii) Rio Tinto plc Management Share Plan 2007, (iv) Rio Tinto Limited Management Share Plan 2007, (v) Rio Tinto plc Mining Companies Comparative Plan 2004, (vi) Rio Tinto Limited Mining Companies Comparative Plan 2004, (vii) Rio Tinto plc Share Savings Plan, (viii) Rio Tinto Bonus Deferral Plan 2008, and (ix) Rio Tinto Share Savings Plan.
Rio Tinto Non-Equity Incentive Compensation Plans means the (i) Rio Tinto Short Term Incentive Plan, (ii) Rio Tinto Energy America Quarterly Incentive Plan and (iii) Rio Tinto Energy America Retention Bonus.
RTA is defined in the introductory paragraph.
RTA Flex Plans is defined in Section 4.10.
RTA Pension Plan means the Rio Tinto America, Inc. Retirement Plan.
RTAs Retiree Benefits means those benefits provided to eligible retirees under the Rio Tinto America Inc. Health and Welfare Plan in effect from time to time.
RTA Savings Plan means the Rio Tinto America, Inc. 401(k) Savings Plan and Investment Partnership Plan.
Rio Tinto SERP means the Rio Tinto America Inc. Supplemental Executive Retirement Plan.
Rio Tinto NQ Saving Plan means the Non-Qualified 401(k) component of the Rio Tinto America Inc. Executive Deferred Compensation Plan.
Rio Tinto NQIPP means the Non-Qualified Investment Partnership Plan component of the Rio Tinto America Inc. Executive Deferred Compensation Plan.
RTEA is defined in the introductory paragraph.
Senior Executives shall mean the chief executive officer of CPE and any individual employed by any of the Companies, CPESC, RIO or RIO LTD prior to the Effective Date that becomes an officer of CPE or any member of the CPE Group reporting directly to the chief executive officer of CPE.
Transferred Employees means (i) those employees of the Companies and their Affiliates listed on Exhibit A and identified as Transferred Employees who accept offers of employment from any member of the CPE Group as of or prior to the Effective Date; provided any such employee on long-term disability pursuant to any of the Benefit Plans of Rio Tinto shall not become a Transferred Employee and (ii) those individuals employed by any entity that is or becomes a member of the CPE Group as of the Effective Date.
Underwriting Agreement means the underwriting agreement entered into among CPE and the several underwriters of the Initial Public Offering.
2. Employment and Employee Benefits.
2.1. Employment; Cooperation .
(a) Effective as of the Effective Date, CPE shall assume or retain, as applicable, responsibility as employer for those employees of the Companies and their Affiliates listed on Exhibit B and identified as Executive Employees who accept offers of employment from CPE as of or prior to the Effective Date (the Executive Employees ) and the applicable member of the CPE Group shall assume or retain, as applicable, responsibility as employer of the Transferred Employees; provided that nothing contained herein shall be construed to limit the ability of the CPE Group, CPE or the Companies or any of their respective subsidiaries to terminate the employment of any of their employees at any time and for any or no reason. Other than with respect to the Rio Tinto Equity Compensation Plans, the assumption or retention of responsibility as employer described in this Section 2.1(a) shall not, of itself, constitute a severance or a termination of employment under any plan of severance or of income extension maintained by the Companies, and no such severance, separation or termination shall be deemed to occur. The CPE Group shall indemnify the Companies and hold the Companies harmless from and against any damages, liabilities, costs or expenses which may be incurred or suffered by any of the Companies relating to, or arising from, any individual listed on Exhibit A or Exhibit B becoming entitled to separation pay, benefit continuation or eligibility for enhanced retirement benefits (other than as provided in Section 5.2) on or after the Effective Date by reason of (i) the transfer of employment from any of the Companies to CPE or any member of the CPE Group, (ii) any termination of employment arising from the failure of any such individual to accept an offer of employment with CPE or any member of the CPE Group or (iii) any termination of employment of an such individual that has become an Executive Employee or a Transferred Employee occurring after the Effective Date.
(b) To the maximum extent permitted under applicable Law, the Companies, the CPE Group and CPE shall share and shall cause each of their respective Affiliates to share, with each other and their respective agents and vendors all participant information reasonably necessary for the efficient and accurate administration of each of the Benefit Plans of the Companies and the CPE Group. The Companies, the CPE Group, CPE and their respective authorized agents shall, subject to applicable Law on confidentiality, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody or control of the other parties, to the extent necessary for such administration. To the extent a party requests information pursuant to this section that cannot be shared lawfully, the parties will cooperate, to the extent practical and reasonable, to offer assistance to the other.
(c) Except as otherwise explicitly provided herein, effective as of the Effective Date, the Companies shall be responsible for, and do hereby, for themselves, and will cause each of their Affiliates and subsidiaries to, and their respective successors and assigns to, relinquish, release, forever discharge and indemnify and hold harmless CPE and the CPE Group and each member of the CPE Groups respective Affiliates, subsidiaries, assigns, current and former directors, officers, employees, agents and representatives (including, without limitation, any such person who may have served on the investment committee for the RTA Savings Plan) to the same extent such indemnification is provided to current directors, officers, employees, agents and representatives of the Companies, in each case, from (i) all Employment Related Obligations arising prior to the Effective Date, and whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed before the Effective Date and (ii) any damages, costs, expenses, losses or liabilities to the extent arising from, relating to or otherwise in respect of any third party claims relating to any investment vehicle under the RTA Savings Plan.
(d) Except as otherwise explicitly provided herein, effective as of the Effective Date, the members of the CPE Group shall be responsible for, and do hereby, for themselves, and will cause each of their Affiliates and subsidiaries to, and their respective successors and assigns to, relinquish, release, forever discharge and indemnify and hold harmless the Companies and each of their respective Affiliates, subsidiaries, assigns, current and former directors, officers, employees, agents and representatives to the same extent such indemnification is provided to directors, officers, employees, agents and representatives of the CPE Group, in each case, from all Employment Related Obligations arising on or after the Effective Date and whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or after the Effective Date.
(e) The Companies shall indemnify CPE and the CPE Group and hold CPE and the CPE Group harmless from and against any damages, liabilities, costs or expenses which may be incurred or suffered by CPE or any member of the CPE Group as a result of any such entity being held jointly and/or severally liable, on, before or after the Effective Date by reason
of being considered to have been an ERISA Affiliate of any of the Companies, RIO or RIO LTD, and each of their Affiliates and subsidiaries before the Effective Date.
(f) The CPE Group shall reimburse RIO or RIO LTD for any reasonable, fees, direct costs and expenses associated with immigration and tax services actually incurred by such entities after the Effective Date as result of any of the Executive Employees or Transferred Employees being assigned by RIO or RIO LTD to the Companies. Notwithstanding anything in Section 6 to the contrary, RIO and RIO LTD shall be considered 3 rd party beneficiaries to this Section 2.1(f).
3. Incentive Plans .
3.1. Non-Equity Incentive Plans . Executive Employees and Transferred Employees who participated in Rio Tintos Non-Equity Incentive Compensation Plans shall receive the full amount of their bonus under such plans for the performance period in which the Effective Date occurs to the extent that the objectives established under such plans are satisfied at the end of the relevant performance period, as determined by the applicable Company in accordance with past practice and the terms and conditions of the applicable Rio Tinto Non-Equity Incentive Compensation Plans (the Bonus Amount ). The Companies shall be liable for the portion of the Bonus Amount equal to the number of days in the performance period prior to the Effective Date divided by the number of days in the performance period and the CPE Group (or CPE) shall be liable for the portion of the Bonus Amount equal to the number of days in the performance period on and after the Effective Date divided by the number of days in the performance period. At the same time that payments are made to all other participants in such Rio Tinto Non-Equity Incentive Compensation Plans, the Companies shall provide funds to the CPE Group equal to the Companies pro rata share of the Bonus Amount as determined pursuant to the preceding sentence and the CPE Group (or CPE) shall make the payments to Executive Employees and Transferred Employees. Notwithstanding anything in this Section 3.1 to the contrary, with respect to any discretion under the terms of the Rio Tinto Non-Equity Incentive Compensation Plans that may be exercised under the terms of the Rio Tinto Non-Equity Incentive Compensation Plans by the Companies, such discretion with respect to the Bonus Amounts for Senior Executives will be exercised by the Companies prior to the Effective Date but otherwise in accordance with past practice and the terms and conditions of the applicable Rio Tinto Non-Equity Incentive Compensation Plans. Prior to the Effective Date, the Companies shall inform the CPE Group of its decision and the CPE Group shall, prior to the Effective Date, inform the Senior Executives that such decision has been made which, for the avoidance of doubt, is to make clear that no discretionary action by the Companies taken after the Effective Date will have an impact on the Bonus Amount for the Senior Executives.
3.2. Equity Incentive Plans . RIO and RIO LTD hereby agree that, for purposes of the Rio Tinto Equity Compensation Plans, each Executive Employee and Transferred Employee shall be deemed to have terminated employment with his or her respective RTA related employer due to his or her employment company ceasing to be under the control of the company and such Executive Employee or Transferred Employee shall be paid out in accordance with the applicable plan terms.
4. Health and Welfare Benefit Plans .
4.1. Effective no later than January 1, 2010, the CPE Group (or CPE) shall adopt such health and welfare plans as it determines for the benefit of the Executive Employees and the Transferred Employees. From the Effective Date until December 31, 2009, or such earlier date that the CPE Group (or CPE) adopts the health and welfare plans described above, (the Health Plan Continuation Period ), the Executive Employees and the Transferred Employees and, subject to the satisfaction of the applicable eligibility requirements, any person hired by CPE or the CPE Group during the Health Plan Continuation Period (and, in each case, their respective beneficiaries and dependents) will be eligible to continue to participate in the health and welfare plans of the Companies listed on Exhibit C (the Health and Welfare Plans ) on the same terms and conditions of the applicable Health and Welfare Plan as in effect immediately prior to the Effective Date. Prior to the Effective Date, the Companies, CPE and the CPE Group shall take all commercially reasonable actions required (including adopting certain amendments of the Health and Welfare Plans and the approval by the authorized boards or committees (or authorized officers) of CPE and the members of the CPE Group of the adoption of the Health and Welfare Plans and the execution of an adoption agreement effecting such adoption, if requested by the Companies) to provide that CPE and the members of the CPE Group shall adopt the Health and Welfare Plans so that CPE and the members of the CPE Group will become participating employers in the Health and Welfare Plans during the Health Plan Continuation Period. During the Health Plan Continuation Period, CPE and the members of CPE Group shall provide, or cause to be provided, to the Companies or the administrator, record-keeper or trustee of the Health and Welfare Plans, all information within its control that is reasonably required to administer and operate the Health and Welfare Plans with respect to the Executive Employees and the Transferred Employees during the Health Plan Continuation Period.
4.2. The Companies shall be responsible for complying with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of their Health and Welfare Plans with respect to Executive Employees and Transferred Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage under such Health and Welfare Plans before January 1, 2010, provided, that the CPE Group shall be responsible for the costs thereof (net of participant contributions actually paid) with respect to any Executive Employee or Transferred Employee who incur a qualifying event during the Health Plan Continuation Period. The CPE Group shall be responsible for complying with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of their health and welfare plans with respect to Executive Employees and Transferred Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage at any time after January 1, 2010.
4.3. No later than 30 days after the date on which any invoice (including supporting documentation in reasonable detail) (a Health Plan Cost Invoice ) from the Companies or any of the Health and Welfare Plans has become final and binding as provided below, the CPE Group shall reimburse the Companies or any of the Health and Welfare Plans, as applicable, for any reasonable fees and direct costs and expenses actually incurred by the Companies or any of
the Health and Welfare Plans for the continued administration and operation by the Companies of the Health and Welfare Plans after the Effective Date with respect to the Executive Employees and the Transferred Employees (net of participant contributions actually paid), including any such amounts resulting from a COBRA qualifying event or loss of coverage affecting an Executive Employee or Transferred Employee during the Health Plan Continuation Period. The Health Plan Cost Invoice shall include any per participant fee charged by the record-keeper for each participating Executive Employee and Transferred Employee and any other incremental costs associated with the continued participation by the Executive Employees and the Transferred Employees in the Health and Welfare Plans of the Companies after the Effective Date. The CPE Group shall cooperate with the Companies in making all filings or reports required under applicable law and in distributing any employee communications or materials to the Executive Employees and the Transferred Employees.
4.4. The CPE Group shall indemnify and hold harmless the Companies and their respective directors, officers, employees, agents and representatives, and the Health and Welfare Plans and their fiduciaries, from and against any costs, expenses, losses or other liabilities (net of participant contributions actually paid) to the extent arising from, relating to or otherwise in respect of (A) the participation of the Executive Employees and the Transferred Employees in such Health and Welfare Plans during the Health and Welfare Plan Continuation Period, (B) the responsibilities of the Companies to comply with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the Health and Welfare Plans with respect to Executive Employees and Transferred Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage after the Effective Date and before January 1, 2010, (C) the adoption by CPE and the members of the CPE Group of the Health and Welfare Plans and (D) CPEs and the members of the CPE Groups status as participating employers under such Health and Welfare Plans; provided , that no indemnification by the CPE Group shall be required, and the Companies shall indemnify and hold harmless CPE and the CPE Group and their directors, officers, employees, agents and representatives from and against any such costs, expenses, losses or other liabilities, to the extent that such costs, expenses, losses or other liabilities result from the willful misconduct or material breach of fiduciary duty of any of the Companies, or any of their respective directors, officers or employees, in the maintenance or administration of the Health and Welfare Plans.
4.5. Nothing in this Agreement shall be deemed to limit the Companies or the CPE Groups right to amend and /or terminate any of the Benefit Plans of the Companies or the Benefit Plans of the CPE Group, as applicable.
4.6. Effective as of the end of the Health Plan Continuation Period, the CPE Group shall provide each Executive Employee and Transferred Employee with credit for all service with the Companies for vesting and eligibility purposes only under each of its Benefits Plans in which such Executive Employee or Transferred Employee is eligible to participate, except to the extent that such service credit would result in a duplication of benefits with respect to the same period of service with the Companies. With respect to each Benefit Plan provided by any member of the CPE Group that is a health and welfare plan, as of the end of the Health Plan Continuation Period the CPE Group shall (i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage requirements applicable to the Executive Employees and Transferred Employees, provided that if such plan is provided under an insured arrangement, such waiver will occur only to the extent required by Law or otherwise permitted under the applicable insurance contract or agreements, and (ii) for the year in which the Health Plan Continuation Period ends, provide each Executive Employee and Transferred Employee with credit for any co-payments and deductibles paid prior to the end of the Health Plan Continuation Period in satisfying any applicable deductible or out-of-pocket requirements under such group health.
4.7. Except as otherwise provided in this Agreement, none of the Companies shall have liability under any Health and Welfare Plan with respect to any claim incurred on or after the Effective Date in respect of any Executive Employee or Transferred Employee. Neither CPE nor any member of the CPE Group shall have any liability under any Health and Welfare Plan for expenses incurred or services rendered with respect to any claim incurred prior to the Effective Date in respect of any Executive Employee or Transferred Employee.
4.8. For purposes of this Section 4, a claim shall be deemed incurred when the event occurs or condition arises giving rise to the claim which, in the case of claims under medical, dental, hospitalization and vision benefits, will be deemed to occur when the applicable expense is incurred or the service provided.
4.9. Effective as of January 1, 2010, the CPE Group shall assume responsibility for operation of the welfare benefit program consisting of health reimbursement accounts known as Option One arising from benefits originally provided in 2004 and 2005 to Executive Employees and Transferred Employees (the Option One Benefits ). No later than 30 days after the date on which any invoice (including supporting documentation in reasonable detail) from the Companies has become final and binding, the CPE Group shall reimburse the Companies for any reasonable fees and direct costs and expenses actually incurred by the Companies for the continued administration and operation by the Companies of the Option One Benefits during the Health Plan Continuation Period.
4.10. Without limiting the foregoing, the CPE Group shall immediately, and in any event within ten (10) business days after receipt by the CPE Group of notice from the Companies of a claim for indemnification hereunder, fully indemnify the Companies from any claim or demand made after the Effective Date, or liability assumed hereunder (including all reasonable fees and expenses incurred by the Companies arising out of or relating to the Option One Benefits) regardless of when the event giving rise to such claim or demand occurred; provided , however , that no indemnification by the CPE Group shall be required, to the extent that such claim was the result of the willful misconduct or material breach of fiduciary duty of any of the Companies, or any of their respective directors, officers or employees, in the maintenance or administration of the Option One Benefits.
4.11. The Companies, CPE and the members of the CPE Group agree that, as of the Effective Date through the end of the Health Plan Continuation Period, with respect to any Benefit Plan of the Companies that has a flexible spending account arrangement, Executive Employees and Transferred Employee will continue to participate in such Benefit Plans (the
RTA Flex Plans ). During the Health Plan Continuation Period, the CPE Group shall provide, or cause to be provided, to the Companies or the record-keepers or trustees of the RTA Flex Plans all information within its control that is reasonably required to administer and operate the RTA Flex Plans with respect to the Executive Employees and Transferred Employees during the Health Plan Continuation Period. No later than 30 days after the date on which any invoice (including supporting documentation in reasonable detail) (an FSA Cost Invoice ) from the Companies or the record-keepers of the RTA Flex Plans has become final and binding as provided below, the CPE Group shall reimburse the Companies or the RTA Flex Plans for any reasonable fees and direct costs and expenses actually incurred by the Companies or by the RTA Flex Plans for the continued administration and operation by the Companies of the RTA Flex Plans with respect to the Executive Employees and the Transferred Employees (net of participant contributions actually paid), including, any per participant fee charged by the record-keepers for each participating Executive Employee and Transferred Employee during the Health Plan Continuation Period and any other incremental costs directly associated with the continued participation by the Executive Employees and the Transferred Employees in the RTA Flex Plans during the Health Plan Continuation Period. The CPE Group shall cooperate with the Companies in making all filings or reports required under the Code or ERISA, including, the Form 5500 for the 2009 plan year, and in distributing any employee communications or materials to the Executive Employees and the Transferred Employees. The Companies shall indemnify and hold harmless the Companies and their respective directors, officers, employees, agents and representatives, and the RTA Flex Plans and its fiduciaries from and against any costs, expenses, losses or other liabilities (net of participant contributions actually paid) to the extent arising from, relating to or otherwise in respect of (A) the participation of the Executive Employees and the Transferred Employees in the RTA Flex Plans during the Health Plan Continuation Period, (B) the adoption by CPE and the members of the CPE Group of the RTA Flex Plans and (C) CPEs and the members of the CPE Groups status as participating employers under the RTA Flex Plans; provided , that no indemnification by the CPE Group shall be required, and the Companies shall indemnify and hold harmless the CPE Group and its directors, officers, employees, agents and representatives from and against any such costs, expenses, losses or other liabilities, to the extent that such costs, expenses, losses or other liabilities result from the willful misconduct or material breach of fiduciary duty of the Companies, or any of their respective directors, officers or employees, in the maintenance or administration of the RTA Flex Plans.
4.12. CPE and the members of the CPE Group shall cease to be participating employers in the Health and Welfare Plans, as well as the RTA Flex Plans, on the last day of the Health Plan Continuation Period.
5. Retirement Plans .
5.1. All benefits accrued on or before the Effective Date in respect of all Executive Employees and Transferred Employees who are participants in the RTA Pension Plan and the Rio Tinto SERP shall be locked and frozen as of the Effective Date and the Companies shall retain sole liability for the payment of such benefits as and when such participants become eligible under such plans. For purposes of this Section, the term locked and frozen means that Executive Employees and Transferred Employees who are plan participants shall retain their
accrued benefits under the RTA Pension Plan and Rio Tinto SERP as of the Effective Date but no additional benefit accruals with respect to service on and after the Effective Date will be provided under the respective plans following the Effective Date. No later than the Effective Date, the Companies shall amend the RTA Pension Plan to ensure that all Executive Employees and Transferred Employees who are participants in such plans as of the Effective Date shall become fully vested in their accrued benefits. Following the Effective Date the Executive Employees and Transferred Employees who participate in the cash balance portion of the RTA Pension Plan shall continue to accrue additional interest credits to their cash balance accounts for benefit accrual purposes in accordance with the RTA Pension Plan.
5.2. Subject to the right of RTA to amend, modify, terminate or otherwise change the provisions of the RTA Retiree Benefits in common with all other affected employees, all Executive Employees and Transferred Employees who will have had at least 10 years of service with any of the Companies and have attained at least age 55, in each case, as of the Effective Date will be treated as if they had retired from the Companies as of the Effective Date and will be entitled to receive the RTA Retiree Benefits. Subject to the right of the CPE Group to amend, modify, terminate or otherwise change the provisions of its retiree benefits, the CPE Group will offer retiree health benefits for all Executive Employees and Transferred Employees from retirement through age 65. Executive Employees and Transferred Employees will be granted credit for all service with the Companies for purposes of eligibility. At the time of retirement, and subject to Section 4.2, Executive Employees and Transferred Employees who satisfy the age and service requirements set forth in the first sentence of this Section 5.2 with respect to RTAs Retiree Benefits will have the option of choosing whether to receive benefits under RTAs Retiree Benefits or pursuant to the plan established by the CPE Group pursuant to this Section 5.2, but may not participate in both plans.
5.3. No later than the Effective Date, RTA shall cause the RTA Savings Plan, Rio Tinto NQ Savings Plan and Rio Tinto NQIPP to be amended, to the extent necessary, in order to (i) provide that the Executive Employees and Transferred Employees shall be fully vested in their accounts under such plans and (ii) permit such individuals to elect to the extent permitted by Law to have their interest in the RTA Savings Plan, including any participant loan balances, rolled over to a savings plan established or maintained by the CPE Group at the discretion of the participant. As of the Effective Date, all employee contributions by the Executive Employees and the Transferred Employees and obligations of any of the Companies to make contributions in respect of such employees (other than in respect to periods prior to the Effective Date) under the RTA Savings Plan shall cease. The Companies will not require any Executive Employee or Transferred Employees to repay any participant loan balances earlier than ninety (90) days following the Effective Date if such loan would not otherwise be payable within such ninety (90) day period.
6. Third-Party Beneficiaries . This Agreement is solely for the benefit of the Parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person or persons (including any employee or former employee of the Companies, any Executive Employee or Transferred Employee or any individual that becomes an employee of the Companies, CPE or the CPE Group on or after the Effective Date, or any of their respective subsidiaries or Affiliates or any beneficiary or
dependent thereof) any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. No provision in this Agreement shall modify or amend any other agreement, plan, program, or document unless this Agreement explicitly states that the provision amends that other agreement, plan, program, or document. This shall not prevent the parties entitled to enforce this Agreement from enforcing any provision in this Agreement, but no other person shall be entitled to enforce any provision in this Agreement on the grounds that it is an amendment to another agreement, plan, program, or document unless the provision is explicitly designated as such in this Agreement, and the person is otherwise entitled to enforce the other agreement, plan, program, or document. If a person not entitled to enforce this Agreement brings a lawsuit or other action to enforce any provision in this Agreement as an amendment to another agreement, plan, program, or document, and that provision is construed to be such an amendment despite not being explicitly designated as one in this Agreement, that provision in this Agreement shall be void ad initio , thereby precluding it from having any amendatory effect. Furthermore, nothing in this Agreement is intended to confer upon any employee or former employee the Companies, any Executive Employee or Transferred Employee or any individual that becomes an employee of the Companies, CPE or the CPE Group on or after the Effective Date, or any of their respective subsidiaries or Affiliates or any beneficiary or dependent thereof, any right to continued employment, or any recall or similar rights to an individual on layoff or any type of approved leave.
7. Miscellaneous .
7.1. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial .
(a) This Agreement is to be construed in accordance with and governed by the 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 laws of the State of New York to the rights and duties of the Parties.
(b) Except for any action, suits or proceedings involving RIO and RIO LTD in which the exclusive jurisdiction shall be in the United Kingdom, 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). Other than any legal proceedings involving RIO and RIO LTD (in which the exclusive jurisdiction shall be in the United Kingdom), each of the Parties hereto agree that:
(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;
(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 7.2 is sufficient and reasonably calculated to give actual notice;
(iii) agrees that the New York Courts shall be deemed to be a convenient forum;
(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
(v) agrees to the entry of an order to enforce any resolution, settlement, order or award made pursuant to this Section 7.1 by the New York Courts and in connection therewith hereby waives, and agrees not to assert by way of motion, as a defense, or otherwise, any claim that such resolution, settlement, order or award is inconsistent with or violative of the laws or public policy of the laws of the State of New York or any other jurisdiction.
(c) 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 or the transactions contemplated hereby or thereby. Each of the Parties hereto (a) certifies that no Representative, agent or attorney of any other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it and the other Parties hereto have been induced to enter into this Agreement and the transactions contemplated by this Agreement, as applicable, by, among other things, the mutual waivers set forth in this Section 7.1(d) .
7.2. Notices . All notices, demands or other communications to be given under or by reason of this Agreement shall be in writing and shall be deemed to have been received when delivered personally, or when transmitted by overnight delivery service, addressed as follows:
If to CPE :
Human Resources
Cloud Peak Energy Inc.
505 S. Gillett Avenue,
Gillette,
Wyoming 82716
Tel: (307) 687-6000
Fax: (307) 687-6014
with a copy to:
General Counsel
Cloud Peak Energy Inc.
505 S. Gillett Avenue,
Gillette,
Wyoming 82716
Tel: (307) 687-6000
Fax: (307) 687-6059
If to CPE LLC or CPESC :
Human Resources
Cloud Peak Energy Inc.
505 S. Gillett Avenue,
Gillette,
Wyoming 82716
Tel: (307) 687-6000
Fax: (307) 687-6014
with a copy to:
General Counsel
Cloud Peak Energy Inc.
505 S. Gillett Avenue,
Gillette,
Wyoming 82716
Tel: (307) 687-6000
Fax: (307) 687-6059
If to RIO, RIO LTD or RTEA :
Jane Craighead
Rio Tinto
1188 Sherbrooke Street West,
Montreal,
Quebec, H3A 3G2, Canada
Tel: (514) 848-8441
Fax: (514) 848 1530
with a copy to:
Craig Johnson
Rio Tinto Services Inc.
4700 Daybreak Parkway
South Jordan, UT 84095
Tel: (801) 204-2803
Fax: (801) 204-2892
Any party hereto may change its address for notices, demands and other communications under this Agreement by giving notice of such change to the other parties hereto in accordance with this Section 7.2.
7.3 Amendment . This Agreement may not be amended, modified, altered or supplemented except by means of a written instrument executed on behalf of each party hereto.
7.4 Waiver . No failure on the part of any party hereto to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any party hereto in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver thereof; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.
7.5 Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
7.6 Counterparts and Facsimiles . 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 others. The parties hereto may execute the signature pages hereof and exchange such signature pages by facsimile transmission.
7.7 Interpretation of Agreement .
(a) As used in this Agreement, the words include and including, and variations thereof, shall not be deemed to be terms of limitation, and shall be deemed to be followed by the words without limitation.
(b) Unless otherwise specified, references in this Agreement to Sections are intended to refer to Sections of this Agreement.
(c) The Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.
(d) Each party hereto and its counsel cooperated in the drafting and preparation of this Agreement and the documents referred to in this Agreement. Any rule of Law or any legal decision that would require interpretation of any ambiguities in this Agreement against the party that drafted it is of no application and is hereby expressly waived.
7.8 Entire Agreement . This Agreement sets forth the entire understanding of parties hereto and supersedes all other agreements and understandings between the parties hereto relating to the subject matter hereof.
[Signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.
CLOUD PEAK ENERGY INC.: |
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/s/ Colin Marshall |
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President and CEO |
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CLOUD PEAK ENERGY RESOURCES LLC |
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/s/ Colin Marshall |
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President and CEO |
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RIO TINTO AMERICA INC: |
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/s/ James P. Berson |
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CLOUD PEAK ENERGY SERVICES COMPANY |
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/s/ Michael Barrett |
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CFO |
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RIO TINTO ENERGY AMERICA INC.: |
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/s/ James P. Berson |
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Authorized Agent |
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Solely for purposes of Section 3.2, |
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RIO TINTO PLC: |
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/s/ James P. Berson |
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Attorney-in-Fact |
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Solely for purposes of Section 3.2, |
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RIO TINTO LTD: |
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By: |
/s/ James P. Berson |
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Its: |
Attorney-in-Fact |
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[Signature page of Employee Matters Agreement]
Exhibit 10.5
EXECUTION COPY
THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CLOUD PEAK ENERGY RESOURCES LLC
Dated November 19, 2009
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS |
2 |
1.1 Defined Terms |
2 |
1.2 Other Definitional Provisions; Interpretation |
17 |
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ARTICLE 2 FORMATION |
18 |
2.1 Formation; Qualification |
18 |
2.2 Name |
18 |
2.3 Term |
18 |
2.4 Headquarters Office |
18 |
2.5 Registered Agent and Office |
18 |
2.6 Purpose |
19 |
2.7 Powers |
19 |
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ARTICLE 3 MEMBERS AND INTERESTS |
19 |
3.1 Members |
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3.2 Meeting of Members |
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3.3 Membership Units |
22 |
3.4 Authorization and Issuance of Additional Units |
25 |
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ARTICLE 4 MANAGEMENT AND OPERATIONS |
26 |
4.1 Manager |
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4.2 Management Authority |
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4.3 Rio Tinto Member Approval Rights |
27 |
4.4 Duties |
28 |
4.5 Reliance by Third Parties |
28 |
4.6 Resignation |
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4.7 Removal |
29 |
4.8 Vacancies |
29 |
4.9 Information Relating to the Company |
29 |
4.10 Insurance |
29 |
4.11 Board of Directors |
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4.12 Officers |
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4.13 Certain Costs, Fees and Expenses |
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4.14 Certain Duties and Obligations of the Members |
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4.15 Limitation of Liability; Exculpation |
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4.16 Indemnification |
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4.17 Title to Assets; Liens |
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4.18 CPE Conduct of Business Only Through the Company |
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4.19 Business Opportunities |
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ARTICLE 5 CAPITAL CONTRIBUTIONS; DISTRIBUTIONS |
36 |
5.1 Capital Contributions |
36 |
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5.2 Loans from Members |
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5.3 Loans from Third Parties |
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5.4 Distributions |
36 |
5.5 Revisions to Reflect Issuance of Additional Units |
37 |
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ARTICLE 6 BOOKS AND RECORDS; TAX; CAPITAL ACCOUNTS; ALLOCATIONS |
37 |
6.1 General Accounting Matters |
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6.2 Capital Accounts |
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6.3 Allocations |
38 |
6.4 Allocations of Net Income and Net Losses for U.S. Federal Income Tax Purposes |
40 |
6.5 Revisions to Allocations to Reflect Issuance |
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6.6 Certain Tax Matters |
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6.7 Tax Year |
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6.8 Withholding Requirements |
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6.9 Reports to Members |
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6.10 Auditors |
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ARTICLE 7 DISSOLUTION |
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7.1 Dissolution |
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7.2 Winding-Up |
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7.3 Final Distribution |
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ARTICLE 8 TRANSFER; SUBSTITUTION; ADJUSTMENTS; REDEMPTION RIGHT OF CLOUD PEAK |
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8.1 Restrictions on Transfer |
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8.2 Substituted Members |
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8.3 Redemption Right of Cloud Peak |
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8.4 Effect of Void Transfers |
51 |
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ARTICLE 9 REDEMPTION RIGHT OF RIO TINTO MEMBERS |
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9.1 Redemption Right of Rio Tinto Members |
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9.2 Effect of Exercise of Redemption Right |
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9.3 Reservation of CPE Common Stock |
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ARTICLE 10 MISCELLANEOUS |
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10.1 Further Assurances |
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10.2 Amendments |
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10.3 Restrictions on Disclosure of Information |
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10.4 Injunctive Relief |
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10.5 No Third-Party Beneficiaries |
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10.6 Notices |
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10.7 Severability |
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10.8 Counterparts and Signature |
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10.9 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial |
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THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CLOUD PEAK ENERGY RESOURCES LLC
This Third Amended and Restated Limited Liability Company Agreement (this Agreement ) of Cloud Peak Energy Resources LLC, a Delaware limited liability company (the Company ), is made and entered into as of November 19, 2009, by and between Rio Tinto Energy America Inc., a Delaware corporation ( RTEA ), Kennecott Management Services Company, a Delaware corporation ( KMS ), and Cloud Peak Energy Inc., a Delaware corporation ( CPE ). Certain terms used in this Agreement are defined in Section 1.1 .
RECITALS
WHEREAS, the Company was formed by RTEA under the provisions of the LLC Act (as defined below) under the name Rio Tinto Sage LLC by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware on August 19, 2008;
WHEREAS, simultaneously therewith RTEA entered into the Limited Liability Company Agreement of Rio Tinto Sage LLC dated as of August 19, 2008 (the Initial LLC Agreement );
WHEREAS, through a series of transactions, RTEA contributed substantially all of RTAs non-Colorado Western United States coal mining business (other than the Colowyo mine) (the Coal Business ) to the Company;
WHEREAS, Rio Tinto Sage LLC was renamed Cloud Peak Energy LLC by filing a Certificate of Amendment with the Secretary of State of the State of Delaware on October 2, 2009, Cloud Peak Energy LLC was renamed CPE LLC by filing a Certificate of Amendment with the Secretary of State of the State of Delaware on November 2, 2009 and CPE LLC was renamed Cloud Peak Energy Resources LLC by filing a Certificate of Amendment with the Secretary of State of the State of Delaware on November 9, 2009;
WHEREAS, on October 28, 2009, RTEA and KMS entered into an Amended and Restated Limited Liability Company Agreement of Rio Tinto Sage LLC (the First Amended and Restated LLC Agreement ) pursuant to which KMS was admitted as a Member in the Company;
WHEREAS, on November 18, 2009, RTEA and KMS entered into the Second Amended and Restated Limited Liability Company Operating Agreement of Cloud Peak Energy Resources LLC (the Second Amended and Restated LLC Agreement ) pursuant to which (i) the membership units in the Company were reclassified into Common Membership Units and (ii) each of RTEA and KMS received the Redemption Right (as defined below and as set forth in Article 9 of this Agreement);
WHEREAS, concurrent with the execution of this Agreement, (i) CPE will purchase a portion of RTEAs interest in the Coal Business through the acquisition from RTEA of 30,600,000 Common Membership Units pursuant to the Acquisition Agreement (the
Acquisition ) and, as consideration, will issue the CPE Promissory Note (as defined below) and (ii) CPE, RTEA, KMS and/or their respective affiliates will enter the Transaction Documents (as defined below); and
WHEREAS, the Members desire to amend and restate the Second Amended and Restated LLC Agreement to, among other things, (i) reflect the admission of CPE as a Member in the Company and its designation as Manager of the Company, (ii) set forth the rights and obligations of each Member with respect to the Company and (iii) set forth the terms and conditions for the operation of the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
Acquisition has the meaning set forth in the recitals of this Agreement.
Acquisition Agreement means the Acquisition Agreement dated as of the date hereof by and between CPE and RTEA, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Action means any suit, arbitration, inquiry, proceeding or investigation (whether civil, criminal, administrative, investigative, or informal) by or before any court, Governmental Authority or any arbitration tribunal asserted by a Person.
Adjusted Capital Account Balance means, with respect to any Member, the balance in such Members Capital Account after giving effect to the following adjustments: (a) debits to such Capital Account of the items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4-6) and (b) credits to such Capital Account of such Members share of Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain or of any amount which such Member would be required to restore under this Agreement or otherwise. The foregoing definition of Adjusted Capital Account Balance is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
Adjustment Event has the meaning set forth in Section 3.3(d) of this Agreement.
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 Person. For purposes of this Agreement, CPE shall be deemed to be an Affiliate of the Company, but the Rio Tinto Members shall not be considered Affiliates of the Company.
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Agency Agreement means the Agency Contract dated as of the date hereof by and between the Company and RTEA as the same may be amended, restated, supplemented or otherwise modified from time to time.
Agreement has the meaning set forth in the preamble of this Agreement, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
Beneficial Owner (including, with correlative meaning, the term beneficially owns ) has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable. For purposes of this Agreement no Member shall be deemed to be the Beneficial Owner of CPE Common Stock solely by reason of such Members ownership of Common Membership Units that are redeemable pursuant to Section 9.1 .
Board has the meaning set forth in Section 4.11 of this Agreement.
Budget means an annual operating and capital budget of the Company, including, among other things, anticipated revenues, expenditures (capital and operating), and cash and capital requirements of the Company for the following year.
Business Day means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.
Capital Account has the meaning set forth in Section 6.2(a) of this Agreement.
Capital Contribution means the total amount of cash and the agreed fair market value (net of all liabilities secured by such assets that the Company is considered to assume or take subject to under Section 752 of the Code) of all other assets contributed to the Company by a Member.
Capital Stock means (i) with respect to any Person that is a corporation, any and all shares, interests in, participations in (or other equivalents), however designated, of corporate stock, including each class of common stock and preferred stock of such Person and (2) with respect to any Person that is not a corporation, any and all partnership, limited liability company or other equity interests of such Person or any other interest that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets, of the issuing Person.
Carrying Value means, with respect to any asset of the Company, the assets adjusted basis for U.S. federal income tax purposes, except that the Carrying Values of all assets of the Company shall be adjusted to equal their respective fair market values, in accordance with the rules, events, and times, set forth in Treasury Regulation Section 1.704-1(b)(2)(iv)(f) and otherwise provided for in the rules governing maintenance of Capital Accounts under Treasury Regulations, except as otherwise provided herein; provided , however , that such adjustments shall be made only if the Manager reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members. The Carrying Value of any asset of the Company distributed to any Member shall be adjusted immediately prior to such distribution to equal its fair market value and depreciation shall be calculated by reference to Carrying Value, instead of tax basis, once Carrying Value differs from tax basis. The Carrying
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Value of any asset contributed (or deemed contributed under Treasury Regulation Section 1.704-1(b)(1)(iv)) by a Member to the Company will be the fair market value of the asset at the date of its contribution thereto.
Cash Settlement means immediately available funds in an amount equal to the Redeemed Units Equivalent in the case of Common Membership Units being redeemed pursuant to Section 8.3 or Section 9.1 of this Agreement.
Certificate has the meaning set forth in Section 2.1(a) of this Agreement.
Certificate of Amendment has the meaning set forth in Section 2.1(a) of this Agreement.
Change in Control (i) with respect to the Manager, shall have the meaning ascribed to the term Change in Control under the CPE 2009 Long-Term Incentive Plan or any similar successor equity incentive plan of CPE and (ii) with respect to the Company, means (1) any acquisition, merger or consolidation of the Company 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 of the Company 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 its stockholders) 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 its stockholders), (2) any other transaction or series of related transactions not covered by clause (ii)(1) of this definition in which more than 50% of the Companys general voting power is Transferred to or acquired by any other Person or Group, or (3) the sale or Transfer by the Company of all or substantially all of its assets; provided , however , that, in determining whether a Change in Control of the Company has occurred, CPE Common Stock and Common Membership Units (A) acquired pursuant to a transaction under this Agreement by the Company, CPE or the Rio Tinto Members, including through the exercise of the Redemption Right under Section 9.1 of this Agreement or otherwise, or (B) Transferred to any Permitted Transferee shall not, in either case, constitute an event which could cause a Change in Control.
Claim means any Action, complaint, charge or investigation pending or, to the Persons knowledge, threatened against the Person or any of its Representatives.
Coal Business has the meaning set forth in the recitals to this Agreement.
Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute and the rules and regulations thereunder in effect from time to time. Any reference herein to a specific provision of the Code shall mean, where appropriate, the corresponding provision in any successor statute.
Commission means the United States Securities and Exchange Commission.
Committed LBA Payments means those expenditures indentified under the caption LBA Payments Committed in the Life of Mine Model.
Common Membership Unit means a Unit representing, when outstanding, a fractional part of the Interests of all Members holding Common Membership Units, and having
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the rights and obligations specified with respect to Common Membership Units in this Agreement.
Company has the meaning set forth in the preamble of this Agreement.
Company Interests means, with respect to any CPE Securities, the corresponding class of Units or Equity Interests, or an incurrence of Indebtedness of the Company, as applicable, with designations, preferences and other rights, terms and conditions (other than financial covenants applicable to CPE or its Subsidiaries) that are substantially the same as the designations, preferences and other rights, terms and conditions of such other CPE Securities.
Company Purposes has the meaning set forth in Section 2.6 of this Agreement.
Confidential Information has the meaning set forth in Section 10.3(a) 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 has the meaning set forth in the preamble of this Agreement, including any successor.
CPESC means Cloud Peak Energy Services Company, a Delaware corporation.
CPE Assumption Notice has the meaning set forth in Section 9.1(b)(i) of this Agreement.
CPE Assumption Right has the meaning set forth in Section 9.1(b)(i) of this Agreement.
CPE Common Stock means the common stock, par value $0.01, of CPE.
CPE Promissory Note means the promissory note dated as of the date hereof issued to RTEA by CPE as consideration for the Acquisition under the Acquisition Agreement.
CPE Redeemed Units has the meaning set forth in Section 8.3(a) of this Agreement.
CPE Redemption Assumption Notice has the meaning set forth in Section 8.3(b)(i) of this Agreement.
CPE Redemption Assumption Right has the meaning set forth in Section 8.3(b)(i) of this Agreement.
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CPE Redemption Date has the meaning set forth in Section 8.3(a) of this Agreement.
CPE Redemption Notice has the meaning set forth in Section 8.3(a) of this Agreement.
CPE Redemption Price means the arithmetic average of the volume weighted average prices for a share of CPE Common Stock on the principal United States securities exchange or automated or electronic quotation system on which CPE Common Stock trades, as reported by Bloomberg, L.P., or its successor, for each of the ten (10) consecutive full Trading Days ending on and including the last full Trading Day immediately prior to the Redemption Notice Date, in the case of Common Membership Units being redeemed pursuant to Section 8.3 or Section 9.1 , subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the CPE Common Stock. If, on the Redemption Date, the CPE Common Stock is not traded on a securities exchange or automated or electronic quotation system, then a nationally recognized independent investment bank, which shall be selected by mutual agreement of the Manager and the Rio Tinto Members, shall, within thirty (30) days after its selection, make a binding determination of the CPE Redemption Price. All fees and costs of such investment bank shall be the responsibility of the Rio Tinto Members. If the Manager and the Rio Tinto Members cannot mutually agree in good faith on the selection of a nationally recognized investment bank, the Rio Tinto Members shall direct the Manager to select the nationally recognized investment bank chosen by the Rio Tinto Members.
CPE Redemption Right has the meaning set forth in Section 8.3(a) of this Agreement.
CPE Redemption Share/Cash Settlement has the meaning set forth in Section 8.3(b)(i) of this Agreement.
CPE Securities means any Equity Interests of CPE, or any rights, options, warrants or convertible or exchangeable securities having the right to convert into, exchange for, subscribe for or purchase any Equity Interests of CPE or any Indebtedness of CPE.
CPE 2009 Long Term Incentive Plan has the meaning set forth in Section 3.4(b)(i) of this Agreement.
CPI Adjustment means for any dollar amount and with respect to a calendar year (the Current Year ), an annual upward adjustment, if any, for inflation (but not any downward adjustments for deflation) which adjustment shall be made by adjusting such dollar amount by the percentage increase, if any, from the CPI Index (as defined below) as of November 2009, in the annual rate set forth in the United States Consumer Price IndexAll Urban Consumers for the U.S. City Average for All Items, 1982-1984=100, published by United States Department of Labor, Bureau of Labor Statistics (the CPI Index ) as of January 1 of the Current Year or, if that index is discontinued, the successor index that most closely approximates such index. The annual CPI Adjustment calculation shall be made as of January 1 of each calendar year and shall be determined upon publication of the CPI Index (or any such successor index).
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Debt Financing Transactions means the Notes Offering and the revolving credit facility to be entered into by the Company.
Employee Matters Agreement means the Employee Matters Agreement dated as of the date hereof by and among the Company, CPE, Rio Tinto plc, Rio Tinto Limited, RTA, RTEA and CPESC as the same may be amended, restated, supplemented or otherwise modified from time to time.
Equity Compensation Notice has the meaning set forth in Section 3.4(b)(i) of this Agreement.
Equity Interests means:
(i) with respect to the Company, any and all units, interests, participations or other equivalents (however designated, whether voting or non-voting) of limited liability company interests or equivalent ownership interests in, or issued by, the Company or interests, participations or other equivalents to share in the revenues or earnings of the Company, or securities convertible into, or exchangeable or exercisable for, such units, interests, participations or other equivalents and options, warrants or other rights to acquire such units, interests, participations or other equivalents (including, Indebtedness that is convertible into, or exchangeable for, units, interests, participations or other equivalents), but shall not include any stock, options or other equivalents in CPE pursuant to any CPE employee benefit plan or any other Indebtedness of the Company, and
(ii) with respect to any other Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of capital stock, partnership interests (whether general or limited), limited liability company interests or equivalent ownership interests in or issued by, or interests, participations or other equivalents to share in the revenues or earnings of including any form of beneficial interest in a trust, such Person or securities convertible into, or exchangeable or exercisable for, such shares, interests, participations or other equivalents and options, warrants or other rights to acquire such shares, interests, participations or other equivalents (including, Indebtedness that is convertible into, or exchangeable for, shares, interests, participations or other equivalents), but shall not include any other Indebtedness of such Person.
ERISA means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
Escrow Agreement means the Escrow Agreement dated November 25, 2009, by and among RTEA, the Company and SunTrust Bank, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.
Excess Nonrecourse Liability has the meaning set forth Treasury Regulation Section 1.752-3(a)(3).
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Exchange Act means the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
First Amended and Restated LLC Agreement has the meaning set forth in the recitals to this Agreement.
Fiscal Month means each fiscal month within the Companys Fiscal Year, as determined by the Manager.
Fiscal Quarter means each fiscal quarter, which shall consist of three Fiscal Months.
Fiscal Year means the fiscal year of the Company ending on December 31 of each year.
Former Manager has the meaning set forth in Section 4.7 of this Agreement.
GAAP means the generally accepted accounting principles in the United States.
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, securities self-regulatory organization or any court, tribunal or judicial or arbitral body or other governmental authority.
Group has the meaning set forth in Section 13(d)(3) and Rule 13d-5 of the Exchange Act.
Indebtedness means, with respect to any Person, at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments issued by such Person, (iii) all obligations of such Person to pay the deferred purchase price for property, including LBAs, or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person evidenced by surety bonds or other similar instruments, (v) all reimbursement obligations of such Person in respect of letters of credit or other similar instruments, (vi) all Indebtedness of others secured by any lien, security interest or mortgage on any asset of such Person and (vii) all Indebtedness of others guaranteed (whether by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain a minimum net worth, financial ratio or similar requirements, or otherwise) by such Person.
Indemnitee has the meaning set forth in Section 4.15(a) of this Agreement.
Information means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, geological
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information, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.
Initial Units means the Common Membership Units of the Company issued and outstanding immediately following the initial public offering by CPE of its CPE Common Stock (the IPO ) as reflected on Exhibit A immediately following the IPO (excluding any Common Membership Units held by CPE in respect of any grants of CPE Common Stock at the time of the IPO under the CPE 2009 Long Term Incentive Plan).
Initial LLC Agreement has the meaning set forth in the recitals of this Agreement.
Interest means a Members limited liability company interest in the Company as provided in this Agreement and under the LLC Act, which shall include any Managing Member Interest and/or Non-Managing Member Interest held by such Member in the Company, and, in addition, any and all rights and benefits to which a Member is entitled under this Agreement and/or the LLC Act, together with all duties and obligations of such Person to comply with this Agreement and/or the LLC Act.
Investment Company Act means the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
Issued CPE Shares has the meaning set forth in Section 3.4(b)(ii) of this Agreement.
JRC MIPA has the meaning set forth in Section 6.4(e) of this Agreement.
KMS has the meaning set forth in the preamble to this Agreement.
KMS Member means KMS and any Permitted Transferees of KMS (so long as Section 8.2 has been satisfied with respect to such Permitted Transferee); provided that if KMS and all of its Permitted Transferees cease to own Common Membership Units, then KMS and its Permitted Transferees shall no longer be treated as the KMS Member under this Agreement.
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 means lease by application.
Liabilities means all damages, losses, liabilities or obligations, payments, amounts paid in settlement, fines, penalties, costs of burdens associated with performing injunctive relief and other costs (including reasonable fees and expenses of outside attorneys, accountants and other professional advisors, and of expert witnesses and other costs of investigation, preparation and litigation in connection with any Action, appeal, petition, plea,
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charge, complaint, claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry, investigation or similar matter or proceeding) of any kind or nature whatsoever, whether known or unknown, asserted or unasserted, absolute, contingent or vested, accrued or unaccrued, liquidated or unliquidated, or matured or unmatured.
Lien means, with respect to any asset, any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable Law, including any conditional sale or other title retention agreement and any lease in the nature thereof.
Life of Mine Model means the model prepared by the Company and attached as Exhibit B to this Agreement.
Liquidator has the meaning set forth in Section 7.2 of this Agreement.
LLC Act means the Delaware Limited Liability Company Act, 6 Del.C. §§18-101, et seq., as it may be amended from time to time, and any successor to such statute.
Management Services Agreement means the Management Services Agreement dated as of the date hereof by and between the Company and CPE, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Manager has the meaning set forth in Section 4.1 of this Agreement.
Managing Member Interest means the management and ownership interest of the Manager in the Company, which includes any Common Membership Units held by the Manager (including Common Membership Units acquired pursuant to Section 8.3 or Section 9.1 of this Agreement) and any other Units held by the Manager, and includes any and all rights and benefits to which the Manager is entitled under this Agreement and/or the LLC Act, together with all obligations of the Manager to comply with this Agreement and/or the LLC Act.
Master Separation Agreement means the Master Separation Agreement dated as of the date hereof by and among the Company, CPE, RTA, RTEA, KMS and the Subsidiaries named therein, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Member means each Person that is or becomes a member, as contemplated in the LLC Act, of the Company in accordance with the provisions of this Agreement and is listed on Exhibit A to this Agreement (as such Exhibit may be amended or modified from time to time) and has not ceased to be a Member as provided in Section 3.1(e) of this Agreement.
Member Information has the meaning set forth in Section 10.3(c) of this Agreement.
MSA Exhibit A has the meaning set forth in Section 6.4(e) of this Agreement.
Net Income or Net Losses, as appropriate, means, for any period, the taxable income or tax loss of the Company for such period for U.S. federal income tax purposes, as determined in accordance with the accounting method used by the Company for U.S. federal
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income tax purposes, taking into account any separately stated tax items and increased by the amount of any tax-exempt income of the Company during such period and decreased by the amount of any Code Section 705(a)(2)(B) expenditures (within the meaning of Treasury Regulation Section 1.704-1(b)(2)(iv)(i)) of the Company); provided , however , that (i) Net Income or Net Losses of the Company shall be computed without regard to the amount of any items of gross income, gain, loss or deduction that are specifically allocated pursuant to Section 6.3(b) and (ii) in determining Net Income or Net Losses of the Company, any amounts paid under the Employee Matters and Management Services Agreement shall be treated as payments to a non-Member under Code Section 707. In the event that the Capital Accounts are adjusted pursuant to an adjustment to the Carrying Value of an asset of the Company or as otherwise provided for in this Agreement, the Net Income or Net Losses of the Company (and the constituent items of income, gain, loss and deduction) realized thereafter shall be computed in accordance with the principles of Treasury Regulation Section 1.704-1(b)(2)(iv)(g). If the Carrying Value of an asset is adjusted, such asset shall be treated as having been sold for its fair market value and any deemed gain or loss shall be taken into account in determining Net Income or Net Losses.
Non-LBA Capital Payments means those expenditures identified under the caption Non-LBA Capital Total in the Life of Mine Model.
Non-Managing Member means, unless the context otherwise requires, the RTEA Member, the KMS Member and each additional Person, other than the Manager, including Permitted Transferees (so long as Section 8.2 has been satisfied with respect to such Permitted Transferees), that becomes a Member pursuant to the terms of this Agreement, in such Persons capacity as a non-managing member of the Company.
Non-Managing Member Interest means the ownership interest of a Non-Managing Member in the Company, which may be evidenced by Common Membership Units (other than Common Membership Units included in the Managing Member Interest) and any other Units held by a Non-Managing Member, and includes any and all rights and benefits to which such Non-Managing Member is entitled under this Agreement and/or the LLC Act, together with all obligations of such Non-Managing Member to comply with this Agreement and/or the LLC Act.
Nonrecourse Debt means any Company liability to the extent that no Member (or related person within the meaning of Treasury Regulation Section 1.752-4(b)) bears the economic risk of loss for such liability under Treasury Regulation Section 1.752-2.
Notes Offering means the offering and sale of the Senior Notes due 2016 and the Senior Notes due 2019 by the Company and Cloud Peak Energy Finance Corp., a Delaware corporation.
Options means options, issued under the CPE 2009 Long-Term Incentive Plan or any similar successor equity incentive plan of CPE providing employee benefits (including benefits related to, among other things, and without limitation, the issuance of restricted and non-restricted CPE Common Stock, the payment of bonuses in CPE Common Stock, the issuance of CPE Common Stock in settlement of stock appreciation rights or otherwise), to acquire CPE Common Stock or other equity equivalents of CPE.
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Over-Allotment Unit Purchase means the purchase, if any, by CPE from RTEA of a portion of RTEAs interest in the Coal Business through the acquisition of Common Membership Units pursuant to the Acquisition Agreement upon exercise by the Underwriters of the over-allotment option that may be exercised by the Underwriters of the initial public offering of CPEs Common Stock pursuant to the Underwriting Agreement.
Partial CPE Redeemed Units Equivalent means the product of (i) the Partial Cash CPE Redeemed Units, times (ii) the CPE Redemption Price.
Partial Cash CPE Redeemed Units means, with respect to any redemption pursuant to Section 8.3 for which CPE has exercised the CPE Redemption Assumption Right, the number of Common Membership Units equal to the difference between (x) the total number of CPE Redeemed Units and (y) the Partial Share CPE Redeemed Units.
Partial Cash Redeemed Units means, with respect to any redemption pursuant to Section 9.1 for which CPE has exercised the CPE Assumption Right, the number of Common Membership Units equal to the difference between (x) the total number of Redeemed Units and (y) the Partial Share Redeemed Units.
Partial Cash Settlement means (i) in the case of Common Membership Units being redeemed pursuant to Section 9.1 , immediately available funds equal to the Partial Redeemed Units Equivalent or (ii) in the case of Common Membership Units being redeemed pursuant to Section 8.3 , immediately available funds equal to the Partial CPE Redeemed Units Equivalent.
Partial Redeemed Units Equivalent means the product of (i) the Partial Cash Redeemed Units, times (ii) the CPE Redemption Price.
Partial Share CPE Redeemed Units means, with respect to any redemption pursuant to Section 8.3 for which CPE has exercised the CPE Redemption Assumption Right, the number of CPE Redeemed Units for which CPE has indicated in the CPE Redemption Assumption Notice for such redemption that it intends to settle in shares of CPE Common Stock.
Partial Share Redeemed Units means, with respect to any redemption pursuant to Section 9.1 for which CPE has exercised the CPE Assumption Right, the number of Redeemed Units for which CPE has indicated in the CPE Assumption Notice for such redemption that it intends to settle in shares of CPE Common Stock.
Partial Share Settlement means (i) a number of shares of CPE Common Stock equal to the Partial Share Redeemed Units, in the case of Common Membership Units being redeemed pursuant to Section 9.1 , or (ii) a number of shares of CPE Common Stock equal to the Partial Share CPE Redeemed Units, in the case of Common Membership units being redeemed pursuant to Section 8.3 .
Partner Nonrecourse Debt means any Company liability to the extent such liability is nonrecourse for purposes of Treasury Regulation Section 1.1001-2 with respect to which a Member (or related person within the meaning of Treasury Regulation Section 1.752-
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4(b)) bears the economic risk of loss under Treasury Regulation Section 1.752-2 because, for example, the Member or related person is a creditor or guarantor with respect to such liability.
Partner Nonrecourse Debt Minimum Gain has the meaning set forth in Treasury Regulation Section 1.704-2(i)(2) and, as provided therein, shall generally be the amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Debt.
Partnership Minimum Gain has the meaning set forth in Treasury Regulation Section 1.704-2(b)(2) and, as provided therein, shall generally be determined by computing, for each Nonrecourse Debt of the Company, any Net Income the Company would realize if it disposed of the property subject to that liability for no consideration other than full satisfaction of the liability and then aggregating the separate amounts of Net Income so computed.
Party or Parties means the Company and each Member of the Company.
Percentage Interest means, with respect to any Member at any time holding Common Membership Units, the quotient, expressed as a percentage, obtained by dividing (i) the number of Common Membership Units held by such holder at the time of such calculation, by (ii) the total number of all Common Membership Units outstanding at the time of such calculation.
Permitted Transferee means in the case of any Member, an Affiliate of such Member.
Person means any individual, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, Governmental Authority or other entity or organization of any nature whatsoever.
Prohibited Person means any Person with whom a Member would be restricted from doing business under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, H. R. 3162, Public Law 107 56, as amended, and Executive Order Number 13224 on Terrorism Financing, effective September 24, 2001, and regulations promulgated pursuant thereto, including, without limitation, Persons named on the Office of Foreign Asset Control Specially Designated Nationals and Blocked Persons List, as such List may be amended from time to time.
PV Amount has the meaning set forth in Section 6.4(d) of this Agreement.
Redeemed Units has the meaning set forth in Section 9.1(a) of this Agreement.
Redeemed Units Equivalent means the product of (i) the Share Settlement, times (ii) the CPE Redemption Price.
Redeeming Member has the meaning set forth in Section 9.1(a) of this Agreement.
Redemption Date has the meaning set forth in Section 9.1(a) of this Agreement.
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Redemption Notice has the meaning set forth in Section 9.1(a) of this Agreement.
Redemption Notice Date means the date on which a Redeeming Member delivers a Redemption Notice pursuant to Section 9.1(a) .
Redemption Right has the meaning set forth in Section 9.1(a) of this Agreement.
Registration Rights Agreement means the Registration Rights Agreement dated as of the date hereof between RTEA, KMS and CPE, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Regulatory Allocations has the meaning set forth in Section 6.3(c) of this Agreement.
Representative has the meaning set forth in Section 4.15(a) of this Agreement.
Retraction Notice has the meaning set forth in Section 9.1(c) of this Agreement.
Rio Tinto Designee has the meaning set forth in Section 3.1(g) of this Agreement.
Rio Tinto Member means the RTEA Member, the KMS Member and their respective Permitted Transferees.
Rio Tinto Member Affiliate has the meaning set forth in Section 4.19(a) of this Agreement.
Rio Tinto Member Approval means the approval of the Rio Tinto Members by the Rio Tinto Designee pursuant to Section 4.3(b) .
Rio Tinto Member Approval Rights has the meaning set forth in Section 4.3(a) of this Agreement.
Rio Tinto Member Non-Approval Trigger Date means the first date on which the aggregate amount of Common Membership Units Transferred by the Rio Tinto Members (other than Transfers to Permitted Transferees pursuant to this Agreement or among the Rio Tinto Members) exceeds 70% (subject to adjustment to reflect any Unit split or reverse Unit split, Unit distribution, Unit reclassification, recapitalization or similar event) of the Initial Units. For purposes of this definition, the Common Membership Units Transferred by the Rio Tinto Members (i) shall include the Transfer of Common Membership Units to CPE pursuant to the Acquisition Agreement and (ii) shall not include the number of (A) shares of CPE Common Stock beneficially owned by the Rio Tinto Members (and such Permitted Transferees) as a result of the exercise of the Redemption Right or the CPE Redemption Right and (B) shares of CPE Common Stock beneficially owned by such Rio Tinto Member issued in connection with any dividend or distribution on CPE Common Stock received by such Rio Tinto Member as a result of the exercise of the Redemption Right or the CPE Redemption Right.
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RTA means Rio Tinto America Inc., a Delaware corporation.
RTEA has the meaning set forth in the preamble of this Agreement.
RTEA Coal Supply Agreement means the Rio Tinto Energy America Coal Supply Agreement dated as of the date hereof by and between the Company and RTEA as the same may be amended, restated, supplemented or otherwise modified from time to time.
RTEA Member means RTEA and any Permitted Transferees of RTEA (so long as Section 8.2 has been satisfied with respect to such Permitted Transferee); provided that if RTEA and all of its Permitted Transferees cease to own any Common Membership Units then RTEA and its Permitted Transferees shall no longer be treated as the RTEA Member under this Agreement.
Second Amended and Restated LLC Agreement has the meaning set forth in the recitals to this Agreement.
Section 704(c) Property means any asset of the Company if the Carrying Value of such asset differs from its adjusted tax basis.
Share/Cash Settlement has the meaning set forth in Section 9.1(b)(i) of this Agreement.
Share Settlement means a number of shares of CPE Common Stock equal to (i) the number of Redeemed Units being redeemed pursuant to Section 9.1 or (ii) the number of CPE Redeemed Units being redeemed pursuant to Section 8.3 .
Software License Agreement means the Software License Agreement dated as of the date hereof between the Company and RTEA, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Subsidiary means, with respect to any Person, (i) a corporation a majority of whose Capital Stock with the general voting power under ordinary circumstances to vote in the election of directors of such corporation (irrespective of whether or not, at the time, any other class or classes of securities shall have, or might have, voting power by reason of the happening of any contingency) or a majority of the outstanding Equity Interests is at the date of determination beneficially owned by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation), including a joint venture, a general or limited partnership or a limited liability company, in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, beneficially owns (x) at least a majority ownership interest entitled to vote in the election of directors, managers or trustees thereof (or other Persons performing such functions), (y) at least a majority of the outstanding Equity Interests or (z) otherwise acts as the general partner or managing member of such other Person. For purposes of this Agreement, the Decker mine shall not be deemed a Subsidiary of the Company.
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Tax Matters Member has the meaning set forth in Section 6.6(a) of this Agreement.
Tax Receivable Agreement means the Tax Receivable Agreement dated as of the date hereof between CPE and RTEA, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Trademark Assignment Agreement means the Trademark Assignment Agreement dated as of the date hereof by and between RTEA and the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Trademark License Agreement means the Trademark License Agreement dated as of the date hereof by and between RTEA and the Company, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Trading Day means a day on which the principal United States securities exchange on which CPE Common Stock is listed or admitted to trading, or a national automated quotation system if CPE Common Stock is not listed or admitted to trading on any such securities exchange, as applicable, is open for the transaction of business (unless such trading shall have been suspended for the entire day).
Transactions means, collectively, (i) the IPO, (ii) the Debt Financing Transactions described in the registration statement on Form S-1 File No. 333-161293 filed by CPE with the Commission and (iii) all other transactions contemplated, as of the date hereof, by this Agreement and the other Transaction Documents.
Transaction Documents means, collectively, the following agreements:
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(i) |
this Agreement; |
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(ii) |
the Acquisition Agreement; |
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(iii) |
the Agency Agreement; |
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(iv) |
the CPE Promissory Note; |
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(v) |
the Employee Matters Agreement; |
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(vi) |
the Escrow Agreement; |
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(vii) |
the Management Services Agreement; |
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(viii) |
the Master Separation Agreement; |
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(ix) |
the Registration Rights Agreement; |
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(x) |
the RTEA Coal Supply Agreement; |
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(xi) |
the Software License Agreement; |
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(xii) |
the Tax Receivable Agreement; |
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(xiii) |
the Trademark Assignment Agreement; |
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(xiv) |
the Trademark License Agreement; and |
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(xv) |
the Transition Services Agreement. |
Transfer (including the term Transferred ) means, directly or indirectly, to sell, transfer, give, exchange, bequest, assign, pledge, grant a security interest in, encumber, hypothecate or otherwise dispose of, either voluntarily or involuntarily.
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Transferring Member has the meaning set forth in Section 8.1(a) of this Agreement.
Transition Services Agreement means the Transition Services Agreement dated as of the date hereof between and among Rio Tinto Services Inc., the Company and CPE, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Treas. Reg. 1.752-7 Liabilities has the meaning set forth in Section 6.4(d) of this Agreement.
Treasury Regulations means the federal income tax regulations, including any temporary regulations, promulgated under the Code, as such Treasury Regulations may be amended from time to time. Any and all references herein to specific Treasury Regulations provisions shall be deemed to refer to any corresponding successor provisions.
Uncommitted LBA Payments means those expenditures identified under the caption LBA Payments Uncommitted in the Life of Mine Model.
Underwriters means the several underwriters of the IPO named in the Underwriting Agreement.
Underwriting Agreement means the underwriting agreement entered into among CPE and the Underwriters for the initial public offering of CPEs Common Stock.
Unit has the meaning set forth in Section 3.3(a) .
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(1) the Company shall (A) revise Exhibit A to reflect (i) that the Rio Tinto Members will hold no Common Membership Units following the CPE Redemption Date and (ii) if CPE exercises the CPE Redemption Assumption Right, the number of Common Membership Units held by CPE following the CPE Redemption Date, and (B) deliver to CPE all transfer tax stamps or funds therefor, if required in connection with the exercise of the CPE Redemption Right;
(2) (i) if CPE has not exercised the CPE Redemption Assumption Right, the Company shall deliver to the Rio Tinto Members a Cash Settlement for the CPE Redeemed Units or (ii) if CPE has exercised the CPE Redemption Assumption Right, CPE shall deliver to the Rio Tinto Members (or such other party that the Rio Tinto Members may designate) one of the following:
(A) in the event that CPE determines to pay the Rio Tinto Members the Share Settlement, CPE shall (x) issue to the Rio Tinto Members in such name or names as the Rio Tinto Members may direct the Share Settlement and (y) deliver or cause to be delivered at the office of CPEs transfer agent, a certificate or certificates representing the number of full shares of CPE Common Stock issuable in a Share Settlement, if the CPE Common Stock is certificated, issued in the name of the Rio Tinto Members or in such other name or names as the Rio Tinto Members may direct;
(B) in the event that CPE determines to pay the Rio Tinto Members the Cash Settlement, CPE shall pay to the Rio Tinto Members or such other Person as the Rio Tinto Members may direct the Cash Settlement; or
(C) in the event that CPE determines to pay the CPE Redemption Share/Cash Settlement, CPE shall (x) issue to the Rio Tinto Members in such name or names as the Rio Tinto Members may direct the Partial Share Settlement, (y) deliver or cause to be delivered at the office of CPEs transfer agent, a certificate or certificates representing the number of full shares of CPE Common Stock issuable upon redemption in a Partial Share Settlement, if the CPE Common Stock is certificated, issued in the name of the Rio Tinto Members or in such other name or names as the Rio Tinto Members may direct, and (z) pay to the Rio Tinto Members or such other Persons as the Rio Tinto Members may direct the Partial Cash Settlement.
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(1) the Company shall (A) revise Exhibit A to reflect (i) the number of Common Membership Units held by the Redeeming Member following the Redemption Date
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and (ii) if CPE exercises the CPE Assumption Right, the number of Common Membership Units held by CPE following the Redemption Date, and (B) deliver to CPE all transfer tax stamps or funds therefor, if required pursuant to Section 9.1(e) ;
(2) (i) if CPE has not exercised the CPE Assumption Right, the Company shall deliver to the Redeeming Member a Cash Settlement for the Redeemed Units or (ii) if CPE has exercised the CPE Assumption Right, CPE shall deliver to the Redeeming Member (or such other party that the Redeeming Member may designate) one of the following:
(A) in the event that CPE determines to pay the Redeeming Member the Share Settlement, CPE shall (x) issue to the Redeeming Member in such name or names as the Redeeming Member may direct the Share Settlement and (y) deliver or cause to be delivered at the office of CPEs transfer agent, a certificate or certificates representing the number of full shares of CPE Common Stock issuable upon redemption in a Share Settlement, if the CPE Common Stock is certificated, issued in the name of the Redeeming Member or in such other name or names as the Redeeming Member may direct;
(B) in the event that CPE determines to pay the Redeeming Member the Cash Settlement, CPE shall pay to the Redeeming Member or such other Person as the Redeeming Member may direct the Cash Settlement; or
(C) in the event that CPE determines to pay the Share/Cash Settlement, CPE shall (x) issue to the Redeeming Member in such name or names as the Redeeming Member may direct the Partial Share Settlement, (y) deliver or cause to be delivered at the office of CPEs transfer agent, a certificate or certificates representing the number of full shares of CPE Common Stock issuable upon redemption in a Partial Share Settlement, if the CPE Common Stock is certificated, issued in the name of the Redeeming Member or in such other name or names as the Redeeming Member may direct, and (z) pay to the Redeeming Member or such other Persons as the Redeeming Member may direct the Partial Cash Settlement.
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(signature page follows)
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to be executed on its behalf as of the date first written above.
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RIO TINTO ENERGY AMERICA INC. |
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By: |
/s/ James P. Berson |
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Name: |
James P. Berson |
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Title: |
Authorized Agent |
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KENNECOTT MANAGEMENT SERVICES COMPANY |
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By: |
/s/ James P. Berson |
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Name: |
James P. Berson |
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Title: |
Authorized Agent |
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CLOUD PEAK ENERGY INC. |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
[Signature page for Third Amended and Restated Limited Liability Company Agreement of Cloud Peak Energy Resources LLC]
59
Exhibit 10.6
EXECUTION COPY
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT dated as of November 19, 2009 (this Agreement ), is between Cloud Peak Energy Inc., a Delaware corporation ( Cloud Peak ), and Rio Tinto Energy America Inc., a Delaware corporation ( RTEA ). Certain terms used in this Agreement are defined in Section 1.1 . Except as otherwise specified in this Agreement, all capitalized terms used herein that are defined in the Master Separation Agreement (as defined below) have the respective meanings specified therein.
RECITALS
WHEREAS, through a series of structuring transactions, RTEA contributed the non-Colorado Western United States coal mining business (other than the Colowyo mine) (the Coal Business ) of Rio Tinto America Inc., a Delaware corporation ( RTA ) to Cloud Peak Energy Resources LLC, a Delaware limited liability company ( CPE LLC );
WHEREAS, prior to the completion of the transactions contemplated in this Agreement, RTEA and Kennecott Management Services Company, a Delaware corporation ( KMS ) owned all of the outstanding Common Membership Units (as defined below) of CPE LLC;
WHEREAS, concurrent with the execution of this Agreement, (i) RTA, RTEA, KMS, Cloud Peak, CPE LLC and certain subsidiaries of CPE LLC will enter into a Master Separation Agreement, (ii) Cloud Peak, RTEA and KMS will enter into the Third Amended and Restated Limited Liability Company Operating Agreement of CPE LLC (the LLC Agreement ) and (iii) Cloud Peak, RTEA and KMS and/or their respective Affiliates will enter into the Transaction Documents, including the Tax Receivable Agreement;
WHEREAS, Cloud Peak desires to acquire a portion of RTEAs interest in the Coal Business through the acquisition from RTEA of Common Membership Units (as defined below) in CPE LLC, and, as consideration, will issue to RTEA the CPE Note (as defined below);
WHEREAS, the Underwriters have required, as a condition to their entering into the Underwriting Agreement, that Cloud Peak grant the Underwriters an option (the Overallotment Option ) to purchase up to an additional 4,590,000 shares of Common Stock from Cloud Peak to cover overallotments of shares in the Initial Public Offering (the Overallotment ); and
WHEREAS, upon the exercise of the Overallotment Option, Cloud Peak desires to acquire an additional portion of RTEAs interest in the Coal Business through the acquisition from RTEA of additional Common Membership Units in CPE LLC.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Cloud Peak and RTEA hereby agree as follows:
ARTICLE 1
DEFINITIONS
Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute and the rules and regulations thereunder in effect from time to time. Any reference herein to a specific provision of the Code shall mean, where appropriate, the corresponding provision in any successor statute.
Common Membership Units means the limited liability company common membership units of CPE LLC as described in the LLC Agreement.
Common Stock means the common stock, $0.01 par value per share, of Cloud Peak.
Encumbrance means, with respect to any specified asset, any security interest, lien, mortgage, claim, charge, pledge, restriction, option, reservation, equitable interest, deed of trust, right of first refusal, easement, servitude or encumbrance of any nature.
First Closing Date has the meaning set forth in Section 3 of the Underwriting Agreement.
Initial Public Offering means the initial public offering registered under the Securities Act of the Common Stock of Cloud Peak.
Optional Closing Date has the meaning set forth in Section 3 of the Underwriting Agreement.
Master Separation Agreement means the Master Separation Agreement dated as of the date hereof among RTA, RTEA, KMS, Cloud Peak, CPE LLC and certain subsidiaries of CPE LLC.
Underwriters means the several underwriters of the offering named in the Underwriting Agreement.
Underwriting Agreement means the underwriting agreement to be entered into among Cloud Peak and the Underwriters for the Initial Public Offering.
Term |
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Section |
Acquisition Closing |
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2.4 |
Agreement |
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Preamble |
Business Day |
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Master Separation Agreement |
Cloud Peak |
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Preamble |
Coal Business |
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Recitals |
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CPE LLC |
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Recitals |
CPE Note |
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2.2 |
KMS |
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Recitals |
Law |
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Master Separation Agreement |
LLC Agreement |
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Recitals |
New York Courts |
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5.3 |
Overallotment |
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Recitals |
Overallotment Acquisition Closing |
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3.3 |
Overallotment Option |
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Recitals |
RTA |
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Recitals |
RTEA |
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Preamble |
Tax Receivable Agreement |
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Master Separation Agreement |
Transaction Documents |
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Master Separation Agreement |
Unit(s) |
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2.1 |
Unit Price |
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2.2 |
ARTICLE 2
ACQUISITION OF UNITS
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With a copy to (which shall not constitute notice):
Craig Johnson, Esq.
Rio Tinto Services Inc.
224 North 2200 West
Salt Lake City, Utah 84116
(801) 238-2400
Fax: (801) 238-2473
or to such other addresses or telecopy numbers as may be specified by like notice to the other Parties.
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[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.
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CLOUD PEAK ENERGY INC. |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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RIO TINTO ENERGY AMERICA INC. |
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By: |
/s/ James P. Berson |
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Name: |
James P. Berson |
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Title: |
Authorized Agent |
[Acquisition Agreement Signature Page]
Exhibit 10.7
PROMISSORY NOTE
$433,755,000 |
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November 19, 2009 |
FOR VALUE RECEIVED, the undersigned, Cloud Peak Energy Inc., a Delaware corporation (the Payor), hereby promises to pay to the order of Rio Tinto Energy America Inc., a Delaware corporation (the Payee), at the Payees office at 4700 Daybreak Parkway, South Jordan, Utah 84095 (or at such other place of payment as the Payee may from time to time specify to the Payor in writing), on the Payment Date (as defined below), the principal sum of Four Hundred Thirty-Three Million, Seven Hundred Fifty-Five Thousand Dollars ($433,755,000), without interest (the Principal Amount) in lawful money of the United States of America. Upon final indefeasible payment of all amounts due under this Note, it shall be surrendered for cancellation.
Except as otherwise defined herein, all capitalized terms used herein shall have the meaning specified in that certain Acquisition Agreement dated November 19, 2009 between the Payor and the Payee.
The outstanding Principal Amount shall become due and payable upon demand by the Payee (such date, the Payment Date), but no earlier than the First Closing Date; provided , however , that the outstanding Principal Amount shall become due and payable on the Payment Date only if the transactions contemplated to have occurred on the First Closing Date by the Underwriting Agreement have occurred.
The Payor hereby expressly waives demand, presentment, protest, notice of dishonor, diligence in collection and any other notice of any kind. No delay by the Payee in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Payee of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy.
In the event that Payor breaches the obligations under this Note, the Payor agrees to pay to the Payee all expenses incurred or paid by the Payee in connection with the collection of this Note, including, without limitation, reasonable attorneys fees and court costs. Notwithstanding the first paragraph of this Note, in the event the Payor fails to make any payment due pursuant to this Note on or prior to the date on which such payment becomes due and payable, whether at maturity or by acceleration or on any other date, such unpaid amount shall accrue interest from the date on which such payment was due until the date on which such payment is made at a rate of interest of 10.0% (ten percent) per annum.
This Note shall inure to the benefit of and be binding upon the Payor and the Payee and their respective successors and assigns; provided that the Payor may not assign any of its rights or obligations hereunder without the prior written consent of the other party hereto.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW RULES THEREOF.
This Note may be amended, and any provisions under the Note waived, only by a written agreement executed by the Payee and the Payor.
If any terms or other provision of this Note shall be determined by a court, administrative agency or arbitrator to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not render the entire Note invalid. Rather, this Note shall be construed as if not containing the particular invalid, illegal or unenforceable provision, and all other provisions of this Note shall remain in full force and effect in accordance with its terms.
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IN WITNESS THEREOF, the Payor has caused this Note to be executed on its behalf by its duly authorized officer.
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CLOUD PEAK ENERGY INC. |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
[CPE Promissory Note Signature Page]
Exhibit 10.8
EXECUTION COPY
ASSIGNMENT OF TRADEMARKS
This ASSIGNMENT OF TRADEMARKS (this Assignment ) is dated and effective as of November 19, 2009 between Rio Tinto Energy America Inc., a Delaware corporation ( RTEA ) and Cloud Peak Energy Resources LLC, a Delaware limited liability company (the Company ).
RECITALS
WHEREAS , RTEA is the sole and exclusive owner of all right, title, and interest in and to all of the trademarks and service marks identified in Schedule A (collectively referred to herein as the Trademarks ); and
WHEREAS , RTEA is the sole and exclusive owner of all right, title, and interest in and to all of the domain name registrations identified in Schedule B (collectively referred to herein as the Domain Names ); and
WHEREAS , pursuant to the initial public offering separating the Company from RTEA, the Company is the successor to that portion of the ongoing business of RTEA, excluding Colowyo, to which the Trademarks and Domain Names pertain and is desirous of acquiring, and RTEA is desirous of assigning to the Company, all right, title, and interest in and to all of the Trademarks and Domain Names and all goodwill connected with the use thereof, symbolized thereby and associated therewith, and the right to sue and recover damages for past and future infringement, misappropriation or other violations related to the Trademarks and Domain Names;
NOW THEREFORE , for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, RTEA and the Company hereby agree as follows:
1. RTEA hereby sells, assigns and transfers to the Company, its successors and assigns, all of its right, title and interest in and to the Trademarks and the Domain Names, and all applications, registrations, and renewals therefor, together with all goodwill symbolized thereby and associated therewith.
2. The Company and RTEA hereby authorize and request the Commissioner of Patents and Trademarks of the United States to issue and to record the title of the Company as owner of all right, title, and interest in and to the Trademarks, all applications, registrations, and renewals therefor, the goodwill connected with the use thereof, symbolized thereby and associated therewith.
3. The Company shall solely and exclusively bear the cost of: (i) all filing and similar fees relating to the filing or recordation of the Companys ownership interest in, or issuance to the Company of, the Trademarks and Domain Names, and (ii) all maintenance, renewal and similar fees payable in connection with the Trademarks and Domain Names after the date of this Assignment.
4. The Company and RTEA agree to make commercially reasonable efforts to promptly update the registration information for the Domain Names to effect this Assignment.
5. RTEA agrees to execute, upon the reasonable request of the Company and at the Companys expense, such additional documents as are reasonably necessary or desirable to continue, secure, defend, register, and otherwise give full effect to and perfect the rights of the Company under this Assignment.
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In testimony whereof, RTEA has signed below, by its duly authorized legal representatives, on this 16 th day of November, 2009.
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Rio Tinto Energy America Inc. |
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By: |
/s/ James P. Berson |
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Title: |
Authorized Agent |
STATE OF New Mexico |
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COUNTY OF Bernalillo |
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On this 16 th day of November, 2009, before me appeared James Paul Berson of Rio Tinto Energy America Inc., who acknowledged execution of this Assignment as a free act by Rio Tinto Energy America Inc.
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/s/ Rosa Mendez |
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Notary Public |
ACKNOWLEDGMENT
On behalf of Cloud Peak Energy Resources LLC, I hereby acknowledge receipt of assignment, for good and valuable consideration, of the Trademarks set forth in Schedule A.
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Cloud Peak Energy Resources LLC |
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By: |
/s/ Colin Marshall |
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Title: |
President and CEO |
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Exhibit 10.9
EXECUTION COPY
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this Agreement ) is made and entered into as of November 19, 2009 (the Effective Date ), between Cloud Peak Energy Resources LLC, a Delaware limited liability company ( CPE LLC ), and Cloud Peak Energy Inc., a Delaware corporation ( CPE ). CPE and CPE LLC are sometimes referred to herein separately as a Party and together as the Parties .
RECITALS
WHEREAS, as contemplated by the terms of the Amended and Restated Limited Liability Company Agreement of CPE LLC dated as of the date hereof (as the same may be amended, restated, supplemented or otherwise modified from time to time, the LLC Agreement ), the members of CPE LLC have approved this Management Services Agreement;
WHEREAS, to facilitate the operation of the business of CPE LLC, CPE LLC and CPE desire for CPE to provide management services to CPE LLC supplemental to CPEs role as manager ( Manager ) under the LLC Agreement and memorialize the clarification of certain responsibilities of CPE in managing CPE LLC on the terms and subject to the conditions specified in this Agreement; and
WHEREAS, to facilitate CPEs provision of management services, CPE LLC and CPE desire for CPE LLC to pay CPE certain employee costs for Service Employees (as defined herein) and to provide certain administrative services, facilities and other resources to CPE on the terms and subject to the conditions specified in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, CPE LLC and CPE agree as follows:
The following terms shall have the indicated meaning:
Affiliate means with respect to a Person (as defined below), any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. As used in this definition, the word control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
Aggregate Employee Costs means, with respect to any month, the aggregate amount of Attributable Employee Costs.
Agreement is defined in the introductory paragraph.
Attributable Employee Costs means, with respect to each Service Employee (as defined below), the monthly Employee Costs attributed to such Service Employee (as defined below).
Board is defined in Section 2.1 .
CPE is defined in the introductory paragraph.
CPE Benefit Plans means, with respect to CPE, any employee pension benefit plan (as defined in Section 3(2) of ERISA), employee welfare benefit plan (as defined in Section 3(1) of ERISA) and any other plan or arrangement of any kind, whether qualified or non-qualified, relating to stock options, incentive compensation, bonus, profit sharing, retirement, pension, deferred compensation, severance benefits, leave of absence, vacation, life, health, accident, disability, sick pay, workmens compensation or other insurance, severance, separation, fringe or any other benefits.
CPE LLC is defined in the introductory paragraph.
Effective Date is defined in the introductory paragraph.
Employee Costs means the direct out-of-pocket costs or reasonable allocated costs of CPE (i) for gross wages, salaries, bonuses, incentive compensation, equity compensation and payroll taxes of the Service Employees, plus (ii) for workers compensation insurance incurred by CPE with respect to the Service Employees, plus (iii) for employee benefit plans attributable to any Service Employees, including but not limited to pension, savings, medical, dental, vision, disability and life insurance, plus (iv) for other benefits directly attributable to the Service Employees, including but not limited to perquisites, personal or fringe benefits or other similar incentive programs, executive programs, severance pay, employee assistance programs, cafeteria plan benefits, dependent care and health care flexible spending accounts, sick leave, legal assistance and educational assistance, plus (v) related to the employee benefit plans or programs, including but not limited to incremental costs of charges or premiums, employee participation, actuarial reports, accounting, or legal fees.
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.
Health and Welfare Plans is defined in Section 4.3(c) .
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.
LLC Agreement is defined in the Recitals.
Loss is defined in Section 5.1 .
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Management Services means all services performed by CPE (by Service Employees or otherwise), whether the provision of such services by CPE is required or contemplated by the LLC Agreement or is supplemental to the services to be provided by CPE to CPE LLC under the LLC Agreement, relating to the management and operation of the business of CPE LLC, including but not limited to executive oversight, exploration, production, sales, marketing, finance and accounting support and reporting, legal support and other services and activities as are customarily performed by persons holding the positions set forth on Exhibit A hereto and all other services provided by CPE, its officers, directors and employees to or for the benefit of CPE LLC in, or relating to, CPEs role as Manager of CPE LLC.
New York Courts has the meaning set forth in Section 7.1 .
Person means an individual, corporation, joint venture, partnership, limited partnership, limited liability company, trust, estate, business trust, association, Governmental Authority or any other entity.
Reimbursable Costs shall mean all of the reasonable out-of-pocket costs and expenses incurred or suffered by CPE in connection with the providing of the Management Services, including the following:
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Representatives means, with respect to any Person, any of such Persons directors, officers, members, partners, managers and employees.
Service Employees means those employees of CPE who devote all or a portion of their working time to the performance of the Management Services and whose (i) job title(s) and (ii) initial estimated Attributable Employee Cost are set forth on Exhibit A hereto, as may be amended from time to time. Service Employees include and will include any former Service Employee to whom CPE has ongoing obligations.
Services Fee is defined in Section 3.1 .
Supporting Documentation is defined in Section 2.5(a) .
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If to CPE :
Cloud Peak Energy Inc.
General Counsel
505 S. Gillette Avenue
Gillette, WY 82716
(307) 687-6000
Fax: (307) 687-6059
If to CPE LLC :
Cloud Peak Energy Inc.
General Counsel
505 S. Gillette Avenue
Gillette, WY 82716
(307) 687-6000
Fax: (307) 687-6059
or to such other addresses or telecopy numbers as may be specified by like notice to the other Parties.
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[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.
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CLOUD PEAK ENERGY RESOURCES LLC |
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By: |
/s/ Michael Barrett |
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Name: |
Michael Barrett |
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Title: |
CFO |
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CLOUD PEAK ENERGY INC. |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
[Signature page for Management Services Agreement]
Exhibit 10.10
EXECUTION COPY
RIO TINTO ENERGY AMERICA COAL SUPPLY AGREEMENT
This Rio Tinto Energy America Coal Supply Agreement (the Agreement ), made this 19th day of November, 2009 (the Effective Date ), is by and between Cloud Peak Energy Resources LLC, a Delaware limited liability company ( CPE LLC or the Company ), and Rio Tinto Energy America Inc., a Delaware corporation ( RTEA ). CPE LLC and RTEA are each referred to herein as a Party and collectively as the Parties .
W I T N E S S E T H:
WHEREAS, through a series of structuring transactions, RTEA contributed RTAs non-Colorado Western United States coal mining business (other than the Colowyo mine) to the Company and have entered into a Master Separation Agreement, dated as of November 19, 2009 (the Master Separation Agreement ), by and between the Parties and their affiliated companies;
WHEREAS, the Parties have determined that the direct transfer of certain coal sales contracts (the Coal Sale Contracts ) of varying duration for the sale or purchase of coal that is produced from the Antelope Mine, the Cordero Rojo Mine and/or the Spring Creek Mine (together the Mines ), to various purchasers (the Counterparties ) as more fully described and listed on Exhibit A attached hereto (the Listed Contracts ), from RTEA to CPE LLC is impractical or otherwise undesirable; and
WHEREAS, to the fullest extent possible, in order to provide the economic benefit and risks to CPE LLC of the Listed Contracts to the same extent as if those Listed Contracts had been fully assigned to CPE LLC, the Parties desire to enter into this Agreement;
NOW THEREFORE, for and in consideration of the amounts to be paid and the promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and intending to be legally bound, the Parties agree as follows:
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e. The Parties also agree that the confirmation(s) and master agreement related to Salt River Project Agricultural Improvement and Power District which are not a Listed Contract may have a separate parental guaranty for which RTEA or its Affiliates have responsibility. CPE LLC agrees to use commercially reasonable efforts to replace this guaranty as soon as practicable. In the event this guaranty cannot be replaced, or if CPE LLC is required to expend significant monies to replace this guaranty, CPE LLC shall not replace this guaranty but agrees to indemnify, without limitation, RTEA and its Affiliates for any future losses incurred as a result of such guaranty.
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d. Any indemnification obligation of CPE LLC arising under this Section 6 will be calculated and payable in accordance with Section 6.1 of the Master Separation Agreement.
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Each Notice shall be effective (i) if delivered personally or by registered or certified mail, return receipt requested, or by nationally recognized overnight courier service, when delivered at the address specified above (or in accordance with the latest unrevoked direction from such Party), and (ii) if given by facsimile, when such facsimile is transmitted to the facsimile number specified above (or in accordance with the latest unrevoked direction from such Party), and confirmation is received; in both such cases if given on a business day during the normal business hours of the recipient and on the business day during which such normal business hours next occur if not given during such hours.
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[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first above written.
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CPE LLC: |
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Cloud Peak Energy Resources LLC |
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a Delaware limited liability company |
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By: |
/s/ Colin Marshall |
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Name: |
Colin Marshall |
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Title: |
President and CEO |
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RTEA: |
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Rio Tinto Energy America Inc. |
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a Delaware corporation |
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By: |
/s/ James P. Berson |
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Name: |
James P. Berson |
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Title: |
Authorized Agent |
[ Signature page for RTEA Coal Supply Agreement]
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Exhibit 10.11
EXECUTION VERSION
TAX RECEIVABLE AGREEMENT
dated as of
November 19, 2009
Table of Contents
ARTICLE I |
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DEFINITIONS |
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Section 1.01. Definitions |
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ARTICLE II |
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DETERMINATION OF EXCHANGE BASIS SCHEDULE AND REALIZED TAX BENEFIT |
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Section 2.01. Basis Adjustment |
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Section 2.02. Duff & Phelps Schedule |
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Section 2.03. Exchange Basis Schedule |
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Section 2.04. Tax Benefit Schedule |
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Section 2.05. Procedures, Amendments |
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Section 2.06. Costs and Expenses |
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ARTICLE III |
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TAX BENEFIT PAYMENTS |
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Section 3.01. Payments |
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Section 3.02. No Duplicative Payments |
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ARTICLE IV |
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TERMINATION AND CHANGE OF CONTROL |
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Section 4.01. Early Termination and Breach of Agreement |
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Section 4.02. Early Termination Notice |
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Section 4.03. Payment upon Early Termination |
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Section 4.04. Transfers of Assets, Change of Control, Change of Structure |
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ARTICLE V |
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LATE PAYMENTS |
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Section 5.01. Late Payments |
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ARTICLE VI |
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PARTICIPATION; CONSISTENCY; COOPERATION |
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Section 6.01. Participation in Buyers Tax Matters |
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Section 6.02. Consistency |
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Section 6.03. Cooperation |
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Section 6.04. Section 754 Elections |
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ARTICLE VII |
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MISCELLANEOUS |
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Section 7.01. Notices |
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Section 7.02. Counterparts |
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Section 7.03. Entire Agreement; No Third Party Beneficiaries |
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Section 7.04. Governing Law |
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Section 7.05. Severability |
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Section 7.06. Successors; Assignment; Amendments; Waivers |
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Section 7.07. Titles and Subtitles |
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Section 7.08. Resolution of Disputes |
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Section 7.09. Reconciliation |
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Section 7.10. Withholding |
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Section 7.11. Present and Future Values |
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Section 7.12. Confidentiality |
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Section 7.13. Non-Effect of Other Tax Receivable Agreements |
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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 Buyers tax basis in the RTEA Units acquired in the Initial Sale is expected to exceed RTEAs 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:
Accelerated RTEA Gain is defined in Section 4.04(a)(4).
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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
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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 entitys 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
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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 LLCs interest in such Adjustable Asset; and D is the sum of the fair market values of CPE LLCs 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 LLCs 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.
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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 Partners 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 Buyers 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
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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).
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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.
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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.
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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.
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If to Buyer, to:
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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.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Buyer and RTEA have duly executed this Agreement as of the date first written above.
RIO TINTO ENERGY AMERICA INC. |
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James P. Berson |
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Authorized Agent |
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CLOUD PEAK ENERGY INC. |
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Colin Marshall |
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President and CEO |
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[Signature page for Tax Receivable Agreement]
Exhibit 99.1
FOR IMMEDIATE RELEASE
November 20, 2009
Contact:
Cloud Peak Energy Inc.
Karla Kimrey
Vice President, Investor Relations
303-713-5000
Cloud Peak Energy Announces Pricing of Its Initial Public Offering
Gillette, WY, November 20, 2009 Cloud Peak Energy Inc. (NYSE:CLD) announced today the pricing of its initial public offering of 30,600,000 shares of its common stock at a price of $15.00 per share. The shares will begin trading on Friday, November 20, 2009, on the New York Stock Exchange under the ticker symbol, CLD. In addition, the underwriters have the option to purchase up to an additional 4,590,000 shares to cover over-allotments, if any. Cloud Peak will not retain the proceeds of the offering.
Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated and RBC Capital Markets Corporation are acting as joint book-running managers for the offering.
The offering of these securities will be made only by means of a prospectus, copies of which may be obtained from Credit Suisse Securities (USA) LLC at One Madison Avenue 1B, New York, New York 10010, Attention: Prospectus Department or by calling (800) 221-1037, Morgan Stanley & Co. Incorporated at 180 Varick Street, 2nd Floor, New York, New York 10014, Attention: Prospectus Department or by calling (866) 718 1649 or my emailing: prospectus@morganstanley.com or RBC Capital Markets Corporation at Three World Financial Center, 200 Vesey Street, 8th Floor, New York, NY 10281-8098, Attention: Equity Syndicate or by calling (212) 428-6670.
A registration statement relating to these securities has been declared effective by the Securities and Exchange Commission. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Cloud Peak Energy
Cloud Peak Energy (NYSE:CLD) is headquartered in Wyoming and is the third largest coal producer in the United States. As one of the safest coal producers in the nation, Cloud Peak Energy Inc. specializes in the production of low sulfur, sub-bituminous coal. The company owns and operates three surface coal mines in the Powder River Basin, the lowest cost coal producing region in the nation among major coal producing regions. The Antelope Mine and Cordero Rojo Mine are located in Wyoming and the Spring Creek Mine is located near Decker, Montana.
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505 South Gillette Avenue · PO Box 3009 · Gillette, WY 82717-3009
Phone: (307) 687-6000 · Fax: (307) 687-6015
Exhibit 99.2
FOR IMMEDIATE RELEASE
November 20, 2009
Contact:
Cloud Peak Energy
Karla Kimrey
Vice President, Investor Relations
303-713-5000
Cloud Peak Energy Resources LLC and Cloud Peak Energy Finance Corp. Announces Pricing of Its Senior Notes Offering
Gillette, November 20, 2009 Cloud Peak Energy Inc. (NYSE: CLD) announced today that its subsidiaries Cloud Peak Energy Resources LLC (CPER) and Cloud Peak Energy Finance Corp. have priced an offering of $300 million of senior notes due 2017 with a coupon of 8.25% and $300 million of senior notes due 2019 with a coupon of 8.50%. This offering was done in a Rule 144A and Regulation S offering with registration rights. CLD expects closing to occur on or about November 25, 2009.
The notes will be guaranteed by all of CPERs existing and future restricted subsidiaries that will guarantee CPERs debt under CPERs credit agreement.
The notes will be offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 and to non-U.S. persons outside the United States in accordance with Regulation S under the Securities Act of 1933. The notes have not been registered under the Securities Act of 1933and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or a solicitation of any offer to buy such securities nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Cautionary Statement Regarding Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based on assumptions that CLD believes to be reasonable. However, actual results almost always vary from assumed facts and the differences can be material, depending upon the circumstances. As a result, you should not place undue reliance on such forward-looking statements. The words believe, expect, estimate, anticipate and similar expressions will generally identify forward-looking statements. All of CLDs forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. In addition, CLD disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date of this release.
505 South Gillette Avenue · PO Box 3009 · Gillette, WY 82717-3009
Phone: (307) 687-6000 · Fax: (307) 687-6015
About Cloud Peak Energy Inc.
Cloud Peak Energy Inc. (NYSE: CLD) is headquartered in Wyoming and is the third largest coal producer in the United States. As one of the safest coal producers in the nation, Cloud Peak Energy Inc. specializes in the production of low sulfur, sub-bituminous coal. The company owns and operates three surface coal mines in the Powder River Basin, the lowest cost coal producing region in the nation among major coal producing regions. The Antelope Mine and Cordero Rojo Mine are located in Wyoming, and Spring Creek Mine is located near Decker, Montana.
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