Exhibit 10.1
TABLE OF CONTENTS
IEC (MONTGOMERY), LLC – BPI ENERGY, INC.
COAL SEAM GAS LEASE AGREEMENT

              SECTION   TITLE   PAGE
1.
  PROPERTY TO BE LEASED AND RESERVATIONS     1  
 
           
2.
  PRIMARY TERM     3  
 
           
3.
  ROYALTIES — PAYMENTS & REPORTS     4  
 
           
4.
  POOLING     11  
 
           
5.
  SHUT-IN OF PRODUCTION     12  
 
           
6.
  DRAINAGE     12  
 
           
7.
  OBLIGATIONS RELATED TO DRILLING     13  
 
           
8.
  DEFAULT     13  
 
           
9.
  ASSIGNMENT     15  
 
           
10.
  WARRANTY AND PROPORTIONATE REDUCTION     15  
 
           
11.
  PLUGGING AND OTHER COVENANTS     16  
 
           
12.
  NOTICES     16  
 
           
13.
  FORCE MAJEURE     16  
 
           
14.
  INFORMATION, INSPECTION AND AUDIT     17  
 
           
15.
  INDEMNIFICATION AND INSURANCE     18  
 
           
16.
  TAXES     18  
 
           
17.
  APPLICABLE LAW     18  
 
           
18.
  DISPUTE RESOLUTION — ARBITRATION     19  
 
           
19.
  ENTIRE AGREEMENT AND AMENDMENT     20  
 
           
20.
  RECORDING OF LEASE AGREEMENT     20  
 
           
21.
  HEADINGS     20  
 
           
22.
  ADDITIONAL DOCUMENTS     20  
 
           
23.
  MULTIPLE COUNTERPARTS     21  
 
           
24.
  SEVERABILITY     21  
 
           
25.
  GENDER     21  

 

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COAL SEAM GAS LEASE AGREEMENT
     THIS COAL SEAM GAS LEASE AGREEMENT (this “Agreement”) is made and entered
into as of the 26th day of April 2006, between IEC (MONTGOMERY), LLC, an
Illinois limited liability company (“LESSOR”), and BPI Energy, INC., a Nevada
corporation (“LESSEE”).
RECITALS
     WHEREAS, LESSEE requests the right to lease in Christian, Fayette,
Montgomery and Shelby Counties, Illinois, certain mineral lands owned by LESSOR
as described in those certain deeds dated December 3, 2003, and recorded with
the Recorder of Deeds in Montgomery County, Illinois as Document
No. 200400016707 in Book 973, Page 202 on January 5, 2004, and as with the
Recorder of Deeds in Christian County, Illinois as Document 2003R10075 on
December 19, 2003, and with the Recorder of Deeds in Shelby County, Illinois as
Document 03-6017 on December 22, 2003, and as with the Recorder of Deeds in
Fayette County, Illinois as Document 036115 in Volume 1483, Page 63 on
December 22, 2003, and also described in Exhibit “A”, attached hereto and made a
part hereof, (hereinafter referred to as the “Leased Premises”), for the
exploration and development of gas (as defined herein below) located therein,
and LESSOR is willing to enter into an agreement to provide for the same upon
the terms and conditions set forth herein.
AGREEMENT
     NOW THEREFORE, in consideration of the premises herein and intending to be
legally bound, LESSOR and LESSEE agree as follows:

1.   PROPERTY TO BE LEASED AND RESERVATIONS

  1.1   In consideration of using its best effort to commercially produce all
economically recoverable Gas (as defined in Paragraph 1.3) and paying LESSOR the
royalties and other consideration for the same as set forth in this Agreement,
and in consideration of the covenants contained in this Agreement to be
performed by LESSEE, and for other good and valuable consideration, LESSOR
hereby GRANTS, LEASES, and LETS unto LESSEE all of LESSOR’S title and interest,
but only to the extent in fact actually legally owned or held by LESSOR, in and
to the Gas underlying the Leased Premises, for the limited purpose of
investigating, exploring by geophysical and other methods, prospecting, drilling
for, developing, producing, treating, storing, and transporting, selling and
using Gas.     1.2   LESSEE acknowledges that LESSOR does not own the surface of
the Leased Premises.     1.3   The term “Gas” shall mean coal seam gas,
including without limitation coalbed methane gas, Gob Gas (other than VMM (as
defined in Paragraph 1.5)) or other naturally occurring gases contained in or
associated with any coal seam and all communicating zones, and all associated
natural gas and other hydrocarbon gas originating or produced

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      from or between coal seam to coal seam. The term “Gob Gas” shall mean gas
that is liberated and accumulated within the fractured and collapsed zones
resulting from the Second Mining of coal seams. The term “Second Mining of coal
seams” includes all forms of underground mining, including technologies not yet
developed which may come to be known in the future, which result in the
collapsing and fracturing of strata overlying the coal beds and includes without
limitation full or partial pillar, shortwall, and longwall mining.     1.4   All
coal, limestone, iron ore, VMM and all other minerals and nonmineral substances,
other than the Gas produced hereunder from said coal seams and all zones in
communication therewith, are excluded from this Agreement, along with the right
to extract, mine, remove, use and dispose of same for all purposes.     1.5  
The term “VMM” shall mean Gas that is vented or flared from coal, whether by
drilling or otherwise, in connection with or related to the mining of coal which
the party mining such coal determines is necessary or appropriate to vent or
flare including without limitation venting which is carried out to ensure mine
safety.     1.6   LESSOR reserves the right of ingress and egress at all times
for itself, its contractors, agents, and licensees on, over and under the Leased
Premises.     1.7   Except for those rights granted to LESSEE herein, LESSOR to
the extent of its interests, expressly reserves all rights with respect to the
surface and subsurface of the Leased Premises for any and all purposes,
including without limitation the right to explore for, drill, mine (by any
method), produce, treat, store and transport any and all minerals, coal and
non-mineral substances (other than Gas), and to conduct geological and other
exploration surveys, whether or not said activities involve the disturbance or
destruction of the coal seams from which the right to produce Gas is provided
herein. However, LESSOR agrees to use commercially reasonable efforts to not
unreasonably interfere with LESSEE’S Operations, as defined in Paragraph 2.1, on
the Leased Premises.     1.8   LESSOR and LESSEE recognize the importance of
environmental protection and the necessity of proper ecological balance, and to
further these objectives, LESSEE agrees to conduct all Operations hereunder with
caution and in material compliance in every respect with all applicable laws of
the State of Illinois and the United States of America now existing or hereafter
enacted, and all rules and regulations promulgated pursuant to such laws, now
existing or hereafter enacted (including without limitation all obligations for
reclamation of surface areas LESSEE disturbs in its activities and operations
hereunder), and to preserve conditions as nearly as practicable as they
presently exist by altering the topography and interfering with or impeding
watercourses as little as possible.

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2.   PRIMARY TERM

  2.1   Unless sooner terminated or extended under other provisions of this
Agreement, this Agreement shall be for a primary term of twenty (20) years from
the date of this Agreement (“Primary Term”), and so long thereafter as Gas is
produced in Paying Quantities (as defined hereafter) from the Leased Premises or
on lands pooled or unitized therewith, as defined hereunder in Paragraph 4, or
so long as Operations are being conducted on any Production Unit (as defined in
Paragraph 2.3). Whenever used in this Agreement, the term “Paying Quantities”
shall mean production in commercially reasonable quantities sufficient to yield
a return in excess of operating costs, even though drilling and equipment costs
may never be recovered, and the undertaking considered as a whole may ultimately
result in loss, and the term “Operations” shall be defined as work conducted in
furtherance of the following: LESSEE is conducting itself as an operator in a
prudent, reasonable manner and in material compliance with all applicable laws
and regulations, using modern equipment and methods that are in accordance with
commercially reasonable practices and technology all related to drilling,
testing, completing, de-watering, reworking, workover, recompleting, deepening,
plugging back, sidetracking, or repairing wells in order to obtain the
production of Gas in Paying Quantities and shall include testing and dewatering
activities of LESSEE conducted on a well or wells drilled and completed upon the
Leased Premises or lands pooled or unitized therewith to produce sufficient
formation water to permit LESSEE a reasonable period of time to ascertain the
volumes of Gas which may be produced from said wells, whether or not such Gas is
producing in Paying Quantities prior thereto.     2.2   In the event of
termination or forfeiture of this Agreement, in whole or part, for any reason,
LESSEE shall immediately execute and record a proper instrument releasing from
the terms hereof all of those portions of the Leased Premises as to which this
Agreement terminated or was forfeited and shall deliver a copy of the instrument
to LESSOR.     2.3   If at the expiration of twenty (20) years from the date of
this Agreement, all acreage under this Agreement has not been developed into a
Production Unit on which is located either a well capable of producing Gas in
Paying Quantities or a well on which Operations are being conducted and which
results in production in Paying Quantities, this Agreement shall automatically
terminate as to any of the Leased Premises which is not included in a Production
Unit, except that LESSEE shall retain, in addition to all such Production Units,
all pipelines, facilities, easements, and rights of ingress and egress to
operate the Production Units on the Leased Premises and in the immediate
vicinity thereof. For purposes of this Agreement, a “Production Unit” is (a) an
area of no more than 160 acres for a typical vertical hydraulically fractured
well (based on current technology and fracturing practices at the time of the
signing of this Lease) (“Current Vertical Well”), plus 10% tolerance, or an area
of no more than 320

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      acres for a vertical, unconventionally stimulated or drilled, well, plus
10% tolerance, 1,920 acres for any horizontal well (currently, as of the time of
the signing of this Lease, planned to include one vertical well and four lateral
wells) (“Planned Horizontal”), plus 10% tolerance, the shape and location of
said units being designated by LESSEE upon which a Gas well has been drilled and
completed or on which Operations are being conducted, or (b) a pooled unit
created pursuant to Paragraph 4.1. LESSEE shall promptly notify LESSOR as soon
as practical after the designation of each Production Unit. Notwithstanding
anything herein to the contrary, if after discovery, and production of Gas from
a Production Unit, and following the Primary Term, such production should cease
for any cause or reason, this Agreement as to the portion of the Leased Premises
included within any such Production Unit shall not terminate if LESSEE commences
Operations thereon for drilling or reworking within ninety (90) days after such
cessation and prosecutes such Operations with no cessation thereafter for more
than ninety (90) consecutive days; and if such drilling or reworking operation
results in the restoration of production of Gas from such Production Unit in
Paying Quantities, so long thereafter as Gas is produced from or attributable to
such Production Unit.

3.   ROYALTIES — PAYMENTS AND REPORTS

  3.1   On Gas produced from the Leased Premises and sold by LESSEE, beginning
upon execution of this Agreement and extending to 12:00 A.M. on April 30, 2011,
the production royalty to be paid by LESSEE shall be One Sixteenth (6.25%) of
the Gross Sales Price (as hereinafter defined) of such Gas (“Royalty
Percentage”).         Beginning on May 1, 2011 and so long thereafter as this
Agreement is in full force and effect, on Gas produced from the Leased Premises
and sold by LESSEE, the production royalty to be paid by LESSEE shall be a
percentage of the Gross Sales Price as follows:

         
GROSS SALES PRICE
     
PER MM BTU
  PRODUCTION ROYALTY  
£ $7.00
    6.25 %
> $7.00 but £ $9.00
    9.00 %
> $9.00
    12.50 %

LESSOR shall have the right, at any time and from time to time, upon not less
than thirty (30) days written notice to LESSEE, to take in kind such LESSOR’S
Royalty Percentage of Gas produced from the Leased Premises. LESSOR may elect to
take LESSOR’S Percentage Royalty of Gas in kind (“In-Kind Royalty”) at the well,
or at the point of delivery where LESSEE delivers LESSEE’S Gas to any third
party. LESSOR shall reimburse LESSEE for all reasonable costs incurred by LESSEE
in installing, operating or maintaining additional facilities

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necessary for LESSOR’S In-Kind Royalty to be separately metered, accounted for,
and delivered to a third party. Should LESSOR elect to take an In-Kind Royalty
in kind as provided for above, LESSOR’S royalty shall bear its proportionate
part of any transportation, treating, conditioning or compression charges
incurred off-lease or after the point nearest to the well that such Gas is ready
for sale or use either at the tailgate of a processing, treating or conditioning
plant or other delivery point.
The term “Gross Sales Price” as used herein shall mean the actual sales price at
which Gas is sold to a Bona Fide Purchaser (as defined in Paragraph 3.4), plus,
to the extent applicable, any BTU bonus or minus BTU penalty; provided, however,
that there shall be no deduction from said Gross Sales Price for any on-site
handling, collecting, dehydrating and compression charges, brokerage fees, sales
commissions, credit losses, sales tax, income tax, severance tax, license tax,
privilege tax, occupational tax, advertising, and any other charges whatsoever
or taxes paid by LESSEE for the privilege of conducting business in Illinois. In
the case of Gas produced hereunder and sold at some point other than the
Delivery Point, the Gross Sales Price may be reduced by deducting from the final
and actual price at which such Gas is sold all transportation and handling
charges beyond the Delivery Point as long as LESSEE can verify such deductions
from the sales price to the satisfaction of LESSOR. The term “Delivery Point” as
used herein shall mean the point at which Gas produced hereunder is delivered by
LESSEE, whether from the wellhead, compressing station, or point of entry into a
Federal Energy Regulatory Commission (FERC) regulated transmission line or
carrier.
Notwithstanding anything to the contrary in this Agreement, the royalty due by
LESSEE under this Agreement shall not be less than the amount required to be
paid by LESSOR or its successors and assigns as an overriding royalty on the
production of Gas that was reserved by the transferors of the Leased Premises in
connection with the sale of the Leased Premises to LESSOR.

  3.2   On Gas produced from the Leased Premises and used off the Leased
Premises or in the manufacture of gasoline or other products therefrom, the
royalty to be paid by LESSEE to LESSOR shall be as stated in Paragraph 3.1,
except that said Royalty Percentage shall be twelve and one-half percent (12.5%)
of the market value of such Gas at the Delivery Point. LESSEE shall have the
free reasonable use of gas and water produced from the Leased Premises for
operations serving the Leased Premises, prior to the Delivery Point.     3.3  
The term “market value” as used in this Agreement shall mean the price paid by a
purchaser under a written purchase contract, arrived at through good faith,
arm’s length negotiations, pursuant to which Gas produced hereunder is being
sold by LESSEE to a Bona Fide Purchaser. The price for all gas sold hereunder
shall be paid on a dry MMBtu basis.

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  3.4   The term “Bona Fide Purchaser” as used herein shall mean a purchaser who
pays consideration in good faith without intending to take unfair advantage of
LESSEE or LESSOR, and in no instance shall a Bona Fide Purchaser include a
person, persons, party, parties, company or corporation affiliated with LESSEE
unless approved in writing by LESSOR, which approval shall not be unreasonably
withheld. It is the parties’ intent that all sales of Gas produced by LESSEE
under this Agreement shall be at the price of the Gas sold on the open market in
an arm’s length transaction to a non-related and unaffiliated entity. As used in
this Agreement, the term “affiliate” means any entity that directly or
indirectly controls or is controlled by or is under common control with LESSEE,
the directors, officers or principal shareholders of LESSEE, or such persons’
spouses, parents or children. For purposes hereof, “control” is presumed to
exist if (a) any director, officer or principal shareholder of LESSEE is an
officer of, partner in, or trustee of, or serves in a similar capacity with
respect to, a specified entity; or (b) LESSEE, or any officer, director or
principal shareholder of LESSEE, directly or indirectly, is the beneficial owner
of more than 5% of any class of voting security of or interest in a specified
entity; or (c) LESSEE, or any officer, director or principal shareholder of
LESSEE is otherwise connected, allied, affiliated or associated with or to a
specified entity.     3.5   LESSEE may vent Gas during repairs to wells, prior
to connection of any wells to gathering and/or transmission lines, and during
market interruptions, as long as the same is in compliance with all rules and
regulations of the Division of Oil and Gas of the Office of Mines and Minerals
of the Department of Natural Resources of the State of Illinois (the “State of
Illinois Division of Oil and Gas”). No royalty shall be due on vented gas.    
3.6   Royalties for Gas produced hereunder shall be as provided for in
Paragraph 3.1 and shall be payable on or before the last day of the second month
following the month of such production, sale or use. All reports and
determinations called for below are to be forwarded to LESSOR at the time
royalty payments are due as provided for in this Paragraph 3.6. In conjunction
with royalty payments, LESSEE shall provide to LESSOR a production report which
shall include:

  1)   the quantity of Gas produced for each individual well and the cumulative
total production on a monthly basis; and     2)   the quantity of Gas sold; and
    3)   the quantity of Gas used as permitted under this Agreement; and     4)
  the Gross Sales Price at the point at which Gas produced hereunder is
delivered by LESSEE to a Bona Fide Purchaser, and/or the market value of the Gas
delivered at the Delivery Point, as the case may be.

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  3.7   Royalty payments and reports by LESSEE shall be completed and delivered
to LESSOR at the following address:

IEC (Montgomery), LLC
1000 Urban Center Drive, Suite 360
Birmingham, Alabama 35242
Attention: Bruce Webster

  3.8   LESSOR expressly reserves all rights with respect to the subsurface of
the Leased Premises for any and all purposes, including without limitation the
following: ingress and egress; mining coal, regardless of whether said coal has
been developed for the production of Gas; venting or flaring VMM (as defined in
Paragraph 1.5) in connection with or related to the mining of coal; conducting
geological and other surveys; selling, leasing, or otherwise transferring
interest in the Leased Premises; and exploring for, drilling, mining, producing,
treating, storing and transporting any and all minerals, coal, oil and natural
gas and surface materials other than those leased hereunder, regardless of
whether said activities involve the disturbance or destruction of coal seams.  
      LESSOR shall within ninety (90) days of the execution of this Agreement
designate to LESSEE the area or areas of the Leased Premises that LESSOR plans
to mine (“Mine Plan Block”) and the order of priority in which they will be
mined. Each Mine Plan Block will be placed in an order of mining priority as
follows: (1) within eight (8) years and (2) greater than eight (8) years. Each
Mine Plan Block can range in size up to twenty thousand (20,000) acres.        
The Leased Premises under this Agreement may be combined with the leased
premises from other agreements between LESSEE and LESSOR to form a Mine Plan
Block. In such case, the terms and conditions under each agreement shall apply
only to the specific acreage covered under that agreement including but not
limited to any mine through provisions and reimbursements.         LESSEE and
LESSOR shall meet at least once a year to review mining plans for the Leased
Premises and at LESSEE’S and LESSOR’S mutual agreement describe and adjust the
order of mining priority of Mine Plan Blocks.         If LESSEE drills a Gas
well within a Mine Plan Block that will be mined with an order of mining
priority within eight (8) years and LESSOR or its lessees or contractors mine
through said well (“Mined Through Well”), then LESSOR or its lessees or
contractors shall not be obligated to reimburse LESSEE for any cost or loss of
profits or loss of reserve associated with said Mined Through Well.         If
LESSOR or its lessees or contractors mines through one of LESSEE’S wells in a
Mine Plan Block with an order of mining priority greater than eight (8) years,
then LESSOR or its lessees or contractors shall be obligated to reimburse LESSEE
for said well (“Reimbursed Well”) as follows:

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  (a)   If a Reimbursed Well has been in production for eight (8) years or
greater at the time of notice as provided for below, the Reimbursed Well will be
plugged at LESSEE’S expense and LESSOR shall not be obligated to compensate
LESSEE for the loss of the Reimbursed Well.     (b)   If the Reimbursed Well has
not been in production for eight (8) years but has produced sufficient gross
income to cover: (i) the cost of drilling, completing and equipping the
Reimbursed Well; (ii) the operating costs incurred by LESSEE during the life of
the Reimbursed Well; (iii) an amount equal to 10% per year upon the total cost
of drilling, completing and equipping the Reimbursed Well; and (iv) the cost of
plugging, then LESSOR will not be obligated to compensate LESSEE for the loss of
the Reimbursed Well.     (c)   If the Reimbursed Well to be plugged does not
meet the requirements of subparagraphs (a) or (b) above, then LESSEE will pay to
LESSOR the value of the Gas reserves remaining in the first eight (8) years of
production in the coal seam or seams to be plugged plus the cost of plugging the
Reimbursed Well. The value of lost economically recoverable reserves reduced to
present value shall be determined by a qualified petroleum engineer acceptable
to all parties. The fees and expenses of the engineer hired for this purpose
shall be paid equally by LESSOR and LESSEE. Any compensation due to LESSEE from
LESSOR shall be deducted out of future royalties due LESSOR.     (d)   In
determining value, the engineer will take into account only LESSEE’S share of
reserves to be recovered from the coal seam or seams then being produced in said
Reimbursed Well by LESSEE at the receipt of the notice to plug minus any
production subsequent to receipt of notice. The value shall be based on an
average of LESSEE’S gas sales contract prices for the six (6) month period prior
to plugging of the Reimbursed Well to be mined through on the Leased Premises.  
  (e)   If LESSEE should produce and sell Gob Gas from the Leased Premises in
the vicinity of a Mined Through Well, then LESSOR shall be credited under
subparagraph (b), (c) and (d) above for any net profit of LESSEE from said
produced and sold Gob Gas. If LESSOR has reimbursed LESSEE for said Mined
Through Well prior to LESSEE producing said Gob Gas, then LESSEE shall refund to
LESSOR all amounts paid by LESSOR for said Mined Through Well.

Should LESSEE reenter a Mined Through Well that LESSEE has been reimbursed for
and begin producing Gas after mining takes place, LESSOR shall only be obligated
to reimburse LESSEE for plugging cost and its actual cost to reenter the Mined
Through Well plus One Hundred and No/100 Dollars ($100.00) per month (“Rental”)
that said well was out of production as a result of mining. LESSOR shall give
written notice to LESSEE when a Mined Through Well is available to reenter for
Gas production. For purposes of calculating the number of months that a Mined
Through Well has been out of production, said

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period shall begin when the well was plugged and end when the aforementioned
notice is given. If LESSOR has reimbursed LESSEE for said Mined Through Well
prior to LESSEE reentering said well, then LESSEE shall refund to LESSOR all
amounts paid by LESSOR for said well less the plugging cost and its actual cost
to reenter the well plus the sum of the Rental paid.
Actual well costs for reimbursement purposes under this Agreement shall not
exceed the average cost (calculated based on Lessee’s actual costs over the
preceding six (6) month period prior to the date such Reimbursed Well was mined
through) to drill and complete a comparable well in the same or similar area;
provided, however, that for the first six (6) months of the Primary Term, the
average costs for a Current Vertical Well and a Planned Horizontal Well (as
described in Section 2.3) shall not exceed $200,000 and $2,000,000 respectively.
LESSOR will provide written notification to LESSEE at least six (6) months prior
to commencement of coal removal that will cause or require mining through any
Gas wells drilled by LESSEE on the Leased Premises.
LESSEE agrees to plug the well or wells to be mined through at least sixty (60)
days in advance of active mining of coal but, in all events, before such mining
approaches within three hundred (300) feet of the well bore.

  3.9   Nothing herein shall prevent LESSOR from venting or flaring VMM out of a
coal mine or taking other reasonable safety precautions, and LESSOR shall not
have any liability or obligation to pay royalty or otherwise compensate LESSEE
or any other person in any fashion for VMM so liberated in ventilation of coal
mining operations. LESSEE shall have no obligation to recover such coal seam gas
that will be vented or flared by any coal mining, and LESSEE shall have no
liability or obligation to LESSOR for royalties on such VMM, nor shall any
royalties be due on any VMM which may be vented or flared by third parties or on
such Gas as may be vented or flared during repairs to wells, prior to connection
of any wells to gathering and/or transmission lines or as may be necessitated by
any underground coal mining activities carried on by LESSOR.         Every six
(6) months commencing on the date that is six (6) months after the date of this
Agreement, LESSEE shall provide to LESSOR a map or maps of not less than
1”=2,000’ scale that describes the location of all existing and proposed Gas
wells and facilities on the Leased Premises. Likewise, should LESSOR subject the
Leased Premises to coal mining operations, LESSOR shall on the same schedule
furnish or caused to be furnished such a map showing the projected coal mining
and other surface use activities that might adversely affect the operations of
LESSEE on the Leased Premises projected by LESSOR.

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  3.10   Measurement of Methane

  (a)   The volume of all Gas for which payment is to be made hereunder shall be
measured, before being mixed with gas or coalbed methane from other lands not
pooled or unitized with the Leased Premises, by standard meters of approved type
adapted to the volume of Gas to be measured. Such meters shall be located at
convenient points to be selected by LESSEE and shall be furnished, connected,
operated, maintained and read by LESSEE at its own expense.         For the
purpose of this Agreement, a cubic foot of Gas shall consist of the quantity or
volume of Gas which shall occupy one (1) dimensional cubic foot at an average
absolute atmospheric pressure of 14.73 pounds per square inch (commonly called
pressure base) and at a temperature of 60 degrees Fahrenheit (commonly called
temperature base). When the Gas is measured through an orifice meter or other
acceptable methods of measuring Gas, the method of computation shall conform
with the recommendations contained in American National Standard Institute
(“ANSI”) / American Petroleum Institute (“API”) 14.3.1 & 2, American Gas
Association (“AGA”) Report No. 3, Orifice Metering of Natural Gas and Other
Related Hydrocarbon Fluids, latest edition. The specific gravity of the Gas
shall be determined when marketing of Gas is begun, and as often thereafter as
conditions may warrant.         LESSEE shall: (i) have sole charge of said
meters; (ii) read said meters as often as necessary to obtain accurate
measurements; (iii) test all of said meters in the field in accordance with
applicable industry standards or rules and regulations of any applicable laws
and regulations; (iv) upon request furnish LESSOR current available meter charts
showing results of tests; and (v) repair said meters when necessary or when
tests show inaccuracy.     (b)   LESSOR shall have access to said meters at all
reasonable times in company with a representative of LESSEE, and LESSOR shall
have the right to inspect the equipment and records of LESSEE for the purpose,
to the extent and in the manner provided in Paragraph 14. If LESSOR challenges
the accuracy of any meter, LESSEE shall upon written request of LESSOR have the
meter tested and adjusted or repaired, and LESSOR shall have the right to have
its representative present during such tests, adjustments or repairs. If the
test shows a meter to be three percent (3%) or more inaccurate, then prior
measurements shall be corrected at the rate of such inaccuracy for any period
which is definitely known and agreed upon, but, if the period of inaccuracy is
not definitely known and agreed upon, then prior measurements for a period
extending back one-half (1/2) of the time elapsed since the

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      last previous test or calibration. During such time as a meter is out of
repair, the Gas may be delivered through a bypass and the quantity estimated by
use of the readings of the repaired meter when replaced. If the test shows
inaccuracy of less than three percent (3%), the cost of removing, testing,
adjusting and returning the meter to service shall be borne by the LESSOR, but
if the test shows inaccuracy of three percent (3%) or more, then such costs
shall be borne by LESSEE. In any case, the cost of repairing and replacing any
meter shall be borne by LESSEE.     (c)   Upon request of LESSOR at any time,
LESSEE shall, at the expense of the LESSEE, install separate meters for the
purpose of measuring the Gas from any individual producing well or wells on the
Leased Premises.

4.   POOLING

  4.1   LESSEE, at its option, is hereby given the right to pool or combine the
Leased Premises, or any portion thereof, as to Gas, with other lands, lease or
leases in the immediate vicinity thereof, when, in LESSEE’S judgment, it is
necessary or advisable to do so in order to properly develop and operate the
Leased Premises. Pooling shall be limited to a unit that conforms to any lawful
spacing rules which may be prescribed or permitted for the field or unit in
which the Leased Premises are situated by any governmental authorities having
jurisdiction thereof. LESSEE shall execute an instrument identifying and
describing the pooled acreage and shall submit it to LESSOR prior to filing with
the appropriate governmental authority. The entire acreage so pooled into a
tract or unit shall be treated for all purposes, except the payment of royalties
on production from the pooled unit, as if it were included in this Agreement.
LESSOR shall receive on production from a unit so pooled only such portion of
the production royalty stipulated herein as the amount of LESSOR’S acreage
placed in the unit, or LESSOR’S royalty interest therein on an acreage basis,
bears to the total acreage so pooled in the particular unit involved.     4.2  
Prior to filing a petition with the State of Illinois Division of Oil and Gas
seeking unitization of any acreage covered by this Agreement or seeking any
changes with respect to Drilling Units including the formation and operation
thereof, LESSEE shall submit to LESSOR a copy of its proposed unitization plan
or proposed changes, together with copies of any exhibits, including technical
data, that are to be submitted to the State of Illinois Division of Oil and Gas
in support thereof.     4.3   Notwithstanding LESSEE’S right, at its option, to
pool or combine the Leased Premises as granted herein, LESSOR reserves the right
to appear before the State of Illinois Division of Oil and Gas regarding any
petition or application made by LESSEE regarding LESSEE’S operations that are
not specifically authorized herein and oppose any relief that LESSEE may be
seeking.

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5.   SHUT-IN OF PRODUCTION

  5.1   If, at any time or times under any term of this Agreement, there is any
well within a Production Unit that is capable of producing Gas in Paying
Quantities and any such well is shut-in, this Agreement shall, nevertheless,
continue in force as though Operations were being conducted on such Production
Unit for so long as any said wells are shut-in, and thereafter, this Agreement
may be continued in force as if no shut-in had occurred. If, any such wells are
shut-in for a period of one hundred twenty (120) consecutive days, and during
such time there are no Operations on the Leased Premises, then at or before the
expiration of any one hundred twenty (120) day period, LESSEE shall pay, as an
advance, annual royalty, an amount equal to $100 for each such well. LESSEE
shall make like payments on or before the end of each anniversary of the
expiration of any ninety (90) day period if upon such anniversary this Agreement
is being continued in force solely by reason of this provision. However, in no
event shall shut-in well payments maintain this Agreement in force for a period
exceeding five (5) consecutive years. LESSEE shall be entitled to recover any
shut-in royalty payments from future sales of Gas. Should such shut-in royalty
payments not be made in a timely manner as provided in this paragraph and for an
additional period of thirty (30) days following LESSEE’S receipt of written
notice from LESSOR of the failure to make any such timely payment, it will be
considered for all purposes that there is no production or no excuse for delayed
production of Gas from any such well or wells, and unless there is then in
effect other preservation provisions of this Agreement, this Agreement shall
terminate as to the acreage within the Production Unit for such well at midnight
on the last day providing for the payment of such shut-in royalties, and LESSEE
shall thereupon furnish to LESSOR a written release of all its interest in and
to the Leased Premises within such Production Unit.

6.   DRAINAGE

  6.1   It is understood and agreed that LESSEE shall conduct its exploration,
drilling, production and marketing in a reasonable and prudent manner not only
with a view to reasonable development and recovery of the Gas and avoidance of
“waste”, as that term is defined in the laws applicable to Gas in the State of
Illinois, but with a view to the conservation of potential production and
reserves by the protection from drainage by adjacent owners, the intrusion of
water into an oil or natural gas stratum, the escape of oil or natural gas out
of one stratum into another, or the pollution of fresh water by oil, natural gas
or salt water. The obligations of LESSEE pursuant to this Paragraph 6.1 are
expressly subject to the following special provision.         In the event that
a well or wells produce Gas in Paying Quantities on land adjacent to the Leased
Premises, and such is draining Gas from the Leased Premises, LESSEE shall
immediately take such action as a

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      prudent operator would take to protect the Leased Premises from
uncompensated drainage.

7.   OBLIGATIONS RELATED TO DRILLING

  7.1   If at any time during the Primary Term of this Agreement or any
continuance thereof, LESSEE shall elect to farm-out (as defined below) the
drilling of any well on the Leased Premises or any parcel unitized therewith,
then LESSEE shall obtain LESSOR’S consent thereto, which LESSOR shall not
unreasonably withhold, by sending advance written notice, at least thirty
(30) days prior to any such farm-out. If LESSEE does not receive a written
response within thirty (30) days of such request, it shall be deemed a consent
to the farm-out. The term “farm-out” as used in this Agreement, and
distinguished from assignment, mortgage, conveyance, sublease or setting over of
LESSOR’S estate interest or rights herein, shall mean that LESSEE may grant
certain of its rights under this Agreement to a third party for the purpose of
drilling a well or a limited number of wells upon a specific area of the Leased
Premises within a defined time period, the production from which wells such
third party is obligated to offer for purchase by LESSEE on the basis of a right
of first refusal.         This provision is not intended to prevent LESSEE from
assigning working interests or other interests in wells to be drilled to
participants in those wells. This provision shall not limit or modify LESSEE’S
obligations or liability to LESSOR, and LESSEE shall be fully responsible and
liable for the performance of this Agreement in the event of a farm-out, and
LESSEE shall be in all respects responsible for the activities and operations of
any such third party.         LESSEE agrees to not stimulate, fracture or inject
fluids under high pressure into any coal seam greater than four (4) feet in
thickness or the overlying and underlying rock or strata in the Leased Premises
without the prior written consent of LESSOR, which consent may be granted or
withheld in LESSOR’S sole discretion.

8.   DEFAULT

  8.1   In the event of default by LESSEE in the payment of any sum of money or
the submission of any report under Paragraph 3.6, LESSOR shall have, without
notice or demand to LESSEE, a lien on all machinery, equipment, structures, and
other property of LESSEE of every kind wherever located on the Leased Premises
at the time of the event of default and thereafter. Upon default continuing for
thirty (30) days for any payment due or any reports to be submitted to LESSOR,
such lien may be enforced as provided by the laws of the State of Illinois,
including without limitation the Illinois Uniform Commercial Code.         In
the event of LESSEE’S failure to pay any royalty or any other sum due to LESSOR
under this Agreement when due, LESSOR shall provide LESSEE with written notice
of said default (the “Default

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      Notice”). Upon the further failure of LESSEE to pay such royalty or other
sum due LESSOR under this Agreement within thirty (30) days after delivery of
the Default Notice by LESSOR, LESSOR shall have the right without further notice
to LESSEE to:

  1)   Exercise any of the remedies set forth herein or allowed under the laws
of the State of Illinois to collect from LESSEE any sum of money due LESSOR
hereunder; and/or     2)   Receive payment from LESSEE, as liquidated damages,
twice the amount due, plus interest from the date due, within ten (10) days
after delivery of the Default Notice; provided, however, that in the event that
any royalty or other sum due LESSOR under this Agreement is the subject of a
bona fide dispute, LESSEE shall notify LESSOR of the disputed portion, and shall
promptly pay the portion of the royalty or sum not in dispute, and, in which
case, LESSOR’S right to receive the above described liquidated damages shall not
apply; or     3)   Terminate this Agreement at any time following the date that
is ten (10) days after delivery of the Default Notice if LESSEE has failed to
pay LESSOR in full.

  8.2   Neither LESSOR’S failure to give, nor any delay in giving, a Default
Notice as herein provided shall be deemed a waiver by LESSOR of its rights
pursuant to any default by LESSEE.     8.3   In the event LESSEE has failed to
comply with any obligations under this Agreement, other than those in
Paragraph 8.1, whether express or implied, and LESSEE does not remedy such
failure within thirty (30) days after delivery of a Default Notice, or, if such
failure cannot reasonably be remedied within thirty (30) days, and LESSEE does
not commence bona fide efforts to remedy such failure within such thirty
(30) day period, and thereafter, continuously and diligently pursue such efforts
to a successful conclusion, LESSOR may terminate this Agreement by providing
LESSEE with written notice pursuant thereto and/or exercise any of the remedies
set forth in this Agreement or allowed under the laws of the State of Illinois.
    8.4   Notwithstanding Paragraph 8.1, LESSOR shall have the right, upon
written notice, to assess interest on all past due royalties or other payments
at the rate of one and one-half percent (1.5%) per month from the date of
delinquency until paid. The date of delinquency shall be the last day of the
month on which payment was due. Time periods provided to cure defaults do not
effect the determination of the date of delinquency or the assessment of
interest to be assessed against delinquent payments. An assessment of interest
shall in no way be deemed to be a waiver of LESSEE’S obligation to pay all
royalties when due or to be a waiver or bar to the subsequent exercise or
enforcement by LESSOR of any and all other rights provided under this Agreement
or applicable law.

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9.   ASSIGNMENT

  9.1   LESSEE may not assign its rights provided under this Agreement, in whole
or in part, without the prior written consent of LESSOR, which consent shall not
be unreasonably withheld, and if LESSEE does obtain LESSOR’S prior consent, then
LESSEE shall be discharged from obligations arising under this Agreement
subsequent to such an assignment of all of its interest. If LESSEE does not
obtain LESSOR’S prior written consent to an assignment of LESSEE’S rights under
this Agreement, then LESSEE shall remain liable to LESSOR under the terms and
conditions of this Agreement. In determining whether to grant or withhold its
consent to any such assignment, LESSOR may consider without limitations, the
prospective assignee’s financial condition, business reputation, and other
factors relevant to the assignee’s ability and willingness to perform LESSEE’s
duties hereunder. Notwithstanding the foregoing statement, LESSEE may not assign
its interest to another coal company or an affiliate of another coal company
without Lessor’s consent. This Agreement shall inure to and be binding upon the
respective successors and assigns of the parties hereto, as well as the parties
themselves.     9.2   Except as provided herein, no change or division in
ownership of the land, however accomplished, shall operate to enlarge the
obligations or diminish the rights of LESSEE, and no change or division in such
ownership shall be binding on LESSEE until thirty (30) days after LESSEE shall
have been furnished by certified mail at the address provided herein with a
certified copy of the recorded instrument or instruments evidencing same.

10.   WARRANTY AND PROPORTIONATE REDUCTION

  10.1   The parties acknowledge that the Leased Premises are hereby leased to
LESSEE, AS IS, IN THEIR PRESENT CONDITION and subject to the rights of others as
hereinabove set forth in this Agreement.         The rights leased pursuant to
this Agreement are limited to such only as LESSOR possesses and has the lawful
right to lease; and where LESSOR owns the minerals and appurtenant rights only,
specific and/or implied by law, the rights herein leased are limited to such as
LESSOR owns under the deeds conveying or reserving said minerals and appurtenant
rights, specific and/or implied by law; and before drilling LESSEE shall satisfy
itself as to the title of LESSOR to the Leased Premises. LESSOR makes no
warranty of title, either express or implied, to the estate leased pursuant to
this Agreement.         It is specifically understood and agreed that LESSOR
shall be under no liability if any claim be made or established or litigation
instituted by any third party as to the title or ownership of LESSOR in or to
any portion of the Leased Premises. In the event of any such claim or
litigation, LESSOR shall have the right, at its option, to defend the same, but
LESSOR shall be under no duty to do so. If LESSOR owns an interest in any part
or all of the Gas leased hereunder that is less

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      than full interest therein, royalties and all payments due prospectively
pursuant to this Agreement with respect to such Gas shall be reduced
proportionately, but LESSOR shall have no obligation to refund any royalties or
payments received by LESSOR.

11.   PLUGGING AND OTHER COVENANTS

  11.1   LESSEE shall comply with all rules and regulations of the State of
Illinois Division of Oil and Gas and other applicable laws of the State of
Illinois in connection with its operations including without limitation the
drilling, completion, operation and plugging of Gas wells.

12.   NOTICES

  12.1   All notice requirements hereunder, unless otherwise provided for in
this Agreement, shall be given in writing and may be delivered (a) by hand
delivery, or (b) by certified or registered United States Mail, postage prepaid,
return receipt requested or (c) by Federal Express or another nationally
recognized similar overnight delivery agency as follows:

         
 
  If to LESSOR:   IEC (Montgomery), LLC
 
      1000 Urban Center Drive, Suite 360
 
      Birmingham, Alabama 35242
 
      Attention: Bruce Webster
 
      Fax: 205-945-6592
 
       
 
  If to LESSEE:   BPI ENERGY, INC.
 
      30775 Bainbridge Road, Suite 280
 
      Solon, Ohio 44139
 
      Attention: Jim Azlein
 
      Fax: 440-248-4240

or at such other address as either party may designate by providing the other
party written notice in the manner defined above. Notices shall be effective
(i) if delivered in person or by courier, upon actual receipt, (ii) if mailed or
sent by Federal Express or other overnight courier, upon the date of delivery as
shown by the receipt therefor.

13.   FORCE MAJEURE

  13.1   This Agreement shall not be terminated or subject to cancellation in
whole or in part, nor shall LESSEE be held liable in damages for failure of
LESSEE to carry out its obligations under this Agreement, if such compliance is
prevented by, through no fault of LESSEE, the direct result of an act of God,
fire, storm, flood, insurrection, rebellion, acts of a public enemy, riot, rule
or order of any governmental authority having jurisdiction over the Leased
Premises, failure of transportation beyond the reasonable control of LESSEE, or
other causes which are beyond the control of LESSEE. Such occurrences shall be
considered to be events of force majeure under this Agreement. LESSEE shall
promptly give LESSOR written notice of the event of force majeure, which notice
shall set forth the full particulars of the case relied upon. While

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      LESSEE is prevented from complying with its obligations under this
Agreement as the result of such force majeure event, the obligations affected by
such force majeure event shall be suspended, but such cause shall, so far as
possible, be remedied by due diligence on the part of LESSEE. However, no event
of force majeure shall relieve the obligation of LESSEE to pay any and all
royalties or payments when due. Notwithstanding any other provision in this
Agreement to the contrary, if the force majeure event, or the effect therefrom,
continues for a continuous period of more than 180 days, then, upon not less
than five (5) days notice, LESSOR may terminate this Agreement.

14.   INFORMATION, INSPECTION AND AUDIT

  14.1   LESSEE shall promptly furnish to LESSOR any information reasonably
requested by LESSOR with respect to Operations on the Leased Premises. LESSOR
shall at all times have full and free right of ingress and egress to and from
all parts of the Leased Premises for the purpose of inspecting drilling
operations or producing wells or inspecting and gauging tanks, meters and other
equipment and storage facilities. LESSEE shall not be liable for injury of
LESSOR’S personnel engaged in such activities unless injury is caused by the
negligence, recklessness or willful misconduct of LESSEE or its agents, servants
or employees.     14.2   LESSEE shall keep adequate books, records, and reports
concerning Gas produced and sold under this Agreement. LESSOR shall have the
right to audit, at all reasonable times, the pertinent books and records of
LESSEE in order to determine the correctness of any report required of LESSEE
pursuant to this Agreement. All books and records of LESSEE concerning any facet
of this Agreement shall be kept open and available for inspection by LESSOR for
eight (8) years, including the eight (8) year period following expiration or
termination of this Agreement.     14.3   LESSEE shall maintain and preserve
accurate drilling reports and logs of each and every well drilled by it under
this Agreement, and LESSOR shall have the right to inspect the same at any and
all reasonable times. LESSEE shall provide LESSOR at LESSOR’S written request
with copies of driller logs and geophysical logs for the total depth of each
drilled well. LESSEE shall furnish LESSOR with such additional reasonable
information as to the progress and results of the drilling and as to its other
operations under this Agreement as LESSOR shall request. Such logs and drilling
reports shall also show the depth of the well, and the volume and original rock
pressure of the coalbed methane, if any. LESSEE shall also furnish LESSOR with
copies of all electrical and radioactivity logs available for each well, as
LESSOR shall request.

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15.   INDEMNIFICATION AND INSURANCE

  15.1   LESSEE assumes all liability for and agrees to indemnify, defend, and
hold harmless LESSOR and its affiliates and their respective officers,
directors, employees, agents and assigns from and against any and all damages,
claims, loss and expense (including attorneys’ fees) arising out of or in
connection with LESSEE’S use of the Leased Premises or the exercise of any right
hereunder by LESSEE; and it is expressly understood and agreed that during the
Primary Term and any continuance of this Agreement, the terms hereof shall be
binding upon LESSEE, its successors and assigns; and upon expiration or
termination of this Agreement, they and each of them, jointly and severally,
shall remain liable to LESSOR under the provisions of this Paragraph in
connection with any claim which arose, or which may be alleged to have arisen
during the Primary Term or any continuance of this Agreement.         As further
protection to LESSOR, but without in any way limiting the scope of the foregoing
assumption of risk and indemnity, LESSEE shall at all times during the Primary
Term and any continuance of this Agreement maintain comprehensive general
liability and automobile liability insurance and workers’ compensation and
employer’s liability insurance with solvent insurance underwriters satisfactory
to LESSOR. The limits of liability of said liability insurance shall not be less
than $10,000,000 for injury to one person; $10,000,000 for personal injuries in
one accident; and $10,000,000 for property damage. LESSOR shall be added as an
additional insured as to policies for general liability and automobile
liability. Additionally, policies for general liability and automobile liability
shall be endorsed to expressly state that they are primary as to any other valid
and collectible insurance available to LESSOR, and said insurance shall not be
changed or cancelled without at least thirty (30) days prior written notice to
LESSOR.

16.   TAXES

  16.1   LESSEE shall pay its portion of all taxes levied on the production,
use, or sale of Gas produced from the Leased Premises, and all taxes on the
receipts therefrom or taxes due by reason of LESSEE’S activities on the Leased
Premises of whatever nature or kind, either federal or state, or any subdivision
thereof. LESSEE shall pay ad valorem taxes levied upon its interests in the
Leased Premises and on all of its improvements, fixtures, and equipment. LESSOR
shall pay ad valorem taxes levied upon its interest in the Leased Premises and
its share of severance taxes and income taxes.

17.   APPLICABLE LAW

  17.1   This Agreement shall be governed and interpreted by Title 9 of the U.S.
Code and by the laws of the State of Illinois and shall be subject to all
applicable state and federal laws and rules and regulations of public bodies
having jurisdiction over this Agreement.

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18.   DISPUTE RESOLUTION — ARBITRATION

  18.1   In the first instance, any unresolved dispute between or among any of
the parties arising under this Agreement shall be attempted to be resolved by
the following procedures. Such a dispute resolution procedure shall be initiated
by any party giving written notice to the other parties of the matter in
dispute. Within twenty (20) days after the delivery of a notice of dispute, the
Chief Executive Officer or President of each of the parties, or their designees,
shall meet at a mutually acceptable time and place to exchange relevant
information and to attempt to resolve the dispute through good faith
negotiations. Requests for information shall be reasonable and responses shall
be prompt and complete. If the matter is not resolved within thirty (30) days
after delivery of the notice to commence, the parties shall be free to pursue
arbitration as set forth below to resolve the dispute.         Such matter or
matters shall be referred to a board of arbitrators consisting of three
(3) disinterested, competent persons, one selected by LESSOR and one by LESSEE,
as hereinafter provided, and the two thus selected shall select the third, who
shall have the power of an umpire and be known as umpire-arbitrator. The
decision and award of such arbitrators, or any two of them, shall be conclusive
and binding upon LESSOR and LESSEE and promptly complied with.         The party
desiring arbitration shall give written notice to the other party definitively
stating the point or points in dispute and naming the person selected as
arbitrator; and it shall be the duty of the other party, within fifteen
(15) days after receiving such notice, to name an arbitrator, and these two
arbitrators shall select the umpire-arbitrator; and in the event the party
notified does not name an arbitrator within said period of fifteen (15) days,
the party serving such notice may select a second arbitrator and the two thus
selected shall select the umpire-arbitrator.         In the event of failure of
the two arbitrators, selected as aforesaid, within thirty (30) days from receipt
by both of them of notice of their selection, to agree upon the
umpire-arbitrator, then they shall jointly notify, in writing, the parties of
their failure to agree upon such umpire-arbitrator. The parties shall then,
within fifteen (15) days from the date of such notification, jointly select the
umpire-arbitrator. In the event the parties are unable to so select the
umpire-arbitrator within said fifteen (15) day period, they shall then jointly
select the names of three (3) potential umpire-arbitrators. None of these three
(3) potential umpire-arbitrators shall represent, or have any affiliation with
either party. Once the list of said three (3) potential umpire-arbitrators has
been prepared, each party shall then strike the name of one (1) potential
umpire-arbitrator from said list. The person remaining on such list after the
parties have stricken a name from said list shall be the umpire-arbitrator.
Further, in the event the parties fail to select such umpire-arbitrator as
aforesaid, either of the parties may apply to the American Arbitration
Association (AAA) for the appointment of an umpire-arbitrator pursuant to the
rules and procedures of the AAA for the

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      appointment of neutral arbitrators, as revised. The individual then
designated will act as such umpire-arbitrator hereunder.         The
umpire-arbitrator thus chosen shall give to LESSOR and LESSEE written notice as
to the time and place of hearing, which hearing shall be not less than ten
(10) nor more than twenty (20) days after his selection, and, at the time and
place appointed, he shall proceed with the hearing unless, for some good cause
of which the arbitrators shall be the judge, it shall be postponed until some
later date within a reasonable time. Both LESSOR and LESSEE shall have full
opportunity to be heard, orally and in writing, on any question thus submitted.
In arriving at a decision and award, the arbitrators shall be bound by any
relevant state and federal law applicable to the substantive issue or issues so
submitted for arbitration, and they shall make such decision and award in
writing, and deliver a copy to both LESSOR and LESSEE. The arbitration award
shall specify by whom the costs of arbitration shall be borne and paid and the
amount of such costs, including reasonable compensation for the arbitrators. Any
meetings, hearings or arbitration regarding dispute resolution shall be held in
Nashville, Tennessee.

19.   ENTIRE AGREEMENT AND AMENDMENT

  19.1   This Agreement constitutes the entire agreement between the parties and
supersedes any and all other written or oral agreements or understandings
between the parties concerning the subject matter hereof. No modification or
amendment of the terms and provisions of this Agreement shall be effective
unless in writing and signed by authorized persons of the parties.

20.   RECORDING OF LEASE AGREEMENT

  20.1   It is specifically understood and agreed that this Agreement shall not
be recorded in full unless required by law and that only a short form of this
Agreement shall be placed of record. LESSEE shall be responsible for recording
the proper instruments and paying all costs associated therewith.

21.   HEADINGS

  21.1   The paragraph headings contained herein are inserted for convenience
only and shall not control or affect the meaning or construction of any
provision in this Agreement.

22.   ADDITIONAL DOCUMENTS

  22.1   The parties agree to execute such additional instruments, agreements,
or documents including without limitation a Memorandum of Lease, as may be
necessary to effectuate the intentions of this Agreement.

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23.   MULTIPLE COUNTERPARTS

  23.1   This Agreement may be executed in multiple counterparts, each of which
shall constitute an original for all purposes, and all of which when taken
together shall constitute a single document.

24.   SEVERABILITY

  24.1   If any provision of this Agreement or the application thereof to LESSOR
or LESSEE shall, for any reason and to any extent, be held to be invalid or
unenforceable, the remainder of this Agreement shall not be affected thereby,
but rather be enforced to the greatest extent permitted by law.

25.   GENDER

  25.1   As used in this Agreement, the neuter gender shall include the
masculine and the feminine, the masculine and feminine genders shall be
interchangeable, and the singular number shall include the plural and the plural
the singular where appropriate to effectuate the intent of the parties.

     IN WITNESS WHEREOF, this Agreement is executed by LESSOR and LESSEE in
duplicate originals as of the day and year first above written.

             
 
                LESSOR:         IEC (MONTGOMERY), LLC,         Its: Manager    
 
           
 
  By:   /s/ Bruce Webster    
 
           
 
  Its:   President    
 
                LESSEE:         BPI ENERGY, INC.    
 
           
 
  By:   /s/ James G. Azlein    
 
           
 
  Its:   President    

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ACKNOWLEDGMENT

     
STATE OF ALABAMA
  ) 
 
  ) 
COUNTY OF JEFFERSON
  ) 

I, the undersigned authority, a Notary Public, in and for said County in said
State, hereby certify that Bruce C. Webster, whose name is signed as President
of IEC (Montgomery), LLC, to the foregoing conveyance, he, as such officer and
with full authority, executed the same voluntarily for and as the act of said
limited liability company.
Given under my hand and seal this the 20th day of April, 2006.

         
 
  /s/ Sandra Everest
 
NOTARY PUBLIC    

ACKNOWLEDGMENT

     
STATE OF OHIO
  ) 
 
  ) 
COUNTY OF PORTAGE
  ) 

I, the undersigned authority, a Notary Public in and for said State and County,
hereby certify that James G. Azlein, whose name as President of BPI Energy,
Inc., is signed to the foregoing conveyance, and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
conveyance, he, with full authority, executed the same voluntarily on the day
the same bears date on behalf of said corporation.
Given under my hand and official seal, this the 25th day of April, 2006.

         
 
  /s/ Joyce M. Werner
 
NOTARY PUBLIC    

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