Exhibit 10.3
TERMINATION AGREEMENT
          This Termination Agreement (“Termination Agreement”) is made this 23rd
day of June, 2006 by and between BPI Energy, Inc., for itself and as successor
by merger or otherwise to Methane Management, Inc. and BPI Industries, Inc.,
(“BPI”), Colt LLC (“Colt”), AFC Coal Properties, Inc. (“AFC”), American Premier
Underwriters, Inc. (“APU”), and Central States Coal Reserves of Illinois, LLC,
for itself and its predecessor Peabody Development Land Holdings, LLC
(collectively “Central States”) (BPI, Colt, AFC, APU, and Central States
collectively, the “Parties”).
RECITALS
          WHEREAS, each of the Parties or their predecessors in interest is or
was a party to that certain Oil, Gas and Coal Bed, Methane Gas Lease dated
April 3, 2001, as amended (the “Methane Lease”); and
          WHEREAS, each of the Parties acknowledges that the Methane Lease has
lapsed and terminated, and forever discharge and release each of the other
Parties from any and all obligations thereunder.
          NOW THEREFORE, in consideration of the mutual promises contained
herein, the benefits to be derived by each party hereunder and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the Parties agree as follows:

  1.   Termination. Each Party acknowledges, on behalf of itself and its
successors and assigns, that the Methane Lease has lapsed and terminated, and
hereby forever discharges and releases each of the other Parties from any and
all obligations thereunder.     2.   Recordation. The Methane Lease is of record
as follows:

Williamson County, Illinois—March 22, 2002, in Miscellaneous Record 267, page
865
Saline County, Illinois—March 21, 2002, in Book 1529, page 187
Franklin County, Illinois—May 9, 2002, as Document No. 2002-003098 and this
Termination Agreement shall be recorded in each of the above listed counties.

  3.   Context. This Termination Agreement is an integral part of that certain
Settlement and Mutual Release Agreement by and between the Parties dated of even
herewith. The terms and provisions of this Termination Agreement are
supplemented by and are to be read in the context of the Settlement and Mutual
Release Agreement.     4.   Representations and Warranties. Each party hereto
represents and warrants to each of the other parties hereto as follows:

 

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  a.   Such party is a corporation or limited liability company, as the case may
be, duly organized and validly existing under the laws of the state of its
incorporation and has the full legal right, power and authority to conduct its
business, to own its properties and to execute, deliver and perform its
obligations under this Termination Agreement.     b.   The execution, delivery
and performance by such a party of this Termination Agreement has been duly
authorized by all necessary corporate action, and does not and will not:

  i.   require any consent or approval of such party’s Board of Directors or
Members, as the case may be, which has not been obtained, and each such consent
and approval that has been obtained is in full force and effect;     ii.  
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination, or award having applicability to such party,
the violation of which could reasonably be expected to have a material adverse
effect on the ability of such party to perform its obligations under this
Termination Agreement;     iii.   result in a breach of or constitute a default
under any provision of the organizational documents or bylaws/operating
agreement of such party; or     iv.   result in a breach of or constitute a
default under any agreement relating to the management or affairs of such party
or any indenture or loan or credit agreement or any other agreement, lease, or
instrument to which such a party is a party or by which such party or its
properties or assets may be bound or affected, the breach or default of which
could reasonably be expected to have material adverse effect on the ability of
such party to perform its obligations under this Termination Agreement, if any,
to which it is a party.

  c.   This Termination Agreement constitutes a legal, valid and binding
obligation of such party and is enforceable against such party in accordance
with their terms.     d.   The promises, covenants and agreements of such party
expressly set forth in this Termination Agreement constitute the only
consideration given by such party for the promises, covenants and agreements of
the other parties expressly set forth in this Termination Agreement.

  5.   Miscellaneous. This Termination Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and
assigns. No party hereto may assign its rights or obligations hereunder without
the express prior written consent of all of the other Parties hereto. This
Termination Agreement may not be amended or modified in any manner whatsoever,
except in a writing signed by all the

 

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      Parties hereto. This Termination Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, except for any
such laws that might refer the governance or construction of this Termination
Agreement to the laws of another state or county. This Termination Agreement may
be executed in multiple counterparts, all of which, taken together, shall be
deemed to be one instrument.

          IN WITNESS WHEREOF, each of the Parties has executed this Termination
Agreement as of the date first above mentioned.

         
 
       
 
  COLT, LLC    
 
       
 
  /s/ James Morris    
 
       
 
  James Morris, Authorized Representative    
 
       
 
  BPI INDUSTRIES, INC.    
 
       
 
  /s/ James Azlein    
 
       
 
  James Azlein, Chief Executive Officer and President    
 
       
 
  AFC COAL PROPERTIES, INC.    
 
       
 
  /s/ Joseph D. Stelzer    
 
       
 
  Joseph D. Stelzer    
 
  Authorized representative for    
 
       
 
  ATTEST:    
 
       
 
  /s/ James C. Kennedy    
 
       
 
  James C. Kennedy    
 
  Secretary    
 
       
 
  AMERICAN PREMIER UNDERWRITERS, INC.    
 
       
 
  /s/ Joseph D. Stelzer    
 
       
 
  Joseph D. Stelzer    
 
  Authorized representative for    

 

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  ATTEST:    
 
       
 
  /s/ James C. Kennedy    
 
       
 
  James C. Kennedy    
 
  Secretary    
 
       
 
  Central States Coal Reserves of Illinois, LLC           /s/ James C. Sevem    
  James C. Sevem, Authorized Representative         

 

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STATE OF ILLINOIS
  )
 
  )
COUNTY OF WILLIAMSON
  )

          I, the undersigned, a Notary Public, in and for said County and State
aforesaid, do hereby certify that James Morris personally known to me to be the
Authorized Representative of COLT, LLC, and COLT LAND COMPANY, LLC, a West
Virginia limited liability company, and personally known to me to be the same
person(s) whose name(s) is (are) subscribed to the foregoing instrument,
appeared before me this day in person and severally acknowledged that as such
representatives/manager(s)/member(s) he signed and delivered the said instrument
for the limited liability company as its free and voluntary act, and as the free
and voluntary act of said limited liability company, for the uses and purposes
therein set forth.
          Given under my hand and seal this 23rd day of June, 2006.

         
 
       
My commission expires:
       
 
  /s/ Michael A. McKelvy    
 
       
 
  Notary Public    

 

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STATE OF ILLINOIS
  )
 
  )
COUNTY OF WILLIAMSON
  )

          I, the undersigned, a Notary Public, in and for said County and State
aforesaid, do hereby certify that James Azlein personally known to me to be the
CEO & President of BPI ENERGY, INC, a Nevada corporation, and personally known
to me to be the same person(s) whose name(s) is (are) subscribed to the
foregoing instrument, appeared before me this day in person acknowledged that as
such representatives/officer he signed and delivered the said instrument for the
corporation as his free and voluntary act, and as the free and voluntary act of
said corporation, for the uses and purposes therein set forth.
          Given under my hand and seal this 23rd day of June, 2006.

         
 
       
My commission expires:
       
 
  /s/ Michael A. McKelvy    
 
       
 
  Notary Public    

 

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STATE OF OHIO
  )
 
  ) :ss
COUNTY OF HAMILTON
  )

BEFORE ME, a Notary Public in and for the State and County aforesaid, personally
appeared Joseph D. Stelzer and James C. Kennedy, known to me to be the Vice
President and Secretary respectively, of AMERICAN PREMIER UNDERWRITERS, INC.,
and AFC COAL PROPERTIES, INC., the corporations which executed the foregoing
instrument, and they did acknowledge that they did sign said instrument in the
name and on behalf of the corporations, that the same is their free act and deed
as such officers and the free act and deed of said corporations, duly authorized
by their Boards of Directors, and that the seals affixed to said instrument are
the corporate seals of said corporations.
IN TESTIMONY WHEREOF, I have hereunto set my hand and notarial seal at
Cincinnati, Ohio this 23rd day of June, 2006.

         
 
       
 
  /s/ Charlotte A. Creech    
 
       
 
  Notary Public    

 

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              STATE OF   )        
 
  )        
COUNTY OF
  )        

          I, the undersigned, a Notary Public, in and for said County and State
aforesaid, do hereby certify that James C. Sevem personally known to me to be
the Vice President of Central States Coal Reserves of Illinois, LLC, a Delaware
limited liability company, and personally known to me to be the same person(s)
whose name(s) is (are) subscribed to the foregoing instrument, appeared before
me this day in person and severally acknowledged that as such
representatives/manager(s)/member(s) he signed and delivered the said instrument
for the limited liability company as its free and voluntary act, and as the free
and voluntary act of said limited liability company, for the uses and purposes
therein set forth.
          Given under my hand and seal this 26th day of June, 2006.

         
 
       
My commission expires: February 6, 2009
       
 
  /s/ Karen M. Sensel    
 
       
 
  Notary Public    

PREPARED BY:
TERRY R. BLACK
Campbell, Black, Carnine, Hedin, Ballard & MacDonald
108 South Ninth Street
P.O. Drawer C
Mt. Vernon, IL 62864