exv10w2



 





Exhibit 10.2



“[*]” = confidential portions of this document that have been omitted and have been separately
filed with the Securities and Exchange Commission pursuant to an application for confidential
treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.




COAL SUPPLY AGREEMENT




BETWEEN




COALSALES, LLC




AND




RENTECH ENERGY MIDWEST CORPORATION




Dated as of May 25, 2007














 






TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	SECTION 1. DEFINED TERMS 
	 	 	1	 
	1.1 “Actual Btu/lb” 
	 	 	2	 
	1.2 “Additional Tons” 
	 	 	2	 
	1.3 “Adequate Assurances” 
	 	 	2	 
	1.4 “Adjusted Base Price” 
	 	 	2	 
	1.5 “Adjusted Btu Price” 
	 	 	2	 
	1.6 “Adjusted Starting Delivery Date Range” 
	 	 	2	 
	1.7 “Agreement” 
	 	 	2	 
	1.8 “Affiliate” 
	 	 	2	 
	1.9 “Alternative Source” 
	 	 	2	 
	1.10 “Analysis” 
	 	 	2	 
	1.11 “Annual Nomination” 
	 	 	2	 
	1.12 “Applicable Laws” 
	 	 	2	 
	1.13 “As Received” 
	 	 	2	 
	1.14 “ASTM” 
	 	 	2	 
	1.15 “Base Price” 
	 	 	3	 
	1.16 “Basic Requirements” 
	 	 	3	 
	1.17 “Billing Price” 
	 	 	3	 
	1.18 “Btu Quality Adjustment” 
	 	 	3	 
	1.19 “Business Day” 
	 	 	3	 
	1.20 “Buyer” 
	 	 	3	 
	1.21 “Buyer’s Facility” 
	 	 	3	 






Page i









 






	 	 	 	 	 
	 	 	Page
	1.22 “Coal” 
	 	 	3	 
	1.23 “Contract Price” 
	 	 	3	 
	1.24 “Contract Year” 
	 	 	3	 
	1.25 “Day” 
	 	 	3	 
	1.26 “Declined Tons” 
	 	 	3	 
	1.27 “Delivery Year” 
	 	 	3	 
	1.28 “Effective Date” 
	 	 	4	 
	1.29 “Environmental Law” 
	 	 	4	 
	1.30 “Event of Default” 
	 	 	4	 
	1.31 “Event of Force Majeure” 
	 	 	4	 
	1.32 “Excuse Event” 
	 	 	4	 
	1.33 “Extension Period” 
	 	 	4	 
	1.34 “Financing” 
	 	 	4	 
	1.35 “First Year” 
	 	 	4	 
	1.36 “Force Majeure” 
	 	 	4	 
	1.37 “Force Majeure Period” 
	 	 	4	 
	1.38 “Gateway Mine” 
	 	 	4	 
	1.39 “GBU Area” 
	 	 	4	 
	1.40 “GBUA Coal” 
	 	 	4	 
	1.41 “Governmental Authority” 
	 	 	4	 
	1.42 “Increased Base Price” 
	 	 	4	 
	1.43 “Legal Holiday” 
	 	 	5	 
	1.44 “Lender” 
	 	 	5	 
	1.45 “Mine” 
	 	 	5	 






Page ii









 






	 	 	 	 	 
	 	 	Page
	1.46 “Notice” 
	 	 	5	 
	1.47 “Party” 
	 	 	5	 
	1.48 “Peabody” 
	 	 	5	 
	1.49 “Point of Delivery” 
	 	 	5	 
	1.50 “Project” 
	 	 	5	 
	1.51 “Quality Specifications” 
	 	 	5	 
	1.52 “Re-adjusted Starting Delivery Date Range” 
	 	 	5	 
	1.53 “Royalties” 
	 	 	5	 
	1.54 “Seller” 
	 	 	5	 
	1.55 “Seller Parent Guaranty” 
	 	 	5	 
	1.56 “Shortfall Tons” 
	 	 	5	 
	1.57 “Starting Delivery Date” 
	 	 	5	 
	1.58 “Starting Delivery Date Notice Date” 
	 	 	6	 
	1.59 “Starting Delivery Date Range” 
	 	 	6	 
	1.60 “Substitute Coal” 
	 	 	6	 
	1.61 “Taxes and Fees” 
	 	 	6	 
	1.62 “Taxes, Fees and Royalties” 
	 	 	6	 
	1.63 “Term” 
	 	 	6	 
	1.64 “Tonnage Variations” 
	 	 	6	 
	1.65 “Transportation Equipment” 
	 	 	6	 
	SECTION 2. CONTRACT TERM 
	 	 	6	 
	2.1 Effective Date 
	 	 	6	 
	2.2 Starting Delivery Date 
	 	 	6	 
	2.3 Term 
	 	 	7	 






Page iii









 






	 	 	 	 	 
	 	 	Page
	2.4 Term Extensions 
	 	 	7	 
	2.5 Delay in the Starting Delivery Date 
	 	 	7	 
	2.6 Special Termination Rights 
	 	 	8	 
	2.6.1 Seller Right
	 	 	8	 
	2.6.2 Buyer Right
	 	 	8	 
	SECTION 3. OUTLINE OF THE OBLIGATIONS OF THE PARTIES 
	 	 	8	 
	3.1 Purpose 
	 	 	8	 
	3.2 Obligations of Seller or Seller’s Affiliate(s) 
	 	 	8	 
	3.3 Obligations of Buyer 
	 	 	9	 
	SECTION 4. COAL QUANTITIES AND DELIVERY SCHEDULES 
	 	 	10	 
	4.1 Quantity Obligations 
	 	 	10	 
	4.2 Annual Nominations 
	 	 	10	 
	4.3 Tonnage Variations 
	 	 	11	 
	4.4 Additional Tons 
	 	 	11	 
	4.5 Shortfall Tons 
	 	 	12	 
	SECTION 5. COAL SPECIFICATIONS 
	 	 	12	 
	5.1 Coal Quality 
	 	 	12	 
	5.2 Suspension of Deliveries
	 	 	13	 
	5.2.1 Right to Suspend 
	 	 	13	 
	5.2.2 Suspension Notice 
	 	 	13	 
	5.2.3 Duration and Effect of Suspension 
	 	 	14	 
	SECTION 6. SOURCES OF COAL 
	 	 	14	 
	6.1 Sources of Coal 
	 	 	14	 
	6.2 Alternative Sources 
	 	 	14	 






Page iv









 






	 	 	 	 	 
	 	 	Page
	6.2.1 Delivery Notice Procedures 
	 	 	14	 
	6.2.2 Delivered Price of Substitute Coal 
	 	 	14	 
	6.2.3 [*]
	 	 	15	 
	SECTION 7. DELIVERY OF COAL 
	 	 	15	 
	7.1 Point of Delivery 
	 	 	15	 
	7.2 Title and Risk of Loss 
	 	 	15	 
	7.3 Acceptance by Buyer 
	 	 	15	 
	SECTION 8. LOADING OBLIGATIONS 
	 	 	16	 
	8.1 Loading Coal 
	 	 	16	 
	8.1.1 General Loading Obligations 
	 	 	16	 
	8.1.2 Operation of Loading Facility 
	 	 	16	 
	8.1.3 Seller’s Liability for Negligent Loading 
	 	 	16	 
	8.1.4 Seller’s Indemnification of Buyer for Seller’s
Negligent or Delayed Loading
	 	 	16	 
	SECTION 9. TRANSPORTATION OBLIGATIONS 
	 	 	17	 
	9.1 Rail Transportation 
	 	 	17	 
	9.2 Compatibility of Rail Cars 
	 	 	17	 
	9.3 Buyer’s Liability for Condition of Rail Cars 
	 	 	17	 
	9.4 Buyer’s Indemnification of Seller 
	 	 	17	 
	SECTION 10. PRICE OF COAL 
	 	 	17	 
	10.1 Contract Price 
	 	 	17	 
	10.2 Calculation of Billing Price 
	 	 	18	 
	10.2.1 Base Price 
	 	 	18	 
	10.2.2 Billing Price 
	 	 	18	 
	10.2.3 Inflation Adjustment 
	 	 	18	 






Page v









 






	 	 	 	 	 
	 	 	Page
	10.2.4 Notice of Calculations 
	 	 	20	 
	10.3 BTU Quality Adjustments 
	 	 	20	 
	10.3.1 Weighted Average Btu Content 
	 	 	20	 
	10.3.2 Determine the Adjusted Btu Price 
	 	 	20	 
	10.3.3 Determining Compensation Payable to Buyer 
	 	 	20	 
	10.3.4 Determining Compensation Payable to Seller 
	 	 	21	 
	10.3.5 Method of Compensating Parties for Btu Quality Adjustments 
	 	 	21	 
	10.4 Taxes, Fees and Royalties 
	 	 	21	 
	10.4.1 Taxes, Fees and Royalties 
	 	 	21	 
	10.4.2 Invoice 
	 	 	22	 
	10.5 Changes in Applicable Law Cost Adjustment 
	 	 	22	 
	10.5.1 Changes in Applicable Law Costs 
	 	 	22	 
	10.5.2 Notification and Disclosure of Information Concerning Changes in
Applicable Law Costs
	 	 	22	 
	10.6 Change or Discontinuance of Indices 
	 	 	23	 
	10.7 Change in Indices Due to Change in the Mine 
	 	 	23	 
	10.8 Rounding 
	 	 	23	 
	10.9 Price Adjustment for Change in Location of the Mine 
	 	 	23	 
	10.10 Seller Right to Adjust Contract Price 
	 	 	23	 
	SECTION 11. COMPLIANCE WITH LAWS 
	 	 	24	 
	11.1 Construction 
	 	 	24	 
	11.2 Severability 
	 	 	24	 
	SECTION 12. WEIGHING, SAMPLING, AND ANALYSIS 
	 	 	24	 
	12.1 Procedures 
	 	 	24	 






Page vi









 






	 	 	 	 	 
	 	 	Page
	12.2 Duties to Sample Coal 
	 	 	24	 
	12.3 Duties of Seller to Weigh Coal
	 	 	24	 
	12.3.1 Duty to Weigh; Use of Weighing Data 
	 	 	24	 
	12.3.2 Inspection and Certification of Scales 
	 	 	25	 
	12.3.3 Seller’s Certification of Scales and Weights; Correction of
Errors
	 	 	25	 
	12.4 Failure of Weighing, Sampling or Analytical Procedures
	 	 	25	 
	12.4.1 Substitute Procedures 
	 	 	25	 
	12.4.2 Inaccurate or Unreliable Sample or Final Analysis 
	 	 	25	 
	12.5 Rights of Buyer and Seller in Weighing, Sampling and Analysis.
	 	 	25	 
	12.5.1 Results of Sampling and Analysis Binding 
	 	 	25	 
	12.5.2 Independent Analysis of Samples 
	 	 	26	 
	12.5.3 Referee Analysis 
	 	 	26	 
	12.5.4 Observation of Sampling and Analysis 
	 	 	26	 
	SECTION 13. RECORDS AND AUDITS 
	 	 	26	 
	13.1 Record Review
	 	 	26	 
	13.1.1 Records of Seller 
	 	 	26	 
	13.1.2 Records of Buyer 
	 	 	26	 
	13.1.3 Overpayment or Underpayment 
	 	 	27	 
	13.2 Timing of Record Review 
	 	 	27	 
	SECTION 14. FORCE MAJEURE 
	 	 	27	 
	14.1 Definition of Force Majeure 
	 	 	27	 
	14.1.1 Buyer 
	 	 	27	 
	14.1.2 Seller 
	 	 	27	 






Page vii









 






	 	 	 	 	 
	 	 	Page
	14.2 Effect of Force Majeure 
	 	 	28	 
	14.3 Termination for Extended Event of Force Majeure Suspension 
	 	 	29	 
	14.4 New Environmental Laws 
	 	 	29	 
	14.5 Reduction in Tonnage 
	 	 	29	 
	14.6 Payment for New Environmental Law Changes 
	 	 	30	 
	14.7 Certain Changes Excluded 
	 	 	30	 
	SECTION 15. EVENTS OF DEFAULT; REMEDIES; RIGHT OF REFUSAL
	 	 	31	 
	15.1 Event of Default 
	 	 	31	 
	15.1.1 Payment Default 
	 	 	31	 
	15.1.2 Continuing Suspension of Coal Deliveries 
	 	 	31	 
	15.1.3 Failure to Perform Material Provisions 
	 	 	31	 
	15.1.4 Failure to Perform Under Guarantee 
	 	 	31	 
	15.2 Remedies for Default and Event(s) of Default 
	 	 	31	 
	15.3 Specific Performance and Injunctive Relief 
	 	 	32	 
	15.4 Waiver of Breach 
	 	 	32	 
	15.5 Seller’s Right to Suspend Deliveries 
	 	 	32	 
	15.6 Cumulative Remedies 
	 	 	32	 
	15.7 Limitation of Liabilities 
	 	 	33	 
	15.8 Right of Refusal 
	 	 	33	 
	SECTION 16. CHOICE OF LAW; DISPUTE RESOLUTION 
	 	 	33	 
	16.1 Choice of Law 
	 	 	33	 
	16.2 Arbitration 
	 	 	33	 
	16.3 AAA Exceptions 
	 	 	33	 






Page viii









 






	 	 	 	 	 
	 	 	Page
	16.3.1 Selection of Arbitration Panel 
	 	 	33	 
	16.3.2 Arbitration Process 
	 	 	34	 
	16.3.3 Arbitration Award 
	 	 	34	 
	16.3.4 Arbitration Costs 
	 	 	34	 
	16.3.5 Enforcement of Award 
	 	 	34	 
	16.4 Remedies 
	 	 	34	 
	16.5 No Consolidation 
	 	 	34	 
	SECTION 17. REPRESENTATIONS AND WARRANTIES 
	 	 	35	 
	17.1 Buyer’s Representations and Warranties 
	 	 	35	 
	17.2 Seller’s Representations and Warranties 
	 	 	35	 
	17.3 Seller’s Representations and Warranties of Title 
	 	 	35	 
	17.4 Seller’s Exclusion of Implied Warranties 
	 	 	35	 
	SECTION 18. INVOICING AND PAYMENT 
	 	 	36	 
	18.1 Invoicing Procedures 
	 	 	36	 
	18.2 Payment Procedures 
	 	 	36	 
	18.3 Disputed Invoices 
	 	 	36	 
	SECTION 19. ASSIGNMENTS AND COOPERATION WITH FINANCING 
	 	 	36	 
	19.1 Assignment Not Allowed 
	 	 	36	 
	19.2 Assignment to Affiliate 
	 	 	36	 
	19.3 Assignment By Seller 
	 	 	37	 
	19.4 Assignment By Buyer 
	 	 	37	 
	19.5 Cooperation with Financing 
	 	 	37	 
	19.6 Successors and Assigns 
	 	 	38	 
	SECTION 20. SECURITY 
	 	 	38	 






Page ix









 






	 	 	 	 	 
	 	 	Page
	20.1 Seller Guaranty 
	 	 	38	 
	20.2 Creditworthiness of Buyer 
	 	 	38	 
	20.3 Adequate Assurances 
	 	 	38	 
	SECTION 21. CONFIDENTIALITY 
	 	 	39	 
	SECTION 22. NOTICES 
	 	 	40	 
	22.1 General Notices 
	 	 	40	 
	22.2 Effectiveness 
	 	 	41	 
	22.3 Changes in Persons and Addresses 
	 	 	41	 
	SECTION 23. WAIVERS 
	 	 	41	 
	SECTION 24.
HEADINGS AND SECTION NUMBERS — CONSTRUCTION
	 	 	41	 
	
24.1 Headings Not to Affect Construction 
	 	 	41	 
	24.2 References to Section Numbers 
	 	 	42	 
	SECTION 25. AMENDMENTS 
	 	 	42	 
	SECTION 26. COMPLETE AGREEMENT 
	 	 	42	 
	SECTION 27. COUNTERPARTS 
	 	 	42	 
	 
	EXHIBIT A Examples of Inflation Adjustment Methodology
	 	 	 	 
	EXHIBIT B Form of Right of Refusal Agreement
	 	 	 	 
	EXHIBIT C Form of Seller Parent Guarantee
	 	 	 	 
	EXHIBIT D Changes in Inflation Adjustment Indices for New
Above Ground Source of Coal
	 	 	 	 







Page x









 








COAL SUPPLY AGREEMENT




BETWEEN




COALSALES, LLC




AND




RENTECH ENERGY MIDWEST CORPORATION




     This COAL SUPPLY AGREEMENT (the “Agreement”) is made and entered into as of the 25th
day of May, 2007, by and between COALSALES, LLC (“Seller”) and RENTECH ENERGY MIDWEST
CORPORATION (“Buyer”). Seller is a Delaware limited liability company, with its principal
place of business in St. Louis, Missouri. Buyer is a Delaware corporation, with its principal
place of business in East Dubuque, Illinois. Together, Seller and Buyer are “Parties” to
the Agreement and either Seller or Buyer individually is a “Party” to the Agreement.



     WHEREAS, Seller is an Affiliate of Coulterville Coal Company, LLC, which owns the coal mine
known as the Gateway Mine located in Coulterville, Illinois;



     WHEREAS, Seller desires to fulfill its obligations under this Agreement (i) by securing Coal
from the Gateway Mine, other portions of the Greater Belleville Underground Area, or other Illinois
coal sources available to Seller and (ii) by selling such Coal to Buyer in accordance with the
terms, and subject to the conditions, of this Agreement;



     WHEREAS, Buyer desires to purchase Coal for the full coal requirements of Buyer’s Facility;
and



     WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, Coal in
the amounts and upon the terms and conditions set forth in this Agreement.



     NOW THEREFORE, in consideration of the mutual covenants and obligations stated in this
Agreement, the receipt and sufficiency of which the Parties acknowledge, Seller and Buyer hereby
agree as follows:



SECTION 1. DEFINED TERMS




     The words and phrases listed in Section 1 shall have the meanings ascribed to them in Section
1 wherever they appear in this Agreement as defined terms, which shall be indicated by initial
capital letters on each word. Capitalized words



 Page 1









 




and phrases contained in this Agreement that are not listed in Section 1 of this Agreement
shall be defined in the particular Section(s) in which they are used.





	1.1	 	“Actual Btu/lb” shall have the meaning given in Section 10.3.1.
	 
	1.2	 	“Additional Tons” shall have the meaning given in Section 4.4.
	 
	1.3	 	“Adequate Assurances” shall have the meaning given in Section 20.3.
	 
	1.4	 	“Adjusted Base Price” shall have the meaning given in Section 10.2.2(b).
	 
	1.5	 	“Adjusted Btu Price” shall have the meaning given in Section 10.3.2.
	 
	1.6	 	“Adjusted Starting Delivery Date Range” shall have the meaning given in Section 2.2.
	 
	1.7	 	“Agreement” means this Coal Supply Agreement by and between COALSALES, LLC and Rentech
Energy Midwest Corporation.
	 
	1.8	 	“Affiliate” shall mean any person or entity with control over or subject to control by,
or under direct or indirect common control with a Party. For purposes of this definition,
“control” when used with respect to a specific Person (including the Parties) means the
power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract, or otherwise. Notwithstanding the
foregoing, in no event shall either Party be deemed an Affiliate of the other Party for the
purposes of this Agreement.
	 
	1.9	 	“Alternative Source” shall have the meaning given in Section 6.1.
	 
	1.10	 	“Analysis” shall have the meaning given in Section 12.2.
	 
	1.11	 	“Annual Nomination” refers to the total number of tons of Coal that Buyer instructs
Seller to deliver during each Delivery Year, in accordance with Section 4.2 of this
Agreement.
	 
	1.12	 	“Applicable Laws” shall mean any laws, statutes, ordinances, regulations, rules, notice
requirements, court decisions, agency guidelines, principles of law and orders of any
Governmental Authority which are applicable to Buyer, Seller, the Mine or the Facility, as
the case may be.
	 
	1.13	 	“As Received” means “as-received basis” as defined in the ASTM Standards Designation:
D3180-89 (Standard Practice for Calculating Coal and Coke Analyses from As Determined to
Different Bases).
	 
	1.14	 	“ASTM” shall have the meaning given in Section 12.2.




 Page 2









 






	1.15	 	“Base Price” shall have the meaning given in Section 10.2.1.
	 
	1.16	 	“Basic Requirements” shall have the meaning given in Section 4.3.
	 
	1.17	 	“Billing Price” shall have the meaning given in Section 10.2.2(c).
	 
	1.18	 	“Btu Quality Adjustment” refers to the methodology prescribed by Section 10.3 to
compensate Buyer and/or Seller for variations in the actual monthly weighted average heating
value of Coal deliveries compared to the [*] Btu/lb value used to set the Contract Price.
	 
	1.19	 	“Business Day” shall mean any Day other than a Legal Holiday.
	 
	1.20	 	“Buyer” shall have the meaning set forth in the Preamble to this Agreement and includes
Buyer’s successors and permitted assigns under this Agreement.
	 
	1.21	 	“Buyer’s Facility” shall mean the Buyer’s feedstock converted coal-fed ammonia
fertilizer and Fischer-Tropsch fuels production facility to be constructed at the existing
natural gas-fed nitrogen fertilizer plant located in East Dubuque, Illinois.
	 
	1.22	 	“Coal” shall mean the coal supplied by Seller to Buyer hereunder, which coal shall have
the specifications and quality characteristics equal to or better than those set forth in
Section 5.2. Coal tendered for delivery by Seller shall be presumed to be Coal unless and
until sampling and analysis performed in accordance with this Agreement establishes
otherwise.
	 
	1.23	 	“Contract Price” shall have the meaning given in Section 10.1.
	 
	1.24	 	“Contract Year” means (i) the period beginning on the Effective Date and ending on
December 31 of such calendar year for the first Contract Year, (ii) the period beginning on
January 1 of the last calendar year this Agreement is in effect and ending on the date of
termination of this Agreement for the last Contract Year, and (iii) for each other calendar
year during the Term, the annual period beginning on January 1 and ending on December 31 of
such calendar year.
	 
	1.25	 	“Day” shall mean calendar day unless the context in which the term “day” is used
clearly indicates that a Business Day is indicated. The word day shall have such meaning
whether or not the initial letter is capitalized.
	 
	1.26	 	“Declined Tons” shall have the meaning given in Section 4.4.
	 
	1.27	 	“Delivery Year” shall have the same meaning as Contract Year except that the first “Delivery Year”
shall begin on the Starting Delivery Date and end on December 31 of such calendar year.




 Page 3









 






	1.28	 	“Effective Date” shall have the meaning given in Section 2.1.
	 
	1.29	 	“Environmental Law” shall mean any Applicable Law pertaining to (i) the regulation and
protection of health, safety and the indoor or outdoor environment, (ii) the conservation,
management, development, control or use of land, natural resources or wildlife, (iii) the
protection or use of surface water or ground water, (iv) the management, manufacture,
possession, presence, use, generation, transportation, or handling of, or exposure to any,
hazardous substance, or (v) pollution (including release of any hazardous substance to the
air, land, surface water or ground water).
	 
	1.30	 	“Event of Default” shall have the meaning given in Section 15.1.
	 
	1.31	 	“Event of Force Majeure” shall have the meaning given in Section 14.1.
	 
	1.32	 	“Excuse Event” shall have the meaning given in Section 4.1
	 
	1.33	 	“Extension Period” shall have the meaning given in Section 2.4.
	 
	1.34	 	“Financing” shall have the meaning given in Section 19.5.
	 
	1.35	 	“First Year” shall have the meaning given in Section 4.2.
	 
	1.36	 	“Force Majeure” shall have the meaning given in Section 14.1.
	 
	1.37	 	“Force Majeure Period” shall have the meaning given in Section 14.2.
	 
	1.38	 	“Gateway Mine” means the mine located in Coulterville, Illinois that is owned or
controlled by one or more Affiliates of Seller.
	 
	1.39	 	“GBU Area” shall mean all the lands that make up the Greater Belleville Underground
coal areas in southwest Illinois (and shall include both surface and subsurface coal areas),
and such contiguous areas located in Illinois in which Seller or Seller’s Affiliate(s) have
the right, or hereafter acquire the right, to mine coal.
	 
	1.40	 	“GBUA Coal” shall mean Coal mined from the GBU Area.
	 
	1.41	 	“Governmental Authority” shall mean any nation or government (including, without
limitation, the government of the United States), any state, county, municipal or other
political subdivision thereof and any Person exercising legislative, judicial, regulatory or
administrative functions of or pertaining to the government.
	 
	1.42	 	“Increased Base Price” shall have the meaning given in Section 10.2.2(a).




 Page 4









 






	1.43	 	“Legal Holiday” shall mean Saturday, Sunday or any Day on which banking institutions in
Illinois are authorized by law, regulation or executive order to remain closed.
	 
	1.44	 	“Lender” shall mean any bank, financial institution, lender, bondholder, noteholder or
other institution entity (or any agent or trustee thereof) providing debt financing as part
of the Financing.
	 
	1.45	 	“Mine” shall mean all the lands, structures, equipment, excavations, roadways, waste
disposal sites, and transportation, loading, connecting, and related
facilities located at or near the Gateway Mine. If Seller elects to permanently supply
Substitute Coal under this Agreement from any other mine pursuant to Section 6.2, then the
term “Mine” shall include the source of such Substitute Coal.
	 
	1.46	 	“Notice” shall mean a notice given in accordance with and complying with the
requirements of Section 22.
	 
	1.47	 	“Party” shall mean either Buyer or Seller and “Parties” means both Buyer and Seller.
	 
	1.48	 	“Peabody” means Peabody Energy Corporation and its successors and permitted assigns.
	 
	1.49	 	“Point of Delivery” shall have the meaning given in Section 7.1.
	 
	1.50	 	“Project” means the proposed feedstock conversion of Rentech’s existing ammonia fertilizer
production facility located in East Dubuque, Illinois from natural gas to coal gasification.
	 
	1.51	 	“Quality Specifications” shall have the meaning given in Section 5.1.
	 
	1.52	 	“Re-adjusted Starting Delivery Date Range” shall have the meaning given in Section 2.2.
	 
	1.53	 	“Royalties” are the per ton amount of any federal, state, tribal, and private royalties
actually paid by Seller to any person (except royalties, if any, paid to an Affiliate of
Seller) on Coal that Seller tenders to Buyer.
	 
	1.54	 	“Seller” shall have the meaning set forth in the Preamble to this Agreement and
includes Seller’s successors and permitted assigns under this Agreement.
	 
	1.55	 	“Seller Parent Guaranty” shall have the meaning given in Section 20.1.
	 
	1.56	 	“Shortfall Tons” shall have the meaning given in Section 4.5.
	 
	1.57	 	“Starting Delivery Date” shall have the meaning given in Section 2.2.




 Page 5









 






	1.58	 	“Starting Delivery Date Notice Date” shall have the meaning given in Section 2.2.
	 
	1.59	 	“Starting Delivery Date Range” shall have the meaning given in Section 2.2.
	 
	1.60	 	“Substitute Coal” means coal from an Alternative Source that meets the requirements of
Section 6 of this Agreement.
	 
	1.61	 	“Taxes and Fees” are the per ton amount of taxes and fees (other than taxes imposed or
calculated with respect to income or franchise taxes) actually levied or assessed with
respect to the Coal that Seller tenders to Buyer, and which are paid by Seller to the
applicable Governmental Entity, including but not limited to the following: Illinois sales
tax, the U.S. Black Lung Excise Tax, the U.S. Reclamation Fee, or similarly applicable taxes
and fees in the State of Illinois with respect to such Coal.
	 
	1.62	 	“Taxes, Fees and Royalties” shall mean Taxes and Fees and Royalties.
	 
	1.63	 	“Term” shall have the meaning given in Section 2.3.
	 
	1.64	 	“Tonnage Variations” shall have the meaning given in Section 4.3.
	 
	1.65	 	“Transportation Equipment” shall mean all coal transportation equipment (including rail cars), which Buyer owns,
leases, or has rights to use and uses to transport Coal from the Point of Delivery to
Buyer’s Facility.





SECTION
2. CONTRACT TERM



2.1 Effective Date. The “Effective Date” shall be the date of this Agreement.



2.2 Starting Delivery Date. The Starting Delivery Date shall occur between August 1, 2009 and
January 1, 2011. At least eighteen (18) months before the Starting Delivery Date, Buyer shall
provide Notice to Seller specifying a five month period in which the Starting Delivery Date will
occur (which date must be between August 1, 2009 and January 1, 2011) (the “Starting Delivery
Date Range”). At least fifteen (15) months before the Starting Delivery Date, Buyer shall
provide Notice to Seller reducing the Starting Delivery Date Range from five (5) months to three
(3) months (the “Adjusted Starting Delivery Date Range”) provided that such three (3) month
period must begin and end within the Starting Delivery Date Range. At least seven (7) months
before the Starting Delivery Date, Buyer shall provide Notice to Seller reducing the Adjusted
Starting Delivery Range from three (3) months to one (1) month (the “Re-adjusted Starting
Delivery Date Range”) provided that such one (1) month period must begin and end within the
Adjusted Starting Delivery Date Range. At least three (3) months before the Starting Delivery
Date, the “Starting Delivery Date Notice Date”). Buyer shall provide Notice to Seller of
the date on which Coal deliveries will commence under this Agreement (the






 Page 6









 





“Starting Delivery
Date”) which shall be a Business Day during the Re-adjusted Starting Delivery Date Range.



2.3 Term. The “Term” of this Agreement shall begin on the Effective Date and shall
continue thereafter to and including December 31, 2017, unless earlier terminated in accordance
with this Agreement, or unless extended pursuant to Section 2.4.



2.4 Term Extensions. The initial Term and each extended Term may be extended upon the mutual
written agreement of both Parties for additional five (5) year extension periods (each an
“Extension Period”). On or before January 1, 2016 (with respect to the initial Term) and
January 1 of the last year of each Extension Period, Seller shall provide Notice to Buyer of the
Mine source (which shall be a Mine located in Illinois), quality, pricing and escalation
methodology offered for the next Extension
Period, together with a sample of Coal from the offered Mine source, if available. Buyer shall
provide Notice to Seller of its acceptance or rejection of the option by April 1 of such calendar
year. If Buyer accepts such proposed terms, Buyer and Seller shall negotiate in good faith all
remaining terms of this Agreement to be effective during the proposed Extension Period. If on or
before June 30 of such calendar year Buyer and Seller mutually agree to the terms of this Agreement
to be effective during the proposed Extension Period, then the term of this Agreement shall be
extended to the end of such Extension Period on such agreed upon terms. If Buyer and Seller do not
reach agreement on or before June 30 of such calendar year, then this Agreement shall terminate
upon the expiration of the then current Term. In connection with any such termination of this
Agreement, without regard to the reasons the Parties were unable to agree to an extension of the
Term, Seller shall have the right of refusal as provided in Section 15.8 for a period of five (5)
years from the date this Agreement terminates.




2.5 Delay in the Starting Delivery Date.




     2.5.1. If the Starting Delivery Date is delayed for any reason beyond [*] (other
than as a result of the breach by Seller of this Agreement or a Seller claimed Event of Force
Majeure), then within thirty (30) Days following receipt of a written invoice from Seller,
accompanied by reasonable supporting documentation, Buyer shall pay Seller all out-of-pocket costs
and obligations sustained by Seller as a result of the failure of the Starting Delivery Date to
occur on or before January 1, 2010 (i.e., costs and obligations in excess of those costs and
obligations Seller would have incurred if the Starting Delivery Date was [*]), plus
interest at the annual rate of 12% per annum from the date such costs were incurred. Seller agrees
to use commercially reasonable efforts to find an alternative buyer for the coal it would have
supplied under this Agreement during the delay in order to mitigate its lost coal sale and other
out-of-pocket costs and obligations associated with such delay.



 Page 7









 





     2.5.2 If the Starting Delivery Date has not occurred by [*] for any reason, then
at any time thereafter until the Starting Delivery Date occurs Seller may, upon thirty (30) Days
prior Notice to Buyer, terminate this Agreement without further liability of either Party to the
other as a result of such termination; provided, however, that if Seller has not previously
invoiced Buyer for its out-of-pocket costs and obligations as provided in Section 2.5.1 on or
before the date of such Notice, Seller shall deliver such invoice to Buyer and Buyer shall be
obligated to make such payments in connection with a termination of this Agreement pursuant to this
Section 2.5.2. In addition, in connection with a termination of this Agreement pursuant to this
Section 2.5.2, Seller shall have the right of refusal as provided in Section 15.8 for a period of
five (5) years from the date this Agreement terminates.



2.6 Special Termination Rights.




     2.6.1 Seller Right. If closing of the Financing has not occurred on or before March 31, 2008
for any reason, then at any time thereafter until the closing of the Financing occurs, Seller may,
upon ten (10) Days prior Notice to Buyer, terminate this Agreement without further liability of
either Party to the other as a result of such termination.



     2.6.2 Buyer Right. If Buyer terminates and abandons development of the Project for any reason
prior to the closing of the Financing, then upon ten (10) Days prior Notice to Seller, Buyer may
terminate this Agreement without further liability of either Party to the other as a result of such
termination.



SECTION 3. OUTLINE OF THE OBLIGATIONS OF THE PARTIES



3.1 Purpose. The purpose of this Section 3 is to state in brief form a summary of the obligations
of the Parties under this Agreement. Notwithstanding this Section 3, Buyer and Seller expressly
intend that all the promises, covenants and other obligations contained in any portion of this
Agreement shall be performed as fully and faithfully as the obligations stated in this Section 3.



3.2 Obligations of Seller or Seller’s Affiliate(s). Subject to the terms and conditions of this
Agreement, Seller or Seller’s Affiliate(s) shall perform the following obligations:




     3.2.1 Mine Coal from the Mine in the quantities and having the qualities set forth in this
Agreement, subject to Seller’s rights to provide Substitute Coal pursuant to Section 6.2 of this
Agreement.



     3.2.2 Tender Coal for delivery to Buyer at the Point of Delivery in the quantities and having
the qualities set forth in this Agreement, and in accordance with the schedules established
pursuant to this Agreement.



 Page 8









 





     3.2.3 Provide, operate, and maintain the loading facility to accomplish the loading of Coal
into the Transportation Equipment provided by Buyer in accordance with this Agreement.



     3.2.4 Perform the analyses of Coal required by this Agreement.



     3.2.5 Issue invoices for Coal as specified by this Agreement.



     3.2.6 Maintain adequate books and records in accordance with generally-accepted accounting
principles with respect to its obligations and performance under this Agreement.



     3.2.7 Seller may perform its obligations hereunder directly or cause such obligations to be
performed by any of its Affiliates, contractors or other designees provided that Seller shall at
all times remain responsible to Buyer for the full and timely performance of its obligations
hereunder.



3.3 Obligations of Buyer. Subject to the terms and conditions of this Agreement, Buyer shall
perform the following obligations:



     3.3.1 Except in connection with an Excuse Event, purchase the full Coal requirements for
Buyer’s Facility under this Agreement and accept delivery of Coal in the quantities set forth in
this Agreement and in accordance with the schedules established pursuant to this Agreement. In the
event that Buyer is obligated to purchase Coal hereunder and is unable or unwilling to take
delivery of such Coal from Seller in accordance with this Agreement, then Buyer shall have the
obligation to pay for such Coal in accordance with the terms hereof without taking delivery of such
Coal. Upon receipt of a Notice by Buyer, Seller shall use commercially reasonable efforts to sell
such Coal on behalf of Buyer at the best net price available to it. Seller shall provide Buyer
with Notice of the best offer it receives for such Coal and Buyer shall promptly either accept or
reject such offer. If Buyer rejects the offer proposed by Seller, or if, for any reason, Seller
fails to provide Buyer with an offer for all such Coal with fourteen (14) Days of receipt of
Buyer’s Notice requesting Seller’s assistance in marketing such Coal, then Buyer shall have the
right to sell such Coal to a third party without reduction of Buyer’s payment obligation to Seller
related to such Coal. Buyer shall be entitled to the sale proceeds from any sale of Coal pursuant
to this Section 3.3.1. In no event shall Seller be in default under this Agreement for failing to
identify an acceptable buyer for Coal pursuant to this Section 3.3.1.



     3.3.2 Provide, or cause to be provided, sufficient Transportation Equipment as required by
Section 9 of this Agreement for the Coal to be delivered in accordance with the schedules
established pursuant to this Agreement.



 Page 9









 





     3.3.3 Pay the applicable Contract Price for Coal delivered and accepted in accordance with
this Agreement and any other amounts owed by it hereunder as and when due in accordance with this
Agreement.



     3.3.4 Provide Seller with the right of refusal to supply coal to Buyer’s Facility following a
termination of this Agreement for any reason other than a Seller Event of Default as provided in
Section 15.8.



SECTION 4. COAL QUANTITIES AND DELIVERY SCHEDULES



4.1 Quantity Obligations. Buyer shall purchase all of its Coal requirements for Buyer’s
Facility from Seller pursuant to this Agreement unless (a) Seller is unable to deliver all of
Buyer’s requirements in accordance with this Agreement, (b) Seller is in default under this
Agreement, (c) an Event of Force Majeure prevents Seller from supplying Buyer with its Coal
requirements, (d) Buyer’s obligations are in suspension as provided for in Section 5.2.3, (e)
Seller is not supplying Buyer with its Coal requirements due to a change in Environmental Laws as
provided in Section 14.5, or (f) Seller is unwilling to supply Buyer with Declined Tons pursuant to
Section 4.4 (each an “Excuse Event”). Subject to the terms and conditions of this
Agreement, during each Delivery Year, Seller shall tender to Buyer at the Point of Delivery and
Buyer shall purchase from Seller, the total quantity of Coal specified in Buyer’s Annual Nomination
pursuant to Section 4.2, as such Annual Nomination may be revised from time to time in accordance
with Section 4.3 and other applicable provisions of this Agreement; provided that Buyer’s Annual
Nomination shall at all times reflect the full Coal requirements of Buyer’s Facility unless Seller
is not obligated to supply or Buyer is not obligated to purchase such full Coal requirements due to
an Excuse Event.



4.2 Annual Nominations. On or before the Starting Delivery Date Notice Date the Parties shall
mutually agree on a start-up schedule and the amount of Coal to be delivered on a monthly basis
during the first twelve-months to occur after the Starting Delivery Date (the “First
Year”). On or before July 1 of each succeeding Delivery Year, Buyer shall nominate the tonnage
to be delivered in the following Delivery Year, broken down into approximately equal monthly
amounts. Each such Annual Nomination shall be no less than 800,000 tons and no greater than
900,000 tons (unless adjusted due to an Excuse Event), provided, however, that for the First Year,
the total tonnage to be delivered during such twelve (12) month period shall be 600,000 tons
delivered in monthly quantities of approximately 50,000 tons and the Annual Nomination(s) for the
Delivery Year(s) in which the First Year occurs shall reflect the reduced Annual Nomination for the
portion of the First Year that occurs in such Delivery Year(s). Buyer may revise the Annual
Nomination within the limits, and in accordance with the notification requirements, for Tonnage
Variations specified in Section 4.3 and the Annual Nomination shall be






 Page 10









 







revised to reflect any
reduced deliveries due to an Excuse Event. The term “Annual Nomination” as used in this
Agreement shall reflect any reduction in effect from time to time to account for an Excuse Event.



4.3 Tonnage Variations. The Annual Nomination shall be delivered in approximate equal monthly
quantities unless otherwise mutually agreed by both Parties. On a quarterly basis, Buyer may, at
its sole discretion, increase or decrease each monthly quantity in such quarter by up to ten
percent (10%) of the monthly allocation of the Annual Nomination, unless a larger increase or
decrease is accepted in writing by Seller, which acceptance or rejection shall be within the sole
discretion of Seller exercisable by Seller for any reason (“Tonnage Variations”); provided
that such an increase or decrease shall not cause the Annual Nomination to either (i) fall below a
minimum of 800,000 tons (600,000 tons for the First Year), or (ii) exceed a maximum of 900,000 tons
(an Annual Nomination within the amounts described in clauses (i) and (ii) is referred to herein as
the “Basic Requirements”). To effect a quarterly increase or decrease, Buyer shall provide
Notice to Seller at least thirty (30) Days prior to the first Day of the impacted quarter (e.g.,
thirty (30) Days prior to April 1, July 1, October 1 and January 1).



4.4 Additional Tons. In the event that the full Coal requirements for Buyer’s Facility are in
excess of 900,000 tons per Delivery Year, Seller shall, in good faith, determine whether the tons
in excess of the Basic Requirements (the “Additional Tons”) can be supplied from the Mine
(including any Mine used to supply Substitute Coal for all or part of the Additional Tons) or any
other Alternative Source on the same terms and conditions as it provides the Basic Requirements
hereunder. If Seller elects not to supply all or any part of the Additional Tons on the same terms
and conditions of this Agreement (the “Declined Tons”), then it shall promptly (and, in any
event, within ten (10) Days) provide Notice thereof to Buyer and Buyer shall have the right to
solicit proposals for the supply of the Declined Tons from third parties. If Buyer determines to
provide for the Declined Tons from one or more third parties, then Seller shall have the right to
match the price and other terms for the supply of the Declined Tons. In order to effect this
right, Buyer shall give Notice to Seller of the terms and conditions for each third party offer it
intends to accept for the delivery of Declined Tons. Such Notice shall specify all terms for the
delivery of such Declined Tons that are different in any material respects than the terms of this
Agreement applicable to the Basic Requirements, together with any additional information regarding
such offer that is reasonably requested by Seller. Within five (5) Business Days following receipt
of Buyer’s Notice, including all differing terms and any additional information reasonably
requested by Seller, Seller shall either accept or reject the delivery of such Declined Tons on the
terms provided by Buyer. If Seller accepts such terms, then the Declined Tons will be
delivered under this Agreement as modified by the terms provided by Buyer and so accepted by
Seller. If Seller rejects such terms, then Buyer may provide for the delivery of the Declined Tons
by the third-party on terms that are not different in any material respect than the terms specified
in Buyers Notice to Seller; provided,






 Page 11









 







however, that Buyer shall provide for such Declined Tons
pursuant to a written contract with the third party supplier, shall provide Seller’s in-house
designated legal counsel or a nationally-recognized coal consultant with a fully executed copy of
such contract (without redaction or incomplete terms, conditions or schedules) and shall provide
Seller’s in-house designated legal counsel or such coal consultant (as applicable) with a written
copy of any amendments, modifications or changes to such contract (which, in each case, shall be
used by such in-house counsel or such coal consultant (as applicable) solely to verify compliance
with the requirements of this Section). All costs associated with such coal consultant’s review
shall be paid by Buyer without contribution from Seller. If after Seller rejects terms for
Declined Tons proposed by a third party, such terms change in any material respect, then Buyer
shall repeat the offer process described above with the new terms included prior to entering into a
definitive agreement with a third party supplier. The Parties understand that the process
described above may delay or inhibit Buyer’s ability to obtain a third party supply of Declined
Tons but the Parties agree to this process in order to provide Seller with the opportunity to
supply the full Coal requirements for Buyer’s Facility.



4.5 Shortfall Tons. In the event the full Coal requirements for Buyer’s Facility are less
than 800,000 tons per Delivery Year (600,000 tons for the First Year), then Buyer shall have the
right to request a tonnage reduction for such Delivery Year by Notice to Seller. Within five (5)
Business Days of receipt of Buyer’s Notice, Seller shall either accept or reject the request, in
Seller’s sole discretion exercisable by Seller for any reason. If Seller accepts the reduction,
than the minimum Basic Requirements for such Delivery Year shall be reduced to the accepted level.
If Seller rejects all or part of the reduction, then with respect to the rejected reduction (the
“Shortfall Tons”), Buyer shall have the right to resell Coal to be delivered hereunder in
an amount equal to the Shortfall Tons to a third party purchaser who shall take delivery of such
Coal in its own Transportation Equipment at the Point of Delivery (or from Buyer if Buyer takes
delivery of such Coal in its own Transportation Equipment at the Point of Delivery). Without
duplication of Buyer’s obligation under Section 10, Buyer shall pay Seller the Contract Price for
all Shortfall Tons delivered at the Point of Delivery to a third party hereunder and once delivered
to such third party shall be considered to have been delivered to Buyer for all purposes of this
Agreement.




SECTION 5. COAL SPECIFICATIONS



5.1 Coal Quality. Seller shall tender Coal for delivery to Buyer with the following quality characteristics
As Received (“Quality Specifications”), averaged over a calendar month:




 Page 12









 








	 	 	 
	 	 	Monthly Average
	               Characteristic	 	(As Received)
	Btu/lb.

	 	[*]
	Ash %

	 	[*]
	Sulfur %

	 	[*]
	Moisture %

	 	[*]
	SO2 (LB/Million Btu)*

	 	[*]






	 	 	 	 	 	 	 
	 

	 	*SO2 (LB/Million Btu)
	 	= (Sulfur % [as received] x 20,000)
	 	 
	 

	 	 	 	Btu/lb	 	 






5.2 Suspension of Deliveries.




     5.2.1 Right to Suspend. Buyer shall have the right to suspend deliveries under this Agreement
if the weighted average Final Analyses for Coal deliveries during the previous calendar quarter
fail to satisfy the following Coal quality specifications.



	 	 	 
	 	 	Quarterly Weighted
	 	 	Average Limit (As
	               Characteristic	 	Received)
	Btu/lb.
	 	[*]
	Ash %
	 	[*]
	Moisture %
	 	[*]
	Sulfur %
	 	[*]
	SO2 (LB/Million Btu)*
	 	[*]
	Chlorine %
	 	[*]






	 	 	 	 	 	 	 
	 

	 	*SO2 (LB/Million Btu)
	 	= (Sulfur % [as received] x 20,000)
	 	 
	 

	 	 	 	Btu/lb	 	 






     5.2.2 Suspension Notice. Buyer may suspend deliveries under this Agreement by providing
Seller with Notice of the suspension together with



 Page 13









 




reasonable supporting documentation and a
specific description of the failed specifications set forth in Section 5.2.1 giving rise to the
suspension.




     5.2.3 Duration and Effect of Suspension. During any period of suspension under this Section
5.2, Buyer’s obligations to accept and pay for Coal under this Agreement shall be excused (and the
Annual Nomination proportionally reduced) and Buyer may purchase coal from suppliers other than
Seller. [*]. A suspension shall remain in effect until
Seller furnishes Buyer with reasonable adequate assurances that future deliveries will conform to
the specifications in Section 5.2. If Seller does not provide such adequate assurances within
ninety (90) Days after the date Seller receives Buyer’s Notice of suspension, Buyer may terminate
this Agreement.



SECTION 6. SOURCES OF COAL



6.1 Sources of Coal. The sources of Coal delivered pursuant to this Agreement shall be (i)
Seller’s Gateway Mine; or (ii) any other Mine in the GBU Area; or (iii) any Mine other than as
described in clause (i) or (ii) above; or (iv) any other alternative source including, without
limitation, contractual rights to supply from a third-party that satisfy the requirements of
Section 6.2. Any source of Coal other than the Gateway Mine shall be an “Alternative
Source”. Notwithstanding anything to the contrary herein, (a) the source of the Coal delivered
by Seller pursuant to this Agreement must be located in Illinois, and (b) the source of any
replacement or substitute coal obtained or procured by Buyer for use at the Facility must be
located in Illinois.



6.2 Alternative Sources. Prior to using an Alternative Source, Seller shall obtain and provide to Buyer evidence that
demonstrates to the reasonable satisfaction of Buyer that such Alternative Source produces Coal
having the average quality characteristics described in Section 5.1, or otherwise as approved by
Buyer, which approval shall not be unreasonably withheld.




     6.2.1 Delivery Notice Procedures. Seller shall provide Notice to Buyer as soon as practical,
but not later than 45 days before first delivery, of Seller’s election to deliver Substitute Coal
pursuant to this Agreement. A sample of such Substitute Coal will be supplied to Buyer concurrent
with the delivery of such Notice.



 Page 14









 





     6.2.2 Delivered Price of Substitute Coal. In the event Seller supplies Coal from an
Alternative Source, the Contract Price hereunder for such Substitute Coal shall be adjusted (either
up or down) such that Buyer’s total equivalent delivered price for such Substitute Coal shall be
the same (on a cost per million Btu basis) as Coal delivered from the Gateway Mine, taking into
consideration Buyer’s alternative transportation and other reasonable cost and charges incurred,
and savings realized, and appropriate quality adjustments resulting from the change to such
Alternative Source.



     6.2.3 [*]



SECTION 7. DELIVERY OF COAL



7.1 Point of Delivery. The “Point of Delivery” shall mean the point where Coal is
transferred from Seller’s loading facility at the Mine into Buyer’s Transportation Equipment.
Seller shall tender Coal for delivery to Buyer (or third party purchaser pursuant to Section 4.5)
f.o.b. the Point of Delivery, and Seller shall load such Coal into Buyer’s (or third party
purchaser pursuant to Section 4.5) Transportation Equipment. In the event Seller elects to furnish
Substitute Coal from an Alternative Source as provided in Section 6, Buyer and Seller shall
mutually agree to an alternative place to tender the delivery of such Substitute Coal (and such
point shall be the “Point of Delivery” therefore), and to any reasonable arrangements needed to
accommodate the loading of such Substitute Coal into Buyer’s Transportation Equipment.



	7.2 Title and Risk of Loss. Title and risk of loss and damage to Coal shall pass to Buyer after Seller loads Coal into
Buyer’s (or third party purchaser pursuant to Section 4.5) Transportation Equipment at the Point of
Delivery and Buyer (or third party purchaser pursuant to Section 4.5) accepts such Coal in
accordance with Section 7.3 of this Agreement. Seller warrants that it will pass to Buyer (or
third party purchaser pursuant to Section 4.5) full title to such Coal free and clear of all liens
and encumbrances. Seller assumes no liability for the Coal after title and risk of loss pass to
Buyer (or third party purchaser pursuant to Section 4.5), except as otherwise specifically provided
in this Agreement.




7.3 Acceptance by Buyer. Buyer shall accept all Coal that is tendered for delivery and loaded
into Buyer’s (or third party purchaser pursuant to Section 4.5) Transportation Equipment at the
Point of Delivery, provided that Coal is tendered for delivery in accordance with the terms of this
Agreement. For purposes of accepting delivery of such Coal, the employees and agents of Buyer’s
(or third party purchaser pursuant to Section 4.5) rail carrier shall be deemed agents of Buyer.




 Page 15









 







Following acceptance of delivery, Buyer shall be obligated to pay Seller for the Coal so accepted
in accordance with the invoicing and payment procedures set forth in this Agreement.
Notwithstanding the preceding sentence, Buyer shall have no obligation to pay Seller for coal that
Buyer properly rejects pursuant to Section 5.2.




SECTION 8. LOADING OBLIGATIONS



8.1 Loading Coal. Seller shall assume the following obligations with respect to loading Coal
at the Point of Delivery or such other place(s) of delivery as the Parties may agree upon pursuant
to Section 7.1:




     8.1.1 General Loading Obligations. Seller shall load or cause to be loaded all Coal tendered
for delivery to Buyer pursuant to this Agreement in a safe and prudent manner in accordance with
the applicable rules of Buyer’s rail carrier (except any rules that such rail carrier may adopt
hereafter that would impose an unreasonable burden or cost on Seller or the Mine’s operations),
Applicable Laws and in accordance with generally accepted loading practices and procedures in the
coal mining industry in the central United States.



     8.1.2 Operation of Loading Facility. Seller shall operate a loading facility at the Mine to
load Coal into empty rail cars placed at the Point of Delivery. Seller shall operate the loading
facility in
a workmanlike manner and at a level of efficiency equal or superior to that generally attained
by mine operators in the central United States.



     8.1.3 Seller’s Liability for Negligent Loading. If Buyer’s Transportation Equipment is
damaged by Seller’s failure to comply with the requirements of Sections 8.1.1 and 8.1.2, then
Seller shall be liable to Buyer for such damage. Seller shall not be liable for the normal wear
and tear to Buyer’s Transportation Equipment.



     8.1.4 Seller’s Indemnification of Buyer for Seller’s Negligent or Delayed Loading. Seller
acknowledges that Buyer has entered into or may enter into agreements with one or more rail
carriers which may place the following liabilities upon Buyer: (i) liability for damages to the
rail carrier’s equipment and property; (ii) liability for personal injuries to rail carrier
employees or third parties; and (iii) liability for the payment of charges to the rail carrier for
delays caused by the improper or untimely loading of coal. If Seller has reviewed and approved in
advance the provisions of Buyer’s agreements with rail carriers that impose such liabilities (it
being understood that Seller shall have the obligation to approve such provisions if they are
customary in the industry), Seller shall indemnify and hold harmless Buyer from and against any and
all such liabilities, losses, or damages to the extent that they result from Seller’s failure to
comply with the requirements of Sections 8.1.1 and 8.1.2,, and for Seller’s failure to load within
4 hours after the train is placed for loading beneath Seller’s loading facilities. Such 4-hour
time



 Page 16









 




limitation assumes a train consisting of no more than 118 steel railcars. The Parties
anticipate that the maximum train makeup shall not be greater than 125 aluminum rail cars, and that
under such circumstances, the loading time limitation shall be five and one-half (5 1/2) hours.




SECTION 9. TRANSPORTATION OBLIGATIONS




     Buyer shall assume the following obligations with respect to the transportation of Coal to
Buyer’s Facility:


9.1 Rail Transportation. Buyer, [*], shall
arrange for rail transportation service for Coal tendered for delivery at the Point of Delivery
pursuant to this Agreement. Such transportation service (in the aggregate) shall be sufficient to
accommodate the transportation of the Annual Nominations made (and adjusted) pursuant to Section 4
of this Agreement. Buyer shall pay all of the costs for such transportation service (except in the
case of rejected coal), and shall
take reasonable steps to ensure that regular transportation service is available to
accommodate Coal tendered for delivery pursuant to this Agreement.



9.2 Compatibility of Rail Cars. Buyer shall use or cause to be used rail cars that are in
good condition, clean, ready to load and compatible with Seller’s loading facility, and the loading
facilities of any mines that supply Substitute Coal. The rail cars shall arrive at the Mine in
good condition, clean and ready to load.



9.3 Buyer’s Liability for Condition of Rail Cars. If the loading facilities at the Mine are
damaged by Buyer’s failure to comply with the requirements of Section 9.1 or 9.2, then Buyer shall
be liable to Seller for such damage. Buyer shall not be liable for the normal wear and tear to
Seller’s loading facilities at the Mine.



9.4 Buyer’s Indemnification of Seller. Buyer shall indemnify and hold harmless Seller from
and against any and all liabilities, losses, or damages to the extent they result from Buyer’s
failure to comply with the requirements of Sections 9.2 and 9.3.




SECTION 10. PRICE OF COAL



10.1 Contract Price. The Contract Price for any calendar month after the Starting Delivery
Date is an amount equal to (without duplication) (i) (a) the Billing Price (determined as provided
in Section 10.2), (b) adjusted by the Btu Adjustment (determined as provided in Section 10.3)
multiplied by (ii) the number of tons of Coal delivered during the month, plus (iii) as
provided in Section 10.4.1 any Illinois sales tax payable by Seller for the Coal sold hereunder
during such month. This amount (the “Contract Price”) will be adjusted to reflect any
applicable changes in certain Taxes, Fees and Royalties as provided in Section 10.4 and for changes
in






 Page 17









 







Applicable Laws as provided in Section 10.5. The Contract Price is subject to an adjustment
pursuant to Section 6.2.2 and by Seller as provided in Section 10.10. The Contract Price is also
subject to adjustment by Buyer due to changes in certain Environmental Laws as provided in Section
14.4. The price for Declined Tons shall be as provided in Section 4.4.




10.2 Calculation of Billing Price.




     10.2.1 Base Price. The base price for coal delivered by Seller to Buyer at the Mine in
accordance with this Agreement is $[*] per ton as of January 1, 2007 (the “Base Price”).



     10.2.2 Billing Price.




          (a) Beginning on April 1, 2007, and continuing quarterly throughout the Term on July 1,
October 1, January 1 and April 1 of each calendar year the Base Price (for April 1, 2007) and
thereafter the price calculated pursuant to this Section 10.2.2(a) shall be increased by $[*]
([*]%] of the Base Price). For each calendar quarter the amount adjusted pursuant to this Section
10.2.2(a) is the “Increased Base Price”.




          (b) Beginning on April 1, 2007, and continuing quarterly throughout the Term on July 1,
October 1, January 1 and April 1 of each calendar year the Base Price (for April 1, 2007) and
thereafter the price calculated pursuant to this Section 10.2.2(b) shall be the amount determined
in accordance with Section 10.2.3. For each calendar quarter the amount adjusted pursuant to this
Section 10.2.2 (b) is the “Adjusted Base Price”.




          (c) Beginning on April 1, 2007, and continuing quarterly throughout the Term on July 1,
October 1, January 1 and April 1 of each calendar year the effective price to be paid by Buyer to
Seller for such calendar quarter (the “Billing Price”) shall be the higher of the Increased
Base Price and the Adjusted Base Price each calculated for such calendar quarter as provided in
Sections 10.2.2(a) and 10.2.2(b) above. Exhibit A contains examples of the calculation of the
price adjustment provisions of this Section 10.2.2 and are included for the sake of clarity.




     10.2.3 Inflation Adjustment. The “Adjusted Base Price” shall be determined quarterly
by increasing or decreasing the Base Price for each percentage point of change, or proportionately
for fractional parts of a percentage point of change, to reflect changes in the following indices.
The Base Price will be allocated per the index weights detailed below. The first five indices
shall be based upon the preliminary indices for November (for the January 1 adjustment), February
(for the April 1 adjustment), May (for the July 1 adjustment) and August (for the October 1
adjustment). The [*] shall be the preliminary
indices for the third quarter of the prior year (for the January 1 adjustment), fourth quarter of
the prior year (for the April 1 adjustment), first



 Page 18









 






quarter of the current year (for the July 1
adjustment) and second quarter of the current year (for the October 1 adjustment).
The [*] index shall be based on the [*] on December 15 (for the January 1
adjustment), March 15 (for the April 1 adjustment), June 15 (for the July 1 adjustment) and
September 1 (for the October 1 adjustment).




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Index	 	Index	 	 	 
	 	 	Source	 	Weight	 	Base	 	 	 
	[*]
	 		 	 	 	 	 	 	 	 
	[*]
	 	1 	 	[*]%	 	 	[*]	 	 	[*]
	[*]
	 		 	 	 	 	 	 	 	 
	[*]
	 	1 	 	[*]%	 	 	[*]	 	 	[*]
	[*]
	 		 	 	 	 	 	 	 	 
	[*]
	 	2 	 	[*]%	 	 	[*]	 	 	[*]
	[*]
	 		 	 	 	 	 	 	 	 
	[*]
	 	2 	 	[*]%	 	 	[*]	 	 	[*]
	[*]
	 		 	 	 	 	 	 	 	 
	[*]
	 	2 	 	[*]%	 	 	[*]	 	 	[*]
	[*]
	 	3	 	[*]%	 	 	[*]	 	 	[*]
	[*]
	 	4	 	[*]%	 	 	[*]		 	[*]






Source:



1. [*]



2. [*]



3. [*]



4. [*]







 Page 19









 







effective date or if
not published on such Day the first Day thereafter that it is published.



Exhibit A to this Agreement contains examples of the calculations pursuant to this Section 10.2.3.




     10.2.4 Notice of Calculations. Seller shall calculate the Adjusted Base Price pursuant to
Section 10.2 for each quarterly adjustment date (beginning on the first Day of the Adjusted
Starting Date Delivery Range for the first quarterly adjustment) and provide Notice to Buyer of the
Adjusted Base Price that will take effect thereon. Seller’s Notice shall provide sufficient detail
regarding how such calculations were made.


10.3 BTU Quality Adjustments. The Parties shall use the Btu Quality Adjustment described in
this Section 10.3 to adjust for variations in the actual monthly weighted average Btu content of
Coal delivered under this Agreement, compared to the [*] Btu/lb content used to set the Base Price.
If the Btu Quality Adjustment reveals that the actual Btu content of delivered Coal is lower than
[*] Btu/lb, then Buyer shall be entitled to compensation from Seller. If the Btu Quality
Adjustment reveals that the actual Btu content of delivered Coal exceeds [*] Btu/lb, then Seller
shall be entitled to compensation from Buyer. The Btu Quality Adjustment and the Parties’
entitlement to compensation shall be determined as follows:




     10.3.1 Weighted Average Btu Content. Seller shall be responsible for determining the weighted
average Btu content of Coal delivered each month during the Term of this Agreement, based on the
weighing, sampling, and testing data generated by Seller in accordance with Section 12.2 of this
Agreement. The foregoing monthly weighted average Btu content may be referred to as the
“Actual Btu/lb” for purposes of this Section 10.3.



     10.3.2 Determine the Adjusted Btu Price. Seller shall compare the Actual Btu/lb with the
applicable Billing Price for [*] Btu/lb Coal to determine the “Adjusted Btu Price,” which
shall be used to determine the compensation Buyer or Seller is entitled to receive pursuant to this
Section 10.3. The “Adjusted Btu Price” shall be determined using the following formula:



Billing Price x Actual Btu/lb = Adjusted Btu Price

[*] Btu/lb                




     For example, [*] Btu/lb Coal sold at a Billing Price of $[*] per ton would yield an
Adjusted Btu Price of $[*] per ton ($[*]/ton x ([*]/[*])) = $[*]/ton.



     10.3.3 Determining Compensation Payable to Buyer. If the Adjusted Btu Price is less than the
Billing Price, then Buyer is entitled to compensation in an



 Page 20









 




amount equal to the total monthly tons
sold in the applicable month multiplied by the difference between the Billing Price and the
Adjusted Btu Price:




(Billing Price — Adjusted Btu Price) x Total Monthly Tons = Amount Owed to Buyer




     For example, if Seller delivers monthly total of 100,000 tons of [*] Btu/lb Coal at the
$[*] per ton Billing Price and the $[*] per ton Adjusted Btu Price referenced in Section 10.3.2,
Buyer would be entitled to receive $[*] from Seller as compensation for taking delivery of Coal
with a weighted average heating value lower than [*] Btu/lb ($[*]$/ton — $[*]$/ton) x 100,000 tons
= $[*].



     10.3.4 Determining Compensation Payable to Seller. If the Adjusted Btu Price is greater than
the Billing Price, then Seller is entitled to compensation in an amount equal to the total monthly
tons sold in the applicable month multiplied by the difference between the Adjusted Btu Price and
the Billing Price:



(Adjusted Btu Price — Billing Price) x Total Monthly Tons = Amount Owed to Seller




     For example, if the Seller delivers a monthly total of 100,000 tons of [*] Btu/lb Coal at
a $[*] per ton Billing Price and a $[*] per ton Adjusted Btu Price, Seller would be entitled to
receive $[*] from Buyer as compensation for delivering Coal with a weighted average Btu value
greater than [*] Btu/lb ($[*]]/ton — $[*]/ton) x 100,000 ton = $[*].



     10.3.5 Method of Compensating Parties for Btu Quality Adjustments. In accordance with Section
18.1 of this Agreement, Seller shall issue an invoice or credit Notice to Buyer on or before the
tenth (10th) Day of each month that accounts for any and all additional payments or
credits mandated pursuant to the Btu Quality Adjustment performed in accordance with this Section
10.3 for the Coal delivered during the previous month, plus any Taxes and Fees applicable to such
amount.



10.4 Taxes, Fees and Royalties.




     10.4.1 Taxes, Fees and Royalties. All Taxes, Fees and Royalties (excluding Illinois sales tax) in effect on January 1, 2007
are included in the Base Price. All Illinois sales tax payable by Seller on the Coal delivered
hereunder and any changes in Taxes, Fees and Royalties occurring after January 1, 2007 shall be
determined and collected from Buyer on a continual basis throughout the Term. Seller shall collect
from Buyer all Illinois sales tax on the sale of all Coal under this Agreement unless Buyer
provides Seller with a sales tax exemption for such sales from the applicable Illinois Governmental
Authority or other assurances reasonably acceptable to Seller that such sales tax is not required
to be collected by Seller or remitted by Seller to the State of Illinois, in each case with respect
to the transactions contemplated under this Agreement.



 Page 21









 





     10.4.2 Invoice. Taxes, Fees and Royalties imposed or increased after January 1, 2007 are not
included in the Base Price and together with Illinois sales tax shall be invoiced by Seller as part
of the monthly invoice provided for in Section 18.



10.5 Changes in Applicable Law Cost Adjustment.




     10.5.1 Changes in Applicable Law Costs. Increased costs associated with changes in Applicable
Law shall be determined on an annual basis beginning on January 1, 2007 and shall continue
throughout the Term. As of January 1, 2007, the change in Applicable Law costs are zero. On an
annual basis, increased costs associated with complying with changes in Applicable Law since
January 1, 2007 applicable to the Gateway Mine or any Alternative Source from which Coal is
actually delivered hereunder (as the case may be) shall be expressed in dollars per ton, based on
the total change in costs associated with complying with all changes in Applicable Law on all tons
of Coal produced from the Gateway Mine or any Alternative Source from which Coal is actually
delivered hereunder (as the case may be) for such year; provided, however, that in no event shall
the costs associated with changes in Applicable Law associated with any Alternative Source be
greater than the costs associated with changes in Applicable Law that would have been associated
with the Gateway Mine had the Coal been delivered from the Gateway Mine. To the extent that such
increased costs are applicable to Coal delivered hereunder, Buyer shall be responsible for
reimbursing the Seller for [*]% of the increased costs associated with complying with all changes
in Applicable Law based on all tons produced from the Mine or any Alternative Source from which
Coal is actually delivered hereunder (as the case may be) calculated on an annual basis provided,
however, that in no event shall the costs associated with changes in Applicable Law associated with
any Alternative Source be greater than the costs associated with changes in Applicable
Law that would have been associated with the Gateway Mine had the Coal been delivered from the
Gateway Mine. Such increased costs associated with complying with changes in Applicable Law based
on an annual basis shall be billed to Buyer on a retroactive basis as a separate invoice which
shall be issued within 30 days after January 1 of the subsequent year and shall be paid by Buyer
within thirty (30) Days of receipt of such invoice.



     10.5.2 Notification and Disclosure of Information Concerning Changes in Applicable Law Costs.
Seller shall notify Buyer of any changes in Seller’s costs associated with complying with changes
in Applicable Law if such changes in Seller’s costs associated with complying with changes in
Applicable Law will have an effect on the Contract Price pursuant to this Agreement. Seller shall
furnish to Buyer all values related to the change(s) and the computations showing the effect of
such change(s) on the cost per ton of Coal produced from the Mine. Seller shall furnish such
information to Buyer along with, or prior to, the invoice identified in Section 10.5.1.



 Page 22









 




10.6 Change or Discontinuance of Indices. If the base period of any designated index is
changed, such index will continue to be used hereunder, but values for the prior time period and
the current time period will be adjusted as appropriate to take into account the use of the new
base period. In the event any designated index is discontinued or altered, becomes unavailable, or
is no longer applicable, the Parties shall undertake to agree on a substitute index or a substitute
method of cost adjustment which most closely matches the economic structure of the discontinued or
altered index. If the Parties fail to reach agreement within thirty (30) Days, then the substitute
index or substitute method of cost adjustment shall be submitted to arbitration and resolved
pursuant to Section 16 of this Agreement.



10.7 Change in Indices Due to Change in the Mine. If Seller elects to deliver Coal from a new
Mine or Substitute Source other than the Gateway Mine and such new Mine is not a surface mine, then
the indices used in Section 10.2.3 shall be changed as provided in Exhibit D.



10.8 Rounding. Unless otherwise specifically provided by this Agreement, the values used to
perform the calculations prescribed by this Agreement shall be rounded to three decimal places.
For invoicing purposes, the dollar amounts of charges and credits shall be rounded to the nearest
cent. For purposes of adjusting values in accordance with this Section 10, all indices shall be
rounded to the nearest
hundredth of an index point. The annual percentage changes for each index shall be rounded to
the nearest hundredth of a percentage point. The total weighted percentage change for the combined
indices shall be rounded to the nearest hundredth of a percentage point. The Base price adjusted
pursuant to Section 10 shall be rounded to two (2) decimal places.



10.9 Price Adjustment for Change in Location of the Mine. If Seller elects to deliver Coal
from a new Mine or Substitute Source other than the Gateway Mine, then the Contract Price for Coal
delivered hereunder from such new Mine or Substitute Source shall be adjusted as provided in
Section 6.2.2.



10.10 Seller Right to Adjust Contract Price. At any time on or before [*] by
Notice to Buyer, Seller shall have the right to adjust the Contract Price for the price and/or
quality of, Coal to be delivered under this Agreement effective [*] and continuing
throughout the remainder of the Term to reflect then current market prices and quality for Illinois
Coal; provided, however, that (i) in no event shall any increase in the Contract Price pursuant to
this Section 10.10 exceed [*]% of the Contract Price in effect on [*], and (ii) in no
event shall any decrease in the quality of Coal pursuant to this Section 10.10 be below the quality
standards set forth in Section 5.2. If Seller does not increase the Contract Price or adjust the
quality of Coal to be delivered hereunder by Notice to Buyer on or before [*], then
Seller shall have irrevocably waived its rights under this Section 10.10.





 Page 23









 








SECTION 11. COMPLIANCE WITH LAWS



11.1 Construction. In performing this Agreement Buyer and Seller shall not knowingly violate any
Applicable Laws; provided, however, that no such violation shall constitute an Event of Default by
a Party unless it results in a material non-performance of the Party’s other performance
obligations under this Agreement. Buyer and Seller shall interpret and construe this Agreement to
achieve lawful results.



11.2 Severability. If any portion of this Agreement becomes or is determined by a Governmental
Authority with jurisdiction to be illegal, Buyer and Seller shall modify that portion to correct
the illegality. The illegality of any portion of this Agreement shall not affect the validity or
the enforceability of the remainder of this Agreement.




SECTION 12. WEIGHING, SAMPLING, AND ANALYSIS



12.1 Procedures. Weighing, sampling, and analysis of the Coal tendered for delivery shall be
carried out in accordance with the provisions of this Section 12.



12.2 Duties to Sample Coal. Seller shall collect samples of Coal that the sampling equipment
at the Mine has taken. The sampling shall be conducted by an automatic mechanical sampling device
located at the Mine and in a statistically reliable method that is in compliance with procedures
approved by the American Society for Testing and Materials (“ASTM”) (except for those
“quick analyses” performed pursuant to Section 12.5.1). Seller shall perform or cause to be
performed an analysis of each trainload of Coal to determine the Btu characteristics of the Coal
(the “Analysis”). The methods and procedures to be used in the sampling process and
laboratory analysis shall be in compliance with those approved by the ASTM, or such other methods
and procedures mutually agreed to in writing by the Parties. The Seller shall provide Buyer with
Notice of the report for the Analysis as soon as practicable after sampling and analysis. Unless
Buyer requests an independent laboratory analysis pursuant to Section 12.5.3, the results of each
Analysis shall be deemed the Final Analysis, be binding as the analysis for all quality
specifications and shall also be used to determine the monthly weighted average Btu content of Coal
used to perform the Btu Quality Adjustments.




12.3 Duties of Seller to Weigh Coal.




     12.3.1 Duty to Weigh; Use of Weighing Data. Seller shall weigh or cause to be weighed all
train loads of Coal tendered for delivery to Buyer by using railroad scales to obtain the tare
weight of inbound railroad cars and then using the same railroad scales to obtain the outbound
loaded weight of such rail cars. A representative of Buyer may be present at each weighing. The
weight of Coal thus



 Page 24









 




determined shall be accepted as the tonnage to be used in determining the
quantity of Coal for which invoices are to be rendered and payments made in accordance with Section
18. The weights thus determined shall also be used to determine the monthly weighted average Btu
content used to perform the Btu Quality Adjustments.




     12.3.2 Inspection and Certification of Scales. Seller will have an independent scale
inspector inspect, test, calibrate and certify the railroad scales at the loading facility annually
at its cost. A
representative of Buyer may be present at the annual inspection, test and calibration.



     12.3.3 Seller’s Certification of Scales and Weights; Correction of Errors. Seller shall
certify the scale readings and the weights indicated thereon shall be used for all tonnages under
this Agreement. If as a result of any inspection by an independent scale inspector as provided for
in Section 12.3.2, the scales are found to be in error in excess of normal scale tolerance, which
is understood to be +/-0.5%, the scales shall be corrected and the tonnage for the period since the
last scale inspection shall be adjusted either up or down, as the case may be, for [*]% of any
correction made to the scales and Seller shall include an appropriate credit or debit line item in
the next regularly scheduled invoice.



12.4 Failure of Weighing, Sampling or Analytical Procedures.




     12.4.1 Substitute Procedures. In the event Seller is unable for any reason to perform the
analyses or Seller is unable to perform the weighing required by this Agreement, the Parties shall
act in good faith to agree on reasonable substitute procedures to be followed by Seller. In the
event the scales become inoperative, the weight of Coal delivered during such period shall be
estimated based on the average weight of Coal per similar railcar delivered during the preceding
sixty (60) Day period multiplied by the number of railcars loaded but not actually weighed.



     12.4.2 Inaccurate or Unreliable Sample or Final Analysis. In the event that the sampling or
analysis of Coal by Seller in the amount of one or more trainloads was inaccurate or unreliable for
any reason, Seller shall certify the average for the preceding and succeeding trainloads which are
reliable and accurate and use this average in lieu of the data for any trainload determined to be
unreliable or inaccurate.



12.5 Rights of Buyer and Seller in Weighing, Sampling and Analysis.




     12.5.1 Results of Sampling and Analysis Binding. Subject to Section 12.5.3 below, the reports
of sampling and analysis made by the Seller shall be binding on the Parties for all purposes under
this Agreement and the performances of the Parties under this Agreement shall be based on such
reports. A copy of the results of each Analysis of Coal shall be sent by Seller to Buyer within
two (2) Business Days after the train is released. In addition, Seller shall use reasonable good
faith



 Page 25









 




efforts to provide Buyer with a “quick Btu analysis” of the Coal being shipped prior to its
unloading by Buyer at Buyer’s Facility.




     12.5.2 Independent Analysis of Samples. Each representative trainload sample collected for
analysis shall be divided into three parts, and two of these parts shall be stored in suitable
containers at the testing facility for a period of at least thirty (30) Days. At any time during
such thirty (30) Day period, Buyer is entitled to receive upon Notice to Seller one part of such
sample for purposes of independently evaluating the performance or verifying the analysis of the
Seller. Buyer shall arrange for transportation of such sample at its expense from the testing
facility.



     12.5.3 Referee Analysis. If Buyer’s analysis of a sample it has received pursuant to Section
12.5.2 differs from the analysis that the Seller performs pursuant to Section 12.2 by more than the
ASTM standard for reproducibility, Buyer shall have the right to have the quality of the shipment
of Coal in question determined by an independent laboratory chosen jointly by Buyer and Seller.
Buyer shall exercise this right, if at all, within thirty (30) Days after it receives the part
sample referenced in Section 12.5.2. The cost of the independent laboratory analysis shall be
borne equally by the Parties. Such determination shall be deemed the Final Analysis.



     12.5.4 Observation of Sampling and Analysis. Each Party shall have the right to have a
representative present at any and all weighing, sampling, and analysis procedures. Buyer or Seller
and their representatives shall also have the right to inspect and examine the performance of any
equipment employed in these procedures at all reasonable times.



SECTION 13. RECORDS AND AUDITS



13.1 Record Review.




     13.1.1 Records of Seller. Seller shall maintain books and records of all matters relating to
its performance under this Agreement in accordance with generally accepted accounting practices,
Seller shall submit to Buyer, upon Buyer’s written request, information in sufficient detail to
support and document any invoices.



     13.1.2 Records of Buyer. Buyer shall maintain books and records of all matters relating to
its performance under this Agreement in accordance with generally accepted accounting practices.
Buyer shall submit to Seller, upon Seller’s reasonable written request, any information related to
Buyer’s performance, including but not
limited to, data relating to the conditions, or Coal consumption, at the Buyer’s Facility.



 Page 26









 





     13.1.3 Overpayment or Underpayment. Should a record review performed by Buyer or Seller
reveal an overpayment or underpayment, then the amount of the overpayment or underpayment shall
promptly be paid to the Party to whom it is owed by the other Party with interest at the late
payment rate specified by Section 18.2.


13.2 Timing of Record Review. Any invoices which are not contested by either Party within
twenty-four (24) months from their date of issue shall be deemed to be correct and final and shall
not thereafter be subject to record review.




SECTION 14. FORCE MAJEURE



14.1 Definition of Force Majeure. “Force Majeure” shall mean an actual inability of
Buyer or Seller to perform any obligation imposed by this Agreement due to the occurrence of any
“Event of Force Majeure” as defined in this Section 14.1. An Event of Force Majeure shall
include any of the events stated in Section 14.1.1 with respect to Buyer and any of the events
stated in Section 14.1.2 with respect to Seller, if the event is beyond the reasonable control of
the affected Party, and if the affected Party has taken all action reasonably necessary to correct
the event. In no event shall an Event of Force Majeure excuse or delay the payment of any amount
owed by one Party to the other Party under this Agreement.




     14.1.1 Buyer. With respect to Buyer, Events of Force Majeure shall mean any event beyond the
control of Buyer that wholly or partially prevents, interrupts or delays the performance by Buyer
of its obligations under this Agreement, including, but not limited to, Acts of God, fires, floods,
explosions, electrical storms, windstorms, extremes of temperature, earthquakes, enactment of new
Applicable Law or changes in Applicable Law, landslides, cave-ins, strikes, lockouts, labor
disputes, labor shortages, war, riot, terrorism, accident, inability to obtain supplies, fuel or
power, discoveries of unforeseen geologic or hydrologic conditions, orders or decisions of courts
or administrative agencies, inability to obtain or maintain necessary permits or approvals,
cessation of, restrictions upon, or delays in rail transportation service to the Buyer’s Facility
(unless alternative equivalent transportation can be arranged), damage to, or breakdown of,
equipment, machinery or apparatus, inability to obtain parts or materials, embargoes, acts of
the public enemy or sabotage, boycotts, terrorism, wars, riots, droughts, inability to obtain
personnel, and any other cause whether similar or dissimilar to the foregoing and whether or not
foreseen or foreseeable which wholly or partially prevents, interrupts or delays the performance by
Buyer of its obligations under this Agreement. Changes in market conditions that render
performance of this Agreement uneconomical for Buyer shall not constitute an Event of Force
Majeure.



     14.1.2 Seller. With respect to Seller, Events of Force Majeure shall mean any event beyond
the control of Seller that wholly or partially prevents, interrupts or delays the performance by
Seller of its obligations under this Agreement,



 Page 27









 




including, but not limited to, Acts of God,
explosions, fires, floods, electrical storms, windstorms, extremes of temperatures, earthquakes,
landslides, cave-ins, discoveries of unforeseen geologic or hydrologic conditions, unknown faults
in coal seams, strikes, lockouts, labor disputes, labor shortages, enactment of new Applicable Law
or changes in Applicable Law, order or decisions of courts or administrative agencies, inability to
obtain or maintain necessary permits, licenses or approvals, damage to, or breakdown of, equipment,
machinery or apparatus, inability to obtain parts or materials, embargoes, boycotts, acts of the
public enemy or sabotage, terrorism, wars, riots, droughts, inability to obtain personnel, failures
of public utility service and any other cause whether similar or dissimilar to the foregoing and
whether or not foreseen or unforeseeable which wholly or partially prevents, interrupts or delays
the performance by Seller of its obligations under this Agreement. If an Event of Force Majeure
prevents Buyer from purchasing Coal under this Agreement, Seller may sell Coal to purchasers other
than Buyer during the pendency of the Event of Force Majeure, including purchasers not affiliated
with Buyer. Changes in market conditions that render performance of this Agreement uneconomical
for Seller shall not constitute an Event of Force Majeure. An event affecting any supplier to
Seller that would have been a Force Majeure Event if it had happened to Seller shall constitute an
Event of Force Majeure. If an Event of Force Majeure prevents Seller from tendering Coal under
this Agreement, Buyer may obtain replacement Coal from other Persons during the pendency of the
non-tender by Seller.



14.2 Effect of Force Majeure. If an Event of Force Majeure prevents either Party from
performing any of its obligations under this Agreement, and if such Party gives to the other Party
Notice of the Force Majeure (which Notice (i) shall identify the Event of Force Majeure and, to the
extent known, the expected length of time during which the Event of Force Majeure will be in effect
and the plan of the Party experiencing the Event of Force Majeure to correct or remove it and (ii)
be delivered, but in no event later than forty-five (45) Days after the start of the Force Majeure
Event), then the obligations of the Party giving such Notice are excused to the extent made
necessary by the Event of Force Majeure and during its continuance, which time period shall be
called the “Force Majeure Period.” However, an Event of Force Majeure shall excuse the
obligations of the notifying Party only to the extent that the Party takes all commercially
reasonable actions necessary to overcome the Event of Force Majeure with all reasonable dispatch.
Only the Party suffering an Event of Force Majeure may claim Force Majeure; however, the other
Party shall be excused from its obligations which depend upon the performance of the obligations
excused by the Event of Force Majeure. An attempt by the Party suffering an Event of Force Majeure
to perform its obligations notwithstanding an Event of Force Majeure shall not constitute a waiver
of the right to claim Force Majeure if such attempt proves unsuccessful. If a Party claims Force
Majeure and shipments of Coal are suspended, neither Seller nor Buyer shall be required to make up
or pay for any deficiency in Coal deliveries needed to satisfy the Annual Nomination as adjusted
pursuant to Section 4.3 for the Force Majeure Period but





 Page 28









 







the Parties shall, by mutual agreement,
provide for the make-up of such suspended deliveries. The Party affected by an Event of Force
Majeure shall not be required to submit to unreasonable conditions or restrictions imposed by any
governmental authority, or to submit to an unfavorable labor agreement. Any settlement of labor
disputes or grievances by workers shall be entirely within the sole discretion of the Party
affected by the dispute or grievance.



14.3 Termination for Extended Event of Force Majeure Suspension. If either Party is prevented
from performing a material obligation under this Agreement for more than [*] consecutive Days due
to one or more Events of Force Majeure, then the non-affected Party may terminate this Agreement at
any time during the continuation of such non-performance by providing the non-performing Party with
thirty (30) Days prior Notice of such termination.



14.4 New Environmental Laws. If any new Environmental Law is enacted after the Effective Date
that could not have been reasonably anticipated by Buyer prior to the Effective Date and that has a
material adverse impact on Buyer’s use of Coal at Buyer’s Facility, then Buyer shall promptly
provide Notice to Seller of such new Environmental Law and its impact on Buyer. Buyer shall first
make all reasonable efforts to change its operating procedures or equipment at Buyer’s Facility, or
to utilize the Coal at other affiliated facilities in order to continue accepting at least 800,000
tons per Delivery Year (600,000 tons for the First Year) during the remainder of the Term.



14.5 Reduction in Tonnage. If as a result of any new Environmental Law Buyer must reduce the
amount of Coal it accepts from Seller pursuant to this Agreement to less than 800,000 tons per
Delivery Year (600,000 tons for the First Year) or adjust the quality of Coal to be
delivered hereunder, then Buyer shall promptly provide Seller with Notice of the new Annual
Nomination or new quality requirements. Seller shall consider and evaluate what steps can be
reasonably taken in the mining and/or preparation of the Coal from the Mine to meet any new Coal
quality specifications. Seller shall determine and provide Notice to Buyer whether meeting the new
quality specification is possible and, if so, the increased costs anticipated by Seller to do so.
Based upon Seller’s evaluation, the Parties will have the following sequential options:





	 	1.	 	If Seller’s increased costs are less than or equal to $[*] per ton, then Buyer will
pay to Seller said increased costs and shipments will continue under the Agreement, as
modified for the new Coal quality specifications, or
	 
	 	2.	 	If Seller’s increased costs are greater than $[*] per ton, then Buyer shall have the
option to pay to Seller said total increased costs and shipments will continue under the
Agreement, as modified for the new Coal quality specifications, or




 Page 29









 






	 	3.	 	If Buyer does not agree to pay to Seller increased costs greater than $[*] per ton or
Seller does not meet the new Coal quality specifications, then Seller has the option to
provide substitute Coal meeting the revised Coal quality specifications under the Agreement
at the current equivalent As Received price plus $[*] per ton; or
	 
	 	4.	 	If Seller does not exercise the option to provide substitute Coal as provided hereunder
then in connection with Buyer’s exercise of its right to reduce the amount of Coal it
accepts from Seller pursuant to this Agreement,






	 	a.	 	Seller shall be entitled to recover the amount described in Section
14.6 from Buyer, and
	 
	 	b.	 	Seller will have the right to match the product selected by Buyer to
replace the remaining Coal requirements for the term of the Agreement as though
such product was Declined Tons pursuant to Section 4.4.






	 	 	Beginning on April 1, 2007 and continuing quarterly thereafter, the $[*] amounts described in
clauses 1-3 above shall be adjusted by [*]% for inflation in the same manner as the Base Price
is adjusted to determine the Increased Base Price pursuant to Section 10.2.2(a).




14.6 Payment for New Environmental Law Changes. If Buyer reduces the amount of Coal it
accepts and purchases from Seller pursuant to this Agreement to less than 800,000 tons per Delivery
Year (600,000
tons for the First Year) as a result of any new Environmental Law pursuant to Section 14.5,
then within thirty (30) Days following receipt of a written invoice from Seller accompanied by
reasonable supporting documentation, Buyer shall pay Seller the amount reflected in such invoice
reflecting all out-of-pocket costs and obligations incurred or sustained by Seller in anticipation
of supplying Coal to Buyer pursuant to this Agreement (i.e. costs and obligations in excess of
those costs and obligations Seller would have incurred if such reduction had not occurred) that
will not be recovered by Seller as a result of such reduction in the amount of Coal Buyer will
accept from Seller hereunder, plus interest on such amount at the annual rate of 12% per annum from
the date such costs were incurred.



14.7 Certain Changes Excluded. Changes in market conditions, commercial frustration,
commercial impracticability or the occurrence of unforeseen events rendering performance of the
Agreement uneconomical for Buyer shall not constitute a new Environmental Law entitling Buyer to
exercise the rights under Sections 14.4 and 14.5.





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SECTION 15. EVENTS OF DEFAULT; REMEDIES; RIGHT OF REFUSAL



15.1 Event of Default. An event of default (“Event of Default”) under this Agreement
shall be deemed to exist upon the occurrence of any one or more of the following events:




     15.1.1 Payment Default. Failure by either Party to pay or cause to be paid any undisputed
amount that is due and payable under this Agreement and such failure continues for a period of ten
(10) Days after Notice of such nonpayment is delivered to the defaulting Party.



     15.1.2 Continuing Suspension of Coal Deliveries. Seller’s failure to remedy the circumstances
allowing Buyer to suspend deliveries of Coal as provided in Section 5.2 within ninety (90) Days
after Seller receives Buyer’s Notice of suspension in accordance with Section 5.2; or



     15.1.3 Failure to Perform Material Provisions. Failure by either Party to perform fully any
material provision of this Agreement other than as described in Sections 15.1.1 and 15.1.2, and (a)
such failure continues for a period of thirty (30) Days after Notice of such nonperformance is
delivered to the non-performing Party or (b) if the non-performing Party shall commence within such
thirty (30) Days and shall thereafter continuously proceed with all due diligence to cure such
failure, such
failure is not cured within such longer period (not to exceed ninety (90) Days) as shall be
necessary for such Party to cure the same with all due diligence.



     15.1.4 Failure to Perform Under Guarantee. The Seller Parent Guarantee shall cease to be in
full force and effect or Peabody shall fail to perform fully its obligations thereunder in
accordance with the terms thereof, and such failure continues for a period of ten (10) Days after
Notice of such default is delivered to Peabody.



     15.2 Remedies for Default and Event(s) of Default. Upon the occurrence and during the
continuation of any Event of Default hereunder, the Party not in default shall have the right, at
its option, to terminate this Agreement upon ten (10) Days’ advance Notice to the defaulting Party,
unless the Event of Default is cured within such ten (10) Day period, and to pursue any other
remedies provided under this Agreement or now or hereafter existing at law or in equity or
otherwise. Without limiting the foregoing, but subject to the exclusive rights described in Section
5.2.3, the non-defaulting Party shall be entitled to recover from the defaulting Party its “cover
costs” associated with a Default or Event of Default or a termination due to an Event of Default.
As used above “cover costs” means (i) costs of procuring and transporting equivalent replacement
coal due to a Default or Event of Default by Seller, or (ii) costs of procuring and lost revenues
resulting from the sale to a replacement purchaser for the same quantity of equivalent coal due to
a Default or Event of Default by Buyer





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15.3 Specific Performance and Injunctive Relief. Each of the Parties shall have and retain under
this Agreement all rights and remedies existing in their favor, at law or in equity, including
(without limitation) the right to bring actions for specific performance and injunctive and other
equitable relief to enforce or prevent a breach or violation of this Agreement. All such rights
and remedies shall be cumulative to the extent permitted by law. Each Party agrees that
irreparable damage would occur in the event that any of the material provisions of this Agreement
are not preformed in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that each Party shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement.



15.4 Waiver of Breach. Either Party may waive a breach by the other Party, provided that no waiver
by or on behalf of either Party of any breach of any of the covenants, provisions, conditions,
restrictions or stipulations contained in this Agreement shall take effect or be binding on Buyer
or Seller unless the waiver is reduced to writing and
executed by such Party, and any such waiver shall be deemed to extend only to the particular breach
waived and shall not limit or otherwise affect any rights that Buyer or Seller may have with
respect to any other or future breach.



15.5 Seller’s Right to Suspend Deliveries. If at any time during the continuation of a payment
Event of Default as described in Section 15.1.1 on the part of Buyer has occurred and is
continuing, then until the date the Event of Default is cured Seller may suspend deliveries of Coal
hereunder upon two (2) Business Days’ prior Notice to Buyer. If the payment Event of Default
described above continues after such two (2) Business Day period, Seller’s suspension will become
effective. If the suspension continues for more than ten (10) Days, then notwithstanding the
subsequent remedy of such Event of Default, Seller shall not be required to resume deliveries of
Coal hereunder for a reasonable period of time taking into account alternative supply arrangements
and Mine operational considerations that Seller may have undertaken as a result of such Buyer
non-performance; provided, however that in no event shall Seller take longer than sixty (60) Days
following the date such Event of Default is cured to resume deliveries.



15.6 Cumulative Remedies. The remedies provided in this Agreement are not intended to be
exclusive, but shall be cumulative and in addition to any other remedy referred to herein or
otherwise available to either Party at law or in equity. If Buyer suspends deliveries hereunder
pursuant to Section 5.2, Seller’s payment of Buyer’s third party Coal replacement costs as
described in Section 5.2.3 shall be the exclusive remedy for Buyer with respect to such suspension
(subject to Section 15.1.2). Whenever Buyer accepts a delivery of coal that does not conform to
the quality specifications set forth in Section 5.2 above (with respect to Btus), the Btu Quality
Adjustment shall be the exclusive remedy for Buyer.





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15.7 Limitation of Liabilities. Without limiting the provisions of Section 11, neither Party shall
be liable to the other Party for any punitive, special, incidental or consequential damages based
upon breach of any warranty or of contract, negligence or any other theory of legal liability
arising under or out of this Agreement.



15.8 Right of Refusal. In connection with termination of this Agreement for any reason other than
an Event of Default by Seller, Seller shall have a right of refusal to match any third-party offer
to supply coal to Buyer’s Facility for a five (5) year period beginning on the date of termination
of this Agreement. Seller’s right of refusal
pursuant to this Section 15.8 shall be exercised pursuant to and in accordance with the Right of
Refusal Agreement (a form of which is attached hereto as Exhibit B) executed by both of the Parties
on or before the Effective Date.




SECTION 16. CHOICE OF LAW; DISPUTE RESOLUTION



16.1 Choice of Law. The Parties agree that this Agreement shall be deemed to have been made and
entered into in the State of Illinois, and all questions arising out of or affecting this
Agreement, including but not limited to those concerning validity, interpretation, performances,
breach, remedies and termination, shall be governed by and decided in accordance with the law of
the State of Illinois without giving effect to principles of conflict of law.



16.2 Arbitration. The Parties agree to make a diligent, good faith attempt to resolve any dispute
before commencing dispute resolution by arbitration with respect to any such dispute and, with
respect to any dispute regarding amounts owed under this Agreement, to pay such undisputed amounts
pursuant to the terms hereof. If, despite the Parties’ diligent, good faith attempt to resolve
such dispute pursuant to the first sentence of this Section 16.2, the Parties do not resolve such
dispute, then at the written request of either Party, senior officers of each Party shall meet at
any mutually agreed location in Illinois within thirty (30) Days of receipt of such request to
resolve the dispute. If despite such meeting the Parties do not resolve the dispute, or if no such
meeting takes place within such time despite one Party’s attempts therefor, either Party may
commence arbitration in accordance with the next paragraph. Arbitration shall be the sole remedy
for any dispute, and shall be binding and final among the Parties.



16.3 AAA Exceptions. Any dispute under this Agreement that has not been resolved pursuant to
Section 16.2 above, shall be settled by binding arbitration in accordance with the American
Arbitration Association rules and procedures with the following exceptions:




     16.3.1 Selection of Arbitration Panel. Within ten (10) Days after one Party sends the other
Party Notice of the commencement of arbitration under this Section 16.2.1, each Party shall select
one Person to act as arbitrator and the two selected



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arbitrators shall, within ten (10) Days of
their appointment, select a third neutral arbitrator who shall chair the arbitration panel. Each
arbitrator shall be a Person having experience in
commercial agreements and, in particular, the implementation and interpretation of contracts
relating to the supply of coal. No arbitrator shall be a present or former employee or agent of,
or consultant or counsel to, either Party or any affiliate thereof. If the arbitrators selected by
the Parties are unable or fail to agree upon the third arbitrator within ten (10) Days after their
appointment, then the third arbitrator and chairman of the arbitration panel shall be selected by
the American Arbitration Association.




     16.3.2 Arbitration Process. Consistent with the expedited nature of the arbitration, each
Party shall, upon the written request of the other Party, promptly provide the other Party with
written copies of documents relevant to the issue raised in the dispute. Any dispute regarding
discovery, or the relevance or scope thereof, shall be determined by the chairman of the
arbitration panel, which determination shall be final and conclusive. All discovery shall be
completed within thirty (30) Days following the appointment of the chairman of the arbitration
panel.



     16.3.3 Arbitration Award. The arbitration award shall be made within sixty (60) Days of the
appointment of the chairman of the arbitration panel and the arbitrators shall agree to comply with
this schedule before accepting appointment. However, this time limit may be extended or reduced by
mutual agreement of the Parties, if necessary.



     16.3.4 Arbitration Costs. The losing Party, as determined by the arbitration award, shall
bear all costs of the arbitration, including (without limitation, its own costs and expenses, the
other Party’s reasonable costs and expenses and the arbitrators and administrative fees of
arbitration. The place of arbitration shall be Chicago, Illinois unless otherwise agreed by both
of the Parties.



     16.3.5 Enforcement of Award. Judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof.


16.4 Remedies. Notwithstanding anything in this Agreement to the contrary, nothing in Section 16.2
is intended to, nor shall it, prevent either Party from seeking injunctive or other equitable
relief at any time as may be available under law or in equity in order to specifically enforce a
right or obligation under this Agreement in existence prior to that Party seeking such injunctive
or other equitable relief.



16.5 No Consolidation. Unless the Parties otherwise agree, no dispute, controversy or claim
hereunder shall be consolidated with any other arbitrable proceeding involving any third party.





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SECTION 17. REPRESENTATIONS AND WARRANTIES



17.1 Buyer’s Representations and Warranties. Buyer expressly represents and warrants to Seller
that Buyer (i) is duly organized and in good standing under the Applicable Law of the State of
Delaware, (ii) is qualified to do business in all jurisdictions where the conduct of its business
or ownership of its assets requires qualification, (iii) to the best of its knowledge, upon due
inquiry, Buyer has or reasonably believes that it will be able to obtain on a timely basis, all
material permits and other governmental approvals and authorizations required to perform its
material obligations under this Agreement and to operate Buyer’s Facility, (iv) is otherwise
legally capable and duly authorized to execute and perform this Agreement and (v) has the power and
authority to enter into this Agreement and upon execution of this Agreement by both of the Parties,
this Agreement shall constitute the valid and binding agreement of Buyer enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy, insolvency, moratorium or
similar Applicable Law affecting the rights of creditors or by general equitable principles
(whether considered in a proceeding in equity or at law).



17.2 Seller’s Representations and Warranties. Seller expressly represents and warrants to Buyer
that Seller (i) is duly organized and in good standing under the Applicable Law of the State of
Delaware, (ii) is qualified to do business in all jurisdictions where the conduct of its business
or ownership of its assets requires qualification, (iii) to the best of its knowledge, upon due
inquiry, Seller has or reasonably believes that it will be able to obtain on a timely basis, all
material permits and other governmental approvals and authorizations required to perform its
material obligations under this Agreement, (iv) is otherwise legally capable and duly authorized to
execute and perform this Agreement, and (v) has the power and authority to enter into this
Agreement and upon execution of this Agreement by both of the Parties, this Agreement shall
constitute the valid and binding agreement of Seller enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency, moratorium or similar
Applicable Law affecting the rights of creditors or by general equitable principles (whether
considered in a proceeding in equity or at law).



17.3 Seller’s Representations and Warranties of Title. Seller’s Affiliate has rights to the coal reserves at the Gateway Mine and all Coal delivered to
Buyer under this Agreement shall be free and clear of all liens and encumbrances.



17.4 Seller’s Exclusion of Implied Warranties. THE WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT ARE THE SOLE WARRANTIES GIVEN BY EITHER PARTY TO THE OTHER IN CONNECTION WITH THE SALE,
DELIVERY, AND QUALITY OF THE COAL TO BE PROVIDED UNDER THIS AGREEMENT. THE PARTIES EXPRESSLY WAIVE
AND DISCLAIM ANY STATUTORY OR IMPLIED WARRANTIES THAT MAY BE APPLICABLE TO THE SUBJECT MATTER OF
THIS AGREEMENT INCLUDING,






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BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.




SECTION 18. INVOICING AND PAYMENT



18.1 Invoicing Procedures. Seller shall invoice Buyer monthly for deliveries under this Agreement.
On or before the tenth (10th) Day of each month of a Delivery Year, Seller shall send Buyer an
invoice for all coal tendered for delivery and accepted by Buyer during the preceding month.
Nothing contained in this Section 18 shall restrict Seller from sending an amended or corrected
invoice to take into account changes in the Contract Price not known at the date of the original
invoice or to correct errors in the original invoice.



18.2 Payment Procedures. Buyer shall pay invoices by wire transfer within thirty (30) Days after
the receipt of each monthly invoice. If Seller does not receive timely payment, then interest
shall be charged at the prime rate in effect on that date (as set by the Chase Manhattan Bank of
New York on ninety (90) Day commercial loans as of the date payment is due) plus two percent (2%),
but in no event in excess of the highest rate allowed by Applicable Law.



18.3 Disputed Invoices. Buyer shall pay all invoices issued by Seller in accordance with this
Section 18, except those portions of any invoice that Buyer formally disputes in a Notice, which
Notice Buyer shall submit to Seller within ten (10) Days after receiving the invoice. Buyer shall
pay all undisputed portions of each disputed invoice. The Parties shall make every reasonable
effort to settle invoice disputes promptly through good faith negotiations. If the Parties fail to
settle such disputes, either Party may refer them to arbitration in accordance with Section 16.
Payment of disputed amounts
shall be made within ten (10) Days following either (i) the date of settlement, or (ii) the date of
an arbitration award. Thereafter, such amounts shall accrue interest at the late payment rate
established pursuant to Section 18.2. Buyer shall have the right to take any payment owed it in
cash or credit on the next regular invoice.




SECTION 19. ASSIGNMENTS AND COOPERATION WITH FINANCING



19.1 Assignment Not Allowed. Except as provided in this Section 19, neither Buyer nor Seller shall
assign any rights under this Agreement unless the other Party consents thereto in writing, which
consent shall not be unreasonably withheld.



19.2 Assignment to Affiliate. Either Party, without the consent of the other Party, may assign
rights or delegate obligations under this Agreement in whole or in part, upon thirty (30) Days’
prior Notice to the other Party, to an Affiliate who assumes the obligations delegated under this
Agreement. A Party who assigns rights or delegates obligations to an Affiliate shall do so in
writing, and shall provide a copy of such writing to the other Party. In all circumstances, the
Party






 Page 36









 







who initiates an assignment or delegation shall remain liable to the other Party for its
Affiliate’s full performance of the Party’s obligations under this Agreement.



19.3 Assignment By Seller. Seller, without the consent of Buyer, may assign rights or delegate
obligations under this Agreement in whole or in part upon thirty (30) Days’ prior Notice to the
other Party, to any Person that acquires all or substantially all of the assets of the Mine,
provided that such Person must assume the obligations delegated under this Agreement. Seller shall
assign rights or delegates obligations under this Section 19.3 pursuant to a written agreement, and
shall provide a copy of such written Agreement to Buyer. In addition, Seller, without the consent
of Buyer, may assign, transfer, pledge or encumber to any Person all or any part of Seller’s
revenues or proceeds under or with respect to this Agreement. In connection with any assignment or
delegation pursuant to this Section 19.3, Seller shall remain liable to Buyer for the assignee’s
full performance of Seller’s assigned or delegated obligations under this Agreement.



19.4 Assignment By Buyer. Buyer shall assign its obligations and may assign its rights under this
Agreement upon thirty (30) Days’ prior Notice to Seller, to any Person that acquires all or
substantially all of Buyer’s Facility and such Person must assume the obligations delegated under
this Agreement. Buyer shall assign obligations and
may assign rights under this Section 19.4 pursuant to a written agreement, and shall provide a copy
of such written Agreement to Seller. In connection with any assignment or delegation pursuant to
this Section 19.4, Buyer shall remain liable to Seller for the assignee’s full performance of
Buyer’s assigned or delegated obligations under this Agreement.



19.5 Cooperation with Financing. Buyer contemplates obtaining debt financing in the amount of at
least $200,000,000 for all or part of the cost of its proposed feedstock conversion of Buyer’s
Facility from natural gas to coal gasification and/or construction of a Fischer-Tropsch clean fuels
production facility consisting of one or more construction or permanent loans to be secured by all
or a portion of Buyer’s Facility and its rights under this Agreement and certain equity
contributions from the shareholders of Buyer (together the “Financing”). In the event
Buyer applies for or obtains any Financing or any refinancing thereof, Seller shall,
notwithstanding the existence of any claim, dispute or litigation between the Parties, promptly
execute or consent to a Consent and Agreement in form and substance reasonably satisfactory to
Seller, including any additional terms or provisions reasonably requested by any Lender that do not
impose significant additional liability or cost on Seller or diminish its rights hereunder, and
such other documents, including but not limited to any amendments to this Agreement, which are
reasonably required by any Lender in connection with such Financing or refinancing thereof and
which are in form and substance reasonably acceptable to the Parties; provided,
however, that Seller and its counsel shall have a reasonable period of time prior to the
execution of such Consent and Agreement within which to review any such documents, and such Consent
and Agreement will include the





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obligation of the Lenders to assign this Agreement to the Person
that receives all or substantially all of the assets of Buyer and/or the Facility in connection
with the exercise by any Lender of its collateral and security rights with respect to the Buyer and
the Facility in connection with the Financing or refinancing thereof. So long as the Lenders’
requested terms or provisions or required amendments do not materially change the terms of this
Agreement and do not impose significant additional liability or cost on Seller, they shall be
deemed reasonable. Seller shall respond to reasonable requests by any Lender for information
regarding the qualifications, experience, past performance and financial condition of Seller and
other matters pertaining to Seller’s participation hereunder and in the Facility.



19.6 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the
Parties and their respective, authorized successors and assigns.




SECTION 20. SECURITY



20.1 Seller Guaranty. On or before the Effective Date, Seller shall cause to be delivered a
guaranty of Seller’s payment obligations under and in respect of this Agreement from Peabody in the
form attached hereto as Exhibit C (the “Seller Parent Guarantee”). Once provided, the
Seller Parent Guarantee shall remain in effect throughout the remainder of the Term.



20.2 Creditworthiness of Buyer. If at any time during the Term Buyer’s rating on its long term
debt or Buyer’s corporate credit rating is below investment grade (“BBB-“ as defined by Standard &
Poor’s or “Baa3” as defined by Moody’s, or the equivalent rating as defined by other nationally
recognized Public rating agencies) or Buyer does not have publicly rated senior unsecured long term
debt, then within ten (10) Business Days of such event Buyer shall provide Seller with Adequate
Assurances. In addition, in the event Adequate Assurances are provided, such Adequate Assurances
must be in amount sufficient to cover [*]. Until the Adequate Assurances are received, Seller
shall only be obligated to deliver Coal to Buyer hereunder upon receipt of full payment for each
Coal delivery at least three (3) Business Days in advance of such delivery. The failure by Buyer
to provide Adequate Assurances within thirty (30) days shall constitute an Event of Default by
Buyer.



20.3 Adequate Assurances. “Adequate Assurances” means (i) a Letter of Credit, (ii)
unconditional guaranty of all of Buyer’s payment obligations under the Agreement by a guarantor
having an investment grade rating (as described in Section 20.2 above), (iii) cash collateral equal
to at least [*] days of Coal shipments to Buyer for Coal sold under this Agreement based on
historical data (or such greater amount as is determined pursuant to Section 20.2), or (iv) other
payment security reasonably satisfactory to Seller. A “Letter of Credit” satisfying clause (i) of
the definition of Adequate Assurances shall (A) be in an initial amount and maintained at an amount
equal to at least [*] days of Coal shipments to Buyer for






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Coal sold under the Agreement based on
historical date (or such greater amount as is determined pursuant to Section 20.2) and (B) be one
or more irrevocable, transferable standby letters of credit issued by a U.S. commercial bank or a
foreign bank with a U.S. branch with such bank having a credit rating of at least “A-“ from
Standard & Poor’s or “A3” from Moody’s (or an equivalent rating from another nationally recognized
public rating agency), in form and substance reasonably acceptable to Seller. Buyer shall be
solely responsible for all costs of and associated with any Letter of Credit and Seller’s exercise
of its rights thereunder.




SECTION 21. CONFIDENTIALITY




     Each Party shall maintain as confidential all provisions of this Agreement that pertain to the
quality, pricing and escalation of the pricing of Coal, and all business records relating to the
negotiation of this Agreement and the Parties’ performance of their respective obligations
hereunder. Notwithstanding the foregoing, each Party may disclose such information to its board of
directors or other internal governing body, Affiliates, independent auditors, bankers, brokers,
consultants, and advisors, provided that such persons agree with a Party (and such Party remains
obligated to the other Party for any breach thereof by such persons) to the same confidentiality
obligations contained in this Agreement. Nothing in this provision shall prohibit either Buyer or
Seller from making public the existence of this Agreement, the term of this Agreement, or the
tonnage of Coal covered by this Agreement. Buyer and Seller acknowledge specifically that this
provision shall not prohibit the disclosure of confidential information:




	(i)	 	to an independent firm of Certified Public Accountants for the purpose of auditing
and verifying price calculations under or pursuant to this Agreement;
	 
	(ii)	 	to the arbitrator(s) appointed to hear disputes in accordance with the procedures set
forth at Section 16 of this Agreement;
	 
	(iii)	 	to a Court in connection with the enforcement of arbitration awards or arbitration
obligations or any other dispute under this Agreement;
	 
	(iv)	 	in response to an order, directive, or request for information from a governmental
authority, court, or litigant, where the disclosure of information is required by law;
	 
	(v)	 	to the actual or potential Lenders, equity investors in Buyer and their consultants
and advisors and Standard & Poor’s and Moody’s;
	 
	(vi)	 	as required to comply with any law, rule, regulation or other directive or
requirement of or in connection with any report or information filed with the
Securities and Exchange Commission or other appropriate governmental authority or
agency; or




 Page 39









 






	(vii)	 	to consultants and contractors performing work related to this Agreement who agree
in writing to protect the confidentiality of such information as and to the extent
provided in this Agreement.





     In the foregoing situations, the Party disclosing information shall comply with any specific
confidentiality requirement(s) imposed by this Agreement, shall notify the other Party as soon as
practicable prior to disclosure, and shall otherwise take reasonable measures to limit the
disclosure of confidential information in a
manner consistent with Applicable Law. Such measures shall include, as appropriate and
permitted by Applicable Law, filing documents under seal, redacting specific pricing information
from disclosed documents, and disclosing documents subject to court-approved protective orders.



SECTION 22. NOTICES



22.1 General Notices. Except as otherwise specifically provided by this Agreement, any notice
provided for pursuant to this Agreement or given or made in connection with this Agreement, shall
be in writing and shall be deemed properly and sufficiently given or made if delivered in person
with receipt acknowledged in writing by the recipient, sent by registered or certified mail return
receipt requested, to the respective Parties at the addresses specified below:




     If to Seller, addressed to:


COALSALES, LLC

701 Market Street

Suite 830

St. Louis, Missouri 63101-1826



Attention: President



Attention: Senior Vice President & Marketing Midwest



With a copy to:



Peabody Energy Corporation

701 Market Street

Suite 830

St. Louis, Missouri 63101-1826

Attention: Executive Vice President Law




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     If to Buyer, addressed to:


Rentech Energy Midwest Corporation

P.O. Box 229

16675 Highway 20

East Dubuque, Illinois 61025-0229

Attention: President



With a copy to:



Rentech, Inc.

10877 Wilshire Boulevard

Suite 710

Los Angeles, California 90024

Attention: Chief Financial Officer



22.2 Effectiveness. No notice is effective unless it is given or made in compliance with Section
22.1. Notices given or made in compliance with Section 22.1 are effective as of the time of
delivery to or receipt by the Party to whom the notice is addressed; provided, however, that if a
notice given or made other than in writing is confirmed by the Party giving or making notice within
48 hours of receipt in compliance with Section 22.1, the effectiveness of the notice relates back
to the time of the receipt.



22.3 Changes in Persons and Addresses. The persons or address of any Party to which notice shall
be given pursuant to this Agreement may be changed at any time pursuant to this Section 22.3 by
giving notice to the other Party.




SECTION 23. WAIVERS




     The failure of either Party to require strict performance of any provision of this Agreement
by the other Party, or the forbearance to exercise any right or remedy under this Agreement shall
not be construed as a waiver by such Party of the right to require strict performance of any such
provision or the relinquishment by such Party of any such right or remedy it might have with
respect to any subsequent breach of such provisions. All waivers shall be signed in writing,
designated a waiver, and signed by the waiving Party, and shall recite the rights waived.



SECTION 24. HEADINGS AND SECTION NUMBERS — CONSTRUCTION



24.1 Headings Not to Affect Construction. The headings of the sections of this Agreement are
inserted for convenience only and shall have no effect on the construction, interpretation, or
meaning of this Agreement.





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24.2 References to Section Numbers. All references in this Agreement to a section of this
Agreement will be interpreted to refer to the entire section, including subsections. For example,
a reference to Section 1, Defined Terms, refers not only to the introductory text on Section 1, but
also to all of the subsections of Section 1.




SECTION 25. AMENDMENTS




     Any and all amendments, supplements, and modifications to this Agreement shall be effective
only if in writing and signed by the Parties.



SECTION 26. COMPLETE AGREEMENT




     This Agreement is the complete and total expression of all agreements, contracts, covenants,
and other promises between Seller and Buyer related to the sale of Coal to Buyer.



SECTION 27. COUNTERPARTS




     Buyer and Seller may execute this Agreement in two or more counterparts, each of which shall
constitute an original document and all of which taken together shall constitute a single
Agreement.



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     IN WITNESS WHEREOF, the Parties have duly executed this Agreement in their respective
corporate names as of the 25th day of May, 2007.



	 	 	 	 	 
	 	 	RENTECH ENERGY MIDWEST CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Merrick Kerr
	 

	 	 	 	 
	 

	 	 	 	Name: Merrick Kerr
	 

	 	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	COALSALES, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Bryan Galli
	 

	 	 	 	 
	 

	 	 	 	Name: Bryan Galli
	 

	 	 	 	Title: President







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