exv10w1



 




Exhibit 10.1




“[*]”
= 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.



DEVELOPMENT COST SHARING AND




EQUITY OPTION AGREEMENT




          THIS DEVELOPMENT COST SHARING AND EQUITY OPTION AGREEMENT (the “Agreement”) is entered into as
of May 25, 2007 (the “Effective Date”), by and among Rentech, Inc., a Colorado corporation
(“Rentech”), and Peabody Venture Fund, LLC, a Delaware limited liability company (“Peabody”).
Rentech and Peabody are sometimes individually referred to herein as a “Party” and, together, as
the “Parties”.




RECITALS




          WHEREAS, Rentech and Peabody Energy Corporation (“Peabody Energy”), the indirect parent of
Peabody, have entered into a Memorandum of Terms effective February 16, 2007 with respect to the
proposed feedstock conversion of Rentech’s existing ammonia fertilizer production facility located
in East Dubuque, Illinois (the “Facility”) from natural gas to coal gasification (referred to as
Phase 1) and construction of a Fischer-Tropsch clean fuels production facility (referred to as
Phase 1A) (collectively, the “Project”); and




          WHEREAS, the Parties desire to set forth their specific rights and obligations with respect to
the sharing of the Development Costs during the term of this Agreement and Peabody’s option to
purchase equity in the Project on the terms and conditions set forth herein.




          NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and
for other good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows:




ARTICLE 1.

DEFINITIONS




          Capitalized words and phrases used and not otherwise defined elsewhere in this Agreement shall
have the following meanings:




     1.1 “Action” means any material claim, action, suit, arbitration, investigation or proceeding
by or before any Governmental Authority.



     1.2 “Actual Amount” is defined in Section 2.1.3.



     1.3 “Actual Exercise Price” is defined in Section 3.8(b).



     1.4 “Additional Earned Equity”
means, as of the Financial Closing Date, the lesser of (a) Fifteen Million Dollars
($15,000,000) or (b) the product of (i) eighty percent (80%) of the aggregate Percentage Interest
held by Rentech or its Affiliates prior to any transfers or issuances of Capital Stock to other
Persons on or before the Financial Closing Date (being eighty percent (80%) of the Capital Stock),
multiplied by (ii) the amount of Peabody Cost Savings on the Financial Closing Date, if any.



 









 





     1.5 “Additional Earned Equity Referee” is defined in Section 3.13.4.



     1.6 “Additional Earned Equity Statement” is defined in Section 3.13.1.



     1.7 “Additional Earned Securities” means a number or amount of shares of Capital Stock in the
Project Entity with a value (measured as of the Financial Closing Date) equal to the quotient of
(a) the Additional Earned Equity, divided by (b) the total amount of Equity Contributions made to
the Project Entity as of the Financial Closing Date, which shall be reflected in the final Sources
and Uses Table delivered to Peabody pursuant to Section 3.9. For purposes of the preceding
sentence, the Project Entity’s outstanding Capital Stock shall be valued based on the total amount
of Equity Contributions actually made to the Project Entity as reflected in the final Sources and
Uses Table.



     1.8 “Affiliate” means, with respect to a specified Person, any Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with, the specified Person.



     1.9 “Affiliate Agreement” is defined in Exhibit C.



     1.10 “Agreed Rate” means interest at the annual rate of twelve percent (12%).



     1.11 “Agreement” is defined in the Preamble, as the same may be amended from time to time.



     1.12 “Applicable Law” means any laws, statutes, ordinances, regulations, rules, notice
requirements, court decisions, agency guidelines, principles of law and orders of any Governmental
Authority.



     1.13 “Assumed Liabilities”
means (i) all Liabilities incurred by REMC as of the Effective Date, (ii) any additional
Liabilities incurred by REMC prior to the completion of the formation transactions contemplated by
Section 3.4 other than Liabilities not related to the Business or REMC’s business of
operating the Facility and selling the products produced therefrom and (iii) all other Liabilities
arising out of or relating to the Development Assets.



     1.14 “Board” is defined in Exhibit C.



     1.15 “Business” means the business of the Project Entity, which is the development,
construction and operation of the Project, possible future expansion thereof at the East Dubuque,
Illinois site, and activities related to the foregoing.



     1.16 “Business Day” means a day other than a Legal Holiday.



     1.17 “Capital Stock” means: (a) in the event that the Project Entity is a corporation, the
capital stock of the Project Entity; (b) in the event that the Project Entity is a limited
liability company, the membership interests in the Project Entity; (c) in the event that the
Project Entity is a partnership, the partnership interests (whether general or limited) in the
Project Entity; or (d) in the event that the Project Entity is another business organization, any
other equity interest that



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confers the right to receive a share of the profits and losses of, or
distributions of assets of, the Project Entity.



     1.18 “Coal Supply Agreement” means the agreement by and between COALSALES LLC, a Delaware
limited liability company, and Rentech Energy Midwest Corporation, a Delaware corporation, dated
May 25, 2007.



     1.19 “Confidentiality Agreement” means the Confidentiality Agreement dated as of May 15, 2006
between Rentech and Peabody Energy.



     1.20 “Confidential Information” is defined in Section 7.5.



     1.21 “Confirmation Failure” is defined in Section 3.6.



     1.22 “Confirmation Period” is defined in Section 3.6.



     1.23 “CSA Assignment and Assumption Agreement” means an assignment and assumption agreement
pursuant to which REMC shall assign, and the direct or indirect Subsidiary of the Project Entity
that will own the Project shall assume, REMC’s rights and obligations under the Coal Supply
Agreement, and which is acknowledged and agreed to by COALSALES, LLC.



     1.24 “Development Assets” means all of the assets of REMC (including the Facility), excluding
cash, held by REMC prior to the completion of the formation transactions contemplated by
Section 3.4 and any other assets held by Rentech or an Affiliate of Rentech, including
Governmental Approvals, contracts and real estate interests, in each case, only if such assets are
exclusively used in connection with the Project but, in any case, excluding intellectual property
(other than intellectual property purchased from third parties with Development Costs).
Notwithstanding anything to the contrary, “Development Assets” shall not include any “know how” of
Rentech or its Affiliates.



     1.25 “Development Budget” means, with regards to the Project, the development cost budget in
the aggregate amount of Fifty Five Million Dollars ($55,000,000) set forth on Exhibit A, as
the same may be amended or updated pursuant to Section 2.1.5.



     1.26 “Development Costs” means collectively, the front-end engineering and design, long lead
time items and pre work costs directly related to the Project Incurred during the period between
November 1, 2006 through and including the Financial Closing Date. Development Costs exclude (a)
any payments to Rentech or its Affiliates, except (i) as set forth in the Development Budget as in
effect on the Effective Date; and (ii) as set forth in any amended Development Budget after the
Effective Date to the extent such payments are for salary, benefits and overhead of employees
working directly on the Project, (b) land and other interests in real property not subject to a
purchase option on the Effective Date, (c) transaction costs related to the negotiation of this
Agreement and the Coal Supply Agreement, (d) amounts not set forth in the Development Budget or
incurred in accordance with Section 2.1.5, or (e) all amounts Incurred before the Effective
Date other than Reimbursement Costs.



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     1.27 “Discussion Period” is defined in Section 2.1.6(c).



     1.28 “Effective Date”
is defined in the Preamble.



     1.29 “Encumbrance” means any material mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than (a) purchase money liens and liens securing rental payments under
capital lease arrangements, and (b) other liens arising in the ordinary course of business.



     1.30 “End Date” is defined in Section 3.8(a).



     1.31 “Environmental Conditions” means the introduction into the environment of any pollution,
including any contaminant, irritant or pollutant or other Hazardous Substance as a result of which
any Owner has or may become liable to any Person under applicable Environmental Laws.



     1.32 “Environmental Laws” means all Applicable Laws which regulate or relate to the protection
or clean-up of the environment, the use, treatment, storage, transportation, generation,
manufacture, processing, distribution, handling or disposal of, or emission, discharge or other
release or threatened release of, Hazardous Substances.



     1.33 “Environmental Liabilities” is defined in Section 3.8(e).



     1.34 “Environmental Permits” means any material Government Approvals required under any
applicable Environmental Law.



     1.35 “EPC Agreement” is defined in Section 7.1(b).



     1.36 “Equity Contribution” means the aggregate amount required to be funded to the Project
Entity by the Owners thereof pursuant to the terms of the Project Financing Facility and as
reflected in the final Sources and Uses Table delivered to Peabody pursuant to Section 3.9.
If the Project Financing Facility permits all of the Owners meeting creditworthiness standards to
provide a guarantee or credit support in respect of its obligation to make an Equity Contribution,
such Owner’s provision of such guarantee or credit support in respect thereof shall satisfy the
portion of the Equity Contribution secured thereby.



     1.37 “Estimated Exercise Price” is defined in Section 3.8(b).



     1.38 “Excluded Debt” means all debt of Rentech or its Affiliates (other than (a) debt under
the Project Financing Facility, (b) purchase money debt and (c) debt under the working capital
revolving line of credit of REMC).



     1.39 “Excluded Illinois Securities” is defined in Section 3.14.



     1.40 “Facility” is defined in the Preamble.



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     1.41 “Financial Advisor” means Credit Suisse, or any successor lead financial advisor of
international reputation.



     1.42 “Financial Advisor Confirmation” is defined in Section 3.6.



     1.43 “Financial Closing” means the closing of the Project Financing.



     1.44 “Financial Closing Date” means the date of the Financial Closing.



     1.45 “Financial Closing Notice” is defined in Section 3.2.



     1.46 “Governmental Approvals” means any approval, consent, franchise, permit, certificate,
resolution, license, or authorization issued by or on behalf of any applicable Governmental
Authority.



     1.47 “Governmental Authority” means, any nation or government (including, without limitation,
the government of the United States), any state, county, municipality or other political
subdivision thereof and
any Person exercising legislative, judicial, regulatory or administrative functions of or
pertaining to the government.



     1.48 “Hazardous Substance” means any pollutant, contaminant, chemical, waste and any toxic,
infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical or chemical compound
or hazardous substance, material or waste, whether solid, liquid or gas, including any quantity of
asbestos in any form, urea formaldehyde, PCBs, radon gas, crude oil or any fraction thereof, all
forms of natural gas, petroleum products or by-products or derivatives, radioactive substance,
waste waters, sludges, slag and any other substance, material or waste that is subject to
regulation, control or remediation under any Environmental Laws because of its dangerous, toxic or
deleterious characteristics or composition or its adverse effect on human health or the
environment.



     1.49 “Illinois Grant” is defined in Section 3.14.



     1.50 “Illinois Grant Securities” is defined in Section 3.14.



     1.51 “Incur” or “Incurred” means, as of any date, paid or incurred and due and owing within
forty-five (45) days of such date.



     1.52 “Independent Accountant” means a nationally recognized accounting firm that does not
currently provide nor is currently negotiating to provide (nor in the last three years has
provided) consultancy or other services to either of the Parties or their respective Affiliates.



     1.53 “IRR Event” is defined in Section 3.8(c).



     1.54 “Knowledge of Rentech” or “Knowledge of Rentech Affiliates” means to the actual knowledge
of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or General Counsel
of Rentech or the President of REMC, in each case, without independent investigation.



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     1.55 “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the
City of New York are authorized by law, regulation or executive order to remain closed.



     1.56 “Lender Commitments” means (a) commitments from financial institutions to provide Project
Financing for the Project setting forth the terms and conditions (including required levels of
Equity Contributions) or (b) in the case of the issuance of public debt, the term sheet for the
terms and conditions for such debt (including the required level of Equity Contributions) provided
by Credit Suisse or another Qualified Underwriter engaged by Rentech for the underwriting or
placement of such debt.



     1.57 “Liabilities” means any direct or indirect liability, indebtedness, obligation,
commitment, expense, claim or deficiency of or by any Person of any type, whether accrued,
absolute, contingent, matured, unmatured or other.



     1.58 “Major Contract” is defined in Exhibit C.



     1.59 “Management Agreement” is defined in Exhibit C.



     1.60 “Material Adverse Effect” means a material adverse effect on the development of the
Project or on the projected financial condition, properties, business or results of operations of
the Project or the Project Entity and its Subsidiaries, taken as a whole (as reflected in the
Project Pro Forma); provided, however, that none of the following shall be deemed,
either individually or in combination, to constitute, and none of the following shall be taken into
account in determining whether there has been or will be, a Material Adverse Effect: (a) any
adverse effect attributable to the announcement or pendency of the transactions contemplated by
this Agreement, (b) any adverse effect attributable to conditions affecting the industry in which
the Project, the Project Entity or its Subsidiaries will participate or the U.S. economy;
provided that such effect does not disproportionately affect the Project, the Project
Entity and its Subsidiaries, taken as a whole, (c) the effect of any change arising in connection
any hostilities, acts of war, sabotage or terrorism or military actions or any escalation or
material worsening of any such hostilities, acts of war, sabotage or terrorism or military action,
(d) any adverse effect arising from or relating to any change in accounting requirements or
principles or any change in Applicable Law or the interpretation thereof, (e) any adverse effect
arising from or relating to compliance with or permitted by the terms of this Agreement or the PSA
or (f) any adverse effect that has been cured prior to the Option Closing.



     1.61 “Material Contract” means any contract, commitment, agreement or other undertaking to
which REMC is a party and which is material to the development of the Project involving aggregate
annual consideration payable to or by REMC of Five Hundred Thousand Dollars ($500,000) or more
(other than contracts, commitments, agreements or other undertakings that by their terms may be
terminated by REMC in the ordinary course of its business upon less than sixty (60) days’ notice
without penalty or premium).



     1.62 “Notice Window” is defined in Section 3.2.



     1.63 “Objection Notice” is defined in Section 3.13.3.



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     1.64 “Option” is defined in Section 3.1.



     1.65 “Option Closing” is defined in Section 3.10.



     1.66 “Option Closing Date” is defined in Section 3.10.



     1.67 “Option Exercise Date” is defined in Section 3.7.



     1.68 “Option Exercise Notice” is defined in Section 3.7.



     1.69 “Option Exercise Period” means the period commencing on the date that Rentech delivers
the Financial Closing Notice and ending on the latest of (a) the thirtieth (30th) day
after the date the Financial Closing Notice is delivered to Peabody; (b) the sixtieth
(60th) day prior to the Financial Advisor’s estimate of the Financial Closing Date set
forth in the Financial Advisor Confirmation delivered under Section 3.6; or (c) in the case
of a Financial Advisor Confirmation delivered within ten (10) days after the end of the
Confirmation Period, the tenth (10th) day after Rentech delivers the Financial Advisor
Confirmation pursuant to Section 3.6. Notwithstanding anything to the contrary, the Option
Exercise Period shall terminate on the date this Agreement is terminated pursuant to Article
8.



     1.70 “Option Exercise Price”
means an Equity Contribution in an amount equal to (a) twenty percent (20%) of the total
amount of Equity Contributions required to be made to the Project Entity as of the Financial
Closing Date, which shall be reflected in the final Sources and Uses Table delivered to Peabody
pursuant to Section 3.9 (excluding any amounts on the Sources and Uses Table attributable
to the Additional Earned Equity or Illinois Grants not listed on Exhibit D), minus
(b) the aggregate amount actually paid by Peabody to Rentech under Article 2 of this
Agreement on or prior to the Option Closing Date. Notwithstanding the foregoing, in the event that
Peabody elects to purchase a reduced amount of Option Securities in accordance with Section
3.8(b)(ii), then the reference to twenty percent (20%) in the foregoing clause (a) shall be
reduced to the percentage resulting from the calculation provided in Section 3.8(b)(ii). A
sample calculation of the Option Exercise Price is included as Exhibit E.



     1.71 “Option Securities” means a number of shares or amount of Capital Stock in the Project
Entity equal to twenty percent (20%) of the Project Entity’s fully diluted shares, profits
interests or membership interests outstanding on the Option Closing Date (after giving effect to
the consummation of the Option Closing). Notwithstanding the foregoing, in the event that Peabody
elects to purchase a reduced amount of Option Securities in accordance with Section
3.8(b)(ii), then the reference to twenty percent (20%) in the foregoing sentence shall be
reduced to the percentage resulting from the calculation provided in Section 3.8(b)(ii).



     1.72 “Owner” is defined in Section 3.5.



     1.73 “Parties” is defined in the Preamble.



     1.74 “Peabody” is defined in the Preamble.



     1.75 “Peabody Budgeted Payment” is defined in Section 2.1.2.



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     1.76 “Peabody Confidential Information” is defined in Section 7.5.



     1.77 “Peabody Cost Savings” means the present value of the reduction in financing costs
(including debt service, fees payable to the lenders under, and debt service reserves required by,
the Project Financing Facility, and commitment and other fees payable to equity investors in the
Project,
other than Rentech, Peabody and their respective Affiliates), which would have been required
to be incurred by the Project Entity to finance the Project, but for any agreement, arrangement or
benefit provided by Peabody or its Affiliates to the Project that was not otherwise available to
Rentech and its Affiliates. Peabody Cost Savings also include (a) reductions in financing costs as
a direct result of any product off-take contract between the Project Entity and Peabody or an
Affiliate of Peabody, and (b) any reductions in financing costs as a direct result of any product
off-take contract between the Project Entity and a supplier to Peabody or an Affiliate of Peabody,
but only if Peabody or such Affiliate induced the supplier to enter into the contract, and
identified the supplier to Rentech before the contract was executed and Rentech confirms in writing
to Peabody that the contract resulted in Peabody Cost Savings which confirmation shall not be
unreasonably withheld. Contracts with Peabody suppliers that have comparable pricing and terms to
those with other off-takers shall not be deemed to result in Peabody Cost Savings. In the
foregoing calculation, present value shall be mutually agreed to by Rentech and Peabody acting
reasonably by discounting the reduction to the Option Closing Date at an annual rate equal to ten
percent (10%).



     1.78 “Peabody Energy” is defined in the Preamble.



     1.79 “Peabody Energy Competitor” means any Person who is a competitor of Peabody Energy
identified on Exhibit K.



     1.80 “Peabody Guaranty (EOA)” means the Peabody Guaranty (EOA) in the form attached hereto as
Exhibit I.



     1.81 “Peabody Guaranty (PSA)” means the Peabody Guaranty (PSA) in the form attached hereto as
Exhibit J.



     1.82 “Percentage Interest” means, as of any time, the percentage of the outstanding Capital
Stock held by Rentech or Peabody or any other Owner as of such time.



     1.83 “Permitted Encumbrance” means with respect to each parcel of Real Property: (a) real
estate taxes, assessments and other governmental levies, fees, or charges imposed with respect to
such Real Property that are (i) not due and payable or (ii) being contested by appropriate
proceedings; (b) mechanics liens and similar liens for labor, materials, or supplies provided with
respect to such Real Property incurred in the ordinary course of business for amounts that are (i)
not delinquent and would not, in the aggregate, have a Material Adverse Effect or (ii) being
contested by appropriate proceedings; (c) zoning, building codes, and other land use laws
regulating the use or
occupancy of such Real Property or the activities conducted thereon that are imposed by any
Governmental Authority having jurisdiction over such Real Property; (d) liens for any Project
Financing or purchase money debt secured by such Real Property that is an obligation of the Project
Entity or any of its Subsidiaries; and (e) easements, covenants, conditions, restrictions, and
other similar matters affecting title to such Real Property



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and other title defects that do not or
would not materially impair the use or occupancy of such Real Property in the operation of the
business of the Project Entity and its Subsidiaries taken as a whole. “Permitted Encumbrance”
excludes Encumbrances securing Excluded Debt.



     1.84 “Person” means and includes an individual, a general or limited partnership, a limited
liability company, a joint venture, a corporation (including any nonprofit corporation), an estate,
a trust, an unincorporated organization, an association, a Governmental Authority or any entity
similar to any of the foregoing.



     1.85 “Proceeding” means a material action, suit, proceeding or arbitration, civil, criminal,
regulatory or otherwise, at law or in equity.



     1.86 “Project” is defined in the Recitals.



     1.87 “Project Budget” means the budget reasonably detailing the estimated construction costs
of the Project.



     1.88 “Project Entity” means the Person that owns (directly or through one or more wholly owned
Subsidiaries) the Development Assets and the Project whether such Person is REMC or, following the
completion of the formation transactions contemplated by Section 3.4, the Person resulting
from the consummation of such transactions, it being understood that the Project likely will be
held by a direct or indirect wholly owned Subsidiary of the Project Entity.



     1.89 “Project Financing” means the debt financing of the Project with one or more banks or
other lenders on a non-recourse basis. Project Financing shall not include any financing that
requires Peabody or its Affiliates to guarantee any debt or obligation of the Project Entity or its
Subsidiaries or guarantee or fund any amount other than as set forth in the Financial Closing
Notice.



     1.90 “Project Financing Facility”
means one or more loan agreements, indentures or similar debt agreements or instruments
governing the terms and conditions of the Project Financing.



     1.91 “Project Information” is defined in Section 7.1(b).



     1.92 “Project Pro Forma” means a projection of the revenues and expenses of the Project
setting forth the assumptions upon which it is based, which are reasonably agreed to by the
Parties, and in a format consistent with the example Project Pro Forma set forth in Exhibit
G.



     1.93 “Project Representative” is defined in Section 7.1(c).



     1.94 “Project Site” means the site on which the Project will be located.



     1.95 “PSA” or “Purchase and Sale Agreement” means the purchase and sale agreement for the
Option Securities that would be executed if Peabody exercises its Option. The PSA must incorporate
the terms and conditions set forth in the term sheet attached hereto as Exhibit F.



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     1.96 “Qualified Expert” means a nationally recognized valuation or appraisal firm or
investment bank with expertise in project finance that (a) does not currently provide nor is
currently negotiating to provide (nor in the last three years has provided) consultancy or other
services to any of the Parties or their respective Affiliates; and (b) does not hold or have
Affiliates that hold capital stock in Rentech or Peabody Energy or their respective Affiliates.



     1.97 “Qualified Underwriter” means an underwriter mutually acceptable by both Parties having
substantial experience in the project financing of power plants or industrial projects having a
value of over Five Hundred Million Dollars ($500,000,000).



     1.98 “Quarterly Adjustment Amount” is defined in Section 2.1.3.



     1.99 “Quarterly Adjustment Statement” is defined in Section 2.1.3.



     1.100 “Quarterly Budgeted Amount” is defined in Section 2.1.3.



     1.101 “Real Property” means all land, together will all buildings, structures, improvements,
and fixtures located thereon, and all easements and other rights and interests appurtenant thereto,
owned by REMC, the Project Entity or any Subsidiary of the Project Entity.



     1.102 “Real Property Interests” means all interests in land or other real property including
fee, leaseholds, easements, rights of way and other interests.



     1.103 “Reimbursement Calculation Referee” is defined in Section 2.1.6(c).



     1.104 “Reimbursement Calculations” is defined in Section 2.1.6(a).



     1.105 “Reimbursement Costs” is defined in Section 2.1.1.



     1.106 “Reimbursement Period” is defined in Section 2.1.



     1.107 “Release” means any release, spill, emission, leaking, pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge, dispersal, leaching, or exhausting on or into
the environment or into, on, under or from any property.



     1.108 “REMC” means Rentech Energy Midwest Corporation, a Delaware corporation.



     1.109 “Remediation” means any legally required action taken to address the Release of a
Hazardous Substance at any Real Property that constitutes a portion of the Rentech Contribution,
including actions to address soil or groundwater contamination or natural resources.



     1.110 “Rentech”
is defined in the Preamble.



     1.111 “Rentech Affiliate” means the Project Entity and its wholly owned Subsidiaries formed on
or prior to the Option Closing Date.



     1.112 “Rentech Confidential Information” is defined in Section 7.5.



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     1.113 “Rentech Contribution” means, collectively, the Development Assets and the Assumed
Liabilities.



     1.114 “Rentech Contribution Agreement” means the written agreement pursuant to which Rentech
agrees to, or REMC or any other Affiliate of Rentech that holds Development Assets agrees to,
contribute and assign, and the Project Entity, or its applicable wholly owned Subsidiary, agrees to
assume (directly, or indirectly through a transfer of the stock of REMC) (a) the Development Assets
free and clear of Encumbrances securing Excluded Debt; and (b) the Assumed Liabilities (other than
Excluded Debt), including warranties of marketable title to the Development Assets at a price that
does not exceed Fifty Million Dollars ($50,000,000) plus REMC’s net working capital on the date of
the contribution, being the amount set forth in the Project Pro Forma.



     1.115 “Rentech License” means a license from Rentech to the Project Entity of all
Fischer-Tropsch-related intellectual property owned by Rentech that is required to construct or
operate the Project and any other intellectual property held by Rentech or its Affiliates that is
made available to the Project as of the Option Closing, which shall provide for royalties and other
compensation thereafter that does not exceed the amounts set forth in the Project Pro Forma.



     1.116 “Representative” means, with respect to a particular Person, any agent, consultant,
advisor, accountant, financial advisor, legal counsel, rating agency, current or prospective
lender, potential Owner, construction contractor, purchaser or other representative of that Person.



     1.117 “Review Period” is defined in Section 2.1.6(a).



     1.118 “Revival Notice” is defined in Section 8.3.1.



     1.119 “Securities Act” means the Securities Act of 1933, as amended.



     1.120 “Sources and Uses Table” is defined in Section 3.9.



     1.121 “Stockholders Agreement” is defined in Section 3.5.



     1.122 “Subsidiary” means, with respect to any specified Person: (a) any limited liability
company, corporation, association or other business entity of which more than fifty percent (50%)
of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency and after giving effect to any voting agreement or stockholders’ agreement that
effectively transfers voting power) to vote in the election of directors, managers or trustees of
the corporation, association or other business entity is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); or (b) any partnership (i) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of
which are that Person or one or more Subsidiaries of that Person (or any combination thereof).



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     1.123 “Supermajority Vote of the Board” is defined in Exhibit C.



     1.124 “Supermajority Vote of the Project Entity’s Capital Stock” is defined in Exhibit
C.



     1.125 “Target Date” is defined in Section 3.6.



     1.126 “Tax” or “Taxes” means any federal, state, provincial, county, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, customs duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto.



     1.127 “Third Party Consent”
means any material consent or approval of any Person other than Peabody or its Affiliates or
any Governmental Authority.



     1.128 “Third Party Equity Commitments” means commitments from Persons other than Peabody and
its Affiliates to fund Equity Contribution needed to meet the known or expected requirements of the
Lender Commitments.



     1.129 “Transaction Agreements” means the Purchase and Sale Agreement, the Rentech Contribution
Agreement, the Rentech License, the other Affiliate Agreements in effect as of the Option Closing
Date, the Stockholders Agreement and the CSA Assignment and Assumption Agreement.



     1.130 “Transfer” means to sell, assign, dispose of, or transfer.



     1.131 “Withdrawal Notice” is defined in Section 7.4.



ARTICLE 2.

DEVELOPMENT COST SHARING




     2.1 Development Cost Sharing. Subject to the terms and conditions of Article 3 below,
Peabody shall pay to Rentech, as provided in this Article 2, twenty percent (20%) of the
Development Costs Incurred by Rentech and its Affiliates during the period between November 1, 2006
and the earliest of (a) the Financial Closing Date, (b) such time as the costs remitted by Peabody
to Rentech pursuant to this Article 2, inclusive of the Reimbursement Costs, shall have
equaled the aggregate sum of Ten Million Dollars ($10,000,000) and (c) the date of any earlier
termination of this Agreement pursuant to Section 8.1 (the “Reimbursement Period”).



          2.1.1 Reimbursement Payment. Within fourteen (14) days following the Effective Date, Peabody
shall pay to Rentech in cash the sum of Three Million One Hundred Six Thousand Two Hundred Ninety
Two Dollars ($3,106,292), representing reimbursement of twenty percent (20%) of the Development
Costs that were Incurred by Rentech from November 1, 2006 through the end of the month preceding
the Effective Date (the “Reimbursement Costs”) and twenty percent (20%) of the budgeted amount of
Development Costs (as reflected in

12









 








the Development Budget) for the month of May 2007. A detailed
listing of the Reimbursement Costs is contained on Exhibit B hereto. Except for the
payment of Reimbursement Costs, Peabody shall not be required to fund any Development Costs
Incurred prior to the end of the month preceding the Effective Date.




          2.1.2 Budgeted Payments. On or after the first day of each month during the Reimbursement
Period, commencing with June 2007, Rentech will deliver a written invoice to Peabody including the
budgeted amount of Development Costs it expects to Incur during such month (excluding any
Development Costs with respect to which Peabody has previously paid Rentech its portion as provided
in this Agreement). No later than ten (10) Business Days after receipt of such written invoice
from Rentech, Peabody shall pay to Rentech in cash twenty percent (20%) of the budgeted amount of
Development Costs for such month as specified in the Development Budget and the written invoice
(each, a “Peabody Budgeted Payment”). Peabody Budgeted Payments shall be paid by Peabody in
accordance with Section 2.1.4, and if not paid when due, shall accrue interest at the
Agreed Rate, as computed from the date payment was due to the actual payment date.




          2.1.3 True-Up Payments. After the end of each calendar quarter beginning with the quarter
ended June 30, 2007, Rentech will calculate the amount of the Development Costs it or its
Affiliates has Incurred as of the end of such quarter (excluding Reimbursement Costs and any
Development Costs with respect to which Peabody has previously paid Rentech its portion under this
Agreement as of the end of the preceding quarter) (an “Actual Amount”) and compare the Actual
Amount to the Development Costs with respect to which Peabody made Peabody Budgeted Payments for
such completed quarter (the amount of such Development Costs, a “Quarterly Budgeted Amount”). In
the event that the Actual Amount differs from the Quarterly Budgeted Amount for such completed
quarter, either (a) Peabody shall pay to Rentech twenty percent (20%) of the amount by which the
Actual Amount exceeds the Quarterly Budgeted Amount or (b) Rentech shall pay to Peabody twenty
percent (20%) of the amount by which the Actual Amount is less than the Quarterly Budgeted Amount
(in either case, the amount of such payment, the “Quarterly Adjustment Amount”). Within thirty
(30) days following the end of such completed quarter, Rentech shall deliver a written notice to
Peabody setting forth the Actual Amount (broken down by month) and its calculation of the Quarterly
Adjustment Amount (the “Quarterly Adjustment Statement”). Payments of the Quarterly Adjustment
Amount to be made by Rentech or Peabody pursuant to this Section 2.1.3 shall be made within
ten (10) Business Days of delivery of the Quarterly Adjustment Statement as provided in Section
2.1.4, and if not paid when due, shall accrue interest at the Agreed Rate, as computed from the
date payment was actually due to the actual payment date. Within twenty (20) calendar days after
the end of each month, Rentech shall furnish Peabody with a list of all expenditures for
Development Costs for the prior month.




          2.1.4 Method of Payment. Payments by Rentech or Peabody to be made to the other Party under
this Article 2 shall be made by check or by wire transfer in immediately available funds
into a bank account designated by the receiving Party.




          2.1.5 Development Budget. By executing and delivering this Agreement, each Party hereby (x) approves the Development
Budget for the Project as of the Effective Date as set




13









 







forth on Exhibit A hereto and (y)
authorizes Rentech to incur costs and expenses on behalf of the Project as contemplated by the
Development Budget. The Development Budget shall contain a line item estimate of Development Costs
for the following twelve-month period on a month-by-month basis. At any time and from time to
time, Rentech may in its sole discretion amend or update the Development Budget to reflect its good
faith estimate of changes in Development Costs that it expects to be incurred prior to the
Financial Closing Date; provided, however, that,




          (a) notwithstanding anything to the contrary in this Agreement, unless consented to by Peabody
in writing, Peabody shall not be required to fund an aggregate amount of Development Costs that
exceeds the lesser of (1) Ten Million Dollars ($10,000,000) or (2) twenty percent (20%) of the
Development Costs actually paid;




          (b) notwithstanding anything to the contrary in this Agreement, unless consented to by Peabody
in writing, Peabody shall not be required to fund an amount of Development Costs for a given month
during the Reimbursement Period that is greater than one hundred twenty five percent (125%) of the
amount that was contemplated to be reimbursed by Peabody during such month as reflected in the
Development Budget previously approved by Peabody, it being acknowledged and agreed that the amount
of such excess may be included in the Reimbursement Costs for the following month(s), subject to
the limits placed on monthly reimbursements provided under this clause (b) with respect to such
month(s); and




          (c) Rentech shall notify Peabody in writing of any material amendment or update of the
Development Budget, which notice shall be delivered promptly after such amendment or update is made
together with a written discussion of the justification for the amendment or update.




          2.1.6 Right to Review.




          (a) Peabody shall be entitled to review the actual expenditures paid or incurred by Rentech
for which Rentech has obtained reimbursement, in accordance with the provisions of Sections
2.1.1, 2.1.2 and 2.1.3 of this Agreement. Within thirty (30) days following
the delivery of each Quarterly Adjustment Statement with respect to a quarter or with respect to
Reimbursement Costs within 30 days following payment thereof (the “Review Period”), Peabody (with
the assistance of any accountants it designates) may elect, by delivering written notice to Rentech
during the Review Period, to review Rentech’s determinations of the Actual Amount and the Quarterly
Adjustment Amount for such completed quarter and the calculations made pursuant thereto (the
“Reimbursement Calculations”) or the Reimbursement Costs, as the case may be. If Peabody timely
and validly elects to undertake such a review, Rentech shall promptly make available its work
papers, invoices and such other data as is reasonably necessary for Peabody to review the
Reimbursement Calculations or the Reimbursement Costs, as the case may be. Rentech shall cooperate
with Peabody in connection with its review and shall provide reasonable access to the books and
records supporting and the
personnel responsible for the Reimbursement Calculations or the Reimbursement Costs, as the
case may be, under review during regular business hours upon advance notice. Peabody and its
Representatives assisting in the review shall maintain all Rentech Confidential Information
regarding Rentech or its business and assets (including, without limitation, the Project) it




14









 







obtained in connection with the review in strict confidence and shall not disclose any such Rentech
Confidential Information to any Person or use any such Rentech Confidential Information for any
purpose other than for the review.




          (b) Peabody shall raise any objection to the Reimbursement Calculations or the Reimbursement
Costs, as the case may be, within thirty (30) days following the end of the Review Period by
sending a written notice to Rentech setting forth in reasonable detail which Reimbursement
Calculations or Reimbursement Costs it is objecting to and the specific bases for such objection.
In the case of Reimbursement Calculations, the only bases for objection shall be (i) non-compliance
with the Development Budget or this Agreement, (ii) computational errors and (iii) lack of
reasonable supporting documentation. In the case of the Reimbursement Costs, the only bases for
objection shall be that the expenditure did not constitute Development Costs or the lack of
reasonable supporting documentation (it being understood that Peabody has approved the Development
Budget (as of the Effective Date) and the categories of Development Costs included therein). Any
Reimbursement Calculations or the Reimbursement Costs, as the case may be, not objected to by
Peabody by written notice to Rentech within the thirty (30) days following the end of the Review
Period shall be deemed to have been consented to and approved by Peabody, and such Reimbursement
Calculations shall be final and binding on all Parties.




          (c) If Peabody timely raises a written objection to a Reimbursement Calculation or the
Reimbursement Costs, as the case may be, during the thirty (30) days following the end of the
Review Period, Peabody and Rentech, together with their respective Representatives, shall have
thirty (30) days from the date written notice of the objection is delivered to Rentech (the
“Discussion Period”) to discuss the objection and bring it to a resolution. If Peabody and Rentech
come to a resolution regarding the Reimbursement Calculation or the Reimbursement Costs, as the
case may be, in writing, such resolution shall be binding on all Parties, and no Party shall raise
any objection thereto. If such a resolution is not achieved during the Discussion Period, then (i)
either Rentech or Peabody may refer such Reimbursement Calculation or the Reimbursement Costs, as
the case may be, to an Independent Accountant to be mutually agreed upon by Rentech and Peabody
or, (ii) if Peabody and Rentech are not able to so mutually agree within fifteen (15) days after
written notice from either Party to the other of its intent to refer to an Independent Accountant,
an Independent Accountant selected by arbitrators appointed in accordance with the provisions of
Section 16.3.1 of the Coal Supply Agreement (the Independent Accountant selected pursuant to this
sentence, and in such capacity, the “Reimbursement Calculation Referee”). Rentech and Peabody
shall instruct the Reimbursement Calculation Referee (A) to determine the applicable Reimbursement
Calculation or Reimbursement Cost, as the case may be (according to the relevant calculation
methodology in this Agreement and Development Budget giving rise to the review); and (B) not to
assign a value to any item in dispute greater than the greatest value for such item assigned by
Rentech, on the one hand, and Peabody, on the other hand, or less than the smallest value for such
items assigned by Peabody, on the one hand, and Rentech, on the other hand. The Reimbursement
Calculation Referee shall act as an expert and not as an arbitrator, and shall resolve only matters
in dispute. The Reimbursement Calculation Referee shall be given full access to the books and
records of Rentech and the Project reasonably relating to the Reimbursement Calculation or
Reimbursement Cost at issue during regular business hours upon advance notice and the accountant
and project manager then serving for Rentech in connection with the Project shall be

15









 








instructed to
discuss freely with such Reimbursement Calculation Referee the Reimbursement Calculations or the
Reimbursement Costs, as the case may be, and other data and information that may be within his or
her knowledge and that is reasonably related to the Reimbursement Calculation or Reimbursement Cost
at issue. The Reimbursement Calculation Referee shall be given copies of the Development Budget,
this Agreement and amendments hereto, if any, and documentation relating to such Development Costs
and shall be entitled to consider the Development Budget, the provisions of this Agreement along
with any other factors he or she may deem appropriate in reviewing the Reimbursement Calculation or
the Reimbursement Costs, as the case may be, at issue. The Reimbursement Calculation Referee shall
render a written report detailing the basis for and assumptions used in reaching his or her
determination. The opinion of the Reimbursement Calculation Referee of the amount of the
applicable Reimbursement Calculation or the Reimbursement Costs, as the case may be, shall be final
and binding absent manifest error or fraud. The costs of the Reimbursement Calculation Referee
shall be borne equally by Rentech and Peabody. Upon making its final assessment of a Reimbursement
Calculation or the Reimbursement Costs, as the case may be, the Reimbursement Calculation Referee
shall provide written notice of such to Rentech and Peabody. Once the Reimbursement Calculation
has become final and binding, the applicable Quarterly Adjustment Amount shall be adjusted to
reflect any adjustments in such final Reimbursement Calculation. In the event that such Quarterly
Adjustment Amount (as adjusted according to the previous sentence) differs from the original
Quarterly Adjustment Amount for the related quarter, either (a) Peabody shall pay to Rentech the
amount by which the Quarterly Adjustment Amount (as adjusted according to the previous sentence)
exceeds the original Quarterly Adjustment Amount or (b) Rentech shall pay to Peabody the amount by
which the Quarterly Adjustment Amount (as adjusted according to the previous sentence) is less than
the original Quarterly Adjustment Amount. Once a disputed Reimbursement Cost has become final and
binding, it shall be adjusted to reflect any adjustments in such final Reimbursement Cost, and
Rentech shall pay to Peabody the amount (if any) by which the Reimbursement Cost (as so adjusted)
is less than the original Reimbursement Costs. Payments to be made by Rentech or Peabody pursuant
to the previous two sentences shall be made in cash to the other Party within five (5) Business
Days of the date that the Reimbursement Calculation or the Reimbursement Costs, as the case may be,
becomes final and binding by check or by wire transfer in immediately available funds into a bank
account designated by the Party, and if not paid when due, shall accrue interest at the Agreed
Rate, as computed from the date payment was actually due to the actual payment date.




          (d) The right of Peabody to undertake a review under this Section 2.1.6 and any
adjustments to be made based on the final Reimbursement Calculation or the Reimbursement Costs, as
the case may be, shall be Peabody’s and its Affiliates’ sole and exclusive remedy for any
disagreement regarding Rentech’s Reimbursement Calculations or the Reimbursement Costs, as the case
may be. Except as provided in the preceding sentence, Peabody (on behalf of itself and its
Affiliates) agrees that it and they shall have no right to, and shall not, review, object to or in
any way contest any Reimbursement Calculation or the
Reimbursement Costs, as the case may be. Peabody shall not withhold payments under this
Agreement as a result of any ongoing review of a Reimbursement Calculation or the Reimbursement
Costs, as the case may be, pursuant to this Section 2.1.6.





16









 








ARTICLE 3.

EQUITY OPTION




     3.1 Grant of Equity Option. Subject to the terms and conditions of this Article 3,
Rentech hereby grants to Peabody the option (the “Option”), exercisable in Peabody’s sole
discretion during the Option Exercise Period, to purchase all, but not less than all, of the Option
Securities, at a purchase price equal to the Option Exercise Price.



     3.2 Notice from Rentech. Not less than ninety (90) days and not more than one hundred twenty
(120) days prior to the date that Rentech in good faith estimates that the Financial Closing Date
will occur (the “Notice Window”), Rentech shall deliver to Peabody a written notice (the “Financial
Closing Notice”) including (a) the estimated Financial Closing Date, (b) a good faith estimate of
the sources and uses for the Project in the form attached hereto as Schedule 3.9, (c) a
statement of the then-estimated amount of Peabody’s Equity Contribution for the Option Securities
and the then-estimated Option Exercise Price, (d) a term sheet for or draft of the Rentech License,
(e) a description of the Project Entity structure, and (f) each of the schedules contemplated by
Article 6. Upon delivery of such Financial Closing Notice, the Option shall become
exercisable, and the Option Exercise Period shall commence. Subject to the following sentence and
Section 3.6, the Option Exercise Period shall not be extended if for any reason the actual
Financial Closing Date is different from the estimated date set forth in the Financial Closing
Notice (including, without limitation, because the actual Financial Closing Date is delayed or
accelerated or due to any other reason that the good faith estimate of the Financial Closing Date
is incorrect); provided, however, that if Rentech does not form a good faith
estimate of the Financial Closing Date within the Notice Window, then Rentech shall deliver the
Financial Closing Notice promptly as practicable after the time that it forms such an estimate.
Notwithstanding the preceding sentence, in the event that, after delivery of the Financial Closing
Notice and prior to the Option Exercise Date, Rentech in good faith concludes that the Financial
Closing Date will occur more than sixty (60) days after the estimated Financial Closing Date set
forth in the Financial Closing Notice, then Rentech shall deliver to Peabody an updated Financial
Closing Notice as provided above, and the Option Exercise Period will be extended as provided under
the definition of “Option Exercise Period” in Section 1.69.



     3.3 Availability of Due Diligence Information. During the period beginning on the date of
delivery of the Financial Closing Notice and ending on the last day of the Option Exercise Period
or, if Peabody exercises the Option, ending on the Option Closing Date, Rentech shall make
reasonably available to Peabody such information relating to the Project as Rentech makes available
to the Project Lender and any other prospective Owner of the Project, including, without
limitation, access to any physical
or on-line data room established by Rentech for the Project Financing. Peabody also shall be
entitled to receive information regarding the Project to the extent provided in Section
7.1(b). Without limiting the foregoing, Rentech shall make the following information available
to Peabody to the extent it is in Rentech’s control and possession or available to Rentech without
unreasonable effort:



          (a) the status of all material Governmental Approvals (including the air permit for the
Project) necessary for the development, construction and operation of the Project;





17









 








          (b) the existence and status of litigation is pending or, to the Knowledge of Rentech or its
Affiliates, threatened which could reasonably be expected to have a Material Adverse Effect on the
Project;




          (c) copies of executed or draft Lender Commitments, if any;




          (d) the proposed level of Peabody’s Equity Contribution for the Option Securities and the
proposed Option Purchase Price;




          (e) all executed or draft Third Party Equity Commitments or term sheets or expressions of
intent therefor;




          (f) the draft or executed EPC Agreement; and




          (g) to the extent known each event or condition exists that Rentech believes will have a
Material Adverse Effect on the construction or operation of the Project.




     3.4 Organization and Structuring of Project Entity. On or prior to the fifth (5th)
Business Day before the expiration of the Option Exercise Period, Rentech shall cause the Project
Entity and each of its Subsidiaries to be formed as a corporation, limited liability company or
other business organization under the laws of the State of Delaware; provided that the form
of the Project Entity and its Subsidiaries shall be subject to Rentech’s consultation with Peabody.
On or before the Option Closing Date, Rentech shall cause REMC to take such actions as are
necessary to transfer (either directly or indirectly by operation of law or through a transfer of
all of the capital stock of REMC) all of REMC’s right, title and interest in and to the Facility,
and any and all other Development Assets, to the Project Entity, which formation and transfer may
be effected through a conversion of REMC into the Project Entity as provided under the laws of the
State of Delaware; provided, however, that in lieu of such formation and transfer,
Rentech, in its sole discretion, may elect for REMC to be the Project Entity. Rentech will consult
with Peabody in the evaluation of structuring such formation (or conversion) for the purpose of
optimizing the economics of Rentech’s and Peabody’s ownership of the Project Entity and the
accounting for the existence of liabilities or potential liabilities associated with the Facility
(it being understood that the present goal is for the Project Entity to be an entity treated as a
partnership for tax purposes); provided, however, the Parties acknowledge and agree
that the ultimate structure shall be determined by Rentech in its sole discretion. In the event
that the Option is exercised pursuant to the terms of this
Agreement, Rentech shall, and shall cause its applicable Affiliates, to enter in a Rentech
Contribution Agreement.



     3.5 Terms Governing Project Entity. After delivery of the Financial Closing Notice, Rentech
and Peabody shall negotiate in good faith with respect to a stockholders agreement, limited
liability company agreement or similar agreement governing the relationship among Rentech, Peabody
and any other owner of stock, membership interests or profits interests as owners of the Project
Entity (together, the “Owners”), which agreement shall incorporate the terms set forth in the term
sheet attached hereto as Exhibit C (the “Stockholders Agreement”).



     3.6 Confirmation of Expected Financial Closing Date. Between eighty (80) and seventy (70) days
prior to Rentech’s good faith estimate of the Financial Closing Date, as set



18









 







forth in the latest
Financial Closing Notice (the “Confirmation Period”), so long as the Option continues to be
exercisable at such time in accordance with the terms of this Agreement, Rentech shall secure from
the Financial Advisor a written confirmation of the date it then estimates the Financial Closing
Date will occur (the “Financial Advisor Confirmation”) and deliver the same to Peabody. If the
Financial Advisor Confirmation is not provided within ten (10) days after the end of the
Confirmation Period or the Financial Advisor Confirmation states that it cannot provide an estimate
of the Financial Closing Date (a “Confirmation Failure”), then the Option Exercise Period shall be
terminated but the Option shall remain in effect in accordance with this Article 3 and a
new Option Exercise Period shall begin only after the delivery of a new Financial Closing Notice
pursuant to Section 3.2. If the Financial Advisor advises the Parties in writing that it
in good faith estimates that the Financial Closing Date will occur more than fifteen (15) days, but
not more than thirty (30) days, after the estimated Financial Closing Date set forth in the latest
Financial Closing Notice (the “Target Date”), then the Option Exercise Period will be extended as
provided under the definition of “Option Exercise Period” to the date that is sixty (60) days prior
to the date the Financial Advisor estimates the Financial Closing Date will occur. If the
Financial Advisor Confirmation contains an estimate of the Financial Closing Date that is more than
thirty (30) days, but not more than sixty (60) days, after the Target Date, then the Option
Exercise Period will be extended as provided under the definition of “Option Exercise Period” to
the date that is sixty (60) days prior to the date the Financial Advisor estimates the Financial
Closing Date will occur and between fifteen (15) and ten (10) days before the end of the extended
Option Exercise Period, Rentech shall deliver to Peabody a Financial Advisor Confirmation
confirming that the Target Date is estimated to be within fifteen (15) days of the estimated
Financial Closing Date set forth in the Financial Advisor Confirmation. If the Financial Advisor
Confirmation contains an estimate of the Financial Closing Date that is more than sixty (60) days
after the Target Date, then the Option Exercise Period shall be terminated but the Option shall
remain in effect in accordance with this Article 3 and a new Option Exercise Period shall
begin only after the delivery of a new Financial Closing Notice pursuant to Section 3.2.



     3.7 Notice of Option Decision. Peabody shall exercise its Option with respect to the Option Securities (if at all) by notice to
Rentech (the “Option Exercise Notice”) on or before the last day of the Option Exercise Period (the
date of such exercise, the “Option Exercise Date”), which notice shall be irrevocable except (a) to
the extent this Agreement may be terminated by Rentech pursuant to Section 8.1(b)(i) or by
Peabody pursuant to Section 8.1(c)(ii) if Rentech delivers a Withdrawal Notice, (b) as
provided in Section 3.8 or (c) as may be provided in the PSA due to a breach by Rentech or
the Project Entity of the PSA that constitutes a Material Adverse Effect. If Peabody fails to
exercise its Option on or before the end of the Option Exercise Period, then the Option shall
expire unless (i) the Option Exercise Period is terminated under Section 3.6, in which
case, the Option shall remain in effect in accordance with this Article 3 and a new Option
Exercise Period shall begin only after the delivery of a new Financial Closing Notice pursuant to
Section 3.2 or (ii) the Option is restored pursuant to Section 8.3.2.



     3.8 Exercise of Option; Purchase and Sale Agreement. If Peabody timely and validly exercises
its Option, the Parties and the Project Entity shall promptly finalize and execute a Purchase and
Sale Agreement requiring the Project Entity to sell to Peabody, and Peabody to purchase, the Option
Securities for the Option Exercise Price. The PSA shall
incorporate the



19









 







terms set forth in the
term sheet attached hereto as Exhibit F with such additional terms as may be mutually
agreed to by the Parties. Notwithstanding the exercise of the Option by Peabody, Peabody may elect
to terminate the PSA and the exercise of the Option prior to the Option Closing Date if, and only
if, any of the events described in clauses (a) through (e) below occur. The occurrence of any of
such event shall not be deemed to be a breach of this Agreement by Rentech or Peabody.



          (a) The Financial Closing shall not have occurred within one hundred twenty (120) days after
the last day of the Option Exercise Period (the “End Date”).




          (b) The
Option Exercise Price (the “Actual Exercise Price”)
is more than [*] greater than the estimated Option Exercise Price in the Sources and Uses Table last
delivered to Peabody prior to the Option Exercise Date (the “Estimated Exercise Price”);
provided, however, that instead of terminating the PSA prior to the Option Closing
Date pursuant to this Section 3.8(b), Peabody may in its sole election, with written notice
to Rentech at least two (2) days prior to the Option Closing Date (i) purchase the Option
Securities for the Actual Exercise Price as calculated herein and receive a full twenty percent
(20%) Percentage Interest in the Project Entity, or (ii) purchase a reduced amount of Option
Securities for a purchase price equal to the sum of (x) the amount of the Estimated Exercise Price,
plus (y) [*] (in which event the twenty percent (20%) amount in the
definitions of “Option Exercise Price” in Section 1.70 and “Option Securities” in
Section 1.71 shall be accordingly reduced to a percentage equal to the product (expressed
as a percentage) of (A) .20, multiplied by (B) the Estimated Exercise Price plus [*], divided by the Actual Exercise Price).




          (c) The leveraged internal rate of return on the Equity Contributions as reflected in the most
recent Project Pro Forma delivered by Rentech to Peabody pursuant to Section 7.1(b)
decreases either (i) by more [*] from the leveraged
internal rate of return on the Equity Contributions reflected in the last Project Pro Forma
delivered by Rentech to Peabody before the Option Exercise Date or (ii) to a percentage that is
less than [*] (an “IRR Event”).




          (d) After the Option Exercise Date, Rentech changes the form, structure, tax elections, tax
attributes, or accounting treatment of the Project Entity and/or its Subsidiaries in a manner that
materially and adversely affects the tax or financial reporting position applicable to Peabody
Energy in its capacity as an Owner.




          (e) There exists an Environmental Condition at, on, or under the Project Site or the Facility
that was not disclosed to Peabody prior to ten (10) days before the Option Exercise Date, for which
the Owners reasonably would be expected to become liable to any Person under Environmental Laws
(such liabilities, the “Environmental Liabilities”) in an aggregate amount exceeding Ten Million
Dollars ($10,000,000); provided, however, that Peabody shall not be entitled to
terminate the PSA or this Agreement under this Section 3.8(e) if (i) the amount of such
Environmental Liabilities reasonably would not be expected to exceed Twenty Million Dollars
($20,000,000) in the aggregate, and Rentech indemnifies the Owners for any Environmental
Liabilities in excess of Ten Million Dollars ($10,000,000) in the aggregate;




20









 







or (ii) the amount of
such Environmental Liabilities reasonably would be expected to exceed Twenty Million Dollars
($20,000,000) in the aggregate, and Rentech indemnifies the Owners for any Environmental
Liabilities in excess of Ten Million Dollars ($10,000,000) in the aggregate and Rentech reasonably
establishes pursuant to written information delivered to Peabody that it has the financial
capability to support such indemnification obligations. In the event that Rentech discovers such
an Environmental Condition, it will promptly give notice to Peabody of such condition.




     3.9 Sources and Uses Table. As soon as practicable, but no later than five (5) Business Days
prior to the Option Closing Date, Rentech shall deliver to Peabody an updated sources and uses
table in the form attached hereto as Schedule 3.9, which shall set forth the final sources
and uses of funds for the Project (the “Sources and Uses Table”). Subject to Section 3.8,
in the event that Peabody timely and validly exercises the Option, then Peabody shall be required
to fund its portion of Equity Contribution in the Project Entity as provided in this Agreement in
an amount equal to the Option Exercise Price.



     3.10 Option Closing; Deliveries. The purchase and sale of the Option Securities (the “Option
Closing”) shall take place at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY
10022 at 10:00 a.m., Eastern time on the Financial Closing Date, or at such other time and place as
Rentech and Peabody mutually agree upon (the “Option Closing Date”). All transactions at the
Option Closing shall be deemed to have taken place simultaneously and no transaction shall be
deemed to have been completed and no document, instrument or certificate shall be deemed to have
been delivered until all transactions are completed and all documents delivered. At the Option
Closing, (a) Rentech shall deliver to Peabody certificates or other documents evidencing
that the Option Securities are registered in Peabody’s name and are free and clear of all
Encumbrances, except Encumbrances permitted under the PSA, against delivery by Peabody of the
Option Exercise Price by wire transfer in immediately available funds into a bank account
designated by Rentetch at or prior to the Option Closing; and (b) Rentech and Peabody shall deliver
the certificates, agreements, instruments and other documents described in Sections 3.11
and 3.12 and comply with the terms of the PSA.



     3.11 Peabody’s Conditions to Option Closing. If Peabody timely and validly exercises the
Option pursuant to Section 3.7, then its obligation to purchase and pay for the Option
Securities shall be subject to the satisfaction of each of the following conditions on or before
the Option Closing Date, in addition to the closing conditions set forth in the PSA:



          (a) Truthfulness of Representations and Warranties. The representations and warranties of
Rentech contained in this Agreement shall be true and correct (without giving effect to any
materiality or Material Adverse Effect qualifications) on and as of the Option Closing Date (except
for such representations and warranties made as of a specified date, which shall be true and
correct as of such specified date), except where the failure of such representations and warranties
to be so true and correct has not had, in the aggregate, a Material Adverse Effect.




          (b) Compliance with Agreements, Obligations and Covenants. Rentech shall have performed,
satisfied or complied in all material respects with all agreements,





21









 







obligations and covenants
required by this Agreement to be performed, satisfied or complied with by Rentech by the time of
the Option Closing.




          (c) Delivery of Officer’s Certificate. Peabody shall have received a certificate dated as of
the Option Closing Date and signed by the chief executive officer or chief financial officer of
Rentech certifying on behalf of Rentech that the conditions set forth in this Section 3.11
have been satisfied on and as of such date.




          (d) Delivery of Rentech Contribution Agreement. Unless Rentech elects for REMC to be the
entity that owns the Development Assets following the transactions contemplated by Section
3.4, Peabody shall have received a copy of the Rentech Contribution Agreement executed by the
parties thereto and in a form reasonably acceptable to Peabody.




          (e) Delivery of Affiliate Agreements. Peabody shall have received a copy of the Rentech
License and each other material Affiliate Agreement executed on or prior to the Option Closing by
Rentech or the applicable Rentech Affiliate and the Project Entity or its applicable Subsidiary and
in a form reasonably acceptable to Peabody.




          (f) Delivery of Stockholders Agreement. Peabody shall have received a counterpart to the
Stockholders Agreement signed by a duly authorized officer of Rentech or its applicable Subsidiary
and each other Owner.




          (g) Delivery of CSA Assignment and Assumption Agreement. Peabody shall have received a
counterpart to the CSA Assignment and Assumption Agreement signed by a duly authorized officer of
REMC and the Project Entity or its applicable Subsidiary and in a form reasonably acceptable to
Peabody.




          (h) Purchase Permitted by Applicable Laws; Legal Investment. The purchase and sale of, and
payment for, the Option Securities shall be permitted by the Applicable Laws of the jurisdictions
to which it is subject.




          (i) Non-Termination of this Agreement. This Agreement shall not have been terminated pursuant
to Article 8.




          (j) Closing of the Project Financing. The closing of the Project Financing shall occur
concurrently with the Option Closing hereunder.




     3.12 Rentech’s Conditions to Option Closing. If Peabody timely and validly exercises the
Option pursuant to Section 3.7, then Rentech’s obligation to deliver the Option Securities
to Peabody shall be subject to the satisfaction of each of the following conditions on or before
the Option Closing Date:



          (a) Truthfulness of Representations and Warranties. The representations and warranties of
Peabody contained in this Agreement shall be true and correct (without giving effect to any
materiality qualifications) on and as of the Option Closing Date, except where the failure of such
representations and warranties to be so true and correct has not had, in the




22









 







aggregate, a material
adverse effect on Peabody’s ability to consummate the transactions contemplated herein.




          (b) Compliance with Agreements, Obligations and Covenants. Peabody shall have performed,
satisfied or complied in all material respects with all agreements, obligations and covenants
required by this Agreement to be performed, satisfied or complied with by Peabody by the time of
the Option Closing, including, without limitation, the payment of the Development Costs due and
payable by Peabody on or prior to the Option Closing Date under Article 2 (other than
Development Costs Peabody has disputed in accordance with Article 2).




          (c) Delivery of Officer’s Certificate. Rentech shall have received a certificate dated as of
the Option Closing Date and signed by the chief executive officer or chief financial officer of
Peabody certifying on behalf of Peabody that the conditions set forth in this Section 3.12
have been satisfied on and as of such date.




          (d) Delivery of Stockholders Agreement. Rentech shall have received a counterpart to the
Stockholders Agreement signed by a duly authorized officer of Peabody.




          (e) Delivery of CSA Assignment and Assumption Agreement. Rentech shall have received a
counterpart to the CSA Assignment and Assumption Agreement signed by a duly authorized officer of
COALSALES, LLC and in a form reasonably acceptable to Rentech.




          (f) Delivery of Peabody Guaranty (PSA). Rentech shall have received a copy of the Peabody
Guaranty (PSA) signed by a duly authorized officer of Peabody Energy in the form set forth in
Exhibit J hereto.




          (g) Purchase Permitted by Applicable Laws; Legal Investment. The purchase and sale of, and
payment for, the Option Securities shall be permitted by the Applicable Laws of the jurisdictions
to which it is subject.




          (h) Non-Termination of this Agreement. This Agreement shall not have been terminated pursuant
to Article 8.




          (i) Closing of the Project Financing. The closing of the Project Financing shall occur
concurrently with the Option Closing hereunder.




3.13 Additional Earned Equity.




          3.13.1 If prior to the Option Closing, and as a direct result of Peabody’s efforts, the
Project Entity receives any agreement, arrangement or benefit for the Project which results in
Peabody Cost Savings, then, no later than forty five (45) days prior to the then estimated
Financial Closing Date, Peabody shall deliver a written notice to Rentech describing in reasonable
detail (a) its specific basis for concluding that it has obtained the Peabody Cost Savings,
including, without limitation, the agreement, arrangement or benefit that has given rise to the
Peabody Cost Savings; and (b) its calculation of the Additional Earned Equity and the Additional
Earned Securities (the “Additional Earned Equity Statement”). Rentech will

23









 








consult with Peabody in
good faith in the evaluation of the tax structuring for the purpose of minimizing Peabody’s federal
taxes in the Additional Earned Equity; provided, however, the Parties acknowledge
and agree that the ultimate structure shall be determined by Rentech in its sole discretion.




          3.13.2 During the fifteen (15) days following Rentech’s receipt of the Additional Earned
Equity Statement, Peabody will promptly provide Rentech and its Representatives with such work
papers, documentation and data as it may reasonably request in support of the matters referenced in
the Additional Earned Equity Statement. Peabody shall cooperate with Rentech in connection with
its review and shall provide reasonable access during regular business hours upon advance notice to
the books and records supporting and the personnel responsible for the Additional Earned Equity
Statement. Rentech and its Representatives assisting in the review shall maintain all Rentech
Confidential Information regarding Peabody or its business and assets it obtained in connection
with the review in strict confidence and shall not disclose any such Rentech Confidential
Information to any Person or use any such Rentech Confidential Information for any purpose other
than for the review.




          3.13.3 Within fifteen (15) days following Rentech’s receipt of the Additional Earned Equity
Statement, Rentech shall notify Peabody in writing of any objections that Rentech may have to the
Additional Earned Equity Statement, stating in reasonable detail the basis for any such objections
(an “Objection Notice”); provided that the only bases for objection shall be (a)
non-compliance with the standards set forth in this Section 3.13, and the related defined
terms in this Agreement, for the preparation of the Additional Earned Equity Statement and
calculation
of the Additional Earned Equity; and (b) computational errors. If Rentech fails to deliver an
Objection Notice to Peabody within such fifteen (15)-day period, Rentech shall be deemed to have
concurred with the Additional Earned Equity Statement and its calculation of the related Peabody
Cost Savings shall become final and binding on all Parties.




          3.13.4 If Rentech timely delivers an Objection Notice to Peabody in accordance with
Section 3.13.3, Rentech and Peabody, together with their respective Representatives, shall
have fifteen (15) days from the date the Objection Notice is delivered to Peabody to discuss the
objection and bring it to a resolution. If Rentech and Peabody come to a resolution regarding the
Additional Earned Equity Statement, such resolution shall be binding on all Parties, and no Party
shall raise any objection thereto. If such a resolution is not achieved during the fifteen
(15)-day period following delivery of the Objection Notice, then (a) either Rentech or Peabody may
refer the dispute regarding the Additional Earned Equity Statement to a Qualified Expert to be
mutually agreed upon by Rentech and Peabody or, (b) if Peabody and Rentech are not able to so
mutually agree within fifteen (15) days after written notice from either Party to the other of its
intent to refer to a Qualified Expert, a Qualified Expert selected by arbitrators appointed in
accordance with the provisions of Section 16.3.1 of the Coal Supply Agreement (the
Qualified Expert selected pursuant to this sentence, and in such capacity, the “Additional Earned
Equity Referee”). Rentech and Peabody shall instruct the Additional Earned Equity Referee (i) to
resolve the dispute regarding the Additional Earned Equity Statement and the amount of the
Additional Earned Equity (according to the relevant calculation methodology in this Agreement
giving rise to the review); and (ii) not to assign a value to any item in dispute greater than the
greatest value for such item assigned by Rentech, on the one hand, and Peabody, on the other

24









 








hand,
or less than the smallest value for such items assigned by Peabody, on the one hand, and Rentech,
on the other hand. The Additional Earned Equity Referee shall act as an expert and not as an
arbitrator, and shall resolve only matters in dispute. The Additional Earned Equity Referee shall
be given full access to the documents, books and records of Peabody reasonably relating to the
Additional Earned Equity Statement and the personnel who assisted in the preparation of the
Additional Earned Equity Statement shall be instructed to discuss freely with the Additional Earned
Equity Referee the Additional Earned Equity Statement and other data and information that may be
within his or her knowledge and that is reasonably related to the Additional Earned Equity
Statement and the calculation of the Additional Earned Equity. The Additional Earned Equity
Referee shall be given copies of this Agreement and amendments hereto, if any, and shall be
entitled to consider the provisions of this Agreement along with any other factors he or she may
deem appropriate in reviewing the Additional Earned Equity Statement. The Additional Earned Equity
Referee shall render a written report detailing the basis for and assumptions used in reaching his
or her determination. The opinion of the Additional Earned Equity Referee of the amount of the
Additional Earned Equity shall be final and binding absent manifest error or fraud. The costs of
the Additional Earned Equity Referee shall be borne equally by Rentech and Peabody.



3.13.5 The closing of the Project Entity’s issuance of the Additional Earned Securities to
Peabody shall occur on the Option Closing Date at the principal offices of Latham & Watkins LLP,
885 Third Avenue, New York, NY 10022; provided, however, in the event that the
Additional Earned Equity has not been finally determined pursuant to the terms of this Section
3.13 by the Option Closing Date, then the closing of the issuance of the Additional
Earned Securities shall be extended to the date that is five Business Days after the date of
the final determination of the amount of the Additional Earned Equity, or such other date mutually
agreed to by Rentech and Peabody; provided, further, that if the Option Closing
Date does not occur for any reason, then Peabody shall have no right to receive the Additional
Earned Securities or any other equity interest in the Project Entity. At the closing of the
issuance of the Additional Earned Securities, (a) the Project Entity shall issue, transfer, and
deliver to Peabody, without any further consideration from Peabody, full right, title and interest
in and to the Additional Earned Securities, free and clear of all liens, and shall deliver to
Peabody certificates or other documents evidencing that the Additional Earned Securities are
registered in Peabody’s name; and (b) the Project Entity shall cancel on its books and records the
lesser of a number of shares of Capital Stock held by Rentech or its Affiliate equal to the number
or amount of Additional Earned Securities issued at the Option Closing or all of Rentech’s Capital
Stock.




     3.14 Equity Adjustment for Specified State Grants. If, prior to the Option Closing, the State
of Illinois awards a dollar-denominated grant, subsidy or governmental benefit to the Project or
the Project Entity or a Subsidiary thereof (an “Illinois Grant”), excluding State of Illinois
Municipal Debt (credit enhanced and tax exempt) and the grants identified on Exhibit D
hereto (the “Excluded Illinois Grants”), then on the Option Closing Date Rentech shall cause the
Project Entity to issue to Peabody an additional number of shares or amount of Capital Stock in the
Project Entity with a value equal to the present value of ten percent (10%) of the reasonably
estimated dollar amount of the Illinois Grant (other than the Excluded Illinois Grants) as of the
Option Closing Date (the “Illinois Grant Securities”); provided, however, that if
the Option Closing Date does not occur for any reason, then Peabody shall have no right to receive



25









 







the Illinois Grant Securities or any other equity interest in the Project Entity. For purposes of
the computations in the preceding sentence, (a) present value shall be mutually agreed to by the
Parties acting reasonably by discounting ten percent (10%) of the reasonably estimated dollar
amount of the Illinois Grants (other than the Excluded Illinois Grants) at an annual rate equal to
ten percent (10%); and (b) the Project Entity’s outstanding Capital Stock shall be valued based on
the amount of Equity Contributions made to the Project Entity at the Financial Closing which shall
be reflected in the final Sources and Uses Table delivered pursuant to Section 3.9. An
Illinois Grant shall be deemed awarded even if funds will be made available after the Option
Closing Date. In the event that the Project Entity issues to Peabody the Illinois Grant
Securities, then concurrently therewith Rentech shall cause the Project Entity to cancel an equal
number of shares or amount of Capital Stock held by the Owners of the Project Entity (other than
any Capital Stock held by Peabody). For purposes of the preceding sentence, all such cancelled
shares or other amount of Capital Stock will be apportioned among all of the Project Entity’s
Owners as of the Option Closing Date (other than Peabody) based on their Percentage Interest in the
Project Entity as of such date (prior to giving effect to the adjustments provided in this
Section 3.14).



     3.15 Other Sales of Project Entity Securities. Except as otherwise provided in this
Article 3 or in the Stockholders Agreement, neither Rentech nor any of its Affiliates shall
be required to offer or sell any Capital Stock in the Project Entity to Peabody or its Affiliates.
So long as this Agreement has not been
terminated pursuant to Article 8 or the PSA has not been terminated pursuant to its
terms, Rentech and its Affiliates (including the Project Entity) shall not issue, sell or transfer
any Capital Stock (or other securities) in the Project Entity to a Person which at the time of such
issuance, sale or transfer is a Peabody Energy Competitor without the prior written consent of
Peabody, which may be given or withheld in its sole discretion.



ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF RENTECH




          Except as specifically set forth in certain schedules provided by Rentech to Peabody and
attached to this Agreement, which are numbered to correspond to the Section numbers of this
Agreement, Rentech hereby represents and warrants to Peabody as of the Effective Date and as of the
Option Closing Date as follows:




     4.1 Organization, Good Standing. Rentech is a Colorado corporation, duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of incorporation. Rentech
has the requisite power and authority necessary to carry out the transactions contemplated by this
Agreement.



     4.2 Authorization; No Breach. This Agreement has been duly authorized, executed and delivered
by Rentech. Assuming that this Agreement is a valid and binding obligation of the other Parties,
this Agreement constitutes a valid and binding obligation of Rentech, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy laws, other similar laws
affecting creditors’ rights and general principles of equity affecting the availability of specific
performance and other equitable remedies. The execution, delivery and performance by Rentech of
this Agreement does not and shall not (i) conflict with any of the provisions of the



26









 







articles of
incorporation, bylaws or similar organizational documents of Rentech, (ii) conflict with, result in
a breach of the terms, conditions or provisions of, or constitute a default under (whether with or
without the passage of time, the giving of notice or both) any agreement, contract or instrument to
which Rentech is subject, (iii) result in the creation of any lien or encumbrance upon the assets
or any equity interests that comprise part of the Project, other than as contemplated herein or by
the Project Financing, (iv) result in a violation of any law, statute, rule, regulation, order,
judgment or decree to which Rentech is subject or (v) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any third party or any
Governmental Authority, except as does not constitute a Material Adverse Effect.



     4.3 Litigation. There are no actions, suits, proceedings, orders or claims pending, or to the
Knowledge of Rentech, threatened in writing against Rentech or its Affiliates at law or in equity,
by any Person or before or by any Governmental Authority which would reasonably be expected to
materially adversely affect Rentech’s performance under this Agreement, which relate to the
transactions contemplated by this Agreement or which would reasonably be expected to
materially adversely affect the consummation of the transactions contemplated by this
Agreement.



ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF PEABODY




          Except as specifically set forth in certain schedules provided by Peabody to Rentech and
attached to this Agreement, which are numbered to correspond to the Section numbers of this
Agreement, Peabody hereby represents and warrants to Rentech as of the Effective Date and as of the
Option Closing Date as follows:




     5.1 Organization, Good Standing. Peabody is a Delaware corporation, duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of incorporation. Peabody
is a wholly owned direct or indirect Subsidiary of Peabody Energy. Peabody has the requisite power
and authority necessary to carry out the transactions contemplated by this Agreement.



     5.2 Authorization; No Breach. This Agreement has been duly authorized, executed and delivered
by Peabody. Assuming that this Agreement is a valid and binding obligation of the other Parties,
this Agreement constitutes a valid and binding obligation of Peabody, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy laws, other similar laws
affecting creditors’ rights and general principles of equity affecting the availability of specific
performance and other equitable remedies. The execution, delivery and performance by Peabody of
this Agreement does not and shall not (i) conflict with any of the provisions of the articles of
incorporation, bylaws or similar organizational documents of Peabody, (ii) conflict with, result in
a breach of the terms, conditions or provisions of, or constitute a default under (whether with or
without the passage of time, the giving of notice or both) any agreement, contract or instrument to
which Peabody is subject, (iii) result in the creation of any lien or encumbrance upon the assets
or any equity interests that comprise part of the Project, other than as contemplated herein or by
the Project Financing, (iv) result in a



27









 







violation of any law, statute, rule, regulation, order,
judgment or decree to which Peabody is subject or (v) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any third party or any
Governmental Authority, except as does not constitute a material adverse effect on Peabody’s
ability to consummate the transactions contemplated herein.



     5.3 Litigation. There are no actions, suits, proceedings, orders or claims pending, or to the
knowledge (after reasonable inquiry) of Peabody, threatened in writing against Peabody or its
Affiliates at law or in equity, by any Person or before or by any Governmental Authority which
would reasonably be expected to materially adversely affect Peabody’s performance under this
Agreement, which relate to the transactions contemplated by this Agreement or which would
reasonably be expected to materially adversely affect the consummation of the transactions
contemplated by this Agreement.



     5.4 Investment Representations. To the extent that the Option is validly exercised and the
Option Closing occurs, Peabody is making an equity investment in the Project Entity for its own
account with the present intention of holding its interests in the Project Entity for investment
purposes and not with a view to or for sale in connection with any public distribution of such
interests in violation of any federal or state securities laws. Peabody is an “accredited
investor” as defined in Regulation D promulgated under the Securities Act. Peabody acknowledges
that it is informed as to the risks of the transactions contemplated hereby and of ownership of
interests in the Project Entity. Peabody acknowledges that the interests in the Project Entity
have not been registered under the Securities Act or any state or foreign securities laws and that
such interests may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of unless such transfer, sale, assignment, pledge, hypothecation or other disposition is
pursuant to the terms of an effective registration statement under the Securities Act and are
registered under any applicable state or foreign securities laws or pursuant to an exemption from
registration under the Securities Act and any applicable state or foreign securities laws.



ARTICLE 6.

REPRESENTATIONS AND WARRANTIES OF RENTECH 

PERTAINING TO THE RENTECH CONTRIBUTION




          Except as specifically set forth in certain schedules provided by Rentech to Peabody with the
Financial Closing Notice, which are numbered to correspond to the Section numbers of this
Agreement, Rentech represents and warrants to Peabody as of the Option Exercise Date and the Option
Closing Date as follows:




     6.1 Organization; Good Standing; Power; Etc. Each Rentech Affiliate is (or, with respect to
Renetch Affiliates not in existence on the Option Exercise Date, on the Option Closing Date will
be) a duly organized, validly existing entity in good standing under the laws of its State of
formation. Each Rentech Affiliate has (or, with respect to Renetch Affiliates not in existence on
the Option Exercise Date, on the Option Closing Date will have) all the requisite corporate,
limited liability company or other entity power to own, lease or operate, as the case may be, the
applicable portion of the Development Assets. REMC has all the requisite corporate power to



28









 







transfer, and the Project Entity (or its applicable wholly owned Subsidiary) on the Option Closing
Date will have, the requisite corporate, limited liability company or other entity power to acquire
the Development Assets. On the Option Closing Date, the Project Entity (or its applicable wholly
owned Subsidiary) will be qualified as a foreign corporation, limited liability company or other
entity, as applicable, and in good standing in all jurisdictions where the ownership or lease of
the Development Assets requires such qualification.



     6.2 Authorization; Effective Agreement. Rentech and each Rentech Affiliate has (or, with
respect to Renetch Affiliates not in existence on the Option Exercise Date, on the Option Closing
Date will have) the corporate or other entity power, authority and capacity to enter into the
Transaction Agreements to which it is
party and to perform all of its obligations thereunder. All corporate proceedings required to
be taken by Rentech and the Rentech Affiliates to authorize the execution and delivery of the
Transaction Agreements to which it is a party, and, subject to the satisfaction of the conditions
to the closing of this Agreement and the PSA, the performance of its obligations thereunder will
have been duly and validly taken on the Option Closing Date. The Transaction Agreements when and
if executed by Rentech or the applicable Rentech Affiliate shall constitute the legal, valid and
binding obligation of Rentech or such Rentech Affiliate, enforceable against it in accordance with
their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency
or other similar laws affecting creditors’ rights generally and by general equitable principles.
The execution, delivery and performance of the Transaction Agreements by Rentech and each
applicable Rentech Affiliate and the consummation of the transactions contemplated hereby and
thereby do not and will not: (a) except as set forth in Schedule 6.3, conflict with,
violate or result in the breach of any of the terms or conditions of, or constitute a default
under, the organizational or constituent documents of a Rentech Affiliate or Rentech, or any
material contract, agreement, commitment, indenture, mortgage, pledge, note, bond, license, permit
or other instrument or obligation to which Rentech or a Rentech Affiliate is a party or by which a
Rentech Affiliate’s or Rentech’s assets are bound, or any Applicable Law to which a Rentech
Affiliate’s or Rentech’s assets are subject; or (b) result in the creation or imposition of any
Encumbrance (other than Permitted Encumbrances), including rights of termination or cancellation,
in or with respect to, any of the Development Assets, except as does not constitute a Material
Adverse Effect.



     6.3 Consents. Except as set forth on Schedule 6.3, (a) no Governmental Approval and
(b) no Third Party Consents, on the part of Rentech or a Rentech Affiliate is required in
connection with the execution, delivery or performance by Rentech or a Rentech Affiliate of this
Agreement, any of the other Transaction Agreements or the transfer of the Development Assets,
except for Governmental Approvals or Third Party Consents the failure of which to be obtained does
not constitute a Material Adverse Effect.



     6.4 Title to Real Property.



          6.4.1 To the Knowledge of Rentech or the Rentech Affiliates, there exists no condemnation
proceeding pending or threatened in writing affecting the Real Property that constitutes a portion
of the Rentech Contribution, except for such proceedings that do not constitute a Material Adverse
Effect.




29









 








          6.4.2 REMC has good and marketable title to the Real Property that constitutes a portion of
the Rentech Contribution (or, with respect to any such Real Property acquired by REMC after the
Option Exercise Date, REMC will have good title to such Real Property on the Option Closing Date).




          6.4.3 To the Knowledge of Rentech or the Rentech Affiliates, neither Rentech nor any Rentech
Affiliate has granted, and there are no outstanding rights, options, agreements or
other obligations pursuant to which any Person other than Rentech or a Rentech Affiliate has a
right to acquire all or any part of, or interest in, the Real Property that constitutes a portion
of the Rentech Contribution, except for such rights, options, agreements or other obligations that
do not constitute a Material Adverse Effect.




     6.5 Agreements.



          6.5.1 Set forth on the Schedule 6.5.1 are complete and accurate lists or descriptions
of all Material Contracts that are part of the Rentech Contribution as of the date of the Financial
Closing Notice (including specific indications of those Material Contracts with Rentech Affiliates
as counterparties) which are to be performed in whole or in part after the Option Closing Date.




          6.5.2 Assuming receipt of the consents listed on Schedule 6.3, there is no default or
state of facts which, with notice or lapse of time, or both, would constitute a default by Rentech
and/or a Rentech Affiliate, as the case may be, that is a party to the Material Contracts that
constitutes a portion of the Rentech Contribution, except for such defaults or state of facts that
do not constitute a Material Adverse Effect. To the Knowledge of Rentech or the Rentech Affiliates,
there is no default or state of facts which, with notice or lapse of time, or both, would
constitute a default by any other party to the Material Contracts that constitutes a portion of the
Rentech Contribution, except for such defaults or state of acts that do not constitute a Material
Adverse Effect.




     6.6 Litigation. Except as set forth on Schedule 6.6, (a) no Action or Proceeding
affecting the Rentech Contribution is pending or, to the Knowledge of Rentech or Rentech
Affiliates, threatened in writing, (b) there are no material judgments, consent decrees or
injunctions binding upon Rentech or the Rentech Affiliates relating to the Rentech Contribution,
(c) Rentech and each Rentech Affiliate is in material compliance with all Applicable Laws
(excluding Environmental Laws) applicable to the Rentech Contribution, (d) neither Rentech nor any
Rentech Affiliate has received notice from any Governmental Authority of any claimed material
default or violation with respect to any such Applicable Laws (excluding Environmental Laws) with
respect to the Rentech Contribution and (e) no material Action or Proceeding affecting Rentech, any
Rentech Affiliate or their respective properties is pending or, to their Knowledge, threatened in
writing against Rentech or any Rentech Affiliate, in each case, which constitutes a material
adverse effect on its ability to consummate the transactions contemplated by this Agreement.



     6.7 Taxes. To their Knowledge, Rentech and the Rentech Affiliates have duly filed
all federal, state, local, foreign and other Tax returns which are required to be filed by them



30









 







relating to the Real Property that constitutes a portion of the Rentech Contribution, and such Tax
returns are true and correct in all material respects and in compliance in all material respects
with all Applicable Laws. All Taxes due by Rentech or any of the Rentech Affiliates relating to the
Real
Property that constitutes a portion of the Rentech Contribution have been paid, and no portion
of the Rentech Contribution is subject to any Encumbrances due to the non-payment of such Taxes,
except for Permitted Encumbrances.



     6.8 Environmental Compliance.



          6.8.1 Rentech has delivered or made available to Peabody copies of each of the following
items: (i) a summary of the activities, if any, to the Knowledge of Rentech or the Rentech
Affiliates, relating to Hazardous Substances generated, transported or disposed of by Rentech or
the Rentech Affiliates from, to or upon the Real Property that constitutes a portion of the Rentech
Contribution during the past three (3) years, together with a description of the location of each
such activity; and (ii) a summary of the nature and quantities of any Hazardous Substances that, to
the Knowledge of Rentech or the Rentech Affiliates, have been disposed of or found at the Real
Property that constitutes a portion of the Rentech Contribution at any previous time.




          6.8.2 Except as set forth in Schedule 6.8.2, to the Knowledge of Rentech or any
Rentech Affiliate, with respect to the Real Property that constitutes a portion of the Rentech
Contribution, Rentech and all Rentech Affiliates are in compliance with all Environmental Laws,
except for such non-compliance that does not constitute a Material Adverse Effect. With respect to
the Real Property that constitute a portion of the Rentech Contribution, neither Rentech nor any
Rentech Affiliate has (i) received any written notice of, or (ii) been subject to, any
administrative or judicial proceeding pursuant to such Environmental Laws either now or at any time
in the past three (3) years, in each case except as set forth in Schedule 6.8.2. 





          6.8.3 Except as set forth on Schedule 6.8.2:




          (a) The Real Property that constitutes a portion of the Rentech Contribution is not being, and
has not been during any period in which Rentech or a Rentech Affiliate owned or occupied such Real
Property (such period being a “Rentech Occupancy Period”) used for the disposal, treatment,
storage, generation, transportation, processing, handling or production of any Hazardous
Substances, except as in material compliance with applicable Environmental Laws.




          (b) Underground storage tanks have not been installed by Rentech or any Rentech Affiliate on
the Real Property that constitutes a portion of the Rentech Contribution during the applicable
Rentech Occupancy Period and to the Knowledge of Rentech or the Rentech Affiliates no underground
storage tanks are located thereon.




          (c) During a Rentech Occupancy Period, there has been no Release, nor, to the Knowledge of
Rentech or the Rentech Affiliates, is there the threat of such a Release of any Hazardous Materials
on, at or from the Real Property that constitutes a portion of the Rentech Contribution.




31









 








          6.8.4 All Environmental Permits relating to the current use of the Real Property that
constitutes a portion of the Rentech Contribution have been obtained and are in full force
and effect, except for any Environmental Permits, the failure of which to be obtained does not
constitute a Material Adverse Effect. The current use refers to the use of the Real Property as of
the date of the representation and does not include the use of the Real Property as part of the
Project, it being recognized that Governmental Approvals obtained or to be obtained for the Project
are not part of the Rentech Contribution.




          6.8.5 To the Knowledge of Rentech and the Rentech Affiliates, there are no agreements, consent
orders, decrees, judgments, license or permit conditions or other orders or directives of any
Governmental Authority arising under Environmental Laws relating to the Real Property that
constitutes a portion of the Rentech Contribution which require any Remediation of a Release or
threat of Release of Hazardous Materials on, at or from the Real Property that constitutes a
portion of the Rentech Contribution.




          6.8.6 Rentech has delivered or made available to Peabody a copy of all environmental reports
in its possession or the possession or control of a Rentech Affiliate between Rentech or any
Rentech Affiliate and any environmental agency relating to the Real Property that constitutes a
portion of the Rentech Contribution during the past three (3) years.




     6.9 Alternative Representations6.10 . If on or prior to the Option Closing Date, Rentech
enters into a definitive option or purchase and sale agreement with an Owner other than Peabody,
providing such Owner representations and warranties (and indemnities for breaches thereof) with
respect to the pre-Option Closing Liabilities of the Project that are in the aggregate materially
more favorable to such Owner than the representations and warranties set forth in Article
6, then the representations and warranties included in this Article 6 shall be deemed
to be replaced with such other representations and warranties, and Rentech shall indemnify Peabody
for breaches thereof, subject to all of the same limitations, exclusions and qualifications
applicable to the other Owner.



ARTICLE 7.

MUTUAL COVENANTS OF THE PARTIES




7.1 Actions With Respect to Project.




          (a) Unless the Option Closing is consummated (and if so, except to the extent provided in the
Stockholders Agreement), Rentech shall have full and complete authority with respect to any actions
to be taken in furtherance of the development of the Project; provided, however,
that, so long as this Agreement has not been terminated pursuant to Article 8, Peabody
shall have the consent rights with respect to the Project Financing to the extent provided in
Section 7.2.




          (b) From the effective date of this Agreement through the earlier of the Option Closing and
the termination of this Agreement under Article 8, Rentech shall, to the extent such
information is in Rentech’s possession or control or is available to Rentech without unreasonable
effort and Rentech is able to share such information under applicable confidentiality obligations
existing on the date of this Agreement, provide (or make available to) Peabody on a monthly




32









 







basis with sufficient information to keep Peabody reasonably apprised about the status of (i)
the development of the Project, including (A) the status of the Project’s expected compliance with
all material zoning and land use regulations, (B) copies of all material title commitments, land
title surveys and environmental surveys for any material portion of the real estate included in the
Project, and (C) the status of the Project’s access to utilities, (ii) the status of negotiations
and copies of material contracts: (w) with construction contractors providing material work for the
Project, (x) with other material vendors for the Project, (y) with respect to the engineering
procurement and construction agreement for Phase 1 of the Project (“EPC Agreement”) and any
material construction agreement for Phase 1A of the Project and (z) for material off-take
agreements or other material agreements for the sale of products produced by the Project, (iii) the
then-current drafts of the Project Budget, (iv) the then-current drafts of the Project Pro Forma
(including an explanation of the basis for the assumptions included therein), (v) the then-current
drafts of the construction schedule, (vi) the then current drafts of Third Party Equity
Commitments, (vii) the form or structure of the Project Entity and its Subsidiaries and any
material changes thereto, (viii) the status of and schedules for the issuance of material
Governmental Approvals for the Project, (ix) if REMC is to be a Project Entity, a description of
its material Liabilities and (x) the terms of all Affiliate Agreements (the “Project Information”).



(c) Each Party shall from time to time designate with written notice to the other Party one
individual to serve as its primary contact for all matters relating to the Project (each, a
“Project Representative”). Rentech shall make its Project Representative available to meet with
Peabody’s Project Representative to discuss the progress of the Project no less frequently than
once each month on a day and at a time mutually agreed to by the Parties. Such meetings may be
held either in person or by teleconference, and if such meetings are held in person, the meeting
sites shall be such locations as the Parties shall mutually agree.



(d) If requested by Rentech, Peabody shall reasonably cooperate with Rentech in connection
with the development of the Project which cooperation shall include, without limitation, assisting
Rentech in negotiating and finalizing the EPC Agreement, the Project Financing arrangements, a coal
transportation agreement, off-take agreements for the Project and potential sources of government
support. Peabody shall not be required to furnish staff members or provide office space for
Rentech’s development efforts. If Rentech requests significant assistance of Peabody or its
Affiliates in connection with Project development, the reasonable out-of-pocket costs incurred by
Peabody and its Affiliates in connection therewith shall constitute Development Costs and Rentech
shall reimburse Peabody for eighty percent (80%) of such Development Costs.



(e) Rentech will promptly notify Peabody of any development specific to the Project that is
known to Rentech and it believes requires a material revision to the Project Information or,
adversely affects the representations and warranties that are in this Agreement and shall furnish
to Peabody any such materials related thereto that are in the control of Rentech or its Affiliates
and are not included in the Project Information.




     7.2 Actions with Respect to Project Financing. Rentech shall consult with Peabody with respect to material decisions regarding the Project
Financing, and Peabody shall have the right to consent to such decisions, which consent shall not
be unreasonably, withheld, delayed or



33









 







conditioned. From the Effective Date to the Option Closing
Date, Rentech shall deliver or make available to Peabody such information relating to the Project
as Peabody may reasonably request to review and to assess the progress of the Project Financing.
Neither Rentech nor any of its Subsidiaries (including the Project Entity and its Subsidiaries)
will enter into or execute any material agreements, arrangements, documents or instruments related
to the Project Financing without the prior written consent of Peabody, which consent shall not be
unreasonably withheld, delayed or conditioned. Each Party shall reasonably cooperate with the
other Party in connection with causing the Project Financing to be closed on the Financial Closing
Date such as (a) providing such information about itself and its Affiliates as may reasonably be
requested by the lenders under the Project Financing in connection with the Project Financing; and
(b) subject to Peabody’s approval rights under this Section 7.2, and only if the Option
Closing is consummated, executing all closing documents, certificates or agreement as such Project
Lender may reasonably request to consummate the Project Financing.



     7.3 Project Naming. In the event a process is initiated to name the Project after the
Effective Date, Rentech will consult with Peabody regarding the naming of the Project and the
Facility; provided, however, the Parties acknowledge and agree that such name shall
be ultimately determined by Rentech in its sole discretion.



     7.4 Notice of Withdrawal. In the event that either Peabody determines that it will not
exercise the Option or Rentech determines to terminate the Project, then the withdrawing Party will
promptly provide the other Party written notice of such determination (in either case, a
“Withdrawal Notice”). Notwithstanding anything to the contrary, Peabody will not be able to
deliver a Withdrawal Notice after the Option Exercise Period, except as otherwise permitted under
the Purchase and Sale Agreement and Section 3.8 of this Agreement.



     7.5 Confidentiality of Information. Neither Peabody nor its Affiliates or Representatives
shall, without the prior written consent of Rentech, disclose or otherwise make available to any
other Person (a) any non-public information of Rentech or any of its Affiliates, or information
relating to its or their respective business and assets including, without limitation, business
plans, strategies, financial information, proprietary, patented, licensed, copyrighted or
trademarked information, and/or technical information regarding the design, operation and
maintenance of the Project; or (b) any information regarding the terms, conditions or existence of
this Agreement or other agreements relating to the transaction contemplated hereby (collectively,
the “Rentech Confidential Information”). Neither Rentech nor its Affiliates or Representatives
shall, without the prior written consent of Peabody, disclose or otherwise make available to any
other Person any non-public information of Peabody or any of its Affiliates or information
regarding the terms,
conditions or the existence of this Agreement or other agreements relating to the transaction
contemplated hereby (the “Peabody Confidential Information” and, together with the Rentech
Confidential Information, the “Confidential Information”). Notwithstanding the foregoing, (i)
either Party may disclose Confidential Information of the other Party, to the extent that it in
good faith determines disclosure of such Confidential Information is required by court order, a
Governmental Authority or Applicable Law or the rules of any recognized national stock exchange;
provided that the Party subject to such restriction of disclosure shall promptly notify the
other Party and will use reasonable efforts to obtain protective orders, have a confidential
treatment request granted or similar restraints



34









 







with respect to such disclosure; and (ii) either
Party may disclose Confidential Information of the other Party to the disclosing Party’s Affiliates
or Representatives; provided that each such Person agrees or is obligated by law to
maintain the confidentiality of such information. Confidential Information shall not include
information which (A) the Party subject to restriction on disclosure can demonstrate was known to
it prior to its disclosure by such Party; (B) is, or later becomes, public knowledge without breach
of this Section 7.5 by such Party; (C) was received by such Party from a third party
without violation of an obligation of confidentiality; or (D) is developed by such Party
independently from Confidential Information received from the other Party, as evidenced by
appropriate documentation. This Section 7.5 supersedes the Confidentiality Agreement.



7.6 Consultation on Material Decision.




          (a) Rentech shall not make the following binding commitments without consulting with Peabody:




               1. any binding commitment that would change the overall design or configuration of the
Project;



               2. any binding commitment for an Affiliate Agreement with an Affiliate of Rentech with respect
to the Project or another Person having a right to become an Owner;



               3. approval of the EPC Agreement;



               4. material agreements or subsidies from a Governmental Authority for the Project; or



               5. the purchase of land or other Real Property Interests for the Project (other than pursuant
to purchase options in effect in the Effective Date).



          (b) Neither Party shall be an agent for the other Party or its Affiliates in connection with
the development of the Project or any other matter. Rentech shall not have the authority to bind
or create any liability for Peabody or its Affiliates.




          (c) As of the Effective Date, the Development Schedule set forth in Exhibit H projects
that the Financial Closing will occur by the first anniversary of the Effective Date, it being
understood by the Parties that, subject to the other terms and conditions of this Agreement,
Rentech may change the Financial Closing Date set forth on such exhibit prior to the Financial
Closing.




ARTICLE 8.

TERMINATION




     8.1 Termination. This Agreement may be terminated at any time:



          (a) by the mutual written consent of Rentech and Peabody;





35









 








          (b) by Rentech, by written notice to Peabody, if (i) Rentech delivers a Withdrawal Notice and
terminates the Project, (ii) Peabody delivers a Withdrawal Notice, (iii) Peabody does not exercise
the Option on or before the last day of the Option Exercise Period, subject to Section 8.3,
(iv) Peabody terminates the exercise of the Option pursuant to Section 3.8 or (v) Peabody
shall have breached or failed to perform in any material respect any of its representations,
warranties, covenants or other agreements (including, without limitation, Section 2.1.2)
contained in this Agreement, and, if capable of being cured, such breach or failure is not cured
within thirty (30) days after Peabody’s receipt of written notice from Rentech specifying the
breach in reasonable detail; provided that Rentech may not terminate this Agreement with
regards to a disputed payment until such payment has been resolved by a referee or a court of
competent jurisdiction; or




          (c) by Peabody, by written notice to Rentech, if (i) Peabody delivers a Withdrawal Notice in
accordance with Section 7.4, (ii) Rentech delivers a Withdrawal Notice, (iii) Peabody does
not exercise the Option on or before the last day of the Option Exercise Period, (iv) Peabody
terminates the exercise of the Option pursuant to Section 3.8 or (v) Rentech shall have
breached or failed to perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, and, if capable of being cured, such
breach or failure is not cured within thirty (30) days after Rentech’s receipt of written notice
from Peabody specifying the breach in reasonable detail.




          For the avoidance of doubt, this Agreement and the Option may be revived or restored as
provided in Section 8.3.




8.2 Effect of Termination.




          8.2.1 Except as provided in Section 8.2.2, 8.2.3, and 8.3 below, if
this Agreement is validly terminated pursuant to Section 8.1, this Agreement will forthwith
become null and void, and no Party (nor any of their respective officers, manager, members,
employees, agents or other representatives or Affiliates) shall have any further rights,
obligations or liability hereunder. Without limiting the generality of the foregoing, if this
Agreement is terminated pursuant to Section 8.1 and the Option is not revived or restored
pursuant to Section 8.3, then Peabody shall have no right to purchase or receive any
Capital Stock or other interest in the Project Entity, including, without limitation, the
Additional Earned Securities or the Illinois Grant Securities, and Peabody’s sole and exclusive
right under this Agreement shall be to receive
payment to the extent provided in Section 8.2.2 and/or its actual damages in the case
of a material breach of this Agreement by Rentech and each Party hereby waives any rights it may
have to specific performance or any other equitable remedies with respect to the foregoing in the
event of a termination of this Agreement pursuant to Section 8.1 but shall retain all
rights to damages at law for any material breach hereof by the other Party. Each Party’s rights to
damages in the event of a termination of this Agreement shall be subject to the limitations on
claims and damages set forth herein, including, without limitation, the limitations set forth in
Sections 9.17 and 9.18.




          8.2.2 Notwithstanding any other provision of this Agreement, if the Financial Closing Date
occurs, then Rentech shall reimburse Peabody no later than (30) days after the

36









 








Financial Closing
Date for all payments in respect of Development Costs actually made by Peabody to Rentech pursuant
to this Agreement, less any amounts owed to Rentech pursuant to Section 8.2.3 unless (a)
Peabody purchases the Option Securities under this Agreement or any similar agreement contemplated
by Section 8.3.1, (b) Peabody elects to terminate the PSA due to the IRR Event or (c)
Rentech properly terminates the PSA due to a material breach thereof by Peabody that occurs on or
before the Option Closing Date.




          8.2.3 Notwithstanding Section 8.2.1, if this Agreement is terminated for any reason,
then each of Rentech and Peabody shall remain obligated to pay to the other Party in the time and
manner otherwise provided herein any unpaid amounts due hereunder as of the termination date of
this Agreement. In addition to the foregoing, if this Agreement is terminated by Peabody pursuant
to Section 8.1(c)(i) because it determines to withdraw from the Project, then Peabody shall
remain obligated to pay Rentech any unpaid amounts that otherwise would have been due hereunder
within the ten (10) days following the termination date of this Agreement less amounts owed to
Peabody by Rentech, and Peabody will no longer be obligated to pay Rentech any amounts that would
have become due hereunder after such ten (10)-day period.




          8.2.4 This Section 8.2 shall survive the termination of this Agreement.




     8.3 Revival of Option.



          8.3.1 In the event that (a) Rentech or Peabody terminates this Agreement in accordance with
Section 8.1(b)(i) or 8.1(c)(ii) after Rentech delivers a Withdrawal Notice to
Peabody; or (b) Peabody terminates this Agreement in accordance with Section 8.1(c)(iv) due
to the occurrence of the End Date, Rentech shall give Peabody prompt written notice if it
determines in its sole discretion to reinitiate work on the Project (i.e., the conversion of the
East Dubuque facility to use coal as a feedstock) (the “Revival Notice”). Upon delivery of a
Revival Notice by Rentech to Peabody, the Parties shall negotiate in good faith to enter into an
agreement on substantially similar terms as this Agreement, providing Peabody an option to purchase
Capital Stock of the Project Entity on terms substantially similar to the Option and crediting
against the purchase price all Development Costs actually paid by Peabody. Notwithstanding
anything to the contrary, Rentech shall not be required to deliver a Revival Notice to Peabody or
provide it the opportunity to purchase any Capital Stock of the Project Entity after the
expiration of the earlier of (i) one (1) year after the termination of this Agreement; or (ii) the
date on which Peabody’s Affiliate exercises its special right of termination under Section 2.6 of
the Coal Supply Agreement.




          8.3.2 If the Financial Closing Notice is given and the Financial Closing does not occur for
any reason within one hundred eighty (180) days after the Target Date in the last Financial Closing
Notice delivered by Rentech to Peabody, and Rentech did not terminate this Agreement in accordance
with Section 8.1(b)(ii) due to Peabody’s delivery of a Withdrawal Notice or Section
8.1(b)(v) due to Peabody’s material breach of this Agreement, then this Agreement shall be
restored in full force and effect and the Option again shall become exercisable in accordance with
Article 3 unless Peabody’s Affiliate exercises its special right of termination under
Section 2.6 of the Coal Supply Agreement, in which event the Option and this

37









 








Agreement shall be not
be restored or be of any force or effect. Notwithstanding anything to the contrary, from and after
the time that the Option terminates due to the expiration of the Option Exercise Period or this
Agreement is terminated pursuant to Section 8.1, the exclusivity provisions included in
Section 8.4 shall terminate and shall be of no force or effect (notwithstanding any
subsequent restoration of this Agreement pursuant to this Section 8.3.2).




          8.3.3 This Section 8.3 shall survive the termination of this Agreement.




     8.4 Exclusivity. Subject to the last sentence of Section 8.3.2, each of Rentech and
its Affiliates agrees with Peabody not to, directly or indirectly (including through a broker,
Financial Advisor or any other Person), (a) solicit from any Person offers relating to, or engage
any Person (other than Peabody) in any discussions or negotiations relating to, the purchase or
sale of the Option Securities, or (b) Transfer or commit to Transfer such Option Securities to any
Person other than Peabody, or (c) enter into or commit to enter into any transaction that could
interfere with the Rentech’s ability to sell such Option Securities to Peabody. This Section shall
be in effect at all times during the period that begins on the Effective Date and ends on the
earliest of (i) the end of the Option Exercise Period, (ii) the Option Closing Date and (iii) the
date of the termination of this Agreement in accordance with its terms. Notwithstanding anything
to the contrary in this Agreement, the Parties acknowledge and agree that nothing herein shall
restrict Rentech or its Affiliates from soliciting or engaging any Person to purchase or receive
any Capital Stock of the Project Entity (other than the Option Securities).



ARTICLE 9.

MISCELLANEOUS




     9.1 Assignment. This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by any of the Parties (including by operation of law in connection with
a merger, a transfer of more than a majority of the equity interests or sale of substantially all
the assets, of such Party) without the prior written consent of the other Party. Notwithstanding
the foregoing, without the prior written consent of the other Party, (a) Rentech may assign its
rights and
obligations hereunder to one or more of its direct or indirect wholly owned Subsidiaries; and
(b) Peabody may assign its rights and obligations hereunder to one or more of Peabody Energy’s
direct or indirect wholly owned Subsidiaries; provided, however, that no assignment
shall limit or affect the assignor’s obligations hereunder. Subject to the previous two sentences
of this Section 9.1, this Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns and no other Person shall have any right,
obligation or benefit hereunder as a third-party beneficiary or otherwise. Any attempted
assignment or transfer in violation of this Section 9.1 shall be void.



     9.2 Amendments. No amendment, supplement, modification or cancellation of this Agreement
shall be effective unless it shall be in writing and signed by each of the Parties.



     9.3 Waiver of Compliance. Except as otherwise provided in this Agreement, any failure of any
of the Parties to comply with any obligation, covenant, agreement or condition herein may be waived
by the Party entitled to the benefits thereof only by a written instrument signed by the Party
granting such waiver, but such waiver or failure to insist upon strict



38









 







compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any other provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.



     9.4 [RESERVED].



     9.5 No Partnership; No Fiduciary Relationship; Competing Opportunities. This Agreement does
not constitute or create a joint venture, partnership or any other similar arrangement between or
among the Parties or any of their Affiliates. The Parties and their Affiliates are independent
contractors and none of them have or shall have the authority to bind the other for any purpose,
whether pursuant to, or as the result of execution and delivery of, this Agreement. Neither Party
nor any Affiliate of either Party shall represent that it has the authority to bind the other or
that the relationship formed pursuant to this Agreement constitutes a joint venture, partnership or
any other similar arrangement between or among the Parties or any of their Affiliates. No Party,
nor any Affiliate of any Party, or any officer, manager, member, employee, agent or other
representatives of the foregoing Parties or Affiliates shall owe any fiduciary duties to any Party.
The Parties acknowledge and agree that either Party and its Affiliates may engage in or possess an
interest in any business venture of any nature or description, independently or with others, which
business venture may be the same as, similar to or dissimilar to the business of the Project, and
neither Party shall have any rights by virtue of this Agreement in and to such independent ventures
or the income or profits derived therefrom, and the pursuit by such Party (or such Affiliate of
such Party) of any such venture, even if competitive with the business of the Project, shall not be
deemed wrongful or improper.



     9.6 Entire Agreement. This Agreement and the Confidentiality Agreement constitute the entire agreement between
the Parties pertaining to the subject matter hereof and fully supersede any and all prior or
contemporaneous agreements or understandings among the Parties hereto pertaining to the subject
matter hereof.



     9.7 Further Assurances. Each of the Parties does hereby covenant and agree on behalf of
itself, its successors, and its assigns, without further consideration, to prepare, execute,
acknowledge, file, record, publish, and deliver such other instruments, documents and statements,
and to take such other action as may be required by law or reasonably necessary to effectively
carry out the purposes of this Agreement.



     9.8 Notices. Any notice, consent, payment, demand, or communication required or permitted to
be given by any provision of this Agreement shall be in writing and shall be (a) delivered
personally to the Person or to an officer of the Person to whom the same is directed, or (b) sent
by facsimile or other electronic or digital transmission method (including e-mail), or registered
or certified mail, return receipt requested, postage prepaid, addressed as follows:



39









 




If to Rentech:



Rentech, Inc.

10877 Wilshire Boulevard, Suite 710

Los Angeles, California 90024

Attention: I. Merrick Kerr

                     Colin Morris



If to Peabody:



Peabody Venture Fund, LLC

c/o Peabody Energy Corporation

701 Market Street

St. Louis, Missouri 63101-1826

Attention: President – Generation and Btu Conversion

Phone: 314-342-7540

Fax: 314-342-7907



with a copy (which shall not constitute notice) to:



Peabody Venture Fund, LLC

c/o Peabody Energy Corporation

701 Market Street

St. Louis, Missouri 63101-1826

Attention: General Counsel



or to such other address as such Person may from time to time specify by notice to the other
Parties. Any such notice shall be deemed to be delivered, given and received for all purposes as
of: (i) the date so delivered, if delivered personally, (ii) upon receipt, if sent by facsimile or
other electronic or digital transmission method (including e-mail), or (iii) on the date of receipt
or refusal indicated on the return receipt, if sent by registered or certified mail, return receipt
requested, postage and charges prepaid and properly addressed.




     9.9 Governing Law. This Agreement, including its existence, validity, construction, and
operating effect, and the rights of each of the Parties, shall be governed by and construed in
accordance with the laws of the State of New York without regard to otherwise governing principles
of conflicts of law.



     9.10 Certain Rules of Construction. To the fullest extent permitted by law, the Parties
intend that any ambiguities shall be resolved without reference to which Party may have drafted
this Agreement. All Article or Section titles or other captions in this Agreement are for
convenience only, and they shall not be deemed part of this Agreement and in no way define, limit,
extend or describe the scope or intent of any provisions hereof. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) “or” is not exclusive; (c) words in the
singular include the plural, and words in the plural include the singular; (d) provisions apply to
successive events and transactions; (e) “herein,” “hereof” and other words of similar



40









 







import refer
to this Agreement as a whole and not to any particular Article, Section or other subdivision; (f)
“include” or “including” shall be deemed to be followed by “without limitation” or “but not limited
to” whether or not they are followed by such phrases or words of like import; (g) all references to
“clauses,” “Sections” or “Articles” refer to clauses, Sections or Articles of this Agreement; and
(h) any pronoun used in this Agreement shall include the corresponding masculine, feminine or
neuter forms. This Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the Party drafting or causing any instrument to be
drafted.



     9.11 Business Days. If any date within which any Person is required to send or deliver
notice, deliver funds or take action pursuant to this Agreement falls on a Legal Holiday, then the
date within which any such Person must send or deliver notice, deliver funds or take such action
shall be extended to the first Business Day following such Legal Holiday.



     9.12 Binding Effect. Except as otherwise expressly provided herein, this Agreement shall be
binding on and inure to the benefit of the Parties, their heirs, executors, administrators and
successors.



     9.13 Severability. In the event that any provision of this Agreement as applied to either
Party or to any circumstance, shall be adjudged by a court to be void, unenforceable or inoperative
as a matter of law, then the same shall in no way affect any other provision in this Agreement, the
application of such provision in any other circumstance or with respect to any other Party, or the
validity or enforceability of the Agreement as a whole.



     9.14 Counterparts. This Agreement may be executed in any number of multiple counterparts,
each of which shall be deemed to be an original copy and all of which shall constitute one
agreement, binding on all Parties hereto.



     9.15 Survival. The provisions of this Article 9 (and any other provisions herein
necessary for the effectiveness of the this Article) shall survive the termination of this
Agreement.



     9.16 Late Payments. In the event that any payment due hereunder is not made when due, the
payment shall accrue interest from that date due at the Agreed Rate. The payment of such interest
shall not limit the Party to whom the payment is owed from exercising any other rights it may have
hereunder as a consequence of the lateness of any payment.



     9.17 Limitations on Claims. Notwithstanding any other provision of this Agreement to the
contrary, neither Party shall be required by this Agreement to indemnify, hold harmless or
otherwise compensate the other Party (or any other Person) for losses with respect to exemplary,
consequential, special or punitive damages. Each Party hereby waives any rights it might have to
specific performance or any other equitable remedies in the event of any breach or violation of, or
default in the performance in, this Agreement. The provisions of this Section 9.17 shall
survive the termination of this Agreement.



     9.18 Limitations on Damages. Notwithstanding any other provision of this Agreement to the
contrary, and subject to Section 9.17, neither Party shall be required by this



41









 







Agreement or
the PSA to indemnify, hold harmless or otherwise compensate the other Party (or any other Person)
for losses in an aggregate amount exceeding Twenty Million Dollars ($20,000,000) (excluding, in
the case of Rentech, any amounts owed by Rentech to Peabody under Section 8.2.2),
except that the foregoing limitation shall not apply to any liability Rentech may have to Peabody
for any knowing and intentional breach of its obligation to deliver the Option Securities to
Peabody at the Option Closing in circumstances in which Peabody has timely and validly exercised
the Option and all of the conditions to Rentech’s obligations to close under this Agreement and the
PSA have been satisfied or waived. The provisions of this Section 9.18 shall survive the
termination of this Agreement.



     9.19 Peabody Energy Guaranties. On the Effective Date, Peabody shall cause to be delivered to
Rentech the Peabody Guaranty (EOA) executed by Peabody Energy and in the form attached hereto as
Exhibit I. On the date that Rentech, Peabody and the Project Entity enter into the PSA (if
such date occurs), Peabody shall cause to be delivered to Rentech the Peabody Guaranty (PSA)
executed by Peabody Energy in the form attached hereto as Exhibit J. Once provided, each
such guaranty shall remain in effect until the guarantied obligations have been satisfied in full
by Peabody.



     9.20 Press Release. Neither Party shall, except as required by Applicable Law or the rules of
any recognized national stock exchange, cause any public announcement to be made regarding this
Agreement, the Coal Supply Agreement or the transactions contemplated hereby without the prior
written consent of the other Party. In the event that a Party shall be required to cause such a
public announcement to be made pursuant to any Applicable Law or the rules of any recognized
national stock exchange, such Party shall endeavor to provide the other Party at least forty-eight
(48) hours prior written notice of such announcement.



(Signature Page Follows)




42









 





     IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day and year first
above written.



	 	 	 	 	 
	 	RENTECH , INC.

 	 
	 	By:  	/s/  Merrick Kerr
 	 
	 	 	Name:  	Merrick Kerr 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	PEABODY VENTURE FUND, LLC

 	 
	 	By:  	/s/ Rick A. Bowen
 	 
	 	 	Name:  	Rick A. Bowen 	 
	 	 	Title:  	President 	 
	 




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TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1. DEFINITIONS
	 	 	1	 
	ARTICLE 2. DEVELOPMENT COST SHARING
	 	 	12	 
	2.1 Development Cost Sharing
	 	 	12	 
	ARTICLE 3. EQUITY OPTION
	 	 	17	 
	3.1 Grant of Equity Option
	 	 	17	 
	3.2 Notice from Rentech
	 	 	17	 
	3.3 Availability of Due Diligence Information
	 	 	17	 
	3.4 Organization and Structuring of Project Entity
	 	 	18	 
	3.5 Terms Governing Project Entity
	 	 	18	 
	3.6 Confirmation of Expected Financial Closing Date
	 	 	18	 
	3.7 Notice of Option Decision
	 	 	19	 
	3.8 Exercise of Option; Purchase and Sale Agreement
	 	 	19	 
	3.9 Sources and Uses Table
	 	 	21	 
	3.10 Option Closing; Deliveries
	 	 	21	 
	3.11 Peabody’s Conditions to Option Closing
	 	 	21	 
	3.12 Rentech’s Conditions to Option Closing
	 	 	22	 
	3.13 Additional Earned Equity
	 	 	23	 
	3.14 Equity Adjustment for Specified State Grants
	 	 	25	 
	3.15 Other Sales of Project Entity Securities
	 	 	26	 
	ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF RENTECH
	 	 	26	 
	4.1 Organization, Good Standing
	 	 	26	 
	4.2 Authorization; No Breach
	 	 	26	 
	4.3 Litigation
	 	 	27	 
	ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PEABODY
	 	 	27	 
	5.1 Organization, Good Standing
	 	 	27	 
	5.2 Authorization; No Breach
	 	 	27	 
	5.3 Litigation
	 	 	28	 
	5.4 Investment Representations
	 	 	28	 
	ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF RENTECH PERTAINING TO THE RENTECH CONTRIBUTION
	 	 	28	 
	6.1 Organization; Good Standing; Power; Etc
	 	 	28	 
	6.2 Authorization; Effective Agreement
	 	 	29	 
	6.3 Consents
	 	 	29	 
	6.4 Title to Real Property
	 	 	29	 
	6.5 Agreements
	 	 	30	 
	6.6 Litigation
	 	 	30	 
	6.7 Taxes
	 	 	30	 
	6.8 Environmental Compliance
	 	 	31	 
	6.9 Alternative Representations
	 	 	32	 
	ARTICLE 7. MUTUAL COVENANTS OF THE PARTIES
	 	 	32	 
	7.1 Actions With Respect to Project
	 	 	32	 
	7.2 Actions with Respect to Project Financing
	 	 	33	 






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	 	 	Page	 
	7.3 Project Naming
	 	 	34	 
	7.4 Notice of Withdrawal
	 	 	34	 
	7.5 Confidentiality of Information
	 	 	34	 
	7.6 Consultation on Material Decision
	 	 	35	 
	ARTICLE 8. Termination
	 	 	35	 
	8.1 Termination
	 	 	35	 
	8.2 Effect of Termination
	 	 	36	 
	8.3 Revival of Option
	 	 	37	 
	8.4 Exclusivity
	 	 	38	 
	ARTICLE 9. MISCELLANEOUS
	 	 	38	 
	9.1 Assignment
	 	 	38	 
	9.2 Amendments
	 	 	38	 
	9.3 Waiver of Compliance
	 	 	38	 
	9.4 [RESERVED]
	 	 	39	 
	9.5 No Partnership; No Fiduciary Relationship; Competing Opportunities
	 	 	39	 
	9.6 Entire Agreement
	 	 	39	 
	9.7 Further Assurances
	 	 	39	 
	9.8 Notices
	 	 	39	 
	9.9 Governing Law
	 	 	40	 
	9.10 Certain Rules of Construction
	 	 	40	 
	9.11 Business Days
	 	 	41	 
	9.12 Binding Effect
	 	 	41	 
	9.13 Severability
	 	 	41	 
	9.14 Counterparts
	 	 	41	 
	9.15 Survival
	 	 	41	 
	9.16 Late Payments
	 	 	41	 
	9.17 Limitations on Claims
	 	 	41	 
	9.18 Limitations on Damages
	 	 	41	 
	9.19 Peabody Energy Guaranties
	 	 	42	 
	9.20 Press Release
	 	 	42	 






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	EXHIBITS AND SCHEDULES

	 

	EXHIBIT A – Development Budget

	 

	EXHIBIT B – Detailed Listing of Development Costs Incurred by Rentech between
November 1, 2006 and the Effective Date

	 

	EXHIBIT C – Terms to be Incorporated into Stockholders Agreement

	 

	EXHIBIT D – Illinois State Grants Not Subject to Disproportionate Allocation

	 

	EXHIBIT E – Sample Calculation of Option Exercise Price

	 

	EXHIBIT F – Purchase and Sale Agreement Term Sheet

	 

	EXHIBIT G – Example Project Pro Forma

	 

	EXHIBIT H – Development Schedule

	 

	EXHIBIT I – Peabody Guaranty (EOA)

	 

	EXHIBIT J – Form of Peabody Guaranty (PSA)

	 

	EXHIBIT K – Peabody Energy Competitors

	 

	SCHEDULE 3.9 – Sources and Uses Table

	 

	SCHEDULE 6.3 – Consents Schedule

	 

	SCHEDULE 6.5.1 – Contracts Schedule

	 

	SCHEDULE 6.6 – Litigation Schedule

	 

	SCHEDULE 6.8.2 – Environmental Schedule








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