Document:

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.

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          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

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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

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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

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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;

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          (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

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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

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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

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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:

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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

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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

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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 	 
	 

S-1

 

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	 

- 1 -

 

	 	 	 	 	 
	 	 	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	 

- 2 -

 

	 
	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

- 3 -exv10w2

 

Exhibit 10.2

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

COAL SUPPLY AGREEMENT

BETWEEN

COALSALES, LLC

AND

RENTECH ENERGY MIDWEST CORPORATION

Dated as of May 25, 2007

 

TABLE OF CONTENTS

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

Page i

 

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

Page ii

 

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

Page iii

 

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

Page iv

 

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

Page v

 

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

Page vi

 

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

Page vii

 

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

Page viii

 

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

Page ix

 

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

Page x

 

COAL SUPPLY AGREEMENT

BETWEEN

COALSALES, LLC

AND

RENTECH ENERGY MIDWEST CORPORATION

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

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

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

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

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

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

SECTION 1. DEFINED TERMS

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

 Page 1

 

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

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

 Page 2

 

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

 Page 3

 

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

 Page 4

 

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

 Page 5

 

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

SECTION
2. CONTRACT TERM

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

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

 Page 6

 

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

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

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

2.5 Delay in the Starting Delivery Date.

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

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

2.6 Special Termination Rights.

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

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

SECTION 3. OUTLINE OF THE OBLIGATIONS OF THE PARTIES

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

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

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

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

 Page 8

 

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

     3.2.4 Perform the analyses of Coal required by this Agreement.

     3.2.5 Issue invoices for Coal as specified by this Agreement.

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

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

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

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

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

 Page 9

 

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

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

SECTION 4. COAL QUANTITIES AND DELIVERY SCHEDULES

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

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

 Page 10

 

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

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

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

 Page 11

 

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

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

SECTION 5. COAL SPECIFICATIONS

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

 Page 12

 

	 	 	 
	 	 	Monthly Average
	               Characteristic	 	(As Received)
	Btu/lb.

	 	[*]
	Ash %

	 	[*]
	Sulfur %

	 	[*]
	Moisture %

	 	[*]
	SO2 (LB/Million Btu)*

	 	[*]

	 	 	 	 	 	 	 
	 

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

	 	 	 	Btu/lb	 	 

5.2 Suspension of Deliveries.

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

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

	 	 	 	 	 	 	 
	 

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

	 	 	 	Btu/lb	 	 

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

 Page 13

 

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

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

SECTION 6. SOURCES OF COAL

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

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

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

 Page 14

 

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

     6.2.3 [*]

SECTION 7. DELIVERY OF COAL

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

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

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

 Page 15

 

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

SECTION 8. LOADING OBLIGATIONS

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

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

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

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

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

 Page 16

 

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

SECTION 9. TRANSPORTATION OBLIGATIONS

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

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

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

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

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

SECTION 10. PRICE OF COAL

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

 Page 17

 

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

10.2 Calculation of Billing Price.

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

     10.2.2 Billing Price.

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

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

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

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

 Page 18

 

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

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

Source:

1. [*]

2. [*]

3. [*]

4. [*]

 Page 19

 

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

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

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

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

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

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

Billing Price x Actual Btu/lb = Adjusted Btu Price

[*] Btu/lb                

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

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

 Page 20

 

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

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

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

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

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

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

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

10.4 Taxes, Fees and Royalties.

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

 Page 21

 

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

10.5 Changes in Applicable Law Cost Adjustment.

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

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

 Page 22

 

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

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

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

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

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

 Page 23

 

SECTION 11. COMPLIANCE WITH LAWS

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

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

SECTION 12. WEIGHING, SAMPLING, AND ANALYSIS

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

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

12.3 Duties of Seller to Weigh Coal.

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

 Page 24

 

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

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

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

12.4 Failure of Weighing, Sampling or Analytical Procedures.

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

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

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

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

 Page 25

 

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

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

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

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

SECTION 13. RECORDS AND AUDITS

13.1 Record Review.

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

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

 Page 26

 

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

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

SECTION 14. FORCE MAJEURE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 16. CHOICE OF LAW; DISPUTE RESOLUTION

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

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

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

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

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

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

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

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

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

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

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

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SECTION 17. REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

SECTION 18. INVOICING AND PAYMENT

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

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

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

SECTION 19. ASSIGNMENTS AND COOPERATION WITH FINANCING

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

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

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

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

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

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

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

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

SECTION 20. SECURITY

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

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

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

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

SECTION 21. CONFIDENTIALITY

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

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

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

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

SECTION 22. NOTICES

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

     If to Seller, addressed to:

COALSALES, LLC

701 Market Street

Suite 830

St. Louis, Missouri 63101-1826

Attention: President

Attention: Senior Vice President & Marketing Midwest

With a copy to:

Peabody Energy Corporation

701 Market Street

Suite 830

St. Louis, Missouri 63101-1826

Attention: Executive Vice President Law

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     If to Buyer, addressed to:

Rentech Energy Midwest Corporation

P.O. Box 229

16675 Highway 20

East Dubuque, Illinois 61025-0229

Attention: President

With a copy to:

Rentech, Inc.

10877 Wilshire Boulevard

Suite 710

Los Angeles, California 90024

Attention: Chief Financial Officer

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

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

SECTION 23. WAIVERS

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

SECTION 24. HEADINGS AND SECTION NUMBERS — CONSTRUCTION

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

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

SECTION 25. AMENDMENTS

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

SECTION 26. COMPLETE AGREEMENT

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

SECTION 27. COUNTERPARTS

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

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

	 	 	 	 	 
	 	 	RENTECH ENERGY MIDWEST CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Merrick Kerr
	 

	 	 	 	 
	 

	 	 	 	Name: Merrick Kerr
	 

	 	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	COALSALES, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Bryan Galli
	 

	 	 	 	 
	 

	 	 	 	Name: Bryan Galli
	 

	 	 	 	Title: President

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