Exhibit 10.3

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

     AGREEMENT, amended and restated as of January 1, 2006, by and between
Peabody Energy Corporation, a Delaware corporation (the “Company”) and Gregory
H. Boyce (the “Executive”).

RECITALS

     The Company and Executive previously entered in to an Employment Agreement
made as of October 1, 2003, as amended (the “2003 Employment Agreement”),
setting forth the terms and conditions of Executive’s employment as the
Company’s President and Chief Operating Officer.

     Effective as of the date hereof (the “Commencement Date”), Executive agrees
to serve after that date in the executive team position set forth on the
signature page hereof.

     In order to induce Executive to serve in the executive team position set
forth on the signature page hereof, the Company desires to provide Executive
with compensation and other benefits on the terms and conditions set forth in
this Agreement.

     Executive is willing to accept such employment and perform services for the
Company, on the terms and conditions hereinafter set forth.

     Accordingly, the 2003 Employment Agreement is amended and restated in its
entirety and superseded in all respects by this Agreement.

     It is therefore hereby agreed by and between the parties as follows:

     1. Employment.

     1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term hereof in the executive team position
set forth on the

 

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signature page hereof. In such capacity, Executive shall report to the Board,
and shall have the customary powers, responsibilities and authorities of
executives holding such positions in corporations of the size, type and nature
of the Company, as it exists from time to time, and as are assigned by the Board
of Directors of the Company (the “Board”).

     1.2 Subject to the terms and conditions of this Agreement, Executive hereby
accepts employment in the executive team position set forth on the signature
page hereof commencing as of the date hereof (the “Commencement Date”) and
agrees, subject to any period of vacation and sick leave, to devote his full
business time and efforts to the performance of services, duties and
responsibilities in connection therewith, subject at all times to review and
control of the Board.

     1.3 Nothing in this Agreement shall preclude Executive from engaging in
charitable work and community affairs, from delivering lectures, fulfilling
speaking engagements or teaching at educational institutions, from managing any
investment made by him or his immediate family with respect to which Executive
or such family member is not substantially involved with the management or
operation of the entity in which Executive has invested (provided that no such
investment in publicly traded equity securities or other property may exceed 5%
of the equity of any entity, without the prior approval of the Board) or from
serving, subject to the prior approval of the Board, as a member of boards of
directors or as a trustee of any other corporation, association or entity, to
the extent that any of the above activities do not materially interfere with the
performance of his duties hereunder. For purposes of the preceding sentence, any
approval by the Board required therein shall not be unreasonably withheld.

     2. Term of Employment. Executive’s term of employment under this Agreement
(the “Term of Employment”) shall commence on the Commencement Date and, subject
to termination by the terms hereunder, shall have an initial term of three years
(the “Initial Term”),

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which, beginning on the first anniversary of the Commencement Date, shall extend
thereafter on a day-to-day basis for an “evergreen” three-year term.

     3. Compensation.

     3.1 Salary. During the Term of Employment, the Company shall pay Executive
a base salary (“Base Salary”) at an initial rate as set forth on the signature
page hereof. Base Salary shall be payable in accordance with the ordinary
payroll practices of the Company. During the Term of Employment, the Board
shall, in good faith, review, at least annually, Executive’s Base Salary in
accordance with the Company’s customary procedures and practices regarding the
salaries of senior executives and may, if determined by the Board to be
appropriate, increase Executive’s Base Salary following such review. “Base
Salary” for all purposes herein shall be deemed to be a reference to any such
increased amount.

     3.2 Annual Bonus. In addition to his Base Salary, Executive shall be
eligible to receive an annual cash bonus (the “Bonus”) during the term of his
employment hereunder to be developed by the Board, based on achievement of
performance targets established by the Board as soon as practicable at the
beginning of the fiscal year for which the performance targets relate. A Bonus
award shall be payable to Executive at the time bonuses are paid to executive
officers in accordance with the Company’s policies and practices as set by the
Board in consultation with Executive.

     3.3 Additional Lump-sum Payment. In the event Executive (a) remains in the
Company’s employ until Executive attains age fifty-five (55), (b) terminates
employment under section 6.1 on or after age fifty-two, or (c) dies or becomes
disabled, the Company shall pay Executive (or, in the event of Executive’s
death, Executive’s estate) $800,000 in a lump sum as

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soon as administratively feasible following the termination of Executive’s
employment with the Company.

     3.4 Signing Bonus and Deferred Compensation Account. (a) As of October 1,
2003 (the “Grant Date”), the Company granted Executive, as a signing bonus (the
“Signing Bonus”), an amount equal to the fair market value of 20,000 shares of
the Company’s common stock (based on the average closing price for the Company’s
common stock as reported on the New York Stock Exchange during the 30-day period
immediately preceding the Grant Date), to be reflected on the Company’s
accounting records as deferred compensation payable to Executive in a lump sum
(with any earnings thereon, as described below) as soon as administratively
feasible following the termination of Executive’s employment with the Company.
Notwithstanding the foregoing, the Signing Bonus (and any earnings thereon)
initially shall constitute unvested and forfeitable deferred compensation and
shall become vested and nonforfeitable on the date on which Executive attains
age 55 or, if earlier, on the fifth anniversary of the date on which Executive
becomes the Company’s chief executive officer; provided, however, that in the
event Executive’s employment with the Company is terminated before the Signing
Bonus (and any earnings thereon) becomes vested and nonforfeitable pursuant to
the immediately preceding clause, the Signing Bonus (and any earnings thereon)
shall be subject to the following:

(1) In the event Executive’s employment with the Company is terminated (i) by
Executive for Good Reason, (ii) by the Company without Cause, or (iii) as a
result of Executive’s death or Disability, the Signing Bonus (and any earnings
thereon) shall become vested and nonforfeitable as of the date of such
termination; and

(2) In the event Executive’s employment with the Company is terminated for any
other reason, the Signing Bonus (and any earnings thereon) shall be immediately
forfeited.

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            (b) In the event Executive’s employment with the Company is
terminated before Executive reaches age 55, the amount payable by the Company
under this Section 3.4 (unless the Signing Bonus is otherwise forfeited pursuant
to Section 3.4(a) hereof) shall be equal to the greater of (i) the value of the
Signing Bonus as of the Commencement Date, as determined under Section 3.4(a)
hereof, plus interest thereon, which shall accrue annually, during the period
beginning on the Grant Date and ending on the date of payment (if any) of the
Signing Bonus, at a rate equal to twelve month LIBOR plus 2, as adjusted on each
anniversary date of the Commencement Date, and (ii) an amount equal to the fair
market value of 20,000 shares of the Company’s common stock as of the date of
termination of Executive’s employment with the Company (based on the average
closing price for the Company’s common stock as reported on the New York Stock
Exchange during the 30-day period immediately preceding the date of such
termination).

            (c) In the event Executive’s employment with the Company is
terminated after Executive reaches age 55 but before Executive reaches age 62,
the amount payable by the Company under this Section 3.4 (unless the Signing
Bonus is otherwise forfeited pursuant to Section 3.4(a) hereof) shall be equal
to the greater of (i) the amount to which Executive would have been entitled
under Section 3.4(b) with interest accruing to the date of termination, without
any forfeiture, (ii) an amount equal to $1,600,000 reduced .by .333% for each
month that the termination date occurs before reaching age 62, or (iii) an
amount equal to the fair market value of 20,000 shares of the Company’s common
stock as of the date of termination of Executive’s employment with the Company
(based on the average closing price for the Company’s common stock as reported
on the New York Stock Exchange during the 30-day period immediately preceding
the date of such termination).

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            (d) In the event Executive’s employment with the Company is
terminated after Executive age 62, the provisions of the immediately preceding
paragraph shall apply; provided, however, that the amount described in
Section 3.4(c)(ii) hereof shall be equal to $1,600,000.

            (e) Notwithstanding anything herein to the contrary, Executive shall
not be deemed to have any beneficial ownership interest in any reserve, account,
fund or other asset of the Company and shall be an unsecured general creditor of
the Company for purposes of this Section 3.4. For purposes of valuing any shares
under this section 3.4, an adjustment shall be made to account for the new
number or new kind of shares of the Company or other securities of the Company
due to a merger, consolidation, recapitalization event, reclassification, stock
split, stock dividend, combination of shares, or otherwise.

     4. Employee Benefits.

     4.1 Equity-Based Compensation. Any outstanding stock option or other
equity-based incentive agreements as of the date hereof (the “Ancillary
Documents”) shall remain in full force and effect and shall not be affected by
this Agreement.

     4.2 Employee Benefit Programs, Plans and Practices; Perquisites. The
Company shall provide Executive while employed hereunder with coverage under
such employee benefit plans (commensurate with his position in the Company and
to the extent permitted under any employee benefit plan) in accordance with the
terms thereof, including the Continuation Benefits (as defined herein),
Directors and Officers (“D&O”) insurance policy, which covers claims arising out
of actions or inactions occurring during the Term of Employment, in accordance
with the D&O insurance policy, and other employee benefits which the Company may
make available to its senior executives from time to time in its discretion. The
Company shall also provide

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Executive with perquisites which the Company may make available to its senior
executives from time to time in its discretion. In addition to the foregoing,
the provisions set forth in Exhibit A to this Agreement shall apply to the
benefits provided to Executive in accordance with this Section 4.2.

     4.3 Vacation. Executive shall be entitled to the number of business days
paid vacation in each calendar year as determined in accordance with the
Company’s applicable vacation policies, which shall be taken at such times as
are consistent with Executive’s responsibilities hereunder.

     5. Expenses. Subject to prevailing Company policy or such guidelines as may
be established by the Board, the Company will reimburse Executive for all
reasonable expenses incurred by Executive in carrying out his duties.

     6. Termination of Employment.

     6.1 Termination Not for Cause or for Good Reason. (a) The Company or
Executive may terminate Executive’s Term of Employment at any time for any
reason by written notice at least thirty (30) days in advance. If the
Executive’s employment is terminated (i) by the Company other than for Cause (as
defined in Section 6.2(b) hereof), Disability (as defined in Section 6.3 hereof)
or death or (ii) by Executive for Good Reason (as defined in Section 6.1(b)
hereof), then:

(1) the Company, as liquidated damages and in lieu of any other damages
therefor, shall (A) continue to pay to Executive Base Salary for a period ending
on the third anniversary date of such termination (the “Continuation Period”),
with such payments to be made in accordance with the terms of Section 3.1 and
(B) pay to Executive an additional amount equal to three (3) times the higher of
(x) Executive’s target Bonus for the year of termination (as established by the
Board under Section 3.2 hereof), or (y) the annualized average of the actual
Bonus awards paid to Executive in the three-year period prior to such
termination (or the total period of Executive’s employment with the Company, if
less than three years) (the “Severance Payments”). The Severance Payments shall
be made

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in substantially equal installments over the Continuation Period in accordance
with Company payroll practices, unless the Board approves payment in a lump sum;

(2) the Company shall pay to Executive (i) any unpaid Bonus earned by Executive
with respect to the year immediately preceding the year of termination, if any,
and (ii) a prorated bonus (the “Prorated Bonus”) for the year of termination,
payable when such bonuses are paid to other senior executives of the Company,
calculated as the Bonus Executive would have received in such year based on the
Company’s actual performance multiplied by a fraction, the numerator of which is
the number of business days during the year of termination that Executive was
employed and the denominator of which is the total number of business days
during the year of termination;

(3) the Company shall also continue to provide Executive during the Continuation
Period with qualified and nonqualified defined contribution pension, life
insurance, medical and other benefits set forth on the signature page hereof
(collectively, the “Continuation Benefits”); provided, however, that the Company
shall not be obligated to provide any benefits under tax qualified plans which
are not permitted by the terms of such plan or by applicable law or could
jeopardize the plan’s tax status; provided, further, that any such coverage
shall terminate to the extent that Executive is offered or obtains comparable
benefits from any other employer during the Continuation Period; and

(4) Executive’s equity-based compensation (including any options and restricted
stock) shall be governed by applicable terms and conditions of the relevant
Ancillary Documents.

(5) Reimbursable expenses incurred by Executive prior to the termination of his
employment with the Company and not previously reimbursed by the Company shall
be reimbursed pursuant to Section 5 hereof.

Notwithstanding the foregoing, if Executive breaches any provision of Section 11
hereof, the remaining balance of the Severance Payments, the Prorated Bonus and
any Continuation Benefits shall be forfeited.

            (b) For purposes of this Agreement, “Good Reason” shall mean (i) a
reduction by the Company in Executive’s Base Salary (in which event Severance
Payments shall be made based upon Executive’s Base Salary in effect prior to any
such reduction), (ii) a material reduction in the aggregate program of employee
benefits and perquisites to which Executive is entitled (other than a reduction
which affects all executives), (iii) relocation by more than 50

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miles from Executive’s workplace, (iv) any material diminution or material
adverse change in Executive’s duties, responsibilities or reporting
relationships, or (v) a material decline in Executive’s annual and long-term
bonuses opportunity.

            (c) Termination by Executive for Good Reason shall be made by
delivery to the Company by Executive of written notice, given at least 45 days
prior to such termination, which sets forth the conduct believed to constitute
Good Reason; provided, however, that the Company shall have the opportunity to
cure the Good Reason during the first 30 days of such notice period and if the
Good Reason is cured within such 30-day period, Executive’s notice of
termination shall be deemed withdrawn. If no notice is given within 90 days of
the event giving rise to Good Reason, the Good Reason shall be deemed waived.

            (d) (i) If Executive becomes entitled to any payment, benefit or
distribution (or combination thereof) by the Company, any affiliated company, or
one or more trusts established by the Company for the benefit of its employees,
whether paid or payable pursuant to Section 6.1 of this Agreement or any other
plan, arrangement, or agreement with the Company or any affiliated company (the
“Payments”), which are or become subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or
any interest or penalties are incurred by Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the “Excise Tax”), the Company shall make to
Executive an additional payment (the “Gross-Up Payment”) in an amount such that
after payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and the
Excise Tax imposed upon

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the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.

                (ii) All determinations required to be made under this
Section 6.1(d), including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by a nationally recognized
certified public accounting firm as may be designated by the Company (the
“Accounting Firm”) which shall provide detailed supporting calculations both to
the Company and Executive within ten business days of the receipt of notice from
Executive that Payments were made, or such earlier time as is required by the
Company; provided that for purposes of determining the amount of any Gross-Up
Payment, Executive shall be deemed to pay federal income tax at the highest
marginal rates applicable to individuals in the calendar year in which any such
Gross-Up Payment is to be made and deemed to pay state and local income taxes at
the highest effective rates applicable to individuals in the state or locality
of Executive’s residence or place of employment in the calendar year in which
any such Gross-Up Payment is to be made, net of the maximum reduction in federal
income taxes that can be obtained from deduction of such state and local taxes,
taking into account limitations applicable to individuals subject to federal
income tax at the highest marginal rates. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 6.1(d), shall be paid by the Company to
Executive (or to the appropriate taxing authority on Executive’s behalf) when
due. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall so indicate to Executive in writing. Any determination by
the Accounting Firm shall be binding upon the Company and Executive. As a result
of the uncertainty in the application of Section 4999 of the Code, it is
possible that the

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amount of the Gross-Up Payment determined by the Accounting Firm to be due to
(or on behalf of) Executive was lower than the amount actually due
(“Underpayment”). In the event that the Company exhausts its remedies hereunder
and Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Executive.

                (iii) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of any Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than ten business days after Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall
not pay such claim prior to the expiration of the thirty-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall (i) give the
Company any information reasonably requested by the Company relating to such
claim, (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company, (iii) cooperate with the Company
in good faith in order to effectively contest such claim and (iv) permit the
Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive

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harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 6.1(d), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, further, that if the Company directs
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis, and shall
indemnify and hold Executive harmless, on an after-tax basis, from any Excise
Tax or income tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; provided, further, that if Executive is required to extend the
statute of limitations to enable the Company to contest such claim, Executive
may limit this extension solely to such contested amount. The Company’s control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

                (iv) If, after the receipt by Executive of an amount paid or
advanced by the Company pursuant to this Section 6.1(d), Executive becomes
entitled to receive any refund with respect to a Gross-Up Payment, Executive
shall (subject to the Company’s complying with

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the requirements of Section 6.1(d)(iii)) promptly pay to the Company the amount
of such refund received (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section 6.1(d), a determination is made that
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of the Gross-Up Payment required to be paid.

     6.2 Voluntary Termination by Executive; Discharge for Cause. (a) In the
event that Executive’s employment is terminated (i) by the Company for Cause, as
hereinafter defined, (ii) by Executive other than for Good Reason, Disability or
death or (iii) by Executive for retirement, Executive shall only be entitled to
receive (A) any Base Salary accrued but unpaid prior to such termination,
(B) any vacation accrued but unused prior to such termination and any other
benefits provided under the employee benefit programs, plans and practices
referred to in Section 4.2 hereof, in accordance with their terms, and
(C) pursuant to Section 5 hereof, reimbursable expenses incurred by Executive
prior to the termination of his employment with the Company and not previously
reimbursed by the Company. After the termination of Executive’s employment under
this Section 6.2, the obligations of the Company under this Agreement to make
any further payments, or provide any benefits specified herein, to Executive,
except as provided in the previous sentence, shall thereupon cease and
terminate.

            (b) As used herein, the term “Cause” shall be limited to (i) any
material and uncorrected breach by Executive of the terms of this Agreement,
including, but not limited to, engaging in action in violation of Section 11
hereof, (ii) any willful fraud or dishonesty of

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Executive involving the property or business of the Company, (iii) a deliberate
or willful refusal or failure of Executive to comply with any major corporate
policy of the Company which is communicated to Executive in writing or
(iv) Executive’s conviction of, or plea of nolo contendere to, any felony if
such conviction shall result in his imprisonment; provided that with respect to
clauses (i), (ii) or (iii) above, Executive shall have 10 days following written
notice of the conduct which is the basis for the potential termination for Cause
within which to cure such conduct in order to prevent termination for Cause by
the Company. Except for violations of Section 11 hereof or terminations under
Section 6.2(b)(iv) above, only actions, conduct, and events occurring during the
term of employment with the Company shall be the subject of a termination For
Cause.

     6.3 Disability. In the event of the Disability (as defined below) of
Executive during the Term of Employment, the Company may terminate Executive’s
Term of Employment upon written notice to Executive (or Executive’s personal
representative, if applicable) effective upon the date of receipt thereof (the
“Disability Commencement Date”). The obligation of the Company to make any
further payments under this Agreement shall, except for earned but unpaid Base
Salary, any unpaid Bonus earned by the Executive with respect to the year
immediately preceding the year of termination, amounts attributable to accrued
but unused vacation days, vested benefits under other Company provided benefit
plans and the Prorated Bonus, cease as of the Disability Commencement Date. The
term “Disability,” for purposes of this Agreement, shall mean Executive’s
absence from the full-time performance of Executive’s duties pursuant to a
reasonable determination made in accordance with the Company’s long-term
disability plan that Executive is disabled and entitled to long term disability
benefits as a result of incapacity due to physical or mental illness that lasts,
or is reasonably expected to last, for at

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least six months. Benefits under all other employee benefit programs, plans and
practices shall be paid in accordance with their terms.

     6.4 Death. In the event of Executive’s death during his Term of Employment
hereunder or at any time thereafter while payments are still owing to Executive
under the terms of this Agreement, all obligations of the Company to make any
further payments, other than the obligation to pay any accrued but unpaid Base
Salary, any unpaid Bonus earned by the Executive with respect to the year
immediately preceding the year of termination, amounts attributable to accrued
but unused vacation days, vested Benefits under other Company provided benefit
plans and the Prorated Bonus or any remaining payments that were payable to
Executive by reason of his termination of employment under Section 6.1 to which
Executive was entitled at the time of his death, shall terminate upon
Executive’s death. Benefits under all other employee benefit programs, plans and
practices shall be paid in accordance with their terms.

     6.5 No Further Notice or Compensation or Damages. Executive understands and
agrees that he shall not be entitled to any further notice, compensation or
damages upon Termination of Employment under this Agreement, other than amounts
specified in this Section 6 and the Ancillary Documents.

     6.6 Executive’s Duty to Provide Materials. Upon the termination of the Term
of Employment for any reason, Executive or his estate shall surrender to the
Company all correspondence, letters, files, contracts, mailing lists, customer
lists, advertising materials, ledgers, supplies, equipment, checks, and all
other materials and records of any kind that are the property of the Company or
any of its subsidiaries or affiliates, that may be in Executive’s possession or
under his control, including all copies of any of the foregoing.

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     7. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:

To the Company:

Peabody Energy Corporation
701 Market Street, Suite 700
St. Louis, Missouri 63101-1826
Attn: Chief Executive Officer

with a copy to:

David R. Shevitz, Esq., and
Michel Vanesse, Esq.
Katten Muchin Zavis Rosenman
525 West Monroe Street
Chicago, Illinois 60661

To Executive at the address set forth on the signature page hereof.

Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of sending shall constitute the time at which notice was given.

     8. Separability. If any provision of this Agreement shall be declared to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.

     9. Assignment. This Agreement shall be binding upon, inure to the benefit
of and be enforceable by the heirs and representatives of Executive and the
assigns and successors of the Company, but neither this Agreement nor any rights
or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of
intestate succession) or by the Company, except that the Company may assign this
Agreement to

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any successor (whether by merger, purchase or otherwise) to all or substantially
all of the stock, assets or businesses of the Company.

     10. Amendment. This Agreement may only be amended by written agreement of
the parties hereto.

     11. Nondisclosure of Confidential Information; Non-Competition.
(a) Executive, both during the term hereof and thereafter, will not, directly or
indirectly, use for himself or use for, or disclose to, any party other than the
Company, or any subsidiary of the Company (other than in the ordinary course of
Executive’s duties for the benefit of the Company or any subsidiary of the
Company), any secret or confidential information regarding the business or
property of the Company or its subsidiaries or regarding any secret or
confidential apparatus, process, system, or other method at any time used,
developed, acquired, discovered or investigated by or for the Company or its
subsidiaries, whether or not developed, acquired, discovered or investigated by
Executive. At the termination of Executive’s employment or at any other time the
Company or any of its subsidiaries may request, Executive shall promptly deliver
to the Company all memoranda, notes, records, plats, sketches, plans or other
documents made by, compiled by, delivered to, or otherwise acquired by Executive
concerning the business or properties of the Company or its subsidiaries or any
secret or confidential product, apparatus or process used developed, acquired or
investigated by the Company or its subsidiaries.

            (b) In consideration of the Company’s obligations under this
Agreement, Executive agrees that during the period of his employment hereunder
and for a period of one year thereafter, without the prior written consent of
the Board, (i) he will not, directly or indirectly, either as principal,
manager, agent, consultant, officer, stockholder, partner, investor, lender or
employee or in any other capacity, carry on, be engaged in or have any financial

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interest in, any entity which is in competition with the business of the Company
or its subsidiaries and (ii) he shall not, on his own behalf or on behalf of any
person, firm or company, directly or indirectly, solicit or offer employment to
any person who is or has been employed by the Company or its subsidiaries at any
time during the twelve (12) months immediately preceding such solicitation.

            (c) For purposes of this Section 11, an entity shall be deemed to be
in competition with the Company if it is principally involved in the purchase,
sale or other dealing in any property or the rendering of any service purchased,
sold, dealt in or rendered by the Company as a part of the business of the
Company within the same geographic area in which the Company effects such sales
or dealings or renders such services. Notwithstanding this subsection 11(c) or
subsection 11(b), nothing herein shall be construed so as to preclude Executive
from investing in any publicly or privately held company, provided Executive’s
beneficial ownership of any class of such company’s securities does not exceed
5% of the outstanding securities of such class.

            (d) Executive agrees that this covenant not to compete is reasonable
under the circumstances and will not interfere with his ability to earn a living
or to otherwise meet his financial obligations. Executive and the Company agree
that if in the opinion of any court of competent jurisdiction such restraint is
not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of this covenant as
to the court shall appear not reasonable and to enforce the remainder of the
covenant as so amended. Executive agrees that any breach of the covenants
contained in this Section 11 would irreparably injure the Company. Accordingly,
Executive agrees that, in the event that a court enjoins Executive from any
activity prohibited by this Section 11, the Company may, in addition

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to pursuing any other remedies it may have in law or in equity, cease making any
payments otherwise required by this Agreement and obtain an injunction against
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by Executive.

     12. Beneficiaries; References. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive’s death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive’s death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.

     13. Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement (other than an action to enforce the covenants in
Section 11 hereof) or the Ancillary Documents shall be resolved by arbitration
in St. Louis, Missouri. Three arbitrators shall be selected, and arbitration
shall be conducted, in accordance with the rules of the American Arbitration
Association. The arbitrators shall have the discretion to award the cost of
arbitration, arbitrators’ fees and the respective attorneys’ fees of each party
between the parties as they see fit.

     14. Governing Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Missouri, without reference
to rules relating to conflicts of law.

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     15. Effect on Prior Agreements. This Agreement and the Ancillary Documents
contain the entire understanding between the parties hereto and supersedes in
all respects any prior or other agreement or understanding, both written and
oral, between the Company, any affiliate of the Company or any predecessor of
the Company or affiliate of the Company and Executive.

     16. Withholding. The Company shall be entitled to withhold from payment any
amount of withholding required by law.

     17. Survival. Notwithstanding the expiration of the term of this Agreement,
the provisions of Section 11 hereunder shall remain in effect as long as is
reasonably necessary to give effect thereto in accordance with the terms hereof.

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     18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.

                Peabody Energy Corporation
 
       

  By:   /s/ ROBERT B KARN

      Name:  Robert B Karn

      Title:  Chairman of Compensation Committee

       
Signature of Executive:
  /s/ GREGORY H BOYCE
 
   
Address of Executive:
  1102 Clayton Road
 
   

  St. Louis, MO 63131
 
   
Executive Team Position:
  President and Chief Executive Officer
 
   
Base Salary:
  $800,000 per annum
 
   
Annual Incentive Target:
  100% of Base Salary
 
   
Long-Term Incentive Target:
  225% of Base Salary
 
   
Continuation Benefits:
  1. Medical, dental and vision benefits;
 
   

  2. Defined contribution plans (qualified and non-qualified);
 
   

  3. Life insurance;
 
   

  4. AD&D;
 
   

  5. Health care reimbursement account; and
 
   

  6. Day care reimbursement account.

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Exhibit A

Additional Provisions Relating To Benefits

1.   No pre-existing limitation provisions for medical, dental and vision
benefit plans will apply.

2.   The years of service requirements for all benefit plans will be waived
unless Federal law precludes such waiver.

3.   Executive will be provided with life insurance coverage equal to one-times
base salary without any pre-existing exclusions or having to provide evidence of
good health. However, Executive may have to provide evidence of good health to
purchase any additional life insurance. Also, the 10-year service requirement at
retirement in order to maintain the applicable retiree life insurance coverage
will be deemed met upon the date of hire.

4.   The five-year of service requirement for benefits at the 100% level for the
short-term disability (“STD”) plan will be waived.

5.   The long-term disability (“LTD”) plan will waive any pre-existing condition
limitations.

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