exv10w4



 





Exhibit 10.4




EXECUTION COPY




NBCWA INDIVIDUAL EMPLOYER PLAN

LIABILITIES ASSUMPTION AGREEMENT




     This NBCWA INDIVIDUAL EMPLOYER PLAN LIABILITIES ASSUMPTION AGREEMENT (“Agreement”) is made on
the 22nd day of October, 2007 by and between Peabody Holding Company, LLC (“PHC”), a Delaware
limited liability company with principal offices at 701 Market Street, St. Louis, MO 63101, Patriot
Coal Corporation (“Patriot”), a Delaware corporation with principal offices at 12312 Olive
Boulevard, Suite 400, St. Louis, Missouri, Peabody Coal Company, LLC (“PCC”), a Delaware limited
liability company with principal offices at 12312 Olive Boulevard, Suite 400, St. Louis, Missouri,
and, solely with respect to its obligations under Section 7 hereof, Peabody Energy Corporation
(“PEC”), a Delaware corporation with principal offices at 701 Market Street, St. Louis, MO 63101
(each of the foregoing being sometimes referred to hereinafter individually as “a party” or jointly
as “the parties”).



RECITALS




     WHEREAS, contemporaneously herewith, all of the shares of common stock of Patriot have been
distributed to the stockholders of PEC, PHC’s ultimate parent company, and Patriot will indirectly
own all of the capital stock of PCC; and



     WHEREAS, PCC is signatory to a collective bargaining agreement with the International Union,
United Mine Workers of America known as the National Bituminous Coal Wage Agreement of 2007
(“NBCWA”); and



     WHEREAS, PCC has an obligation to provide retiree healthcare pursuant to its “me too” labor
contract which incorporates by reference Article XX of the NBCWA; and



     WHEREAS, the parties desire that PCC continue to provide the retiree healthcare required by
Article XX of the NBCWA (or any successor PCC labor contract);



     WHEREAS, PHC has agreed to assume the liabilities of PCC for provision of healthcare pursuant
to Article XX of the NBCWA (or any successor PCC labor contract) to certain retirees and their
eligible dependents to the extent expressly set forth in this Agreement; and



     WHEREAS, contemporaneously herewith PHC and Patriot have entered an Administrative Service
Agreement pursuant to which Patriot will take certain actions necessary and appropriate for the
administration of any NBCWA Individual Employer Plans (as defined below) and delivery of benefits
constituting NBCWA Individual Employer Plan Liabilities (as defined below).



     NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained
herein, the parties do hereby agree as follows:



     Section 1. Defined Terms.



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     (a) The term “Effective Date” shall mean the date first hereinabove entered.



     (b) The term “NBCWA” shall mean the National Bituminous Coal Wage Agreement of 2007, as may be
amended, supplemented or replaced from time to time (subject to the proviso of the definition of
“NBCWA Individual Employer Plan Liabilities”).



     (c) The term “NBCWA Individual Employer Plan” shall mean a plan for the provision of
healthcare benefits to retirees of PCC and their eligible dependents maintained by PCC pursuant to
Article XX of the NBCWA.



     (d) The term “NBCWA Individual Employer Plan Liabilities” shall mean amounts PCC pays for
benefits to those retirees of PCC identified on Attachment A hereto, and such retirees’ eligible
dependents, under the terms of the NBCWA Individual Employer Plan, provided that such retirees had
vested in a right to receive retiree health benefits under the NBCWA Individual Employer Plan as of
December 31, 2006 and that such retirees were retired from coal mine employment as of December 31,
2006 and did not thereafter return to employment with any company signatory to a labor agreement
which requires the employer to provide health benefits to its UMWA retirees. Changes to benefit
levels, cost containment programs, plan design or other such modifications contained in PCC’s
future UMWA labor agreements that are applicable to the retirees and eligible dependents subject to
this Agreement shall be included for the purposes of the definition of “NBCWA Individual Employer
Plan Liabilities”; provided that, for purposes of any successor PCC labor contract, “NBCWA
Individual Employer Plan Liabilities” shall be based on benefits that are the lesser of (i)
benefits provided in any future UMWA labor agreement with Eastern Associated Coal, LLC or any
successor of Eastern Associated Coal, LLC and (ii) benefits provided in any future NBCWA labor
agreement or any successor labor agreement and offered to Eastern Associated Coal, LLC or any
successor of Eastern Associated Coal, LLC, or which Eastern Associated Coal, LLC or any successor
of Eastern Associated Coal, LLC had the opportunity to sign.



     Section 2. PHC Assumption of Liabilities.



     (a) PHC assumes, and agrees to pay and discharge when due in accordance herewith, the NBCWA
Individual Employer Plan Liabilities.



     (b) Patriot shall instruct each third party administrator to deliver each invoice with respect
to the NBCWA Individual Employer Plan Liabilities directly to PHC in accordance with such third
party administrator’s normal billing cycle, and PHC shall pay each such invoice in full (solely to
the extent such amounts relate to the NBCWA Individual Employer Plan Liabilities) by wire transfer
in immediately available funds when due. PHC shall pay the fees of the third-party administrators
of the medical and prescription drug services to the retirees identified on Attachment A, and their
eligible dependents, when due. The parties hereto acknowledge that the current practice is to
include such fees in the last invoice of the month related to such medical or prescription drug
services.



     Section 3. Mutual Cooperation. Each of PHC, Patriot and PCC will use their
commercially reasonable efforts to cooperate with each other to give full effect to the
transactions contemplated by this Agreement. If PHC provides written notice that any amounts



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were paid under this agreement in excess of the actual NBCWA Individual Employer Plan
Liabilities, Patriot and PCC will use its commercially reasonable efforts to recover such excess
amounts for PHC’s benefit.




     Section 4. Settlement of Claims. Patriot shall immediately notify PHC when Patriot or
any of its subsidiaries is sued by the UMWA or a former employee or his or her eligible dependents
or when an administrative claim has been filed with the trustees under the NBCWA, in each case
regarding the NBCWA Individual Employer Plan Liabilities. Patriot and PCC may not settle any such
dispute without the prior written consent of PHC, not to be unreasonably withheld or delayed. If
Patriot or PCC settles any such claim without the prior written consent of PHC, then PHC shall not
be liable for reimbursement of any amounts paid by Patriot or PCC as a result of such un-consented
settlement under this Agreement.



     Section 5. PHC Right to Pursue a Claim or Defense. If PHC determines that Patriot
and/or PCC is failing to pursue with reasonable diligence a claim or defense related to any NBCWA
Individual Employer Plan Liabilities, it shall notify Patriot and/or PCC in writing of such
failure. If Patriot and/or PCC fails or refuses to pursue such claim or defense diligently within
thirty (30) days of such notice, then PHC at its option may elect to pursue such claim or defense
at its cost in the name of Patriot or PCC. Any contest assumed by PHC pursuant to this provision
shall be conducted by attorneys employed or retained by PHC (subject to the right of Patriot and/or
PCC to participate in such prosecution or defense at Patriot’s or PCC’s cost) and PHC may settle or
compromise the claim or defense without the consent of Patriot and/or PCC, so long as such
settlement or compromise does not include any payment or other obligation of Patriot, PCC or their
respective controlled affiliates. PHC, Patriot and PCC shall use their commercially reasonable
efforts to cooperate with each other in the continued prosecution or defense of any such claim,
including the provision of witnesses and production of documents.



     Section 6. Maintenance of Books and Records; Inspection. Patriot shall, at all times
during the continuance of this Agreement, maintain full and complete books of account and other
records with respect to all activities under this Agreement including, but not limited to, records
of all payments made in connection with, or as a result of, such activities and all contracts
entered and evaluations performed with respect to payment of NBCWA Individual Employer Plan
Liabilities. PHC shall, at all times during the continuance of this Agreement, have the right to
inspect, copy, and/or audit all account books and other records with respect to this Agreement at
Patriot’s offices and during regular business hours; provided that (i) PHC is not entitled to
inspect such books and records more than once every six months, (ii) PHC shall provide at least
forty-eight (48) hours advance notification, including reasonable detail of the materials to be
reviewed, and (iii) no such inspection or audit shall unreasonably interfere with the normal and
regular conduct of Patriot’s business.



     Section 7. PEC Guarantee. PEC hereby irrevocably and unconditionally guarantees the
prompt and full payment by PHC of all amounts owed by it under this Agreement, subject to its right
of setoff set forth in the Separation Agreement, Plan of Reorganization and Distribution, dated as
of October 22, 2007 (the “Separation Agreement”) by and between PEC and Patriot. Such guaranty
shall be a guaranty of payment and not merely of collection, and shall not be conditioned or
contingent upon the pursuit of any remedies against PHC. The liability of PEC under this guaranty
shall, to the fullest extent permitted under applicable law, be absolute,



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unconditional and irrevocable. PEC hereby waives any and all notice of the creation, renewal,
extension or accrual of any of the guaranteed obligations and notice of or proof of reliance by
Patriot or PCC upon this guaranty or acceptance of this guaranty. The guaranteed obligations, and
any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance
upon this guaranty. When pursuing its rights and remedies hereunder against PEC, neither Patriot
nor PCC shall be under any obligation to pursue such rights and remedies it may have against PHC or
any right of offset with respect thereto, and any failure by Patriot or PCC to pursue such other
rights or remedies or to collect any payments from PHC or to realize upon or to exercise any such
right of offset shall not relieve PEC of any liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of law, of Patriot or
PCC. PEC irrevocably waives acceptance hereof, presentment, demand, protest, promptness,
diligence, obligation to protect, secure or perfect any security interest and any notice. Neither
Patriot nor PCC shall be obligated to file any claim relating to any guaranteed obligation in the
event that PHC becomes subject to a bankruptcy, reorganization or similar proceeding, and the
failure of Patriot or PCC to so file shall not affect PEC’s obligations hereunder. In the event
that any payment to Patriot or PCC in respect of any guaranteed obligation is rescinded or must
otherwise be returned for any reason whatsoever, PEC shall remain liable hereunder with respect to
the guaranteed obligation as if such payment had not been made, and the guaranty shall be
reinstated and shall continue even if otherwise terminated.




     Section 8. Indemnification. PHC agrees that it shall indemnify, defend and hold
harmless each of Patriot, PCC and their respective affiliates and the successors, assigns,
employees, officers, directors and agents of each, from and against any claims, actions or causes
of action, damages, penalties, fines, assessments, attorney fees or other costs or expenses
principally resulting from the failure of PHC to timely pay and discharge the NBCWA Individual
Employer Plan Liabilities.



     Section 9. Resolution of Disputes. Any party or parties to a dispute or disagreement
under this Agreement (“Covered Dispute”) (including but not limited to any issue as to the
arbitrability of such Covered Dispute) may give the other parties to the Covered Dispute written
notice of the Covered Dispute initiating the provisions hereunder. Within ten days after delivery
of the notice of a Covered Dispute, the receiving parties shall submit to the other a written
response. The notice and the response shall include a statement of each party’s respective position
and a summary of arguments supporting that position and the name and title of the executive who
will represent the claimants and of any other individual who will accompany such executive in
resolving the Covered Dispute. Within twenty (20) days after delivery of the first notice, such
executives shall meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, and shall negotiate in good faith to attempt to resolve the Covered
Dispute. All reasonable requests for information made by one party to the other will be honored.
If the Covered Dispute has not been resolved by negotiation within thirty (30) days of the first
notice of the Covered Dispute, the parties to the Covered Dispute may, by their mutual consent,
submit the Covered Dispute to arbitration in St. Louis, Missouri. Arbitration of any Covered
Dispute shall be conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date of the first notice of the Covered Dispute. The
parties agree to use 3 arbitrators for any Covered Dispute in excess of Two Million Dollars
($2,000,000.00). Any decision of the arbitrator (or arbitrators) agreed upon or appointed and
acting pursuant to this Section 9 shall be final and binding upon the parties and judgment



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may be entered thereon, upon the application of any of the parties, by any court of competent
jurisdiction. The arbitrator may also award reasonable attorney’s fees and the costs of the
arbitration to the prevailing party. This Section 9 shall not preclude any of the parties from
seeking a temporary restraining order, preliminary injunction or other temporary injunctive relief
necessary to enforce this Section 9 or protect rights under this Agreement. If the parties do not
mutually agree to arbitrate the Covered Dispute, the Covered Dispute shall be resolved pursuant to
Section 15.08 of the Separation Agreement.




     Section 10. Waiver. The failure of any party to comply with any of its obligations or
agreements or to fulfill any conditions contained in this Agreement may be excused only by a
written waiver from the other parties. Failure by any party to exercise, or delay by any party in
exercising, any right under this Agreement shall not operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder by a party preclude any other or future exercise
of that right or any other right hereunder by such party.



     Section 11. Notices. All notices, requests or other communications required or
permitted hereunder shall be given in writing by hand delivery, registered mail, certified mail or
overnight courier, return receipt requested, postage prepaid, to the party to receive the same at
its respective address set forth below, or at such other address as may from time to time be
designated by such party to the others in accordance with this Section 11.



If to Patriot, to:




Joseph W. Bean

Senior Vice President, General Counsel and Corporate Secretary

Patriot Coal Corporation

12312 Olive Boulevard, Suite 400

St. Louis, MO 63141

Fax:




If to PCC, to:




Joseph W. Bean

Senior Vice President, General Counsel and Corporate Secretary

Patriot Coal Corporation

12312 Olive Boulevard, Suite 400

St. Louis, MO 63141

Fax:




If to PHC, to:




Alexander Schoch, Esq.

Executive Vice President Law and Chief Legal Officer

Peabody Holding Company, LLC

701 Market Street

St. Louis, MO 63101

Fax: 314-342-3419




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All such notices and communications hereunder shall be deemed given when received, as evidenced by
the acknowledgment of receipt issued with respect thereto by the applicable postal authorities or
the signed acknowledgment of receipt of the person to whom such notice or communication shall have
been addressed or his or her authorized representative.




     Section 12. No Third-Party Beneficiaries. Neither this Agreement nor any provision of
it shall create any right in favor of or impose any obligation upon any person or entity other than
the parties hereto and their respective successors and permitted assigns. Without limiting the
generality of the foregoing, this Agreement is not intended to, and does not, create any rights,
third party or otherwise, on behalf of the United Mine Workers of America, any retiree or
dependent, or any other person or individual. No third party shall be entitled to any subrogation
rights with respect to any obligation of any party under this Agreement.



     Section 13. Captions and Paragraph Headings. Captions and paragraph headings are used
hereinafter for convenience only and are not a part of this Agreement and shall not be used in
construing it.



     Section 14. Entire Agreement. The making, execution and delivery of this Agreement by
the parties has been induced by no representations, statements, warranties or agreements other than
those herein expressed. Notwithstanding any provisions in any other agreement, this Agreement,
together with the Separation Agreement and the other agreements contemplated thereby, including
without limitation the Administrative Services Agreement, dated as of October 22, 2007, by and
between PHC and Patriot, embodies the entire understanding of the parties and their respective
subsidiaries and affiliates relating to the matters set forth herein. This Agreement may be
modified only by a written instrument executed by the parties. The parties make no representation
or warranties with respect to the subject matter of this Agreement not expressly set forth in this
Agreement. This Agreement supersedes and terminates all other discussions, negotiations,
understandings, arrangements and agreements between or among PHC and Patriot, or any respective
affiliated companies, entities or persons relating to the subject matter hereof.



     Section 15. Assignability. Neither of the parties hereto may assign this Agreement
without the prior written consent of the other parties, which consent will not be unreasonably
withheld or delayed. Any impermissible attempted assignment of this Agreement without such prior
written consent shall be void, and the party assigning or attempting to assign this Agreement shall
remain bound by and obligated by this Agreement as if no assignment or attempted assignment had
occurred.



     Section 16. Successors and Assigns. This Agreement and the provisions hereof shall be
binding upon and inure to the benefit of the respective successors and permitted assigns of the
parties hereto.



     Section 17. Severability. In the event one or more of the provisions of this
Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the validity, legality or
enforceability of any other



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provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal
or unenforceable provision was not a part of this Agreement.




     Section 18. Counterparts. This Agreement may be executed in any number of duplicate
counterparts, each of which shall be deemed an original and all of which together shall constitute
one and the same instrument.



     Section 19. Governing Law. The parties hereto have agreed that the validity,
construction, operation and effect of any and all of the terms and provisions of this Agreement
shall be determined and enforced in accordance with the laws and regulations of the State of
Delaware, without giving effect to principles of conflicts of law thereunder.



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     IN WITNESS WHEREOF, the parties hereto have caused this NBCWA Individual Employer Plan
Liabilities Assumption Agreement to be duly executed by one of their respective officers duly
authorized and directed as of the date first written above.



	 	 	 	 	 	 	 	 	 	 	 
	PEABODY HOLDING COMPANY, LLC	 	 	 	PATRIOT COAL CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Richard A. Navarre
	 	 	 	By:
	 	/s/ Richard M. Whiting	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name: Richard A. Navarre
	 	 	 	 	 	Name: Richard M. Whiting	 	 
	 

	 	Title: Executive Vice President
	 	 	 	 	 	Title: President & Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Solely for purposes of Section 7 hereof:

PEABODY ENERGY CORPORATION	 	 	 	PEABODY COAL COMPANY LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Richard A. Navarre
	 	 	 	By:
	 	/s/ Mark N. Schroeder	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name: Richard A. Navarre
	 	 	 	 	 	Name: Mark N. Schroeder	 	 
	 

	 	Title: Executive Vice President
	 	 	 	 	 	Title: Vice President & Treasurer	 	 







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