<PAGE>

                       RECEIVABLES CONTRIBUTION AGREEMENT

                           dated as of March 31, 2000

                                     between

                         P&L COAL HOLDINGS CORPORATION,

                                 AS CONTRIBUTOR,

                                       and

                          P&L RECEIVABLES COMPANY, LLC,

                                  AS TRANSFEREE


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                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I. THE CONTRIBUTIONS...................................................1

    Section 1.1       Contributions of Receivables.............................1
    Section 1.2       Transfer of Records......................................2
    Section 1.3       Characterization; Granting Clauses.......................3
    Section 1.4       Recourse for Dilution....................................3

ARTICLE II. REPRESENTATIONS AND WARRANTIES.....................................3

    Section 2.1       Representations of P&L...................................3

ARTICLE III. CONDITIONS OF CONTRIBUTIONS.......................................7

    Section 3.1       Condition Precedent to Initial Contribution..............7
    Section 3.2       Condition Precedent to All Contributions.................7

ARTICLE IV. COVENANTS..........................................................7

    Section 4.1       Compliance with Receivables Purchase Agreement...........7
    Section 4.2       Reporting................................................7

ARTICLE V. INDEMNIFICATION ....................................................7

    Section 5.1       Indemnities by P&L.......................................7

ARTICLE VI. MISCELLANEOUS  ...................................................11

    Section 6.1       Waivers and Amendments..................................11
    Section 6.2       Notices, Etc............................................11
    Section 6.3       Cumulative Remedies.....................................11
    Section 6.4       Binding Effect; Assignability...........................11
    Section 6.5       Acknowledgment and Agreement............................12
    Section 6.6       Governing Law...........................................12
    Section 6.7       Submission to Jurisdiction..............................12
    Section 6.8       Waiver of Jury Trial....................................13
    Section 6.9       Captions and Cross References;
                      Incorporation by Reference..............................13

    Section 6.10      Execution in Counterparts...............................13
    Section 6.11      No Proceedings..........................................13

ANNEX A DEFINITIONS...........................................................15
<PAGE>
                       RECEIVABLES CONTRIBUTION AGREEMENT

     THIS RECEIVABLES CONTRIBUTION AGREEMENT (as amended, supplemented, restated
or otherwise  modified from time to time, this  "Agreement"),  dated as of March
31, 2000, is entered into by and among:

          (1) P&L Coal Holdings Corporation,  a Delaware corporation ("P&L"), as
     contributor; and

          (2) P&L Receivables Company, LLC, a Delaware limited liability company
     ("SPV"), as transferee.

Unless otherwise indicated, capitalized terms used in this Agreement are defined
in ANNEX A hereto or in the Receivables  Purchase  Agreement or Receivables Sale
Agreement referenced in ANNEX A.

                              W I T N E S S E T H :

     WHEREAS,  P&L  owns,  directly  or  indirectly,   all  of  the  issued  and
outstanding equity membership interests in SPV; and

     WHEREAS,  P&L desires to contribute to SPV Receivables and Related Security
owned from time to time by P&L, and SPV is willing,  on the terms and subject to
the  conditions set forth herein,  to accept  contributions  of Receivables  and
Related Security from P&L.

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereto  agree as
follows:

                                   ARTICLE I.
                                THE CONTRIBUTIONS

     Section 1.1 Contributions of Receivables.

     (a)  Effective  on the  Effective  Date upon the terms and  subject  to the
conditions  set forth  herein,  P&L does hereby  contribute,  assign,  transfer,
set-over and otherwise  convey to SPV,  without  recourse  (except to the extent
expressly  provided  herein),  and SPV does hereby accept from P&L, all of P&L's
right,  title and  interest  in and to P&L's  Receivables  in  existence  on the
Initial  Cut-Off  Date and all Related  Security  with  respect  thereto.  P&L's
paid-in  capital shall be increased by the lower of book or market value of such
contributed Receivables, as adjusted from time to time.

     (b) Effective on each  Business Day after the  Effective  Date and prior to
the  Termination  Date,  upon the terms and subject to the  conditions set forth
herein, P&L does hereby  contribute,  assign,  transfer,  set-over and otherwise
convey  to SPV,  without  recourse  (except  to the  extent  expressly  provided
herein),  and SPV does hereby  accept from P&L,  all of P&L's  right,  title and
interest  in and to all newly  arising or acquired  Receivables  and all Related
Security with respect  thereto.  P&L's paid-in capital shall be increased by the
lower of book or market value of such contributed Receivables,  as adjusted from
time to time.

     (c) It is the  intention of the parties  hereto that each  contribution  of
Receivables  made hereunder shall  constitute a "sale of accounts" (as such term
is used in Article 9 of the UCC),  which is absolute and  irrevocable  and shall
provide  SPV with the full  benefits of  ownership  of the  Receivables  and the
associated Related Security.  Each contribution of Receivables hereunder is made
without recourse to P&L; provided,  however, that (i) P&L shall be liable to SPV
for all  representations,  warranties,  covenants  and  indemnities  made by P&L
pursuant to the terms of the Transaction  Documents to which P&L is a party, and
(ii) such  contribution  does not constitute and is not intended to result in an
assumption by SPV or any assignee  thereof of any obligation of P&L or any other
Person arising in connection with the Receivables,  the related Contracts and/or
other Related Security or any other obligations of P&L. In view of the intention
of the parties hereto that the contributions of Receivables made hereunder shall
constitute outright  contributions of such Receivables rather than loans secured
thereby,  P&L agrees that it will, on or prior to the Effective  Date,  mark its
master  data  processing  records  relating  to the  Receivables  with a  legend
evidencing the contribution of the Receivables and Related Security to SPV. Upon
the request of SPV (or the Agent, as assignee of SPV), P&L will execute and file
such financing or continuation statements,  or amendments thereto or assignments
thereof,  and  such  other  instruments  or  notices,  as  may be  necessary  or
appropriate to perfect and maintain the perfection of SPV's  ownership  interest
in the Receivables and the Related Security or as SPV (or the Agent, as assignee
of SPV) may reasonably request.

     Section 1.2 Transfer of Records.

     (a) In connection  with the  contributions  of Receivables  hereunder,  P&L
hereby contributes, transfers, assigns and otherwise conveys to SPV all of P&L's
right and title to and  interest  in the  Records  relating  to all  Receivables
contributed  hereunder,  without  the  need  for any  further  documentation  in
connection with any contribution.  In connection with such transfer,  P&L hereby
grants to each of SPV (and the Agent,  as assignee  of SPV) and the  Servicer an
irrevocable,  non-exclusive  license to use,  without  royalty or payment of any
kind,  all software  used by P&L to account for its  Receivables,  to the extent
necessary to administer such Receivables,  whether such software is owned by P&L
or is owned by others  and used by P&L under  license  agreements  with  respect
thereto,  provided  that should the consent of any licensor of P&L to such grant
of the license  described  herein be required,  P&L hereby  agrees that upon the
request of SPV (or the Agent, as assignee of SPV) or the Servicer,  P&L will use
its reasonable efforts to obtain the consent of such third-party  licensor.  The
license granted hereby shall be irrevocable,  and shall terminate on the date on
which all Aggregate Unpaids under the Receivables  Purchase  Agreement have been
paid in full.

     (b) P&L (i) shall take such  action  requested  by SPV and/or the Agent (as
assignee  of  SPV),  from  time to time  hereafter,  that  may be  necessary  or
reasonably  appropriate to ensure that SPV has an enforceable ownership interest
in the Records  relating to the  Receivables  contributed by P&L hereunder,  and
(ii) shall use its  reasonable  efforts to ensure that SPV and the Servicer each
has an enforceable  right (whether by license or sublicense or otherwise) to use
all of the  computer  software  used to account  for the  Receivables  and/or to
recreate such Records.

     Section  1.3.Characterization;  Granting Clauses.  If,  notwithstanding the
intention of the parties expressed in Section 1.1(c), any contribution to SPV of
Receivables hereunder shall be characterized as a secured loan and not a sale or
contribution,  then this  Agreement  shall be deemed to  constitute  a  security
agreement  under the UCC and other  applicable law. For this purpose and without
being  in  derogation  of the  parties'  intention  that  each  contribution  of
Receivables  hereunder shall constitute an absolute transfer thereof, P&L hereby
grants to SPV a duly perfected  security  interest in all of P&L's right,  title
and  interest  in,  to and  under  all of P&L's  Receivables  now  existing  and
hereafter  arising,  and in all Related  Security  with respect  thereto,  which
security  interest shall be prior to all other Adverse Claims thereto.  From and
after the Termination  Date, if P&L is in material  default of its covenants and
agreements herein, SPV and its assigns shall have as against P&L, in addition to
the rights and  remedies  which  they may have under this  Agreement,  all other
rights and remedies  provided to a secured  creditor after default under the UCC
and other applicable law, which rights and remedies shall be cumulative.

     Section  1.4  Recourse  for  Dilution.  If at any time (a) the  Outstanding
Balance of any  Receivable  contributed  hereunder  is either  (i)  reduced as a
result of any  defective or rejected  goods,  any discount or any  adjustment or
otherwise by P&L or any  Originator  (other than cash  Collections on account of
the Receivables) or a setoff in respect of any claim by any Person (whether such
claim  arises  out  of  the  same  or a  related  transaction  or  an  unrelated
transaction),  or (ii)  canceled as a result of a setoff in respect of any claim
by  any  Person  (whether  such  claim  arises  out  of the  same  or a  related
transaction or an unrelated  transaction),  or (b) any of the representations or
warranties  in Article II of this  Agreement  were not true with  respect to any
Receivable at the time of its  contribution  hereunder,  P&L shall pay to SPV in
cash upon demand the amount of such reduction (in the case of an event described
in the preceding clause (a)(i)),  or the Outstanding  Balance of such Receivable
(in the case of an event described in the preceding clause (a)(ii) or (b)).

                                  ARTICLE II.
                         REPRESENTATIONS AND WARRANTIES

     Section  2.1  Representations  of P&L. In order to induce SPV to enter into
this  Agreement  and to accept  contributions  hereunder,  P&L hereby  makes the
following  representations  and  warranties as of the date of each  contribution
hereunder:

     (a) Existence and Power. P&L is a corporation,  duly incorporated,  validly
existing and in good standing under the laws of Delaware.  P&L is duly qualified
to do  business  and is in good  standing as a foreign  corporation  and has and
holds  all  corporate  power  and  all  governmental  licenses,  authorizations,
consents and approvals required to carry on its business in each jurisdiction in
which its  business is  conducted  except  where the failure to so qualify or so
hold could not reasonably be expected to have a Material Adverse Effect.

     (b) Power and Authority;  Due  Authorization,  Execution and Delivery.  The
execution  and  delivery  by P&L of this  Agreement  and each other  Transaction
Document  to  which  it is a  party,  and  the  performance  of its  obligations
hereunder and thereunder, are within its corporate powers and authority and have
been duly  authorized  by all  necessary  corporate  action  on its  part.  This
Agreement and each other  Transaction  Document to which P&L is a party has been
duly executed and delivered by P&L.

     (c) No Conflict.  The execution  and delivery by P&L of this  Agreement and
each other  Transaction  Document to which it is a party, and the performance of
its  obligations  hereunder and  thereunder do not contravene or violate (i) its
certificate  of  incorporation  or  by-laws,  (ii) any law,  rule or  regulation
applicable  to it,  (iii) any  restrictions  under any  agreement,  contract  or
instrument  to which it is a party  or by  which  it or any of its  property  is
bound, or (iv) any order, writ, judgment, award, injunction or decree binding on
or affecting it or its property, and do not result in the creation or imposition
of any  Adverse  Claim on assets of P&L or its  Subsidiaries  (other than (A) as
created under the Transaction  Documents and (B) the pledge of the  Subordinated
Notes pursuant to the Credit Agreement and associated  documents) except, in any
case, where such  contravention or violation could not reasonably be expected to
have a Material Adverse Effect, and no transaction  contemplated hereby requires
compliance with any bulk sales act or similar law.

     (d)  Governmental  Authorization.  Other than the  filing of the  financing
statements required hereunder,  no authorization or approval or other action by,
and no notice to or filing with, any  governmental  authority or regulatory body
is required for the due execution and delivery by P&L of this Agreement and each
other  Transaction  Document to which it is a party and the  performance  of its
obligations hereunder and thereunder.

     (e) Actions,  Suits.  Except as disclosed in P&L's reports on SEC Form 10-K
or 10-Q, there are no actions,  suits or proceedings  pending, or to the best of
P&L's knowledge, threatened, against or affecting P&L, or any of its properties,
in or before any court,  arbitrator  or other  body,  that could  reasonably  be
expected to have a Material  Adverse Effect.  P&L is not in default with respect
to any order of any  court,  arbitrator  or  governmental  body  which  could be
reasonably expected to have a Material Adverse Effect.

     (f) Binding Effect.  This Agreement and each other Transaction  Document to
which P&L is a party constitute the legal, valid and binding  obligations of P&L
enforceable  against P&L in accordance with their  respective  terms,  except as
such   enforcement  may  be  limited  by  applicable   bankruptcy,   insolvency,
reorganization  or other similar laws relating to or limiting  creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).

     (g) Accuracy of Information. All information heretofore furnished by P&L or
any  of its  Affiliates  to SPV  for  purposes  of or in  connection  with  this
Agreement or any transaction  contemplated  hereby is, and all such  information
hereafter  furnished by P&L or any of its Affiliates  will be, true and accurate
in every  material  respect on the date such  information is stated or certified
and does not and will not contain any material  misstatement  of fact or omit to
state a material  fact or any fact  necessary to make the  statements  contained
therein not misleading.

     (h)  Consideration.  With  respect to each  Receivable  contributed  to SPV
hereunder:  (i) P&L has  given  reasonably  equivalent  value to the  applicable
Originator in consideration therefor pursuant to the Receivables Sale Agreement,
(ii) such contribution was not made for or on account of an antecedent debt, and
(iii)  such  contribution  is not  voidable  under any  section  of the  Federal
Bankruptcy Code.

     (i) Good Title. Immediately prior to each contribution hereunder, P&L shall
be the legal and beneficial  owner of the Receivables and Related  Security with
respect thereto,  free and clear of any Adverse Claim,  except as created by the
Transaction Documents.

     (j) Perfection.  This Agreement,  together with the filing of the financing
statements   contemplated   hereby,  is  effective  to,  and  shall,  upon  each
contribution hereunder, transfer to SPV (and SPV shall acquire from P&L) a valid
and perfected first priority ownership  interest in each Receivable  existing or
hereafter  arising and in the Related  Security  and  Collections  with  respect
thereto,  free  and  clear  of any  Adverse  Claim,  except  as  created  by the
Transactions  Documents.  There have been delivered to the Agent (as assignee of
SPV) in form  suitable  for filing all  financing  statements  or other  similar
instruments or documents  necessary under the UCC (or any comparable law) of all
appropriate   jurisdictions   to  perfect  SPV's  ownership   interest  in  each
Receivable, its Collections and the Related Security.

     (k) Places of Business and Locations of Records.  The  principal  places of
business and chief executive office of P&L and the offices where it keeps all of
its  Records  are  located  at the  address(es)  listed  on  Exhibit  III to the
Receivables  Purchase  Agreement or such other  locations of which the Agent has
been  notified in accordance  with Section  7.2(a) of the  Receivables  Purchase
Agreement in  jurisdictions  where all action required by Section 14.4(a) of the
Receivables  Purchase  Agreement  has been taken and  completed.  P&L's  Federal
Employer Identification Number is 13-4004153.

     (l)  Collections.  The  conditions  and  requirements  set forth in Section
7.1(j) and, so long as P&L or any of its Affiliates is the Servicer, Section 8.2
of the Receivables Purchase Agreement have at all times since the Effective Date
been satisfied and duly performed.

     (m) Material Adverse Effect. Since December 31, 1999, no event has occurred
that  would  have  a  material  adverse  effect  on the  consolidated  financial
condition or operations  of P&L and its  Subsidiaries  taken as a whole,  or the
ability  of  P&L  to  perform  its  obligations  under  this  Agreement,  or the
collectibility  of the  Receivables  generally  or any  material  portion of the
Receivables.

     (n)  Names.  In the past  five (5)  years,  P&L has not used any  corporate
names, trade names or assumed names other than the name in which it has executed
this Agreement and "Peabody Group."

     (o) Ownership of SPV. P&L owns, directly or indirectly,  100% of the issued
and  outstanding  equity  membership  interests  of SPV,  free and  clear of any
Adverse Claim.

     (p) Not a Holding Company or an Investment  Company.  P&L is not a "holding
company" or a "subsidiary  holding  company" of a "holding  company"  within the
meaning of the Public Utility  Holding  Company Act of 1935, as amended,  or any
successor statute.  P&L is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or any successor statute.

     (q)  Compliance  with  Law.  P&L has  complied  in all  respects  with  all
applicable laws, rules,  regulations,  orders,  writs,  judgments,  injunctions,
decrees or awards to which it may be  subject,  except  where the  failure to so
comply could not reasonably be expected to have a Material Adverse Effect.  Each
Receivable,  together with the Contract and Invoice  related  thereto,  does not
contravene any laws, rules or regulations applicable thereto (including, without
limitation,  laws,  rules and  regulations  relating to truth in  lending,  fair
credit  billing,  fair credit  reporting,  equal credit  opportunity,  fair debt
collection practices and privacy), and no part of such Contract or Invoice is in
violation of any such law, rule or regulation,  except where such  contravention
or violation could not reasonably be expected to have a Material Adverse Effect.

     (r)  Compliance  with  Credit  and  Collection  Policy.  From and after the
Effective  Date,  P&L has complied in all material  respects with the Credit and
Collection  Policy with regard to each Receivable and the related  Invoice,  and
has not made any material  change to the Credit and  Collection  Policy,  except
such  material  change  as to which  SPV and the Agent  have  been  notified  in
accordance with Section 7.1(a)(vii) of the Receivables Purchase Agreement.

     (s)  Accounting.  The  manner in which P&L  accounts  for the  transactions
contemplated  by this  Agreement  does  not  jeopardize  the  true  contribution
analysis.

     (t)  Enforceability  of  Invoices.   Each  Invoice  with  respect  to  each
Receivable is effective to create,  and has created,  a legal, valid and binding
obligation  of  the  related  Obligor  to pay  the  Outstanding  Balance  of the
Receivable  created  thereunder  (subject to adjustment,  to the extent provided
therein) and any accrued interest  thereon,  enforceable  against the Obligor in
accordance  with  its  terms,  except  as such  enforcement  may be  limited  by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting  creditors' rights generally and by general  principles of equity
(regardless  of whether  enforcement  is sought in a proceeding  in equity or at
law).

     (u) Eligible  Receivables.  Each Receivable listed on any Monthly Report as
being an  Eligible  Receivable  was an  Eligible  Receivable  on the date of its
contribution  hereunder,  and  its  Outstanding  Balance  as of the  date of its
contribution  hereunder  and  thereafter  adjusted is  correctly  stated on such
Monthly Report.

                                  ARTICLE III.
                           CONDITIONS OF CONTRIBUTIONS

     Section  3.1  Condition  Precedent  to Initial  Contribution.  The  initial
contribution under this Agreement is subject to the condition precedent that the
Effective Date under the Receivables Purchase Agreement shall have occurred.

     Section 3.2 Condition Precedent to All Contributions.  Each contribution of
Receivables  and Related  Security  shall be subject to the condition  precedent
that the Termination Date shall not have occurred.

                                   ARTICLE IV.
                                    COVENANTS

     Section  4.1  Compliance  with  Receivables  Purchase  Agreement.  From the
Effective  Date until the later to occur of the  Termination  Date or payment in
full of all Aggregate Unpaids under the Receivables  Purchase Agreement,  unless
SPV and the Agent shall otherwise consent in writing,  P&L will comply with each
of  the  covenants  and  other  agreements   required  to  be  observed  by  it,
individually  or as  Servicer  (so long as it remains the  Servicer),  under the
Receivables Purchase Agreement.

     Section  4.2  Reporting.  Not later  than the third  Tuesday  of each month
hereafter commencing April 18, 2000, P&L will provide SPV and, upon request, the
Agent (as assignee of SPV) with a written listing (each such listing, a "Monthly
Report") of all  Receivables  contributed  by it during the  preceding  calendar
month indicating (a) which  Receivables were Eligible  Receivables on their date
of contribution,  and (b) the Obligor(s) of and the Outstanding  Balance of each
Receivable on its date of contribution.

                                   ARTICLE V.
                                 INDEMNIFICATION

     Section 5.1 Indemnities by P&L.  Without limiting any other rights that SPV
or its assigns may have hereunder or under  applicable law, P&L hereby agrees to
indemnify  (and pay upon  demand to) SPV and its  assigns,  officers,  managers,
directors,  agents and employees (each, an "Indemnified Party") from and against
any and all damages, losses, claims, taxes, liabilities, costs, expenses and for
all other amounts payable, including reasonable attorneys' fees (which attorneys
may be  employees  of any  Indemnified  Party)  and  disbursements  (all  of the
foregoing  being  collectively  referred to as  "Indemnified  Amounts")  awarded
against or incurred by any of them relating to, arising out of or as a result of
this Agreement or the acquisition,  either directly or indirectly, by SPV of any
Receivable, excluding, however, in all of the foregoing instances:

     (a)  Indemnified  Amounts  to the  extent  a final  judgment  of a court of
competent  jurisdiction holds that such Indemnified  Amounts resulted from gross
negligence or willful  misconduct on the part of the  Indemnified  Party seeking
indemnification;

     (b)  Indemnified  Amounts to the extent the same includes losses in respect
of Receivables that are  uncollectible on account of the insolvency,  bankruptcy
or lack of creditworthiness of the related Obligor; or

     (c) taxes imposed by the  jurisdiction  in which such  Indemnified  Party's
principal  executive office is located, on or measured by the overall net income
of such  Indemnified  Party to the extent that the  computation of such taxes is
consistent with the  characterization for income tax purposes of the acquisition
by SPV of Receivables as a true  contribution  by P&L to SPV of the  Receivables
and the Related Security;

provided,  however,  that  nothing  contained in this  sentence  shall limit the
liability  of P&L or limit  the  recourse  of SPV and its  assigns  for  amounts
otherwise  specifically  provided  to be paid by P&L  under  the  terms  of this
Agreement. Without limiting the generality of the foregoing indemnification, but
subject to the exclusions in clauses (a), (b) and (c) above, P&L shall indemnify
SPV and its assigns for  Indemnified  Amounts  (including,  without  limitation,
losses  in  respect  of   uncollectible   receivables,   regardless  of  whether
reimbursement  therefor  would  constitute  recourse  to  P&L)  relating  to  or
resulting from:

          (i)  any  representation  or  warranty  made  by  P&L  (or  any of its
     officers) under or in connection with this Agreement, any other Transaction
     Document  to  which  P&L is a party  or any  other  information  or  report
     delivered by any such Person pursuant  hereto or thereto,  which shall have
     been false or incorrect when made or deemed made;

          (ii)  the  failure  by  P&L or  any  Originator  to  comply  with  any
     applicable  law, rule or regulation  with respect to any  Receivable or any
     Contract  or Invoice  related  thereto,  or the  nonconformity  of any such
     Receivable,  Contract  or Invoice  with any such  applicable  law,  rule or
     regulation  or any failure of P&L or any  Originator to keep or perform any
     of its  obligations,  express or implied,  with  respect to any Contract or
     Invoice;

          (iii) any  failure of P&L to perform its  duties,  covenants  or other
     obligations  in accordance  with the  provisions  of this  Agreement or any
     other Transaction Document to which it is a party;

          (iv) any products liability,  personal injury or damage suit, or other
     similar  claim  arising  out of or in  connection  with  goods that are the
     subject of any Contract or Invoice or any Receivable;

          (v) any dispute,  claim,  offset or defense  (other than  discharge in
     bankruptcy of the Obligor) of the Obligor to the payment of any  Receivable
     (including,  without limitation,  a defense based on such Receivable or the
     related Contract or Invoice not being a legal, valid and binding obligation
     of such Obligor  enforceable  against it in accordance with its terms),  or
     any  other  claim  resulting  from the sale of the  goods  related  to such
     Receivable or the furnishing or failure to furnish such goods;

          (vi) the  commingling  of  Collections of Receivables at any time with
     other funds;

          (vii)  any  investigation,  litigation  or  proceeding  related  to or
     arising from any Transaction  Document or other agreement to which P&L is a
     party, the  transactions  contemplated  hereby,  the use of the proceeds of
     distributions  by SPV to P&L, the ownership of the  Receivables  or Related
     Security or any other  investigation,  litigation or proceeding relating to
     P&L or any Originator in which any Indemnified  Party becomes involved as a
     result of any of the transactions contemplated hereby;

          (viii) any  inability  to  litigate  any claim  against any Obligor in
     respect of any  Receivable  as a result of such  Obligor  being immune from
     civil  and  commercial  law  and  suit on the  grounds  of  sovereignty  or
     otherwise from any legal action, suit or proceeding;

          (ix) (A) failure of P&L or any  Originator  generally to pay its debts
     as such debts become due or admission by P&L or any  Originator  in writing
     of its  inability  to pay its debts  generally  or any making by P&L or any
     Originator of a general assignment for the benefit of creditors; or (B) the
     institution of any  proceeding by or against P&L or any Originator  seeking
     to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
     reorganization,  arrangement, adjustment, protection, relief or composition
     of it or its debts under any law  relating  to  bankruptcy,  insolvency  or
     reorganization  or relief of debtors,  or seeking the entry of an order for
     relief or the appointment of a receiver,  trustee or other similar official
     for it or any substantial part of its property, or (C) the taking by P&L or
     any Originator of any corporate  action to authorize any of the actions set
     forth in clauses (A) or (B) above in this clause (ix);

          (x) any failure of P&L to acquire  and  maintain  legal and  equitable
     title to, and  ownership  of any  Receivable  and the Related  Security and
     Collections  with  respect  thereto  from any  Originator  (subject  to the
     Transaction Documents),  free and clear of any Adverse Claim (other than as
     created  under the  Transaction  Documents)  or any  failure of P&L to give
     reasonably   equivalent  value  to  any  applicable  Originator  under  the
     Receivables  Sale  Agreement  in  consideration  of the  transfer  by  such
     Originator  of any  Receivable,  or any  attempt by any Person to void such
     transfer under statutory provisions or common law or equitable action;

          (xi) any failure to vest and  maintain  vested in SPV  (subject to the
     Receivables Purchase Agreement), or to transfer to SPV, legal and equitable
     title to, and ownership of, a first priority  perfected  ownership interest
     in the  Receivables,  the Related  Security and the  Collections,  free and
     clear  of  any  Adverse  Claim  (except  as  created  by  the   Transaction
     Documents);

          (xii) the  failure to have  filed,  or any delay in filing,  financing
     statements or other similar  instruments or documents  under the UCC of any
     applicable  jurisdiction  or other  applicable  laws  with  respect  to any
     Receivable,  the Related Security and Collections with respect thereto, and
     the  proceeds  of any  thereof,  whether  at the  time of any  contribution
     hereunder or at any subsequent time; and

          (xiii) the failure of any  Receivable  included in a Monthly Report as
     an  Eligible  Receivable  to be an Eligible  Receivable  at the time it was
     contributed to SPV hereunder.

     Section 5.2 Costs,  Expenses and Taxes.  In addition to the  obligations of
P&L under Section 5.1, P&L agrees to pay on demand:

     (a) all  reasonable  costs and  expenses,  including  attorneys'  fees,  in
connection  with the  enforcement  against P&L of this  Agreement  and the other
Transaction Documents executed by P&L; and

     (b) all stamp duties and other similar  filing or recording  taxes and fees
payable or determined to be payable in connection with the execution,  delivery,
filing  and  recording  of this  Agreement  or the other  Transaction  Documents
executed  by P&L,  and  agrees to  indemnify  Indemnified  Parties  against  any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.

                                   ARTICLE VI.
                                  MISCELLANEOUS

     Section 6.1 Waivers and  Amendments.  The  provisions of this Agreement may
from time to time be amended,  restated,  otherwise  modified or waived, if such
amendment, modification or waiver is in writing and consented to by P&L, SPV and
the Agent (as  assignee  of SPV).  No failure  or delay on the part of SPV,  its
assigns  or any  third  party  beneficiary  in  exercising  any  power  or right
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any such  power or right  preclude  any other or  further  exercise
thereof or the  exercise of any other power or right.  No notice to or demand on
any party hereto in any case shall entitle it to any notice or demand in similar
or other  circumstances.  No waiver or approval by SPV or its assigns under this
Agreement  shall,  except as may otherwise be stated in such waiver or approval,
be  applicable  to  subsequent  transactions.  No waiver or approval  under this
Agreement shall require any similar or dissimilar waiver or approval  thereafter
to be granted hereunder.

     Section 6.2 Notices, Etc. All notices and other communications provided for
hereunder  shall,  unless  otherwise  stated  herein,  be in writing  (including
facsimile  communication)  and shall be personally  delivered or sent by express
mail or courier or by certified mail,  postage-prepaid,  or by facsimile, to the
intended party at its address set forth in the Receivables  Purchase  Agreement,
or at such other  address or  facsimile  number as shall be  designated  by such
party in a written  notice to the other  parties  hereto.  All such  notices and
communications  shall  be  effective,  (i) if  personally  delivered  or sent by
express mail or courier or if sent by certified mail, when received, and (ii) if
transmitted  by  facsimile,   when  sent,  receipt  confirmed  by  telephone  or
electronic means.

     Section  6.3  Cumulative   Remedies.   The  remedies  herein  provided  are
cumulative and not exclusive of any remedies provided by law.

     Section 6.4 Binding Effect; Assignability.  This Agreement shall be binding
upon and inure to the benefit of P&L, SPV and their  respective  successors  and
permitted  assigns;  provided,  however,  that  P&L may not  assign  its  rights
hereunder or any interest  herein  without the prior written  consent of SPV and
the Agent (as assignee of SPV).  This Agreement  shall create and constitute the
continuing  obligations of the parties hereto in accordance with its terms,  and
shall  remain  in full  force and  effect  as to P&L  until  the date  after the
Termination Date on which all Aggregate  Unpaids under the Receivables  Purchase
Agreement  have been paid in full.  The rights and remedies  with respect to any
breach of any representation and warranty made by P&L pursuant to Article II and
the  indemnification and payment provisions of Article V shall be continuing and
shall survive any termination of this Agreement.

     Section 6.5 Acknowledgment and Agreement. P&L hereby expressly acknowledges
and agrees that all of SPV's rights, title, and interests in, to, and under this
Agreement  shall  be  assigned  by SPV to the  Agent,  for  the  benefit  of the
Purchasers,  pursuant to the Receivables Purchase Agreement, and P&L consents to
such  assignment.  Each of the parties hereto  acknowledges  and agrees that the
Agent and the  Purchasers  are third  party  beneficiaries  of the rights of SPV
arising  hereunder and under the other  Transaction  Documents to which P&L is a
party. P&L further acknowledges and agrees that all right, title and interest in
and to the Lock-Boxes and Collection Accounts has been transferred to and vested
in SPV and its assigns,  and SPV may at any time in its sole discretion (subject
to the terms of the Receivables  Purchase  Agreement and the Collection  Account
Agreements executed in connection  therewith) direct and re-direct payments from
such Lock-Boxes and Collection Accounts.

     Section 6.6 Governing Law. Each Transaction  Document shall be governed by,
and  construed in  accordance  with,  the law of the State of illinois,  without
regard to the  principles of conflicts of laws thereof EXCEPT TO THE EXTENT THAT
THE  PERFECTION OF THE  OWNERSHIP  INTERESTS OF SPV IS GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF ILLINOIS.

     Section  6.7   Submission  to   Jurisdiction.   EACH  PARTY  HERETO  HEREBY
IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE  JURISDICTION OF ANY ILLINOIS STATE
OR UNITED STATES FEDERAL COURT SITTING IN CHICAGO,  ILLINOIS, OVER ANY ACTION OR
PROCEEDING  ARISING OUT OF OR RELATING TO ANY TRANSACTION  DOCUMENT;  (b) AGREES
THAT ALL  CLAIMS  IN  RESPECT  OF SUCH  ACTION  OR  PROCEEDING  MAY BE HEARD AND
DETERMINED IN SUCH COURT;  (c) WAIVES,  TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO  UNDER  APPLICABLE  LAW,  THE  DEFENSE  OF AN  INCONVENIENT  FORUM  TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY AND
ALL  PROCESS IN ANY SUCH ACTION OR  PROCEEDING  BY THE MAILING OF COPIES OF SUCH
PROCESS TO SUCH PERSON AT ITS ADDRESS  SPECIFIED  IN SECTION 6.2; AND (e) TO THE
EXTENT  ALLOWED  BY LAW,  AGREES  THAT A FINAL  JUDGMENT  IN ANY SUCH  ACTION OR
PROCEEDING  SHALL BE CONCLUSIVE  AND MAY BE ENFORCED IN OTHER  JURISDICTIONS  BY
SUIT ON THE  JUDGMENT OR IN ANY OTHER  MANNER  PROVIDED BY LAW.  NOTHING IN THIS
SECTION  6.7 SHALL  AFFECT  BUYER'S  RIGHT TO SERVE  LEGAL  PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING  AGAINST P&L OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

     Section 6.8 Waiver of Jury Trial.  EACH PARTY HERETO  EXPRESSLY  WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY  ACTION OR  PROCEEDING  TO ENFORCE OR DEFEND ANY
RIGHTS  UNDER  THIS  AGREEMENT,  ANY OTHER  TRANSACTION  DOCUMENT,  OR UNDER ANY
AMENDMENT,  INSTRUMENT,  JOINDER AGREEMENT OR DOCUMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED BY IT OR ON ITS BEHALF IN CONNECTION HEREWITH OR ARISING
FROM ANY  RELATIONSHIP  EXISTING IN CONNECTION  WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION  DOCUMENT,  AND AGREES THAT ANY SUCH ACTION OR  PROCEEDING  SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.

     Section 6.9 Captions and Cross References;  Incorporation by Reference. The
various captions (including,  without limitation, the table of contents) in this
Agreement are included for convenience  only and shall not affect the meaning or
interpretation of any provision of this Agreement.  References in this Agreement
to any  underscored  Section or Exhibit  are to such  Section or Exhibit of this
Agreement,  as the case may be. The Exhibits  hereto are hereby  incorporated by
reference into and made a part of this Agreement.

     Section 6.10 Execution in  Counterparts.  This Agreement may be executed in
any  number  of  counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each of which so executed  shall be deemed to be an original  and
all of which taken together shall constitute one and the same agreement.

     Section 6.11 No Proceedings. P&L hereby covenants and agrees that, prior to
the  date  that is one  year  and  one  day  after  the  payment  in full of all
outstanding  Aggregate Unpaids, it will not institute against, or join any other
Person in instituting against, SPV any bankruptcy, reorganization,  arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any state of the United States.

                            <signature pages follow>

<PAGE>



     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed and delivered as of the date first above written.

                          P&L COAL HOLDINGS CORPORATIONS

                          By: /s/ Steven F. Schaab
                              ---------------------------------------
                              Name: Steven F. Schaab
                              Title: Vice President and Treasurer

                          P&L RECEIVABLES COMPANY, LLC

                          By: /s/ Joseph C. Meek
                              ---------------------------------------
                              Name: Joseph C. Meek
                              Title: Assistant Treasurer
<PAGE>




                                     ANNEX A
                                   DEFINITIONS

     A. of Receivables Purchase Agreement Definitions.  Unless otherwise defined
herein,  terms that are  capitalized and used throughout this Agreement are used
as defined in the Receivables Purchase Agreement (hereinafter defined).

     B. Certain Defined Terms. The following terms have the respective  meanings
indicated hereinbelow:

     "Agreement"  means this Receivables  Contribution  Agreement,  as it may be
amended or modified and in effect from time to time in accordance with the terms
hereof.

     "Material  Adverse  Effect"  means a  material  adverse  effect  on (i) the
consolidated  financial  condition or  operations  of P&L and its  Subsidiaries,
taken as a whole,  (ii) the ability of P&L to perform its obligations under this
Agreement,  (iii) the legality,  validity or enforceability of this Agreement or
any other  Transaction  Document to which P&L is a party,  (iv) SPV's  ownership
interest  in the  Receivables  generally  or in any  significant  portion of the
Receivables,  the Related Security or the Collections  with respect thereto,  or
(v) the  collectibility of the Receivables  generally or of any material portion
of the Receivables.

     "Monthly  Report"  has  the  meaning  specified  in  Section  4.2  of  this
Agreement.

     "P&L" has the meaning specified in the preamble of this Agreement.

     "Receivables  Purchase Agreement" means that certain  Receivables  Purchase
Agreement  dated as of March 31,  2000,  by and among SPV,  as Seller,  P&L,  as
initial  Servicer,   International  Securitization  Corporation,  the  Financial
Institutions  from time to time party  thereto,  and Bank One, NA, as Agent,  as
amended, restated or otherwise modified from time to time in accordance with the
terms thereof.

     "Receivables Sale Agreement" means that certain  Receivables Sale Agreement
dated as of March 31,  2000,  by and among the  Originators  (as  defined in the
Receivables Purchase Agreement),  as sellers, and P&L, as purchaser, as amended,
restated or otherwise  modified from time to time in  accordance  with the terms
thereof.

     "Related Security" means, with respect to any Receivable:

     (i). all  of P&L's  interest  in the  inventory  and  goods  (including
returned or  repossessed  inventory or goods),  if any,  the sale,  financing or
lease of which by an Originator gave rise to such Receivable,  and all insurance
contracts with respect thereto,

     (ii). all other security interests or liens and property subject thereto
from time to time,  if any,  purporting  to secure  payment of such  Receivable,
whether  pursuant  to the  Contract  or Invoice  related to such  Receivable  or
otherwise,  together  with all  financing  statements  and  security  agreements
describing any collateral securing such Receivable,

     (iii). all guaranties,  letters of credit, insurance and other agreements
or arrangements  of whatever  character from time to time supporting or securing
payment of such Receivable  whether  pursuant to the Contract or Invoice related
to such Receivable or otherwise,

     (iv). all Records related to such Receivable,

     (v). all  of P&L's  right,  title  and  interest  in,  to and under the
Receivables Sale Agreement in respect of such Receivable, and

     (vi). all proceeds of any of the foregoing;

provided,  however, that in no event shall "Related Security" include any right,
duty or  obligation  under any  Contract  other  than that the right to  receive
payments  thereunder (and any collateral  for,  guaranty of or letter of credit,
surety bond or other credit support for any such payment right).

     "SPV" has the meaning specified in the preamble of this Agreement.

     "Termination Date" means the earliest of (i) the Facility  Termination Date
under the  Receivables  Purchase  Agreement,  (ii) the date on which a Change of
Control  to which the Agent has not given  its  express  prior  written  consent
occurs,  or (iii) the date specified by P&L in a written notice delivered to and
received by both SPV and the Agent.

     All accounting terms not specifically  defined herein shall be construed in
accordance  with  GAAP.  All terms  used in Article 9 of the UCC in the State of
Illinois,  and not  specifically  defined herein,  are used herein as defined in
such Article 9.