exv10w1






Exhibit 10.1




EXECUTION COPY




SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT




DATED AS OF DECEMBER 15, 2009




BY AND AMONG




P&L RECEIVABLES COMPANY, LLC,

As Seller




AND




PEABODY ENERGY CORPORATION,

As initial Servicer




AND




ARCLAR COMPANY, LLC

PEABODY MIDWEST MINING, LLC

TWENTYMILE COAL, LLC

CABALLO COAL, LLC

COALSALES II, LLC

PEABODY WESTERN COAL COMPANY

POWDER RIVER COAL, LLC

PEABODY HOLDING COMPANY, LLC

COALTRADE, LLC

PEABODY COALTRADE INTERNATIONAL (CTI), LLC

COALSALES, LLC,

As Sub-Servicers




AND




MARKET STREET FUNDING LLC,

As Issuer




AND




THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTIES HERETO,

As LC Participants




AND




PNC BANK, NATIONAL ASSOCIATION,

As Administrator and As LC Bank




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I. AMOUNTS AND TERMS OF THE INVESTMENTS 
	 	 	2	 
	Section 1.1 Investment Facility
	 	 	2	 
	Section 1.2 Making Investments
	 	 	3	 
	Section 1.3 Transfer of Receivables and Other Purchased Assets
	 	 	3	 
	Section 1.4 Terms and Conditions for Sale, Assignment and Transfer
	 	 	4	 
	Section 1.5 Purchased Assets Coverage Percentage Computation
	 	 	6	 
	Section 1.6 Settlement Procedures
	 	 	6	 
	Section 1.7 Fees
	 	 	9	 
	Section 1.8 Payments and Computations, Etc
	 	 	10	 
	Section 1.9 Increased Costs
	 	 	10	 
	Section 1.10 Requirements of Law
	 	 	11	 
	Section 1.11 Inability to Determine Euro-Rate
	 	 	12	 
	Section 1.12 Extension of the Facility Termination Date
	 	 	13	 
	Section 1.13 Letters of Credit
	 	 	13	 
	Section 1.14 Issuance of Letters of Credit
	 	 	13	 
	Section 1.15 Requirements For Issuance of Letters of Credit
	 	 	14	 
	Section 1.16 Disbursements, Reimbursement
	 	 	14	 
	Section 1.17 Repayment of Participation Advances
	 	 	15	 
	Section 1.18 Documentation
	 	 	16	 
	Section 1.19 Determination to Honor Drawing Request
	 	 	16	 
	Section 1.20 Nature of Participation and Reimbursement Obligations
	 	 	16	 
	Section 1.21 Indemnity
	 	 	18	 
	Section 1.22 Liability for Acts and Omissions
	 	 	18	 
	ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS 
	 	 	20	 
	Section 2.1 Representations and Warranties; Covenants
	 	 	20	 
	Section 2.2 Termination Events
	 	 	20	 
	ARTICLE III. INDEMNIFICATION 
	 	 	20	 
	Section 3.1 Indemnities by the Seller
	 	 	20	 
	Section 3.2 Indemnities by the Servicer
	 	 	22	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	ARTICLE IV. ADMINISTRATION AND COLLECTIONS 
	 	 	22	 
	Section 4.1 Appointment of the Servicer
	 	 	22	 
	Section 4.2 Duties of the Servicer
	 	 	23	 
	Section 4.3 Lock-Box Arrangements
	 	 	24	 
	Section 4.4 Enforcement Rights
	 	 	24	 
	Section 4.5 Responsibilities of the Seller
	 	 	25	 
	Section 4.6 Servicing Fee
	 	 	26	 
	Section 4.7 Authorization and Action of the Administrator
	 	 	26	 
	Section 4.8 Nature of Administrator’s Duties
	 	 	26	 
	Section 4.9 UCC Filings
	 	 	27	 
	Section 4.10 Administrator’s Reliance, Etc
	 	 	27	 
	Section 4.11 Administrator and Affiliates
	 	 	28	 
	Section 4.12 Purchase Decision
	 	 	28	 
	Section 4.13 Indemnification
	 	 	28	 
	Section 4.14 Successor Administrator
	 	 	29	 
	ARTICLE V. MISCELLANEOUS 
	 	 	29	 
	Section 5.1 Amendments, Etc
	 	 	29	 
	Section 5.2 Notices, Etc
	 	 	30	 
	Section 5.3 Successors and Assigns; Assignability; Participations
	 	 	30	 
	Section 5.4 Costs, Expenses and Taxes
	 	 	31	 
	Section 5.5 No Proceedings; Limitation on Payments
	 	 	32	 
	Section 5.6 Confidentiality
	 	 	32	 
	Section 5.7 GOVERNING LAW AND JURISDICTION
	 	 	33	 
	Section 5.8 Execution in Counterparts
	 	 	33	 
	Section 5.9 Survival of Termination; Non-Waiver
	 	 	33	 
	Section 5.10 WAIVER OF JURY TRIAL
	 	 	34	 
	Section 5.11 Entire Agreement
	 	 	34	 
	Section 5.12 Headings
	 	 	34	 
	Section 5.13 Issuer’s Liabilities
	 	 	34	 






-ii-









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	EXHIBIT I
	 	DEFINITIONS	 	 	I-1	 
	EXHIBIT II
	 	CONDITIONS PRECEDENT	 	 	II-1	 
	EXHIBIT III
	 	REPRESENTATIONS AND WARRANTIES	 	 	III-1	 
	EXHIBIT IV
	 	COVENANTS	 	 	IV-1	 
	EXHIBIT V
	 	TERMINATION EVENTS	 	 	V-1	 
	SCHEDULE I
	 	CREDIT AND COLLECTION POLICY	 	 	Schedule I-1	 
	SCHEDULE II
	 	LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS	 	 	Schedule II-1	 
	SCHEDULE III
	 	TRADE NAMES	 	 	Schedule III-1	 
	SCHEDULE IV
	 	OFFICE LOCATIONS	 	 	Schedule IV-1	 
	ANNEX A
	 	FORM OF INFORMATION PACKAGE	 	 	Annex A-1	 
	ANNEX B
	 	FORM OF INVESTMENT NOTICE	 	 	Annex B-1	 
	ANNEX C
	 	FORM OF PAYDOWN NOTICE	 	 	Annex C-1	 
	ANNEX D
	 	FORM OF COMPLIANCE CERTIFICATE	 	 	Annex D-1	 
	ANNEX E
	 	FORM OF LETTER OF CREDIT APPLICATION	 	 	Annex E-1	 







-iii-











 





     This SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this “Agreement”) is entered into as of December 15,
2009, by and among P&L RECEIVABLES COMPANY, LLC, a Delaware limited liability company, as seller
(the “Seller”), PEABODY ENERGY CORPORATION, a Delaware corporation (“Peabody”), as
initial servicer (in such capacity, collectively, together with its successors and permitted
assigns in such capacity, the “Servicer”), ARCLAR COMPANY, LLC, an Indiana limited
liability company, PEABODY MIDWEST MINING, LLC, an Indiana limited liability company, TWENTYMILE
COAL, LLC, a Delaware corporation, CABALLO COAL, LLC, a Delaware corporation, COALSALES II, LLC, a
Delaware limited liability company, PEABODY WESTERN COAL COMPANY, a Delaware corporation, POWDER
RIVER COAL, LLC, a Delaware limited liability company, PEABODY HOLDING COMPANY, LLC, a Delaware
limited liability company, COALTRADE, LLC, a Delaware limited liability company, PEABODY COALTRADE
INTERNATIONAL (CTI), LLC, a Delaware limited liability company, COALSALES, LLC, a Delaware limited
liability company (each a “Sub-Servicer” and collectively the “Sub-Servicers”),
MARKET STREET FUNDING LLC, a Delaware limited liability company (together with its successors and
permitted assigns, the “Issuer”), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES
HEREOF (together with their successors and permitted assigns in such capacity, the “LC
Participants”), PNC BANK, NATIONAL ASSOCIATION, a national banking association (“PNC”),
as administrator (in such capacity, together with its successors and assigns in such capacity, the
“Administrator”) and as issuer of Letters of Credit (in such capacity, together with its
successors and assigns in such capacity, the “LC Bank”).



     PRELIMINARY STATEMENTS. Certain terms that are capitalized and used throughout this Agreement
are defined in Exhibit I. References in the Exhibits hereto to the “Agreement” refer to
this Agreement, as amended, supplemented or otherwise modified from time to time.



     The Seller desires to sell, transfer and assign receivables, and the Purchasers desire to
acquire such receivables from time to time on the terms and subject to the conditions set forth
herein.



     This Agreement amends and restates in its entirety, as of the Closing Date, the Amended and
Restated Receivables Purchase Agreement, dated as of September 30, 2005 (as amended, restated,
supplemented or otherwise modified prior to the date hereof, the “Original Agreement”),
among the Seller, the Servicer, the Sub-Servicers, the Issuer and the Administrator.
Notwithstanding the amendment and restatement of the Original Agreement by this Agreement, (i) the
Seller and Servicer shall continue to be liable to PNC, the Issuer or any other Indemnified Party
or Affected Person (as such terms are defined in the Original Agreement) for fees and expenses
which are accrued and unpaid under the Original Agreement on the date hereof (collectively, the
“Original Agreement Outstanding Amounts”) and all agreements to indemnify such parties in
connection with events or conditions arising or existing prior to the effective date of this
Agreement and (ii) the security interest created under the Original Agreement shall remain in full
force and effect as security for such Original Agreement Outstanding Amounts until such Original
Agreement Outstanding Amounts shall have been paid in full. Upon the effectiveness of this
Agreement, each reference to the Original Agreement in



 









 




any other document, instrument or agreement shall mean and be a reference to this Agreement.
Nothing contained herein, unless expressly herein stated to the contrary, is intended to amend,
modify or otherwise affect any other instrument, document or agreement executed and/or delivered in
connection with the Original Agreement.




     In consideration of the mutual agreements, provisions and covenants contained herein, the
parties hereto agree as follows:



ARTICLE I.

AMOUNTS AND TERMS OF THE INVESTMENTS




     Section 1.1 Investment Facility.



     (a) On the terms and conditions hereinafter set forth, the Issuer hereby agrees to make
investments in (each, an “Investment”) and, if so requested in accordance with and subject
to the terms of this Agreement, the LC Bank hereby agrees to issue Letters of Credit in return for
(and each LC Participant hereby severally agrees to make participation advances in connection with
any draws under such Letters of Credit equal to such LC Participant’s Pro Rata Share thereof), the
Purchased Assets from time to time from the date hereof to the Facility Termination Date.



     The Seller may, subject to the remainder of this paragraph (a) and the other
requirements and conditions herein, use the proceeds of any Investment or Reinvestment by the
Issuer, hereunder, to satisfy its Reimbursement Obligation to the LC Bank and the LC Participants
(ratably, based on the outstanding amounts funded by the LC Bank and each such LC Participant)
pursuant to Section 1.16 below.



     In addition, in the event the Seller fails to reimburse the LC Bank and each applicable LC
Participant for the full amount of any drawing under any Letter of Credit on the applicable Drawing
Date (out of its own funds available therefor, or otherwise, at such time), pursuant to Section
1.16, then the Seller shall, automatically (and without the requirement of any further action
on the part of any Person hereunder), be deemed to have requested a new Investment from the Issuer
on such date, pursuant to the terms hereof, in an amount equal to the amount of such Reimbursement
Obligation at such time. Subject to the limitations on funding set forth in the remainder of this
paragraph (a), below (and otherwise herein), the Issuer shall fund such deemed Investment
request and deliver the proceeds thereof directly to the Administrator to be immediately
distributed (ratably) to the LC Bank and the applicable LC Participants in satisfaction of the
Seller’s Reimbursement Obligation pursuant to Section 1.16, below, to the extent of the
amounts permitted to be funded by the Issuer, at such time, hereunder.



     Notwithstanding anything set forth in this paragraph (a), or otherwise herein to the
contrary, under no circumstances shall any Purchaser make any such Investment or Reinvestment
(including, without limitation, any deemed Investment by the Issuer pursuant to the immediately
preceding paragraphs of this Section 1.1(a)), or issue any Letter of Credit, as applicable,
if, after giving effect to such Investment, Reinvestment or issuance, (i) the aggregate outstanding
amount of the Capital funded by such Purchaser shall exceed (A) the Commitment set forth opposite
its name on the signature page hereto, as the same may be reduced from time



2









 




to time pursuant to Section 1.1(b), minus (B) in the case of any LC Participant such
LC Participant’s Pro Rata Share of the face amount of any outstanding Letters of Credit, (ii) the
aggregate outstanding Capital plus the LC Participation Amount would exceed the Purchase Limit or
(iii) or the Purchased Assets Coverage Percentage would exceed 100%.




     (b) The Seller may, upon at least 30 days’ written notice to the Administrator, irrevocably
reduce the unused portion of the Purchase Limit in whole or in part (but not below the amount that
would cause the aggregate outstanding Capital plus the LC Participation Amount to exceed the
Purchase Limit (after giving effect to such reduction)); provided, that each partial
reduction shall be in the amount of at least $5,000,000, or an integral multiple of $1,000,000 in
excess thereof, and that, unless terminated in whole, the Purchase Limit shall in no event be
reduced below $50,000,000. Each reduction in the Commitments hereunder shall be made ratably among
the LC Participants in accordance with their respective Pro Rata Shares. The Administrator shall
promptly advise the Purchasers of any notice pursuant to this Section 1.1(b); it being
understood that (in addition to and without limiting any other requirements for termination,
prepayment and/or the funding of the LC Collateral Account hereunder) no such reduction shall be
effective unless and until (i) in the case of a reduction of the Purchase Limit in whole to zero
($0), the amount on deposit in the LC Collateral Account is at least equal to the then outstanding
LC Participation Amount and (ii) in the case of a partial reduction, the amount on deposit in the
LC Collateral Account is at least equal to the difference between the then outstanding LC
Participation Amount and the Purchase Limit as so reduced by such partial reduction.



     Section 1.2 Making Investments.



     (a) Each request for any Investment hereunder may be made on any day upon the Seller’s
irrevocable written notice in the form of Annex B (each, an “Investment Notice”)
delivered to the Administrator in accordance with Section 5.2 (which notice must be
received by the Administrator before 11:00 a.m., New York City time) at least two Business Days
before the requested Investment Date, which notice shall specify: (A) the amount requested to be
paid to the Seller (such amount, which shall not be less than $300,000 and shall be in integral
multiples of $100,000, (B) the requested date of such Investment (which shall be a Business Day)
and (C) the pro forma calculation of the Purchased Assets Coverage Percentage after giving effect
to the increase in the Capital.



     (b) On the date of each Investment hereunder, the Issuer shall, upon satisfaction of the
applicable conditions set forth in Exhibit II, make available to the Seller in same day
funds, at Bank of America, N.A., account number 4426927763, ABA No. 026009593, an amount equal to
the Capital of the Investment being funded by the Issuer.



     Section 1.3 Transfer of Receivables and Other Purchased Assets.



     (a) Sale of Receivables. Notwithstanding the otherwise applicable conditions
precedent to Investments hereunder, upon effectiveness of this Agreement in accordance with its
terms, (i) the Issuer shall be deemed to have made an Investment in an amount equal to its
outstanding Capital under the Original Agreement, and (ii) the Issuer’s outstanding Capital



3









 




hereunder after giving effect to such deemed Investment shall be equal to the Issuer’s
outstanding Capital that was outstanding under the Original Agreement immediately prior to the
effectiveness of this Agreement. In consideration of such initial Investment, the entry into this
Agreement by the Administrator and the Purchasers and the Administrator’s agreement (on behalf of
the applicable Purchasers) to make payments to the Seller from time to time in accordance with
Section 1.4, effective on the Closing Date, the Seller hereby sells, conveys, transfers and
assigns to the Administrator, on behalf of the Purchasers, all of Seller’s right, title and
interest in and to (i) all Pool Receivables existing on the Closing Date or thereafter arising or
acquired by the Seller from time to time prior to the Facility Termination Date and (ii) all
Related Security, whether existing on the Closing Date or thereafter arising at any time and
acquired by the Seller.




     (b) Purchase of Purchased Assets. Subject to the terms and conditions hereof, the
Administrator (on behalf of the Purchasers) hereby purchases and accepts from the Seller the Pool
Receivables and all other Related Security sold, assigned and transferred pursuant to Section
1.3(a) (collectively, the “Purchased Assets”).



     (c) Obligations Not Assumed. The foregoing sale, assignment and transfer does not
constitute and is not intended to result in the creation, or an assumption by the Administrator or
any Purchaser, of any obligation of the Seller, any Originator or any other Person under or in
connection with the Receivables or any other Related Security, all of which shall remain the
obligations and liabilities of the Seller, the Originator and/or such other Person, as applicable.



     Section 1.4 Terms and Conditions for Sale, Assignment and Transfer. Subject to the
terms and conditions hereof, including Exhibit II, in consideration for the sale,
assignment and transfer of the Purchased Assets by the Seller to the Administrator (on behalf of
the Purchasers) hereunder:



     (a) Investments. On the Closing Date, and thereafter from time to time prior to the
Facility Termination Date, on request of the Seller for an Investment in accordance with
Section 1.2(a), the Issuer, in accordance with Section 1.2(b), shall pay to the
Seller the amount requested by the Seller under Section 1.2(a).



     (b) Reinvestments. On each Business Day prior to the Facility Termination Date, the
Servicer, on behalf of the Issuer, shall pay to the Seller, out of Collections of the Pool
Receivables, the amount available for reinvestment in accordance with Section 1.6(b)(ii).
Each such payment is herein referred to as a “Reinvestment”.



     (c) Deferred Purchase Price. The Servicer, on behalf of the Administrator and the
Purchasers, shall pay to the Seller, from Collections, the amounts payable to the Seller from time
to time pursuant to Section 1.6(b)(iv) and clause sixth of Section
1.6(d)(ii) (such amounts, the “Deferred Purchase Price” with respect to the Purchased
Assets) at the times specified in such Sections. The parties hereto acknowledge and agree that the
Administrator and the Purchasers shall have the right to, and intend to, set off (i) the Seller’s
obligation to pay (or cause to be paid) to the Purchasers (or to the Administrator on their behalf)
all Collections on the portion of the



4









 




Purchased Assets attributable to the Deferred Purchase Price against (ii) the Administrator’s
and the Purchasers’ obligations to pay (or cause to be paid) to the Seller the Deferred Purchase
Price.




     (d) Seller Payments Limited to Collections. Notwithstanding any provision contained
in this Agreement to the contrary, none of the Administrator or the Purchasers shall be obligated
to pay any amount to the Seller as the purchase price of the Purchased Assets pursuant to
subsections (b) and (c) above except to the extent of Collections on Receivables
available for distribution to the Seller in accordance with this Agreement. Any amount that
Administrator or any Purchaser does not pay pursuant to the preceding sentence shall not constitute
a claim (as defined in § 101 of the Bankruptcy Code) against or corporate obligation of such Person
for any such insufficiency unless and until such amount becomes available for distribution to the
Seller in accordance with Section 1.6(d)(ii).



     (e) Intent of the Parties. The Seller, the Administrator and the Purchasers intend
that the sale, assignment and transfer of Purchased Assets to the Administrator (on behalf of the
Purchasers) shall be treated as a sale for all purposes (other than for federal, state and local
income and franchise tax purposes as provided in the following paragraph of this clause
(e)). If notwithstanding the intent of the parties, such sale, transfer and assignment is not
treated as a sale for such purposes, such sale, assignment and transfer shall be treated as the
grant of, and the Seller does hereby grant to the Administrator (for the benefit of the Purchasers)
a security interest in the following property to secure all of the Seller’s obligations (monetary
or otherwise) under this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or indirect, absolute or
contingent: all of the Seller’s right, title and interest in, to and under all of the following,
whether now or hereafter owned, existing or arising: (i) all Pool Receivables, (ii) all Related
Security with respect to such Pool Receivables, (iii) all Collections with respect to such Pool
Receivables, (iv) the Lock-Box Accounts and all amounts on deposit therein, and all certificates
and instruments, if any, from time to time evidencing such Lock-Box Accounts and amounts on deposit
therein, (v) all rights (but none of the obligations) of the Seller under the Sale Agreement and
(vi) all proceeds of, and all amounts received or receivable under any or all of, the foregoing
(collectively, the “Pool Assets”). The Seller hereby authorizes the Administrator to file
financing statements describing as the collateral covered thereby as “all of the debtor’s personal
property or assets” or words to that effect, notwithstanding that such wording may be broader in
scope than the collateral described in this Agreement. The Administrator, for the benefit of the
Purchasers, shall have, with respect to the Pool Assets, and in addition to all the other rights
and remedies available to the Administrator and the Purchasers, all the rights and remedies of a
secured party under any applicable UCC.



     Notwithstanding the foregoing paragraph of this clause (e), the Seller, the
Administrator, the Purchasers and all other parties to this Agreement intend and agree to treat,
for U.S. federal, state and local income and franchise tax (in the nature of income tax) purposes
only, the sale, assignment and transfer of the Purchased Assets to the Administrator (on behalf of
the Purchasers) as a loan to the Seller secured by the Pool Assets. The provisions of this
Agreement and all related Transaction Documents shall be construed to further these intentions of
the parties.



5









 





     (f) LC Participant Investments. Whenever the LC Bank issues a Letter of Credit
pursuant to Section 1.14 hereof, each LC Participant shall, automatically and without
further action of any kind upon the effective date of issuance of such Letter of Credit, have
irrevocably deemed to make an Investment hereunder in the event that such Letter of Credit is
subsequently drawn and such drawn amount shall not have been reimbursed pursuant to Section
1.16 upon such draw. All such Investments shall comprise Base Rate Portions of Capital in an
amount equal to the amount of such draw (without regard to the numerical requirements set forth in
Section 1.2(a)), shall be made ratably by the LC Participants according to their Pro Rata
Shares and shall accrue Discount. In the event that any Letter of Credit expires or is surrendered
without being drawn (in whole or in part) then, in such event, the foregoing commitment to make
Investments shall expire with respect to such Letter of Credit and the LC Participation Amount
shall automatically reduce by the amount of the Letter of Credit which is no longer outstanding.



     Section 1.5 Purchased Assets Coverage Percentage Computation.



          The Purchased Assets Coverage Percentage shall be initially computed on the Closing Date.
Thereafter, until the Facility Termination Date, such Purchased Assets Coverage Percentage shall be
automatically recomputed (or deemed to be recomputed) on each Business Day other than a Termination
Day. From and after the occurrence of any Termination Day, the Purchased Assets Coverage
Percentage shall (until the event(s) giving rise to such Termination Day are satisfied or are
waived in accordance with Section 5.1) be deemed to be 100%. The Purchased Assets Coverage
Percentage shall become zero when the Final Payout Date has occurred and the Servicer shall have
received the accrued Servicing Fee thereon.




     Section 1.6 Settlement Procedures.



     (a) The collection of the Pool Receivables shall be administered by the Servicer in accordance
with this Agreement. The Seller shall provide to the Servicer on a timely basis all information
needed for such administration, including notice of the occurrence of any Termination Day and
current computations of the Purchased Assets Coverage Percentage.



     (b) The Servicer shall, on each day on which Collections of Pool Receivables are received (or
deemed received) by the Seller or the Servicer:




     (i) set aside and hold in trust (and shall, at the request of the Administrator,
segregate in a separate account approved by the Administrator) for the Administrator (for
the benefit of the Purchasers), out of such Collections, first, an amount equal to
the Discount accrued through such day for each Portion of Capital and not previously set
aside, second, an amount equal to the fees set forth in the Fee Letter accrued and
unpaid through such day, and third, to the extent funds are available therefor, an
amount equal to the Servicing Fee accrued through such day and not previously set aside,




     (ii) subject to Section 1.6(f), if such day is not a Termination Day, remit to
the Seller, on behalf of the Purchasers, the remainder of such Collections. Such remainder
shall, to the extent representing a return on Capital, be automatically reinvested in Pool
Receivables, and in the Related Security, Collections and other proceeds with respect



6









 






thereto; provided, however, that if the Purchased Assets Coverage
Percentage would exceed 100%, then the Servicer shall not reinvest, but shall set aside and
hold in trust for the benefit of the Purchasers (and shall, at the request of the
Administrator, segregate in a separate account approved by the Administrator) a portion of
such Collections that, together with the other Collections set aside pursuant to this
paragraph, shall equal the amount necessary to reduce the Purchased Assets Coverage
Percentage to 100%,




     (iii) if such day is a Termination Day, set aside, segregate and hold in trust (and
shall, at the request of the Administrator, segregate in a separate account approved by the
Administrator) for the Purchasers, the entire remainder of such Collections;
provided, that if amounts are set aside and held in trust on any Termination Day of
the type described in clause (a) of the definition of “Termination Day” and,
thereafter, the conditions set forth in Section 2 of Exhibit II are
satisfied or waived by the Administrator, such previously set-aside amounts shall, to the
extent representing a return of the Capital, be reinvested in accordance with clause
(ii) on the day of such subsequent satisfaction or waiver of conditions, and




     (iv) subject to Section 1.6(f), pay to the Seller (on behalf of the
Administrator and the Purchasers) for the Seller’s own account and in payment of the
Deferred Purchase Price for the Purchased Assets any Collections in excess of: (x) amounts
required to be reinvested in accordance with clause (ii) above or the proviso to
clause (iii) above, plus (y) the amounts that are required to be set aside
pursuant to clause (i) above, the proviso to clause (ii) and clause
(iii) above, plus (z) all reasonable and appropriate out-of-pocket costs and
expenses of the Servicer for servicing, collecting and administering the Pool Receivables.



     (c) The Servicer shall, in accordance with the priorities set forth in Section 1.6(d),
deposit into the Administration Account (or such other account designated by the Administrator), on
each Settlement Date (or, solely with respect to Collections held for the Purchasers pursuant to
Section 1.6(f)(iii), such other date approved by the Administrator with at least five (5)
Business Days prior written notice to the Administrator of such payment), Collections held for the
Purchasers pursuant to Section 1.6(b)(i) or 1.6(f) plus the amount of Collections
then held for the Purchasers pursuant to clauses (b)(ii) and (iii) of Section
1.6; provided, that if Peabody or an Affiliate thereof is the Servicer, such day is not
a Termination Day and the Administrator has not notified Peabody (or such Affiliate) that the right
to retain the portion of Collections set aside pursuant to Section 1.6(b)(i) that
represents the Servicing Fee is revoked, Peabody (or such Affiliate) may retain the portion of the
Collections set aside pursuant to Section 1.6(b)(i) that represents the Servicing Fee in
payment in full of the accrued Servicing Fees so set aside. On the last day of each Settlement
Period, the Administrator will notify the Servicer by facsimile of the amount of Discount accrued
with respect to each Portion of Capital during such Settlement Period or portion thereof.



     (d) Upon receipt of funds deposited into the Administration Account pursuant to clause
(c) above, the Administrator shall cause such funds to be distributed as follows:



7









 






     (i) if such distribution occurs on a day that is not a Termination Day and the
Purchased Assets Coverage Percentage does not exceed 100%, first to the Purchasers
ratably (based on the aggregate accrued and unpaid Discount and fees payable to all
Purchasers at such time) in payment in full of all accrued Discount and fees (other than
Servicing Fees) with respect to each Portion of Capital, and second, if the Servicer
has set aside amounts in respect of the Servicing Fee pursuant to clause (b)(i)
above and has not retained such amounts pursuant to clause (c) above, to the
Servicer (payable in arrears on each Settlement Date) in payment in full of the accrued
Servicing Fees so set aside, and




     (ii) if such distribution occurs on a Termination Day or on a day when the Purchased
Assets Coverage Percentage exceeds 100%, first to the Purchasers ratably (based on
the aggregate accrued and unpaid Discount and fees payable to all Purchasers at such time)
in payment in full of all accrued Discount and fees (other than Servicing Fees) with respect
to each Portion of Capital, second to the Purchasers ratably (based on their
respective Portions of Capital funded thereby) in payment in full of Capital (or, if such
day is not a Termination Day, the amount necessary to reduce the Purchased Assets Coverage
Percentage to 100%) (determined as if such Collections had been applied to reduce the
aggregate outstanding Capital), third, to the LC Collateral Account for the benefit
of the LC Bank and the LC Participants, the amount (if any) necessary to cause the amount of
cash collateral held in the LC Collateral Account to equal the aggregate outstanding amount
of the LC Participation Amount (or, if such day is not a Termination Day, the amount
necessary to reduce the Purchased Assets Coverage Percentage to 100%) (determined as if such
Collections had been applied to reduce the aggregate outstanding amount of the LC
Participation Amount), fourth, to the Servicer in payment in full of all accrued
Servicing Fees, fifth, if the Capital and accrued Discount with respect to each
Portion of Capital have been reduced to zero, and all accrued Servicing Fees payable to the
Servicer have been paid in full, to the Purchasers ratably (based on their respective
Portions of Capital funded thereby), the Administrator and any other Indemnified Party or
Affected Person in payment in full of any other amounts owed thereto by the Seller
hereunder, and sixth, after the occurrence of the Final Payout Date, all additional
Collections with respect to the Purchased Assets shall be paid to the Seller for its own
account in payment of the Deferred Purchase Price for such Purchased Assets.



     (e) For the purposes of this Section 1.6:




     (i) if on any day the Outstanding Balance of any Pool Receivable is reduced or adjusted
as a result of any defective, rejected, returned, repossessed or foreclosed goods or
services, or any revision, cancellation, allowance, rebate, discount or other adjustment
made by the Seller or any Affiliate of the Seller, or any setoff or dispute between the
Seller or any Affiliate of the Seller and an Obligor, the Seller shall be deemed to have
received on such day a Collection of such Pool Receivable in the amount of such reduction or
adjustment;




     (ii) if on any day any of the representations or warranties in Section l(g) or
(n) of Exhibit III is not true with respect to any Pool Receivable, the
Seller shall be deemed to have received on such day a Collection of such Pool Receivable in
full;



8









 






     (iii) except as provided in clause (i) or (ii) above, or as otherwise
required by applicable law or the relevant Contract, all Collections received from an
Obligor of any Receivable shall be applied to the Receivables of such Obligor in the order
of the age of such Receivables, starting with the oldest such Receivable, unless such
Obligor designates in writing its payment for application to specific Receivables; and




     (iv) if and to the extent the Administrator or any Purchaser shall be required for any
reason to pay over to an Obligor (or any trustee, receiver, custodian or similar official in
any Insolvency Proceeding) any amount received by it hereunder, such amount shall be deemed
not to have been so received by the Administrator or such Purchaser but rather to have been
retained by the Seller and, accordingly, the Administrator or such Purchaser, as the case
may be, shall have a claim against the Seller for such amount, payable when and to the
extent that any distribution from or on behalf of such Obligor is made in respect thereof.



     (f) If at any time the Seller shall wish to cause the reduction of Capital (but not to
commence the liquidation, or reduction to zero, of the entire Capital), the Seller may do so as
follows:




     (i) the Seller shall give the Administrator and the Servicer written notice in the form
of Annex C (the “Paydown Notice”) (A) at least two Business Days’ prior to
the date of such reduction for any reduction of Capital less than or equal to $20,000,000
and (B) at least five Business Days’ prior to the date of such reduction for any reduction
of Capital greater than $20,000,000, in each case such notice shall include the amount of
such reduction and the proposed date on which such reduction shall commence;




     (ii) on the proposed date of the commencement of such reduction and on each day
thereafter, the Servicer shall cause Collections not to be reinvested until the amount
thereof not so reinvested shall equal the desired amount of reduction; and




     (iii) the Servicer shall hold such Collections in trust for the Purchasers, for payment
to the Administrator on the next Settlement Date immediately following the current
Settlement Period or such other date approved by the Administrator, and Capital shall be
deemed reduced in the amount to be paid to the Administrator only when in fact finally so
paid;


provided, that the amount of any such reduction shall be not less than $300,000 and shall
be an integral multiple of $100,000.




     Section 1.7 Fees.



          The Seller shall pay to the Administrator for the benefit of the Issuer, the LC Bank and each
LC Participant, certain fees in the amounts and on the dates set forth in that certain amended and
restated fee letter agreement, dated as of May 12, 2009, among Peabody, the Seller, the
Administrator and the Issuer (as such letter agreement may be amended, supplemented or otherwise
modified from time to time, the “Fee Letter”).




9









 








     Section 1.8 Payments and Computations, Etc.



     (a) All amounts to be paid or deposited by the Seller or the Servicer hereunder shall be made
without reduction for offset or counterclaim and shall be paid or deposited no later than noon (New
York City time) on the day when due in same day funds to the Administration Account. All amounts
received after noon (New York City time) will be deemed to have been received on the next Business
Day.



     (b) The Seller or the Servicer, as the case may be, shall, to the extent permitted by law, pay
interest on any amount not paid or deposited by the Seller or the Servicer, as the case may be,
when due hereunder, at an interest rate equal to 2.0% per annum above the Base Rate, payable on
demand.



     (c) All computations of interest under clause (b) above and all computations of
Discount, fees and other amounts hereunder shall be made on the basis of a year of 360 (or 365 or
366, as applicable, with respect to Discount or other amounts calculated by reference to the Base
Rate) days for the actual number of days elapsed. Whenever any payment or deposit to be made
hereunder shall be due on a day other than a Business Day, such payment or deposit shall be made on
the next Business Day and such extension of time shall be included in the computation of such
payment or deposit.



     Section 1.9 Increased Costs.



     (a) If the Administrator, the LC Bank, the Issuer, any Purchaser, any Liquidity Bank, any
other Program Support Provider or any of their respective Affiliates (each an “Affected
Person”) reasonably determines that the existence of or compliance with: (i) any law or
regulation or any change therein or in the interpretation or application thereof, in each case
adopted, issued or occurring after the date hereof, or (ii) any request, guideline or directive
from any central bank or other Governmental Authority (whether or not having the force of law)
issued or occurring after the date of this Agreement, affects or would affect the amount of capital
required or expected to be maintained by such Affected Person, and such Affected Person determines
that the amount of such capital is increased by or based upon the existence of any commitment to
make Investments in (or otherwise to maintain the Investments in) Pool Receivables or issue any
Letter of Credit related to this Agreement or any related liquidity facility, credit enhancement
facility and other commitments of the same type, then, upon demand by such Affected Person (with a
copy to the Administrator), the Seller shall promptly pay to the Administrator, for the account of
such Affected Person, from time to time as specified by such Affected Person, additional amounts
sufficient to compensate such Affected Person in the light of such circumstances, to the extent
that such Affected Person reasonably determines such increase in capital to be allocable to the
existence of any of such commitments. A certificate as to such amounts submitted to the Seller and
the Administrator by such Affected Person shall be conclusive and binding for all purposes, absent
manifest error.



     (b) If, due to either: (i) the introduction of or any change in or in the interpretation of
any law or regulation or (ii) compliance with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there shall be any



10









 




increase in the cost to any Affected Person of agreeing to purchase or purchasing, or
maintaining the ownership of, the Purchased Assets in respect of which Discount is computed by
reference to the Euro-Rate, then, upon demand by such Affected Person, the Seller shall promptly
pay to such Affected Person, from time to time as specified by such Affected Person, additional
amounts sufficient to compensate such Affected Person for such increased costs. A certificate as
to such amounts submitted to the Seller and the Administrator by such Affected Person shall be
conclusive and binding for all purposes, absent manifest error.




     (c) If such increased costs affect the related Affected Person’s portfolio of financing
transactions, such Affected Person shall use reasonable averaging and attribution methods to
allocate such increased costs to the transactions contemplated by this Agreement.



     Section 1.10 Requirements of Law.



          If any Affected Person reasonably determines that the existence of or compliance with: (a)
any law or regulation or any change therein or in the interpretation or application thereof, in
each case adopted, issued or occurring after the date hereof, or (b) any request, guideline or
directive from any central bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement:





     (i) does or shall subject such Affected Person to any tax of any kind whatsoever with
respect to this Agreement, any purchase of or investment in the Purchased Assets or any
increase in the amount of Capital relating thereto, or does or shall change the basis of
taxation of payments to such Affected Person on account of Collections, Discount or any
other amounts payable hereunder (excluding taxes imposed on the overall or branch pre-tax
net income of such Affected Person, and franchise taxes imposed on such Affected Person, by
the jurisdiction under the laws of which such Affected Person is organized or otherwise is
considered doing business (unless the Affected Person would not be considered doing business
in such jurisdiction, but for having entered into, or engaged in the transactions in
connection with, this Agreement or any other Transaction Document) or a political
subdivision thereof),




     (ii) does or shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, or deposits or other
liabilities in or for the account of, purchases, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such Affected Person that
are not otherwise included in the determination of the Euro-Rate or the Base Rate hereunder,
or




     (iii) does or shall impose on such Affected Person any other condition, and the result
of any of the foregoing is: (A) to increase the cost to such Affected Person of agreeing to
purchase or purchasing or maintaining the ownership of, or issuing any Letter of Credit in
respect of, the Purchased Assets (or interests therein) or any Portion of Capital, or (B) to
reduce any amount receivable hereunder (whether directly or indirectly), then, in any such
case, upon demand by such Affected Person, the Seller shall promptly pay to such Affected
Person additional amounts necessary to compensate such



11









 






Affected Person for such additional cost or reduced amount receivable. All such
amounts shall be payable as incurred. A certificate from such Affected Person to the Seller
and the Administrator certifying, in reasonably specific detail, the basis for, calculation
of, and amount of such additional costs or reduced amount receivable shall be conclusive and
binding for all purposes, absent manifest error; provided, however, that no
Affected Person shall be required to disclose any confidential or tax planning information
in any such certificate.



     Section 1.11 Inability to Determine Euro-Rate.



     (a) If the Administrator determines before the first day of any Settlement Period (which
determination shall be final and conclusive) that, by reason of circumstances affecting the
interbank eurodollar market generally, deposits in dollars (in the relevant amounts for such
Settlement Period) are not being offered to banks in the interbank eurodollar market for such
Settlement Period, or adequate means do not exist for ascertaining the Euro-Rate for such
Settlement Period, then the Administrator shall give notice thereof to the Seller. Thereafter,
until the Administrator notifies the Seller that the circumstances giving rise to such suspension
no longer exist, (i) no Portion of Capital shall be funded at the Alternate Rate determined by
reference to the Euro-Rate and (ii) the Discount for any outstanding Portions of Capital then
funded at the Alternate Rate determined by reference to the Euro-Rate shall, on the last day of the
then current Settlement Period, be converted to the Alternate Rate determined by reference to the
Base Rate.



     (b) If, on or before the first day of any Settlement Period, the Administrator shall have been
notified by any Affected Person that, such Affected Person has determined (which determination
shall be final and conclusive) that, any enactment, promulgation or adoption of or any change in
any applicable law, rule or regulation, or any change in the interpretation or administration
thereof by a governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Affected Person with any guideline,
request or directive (whether or not having the force of law) of any such authority, central bank
or comparable agency shall make it unlawful or impossible for such Affected Person to fund or
maintain any Portion of Capital at the Alternate Rate and based upon the Euro-Rate, the
Administrator shall notify the Seller thereof. Upon receipt of such notice, until the
Administrator notifies the Seller that the circumstances giving rise to such determination no
longer apply, (i) no Portion of Capital shall be funded at the Alternate Rate determined by
reference to the Euro-Rate and (ii) the Discount for any outstanding Portions of Capital then
funded at the Alternate Rate determined by reference to the Euro-Rate shall be converted to the
Alternate Rate determined by reference to the Base Rate either (A) on the last day of the then
current Settlement Period if such Affected Person may lawfully continue to maintain such Portion of
Capital at the Alternate Rate determined by reference to the Euro-Rate to such day, or (B)
immediately, if such Affected Person may not lawfully continue to maintain such Portion of Capital
at the Alternate Rate determined by reference to the Euro-Rate to such day.



12









 





     Section 1.12 Extension of the Facility Termination Date.



          Provided that no Termination Event or Unmatured Termination Event exists and is continuing,
the Seller may request the extension of the Facility Termination Date by providing written notice
to the Administrator; provided such request is made not more than 120 days prior to, and
not less than 60 days prior to, the then current Facility Termination Date. In the event that the
Purchasers are all agreeable to such extension, the Administrator shall so notify the Seller and
the Servicer in writing (it being understood that the Purchasers may accept or decline such
a request in their sole discretion and on such terms as they may elect) not less than 30 days prior
to the then current Facility Termination Date and the Seller, the Servicer, the Sub-Servicers, the
Administrator and the Purchasers shall enter into such documents as the Administrator and the
Purchasers may deem necessary or appropriate to reflect such extension, and all reasonable costs
and expenses incurred by the Purchasers and the Administrator in connection therewith (including
reasonable Attorney Costs) shall be paid by the Seller. In the event any Purchaser declines the
request for such extension, such Purchaser shall so notify the Administrator and the Administrator
shall so notify the Seller of such determination; provided, that the failure of the
Administrator to notify the Seller of the determination to decline such extension shall not affect
the understanding and agreement that the applicable Purchasers shall be deemed to have refused to
grant the requested extension in the event the Administrator fails to affirmatively notify the
Seller, in writing, of their agreement to accept the requested extension.




     Section 1.13 Letters of Credit.



          Subject to the terms and conditions hereof, the LC Bank shall issue or cause the issuance of
standby Letters of Credit (“Letters of Credit”) on behalf of Seller (and, if applicable, on
behalf of, or for the account of, the Servicer or any Sub-Servicer); provided,
however, that the LC Bank will not be required to issue or cause to be issued any Letters
of Credit to the extent that the issuance of such Letters of Credit would then cause the sum of (i)
the outstanding Capital plus (ii) the LC Participation Amount to exceed the Purchase Limit. The LC
Participation Amount shall not exceed in the aggregate, at any time, the aggregate of the
Commitments of the LC Bank and the LC Participants. All amounts drawn upon Letters of Credit shall
accrue Discount. Letters of Credit that have not been drawn upon shall not accrue Discount.




     Section 1.14 Issuance of Letters of Credit.



     (a) The Seller may request the LC Bank, upon two (2) Business Days’ prior written notice
submitted on or before 11:00 a.m., New York time, to issue a Letter of Credit by delivering to the
Administrator an Investment Notice substantially in the form of Annex B attached hereto and
the LC Bank’s form of Letter of Credit Application (the “Letter of Credit Application”),
substantially in the form of Annex E attached hereto completed to the satisfaction of the
Administrator and the LC Bank; and, such other certificates, documents and other papers and
information as the Administrator may reasonably request. The Seller also has the right to give
instructions and make agreements with respect to any Letter of Credit Application and the
disposition of documents, and to agree with the Administrator upon any amendment, extension or
renewal of any Letter of Credit.



13









 





     (b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight
drafts or other written demands for payment when presented for honor thereunder in accordance with
the terms thereof and when accompanied by the documents described therein and (ii) have an expiry
date not later than twelve (12) months after such Letter of Credit’s date of issuance, extension or
renewal, as the case may be, and in no event later than twelve (12) months after the Facility
Termination Date. Each Letter of Credit shall be subject either to the Uniform Customs and
Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No.
600, and any amendments or revisions thereof adhered to by the LC Bank (“UCP 600”) or the
International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590),
and any amendments or revisions thereof adhered to by the LC Bank (the “ISP98 Rules”), as
determined by the LC Bank.



     (c) The Administrator shall promptly notify the LC Bank , at its address for notices
hereunder, and each LC Participant of the request by the Seller for a Letter of Credit hereunder,
and shall provide the LC Bank with the Letter of Credit Application delivered to the Administrator
by the Seller pursuant to paragraph (a), above, by the close of business on the day
received or if received on a day that is not a Business Day or on any Business Day after 11:00 a.m.
New York time on such day, on the next Business Day.



     Section 1.15 Requirements For Issuance of Letters of Credit.



     The Seller shall authorize and direct the LC Bank to name the Seller as the “Applicant” or
“Account Party” of each Letter of Credit.



     Section 1.16 Disbursements, Reimbursement.



     (a) Immediately upon the issuance of each Letter of Credit, each LC Participant shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the LC Bank a
participation in such Letter of Credit and each drawing thereunder in an amount equal to such LC
Participant’s Pro Rata Share of the face amount of such Letter of Credit and the amount of such
drawing, respectively.



     (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or
transferee thereof, the LC Bank will promptly notify the Administrator and the Seller of such
request. Provided that it shall have received such notice, the Seller shall reimburse (such
obligation to reimburse the LC Bank shall sometimes be referred to as a “Reimbursement
Obligation”) the LC Bank prior to 12:00 p.m., New York time on each date that an amount is paid
by the LC Bank under any Letter of Credit (each such date, a “Drawing Date”) in an amount
equal to the amount so paid by the LC Bank. In the event the Seller fails to reimburse the LC Bank
for the full amount of any drawing under any Letter of Credit by 12:00 p.m., New York time, on the
Drawing Date, the LC Bank will promptly notify each LC Participant thereof, and the Seller shall be
deemed to have requested that an Investment be made by the LC Bank and the LC Participants to be
disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized
portion of the Purchase Limit. Any notice given by the LC Bank pursuant to this Section may be
oral if immediately confirmed in writing; provided that the lack



14









 




of such an immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.




     (c) Each LC Participant shall upon any notice pursuant to clause (b) above make
available to the LC Bank an amount in immediately available funds equal to its Pro Rata Share of
the amount of the drawing, whereupon the LC Participants shall each be deemed to have made an
Investment in that amount. If any LC Participant so notified fails to make available to the LC
Bank the amount of such LC Participant’s Pro Rata Share of such amount by no later than 2:00 p.m.,
New York time on the Drawing Date, then interest shall accrue on such LC Participant’s obligation
to make such payment, from the Drawing Date to the date on which such LC Participant makes such
payment (i) at a rate per annum equal to the Federal Funds Rate during the first three days
following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Capital on
and after the fourth day following the Drawing Date. The LC Bank will promptly give notice of the
occurrence of the Drawing Date, but failure of the LC Bank to give any such notice on the Drawing
Date or in sufficient time to enable any LC Participant to effect such payment on such date shall
not relieve such LC Participant from its obligation under this clause (c), provided
that such LC Participant shall not be obligated to pay interest as provided in subclauses
(i) and (ii) above until and commencing from the date of receipt of notice from the LC
Bank or the Administrator of a drawing. Each LC Participant’s Commitment shall continue until the
last to occur of any of the following events: (A) the LC Bank ceases to be obligated to issue or
cause to be issued Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains
outstanding and uncancelled or (C) all Persons (other than the Seller) have been fully reimbursed
for all payments made under or relating to Letters of Credit.



     Section 1.17 Repayment of Participation Advances.



     (a) Upon (and only upon) receipt by the LC Bank for its account of immediately available funds
from the Seller (i) in reimbursement of any payment made by the LC Bank under a Letter of Credit
with respect to which any LC Participant has made a participation advance to the LC Bank, or (ii)
in payment of Discount on the Investments made or deemed to have been made in connection with any
such draw, the LC Bank will pay to each LC Participant, ratably (based on the outstanding drawn
amounts funded by each such LC Participant in respect of such Letter of Credit), in the same funds
as those received by the LC Bank; it being understood, that the LC Bank
shall retain a ratable amount of such funds that were not the subject of any payment in respect of
such Letter of Credit by any LC Participant.



     (b) If the LC Bank is required at any time to return to the Seller, or to a trustee, receiver,
liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments
made by the Seller to the LC Bank pursuant to this Agreement in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each LC Participant shall, on demand of the
LC Bank, forthwith return to the LC Bank the amount of its Pro Rata Share of any amounts so
returned by the LC Bank plus interest at the Federal Funds Rate.



15









 





     Section 1.18 Documentation.



          The Seller agrees to be bound by the terms of the Letter of Credit Application and by the LC
Bank’s interpretations of any Letter of Credit issued for the Seller and by the LC Bank’s written
regulations and customary practices relating to letters of credit, though the LC Bank’s
interpretation of such regulations and practices may be different from the Seller’s own. In the
event of a conflict between the Letter of Credit Application and this Agreement, this Agreement
shall govern. It is understood and agreed that, except in the case of gross negligence or willful
misconduct by the LC Bank, the LC Bank shall not be liable for any error, negligence and/or
mistakes, whether of omission or commission, in following the Seller’s instructions or those
contained in the Letters of Credit or any modifications, amendments or supplements thereto.




     Section 1.19 Determination to Honor Drawing Request.



          In determining whether to honor any request for drawing under any Letter of Credit by the
beneficiary thereof, the LC Bank shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been delivered and that they
comply on their face with the requirements of such Letter of Credit and that any other drawing
condition appearing on the face of such Letter of Credit has been satisfied in the manner so set
forth.




     Section 1.20 Nature of Participation and Reimbursement Obligations.



          Each LC Participant’s obligation in accordance with this Agreement to make participation
advances as a result of a drawing under a Letter of Credit, and the obligations of the Seller to
reimburse the LC Bank upon a draw under a Letter of Credit, shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of this Article I
under all circumstances, including the following circumstances:





     (i) any set-off, counterclaim, recoupment, defense or other right which such LC
Participant may have against the LC Bank, the Administrator, the Issuer, the Seller or any
other Person for any reason whatsoever;




     (ii) the failure of the Seller or any other Person to comply with the conditions set
forth in this Agreement for the making of an Investment, Reinvestments, requests for Letters
of Credit or otherwise, it being acknowledged that such conditions are not required for the
making of participation advances hereunder;




     (iii) any lack of validity or enforceability of any Letter of Credit;




     (iv) any claim of breach of warranty that might be made by the Seller, the LC Bank or
any LC Participant against the beneficiary of a Letter of Credit, or the existence of any
claim, set-off, defense or other right which the Seller, the LC Bank or any LC Participant
may have at any time against a beneficiary, any successor beneficiary or any transferee of
any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee
may be acting), the LC Bank, any LC Participant, the Issuer or any other



16









 






Person, whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction (including any underlying transaction between the Seller or any
Subsidiaries of the Seller or any Affiliates of the Seller and the beneficiary for which any
Letter of Credit was procured);




     (v) the lack of power or authority of any signer of, or lack of validity, sufficiency,
accuracy, enforceability or genuineness of, any draft, demand, instrument, certificate or
other document presented under any Letter of Credit, or any such draft, demand, instrument,
certificate or other document proving to be forged, fraudulent, invalid, defective or
insufficient in any respect or any statement therein being untrue or inaccurate in any
respect, even if the Administrator or the LC Bank has been notified thereof;




     (vi) payment by the LC Bank under any Letter of Credit against presentation of a
demand, draft or certificate or other document which does not comply with the terms of such
Letter of Credit other than as a result of the gross negligence or willful misconduct of the
LC Bank;




     (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of
Credit, or any other Person having a role in any transaction or obligation relating to a
Letter of Credit, or the existence, nature, quality, quantity, condition, value or other
characteristic of any property or services relating to a Letter of Credit;




     (viii) any failure by the LC Bank or any of the LC Bank’s Affiliates to issue any
Letter of Credit in the form requested by the Seller, unless the LC Bank has received
written notice from the Seller of such failure within three Business Days after the LC Bank
shall have furnished the Seller a copy of such Letter of Credit and such error is material
and no drawing has been made thereon prior to receipt of such notice;




     (ix) any Material Adverse Effect on the Seller, any Originator or any Affiliates
thereof;




     (x) any breach of this Agreement or any Transaction Document by any party thereto;




     (xi) the occurrence or continuance of an Insolvency Proceeding with respect to the
Seller, any Originator or any Affiliate thereof;




     (xii) the fact that a Termination Event or an Unmatured Termination Event shall have
occurred and be continuing;




     (xiii) the fact that this Agreement or the obligations of Seller or Servicer hereunder
shall have been terminated; and




     (xiv) any other circumstance or happening whatsoever, whether or not similar to any of
the foregoing.



17









 





     Nothing in this Section 1.20 shall relieve the LC Bank from liability for its gross
negligence or willful misconduct, as determined by a final non-appealable judgment of a court of
competent jurisdiction.



     Section 1.21 Indemnity.



          In addition to other amounts payable hereunder, the Seller hereby agrees to protect,
indemnify, pay and save harmless the Administrator, the LC Bank, each LC Participant and any of the
LC Bank’s Affiliates that have issued a Letter of Credit from and against any and all claims,
demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and
expenses (including Attorney Costs) which the Administrator, the LC Bank, any LC Participant or any
of their respective Affiliates may incur or be subject to as a consequence, direct or indirect, of
the issuance of any Letter of Credit, other than as a result of (a) the gross negligence or willful
misconduct of the party to be indemnified as determined by a final judgment of a court of competent
jurisdiction or (b) the wrongful dishonor by the LC Bank of a proper demand for payment made under
any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto Governmental Authority (all such acts or
omissions herein called “Governmental Acts”).




     Section 1.22 Liability for Acts and Omissions.



          As between the Seller, on the one hand, and the Administrator, the LC Bank, the LC
Participants and the Issuer, on the other, the Seller assumes all risks of the acts and omissions
of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit.
In furtherance and not in limitation of the respective foregoing, none of the Administrator, the LC
Bank, the LC Participants or the Issuer shall be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for an issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if the LC Bank shall have been notified thereof); (ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter
of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully
with any conditions required in order to draw upon such Letter of Credit or any other claim of the
Seller against any beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among the Seller and any beneficiary of any Letter of Credit or any such transferee;
(iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond
the control of the Administrator, the LC Bank, the LC Participants and the Issuer, including any
Governmental Acts, and none of the above shall




18









 







affect or impair, or prevent the vesting of, any of the LC Bank’s rights or powers hereunder.
Nothing in the preceding sentence shall relieve the LC Bank from liability for its gross negligence
or willful misconduct, as determined by a final non-appealable judgment of a court of competent
jurisdiction, in connection with actions or omissions described in such clauses (i) through (viii)
of such sentence. In no event shall the Administrator, the LC Bank, the LC Participants, the
Issuer or their respective Affiliates, be liable to the Seller or any other Person for any
indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including
without limitation attorneys’ fees), or for any damages resulting from any change in the value of
any property relating to a Letter of Credit.




          Without limiting the generality of the foregoing, the Administrator, the LC Bank, the LC
Participants and the Issuer and each of its Affiliates (i) may rely on any written communication
believed in good faith by such Person to have been authorized or given by or on behalf of the
applicant for a Letter of Credit; (ii) may honor any presentation if the documents presented appear
on their face to comply with the terms and conditions of the relevant Letter of Credit; (iii) may
honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was
pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise,
and shall be entitled to reimbursement to the same extent as if such presentation had initially
been honored, together with any interest paid by the LC Bank or its Affiliates; (iv) may honor any
drawing that is payable upon presentation of a statement advising negotiation or payment, upon
receipt of such statement (even if such statement indicates that a draft or other document is being
delivered separately), and shall not be liable for any failure of any such draft or other document
to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or
negotiating bank claiming that it rightfully honored under the laws or practices of the place where
such bank is located; and (vi) may settle or adjust any claim or demand made on the Administrator,
the LC Bank, the LC Participants, the Issuer or their respective Affiliates, in any way related to
any order issued at the applicant’s request to an air carrier, a letter of guarantee or of
indemnity issued to a carrier or any similar document (each an “Order”) and honor any
drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding
that any drafts or other documents presented in connection with such Letter of Credit fail to
conform in any way with such Letter of Credit.




          In furtherance and extension and not in limitation of the specific provisions set forth above,
any action taken or omitted by the LC Bank under or in connection with the Letters of Credit issued
by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and
without gross negligence or willful misconduct, as determined by a final non-appealable judgment of
a court of competent jurisdiction, shall not put the LC Bank under any resulting liability to the
Seller, any LC Participant or any other Person.




19









 








ARTICLE II.

REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS




     Section 2.1 Representations and Warranties; Covenants.



          Each of the Seller, Peabody and the Servicer hereby makes the representations and warranties,
and hereby agrees to perform and observe the covenants, applicable to it set forth in Exhibits
III and IV, respectively.




     Section 2.2 Termination Events.



          If any of the Termination Events set forth in Exhibit V shall occur, the Administrator
may, by notice to the Seller, declare the Facility Termination Date to have occurred (in which case
the Facility Termination Date shall be deemed to have occurred); provided, that
automatically upon the occurrence of any event (without any requirement for the passage of time or
the giving of notice) described in paragraph (f) of Exhibit V, the Facility
Termination Date shall occur. Upon any such declaration, occurrence or deemed occurrence of the
Facility Termination Date, the Purchasers and the Administrator shall have, in addition to the
rights and remedies that they may have under this Agreement, all other rights and remedies provided
after default under the Illinois UCC and under other applicable law, which rights and remedies
shall be cumulative.




ARTICLE III.

INDEMNIFICATION




     Section 3.1 Indemnities by the Seller.



          Without limiting any other rights that the Administrator, the Purchasers, the Liquidity Banks,
any Program Support Provider or any of their respective Affiliates, employees, officers, directors,
agents, counsel, successors, transferees or permitted assigns (each, an “Indemnified
Party”) may have hereunder or under applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all claims, damages, expenses, costs, losses and
liabilities (including Attorney Costs) (all of the foregoing being collectively referred to as
“Indemnified Amounts”) arising out of or resulting from this Agreement (whether directly or
indirectly), the use of proceeds of Investments or Reinvestments, the ownership of any portion of
the Purchased Assets, or any interest therein, or in respect of any Receivable, Related Security or
Contract, excluding, however: (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or its officers, directors,
agents, counsel, successors, transferees or permitted assigns, (b) any indemnification which has
the effect of recourse for the non-payment of the Receivables to any indemnitor (except as
otherwise specifically provided in this Agreement), or (c) overall net income taxes or franchise
taxes imposed on such Indemnified Party by the jurisdiction under the laws of which such
Indemnified Party is organized or any political subdivision thereof. Without limiting or being
limited by the foregoing, and subject to the exclusions set forth in the preceding sentence, the
Seller shall pay on demand (which demand shall be accompanied by documentation of the Indemnified
Amounts, in reasonable detail) to each Indemnified Party any and all amounts




20









 







necessary to indemnify such Indemnified Party from and against any and all Indemnified Amounts
relating to or resulting from any of the following:




               (i) the failure of any Receivable included in the calculation of the Net Receivables Pool
Balance as an Eligible Receivable to be an Eligible Receivable, the failure of any information
contained in an Information Package to be true and correct, or the failure of any other information
provided to any Purchaser or the Administrator with respect to Receivables or this Agreement to be
true and correct,



               (ii) the failure of any representation, warranty or statement made or deemed made by the
Seller (or any of its officers) under or in connection with this Agreement to have been true and
correct as of the date made or deemed made in all respects when made,



               (iii) the failure by the Seller to comply with any applicable law, rule or regulation with
respect to any Pool Receivable or the related Contract, or the failure of any Pool Receivable or
the related Contract to conform to any such applicable law, rule or regulation,



               (iv) the failure to vest in the Administrator (on behalf of the Purchasers) a valid and
enforceable first priority perfected ownership or security interest in the Pool Assets, free and
clear of any Adverse Claim,



               (v) 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 Receivables in, or purporting to be in, the Receivables Pool and the other Pool
Assets, whether at the time of any Investment or Reinvestment or at any subsequent time,



               (vi) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor)
of the Obligor to the payment of any Receivable in, or purporting to be in, the Receivables Pool
(including a defense based on such Receivable or the related Contract 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 or services related to such Receivable or the
furnishing or failure to furnish such goods or services or relating to collection activities with
respect to such Receivable (if such collection activities were performed by the Seller or any of
its Affiliates acting as Servicer or by any agent or independent contractor retained by the Seller
or any of its Affiliates),



               (vii) any failure of the Seller (or any of its Affiliates acting as the Servicer) to perform
its duties or obligations in accordance with the provisions hereof or under the Contracts,



               (viii) any products liability or other claim, investigation, litigation or proceeding arising
out of or in connection with merchandise, insurance or services that are the subject of any
Contract,



               (ix) the commingling of Collections at any time with other funds,




21












 





               (x) the use of proceeds of Investments or Reinvestments, or



               (xi) any reduction in Capital as a result of the distribution of Collections pursuant to
Section 1.6(d), if all or a portion of such distributions shall thereafter be rescinded or
otherwise must be returned for any reason.



     Section 3.2 Indemnities by the Servicer.



          Without limiting any other rights that the Administrator, any Purchasers, any Liquidity Banks,
any Program Support Provider or any other Indemnified Party may have hereunder or under applicable
law, the Servicer hereby agrees to indemnify each Indemnified Party from and against any and all
Indemnified Amounts arising out of or resulting from (whether directly or indirectly): (a) the
failure of any information contained in an Information Package to be true and correct, or the
failure of any other information provided to any such Indemnified Party by, or on behalf of, the
Servicer to be true and correct, (b) the failure of any representation, warranty or statement made
or deemed made by the Servicer (or any of its officers) under or in connection with this Agreement
to have been true and correct as of the date made or deemed made in all respects when made, (c) the
failure by the Servicer to comply with any applicable law, rule or regulation with respect to any
Pool Receivable or the related Contract, (d) any dispute, claim, offset or defense of the Obligor
to the payment of any Receivable in, or purporting to be in, the Receivables Pool resulting from or
related to the collection activities with respect to such Receivable, or (e) any failure of the
Servicer to perform its duties or obligations in accordance with the provisions hereof.



ARTICLE IV.

ADMINISTRATION AND COLLECTIONS




     Section 4.1 Appointment of the Servicer.



     (a) The servicing, administering and collection of the Pool Receivables shall be conducted by
the Person so designated from time to time as the Servicer in accordance with this Section. Until
the Administrator gives notice to Peabody (in accordance with this Section) of the designation of a
new Servicer, Peabody is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms hereof. Upon the occurrence of a Termination
Event, the Administrator may designate as Servicer any Person (including itself) to succeed Peabody
or any successor Servicer, on the condition in each case that any such Person so designated shall
agree to perform the duties and obligations of the Servicer pursuant to the terms hereof.



     (b) Upon the designation of a successor Servicer as set forth in clause (a) above,
Peabody agrees that it will terminate its activities as Servicer hereunder in a manner that the
Administrator determines will facilitate the transition of the performance of such activities to
the new Servicer, and Peabody shall cooperate with and assist such new Servicer. Such cooperation
shall include access to and transfer of related records and use by the new Servicer of all
licenses, hardware or software necessary or desirable to collect the Pool Receivables and the
Related Security.



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     (c) Peabody acknowledges that, in making their decision to execute and deliver this Agreement,
the Administrator and the Purchasers have relied on Peabody’s agreement to act as Servicer
hereunder. Accordingly, Peabody agrees that it will not voluntarily resign as Servicer.



     (d) The Servicer may and hereby does delegate its duties and obligations hereunder to the
Originators as subservicer (each a “Sub-Servicer”); provided, that, in such
delegation: (i) each such Sub-Servicer shall and hereby does agree in writing to perform the
duties and obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer shall remain
primarily liable for the performance of the duties and obligations so delegated, (iii) the Seller,
the Administrator and the Purchasers shall have the right to look solely to the Servicer for
performance, and (iv) the terms of any agreement with any Sub-Servicer shall and hereby do provide
that the Administrator may terminate such agreement upon the termination of the Servicer hereunder
by giving notice of its desire to terminate such agreement to the Servicer (and the Servicer shall
provide appropriate notice to each such Sub-Servicer); provided, however, that if
any such delegation is to any Person other than Arclar Company, LLC, Peabody Midwest Mining, LLC,
Twentymile Coal, LLC, Caballo Coal, LLC, COALSALES II, LLC, Peabody Western Coal Company, Powder
River Coal, LLC, Peabody Holding Company, LLC, COALTRADE, LLC, Peabody COALTRADE International
(CTI), LLC, or COALSALES, LLC, the Administrator shall have consented in writing in advance to such
delegation.



     Section 4.2 Duties of the Servicer.



     (a) The Servicer shall take or cause to be taken all such action as may be necessary or
advisable to administer and collect each Pool Receivable from time to time, all in accordance with
this Agreement and all applicable laws, rules and regulations, with reasonable care and diligence,
and in accordance with the Credit and Collection Policies. The Servicer shall set aside, for the
accounts of the Seller and the Purchasers, the amount of the Collections to which each is entitled
in accordance with Article I. The Servicer may, in accordance with the applicable Credit
and Collection Policy, extend the maturity of any Pool Receivable and extend the maturity or adjust
the Outstanding Balance of any Defaulted Receivable as the Servicer may determine to be appropriate
to maximize Collections thereof; provided, however, that: for the purposes of this
Agreement, (i) such extension shall not change the number of days such Pool Receivable has remained
unpaid from the date of the invoice date related to such Pool Receivable, (ii) such extension or
adjustment shall not alter the status of such Pool Receivable as a Delinquent Receivable or a
Defaulted Receivable or limit the rights of any of the Purchasers or the Administrator under this
Agreement and (iii) if a Termination Event has occurred and is continuing and Peabody or an
Affiliate thereof is serving as the Servicer, Peabody or such Affiliate may make such extension or
adjustment only upon the prior approval of the Administrator. The Seller shall deliver to the
Servicer and the Servicer shall hold for the benefit of the Seller and the Administrator
(individually and for the benefit of the Purchasers), in accordance with their respective
interests, all records and documents (including computer tapes or disks) with respect to each Pool
Receivable. Notwithstanding anything to the contrary contained herein, the Administrator may
direct the Servicer (whether the Servicer is Peabody or any other Person) to commence or settle any
legal action to enforce collection of any Pool Receivable or to foreclose upon or repossess any
Related Security.



23









 





     (b) The Servicer shall, as soon as practicable following actual receipt of collected funds,
turn over to the Seller the collections of any indebtedness that is not a Pool Receivable, less, if
Peabody or an Affiliate thereof is not the Servicer, all reasonable and appropriate out-of-pocket
costs and expenses of such Servicer of servicing, collecting and administering such collections.
The Servicer, if other than Peabody or an Affiliate thereof, shall, as soon as practicable upon
demand, deliver to the Seller all records in its possession that evidence or relate to any
indebtedness that is not a Pool Receivable, and copies of records in its possession that evidence
or relate to any indebtedness that is a Pool Receivable.



     (c) The Servicer’s obligations hereunder shall terminate on the Final Payout Date.



     After such termination, if Peabody or an Affiliate thereof was not the Servicer on the date of
such termination, the Servicer shall promptly deliver to the Seller all books, records and related
materials that the Seller previously provided to the Servicer, or that have been obtained by the
Servicer, in connection with this Agreement.



     Section 4.3 Lock-Box Arrangements.



          Prior to the Closing Date, the Seller shall enter into Lock-Box Agreements with all of the
Lock-Box Banks and deliver original counterparts thereof to the Administrator. Upon the occurrence
of a Termination Event, the Administrator may at any time thereafter give notice to each Lock-Box
Bank that the Administrator is exercising its rights under the Lock-Box Agreements to do any or all
of the following: (a) to have the exclusive ownership and control of the Lock-Box Accounts
transferred to the Administrator and to exercise exclusive dominion and control over the funds
deposited therein, (b) to have the proceeds that are sent to the respective Lock-Box Accounts
redirected pursuant to the Administrator’s instructions rather than deposited in the applicable
Lock-Box Account, and (c) to take any or all other actions permitted under the applicable Lock-Box
Agreement. The Seller hereby agrees that if the Administrator at any time takes any action set
forth in the preceding sentence, the Administrator shall have exclusive control of the proceeds
(including Collections) of all Pool Receivables and the Seller hereby further agrees to take any
other action that the Administrator may reasonably request to transfer such control. Any proceeds
of Pool Receivables received by the Seller or the Servicer thereafter shall be sent immediately to
the Administrator. The parties hereto hereby acknowledge that if at any time the Administrator
takes control of any Lock-Box Account, the Administrator shall not have any rights to the funds
therein in excess of the unpaid amounts due to the Administrator, the Purchasers or any other
Person hereunder, and the Administrator shall distribute or cause to be distributed such funds in
accordance with Section 4.2(b) and Article I (in each case as if such funds were
held by the Servicer thereunder).



     Section 4.4 Enforcement Rights.



     (a) At any time following the occurrence and during the continuation of a Termination Event:



24









 





          (i) the Administrator may direct the Obligors that payment of all amounts payable under
any Pool Receivable is to be made directly to the Administrator or its designee,



          (ii) the Administrator may instruct the Seller or the Servicer to give notice of the
Purchasers’ interest in Pool Receivables to each Obligor, which notice shall direct that
payments be made directly to the Administrator or its designee, and the Seller or the
Servicer, as the case may be, shall give such notice at the expense of the Seller or the
Servicer, as the case may be; provided, that if the Seller or the Servicer, as the
case may be, fails to so notify each Obligor, the Administrator (at the Seller’s or the
Servicer’s, as the case may be, expense) may so notify the Obligors, and



          (iii) the Administrator may request the Servicer to, and upon such request the Servicer
shall: (A) assemble all of the records necessary or desirable to collect the Pool
Receivables and the Related Security, and transfer or license to a successor Servicer the
use of all software necessary or desirable to collect the Pool Receivables and the Related
Security, and make the same available to the Administrator or its designee at a place
selected by the Administrator, and (B) segregate all cash, checks and other instruments
received by it from time to time constituting Collections in a manner acceptable to the
Administrator and, promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Administrator or its
designee.



     (b) The Seller hereby authorizes the Administrator, and irrevocably appoints the Administrator
as its attorney-in-fact with full power of substitution and with full authority in the place and
stead of the Seller, which appointment is coupled with an interest, to take any and all steps in
the name of the Seller and on behalf of the Seller necessary or desirable following the occurrence
and during the continuation of a Termination Event, in the determination of the Administrator, to
collect any and all amounts or portions thereof due under any and all Pool Assets, including
endorsing the name of the Seller on checks and other instruments representing Collections and
enforcing such Pool Assets. Notwithstanding anything to the contrary contained in this subsection,
none of the powers conferred upon such attorney-in-fact pursuant to the preceding sentence shall
subject such attorney-in-fact to any liability if any action taken by it shall prove to be
inadequate or invalid, nor shall they confer any obligations upon such attorney-in-fact in any
manner whatsoever.



     Section 4.5 Responsibilities of the Seller.



     (a) Anything herein to the contrary notwithstanding, the Seller shall: (i) perform all of its
obligations, if any, under the Contracts related to the Pool Receivables to the same extent as if
such Pool Receivables had not been transferred hereunder, and the exercise by the Administrator or
any Purchaser of their respective rights hereunder shall not relieve the Seller from such
obligations, and (ii) pay when due any taxes, including any sales taxes payable in connection with
the Pool Receivables and their creation and satisfaction. Neither the Administrator nor any
Purchaser shall have any obligation or liability with respect to any Pool



25









 




Asset, nor shall any of them be obligated to perform any of the obligations of the Seller,
Peabody or any Originator thereunder.




     (b) Peabody hereby irrevocably agrees that if at any time it shall cease to be the Servicer
hereunder, it shall act (if the then-current Servicer so requests) as the data-processing agent of
the Servicer and, in such capacity, Peabody shall conduct the data-processing functions of the
administration of the Receivables and the Collections thereon in substantially the same way that
Peabody conducted such data-processing functions while it acted as the Servicer.



     Section 4.6 Servicing Fee.



     (a) Subject to clause (b), the Servicer shall be paid a fee equal to 1.00% per
annum (the “Servicing Fee Rate”) of the daily average aggregate Outstanding Balance of
the Pool Receivables. Such fee shall be paid through the distributions contemplated by Section
1.6(d).



     (b) If the Servicer ceases to be Peabody or an Affiliate thereof, the servicing fee shall be
the greater of: (i) the amount calculated pursuant to clause (a), and (ii) an alternative
amount specified by the successor Servicer not to exceed 110% of the aggregate reasonable costs and
expenses incurred by such successor Servicer in connection with the performance of its obligations
as Servicer.



     Section 4.7 Authorization and Action of the Administrator.



          Each Purchaser hereby accepts the appointment of and irrevocably authorizes the Administrator
to take such action as agent on its behalf and to exercise such powers as are delegated to the
Administrator by the terms hereof, together with such powers as are reasonably incidental thereto.
The Administrator shall not be required to take any action which exposes such Administrator to
personal liability or which is contrary to this Agreement or applicable law. The appointment and
authority of the Administrator hereunder shall terminate upon the occurrence of the Final Payout
Date.



     Section 4.8 Nature of Administrator’s Duties.



          The Administrator shall have no duties or responsibilities except those expressly set forth in
this Agreement or in the other Transaction Documents. The duties of the Administrator shall be
mechanical and administrative in nature. The Administrator shall not have, by reason of this
Agreement, a fiduciary relationship in respect of any Purchaser. Nothing in this Agreement or any
of the Transaction Documents, express or implied, is intended to or shall be construed to impose
upon the Administrator any obligations in respect of this Agreement or any of the Transaction
Documents except as expressly set forth herein or therein. The Administrator shall not have any
duty or responsibility, either initially or on a continuing basis, to provide any Purchaser with
any credit or other information with respect to the Seller, any Originator, any Sub-Servicer or the
Servicer, whether coming into its possession before the date hereof or at any time or times
thereafter. If the Administrator seeks the consent or approval of the Purchasers to the taking or
refraining from taking any action hereunder, the Administrator shall send notice thereof to each
Purchaser. The Administrator shall promptly notify each



26









 




Purchaser any time that the Purchasers have instructed the Administrator to act or refrain
from acting pursuant hereto.




     Section 4.9 UCC Filings.



          Each of the Seller and the Purchasers expressly recognizes and agrees that the Administrator
may be listed as the assignee or secured party of record on the various UCC filings required to be
made hereunder in order to perfect the sale of the Purchased Assets from the Seller to the
Purchasers, that such listing shall be for administrative convenience only in creating a record or
nominee owner to take certain actions hereunder on behalf of the Purchasers and that such listing
will not affect in any way the status of the Purchasers as the owners of the Purchased Assets. In
addition, such listing shall impose no duties on the Administrator other than those expressly and
specifically undertaken in accordance with this Section 4.9.



     Section 4.10 Administrator’s Reliance, Etc.



          Neither the Administrator nor any of its directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it as Administrator under or in connection
with this Agreement except for its own gross negligence or willful misconduct. Without limiting
the foregoing, the Administrator: (i) may consult with legal counsel (including counsel for the
Seller), independent public accountants and other experts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants or experts; (ii) makes no warranty or representation to any Purchaser and
shall not be responsible to any Purchaser for any statements, warranties or representations made in
or in connection with this Agreement; (iii) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of this Agreement on
the part of the Seller, the Servicer, any Sub-Servicer or any Originator or to inspect the property
(including the books and records) of the Seller, the Servicer, any Sub-Servicer or any Originator;
(iv) shall not be responsible to any Purchaser for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement, or any other instrument or
document furnished pursuant hereto; and (v) shall incur no liability under or in respect of this
Agreement or any other Transaction Document by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by telex) believed by
it to be genuine and signed or sent by the proper party or parties. The Administrator may at any
time request instructions from the Purchasers with respect to any actions or approvals which by the
terms of this Agreement or of any of the other Transaction Documents the Administrator is permitted
or required to take or to grant, and if such instructions are promptly requested, the Administrator
shall be absolutely entitled to refrain from taking any action or to withhold any approval and
shall not be under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Transaction Documents until it shall have received such
instructions from the Issuer and the Majority LC Participants (or, where expressly required
hereunder, from the Required LC Participants or all of the LC Participants). Without limiting the
foregoing, neither the Issuer, the LC Bank nor any LC Participant shall have any right of action
whatsoever against the Administrator as a result of the Administrator acting or refraining from
acting under this Agreement or any of the other Transaction Documents in accordance with the
instructions of the Issuer and the Majority LC



27









 




Participants (or, where expressly required hereunder, the Required LC Participants or all of
the LC Participants).




     Section 4.11 Administrator and Affiliates.



          To the extent that the Administrator or any of its Affiliates is or shall become an LC
Participant hereunder, the Administrator or such Affiliate, in such capacity, shall have the same
rights and powers under this Agreement as would any other LC Participant hereunder and may exercise
the same as though it were not the Administrator. The Administrator and its Affiliates may
generally engage in any kind of business with the Seller, any Originator, Peabody, any Sub-Servicer
or the Servicer, any of their respective Affiliates and any Person who may do business with or own
securities of the Seller, any Originator, Peabody, any Sub-Servicer or the Servicer or any of their
respective Affiliates, all as if it were not the Administrator hereunder and without any duty to
account therefor to the Issuer or the LC Participants.



     Section 4.12 Purchase Decision.



          Each of the Purchasers acknowledges that it has, independently and without reliance upon the
Administrator, the LC Bank or any LC Participant and based on such documents and information as it
has deemed appropriate, made its own evaluation and decision to enter into this Agreement and, to
the extent it so determines, to issue Letters of Credit and/or to purchase the Purchased Assets
hereunder. Each Purchaser also acknowledges that it will, independently and without reliance upon
the Administrator, the LC Bank or any LC Participant, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in taking or not
taking action under this Agreement.



     Section 4.13 Indemnification.



          Each LC Participant agrees to indemnify the Administrator and the LC Bank (to the extent not
reimbursed by the Seller or the Servicer), ratably according to its Pro Rata Share, from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Administrator in any way relating to or arising out of this
Agreement or any action taken or omitted by the Administrator under this Agreement;
provided, however, that no LC Participant shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses,
or disbursements resulting from the Administrator’s or the LC Bank’s gross negligence or willful
misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction.
Without limiting the generality of the foregoing, each LC Participant agrees to reimburse the
Administrator and the LC Bank, ratably according to their Pro Rata Shares, promptly upon demand,
for any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrator or
the LC Bank in connection with the administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in respect of its rights
or responsibilities under, this Agreement.



28









 





     Section 4.14 Successor Administrator.



          The Administrator may resign at any time by giving thirty days’ notice thereof to the
Purchasers, the Seller and the Servicer. Upon any such resignation, the Issuer and the Majority LC
Participants shall have the right to appoint a successor Administrator approved by the Seller
(which approval will not be unreasonably withheld or delayed). If no successor Administrator shall
have been so appointed and accepted such appointment within 30 days after the retiring
Administrator’s giving of notice of resignation, then the retiring Administrator may appoint a
successor Administrator approved by the Seller (which approval will not be unreasonably withheld or
delayed), which successor Administrator shall be either (i) a commercial bank having a combined
capital and surplus of at least $250,000,000 or (ii) an Affiliate of such an institution Upon the
acceptance of any appointment as an Administrator hereunder by a successor Administrator, such
successor Administrator shall thereupon succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring Administrator, and the retiring Administrator shall
be discharged from any further duties and obligations under this Agreement. After any retiring
Administrator’s resignation hereunder as Administrator, the provisions of this Article IV
shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an
Administrator under this Agreement.



ARTICLE V.

MISCELLANEOUS




     Section 5.1 Amendments, Etc.



          No amendment or waiver of any provision of this Agreement or any other Transaction Document,
or consent to any departure by the Seller or the Servicer therefrom, shall be effective unless in a
writing signed by the Administrator, the LC Bank and the Majority LC Participants;
provided, however, that no such amendment shall (i) decrease the outstanding amount
of, or extend the repayment of or any scheduled payment date for the payment of, any Discount in
respect of any Portion of Capital or any fees owed to a Purchaser without the prior written consent
of such Purchaser; (ii) forgive or waive or otherwise excuse any repayment of Capital without the
prior written consent of each Purchaser affected thereby; (iii) increase the Commitment of any
Purchaser without its prior written consent; (iv) amend or modify the Pro Rata Share of any LC
Participant without its prior written consent; (v) amend or modify the provisions of this
Section 5.1 or the definition of “Majority LC Participants” or “Required LC Participants”
without the prior written consent of the LC Bank and all LC Participants; (vi) waive any
Termination Event arising from an Event of Bankruptcy with respect to Seller, the Servicer, any
Sub-Servicer or any Originator; (vii) without the prior written consent of all Purchasers affected
thereby, extend the Facility Termination Date or waive, amend or otherwise modify the definition of
Facility Termination Date; (viii) amend, modify or otherwise affect the rights or duties of the
Administrator or the LC Bank hereunder without the prior written consent of the Administrator or
the LC Bank, as the case may be; and (ix) amend, waive or modify any definition or provision
expressly requiring the consent of the Required LC Participants without the prior written consent
of the LC Bank and the Required LC Participants, and, in the case of any amendment, by the other
parties thereto; and then such amendment, waiver or consent shall



29









 




be effective only in the specific instance and for the specific purpose for which given. No
failure on the part of the Issuer or the Administrator to exercise, and no delay in exercising any
right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise of any other right.




     Section 5.2 Notices, Etc.



          All notices and other communications hereunder shall, unless otherwise stated herein, be in
writing (which shall include facsimile communication) and be sent or delivered to each party hereto
at its address set forth under its name on the signature pages hereof or at such other address as
shall be designated by such party in a written notice to the other parties hereto. Notices and
communications by facsimile shall be effective when sent (and shall be followed by hard copy sent
by first class mail), and notices and communications sent by other means shall be effective when
received.



     Section 5.3 Successors and Assigns; Assignability; Participations.



     (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; all covenants, promises and
agreements by or on behalf of any parties hereto that are contained in this Agreement shall bind
and inure to the benefit of their respective successors and assigns. The Seller may not assign or
transfer any of its rights or obligations hereunder without the written consent of the
Administrator, the LC Bank and the Required LC Participants. Each of the LC Participants, with the
prior written consent of the Administrator, the LC Bank and of the Seller (such consent not to be
unreasonably withheld), may assign any of its interests, rights and obligations hereunder to an
Eligible Assignee; provided, that (i) the Commitment amount to be assigned by any such LC
Participant hereunder shall not be less than $5,000,000 and (ii) prior to the effective date of any
such assignment, the assignee and assignor shall have executed and delivered to the Administrator
and the LC Bank an assignment and acceptance agreement in form and substance satisfactory to the
Administrator and the LC Bank. Upon the effectiveness of any such permitted assignment, (i) the
assignee thereunder shall, to the extent of the interests assigned to it, be entitled to the
interests, rights and obligations of an LC Participant under this Agreement and (ii) the assigning
LC Participant shall, to the extent of the interest assigned, be released from any further
obligations under this Agreement.



     (b) Notwithstanding anything contained in clause (a) of this Section 5.3, each
of the LC Bank and each LC Participant may sell participations in all or any part of any Investment
made by such LC Participant to another bank or other entity so long as (A) no such grant of a
participation shall, without the consent of the Seller, require the Seller to file a registration
statement with the Securities and Exchange Commission and (B) no holder of any such participation
shall be entitled to require such LC Participant to take or omit to take any action hereunder
except that such LC Participant may agree with such participant that, without such participant’s
consent, such LC Participant will not consent to an amendment, modification or waiver referred to
in clauses (i) through (vi) of Section 5.1. Any such participant shall not have any rights
hereunder or under the Transaction Documents except that such participant shall have rights under
Sections 1.9, 1.10 and 1.11 hereunder as if it were an LC Participant;
provided that



30









 




no such participant shall be entitled to receive any payment pursuant to such sections which
is greater in amount than the payment which the transferor LC Participant would have otherwise been
entitled to receive in respect of the participation interest so sold.




     (c) This Agreement and the Issuer’s rights and obligations herein (including ownership of the
Purchased Assets or an interest therein) shall be assignable, in whole or in part, by the Issuer
and its successors and assigns with the prior written consent of the Seller; provided,
however, that such consent shall not be unreasonably withheld; and provided
further, that no such consent shall be required if the assignment is made to PNC, any
Affiliate of PNC (other than a director or officer of PNC), any Liquidity Bank or other Program
Support Provider or any Person that is: (i) in the business of issuing Notes and (ii) associated
with or administered by PNC or any Affiliate of PNC. Each assignor may, in connection with the
assignment, disclose to the applicable assignee (that shall have agreed to be bound by Section
5.6) any information relating to the Servicer, the Seller or the Pool Receivables furnished to
such assignor by or on behalf of the Servicer, the Seller, the Issuer or the Administrator. The
Administrator shall give prior written notice of any assignment of the Issuer’s rights and
obligations (including ownership of the Purchased Assets to any Person other than a Program Support
Provider).



     (d) The Issuer may at any time grant to one or more banks or other institutions (each a
“Liquidity Bank”) party to the Liquidity Agreement, or to any other Program Support
Provider, participating interests in the Purchased Assets. In the event of any such grant by the
Issuer of a participating interest to a Liquidity Bank or other Program Support Provider, the
Issuer shall remain responsible for the performance of its obligations hereunder. The Seller
agrees that each Liquidity Bank or other Program Support Provider shall be entitled to the benefits
of Sections 1.9 and 1.10.



     (e) This Agreement and the rights and obligations of the Administrator hereunder shall be
assignable, in whole or in part, by the Administrator and its successors and assigns;
provided, that unless: (i) such assignment is to an Affiliate of PNC, (ii) it becomes
unlawful for PNC to serve as the Administrator or (iii) a Termination Event exists, the Seller has
consented to such assignment, which consent shall not be unreasonably withheld.



     (f) Except as provided in Section 4.1(d), none of the Seller, Peabody or the Servicer
may assign its rights or delegate its obligations hereunder or any interest herein without the
prior written consent of the Administrator.



     (g) Without limiting any other rights that may be available under applicable law, the rights
of the Issuer and each Liquidity Bank may be enforced through it or by its agents.



     Section 5.4 Costs, Expenses and Taxes.



     (a) In addition to the rights of indemnification granted under Sections 1.18 and
3.1, the Seller agrees to pay on demand (which demand shall be accompanied by documentation
thereof in reasonable detail) all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic internal audits by the Administrator of
Pool Receivables, provided that at any time when no Termination Event exists and is
continuing,



31









 




the Seller shall not be required to pay the costs and expenses of more than one such audit per
year) of this Agreement, the other Transaction Documents and the other documents and agreements to
be delivered hereunder (and all reasonable costs and expenses in connection with any amendment,
waiver or modification of any thereof), including: (i) Attorney Costs for the Administrator, the
Issuer and their respective Affiliates and agents with respect thereto and with respect to advising
the Administrator, the Issuer and their respective Affiliates and agents as to their rights and
remedies under this Agreement and the other Transaction Documents, and (ii) all reasonable costs
and expenses (including Attorney Costs), if any, of the Administrator, the Issuer and their
respective Affiliates and agents in connection with the enforcement of this Agreement and the other
Transaction Documents.




     (b) In addition, the Seller shall pay on demand any and all stamp and other taxes and fees
payable in connection with the execution, delivery, filing and recording of this Agreement or the
other documents or agreements to be delivered hereunder, and agrees to save each Indemnified Party
harmless from and against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.



     Section 5.5 No Proceedings; Limitation on Payments.



          Each of the Seller, Peabody, the Servicer, the Administrator, the LC Bank, each LC Participant
and each assignee of the Purchased Assets or any interest therein, and each Person that enters into
a commitment to purchase or make Investments in the Purchased Assets or any interest therein,
hereby covenants and agrees that it will not institute against, or join any other Person in
instituting against, the Issuer any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law,
for one year and one day after the latest maturing Note issued by the Issuer is paid in full. The
provision of this Section 5.5 shall survive any termination of this Agreement.



     Section 5.6 Confidentiality.



          Each of the Seller and the Servicer agrees to maintain the confidentiality of this Agreement
and the other Transaction Documents (and all drafts thereof) in communications with third parties
and otherwise; provided, that this Agreement and the other Transaction Documents may be
disclosed to: (a) third parties to the extent such disclosure is made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to the Administrator,
(b) the Seller’s legal counsel and auditors if they agree to hold it confidential, and (c) as
otherwise required by applicable law (including applicable SEC requirements); and provided,
further, however, that the Seller and the Servicer may disclose this Agreement and
the other Transaction Documents (other than the Fee Letter or any such Transaction Document that
discloses the fees set forth in the Fee Letter) to other financial institutions and their
affiliates in connection with a replacement of the receivables securitization facility represented
by this Agreement and the other Transaction Documents with a new receivables securitization
facility. The Seller and the Servicer shall cause any financial institution and its affiliates
described in the foregoing proviso to maintain the confidentiality of the Transaction Documents in
accordance with the Seller’s and the Servicer’s obligations under this Section 5.6;
provided, however, that any such financial institution and its affiliates may disclose this
Agreement and the other



32









 




Transaction Documents it receives in accordance with the immediately preceding sentence to
their legal counsel and auditors if they agree to hold them confidential and to any regulatory
authorities having jurisdiction over such financial institution or its affiliates. Unless
otherwise required by applicable law, each of the Administrator, the Issuer, the LC Bank and each
LC Participant agrees to maintain the confidentiality of non-public financial information regarding
Peabody and its Subsidiaries and Affiliates; provided, that such information may be
disclosed to: (i) third parties to the extent such disclosure is made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to Peabody, (ii) legal
counsel and auditors of the Issuer, the Administrator, the LC Bank or any LC Participant if they
agree to hold it confidential, (iii) the rating agencies rating the Notes, (iv) any Program Support
Provider or potential Program Support Provider (if they agree to hold it confidential), (v) any
placement agent placing the Notes and (vi) any regulatory authorities having jurisdiction over PNC,
the Issuer, the LC Bank, any LC Participant, any Program Support Provider or any Purchaser.




     Section 5.7 GOVERNING LAW AND JURISDICTION.



     (a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF ILLINOIS EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY
INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF
A JURISDICTION OTHER THAN THE STATE OF ILLINOIS.



     (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS; AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF
THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED
BY ILLINOIS LAW.



     Section 5.8 Execution in Counterparts.



          This Agreement may be executed in any number of counterparts, each of which, when so executed,
shall be deemed to be an original, and all of which, when taken together, shall constitute one and
the same agreement.



33









 





     Section 5.9 Survival of Termination; Non-Waiver.



          The provisions of Sections 1.9, 1.10, 1.21, 1.22, 3.1,
3.2, 4.10, 4.12, 4.13, 5.4, 5.5, 5.6,
5.7, 5.10 and 5.13 shall survive any termination of this Agreement. Neither
the Servicer nor any other Person may waive a breach of Exhibit III, Section 1(g)
of this Agreement for so long as the Notes are outstanding.



     Section 5.10 WAIVER OF JURY TRIAL.



          EACH OF THE PARTIES HERETO WAIVES THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR
OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO
FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.



     Section 5.11 Entire Agreement.



          This Agreement and the other Transaction Documents embody the entire agreement and
understanding between the parties hereto, and supersede all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject matter hereof and
thereof, except for any prior arrangements made with respect to the payment by the Issuer of (or
any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by
or on behalf of the Seller, the Servicer and the Administrator.



     Section 5.12 Headings.



          The captions and headings of this Agreement and any Exhibit, Schedule or Annex hereto are for
convenience of reference only and shall not affect the interpretation hereof or thereof.



     Section 5.13 Issuer’s Liabilities.



          The obligations of the Issuer under the Transaction Documents are solely the corporate
obligations of the Issuer. No recourse shall be had for any obligation or claim arising out of or
based upon any Transaction Document against any stockholder, employee, officer, director or
incorporator of the Issuer; provided, however, that this Section shall not relieve
any



34









 




such Person of any liability it might otherwise have for its own gross negligence or willful
misconduct.




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




35









 





     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective
officers thereunto duly authorized, as of the date first above written.



	 	 	 	 	 
	 	P&L RECEIVABLES COMPANY, LLC,

as Seller

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market Street
	 
	 	 	 	St. Louis, MO 63101
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






	 	 	 	 	 
	 	PEABODY ENERGY CORPORATION,

as initial Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market Street
	 
	 	 	 	St. Louis, MO 63101
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






Amended and Restated

Receivables Purchase Agreement




S-1









 






	 	 	 	 	 
	 	ARCLAR COMPANY, LLC,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr.	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market Street
	 
	 	 	 	St. Louis, MO 63101
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	341-342-7740






	 	 	 	 	 
	 	PEABODY MIDWEST MINING, LLC,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market Street
	 
	 	 	 	St. Louis, MO 63101
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	341-342-7740






Amended and Restated

Receivables Purchase Agreement




S-2









 






	 	 	 	 	 
	 	TWENTYMILE COAL, LLC,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market Street
	 
	 	 	 	St. Louis, MO 63101
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	341-342-7740






	 	 	 	 	 
	 	CABALLO COAL, LLC ,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 




	 	 	 	 	 
	 
	 	Address:	 	701 Market St.
	 
	 	 	 	St. Louis, MO 63101-1826
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






Amended and Restated

Receivables Purchase Agreement





S-3









 








	 	 	 	 	 
	 	COALSALES II, LLC,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market St.
	 
	 	 	 	St. Louis, MO 63101-1826
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






Amended and Restated

Receivables Purchase Agreement




S-4









 








	 	 	 	 	 
	 	PEABODY WESTERN COAL COMPANY,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market St.
	 
	 	 	 	St. Louis, MO 63101-1826
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






Amended and Restated

Receivables Purchase Agreement




S-5









 








	 	 	 	 	 
	 	POWDER RIVER COAL, LLC

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market St.
	 
	 	 	 	St. Louis, MO 63101-1826
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






	 	 	 	 	 
	 	PEABODY HOLDING COMPANY, LLC,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market St.
	 
	 	 	 	St. Louis, MO 63101-1825
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






Amended and Restated

Receivables Purchase Agreement





S-6












 





	 	 	 	 	 
	 	COALTRADE, LLC,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market St.
	 
	 	 	 	St. Louis, MO 63101-1825
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






	 	 	 	 	 
	 	PEABODY COALTRADE INTERNATIONAL (CTI), LLC,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market St.
	 
	 	 	 	St. Louis, MO 63101-1825
	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






Amended and Restated

Receivables Purchase Agreement





S-7









 








	 	 	 	 	 
	 	COALSALES, LLC,

as Sub-Servicer

 	 
	 	By:  	/s/ Walter L. Hawkins, Jr.
 	 
	 	 	Name:  	Walter L. Hawkins, Jr. 	 
	 	 	Title:  	Sr. Vice President and Treasurer 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	701 Market St.
	 
	 	 	 	St. Louis, MO 63101-1825
	 
	 	 	 	 
	 
	 	Attention:	 	Treasurer
	 
	 	Telephone:	 	314-342-3400
	 
	 	Facsimile:	 	314-342-7740






Amended and Restated

Receivables Purchase Agreement




S-8









 








	 	 	 	 	 
	 	MARKET STREET FUNDING LLC,

as Issuer

 	 
	 	By:  	/s/ Doris J. Hearn
 	 
	 	 	Name:  	Doris J. Hearn 	 
	 	 	Title:  	Vice President 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	Market Street Funding LLC
	 
	 	 	 	c/o AMACAR Group, LLC
	 
	 	 	 	6525 Morrison Boulevard, Suite 318
	 
	 	 	 	Charlotte, NC  28211
	 
	 	 	 	 
	 
	 	Attention:	 	Doug Johnson
	 
	 	Telephone:	 	704-365-0569
	 
	 	Facsimile:	 	704-365-1362
	 
	 	 	 	 
	 
	 	With a copy to:	 	 
	 
	 	 	 	 
	 	 	PNC Bank, National Association
	 	 	One PNC Plaza, 26th Floor
	 	 	249 Fifth Avenue
	 	 	Pittsburgh, PA 15222-2707
	 	 	Attention: William Falcon
	 
	 	Telephone:	 	412-762-5442
	 
	 	Facsimile:	 	412-762-9184






Amended and Restated

Receivables Purchase Agreement




S-9









 








	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION,

as Administrator

 	 
	 	By:  	/s/ William Falcon
 	 
	 	 	Name:  	William Falcon 	 
	 	 	Title:  	Vice President 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	PNC Bank, National Association
	 
	 	 	 	One PNC Plaza, 26th Floor
	 
	 	 	 	249 Fifth Avenue
	 
	 	 	 	Pittsburgh, PA  15222-2707
	 
	 	Attention:	 	William Falcon
	 
	 	Telephone:	 	412-762-5442
	 
	 	Facsimile:	 	412-762-9184






	 	 	 	 	 
	 	LC BANK/LC PARTICIPANTS:



PNC BANK, NATIONAL ASSOCIATION,

as the LC Bank and as an LC Participant

 	 
	 	By:  	/s/ Richard Munsick
 	 
	 	 	Name:  	Richard Munsick 	 
	 	 	Title:  	Senior Vice President 	 
	 



	 	 	 	 	 
	 
	 	Address:	 	PNC Bank, National Association
	 
	 	 	 	500 First Avenue
	 
	 	 	 	Third Floor
	 
	 	 	 	Pittsburgh, PA  15219
	 
	 	Attention:	 	Richard Munsick
	 
	 	Telephone:	 	412-762-4299
	 
	 	Facsimile:	 	412-762-9184
	 
	 	 	 	 
	 	 	Commitment: $275,000,000
	 	 	Pro-Rata Share: 100%






Amended and Restated

Receivables Purchase Agreement




S-10









 








EXHIBIT I

DEFINITIONS




     As used in the Agreement (including its Exhibits, Schedules and Annexes), the following terms
shall have the following meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined). Unless otherwise indicated, all Section, Annex, Exhibit and
Schedule references in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to the
Agreement.



     “Adjusted LC Participation Amount” means, at any time, the LC Participation Amount
less the amount of cash collateral held in the LC Collateral Account at such time.



     “Administration Account” means the account number 1002422076 of the Administrator
maintained at the office of PNC at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania
15222-2707, or such other account as may be so designated in writing by the Administrator to the
Servicer.



     “Administrator” has the meaning set forth in the preamble to the Agreement.



     “Adverse Claim” means a lien, security interest or other charge or encumbrance, or any
other type of preferential arrangement; it being understood that any thereof in favor of, or
assigned to, the Administrator (for the benefit of the Purchasers) shall not constitute an Adverse
Claim.



     “Affected Person” has the meaning set forth in Section 1.9 of the Agreement.



     “Affiliate” means, as to any Person: (a) any Person that, directly or indirectly, is
in control of, is controlled by or is under common control with such Person, or (b) who is a
director or officer: (i) of such Person or (ii) of any Person described in clause (a),
except that, with respect to the Issuer, Affiliate shall mean the holder(s) of its capital stock.
For purposes of this definition, control of a Person shall mean the power, direct or indirect: (x)
to vote 25% or more of the securities having ordinary voting power for the election of directors or
managers of such Person, or (y) to direct or cause the direction of the management and policies of
such Person, in either case whether by ownership of securities, contract, proxy or otherwise.



     “Agreement” has the meaning set forth in the preamble to the Agreement.



     “Alternate Rate” for any Settlement Period for any Portion of Capital means an
interest rate per annum equal to: (a) 3.25% per annum above the Euro-Rate for such Settlement
Period or, in the sole discretion of the applicable Purchaser, (b) the Base Rate for such
Settlement Period; provided, that the “Alternate Rate” for any day while a Termination
Event exists shall be an interest rate equal to the greater of (i) 3.00% per annum above the Base
Rate in effect on such day and (ii) the “Alternate Rate” as calculated in clause (a) above.



     “Attorney Costs” means and includes all reasonable fees and disbursements of any law
firm or other external counsel.



I-1









 





     “Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. §
101, et seq.), as amended from time to time.



     “Base Rate” means, for any day, a fluctuating interest rate per annum as shall be in
effect from time to time, which rate shall be at all times equal to the higher of:




     (a) the rate of interest in effect for such day as publicly announced from time to time
by PNC in Pittsburgh, Pennsylvania as its “prime rate.” Such “prime rate” is set by PNC
based upon various factors, including PNC’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such announced rate, and




     (b) 0.50% per annum above the latest Federal Funds Rate.



     “Base Rate Portion of Capital” shall mean a Portion of Capital, the Discount with
respect to which is calculated at a per annum rate based on the interest rate
determined by reference to the Base Rate.



     “BBA” means the British Bankers’ Association.



     “Benefit Plan” means any employee benefit pension plan as defined in Section 3(2) of
ERISA in respect of which the Seller, any Originator, Peabody or any ERISA Affiliate is, or at any
time during the immediately preceding six years was, an “employer” as defined in Section 3(5) of
ERISA.



     “Business Day” means any day (other than a Saturday or Sunday) on which: (a) banks
are not authorized or required to close in New York City, New York, or Pittsburgh, Pennsylvania and
(b) if this definition of “Business Day” is utilized in connection with the Euro-Rate, dealings are
carried out in the London interbank market.



     “Capital” means the aggregate amounts paid to (or for the benefit of) the Seller in
respect of Investments by the Purchasers (including, without limitation, pursuant to Section
1.4(f)), as reduced from time to time by Collections distributed and applied on account of such
Capital pursuant to Section 1.6(d) of the Agreement; provided, that if such Capital
shall have been reduced by any distribution and thereafter all or a portion of such distribution is
rescinded or must otherwise be returned for any reason, such Capital shall be increased by the
amount of such rescinded or returned distribution as though it had not been made.



     “Change in Control” means (a) Peabody ceases to own, directly or indirectly, 100% of
the membership interests of the Seller free and clear of all Adverse Claims; (b) a “Change in
Control” (as defined in the Senior Notes Indenture as in effect on September 30, 2005); (c) with
respect to any Material Originator, Peabody ceases to be the beneficial owner (as defined in Rules
13(d)-3 and 13(d)-5 under the Securities Exchange Act of 1934, as amended), directly or indirectly,
of at least 75% of the outstanding shares of voting securities of such Material Originator without
the prior written consent of the Administrator, such consent not to be unreasonably withheld; or
(d) Peabody ceases to have beneficial ownership (as defined in clause (c)), directly or indirectly,
of 100% of the outstanding shares of voting securities of Peabody Holding Company, LLC



I-2









 





     “Closing Date” means December 15, 2009.



     “Collateral” shall have the meaning set forth in Section 1.1 of the Sale
Agreement.



     “Collections” means, with respect to any Pool Receivable: (a) all funds that are
received by any Originator, Peabody, the Seller or the Servicer in payment of any amounts owed in
respect of such Receivable (including purchase price, finance charges, interest and all other
charges), or applied to amounts owed in respect of such Receivable (including insurance payments
and net proceeds of the sale or other disposition of repossessed goods or other collateral or
property of the related Obligor or any other Person directly or indirectly liable for the payment
of such Pool Receivable and available to be applied thereon), (b) all amounts deemed to have been
received pursuant to Section 1.6(e) of the Agreement and (c) all other proceeds of such
Pool Receivable.



     “Commitment” shall mean, as to any LC Participant, its commitment to make
participation advances and/or share in draws, in each case, under Letters of Credit up to that
dollar amount set forth as the “Commitment” under its name on the signature pages to the Agreement
(or, as applicable, set forth in any amendment thereto or set forth in any assignment agreement
entered into pursuant to Section 5.3 as such dollar amount may be reduced pursuant to
Section 1.1(b) of the Agreement, and “Commitments” shall mean the aggregate
commitments of the LC Participants to make participating advances in the Letters of Credit up to
the Purchase Limit (or, if less, the amount permitted under Section 1.1(a)).



     “Company Note” has the meaning set forth in Section 3.1 of the Sale Agreement.



     “Concentration Percentage” means: (a) for any Group A Obligor, 15%, (b) for any Group
B Obligor, 7.5%, (c) for any Group C Obligor 5.0% and (d) for any Group D Obligor, 3.0%.



     “Concentration Reserve” means the product of (a) the Capital plus the LC Participation
Amount, and (b)(i) the Concentration Reserve Percentage divided by (ii) 1 minus the Concentration
Reserve Percentage.



     “Concentration Reserve Percentage” means the (a) largest of the following (i) the sum
of the five (5) largest Group D Obligor Receivables balances (up to the Concentration Percentage
for each Obligor), (ii) the sum of the three (3) largest Group C Obligor Receivables balances (up
to the Concentration Percentage for each Obligor), (iii) the sum of the two (2) largest Group B
Obligor Receivables balances (up to the Concentration Percentage for each Obligor), and (iv) the
one (1) largest Group A Obligor Receivables balance (up to the Concentration Percentage for such
Obligor), divided by (b) the Eligible Receivables.



     “Contract” means, with respect to any Receivable, any and all contracts, instruments,
agreements, leases, invoices, notes or other writings pursuant to which such Receivable arises or
that evidence such Receivable or under which an Obligor becomes or is obligated to make payment in
respect of such Receivable.



I-3









 





     “Contribution Agreement” means that certain Contribution Agreement dated as of
February 20, 2002 by and between the Contributor and the Seller, as the same may be amended from
time to time.



     “Contribution Indemnified Amounts” has the meaning set forth in Section 7.1 of
the Contribution Agreement.



     “Contribution Indemnified Party” has the meaning set forth in Section 7.1 of
the Contribution Agreement.



     “Contribution Termination Date” has the meaning set forth in Section 1.3 of
the Contribution Agreement.



     “Contribution Termination Event” has the meaning set forth in Section 6.1 of
the Contribution Agreement.



     “Contributor” means Peabody Energy Corporation, a Delaware corporation.



     “CP Rate” for any Settlement Period for any Portion of Capital means a rate calculated
by the Administrator equal to: (a) the rate (or if more than one rate, the weighted average of the
rates) at which Notes of the Issuer on each day during such period have been outstanding;
provided, that if such rate(s) is a discount rate(s), then the CP Rate shall be the rate
(or if more than one rate, the weighted average of the rates) resulting from converting such
discount rate(s) to an interest-bearing equivalent rate plus (b) the commissions and charges
charged by such placement agent or commercial paper dealer with respect to such Notes, expressed as
a percentage of the face amount of such Notes and converted to an interest-bearing equivalent rate
per annum. Notwithstanding the foregoing, the “CP Rate” for any day while a Termination Event
exists shall be an interest rate equal to the greater of (a) 3.00% above the Base Rate in effect on
such day and (b) the Alternate Rate as calculated in the definition thereof.



     “Credit Agreement” means that certain Third Amended and Restated Credit Agreement,
dated as of September 15, 2006, among Peabody, as borrower, the several lenders from time to time
parties thereto, Bank of America Securities, LLC and Citigroup Global Markets, Inc., as arrangers,
the various other parties thereto, and Bank of America, N.A., as administrative agent, and shall
include, except as otherwise expressly provided herein, such agreement as amended, restated and/or
otherwise modified from time to time in accordance with the terms thereof, and any extension,
replacement, substitution, and/or refinancing thereof.



     “Credit and Collection Policy” means, as the context may require, those receivables
credit and collection policies and practices of the Originators in effect on the date of the
Agreement and described in Schedule I to the Agreement, as modified in compliance with the
Agreement.



     “Cut-off Date” has the meaning set forth in the Sale Agreement.



     “Days’ Sales Outstanding” means, at any time, an amount computed as of the last day of
each calendar month equal to: (a) the average of the Outstanding Balance of all Pool Receivables
as of the last day of each of the three most recent calendar months ended on the last



I-4









 





day of such
calendar month divided by (b) (i) the aggregate credit sales made by the Originators during the
three calendar months ended on or before the last day of such calendar month divided by (ii) 90.




     “Debt” means: (a) indebtedness for borrowed money, (b) obligations evidenced by
bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase
price of property or services, (d) obligations as lessee under leases that shall have been or
should be, in accordance with generally accepted accounting principles, recorded as capital leases,
and (e) obligations under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in clauses (a)
through (d) above.



     “Defaulted Receivable” means a Receivable:




     (a) as to which any payment, or part thereof, remains unpaid for more than 60
days from the due date for such payment (which shall be determined without regard to
any credit memos or credit balances available to the Obligor); provided,
that, any Receivable the related Obligor of which is TVA that would
otherwise have become a Defaulted Receivable pursuant to this clause (a)
during the calendar month of March 2007 shall not be deemed a Defaulted Receivable,
or




     (b) without duplication (i) as to which an Insolvency Proceeding shall have
occurred with respect to the Obligor thereof or any other Person obligated thereon
or owning any Related Security with respect thereto, or (ii) that has been written
off the Seller’s books as uncollectible.



     “Default Ratio” means the ratio (expressed as a percentage and rounded to the nearest
1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each calendar month
by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables that became Defaulted
Receivables during such month (other than Receivables that became Defaulted Receivables as a result
of an Event of Bankruptcy with respect to the Obligor thereof during such month), by (b) the
aggregate credit sales made by the Originators during the month that is three calendar months
before such month.



     “Deferred Purchase Price” has the meaning set forth in Section 1.4(c) of the
Agreement.



     “Delinquency Ratio” means the ratio (expressed as a percentage and rounded to the
nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each
calendar month by dividing: (a) the aggregate Outstanding Balance of all Pool Receivables that
were Delinquent Receivables on such day by (b) the aggregate Outstanding Balance of all Pool
Receivables on such day.



     “Delinquent Receivable” means a Receivable as to which any payment, or part thereof,
remains unpaid for more than 60 days from the due date for such payment.



     “Dilution Horizon” means, for any calendar month, the ratio (expressed as a percentage
and rounded to the nearest 1/100th of 1%, with 5/l000th of 1% rounded upward) computed as of



I-5









 





the
last day of such calendar month of: (a) the aggregate credit sales made by the Originators during
the two most recent calendar months to (b) the Net Receivables Pool Balance at the last day of the
most recent calendar month.




     “Dilution Ratio” means the ratio (expressed as a percentage and rounded to the nearest
1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each calendar
month by dividing: (a) the aggregate amount of payments required to be made by the Seller pursuant
to Section 1.6(e)(i) of the Agreement during such calendar month by (b) the aggregate
credit sales made by the Originators during the month that is one month prior to the current month.



     “Dilution Reserve” means, on any date, an amount equal to: (a) the sum of the Capital
plus the LC Participation Amount at the close of business of the Seller on such date multiplied by
(b) (i) the Dilution Reserve Percentage on such date, divided by (ii) 100% minus the
Dilution Reserve Percentage on such date.



     “Dilution Reserve Percentage” means on any date, the product of (i) the Dilution
Horizon multiplied by (ii) the sum of (x) 2.25 times the average of the Dilution
Ratio for the twelve most recent calendar months and (y) the Spike Factor.



     “Discount” means:




     (a) for the Portion of Capital for any Settlement Period to the extent the Issuer will
be funding such Portion of Capital during such Settlement Period through the issuance of
Notes:



CPR x C x ED/360




     (b) for the Portion of Capital for any Settlement Period to the extent the Issuer will
not be funding such Portion of Capital during such Settlement Period through the issuance of
Notes or, to the extent the LC Bank and/or any LC Participant has made an Investment in
connection with any drawing under a Letter of Credit, which Investment accrues Discount
pursuant to Section 1.4(f) of the Agreement:



AR x C x ED/Year + TF



     where:



	 	 	 	 	 
	 	AR

	=
	 	the Alternate Rate for the Portion of Capital for such
Settlement Period,
	 
	 	 	 	 
	 	C

	=
	 	the Portion of Capital during such Settlement Period,
	 
	 	 	 	 
	 	CPR

	=
	 	the CP Rate for the Portion of Capital for such Settlement
Period,
	 
	 	 	 	 
	 	ED

	=
	 	the actual number of days during such Settlement Period,






I-6









 






	 	 	 	 	 
	 	Year

	=
	 	if such Portion of Capital is funded based upon: (i) the
Euro-Rate, 360 days, and (ii) the Base Rate, 365 or 366 days, as applicable,
and
	 
	 	 	 	 
	 	TF

	=
	 	the Termination Fee, if any, for the Portion of Capital for
such Settlement Period;






provided, that no provision of the Agreement shall require the payment or permit the
collection of Discount in excess of the maximum permitted by applicable law; and provided
further, that Discount for the Portion of Capital shall not be considered paid by any
distribution to the extent that at any time all or a portion of such distribution is rescinded or
must otherwise be returned for any reason.




     “Drawing Date” has the meaning set forth in Section 1.16 of the Agreement.



     “Eligible Assignee” means any bank or financial institution acceptable to the LC Bank
and the Administrator.



     “Eligible Receivable” means, at any time, a Pool Receivable:




     (a) the Obligor of which is (i) a United States resident or if such Obligor is not a
United States resident: (A) such Pool Receivable must result from goods sold and shipped
from the Originator in the United States and payment for such goods must be denominated and
payable only in U.S. dollars and payable to an Originator at a Lock-Box Account, (B) if such
Obligor is a resident of Canada, the total of all Eligible Receivables the Obligors of which
are Canadian residents does not exceed 3% (or, if at any time the foreign currency rating of
Canada falls below A by Standard & Poor’s or A2 by Moody’s, 2%) of all Eligible Receivables
and (C) if such Obligor is neither a U.S. nor a Canadian resident, the total of all Eligible
Receivables the Obligors of which are both non-U.S. and non-Canadian residents does not
exceed 5% of all Eligible Receivables, (ii) not a government or a governmental subdivision,
affiliate or agency, except that up to 3% of all Eligible Receivables may consist of
Receivables the Obligors of which are governments, governmental subdivisions, affiliates or
agencies, provided, however, that TVA shall not be subject to the
restrictions of this subsection (ii), (iii) not subject to any action of the type described
in paragraph (f) of Exhibit V to the Agreement, (iv) not an Affiliate of Peabody or
any other Originator, and (v) not an Obligor as to which the Administrator, in its
reasonable business judgment, has notified the Seller that such Obligor is not acceptable,




     (b) that is denominated and payable only in U.S. dollars in the United States to the
Originator at a Lockbox Account,




     (c) that does not have a stated maturity which is more than 60 days after the original
invoice date of such Receivable,




     (d) that arises under a duly authorized Contract for the sale and delivery of goods or
services in the ordinary course of the Originator’s business,



I-7









 






     (e) that arises under a duly authorized Contract that is in full force and effect and
that is a legal, valid and binding obligation of the related Obligor, enforceable against
such Obligor in accordance with its terms,




     (f) that conforms in all material respects with all applicable laws, rulings and
regulations in effect,




     (g) that is not the subject of any asserted dispute, offset, hold back defense, Adverse
Claim or other claim, provided, that, with respect to any Receivable which is subject to any
such a claim, the amount of such Receivable which shall be treated as an Eligible Receivable
shall equal the excess of the amount of such Receivable over the amount of such claim
asserted by or available to the account party or other obligor,




     (h) that satisfies all applicable requirements of the applicable Credit and Collection
Policy,




     (i) that has not been modified, waived or restructured since its creation, except as
permitted pursuant to Section 4.2 of the Agreement,




     (j) in which the Seller owns good and marketable title, free and clear of any Adverse
Claims, and that is freely assignable by the Seller (including without any consent of the
related Obligor),




     (k) for which the Administrator (on behalf of the Purchasers) shall have a valid and
enforceable ownership or security interest and a valid and enforceable first priority
perfected ownership or security interest therein and in the Related Security and Collections
with respect thereto, in each case free and clear of any Adverse Claim,




     (l) that constitutes an account as defined in the UCC, and that is not evidenced by
instruments or chattel paper,




     (m) that is neither a Defaulted Receivable nor a Delinquent Receivable,




     (n) for which neither the Originator thereof, the Seller nor the Servicer has
established any offset arrangements with the related Obligor,




     (o) for which Defaulted Receivables of the related Obligor do not exceed 25% of the
Outstanding Balance of all such Obligor’s Receivables,




     (p) that represents amounts earned and payable by the Obligor that are not subject to
the performance of additional services by the Originator thereof,




     (q) that is not a Receivable considered to be a “quality accrual” (as reported on the
monthly Information Package), except that up to 5% of Eligible Receivables may be “quality
accruals”, and




     (r) the Obligor of which is not the Mohave Project.



I-8









 





     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections of ERISA also
refer to any successor sections.



     “ERISA Affiliate” means: (a) any corporation that is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as the
Seller, any Originator or Peabody, (b) a trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Internal Revenue Code) with the Seller,
any Originator or Peabody, or (c) a member of the same affiliated service group (within the meaning
of Section 414(m) of the Internal Revenue Code) as the Seller, any Originator, any corporation
described in clause (a) or any trade or business described in clause (b).



     “Euro-Rate” means with respect to any Settlement Period the interest rate per annum
determined by the Administrator by dividing (the resulting quotient rounded upwards, if necessary,
to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Administrator in
accordance with its usual procedures (which determination shall be conclusive absent manifest
error) to be the average of the London interbank market offered rates for U.S. dollars quoted by
the BBA as set forth on Dow Jones Markets Service (formerly known as Telerate) (or appropriate
successor or, if the BBA or its successor ceases to provide display page 3750 (or such other
display page on the Dow Jones Markets Service system as may replace display page 3750) at or about
11:00 a.m. (London time) on the Business Day which is two (2) Business Days prior to the first day
of such Settlement Period for an amount comparable to the Portion of Capital to be funded at the
Alternate Rate and based upon the Euro-Rate during such Settlement Period by (ii) a number equal to
1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the following
formula:



	 	 	 	 	 
	Euro-Rate

	 	=
	 	Average of London interbank offered rates quoted
 by BBA
as shown on Dow Jones Markets Service

display page 3750 or appropriate
successor               
	 

	 	 	 	            1.00 – Euro-Rate Reserve Percentage






where “Euro-Rate Reserve Percentage” means, the maximum effective percentage in effect on
such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor)
for determining the reserve requirements (including without limitation, supplemental, marginal, and
emergency reserve requirements) with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities”). The Euro-Rate shall be adjusted with respect to any Portion
of Capital funded at the Alternate Rate and based upon the Euro-Rate that is outstanding on the
effective date of any change in the Euro-Rate Reserve Percentage as of such effective date. The
Administrator shall give prompt notice to the Seller of the Euro-Rate as determined or adjusted in
accordance herewith (which determination shall be conclusive absent manifest error).




     “Event of Bankruptcy” means (a) any case, action or proceeding before any court or
other governmental authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors or (b) any general assignment for the
benefit of creditors of a Person or any composition, marshalling of assets for creditors of a
Person, or other similar arrangement in respect of its creditors generally or any substantial



I-9









 





portion of its creditors; in each of cases (a) and (b) undertaken under U.S. Federal, state or
foreign law, including the Bankruptcy Code.




     “Excess Concentration” means the sum of the amounts by which the Outstanding Balance
of Eligible Receivables of each Obligor then in the Receivables Pool exceeds an amount equal
to: (a) the Concentration Percentage for such Obligor multiplied by (b) the Outstanding
Balance of all Eligible Receivables then in the Receivables Pool.



     “Facility Termination Date” means the earliest to occur of: (a) May 12, 2012, subject
to any extension thereof pursuant to Section 1.12, (b) the date determined pursuant to
Section 2.2 of the Agreement, (c) the date the Purchase Limit reduces to zero pursuant to
Section 1.1(b) of the Agreement, (d) the date on which the commitments of the purchasers
under the Liquidity Agreement terminate and (e) the Issuer shall fail to cause the amendment or
modification of any Transaction Document or related opinion as required by Moody’s or Standard and
Poor’s, and such failure shall continue for 30 days after such amendment is initially requested.



     “Federal Funds Rate” means, for any day, the per annum rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, “H.15(519)”) for such day opposite the caption
“Federal Funds (Effective).” If on any relevant day such rate is not yet published in H. 15(519),
the rate for such day will be the rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor, the “Composite
3:30 p.m. Quotations”) for such day under the caption “Federal Funds Effective Rate.” If on any
relevant day the appropriate rate is not yet published in either H.15(519) or the Composite 3:30
p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the
Administrator of the rates for the last transaction in overnight Federal funds arranged before 9:00
a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in
New York City selected by the Administrator.



     “Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or
any entity succeeding to any of its principal functions.



     “Fee Letter” has the meaning set forth in Section 1.7 of the Agreement.



     “Final Payout Date” means the date on or after the Facility Termination Date on which
(i) the Purchase Limit has been reduced to zero ($0), (ii) the Capital has been reduced to zero
($0), (iii) all accrued Discount has been paid in full, (iv) all accrued fees under the Fee Letter
have been paid in full, (v) the Adjusted LC Participation Amount has been reduced to zero ($0) and
(vi) all other amounts owing by the Seller and the Servicer to the Administrator, the Purchasers,
the Indemnified Parties and the other Affected Persons hereunder and under the other Transaction
Documents have been paid in full.



     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any
body or entity exercising executive, legislative, judicial, regulatory or administrative functions
of



I-10









 





or pertaining to government, including any court, and any Person owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.




     “Group A Obligor” means any Obligor with a short-term rating of at least: (a) “A1” by
Standard & Poor’s, or if such Obligor does not have a short-term rating from Standard & Poor’s, a
rating of “A+” or better by Standard & Poor’s on its long-term senior unsecured and uncredit-
enhanced debt securities, and (b) “P-1” by Moody’s, or if such Obligor does not have a
short-term rating from Moody’s, “Al” or better by Moody’s on its long-term senior unsecured and
uncredit-enhanced debt securities, and any Special Group A Obligor.



     “Group B Obligor” means an Obligor, not a Group A Obligor, with a short-term rating of
at least: (a) “A-2” by Standard & Poor’s, or if such Obligor does not have a short-term rating
from Standard & Poor’s, a rating of “BBB+” to “A” by Standard & Poor’s on its long-term senior
unsecured and uncredit-enhanced debt securities, and (b) “P-2” by Moody’s, or if such
Obligor does not have a short-term rating from Moody’s, “Baal” to “A2” by Moody’s on its long-term
senior unsecured and uncredit-enhanced debt securities, and any Special Group B Obligor.



     “Group C Obligor” means an Obligor, not a Group A Obligor or a Group B Obligor, with a
short-term rating of at least: (a) “A-3” by Standard & Poor’s, or if such Obligor does not have a
short-term rating from Standard & Poor’s, a rating of “BBB-” to “BBB” by Standard & Poor’s on its
long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-3” by Moody’s,
or if such Obligor does not have a short-term rating from Moody’s, “Baa3” to “Baa2” by Moody’s on
its long-term senior unsecured and uncredit-enhanced debt securities, and any Special Group C
Obligor.



     “Group D Obligor” means any Obligor that is not a Group A Obligor, Group B Obligor or
Group C Obligor, and any Special Group D Obligor.



     “Indemnified Amounts” has the meaning set forth in Section 3.1 of the
Agreement.



     “Indemnified Party” has the meaning set forth in Section 3.1 of the Agreement.



     “Independent Director” has the meaning set forth in paragraph 3(c) of
Exhibit IV to the Agreement.



     “Information Package” means a report, in substantially the form of Annex A to
the Agreement, furnished to the Administrator pursuant to the Agreement.



     “Insolvency Proceeding” means: (a) any case, action or proceeding before any court or
other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors of a Person, composition, marshaling of assets for creditors of a Person, or
other, similar arrangement in respect of its creditors generally or any substantial portion of its
creditors, in each of cases (a) and (b) undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.



I-11









 





     “Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
February 20, 2002, by and between the Administrator and Bank One, NA, in its capacity as
administrative agent under the Credit Agreement, as such Intercreditor Agreement may be amended,
restated and/or otherwise modified from time to time in accordance with the terms thereof.



     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections of the
Internal Revenue Code also refer to any successor sections.



     “Investment” has the meaning set forth in Section 1.1(a) of the Agreement.



     “Investment Date” means the date on which an Investment or a Reinvestment is made
pursuant to this Agreement.



     “Investment Notice” has the meaning set forth in Section 1.2(a) of this
Agreement.



     “ISP98 Rules” has the meaning set forth in Section 1.14 of the Agreement.



     “Issuer” has the meaning set forth in the preamble to the Agreement.



     “LC Bank” has the meaning set forth in the preamble to the Agreement.



     “LC Collateral Account” means the account designated as the LC Collateral Account
established and maintained by the Administrator (for the benefit of the LC Bank and the LC
Participants), or such other account as may be so designated as such by the Administrator.



     “LC Commitment” means, the “Commitment” of each LC Participant party hereto as set
forth under its name on the signature pages to the Agreement or as set forth in any assignments
agreement pursuant to which it became a party hereto.



     “LC Participant” has the meaning set forth in the preamble to the Agreement.



     “LC Participation Amount” shall mean, at any time, the then aggregate face amount of
the outstanding Letters of Credit.



     “Letter of Credit” shall mean any stand-by letter of credit issued by the LC Bank for
the account of the Seller pursuant to the Agreement.



     “Letter of Credit Application” has the meaning set forth in Section 1.14 of
the Agreement.



     “Liquidity Agent” means PNC in its capacity as the Liquidity Agent pursuant to the
Liquidity Agreement.



     “Liquidity Agreement” means the Liquidity Asset Purchase Agreement, dated as of
February 20, 2002, between the purchasers from time to time party thereto, the Issuer and PNC,



I-12









 





as
Administrator and Liquidity Agent, as amended, supplemented or otherwise modified from time to
time.




     “Liquidity Bank” shall have the meaning set forth in Section 5.3(d) of the
Agreement.



     “LLC Agreement” means the Second Amended and Restated Limited Liability Company
Agreement of P&L Receivables Company, LLC.



     “Lock-Box Account” means an account in the name of the Seller and maintained by the
Seller at a bank or other financial institution for the purpose of receiving Collections.



     “Lock-Box Agreement” means an agreement, in form and substance satisfactory to the
Administrator, among the Seller, the Servicer, the Issuer and a Lock-Box Bank.



     “Lock-Box Bank” means any of the banks or other financial institutions holding one or
more Lock-Box Accounts.



     “Loss Reserve” means, on any date, an amount equal to: (a) the sum of Capital plus
the LC Participation Amount at the close of business of the Seller on such date multiplied by (b)
(i) the Loss Reserve Percentage on such date divided by (ii) 100% minus the Loss Reserve Percentage
on such date.



     “Loss Reserve Percentage” means, on any date, the product of (i) 2.25 times (ii) the
highest average of the Default Ratios for any three consecutive calendar months during the twelve
most recent calendar months and (iii) (A) the aggregate credit sales made by the Originator during
the four most recent calendar months divided by (B) the Net Receivables Pool Balance as of such
date.



     “Majority LC Participants” shall mean LC Participants whose Pro Rata Shares aggregate
51% or more.



     “Material Adverse Effect” means with respect to any event or circumstance, a material
adverse effect on:




     (a) the assets, operations, business or financial condition of (i) the Seller, or (ii)
Peabody and its Subsidiaries taken as a whole,




     (b) the ability of any of the Originators, the Contributor, the Servicer, any of the
Sub-Servicers, the Transferee or the Seller to perform its obligations under the Agreement
or any other Transaction Document to which it is a party,




     (c) the validity or enforceability of the Agreement or any other Transaction Document,
or the validity, enforceability or collectibility of a material portion of the Pool
Receivables, or




     (d) the status, perfection, enforceability or priority of the Administrator’s, the
Purchasers’ or the Seller’s interest in the Pool Assets.



I-13









 





     “Material Originator” means any of the following at any time, so long as such Person
is an Originator: (i) COALSALES II, LLC, a Delaware corporation, (ii) Powder River Coal, LLC, a
Delaware limited liability company, (iii) Peabody Western Coal Company, a Delaware corporation,
(iv) Peabody Midwest Mining, LLC, an Indiana limited liability company and (v) any other Originator
now or hereafter party to the Sale Agreement whose Receivables represent 15% or more of the
aggregate Receivables originated by the Originators in any calendar month during the immediately
preceding 12 Settlement Periods.



     “Member” shall have the meaning set forth in Schedule A to the LLC Agreement.



     “Mohave Project” means that certain joint venture that developed, built and operates
the Mohave Generating Station located in Laughlin, Nevada, which joint venture is owned by Southern
California Edison (56%), Nevada Power Company (14%), Salt River Project Agricultural Improvement
and Power District (10%), and Department of Water and Power of Los Angeles (20%).



     “Monthly Settlement Date” means the twenty-third day of each calendar month (or the
next succeeding Business Day if such day is not a Business Day), beginning May 23, 2008.



     “Moody’s” means Moody’s Investors Service, Inc.



     “Navajo Project” means that certain joint venture that developed, built and operates
the Navajo Electric Generating Station located in Page, Arizona, which joint venture is owned by
Nevada Power Company (11.3%), Salt River Project Agricultural Improvement and Power District (46%),
Department of Water and Power of Los Angeles (21.2%), Arizona Public Service Co. (14%), and Tucson
Gas and Electric Co. (7.5%).



     “Net Receivables Pool Balance” means, at anytime: (a) the Outstanding Balance of
Eligible Receivables then in the Receivables Pool minus (b) Excess Concentration.



     “Notes” means short-term promissory notes issued, or to be issued, by the Issuer to
fund its investments in accounts receivable or other financial assets.



     “Obligor” means, with respect to any Receivable, the Person obligated to make payments
pursuant to the Contract relating to such Receivable.



     “Obligor Group” means any of the following: Group A Obligor, Group B Obligor, Group C
Obligor or Group D Obligor.



     “Order” has the meaning set forth in Section 1.22 of the Agreement.



     “Original Agreement” has the meaning set forth in the preliminary statements of the
Agreement.



     “Original Agreement Outstanding Amounts” has the meaning set forth in the preliminary
statements of the Agreement.



I-14









 





     “Originator” and “Originators” have the meaning set forth in the Sale
Agreement, as the same may be modified from time to time by adding new Originators or removing
Originators, in each case with the prior written consent of the Administrator.



     “Originator Assignment Certificate” means the assignment by each Originator to the
Contributor, and subsequently to the Seller, in substantially the form of Exhibit C to the
Sale Agreement, evidencing Seller’s ownership of the Receivables generated by the Originators, as
the same may be amended, supplemented, amended and restated, or otherwise modified from time to
time in accordance with the Sale Agreement.



     “Other Material Financing Agreement” has the meaning set forth in paragraph
(j) of Exhibit V of the Agreement.



     “Outstanding Balance” of any Receivable at any time means the then outstanding
principal balance thereof.



     “Paydown Notice” has the meaning set forth in Section 1.6(f)(i) of the
Agreement.



     “Payment Date” has the meaning set forth in Section 2.1 of the Sale Agreement.



     “Peabody” has the meaning set forth in the preamble to the Agreement.



     “Performance Reserve” means the sum of the Loss Reserve and the Dilution Reserve.



     “Permitted Lock-Box Bank” means a bank or other financial institution with minimum
capital of at least $250,000.



     “Person” means an individual, partnership, corporation (including a business trust),
joint stock company, trust, unincorporated association, joint venture, limited liability company or
other entity, or a government or any political subdivision or agency thereof.



     “PNC” has the meaning set forth in the preamble to the Agreement.



     “Pool Assets” has the meaning set forth in Section 1.4(e) of the Agreement.



     “Pool Receivable” means a Receivable in the Receivables Pool.



     “Portion of Capital” means any separate portion of Capital being funded or maintained
by the Issuer (or its successors or permitted assigns) by reference to a particular interest rate
basis. In addition, at any time when the Capital is not divided into two or more such portions,
“Portion of Capital” means 100% of the Capital.



     “Program Support Agreement” means and includes the Liquidity Agreement and any other
agreement entered into by any Program Support Provider providing for: (a) the issuance of one or
more letters of credit for the account of the Issuer, (b) the issuance of one or more surety bonds
for which the Issuer is obligated to reimburse the applicable Program Support Provider for any
drawings thereunder, (c) the sale by the Issuer to any Program Support Provider of the Purchased
Assets (or portions thereof) and/or (d) the making of loans and/or other extensions of



I-15









 





credit to
the Issuer in connection with the Issuer’s Receivables-securitization program contemplated in the
Agreement, together with any letter of credit, surety bond or other instrument issued thereunder
(but excluding any discretionary advance facility provided by the Administrator).




     “Program Support Provider” means and includes any Liquidity Bank and any other Person
(other than any customer of the Issuer) now or hereafter extending credit or having a commitment to
extend credit to or for the account of, or to make purchases from, the Issuer pursuant to any
Program Support Agreement.



     “Pro Rata Share” shall mean, as to any LC Participant, a fraction, the numerator of
which equals the Commitment of such LC Participant at such time and the denominator of which equals
the aggregate of the Commitments of all LC Participant at such time.



     “Purchase and Sale Indemnified Amounts” has the meaning set forth in Section
9.1 of the Sale Agreement.



     “Purchase and Sale Indemnified Party” has the meaning set forth in Section 9.1
of the Sale Agreement.



     “Purchase and Sale Termination Date” has the meaning set forth in Section 1.4
of the Sale Agreement.



     “Purchase and Sale Termination Event” has the meaning set forth in Section 8.1
of the Sale Agreement.



     “Purchased Assets” has the meaning set forth in Section 1.3(b) of the
Agreement.



     “Purchased Assets Coverage Percentage” means, at any time and subject to Section
1.5 of the Agreement, the percentage computed as:



Capital + Adjusted LC Participation Amount + Total Reserves

Net Receivables Pool Balance



The Purchased Assets Coverage Percentage shall be determined from time to time in accordance with
Section 1.5 of the Agreement.




     “Purchase Limit” means $275,000,000, as such amount may be reduced pursuant to
Section 1.1(b) of the Agreement. References to the unused portion of the Purchase Limit
shall mean, at any time, the Purchase Limit minus the sum of the then aggregate outstanding Capital
plus the LC Participation Amount.



     “Purchase Price” has the meaning set forth in Section 2.1 of the Sale
Agreement.



     “Purchase Report” has the meaning set forth in Section 2.1 of the Sale
Agreement.



     “Purchasers” means the Issuer, the LC Bank and each LC Participant.



I-16









 





     “Receivable” means any indebtedness and other obligations owed to the Seller (as
assignee of the Contributor and each Originator), the Contributor or any Originator by, or any
right of the Seller, the Contributor or any Originator to payment from or on behalf of, an Obligor,
whether constituting an account, chattel paper, instrument or general intangible, arising in
connection with the sale of goods or the rendering of services by any Originator, and includes the
obligation to pay any finance charges, fees and other charges with respect thereto. Indebtedness
and other obligations arising from any one transaction, including indebtedness and other
obligations represented by an individual invoice or agreement, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other obligations arising from any
other transaction.



     “Receivables Pool” means, at any time, all of the then outstanding Receivables
purchased by the Contributor pursuant to the Sale Agreement prior to the Facility Termination Date.



     “Reference Bank” means PNC.



     “Reimbursement Obligation” has the meaning set forth in Section 1.16 of the
Agreement.



     “Reinvestment” has the meaning set forth in Section 1.4(b) of the Agreement.



     “Related Rights” has the meaning set forth in Section 1.1 of the Sale
Agreement.



     “Related Security” means, with respect to any Receivable:




     (a) all of the Seller’s, the Contributor’s and each Originator’s interest in any goods
(including returned goods), and documentation of title evidencing the shipment or storage of
any goods (including returned goods), relating to any sale giving rise to such Receivable,




     (b) all instruments and chattel paper that may evidence such Receivable,




     (c) all other security interests or liens and property subject thereto from time to
time purporting to secure payment of such Receivable, whether pursuant to the Contract
related to such Receivable or otherwise, together with all UCC financing statements or
similar filings relating thereto, and




     (d) all of the Seller’s, the Contributor’s and each Originator’s rights, interests and
claims under the Contracts and all guaranties, indemnities, insurance and other agreements
(including the related Contract) or arrangements of whatever character from time to time
supporting or securing payment of such Receivable or otherwise relating to such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise.



     “Required LC Participants” shall mean the LC Participants whose Pro Rata Shares
aggregate 662⁄3% or more.



     “Responsible Officer” means, with respect to each Originator, the Contributor, the
Servicer, the Transferee and the Seller, any president, vice president, treasurer, assistant




I-17











 




treasurer, secretary, assistant secretary, chief financial officer, controller or any other
officer of any such Person charged with the responsibility for administration of any Transaction
Document.




     “Restricted Payments” has the meaning set forth in Section 1(n) of Exhibit
IV of the Agreement.



     “Sale Agreement” means the Purchase and Sale Agreement, dated as of February 20, 2002,
between the Contributor and the Originators as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time.



     “Seller” has the meaning set forth in the preamble to the Agreement.



     “Senior Notes Indenture” means that certain Indenture, dated as of March 21, 2003,
among Peabody, the guarantors named therein, and U.S. Bank National Association, as trustee.



     “Servicer” has the meaning set forth in the preamble to the Agreement.



     “Servicer Note” shall mean that certain Promissory Note dated February 20, 2002 made
by Peabody in favor of the Seller, as the same may be amended from time to time.



     “Servicing Fee” shall mean the fee referred to in Section 4.6 of the
Agreement.



     “Servicing Fee Rate” shall mean the rate referred to in Section 4.6 of the
Agreement.



     “Settlement Date” means with respect to any Portion of Capital for any Settlement
Period, (i) prior to the Facility Termination Date, the Monthly Settlement Date and (ii) on and
after the Facility Termination Date, each day selected from time to time by the Administrator (it
being understood that the Administrator may select such Settlement Date to occur as frequently as
daily), or, in the absence of such selection, the Monthly Settlement Date.



     “Settlement Period” means: (a) before the Facility Termination Date, each period
commencing on the second Business Day prior to each Monthly Settlement Date and ending on (but not
including) the second Business Day prior to the next Monthly Settlement Date, and (b) on and after
the Facility Termination Date, such period (including a period of one day) as shall be selected
from time to time by the Administrator or, in the absence of any such selection, each period of 30
days from the last day of the preceding Settlement Period.



     “Similar Businesses” means coal production, coal mining, coal brokering, coal
transportation, mine development, power marketing, electricity generation, power/ energy sales and
trading, energy transactions/ asset restructurings, risk management products associated with
energy, fuel/ power integration and other energy related businesses, ash disposal, environmental
remediation, coal, natural gas, petroleum or other fossil fuel exploration, production, marketing,
transportation and distribution and other related businesses, and activities of Peabody and its
Subsidiaries as of the Closing Date and any business or activity that is reasonably similar thereto
or a reasonable extension, development or expansion thereof or ancillary thereto.



I-18









 





     “Solvent” means, with respect to any Person at any time, a condition under which:




     (i) the fair value and present fair saleable value of such Person’s total assets is, on
the date of determination, greater than such Person’s total liabilities (including
contingent and unliquidated liabilities) at such time;




     (ii) the fair value and present fair saleable value of such Person’s assets is greater
than the amount that will be required to pay such Person’s probable liability on its
existing debts as they become absolute and matured (“debts,” for this purpose, includes all
legal liabilities, whether matured or unmatured, liquidated or unliquidated, absolute,
fixed, or contingent);




     (iii) such Person is and shall continue to be able to pay all of its liabilities as
such liabilities mature; and




     (iv) such Person does not have unreasonably small capital with which to engage in its
current and in its anticipated business.




For purposes of this definition:




     (A) the amount of a Person’s contingent or unliquidated liabilities at any time shall
be that amount which, in light of all the facts and circumstances then existing, represents
the amount which can reasonably be expected to become an actual or matured liability;




     (B) the “fair value” of an asset shall be the amount which may be realized within a
reasonable time either through collection or sale of such asset at its regular market value;




     (C) the “regular market value” of an asset shall be the amount which a capable and
diligent business person could obtain for such asset from an interested buyer who is willing
to Purchase such asset under ordinary selling conditions; and




     (D) the “present fair saleable value” of an asset means the amount which can be
obtained if such asset is sold with reasonable promptness in an arm’s-length transaction in
an existing and not theoretical market.



     “Special Member” shall have the meaning set forth in Schedule A to the LLC
Agreement.



     “Special Obligor” means the Navajo Project, for so long as, with respect to such
Navajo Project, (a) the agreement among the project participants requires that upon the default of
any participant, the non-defaulting participants are required to cure any such default, and (b)
Peabody represents and warrants that, to its knowledge, the statement set forth in subsection (a)
above is true, complete and correct. The Navajo Project shall be deemed to be a “Special
Group A Obligor” hereunder for so long as such Navajo Project has at least one project
participant with the rating of a Group A Obligor; the Navajo Project shall be deemed to be a
“Special Group B Obligor” hereunder for so long as such Navajo Project has at least one
project participant with the rating of a Group B Obligor (but no project participants with the
rating of a Group A



I-19









 




Obligor); the Navajo Project shall be deemed to be a “Special Group C Obligor”
hereunder for so long as such Navajo Project has at least one project participant with the rating
of a Group C Obligor (but no project participants with the rating of a Group A Obligor or a Group B
Obligor); and the Navajo Project shall be deemed to be a “Special Group D Obligor”
hereunder for so long as such Navajo Project has no project participants with the rating of a Group
A Obligor, a Group B Obligor or a Group C Obligor.




     “Special Obligor Group” means any one of the following: Special Group A Obligor,
Special Group B Obligor, Special Group C Obligor, or Special Group D Obligor.



     “Spike Factor” means, for any calendar month, (a) the positive difference, if any,
between: (i) the highest Dilution Ratio for any one calendar month during the twelve most recent
calendar months and (ii) the arithmetic average of the Dilution Ratios for such twelve months
times (b) (i) the highest Dilution Ratio for any one calendar month during the twelve most
recent calendar months divided by (ii) the arithmetic average of the Dilution Ratios for
such twelve months.



     “Standard & Poor’s” means Standard & Poor’s Ratings Services, a Standard and Poor’s
Financial Services LLC business.



     “Sub-Servicer” has the meaning set forth in Section 4.1 of the Agreement.



     “Subsidiary” means, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock of each class or other interests having ordinary
voting power (other than stock or other interests having such power only by reason of the happening
of a contingency) to elect a majority of the Board of Directors or other managers of such entity
are at the time owned, or management of which is otherwise controlled: (a) by such Person, (b) by
one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such
Person.



     “Termination Day” means: (a) each day on which the conditions set forth in
Section 2 of Exhibit II to the Agreement are not satisfied or (b) each day that
occurs on or after the Facility Termination Date.



     “Termination Event” has the meaning specified in Exhibit V to the Agreement.



     “Termination Fee” means, for any Settlement Period during which a Termination Day
occurs, the amount, if any, by which: (a) the additional Discount (calculated without taking into
account any Termination Fee or any shortened duration of such Settlement Period pursuant to the
definition thereof) that would have accrued during such Settlement Period on the reductions of
Capital relating to such Settlement Period had such reductions not been made, exceeds (b) the
income, if any, received by the Issuer from investing the proceeds of such reductions of Capital,
as determined by the Administrator, which determination shall be binding and conclusive for all
purposes, absent manifest error.



     “Total Reserves” means, at any time the sum of: (a) the Yield Reserve, plus the
greater of (b) (i) the Performance Reserve, or (ii) the Concentration Reserve.



I-20









 





     “Transaction Documents” means the Agreement, the Lock-Box Agreements, the Fee Letter,
the Sale Agreement, the Contribution Agreement, the Intercreditor Agreement, the Servicer Note, and
all other certificates, instruments, UCC financing statements, reports, notices, agreements and
documents executed or delivered under or in connection with the Agreement, in each case as the same
may be amended, supplemented or otherwise modified from time to time in accordance with the
Agreement.



     “TVA” means Tennessee Valley Authority, an Obligor of the Originators.



     “UCC” means the Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction.



     “UCP 600” has the meaning set forth in Section 1.14 of the Agreement.



     “Unmatured Contribution Termination Event” means any event which, with the giving of
notice or lapse of time, or both, would become a Contribution Termination Event.



     “Unmatured Purchase and Sale Termination Event” means any event which, with the giving
of notice or lapse of time, or both, would become a Purchase and Sale Termination Event.



     “Unmatured Termination Event” means an event that, with the giving of notice or lapse
of time, or both, would constitute a Termination Event.



     “Yield Reserve” means, on any date, an amount equal to: (a) the sum of the Capital
plus the LC Participation Amount at the close of business of the Seller on such date multiplied by
(b) (i) the Yield Reserve Percentage on such date divided by (ii) 100% minus the Yield Reserve
Percentage on such date.



     “Yield Reserve Percentage” means at any time:



	 	 	 	 	 
	 

	 	(BR+SFR)
 

360
	 	x l.5 x DSO 






     where:




BR = the Base Rate computed for the most recent Settlement Period,




DSO = Days’ Sales Outstanding, and




SFR = the Servicing Fee Rate



     Other Terms. All accounting terms not specifically defined herein shall be construed
in accordance with generally accepted accounting principles. 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. Unless the context otherwise requires, “or” means “and/or,” and “including” (and
with correlative meaning “include” and “includes”) means including without limiting the generality
of any description preceding such term.



I-21









 





EXHIBIT II

CONDITIONS PRECEDENT




     1. Conditions Precedent to Effectiveness of this Agreement. The effectiveness of
this Agreement is subject to the following conditions precedent that the Administrator shall have
received on or before the Closing Date, each in form and substance (including the date thereof)
satisfactory to the Administrator:



     (a) A counterpart of the Agreement executed by the parties thereto.



     (b) Executed counterparts of that certain Seventh Amendment to the Purchase and Sale
Agreement, dated as of the date hereof, by and among the parties thereto and satisfaction of the
conditions precedent to the effectiveness thereto.



     (c) Copies of the resolutions of the Board of Directors of each of the Seller, the
Sub-Servicers and Peabody authorizing the execution, delivery and performance by the Seller, the
Sub-Servicers and Peabody of the Agreement and, with respect to Peabody and the Seller, the LLC
Agreement.



     (d) A certificate of the Secretary or Assistant Secretary of each of the Seller, the
Sub-Servicers and Peabody certifying the names and true signatures of its officers who are
authorized to sign the Agreement. Until the Administrator receives a subsequent incumbency
certificate from the Seller, the Sub-Servicers or Peabody, as the case may be, the Administrator
shall be entitled to rely on the last such certificate delivered to it by the Seller, the
Sub-Servicers or Peabody, as the case may be.



     (e) Proper financing statements (Forms UCC-1 and UCC-3), duly executed on or before the date
of such initial purchase suitable for filing under the UCC of all jurisdictions that the
Administrator may deem, if any, necessary or desirable in order to perfect the interests of the
Seller and the Administrator (for the benefit of the Purchasers) contemplated by the Agreement, the
Contribution Agreement and the Sale Agreement.



     (f) Proper financing statements (Form UCC-3), duly executed and suitable for filing under the
UCC of all jurisdictions that the Administrator may deem, if any, necessary or desirable to release
all security interests and other rights of any Person in the Receivables, Contracts or Related
Security previously granted by the Originators, Peabody or the Seller.



     (g) A fully executed copy of the LLC Agreement in form and substance satisfactory to the
Administrator and conforming the LLC Agreement to the applicable requirements set forth in this
Agreement (including, without limitation, as set forth in Section 3(c) of Exhibit
IV to this Agreement).



     (h) Good standing certificates with respect to each of the Seller, the Originators, and
Peabody issued by the Secretary of State (or similar official) of the state of each such Person’s
organization or formation and principal place of business.



     2. Conditions Precedent to All Investments, Issuances of Letters of Credit and
Reinvestments. Each Investment (including the initial Investment, but excluding the deemed



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Investment made pursuant to the first sentence of Section 1.3(a) and any deemed
Investment pursuant to Section 1.4(f) of the Agreement) and the issuance of any Letters of
Credit and each Reinvestment shall be subject to the further conditions precedent that:




     (a) in the case of each Investment and the issuance of any Letters of Credit, the Servicer
shall have delivered to the Administrator on or before such Investment or issuance, as the case may
be, in form and substance satisfactory to the Administrator, a completed pro forma Information
Package to reflect the level of Capital, the LC Participation Amount and related reserves and the
calculation of the Purchased Asset Coverage Percentage after such subsequent Investment or
issuance, as the case may be, and a completed Investment Notice in the form of Annex B; and



     (b) on the date of such Investment, issuance or Reinvestment, as the case may be, the
following statements shall be true (and acceptance of the proceeds of such Investment, issuance or
Reinvestment shall be deemed a representation and warranty by the Seller that such statements are
then true):




     (i) the representations and warranties contained in Exhibit III to the
Agreement are true and correct in all material respects on and as of the date of such
Investment, issuance or Reinvestment as though made on and as of such date (except to the
extent that such representations and warranties expressly relate to an earlier date, and in
which case such representations and warranties shall be true and correct in all material
respects as of such earlier date);




     (ii) no event has occurred and is continuing, or would result from such Investment,
issuance or Reinvestment, that constitutes a Termination Event;




     (iii) solely in the case of any Investment (but not Reinvestment) or any such issuance,
no Unmatured Termination Event shall exist and be continuing;




     (iv) the sum of the Capital plus the LC Participation Amount, after giving effect to
any such Investment, issuance or Reinvestment, as the case may be, shall not exceed the
Purchase Limit;




     (v) after giving effect to any such Investment, issuance or Reinvestment, as the case
may be, the Purchased Assets Coverage Percentage shall not exceed 100%; and




     (vi) the Facility Termination Date shall not have occurred.



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EXHIBIT III

REPRESENTATIONS AND WARRANTIES




     1. Representations and Warranties of the Seller. The Seller represents and warrants
as follows:



     (a) The Seller is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly qualified to do business and is in
good standing as a foreign limited liability company in every jurisdiction where the nature of its
business requires it to be so qualified, except where the failure to be so qualified would not have
a Material Adverse Effect.



     (b) The execution, delivery and performance by the Seller of the Agreement and the other
Transaction Documents to which it is a party, including its use of the proceeds of Investments and
Reinvestments: (i) are within its organizational powers; (ii) have been duly authorized by all
necessary organizational action; (iii) do not contravene or result in a default under or conflict
with: (A) its certificate of formation or any other organizational document of the Seller, (B) any
law, rule or regulation applicable to it, (C) any indenture, loan agreement, mortgage, deed of
trust or other material agreement or instrument to which it is a party or by which it is bound, or
(D) any order, writ, judgment, award, injunction or decree binding on or affecting it or any of its
property; and (iv) do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties. The Agreement and the other Transaction Documents to which it is
a party have been duly executed and delivered by the Seller.



     (c) No authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority or other Person is required for its due execution, delivery and performance
by the Seller of the Agreement or any other Transaction Document to which it is a party, other than
the Uniform Commercial Code filings referred to in Exhibit II to the Agreement, all of
which shall have been filed on or before the Closing Date.



     (d) Each of the Agreement and the other Transaction Documents to which the Seller is a party
constitutes its legal, valid and binding obligation enforceable against the Seller in accordance
with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws from time to time in effect affecting the enforcement of creditors’ rights
generally and by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.



     (e) There is no pending or, to Seller’s best knowledge, threatened action or proceeding
affecting Seller or any of its properties before any Governmental Authority or arbitrator.



     (f) No proceeds of any Investment or Reinvestment will be used to acquire any equity security
of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934.



     (g) The Seller is the legal and beneficial owner of, and has good and marketable title to, the
Pool Receivables, the Lock-Box Accounts (and related lock-boxes) and Related Security,



III -1









 




free and clear of any Adverse Claim. Upon each Investment or Reinvestment, the Administrator
(on behalf of the Purchasers) shall acquire a valid and enforceable perfected ownership or security
interest in each Pool Receivable then existing or thereafter arising and in the Related Security,
Collections and other proceeds with respect thereto, free and clear of any Adverse Claim. The
Agreement creates a valid and continuing ownership or security interest (as defined in the
applicable UCC) in favor of the Administrator in the Pool Assets and the Lock-Box Accounts (and
related lock-boxes), which ownership or security interest is prior to all other Adverse Claims, and
is enforceable as such against creditors of and purchasers from the Seller. The Pool Assets
constitute “accounts”, “general intangibles” or “tangible chattel paper” within the meaning of the
applicable UCC. Each Lock-Box Account constitutes a “deposit account: within the meaning of the
applicable UCC. The Seller has caused or will have caused, within ten (10) days, the filing of all
appropriate UCC financing statements in the proper filing offices in the appropriate jurisdictions
under applicable laws in order to perfect the ownership or security interest in the Pool Assets and
the Lock-Box Accounts (and related lock-boxes) granted to the Administrator (on behalf of the
Purchasers) hereunder. Other than the ownership or security interest granted to the Administrator
(on behalf of the Purchasers) pursuant to this Agreement, Seller has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Pool Assets or the Lock-Box
Accounts (and related lock-boxes). Seller has not authorized the filing of and is not aware of any
UCC financing statements against Seller that include a description of collateral covering the Pool
Assets, other than any UCC financing statement relating to the security interest granted to the
Administrator (on behalf of the Purchasers) hereunder or that has been terminated. Seller is not
aware of any judgment, ERISA or tax lien filings against the Seller. With respect to any Pool
Receivable that constitutes “tangible chattel paper”, the Servicer is in possession of the original
copies of the tangible chattel paper that constitutes or evidences such Pool Receivables, and the
Seller has filed or has caused to be filed within ten (10) days after the date hereof the financing
statements described in this section above, each of which will contain a statement that “A purchase
of or a grant of a security interest in any property described in this financing statement will
violate the rights of the Administrator.” The Pool Receivables to the extent they are evidenced by
“tangible chattel paper” do not have any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than the Seller or the Administrator (on behalf
of the Purchasers).




     (h) Each Information Package (if prepared by the Seller or one of its Affiliates, or to the
extent that information contained therein is supplied by the Seller or one of its Affiliates),
information, exhibit, financial statement, document, book, record or report furnished or to be
furnished at any time by or on behalf of the Seller to the Administrator in connection with the
Agreement or any other Transaction Document to which it is a party is or will be complete and
accurate in all material respects as of its date or (except as otherwise disclosed to the
Administrator at such time) as of the date so furnished.



     (i) The Seller’s principal place of business, chief executive office and state of formation
(as such terms are used in the UCC) and the office where it keeps its records concerning the
Receivables are located at the address referred to in Sections l(b) and 2(b) of
Exhibit IV to the Agreement.



III -2









 





     (j) The names and addresses of all the Lock-Box Banks, together with the account numbers of
the Lock-Box Accounts at such Lock-Box Banks, are specified in Schedule II to the Agreement
(or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to
the Administrator in accordance with the Agreement) and all Lock-Box Accounts are subject to
Lock-Box Agreements. With respect to all Lock-Box Accounts (and related lock-boxes), the Seller
has delivered to the Administrator, on behalf of the Purchasers, a fully executed Lock-Box
Agreement pursuant to which the applicable Lock-Box Bank has agreed, following the occurrence and
continuation of a Termination Event, to comply with all instructions given by the Administrator
with respect to all funds on deposit in such Lock-Box Account (and all funds sent to the respective
lock-box), without further consent by the Seller or the Servicer. None of the Lock-Box Accounts
(and the related lock-boxes) are in the name of any Person other than the Seller or the
Administrator (on behalf of the Purchasers). The Seller has not consented to any Lock-Box Bank’s
complying with instructions of any person other than the Administrator.



     (k) The Seller is not in violation of any order of any court, arbitrator or Governmental
Authority.



     (l) Neither the Seller nor any of its Affiliates has any direct or indirect ownership or other
financial interest in the Issuer.



     (m) No proceeds of any Investment or Reinvestment will be used for any purpose that violates
any applicable law, rule or regulation, including Regulations T, U or X of the Federal Reserve
Board.



     (n) Each Pool Receivable included as an Eligible Receivable in the calculation of the Net
Receivables Pool Balance is an Eligible Receivable.



     (o) No event has occurred and is continuing, or would result from an Investment or
Reinvestment or from the application of the proceeds therefrom, that constitutes a Termination
Event or an Unmatured Termination Event.



     (p) The Seller has accounted for each sale of the Receivables and the other Purchased Assets
in its books and financial statements as sales, consistent with generally accepted accounting
principles.



     (q) The Seller has complied in all material respects with the Credit and Collection Policies
of the Originators with regard to each Receivable originated by the Originators.



     (r) The Seller has complied in all material respects with all of the terms, covenants and
agreements contained in the Agreement and the other Transaction Documents that are applicable to
it.



     (s) The Seller’s complete organizational name is set forth in the preamble to the Agreement,
and it does not use and has not during the last six years used any other organizational name, trade
name, doing-business name or fictitious name, except as set forth on Schedule III to the
Agreement and except for names first used after the date of the Agreement and set forth in a



III -3









 




notice delivered to the Administrator pursuant to Section 1(1)(iv) of Exhibit
IV to the Agreement.




     (t) The Seller is not an “investment company,” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.



     2. Representations and Warranties of Peabody (including in its capacity as the
Servicer). Peabody, individually and in its capacity as the Servicer, represents and warrants
jointly and severally as follows:



     (a) Peabody is a corporation duly formed, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified to do business and is in good standing as a foreign
corporation in every jurisdiction where the nature of its business requires it to be so qualified,
except where the failure to be so qualified would not have a Material Adverse Effect.



     (b) The execution, delivery and performance by Peabody of the Agreement and the other
Transaction Documents to which it is a party, including the Servicer’s use of the proceeds of
Investments and Reinvestments: (i) are within its organizational powers; (ii) have been duly
authorized by all necessary organizational action; (iii) do not contravene or result in a default
under or conflict with: (A) its certificate of incorporation or any other organizational document
of Peabody, (B) any law, rule or regulation applicable to it, (C) any indenture, loan agreement,
mortgage, deed of trust or other material agreement or instrument to which it is a party or by
which it is bound, or (D) any order, writ, judgment, award, injunction or decree binding on or
affecting it or any of its property; and (iv) do not result in or require the creation of any
Adverse Claim upon or with respect to any of its properties. The Agreement and the other
Transaction Documents to which Peabody is a party have been duly executed and delivered by Peabody.



     (c) No authorization, approval or other action by, and no notice to or filing with any
Governmental Authority or other Person, is required for the due execution, delivery and performance
by Peabody of the Agreement or any other Transaction Document to which it is a party.



     (d) Each of the Agreement and the other Transaction Documents to which Peabody is a party
constitutes the legal, valid and binding obligation of Peabody enforceable against Peabody in
accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws from time to time in effect affecting the enforcement of
creditors’ rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.



     (e) The balance sheets of Peabody and its consolidated Subsidiaries as at December 31, 2008,
and the related statements of income and retained earnings for the fiscal year then ended, copies
of which have been furnished to the Administrator, fairly present in all material respects the
financial condition of Peabody and its consolidated Subsidiaries as at such date and the results of
the operations of Peabody and its Subsidiaries for the period ended on such date, all in accordance
with generally accepted accounting principles consistently applied, and since



III -4









 




December 31, 2008 there has been no event or circumstances which have had a Material Adverse
Effect.




     (f) Except as disclosed in the most recent audited financial statements of Peabody furnished
to the Administrator, there is no pending or, to its best knowledge, threatened action or
proceeding affecting it or any of its Subsidiaries before any Governmental Authority or arbitrator
that is reasonably likely to have a Material Adverse Effect.



     (g) No proceeds of any Investment or Reinvestment will be used to acquire any equity security
of a class that is registered pursuant to Section 12 of the Securities Exchange Act of 1934. No
proceeds of any Investment or Reinvestment will be used for any purpose that violates any
applicable law, rule or regulation, including Regulations T, U or X of the Federal Reserve Board.



     (h) Each Information Package (if prepared by Peabody or one of its Affiliates, or to the
extent that information contained therein is supplied by Peabody or an Affiliate), information,
exhibit, financial statement, document, book, record or report furnished or to be furnished at any
time by or on behalf of the Servicer to the Administrator in connection with the Agreement is or
will be complete and accurate in all material respects as of its date or (except as otherwise
disclosed to the Administrator at such time) as of the date so furnished.



     (i) The principal place of business, chief executive office and state of formation (as such
terms are used in the UCC) of Peabody and the office where it keeps its records concerning the
Receivables are located at the address referred to in Section 2(b) of Exhibit IV to
the Agreement.



     (j) Peabody is not in violation of any order of any court, arbitrator or Governmental
Authority, which is reasonably likely to have a Material Adverse Effect.



     (k) Neither Peabody nor any of its Affiliates has any direct or indirect ownership or other
financial interest in the Issuer.



     (l) The Servicer has complied in all material respects with the Credit and Collection Policy
of the Originators with regard to each Receivable originated by the Originators.



     (m) Peabody has complied in all material respects with all of the terms, covenants and
agreements contained in the Agreement and the other Transaction Documents that are applicable to
it.



     (n) Peabody is not an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.



     (o) [Reserved].



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     (p) The agreement among the project participants of the Navajo Project requires that upon the
default of any participant, the non-defaulting participants are required to cure any such default.



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EXHIBIT IV

COVENANTS




     1. Covenants of the Seller. Until the Final Payout Date:



     (a) Compliance with Laws, Etc. The Seller shall comply in all material respects with
all applicable laws, rules, regulations and orders, and preserve and maintain its organizational
existence, rights, franchises, qualifications and privileges, except to the extent that the failure
so to comply with such laws, rules, regulations and orders or the failure so to preserve and
maintain such rights, franchises, qualifications and privileges would not have a Material Adverse
Effect.



     (b) Offices, Records and Books of Account, Etc. The Seller: (i) shall keep its
principal place of business, chief executive office and state of formation (as such terms or
similar terms are used in the UCC) and the office where it keeps its records concerning the
Receivables at the address of the Seller set forth on Schedule IV or, pursuant to
clause (1)(iv) below, at any other locations in jurisdictions where all actions reasonably
requested by the Administrator to protect and perfect the interest of the Administrator in the
Receivables and related items (including the Pool Assets) have been taken and completed and (ii)
shall provide the Administrator with at least 30 days’ written notice before making any change in
the Seller’s name or making any other change in the Seller’s identity or organizational structure
(including a Change in Control) that could render any UCC financing statement filed in connection
with this Agreement “seriously misleading” as such term (or similar term) is used in the UCC; each
notice to the Administrator pursuant to this sentence shall set forth the applicable change and the
effective date thereof. The Seller also will maintain and implement (or cause the Servicer to
maintain and implement) administrative and operating procedures (including an ability to recreate
records evidencing Receivables and related Contracts in the event of the destruction of the
originals thereof), and keep and maintain (or cause the Servicer to keep and maintain) all
documents, books, records, computer tapes and disks and other information reasonably necessary or
advisable for the collection of all Receivables (including records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each existing
Receivable). Notwithstanding the above, in no event shall the Seller have or maintain, or be a
partner in any partnership that has or maintains, its jurisdiction of organization, principal place
of business or principal assets in any of the states of Colorado, Kansas, New Mexico, Oklahoma,
Utah or Wyoming.



     (c) Performance and Compliance with Contracts and Credit and Collection Policy. The
Seller shall (and shall cause the Servicer to), at its expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be observed by it under the
Contracts related to the Receivables, and timely and fully comply in all material respects with the
applicable Credit and Collection Policies with regard to each Receivable and the related Contract.



     (d) Ownership Interest, Etc. The Seller shall (and shall cause the Servicer to), at
its expense, take all action necessary or desirable to establish and maintain a valid and
enforceable ownership or security interest in the Pool Receivables, the Related Security and
Collections with respect thereto, and a first priority perfected ownership or security interest in
the Pool Assets, in



IV-1









 




each case free and clear of any Adverse Claim, in favor of the Administrator (on behalf of the
Purchasers), including taking such action to perfect, protect or more fully evidence the interest
of the Administrator (on behalf of the Purchasers), as the Administrator, may reasonably request.
The Seller shall from time to time and within the time limits established by law prepare and
present to the Administrator for the Administrator’s authorization and approval all financing
statements, amendments, continuations or initial financing statements in lieu of a continuation
statement, or other filings necessary to continue, maintain and perfect the Administrator’s (on
behalf of the Purchasers) ownership or security interest in the Pool Assets as a first-priority
interest. The Administrator’s approval of such filings shall authorize the Seller to file such
financing statements under the UCC without the signature of the Seller, or the Issuer, the
Administrator or any Purchaser where allowed by applicable law. Notwithstanding anything else in
the Transaction Documents to the contrary, neither the Seller, the Servicer nor any other Person
shall have any authority to file a termination, partial termination, release or partial release or
any amendment that deletes the name of a debtor or excludes collateral of any such financing
statements without the prior written consent of the Administrator.




     (e) Sales, Liens, Etc. The Seller shall not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim upon or with
respect to, any or all of its right, title or interest in, to or under any Pool Assets (including
the Seller’s interest in any Receivable, Related Security or Collections, or upon or with respect
to any account to which any Collections of any Receivables are sent), or assign any right to
receive income in respect of any items contemplated by this paragraph.



     (f) Extension or Amendment of Receivables. Except as provided in the Agreement, the
Seller shall not, and shall not permit the Servicer to, alter the delinquency status or adjust the
Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect,
or amend, modify or waive, in any material respect, any term or condition of any related Contract
(which term or condition relates to payments under, or the enforcement of, such Contract).



     (g) Change in Business or Credit and Collection Policy. Without the prior written
consent of the Administrator, the Seller shall not make (or permit the Originators to make) any
material change in the character of its business or in any Credit and Collection Policy, or any
change in any Credit and Collection Policy that would have a Material Adverse Effect with respect
to the Receivables. The Seller shall not make (or permit the Originators to make) any other change
in any Credit and Collection Policy without giving 30 days’ prior written notice thereof to the
Administrator.



     (h) Audits. The Seller shall (and shall cause the Originators to), from time to time
during regular business hours as reasonably requested in advance (unless a Termination Event or
Unmatured Termination Event exists) by the Administrator, permit the Administrator, or its agents
or representatives: (i) to examine and make copies of and abstracts from all books, records and
documents (including computer tapes and disks) in the possession or under the control of the Seller
(or the Originators) relating to Receivables and the Related Security, including the related
Contracts, (ii) to visit the offices and properties of the Seller and the Originators for the
purpose of examining such materials described in clause (i) above, and to



IV-2









 




discuss matters relating to Receivables and the Related Security or the Seller’s, Peabody’s or
any Originator’s performance under the Transaction Documents or under the Contracts with any of the
officers, employees, agents or contractors of the Seller, Peabody or any Originator having
knowledge of such matters and (iii) without limiting the clauses (i) and (ii)
above, to engage certified public accountants or other auditors acceptable to the Seller and the
Administrator to conduct, at the Seller’s expense, a review of the Seller’s books and records with
respect to such Receivables, provided, that at any time when no Termination Event exists and is
continuing, the Seller shall be required to reimburse the Administrator for only one (1) such audit
per year.




     (i) Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to Obligors.
The Seller shall not, and shall not permit the Servicer or any Originator to, add or terminate any
bank as a Lock-Box Bank or any account as a Lock-Box Account from those listed in Schedule
II to the Agreement, or make any change in its instructions to Obligors regarding payments to
be made to the Seller, any Originator, the Servicer or any Lock-Box Account (or related post office
box), unless the Administrator shall have received ten (10) days prior written notice of assignment
to a Permitted Lock-Box Bank and the Administrator shall have received copies of all agreements
and documents (including Lock-Box Agreements) that it may request in connection therewith.



     (j) Deposits to Lock-Box Accounts. The Seller shall (or shall cause the Servicer to):
(i) instruct all Obligors to make payments of all Receivables to one or more Lock-Box Accounts or
to post office boxes to which only Lock-Box Banks have access (and shall instruct the Lock-Box
Banks to cause all items and amounts relating to such Receivables received in such post office
boxes to be removed and deposited into a Lock-Box Account on a daily basis), and (ii) deposit, or
cause to be deposited, any Collections received by it, the Servicer or any Originator into Lock-Box
Accounts not later than two (2) Business Days after receipt thereof. Each Lock-Box Account shall
at all times be subject to a Lock-Box Agreement. The Seller will not (and will not permit the
Servicer to) deposit or otherwise credit, or cause or permit to be so deposited or credited, to any
Lock-Box Account cash or cash proceeds other than Collections.



     (k) Marking of Records. At its expense, the Seller shall: (i) mark (or cause the
Servicer to mark) its master data processing records relating to Pool Receivables and related
Contracts, including with a legend evidencing that the Receivables and related Contracts included
in the Purchased Assets have been sold in accordance with the Agreement, and (ii) cause each
Originator so to mark its master data processing records pursuant to the Sale Agreement.



     (l) Reporting Requirements. The Seller will provide to the Administrator (in multiple
copies, if requested by the Administrator) the following:




     (i) as soon as available and in any event within 120 days after the end of each fiscal
year of the Seller, a copy of the financial statements for such year for the Seller,
certified as to accuracy by the chief financial officer or treasurer of the Seller;




     (ii) as soon as possible and in any event within five days after the occurrence of each
Termination Event or Unmatured Termination Event, a statement of the chief



IV-3









 






financial officer of the Seller setting forth details of such Termination Event or
Unmatured Termination Event and the action that the Seller has taken and proposes to take
with respect thereto;




     (iii) promptly after the filing or receiving thereof, copies of all reports and notices
that the Seller or any Affiliate files under ERISA with the Internal Revenue Service, the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor or that the Seller or
any Affiliate receives from any of the foregoing or from any multiemployer plan (within the
meaning of Section 400l(a)(3) of ERISA) to which the Seller or any of its Affiliates is or
was, within the preceding five years, a contributing employer, in each case in respect of
the assessment of withdrawal liability or an event or condition that could, in the
aggregate, result in the imposition of liability on the Seller and/or any such Affiliate;




     (iv) at least thirty days before any change in the Seller’s name or any other change
requiring the amendment of UCC financing statements, a notice setting forth such changes and
the effective date thereof;




     (v) promptly after any Responsible Officer of the Seller obtains knowledge thereof,
notice of any: (A) material litigation, investigation or proceeding that may exist at any
time between the Seller and any Person or (B) material litigation or proceeding relating to
any Transaction Document;




     (vi) promptly after the occurrence thereof, notice of a material adverse change in the
business, operations, property or financial or other condition of the Seller, the Servicer
or the Originator; and




     (vii) such other information respecting the Receivables or the condition or operations,
financial or otherwise, of the Seller or any of its Affiliates as the Administrator may from
time to time reasonably request.



     (m) Certain Agreements. Without the prior written consent of the Administrator, the
Seller will not (and will not permit the Originators to) amend, modify, waive, revoke or terminate
any Transaction Document to which it is a party or any provision of Seller’s certificate of
incorporation or other organizational document of the Seller.



     (n) Restricted Payments. (i) Except pursuant to clause (ii) below, the Seller
will not: (A) purchase or redeem any shares of its capital stock, (B) declare or pay any dividend
or set aside any funds for any such purpose, (C) prepay, purchase or redeem any Debt, (D) lend or
advance any funds or (E) repay any loans or advances to, for or from any of its Affiliates (the
amounts described in clauses (A) through (E) being referred to as “Restricted
Payments”).




     (ii) Subject to the limitations set forth in clause (iii) below, the Seller may
make Restricted Payments so long as such Restricted Payments are made only in the following
way: the Seller may declare and pay distributions and make loans and advances to Peabody
(provided that any such loans and advances shall be treated as a dividend within no less
than 30 days following the making thereof).



IV-4









 






     (iii) The Seller may make Restricted Payments only out of the funds it receives
pursuant to Sections 1.6(b)(ii) and (iv) and 1.6(d) of the
Agreement. Furthermore, the Seller shall not pay, make or declare: (A) any distributions,
loans or advances if, after giving effect thereto, the Seller’s tangible net worth would be
less than $10,000,000, or (B) any Restricted Payment (including any dividend) if, after
giving effect thereto, any Termination Event or Unmatured Termination Event shall have
occurred and be continuing.



     (o) Other Business. The Seller will not: (i) engage in any business other than the
transactions contemplated by the Transaction Documents; (ii) create, incur or permit to exist any
Debt of any kind (or cause or permit to be issued for its account any letters of credit or bankers’
acceptances) other than pursuant to this Agreement or any Company Note; or (iii) form any
Subsidiary or make any investments in any other Person; provided, however, that the
Seller shall be permitted to incur minimal obligations to the extent necessary for the day-to-day
operations of the Seller (such as expenses for stationery, audits, maintenance of legal status,
etc.).



     (p) Use of Collections. The Seller shall apply the Collections that are available to
the Seller in accordance with the Agreement to make payments in the following order of priority:
(i) the payment of its expenses (including all obligations payable to the Issuer and the
Administrator under the Agreement and under the Fee Letter); (ii) the payment of accrued and unpaid
interest on any Company Note; and (iii) other legal and valid organizational purposes.



     (q) Tangible Net Worth. The Seller will not permit its tangible net worth, at any
time, to be less than $10,000,000.



     2. Covenants of the Servicer and Peabody. Until the Final Payout Date:



     (a) Compliance with Laws, Etc. The Servicer and, to the extent that it ceases to be
the Servicer, Peabody shall comply (and shall cause the Originators to comply) in all material
respects with all applicable laws, rules, regulations and orders, and preserve and maintain its
organizational existence, rights, franchises, qualifications and privileges, except to the extent
that the failure so to comply with such laws, rules and regulations or the failure so to preserve
and maintain such existence, rights, franchises, qualifications and privileges would not have a
Material Adverse Effect.



     (b) Offices, Records and Books of Account, Etc. The Servicer and, to the extent that
it ceases to be the Servicer, Peabody, (i) shall keep its principal place of business, chief
executive office and state of formation (as such terms or similar terms are used in the applicable
UCC) and the office where it keeps its records concerning the Receivables at the address of the
Servicer set forth on Schedule IV and (ii) shall cause Peabody Holding Company, LLC and
each Originator to keep its state of formation (as such term is defined in the applicable UCC) and
the office where it keeps its records concerning the Receivables at the applicable address set
forth on Schedule IV, in the case of Peabody Holding Company, LLC, and Exhibit E to
the Sale Agreement, in the case of any Originator or, in the case of either sub-clause (i)
or (ii) of this clause (b), upon at least 30 days’ prior written notice of a
proposed change to the Administrator, at any other locations in jurisdictions where all actions
reasonably requested by the



IV-5









 




Administrator to protect and perfect the interest of the Administrator in the Receivables and
related items (including the Pool Assets) have been taken and completed. The Servicer and, to the
extent that it ceases to be the Servicer, Peabody, also will (and will cause the Originators to)
maintain and implement administrative and operating procedures (including an ability to recreate
records evidencing Receivables and related Contracts in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records, computer tapes and disks
and other information reasonably necessary or advisable for the collection of all Receivables
(including records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable).




     (c) Performance and Compliance with Contracts and Credit and Collection Policy. 
The Servicer and, to the extent that it ceases to be the Servicer, Peabody, shall (and shall
cause the Originators to), at its expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it under the Contracts related
to the Receivables, and timely and fully comply in all material respects with the Credit and
Collection Policy with regard to each Receivable and the related Contract.



     (d) Extension or Amendment of Receivables. Except as provided in the Agreement, the
Servicer and, to the extent that it ceases to be the Servicer, Peabody, shall not alter the
delinquency status or adjust the Outstanding Balance or otherwise modify the terms of any Pool
Receivable in any material respect, or amend, modify or waive, in any material respect, any term or
condition of any related Contract (which term or condition relates to payments under, or the
enforcement of, such Contract).



     (e) Change in Business or Credit and Collection Policy. The Servicer and, to the
extent that it ceases to be the Servicer, Peabody, shall not make (and shall not permit the
Originators to make) any material change in the character of its business, other than Similar
Businesses, or any change in any Credit and Collection Policy that would have a Material Adverse
Effect. The Servicer and, to the extent that it ceases to be the Servicer, Peabody, shall not make
(and shall not permit the Originators to make) any other change in any Credit and Collection Policy
without giving prior written notice thereof to the Administrator.



     (f) Audits. The Servicer and, to the extent that it ceases to be the Servicer,
Peabody, shall (and shall cause the Originators to), from time to time during regular business
hours as reasonably requested in advance (unless a Termination Event or Unmatured Termination Event
exists) by the Administrator, permit the Administrator, or its agents or representatives: (i) to
examine and make copies of and abstracts from all books, records and documents (including computer
tapes and disks) in its possession or under its control relating to Receivables and the Related
Security, including the related Contracts; (ii) to visit its offices and properties for the purpose
of examining such materials described in clause (i) above, and to discuss matters relating
to Receivables and the Related Security or its performance hereunder or under the Contracts with
any of its officers, employees, agents or contractors having knowledge of such matters and (iii),
without limiting the clauses (i) and (ii) above, to engage certified public
accountants or other auditors acceptable to the Servicer and the Administrator to conduct, at the
Servicer’s expense, a review of the Servicer’s books and records with respect to such



IV-6









 




Receivables, provided, that at any time when no Termination Event exists and is continuing,
the Servicer shall be required to reimburse the Administrator for only one (1) such audit per year.




     (g) Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to Obligors.
The Servicer and, to the extent that it ceases to be the Servicer, Peabody, shall not (and shall
not permit the Originators to) add or terminate any bank as a Lock-Box Bank or any account as a
Lock-Box Account from those listed in Schedule II to the Agreement, or make any change in
its instructions to Obligors regarding payments to be made to the Servicer or any Lock-Box Account
(or related post office box), unless the Administrator shall have received ten (10) days advance
written notice of assignment to a Permitted Lock-Box Bank and the Administrator shall have received
copies of all agreements and documents (including Lock-Box Agreements) that it may request in
connection therewith.



     (h) Deposits to Lock-Box Accounts. The Servicer shall: (i) instruct all Obligors to
make payments of all Receivables to one or more Lock-Box Accounts or to post office boxes to which
only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause all items and
amounts relating to such Receivables received in such post office boxes to be removed and deposited
into a Lock-Box Account on a daily basis); and (ii) deposit, or cause to be deposited, any
Collections received by it into Lock-Box Accounts not later than two (2) Business Days after
receipt thereof. Each Lock-Box Account shall at all times be subject to a Lock-Box Agreement.



     (i) Preservation of Security Interest. The Servicer shall (and shall cause the Seller
to) take any and all action as the Administrator may require to preserve and maintain the
perfection and priority of the ownership or security interest of the Administrator in the Pool
Assets pursuant to this Agreement.



     (j) Marking of Records. At its expense, the Servicer shall mark its master data
processing records relating to Pool Receivables and related Contracts with a legend evidencing that
such Receivables and related Contracts have been sold in accordance with the Agreement.



     (k) Navajo Project. Peabody shall notify the Administrator if a Responsible Officer
of Peabody obtains actual knowledge that the documents and agreements governing the Navajo Project
are amended in any manner which would cause the representations and warranties set forth in
Section 2(p) to be incorrect or untrue in any respect.



     (l) Reporting Requirements. Peabody shall provide to the Administrator (in multiple
copies, if requested by the Administrator) the following:




     (i) as soon as available and in any event within 60 days after the end of the first
three quarters of each fiscal year of Peabody balance sheets of Peabody and the consolidated
Subsidiaries of Peabody as of the end of such quarter and statements of income, retained
earnings and cash flow of Peabody and the consolidated Subsidiaries of Peabody for the
period commencing at the end of the previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of Peabody;



IV-7









 






     (ii) as soon as available and in any event within 120 days after the end of each fiscal
year of Peabody, a copy of the annual report for such year for Peabody and its consolidated
Subsidiaries, containing financial statements for such year audited by independent certified
public accountants of nationally recognized standing;




     (iii) together with the financial statements required in (i) and (ii) above, a
compliance certificate in substantially the form of Annex D signed by the senior
financial officer of the Seller or Peabody, or such other Person as may be acceptable to the
Administrator;




     (iv) as to the Servicer only, as soon as available and in any event not later than two
Business Days prior to the Monthly Settlement Date, an Information Package as of the most
recently completed calendar month or, if in the opinion of the Administrator reasonable
grounds for insecurity exist with respect to the collectibility of the Pool Receivables or
with respect to the Seller or Servicer’s performance or ability to perform its obligations
under the Agreement, within six Business Days of a request by the Administrator, an
Information Package for such periods as is specified by the Administrator (but in no event
more frequently than weekly);




     (v) as soon as possible and in any event within five days after becoming aware of the
occurrence of each Termination Event or Unmatured Termination Event, a statement of the
chief financial officer of Peabody setting forth details of such Termination Event or
Unmatured Termination Event and the action that such Person has taken and proposes to take
with respect thereto;




     (vi) promptly after the sending or filing thereof, copies of all reports that Peabody
sends to any of its security holders, and copies of all reports and registration statements
that Peabody, or any Subsidiary files with the Securities and Exchange Commission or any
national securities exchange; provided, that any filings with the Securities and
Exchange Commission that have been granted “confidential” treatment shall be provided
promptly after such filings have become publicly available;




     (vii) promptly after the filing or receiving thereof notice of and, upon the request of
the Administrator, copies of all reports and notices that Peabody or any Affiliate of
Peabody files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that such Person or any of its Affiliates
receives from any of the foregoing or from any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which such Person or any Affiliate of Peabody is or was,
within the preceding five years, a contributing employer, in each case in respect of the
assessment of withdrawal liability or an event or condition that could, in the aggregate,
result in the imposition of liability on Peabody and/or any such Affiliate;




     (viii) at least thirty days before any change in Peabody or any Originator’s name or
any other change requiring the amendment of UCC financing statements, a notice setting forth
such changes and the effective date thereof;



IV-8









 






     (ix) promptly after a Responsible Officer of Peabody obtains knowledge thereof, notice
of any: (A) litigation, investigation or proceeding that may exist at any time between
Peabody or any of its Subsidiaries and any Governmental Authority that is reasonably likely
to have a Material Adverse Effect; (B) litigation or proceeding adversely affecting such
Person or any of its Subsidiaries in which the amount involved is $25,000,000 or more after
deducting (x) the amount with respect to which such Person or any such Subsidiary is insured
and with respect to which the insurer has assumed responsibility in writing, and (y) the
amount for which such Person or any such Subsidiary is otherwise indemnified if the terms of
indemnification are satisfactory to the Administrator or in which injunctive or similar
relief is sought; or (C) litigation or proceeding relating to any Transaction Document;




     (x) promptly after the occurrence thereof, notice of a material adverse change in the
business, operations, property or financial or other condition of Peabody and its
Subsidiaries taken as a whole, or any individual Material Originator;



          (xi) the occurrence of a default or any event of default under any other financing arrangement
evidencing $50,000,000 or more of indebtedness pursuant to which Peabody is a debtor or an obligor;
and




          (xii) such other information respecting the Receivables or the condition or operations,
financial or otherwise, of Peabody or any of its Affiliates as the Administrator may from time to
time reasonably request.




     3. Separate Existence. Each of the Seller and Peabody hereby acknowledges that the
Purchasers, the Issuer and the Administrator are entering into the transactions contemplated by
this Agreement and the other Transaction Documents in reliance upon the Seller’s identity as a
legal entity separate from Peabody and its Affiliates. Therefore, from and after the date hereof,
each of the Seller and Peabody shall take all steps specifically required by the Agreement or
reasonably required by the Administrator to continue the Seller’s identity as a separate legal
entity and to make it apparent to third Persons that the Seller is an entity with assets and
liabilities distinct from those of Peabody and any other Person, and is not a division of Peabody,
its Affiliates or any other Person. Without limiting the generality of the foregoing and in
addition to and consistent with the other covenants set forth herein, each of the Seller and
Peabody shall take such actions as shall be required in order that:



     (a) The Seller will be a limited purpose limited liability company whose activities are
restricted in its certificate of formation to: (i) purchasing or otherwise acquiring from the
Originators or Peabody (or their Affiliates), owning, holding, granting security interests or
selling interests in Pool Assets (or other receivables originated by the Originators or their
Affiliates, and certain related assets), (ii) entering into agreements for the selling and
servicing of the Receivables Pool (or other receivables pools originated by the Originators or
their Affiliates), and (iii) conducting such other activities as are necessary or appropriate to
carry out such activities;




IV-9











 





     (b) The Seller shall not engage in any business or activity except as set forth in this
Agreement nor incur any indebtedness or liability, other than as expressly permitted by the
Transaction Documents;



     (c) Not less than one of the Seller’s Directors (the “Independent Director”) shall be
a natural person who (A) for the five-year period prior to his or her appointment as Independent
Director has not been, and during the continuation of his or her service as Independent Director is
not: (i) an employee, director, stockholder, member, manager, partner or officer of the Seller,
Peabody or any of their respective Affiliates (other than his or her service as an Independent
Director of the Seller); (ii) a customer or supplier of the Seller, Peabody or any of their
respective Affiliates (other than his or her service as an Independent Director of Seller); or
(iii) any member of the immediate family of a person described in clause (i) or
(ii) above, and (B) has, (i) prior experience as an Independent Director for a corporation
or limited liability company whose charter documents required the unanimous consent of all
independent directors thereof before such corporation or limited liability company could consent to
the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking
relief under any applicable federal or state law relating to bankruptcy and (ii) at least three
years of employment experience with one or more entities that provide, in the ordinary course of
their respective businesses, advisory, management or placement services to issuers of
securitization or structured finance instruments, agreements or securities. Such Independent
Director of the Seller shall have been appointed as such in strict compliance with the Seller’s LLC
Agreement. The Seller’s LLC Agreement shall provide that (i) the Seller’s Board of Directors shall
not approve, or take any other action to cause the filing of, or join in any filing of, a voluntary
bankruptcy or insolvency petition, dissolution, liquidation, consolidation, merger, sale of all or
substantially all of its assets, assignment for the benefit of creditors, admit in writing its
inability to pay its debts generally as they become due, or to engage in any other business or
activity with respect to the Seller unless (x) there is at least one Independent Director then
serving as a director of the Seller and appointed pursuant to and in strict compliance with the
Seller’s LLC Agreement, and (y) all such Independent Directors of the Seller shall have approved
the taking of such action in writing prior to the taking of such action and (ii) such provision
cannot be amended without the prior written consent of the Independent Director and the
Administrator;



     (d) Upon the occurrence of any event that causes the Member to cease to be a member of the
Seller (other than (i) upon an assignment by the Member of all of its limited liability company
interest in the Seller and the admission of the transferee pursuant to Sections 21 and 23 of the
LLC Agreement, or (ii) the resignation of the Member and the admission of an additional member of
the Seller pursuant to Sections 22 and 23 of the LLC Agreement), each person acting as an
Independent Director pursuant to Section 10 of the LLC Agreement shall, without any action of any
Person and simultaneously with the Member ceasing to be a member of the Seller, automatically be
admitted to the Seller as a Special Member and shall continue the Seller without dissolution. No
Special Member may resign from the Seller or transfer its rights as a Special Member unless (i) a
successor Special Member has been admitted to the Seller as Special Member by executing a
counterpart to the LLC Agreement, and (ii) such successor has also accepted its appointment as
Independent Director pursuant to Section 10 of the LLC Agreement; provided,
however, the Special Members shall automatically cease to be members of the Seller upon the
admission to the Seller of a substitute Member.



IV-10









 





     (e) The Independent Director shall not at any time serve as a trustee in bankruptcy for the
Seller, Peabody or any Affiliate thereof;



     (f) Any employee, consultant or agent of the Seller will be compensated from the Seller’s
funds for services provided to the Seller. The Seller will not engage any agents other than its
attorneys, auditors and other professionals, and a servicer and any other agent contemplated by the
Transaction Documents for the Receivables Pool, which servicer will be fully compensated for its
services by payment of the Servicing Fee, and a manager, which manager will be fully compensated
from the Seller’s funds;



     (g) The Seller will contract with the Servicer to perform for the Seller all operations
required on a daily basis to service the Receivables Pool. The Seller will pay the Servicer the
Servicing Fee pursuant hereto. The Seller will not incur any material indirect or overhead
expenses for items shared with Peabody (or any other Affiliate thereof) that are not reflected in
the Servicing Fee. To the extent, if any, that the Seller (or any Affiliate thereof) shares items
of expenses not reflected in the Servicing Fee or the manager’s fee, such as legal, auditing and
other professional services, such expenses will be allocated to the extent practical on the basis
of actual use or the value of services rendered, and otherwise on a basis reasonably related to the
actual use or the value of services rendered; it being understood that Peabody shall pay all
expenses relating to the preparation, negotiation, execution and delivery of the Transaction
Documents, including legal, agency and other fees;



     (h) The Seller’s operating expenses will be paid by the Seller and not by Peabody or any other
Affiliate thereof;



     (i) All of the Seller’s business correspondence and other communications shall be conducted in
the Seller’s own name and on its own separate stationery;



     (j) The Seller’s books and records will be maintained separately from those of Peabody and any
other Affiliate thereof and any other Person;



     (k) All financial statements of Peabody or any Affiliate thereof that are consolidated to
include Seller will contain detailed notes clearly stating that: (i) a special purpose limited
liability company exists as a Subsidiary of Peabody, and (ii) the Originators have sold
receivables and other related assets to the Contributor, which has contributed such receivables and
other related assets to such special purpose Subsidiary that, in turn, has sold such receivables
and other related assets to certain financial institutions and other entities;



     (l) The Seller’s assets will be maintained in a manner that facilitates their identification
and segregation from those of Peabody or any Affiliate thereof and any other Person;



     (m) The Seller will strictly observe organizational formalities in its dealings with Peabody
or any Affiliate thereof, and funds or other assets of the Seller will not be commingled with those
of Peabody or any Affiliate thereof except as permitted by the Agreement in connection with
servicing the Pool Receivables. The Seller shall not maintain joint bank accounts or other
depository accounts to which Peabody or any Affiliate thereof or any other



IV-11









 




Person has independent access, and the Seller shall use separate invoices and checks from any
other Person. The Seller is not named, and has not entered into any agreement to be named,
directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy
with respect to any loss relating to the property of Peabody or any Subsidiary or other Affiliate
of Peabody (other than the Seller) The Seller will pay to the appropriate Affiliate the marginal
increase or, in the absence of such increase, the market amount of its portion of the premium
payable with respect to any insurance policy that covers the Seller and such Affiliate;




     (n) The Seller will maintain arm’s-length relationships with Peabody (and any Affiliate
thereof). Any Person that renders or otherwise furnishes services to the Seller will be
compensated by the Seller at market rates for such services it renders or otherwise furnishes to
the Seller. Neither the Seller nor Peabody will be or will hold itself out to be responsible for
the debts of the other or the decisions or actions respecting the daily business and affairs of the
other. The Seller and Peabody will immediately correct any known misrepresentation with respect to
the foregoing, and they will not operate or purport to operate as an integrated single economic
unit with respect to each other or in their dealing with any other entity;



     (o) Peabody shall not pay the salaries of Seller’s employees, if any;



     (p) The Seller does not and will not hold itself responsible for the obligations of any other
Person, and shall not guarantee or become liable for the debts of any other Person;



     (q) The Seller will conduct its business in its own name and shall hold itself out as a
separate entity from any other Person;



     (r) The Seller shall maintain a sufficient number of employees and adequate capital in light
of its contemplated business activities;



     (s) The Seller shall not acquire the obligations or securities of any of its members; and



     (t) The Seller shall not pledge its assets for the benefit of any other Person or make any
loans or advances to any other Person, except pursuant to the Transaction Documents.



IV-12









 





EXHIBIT V

TERMINATION EVENTS




     Each of the following shall be a “Termination Event”:



     (a) (i) the Seller, Peabody, any Originator or the Servicer (if Peabody or any of its
Affiliates) shall fail to perform or observe any term, covenant or agreement under the Agreement
(other than those terms, covenants or agreements contained in Exhibit IV, Sections 1(a),
1(l) (except clause (iv) thereof), 2(a), and 2(l) (except clause
(viii) thereof)) or any other Transaction Document and, except as otherwise provided herein,
such failure shall continue for five consecutive Business Days after knowledge or notice thereof,
(ii) the Seller or the Servicer shall fail to make when due any payment or deposit to be made by it
under the Agreement and such failure shall continue unremedied for one Business Day, (iii) Peabody
shall resign as Servicer, and no successor Servicer reasonably satisfactory, to the Administrator
shall have been appointed, or (iv) the Seller, Peabody, any Originator or the Servicer (if Peabody
or any of its Affiliates) shall fail to perform or observe any term covenant or agreement in any of
Exhibit IV, Sections 1(a), 1(l) (except clause (iv) thereof), 2(a), or
2(l) (except clause (viii) thereof) and, except as otherwise provided herein, such
failure shall continue for thirty days after knowledge or notice thereof;



     (b) Peabody (or any Affiliate thereof) shall fail to transfer to any successor Servicer when
required any rights pursuant to the Agreement that Peabody (or such Affiliate) then has as
Servicer;



     (c) any representation or warranty made or deemed made by the Seller, Peabody or any
Originator (or any of their respective officers) under or in connection with the Agreement or any
other Transaction Document, or any information or report delivered by the Seller, Peabody or any
Originator or the Servicer pursuant to the Agreement or any other Transaction Document, shall prove
to have been incorrect or untrue in any material respect when made or deemed made or delivered, and
shall remain incorrect or untrue for 10 Business Days after notice to the Seller or the Servicer of
such inaccuracy;



     (d) the Seller or the Servicer shall fail to deliver the Information Package pursuant to the
Agreement, and such failure shall remain unremedied for two Business Days;



     (e) the Agreement or any Investment or Reinvestment pursuant to the Agreement shall for any
reason: (i) cease to create a valid and enforceable perfected ownership or security interest in
each Pool Receivable, the Related Security and Collections with respect thereto, free and clear of
any Adverse Claim, or (ii) cease to create with respect to the Pool Assets, or the interest of the
Administrator with respect to such Pool Assets shall cease to be, a valid and enforceable first
priority perfected ownership or security interest, free and clear of any Adverse Claim;



     (f) the Seller, Peabody or any Originator shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be instituted by or
against the Seller, Peabody or any Originator seeking to adjudicate it as bankrupt or insolvent, or
seeking



V-1









 




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, custodian or other similar official for it or for any substantial part of its property
and, in the case of any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or for any substantial part of
its property) shall occur; or the Seller, Peabody or any Originator shall take any corporate or
organizational action to authorize any of the actions set forth above in this paragraph;




     (g) (i) the (A) Default Ratio shall exceed 2.25% or (B) the Delinquency Ratio shall exceed
4.50% or (ii) the average for three consecutive calendar months of: (A) the Default Ratio shall
exceed 1.75%, (B) the Delinquency Ratio shall exceed 3.50% or (C) the Dilution Ratio shall exceed
2.50%;



     (h) a Change in Control shall occur;



     (i) at any time the Purchased Assets Coverage Percentage exceeds 100%, and such circumstance
shall not have been cured within two Business Days;



     (j) (i) the occurrence of any Event of Default under and as defined in the Credit Agreement,
provided that if the Credit Agreement is terminated but not replaced, the covenants in effect in
the Credit Agreement immediately prior to termination of the Credit Agreement shall be deemed to be
effective for the purposes of the Agreement; (ii) any other event shall occur or condition shall
exist under the Credit Agreement and shall continue after the applicable grace period, if any,
specified in such Credit Agreement if, in either case: (a) the effect of such non-payment, event
or condition is to give the applicable debtholders the right (whether acted upon or not) to
accelerate the maturity of such Debt, or (b) any such Debt shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to repay, redeem, purchase or defease such Debt shall be
required to be made, in each case before the stated maturity thereof; (iii) in the event that the
Credit Agreement shall have terminated, and there exists any other financing arrangement evidencing
$25,000,000 or more of indebtedness pursuant to which Peabody is a debtor or an obligor (an
“Other Material Financing Agreement”); either (A) the occurrence of any event of default
under such Other Material Financing Agreement, or (B) any other event shall occur or condition
shall exist under and shall continue after the applicable grace period, if any, specified in such
Other Material Financing Agreement, if, in either case of (A) or (B): (i) the effect of such
non-payment, event or condition is to give the applicable debtholders the right (whether acted upon
or not) to accelerate the maturity of such Other Material Financing Agreement, or (b) any such
Other Material Financing Agreement shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased,
or an offer to repay, redeem, purchase or defease such Debt shall be required to be made, in each
case before the stated maturity thereof;



     (k) except as could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, either: (i) a contribution failure shall occur with respect to any



V-2









 





Benefit Plan sufficient to give rise to a lien on any of the assets of Seller, any Originator,
Peabody or any ERISA Affiliate under Section 302(f) of ERISA, (ii) the Internal Revenue Service
shall file a notice of lien asserting a claim or claims pursuant to the Internal Revenue Code with
regard to any of the assets of Seller, any Originator, Peabody or any ERISA Affiliate and such lien
shall have been filed and not released within 10 days, or (iii) the Pension Benefit Guaranty
Corporation shall, or shall indicate its intention in writing to the Seller, any Originator,
Peabody or any ERISA Affiliate to, either file a notice of lien asserting a claim pursuant to ERISA
with regard to any assets of the Seller, any Originator, Peabody or any ERISA Affiliate or
terminate any Benefit Plan that has unfunded benefit liabilities, or any steps shall have been
taken to terminate any Benefit Plan subject to Title IV of ERISA so as to result in any liability
and such lien shall have been filed and not released within 10 days;



     (l) the Days’ Sales Outstanding exceed 40.0 days;



     (m) a default shall occur under the Intercreditor Agreement, or any Person shall attempt to
terminate or assert the invalidity or unenforceability of the Intercreditor Agreement or any
provision thereof; or



     (n) Any Letter of Credit is drawn upon and, unless as a result of the LC Bank’s failure to
provide the notice required by Section 1.16(b), not fully reimbursed pursuant to
Section 1.16 (including, if applicable, with the proceeds of any funding by the Issuer)
within two Business Days from the date of such draw.





V-3









 








SCHEDULE I

CREDIT AND COLLECTION POLICY




(Attached)




Schedule I-1












 





SCHEDULE II

LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS




	 	 	 
	BANK:

	 	PNC BANK

PITTSBURGH, PA






	 	 	 	 	 
	NAME OF ORIGINATOR	 	ACCOUNT NUMBER	 	LOCK-BOX NUMBER
	Powder River Coal, LLC
	 	1008971367
	 	642396
	 	 	 	 	 
	COALSALES II, LLC
	 	1008971287
	 	642381
	 	 	 	 	 
	COALTRADE, LLC
	 	1008971359
	 	642406
	 	 	 	 	 
	Peabody Western Coal Company
	 	1008971308
	 	N/A
	 	 	 	 	 
	Arclar Company, LLC
	 	1017292948
	 	643445
	 	 	 	 	 
	Peabody Midwest Mining, LLC1
	 	1017293238
	 	643461
	 	 	 	 	 
	Twentymile Coal, LLC
	 	1017307281
	 	643625
	 	 	 	 	 
	COALSALES, LLC
	 	1019275295
	 	643772
	 	 	 	 	 
	Peabody COALTRADE International
(CTI),
LLC
	 	1019270195
	 	643694








 




			
	1	 	The parties acknowledge and agree that on the Closing
Date this account will be in the name of Black Beauty Coal Company, LLC, and
that Seller and the Servicer shall cause such account to be in the name of
Peabody Midwest Mining, LLC not later than thirty (30) days after the Closing
Date.




Schedule II-1









 










SCHEDULE III

TRADE NAMES




None.





Schedule III-1









 








SCHEDULE IV

OFFICE LOCATIONS



The Principal Place of Business, Chief Executive Office and state of formation of the Seller is:




     701 Market Street, St. Louis, Missouri 63101; Seller is a Delaware limited liability company


The Seller maintains its master books and records relating to Receivables at:




     701 Market Street, St. Louis, Missouri 63101


The Principal Place of Business, Chief Executive Office and state of formation of Peabody is:




     701 Market Street, St. Louis, Missouri 63101; Peabody is a Delaware corporation


Peabody maintains its master books and records relating to the Receivables at:




     701 Market Street, St. Louis, Missouri 63101


The Principal Place of Business, Chief Executive Office and state of formation of Peabody Holding
Company, LLC is:




     701 Market Street, St. Louis, Missouri 63101; Peabody Holding Company, LLC is a Delaware
limited liability company


Peabody Holding Company, LLC maintains its master books and records relating to the Receivables at:




     701 Market Street, St. Louis, Missouri 63101



Schedule IV-1









 





ANNEX A

to Receivables Purchase Agreement




FORM OF INFORMATION PACKAGE




(Attached)




Annex A-1









 








ANNEX B

to Receivables Purchase Agreement




FORM OF INVESTMENT NOTICE

                                        , [20            ]




PNC Bank, National Association

One PNC Plaza, 26th Floor

249 Fifth Avenue

Pittsburgh, PA 15222-2707



Ladies and Gentlemen:




     Reference is hereby made to the Second Amended and Restated Receivables Purchase Agreement,
dated as of December 15, 2009 (as heretofore amended or supplemented, the “Receivables Purchase
Agreement”), among P&L Receivables Company, LLC, (“Seller”), Peabody Energy
Corporation, as Servicer, the Persons from time to time party thereto as Sub-Servicers, Market
Street Funding LLC (“Issuer”), PNC Bank National Association, as administrator (in such
capacity, the “Administrator”) and as the issuer of letters of credit thereunder (in such
capacity, the “LC Bank”) and the LC Participants from time to time party thereto.
Capitalized terms used in this Investment Notice and not otherwise defined herein shall have the
meanings assigned thereto in the Receivables Purchase Agreement.



     [This letter constitutes an Investment Notice pursuant to Section 1.2(a) of the
Receivables Purchase Agreement. Seller requests that the Issuer make an Investment in a pool of
receivables on                                         , [20             ], in the amount of $
             
                     
      . Subsequent
to this Investment, the aggregate outstanding Capital will be $           
                     
        .]2



     [This letter constitutes a notice pursuant to Section 1.14(a) of the Receivables
Purchase Agreement. Seller desires that LC Bank issue a Letter of Credit with a face amount of
$                    . Subsequent to this issuance, the LC Participation Amount will be $                     and the aggregate
outstanding Capital will be $                    .]3



     Seller hereby represents and warrants as of the date hereof, and as of the date of such
[Investment] [issuance], as follows:




	(i)	 	the representations and warranties contained in Exhibit III to the
Receivables Purchase Agreement are true and correct in all material respects (except to
the extent that such representations and warranties expressly relate to an earlier
date, and in which case such representations and warranties are true and correct in all
material respects as of such earlier date);







 




			
	2	 	In the case of a Borrowing Request.
	 
	3	 	In the case of a request for an issuance of a Letter of
Credit. In the event of a request for the issuance of a Letter of Credit, a
Letter of Credit Application in the form of Annex E to the Receivables
Purchase Agreement must also be delivered by the Seller.




Annex B-1









 











	(ii)	 	no event has occurred and is continuing, or would result from the Investment or
issuance requested hereby that constitutes a Termination Event;
	 
	(iii)	 	no Unmatured Termination Event exists and is continuing;
	 
	(iv)	 	the sum of the Capital plus the LC Participation Amount, after giving effect to
the Investment or issuance requested hereby will not exceed the Purchase Limit;
	 
	(v)	 	after giving effect to the Investment or issuance requested hereby, the
Purchased Assets Coverage Percentage shall not exceed 100%; and
	 
	(vi)	 	the Facility Termination Date has not occurred.




Annex B-2









 











     IN WITNESS WHEREOF, the undersigned has caused this Investment Notice to be executed by its
duly authorized officer as of the date first above written.



	 	 	 	 	 
	 	P&L RECEIVABLES COMPANY, LLC



 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



Annex B-3









 






	 	 	 	 	 



ANNEX C

to Receivables Purchase Agreement




FORM OF PAYDOWN NOTICE



                                        , 20            




PNC Bank, National Association

One PNC Plaza, 26th Floor

249 Fifth Avenue

Pittsburgh, Pennsylvania 15222-2707



Ladies and Gentlemen:





     Reference is hereby made to the Second Amended and Restated Receivables Purchase Agreement,
dated as of December 15, 2009 (as amended, supplemented or otherwise modified, the “Receivables
Purchase Agreement”), among P&L Receivables Company, LLC, as Seller, Peabody Energy
Corporation, as Servicer, the Persons from time to time party thereto as Sub-Servicers, Market
Street Funding LLC, as Issuer, PNC Bank, National Association, as Administrator and as the LC Bank
and the various LC Participants from time to time party thereto. Capitalized terms used in this
paydown notice and not otherwise defined herein shall have the meanings assigned thereto in the
Receivables Purchase Agreement.



     This letter constitutes a paydown notice pursuant to Section 1.6(f)(i) of the
Receivables Purchase Agreement. The Seller desires to reduce the Capital on
                                        ,                     4 by the application of $    
                     
                in cash to
pay Capital and Discount to accrue (until such cash can be used to pay commercial paper notes) with
respect to such Capital, together with all costs related to such reduction of Capital. Subsequent
to this Paydown, the Capital will be $               
                    
     .



     IN WITNESS WHEREOF, the undersigned has caused this paydown notice to be executed by its duly
authorized officer as of the date first above written.



	 	 	 	 	 
	 	P&L RECEIVABLES COMPANY, LLC



 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 





 




			
	4	 	Notice must be given at least five Business Days’ prior
to the requested paydown date, in the case of reductions in excess of
$20,000,000, or at least two Business Days’ prior to the requested paydown
date, in the case of reductions of $20,000,000 or less.




Annex C-1









 










ANNEX D

to Receivables Purchase Agreement




FORM OF COMPLIANCE CERTIFICATE




To: PNC Bank, National Association, as Administrator




          This Compliance Certificate is furnished pursuant to that certain Second Amended and Restated
Receivables Purchase Agreement, dated as of December 15, 2009, by and among P&L Receivables
Company, LLC (“Seller”), Peabody Energy Corporation (the “Servicer”), the Persons
from time to time party thereto as Sub-Servicers, Market Street Funding LLC (the “Issuer”),
PNC Bank, National Association (the “Administrator”) and as the LC Bank and the various LC
Participants from time to time party thereto (the “Agreement”). Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to them in the Agreement.




          THE UNDERSIGNED HEREBY CERTIFIES THAT:




          1.
I am the duly elected                                          of Seller.




          2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under
my supervision, a detailed review of the transactions and condition of Seller during the accounting
period covered by the attached financial statements.




          3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the
existence of any condition or event which constitutes a Termination Event or an Unmatured
Termination Event, as each such term is defined under the Agreement, during or at the end of the
accounting period covered by the attached financial statements or as of the date of this
Certificate, except as set forth in paragraph 5 below.




          4. Schedule I attached hereto sets forth financial data and computations evidencing the
compliance with certain covenants of the Agreement (and the Credit Agreement), all of which data
and computations are true, complete and correct.




          5. Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the
nature of the condition or event, the period during which it has existed and the action which
Seller has taken, is taking, or proposes to take with respect to each such condition or event:




Annex D-1









 









     The foregoing certifications, together with the computations set forth in Schedule I hereto and the
financial statements delivered with this Certificate in support hereof, are made and delivered this
                     day of
                            
            ,
 20              .



	 	 	 	 	 
	P&L RECEIVABLES COMPANY, LLC


 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 



Annex D-1









 






	 	 	 	 	 



SCHEDULE I TO COMPLIANCE CERTIFICATE





     A. Schedule of Compliance as of 
                        
                ,
20            
with Section(s)                   
   of the
Agreement. Unless otherwise defined herein, the terms used in this Compliance Certificate have the
meanings ascribed thereto in the Agreement.



     This schedule relates to the month ended:                                        



Annex D-1









 





ANNEX E

to Receivables Purchase Agreement




FORM OF LETTER OF CREDIT APPLICATION




(Attached)





Annex E-1