exv10w11



 





Exhibit 10.11




	 	 	 
	BANK OF AMERICA, N.A.

	 	BANC OF AMERICA SECURITIES LLC
	100 Federal Street

	 	100 Federal Street
	Boston, Massachusetts 02110

	 	Boston, Massachusetts 02110
	 
	 	 
	 
	 	 
	 
	 	 





September 24, 2007




Patriot Coal Corporation

701 Market Street

St. Louis, Missouri 63101-1826




Attention: Mark Schroeder, Senior Vice President and Chief Financial Officer




$500,000,000 Senior Secured Credit Facility




Ladies and Gentlemen:



Bank of America, N.A. (“Bank of America”) is pleased to offer to be the sole administrative agent
(in such capacity, the “Administrative Agent”) for a revolving credit facility of up to
$500,000,000 (the “Senior Credit Facility”) to Patriot Coal Corporation, a Delaware corporation
(“you” or the “Borrower”), and Bank of America is pleased to offer its commitment to provide up to
the full principal amount of the Senior Credit Facility, upon and subject to the terms and
conditions set forth in this letter (this “Commitment Letter”) and in the Summary of Terms and
Conditions attached as Exhibit A hereto and incorporated herein by this reference (the “Summary of
Terms”). Banc of America Securities LLC (“BAS”) is pleased to advise you of its willingness in
connection with the foregoing commitment, as the sole and exclusive lead arranger and sole and
exclusive book manager (in such capacities, the “Lead Arranger”) for the Senior Credit Facility, to
use its best efforts to form a syndicate of financial institutions and institutional lenders
(including Bank of America) (collectively, the “Lenders”) for the Senior Credit Facility.



Bank of America will act as sole Administrative Agent for the Senior Credit Facility and BAS will
act as sole Lead Arranger for the Senior Credit Facility. No additional agents, co-agents or
arrangers will be appointed and no other titles will be awarded unless you and we shall so agree.



The commitment of Bank of America hereunder and the undertaking of BAS to provide the services
described herein are subject to the satisfaction of each of the following conditions precedent in a
manner acceptable to Bank of America and BAS: (a) the completion of a legal and confirmatory
business due diligence review of the Borrower and its subsidiaries in scope and with results
reasonably satisfactory to us; (b) the accuracy and completeness in all material respects of all
representations that you make to Bank of America and BAS in this Commitment Letter and your
compliance with all material covenants and agreements contained in this Commitment Letter
(including the Summary of Terms) and the Fee Letter (as hereinafter defined); (c) prior to and
during the syndication of the Senior Credit Facility there shall be no competing offering,
placement or arrangement of any debt securities or bank financing by or on behalf of the Borrower
or any of its subsidiaries if such debt securities or bank financing could have, in the reasonable
judgment of the Lead Arranger, a detrimental effect upon the primary syndication of the Senior
Credit Facility; (d) the negotiation, execution and delivery of definitive documentation for the


 









 






Senior Credit Facility consistent with the Summary of Terms and otherwise satisfactory to you and
us; and (e) no change, occurrence or development shall have occurred since June 30, 2007 that has
had or could reasonably be expected to have a Material Adverse Effect (as defined in the Summary of
Terms).



BAS intends to commence syndication of the Senior Credit Facility promptly upon your acceptance of
this Commitment Letter and the Fee Letter, and the commitment of Bank of America hereunder shall be
reduced dollar-for-dollar as and when corresponding commitments are received from the Lenders and
each such Lender has executed a commitment letter with the Borrower substantially similar to this
Commitment Letter. You agree to actively assist BAS in achieving a syndication of the Senior
Credit Facility that is satisfactory to BAS and you. Such assistance shall include your (a)
providing, and using commercially reasonable efforts to cause your advisors to provide, Bank of
America and BAS and the other Lenders upon request with all information reasonably deemed necessary
by Bank of America and BAS to complete such syndication, including, but not limited to, information
and evaluations prepared by you and your advisors, or on your behalf, relating to the transactions
contemplated hereby (including the Projections (as hereinafter defined), the “Information”), (b)
assisting in the preparation of an Information Memorandum and other materials to be used in
connection with the syndication of the Senior Credit Facility (collectively with the Summary of
Terms, the “Information Materials”), (c) using your commercially reasonable efforts, and using
commercially reasonable efforts to cause Peabody Energy Corporation (“Peabody”) to use its
commercially reasonable efforts, to ensure that the syndication efforts of BAS benefit materially
from your existing lending and banking relationships and the existing banking and lending
relationships of Peabody and (d) otherwise providing reasonable assistance to Bank of America and
BAS in their syndication efforts, including by making your officers and the officers of the
Borrower’s subsidiaries available, and using commercially reasonable efforts to make your advisors
available, from time to time to attend and make presentations regarding the business and prospects
of the Borrower and its subsidiaries, as appropriate, at one or more meetings of prospective
Lenders. You hereby agree that the Information Memorandum to be used in connection with the
syndication of the Senior Credit Facility shall be completed at least 30 days prior to the Closing
Date (as hereinafter defined).




It is understood and agreed that BAS will manage and control all aspects of the syndication in
consultation with you, including decisions as to the selection of prospective Lenders and any
titles offered to proposed Lenders, when commitments will be accepted and the final allocations of
the commitments among the Lenders. It is understood that no Lender participating in the Senior
Credit Facility will receive compensation from you in order to obtain its commitment, except on the
terms contained herein and in the Summary of Terms. It is also understood and agreed that the
amount and distribution of the fees among the Lenders will be at the sole and absolute discretion
of Bank of America and BAS.



You represent and warrant that (a) all financial projections concerning the Borrower and its
subsidiaries that have been or are hereafter made available to Bank of America, BAS or the Lenders
by you or any of your representatives (or on your or their behalf) (the “Projections”) have been or
will be prepared in good faith based upon assumptions believed by you to be reasonable at the time
made and (b) all Information, other than Projections and information of a general economic or
general industry nature, which has been or is hereafter made available to Bank of America, BAS or
the Lenders by you or any of your representatives (or on your or their behalf) in connection with
any aspect of the transactions contemplated hereby, as and when furnished, when taken as a whole,
is and will be complete and correct in all material respects and does not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the
statements contained therein not materially misleading in light of the circumstances under which
such statements are made. You agree to furnish us with further and supplemental information from
time to time until the date of the initial borrowing under the Senior Credit Facility (the “Closing
Date”) and, if reasonably requested by us, for a reasonable period thereafter as is necessary to
achieve a “successful syndication” (as defined in the Fee Letter) so that the representation



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and warranty in the immediately preceding sentence is correct on the Closing Date and on such later
date on which a “successful syndication” is achieved as if the Information were being furnished,
and such representation and warranty were being made, on such date. In issuing this commitment and
in arranging and syndicating the Senior Credit Facility, Bank of America and BAS are and will be
using and relying on the Information without independent verification thereof.



You acknowledge that BAS and/or Bank of America on your behalf will make available Information
Materials to the proposed syndicate of Lenders by posting the Information Materials on IntraLinks
or another similar electronic system. In connection with the syndication of the Senior Credit
Facility, unless the parties hereto otherwise agree in writing, you shall be under no obligation to
provide Information Materials suitable for distribution to any prospective Lender (each, a “Public
Lender”) that has personnel who do not wish to receive material non-public information (within the
meaning of the United States federal securities laws, “MNPI”) with respect to the Borrower or its
affiliates or any other entity, or the respective securities of any of the foregoing. You agree,
however, that the definitive credit documentation will contain provisions concerning Information
Materials to be provided to Public Lenders and the absence of MNPI therefrom. Prior to
distribution of Information Materials to prospective Lenders, you shall provide us with a customary
letter authorizing the dissemination thereof.



By executing this Commitment Letter, you agree to reimburse Bank of America and BAS from time to
time on demand for all reasonable out-of-pocket fees and expenses (including, but not limited to,
(a) the reasonable fees, disbursements and other charges of Latham & Watkins LLP, as counsel to the
Lead Arranger and the Administrative Agent, and of special and local counsel to the Lenders
retained by the Lead Arranger or the Administrative Agent and (b) due diligence expenses) incurred
in connection with the Senior Credit Facility, the syndication thereof, the preparation of the
definitive documentation therefor and the other transactions contemplated hereby.



You agree to indemnify and hold harmless Bank of America, BAS, and each of their affiliates and
their respective officers, directors, employees, agents, advisors and other representatives (each,
an “Indemnified Party”) from and against (and will reimburse each Indemnified Party as the same are
incurred for) any and all claims, damages, losses, liabilities and expenses (including, without
limitation, the reasonable fees, disbursements and other charges of counsel) that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in connection therewith) (a)
any matters contemplated by this Commitment Letter or any related transaction or (b) the Senior
Credit Facility and any other financings, or any use made or proposed to be made with the proceeds
thereof except to the extent such claim, damage, loss, liability or expense is found in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence, bad faith, willful misconduct or material breach of this Commitment
Letter. In the case of an investigation, litigation or proceeding to which the indemnity in this
paragraph applies, such indemnity shall be effective whether or not such investigation, litigation
or proceeding is brought by you, your equityholders or creditors or an Indemnified Party, whether
or not an Indemnified Party is otherwise a party thereto and whether or not any aspect of the
transactions contemplated hereby are consummated. You also agree that no Indemnified Party shall
have any liability (whether direct or indirect, in contract or tort or otherwise) to you or your
subsidiaries or affiliates or to your or their respective equity holders or creditors arising out
of, related to or in connection with any aspect of the transactions contemplated hereby, except to
the extent of direct, as opposed to special, indirect, consequential or punitive, damages.
Notwithstanding any other provision of this Commitment Letter, no Indemnified Party shall be liable
for any damages arising from the use by others of information or other materials obtained through
electronic telecommunications or other information transmission systems, other than for direct or
actual damages resulting from the gross negligence, bad



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faith or willful misconduct of such Indemnified Party as determined by a final and nonappealable
judgment of a court of competent jurisdiction.



This Commitment Letter and the fee letter among you, Bank of America and BAS of even date herewith
(the “Fee Letter”) and the contents hereof and thereof are confidential and, except for disclosure
hereof or thereof on a confidential basis to Peabody and to your and their accountants, attorneys
and other professional advisors retained in connection with the transactions contemplated hereby or
as otherwise required by law, may not be disclosed in whole or in part to any person or entity
without our prior written consent; provided, however, it is understood and agreed that you may
disclose this Commitment Letter (including the Summary of Terms) but not the Fee Letter, after your
acceptance of this Commitment Letter and the Fee Letter, in filings with the Securities and
Exchange Commission and other applicable regulatory authorities and stock exchanges. Bank of
America and BAS hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title
III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), each of them is required to
obtain, verify and record information that identifies you, which information includes your name and
address and other information that will allow Bank of America or BAS, as applicable, to identify
you in accordance with the Act.



You acknowledge that Bank of America and BAS or their affiliates may be providing financing or
other services to parties whose interests may conflict with yours. Bank of America and BAS agree
that they will not furnish confidential information obtained from you to any of their other
customers and that they will treat confidential information relating to you and your affiliates
with the same degree of care as they treat their own confidential information. Bank of America and
BAS further advise you that they will not make available to you confidential information that they
have obtained or may obtain from any other customer. In connection with the services and
transactions contemplated hereby, you agree that Bank of America and BAS are permitted to access,
use and share with any of their bank or non-bank affiliates, agents, advisors (legal or otherwise)
or representatives any information concerning you or any of your affiliates that is or may come
into the possession of Bank of America, BAS or any of such affiliates.



In connection with all aspects of each transaction contemplated by this Commitment Letter, you
acknowledge and agree that: (a) (i) the arranging and other services described herein regarding
the Senior Credit Facility are arm’s-length commercial transactions between you and your
affiliates, on the one hand, and Bank of America and BAS, on the other hand, (ii) you have
consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed
appropriate, and (iii) you are capable of evaluating, and understand and accept, the terms, risks
and conditions of the transaction contemplated hereby; (b) (i) Bank of America and BAS each has
been, is, and will be acting solely as a principal and, except as otherwise expressly agreed in
writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent
or fiduciary for you, any of your affiliates or any other person or entity and (ii) neither Bank of
America nor BAS has any obligation to you or your affiliates with respect to the transaction
contemplated hereby except those obligations expressly set forth herein; and (c) Bank of America
and BAS and their respective affiliates may be engaged in a broad range of transactions that
involve interests that differ from yours and those of your affiliates, and Bank of America and BAS
have no obligation to disclose any of such interests to you or your affiliates. To the fullest
extent permitted by law, you hereby waive and release any claims that you may have against Bank of
America and BAS with respect to any breach or alleged breach of agency or fiduciary duty in
connection with any aspect of any transaction contemplated by this Commitment Letter.



The provisions of the immediately preceding five paragraphs shall remain in full force and effect
regardless of whether any definitive documentation for the Senior Credit Facility shall be executed
and delivered, and notwithstanding the termination of this Commitment Letter or any commitment or
undertaking of Bank of America or BAS hereunder; provided that provisions relating to reimbursement



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and indemnification shall automatically terminate and be superseded by the definitive documentation
for the Senior Credit Facility on the Closing Date.



This Commitment Letter and the Fee Letter may be executed in counterparts which, taken together,
shall constitute an original. Delivery of an executed counterpart of this Commitment Letter or the
Fee Letter by telecopier or facsimile shall be effective as delivery of a manually executed
counterpart thereof.



This Commitment Letter (including the Summary of Terms) and the Fee Letter shall be governed by,
and construed in accordance with, the laws of the State of New York. Each of you, Bank of America
and BAS hereby irrevocably waives any and all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this
Commitment Letter (including the Summary of Terms), the Fee Letter, the transactions contemplated
hereby and thereby or the actions of Bank of America and BAS in the negotiation, performance or
enforcement hereof.



This Commitment Letter (including the Summary of Terms) and the Fee Letter embody the entire
agreement and understanding among Bank of America, BAS, you and your affiliates with respect to the
Senior Credit Facility and supersedes all prior agreements and understandings relating to the
specific matters hereof. However, please note that the terms and conditions of the commitment of
Bank of America and the undertaking of BAS hereunder are not limited to those set forth herein or
in the Summary of Terms. Those matters that are not covered or made clear herein or in the Summary
of Terms or the Fee Letter are subject to mutual agreement of the parties. No party has been
authorized by Bank of America or BAS to make any oral or written statements that are inconsistent
with this Commitment Letter. This Commitment Letter is not assignable by you without our prior
written consent and is intended to be solely for the benefit of the parties hereto and the
Indemnified Parties.



This Commitment Letter and all commitments and undertakings of Bank of America and BAS hereunder
will expire at 5:00 p.m. (Boston, MA time) on September 24, 2007 unless you execute this Commitment
Letter and the Fee Letter and return them to us prior to that time (which may be by facsimile
transmission), whereupon this Commitment Letter (including the Summary of Terms) and the Fee Letter
(each of which may be signed in one or more counterparts) shall become binding agreements.
Thereafter, all commitments and undertakings of Bank of America and BAS hereunder will expire on
December 15, 2007, unless the Closing Date occurs on or prior to such date.



THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK




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We are pleased to have the opportunity to work with you in connection with this important
financing.



	 	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Adam H. Fey
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Adam H. Fey
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BANC OF AMERICA SECURITIES LLC
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Jeffrey Bloomquist
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Jeffrey Bloomquist
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Principal
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 





	 	 	 	 	 	 	 
	ACCEPTED AND AGREED TO	 	 
	AS OF THE DATE FIRST ABOVE WRITTEN:	 	 
	 
	 	 	 	 	 	 
	PATRIOT COAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Mark N. Schroeder	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Mark N. Schroeder	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Senior Vice President & Chief Financial Officer	 	 
	 

	 	 	 	 	 	 





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EXHIBIT A




SUMMARY OF INDICATIVE TERMS AND CONDITIONS

PATRIOT COAL CORPORATION

$500,000,000 SENIOR CREDIT FACILITY




	 	 	 
	Borrower:

	 	Patriot Coal Corporation (the “Borrower”).
	 
	 	 
	Guarantors:

	 	The Senior Credit Facility (defined below) shall be guaranteed by all existing and future
direct and indirect wholly-owned domestic and, to the extent no material adverse tax
consequences would result, foreign subsidiaries of the Borrower (with exceptions for
immaterial subsidiaries to be agreed) (the “Guarantors”). All guarantees shall be guarantees
of payment and not of collection.
	 
	 	 
	Administrative
	 	 
	Agent:

	 	Bank of America, N.A. (the “Administrative Agent” or “Bank of America”) will act as sole and
exclusive administrative agent.
	 
	 	 
	Lead Arranger and
	 	 
	Book Manager:

	 	Banc of America Securities LLC (“BAS”).
	 
	 	 
	Lenders:

	 	A syndicate of financial institutions (including Bank of America) arranged by BAS, which
institutions shall be reasonably acceptable to the Administrative Agent and the Borrower
(collectively, the “Lenders”).
	 
	 	 
	Senior Credit
	 	 
	Facility:

	 	$500.0 million 5-year revolving credit facility (the “Senior Credit Facility”), which shall be
available for the issuance of letters of credit (each a “Letter of Credit”), and shall include
a $50.0 million sublimit for swingline loans (each a “Swingline Loan”). Letters of Credit
will be issued by Bank of America and other Lenders to be mutually agreed (in such capacity,
each a “Fronting Bank”) and Swingline Loans will be made available by Bank of America, and
each Lender will purchase an irrevocable and unconditional participation in each Letter of
Credit and Swingline Loan.
	 
	 	 
	Swingline Option:

	 	Swingline Loans will be made available on a same day basis in a minimum amount of $100,000 or
a whole multiple of $50,000 in excess thereof. The Borrower must repay each Swingline Loan in
full no later than ten (10) business days after such loan is made.
	 
	 	 
	Purpose:

	 	The proceeds of the Senior Credit Facility shall be used for working capital (including the
issuance of Letters of Credit) capital expenditures, and other lawful corporate purposes,
including, without limitation, acquisitions.
	 
	 	 
	Closing Date:

	 	The execution of definitive loan documentation, to occur on or before a mutually agreeable
date to be determined (the “Closing Date”).






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	Interest Rates:

	 	As set forth in Addendum I.
	 
	 	 
	Maturity:

	 	The Senior Credit Facility shall terminate and all amounts outstanding thereunder shall be due
and payable in full 5 years from the Closing Date.
	 
	 	 
	Increase of Commitment:

	 	Provided that no Default has occurred and is continuing, the Borrower shall have the right,
without the consent of the Lenders but subject to the approval of the Administrative Agent, to
effectuate from time to time an increase in the commitments under the Senior Credit Facility
by adding one or more commercial banks or other financial institutions or by allowing one or
more Lenders to increase their individual commitments hereunder; provided that (a) no increase
in individual commitments shall result in the aggregate commitments under the Senior Credit
Facility being more than $200,000,000 above the amount of the Senior Credit Facility on the
Closing Date and (b) no Lender’s individual commitment amount shall be increased without the
consent of such Lender.
	 
	 	 
	Mandatory Prepayments:

	 	100% of all net cash proceeds (i) from sales of property and assets of the Borrower and its
subsidiaries (excluding sales of inventory in the ordinary course of business and other
exceptions to be agreed upon in the loan documentation), (ii) from casualty and condemnation
events, and (iii) from the issuance or incurrence after the Closing Date of additional senior
secured debt of the Borrower or any of its subsidiaries otherwise permitted under the loan
documentation. Any mandatory prepayments pursuant to this paragraph shall not result in a
reduction in the commitments.
	 
	 	 
	Optional
	 	 
	Prepayments
	 	 
	And Commitment
	 	 
	Reductions:

	 	The Borrower may prepay the Senior Credit Facility in whole or in part at any time without
penalty, subject to reimbursement of the Lenders’ breakage and redeployment costs in the case
of prepayment of LIBOR borrowings. The unutilized portion of any commitment under the Senior
Credit Facility in excess of the Swingline Loans and the stated amount of all Letters of
Credit may be irrevocably canceled in whole or in part.
	 
	 	 
	Security:

	 	The Senior Credit Facility shall be secured by valid and perfected first priority (subject to
certain exceptions to be set forth in the loan documentation) liens and security interests in
all of the following:







	 	(a)	 	All present and future shares of
capital stock of (or other ownership or profit interests in)
each of the Borrower’s and each Guarantor’s direct present and
future subsidiaries (limited, in the case of each entity that is
a “controlled foreign corporation” under Section 957 of the
Internal Revenue Code, to a pledge of 66% of the capital stock
of each such first-tier foreign subsidiary to the extent the
pledge of any greater percentage would result in adverse tax
consequences to the Borrower);





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	 	(b)	 	All present and future
intercompany debt of the Borrower and each Guarantor;
	 
	 	(c)	 	Certain currently-owned and
after-acquired parcels of real property, including mines and
coal reserves, and related fixtures, held in fee or under lease,
as shall be mutually agreed;
	 
	 	(d)	 	All present and future personal
property and assets of the Borrower and each Guarantor, other
than described in (a) through (c) above, including, but not
limited to, machinery and equipment, inventory and other goods,
accounts receivable, bank accounts, general intangibles,
financial assets, investment property, license rights, patents,
trademarks, tradenames, copyrights, chattel paper, insurance
proceeds, documents, instruments, and cash; and
	 
	 	(e)	 	All proceeds and products of the
property and assets described in clauses (a) through (d) above.





	 	 	 
	 

	 	The Security shall ratably secure the relevant party’s obligations in
respect of the Senior Credit Facility, any treasury management
arrangements and any interest rate swap or similar agreements with a
Lender under the Senior Credit Facility.
	 
	 	 
	 

	 	Notwithstanding anything to the contrary, the Security shall exclude
the following: (i) those assets over which the granting of security
interests in such assets would be prohibited by contract, applicable
law or regulation or, with respect to the assets of any non-wholly
owned subsidiary, the organizational documents of such non-wholly
owned subsidiary, (ii) payroll, tax and other trust accounts, and
(iii) those assets as to which the Administrative Agent and the
Borrower reasonably determine that the cost of obtaining such a
security interest or perfection thereof are excessive in relation to
the benefit to the Lenders of the security to be afforded thereby.
	 
	 	 
	 

	 	The Borrower shall not be required to take any action other than
delivery of UCC financing statements with respect to perfection of
security interests in motor vehicles and other assets subject to
certificates of title not used in coal production operations.
	 
	 	 
	Conditions Precedent
	 	 
	To Closing:

	 	The Closing (and the initial funding) of the
Senior Credit Facility will be subject to
satisfaction of the following conditions
precedent:







	 	(i)	 	The negotiation, execution and
delivery of definitive documentation (including, without
limitation, reasonably satisfactory legal opinions and other
customary closing documents) for the Senior Credit Facility
satisfactory to BAS, the Administrative Agent and the Borrower.
	 
	 	(ii)	 	The Administrative Agent shall
have received reasonably satisfactory evidence that the
Administrative Agent (on behalf of




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	 	 	 	the Lenders) shall have a valid and perfected first priority
(subject to certain exceptions to be set forth in the loan
documentation) lien and security interest in the collateral
referred to under the section “Security” set forth above.






	 	(iii)	 	The corporate and capital
structure of the Borrower shall be substantially similar as
disclosed in the Borrower’s draft Form 10 dated August 20, 2007.
	 
	 	(iv)	 	The completion (subject only to
the closing of the Senior Credit Facility) of the spin-off
transaction of the Borrower from Peabody Energy Corporation
(“Peabody”) on terms substantially similar to those described in
the Borrower’s draft Form 10, as amended through the date
hereof.
	 
	 	(v)	 	There shall not have occurred a
material adverse change in the business, assets, operations,
property or condition (financial or otherwise) of the Borrower
and its subsidiaries, taken as a whole, since June 30, 2007.
	 
	 	(vi)	 	All representations and
warranties in the definitive documentation for the Senior Credit
Facility shall be true and correct in all material respects as
of the date of such borrowing.
	 
	 	(vii)	 	The absence of any action, suit,
investigation or proceeding pending or, to the knowledge of the
Borrower, threatened in any court or before any arbitrator or
governmental authority that could reasonably be expected to (y)
have a material adverse effect on the business, assets,
operations, property or condition (financial or otherwise) of
the Borrower and its subsidiaries, taken as a whole, or (z)
materially adversely affect the validity or enforceability of
the loan documentation or the rights and remedies of the
Administrative Agent or the Lenders thereunder (collectively, a
“Material Adverse Effect”).
	 
	 	(viii)	 	The Administrative Agent shall have completed a legal and
confirmatory business due diligence investigation of the
Borrower and its subsidiaries in scope, and with results,
reasonably satisfactory to it and shall have received the
December 31, 2006 audited financial statements of the Borrower
and its subsidiaries, quarterly financial statements of the
Borrower and its subsidiaries dated the end of the most recent
fiscal quarter ended 45 days prior to the Closing Date for which
financial statements are available, and financial projections in
a form to be mutually agreed covering the term of the Senior
Credit Facility.
	 
	 	(ix)	 	Payment of all reasonable fees
and expenses related to the Senior Credit Facility required to
be paid at closing for which invoices have been received at
least one business day before the Closing Date.




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	Conditions Precedent
	 	 
	To All Borrowings:

	 	The following: (i) all representations and
warranties are true and correct in all
material respects as of the date of each
borrowing, and (ii) no event of default
under the Senior Credit Facility or
incipient default has occurred and is
continuing, or would result from such
borrowing.
	 
	 	 
	Representations
	 	 
	And Warranties:

	 	Usual and customary for transactions of this
type, to include without limitation (subject
to customary materiality and other
qualifications and exceptions to be mutually
agreed): (i) corporate existence and status;
(ii) corporate power and authority,
enforceability; (iii) no violation of law,
contracts or organizational documents; (iv)
no material litigation; (v) accuracy and
completeness of specified financial
statements and no material adverse change;
(vi) no required governmental or third party
approvals or consents; (vii) use of proceeds
and not engaging in business of
purchasing/carrying margin stock; (viii)
status under Investment Company Act; (ix)
ERISA matters; (x) environmental matters;
(xi) tax matters; (xii) ownership of
property and insurance matters; (xiii)
accuracy of disclosure; (xiv) compliance
with laws; (xv) subsidiaries; (xvi) no
default; (xvii) perfected liens, security
interests and charges; and (xviii) solvency.
	 
	 	 
	Covenants:

	 	Usual and customary for transactions of this
type, to include without limitation (subject
to customary materiality and other
qualifications and exceptions to be mutually
agreed): (i) delivery of financial
statements, SEC filings, compliance
certificates and notices of default, and
other materially adverse events; (ii)
compliance with laws and material
contractual obligations; (iii) payment of
obligations; (iv) preservation of existence;
(v) maintenance of books and records and
inspection rights; (vi) use of proceeds;
(vii) maintenance of insurance; (viii)
limitation on liens, mergers,
consolidations, sales of assets and
incurrence of debt; (ix) limitation on
dividends, stock redemptions and the
redemption and/or prepayment of other debt;
(x) limitation on investments (including
loans and advances) and acquisitions; (xi)
limitation on transactions with affiliates;
(xii) limitation on lines of business; and
(xiii) limitation on capital expenditures
accounting for maintenance capital as well
as acquisition and organic growth capital
expenditures.







Financial covenants as follows:




	 	•	 	Maintenance on a rolling four
quarter basis of a Maximum Leverage Ratio (total funded net
debt/EBITDA) of 3.25x; provided that for purposes of calculating
the Maximum Leverage Ratio, EBITDA for the first quarter after
the Closing Date shall equal EBITDA for the first quarter, times
4, EBITDA for the second quarter after the Closing Date shall
equal EBITDA for the first two quarters, times 2, EBITDA for the
third quarter after the Closing Date shall equal EBITDA for the
first three quarters, times 4/3, and thereafter, EBITDA shall be
calculated on a rolling four quarter basis, and




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	 	•	 	Maintenance on a rolling four
quarter basis of an Interest Coverage Ratio (EBITDA/interest
expense) of 3.50x; provided that the first Interest Coverage
Ratio test after the Closing Date shall be measured for one
fiscal quarter, the second Interest Coverage Ratio test after
the Closing Date shall be measured for two fiscal quarters, the
third Interest Coverage Ratio test after the Closing Date shall
be measured for three fiscal quarters, and each Interest
Coverage Ratio test thereafter shall be measured on a rolling
four quarter period.





	 	 	 
	Events of Default:

	 	Usual and customary in transactions of this
type, to include without limitation: (i)
nonpayment of principal, interest, fees or
other amounts (with grace periods in certain
cases to be agreed); (ii) any representation
or warranty proving to have been incorrect in
any material respect when made or confirmed;
(iii) failure to perform or observe covenants
set forth in the loan documentation within a
specified period of time, where customary and
appropriate, after such failure; (iv)
cross-default to other indebtedness in an
amount to be agreed; (v) bankruptcy and
insolvency defaults (with grace period for
involuntary proceedings); (vi) monetary
judgment defaults in an amount to be agreed;
(vii) actual or asserted invalidity of any
loan documentation; (viii) change of control
(with a definition to be agreed); and (ix)
customary ERISA defaults.
	 
	 	 
	Assignments and
	 	 
	Participations:

	 	Assignments: Subject to the consents
described below (which consents will not be
unreasonably withheld or delayed), each Lender
will be permitted to make assignments to other
financial institutions in respect of the
Senior Credit Facility in a minimum amount
equal to $5 million.







Consents: The consent of the Borrower (not to be
unreasonably withheld or delayed) will be required unless (i) an
Event of Default has occurred and is continuing or (ii) the
assignment is to a Lender, an affiliate of a Lender or an Approved
Fund (as such term shall be defined in the loan documentation). So
long as no Event of Default has occurred and is continuing,
assignments will be subject to certain customary restrictions
regarding increased taxes and other costs. The consent of the
Administrative Agent will be required for any assignment of the
Senior Credit Facility to an entity that is not a Lender with a
commitment in respect of the Senior Credit Facility, an affiliate of
such Lender or an Approved Fund in respect of such Lender. The
consent of the Fronting Bank and the lender of any Swingline Loan
will be required for any assignment under the Senior Credit Facility.




Assignments Generally: An assignment fee in the amount of
$3,500 will be charged with respect to each assignment unless waived
by the Administrative Agent in its sole discretion. Each Lender will
also have the right, without consent of the Borrower or the
Administrative Agent, to assign as security all or part of its rights
under the loan documentation to any Federal Reserve Bank.



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Participations: Lenders will be permitted to
sell participations with voting rights limited
to significant matters such as changes in
amount, rate, maturity date and releases of all
or substantially all of the collateral securing
the Senior Credit Facility or all or
substantially all of the value of the guaranties
of the Borrower’s obligations made by the
Guarantors. Participants will not have the
benefit of certain gross-up rights regarding
taxes and other increased costs.



	 	 	 
	Waivers and
	 	 
	Amendments:

	 	Amendments and waivers of the provisions of the
loan agreement and other definitive credit
documentation will require the approval of
Lenders holding loans and commitments
representing more than 50% of the aggregate
amount of loans and commitments under the Senior
Credit Facility, except that the consent of all
the Lenders affected thereby shall be required
with respect to (i) increases in the commitment
of such Lenders, (ii) reductions of principal,
interest or fees, (iii) extensions of scheduled
maturities or times for payment, and (iv)
releases of all or substantially all of the
collateral or the Guarantors. The loan
documentation will contain customary
“yank-a-bank” provisions.
	 
	 	 
	Indemnification:

	 	The Borrower will indemnify and hold harmless
the Administrative Agent, BAS, each Lender and
their respective affiliates and their officers,
directors, employees, agents and advisors from
and against all losses, liabilities, claims,
damages or expenses arising out of or relating
to the Senior Credit Facility, the Borrower’s
use of loan proceeds or the commitments,
including, but not limited to, reasonable
attorneys’ fees and settlement costs, except for
losses, liabilities, claims, damages or expenses
resulting from an indemnified party’s gross
negligence, bad faith, or willful misconduct.
This indemnification shall survive and continue
for the benefit of all such persons or entities.
	 
	 	 
	Governing Law:

	 	State of New York.
	 
	 	 
	Pricing/Fees/
	 	 
	Expenses:

	 	As set forth in Addendum I.
	 
	 	 
	Other:

	 	This Summary of Terms is intended as an outline
of certain of the material terms of the Senior
Credit Facility and does not purport to
summarize all of the conditions, covenants,
representations, warranties and other provisions
which would be contained in definitive
documentation for the Senior Credit Facility
contemplated hereby, which shall be subject to
agreement of the parties thereto. Each of the
parties shall (i) waive its right to a trial by
jury and (ii) submit to New York jurisdiction.
The loan documentation will contain customary
increased cost, withholding tax, capital
adequacy and yield protection provisions and
customary provisions for removing Lenders
subject to such costs.







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ADDENDUM I

PRICING, FEES AND EXPENSES




	 	 	 
	Commitment Fee:

	 	The Borrower will pay a fee (the “Commitment
Fee”), determined in accordance with the
Performance Pricing grid set forth below, on the
unused portion of each Lender’s commitments under
the Senior Credit Facility. The Commitment Fee
will be payable quarterly in arrears commencing
upon the Closing Date. Swing Line Loans will not
be deemed to be utilization for purposes of
calculating the Commitment Fee.
	 
	 	 
	Letters of
	 	 
	Credit Fees:

	 	The Borrower will pay a fee equal to the
Applicable Margin on LIBOR Loans (the “Letter of
Credit Fee”), determined in accordance with the
Performance Pricing grid set forth below, on the
maximum amount available to be drawn under each
Letter of Credit that is issued and outstanding.
The Letter of Credit Fee will be payable
quarterly in arrears, commencing on the Closing
Date, and will be shared proportionately by the
Lenders. In addition there shall be a fronting
fee of 0.125% per annum paid to the Fronting Bank
as well as customary administrative fees.
	 
	 	 
	Interest Rates:

	 	At the Borrower’s option, loans under the Senior
Credit Facility will bear interest at a rate
equal to the Applicable Margin, as determined in
accordance with the Performance Pricing grid set
forth below, plus one of the following indexes: (i) LIBOR and (ii) for Dollar-denominated loans
only, the Base Rate (to be defined as the higher
of (a) the Bank of America prime rate and (b) the
Federal Funds rate plus .50%). Each Swingline
Loan shall bear interest at the Base Rate plus
the Applicable Margin for Base Rate loans under
the Senior Credit Facility.


The Borrower may select interest periods of 1, 2, 3 or 6 months for
LIBOR loans (or 9 or 12 months, subject to availability to all
Lenders). Interest shall be payable at the end of the selected
interest period, but no less frequently than quarterly.


A default rate shall apply on all obligations not paid when due at a
rate per annum of 2% above the applicable interest rate.
	 
	 	 
	Performance
	 	 
	Pricing:

	 	The Commitment Fee and Applicable Margin, for any
fiscal quarter, shall be the applicable rate per
annum set forth in the table below opposite
Borrower’s Leverage Ratio as determined in Financial
Covenants as of the last day of the immediately
preceding fiscal quarter.






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	 	 	 	 	 	 	Applicable Margin	 	 	Commitment	 
	Level	 	Leverage	 	 	LIBOR	 	 	Base Rate	 	 	Fee	 
	I
	 	 	> 2.50x	 	 	 	2.250	%	 	 	1.250	%	 	 	0.500	%
	II
	 	 	> 2.00x	 	 	 	1.875	%	 	 	0.875	%	 	 	0.375	%
	III
	 	 	> 1.50x	 	 	 	1.625	%	 	 	0.625	%	 	 	0.375	%
	IV
	 	 	> 1.00x	 	 	 	1.375	%	 	 	0.375	%	 	 	0.250	%
	V
	 	 	< 1.00x	 	 	 	1.250	%	 	 	0.250	%	 	 	0.250	%






	 	 	 
	Calculation of
	 	 
	Interest and Fees:

	 	Other than calculations in respect of
interest at the Bank of America prime rate
(which shall be made on the basis of actual
number of days elapsed in a 365/366 day
year), all calculations of interest and fees
shall be made on the basis of actual number
of days elapsed in a 360 day year.
	Expenses:

	 	The Borrower will pay all reasonable and
documented costs and expenses associated with
the preparation, due diligence, negotiation,
administration, syndication and closing of
all loan documentation, including, without
limitation, the reasonable and documented
legal fees of counsel to the Administrative
Agent and BAS, regardless of whether or not
the Senior Credit Facility is closed. The
Borrower will also pay the reasonable and
documented expenses of the Administrative
Agent and each Lender in connection with the
enforcement of any loan documentation.







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