Document:

Exhibit 10.5(E)

                                                               EXECUTION VERSION

                ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT

     Assignment, Assumption and Recognition Agreement (the "Agreement"), dated
January 31, 2006, is among Bank of America, National Association, a national
banking association ("Assignor"), Banc of America Funding Corporation, a
Delaware corporation ("BAFC"), U.S. Bank National Association, a national
banking association, as trustee of the Banc of America Funding 2006-A Trust
("Assignee"), Wells Fargo Bank, N.A., a national banking association ("Wells
Fargo Bank"), as master servicer of the Banc of America Funding 2006-A Trust,
Countrywide Home Loans, Inc. (the "Company"), and Countrywide Home Loans
Servicing LP ("Countrywide").

     WHEREAS, pursuant to (i) that certain Master Mortgage Loan Purchase and
Servicing Agreement, dated as of April 1, 2003, by and between Assignor (as
successor in interest to Banc of America Mortgage Capital Corporation
("BAMCC")), as purchaser, and the Company, as seller, (ii) that certain
Amendment No. 1, dated as of June 1, 2003, by and among BAMCC, the Company and
the Assignor, (iii) that certain Amendment No. 2, dated as of September 1, 2004,
by and among BAMCC, the Company and the Assignor, (iv) that certain Amendment
Reg AB to the Master Mortgage Loan Purchase and Servicing Agreement (the
"Amendment Reg AB"), dated as of January 1, 2006, by and between the Company and
the Assignor, (v) that certain Purchase Confirmation, dated as of May 25, 2005,
by and between the Company and the Assignor, (vi) that certain Purchase
Confirmation, dated as of June 24, 2005, by and between the Company and the
Assignor, (vii) that certain Purchase Confirmation, dated as of July 25, 2005,
by and between the Company and the Assignor, (viii) that certain Purchase
Confirmation, dated as of September 29, 2005, by and between the Company and the
Assignor, (ix) that certain Purchase Confirmation, dated as of November 16,
2005, by and between the Company and the Assignor and (x) that certain Purchase
Confirmation, dated as of December 29, 2005, by and between the Company and the
Assignor (collectively, the "Purchase and Servicing Agreement"), each of which
is attached in Appendix I hereto, the Assignor purchased the Mortgage Loans (as
defined herein) from the Company;

     WHEREAS, on the date hereof, the Assignor is transferring all of its right,
title and interest in and to the Mortgage Loans to BAFC;

     WHEREAS, on the date hereof, BAFC is transferring all of its right, title
and interest in and to the Mortgage Loans to the Assignee;

     WHEREAS, on the date hereof, the Company is transferring all of its right,
title and interest in and to the servicing of the Mortgage Loans to Countrywide;
and

     WHEREAS, on the date hereof, Wells Fargo Bank, as master servicer (in such
capacity, the "Master Servicer"), is entering into a Pooling and Servicing
Agreement, dated the date hereof (the "Pooling Agreement), among BAFC, the
Master Servicer, Wells Fargo Bank, as securities administrator (the "Securities
Administrator"), and the Assignee, pursuant to which the Master Servicer will
supervise, monitor and oversee the servicing of the Mortgage Loans.

     For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:

     1. The Assignor hereby grants, transfers and assigns to BAFC, and BAFC
hereby grants, transfers and assigns to Assignee, all of the right, title and
interest of the Assignor in, to and under the Purchase and Servicing Agreement,
and the mortgage loans delivered under such agreement by Countrywide to the
Assignor and listed on Exhibit A attached hereto (the "Mortgage Loans").

     The Assignor specifically reserves and does not assign to BAFC or the
Assignee any right, title and interest in, to or under any mortgage loan subject
to the Purchase and Servicing Agreement other than the Mortgage Loans.

     2. The Company hereby grants, transfers and assigns to Countrywide all of
the right, title and interest of the Company in, to and under the servicing
rights under the Purchase and Servicing Agreement as it relates to the mortgage
loans and only the mortgage loans delivered under such agreement by Countrywide
to the Assignor and listed on Exhibit A attached hereto (the "Mortgage Loans").
The parties hereto acknowledge that Countrywide shall service the Mortgage Loans
on behalf of the Company in accordance with the Purchase and Servicing Agreement
from the date hereof. Countrywide hereby assumes all of the Company's
obligations and duties under the Purchase and Servicing Agreement as it relates
to the Mortgage Loans from and after the date hereof. The Company specifically
reserves and does not assign to Countrywide any right, title and interest in, to
or under (i) the Purchase and Servicing Agreement as it relates to any mortgage
loans other than the Mortgage Loans or (ii) any mortgage loans subject to the
Purchase and Servicing Agreement other than the Mortgage Loans. Notwithstanding
the foregoing, it is understood that the Company is not released from liability
to the Assignor, or its permitted successors and assigns, for any breaches of
any representations, warranties or covenants made by the Company in the Purchase
and Servicing Agreement prior to the date hereof.

     3. The Assignor warrants and represents to, and covenants with, BAFC and
the Assignee that:

     a.   The Assignor is the lawful owner of the Mortgage Loans with the full
          right to transfer the Mortgage Loans free from any and all claims and
          encumbrances whatsoever;

     b.   The Assignor has not received notice of, and has no knowledge of, any
          offsets, counterclaims or other defenses available to Countrywide with
          respect to the Purchase and Servicing Agreement or the Mortgage Loans;

     c.   The Assignor has not waived or agreed to any waiver under, or agreed
          to any amendment or other modification of, the Purchase and Servicing
          Agreement or the Mortgage Loans, including without limitation the
          transfer of the servicing obligations under the Purchase and Servicing
          Agreement. The Assignor has no knowledge of, and has not received

          notice of, any waivers under or amendments or other modifications of,
          or assignments of rights or obligations under, the Purchase and
          Servicing Agreement or the Mortgage Loans; and

     d.   Neither the Assignor nor anyone acting on its behalf has offered,
          transferred, pledged, sold or otherwise disposed of the Mortgage
          Loans, any interest in the Mortgage Loans or any other similar
          security to, or solicited any offer to buy or accept a transfer,
          pledge or other disposition of the Mortgage Loans, any interest in the
          Mortgage Loans or any other similar security from, or otherwise
          approached or negotiated with respect to the Mortgage Loans, any
          interest in the Mortgage Loans or any other similar security with, any
          person in any manner, or made any general solicitation by means of
          general advertising or in any other manner, or taken any other action
          which would constitute a distribution of the Mortgage Loans under the
          Securities Act of 1933, as amended (the "Securities Act"), or which
          would render the disposition of the Mortgage Loans a violation of
          Section 5 of the Securities Act or require registration pursuant
          thereto.

     4. From and after the date hereof, Countrywide shall (i) note the transfer
of the Mortgage Loans to the Assignee in its books and records, (ii) recognize
the Assignee as the owner of the Mortgage Loans and (iii) notwithstanding
anything to the contrary contained in Section 8.07 of the Purchase and Servicing
Agreement, shall service the Mortgage Loans pursuant to the Purchase and
Servicing Agreement, as modified by Section 10 hereof, for the benefit of the
Assignee.

     5. Countrywide hereby acknowledges that Wells Fargo Bank, N.A. has been
appointed as the Master Servicer of the Mortgage Loans pursuant to the Pooling
Agreement, and therefore has the right to enforce all obligations of Countrywide
as they relate to the Mortgage Loans, under the Purchase and Servicing
Agreement, including, without limitation, the right to exercise any and all
rights of the Assignor (but not the obligations) under the Purchase and
Servicing Agreement to monitor and enforce the obligations of Countrywide
thereunder, the right to terminate Countrywide under the Purchase and Servicing
Agreement upon the occurrence of an event of default thereunder, the right to
receive all remittances required to be made by Countrywide under the Purchase
and Servicing Agreement, the right to receive all monthly reports and other data
required to be delivered by Countrywide under the Purchase and Servicing
Agreement, the right to examine the books and records of Countrywide or the
Company (as such books and records relate to the prior period of servicing of
the Mortgage Loans by the Company), indemnification rights, and the right to
exercise certain rights of consent and approval relating to actions taken by
Countrywide. Wire remittances shall be sent to: WELLS FARGO BANK, N.A., ABA#
121000248, FOR CREDIT TO: SAS CLEARING, ACCT: 3970771416, FFC TO: BAFC 2006-A #
50892300.

     6. Countrywide hereby represents and warrants to each of the other parties
hereto (i) that the representations and warranties in Section 3.01 of the
Purchase and Servicing Agreement are true and correct in all material respects
as of the date hereof with the same force and effect as though expressly made by
Countrywide at and/or as of

the date hereof, (ii) the Mortgage Loans have been serviced in accordance with
the terms of the Purchase and Servicing Agreement, (iii) that the Company has
taken no action nor omitted to take any required action the omission of which
would have the effect of impairing any mortgage insurance or guarantee on the
Mortgage Loans and (iv) that any information provided by the Company on or
before the date hereof to any of the parties hereto is true and correct.

     7. Countrywide hereby agrees to cooperate with BAFC, the Master Servicer
and the Assignee to enable BAFC, the Master Servicer and the Securities
Administrator to fully comply with all Securities and Exchange Commission
("SEC") disclosure and reporting requirements in effect from time to time with
respect to the trust created by the Pooling Agreement (which shall be named
"Banc of America Funding 2006-A Trust") (the "Trust") and any securities
representing ownership interests in or backed by assets of the Trust, including
without limitation, the SEC's recently published rules regarding asset-backed
securities (Release Nos. 33-8518; 34-50905; File No. S7-21-0433-8419) as set
forth in the Amendment Reg AB.

     8. Countrywide hereby agrees that, in connection with each Mortgage Loan of
which the related Mortgage has been recorded in the name of MERS or its
designee, it shall take all actions as are necessary to cause the Assignee, as
trustee of the Trust pursuant to the Pooling Agreement, to be shown as the owner
of such Mortgage Loan on the records of MERS for purposes of the system of
recording transfers of beneficial ownership of mortgages maintained by MERS.

     9. In accordance with Sections 2.05 and 7.01 of the Purchase and Servicing
Agreement, the Assignor hereby instructs Countrywide, and Countrywide hereby
agrees, to release from its custody and deliver the contents of the Collateral
File (as defined in the Purchase and Servicing Agreement) for each Mortgage Loan
to U.S. Bank National Association, in its capacity as custodian under the
Pooling Agreement on or before the closing date of the related Pass-Through
Transfer (as defined in the Purchase and Servicing Agreement).

     10. Countrywide, BAFC and Assignee hereby agree to the following
modifications to the Purchase and Servicing Agreement solely with respect to the
Mortgage Loans:

     a.   Article I. The definition of "Qualified Substitute Mortgage Loan" is
          hereby replaced in its entirety with the following:

          "A mortgage loan that must, on the date of such substitution, (i) have
          an unpaid principal balance, after deduction of all scheduled payments
          due in the month of substitution (or if more than one (1) mortgage
          loan is being substituted, an aggregate principal balance), not in
          excess of the unpaid principal balance of the repurchased Mortgage
          Loan (the amount of such shortfall will be deposited in the Custodial
          Account by Countrywide in the month of substitution); (ii) have a
          Mortgage Interest Rate not less than, and not more than two percent
          (2%) greater than, the Mortgage Interest Rate of the repurchased
          Mortgage Loan; (iii) have a remaining term to

          maturity not greater than and not more than one year less than that of
          the repurchased Mortgage Loan; (iv) comply with each representation
          and warranty set forth in Sections 3.01 and 3.02; (v) be of the same
          type as the repurchased Mortgage Loan; (vi) have a Gross Margin not
          less than that of the repurchased Mortgage Loan; (vii) have the same
          Index as the repurchased Mortgage Loan; (viii) have a FICO score not
          less than that of the repurchased Mortgage Loan, (ix) have an LTV not
          greater than that of the repurchased Mortgage Loan; (x) have a credit
          grade not lower in quality than that of the repurchased Mortgage Loan
          and (xi) have the same lien status as the repurchased Mortgage Loan."

     b.   Section 5.01. The following is added as the second paragraph of
          Section 5.01:

          "With respect to any remittance received by the Purchaser or any
          master servicer after the Business Day on which such payment was due,
          Countrywide shall pay to the Purchaser or any master servicer interest
          on any such late payment at an annual rate equal to the rate of
          interest as is publicly announced from time to time at its principal
          office by JPMorgan Chase Bank, New York, New York, as its prime
          lending rate, adjusted as of the date of each change, plus one
          percentage point, but in no event greater than the maximum amount
          permitted by applicable law. Such interest shall be paid by
          Countrywide to the Purchaser or any master servicer on the date such
          late payment is made and shall cover the period commencing with the
          day such remittance was due and ending with the Business Day on which
          such payment is made, both inclusive. Such interest shall be remitted
          along with such late payment. The payment by Countrywide of any such
          interest shall not be deemed an extension of time for payment or a
          waiver of any Event of Default by Countrywide."

     c.   Section 5.02. The first paragraph of Section 5.02 is hereby modified
          to read as follows:

          "Not later than the fifth (5th) Business Day of each month,
          Countrywide shall furnish to the Purchaser a delinquency report in the
          form set forth in Exhibit H-1, a monthly remittance advice in the form
          set forth in Exhibit H-2, and a realized loss report in the form set
          forth in Exhibit H-3, each in a mutually agreeable electronic format,
          as to the remittance on such Remittance Date and as to the period
          ending on the last day of the month preceding such Remittance Date."

          The exhibits referenced in this Section 9(c) are attached to this
          Agreement on Exhibit B hereto.

          Section 7.01. Section 7.01(a)(i) is hereby modified by deleting "three
          (3) Business Days" and replacing it with "two (2) Business Days (but
          in no event later than the 20th day of the month)".

     11. The Assignee's address for purposes of all notices and correspondence
related to the Mortgage Loans and the Purchase and Servicing Agreement is:

         U.S. Bank National Association
         209 S. LaSalle Street, Suite 300
         Chicago, Illinois 60604
         Attention: Structured Finance Trust Services, BAFC 2006-A

     The Assignor's address for purposes of all notices and correspondence
related to the Mortgage Loans and the Purchase and Servicing Agreement is:

         Bank of America, National Association
         214 North Tryon Street
         Charlotte, North Carolina 28255
         Attention: Managing Director

     BAFC's address for purposes of all notices and correspondence related to
the Mortgage Loans is:

         Banc of America Funding Corporation
         214 North Tryon Street
         Charlotte, North Carolina 28255
         Attention: General Counsel and Chief Financial Officer

                               [Signatures Follow]

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

                                        Bank of America, National Association,
                                        Assignor

                                        By: /s/ Bruce W. Good
                                            ------------------------------------
                                        Name: Bruce W. Good
                                        Title: Vice President

                                        U.S. Bank National Association, Assignee

                                        By: /s/ Melissa A. Rosal
                                            ------------------------------------
                                        Name: Melissa A. Rosal
                                        Title: Vice President

                                        Banc of America Funding Corporation

                                        By: /s/ Scott Evans
                                            ------------------------------------
                                        Name: Scott Evans
                                        Title: Senior Vice President

                                        Countrywide Home Loans, Inc.

                                        By: /s/ Monica Brudenell
                                            ------------------------------------
                                        Name: Monica Brudenell
                                        Title: First Vice President

                                        Countrywide Home Loans Servicing LP

                                        By: Countrywide GP, Inc., its general
                                            partner

                                            By: /s/ Monica Brudenell
                                                --------------------------------
                                            Name:  Monica Brudenell
                                            Title: First Vice President

   [BAFC 2006-A Countrywide Assignment, Assumption and Recognition Agreement]

Acknowledged and Agreed
as of the date first above written:

Wells Fargo Bank, N.A., as Master Servicer

By: /s/ Graham Oglesby
    ---------------------------------
Name: Graham Oglesby
Title: Assistant Vice President

                                    EXHIBIT A

                           Schedule of Mortgage Loans

                                       A-1

                                    EXHIBIT B

EXHIBIT H-1 STANDARD FILE LAYOUT - DELINQUENCY REPORTING

-----------------------------------------------------------------------------------------------------
COLUMN/HEADER NAME                           DESCRIPTION                   DECIMAL    FORMAT COMMENT
-----------------------------------------------------------------------------------------------------

SERVICER_LOAN_NBR            A unique number assigned to a loan by the
                             Servicer. This may be different than the
                             LOAN_NBR
-----------------------------------------------------------------------------------------------------
LOAN_NBR                     A unique identifier assigned to each loan
                             by the originator.
-----------------------------------------------------------------------------------------------------
CLIENT_NBR                   Servicer Client Number
-----------------------------------------------------------------------------------------------------
SERV_INVESTOR_NBR            Contains a unique number as assigned by an
                             external servicer to identify a group of
                             loans in their system.
-----------------------------------------------------------------------------------------------------
BORROWER_FIRST_NAME          First Name of the Borrower.
-----------------------------------------------------------------------------------------------------
BORROWER_LAST_NAME           Last name of the borrower.
-----------------------------------------------------------------------------------------------------
PROP_ADDRESS                 Street Name and Number of Property
-----------------------------------------------------------------------------------------------------
PROP_STATE                   The state where the  property located.
-----------------------------------------------------------------------------------------------------
PROP_ZIP                     Zip code where the property is located.
-----------------------------------------------------------------------------------------------------
BORR_NEXT_PAY_DUE_DATE       The date that the borrower's next payment               MM/DD/YYYY
                             is due to the servicer at the end of
                             processing cycle, as reported by Servicer.
-----------------------------------------------------------------------------------------------------
LOAN_TYPE                    Loan Type (i.e. FHA, VA, Conv)
-----------------------------------------------------------------------------------------------------
BANKRUPTCY_FILED_DATE        The date a particular bankruptcy claim was              MM/DD/YYYY
                             filed.
-----------------------------------------------------------------------------------------------------
BANKRUPTCY_CHAPTER_CODE      The chapter under which the bankruptcy was
                             filed.
-----------------------------------------------------------------------------------------------------
BANKRUPTCY_CASE_NBR          The case number assigned by the court to
                             the bankruptcy filing.
-----------------------------------------------------------------------------------------------------
POST_PETITION_DUE_DATE       The payment due date once the bankruptcy                MM/DD/YYYY
                             has been approved by the courts
-----------------------------------------------------------------------------------------------------
BANKRUPTCY_DCHRG_DISM_DATE   The Date The Loan Is Removed From                       MM/DD/YYYY
                             Bankruptcy. Either by Dismissal, Discharged
                             and/or a Motion For Relief Was Granted.
-----------------------------------------------------------------------------------------------------
LOSS_MIT_APPR_DATE           The Date The Loss Mitigation Was Approved               MM/DD/YYYY
                             By The Servicer
-----------------------------------------------------------------------------------------------------
LOSS_MIT_TYPE                The Type Of Loss Mitigation Approved For A
                             Loan Such As;
-----------------------------------------------------------------------------------------------------
LOSS_MIT_EST_COMP_DATE       The Date The Loss Mitigation /Plan Is                   MM/DD/YYYY
                             Scheduled To End/Close
-----------------------------------------------------------------------------------------------------
LOSS_MIT_ACT_COMP_DATE       The Date The Loss Mitigation Is Actually                MM/DD/YYYY
                             Completed
-----------------------------------------------------------------------------------------------------
FRCLSR_APPROVED_DATE         The date DA Admin sends a letter to the                 MM/DD/YYYY
                             servicer with instructions to begin
                             foreclosure proceedings.
-----------------------------------------------------------------------------------------------------
ATTORNEY_REFERRAL_DATE       Date File Was Referred To Attorney to                   MM/DD/YYYY
                             Pursue Foreclosure
-----------------------------------------------------------------------------------------------------
FIRST_LEGAL_DATE             Notice of 1st legal filed by an Attorney in             MM/DD/YYYY
                             a Foreclosure Action
-----------------------------------------------------------------------------------------------------
FRCLSR_SALE_EXPECTED_DATE    The date by which a foreclosure sale is                 MM/DD/YYYY
                             expected to occur.
-----------------------------------------------------------------------------------------------------
FRCLSR_SALE_DATE             The actual date of the foreclosure sale.                MM/DD/YYYY
-----------------------------------------------------------------------------------------------------
FRCLSR_SALE_AMT              The amount a property sold for at the            2      No commas(,) or
                             foreclosure sale.                                       dollar signs ($)
-----------------------------------------------------------------------------------------------------
EVICTION_START_DATE          The date the servicer initiates eviction of             MM/DD/YYYY
                             the borrower.
-----------------------------------------------------------------------------------------------------
EVICTION_COMPLETED_DATE      The date the court revokes legal possession             MM/DD/YYYY
                             of the property from the borrower.
-----------------------------------------------------------------------------------------------------
LIST_PRICE                   The price at which an REO property is            2      No commas(,) or
                             marketed.                                               dollar signs ($)
-----------------------------------------------------------------------------------------------------
LIST_DATE                    The date an REO property is listed at a                 MM/DD/YYYY
                             particular price.
-----------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------
OFFER_AMT                     The dollar value of an offer for an REO            2      No commas(,) or
                              property.                                                 dollar signs ($)
--------------------------------------------------------------------------------------------------------
OFFER_DATE_TIME               The date an offer is received by DA Admin                 MM/DD/YYYY
                              or by the Servicer.
--------------------------------------------------------------------------------------------------------
REO_CLOSING_DATE              The date the REO sale of the property is                  MM/DD/YYYY
                              scheduled to close.
--------------------------------------------------------------------------------------------------------
REO_ACTUAL_CLOSING_DATE       Actual Date Of REO Sale                                   MM/DD/YYYY
--------------------------------------------------------------------------------------------------------
OCCUPANT_CODE                 Classification of how the property is
                              occupied.
--------------------------------------------------------------------------------------------------------
PROP_CONDITION_CODE           A code that indicates the condition of the
                              property.
--------------------------------------------------------------------------------------------------------
PROP_INSPECTION_DATE          The date a  property inspection is                        MM/DD/YYYY
                              performed.
--------------------------------------------------------------------------------------------------------
APPRAISAL_DATE                The date the appraisal was done.                          MM/DD/YYYY
--------------------------------------------------------------------------------------------------------
CURR_PROP_VAL                 The current "as is" value of the property          2
                              based on brokers price opinion or appraisal.
--------------------------------------------------------------------------------------------------------
REPAIRED_PROP_VAL             The amount the property would be worth if          2
                              repairs are completed pursuant to a
                              broker's price opinion or appraisal.
--------------------------------------------------------------------------------------------------------
IF APPLICABLE:
--------------------------------------------------------------------------------------------------------
DELINQ_STATUS_CODE            FNMA Code Describing Status of Loan
--------------------------------------------------------------------------------------------------------
DELINQ_REASON_CODE            The circumstances which caused a borrower to
                              stop paying on a loan. Code indicates the
                              reason why the loan is in default for this
                              cycle.
--------------------------------------------------------------------------------------------------------
MI_CLAIM_FILED_DATE           Date Mortgage Insurance Claim Was Filed                   MM/DD/YYYY
                              With Mortgage Insurance Company.
--------------------------------------------------------------------------------------------------------
MI_CLAIM_AMT                  Amount of Mortgage Insurance Claim Filed                  No commas(,) or
                                                                                        dollar signs ($)
--------------------------------------------------------------------------------------------------------
MI_CLAIM_PAID_DATE            Date Mortgage Insurance Company Disbursed                 MM/DD/YYYY
                              Claim Payment
--------------------------------------------------------------------------------------------------------
MI_CLAIM_AMT_PAID             Amount Mortgage Insurance Company Paid On          2      No commas(,) or
                              Claim                                                     dollar signs ($)
--------------------------------------------------------------------------------------------------------
POOL_CLAIM_FILED_DATE         Date Claim Was Filed With Pool Insurance                  MM/DD/YYYY
                              Company
--------------------------------------------------------------------------------------------------------
POOL_CLAIM_AMT                Amount of Claim Filed With Pool Insurance          2      No commas(,) or
                              Company                                                   dollar signs ($)
--------------------------------------------------------------------------------------------------------
POOL_CLAIM_PAID_DATE          Date Claim Was Settled and The Check Was                  MM/DD/YYYY
                              Issued By The Pool Insurer
--------------------------------------------------------------------------------------------------------
POOL_CLAIM_AMT_PAID           Amount Paid On Claim By Pool Insurance             2      No commas(,) or
                              Company                                                   dollar signs ($)
--------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_FILED_DATE   Date FHA Part A Claim Was Filed With HUD                  MM/DD/YYYY
--------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_AMT          Amount of FHA Part A Claim Filed                   2      No commas(,) or
                                                                                        dollar signs ($)
--------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_DATE    Date HUD Disbursed Part A Claim Payment                   MM/DD/YYYY
--------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_AMT     Amount HUD Paid on Part A Claim                    2      No commas(,) or
                                                                                        dollar signs ($)
--------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_FILED_DATE   Date FHA Part B Claim Was Filed With HUD                  MM/DD/YYYY
--------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_AMT          Amount of FHA Part B Claim Filed                   2      No commas(,) or
                                                                                        dollar signs ($)
--------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_DATE    Date HUD Disbursed Part B Claim Payment                   MM/DD/YYYY
--------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_AMT     Amount HUD Paid on Part B Claim                    2      No commas(,) or
                                                                                        dollar signs ($)
--------------------------------------------------------------------------------------------------------
VA_CLAIM_FILED_DATE           Date VA Claim Was Filed With the Veterans                 MM/DD/YYYY
                              Admin
--------------------------------------------------------------------------------------------------------
VA_CLAIM_PAID_DATE            Date Veterans Admin. Disbursed VA Claim                   MM/DD/YYYY
                              Payment
--------------------------------------------------------------------------------------------------------
VA_CLAIM_PAID_AMT             Amount Veterans Admin. Paid on VA Claim            2      No commas(,) or
                                                                                        dollar signs ($)
--------------------------------------------------------------------------------------------------------

EXHIBIT H-1: STANDARD FILE CODES - DELINQUENCY REPORTING

The LOSS MIT TYPE field should show the approved Loss Mitigation Code as
follows:
     o    ASUM- Approved Assumption

     o    BAP- Borrower Assistance Program

     o    CO- Charge Off

     o    DIL- Deed-in-Lieu

     o    FFA- Formal Forbearance Agreement

     o    MOD- Loan Modification

     o    PRE- Pre-Sale

     o    SS- Short Sale

     o    MISC- Anything else approved by the PMI or Pool Insurer

NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.

The OCCUPANT CODE field should show the current status of the property code as
follows:

     o    Mortgagor

     o    Tenant

     o    Unknown

     o    Vacant

The PROPERTY CONDITION field should show the last reported condition of the
property as follows:

     o    Damaged

     o    Excellent

     o    Fair

     o    Gone

     o    Good

     o    Poor

     o    Special Hazard

     o    Unknown

EXHIBIT H-1: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED

The FNMA DELINQUENT REASON CODE field should show the Reason for Delinquency as
follows:

------------------------------------------------------------
DELINQUENCY CODE   DELINQUENCY DESCRIPTION
------------------------------------------------------------
       001         FNMA-Death of principal mortgagor
------------------------------------------------------------
       002         FNMA-Illness of principal mortgagor
------------------------------------------------------------
       003         FNMA-Illness of mortgagor's family member
------------------------------------------------------------
       004         FNMA-Death of mortgagor's family member
------------------------------------------------------------
       005         FNMA-Marital difficulties
------------------------------------------------------------
       006         FNMA-Curtailment of income
------------------------------------------------------------
       007         FNMA-Excessive Obligation
------------------------------------------------------------
       008         FNMA-Abandonment of property
------------------------------------------------------------
       009         FNMA-Distant employee transfer
------------------------------------------------------------
       011         FNMA-Property problem
------------------------------------------------------------
       012         FNMA-Inability to sell property
------------------------------------------------------------
       013         FNMA-Inability to rent property
------------------------------------------------------------
       014         FNMA-Military Service
------------------------------------------------------------
       015         FNMA-Other
------------------------------------------------------------
       016         FNMA-Unemployment
------------------------------------------------------------
       017         FNMA-Business failure
------------------------------------------------------------
       019         FNMA-Casualty loss
------------------------------------------------------------
       022         FNMA-Energy environment costs
------------------------------------------------------------
       023         FNMA-Servicing problems
------------------------------------------------------------
       026         FNMA-Payment adjustment
------------------------------------------------------------
       027         FNMA-Payment dispute
------------------------------------------------------------
       029         FNMA-Transfer of ownership pending
------------------------------------------------------------
       030         FNMA-Fraud
------------------------------------------------------------
       031         FNMA-Unable to contact borrower
------------------------------------------------------------
       INC         FNMA-Incarceration
------------------------------------------------------------

EXHIBIT H-1: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED

The FNMA DELINQUENT STATUS CODE field should show the Status of Default as
follows:

-------------------------------------------------------------
   STATUS CODE     STATUS DESCRIPTION
-------------------------------------------------------------
       09          Forbearance
-------------------------------------------------------------
       17          Pre-foreclosure Sale Closing Plan Accepted
-------------------------------------------------------------
       24          Government Seizure
-------------------------------------------------------------
       26          Refinance
-------------------------------------------------------------
       27          Assumption
-------------------------------------------------------------
       28          Modification
-------------------------------------------------------------
       29          Charge-Off
-------------------------------------------------------------
       30          Third Party Sale
-------------------------------------------------------------
       31          Probate
-------------------------------------------------------------
       32          Military Indulgence
-------------------------------------------------------------
       43          Foreclosure Started
-------------------------------------------------------------
       44          Deed-in-Lieu Started
-------------------------------------------------------------
       49          Assignment Completed
-------------------------------------------------------------
       61          Second Lien Considerations
-------------------------------------------------------------
       62          Veteran's Affairs-No Bid
-------------------------------------------------------------
       63          Veteran's Affairs-Refund
-------------------------------------------------------------
       64          Veteran's Affairs-Buydown
-------------------------------------------------------------
       65          Chapter 7 Bankruptcy
-------------------------------------------------------------
       66          Chapter 11 Bankruptcy
-------------------------------------------------------------
       67          Chapter 13 Bankruptcy
-------------------------------------------------------------

EXHIBIT H-2: STANDARD FILE LAYOUT - SCHEDULED/SCHEDULED

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                                                                                                                 MAX
COLUMN NAME              DESCRIPTION                                 DECIMAL   FORMAT COMMENT                   SIZE
--------------------------------------------------------------------------------------------------------------------

SER_INVESTOR_NBR         A value assigned by the Servicer to                   Text up to 10 digits              20
                         define a group of loans.
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LOAN_NBR                 A unique identifier assigned to each loan             Text up to 10 digits              10
                         by the investor.
--------------------------------------------------------------------------------------------------------------------
SERVICER_LOAN_NBR        A unique number assigned to a loan by the             Text up to 10 digits              10
                         Servicer. This may be different than the
                         LOAN_NBR.
--------------------------------------------------------------------------------------------------------------------
BORROWER_NAME            The borrower name as received in the                  Maximum length of 30 (Last,       30
                         file. It is not separated by first and                First)
                         last name.
--------------------------------------------------------------------------------------------------------------------
SCHED_PAY_AMT            Scheduled monthly principal and scheduled      2      No commas(,) or dollar signs      11
                         interest payment that a borrower is                   ($)
                         expected to pay, P&I constant.
--------------------------------------------------------------------------------------------------------------------
NOTE_INT_RATE            The loan interest rate as reported by the      4      Max length of 6                    6
                         Servicer.
--------------------------------------------------------------------------------------------------------------------
NET_INT_RATE             The loan gross interest rate less the          4      Max length of 6                    6
                         service fee rate as reported by the
                         Servicer.
--------------------------------------------------------------------------------------------------------------------
SERV_FEE_RATE            The servicer's fee rate for a loan as          4      Max length of 6                    6
                         reported by the Servicer.
--------------------------------------------------------------------------------------------------------------------
SERV_FEE_AMT             The servicer's fee amount for a loan as        2      No commas(,) or dollar signs      11
                         reported by the Servicer.                             ($)
--------------------------------------------------------------------------------------------------------------------
NEW_PAY_AMT              The new loan payment amount as reported        2      No commas(,) or dollar signs      11
                         by the Servicer.                                      ($)
--------------------------------------------------------------------------------------------------------------------
NEW_LOAN_RATE            The new loan rate as reported by the           4      Max length of 6                    6
                         Servicer.
--------------------------------------------------------------------------------------------------------------------
ARM_INDEX_RATE           The index the Servicer is using to             4      Max length of 6                    6
                         calculate a forecasted rate.
--------------------------------------------------------------------------------------------------------------------
ACTL_BEG_PRIN_BAL        The borrower's actual principal balance        2      No commas(,) or dollar signs      11
                         at the beginning of the processing cycle.             ($)
--------------------------------------------------------------------------------------------------------------------
ACTL_END_PRIN_BAL        The borrower's actual principal balance        2      No commas(,) or dollar signs      11
                         at the end of the processing cycle.                   ($)
--------------------------------------------------------------------------------------------------------------------
BORR_NEXT_PAY_DUE_DATE   The date at the end of processing cycle               MM/DD/YYYY                        10
                         that the borrower's next payment is due
                         to the Servicer, as reported by Servicer.
--------------------------------------------------------------------------------------------------------------------
SERV_CURT_AMT_1          The first curtailment amount to be             2      No commas(,) or dollar signs      11
                         applied.                                              ($)
--------------------------------------------------------------------------------------------------------------------
SERV_CURT_DATE_1         The curtailment date associated with the              MM/DD/YYYY                        10
                         first curtailment amount.
--------------------------------------------------------------------------------------------------------------------
CURT_ADJ_ AMT_1          The curtailment interest on the first          2      No commas(,) or dollar signs      11
                         curtailment amount, if applicable.                    ($)
--------------------------------------------------------------------------------------------------------------------
SERV_CURT_AMT_2          The second curtailment amount to be            2      No commas(,) or dollar signs      11
                         applied.                                              ($)
--------------------------------------------------------------------------------------------------------------------
SERV_CURT_DATE_2         The curtailment date associated with the              MM/DD/YYYY                        10
                         second curtailment amount.
--------------------------------------------------------------------------------------------------------------------
CURT_ADJ_ AMT_2          The curtailment interest on the second         2      No commas(,) or dollar signs      11
                         curtailment amount, if applicable.                    ($)
--------------------------------------------------------------------------------------------------------------------
SERV_CURT_AMT_3          The third curtailment amount to be             2      No commas(,) or dollar signs      11
                         applied.                                              ($)
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SERV_CURT_DATE_3         The curtailment date associated with the              MM/DD/YYYY                        10
                         third curtailment amount.
--------------------------------------------------------------------------------------------------------------------
CURT_ADJ_AMT_3           The curtailment interest on the third          2      No commas(,) or dollar signs      11
                         curtailment amount, if applicable.                    ($)
--------------------------------------------------------------------------------------------------------------------

PIF_AMT                  The loan "paid in full" amount as              2      No commas(,) or dollar signs      11
                         reported by the Servicer.                             ($)
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PIF_DATE                 The paid in full date as reported by the              MM/DD/YYYY                        10
                         Servicer.
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ACTION_CODE              The standard FNMA numeric code used to                Action Code Key:                   2
                         indicate the default/delinquent status of             15=Bankruptcy, 30=Foreclosure,
                         a particular loan.                                    60=PIF, 63=Substitution,
                                                                               65=Repurchase, 70=REO
-------------------------------------------------------------------------------------------------------------------
INT_ADJ_AMT              The amount of the interest adjustment as       2      No commas(,) or dollar signs      11
                         reported by the Servicer.                             ($)
--------------------------------------------------------------------------------------------------------------------
SOLDIER_SAILOR_ADJ_AMT   The Soldier and Sailor Adjustment amount,      2      No commas(,) or dollar signs      11
                         if applicable.                                        ($)
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NON_ADV_LOAN_AMT         The Non Recoverable Loan Amount, if            2      No commas(,) or dollar signs      11
                         applicable.                                           ($)
--------------------------------------------------------------------------------------------------------------------
LOAN_LOSS_AMT            The amount the Servicer is passing as a        2      No commas(,) or dollar signs      11
                         loss, if applicable.                                  ($)
--------------------------------------------------------------------------------------------------------------------
SCHED_BEG_PRIN_BAL       The scheduled outstanding principal            2      No commas(,) or dollar signs      11
                         amount due at the beginning of the cycle              ($)
                         date to be passed through to investors.
--------------------------------------------------------------------------------------------------------------------
SCHED_END_PRIN_BAL       The scheduled principal balance due to         2      No commas(,) or dollar signs      11
                         investors at the end of a processing                  ($)
                         cycle.

--------------------------------------------------------------------------------------------------------------------
SCHED_PRIN_AMT           The scheduled principal amount as              2      No commas(,) or dollar signs      11
                         reported by the Servicer for the current              ($)
                         cycle -- only applicable for
                         Scheduled/Scheduled Loans.

--------------------------------------------------------------------------------------------------------------------
SCHED_NET_INT            The scheduled gross interest amount less       2      No commas(,) or dollar signs      11
                         the service fee amount for the current                ($)
                         cycle as reported by the Servicer -- only
                         applicable for Scheduled/Scheduled Loans.
--------------------------------------------------------------------------------------------------------------------
ACTL_PRIN_AMT            The actual principal amount collected by       2      No commas(,) or dollar signs      11
                         the Servicer for the current reporting                ($)
                         cycle -- only applicable for
                         Actual/Actual Loans.

--------------------------------------------------------------------------------------------------------------------
ACTL_NET_INT             The actual gross interest amount less the      2      No commas(,) or dollar signs      11
                         service fee amount for the current                    ($)
                         reporting cycle as reported by the
                         Servicer -- only applicable for
                         Actual/Actual Loans.
--------------------------------------------------------------------------------------------------------------------
PREPAY_PENALTY_ AMT      The penalty amount received when a             2      No commas(,) or dollar signs      11
                         borrower prepays on his loan as reported              ($)
                         by the Servicer.

--------------------------------------------------------------------------------------------------------------------
PREPAY_PENALTY_ WAIVED   The prepayment penalty amount for the          2      No commas(,) or dollar signs      11
                         loan waived by the servicer.                          ($)
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MOD_DATE                 The Effective Payment Date of the                     MM/DD/YYYY                        10
                         Modification for the loan.
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MOD_TYPE                 The Modification Type.                                Varchar - value can be alpha      30
                                                                               or numeric
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DELINQ_P&I_ADVANCE_AMT   The current outstanding principal and          2      No commas(,) or dollar signs      11
                         interest advances made by Servicer.                   ($)
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EXHIBIT H-3: CALCULATION OF REALIZED LOSS/GAIN FORM 332- INSTRUCTION SHEET

          The numbers on the form correspond with the numbers listed below.

Liquidation and Acquisition Expenses:

1.   The Actual Unpaid Principal Balance of the Mortgage Loan. For
     documentation, an Amortization Schedule from date of default through
     liquidation breaking out the net interest and servicing fees advanced is
     required.

2.   The Total Interest Due less the aggregate amount of servicing fee that
     would have been earned if all delinquent payments had been made as agreed.
     For documentation, an Amortization Schedule from date of default through
     liquidation breaking out the net interest and servicing fees advanced is
     required.

3.   Accrued Servicing Fees based upon the Scheduled Principal Balance of the
     Mortgage Loan as calculated on a monthly basis. For documentation, an
     Amortization Schedule from date of default through liquidation breaking out
     the net interest and servicing fees advanced is required.

4-12. Complete as applicable. All line entries must be supported by copies of
     appropriate statements, vouchers, receipts, bills, canceled checks, etc.,
     to document the expense. Entries not properly documented will not be
     reimbursed to the Servicer.

13.  The total of lines 1 through 12.

Credits:

14-21. Complete as applicable. All line entries must be supported by copies of
     the appropriate claims forms, EOBs, HUD-1 and/or other proceeds
     verification, statements, payment checks, etc. to document the credit. If
     the Mortgage Loan is subject to a Bankruptcy Deficiency, the difference
     between the Unpaid Principal Balance of the Note prior to the Bankruptcy
     Deficiency and the Unpaid Principal Balance as reduced by the Bankruptcy
     Deficiency should be input on line 20.

22.  The total of lines 14 through 21.

Please note: For HUD/VA loans, use line (15) for Part A/Initial proceeds and
     line (16) for Part B/Supplemental proceeds.

          Total Realized Loss (or Amount of Any Gain)

23.  The total derived from subtracting line 22 from 13. If the amount
     represents a realized gain, show the amount in parenthesis ( ).

EXHIBIT H-3: CALCULATION OF REALIZED LOSS/GAIN FORM 332

                             WELLS FARGO BANK, N.A.
                        CALCULATION OF REALIZED LOSS/GAIN

Prepared by:  ____________________________                Date:  _______________
Phone: ___________________________________   Email Address:_____________________

     -----------------   -------------   ----------------
     Servicer Loan No.   Servicer Name   Servicer Address

     -----------------   -------------   ----------------

WELLS FARGO BANK, N.A. Loan No. _____________________________________________
Borrower's Name: ____________________________________________________________
Property Address: ___________________________________________________________
LIQUIDATION AND ACQUISITION EXPENSES:
(1) Actual Unpaid Principal Balance of Mortgage Loan   $___________________ (1)
(2) Interest accrued at Net Rate                       ____________________ (2)
(3) Accrued Servicing Fees                             ____________________ (3)
(4) Attorney's Fees                                    ____________________ (4)
(5) Taxes                                              ____________________ (5)
(6) Property Maintenance                               ____________________ (6)
(7) MI/Hazard Insurance Premiums                       ____________________ (7)
(8) Utility Expenses                                   ____________________ (8)
(9) Appraisal/BPO                                      ____________________ (9)
(10) Property Inspections                              ____________________ (10)
(11) FC Costs/Other Legal Expenses                     ____________________ (11)
(12) Other (itemize)                                   $___________________ (12)
     Cash for Keys _________________________________   ____________________
     HOA/Condo Fees ________________________________   ____________________
     _______________________________________________   ____________________
     _______________________________________________   ____________________
     TOTAL EXPENSES                                    $___________________ (13)
CREDITS:
(14) Escrow Balance                                    $___________________ (14)
(15) HIP Refund                                        ____________________ (15)
(16) Rental Receipts                                   ____________________ (16)
(17) Hazard Loss Proceeds                              ____________________ (17)
(18) Primary Mortgage Insurance Proceeds               ____________________ (18)
(19) Pool Insurance Proceeds                           ____________________ (19)

(20) Proceeds from Sale of Acquired Property           ____________________ (20)
(21) Other (itemize)                                   ____________________ (21)
     _______________________________________________   ____________________
     _______________________________________________   ____________________
     TOTAL CREDITS                                     $___________________ (22)

TOTAL REALIZED LOSS (OR AMOUNT OF GAIN)                $___________________ (23)

                                   APPENDIX I

                        Purchase and Servicing Agreement

                                [Attached hereto]exv10w1

 

Exhibit 10.1

RECEIVABLES PURCHASE AGREEMENT

DATED AS OF FEBRUARY 3, 2006

BY AND AMONG

ARCH RECEIVABLE COMPANY, LLC,

as Seller,

ARCH COAL SALES COMPANY, INC.,

as initial Servicer,

MARKET STREET FUNDING LLC,

as Issuer,

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 PURCHASES	 	 	1	 
	 
	 	Section 1.1	 	Purchase Facility	 	 	1	 
	 
	 	Section 1.2	 	Making Purchases	 	 	2	 
	 
	 	Section 1.3	 	Purchased Interest Computation	 	 	4	 
	 
	 	Section 1.4	 	Settlement Procedures	 	 	4	 
	 
	 	Section 1.5	 	Fees	 	 	8	 
	 
	 	Section 1.6	 	Payments and Computations, Etc	 	 	8	 
	 
	 	Section 1.7	 	Increased Costs	 	 	8	 
	 
	 	Section 1.8	 	Requirements of Law; Funding Losses	 	 	9	 
	 
	 	Section 1.9	 	Inability to Determine Euro-Rate	 	 	10	 
	 
	 	Section 1.10	 	Taxes	 	 	11	 
	 
	 	Section 1.11	 	Letters of Credit	 	 	11	 
	 
	 	Section 1.12	 	Issuance of Letters of Credit	 	 	12	 
	 
	 	Section 1.13	 	Requirements For Issuance of Letters of Credit	 	 	12	 
	 
	 	Section 1.14	 	Disbursements, Reimbursement	 	 	12	 
	 
	 	Section 1.15	 	Repayment of Participation Advances	 	 	13	 
	 
	 	Section 1.16	 	Documentation	 	 	14	 
	 
	 	Section 1.17	 	Determination to Honor Drawing Request	 	 	14	 
	 
	 	Section 1.18	 	Nature of Participation and Reimbursement Obligations	 	 	14	 
	 
	 	Section 1.19	 	Indemnity	 	 	16	 
	 
	 	Section 1.20	 	Liability for Acts and Omissions	 	 	16	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS	 	 	18	 
	 
	 	Section 2.1	 	Representations and Warranties; Covenants	 	 	18	 
	 
	 	Section 2.2	 	Termination Events	 	 	18	 
	ARTICLE III INDEMNIFICATION	 	 	18	 
	 
	 	Section 3.1	 	Indemnities by the Seller	 	 	18	 
	 
	 	Section 3.2	 	Indemnities by the Servicer	 	 	20	 
	ARTICLE IV ADMINISTRATION AND COLLECTIONS	 	 	20	 

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	 	 	 	 	 	 	Page
	 
	 	Section 4.1	 	Appointment of the Servicer	 	 	20	 
	 
	 	Section 4.2	 	Duties of the Servicer	 	 	21	 
	 
	 	Section 4.3	 	Lock-Box Account Arrangements	 	 	22	 
	 
	 	Section 4.4	 	Enforcement Rights	 	 	23	 
	 
	 	Section 4.5	 	Responsibilities of the Seller	 	 	24	 
	 
	 	Section 4.6	 	Servicing Fee	 	 	24	 
	 
	 	Section 4.7	 	Authorization and Action of the Administrator	 	 	24	 
	 
	 	Section 4.8	 	Nature of Administrator’s Duties; Delegation of	 	 	 	 
	 
	 	 	 	Administrator’s Duties; Exculpatory Duties	 	 	25	 
	 
	 	Section 4.9	 	UCC Filings	 	 	26	 
	 
	 	Section 4.10	 	Administrator’s Reliance, Etc	 	 	26	 
	 
	 	Section 4.11	 	Administrator and Affiliates	 	 	27	 
	 
	 	Section 4.12	 	Notice of Termination Events	 	 	27	 
	 
	 	Section 4.13	 	Non-Reliance on Administrator and other Purchasers;	 	 	 	 
	 
	 	 	 	Administrators and Affiliates	 	 	28	 
	 
	 	Section 4.14	 	Indemnification	 	 	28	 
	 
	 	Section 4.15	 	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	 	 	32	 
	 
	 	Section 5.5	 	No Proceedings; Limitation on Payments	 	 	33	 
	 
	 	Section 5.6	 	Confidentiality	 	 	33	 
	 
	 	Section 5.7	 	GOVERNING LAW AND JURISDICTION	 	 	34	 
	 
	 	Section 5.8	 	Execution in Counterparts	 	 	34	 
	 
	 	Section 5.9	 	Survival of Termination; Non-Waiver	 	 	35	 
	 
	 	Section 5.10	 	WAIVER OF JURY TRIAL	 	 	35	 
	 
	 	Section 5.11	 	Entire Agreement	 	 	35	 
	 
	 	Section 5.12	 	Headings	 	 	35	 

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	 	 	 	 	 	 	Page
	 
	 	Section 5.13	 	Right of Setoff	 	 	35	 
	 
	 	Section 5.14	 	Issuer’s Liabilities	 	 	36	 
	 
	 	Section 5.15	 	Sharing of Recoveries	 	 	36	 

	 	 	 
	EXHIBIT I

	 	DEFINITIONS
	EXHIBIT II

	 	CONDITIONS OF PURCHASES
	EXHIBIT III

	 	REPRESENTATIONS AND WARRANTIES
	EXHIBIT IV

	 	COVENANTS
	EXHIBIT V

	 	TERMINATION EVENTS
	SCHEDULE I

	 	CREDIT AND COLLECTION POLICY
	SCHEDULE II

	 	LOCK-BOX BANK, BLOCKED ACCOUNT AND LOCK-BOX ACCOUNT
	SCHEDULE III

	 	ACTIONS AND PROCEEDINGS
	ANNEX A

	 	FORM OF INFORMATION PACKAGE
	ANNEX B

	 	FORM OF PURCHASE NOTICE
	ANNEX C

	 	FORM OF PAYDOWN NOTICE
	ANNEX D

	 	FORM OF COMPLIANCE CERTIFICATE
	ANNEX E

	 	FORM OF LETTER OF CREDIT APPLICATION

-iii-

 

     This RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time
to time, this “Agreement”) is entered into as of February 3, 2006, by and among ARCH
RECEIVABLE COMPANY, LLC, a Delaware limited liability company, as seller (the “Seller”),
ARCH COAL SALES COMPANY, INC., a Delaware corporation (“Arch Sales”), as initial servicer
(in such capacity, collectively, together with its successors and permitted assigns in such
capacity, the “Servicer”), MARKET STREET FUNDING LLC, a Delaware limited liability company
(together with its successors and permitted assigns, the “Issuer”), THE FINANCIAL
INSTITUTIONS FROM TIME TO TIME PARTIES HERETO AS LC PARTICIPANTS (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 (i) desires to sell, transfer and assign an undivided variable percentage interest
in a pool of receivables, and the Issuer desires to acquire such undivided variable percentage
interest, as such percentage interest shall be adjusted from time to time based upon, in part,
reinvestment payments that are made by the Issuer and (ii) may, subject to the terms and conditions
hereof, request that the LC Bank issue or cause the issuance of Letters of Credit.

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

ARTICLE I

AMOUNTS AND TERMS OF THE PURCHASES

     Section 1.1 Purchase Facility.

     (a) On the terms and subject to the conditions hereinafter set forth, the Issuer hereby agrees
to purchase, and make reinvestments in 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),
undivided variable percentage ownership interests with regard to the Purchased Interest from the
Seller from time to time from the Closing Date 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 purchase 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 1.14 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
1.14 below, 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 purchase 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 the other requirements and conditions herein),
the Issuer shall fund such deemed purchase 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
1.14 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 purchase or reinvestment
(including, without limitation, any deemed purchases 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 purchase, reinvestment or issuance, the (i) 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 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 or (ii) the aggregate outstanding
Capital plus the LC Participation Amount would exceed the Purchase Limit.

     (b) The Seller may, upon at least 30 days’ written notice to the Administrator, terminate the
Purchase Facility in whole or, upon at least 30 days’ written notice to the Administrator, from
time to time, irrevocably reduce in part the unused portion of the Purchase Limit;
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 received by it
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 termination or reduction shall be effective unless and until (i) in the
case of a termination, 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 Purchases.

     (a) Each Funded Purchase (but not reinvestment) of undivided percentage ownership interests
with regard to the Purchased Interest hereunder may be made on any day upon the Seller’s
irrevocable written notice in the form of Annex B (each, a “Purchase Notice”)
delivered

2

 

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 Purchase Date, which notice shall specify: (A) solely in the case of a Funded Purchase
maintained by Capital, the amount requested to be paid to the Seller (such amount, which shall not
be less than $300,000 (or such lesser amount as agreed to by the Administrator) and shall be in
integral multiples of $100,000 in excess thereof, being the Capital relating to the undivided
percentage ownership interest then being purchased), (B) the date of such Funded Purchase (which
shall be a Business Day), and (C) the pro forma calculation of the Purchased Interest after giving
effect to the increase in Capital.

     (b) On the date of each Funded Purchase (but not reinvestment or issuance of a Letter of
Credit) of undivided percentage ownership interests with regard to the Purchased Interest
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 PNC Bank, National
Association, account number 1019291244, ABA No. 043-000-096, an amount equal to the Capital
relating to the undivided percentage ownership interest then being purchased.

     (c) Effective on the date of each Funded Purchase pursuant to this Section 1.2 and
each reinvestment pursuant to Section 1.4, the Seller hereby sells and assigns to the
Administrator for the benefit of the Purchasers (ratably based on the sum of the Capital plus the
LC Participation Amount outstanding at such time) an undivided percentage ownership interest in:
(i) each Pool Receivable then existing, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other proceeds of, such Pool
Receivables and Related Security.

     (d) 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, the Seller hereby grants
to the Administrator (for the benefit of the Purchasers and their assigns) a security interest in
all of the Seller’s right, title and interest (including any undivided interest of the Seller) 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 Agreements, and (vi) all proceeds of, and all amounts received or
receivable under any or all of, the foregoing (collectively, the “Pool Assets”). The
Administrator (on behalf of the Purchasers and their assigns) shall have, with respect to the Pool
Assets, and in addition to all the other rights and remedies available to the Administrator, all
the rights and remedies of a secured party under any applicable UCC.

     (e) Whenever the LC Bank issues a Letter of Credit pursuant to Section 1.12 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 a Funded Purchase
hereunder in the event that such Letter of Credit is subsequently drawn and such drawn amount shall
not have been reimbursed pursuant to Section 1.14 upon such draw. All such Funded

3

 

Purchases 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
from the date of such draw. 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
Funded Purchases 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 1.3 Purchased Interest Computation.

          The Purchased Interest shall be initially computed on the date of the initial purchase
hereunder. Thereafter, until the Facility Termination Date, such Purchased Interest 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 Interest shall (until the
event(s) giving rise to such Termination Day are satisfied or are waived by the Administrator in
accordance with Section 2.2) be deemed to be 100%. The Purchased Interest shall become
zero when the Capital thereof and Discount thereon shall have been paid in full, the LC
Participation Amount has been cash collateralized in full, all the amounts owed by the Seller and
the Servicer hereunder to the Issuer, the LC Bank, the LC Participants, the Administrator and any
other Indemnified Party or Affected Person are paid in full, and the Servicer shall have received
the accrued Servicing Fee thereon.

     Section 1.4 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 Interest.

     (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 the percentage of such Collections represented by the Purchased Interest,
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 Purchasers’ Share of the Servicing Fee accrued through such day and not previously set aside,

               (ii) subject to Section 1.4(f), if such day is not a Termination Day, remit to the
Seller, on behalf of the Purchasers, the remainder of the percentage of such Collections
represented by the Purchased Interest (to the extent representing a return on Capital); such
remainder shall be automatically reinvested in Pool Receivables, and in the Related Security,
Collections and other proceeds with respect thereto; provided, however, that if the

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Purchased Interest would exceed 100%, then the Servicer shall not remit such remainder to the
Seller or reinvest, but shall set aside and hold in trust for the Administrator (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 Interest to 100%,

               (iii) if such day is a Termination Day, set aside, segregate and hold in trust for the
Administrator (for the benefit of the Purchasers, and shall, at the request of the Administrator,
segregate in a separate account approved by the Administrator) the entire remainder of the
Purchasers’ Share of the 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 appropriate Person or Persons, such previously set-aside
amounts shall, to the extent representing a return on Capital, be reinvested in accordance with
clause (ii) on the day of such subsequent satisfaction or waiver of conditions, and

               (iv) release to the Seller (subject to Section 1.4(f)) for its own account any
Collections in excess of: (w) amounts required to be reinvested in accordance with clause
(ii) or the proviso to clause (iii) plus (x) the amounts that are required to be set
aside pursuant to clause (i), the proviso to clause (ii) and clause (iii)
plus (y) the Seller’s Share of the Servicing Fee accrued and unpaid through such day and all
reasonable and appropriate out-of-pocket costs and expenses of the Servicer for servicing,
collecting and administering the Pool Receivables plus (z) all other amounts owed by the Seller
under this Agreement to the Issuer, the LC Bank, any LC Participant, the Administrator, and any
other Indemnified Party or Affected Person.

     (c) The Servicer shall deposit into the Administration Account (or such other account
designated by the Administrator), on each Settlement Date, Collections held for the Administrator
(for the benefit of the Purchasers) pursuant to clause (b)(i) or (f) plus the
amount of Collections then held for the Administrator (for the benefit of the Purchasers) pursuant
to clauses (b)(ii) and (iii) of Section 1.4; provided, that if Arch
Sales or an Affiliate thereof is the Servicer, such day is not a Termination Day and the
Administrator has not notified Arch Sales (or such Affiliate) that such right is revoked, Arch
Sales (or such Affiliate) may retain the portion of the Collections set aside pursuant to
clause (b)(i) that represents the Purchasers’ Share of the Servicing Fee. 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), the Administrator shall cause such funds to be distributed as follows:

               (i) if such distribution occurs on a day that is not a Termination Day and the Purchased
Interest does not exceed 100%, first to the Purchasers ratably (based on their respective Portions
of Capital funded thereby) 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) and has not

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retained such amounts pursuant to clause (c), to the Servicer (payable in arrears on
each Settlement Date) in payment in full of the Purchasers’ Share of accrued Servicing Fees so set
aside, and

               (ii) if such distribution occurs on a Termination Day or on a day when the Purchased Interest
exceeds 100%, first, if Arch Sales or an Affiliate thereof is not the Servicer, to the Servicer in
payment in full of the Purchasers’ Share of all accrued Servicing Fees, second, to the Purchasers
ratably (based on their respective Portions of Capital funded thereby) in payment in full of all
accrued Discount with respect to each Portion of Capital, third, 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 Interest to 100%),
fourth, to the LC Collateral Account for the benefit of the LC Bank and the LC Participants, the
amount necessary to cash collateralize the LC Participation Amount until the amount of cash
collateral held in such LC Collateral Account equals the aggregate outstanding amount of the LC
Participation Amount, 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 (if other
than Arch Sales or an Affiliate thereof) 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 or the Servicer hereunder, and sixth, to the Servicer (if the Servicer is Arch Sales or an
Affiliate thereof) in payment in full of the Purchasers’ Share of all accrued Servicing Fees.

After the Capital, Discount, fees payable pursuant to the Fee Letter and Servicing Fees with
respect to the Purchased Interest, and any other amounts payable by the Seller and the Servicer to
the Purchasers, the Administrator or any other Indemnified Party or Affected Person hereunder, have
been paid in full, and (on and after a Termination Day) after the LC Participation Amount has been
cash collateralized in full, all additional Collections with respect to the Purchased Interest
shall be paid to the Seller for its own account.

     (e) For the purposes of this Section 1.4:

               (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 the Servicer or any Affiliate of the Servicer, or any setoff or dispute
between the Seller or any Affiliate of the Seller or the Servicer or any Affiliate of the Servicer
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 and shall immediately pay any and all such
amounts in respect thereof to a Lock-Box Account for the benefit of the Purchasers and their
assigns and for application pursuant to Section 1.4;

               (ii) if on any day any of the representations or warranties in Sections l(j) or
3(a) 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 and shall
immediately pay any and all such amounts in respect thereof to a Lock-Box Account (or as

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otherwise directed by the Administrator at such time) for the benefit of the Purchasers and
their assigns and for application pursuant to Section 1.4;

               (iii) except as provided in clause (i) or (ii), 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 of the Purchased Interest),
the Seller may do so as follows:

               (i) the Seller shall give the Administrator and the Servicer written notice in substantially
the form of Annex C (each, a “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 Paydown Notice shall include, among other things, the
amount of such proposed reduction and the proposed date on which such reduction will commence;

               (ii) (A) 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 or (B) the Seller shall remit to the
Administration Account in immediately available funds an amount equal to the desired amount of such
reduction together with accrued and unpaid Discount, and Discount to accrue through the next
Settlement Date, with respect to such Capital; and

               (iii) the Servicer shall hold such Collections in trust for the benefit of each of the
Purchasers ratably (based on their respective Portions of Capital funded thereby), 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 in excess thereof.

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     Section 1.5 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 fee letter
agreement, dated the date hereof, among ACI, the Seller and the Administrator (as such fee letter
agreement may be amended, supplemented or otherwise modified from time to time, the “Fee
Letter”).

     Section 1.6 Payments and Computations, Etc.

     (a) All amounts to be paid or deposited by the Seller or the Servicer hereunder or under any
other Transaction Document 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) 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 1.7 Increased Costs.

     (a) If the Administrator, the LC Bank, the Issuer, any Purchaser, any Liquidity Provider, 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, rule or
regulation (including any applicable law, rule or regulation regarding capital adequacy) or any
change therein or in the interpretation or application thereof, or (ii) any request, guideline or
directive from Financial Accounting Standards Board (“FASB”), or any central bank or other
Governmental Authority (whether or not having the force of law), 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 purchases of (or otherwise to maintain the investment 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

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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. For the avoidance
of doubt, if the issuance of FASB Interpretation No. 46, or any other change in accounting
standards or the issuance of any other pronouncement, release or interpretation, causes or requires
the consolidation of all or a portion of the assets and liabilities of the Issuer or the Seller
with the assets and liabilities of such Affected Person, such event shall constitute a circumstance
on which such Person may base a claim for reimbursement under this Section 1.7. 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, rule or regulation or (ii) compliance with any guideline, request or directive from any
central bank or other Governmental Authority (whether or not having the force of law), there shall
be any increase in the cost to any Affected Person of agreeing to purchase or purchasing, or
maintaining the ownership of, the Purchased Interest (or its portion thereof) 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.

     Section 1.8 Requirements of Law; Funding Losses.

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

               (i) does or shall subject such Affected Person to any tax of any kind whatsoever with respect
to this Agreement, any increase in the Purchased Interest (or its portion thereof) or 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 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 a political subdivision thereof), or

               (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,

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and the result of any of the foregoing is: (A) to increase the cost to such Affected Person of
acting as Administrator, or of agreeing to purchase or purchasing or maintaining the ownership of
undivided percentage ownership interests with regard to, or issuing any Letter of Credit in respect
of, the Purchased Interest (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 Affected Person for such additional cost or reduced amount receivable.
All such amounts shall be payable as incurred. A certificate as to such amounts from such
Affected Person to the Seller and the Administrator shall be conclusive and binding for all
purposes, absent manifest error.

     (II) The Seller shall compensate each Affected Person, upon written request by such Person for
all losses, expenses and liabilities (including any interest paid by such Affected Person to
lenders of funds borrowed by it to fund or maintain any Portion of Capital hereunder at an interest
rate determined by reference to the Euro-Rate and any loss sustained by such Person in connection
with the re-employment of such funds), which such Affected Person may sustain with respect to
funding or maintaining such Portion of Capital at the Euro-Rate if, for any reason, funding or
maintaining such Portion of Capital at an interest rate determined by reference to the Euro-Rate
does not occur on a date specified therefor.

     Section 1.9 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, (i) 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, (ii) adequate means do not exist for ascertaining the Euro-Rate for such
Settlement Period or (iii) the Euro-Rate does not accurately reflect the cost to any Purchaser (as
determined by such Purchaser) of maintaining any Portion of Capital during 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, (a) no Portion of Capital shall be funded at the Alternate Rate determined by reference to
the Euro-Rate and (b) 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

10

 

Administrator notifies the Seller that the circumstances giving rise to such determination no
longer apply, (a) no Portion of Capital shall be funded at the Alternate Rate determined by
reference to the Euro-Rate and (b) 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 (i) 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 (ii) 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.

     Section 1.10 Taxes.

          The Seller agrees that any and all payments by the Seller under this Agreement shall be made
free and clear of and without deduction for any and all current or future taxes, stamp or other
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding overall income or franchise taxes, in either case, imposed on the Person
receiving such payment by the Seller hereunder by the jurisdiction under whose laws such Person is
organized, operates or where its principal executive office is located or any political subdivision
thereof (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as “Taxes”). If the Seller shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder to any Purchaser, any
Liquidity Provider, Program Support Provider or the Administrator, then the sum payable shall be
increased by the amount necessary to yield to such Person (after payment of all Taxes) an amount
equal to the sum it would have received had no such deductions been made. Whenever any Taxes are
payable by the Seller, the Seller agrees that, as promptly as possible thereafter, the Seller shall
send to the Administrator for its own account or for the account of any Purchaser or any Liquidity
Provider or other Program Support Provider, as the case may be, a certified copy of an original
official receipt showing payment thereof or such other evidence of such payment as may be available
to the Seller and acceptable to the taxing authorities having jurisdiction over such Person. If
the Seller fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to
the Administrator the required receipts or other required documentary evidence, the Seller shall
indemnify the Administrator and/or any other Affected Person, as applicable, for any incremental
taxes, interest or penalties that may become payable by such party as a result of any such failure.

     Section 1.11 Letters of Credit.

          Subject to the terms and conditions hereof, the LC Bank shall issue or cause the issuance of
Letters of Credit (“Letters of Credit”) on behalf of Seller (and, if applicable, on behalf
of, or for the account of, the Transferor in favor of such beneficiaries as the Transferor may
elect); 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 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

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upon Letters of Credit shall accrue Discount. Letters of Credit that have not been drawn upon
shall not accrue Discount.

     Section 1.12 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, 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.

     (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 and in no
event later than the Facility Termination Date. Each Letter of Credit shall be subject either to
the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any amendments or revisions thereof adhered to by the LC Bank
(“UCP 500”) 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 1.13 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 1.14 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.

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     (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 a Funded Purchase 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 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 subclause (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 a Funded Purchase
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 subclause (c), provided that such LC Participant
shall not be obligated to pay interest as provided in this 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 1.15 Repayment of Participation Advances.

     (a) Upon (and only upon) receipt by the LC Bank for its account of immediately available funds
from or for the account of 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 Funded Purchases 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

13

 

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.

     Section 1.16 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 1.17 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 1.18 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 a purchase, reinvestments, requests for

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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 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, the Transferor, 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, the
Transferor, any Originator or any Affiliate thereof;

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               (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.

     Section 1.19 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, except to the extent resulting from (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 1.20 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

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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 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.

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ARTICLE II

REPRESENTATIONS AND WARRANTIES; COVENANTS;

TERMINATION EVENTS

     Section 2.1 Representations and Warranties; Covenants.

          Each of the Seller and the Servicer hereby makes the representations and warranties, and
hereby agrees to perform and observe the covenants, applicable to it as 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 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
Providers, 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,
liabilities, penalties and Taxes (including Attorney Costs) (all of the foregoing being
collectively referred to as “Indemnified Amounts”) at any time imposed on or incurred by
any Indemnified Party arising out of or otherwise relating to any Transaction Document, the
transactions contemplated thereby or the acquisition of any portion of the Purchased Interest, or
any action taken or omitted by any of the Indemnified Parties (including any action taken by the
Administrator as attorney-in-fact for the Seller, the Transferor or any Originator hereunder or
under any other Transaction Document) whether arising by reason of the acts to be performed by the
Seller hereunder or otherwise, excluding only Indemnified Amounts to the extent: (a) a final
judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from
gross negligence or willful misconduct of the Indemnified Party seeking indemnification, (b) due to
the credit risk of the Obligor and for which reimbursement would constitute recourse to the
Transferor, any Originator, the Seller or the Servicer for uncollectible Receivables or (c) such
Indemnified Amounts include Taxes imposed or based on, or measured by, the gross or net

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income or receipts of such Indemnified Party by the jurisdiction under the laws of which such
Indemnified Party is organized, operates or where its principal executive office is located (or any
political subdivision thereof); provided, however, that nothing contained in this
sentence shall limit the liability of the Seller or the Servicer or limit the recourse of any
Indemnified Party to the Seller or the Servicer for any amounts otherwise specifically provided to
be paid by the Seller or the Servicer hereunder. Without limiting the foregoing indemnification,
the Seller shall indemnify each Indemnified Party for 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 employee or agent of the Seller) under or in connection with this Agreement, any
Information Package or any other information or report delivered by or on behalf of the Seller
pursuant hereto to have been true and correct as of the date made or deemed made when made,

               (iii) the failure by the Seller to comply with any applicable law, rule or regulation related
to any Receivable or the non-conformity of any Receivable with any such applicable law, rule or
regulation,

               (iv) the failure of the Seller to vest and maintain vested in the Administrator (on behalf of
the Purchasers) a perfected ownership interest or security interest in the Purchased Interest and
the property conveyed hereunder, free and clear of any Adverse Claim,

               (v) any commingling of funds to which the Administrator or any Purchaser is entitled hereunder
with any other funds;

               (vi) any failure of a Lock-Box Bank to comply with the terms of the applicable Lock-Box
Agreement;

               (vii) any dispute, claim, offset or defense (other than discharge in bankruptcy of the
Obligor) of the Obligor to the payment of any Receivable, or any other claim resulting from the
sale or lease of goods or the rendering of services related to such Receivable or the furnishing or
failure to furnish any such goods or services or other similar claim or defense not arising from
the financial inability of any Obligor to pay undisputed indebtedness;

               (viii) any failure of the Seller to perform its duties or obligations in accordance with the
provisions of this Agreement or any other Transaction Document to which it is a party;

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               (ix) any action taken by the Administrator as attorney-in-fact for the Seller, the Transferor
or any Originator pursuant to this Agreement or any other Transaction Document;

               (x) any environmental liability claim or products liability claim 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;

               (xi) the use of proceeds of purchases or reinvestments or the issuance of any Letter of
Credit; or

               (xii) any reduction in Capital as a result of the distribution of Collections pursuant to
Section 1.4(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
Provider, 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
or any other Transaction Document to which it is a party to have been true and correct as of the
date made or deemed made 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 or any other Transaction Document to which it is a party.

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 Arch Sales (in accordance with this Section) of the designation
of a new Servicer, Arch Sales 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 Arch
Sales or any successor Servicer, on the condition in each case

20

 

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), Arch
Sales 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 Arch Sales shall cooperate with and assist such new Servicer. Such
cooperation shall include access to and transfer of related records (including all Contracts) and
use by the new Servicer of all licenses, hardware or software necessary or desirable to collect the
Pool Receivables and the Related Security.

     (c) Arch Sales acknowledges that, in making their decision to execute and deliver this
Agreement, the Administrator and the Purchasers have relied on Arch Sales’ agreement to act as
Servicer hereunder. Accordingly, Arch Sales agrees that it will not voluntarily resign as Servicer
without the prior written consent of the Administrator and the Purchasers.

     (d) The Servicer may delegate its duties and obligations hereunder to any subservicer (each a
“Sub-Servicer”); provided, that, in each such delegation: (i) each such
Sub-Servicer shall agree in writing to perform the duties and obligations of the Servicer pursuant
to the terms hereof, (ii) the Servicer shall remain 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 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 an
Originator or the Transferor, 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, take such action, including modifications, waivers or restructurings of Pool
Receivables and the related Contracts as the Servicer may determine to be appropriate to maximize
Collections thereof or reflect adjustments permitted under the Credit and Collection Policy or
required under applicable laws, rules or regulations or the applicable Contract; provided,
however, that for the purposes of this Agreement (i) such action shall not change the
number of days such Pool Receivable has remained unpaid from the date of the original due date
related to such Pool Receivable, (ii) such action shall not alter the status of such Pool
Receivable as a Delinquent Receivable or a Defaulted Receivable under this Agreement or limit the
rights of any of the Purchasers or the Administrator under this Agreement or any other Transaction
Document and (iii) if a Termination Event has occurred and is continuing and Arch

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Sales or an Affiliate thereof is serving as the Servicer, Arch Sales or such Affiliate may
take such action 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, if a Termination Event has
occurred and is continuing, the Administrator may direct the Servicer (whether the Servicer is Arch
Sales 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.

     (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
Arch Sales 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 Arch Sales 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 later of: (i) the Facility
Termination Date, (ii) the date on which no Capital of or Discount in respect of the Purchased
Interest shall be outstanding, (iii) the date the LC Participation Amount is cash collateralized in
full and (iv) the date on which all amounts required to be paid to the Purchasers, the
Administrator and any other Indemnified Party or Affected Person hereunder shall have been paid in
full. After such termination, if Arch Sales 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 Account Arrangements.

          Prior to the initial purchase hereunder, the Seller shall have entered into Lock-Box
Agreements with all of the Lock-Box Banks and delivered 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 (for the benefit of the
Purchasers) 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 (for the benefit of the Purchasers) 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

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thereafter shall be sent immediately to, or as otherwise instructed by, 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, any Indemnified Party, any Affected Person
or any other Person hereunder or under any other Transaction Document, 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:

               (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 (on behalf of the Purchasers), 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 (for the benefit of the Purchasers) 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, in the determination of
the Administrator, following the occurrence and during the continuation of a Termination Event, 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

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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
interests in 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
Asset, nor shall any of them be obligated to perform any of the obligations of the Seller, the
Transferor, ACI or any Originator thereunder.

     (b) Arch Sales 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, Arch Sales shall conduct the data-processing functions of the
administration of the Receivables and the Collections thereon in substantially the same way that
Arch Sales 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 (the “Servicing
Fee”) equal to 1.00% per annum (the “Servicing Fee Rate”) of the daily average
aggregate Outstanding Balance of the Pool Receivables. The Purchasers’ Share of such fee shall be
paid through the distributions contemplated by Section 1.4(d), and the Seller’s Share of
such fee shall be paid by the Seller on each Settlement Date.

     (b) If the Servicer ceases to be Arch Sales 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.

     (a) Each Purchaser hereby accepts the appointment of and irrevocably authorizes the
Administrator to take such actions as agent on its behalf and to exercise such powers as are
delegated to the Administrator hereby and to exercise such other powers as are reasonably
incidental thereto. The Administrator shall hold, in its name, for the benefit of each Purchaser,
ratably, the Purchased Interest. The Administrator shall not have any duties other than those
expressly set forth herein or any fiduciary relationship with any Purchaser, and no implied
obligations or liabilities shall be read into this Agreement, or otherwise exist, against the
Administrator. The Administrator does not assume, nor shall it be deemed to have assumed, any
obligation to, or relationship of trust or agency with, the Seller or Servicer. Notwithstanding
any

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provision of this Agreement or any other Transaction Document to the contrary, in no event
shall the Administrator ever be required to take any action which exposes the Administrator to
personal liability or which is contrary to the provisions of this Agreement, any other Transaction
Document or applicable law. The appointment and authority of the Administrator hereunder shall
terminate on the later of (i) the Facility Termination Date, (ii) the date on which no Capital of
or Discount in respect of the Purchased Interest shall be outstanding, (iii) the date the LC
Participation Amount is cash collateralized in full and (iv) the date on which all amounts required
to be paid by the Seller under this Agreement to any Purchaser, the Administrator and any other
Indemnified Party or Affected Person shall have been paid in full.

     (b) Except as otherwise specifically provided in this Agreement, the provisions of this
Section 4.7 are solely for the benefit of the Administrator and the Purchasers, and none of
the Seller or the Servicer shall have any rights as a third party beneficiary or otherwise under
any of the provisions of this Section 4.7, except that this Section 4.7 shall not
affect any obligations which the Administrator or any Purchaser may have to the Seller or the
Servicer under the other provisions of this Agreement.

     (c) In performing its functions and duties hereunder, the Administrator shall act solely as
the agent of the Purchasers and does not assume nor shall be deemed to have assumed any obligation
or relationship of trust or agency with or for the Seller or Servicer or any of their successors
and assigns.

     Section 4.8 Nature of Administrator’s Duties; Delegation of Administrator’s Duties;
Exculpatory Duties.

     (a) 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, the
Transferor, 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
Purchaser any time that the Purchasers have instructed the Administrator to act or refrain from
acting pursuant hereto.

     (b) The Administrator may execute any of its duties through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such duties. The
Administrator shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

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     (c) Neither the Administrator nor any of its directors, officers, agents or employees shall be
liable for any action taken or omitted (i) with the consent or at the direction of the required
Purchasers or (ii) in the absence of such Person’s gross negligence or willful misconduct. The
Administrator shall not be responsible to any Purchaser or other Person for (i) any recitals,
representations, warranties or other statements made by the Seller, any Sub-Servicer, the Servicer,
the Transferor, any Originator or any of their Affiliates, (ii) the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Transaction Document, (iii) any failure of the
Seller, any Sub-Servicer, the Servicer, the Transferor, any Originator or any of their Affiliates
to perform any obligation hereunder or under the other Transaction Documents to which it is a party
(or under any Contract), or (iv) the satisfaction of any condition specified in Exhibit II. The
Administrator shall not have any obligation to any Purchaser to ascertain or inquire about the
observance or performance of any agreement contained in any Transaction Document or to inspect the
properties, books or records of the Seller, the Servicer, the Transferor, any Originator or any of
their respective Affiliates.

     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 transfer of the Purchased Interest 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 beneficial owners of the Purchased
Interest. 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, the Transferor or any Originator or to
inspect the property (including the books and records) of the Seller, the Servicer, any
Sub-Servicer, the Transferor 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

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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 Participants (or, where expressly required
hereunder, the Required LC Participants or all of the LC Participants). The Administrator shall in
all cases be fully protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the required Purchasers or the Required LC Participants, and such
request and any action taken or failure to act pursuant thereto shall be binding upon all
Purchasers and the Administrator.

     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, the Transferor, any Originator, ACI, 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, the Transferor, any Originator, ACI, 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 Notice of Termination Events.

          The Administrator shall not be deemed to have knowledge or notice of the occurrence of any
Termination Event or Unmatured Termination Event unless it has received notice from any Purchaser,
the Servicer or the Seller stating that a Termination Event or an Unmatured Termination Event has
occurred hereunder and describing such Termination Event or Unmatured Termination Event. In the
event that the Administrator receives such a notice, it shall promptly give notice thereof to each
Purchaser. The Administrator shall take such action concerning a Termination Event or an Unmatured
Termination Event as may be directed by the required Purchasers (unless such action otherwise
requires the consent of all Purchasers, the LC Bank and/or the Required LC Participants), but until
the Administrator receives such directions, the Administrator may (but shall not be obligated to)
take such action, or refrain from taking such action, as the Administrator deems advisable and in
the best interests of the Purchasers.

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     Section 4.13 Non-Reliance on Administrator and other Purchasers; Administrators and
Affiliates.

     (a) Each Purchaser expressly acknowledges that neither the Administrator nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Administrator hereafter taken, including
any review of the affairs of the Seller, the Transferor, ACI, the Servicer or any Originator, shall
be deemed to constitute any representation or warranty by the Administrator. Each Purchaser
represents and warrants to the Administrator that it has, independently and without reliance upon
the Administrator, the LC Bank or any Purchaser and based on such documents and information as it
has deemed appropriate, made and will continue to make its own appraisal of any investigation into
the business, operations, property, prospects, financial and other conditions and creditworthiness
or the Seller, the Transferor, ACI, the Servicer or the Originators, and made its own evaluation
and decision to enter into this Agreement. Except for terms specifically required to be delivered
hereunder, the Administrator shall not have any duty or responsibility to provide any Purchaser
with any information concerning the Seller, the Transferor, ACI, the Servicer or the Originators or
any of their Affiliates that comes into the possession of the Administrator or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.

     (b) Each of the Purchasers and the Administrator and any of their respective Affiliates may
extend credit to, accept deposits from and generally engage in any kind of banking, trust, debt,
entity or other business with the Seller, the Transferor, ACI, the Servicer or any Originator or
any of their Affiliates. With respect to the acquisition of the Eligible Receivables pursuant to
this Agreement, the Administrator shall have the same rights and powers under this Agreement as any
Purchaser and may exercise the same as though it were not such an agent, and the terms “Purchaser”
and “Purchasers” shall include, to the extent applicable, the Administrator in its individual
capacity.

     Section 4.14 Indemnification.

          Each LC Participant agrees to indemnify and hold harmless the Administrator and its officers,
directors, employees, representatives and agents and the LC Bank (to the extent not reimbursed by
the Seller, the Transferor, the Servicer or any Originator and without limiting the obligation of
the Seller, the Transferor, the Servicer, or any Originator to do so), ratably according to its Pro
Rata Share, from and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, settlements, costs, expenses and, or disbursements of any kind or nature
whatsoever (including, in connection with any investigative or threatened proceeding, whether or
not the Administrator or such Person shall be designated a party thereto) that may at any time be
imposed on, incurred by, or asserted against the Administrator or such Person as a result of, or
related to, any of the transactions contemplated by the Transaction Documents or the execution,
delivery or performance of the Transaction Documents or any other document furnished in connection
therewith; 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,

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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.

     Section 4.15 Successor Administrator.

          The Administrator may, upon at least thirty (30) days’ notice to the Seller, the Purchasers
and the Servicer, resign as Administrator. Such resignation shall not become effective until a
successor Administrator is appointed by the Issuer and the LC Bank and has accepted such
appointment. Upon such acceptance of its appointment as Administrator hereunder by a successor
Administrator, such successor Administrator shall succeed to and become vested with all the rights
and duties of the retiring Administrator, and the retiring Administrator shall be discharged from
its duties and obligations under the Transaction Documents. After any retiring Administrator’s
resignation hereunder, the provisions of Sections 3.1 and 3.2 and this Article
IV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was
the Administrator.

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 Insolvency Proceeding with respect to Seller, the Transferor, the
Servicer or any Originator without the prior written consent of the LC Bank and all LC
Participants; (vii) without the prior written consent of the LC Participant affected thereby,
waive, amend or otherwise modify the definition of Scheduled Commitment Termination Date for such
LC Participant; (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; or (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

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other parties thereto; and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given. No failure on the part
of any Purchaser 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 provided for hereunder shall, unless otherwise stated
herein, be in writing (including facsimile communication) and shall be personally delivered or sent
by facsimile, or by overnight mail, to the intended party at the mailing address or facsimile
number of such party set forth under its name on the signature pages hereof (or in any other
document or agreement pursuant to which it is or became a party hereto), or at such other address
or facsimile number as shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective (i) if delivered by overnight mail,
when received, and (ii) if transmitted by facsimile, when sent, receipt confirmed by telephone or
electronic means.

     Section 5.3 Successors and Assigns; Assignability; Participations.

     (a) Successors and Assigns. 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 the parties hereto and their respective
successors and assigns. Except as otherwise provided herein, neither the Seller nor the Servicer
may assign or transfer any of its rights or delegate any of its duties hereunder or under any
Transaction Document without the prior 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, the Servicer and the Seller (such consent not to be unreasonably
withheld, conditioned or delayed), 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) Participations. Notwithstanding anything contained in paragraph (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 Funded Purchase or Funded Purchases made by such LC Participant to another bank or
other entity (the “Participant”) so long as (i) no such grant of a participation shall,
without the consent of the Seller, require the Seller to file a registration statement with the SEC
and (ii) no holder of any such participation shall be entitled to require such LC Participant to
take or omit to

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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 1.7, 1.8 and 1.9 hereunder as
if it were an LC Participant; provided that 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) Assignments by Issuer. This Agreement and the Issuer’s rights and obligations
herein (including ownership of the Purchased Interest 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, conditioned or delayed; 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 Provider 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 to Seller of any assignment of the Issuer’s rights and obligations (including ownership of
the Purchased Interest to any Person other than a Program Support Provider).

     (d) Assignments to Liquidity Providers and other Program Support Providers. The
Issuer may at any time grant to one or more of its Liquidity Providers or other Program Support
Providers participating interests in the Purchased Interest. In the event of any such grant by the
Issuer of a participating interest to a Liquidity Provider or other Program Support Provider, the
Issuer shall remain responsible for the performance of its obligations hereunder. The Seller
agrees that each Liquidity Provider and Program Support Provider shall be entitled to the benefits
of Sections 1.7 and 1.8.

     (e) Assignment by Administrator. 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, conditioned or delayed.

     (f) Except as provided in Section 4.1 (d), neither the Seller nor 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 Provider may be enforced through it or by its agents.

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     Section 5.4 Costs, Expenses and Taxes.

     (a) By way of clarification, and not of limitation, of Sections 1.7, 1.19 or
3.1, the Seller shall pay to the Administrator and/or any Purchaser on demand all costs and
expenses in connection with (i) the preparation, execution, delivery and administration (including
amendments or waivers of any provision) of this Agreement or the other Transaction Documents, (ii)
the sale of the Purchased Interest (or any portion thereof), (iii) the perfection (and
continuation) of the Administrator’s rights in the Receivables, Collections and other Pool Assets,
(iv) the enforcement by the Administrator or the Purchasers of the obligations of the Seller, the
Transferor, the Servicer or the Originators under the Transaction Documents or of any Obligor under
a Receivable and (v) the maintenance by the Administrator of the Lock-Box Accounts (and any related
lock-box or post office box), including reasonable fees, costs and expenses of legal counsel for
the Administrator the Purchasers relating to any of the foregoing or to advising the Administrator,
any Purchaser, any Liquidity Provider or any other Program Support Provider about its rights and
remedies under any Transaction Document and all costs and expenses (including reasonable counsel
fees and expenses) of the Administrator and any Purchaser in connection with the enforcement of the
Transaction Documents and in connection with the administration of the Transaction Documents.
Subject to Section 1(e) of Exhibit IV of this Agreement, the Seller shall reimburse
the Administrator and each Purchaser for the cost of such Person’s auditors (which may be employees
of such Person) auditing the books, records and procedures of the Seller or the Servicer. The
Seller shall reimburse the Issuer for any amounts the Issuer must pay to any Liquidity Provider or
other Program Support Provider on account of any Tax. The Seller shall reimburse the Issuer on
demand for all reasonable costs and expenses incurred by the Issuer or any holder of membership
interests of the Issuer in connection with the Transaction Documents or the transactions
contemplated thereby, including costs related to the auditing of the Issuer’s books by certified
public accountants, and the Rating Agencies and fees and out of pocket expenses of counsel of the
Administrator and any Purchaser, or any membership interest holder, or administrator, of such for
advice relating to the Issuer’s operation.

     (b) All payments made by the Seller to the Administrator, any Purchaser, Liquidity Provider or
other Program Support Provider hereunder shall be made without withholding for or on account of any
present or future taxes (other than those imposed or based on the gross or net income or receipts
of the recipient by the jurisdiction under the laws of which such Person is organized, operates or
where its principal executive office is located or any political subdivision thereof). If any such
withholding is so required, the Seller shall make the withholding, pay the amount withheld to the
appropriate authority before penalties attach thereto or interest accrues thereon and pay such
additional amount as may be necessary to ensure that the net amount actually received by such
Person free and clear of such taxes (including such taxes on such additional amount) is equal to
the amount that such Person would have received had such withholding not been made. If any such
Person pays any such taxes, penalties or interest the Seller shall reimburse such Person for that
payment on demand. If the Seller pays any such taxes, penalties or interest, it shall deliver
official tax receipts evidencing that payment or certified copies thereof to such Person on whose
account such withholding was made on or before the thirtieth day after payment.

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     (c) 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, the
other Transaction Documents or the other documents or agreements to be delivered hereunder or
thereunder, and agrees to save each Indemnified Party and Affected Person 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.

     (a) Each of the Seller, the Servicer, the Administrator, the LC Bank, each LC Participant and
each assignee of the Purchased Interest or any interest therein, and each Person that enters into a
commitment to purchase the Purchased Interest or interests 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 provisions of this paragraph shall survive
any termination of this Agreement.

     (b) Notwithstanding any provisions contained in this Agreement to the contrary, the Issuer
shall not and shall not be obligated to, pay any amount, if any, payable by it pursuant to this
Agreement or any other Transaction Document unless (i) the Issuer has received funds which may be
used to make such payment and which funds are not required to repay the Notes when due and (ii)
after giving effect to such payment, either (x) the Issuer could issue Notes to refinance all
outstanding Notes (assuming such outstanding Notes matured at such time) in accordance with the
program documents governing the Issuer’s securitization program or (y) all Notes are paid in full.
Any amount which the Issuer does not pay pursuant to the operation of the preceding sentence shall
not constitute a claim (as defined in §101 of the Bankruptcy Code) against or company obligation of
the Issuer for any such insufficiency unless and until the Issuer satisfies the provisions of
clauses (i) and (ii) above. The provisions of this paragraph shall survive any
termination of this Agreement.

     Section 5.6 Confidentiality.

          Unless otherwise required by applicable law, 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
may be disclosed: (a) to 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 and
each Purchaser, (b) to the Seller’s legal counsel and auditors if they agree to hold it
confidential, subject to applicable law, (c) in connection with any legal proceeding arising out of
or in connection with this Agreement or any other Transaction Document or the preservation or
maintenance of that party’s rights hereunder or thereunder, (d) if required to do so by a court of
competent jurisdiction whether in pursuance of any procedure for discovering documents or
otherwise, (e) pursuant to any law in accordance with which that party is required or accustomed to
act (including applicable SEC requirements), (f) to any Governmental Authority, and (g) to any
Person in connection with any credit agreement or other financing

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transaction. The restrictions in the preceding sentence shall not apply to disclosures to any
party to this Agreement by any other party hereto, information already known to a recipient
otherwise than in breach of this Section, information also received from another source on terms
not requiring it to be kept confidential, or information that is or becomes publicly available
otherwise than in breach of this Section. Unless otherwise required by applicable law, each of the
Administrator and the Purchasers agrees to maintain the confidentiality of non-public financial
information regarding ACI, the Seller, the Transferor, the Servicer and the Originators;
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 ACI, (ii) legal counsel and auditors of the Purchasers or the
Administrator if they agree to hold it confidential, (iii) if applicable, the Rating Agencies
rating the Notes of any Issuer, (iv) any Program Support Provider or potential Program Support
Provider (if they agree to hold it confidential), (v) any placement agency placing the Notes and
(vi) any regulatory authorities or Governmental Authority having jurisdiction over the
Administrator, any Purchaser, any Program Support Provider or any Liquidity Provider.

     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 NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK) 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 NEW YORK.

     (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; 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 NEW YORK 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.

34

 

     Section 5.9 Survival of Termination; Non-Waiver.

          The provisions of Sections 1.7, 1.8, 1.18, 1.19, 3.1,
3.2, 5.4, 5.5, 5.6, 5.7, 5.10 and 5.14
shall survive any termination of this Agreement.

     Section 5.10 WAIVER OF JURY TRIAL.

          EACH OF THE PARTIES HERETO WAIVES ITS 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.

     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 Right of Setoff.

          Each Purchaser is hereby authorized (in addition to any other rights it may have) to setoff,
appropriate and apply (without presentment, demand, protest or other notice which are hereby
expressly waived) any deposits and any other indebtedness held or owing by such Purchaser
(including by any branches or agencies of such Purchaser) to, or for the account of, the Seller
against amounts owing by the Seller hereunder (even if contingent or unmatured); provided
that such Purchaser shall notify Seller concurrently with such setoff.

35

 

     Section 5.14 Issuer’s Liabilities.

          The obligations of the Issuer under the Transaction Documents are solely the limited liability
company 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 member, employee, officer, director or
incorporator of the Issuer; provided, however, that this Section shall not relieve
any such Person of any liability it might otherwise have for its own gross negligence or willful
misconduct.

     Section 5.15 Sharing of Recoveries.

          Each Purchaser agrees that if it receives any recovery, through set-off, judicial action or
otherwise, on any amount payable or recoverable hereunder in a greater proportion than should have
been received hereunder or otherwise inconsistent with the provisions hereof, then the recipient of
such recovery shall purchase for cash an interest in amounts owing to the other Purchasers (as
return of Capital or otherwise), without representation or warranty except for the representation
and warranty that such interest is being sold by each such other Purchaser free and clear of any
Adverse Claim created or granted by such other Purchaser, in the amount necessary to create
proportional participation by the Purchaser in such recovery. If all or any portion of such amount
is thereafter recovered from the recipient, such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

36

 

     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.

	 	 	 	 	 
	 	 	ARCH RECEIVABLE COMPANY, LLC,
	 

	 	as Seller	 	 
	 
	 	 	 	 
	 

	 	By:	 	 /s/ James E. Florczak
	 

	 	 	 	 
	 

	 	Name:	 	 James E. Florczak
	 

	 	 	 	 
	 

	 	Title:	 	 Vice President & Treasurer
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address:
	 	One CityPlace Drive, Suite 300
	 

	 	 	 	St. Louis, MO 63141
	 
	 	 	 	 
	 

	 	Attention:
	 	James E. Florczak,
	 

	 	 	 	Vice President and Treasurer
	 
	 	 	 	 
	 

	 	Telephone:
	 	314-994-2785
	 
	 	 	 	 
	 

	 	Facsimile:
	 	314-994-2739
	 
	 	 	 	 
	 	 	ARCH COAL SALES COMPANY, INC.,
	 	 	as initial Servicer
	 
	 	 	 	 
	 

	 	By:	 	 /s/ James E. Florczak
	 

	 	 	 	 
	 

	 	Name:	 	 James E. Florczak
	 

	 	 	 	 
	 

	 	Title:	 	 Vice President & Treasurer
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address:
	 	One CityPlace Drive, Suite 300
	 

	 	 	 	St. Louis, MO 63141
	 

	 	Attention:
	 	James E. Florczak,
	 

	 	 	 	Vice President and Treasurer
	 

	 	Telephone:
	 	314-994-2785
	 

	 	Facsimile:
	 	314-994-2739

			
	 	 	 
	 	S-1	Receivables Purchase Agreement
	 	 	(ARCH COAL)

 

	 	 	 	 	 
	 	 	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: John T. Smathers
	 

	 	Telephone No.: 412-762-6440
	 

	 	Facsimile No.: 412-762-9184
	 

	 	Commitment: $100,000,000

			
	 	 	 
	 	S-2	Receivables Purchase Agreement
	 	 	(ARCH COAL)

 

	 	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION,
	 	 	as Administrator
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ John T. Smathers	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	John T. Smathers	 	 
	 

	 	Title:	 	Vice President
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	PNC Bank, National Association

	 

	 	 	 	One PNC Plaza, 26th Floor

	 

	 	 	 	249 Fifth Avenue

	 

	 	 	 	Pittsburgh, PA 15222-2707

	 

	 	Attention:
	 	John T. Smathers

	 

	 	Telephone:
	 	412-762-6440
	 

	 	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:
	 	$100,000,000
	 

	 	Pro-Rata Share:	 	100%

			
	 	 	 
	 	S-3	Receivables Purchase Agreement
	 	 	(ARCH COAL)

 

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.

     “ACI” means Arch Coal, Inc., a Delaware corporation.

     “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 1.7 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 membership
interests. 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 Capital (or portion thereof) funded
by any Purchaser other than through the issuance of Notes means an interest rate per annum equal
to: (a) 2.0% 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,
however, that the “Alternate Rate” for any day while a Termination Event or an Unmatured
Termination Event exists shall be an interest rate equal to 2.0% per annum above the Base Rate in
effect on such day.

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

     “Arch Western Group” means Arch Western Resources, LLC, a Delaware limited liability
company, and any of its Subsidiaries.

I-1

 

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

     “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 “reference rate” (such “reference 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, the Transferor, any Originator, ACI 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 the Seller in connection with Funded
Purchases in respect of the Purchased Interest by the Purchasers pursuant to Section 1.2 of
the Agreement (including Section 1.2(e)), as reduced from time to time by Collections
distributed and applied on account of such Capital pursuant to Section 1.4(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) ACI ceases to own, directly or indirectly, 100% of the
issued and outstanding capital stock of Arch Sales free and clear of all Adverse Claims (other than
the lien in favor of PNC, as administrative agent or collateral agent, under any revolving credit
agreement of ACI) or ceases to own, directly or indirectly, 100% of the membership interests of the
Seller free and clear of all Adverse Claims (other than the lien in favor of PNC, as

I-2

 

administrative agent or collateral agent, under any revolving credit agreement of ACI); or (b)
any person or group of persons (within the meaning of Sections 13(d) or 14(a) of the Securities
Exchange Act of 1934, as amended) shall have acquired beneficial ownership of (within the meaning
of Rule 13d-3 promulgated by the SEC under said Act) 35% or more of the voting capital stock of
ACI; or (c) within a period of twelve (12) consecutive calendar months, individuals who (1) were
directors of ACI on the first day of such period, (2) were nominated for election by the ACI, or
(3) were appointed by the board shall cease to constitute a majority of the board of directors of
ACI.

     “Closing Date” means February 10, 2006.

     “Collections” means, with respect to any Pool Receivable: (a) all funds that are
received by any Originator, the Transferor, ACI, 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 1.4(e) of the Agreement and (c) all other proceeds
of such Pool Receivable.

     “Commitment” shall mean, (i) as to the Issuer, that dollar amount set forth as the
“Commitment” under its name on the signature pages to the Agreement and (ii) 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)).

     “Commodity Hedge” means a price protection agreement: (i) related to crude oil,
diesel fuel, heating oil, coal, SO2 allowances or other commodities used in the ordinary course of
business of ACI and its Affiliates and (ii) entered into by ACI and its Affiliates for hedging
purposes in the ordinary course of the operations of their business.

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

     “Concentration Percentage” means: (a) for any Group A Obligor, 16%, (b) for any Group
B Obligor, 16%, (c) for any Group C Obligor, 8% and (d) for any Group D Obligor, 4%;
provided, that the Concentration Percentage for TVA, so long as TVA maintains a long term
debt rating of “AAA” by Standard & Poor’s and “Aaa” by Moody’s, shall be 25%.

     “Concentration Reserve” means at any time, 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.

I-3

 

     “Concentration Reserve Percentage” means, at any time, the (a) largest of the
following (i) the sum of the four (4) largest Group D Obligor Receivables balances (up to the
Concentration Percentage for each Obligor), (ii) the sum of the two (2) largest Group C Obligor
Receivables balances (up to the Concentration Percentage for each Obligor), (iii) the largest Group
B Obligor Receivables balance (up to the Concentration Percentage for each Obligor), and (iv) the
largest Group A Obligor Receivables balance (up to the Concentration Percentage for such Obligor),
divided by (b) the sum of the outstanding balances of all 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.

     “CP Rate” means for any Settlement Period for any Portion of Capital (a) the
per annum rate equivalent to the weighted average cost (as determined by the
applicable Issuer and which shall include commissions of placement agents and dealers, incremental
carrying costs incurred with respect to Notes of such Person maturing on dates other than those on
which corresponding funds are received by the Issuer, other borrowings by the Issuer (other than
under any Program Support Agreement) and any other costs associated with the issuance of Notes) of
or related to the issuance of Notes that are allocated, in whole or in part, by the applicable
Issuer to fund or maintain such Portion of Capital (and which may be also allocated in part to the
funding of other assets of the Issuer); provided, however, that if any component of
such rate is a discount rate, in calculating the “CP Rate” for such Portion of Capital for
such Settlement Period, the applicable Issuer shall for such component use the rate resulting from
converting such discount rate to an interest bearing equivalent rate per annum;
provided, further, that notwithstanding anything in this Agreement or the other
Transaction Documents to the contrary, the Seller agrees that any amounts payable to the Issuer in
respect of Discount for any Settlement Period with respect to any Portion of Capital funded by the
Issuer at the CP Rate shall include an amount equal to the portion of the face amount of the
outstanding Notes issued to fund or maintain such Portion of Capital that corresponds to the
portion of the proceeds of such Notes that was used to pay the interest component of maturing Notes
issued to fund or maintain such Portion of Capital, to the extent that the Issuer had not received
payments of interest in respect of such interest component prior to the maturity date of such
maturing Notes (for purposes of the foregoing, the “interest component” of Notes equals the excess
of the face amount thereof over the net proceeds received by the Issuer from the issuance of Notes,
except that if such Notes are issued on an interest-bearing basis its “interest component” will
equal the amount of interest accruing on such Notes through maturity). The “CP Rate” for any day
while a Termination Event or an Unmatured Termination Event exists shall be an interest rate equal
to 2.0% per annum above the Base Rate as in effect on such day.

     “Credit and Collection Policy” means, as the context may require, those receivables
credit and collection policies and practices of the Originators and the Transferor in effect on the
Closing Date 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 Agreements.

I-4

 

     “Days’ Sales Outstanding” means, for any calendar month, an amount computed as of the
last day of such 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
day of such calendar month divided by (b) (i) the aggregate credit sales made by the Originators
and the Transferor during the three calendar months ended on the last day of such calendar month
divided by (ii) 90.

     “Debt” means, as to any Person at any time, any and all indebtedness, obligations or
liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute
or contingent, or joint or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or acceptance credit facility,
(iii) reimbursement obligations (contingent or otherwise) under any letter of credit, (iv) any
other transaction (including production payments (excluding royalties), installment purchase
agreements, forward sale or purchase agreements, capitalized leases and conditional sales
agreements) having the commercial effect of a borrowing of money entered into by such Person to
finance its operations or capital requirements (but not including trade payable and accrued
expenses incurred in the ordinary course of business which are not represented by a promissory note
or other evidence of indebtedness and which are not more than thirty (30) days past due), or (v)
any Guaranty of any such Indebtedness. It is understood that obligations in respect of any Hedging
Transaction shall not be deemed to be Debt.

     “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 Insolvency Proceeding with respect to the Obligor thereof during such month), by (b) the
aggregate credit sales made by the Originators and the Transferor during the month that is seven
calendar months before such month.

     “Defaulted Receivable” means a Receivable:

     (a) as to which any payment, or part thereof, remains unpaid for more than 150
days from the original due date for such payment, 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 applicable Originator’s or the Transferor’s books as uncollectible.

     “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 original due date for such payment.

I-5

 

     “Dilution Horizon” means, for any calendar month, 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 such calendar month of: (a) the aggregate credit sales made by the Originators and the
Transferor 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 made or owed by the Seller pursuant to
Section 1.4(e)(i) of the Agreement during such calendar month by (b) the aggregate credit
sales made by the Originators and the Transferor during the calendar month that is one month prior
to such calendar month.

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

     “Dilution Reserve Percentage” means on any day, the greater of (a) 5% and (b) the
product of (i) the Dilution Horizon multiplied by (ii) the sum of (x) 2.00 times the
average of the Dilution Ratios 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 a Funded Purchase, in
connection with any drawing under a Letter of Credit, which accrues Discount pursuant to
Section 1.2(e) 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 1.14 of the Agreement.

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

     “Eligible Foreign Obligor” means an Obligor which is a resident of any country (other
than the United States of America) that has a short-term foreign currency rating (or, if such
country does not have such a short-term foreign currency rating, a long-term foreign currency
rating) of at least “A2” (or “A”) by Standard & Poor’s and “P-1” (or “A2”) by Moody’s.

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

     (a) the Obligor of which is: (A) (i) a United States resident or (ii) an Eligible
Foreign Obligor; (B) not (i) a United States Federal Government Authority or (ii) a
governmental entity within the State of Ohio; provided that TVA shall not be subject
to the restriction set forth in clause (B)(i) above; (iii) not subject to any action
of the type described in paragraph (f) of Exhibit V to the Agreement; and
(iv) not an Affiliate of ACI, the Transferor, the Servicer or any other Originator,

     (b) that is denominated and payable only in U.S. dollars in the United States, and the
Obligor with respect to which has been instructed to remit Collections in respect thereof to
a Lock-Box Account in the United States of America,

     (c) that does not have a stated maturity which is more than 30 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 applicable Originator’s or the Transferor’s business,

     (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,

I-7

 

     (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 Pool Receivable which is subject to
any such claim, the amount of such Pool Receivable which shall be treated as an Eligible
Receivable shall equal the excess of the amount of such Pool Receivable over the amount of
such claim asserted by or available to the related 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 undivided percentage ownership or security interest, to the extent of the
Purchased Interest, and a valid and enforceable first priority perfected 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 Transferor, the Seller nor the
Servicer has established any offset arrangements with the related Obligor,

     (o) for which the sum of the Outstanding Balances of all Receivables of the related
Obligor with respect to which any payment, or part thereof, remains unpaid for more than 90
days from the original due date for such payment do not exceed 35.00% 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 or the Transferor, and

     (q) that if such Receivable has not yet been billed, the related coal has been shipped
within the last 60 days.

     “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

I-8

 

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, the Transferor, any Originator or ACI, (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, the Transferor, any Originator or ACI, 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, the Transferor, 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).

     “Excess Concentration” means the sum of the following amounts: (i) the amount by which
the Outstanding Balance of Eligible Receivables of each Obligor then in the Receivables Pool
exceeds an amount equal to the Concentration Percentage for such Obligor multiplied by the
Outstanding Balance of all Eligible Receivables then in the Receivables Pool, plus (ii) the amount
by which the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool
the Obligor of which is a Canadian resident exceeds 15% of the aggregate

I-9

 

Outstanding Balance of all Eligible Receivables then in the Receivables Pool, plus (iii) the
amount by which the aggregate Outstanding Balance of all Eligible Receivables then in the
Receivable Pool the Obligor of which is an Eligible Foreign Obligor (other than a resident of
Canada) exceeds 5% of the aggregate Outstanding Balance of all Eligible Receivables then in the
Receivables Pool, plus (iv) the amount by which the aggregate Outstanding Balance of all Eligible
Receivables then in the Receivables Pool the coal with respect to which has been shipped but not
yet billed for more than 30 days but not more than 60 days from shipment exceeds 10% of the
aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool.

     “Excluded Subsidiary” means Arch Western Acquisition Corporation, a Delaware
corporation, Arch Western Resources, LLC, a Delaware limited liability company, and any
Subsidiaries of Arch Western Resources, LLC.

     “Facility Termination Date” means the earliest to occur of: (a) February 3, 2011, (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 that the
commitments of the Liquidity Providers terminate under the Liquidity Agreement, (e) the date which
is 30 days after the date on which the Administrator has received written notice from the Seller of
its election to terminate the Purchase Facility, and (f) with respect to any LC Participant, such
LC Participant’s Scheduled Commitment Termination Date.

     “FASB” has the meaning set forth in Section 1.7(a) of the Agreement.

     “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 1.5 of the Agreement.

     “Funded Purchase” shall mean a purchase or deemed purchase of undivided interests in
the Purchased Interest under the Agreement which (i) is paid for in cash (other than through
reinvestment of Collections pursuant to Section 1.4(b) of the Agreement), (ii) treated as a
Funded Purchase pursuant to Section 1.2(e) of the Agreement and/or any of the provisions
set forth in

I-10

 

Sections 1.11 through 1.20 of the Agreement or (iii) without double counting
any of the amounts described in clause (i) or (ii), above, is the result of the
issuance of Notes by the Issuer, pursuant to the Agreement or otherwise, the proceeds of which are
used to reimburse draws on the LC Bank and/or any LC Participant under any Letter of Credit,
whether on, prior to or after the date any such draw is treated as or deemed to be a Funded
Purchase under the Agreement.

     “Governmental Acts” has the meaning set forth in Section 1.19 of the Agreement.

     “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 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.

     “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.

     “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.

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

     “Guaranty” of any Person means any obligation of such Person guarantying or in effect
guarantying any liability or obligation of any other Person in any manner, whether directly or
indirectly, including any such liability arising by virtue of partnership agreements, including any
agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship
arrangement and any other form of assurance against loss, except endorsement of negotiable or other
instruments for deposit or collection in the ordinary course of business.

     “Hedging Transaction” means any of the following transactions by ACI or any of its
Subsidiaries: any rate swap transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option, bond option,

I-11

 

interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction, currency option or
any other similar transaction or any combination of the foregoing transactions, including, without
limitation, any Interest Rate Hedge or any Commodity Hedge.

     “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.

     “Interest Rate Hedge” means an interest rate exchange, collar, cap, swap, adjustable
strike cap, adjustable strike corridor or similar agreements entered into by ACI or any of its
Affiliates in the ordinary course operations of their business.

     “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.

     “ISP98 Rules” has the meaning set forth in Section 1.12 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.

I-12

 

     “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 1.12 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 3, 2006 between the purchasers from time to time party thereto, the Issuer and PNC, as
Administrator and Liquidity Agent, as the same may be amended, supplemented or otherwise modified
from time to time.

     “Liquidity Provider” means each bank or other financial institution that provides
liquidity support to the Issuer pursuant to the terms of a Liquidity Agreement.

     “LLC Agreement” means the limited liability company agreement of Seller.

     “Lock-Box Account” means each account listed on Schedule II to this Agreement
(in each case, in the name of the Seller) and maintained at a bank or other financial institution
acting as a Lock-Box Bank pursuant to a Lock-Box Agreement for the purpose of receiving
Collections.

     “Lock-Box Agreement” means each agreement, in form and substance satisfactory to the
Administrator, among the Seller, the Servicer, the Administrator and a Lock-Box Bank, governing the
terms of the related Lock-Box Accounts.

     “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 Servicer 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,(i) the product of (A) 2.00 times (B) the
highest average of the Default Ratios for any three consecutive calendar months during the twelve
most recent calendar months times (C) the aggregate credit sales made by the Originators and the
Transferor during the 5 most recent calendar months divided by (ii) the Net Receivables Pool
Balance as of such date.

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

I-13

 

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

     (a) the assets, operations, business or financial condition of such Person,

     (b) the ability of any such Person 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 any of the Pool Receivables, or

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

     “Monthly Settlement Date” means the 21st day of each calendar month (or if such day is
not a Business Day, the next occurring Business Day); provided, however, that on and after the
occurrence and continuation of any Termination Event, the Monthly Settlement Date shall be the date
selected as such by the Administrator from time to time (it being understood that the
Administrator may select such Monthly Settlement Date to occur as frequently as daily) or, in the
absence of any such selection, the date which would be the Monthly Settlement Date pursuant to this
definition).

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

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

     “Order” has the meaning set forth in Section 1.20 of the Agreement.

     “Originator” and “Originators” have the meaning set forth in the Purchase and
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.

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

     “Participant” has the meaning set forth in Section 5.3(b) of this Agreement.

     “Paydown Notice” has the meaning set forth in Section 1.4(f)(i) of the
Agreement.

     “Performance Guarantor” means ACI.

I-14

 

     “Performance Guaranty” means the Performance Guaranty, dated as of February 3, 2006,
by the Performance Guarantor in favor of the Administrator for the benefit of the Purchasers and LC
Participants, as the same may be amended, restated, supplemented or otherwise modified from time to
time.

     “Permitted Merger” means (i) the merger of Paint Creek Terminal, Inc. into ACI within
90 days of the Closing Date, (ii) the merger of Julian Tipple, Inc. into Mountain Mining, Inc.
within 90 days of the Closing Date, (iii) any merger of any existing Originator into any other
existing Originator, and (iv) any merger of any existing Originator into ACI.

     “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 1.2(d) 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 of the Purchased Interest 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
Interest (or portions thereof) and/or (d) the making of loans and/or other extensions of 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 Provider 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 Participants at such time.

     “Purchase and Sale Agreement” means the Purchase and Sale Agreement, dated as of
February 3, 2006, between the Originators and the Transferor, as such agreement may be amended,
supplemented or otherwise modified from time to time.

I-15

 

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

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

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

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

     “Purchase Date” means the date on which a Funded Purchase or a reinvestment is made
pursuant to this Agreement.

     “Purchase Facility” has the meaning set forth in Section 1.1 of the Purchase
and Sale Agreement.

     “Purchase Limit” means $100,000,000, 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 Notice” has the meaning set forth in Section 1.2(a) of the
Agreement.

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

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

     “Purchased Interest” means, at any time, the undivided percentage ownership interest
in: (a) each and every Pool Receivable now existing or hereafter arising, (b) all Related Security
with respect to such Pool Receivables and (c) all Collections with respect to, and other proceeds
of, such Pool Receivables and Related Security. Such undivided percentage interest shall be
computed as:

Capital + LC Participation Amount +

Total Reserves

Net Receivables Pool Balance

The Purchased Interest shall be determined from time to time pursuant to Section 1.3 of the
Agreement.

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

     “Purchasers’ Share” of any amount, at any time, means such amount multiplied by the
Purchased Interest at such time.

I-16

 

     “Rating Agency” mean each of Standard & Poor’s and Moody’s (and/or each other rating
agency then rating the Notes of the Issuer).

     “Receivable” means any indebtedness and other obligations owed to any Originator, the
Transferor or the Seller, or any right of the Seller, the Transferor or any Originator to payment
from or on behalf of, an Obligor, whether constituting an account, chattel paper, payment
intangible, instrument or general intangible, in each instance arising in connection with the sale
of goods or the rendering of services, and includes, without limitation, the obligation to pay any
finance charges, fees and other charges with respect thereto. Indebtedness and other obligations
arising from any one transaction, including, without limitation, 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 Seller pursuant to the Sale and Contribution Agreement prior to the Facility
Termination Date.

     “Reimbursement Obligation” has the meaning set forth in Section 1.14 of the
Agreement.

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

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

     (a) all of the Seller’s, the Transferor’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), the sale of which gave 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,

     (d) all of the Seller’s, the Transferor’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, and

     (e) all of the Seller’s rights, interests and claims under the Sale Agreements and the
other Transaction Documents.

I-17

 

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

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

     “Release Agreement” means the letter agreement dated as of February 3, 2006, between
ACI and PNC Bank, National Association, as administrative agent and collateral agent, as may be
amended, modified, restated or replaced from time to time with the consent of the Administrator.

     “Sale Agreements” means, collectively the Purchase and Sale Agreement and the Sale and
Contribution Agreement.

     “Sale and Contribution Agreement” means the Sale and Contribution Agreement, dated as
of February 3, 2006, between the Transferor and the Seller, as such agreement may be amended,
supplemented or otherwise modified from time to time.

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

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

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

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

     “Scheduled Commitment Termination Date” means with respect to the LC Bank and any LC
Participant, initially February 2, 2007, as such date may be extended from time to time in the sole
discretion of the LC Bank or such LC Participant, as the case may be.

     “SEC” shall mean the Securities and Exchange Commission or any governmental agencies
substituted therefor.

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

     “Seller’s Share” of any amount means the greater of: (a) $0 and (b) such amount minus
the Purchasers’ Share.

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

     “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.

I-18

 

     “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: (i) initially
the period commencing on the date of the initial purchase pursuant to Section 1.2 of the
Agreement (or in the case of any fees payable hereunder, commencing on the Closing Date) and ending
on (but not including) the next Monthly Settlement Date, and (ii) thereafter, each period
commencing on such Monthly Settlement Date and ending on (but not including) 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.

     “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

I-19

 

     (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.

     “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, a division of The McGraw-Hill Companies,
Inc.

     “Sub-Servicer” has the meaning set forth in Section 4.1(d) of this 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.

     “Tangible Net Worth” means, with respect to any Person, the tangible net worth of such
Person as determined in accordance with generally accepted accounting principles, consistently
applied.

     “Taxes” has the meaning set forth in Section 1.10 of this Agreement.

     “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 (b) the
Dilution Reserve plus (c) the greater of (i) the Concentration Reserve and (ii) the Loss Reserve.

I-20

 

     “Transaction Documents” means the Agreement, the Lock-Box Agreements, the Fee Letter,
the Purchase and Sale Agreement, the Sale and Contribution Agreement, the Performance Guaranty, 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.

     “Transferor” has the meaning set forth in the Sale and Contribution Agreement.

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

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

     “UCP 500” has the meaning set forth in Section 1.12 of the Agreement.

     “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 Sale and Contribution Termination Event” means any event which, with the
giving of notice or lapse of time, or both, would become a Sale and Contribution 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 Servicer 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 New York, and not specifically defined herein, are used herein as defined in

I-21

 

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-22

 

EXHIBIT II

CONDITIONS OF PURCHASES

     1. Conditions Precedent to Initial Purchase. The initial purchase under this
Agreement is subject to the following conditions precedent that the Administrator shall have
received on or before the date of such purchase, each in form and substance (including the date
thereof) satisfactory to the Administrator:

     (a) A counterpart of the Agreement and the other Transaction Documents executed by the parties
thereto.

     (b) Certified copies of: (i) the resolutions of the Board of Directors of each of the Seller,
the Originators, the Transferor, and ACI authorizing the execution, delivery and performance by the
Seller, the Originators, the Transferor and ACI, as the case may be, of the Agreement and the other
Transaction Documents to which it is a party; (ii) all documents evidencing other necessary
corporate or organizational action and governmental approvals, if any, with respect to the
Agreement and the other Transaction Documents and (iii) the certificate of incorporation and
by-laws or limited liability company agreement, as applicable, of the Seller, the Originators, the
Transferor and ACI.

     (c) A certificate of the Secretary or Assistant Secretary of the Seller, each of the
Originators, the Transferor and ACI certifying the names and true signatures of its officers who
are authorized to sign the Agreement and the other Transaction Documents to which it is a party.
Until the Administrator receives a subsequent incumbency certificate from the Seller, the
Originators, the Transferor or ACI, as the case may be, the Administrator shall be entitled to rely
on the last such certificate delivered to it by the Seller, the Originators, the Transferor or ACI,
as the case may be.

     (d) Proper financing statements (Form UCC-1), duly authorized and suitable for filing under
the UCC of all jurisdictions that the Administrator may deem 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 and each of the Sale Agreements.

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

     (f) Completed UCC search reports, dated on or shortly before the date of the initial purchase
hereunder, listing the financing statements filed in all applicable jurisdictions referred to in
subsection (e) above that name any Originator, the Transferor or the Seller as debtor,
together with copies of such other financing statements, and similar search reports with respect to
judgment liens, federal tax liens and liens of the Pension Benefit Guaranty Corporation in such
jurisdictions, as the Administrator may request, showing no Adverse Claims on any Pool Assets other
than any security interests that are released as of the Closing Date.

     (g) Favorable opinions, addressed to each Rating Agency, the Administrator and each Purchaser,
in form and substance reasonably satisfactory to the Administrator, of (i) Bryan Cave

II-1

 

LLP, counsel for the Seller, the Originators, the Servicer, the Transferor and ACI, covering
such matters as the Administrator may reasonably request, including, without limitation, certain
organizational and New York enforceability matters, certain bankruptcy matters, certain UCC
perfection and priority matters, and (ii) Robert G. Jones, Vice President – Law, General Counsel
and Secretary of ACI.

     (h) Satisfactory results of a review and audit (performed by representatives of the
Administrator) of the Servicer’s collection, operating and reporting systems, the Credit and
Collection Policy of each Originator and the Transferor, historical receivables data and accounts,
including satisfactory results of a review of the Servicer’s operating location(s) and satisfactory
review and approval of the Eligible Receivables in existence on the date of the initial purchase
under the Agreement.

     (i) A pro forma Information Package representing the performance of the Receivables Pool for
the calendar month before closing.

     (j) Evidence of payment by the Seller of all accrued and unpaid fees (including those
contemplated by the Fee Letter), costs and expenses to the extent then due and payable on the date
thereof, including any such costs, fees and expenses arising under or referenced in Section
5.4 of the Agreement and the Fee Letter.

     (k) The Fee Letter duly executed by the Seller and ACI.

     (l) Good standing certificates with respect to each of the Seller, the Originators, the
Transferor and ACI 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.

     (m) The Liquidity Agreement and all other Transaction Documents duly executed by the parties
thereto.

     (n) All information with respect to the Receivables as the Administrator or the Purchasers may
reasonably request.

     (o) Such other approvals, opinions or documents as the Administrator or the Purchasers may
reasonably request.

     2. Conditions Precedent to All Funded Purchases, Issuances of Letters of Credit and
Reinvestments. Each Funded Purchase (including the initial Funded Purchase) 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 Funded Purchase and the issuance of any Letters of Credit, the
Servicer shall have delivered to the Administrator on or before such purchase 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 Interest after such subsequent purchase or issuance,
as the case may be, and a completed Purchase Notice in the form of Annex B; and

II-2

 

     (b) on the date of such Funded Purchase, issuance or reinvestment, as the case may be, the
following statements shall be true (and acceptance of the proceeds of such Funded Purchase,
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 on and as of the date of such Funded Purchase,
issuance or reinvestment as though made on and as of such date except for
representations and warranties which apply as to an earlier date (in which case such
representations and warranties shall be true and correct as of such earlier date);

     (ii) no event has occurred and is continuing, or would result from such Funded
Purchase, issuance or reinvestment, that constitutes a Termination Event or an
Unmatured Termination Event;

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

     (iv) the Facility Termination Date has not occurred.

II-3

 

EXHIBIT III

REPRESENTATIONS AND WARRANTIES

     1. Representations and Warranties of the Seller. The Seller represents and warrants
to the Administrator and each Purchaser as of the Closing Date that:

     (a) Existence and Power. The Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of Delaware, and has all organizational power
and all governmental licenses, authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is conducted except if failure to have such
licenses, authorizations, consents or approvals could not reasonably be expected to have a Material
Adverse Effect.

     (b) Company and Governmental Authorization, Contravention. The execution, delivery
and performance by the Seller of this Agreement and each other Transaction Document to which it is
a party are within the Seller’s organizational powers, have been duly authorized by all necessary
organizational action, require no action by or in respect of, or filing with (other than the filing
of UCC financing statements and continuation statements), any governmental body, agency or
official, and, do not contravene, or constitute a default under, any provision of applicable law or
regulation or of the operating agreement of the Seller or of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Seller or result in the creation or imposition
of any lien (other than liens in favor of the Administrator) on assets of the Seller.

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

     (d) Accuracy of Information. All information heretofore furnished by the Seller to
the Administrator or any Purchaser pursuant to or in connection with this Agreement or any other
Transaction Document is, and all such information hereafter furnished by the Seller to the
Administrator or any Purchaser in writing pursuant to this Agreement or any Transaction Document
will be, true and accurate on the date such information is stated or certified.

     (e) Actions, Suits. Except as set forth in Schedule III, there are no
actions, suits or proceedings pending or, to the best of the Seller’s knowledge, threatened against
or affecting the Seller or its properties, in or before any court, arbitrator or other body, which
could reasonably be expected to have a Material Adverse Effect upon the ability of the Seller to
perform its obligations under this Agreement or any other Transaction Document to which it is a
party.

     (f) Accuracy of Exhibits; Lock-Box Arrangements. 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 this Agreement (or at such other Lock-Box Banks

II-1

 

and/or with such other Lock-Box Accounts as have been notified to the Administrator), and all
Lock-Box Accounts are subject to Lock-Box Agreements. All information on each Exhibit, Schedule or
Annex to this Agreement or the other Transaction Documents (as updated by the Seller from time to
time) is true and complete. The Seller has delivered a copy of all Lock-Box Agreements to the
Administrator. The Seller has not granted any interest in any Lock-Box Account (or any related
lock-box or post office box) to any Person other than the Administrator and, upon delivery to a
Lock-Box Bank of the related Lock-Box Agreement, the Administrator will have exclusive ownership
and control of the Lock-Box Account at such Lock-Box Bank.

     (g) No Material Adverse Effect. Since the date of formation of Seller as set forth in
its certificate of formation, there has been no Material Adverse Effect with respect to the Seller.

     (h) Names and Location. The Seller has not used any company names, trade names or
assumed names other than its name set forth on the signature pages of this Agreement. The Seller is
“located” (as such term is defined in the applicable UCC) in Delaware. The office where the Seller
keeps its records concerning the Receivables is at the address set forth below its signature to
this Agreement.

     (i) Margin Stock. The Seller is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U and X,
as issued by the Board of Governors of the Federal Reserve System), and no proceeds of any purchase
or reinvestment hereunder will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock.

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

     (k) Credit and Collection Policy. The Seller has complied in all material respects
with the Credit and Collection Policy of each Originator and the Transferor with regard to each
Receivable originated by such Originator or the Transferor, as applicable.

     (l) Investment Company Act. 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. In addition, the Seller is not a “holding company,” a “subsidiary company” of a
“holding company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a
“holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

     2. Representations and Warranties of the Servicer. The Servicer represents and
warrants to the Administrator and each Purchaser as of the Closing Date that:

     (a) Existence and Power. The Servicer is a corporation duly formed, validly existing
and in good standing under the laws of the State of Delaware, and has all company power and all
governmental licenses, authorizations, consents and approvals required to carry on its business in
each jurisdiction in which its business is conducted, except if failure to have such licenses,
authorizations, consents or approvals would not reasonably be expected to have a Material Adverse
Effect.

II-2

 

     (b) Company and Governmental Authorization, Contravention. The execution, delivery
and performance by the Servicer of this Agreement and each other Transaction Document to which it
is a party are within the Servicer’s organizational powers, have been duly authorized by all
necessary organizational action, require no action by or in respect of, or filing with, any
governmental body, agency or official, and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation or bylaws of the
Servicer or of any judgment, injunction, order or decree or agreement or other instrument binding
upon the Servicer or result in the creation or imposition of any lien on assets of the Servicer
(other than in favor of the Administrator under the Transaction Documents) or any of its
Subsidiaries.

     (c) Binding Effect of Agreement. This Agreement and each other Transaction Document
to which it is a party constitutes the legal, valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement
of creditors’ rights generally and by general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at law.

     (d) Accuracy of Information. All information heretofore furnished by the Servicer to
the Administrator or any Purchaser pursuant to or in connection with this Agreement or any other
Transaction Document is, and all such information hereafter furnished by the Servicer to the
Administrator or any Purchaser in writing pursuant to this Agreement or any other Transaction
Document will be, true and accurate on the date such information is stated or certified.

     (e) Actions, Suits. Except as set forth in Schedule III, there are no
actions, suits or proceedings pending or, to the best of the Servicer’s knowledge, threatened
against or affecting the Servicer or any of its Affiliates or their respective properties, in or
before any court, arbitrator or other body, which could reasonably be expected to have a Material
Adverse Effect upon the ability of the Servicer (or such Affiliate) to perform its obligations
under this Agreement or any other Transaction Document to which it is a party.

     (f) No Material Adverse Effect. Since December 31, 2004, there has been no Material
Adverse Effect on the Servicer.

     (g) Credit and Collection Policy. The Servicer has complied in all material respects
with the Credit and Collection Policy of each Originator and the Transferor with regard to each
Receivable originated by such Originator or the Transferor, as applicable.

     (h) Investment Company Act. The Servicer 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. In addition, the Servicer is not a “holding company,” a “subsidiary company” of a
“holding company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a
“holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

II-3

 

     3. Representations, Warranties and Agreements Relating to the Security Interest. The
Seller hereby makes the following representations, warranties and agreements with respect to the
Receivables and Related Security:

     (a) The Receivables.

     (i) Creation. This Agreement creates a valid and continuing security
interest (as defined in the applicable UCC) in the Receivables included in the
Receivables Pool in favor of the Administrator (for the benefit of the Purchasers),
which security interest is prior to all other Adverse Claims, and is enforceable as
such as against creditors of and purchasers from the Seller.

     (ii) Nature of Receivables. The Receivables included in the
Receivables Pool constitute either “accounts”, “general intangibles” or “tangible
chattel paper” within the meaning of the applicable UCC.

     (iii) Ownership of Receivables. The Seller owns and has good and
marketable title to the Receivables included in the Receivables Pool and Related
Security free and clear of any Adverse Claim.

     (iv) Perfection and Related Security. The Seller will cause (and will
cause each Originator and the Transferor to cause), within ten days after the
Closing Date, the filing of all appropriate financing statements in the proper
filing office in the appropriate jurisdictions under applicable law in order to
perfect the sale of the Receivables and Related Security from such Originator to the
Transferor pursuant to the Purchase and Sale Agreement and in order to perfect the
sale from the Transferor to the Seller pursuant to the Sale and Contribution
Agreement, and the sale and security interest therein from the Seller to the
Administrator under this Agreement, to the extent that such collateral constitutes
“accounts,” “general intangibles,” or “tangible chattel paper.”

     (v) Tangible Chattel Paper. With respect to any Receivables included
in the Receivables Pool that constitute “tangible chattel paper”, if any, the Seller
(or the Servicer on its behalf) has in its possession the original copies of such
tangible chattel paper that constitute or evidence such Receivables, and the Seller
has caused (and will cause the applicable Originator and the Transferor to cause),
within ten days after the Closing Date, the filing of financing statements described
in clause (iv), above, each of which will contain a statement that: “A
purchase of, or security interest in, any collateral described in this financing
statement will violate the rights of the Administrator.” The 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.

     (b) The Collection Account.

II-4

 

     (i) Nature of Account. Each Lock-Box Account constitutes a “deposit
account” within the meaning of the applicable UCC.

     (ii) Ownership. The Seller owns and has good and marketable title to
the Lock-Box Accounts and Collection Account free and clear of any Adverse Claim.

     (iii) Perfection. The Seller has delivered to the Administrator a
fully executed Lock-Box Agreement relating to each Lock-Box Account, pursuant to
which each applicable Lock-Box Bank, respectively, has agreed, following the
occurrence and continuation of a Termination Event, to comply with all instructions
originated by the Administrator (on behalf of the Purchasers) directing the
disposition of funds in such Lock-Box Account without further consent by the Seller
or the Servicer.

     (c) Priority.

     (i) Other than the transfer of the Receivables to the Transferor, the Seller
and the Administrator under the Purchase and Sale Agreement, the Sale and
Contribution Agreement and this Agreement, respectively, and/or the security
interest granted to the Transferor, the Seller and the Administrator pursuant to the
Purchase and Sale Agreement, the Sale and Contribution Agreement and this Agreement,
respectively, neither the Transferor, the Seller nor any Originator has pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any of the
Receivables transferred or purported to be transferred under the Transaction
Documents, the Lock-Box Accounts or any subaccount thereof, except for any such
pledge, grant or other conveyance which has been or will be released or terminated.
Neither the Seller, the Transferor nor any Originator has authorized the filing of,
or is aware of any financing statements against any of the Seller, the Transferor or
such Originator that include a description of Receivables transferred or purported
to be transferred under the Transaction Documents, the Lock-Box Accounts or any
subaccount thereof, other than any financing statement (i) relating to the sale
thereof by such Originator to the Transferor under the Purchase and Sale Agreement
or relating to the sale thereof by the Transferor to the Seller under the Sale and
Contribution Agreement, (ii) relating to the security interest granted to the
Administrator under this Agreement, or (iii) that has been or will be released or
terminated pursuant to the Release Agreement.

     (ii) The Seller is not aware of any judgment, ERISA or tax lien filings against
either the Seller, the Servicer, the Transferor or any Originator, other than such
judgment, ERISA or tax lien filing that (A) has not been outstanding for greater
than 30 days from the earlier of such Person’s knowledge or notice thereof, (B) is
less than $250,000 and (C) does not otherwise give rise to a Termination Event under
clause (l) of Exhibit V hereto.

II-5

 

     (iii) The Lock-Box Accounts are not in the name of any person other than the
Seller or the Administrator. Neither the Seller nor the Servicer has consented to
any bank maintaining such account to comply with instructions of any person other
than the Administrator.

     (d) Survival of Supplemental Representations. Notwithstanding any other provision of
this Agreement or any other Transaction Document, the representations contained in this Section
shall be continuing, and remain in full force and effect until such time as the Purchased Interest
and all other obligations under this Agreement have been finally and fully paid and performed.

     (e) No Waiver. To the extent required pursuant to the securitization program of the
Issuer, the parties to this Agreement: (i) shall not, without obtaining a confirmation of the
then-current rating of the Notes, waive any of the representations set forth in this Section; (ii)
shall provide the Ratings Agencies with prompt written notice of any breach of any representations
set forth in this Section, and shall not, without obtaining a confirmation of the then-current
rating of the Notes (as determined after any adjustment or withdrawal of the ratings following
notice of such breach) waive a breach of any of the representations set forth in this Section.

     (f) Servicer to Maintain Perfection and Priority. In order to evidence the interests
of the Administrator under this Agreement, the Servicer shall, from time to time take such action,
or execute and deliver such instruments as may be necessary (including, without limitation, such
actions as are reasonably requested by the Administrator) to maintain and perfect, as a
first-priority interest, the Administrator’s security interest in the Receivables, Related Security
and Collections. The Servicer 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 security interest as a first-priority interest. The Administrator’s approval of
such filings shall authorize the Servicer to file such financing statements under the UCC without
the signature of the Seller, any Originator, the Transferor or the Administrator where allowed by
applicable law. Notwithstanding anything else in the Transaction Documents to the contrary, the
Servicer shall not have any authority to file a termination, partial termination, release, partial
release, or any amendment that deletes the name of a debtor or excludes collateral of any such
financing statements filed in connection with the Transaction Documents, without the prior written
consent of the Administrator.

     4. Reaffirmation of Representations and Warranties. On the date of each purchase
and/or reinvestment and issuance of a Letter of Credit hereunder, and on the date each Information
Package or other report is delivered to the Administrator, or any Purchaser hereunder, the Seller
and the Servicer, by accepting the proceeds of such purchase reinvestment or Letter of Credit, as
applicable and/or the provision of such information or report, shall each be deemed to have
certified that (i) all representations and warranties of the Seller and the Servicer, as
applicable, described in this Exhibit III, as from time to time amended in accordance with
the terms hereof, are correct on and as of such day as though made on and as of such day, except
for representations and warranties which apply as to an earlier date (in which case such

II-6

 

representations and warranties shall be true and correct as of such date), and (ii) no event
has occurred or is continuing, or would result from any such purchase, reinvestment or issuance,
which constitutes a Termination Event or an Unmatured Termination Event.

II-7

 

EXHIBIT IV

COVENANTS

     1. Covenants of the Seller. At all times from the date hereof until the latest of the
Facility Termination Date, the date on which no Capital of or Discount in respect of the Purchased
Interest shall be outstanding, the date the LC Participation Amount is cash collateralized in full
or the date all other amounts owed by the Seller under this Agreement to any Purchaser, the
Administrator and any other Indemnified Party or Affected Person shall be paid in full:

     (a) Financial Reporting. The Seller will maintain a system of accounting established
and administered in accordance with generally accepted accounting principles as in effect in the
appropriate jurisdiction, and the Seller (or the Servicer on its behalf) shall furnish to the
Administrator:

     (i) Annual Reporting. Promptly upon completion and in no event later
than 90 days after the close of each fiscal year of the Seller, annual unaudited
financial statements of the Seller certified by a designated financial or other
officer of the Seller.

     (ii) Information Packages. 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.

     (iii) Other Information. Such other information (including
non-financial information) as the Administrator may from time to time reasonably
request.

     (b) Notices. The Seller will notify the Administrator and each Purchaser in writing
of any of the following events promptly upon (but in no event later than three Business Days after)
a financial or other officer learning of the occurrence thereof, with such notice describing the
same, and if applicable, the steps being taken by the Person(s) affected with respect thereto:

     (i) Notice of Termination Events or Unmatured Termination Events. A
statement of the chief financial officer or chief accounting officer of the Seller
setting forth details of any Termination Event or Unmatured Termination Event and
the action which the Seller proposes to take with respect thereto.

     (ii) Representations and Warranties. The failure of any representation
or warranty to be true (when made or at any time thereafter) with respect to the
Receivables included in the Receivables Pool.

     (iii) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding which may have a Material Adverse Effect on
the Seller.

IV-1

 

     (iv) Adverse Claim. (A) Any Person shall obtain an Adverse Claim upon
the Pool Receivables or Collections with respect thereto, (B) any Person other than
the Seller, the Servicer or the Administrator shall obtain any rights or direct any
action with respect to any Lock-Box Account (or related lock-box or post office box)
or (C) any Obligor shall receive any change in payment instructions with respect to
Pool Receivable(s) from a Person other than the Servicer or the Administrator.

     (v) ERISA and Other Claims. Promptly after the filing or receiving
thereof, copies of all reports and notices that the Seller or any ERISA 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 4001(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.

     (vi) Name Changes. 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.

     (vii) Material Adverse Change. 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, the Transferor or any
Originator.

     (c) Conduct of Business. The Seller will carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise as it is presently
conducted and will do all things necessary to remain duly organized, validly existing and in good
standing as a domestic organization in its jurisdiction of organization and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is conducted.

     (d) Compliance with Laws. The Seller will comply with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be subject.

     (e) Furnishing of Information and Inspection of Receivables. The Seller will furnish
to the Administrator from time to time such information with respect to the Pool Receivables as the
Administrator may reasonably request. The Seller will, at the Seller’s expense, during regular
business hours with prior written notice (i) permit the Administrator, or its respective agents or
representatives, (A) to examine and make copies of and abstracts from all books and records
relating to the Pool Receivables or other Pool Assets and (B) to visit the offices and properties
of the Seller for the purpose of examining such books and records, and to discuss matters relating
to the Pool Receivables, other Pool Assets or the Seller’s performance hereunder or under the other
Transaction Documents to which it is a party with any of the officers,

IV-2

 

directors, employees or independent public accountants of the Seller (provided that
representatives of the Seller are present during such discussions) having knowledge of such matters
and (ii) without limiting the provisions of clause (i) above, during regular business
hours, at the Seller’s expense, upon prior written notice from the Administrator, permit certified
public accountants or other auditors acceptable to the Administrator to conduct a review of its
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.

     (f) Payments on Receivables, Accounts. The Seller will, and will cause each
Originator and the Transferor to, at all times instruct all Obligors to deliver payments on the
Pool Receivables to a Lock-Box Account. If any such payments or other Collections are received by
the Seller, an Originator or the Transferor, it shall hold such payments in trust for the benefit
of the Administrator and the Purchasers and promptly (but in any event within two Business Days
after receipt) remit such funds into a Lock-Box Account. The Seller will cause each Lock-Box Bank
to comply with the terms of each applicable Lock-Box Agreement. The Seller will not permit the
funds other than Collections on Pool Receivables and other Pool Assets to be deposited into any
Lock-Box Account. If such funds are nevertheless deposited into any Lock-Box Account, the Seller
will promptly identify such funds for segregation. The Seller will not, and will not permit the
Servicer, any Originator or the Transferor or other Person to, commingle Collections or other funds
to which the Administrator or any Purchaser is entitled with any other funds. The Seller shall
only add, and shall only permit an Originator or the Transferor to add, a Lock-Box Bank (or the
related lock-box or post office box), or Lock-Box Account to those listed on Schedule II to
this Agreement, if the Administrator has received notice of such addition, a copy of any new
Lock-Box Agreement and an executed and acknowledged copy of a Lock-Box Agreement in form and
substance acceptable to the Administrator from any such new Lock-Box Bank. The Seller shall only
terminate a Lock-Box Bank or close a Lock-Box Account (or the related lock-box or post office box),
with the prior written consent of the Administrator.

     (g) Sales, Liens, etc. Except as otherwise provided herein, the Seller will not sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon (including, without limitation, the filing of any financing statement) or with
respect to, any Pool Receivable or other Pool Asset, or assign any right to receive income in
respect thereof.

     (h) Extension or Amendment of Pool Receivables. Except as otherwise permitted in
Section 4.2 of this Agreement, the Seller will not, and will 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). The Seller shall at its expense, timely and fully perform and
comply with all provisions, covenants and other promises required to be observed by it under the
Contracts related to the Pool Receivables, and timely and fully comply with the Credit and
Collection Policy with regard to each Receivable and the related Contract (which term or condition
relates to payments under, or the enforcement of, such Contract).

IV-3

 

     (i) Change in Business. The Seller will not (i) make any change in the character of
its business or (ii) make any change in any Credit and Collection Policy that could reasonably be
expected to have a Material Adverse Effect, in the case of either clause (i) or
(ii) above, without the prior written consent of the Administrator. The Seller shall not
make any other written change in any Credit and Collection Policy without giving prior written
notice thereof to the Administrator and each Purchaser.

     (j) Fundamental Changes. The Seller shall not, without the prior written consent of
the Administrator, permit itself (i) to merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to, any Person or (ii) to
be owned by any Person other than Arch Sales and thereby cause Arch Sales’ percentage of ownership
or control of the Seller to be reduced. The Seller shall provide the Administrator and each
Purchaser with at least 30 days’ prior written notice before making any change in the Seller’s
name, location or making any other change in the Seller’s identity or corporate structure that
could impair or otherwise render any UCC financing statement filed in connection with this
Agreement “seriously misleading” as such term (or similar term) is used in the applicable UCC; each
notice to the Administrator and the Purchasers pursuant to this sentence shall set forth the
applicable change and the proposed effective date thereof. The Seller will also maintain and
implement (or cause the Servicer to maintain and implement) administrative and operating procedures
(including an ability to recreate records evidencing Pool 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 Pool Receivables (including records
adequate to permit the daily identification of each Pool Receivable and all Collections of and
adjustments to each existing Pool Receivable).

     (k) Change in Payment Instructions to Obligors. The Seller shall not (and shall cause
the Servicer and each Sub-Servicer not to) add to, replace or terminate any of the Lock-Box
Accounts (or any related lock-box or post office box) listed in Schedule II hereto or make
any change in its (or their) instructions to the Obligors regarding payments to be made to the
Lock-Box Accounts (or any related lock-box or post office box), unless the Administrator shall have
received (x) prior written notice of such addition, termination or change and (y) signed and
acknowledged Lock-Box Agreements with respect to such new Lock-Box Accounts (or any related
lock-box or post office box).

     (l) Ownership Interest, Etc. The Seller shall (and shall cause the Servicer to), at
its expense, take all action necessary or reasonably desirable to establish and maintain a valid
and enforceable undivided percentage ownership or security interest, to the extent of the Purchased
Interest, in the Pool Receivables, the Related Security and Collections with respect thereto, and a
first priority perfected security interest in the Pool Assets, in 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 or any Purchaser may reasonably request.

IV-4

 

     (m) Certain Agreements. Without the prior written consent of the Administrator, the
Seller will not (and will not permit the Originators or the Transferor to) amend, modify, waive,
revoke or terminate any Transaction Document to which it is a party or any provision of the
Seller’s organizational documents which requires the consent of the “Independent Director” (as
defined in the Seller’s LLC Agreement).

     (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 one or more of the following ways: (A) the Seller may make cash payments
(including prepayments) on the Company Notes in accordance with their respective
terms, and (B) if no amounts are then outstanding under any Company Note, the Seller
may declare and pay dividends.

     (iii) The Seller may make Restricted Payments only out of the funds, if any, it
receives pursuant to Sections 1.4(b)(ii) and (iv) and 1.4(d)
of this Agreement. Furthermore, the Seller shall not pay, make or declare: (A) any
dividend if, after giving effect thereto, the Tangible Net Worth of the Seller would
be less than $5,000,000, 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 the Company Notes, or (iii) form any
Subsidiary or make any investments in any other Person.

     (p) Use of Seller’s Share of Collections. The Seller shall apply the Seller’s Share of
Collections to make payments in the following order of priority: (i) the payment of its expenses
(including all obligations payable to the Purchasers and the Administrator under this Agreement and
under the Fee Letter), (ii) the payment of accrued and unpaid interest on the Company Notes and
(iii) other legal and valid organizational purposes.

     (q) Further Assurances; Change in Name or Jurisdiction of Origination, etc. (i) The
Seller hereby authorizes and hereby agrees from time to time, at its own expense, promptly to
execute (if necessary) and deliver all further instruments and documents, and to take all further
actions, that may be necessary or desirable, or that the Administrator or any Purchaser may
reasonably request, to perfect, protect or more fully evidence the purchases or issuances made
under this Agreement and/or security interest granted pursuant to this Agreement or any other
Transaction Document, or to enable the Administrator or any Purchaser to exercise and enforce

IV-5

 

their respective rights and remedies under this Agreement or any other Transaction Document.
Without limiting the foregoing, the Seller hereby authorizes, and will, upon the request of the
Administrator or any Purchaser, at its own expense, execute (if necessary) and file such financing
or continuation statements (including fixture filings and as extracted collateral filings), or
amendments thereto, and such other instruments and documents, that may be necessary or desirable,
or that the Administrator or any Purchaser may reasonably request, to perfect, protect or evidence
any of the foregoing.

     (i) The Seller authorizes the Administrator to file financing or continuation
statements, and amendments thereto and assignments thereof, relating to the
Receivables and the Related Security, the related Contracts and the Collections with
respect thereto and the other collateral subject to a lien under any Transaction
Document without the signature of the Seller. A photocopy or other reproduction of
this Agreement shall be sufficient as a financing statement where permitted by law.

     (ii) The Seller shall at all times be organized under the laws of the State of
Delaware and shall not take any action to change its jurisdiction of organization.

     (iii) The Seller will not change its name, location, identity or corporate
structure unless (x) the Administrator and each Purchaser shall have received at
least thirty (30) days’ advance written notice of such change, (y) the Seller, at
its own expense, shall have taken all action necessary or appropriate to perfect or
maintain the perfection of the lien under this Agreement (including, without
limitation, the filing of all financing statements and the taking of such other
action as the Administrator or any Purchaser may request in connection with such
change or relocation), and (z) if requested by the Administrator or any Purchaser,
the Seller shall cause to be delivered to the Administrator and each Purchaser, an
opinion, in form and substance satisfactory to the Administrator and each Purchaser
as to such UCC perfection and priority matters as such Person may request at such
time.

     (r) Tangible Net Worth. The Seller will not permit its Tangible Net Worth, at any
time, to be less than $5,000,000.

     2. Covenants of the Servicer. At all times from the date hereof until the latest of
the Facility Termination Date, the date on which no Capital of or Discount in respect of the
Purchased Interest shall be outstanding, the date the LC Participation Amount is cash
collateralized in full or the date all other amounts owed by the Seller or the Servicer under this
Agreement to any Purchaser, the Administrator and any other Indemnified Party or Affected Person
shall be paid in full:

     (a) Financial Reporting. The Servicer will maintain a system of accounting
established and administered in accordance with generally accepted accounting principles as in
effect in the appropriate jurisdiction, and the Servicer shall furnish to the Administrator:

IV-6

 

     (i) Compliance Certificates. (a) A compliance certificate promptly
upon completion of the annual report of the Performance Guarantor and in no event
later than 90 days after the close of the Performance Guarantor’s fiscal year, in
form and substance substantially similar to Annex D signed by its chief accounting
officer or treasurer solely in their capacities as officers of the Servicer stating
that no Termination Event or Unmatured Termination Event exists, or if any
Termination Event or Unmatured Termination Event exists, stating the nature and
status thereof, and (b) within 45 days after the close of each fiscal quarter of the
Servicer, a compliance certificate in form and substance substantially similar to
Annex D.

     (ii) Information Packages. 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.

     (iii) Other Information. Such other information (including
non-financial information) as the Administrator may from time to time reasonably
request.

     (b) Notices. The Servicer will notify the Administrator and each Purchaser in writing
of any of the following events promptly upon (but in no event later than three Business Days after)
a financial or other officer learning of the occurrence thereof, with such notice describing the
same, and if applicable, the steps being taken by the Person(s) affected with respect thereto:

     (i) Notice of Termination Events or Unmatured Termination Events. A
statement of the chief financial officer or chief accounting officer of the Servicer
setting forth details of any Termination Event or Unmatured Termination Event and
the action which the Servicer proposes to take with respect thereto.

     (ii) Representations and Warranties. The failure of any representation
or warranty to be true (when made or at any time thereafter) with respect to the
Pool Receivables.

     (iii) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding which could reasonably be expected to have a
Material Adverse Effect on the Servicer.

     (iv) Adverse Claim. (A) Any Person shall obtain an Adverse Claim upon
the Pool Receivables or Collections with respect thereto, (B) any Person other than
the Seller, the Servicer or the Administrator shall obtain any rights or direct any
action with respect to any Lock-Box Account (or related lock-box or post office box)
or (C) any Obligor shall receive any change in payment instructions with respect to
Pool Receivable(s) from a Person other than the Servicer or the Administrator.

IV-7

 

     (v) ERISA. Promptly after the filing or receiving thereof notice of
and, upon the request of the Administrator, copies of all reports and notices that
ACI or any Affiliate of ACI 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 ACI 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 ACI and/or any such Affiliate.

     (vi) Name Changes. At least thirty days before any change in ACI, any
Originator’s or the Transferor’s name or any other change requiring the amendment of
UCC financing statements, a notice setting forth such changes and the effective date
thereof.

     (vii) Material Adverse Change. A material adverse change in the
business, operations, property or financial or other condition of ACI or any
Originator or the Transferor or any of their respective Subsidiaries.

     (viii) Other Debt Default. A default or any event of default under any
other financing arrangement evidencing $40,000,000 or more of indebtedness pursuant
to which ACI, Arch Sales, any Originator, the Transferor or any of their Affiliates
is a debtor or an obligor.

     (ix) Permitted Merger. No later than 10 Business Days after the
effective date of any Permitted Merger, a notice setting forth, in reasonable
detail, the terms, conditions and Persons involved therein.

     (c) Conduct of Business. The Servicer will carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise as it is presently
conducted and will do all things necessary to remain duly incorporated, validly existing and in
good standing as a domestic corporation in its jurisdiction of incorporation and maintain all
requisite authority to conduct its business in each jurisdiction in which its business is conducted
if the failure to have such authority could reasonably be expected to have a Material Adverse
Effect.

     (d) Compliance with Laws. The Servicer will comply with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be subject if the failure
to comply could reasonably be expected to have a Material Adverse Effect.

     (e) Furnishing of Information and Inspection of Receivables. The Servicer will
furnish to the Administrator from time to time such information with respect to the Pool
Receivables as the Administrator may reasonably request. The Servicer will, at the Servicer’s
expense, during regular business hours with prior written notice, (i) permit the Administrator, or
its agents or representatives, (A) to examine and make copies of and abstracts from all books and

IV-8

 

records relating to the Pool Receivables or other Pool Assets and (B) to visit the offices and
properties of the Servicer for the purpose of examining such books and records, and to discuss
matters relating to the Pool Receivables, other Pool Assets or the Servicer’s performance hereunder
or under the other Transaction Documents to which it is a party with any of the officers,
directors, employees or independent public accountants of the Servicer (provided that
representatives of the Servicer are present during such discussions) having knowledge of such
matters and (ii) without limiting the provisions of clause (i) above, during regular
business hours, at the Servicer’s expense, upon prior written notice from the Administrator, permit
certified public accountants or other auditors acceptable to the Administrator to conduct, a review
of its books and records with respect to such 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.

     (f) Payments on Receivables, Accounts. The Servicer will at all times instruct all
Obligors to deliver payments on the Pool Receivables to a Lock-Box Account. If any such payments
or other Collections are received by the Servicer, it shall hold such payments in trust for the
benefit of the Administrator and the Purchasers and promptly (but in any event within two Business
Days after receipt) remit such funds into a Lock-Box Account. The Servicer will cause each
Lock-Box Bank to comply with the terms of each applicable Lock-Box Agreement. The Servicer will
not permit the funds other than Collections on Pool Receivables and other Pool Assets to be
deposited into any Lock-Box Account. If such funds are nevertheless deposited into any Lock-Box
Account, the Servicer will promptly identify such funds for segregation. The Servicer will not
commingle Collections or other funds to which the Administrator or any Purchaser is entitled with
any other funds. The Servicer shall only add, a Lock-Box Bank (or the related lock-box or post
office box), or Lock-Box Account to those listed on Schedule II to this Agreement, if the
Administrator has received notice of such addition, a copy of any new Lock-Box Agreement and an
executed and acknowledged copy of a Lock-Box Agreement in form and substance acceptable to the
Administrator from any such new Lock-Box Bank. The Servicer shall only terminate a Lock-Box Bank
or close a Lock-Box Account (or the related lock-box or post office box) with the prior written
consent of the Administrator.

     (g) Extension or Amendment of Pool Receivables. Except as otherwise permitted in
Section 4.2 of this Agreement, the Servicer will not, and will 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). The Servicer shall at its expense, timely and fully perform and
comply with all provisions, covenants and other promises required to be observed by it under the
Contracts related to the Pool Receivables, and timely and fully comply with the Credit and
Collection Policy with regard to each Pool Receivable and the related Contract (which term or
condition relates to payments under, or the enforcement of, such Contract).

     (h) Change in Business. The Servicer will not (i) make any material change in the
character of its business or (ii) make any change in any Credit and Collection Policy that could
reasonably be expected to have a Material Adverse Effect, in the case of either (i) or (ii) above,
without the prior written consent of the Administrator. The Servicer shall not make any written

IV-9

 

change in any Credit and Collection Policy without giving prior written notice thereof to the
Administrator and each Purchaser.

     (i) Records. The Servicer will maintain and implement administrative and operating
procedures (including an ability to recreate records evidencing Pool 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 Pool Receivables (including records adequate to permit the
daily identification of each Pool Receivable and all Collections of and adjustments to each
existing Pool Receivable).

     (j) Change in Payment Instructions to Obligors. The Servicer shall not add to,
replace or terminate any of the Lock-Box Accounts (or any related lock-box or post office box)
listed in Schedule II hereto or make any change in its instructions to the Obligors
regarding payments to be made to the Lock-Box Accounts (or any related lock-box or post office
box), unless the Administrator shall have received (x) prior written notice of such addition,
termination or change and (y) signed and acknowledged Lock-Box Agreements with respect to such new
Lock-Box Accounts (or any related lock-box or post office box).

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

     (l) Further Assurances; Change in Name or Jurisdiction of Origination, etc. The
Servicer hereby authorizes and hereby agrees from time to time, at its own expense, promptly to
execute (if necessary) and deliver all further instruments and documents, and to take all further
actions, that may be necessary or desirable, or that the Administrator or any Purchaser may
reasonably request, to perfect, protect or more fully evidence the purchases or issuances made
under this Agreement and/or security interest granted pursuant to this Agreement or any other
Transaction Document, or to enable the Administrator or any Purchaser to exercise and enforce their
respective rights and remedies under this Agreement or any other Transaction Document. Without
limiting the foregoing, the Servicer hereby authorizes, and will, upon the request of the
Administrator or any Purchaser, at its own expense, execute (if necessary) and file such financing
or continuation statements (including fixture filings and as extracted collateral filings), or
amendments thereto, and such other instruments and documents, that may be necessary or desirable,
or that the Administrator or any Purchaser may reasonably request, to perfect, protect or evidence
any of the foregoing.

     (i) The Servicer authorizes the Administrator to file financing or continuation
statements, and amendments thereto and assignments thereof, relating to the
Receivables and the Related Security, the related Contracts and the

IV-10

 

Collections with respect thereto and the other collateral subject to a lien
under any Transaction Document without the signature of the Servicer. A photocopy
or other reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law.

     (ii) The Servicer shall at all times be organized under the laws of the State
of Delaware and shall not take any action to change its jurisdiction of
organization.

     (iii) The Servicer will not change its name, location, identity or corporate
structure unless (x) the Administrator and each Purchaser shall have received at
least thirty (30) days’ advance written notice of such change, (y) the Servicer, at
its own expense, shall have taken all action necessary or appropriate to perfect or
maintain the perfection of the lien under this Agreement (including, without
limitation, the filing of all financing statements and the taking of such other
action as the Administrator or any Purchaser may request in connection with such
change or relocation), and (z) if requested by the Administrator or any Purchaser,
the Servicer shall cause to be delivered to the Administrator and each Purchaser, an
opinion, in form and substance satisfactory to the Administrator and each Purchaser
as to such UCC perfection and priority matters as such Person may request at such
time.

     3. Separate Existence. Each of the Seller and the Servicer hereby acknowledges that
the Purchasers 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 ACI and its Affiliates. Therefore, from and after the date hereof, each of
the Seller and ACI shall take all steps specifically required by this Agreement or reasonably
required by the Administrator or any Purchaser 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 ACI and any other Person, and is not a division of ACI, 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 ACI shall take
such actions as shall be required in order that:

     (a) The Seller will be a limited liability company whose primary activities are restricted in
its LLC Agreement to: (i) purchasing or otherwise acquiring from the Transferor, owning, holding,
granting security interests or selling interests in Pool Assets, (ii) entering into agreements for
the selling and servicing of the Receivables Pool, and (iii) conducting such other activities as it
deems necessary or appropriate to carry out its primary activities;

     (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 member of the Seller’s Board of Directors (the “Independent
Director”) shall be an individual who is not a direct, indirect or beneficial stockholder,
officer,

IV-11

 

director, employee, affiliate, or supplier of ACI, Arch Sales, any Originator, the Transferor
or any of their respective Affiliates. The LLC Agreement of the Seller shall provide that: (i) the
Seller’s Board of Directors shall not approve, or take any other action to cause the filing of, a
voluntary bankruptcy petition with respect to the Seller unless the Independent Director shall
approve the taking of such action in writing before the taking of such action, and (ii) such
provision cannot be amended without the prior written consent of the Independent Director;

     (d) The Independent Director shall not at any time serve as a trustee in bankruptcy for the
Seller, ACI, any Originator, the Transferor or any of their respective Affiliates;

     (e) The Seller shall conduct its affairs strictly in accordance with its organizational
documents and observe all necessary, appropriate and customary company formalities, including, but
not limited to, holding all regular and special members’ and board of directors’ meetings
appropriate to authorize all limited liability company action, keeping separate and accurate
minutes of its meetings, passing all resolutions or consents necessary to authorize actions taken
or to be taken, and maintaining accurate and separate books, records and accounts, including, but
not limited to, payroll and intercompany transaction accounts;

     (f) Any employee, consultant or agent of the Seller will be compensated from the Seller’s
funds for services provided to the Seller, and to the extent that Seller shares the same officers
or other employees as ACI (or any other Affiliate thereof), the salaries and expenses relating to
providing benefits to such officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary and benefit costs associated
with such common officers and employees. 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 indirect or overhead expenses for
items shared with ACI (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 ACI 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 not be paid by ACI, the Transferor or any Originator
or any Affiliate thereof;

     (i) The Seller will have its own separate stationery;

IV-12

 

     (j) The Seller’s books and records will be maintained separately from those of ACI and any
other Affiliate thereof and in a manner such that it will not be difficult or costly to segregate,
ascertain or otherwise identify the assets and liabilities of Seller;

     (k) All financial statements of ACI or any Affiliate thereof that are consolidated to include
the Seller will disclose that (i) the Seller’s sole business consists of the purchase or acceptance
through capital contributions of the Receivables and Related Rights from the Transferor and the
subsequent retransfer of or granting of a security interest in such Receivables and Related Rights
to certain purchasers party to this Agreement, (ii) the Seller is a separate legal entity with its
own separate creditors who will be entitled, upon its liquidation, to be satisfied out of the
Seller’s assets prior to any assets or value in the Seller becoming available to the Seller’s
equity holders and (iii) the assets of the Seller are not available to pay creditors of ACI or any
other Affiliates of ACI or the Originators or the Transferor;

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

     (m) The Seller will strictly observe corporate formalities in its dealings with ACI or any
Affiliates thereof, and funds or other assets of the Seller will not be commingled with those of
ACI or any Affiliates thereof except as permitted by this Agreement in connection with servicing
the Pool Receivables. The Seller shall not maintain joint bank accounts or other depository
accounts to which ACI or any Affiliate thereof (other than ACI in its capacity as the Servicer) has
independent access. 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 ACI or any Subsidiaries or other Affiliates
thereof. 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 ACI (and any Affiliates 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 on the one hand, nor ACI, on the other hand, 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 ACI 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) The Seller shall have a separate area from ACI for its business (which may be located at
the same address as such entities) and to the extent that any other such entity have offices in the
same location, there shall be a fair and appropriate allocation of overhead costs between them, and
each shall bear its fair share of such expenses; and

IV-13

 

     (p) To the extent not already covered in paragraphs (a) through (o) above, Seller shall comply
and/or act in accordance with the provisions of Section 6.4 of the Sale and Contribution Agreement.

IV-14

 

EXHIBIT V

TERMINATION EVENTS

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

     (a) (i) the Seller, ACI, any Originator, the Transferor or the Servicer shall fail to perform
or observe any term, covenant or agreement under the Agreement or any other Transaction Document,
and, except as otherwise provided herein, such failure, solely to the extent capable of cure, shall
continue for 30 days, (ii) the Seller or the Servicer shall fail to make when due any payment or
deposit to be made by it under the Agreement or any other Transaction Document and such failure
shall continue unremedied for one Business Day, or (iii) Arch Sales shall resign as Servicer, and
no successor Servicer reasonably satisfactory to the Administrator shall have been appointed;

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

     (c) any representation or warranty made or deemed made by the Seller, ACI, any Originator, the
Transferor or the Servicer (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,
ACI, any Originator, the Transferor or the Servicer pursuant to the Agreement or any other
Transaction Document, shall prove to have been incorrect or untrue when made or deemed made or
delivered, and shall remain incorrect or untrue for 10 Business Days;

     (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 purchase or reinvestment pursuant to the Agreement shall for any
reason: (i) cease to create, or the Purchased Interest shall for any reason cease to be, a valid
and enforceable perfected undivided percentage ownership or security interest to the extent of the
Purchased 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 security interest, free and clear of any Adverse
Claim;

     (f) the Seller, ACI, the Transferor 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, ACI, the Transferor or any Originator seeking to adjudicate it as bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, 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

V-1

 

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, ACI, the Transferor 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 3% or (B) the Delinquency Ratio shall exceed 6%, or
(ii) the average for three consecutive calendar months of: (A) the Default Ratio shall exceed 2%,
(B) the Delinquency Ratio shall exceed 4% or (C) the Dilution Ratio shall exceed 3%, or (iii) Days’
Sales Outstanding shall exceed 48 days;

     (h) a Change in Control shall occur;

     (i) at any time (i) the sum of (A) the Capital, plus the LC Participation Amount, plus (B) the
Total Reserves exceeds (ii) the sum of (A) the Net Receivables Pool Balance at such time, plus (B)
the Purchasers’ Share of the amount of Collections then on deposit in the Lock-Box Accounts (other
than amounts set aside therein representing Discount and fees), plus (C) the sum of all amounts
then on deposit in the LC Collateral Account, and such circumstance shall not have been cured
within two Business Days;

     (j) ACI or any of its Subsidiaries (other than any Excluded Subsidiary) shall fail to pay any
principal of or premium or interest on any of its Debt that is outstanding in a principal amount of
at least $40,000,000 in the aggregate when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement, mortgage, indenture or
instrument relating to such Debt (whether or not such failure shall have been waived under the
related agreement), (ii) any other event shall occur or condition shall exist under any agreement,
mortgage, indenture or instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement, mortgage, indenture or instrument (whether or
not such failure shall have been waived under the related agreement), if the effect of such event
or condition is to give the applicable debtholders the right (whether acted upon or not) to
accelerate the maturity of such Debt, or (iii) 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;

     (k) ACI shall fail to perform any of its obligations under the Performance Guaranty;

     (l) (i) a contribution failure shall occur with respect to any Benefit Plan sufficient to give
rise to a lien on any of the assets of Seller, any Originator, the Transferor, ACI or any ERISA
Affiliate under Section 302(f) of ERISA and such failure is not cured and any related lien released
within 10 days or (ii) either the Internal Revenue Service or the Pension Benefit Guaranty
Corporation shall have filed one or more notices of lien asserting a claim or claims pursuant to
the Internal Revenue Code, or ERISA, as applicable, against the assets of (a) the

V-2

 

Seller or (b) the Servicer, the Transferor, any Originator, ACI or any ERISA Affiliate (other
than the Seller) in an amount in excess of $250,000 and such lien is not released within 10 days;
or

     (m) 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 1.14(b), not fully reimbursed pursuant to
Section 1.14 (including, if applicable, with the proceeds of any funding by the Issuer)
within two Business Days from the date of such draw.

V-3

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