Document:

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                         RECEIVABLES PURCHASE AGREEMENT

                           DATED AS OF MARCH 31, 2000

                                      Among

                    P&L RECEIVABLES COMPANY, LLC, AS SELLER,

                   P&L COAL HOLDINGS CORPORATION, AS SERVICER,

                    INTERNATIONAL SECURITIZATION CORPORATION

                                       and

                     BANK ONE, NA, INDIVIDUALLY AND AS AGENT

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                         RECEIVABLES PURCHASE AGREEMENT

     This Receivables Purchase Agreement dated as of March 31, 2000 is among P&L
Receivables Company,  LLC, a Delaware limited liability company ("Seller"),  P&L
Coal Holdings  Corporation,  a Delaware corporation ("P&L"), as initial Servicer
(the Servicer,  together with Seller,  the "Seller  Parties" and each, a "Seller
Party"),  the entities listed on Schedule A to this Agreement (together with any
of  their   respective   successors  and  assigns   hereunder,   the  "Financial
Institutions"),  International  Securitization  Corporation ("Conduit") and Bank
One, NA, as agent for the Purchasers  hereunder or any successor agent hereunder
(together  with its  successors  and assigns  hereunder,  the  "Agent").  Unless
defined  elsewhere  herein,  capitalized terms used in this Agreement shall have
the meanings assigned to such terms in Exhibit I.

                             PRELIMINARY STATEMENTS

     Seller desires to transfer and assign Purchaser Interests to the Purchasers
from time to time.

     Conduit  may,  in its  absolute  and sole  discretion,  purchase  Purchaser
Interests from Seller from time to time.

     In the event that  Conduit  declines to make any  purchase,  the  Financial
Institutions shall, at the request of Seller,  purchase Purchaser Interests from
time to time. In addition,  the Financial  Institutions have agreed to provide a
liquidity facility to Conduit in accordance with the terms hereof.

     Bank One, NA has been requested and is willing to act as Agent on behalf of
Conduit and the Financial Institutions in accordance with the terms hereof.

                                   ARTICLE I.

                              PURCHASE ARRANGEMENTS

     Section 1.1 Purchase Facility.

     (a) Upon the terms and subject to the conditions hereof, Seller may, at its
option,  sell and assign Purchaser Interests to the Agent for the benefit of one
or more of the Purchasers. In accordance with the terms and conditions set forth
herein, Conduit may, at its option,  instruct the Agent to purchase on behalf of
Conduit,  or if Conduit shall decline to purchase,  except as otherwise provided
in  Section  1.2,  the  Agent  shall  purchase,   on  behalf  of  the  Financial
Institutions,  Purchaser  Interests from time to time in an aggregate amount not
to  exceed  at such  time the  lesser  of (i) the  Purchase  Limit  and (ii) the
aggregate  amount of the  Commitments  during the period from the date hereof to
but not including the Facility Termination Date.

     (b) Seller may, upon at least ten (10) Business  Days' notice to the Agent,
terminate in whole or reduce in part, ratably among the Financial  Institutions,
the unused portion of the Purchase Limit;  provided that each partial  reduction
of the Purchase  Limit shall be in an amount equal to  $5,000,000 or an integral
multiple thereof.

     Section 1.2 Increases. Seller shall provide the Agent with at least two (2)
Business  Days'  prior  notice in a form set forth as  Exhibit II hereto of each
Incremental Purchase (each, a "Purchase Notice").  Each Purchase Notice shall be
subject  to  Section  6.2  hereof  and,  except  as set  forth  below,  shall be
irrevocable  and shall specify the requested  Purchase Price (which shall not be
less  than  $1,000,000)  and  date  of  purchase  (which,  in  the  case  of any
Incremental Purchase (after the initial Incremental  Purchase hereunder),  shall
only be on a Settlement Date) and, in the case of an Incremental  Purchase to be
funded by the Financial  Institutions,  the requested  Discount Rate and Tranche
Period. Following receipt of a Purchase Notice, the Agent will determine whether
Conduit  agrees to make the  purchase.  If Conduit  declines  to make a proposed
purchase,  the Agent will promptly notify Seller of such fact,  whereupon Seller
may cancel the Purchase  Notice or, in the absence of such a  cancellation,  the
Incremental  Purchase of the  Purchaser  Interest  will be made by the Financial
Institutions. On the date of each Incremental Purchase, upon satisfaction of the
applicable  conditions  precedent  set  forth  in  Article  VI,  Conduit  or the
Financial Institutions, as applicable, shall deposit to the Facility Account, in
immediately  available funds, no later than 12:00 noon (Chicago time), an amount
equal  to (i) in the  case of  Conduit,  the  aggregate  Purchase  Price  of the
Purchaser  Interests  Conduit  is  then  purchasing  or  (ii)  in the  case of a
Financial  Institution,  such  Financial  Institution's  Pro  Rata  Share of the
aggregate Purchase Price of the Purchaser  Interests the Financial  Institutions
are purchasing.

     Section 1.3  Decreases.  Seller shall  provide the Agent with prior written
notice in conformity with the Required  Notice Period (a "Reduction  Notice") of
any proposed  reduction of Aggregate  Capital from Collections or other funds of
Seller.  Such  Reduction  Notice  shall  designate  (i) the date (the  "Proposed
Reduction Date") upon which any such reduction of Aggregate  Capital shall occur
(which date shall give effect to the applicable  Required  Notice  Period),  and
(ii) the amount of Aggregate  Capital to be reduced (the "Aggregate  Reduction")
which shall be applied  ratably to the  Purchaser  Interests  of Conduit and the
Financial  Institutions  in accordance with the amount of Capital (if any) owing
to  Conduit,  on the one hand,  and the amount of Capital  (if any) owing to the
Financial Institutions (ratably,  based on their respective Pro Rata Shares), on
the other hand. Only one (1) Reduction Notice shall be outstanding at any time.

     Section 1.4 Payment  Requirements.  All amounts to be paid or  deposited by
any Seller Party  pursuant to any provision of this  Agreement  shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m.  (Chicago
time) on the day when due in immediately  available  funds,  and if not received
before  11:00 a.m.  (Chicago  time)  shall be deemed to be  received on the next
succeeding Business Day. If such amounts are payable to a Purchaser,  they shall
be paid to the Agent,  for the account of such  Purchaser,  at 1 Bank One Plaza,
Chicago,  Illinois 60670 until otherwise  notified by the Agent.  Upon notice to
Seller, the Agent may debit the Facility Account for all amounts due and payable
hereunder.  All  computations of Yield at a LIBO Rate, per annum fees calculated
as part of any CP Costs,  and per annum fees  hereunder and under the Fee Letter
shall be made on the basis of a year of 360 days for the  actual  number of days
elapsed.  All computations of Yield at the Prime Rate shall be made on the basis
of a year of 365 (or, when appropriate,  366) days for the actual number of days
elapsed.  If any  amount  hereunder  shall be  payable  on a day  which is not a
Business Day, such amount shall be payable on the next succeeding Business Day.

     Section 1.5 Extension of the Liquidity  Termination Date.  Provided that no
Servicer Default,  Potential  Servicer Default,  Amortization Event or Potential
Amortization Event exists and is continuing,  Seller may request an extension of
the Liquidity  Termination  Date by submitting a request for an extension (each,
an  "Extension  Request")  to the  Agent  no more  than  210  days  prior to the
Liquidity  Termination Date then in effect.  Each Extension Request must specify
the new Liquidity  Termination Date requested by Seller and the date (which must
be at least 30 days after the Extension Request is delivered to the Agent) as of
which the Agent and the  Financial  Institutions  must respond to the  Extension
Request (the "Response  Date").  The new Liquidity  Termination Date shall be no
more than 364 days after the Response  Date,  including the Response Date as one
of the days in the calculation of the days elapsed.  Promptly upon receipt of an
Extension  Request,  the Agent shall notify the  Financial  Institutions  of the
contents  thereof and shall request each  Financial  Institution  to approve the
Extension Request.  Each Financial  Institution  approving the Extension Request
shall deliver its written approval to the Agent no later than the Response Date,
whereupon the Agent shall notify  Seller within one (1) Business Day  thereafter
as to whether all of the  Financial  Institutions  have  approved the  Extension
Request.  If any of the  Financial  Institutions  have  approved  the  Extension
Request and Seller pays the Agent a fully  earned and  non-refundable  extension
fee of $2,500  (each,  an  "Extension  Fee"),  the  Liquidity  Termination  Date
specified in the Extension  Request shall become effective on such Response Date
for each such  approving  Financial  Institution,  and the Agent shall  promptly
notify Seller and the Purchasers of the new Liquidity  Termination  Date. If any
Financial  Institution  does not agree to an Extension  Request,  the  Liquidity
Termination  Date shall not be  extended  for such  Financial  Institution,  and
Seller shall have the right to require such Financial Institution to assign all,
but not less than all, of its Commitment and outstanding Obligations by entering
into an Assignment Agreement with one or more Purchasing Financial  Institutions
in  accordance  with the  provisions of Section  12.1(b),  to which the extended
Liquidity  Termination  Date shall apply.  Each such  assignment to a Purchasing
Financial  Institution  shall  become  effective  on the date  set  forth in the
applicable  Assignment  Agreement,  and subject to receipt of payment in full on
such existing scheduled Liquidity Termination Date for all such Obligations, the
non-extending  Financial Institution shall make such assignments;  provided that
any expenses or other amounts which would be owing to such Financial Institution
pursuant to any indemnification  provision hereof shall be payable by the Seller
as if the Seller had prepaid the  Obligations  owing to the assigning  Financial
Institution rather than such assigning Financial Institution having assigned its
respective interests hereunder.  If such an assignment is not consummated by the
Liquidity  Termination Date of the  non-approving  Financial  Institutions,  the
Purchase  Limit as of such  Liquidity  Termination  Date  shall be reduced by an
amount  equal  to  the  aggregate   Commitments  of  any  Terminating  Financial
Institution(s) under Section 13.6 hereof.

                                  ARTICLE II.

                            PAYMENTS AND COLLECTIONS

     Section 2.1 Payments.  Notwithstanding any limitation on recourse contained
in this Agreement,  Seller shall  immediately pay to the Agent when due, for the
account of the relevant  Purchaser or Purchasers on a full recourse  basis,  (i)
such fees as set forth in the Fee Letter  (which fees shall be sufficient to pay
all fees  owing to the  Financial  Institutions),  (ii) all CP Costs,  (iii) all
amounts payable as Yield, (iv) all amounts payable as Deemed  Collections (which
shall be immediately due and payable by Seller and applied to reduce outstanding
Aggregate Capital hereunder in accordance with Sections 2.2 and 2.3 hereof), (v)
all amounts payable to reduce the Purchaser Interests, if required,  pursuant to
Section 2.6, (vi) all amounts  payable  pursuant to Article X, if any, (vii) all
Servicer  costs and expenses,  including the Servicing  Fee, in connection  with
servicing,  administering  and  collecting  the  Receivables,  (viii) all Broken
Funding Costs, (ix) all Extension Fees, and (x) all Default Fees  (collectively,
the "Obligations"). If Seller fails to pay any of the Obligations when due or if
Servicer  fails  to make  any  deposit  required  to be made  by it  under  this
Agreement  when due,  such Person  agrees to pay, on demand,  the Default Fee in
respect thereof until paid.  Notwithstanding the foregoing, no provision of this
Agreement or the Fee Letter shall  require the payment or permit the  collection
of any amounts  hereunder in excess of the maximum  permitted by applicable law.
If at any time  Seller  receives  any  Collections  or is deemed to receive  any
Collections, Seller shall immediately pay such Collections or Deemed Collections
to the Servicer for  application  in  accordance  with the terms and  conditions
hereof and,  at all times  prior to such  payment,  such  Collections  or Deemed
Collections  shall be held in trust by Seller for the  exclusive  benefit of the
Purchasers and the Agent.

     Section 2.2 Collections  Prior to  Amortization.  Prior to the Amortization
Date, any Collections and/or Deemed  Collections  received by the Servicer shall
be paid to the Agent in accordance with this Agreement or reinvested as provided
in this Section 2.2. If at any time any Collections are received by the Servicer
prior to the Amortization Date, (i) the Servicer shall set aside the Termination
Percentage  (hereinafter  defined) of  Collections  evidenced  by the  Purchaser
Interests  of each  Terminating  Financial  Institution  and (ii) Seller  hereby
requests and the Purchasers (other than any Terminating Financial  Institutions)
hereby agree to make,  simultaneously with such receipt, a reinvestment (each, a
"Reinvestment")  with that  portion of the balance of each and every  Collection
received by the Servicer that is part of any Purchaser  Interest (other than any
Purchaser  Interests of  Terminating  Financial  Institutions),  such that after
giving  effect to such  Reinvestment,  the amount of  Capital of such  Purchaser
Interest immediately after such receipt and corresponding  Reinvestment shall be
equal to the  amount  of  Capital  immediately  prior to such  receipt.  On each
Settlement Date prior to the occurrence of the  Amortization  Date, the Servicer
shall remit to the Agent's  account the amounts set aside  during the  preceding
calendar  week that  have not been  subject  to a  Reinvestment  and apply  such
amounts (if not previously paid in accordance with Section 2.1) first, to reduce
unpaid CP Costs,  Yield and other  Obligations and second, to reduce the Capital
of all  Purchaser  Interests  of  Terminating  Financial  Institutions,  applied
ratably to each Terminating  Financial  Institution  according to its respective
Termination  Percentage.  If such Capital, CP Costs, Yield and other Obligations
shall be reduced to zero,  any additional  Collections  received by the Servicer
(i) if applicable,  shall be remitted to the Agent's account no later than 11:00
a.m.  (Chicago time) to the extent  required to fund any Aggregate  Reduction on
such Settlement Date and (ii) any balance remaining thereafter shall be remitted
from the Servicer to Seller on such Settlement Date. Each Terminating  Financial
Institution shall be allocated a ratable portion of Collections from the date of
any  assignment  by Conduit  pursuant to Section 13.6 (the  "Termination  Date")
until such Terminating  Financing  Institution's  Capital shall be paid in full.
This  ratable  portion  shall  be  calculated  on the  Termination  Date of each
Terminating  Financial  Institution  as a  percentage  equal  to  its  Purchaser
Interest  on  such  Termination  Date  (the  "Termination   Percentage").   Each
Terminating Financial Institution's Termination Percentage shall remain constant
prior to the  Amortization  Date.  On and  after  the  Amortization  Date,  each
Termination  Percentage  shall be disregarded,  and each  Terminating  Financial
Institution's  Capital shall be reduced ratably with all Financial  Institutions
in accordance with Section 2.3.

     Section 2.3 Collections  Following  Amortization.  On the Amortization Date
and on each day thereafter,  the Servicer shall set aside and hold in trust, for
the holder of each Purchaser Interest,  (a) if no Amortization Event or Servicer
Default has occurred, that portion of such Collections equal to the aggregate of
the Purchaser  Interests then outstanding,  and (b) if an Amortization  Event or
Servicer  Default  has  occurred,  all  Collections  received on such day and an
additional  amount of prior Collection for the payment of any accrued and unpaid
Obligations  owed by Seller and not previously paid by Seller in accordance with
Section 2.1. On and after the Amortization Date, the Servicer shall, at any time
upon the request  from time to time by (or  pursuant  to  standing  instructions
from) the Agent (i) remit to the Agent's  account the amounts set aside pursuant
to the  preceding  sentence,  and (ii) apply such  amounts to reduce the Capital
associated with each such Purchaser Interest and any other Aggregate Unpaids.

     Section 2.4  Application  of  Collections.  If there shall be  insufficient
funds on deposit for the Servicer to distribute  funds in payment in full of the
aforementioned  amounts  pursuant  to Section  2.2 or 2.3 (as  applicable),  the
Servicer shall distribute funds:

          first, to the payment of the Servicer's reasonable out-of-pocket costs
     and expenses in connection with servicing, administering and collecting the
     Receivables, including the Servicing Fee,

          second,  to the  reimbursement  of the Agent's costs of collection and
     enforcement of this Agreement,

          third, ratably to the payment of all accrued and unpaid fees under the
     Fee Letter, CP Costs and Yield,

          fourth,  (to the extent  applicable)  to the ratable  reduction of the
     Aggregate Capital (without regard to any Termination Percentage),

          fifth, for the ratable payment of all other unpaid Obligations, and

          sixth,  after the Aggregate Unpaids have been indefeasibly  reduced to
     zero, to Seller.

Collections  applied to the payment of Aggregate Unpaids shall be distributed in
accordance with the aforementioned provisions, and, giving effect to each of the
priorities set forth in this Section 2.4,  shall be shared ratably  (within each
priority)  among the Agent and the  Purchasers in accordance  with the amount of
such Aggregate Unpaids owing to each of them in respect of each such priority.

     Section 2.5 Payment  Recission.  No payment of any of the Aggregate Unpaids
shall be considered  paid or applied  hereunder to the extent that, at any time,
all or any portion of such payment or application is rescinded by application of
law or judicial  authority,  or must  otherwise  be returned or refunded for any
reason.  Seller  shall  remain  obligated  for  the  amount  of any  payment  or
application  so rescinded,  returned or refunded,  and shall promptly pay to the
Agent (for  application  to the Person or Persons who suffered  such  recission,
return or refund) the full amount thereof, plus the Default Fee from the date of
demand for any such recission, return or refunding.

     Section 2.6  Maximum  Purchaser  Interests.  Seller  shall  ensure that the
Purchaser  Interests of the Purchasers  shall at no time exceed in the aggregate
100%.  If the  aggregate of the Purchaser  Interests of the  Purchasers  exceeds
100%,  Seller shall pay to the Agent within one (1) Business Day an amount to be
applied to reduce the Aggregate  Capital (as allocated by the Agent),  such that
after giving  effect to such payment the  aggregate of the  Purchaser  Interests
equals or is less than 100%.

     Section  2.7  Clean Up Call.  The  Servicer  shall  have the  right  (after
providing  written  notice to the Agent in accordance  with the Required  Notice
Period), at any time following the reduction of the Aggregate Capital to a level
that is less than 10.0% of the original  Purchase  Limit,  to purchase  from the
Purchasers  all,  but not  less  than  all,  of the then  outstanding  Purchaser
Interests. The purchase price in respect thereof shall be an amount equal to the
Aggregate  Unpaids  through the date of such  purchase,  payable in  immediately
available  funds.  Such  purchase  and  sale  shall be  without  representation,
warranty or recourse of any kind by, on the part of, or against any Purchaser or
the Agent.

                                  ARTICLE III.

                                 CONDUIT FUNDING

     Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the Capital
associated with each Purchaser Interest of Conduit for each day that any Capital
in respect of such Purchaser  Interest is outstanding.  Each Purchaser  Interest
funded  substantially with Pooled Commercial Paper will accrue CP Costs each day
on a pro rata basis,  based upon the percentage  share the Capital in respect of
such Purchaser Interest represents in relation to all assets held by Conduit and
funded substantially with related Pooled Commercial Paper.

     Section 3.2 CP Costs Payments.  On the first  Settlement Date after each CP
Cost Billing Date, Seller shall pay to the Agent (for the benefit of Conduit) an
aggregate  amount  equal to all  accrued  and  unpaid CP Costs in respect of the
Capital  associated with all Purchaser  Interests of Conduit for the immediately
preceding Accrual Period in accordance with Article II.

     Section 3.3 Calculation of CP Costs. On each CP Cost Billing Date,  Conduit
shall  calculate  the aggregate  amount of CP Costs  allocated to the Capital of
Purchaser Interests for the applicable Accrual Period and shall notify Seller of
such aggregate amount.

                                  ARTICLE IV.

                          FINANCIAL INSTITUTION FUNDING

     Section 4.1 Financial  Institution Funding.  Each Purchaser Interest of the
Financial Institutions shall accrue Yield for each day during its Tranche Period
at  either  the LIBO  Rate or the Prime  Rate in  accordance  with the terms and
conditions  hereof.  Until Seller gives notice to the Agent of another  Discount
Rate in accordance with Section 4.4, the initial Discount Rate for any Purchaser
Interest  transferred  to the Financial  Institutions  pursuant to the terms and
conditions hereof shall be the Prime Rate. If the Financial Institutions acquire
by assignment from Conduit any Purchaser Interest pursuant to Article XIII, each
Purchaser Interest so assigned shall each be deemed to have a new Tranche Period
commencing on the date of any such assignment.

     Section 4.2 Yield  Payments.  On the Yield Payment Date for each  Purchaser
Interest of the Financial  Institutions,  Seller shall pay to the Agent (for the
benefit of the Financial  Institutions) an aggregate amount equal to the accrued
and unpaid Yield for the entire Tranche Period (or quarterly  portion thereof if
such Tranche Period is greater than 3 months) of each such Purchaser Interest in
accordance with Article II.

     Section   4.3   Selection   and    Continuation    of   Tranche    Periods.

     (a) With  consultation  from the  Agent,  Seller  shall  from  time to time
request   Tranche   Periods  for  the  Purchaser   Interests  of  the  Financial
Institutions,  provided  that, if at any time the Financial  Institutions  shall
have a Purchaser Interest, Seller shall always request Tranche Periods such that
at least one Tranche  Period shall end on the day specified in clause (A) of the
definition of Settlement Date.

     (b) Seller,  upon notice to the Agent  received at least three (3) Business
Days prior to the end of a Tranche  Period (the  "Terminating  Tranche") for any
Purchaser  Interest,  may, and the Agent,  at any time during the occurrence and
continuance of an Amortization Event, may (in which case Agent's direction shall
control), in each case effective on the last day of the Terminating Tranche: (i)
divide any such  Purchaser  Interest into  multiple  Purchaser  Interests,  (ii)
combine any such Purchaser  Interest with one or more other Purchaser  Interests
that  have a  Terminating  Tranche  ending  on the same day as such  Terminating
Tranche  or (iii)  combine  any such  Purchaser  Interest  with a new  Purchaser
Interest to be purchased on the day such  Terminating  Tranche  ends,  provided,
that in no  event  may a  Purchaser  Interest  of  Conduit  be  combined  with a
Purchaser Interest of the Financial Institutions.

     Section 4.4 Financial  Institution  Discount  Rates.  Seller may select the
LIBO  Rate or the  Prime  Rate  for each  Purchaser  Interest  of the  Financial
Institutions.  Seller shall by 11:00 a.m. (Chicago time): (i) at least three (3)
Business Days prior to the expiration of any Terminating Tranche with respect to
which the LIBO Rate is being  requested as a new Discount Rate and (ii) at least
one (1) Business Day prior to the  expiration  of any  Terminating  Tranche with
respect to which the Prime Rate is being  requested as a new Discount Rate, give
the Agent irrevocable notice of the new Discount Rate for the Purchaser Interest
associated with such Terminating Tranche. Until Seller gives notice to the Agent
of another Discount Rate, the initial  Discount Rate for any Purchaser  Interest
transferred to the Financial  Institutions by the Conduit  pursuant to the terms
and conditions hereof shall be the Prime Rate.

     Section 4.5 Suspension of the LIBO Rate

     (a) If any Financial  Institution notifies the Agent that it has determined
that (i) funding its Pro Rata Share of the Purchaser  Interests of the Financial
Institutions at a LIBO Rate would violate any applicable law, rule,  regulation,
or directive of any governmental or regulatory authority,  whether or not having
the force of law, or that (ii)  deposits of a type and maturity  appropriate  to
match fund its Purchaser  Interests at such LIBO Rate are not available or (iii)
such LIBO Rate does not accurately  reflect the cost of acquiring or maintaining
a  Purchaser  Interest  at such LIBO  Rate,  then the Agent  shall  suspend  the
availability  of such LIBO Rate and require  Seller to select the Prime Rate for
any Purchaser  Interest  accruing Yield at such LIBO Rate;  provided that before
making any such  suspension,  the  applicable  Financial  Institution  shall use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be  disadvantageous to it, in
its  reasonable  discretion,  in any legal,  economic or  regulatory  manner) to
designate a different LIBO Rate lending office if the making of such designation
would  allow  such  Financial  Institution  or its LIBO Rate  lending  office to
continue to fund its Pro Rata Share of the  Purchaser  Interests  at a LIBO Rate
and avoid the situations set forth in clauses (i)-(iii) in this Section 4.5(a).

     (b) If less  than all of the  Financial  Institutions  give a notice to the
Agent pursuant to Section 4.5(a),  each Financial  Institution which gave such a
notice  shall be  obliged,  at the request of Seller,  Conduit or the Agent,  to
assign all of its rights and  obligations  hereunder  to (i)  another  Financial
Institution or (ii) another funding entity nominated by Seller or the Agent that
is acceptable to Conduit and willing to participate  in this  Agreement  through
the  Liquidity  Termination  Date  in the  place  of  such  notifying  Financial
Institution;  provided that (i) the  notifying  Financial  Institution  receives
payment in full, pursuant to an Assignment Agreement, of an amount equal to such
notifying Financial  Institution's Pro Rata Share of the Capital and Yield owing
to all of the Financial  Institutions  and all accrued but unpaid fees and other
costs and  expenses  payable in  respect of its Pro Rata Share of the  Purchaser
Interests of the  Financial  Institutions,  and (ii) the  replacement  Financial
Institution otherwise satisfies the requirements of Section 12.1(b).

                                   ARTICLE V.

                         REPRESENTATIONS AND WARRANTIES

     Section 5.1  Representations  and  Warranties of the Seller  Parties.  Each
Seller Party hereby represents and warrants to the Agent and the Purchasers,  as
to itself, as of the date hereof and as of the date of each Incremental Purchase
and the date of each Reinvestment that:

     (a)  Existence  and Power.  Such Seller Party is a  corporation  or limited
liability company,  duly organized,  validly existing and in good standing under
the laws of its state of organization. Such Seller Party is duly qualified to do
business and is in good standing as a foreign  corporation or limited  liability
company, as the case may be, and has and holds 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
where the failure to so qualify or so hold could not  reasonably  be expected to
have a Material Adverse Effect.

     (b) Power and Authority;  Due  Authorization,  Execution and Delivery.  The
execution  and  delivery by such Seller Party of this  Agreement  and each other
Transaction  Document  to  which  it is a  party,  and  the  performance  of its
obligations hereunder and thereunder and, in the case of Seller, Seller's use of
the proceeds of purchases  made  hereunder,  are within its corporate or limited
liability  company,  as  applicable,  powers  and  authority  and have been duly
authorized  by  all  necessary   corporate  or  limited  liability  company,  as
applicable,  action on its  part.  This  Agreement  and each  other  Transaction
Document  to which  such  Seller  Party is a party  has been duly  executed  and
delivered by such Seller Party.

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

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

     (e) Actions,  Suits. There are no actions, suits or proceedings pending, or
to the best of such Seller Party's knowledge,  threatened,  against or affecting
such Seller Party, or any of its properties,  in or before any court, arbitrator
or other body,  that could  reasonably  be  expected to have a Material  Adverse
Effect.  Such Seller  Party is not in default  with  respect to any order of any
court, arbitrator or governmental body.

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

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

     (h) Use of Proceeds. No proceeds of any purchase hereunder will be used (i)
for a purpose that violates, or would be inconsistent with, Regulation T, U or X
promulgated by the Board of Governors of the Federal Reserve System from time to
time or (ii) to acquire  any  security  in any  transaction  which is subject to
Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.

     (i) Good Title. Immediately prior to each purchase hereunder,  Seller shall
be the legal and beneficial  owner of the  Receivables  and the  Collections and
Related  Security  with respect  thereto,  free and clear of any Adverse  Claim,
except as created by the Transaction  Documents.  There have been duly filed (or
delivered to the Agent in form suitable for filing) all financing  statements or
other  similar  instruments  or  documents  necessary  under  the  UCC  (or  any
comparable law) of all appropriate  jurisdictions to perfect Seller's  ownership
interest in each Receivable, its Collections and the Related Security.

     (j) Perfection.  This Agreement,  together with the filing of the financing
statements  contemplated  hereby, is effective to, and shall, upon each purchase
hereunder,  transfer to the Agent for the benefit of the  relevant  Purchaser or
Purchasers (and the Agent for the benefit of such Purchaser or Purchasers  shall
acquire from Seller) a valid and perfected first priority  undivided  percentage
ownership or security interest in each Receivable  existing or hereafter arising
and in the Related Security and Collections with respect thereto, free and clear
of any Adverse Claim,  except as created by the  Transactions  Documents.  There
have been duly filed (or delivered to the Agent in form suitable for filing) all
financing  statements or other similar  instruments or documents necessary under
the UCC (or any comparable law) of all appropriate  jurisdictions to perfect the
Agent's (on behalf of the  Purchasers)  ownership  or  security  interest in the
Receivables, the Related Security and the Collections.

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

     (l)  Collections.  The  conditions  and  requirements  set forth in Section
7.1(j) and Section 8.2 have at all times since the Effective Date been satisfied
and duly performed.  The names and addresses of all Collection  Banks,  together
with the account numbers of the Collection Accounts of Seller at each Collection
Bank and the post office box number of each Lock-Box,  are listed on Exhibit IV.
Seller has not granted any Person,  other than the Agent as contemplated by this
Agreement,  dominion and control of any Lock-Box or Collection  Account,  or the
right to take dominion and control of any such Lock-Box or Collection Account at
a future time or upon the occurrence of a future event.

     (m)  Material  Adverse  Effect.  (i) The initial  Servicer  represents  and
warrants  that since  December 31, 1999, no event has occurred that would have a
material  adverse  effect on the ability of the initial  Servicer to perform its
obligations  under this Agreement,  and (ii) Seller represents and warrants that
since  the date of this  Agreement,  no event has  occurred  that  would  have a
material adverse effect on (A) the financial  condition or operations of Seller,
(B) the  ability  of Seller to perform  its  obligations  under the  Transaction
Documents,  or (C)  the  collectibility  of  the  Receivables  generally  or any
material portion of the Receivables.

     (n)  Names.  In the past five (5) years,  Seller  has not used any  limited
liability  company  names,  trade names or assumed  names other than the name in
which it has executed this Agreement.

     (o)  Ownership of Seller.  P&L owns,  directly or  indirectly,  100% of the
issued and outstanding  equity membership  interests of Seller.  Such membership
interests are validly  issued,  fully paid and  nonassessable,  and there are no
options, warrants or other rights to acquire securities of Seller.

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

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

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

     (s)  Accounting.  The manner in which such Seller  Party  accounts  for the
transactions  contemplated  by  this  Agreement,  the  Receivables  Contribution
Agreement and, as applicable, the Receivables Sale Agreement does not jeopardize
the true sale or true contribution analysis.

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

     (u)  Eligible  Receivables.   Seller  represents  and  warrants  that  each
Receivable  included in the Net  Receivables  Balance as an Eligible  Receivable
was,  on the  date  of  its  contribution  under  the  Receivables  Contribution
Agreement, an Eligible Receivable on such date.

     (v) Net Receivables Balance. Seller represents and warrants that Seller has
determined that, immediately after giving effect to each purchase hereunder, the
Net  Receivables  Balance  is at  least  equal  to the sum of (i) the  Aggregate
Capital, plus (ii) the Aggregate Reserves.

     Section 5.2 Financial  Institution  Representations  and  Warranties.  Each
Financial  Institution  hereby  represents and warrants to the Agent and Conduit
that:

     (a) Existence and Power.  Such Financial  Institution is a corporation or a
banking association duly organized,  validly existing and in good standing under
the laws of its  jurisdiction  of  incorporation  or  organization,  and has all
corporate power to perform its obligations hereunder.

     (b) No Conflict.  The execution and delivery by such Financial  Institution
of this Agreement and the  performance of its  obligations  hereunder are within
its corporate  powers,  have been duly  authorized  by all  necessary  corporate
action,  do not  contravene  or  violate  (i) its  certificate  or  articles  of
incorporation  or  association  or  by-laws,  (ii) any law,  rule or  regulation
applicable  to it,  (iii) any  restrictions  under any  agreement,  contract  or
instrument  to which it is a party or any of its property is bound,  or (iv) any
order, writ, judgment, award, injunction or decree binding on or affecting it or
its  property,  and do not result in the creation or  imposition  of any Adverse
Claim on its assets.  This  Agreement  has been duly  authorized,  executed  and
delivered by such Financial Institution.

     (c)  Governmental  Authorization.  No  authorization  or  approval or other
action  by,  and no notice to or filing  with,  any  governmental  authority  or
regulatory body is required for the due execution and delivery by such Financial
Institution of this Agreement and the performance of its obligations hereunder.

     (d) Binding Effect. This Agreement constitutes the legal, valid and binding
obligation of such  Financial  Institution  enforceable  against such  Financial
Institution  in accordance  with its terms,  except as such  enforcement  may be
limited by applicable  bankruptcy,  insolvency,  reorganization or other similar
laws  relating  to or  limiting  creditors'  rights  generally  and  by  general
principles  of equity  (regardless  of whether such  enforcement  is sought in a
proceeding in equity or at law).

                                  ARTICLE VI.

                             CONDITIONS OF PURCHASES

     Section 6.1  Conditions  Precedent  to Initial  Incremental  Purchase.  The
initial  Incremental  Purchase of a Purchaser  Interest  under this Agreement is
subject to the conditions precedent that (a) the Agent shall have received on or
before the date of such purchase  those  documents  listed on Schedule B and (b)
the Agent shall have received all fees and expenses  required to be paid on such
date pursuant to the terms of this Agreement and the Fee Letter.

     Section 6.2 Conditions  Precedent to All Purchases and Reinvestments.  Each
purchase of a Purchaser  Interest (other than pursuant to Section 13.1) and each
Reinvestment  shall be subject to the further  conditions  precedent that (a) in
the  case of each  such  purchase  or  Reinvestment,  the  Servicer  shall  have
delivered  to the  Agent on or prior to the date of such  purchase,  in form and
substance  satisfactory to the Agent, all Weekly Reports and Monthly Supplements
as and when due under Section 8.5; (b) the Facility  Termination  Date shall not
have occurred; (c) the Agent shall have received such other approvals,  opinions
or documents as it may reasonably request prior thereto;  and (d) on the date of
each such Incremental  Purchase or Reinvestment,  the following statements shall
be true  (and  acceptance  of the  proceeds  of  such  Incremental  Purchase  or
Reinvestment  shall be deemed a representation  and warranty by Seller that such
statements are then true):

          (i) the  representations  and  warranties set forth in Section 5.1 are
     true and  correct  on and as of the date of such  Incremental  Purchase  or
     Reinvestment as though made on and as of such date;

          (ii) no event has  occurred  and is  continuing,  or would result from
     such Incremental Purchase or Reinvestment,  that will constitute (A) in the
     case  of an  Incremental  Purchase,  an  Amortization  Event,  a  Potential
     Amortization Event, a Servicer Default or a Potential Servicer Default, and
     (B) in the case of a  Reinvestment,  an  Amortization  Event or a  Servicer
     Default; and

          (iii) the Aggregate Capital does not exceed the Purchase Limit and the
     aggregate Purchaser Interests do not exceed 100%.

It is  expressly  understood  that each  Reinvestment  shall,  unless  otherwise
directed by the Agent or any Purchaser, occur automatically on each day that the
Servicer shall receive any Collections  without the requirement that any further
action be taken on the part of any Person  and  notwithstanding  the  failure of
Seller to satisfy any of the foregoing  conditions  precedent in respect of such
Reinvestment.  The failure of Seller to satisfy any of the foregoing  conditions
precedent  in  respect  of any  Reinvestment  shall  give rise to a right of the
Agent,  which  right may be  exercised  at any time on demand of the  Agent,  to
rescind  the  related  purchase  and  direct  Seller to pay to the Agent for the
benefit of the Purchasers an amount equal to the  Collections  that were applied
to the affected Reinvestment.

                                  ARTICLE VII.

                                    COVENANTS

     Section 7.1 Affirmative Covenants of the Seller Parties.  Until the date on
which  the  Aggregate  Unpaids  have  been  indefeasibly  paid in full  and this
Agreement  terminates  in  accordance  with its terms,  each Seller Party hereby
covenants, as to itself, as set forth below:

     (a) Financial  Reporting.  Such Seller Party will maintain,  for itself and
each of its Subsidiaries, a system of accounting established and administered in
accordance with GAAP, and furnish or cause to be furnished to the Agent:

          (i)  Annual  Reporting.  Within 90 days after the close of each of its
     fiscal years, an audit report on SEC Form 10-K for P&L and its consolidated
     Subsidiaries for such fiscal year,  certified (without  qualification as to
     scope  or  going  concern)  in a  manner  acceptable  to  the  Agent  by an
     independent  public  accounting firm of nationally  recognized  standing or
     otherwise  reasonably  acceptable  to the Agent,  and  unaudited  financial
     statements  (which shall include a balance sheet, a statement of income and
     retained earnings and a statement of cash flows) for Seller for such fiscal
     year, certified in a manner reasonably  acceptable to the Agent by Seller's
     treasurer or chief financial officer.

          (ii) Quarterly Reporting.  Within 45 days after the close of the first
     three (3)  quarterly  periods of each of its  respective  fiscal  years,  a
     report on SEC Form 10-Q for P&L and its consolidated  Subsidiaries for such
     fiscal quarter, and an unaudited balance sheet as at the close of each such
     period and unaudited statements of income, retained earnings and cash flows
     for Seller for the period from the beginning of such fiscal year to the end
     of such quarter, all certified by its treasurer or chief financial officer.

          (iii) Compliance  Certificate.  Together with the financial statements
     required hereunder,  a compliance  certificate in substantially the form of
     Exhibit V signed by Seller's  Authorized Officer and dated the date of such
     annual financial  statement or such quarterly financial  statement,  as the
     case may be.

          (iv)  Shareholders/Members  Statements and Reports.  Promptly upon the
     furnishing thereof to the shareholders or members,  as applicable,  of such
     Seller  Party  copies  of  all  financial  statements,  reports  and  proxy
     statements so furnished.

          (v) S.E.C.  Filings.  Promptly upon the filing thereof,  copies of all
     registration  statements  and annual,  quarterly,  monthly or other regular
     reports which P&L or any of its Subsidiaries  files with the Securities and
     Exchange Commission.

          (vi)  Copies of  Notices.  Promptly  upon its  receipt of any  notice,
     request for consent, financial statements,  certification,  report or other
     communication under or in connection with any Transaction Document from any
     Person other than the Agent or Conduit, copies of the same.

          (vii)  Change in Credit and  Collection  Policy.  At least thirty (30)
     days  prior to the  effectiveness  of any  material  change in or  material
     amendment  to the Credit and  Collection  Policy,  a copy of the Credit and
     Collection Policy then in effect and a notice (A) indicating such change or
     amendment, and (B) if such proposed change or amendment would be reasonably
     likely  to  adversely  affect  the  collectibility  of the  Receivables  or
     decrease the credit  quality of any newly created  Receivables,  requesting
     the Agent's consent  thereto,  to the extent such Seller Party may lawfully
     provide the same.

          (viii)  Other  Information.  Promptly,  from time to time,  such other
     information,  documents,  records or reports relating to the Receivables or
     the condition or operations,  financial or otherwise,  of such Seller Party
     as the Agent may from time to time  reasonably  request in order to protect
     the interests of the Agent and the Purchasers  under or as  contemplated by
     this  Agreement,  to the extent such Seller Party may lawfully  provide the
     same.

     (b)  Notices.  Such Seller Party will notify the Agent in writing of any of
the following promptly upon learning of the occurrence  thereof,  describing the
same and, if applicable, the steps being taken with respect thereto:

          (i) Amortization  Events,  Servicer Defaults,  Potential  Amortization
     Events or Potential Servicer Defaults.  The occurrence of each Amortization
     Event, each Servicer Default,  each Potential  Amortization  Event and each
     Potential Servicer Default, by a statement of an Authorized Officer of such
     Seller Party.

          (ii)  Judgment and  Proceedings.  (A) (1) The entry of any judgment or
     decree  against the Servicer or any of its respective  Subsidiaries  (other
     than  Seller) if the  aggregate  amount of all  judgments  and decrees then
     outstanding  against the Servicer and its Subsidiaries  exceeds $25,000,000
     after  deducting  (a) the amount with  respect to which the Servicer or any
     such  Subsidiary  is  insured  and with  respect to which the  insurer  has
     assumed  responsibility  in  writing,  and (b) the  amount  for  which  the
     Servicer or any such  Subsidiary is otherwise  indemnified  if the terms of
     such indemnification are satisfactory to the Agent, and (2) the institution
     of  any  litigation,  arbitration  proceeding  or  governmental  proceeding
     against  the  Servicer  which,  individually  or in  the  aggregate,  could
     reasonably be expected to have a Material Adverse Effect; and (B) the entry
     of any judgment or decree or the institution of any litigation, arbitration
     proceeding or governmental proceeding against Seller.

          (iii)  Material  Adverse  Effect.  The  occurrence  of  any  event  or
     condition that has had, or could  reasonably be expected to have, a Adverse
     Effect.

          (iv) Termination  Date. The occurrence of (A) any  Originator's  "Sale
     Termination  Date" under and as defined in the  Receivables  Sale Agreement
     and  whether  such  Originator  is  a  Material  Originator,   or  (B)  the
     "Termination  Date"  under and as defined in the  Receivables  Contribution
     Agreement.

          (v) Defaults Under Other Agreements. The occurrence of a default or an
     event of  default  under any other  financing  arrangement  evidencing  (a)
     $25,000,000 or more of indebtedness  pursuant to which Servicer is a debtor
     or an obligor  or (b)  $10,750 or more of  indebtedness  pursuant  to which
     Seller is a debtor  or an  obligor,  in each of the  foregoing  cases,  the
     effect  of which is to  cause,  or to  permit  any  Person  to  cause,  the
     acceleration of Indebtedness evidenced thereby.

          (vi)  Downgrade of Servicer or any  Originator.  Any  downgrade in the
     rating of any  Indebtedness  of  Servicer or any  Originator  by Standard &
     Poor's Ratings Group or by Moody's Investors  Service,  Inc., setting forth
     the Indebtedness affected and the nature of such change.

     (c) Compliance  with Laws and  Preservation  of Corporate  Existence.  Such
Seller  Party will  comply in all  respects  with all  applicable  laws,  rules,
regulations,  orders, writs, judgments,  injunctions, decrees or awards to which
it may be subject, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect.  Such Seller Party will preserve and
maintain its corporate or limited liability company,  as applicable,  existence,
rights,  franchises and privileges in the  jurisdiction of its  incorporation or
formation, as applicable, and qualify and remain qualified in good standing as a
foreign corporation or foreign limited liability company, as applicable, in each
jurisdiction  where its  business is  conducted,  except where the failure to so
preserve  and  maintain or qualify  could not  reasonably  be expected to have a
Material Adverse Effect.

     (d) Audits.  Such Seller  Party will furnish to the Agent from time to time
such  information  with  respect  to it and the  Receivables  as the  Agent  may
reasonably  request and to the extent it may  lawfully do so. Such Seller  Party
will, from time to time during regular  business hours as requested by the Agent
upon  reasonable  notice and at the sole cost of such Seller  Party,  permit the
Agent, or its agents or  representatives  (and, to the extent it may do so under
the Receivables Contribution Agreement and the Receivables Sale Agreement, shall
cause P&L to permit,  and cause each of the Originators to permit,  the Agent or
its agents or representatives):  (i) to examine and make copies of and abstracts
from all Records in the possession or under the control of such Person  relating
to the Receivables, the Collections and the Related Security, including, without
limitation,  the related Invoices,  and (ii) to visit the offices and properties
of such Person for the purpose of examining such  materials  described in clause
(i) above, and to discuss matters relating to such Person's financial  condition
or the  Receivables,  the Collections  and the Related  Security or any Person's
performance under any of the Transaction  Documents or any Person's  performance
under the Invoices  and, in each case,  with any of the officers or employees of
Seller or the Servicer having knowledge of such matters.  As of the date of this
Agreement,  it is the intention of the Agent to conduct audits  pursuant to this
Section  7.1(d)  semi-annually,  but nothing  herein shall be deemed to preclude
more frequent audits if reasonably deemed necessary or advisable by the Agent.

     (e) Keeping and Marking of Records and Books.

          (i) The  Servicer  will  maintain  and  implement  administrative  and
     operating procedures (including, without limitation, an ability to recreate
     records  evidencing  Receivables  in the  event of the  destruction  of the
     originals thereof), and keep and maintain all documents, books, records and
     other information  reasonably  necessary or advisable for the collection of
     all Receivables (including,  without limitation, records adequate to permit
     the immediate  identification of each new Receivable and all Collections of
     and  adjustments to each existing  Receivable).  The Servicer will give the
     Agent notice of any material  change in the  administrative  and  operating
     procedures referred to in the previous sentence.

          (ii) Such Seller Party will (A) on or prior to the date  hereof,  mark
     its master data processing  records and other books and records relating to
     the Purchaser Interests with a legend,  acceptable to the Agent, describing
     the Purchaser Interests and (B) upon the request of the Agent following the
     occurrence of a Servicer  Default or an Amortization  Event:  (x) mark each
     Invoice with a legend describing the Purchaser Interests and (y) deliver to
     the  Agent  all  Invoices  (including,  without  limitation,  all  multiple
     originals of any such Invoice) relating to the Receivables.

     (f) Compliance with Contracts,  Invoices and Credit and Collection  Policy.
Such Seller Party will timely and fully (i) perform and comply with all material
provisions, covenants and other promises required to be observed by it under the
Contracts  and  Invoices  related  to the  Receivables,  and (ii)  comply in all
material  respects  with the  Credit  and  Collection  Policy  in regard to each
Receivable and the related Invoice.

     (g) Performance and Enforcement of the Receivables  Contribution  Agreement
and the Receivables Sale Agreement.  Seller will perform each of its obligations
and undertakings  under and pursuant to the Receivables  Contribution  Agreement
and  Receivables  Sale  Agreement,  as  applicable,   will  acquire  Receivables
thereunder  in strict  compliance  with the terms  thereof  and will  vigorously
enforce  the  rights  and  remedies  accorded  to Seller  under the  Receivables
Contribution Agreement.  Seller will take all actions to perfect and enforce its
rights  and  interests  (and the  rights  and  interests  of the  Agent  and the
Purchasers as assignees of Seller) under the Receivables  Contribution Agreement
and the Receivables Sale Agreement as the Agent may from time to time reasonably
request,  including,  without  limitation,  making  claims  to  which  it may be
entitled under any indemnity,  reimbursement or similar  provision  contained in
the Receivables Sale Agreement or Receivables Contribution Agreement.

     (h) Ownership.  Seller will take all necessary action to (i) vest legal and
equitable  title to the  Receivables,  the Related  Security and the Collections
purchased  under  the  Receivables  Sale  Agreement  and  contributed  under the
Receivables  Contribution Agreement irrevocably in Seller, free and clear of any
Adverse  Claims  other  than  Adverse  Claims  in  favor  of the  Agent  and the
Purchasers  (including,   without  limitation,   the  filing  of  all  financing
statements or other similar instruments or documents necessary under the UCC (or
any  comparable  law)  of all  appropriate  jurisdictions  to  perfect  Seller's
interest in such  Receivables,  Related  Security and Collections and such other
action to perfect, protect or more fully evidence the interest of Seller therein
as the Agent may reasonably request),  and (ii) establish and maintain, in favor
of the Agent,  for the benefit of the  Purchasers,  a valid and perfected  first
priority undivided  percentage  ownership interest (and/or a valid and perfected
first  priority  security  interest) in all  Receivables,  Related  Security and
Collections  to the full  extent  contemplated  herein,  free  and  clear of any
Adverse  Claims other than Adverse  Claims in favor of the Agent for the benefit
of the Purchasers  (including,  without limitation,  the filing of all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect the Agent's (for
the benefit of the Purchasers)  interest in such  Receivables,  Related Security
and Collections and such other action to perfect, protect or more fully evidence
the  interest  of the Agent for the benefit of the  Purchasers  as the Agent may
reasonably request).

     (i)  Purchasers'  Reliance.  Seller  acknowledges  that the  Purchasers are
entering into the  transactions  contemplated by this Agreement in reliance upon
Seller's  identity as a legal  entity  that is  separate  from P&L and its other
Affiliates. Therefore, from and after the date of execution and delivery of this
Agreement,   Seller  shall  take  all  reasonable  steps,   including,   without
limitation,  all  steps  that the Agent or any  Purchaser  may from time to time
reasonably request, to maintain Seller's identity as a separate legal entity and
to make it  manifest to third  parties  that Seller is an entity with assets and
liabilities distinct from those of P&L and any Affiliates thereof and not just a
division of P&L or any such  Affiliate.  Without  limiting the generality of the
foregoing and in addition to the other covenants set forth herein, Seller will:

               (A) conduct its own business in its own name and require that all
          full-time employees of Seller, if any, identify themselves as such and
          not as  employees  of P&L or any of its  Affiliates  other than Seller
          (including,  without  limitation,  by means of  providing  appropriate
          employees  with  business or  identification  cards  identifying  such
          employees as Seller's employees);

               (B) compensate all employees,  consultants  and agents  directly,
          from  Seller's  own funds,  for  services  provided  to Seller by such
          employees,  consultants  and agents and,  to the extent any  employee,
          consultant or agent of Seller is also an employee, consultant or agent
          of P&L or any Affiliate  thereof,  allocate the  compensation  of such
          employee,   consultant  or  agent  between  Seller  and  P&L  or  such
          Affiliate,  as  applicable,  on a basis  that  reflects  the  services
          rendered to Seller and P&L or such Affiliate, as applicable;

               (C) clearly identify its offices (by signage or otherwise) as its
          offices and, if such office is located in the offices of P&L or any of
          its Affiliates, Seller shall lease such office at a fair market rent;

               (D) have a separate telephone number, which will be answered only
          in its name and  separate  stationery,  invoices and checks in its own
          name;

               (E) conduct all  transactions  with P&L and its other  Affiliates
          (including,  without  limitation,  any delegation of P&L's obligations
          hereunder as Servicer) strictly on an arm's-length basis, allocate all
          overhead expenses (including, without limitation,  telephone and other
          utility charges) for items shared between Seller and P&L or such other
          Affiliate on the basis of actual use to the extent practicable and, to
          the extent such allocation is not  practicable,  on a basis reasonably
          related to actual use;

               (F) at all times have a Board of Directors consisting of not less
          than three (3) members, at least one member of which is an Independent
          Director;

               (G)  observe  all  limited  liability  company  formalities  as a
          distinct entity, and ensure that all limited liability company actions
          relating  to (A) the  selection,  maintenance  or  replacement  of the
          Independent Director,  (B) the dissolution or liquidation of Seller or
          (C) the initiation of, participation in, acquiescence in or consent to
          any  bankruptcy,  insolvency,  reorganization  or  similar  proceeding
          involving  Seller,  are duly authorized by unanimous vote of its Board
          of Directors (including the Independent Director);

               (H) maintain  Seller's  books and records  separate from those of
          P&L and any other Affiliate thereof and otherwise readily identifiable
          as its own books and records  rather than books and records of P&L and
          any other Affiliate thereof;

               (I) prepare its financial statements separately from those of P&L
          and its other  Affiliates and insure that any  consolidated  financial
          statements  of P&L or any  Affiliate  thereof that include  Seller and
          that are filed with the  Securities  and  Exchange  Commission  or any
          other governmental  agency have notes clearly stating that Seller is a
          separate legal entity and that its assets will be available  first and
          foremost to satisfy the claims of the creditors of Seller;

               (J) except as herein specifically  otherwise  provided,  maintain
          the funds or other assets of Seller  separate from, and not commingled
          with,  those of P&L or any other  Affiliate  thereof  (subject  to the
          commingling of funds pursuant to the  centralized  cash  management of
          P&L and its  subsidiaries,  to the extent permitted under the terms of
          the legal  opinion  referred to in clause (P) below) and only maintain
          bank  accounts or other  depository  accounts to which Seller alone is
          the account  party,  into which Seller  alone makes  deposits and from
          which  Seller  alone  (or the Agent  hereunder)  has the power to make
          withdrawals;

               (K) pay all of Seller's  operating  expenses  from  Seller's  own
          assets (except for certain  payments by P&L or other Persons  pursuant
          to allocation  arrangements  that comply with the requirements of this
          Section 7.1(i));

               (L) operate its business and  activities  such that:  it does not
          engage in any  business  or  activity  of any kind,  or enter into any
          transaction or indenture, mortgage,  instrument,  agreement, contract,
          lease or other undertaking,  other than the transactions  contemplated
          and  authorized  by  this  Agreement,   the  Receivables  Contribution
          Agreement and the  Receivables  Sale  Agreement;  and does not create,
          incur, guarantee,  assume or suffer to exist any indebtedness or other
          liabilities,  whether direct or contingent, other than (1) as a result
          of the endorsement of negotiable instruments for deposit or collection
          or similar  transactions in the ordinary  course of business,  (2) the
          incurrence of obligations under this Agreement, and (3) the incurrence
          of operating  expenses in the ordinary  course of business of the type
          otherwise contemplated by this Agreement;

               (M) maintain its limited  liability company charter in conformity
          with this Agreement, such that it does not amend, restate,  supplement
          or  otherwise   modify  its  Certificate  of  Formation  or  operating
          agreement  in any respect that would impair its ability to comply with
          the  terms  or  provisions  of  any  of  the  Transaction   Documents,
          including, without limitation, this Section 7.1(i);

               (N) maintain its legal  separateness  such that it does not merge
          or consolidate with or into, or convey,  transfer,  lease or otherwise
          dispose of (whether in one transaction or in a series of transactions,
          and except as otherwise  contemplated herein) all or substantially all
          of its assets (whether now owned or hereafter acquired) to, or acquire
          all or substantially all of the assets of, any Person, nor at any time
          create,   have,  acquire,   maintain  or  hold  any  interest  in  any
          Subsidiary;

               (O) maintain at all times the Required Capital Amount and refrain
          from  making any  dividend,  distribution,  redemption  of  membership
          interests  or payment of any  subordinated  indebtedness  which  would
          cause the Required Capital Amount to cease to be so maintained; and

               (P) take  such  other  actions  as are  necessary  on its part to
          ensure that the facts and  assumptions set forth in the opinion issued
          by Sidley & Austin,  as counsel for  Seller,  in  connection  with the
          closing or initial  Incremental  Purchase  under  this  Agreement  and
          relating to substantive  consolidation issues, and in the certificates
          accompanying  such  opinion,  remain true and correct in all  material
          respects at all times.

     (j)  Collections.  Such Seller Party will cause (1) all  proceeds  from all
Lock-Boxes  to be directly  deposited  by a  Collection  Bank into a  Collection
Account and (2) each Lock-Box and Collection  Account to be subject at all times
to a Collection Account Agreement that is in full force and effect. In the event
any payments  relating to  Receivables  are  remitted  directly to Seller or any
Affiliate  of Seller,  Seller will remit (or will cause all such  payments to be
remitted)  directly to a Collection  Bank for deposit into a Collection  Account
within two (2) Business Days following receipt thereof,  and, at all times prior
to such remittance,  Seller will itself hold or, if applicable,  will cause such
payments  to be held in trust  for the  exclusive  benefit  of the Agent and the
Purchasers.  Seller will  maintain  exclusive  ownership,  dominion  and control
(subject to the terms of this Agreement) of each Lock-Box and Collection Account
and shall not grant the right to take  dominion  and control of any  Lock-Box or
Collection  Account at a future time or upon the occurrence of a future event to
any Person, except to the Agent as contemplated by this Agreement.

     (k) Taxes. Such Seller Party will file all tax returns and reports required
by law to be  filed by it and  will  promptly  pay all  taxes  and  governmental
charges at any time owing, except any such taxes which are not yet delinquent or
are being diligently contested in good faith by appropriate  proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.  Seller  will pay when  due any  taxes  payable  in  connection  with the
Receivables,  exclusive  of taxes on or measured by income or gross  receipts of
Conduit, the Agent or any Financial Institution.

     (l) Insurance. Seller will maintain in effect, or cause to be maintained in
effect, at Seller's own expense, such casualty and liability insurance as Seller
shall deem appropriate in its good faith business  judgment.  Seller will pay or
cause to be paid, the premiums therefor. The foregoing requirements shall not be
construed  to  negate,  reduce  or  modify,  and are in  addition  to,  Seller's
obligations hereunder.

     Section 7.2  Negative  Covenants of the Seller  Parties.  Until the date on
which  the  Aggregate  Unpaids  have  been  indefeasibly  paid in full  and this
Agreement terminates in accordance with its terms:

     (a) Name Change, Offices and Records. Such Seller Party will not change its
name,  identity  or  corporate  or  limited  liability  company  structure,   as
applicable  (within the meaning of Section 9-402(7) of any applicable  enactment
of the UCC) or relocate its chief  executive  office or any office where Records
are kept  unless it shall have:  (i) given the Agent at least  thirty (30) days'
prior  written  notice  thereof and (ii)  delivered  to the Agent all  financing
statements, instruments and other documents requested by the Agent in connection
with such change or relocation.

     (b) Change in Payment  Instructions to Obligors.  Except as may be required
by the Agent  pursuant  to Section  8.2(b),  such  Seller  Party will not add or
terminate any bank as a Collection  Bank, or make any change in the instructions
to Obligors regarding payments to be made to any Lock-Box or Collection Account,
unless the Agent shall have received, at least ten (10) days before the proposed
effective  date therefor,  (i) written  notice of such addition,  termination or
change  and  (ii)  with  respect  to the  addition  of a  Collection  Bank  or a
Collection  Account or Lock-Box,  an executed  Collection Account Agreement with
respect to the new Collection Account or Lock-Box;  provided,  however, that the
Servicer may make changes in instructions to Obligors regarding payments if such
new  instructions  require  such  Obligor to make  payments to another  existing
Collection Account.

     (c) Modifications to Invoices and Credit and Collection Policy. Such Seller
Party will not, and will enforce its rights under the  Receivables  Contribution
Agreement and the  Receivables  Sale  Agreement to not permit any Originator to,
make any change to the Credit and Collection  Policy that could adversely affect
the  collectibility  of the  Receivables  or decrease the credit  quality of any
newly created  Receivables.  Except as provided in Section 8.2(d),  the Servicer
will  not,  and will  enforce  its  rights  under the  Receivables  Contribution
Agreement and the  Receivables  Sale  Agreement to not permit any Originator to,
extend,  amend or otherwise  modify the terms of any  Receivable  or any Invoice
related thereto other than in accordance with the Credit and Collection Policy.

     (d) Sales,  Liens.  Seller will not sell,  assign (by  operation  of law or
otherwise)  or  otherwise  dispose of, or grant any option  with  respect to, or
create or suffer to exist any Adverse Claim upon (including, without limitation,
the filing of any  financing  statement)  or with  respect  to, any  Receivable,
Related  Security or  Collections,  or upon or with respect to any Invoice under
which any Receivable  arises, or any Lock-Box or Collection  Account,  or assign
any right to receive income with respect  thereto (other than, in each case, the
creation  of the  interests  therein  in favor of the Agent  and the  Purchasers
provided  for herein),  and Seller will defend the right,  title and interest of
the Agent and the  Purchasers  in, to and under any of the  foregoing  property,
against all claims of third parties claiming through or under Seller or P&L.

     (e) Net  Receivables  Balance.  At no time prior to the  Amortization  Date
shall Seller permit the Net Receivables  Balance to be less than an amount equal
to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves.

     (f) [reserved]

     (g) Restricted  Junior Payments.  Prior to the Facility  Termination  Date,
Seller will not make any  Restricted  Junior  Payment if,  after  giving  effect
thereto,  Seller  would fail to have an excess of total  assets  (determined  in
accordance  with GAAP) over total  liabilities  (determined  in accordance  with
GAAP) of at least  the  Required  Capital  Amount.  On and  after  the  Facility
Termination  Date, Seller will not make any Restricted Junior Payment unless and
until all Aggregate Unpaids have been paid in full.

     (h) Receivables Sale Agreement and Receivables Contribution Agreement. Such
Seller  Party  will not  amend,  restate,  supplement  or  otherwise  modify the
Receivables  Contribution  Agreement  or  the  Receivables  Sale  Agreement,  as
applicable,  or give any consent,  waiver,  directive or approval  thereunder or
waive any  default,  action,  omission  or breach  under  the  Receivables  Sale
Agreement or the Receivables Contribution Agreement, as applicable, or otherwise
grant any  indulgence  thereunder,  without  (in each  case)  the prior  written
consent of the Agent; provided that nothing herein shall impair the right of P&L
to cease contributions under the Receivables  Contribution Agreement at any time
in its sole discretion.

     (i) Limitation on Fundamental  Changes.  Seller will not (i) enter into any
merger,  consolidation or amalgamation,  or (ii) liquidate,  wind up or dissolve
itself (or suffer any liquidation or dissolution), or (iii) convey, sell, lease,
assign,  transfer  or  otherwise  dispose  of, all or  substantially  all of its
property,  business or assets,  or (iv) make any material  change in its limited
liability company agreement.

                                 ARTICLE VIII.

                          ADMINISTRATION AND COLLECTION

     Section 8.1 Designation of Servicer.

     (a) The servicing,  administration  and collection of the Receivables shall
be conducted by such Person (the  "Servicer") so designated from time to time in
accordance with this Section 8.1. P&L is hereby designated as, and hereby agrees
to perform the duties and obligations of, the Servicer  pursuant to the terms of
this Agreement.  At any time following the occurrence and during the continuance
of a Servicer Default, the Agent may designate as Servicer any Person to succeed
P&L or any successor Servicer.

     (b) P&L may delegate,  and P&L hereby  advises the Purchasers and the Agent
that it has  delegated,  to PHC and the  Originators,  as  sub-servicers  of the
Servicer,  certain of its duties and  responsibilities  as Servicer hereunder in
respect of the Receivables originated by Originators.  Without the prior written
consent of the Agent and the Required Financial  Institutions,  P&L shall not be
permitted to delegate any of its duties or  responsibilities  as Servicer to any
Person other than (i) PHC and the Originators,  and (ii) with respect to certain
Charged-Off  Receivables,  outside  collection  agencies in accordance  with its
customary  practices.  Neither  PHC nor any  Originator  shall be  permitted  to
further  delegate to any other Person any of the duties or  responsibilities  of
the Servicer delegated to it by P&L. If at any time the Agent shall designate as
Servicer any Person other than P&L, all duties and responsibilities  theretofore
delegated by P&L to PHC and/or the  Originators  may, at the  discretion  of the
Agent, be terminated  forthwith on notice given by the Agent to P&L, PHC and the
Originators.

     (c) Notwithstanding the foregoing  subsection (b), so long as P&L or any of
its  Affiliates  remains  the  Servicer  hereunder,  (i) P&L shall be and remain
primarily  liable  to the  Agent  and the  Purchasers  for the full  and  prompt
performance  of all duties and  responsibilities  of the Servicer  hereunder and
(ii) the Agent and the Purchasers shall be entitled to deal exclusively with P&L
in  matters  relating  to the  discharge  by the  Servicer  of  its  duties  and
responsibilities  hereunder.  The Agent and the Purchasers shall not be required
to give notice,  demand or other  communication to any Person other than P&L (so
long as it is the Servicer) in order for  communication  to the Servicer and its
sub-servicers or other delegates with respect thereto to be  accomplished.  P&L,
at all times that it is the  Servicer,  shall be  responsible  for providing any
sub-servicer  or other  delegate of the  Servicer  with any notice  given to the
Servicer under this Agreement.

     Section 8.2 Duties of Servicer.

     (a) The Servicer shall take or cause to be taken all such actions as may be
necessary  or advisable to collect  each  Receivable  from time to time,  all in
accordance with applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy.

     (b) The Servicer will instruct all Obligors to pay all Collections directly
to a Lock-Box or  Collection  Account.  The  Servicer  shall effect a Collection
Account  Agreement  substantially in the form of Exhibit VI with each bank party
to a Collection Account at any time. In the case of any remittances  received in
any  Lock-Box or  Collection  Account  that shall have been  identified,  to the
satisfaction of the Servicer, to not constitute Collections or other proceeds of
the Receivables or the Related Security,  the Servicer shall promptly remit such
items to the  Person  identified  to it as being the owner of such  remittances.
From and after the date the Agent delivers to any  Collection  Bank a Collection
Notice pursuant to Section 8.3, the Agent may request that the Servicer, and the
Servicer  thereupon  promptly  shall  instruct all Obligors  with respect to the
Receivables, to remit all payments thereon to a new depositary account specified
by the Agent and, at all times  thereafter,  Seller and the  Servicer  shall not
deposit or otherwise credit, and shall not permit any other Person to deposit or
otherwise  credit to such new depositary  account any cash or payment item other
than Collections.

     (c) The Servicer shall administer,  deposit and pay over the Collections in
accordance with the procedures  described herein and in Article II. The Servicer
shall, upon the request of the Agent,  segregate,  in a manner acceptable to the
Agent, all cash, checks and other  instruments  received by it from time to time
constituting  Collections from the general funds of the Servicer or Seller prior
to the remittance  thereof in accordance  with Article II. If the Servicer shall
be required to segregate  Collections  pursuant to the preceding  sentence,  the
Servicer  shall  segregate and deposit with a bank  designated by the Agent such
allocable  share of Collections  of Receivables  set aside for the Purchasers on
the first  Business Day following  receipt by the Servicer of such  Collections,
duly endorsed or with duly executed instruments of transfer.

     (d) The Servicer may, in accordance with the Credit and Collection  Policy,
extend the maturity of any Receivable or adjust the  Outstanding  Balance of any
Receivable as the Servicer determines to be appropriate to maximize  Collections
thereof;  provided,  however,  that such extension or adjustment shall not alter
the  status  of  such  Receivable  as a  Delinquent  Receivable  or  Charged-Off
Receivable  or limit  the  rights  of the  Agent or the  Purchasers  under  this
Agreement.  Notwithstanding anything to the contrary contained herein, after the
occurrence and during the continuance of an Amortization  Event, the Agent shall
have the  absolute  and  unlimited  right to direct the  Servicer to commence or
settle any legal action with respect to any  Receivable or to foreclose  upon or
repossess any Related Security.

     (e) The  Servicer  shall hold in trust for Seller  and the  Purchasers  all
Records that (i) evidence or relate to the Receivables, the related Invoices and
Related  Security or (ii) are  otherwise  necessary  or desirable to collect the
Receivables and shall, as soon as practicable upon demand of the Agent following
the occurrence and during the continuance of a Servicer Default, deliver or make
available  to the Agent all such Records at a place  selected by the Agent.  The
Servicer  shall, as soon as practicable  following  receipt thereof turn over to
Seller any cash  collections  or other cash proceeds  received not  constituting
Collections or other proceeds of Receivables or Related  Security.  The Servicer
shall,  from  time to time  at the  request  of any  Purchaser,  furnish  to the
Purchasers  (promptly  after any such request) a calculation  of the amounts set
aside for the Purchasers pursuant to Article II.

     (f) Any payment by an Obligor in respect of any indebtedness  owed by it to
P&L or any Originator  shall,  except as otherwise  specified by such Obligor or
otherwise  required by contract or law and unless  otherwise  instructed  by the
Agent,  be applied as a Collection of any  Receivable of such Obligor  (starting
with the  oldest  such  Receivable)  to the extent of any  amounts  then due and
payable  thereunder  before  being  applied  to any  other  receivable  or other
obligation of such Obligor.

     Section 8.3 Collection Notices. The Agent is authorized at any time to date
and to  deliver  to the  Collection  Banks  the  Collection  Notices;  provided,
however,  that unless an Amortization  Event or a Servicer Default exists and is
continuing,  the Agent shall give Seller at least two (2) Business  Days' notice
of its intention to deliver any Collection Notice(s). Seller hereby transfers to
the Agent for the benefit of the  Purchasers,  effective when the Agent delivers
such  notice,  the  exclusive  ownership  and control of each  Lock-Box  and the
Collection Accounts.  In case any authorized signatory of Seller whose signature
appears on a Collection  Account  Agreement  shall cease to have such  authority
before the delivery of such notice, such Collection Notice shall nevertheless be
valid as if such authority had remained in force.  Seller hereby  authorizes the
Agent,  and agrees that the Agent shall be entitled (i) from and after  delivery
of the  Collection  Notices,  to  endorse  Seller's  name on  checks  and  other
instruments  representing  Collections,  (ii) from and after the  occurrence and
during the continuance of an Amortization Event, to enforce the Receivables, the
related  Invoices  and the  Related  Security  and  (iii)  from  and  after  the
occurrence and during the  continuance of an  Amortization  Event,  to take such
action as shall be necessary  or  desirable to cause all cash,  checks and other
instruments  constituting Collections of Receivables to come into the possession
of the Agent rather than Seller.

     Section 8.4  Responsibilities  of Seller.  Anything  herein to the contrary
notwithstanding,  the exercise by the Agent and the  Purchasers  of their rights
hereunder shall not release the Servicer, P&L or Seller from any of their duties
or obligations with respect to any Receivables or under the related Contracts or
Invoices.  The Purchasers  shall have no obligation or liability with respect to
any  Receivables  or related  Contracts  or  Invoices,  nor shall any of them be
obligated to perform the obligations of Seller.

     Section 8.5 Reports.  The Servicer  shall prepare and forward to the Agent:
(i) on  Tuesday  of each week  hereafter  and at such  times as the Agent  shall
request, a Weekly Report, (ii) simultaneously with delivery of the Weekly Report
on the third  Tuesday of each month  hereafter,  commencing  April 18,  2000,  a
Monthly Supplement and (iii) at such times as the Agent shall request, a listing
by  Obligor  of all  Receivables  together  with an aging  of such  Receivables;
provided,  however, that if any Tuesday is not a Business Day, the Weekly Report
and, if applicable,  the Monthly  Supplement,  shall be due on Wednesday of that
week.

     Section 8.6 Servicing Fees. In  consideration  of P&L's agreement to act as
Servicer  hereunder,  the  Purchasers  hereby  agree that,  so long as P&L shall
continue to perform as Servicer  hereunder,  Seller  shall pay over to P&L a fee
(the  "Servicing  Fee") on the first Business Day of each month,  in arrears for
the  immediately  preceding  month,  equal to  1.00%  per  annum of the  average
aggregate  Outstanding  Balance  of  all  Receivables  during  such  period,  as
compensation for its servicing activities.

                                  ARTICLE IX.

                               AMORTIZATION EVENTS

     Section 9.1 Amortization  Events.  The occurrence of any one or more of the
following events shall constitute an Amortization Event:

     (a) Any Seller Party shall fail (i) to make any payment or deposit required
hereunder  when due and, for any such payment or deposit which is not in respect
of Capital,  such failure continues for one (1) Business Day, or (ii) to perform
or observe any term,  covenant or agreement hereunder (other than as referred to
in clause (i) of this paragraph (a) and paragraph 9.1(e)) and such failure shall
continue for three (3) consecutive Business Days.

     (b) Any representation, warranty, certification or statement made by Seller
in this  Agreement,  any other  Transaction  Document  or in any other  document
delivered  pursuant  hereto or thereto shall prove to have been incorrect in any
material respect when made or deemed made.

     (c)  Failure  of  Seller  to pay any  Indebtedness  of  $10,750  or more in
aggregate  amount when due; or the default by Seller in the  performance  of any
term,  provision or condition  contained in any  agreement  under which any such
Indebtedness was created or is governed,  the effect of which is to cause, or to
permit the holder or holders of such Indebtedness to cause, such Indebtedness to
become due prior to its stated maturity;  or any such Indebtedness of the Seller
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled payment) prior to the date of maturity thereof.

     (d) (i) Seller 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 (ii) any proceeding shall
be  instituted  by or  against  Seller  seeking to  adjudicate  it  bankrupt  or
insolvent,  or seeking  liquidation,  winding up,  reorganization,  arrangement,
adjustment,  protection,  relief or composition of it or its debts under any law
relating to bankruptcy,  insolvency or reorganization  or relief of debtors,  or
seeking  the entry of an order  for  relief or the  appointment  of a  receiver,
trustee or other similar official for it or any substantial part of its property
or (iii) Seller shall take any corporate  action to authorize any of the actions
set forth in clauses (i) or (ii) above in this subsection (d).

     (e) Seller shall fail to comply with the terms of Section 2.6 hereof.

     (f) As at the end of any Measurement Period:

          (i) the  average  of the  Delinquency  Trigger  Ratios  for the  three
     Measurement  Periods then most recently  ended shall exceed (A) 3.80%,  for
     the three  Measurement  Periods  ended March 31, 2000,  (B) 3.60%,  for the
     three  Measurement  Periods  ended April 30, 2000,  (C) 3.40% for the three
     Measurement  Periods  ended  May  31,  2000,  and  (D)  3.20%  at any  time
     thereafter,

          (ii)  the  average  of the  Past  Due  Trigger  Ratios  for the  three
     Measurement Periods then most recently ended shall exceed 5.10%, or

          (iii) the  average of the  Dilution  Ratios for the three  Measurement
     Periods then most recently ended shall exceed 1.00%.

     (g) A Change of Control shall occur with respect to Seller.

     (h) One or more final  judgments  for the payment of money shall be entered
against  Seller on claims not covered by insurance or as to which the  insurance
carrier  has  denied  its  responsibility,  and  such  judgment  shall  continue
unsatisfied  and in effect for thirty (30)  consecutive  days  without a stay of
execution.

     (i)  This  Agreement  shall  terminate  in  whole  or in  part  (except  in
accordance with its terms),  or shall cease to be effective or to be the legally
valid,  binding and enforceable  obligation of Seller (subject to the exceptions
set forth in Section  5.1(f)),  or any  Obligor  shall  directly  or  indirectly
contest  in  any  manner  such  effectiveness,   validity,   binding  nature  or
enforceability,  or the Agent for the benefit of the  Purchasers  shall cease to
have a valid and perfected first priority  security  interest in the Receivables
and the Related Security.

     Section 9.2 Remedies. Upon the occurrence and during the continuation of an
Amortization  Event,  the  Agent  may,  or upon the  direction  of the  Required
Financial Institutions shall, take any of the following actions: (i) replace the
Person then acting as  Servicer,  (ii)  declare  the  Amortization  Date to have
occurred, whereupon the Amortization Date shall forthwith occur, without demand,
protest or further notice of any kind, all of which are hereby  expressly waived
by each  Seller  Party;  provided,  however,  that  upon  the  occurrence  of an
Amortization  Event described in Section  9.1(d)(ii),  or of an actual or deemed
entry of an order for relief with respect to Seller under the Federal Bankruptcy
Code, the Amortization Date shall automatically occur,  without demand,  protest
or any  notice of any kind,  all of which are  hereby  expressly  waived by each
Seller Party,  (iii) to the fullest extent  permitted by applicable law, declare
that the Default Fee shall accrue with respect to any of the  Aggregate  Unpaids
outstanding at such time, and (iv) notify Obligors of the  Purchasers'  interest
in the  Receivables.  The  aforementioned  rights and remedies  shall be without
limitation,  and shall be in  addition to all other  rights and  remedies of the
Agent and the Purchasers  otherwise  available under any other provision of this
Agreement, by operation of law, at equity or otherwise,  all of which are hereby
expressly  preserved,  including,  without  limitation,  all rights and remedies
provided under the UCC, all of which rights shall be cumulative.

                                   ARTICLE X.

                                 INDEMNIFICATION

     Section 10.1 Indemnities by the Seller Parties.  Without limiting any other
rights that the Agent or any  Purchaser may have  hereunder or under  applicable
law, (A) Seller  hereby  agrees to indemnify  (and pay upon demand to) the Agent
and each Purchaser and their respective assigns, officers, directors, agents and
employees  (each an  "Indemnified  Party") from and against any and all damages,
losses,  claims, taxes,  liabilities,  costs, expenses and for all other amounts
payable,  including reasonable attorneys' fees (which attorneys may be employees
of the Agent or such  Purchaser) and  disbursements  (all of the foregoing being
collectively  referred to as "Indemnified  Amounts") awarded against or incurred
by  any  of  them  arising  out  of or as a  result  of  this  Agreement  or the
acquisition, either directly or indirectly, by a Purchaser of an interest in the
Receivables,  and (B) the  Servicer  hereby  agrees to  indemnify  (and pay upon
demand to) each  Indemnified  Party for  Indemnified  Amounts awarded against or
incurred by any of them arising out of the Servicer's failure to comply with any
of the  obligations  imposed on it under the Transaction  Documents,  excluding,
however,  in all of the foregoing  instances under the preceding clauses (A) and
(B):

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

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

     (c) taxes imposed by the  jurisdiction  in which such  Indemnified  Party's
principal  executive office is located, on or measured by the overall net income
of such  Indemnified  Party to the extent that the  computation of such taxes is
consistent with the  characterization for income tax purposes of the acquisition
by the Purchasers of Purchaser Interests as a loan or loans by the Purchasers to
Seller secured by the Receivables, the Related Security, the Collection Accounts
and the Collections;

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

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

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

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

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

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

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

          (vii)  any  investigation,  litigation  or  proceeding  related  to or
     arising  from  this  Agreement  or  any  other  Transaction  Document,  the
     transactions contemplated hereby, the use of the proceeds of an Incremental
     Purchase or a Reinvestment, the ownership of the Purchaser Interests or any
     other  investigation,  litigation  or  proceeding  relating to Seller,  the
     Servicer or P&L in which any Indemnified Party becomes involved as a result
     of any of the transactions contemplated hereby;

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

          (ix) any Amortization Event described in Section 9.1(d);

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

          (xi) any  failure  to vest and  maintain  vested  in the Agent for the
     benefit of the  Purchasers,  or to transfer to the Agent for the benefit of
     the  Purchasers,  legal and  equitable  title to, and ownership of, a first
     priority perfected undivided  percentage  ownership interest (to the extent
     of the Purchaser Interests contemplated  hereunder) or security interest in
     the Receivables,  the Related Security and the Collections,  free and clear
     of any Adverse Claim (except as created by the Transaction Documents);

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

          (xiii) any action or  omission by any Seller  Party  which  reduces or
     impairs  the  rights of the Agent or the  Purchasers  with  respect  to any
     Receivable or the value of any such  Receivable  (other than such an action
     taken or omission  made at the request of the Agent or any Purchaser or any
     action taken by the Servicer in accordance  with the Credit and  Collection
     Policy);

          (xiv) avoidance of any Incremental Purchase or Reinvestment  hereunder
     under any statutory provision, the common law or any equitable action; and

          (xv) the failure of any Receivable  included in the calculation of the
     Net  Receivables  Balance  as an  Eligible  Receivable  to  be an  Eligible
     Receivable at the time so included.

Notwithstanding  the  foregoing,  to the  extent  that any  Indemnified  Amounts
arising  under  clauses (i) through (xv) above result from a  misrepresentation,
breach,  action or omission by any Person  other than  Seller,  Seller  shall be
obligated  to pay such  Indemnified  Amounts  only to the  extent it  receives a
payment in respect of such  amounts  pursuant  to the  Receivables  Contribution
Agreement or the Receivables Sale Agreement.

     Section 10.2 Increased Cost and Reduced  Return.  If after the date hereof,
any  Funding  Source  shall be charged  any fee,  expense or  increased  cost on
account of the adoption of any applicable law, rule or regulation (including any
applicable  law, rule or regulation  regarding  capital  adequacy) or any change
therein,  or any change in the  interpretation or administration  thereof by any
governmental  authority,  central  bank or  comparable  agency  charged with the
interpretation  or  administration  thereof,  or compliance  with any request or
directive  (whether  or not  having  the  force of law) of any  such  authority,
central bank or comparable agency (a "Regulatory Change"): (i) that subjects any
Funding  Source to any charge or  withholding  on or with respect to any Funding
Agreement or a Funding Source's obligations under a Funding Agreement,  or on or
with respect to the Receivables, or changes the basis of taxation of payments to
any Funding Source of any amounts  payable under any Funding  Agreement  (except
for changes in the rate of tax on the overall net income of a Funding  Source or
taxes  excluded  by  Section  10.1)  or (ii)  that  imposes,  modifies  or deems
applicable any reserve, assessment, insurance charge, special deposit or similar
requirement  against  assets of,  deposits  with or for the account of a Funding
Source,  or credit extended by a Funding Source pursuant to a Funding  Agreement
or (iii) that imposes any other condition the result of which is to increase the
cost  to a  Funding  Source  of  performing  its  obligations  under  a  Funding
Agreement,  or to reduce the rate of return on a Funding  Source's  capital as a
consequence  of its  obligations  under a Funding  Agreement,  or to reduce  the
amount of any sum  received or  receivable  by a Funding  Source under a Funding
Agreement  or to require any payment  calculated  by  reference to the amount of
interests  or loans held or interest  received by it,  then,  upon demand by the
Agent,  Seller shall pay to the Agent,  for the benefit of the relevant  Funding
Source, such amounts charged to such Funding Source or such amounts to otherwise
compensate such Funding Source for such increased cost or such reduction.

     Section  10.3 Other Costs and  Expenses.  Seller shall pay to the Agent and
Conduit on demand all costs and  out-of-pocket  expenses in connection  with the
preparation,  execution,  delivery and  administration  of this  Agreement,  the
transactions  contemplated  hereby  and  the  other  documents  to be  delivered
hereunder, including without limitation, the cost of Conduit's auditors auditing
the books,  records and procedures of Seller,  reasonable fees and out-of-pocket
expenses of legal  counsel for Conduit and the Agent  (which such counsel may be
employees  of Conduit or the Agent) with  respect  thereto  and with  respect to
advising Conduit and the Agent as to their respective  rights and remedies under
this  Agreement.  Seller  shall pay to the Agent on demand any and all costs and
expenses of the Agent and the Purchasers,  if any, including  reasonable counsel
fees and expenses in connection  with the  enforcement of this Agreement and the
other documents  delivered hereunder and in connection with any restructuring or
workout of this  Agreement  or such  documents,  or the  administration  of this
Agreement  following an Amortization  Event.  Seller shall reimburse  Conduit on
demand for all other costs and  expenses  incurred by Conduit  ("Other  Costs"),
including, without limitation,  Seller's allocable share of the cost of auditing
Conduit's  books  by  certified  public  accountants,  the  cost of  rating  the
Commercial Paper by independent  financial  rating agencies,  and the reasonable
fees and  out-of-pocket  expenses  of counsel for Conduit or any counsel for any
shareholder of Conduit with respect to advising  Conduit or such  shareholder as
to matters relating to Conduit's operations, but in each case only to the extent
allocated to Seller pursuant to Section 10.4.

     Section 10.4  Allocations.  Conduit shall  allocate the liability for Other
Costs  among  Seller  and other  Persons  with whom  Conduit  has  entered  into
agreements to finance or purchase  interests in  receivables  ("Other  Sellers")
based  on  the  relative  sizes  of  their  respective   purchase  or  financing
facilities.  If any Other Costs are  attributable to Seller and not attributable
to any  Other  Seller,  Seller  shall be solely  liable  for such  Other  Costs.
However,  if Other Costs are  attributable to Other Sellers and not attributable
to Seller,  such Other Sellers shall be solely liable for such Other Costs.  All
allocations  to be made pursuant to the  foregoing  provisions of this Article X
shall be made by Conduit in its sole  discretion  and shall be binding on Seller
and the Servicer.

                                  ARTICLE XI.

                                    THE AGENT

     Section 11.1 Authorization and Action. Each Purchaser hereby designates and
appoints Bank One to act as its agent hereunder and under each other Transaction
Document,  and  authorizes the Agent to take such actions as agent on its behalf
and to exercise  such powers as are  delegated to the Agent by the terms of this
Agreement and the other Transaction  Documents  together with such powers as are
reasonably   incidental  thereto.  The  Agent  shall  not  have  any  duties  or
responsibilities,  except  those  expressly  set  forth  herein  or in any other
Transaction Document, or any fiduciary  relationship with any Purchaser,  and no
implied  covenants,   functions,   responsibilities,   duties,   obligations  or
liabilities  on the part of the Agent shall be read into this  Agreement  or any
other  Transaction  Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other  Transaction  Documents,  the
Agent shall act solely as agent for the Purchasers and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for any Seller Party or any of such Seller Party's successors or assigns. The
Agent  shall  not be  required  to take any  action  that  exposes  the Agent to
personal liability or that is contrary to this Agreement,  any other Transaction
Document or applicable law. The appointment and authority of the Agent hereunder
shall terminate upon the indefeasible  payment in full of all Aggregate Unpaids.
Each  Purchaser  hereby  authorizes  the Agent to  execute  each of the  Uniform
Commercial  Code  financing  statements,  the  Intercreditor  Agreement and each
Collection  Account  Agreement on behalf of such  Purchaser  (the terms of which
shall be binding on such Purchaser).

     Section 11.2 Delegation of Duties.  The Agent may execute any of its duties
under this Agreement and each other Transaction Document by or through agents or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining to such duties.  The Agent shall not be responsible  for the
negligence or misconduct of any agents or attorneys-in-fact  selected by it with
reasonable care.

     Section  11.3  Exculpatory  Provisions.  Neither  the  Agent nor any of its
directors,  officers,  agents or  employees  shall be (i)  liable for any action
lawfully taken or omitted to be taken by it or them under or in connection  with
this Agreement or any other Transaction  Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Purchasers for any recitals, statements, representations or
warranties  made by any Seller  Party  contained  in this  Agreement,  any other
Transaction  Document or any  certificate,  report,  statement or other document
referred to or provided for in, or received  under or in connection  with,  this
Agreement,  or any  other  Transaction  Document  or for  the  value,  validity,
effectiveness,  genuineness, enforceability or sufficiency of this Agreement, or
any other  Transaction  Document or any other  document  furnished in connection
herewith or  therewith,  or for any  failure of any Seller  Party to perform its
obligations  hereunder or thereunder,  or for the  satisfaction of any condition
specified in Article VI, or for the perfection,  priority,  condition,  value or
sufficiency of any collateral  pledged in connection  herewith.  The Agent shall
not be under any  obligation  to any  Purchaser to ascertain or to inquire as to
the observance or  performance  of any of the agreements or covenants  contained
in, or conditions of, this Agreement or any other  Transaction  Document,  or to
inspect the properties,  books or records of the Seller Parties. The Agent shall
not  be  deemed  to  have  knowledge  of any  Amortization  Event  or  Potential
Amortization  Event  unless  the  Agent has  received  notice  from  Seller or a
Purchaser.

     Section 11.4 Reliance by Agent. The Agent shall in all cases be entitled to
rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been  signed,  sent or made
by the proper Person or Persons and upon advice and  statements of legal counsel
(including,  without limitation, counsel to Seller), independent accountants and
other  experts  selected  by the  Agent.  The Agent  shall in all cases be fully
justified in failing or refusing to take any action under this  Agreement or any
other  Transaction  Document  unless  it shall  first  receive  such  advice  or
concurrence  of Conduit or the  Required  Financial  Institutions  or all of the
Purchasers,  as  applicable,  as it  deems  appropriate  and it  shall  first be
indemnified  to its  satisfaction  by the  Purchasers,  provided that unless and
until the Agent shall have received  such advice,  the Agent may take or refrain
from  taking  any  action,  as the Agent  shall deem  advisable  and in the best
interests of the Purchasers.  The Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of Conduit or
the Required Financial Institutions or all of the Purchasers, as applicable, and
such request and any action taken or failure to act  pursuant  thereto  shall be
binding upon all the Purchasers.

     Section 11.5  Non-Reliance  on Agent and Other  Purchasers.  Each Purchaser
expressly  acknowledges  that  neither  the  Agent,  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  Agent  hereafter
taken,  including,  without limitation,  any review of the affairs of any Seller
Party,  shall be deemed to  constitute  any  representation  or  warranty by the
Agent. Each Purchaser represents and warrants to the Agent that it has and will,
independently  and without  reliance  upon the Agent or any other  Purchaser and
based on such documents and information as it has deemed  appropriate,  made its
own  appraisal of and  investigation  into the business,  operations,  property,
prospects,  financial and other  conditions and  creditworthiness  of Seller and
made its own  decision  to enter  into this  Agreement,  the  other  Transaction
Documents and all other documents related hereto or thereto.

     Section 11.6 Reimbursement and Indemnification.  The Financial Institutions
agree  to  reimburse  and  indemnify  the  Agent  and its  officers,  directors,
employees,  representatives  and  agents  ratably  according  to their  Pro Rata
Shares,  to the extent not paid or reimbursed by the Seller  Parties (i) for any
amounts for which the Agent,  acting in its  capacity  as Agent,  is entitled to
reimbursement  by the Seller  Parties  hereunder and (ii) for any other expenses
incurred  by the  Agent,  in its  capacity  as Agent and acting on behalf of the
Purchasers,  in  connection  with the  administration  and  enforcement  of this
Agreement and the other Transaction Documents.

     Section 11.7 Agent in its Individual Capacity. The Agent and its Affiliates
may make loans to,  accept  deposits  from and  generally  engage in any kind of
business with Seller or any Affiliate of Seller as though the Agent were not the
Agent hereunder. With respect to the acquisition of Purchaser Interests pursuant
to this  Agreement,  the Agent shall have the same rights and powers  under this
Agreement in its individual  capacity as any Purchaser and may exercise the same
as  though  it  were  not the  Agent,  and the  terms  "Financial  Institution,"
"Purchaser,"  "Financial  Institutions" and "Purchasers" shall include the Agent
in its individual capacity.

     Section  11.8  Successor  Agent.  The Agent may,  upon five days' notice to
Seller and the Purchasers,  and the Agent will, upon the direction of all of the
Purchasers  (other than the Agent, in its individual  capacity) resign as Agent.
If the Agent shall resign, then the Required Financial  Institutions during such
five-day  period shall appoint from among the Purchasers a successor  agent.  If
for any  reason  no  successor  Agent is  appointed  by the  Required  Financial
Institutions during such five-day period, then effective upon the termination of
such five day  period,  the  Purchasers  shall  perform all of the duties of the
Agent  hereunder  and under the other  Transaction  Documents and Seller and the
Servicer (as  applicable)  shall make all  payments in respect of the  Aggregate
Unpaids  directly to the  applicable  Purchasers and for all purposes shall deal
directly with the Purchasers.  After the  effectiveness  of any retiring Agent's
resignation  hereunder as Agent, the retiring Agent shall be discharged from its
duties and obligations  hereunder and under the other Transaction  Documents and
the provisions of this Article XI and Article X shall continue in effect for its
benefit with respect to any actions  taken or omitted to be taken by it while it
was Agent under this Agreement and under the other Transaction Documents.

                                  ARTICLE XII.

                           ASSIGNMENTS; PARTICIPATIONS

     Section 12.1 Assignments.

     (a) Seller and each Financial  Institution  hereby agree and consent to the
complete  or partial  assignment  by Conduit of all or any portion of its rights
under,  interest  in,  title to and  obligations  under  this  Agreement  to the
Financial  Institutions  pursuant to Section 13.1 or, with the consent of Seller
which shall not be unreasonably  withheld or delayed,  to any other Person,  and
upon  such  assignment,  Conduit  shall  be  released  from its  obligations  so
assigned.  Further,  Seller and each Financial Institution hereby agree that any
assignee of Conduit of this  Agreement or all or any of the Purchaser  Interests
of Conduit shall have all of the rights and benefits  under this Agreement as if
the term "Conduit"  explicitly  referred to such party,  and no such  assignment
shall in any way impair the rights and  benefits of Conduit  hereunder.  Neither
Seller nor the Servicer shall have the right to assign its rights or obligations
under this Agreement.

     (b) Any Financial  Institution may at any time and from time to time assign
to one or more Persons ("Purchasing Financial  Institutions") all or any part of
its rights  and  obligations  under this  Agreement  pursuant  to an  assignment
agreement,   substantially   in  the  form  set  forth  in  Exhibit  VII  hereto
("Assignment  Agreement") executed by such Purchasing Financial  Institution and
such selling  Financial  Institution.  The consent of Seller (which shall not be
unreasonably  withheld or delayed) and the Agent shall be required  prior to the
effectiveness of any such assignment.  Each assignee of a Financial  Institution
must (i) have a  short-term  debt  rating of A-1 or better by  Standard & Poor's
Ratings  Group and P-1 by  Moody's  Investor  Service,  Inc.  and (ii)  agree to
deliver to the Agent,  promptly  following any request  therefor by the Agent or
Conduit,  an  enforceability  opinion in form and substance  satisfactory to the
Agent and Conduit.  Upon  delivery of the executed  Assignment  Agreement to the
Agent, such selling Financial Institution shall be released from its obligations
hereunder to the extent of such assignment.  Thereafter the Purchasing Financial
Institution  shall for all  purposes  be a Financial  Institution  party to this
Agreement  and  shall  have  all  the  rights  and  obligations  of a  Financial
Institution  under this  Agreement  to the same extent as if it were an original
party hereto and no further  consent or action by Seller,  the Purchasers or the
Agent shall be required.

     (c) Each of the  Financial  Institutions  agrees  that in the event that it
shall  cease to have a  short-term  debt  rating of A-1 or better by  Standard &
Poor's  Ratings  Group and P-1 by  Moody's  Investor  Service,  Inc.  (each such
Financial  Institution,  an "Affected  Financial  Institution"),  such  Affected
Financial  Institution shall be obliged, at the request of Conduit or the Agent,
to assign all of its rights and obligations  hereunder to (x) another  Financial
Institution or (y) another funding entity  nominated by the Agent and acceptable
to Conduit,  and willing to participate in this Agreement  through the Liquidity
Termination Date in the place of such Affected Financial  Institution;  provided
that the Affected Financial Institution receives payment in full, pursuant to an
Assignment  Agreement,  of an amount equal to such Financial  Institution's  Pro
Rata  Share  of  the  Aggregate   Capital  and  Yield  owing  to  the  Financial
Institutions  and all  accrued  but  unpaid  fees and other  costs and  expenses
payable  in  respect of its Pro Rata  Share of the  Purchaser  Interests  of the
Financial Institutions.

     Section 12.2 Participations. Any Financial Institution may, in the ordinary
course  of its  business  at any  time  sell to one or  more  Persons  (each,  a
"Participant")  participating  interests in its Pro Rata Share of the  Purchaser
Interests  of the  Financial  Institutions,  its  obligation  to pay Conduit its
Acquisition  Amounts  or  any  other  interest  of  such  Financial  Institution
hereunder.  Notwithstanding  any  such  sale  by a  Financial  Institution  of a
participating interest to a Participant, such Financial Institution's rights and
obligations  under  this  Agreement  shall  remain  unchanged,   such  Financial
Institution  shall  remain  solely   responsible  for  the  performance  of  its
obligations hereunder,  and Seller, Conduit and the Agent shall continue to deal
solely and directly with such  Financial  Institution  in  connection  with such
Financial  Institution's  rights  and  obligations  under this  Agreement.  Each
Financial   Institution   agrees  that  any  agreement  between  such  Financial
Institution and any such Participant in respect of such  participating  interest
shall not restrict such Financial Institution's right to agree to any amendment,
supplement,  waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in Section 14.1(b)(i).

                                 ARTICLE XIII.

                               LIQUIDITY FACILITY

     Section 13.1 Transfer to Financial Institutions. Each Financial Institution
hereby agrees,  subject to Section 13.4,  that  immediately  upon written notice
from Conduit  delivered on or prior to the Liquidity  Termination Date, it shall
acquire by assignment from Conduit,  without recourse or warranty,  its Pro Rata
Share of one or more of the  Purchaser  Interests  of  Conduit as  specified  by
Conduit. Each such assignment by Conduit shall be made pro rata among all of the
Financial  Institutions,  except  for  pro  rata  assignments  to  one  or  more
Terminating Financial Institutions pursuant to Section 13.6. Each such Financial
Institution  shall,  no later than 1:00 p.m.  (Chicago time) on the date of such
assignment,  pay in immediately  available funds (unless another form of payment
is otherwise agreed between Conduit and any Financial  Institution) to the Agent
at an  account  designated  by the  Agent,  for  the  benefit  of  Conduit,  its
Acquisition Amount.  Unless a Financial  Institution has notified the Agent that
it does not intend to pay its Acquisition Amount, the Agent may assume that such
payment has been made and may, but shall not be obligated to, make the amount of
such payment  available  to Conduit in reliance  upon such  assumption.  Conduit
hereby sells and assigns to the Agent for the ratable  benefit of the  Financial
Institutions, and the Agent hereby purchases and assumes from Conduit, effective
upon the  receipt  by Conduit  of the  Conduit  Transfer  Price,  the  Purchaser
Interests  of Conduit  which are the  subject of any  transfer  pursuant to this
Article XIII.

     Section 13.2 Transfer Price Reduction  Yield. If the Adjusted Funded Amount
is included in the  calculation of the Conduit  Transfer Price for any Purchaser
Interest,  each Financial Institution agrees that the Agent shall pay to Conduit
the Reduction Percentage of any Yield received by the Agent with respect to such
Purchaser Interest.

     Section 13.3 Payments to Conduit. In consideration for the reduction of the
Conduit Transfer Prices by the Conduit Transfer Price Reductions, effective only
at such time as the aggregate  amount of the Capital of the Purchaser  Interests
of the  Financial  Institutions  equals the  Conduit  Residual,  each  Financial
Institution  hereby agrees that the Agent shall not  distribute to the Financial
Institutions and shall  immediately  remit to Conduit any Yield,  Collections or
other  payments  received by it to be applied  pursuant  to the terms  hereof or
otherwise  to reduce the Capital of the  Purchaser  Interests  of the  Financial
Institutions.

     Section  13.4   Limitation   on   Commitment   to  Purchase  from  Conduit.
Notwithstanding  anything  to the  contrary  in  this  Agreement,  no  Financial
Institution  shall have any  obligation to purchase any Purchaser  Interest from
Conduit, pursuant to Section 13.1 or otherwise, if:

          (i) Conduit shall have  voluntarily  commenced any proceeding or filed
     any petition  under any  bankruptcy,  insolvency or similar law seeking the
     dissolution,   liquidation  or  reorganization  of  Conduit  or  taken  any
     corporate action for the purpose of effectuating any of the foregoing; or

          (ii)  involuntary  proceedings or an  involuntary  petition shall have
     been commenced or filed against Conduit by any Person under any bankruptcy,
     insolvency  or  similar  law  seeking  the   dissolution,   liquidation  or
     reorganization  of Conduit and such  proceeding or petition  shall have not
     been dismissed.

     Section 13.5 Defaulting  Financial  Institutions.  If one or more Financial
Institutions  defaults in its obligation to pay its Acquisition  Amount pursuant
to Section 13.1 (each such Financial  Institution  shall be called a "Defaulting
Financial  Institution" and the aggregate  amount of such defaulted  obligations
being herein called the "Conduit Transfer Price Deficit"), then upon notice from
the  Agent,  each  Financial  Institution  other than the  Defaulting  Financial
Institutions (a "Non-Defaulting  Financial  Institution")  shall promptly pay to
the Agent, in immediately  available funds, an amount equal to the lesser of (x)
such Non-Defaulting Financial Institution's  proportionate share (based upon the
relative  Commitments  of  the  Non-Defaulting  Financial  Institutions)  of the
Conduit Transfer Price Deficit and (y) the unused portion of such Non-Defaulting
Financial  Institution's  Commitment.  A Defaulting Financial  Institution shall
forthwith  upon  demand pay to the Agent for the  account of the  Non-Defaulting
Financial  Institutions  all  amounts  paid  by  each  Non-Defaulting  Financial
Institution on behalf of such Defaulting  Financial  Institution,  together with
interest  thereon,  for  each  day  from  the  date  a  payment  was  made  by a
Non-Defaulting   Financial   Institution  until  the  date  such  Non-Defaulting
Financial  Institution  has been paid such amounts in full,  at a rate per annum
equal to the Federal  Funds  Effective  Rate plus two percent (2%). In addition,
without  prejudice to any other  rights that  Conduit may have under  applicable
law, each Defaulting  Financial  Institution shall pay to Conduit forthwith upon
demand, the difference between such Defaulting  Financial  Institution's  unpaid
Acquisition   Amount  and  the  amount   paid  with   respect   thereto  by  the
Non-Defaulting Financial Institutions,  together with interest thereon, for each
day  from  the  date  of the  Agent's  request  for  such  Defaulting  Financial
Institution's  Acquisition  Amount  pursuant to Section  13.1 until the date the
requisite  amount is paid to Conduit in full,  at a rate per annum  equal to the
Federal Funds Effective Rate plus two percent (2%).

     Section 13.6 Terminating Financial Institutions.

     (a) If any  Financial  Institution  has not already  approved an  Extension
Request pursuant to Section 1.5 hereof, such Financial Institution hereby agrees
to deliver  written  notice to the Agent not more than 30 Business  Days and not
less than 5 Business Days prior to the  Liquidity  Termination  Date  indicating
whether such Financial Institution intends to renew its Commitment hereunder. If
any Financial  Institution  fails to deliver such notice on or prior to the date
that is 5 Business Days prior to the Liquidity  Termination Date, such Financial
Institution  will be  deemed to have  declined  to renew  its  Commitment  (each
Financial  Institution which has declined or has been deemed to have declined to
renew its Commitment hereunder,  a "Non-Renewing  Financial  Institution").  The
Agent shall promptly notify Conduit of each Non-Renewing  Financial  Institution
and, unless such Non-Renewing Financial Institution's  Commitment is assigned in
accordance with Section 1.5,  Conduit,  in its sole  discretion,  may (A) to the
extent of  Commitment  Availability,  declare that such  Non-Renewing  Financial
Institution's  Commitment shall, to such extent,  automatically terminate on the
Liquidity  Termination  Date or (B) upon one (1)  Business  Days' notice to such
Non-Renewing  Financial  Institution,  assign  to  such  Non-Renewing  Financial
Institution  on a date  specified by Conduit its Pro Rata Share of the aggregate
Purchaser  Interests then held by Conduit,  subject to, and in accordance  with,
Section 13.1. In addition,  Conduit may, in its sole discretion, at any time (x)
to the extent of Commitment  Availability,  declare that any Affected  Financial
Institution's  Commitment shall  automatically  terminate on a date specified by
Conduit unless prior to such date,  another  Financial  Institution  meeting the
requirements  of Section  12.1(b) has accepted an  assignment  of such  Affected
Financial  Institution's  remaining  Commitment  or (y)  assign to any  Affected
Financial  Institution  on a date specified by Conduit its Pro Rata Share of the
aggregate  Purchaser  Interests  then  held  by  Conduit,  subject  to,  and  in
accordance  with,  Section 13.1 (each  Affected  Financial  Institution  or each
Non-Renewing  Financial Institution is hereinafter referred to as a "Terminating
Financial  Institution").  The parties  hereto  expressly  acknowledge  that any
declaration of the  termination of any  Commitment,  any assignment  pursuant to
this  Section  13.6  and the  order  of  priority  of any  such  termination  or
assignment among Terminating Financial  Institutions shall be made by Conduit in
its sole and absolute discretion.

     (b) Upon any assignment to a Terminating  Financial Institution as provided
in Section  13.6(a),  any  remaining  Commitment of such  Terminating  Financial
Institution shall automatically terminate unless it has been assigned to another
Financial Institution in accordance with Section 12.1(b). Upon reduction to zero
of the Capital of all of the  Purchaser  Interests  of a  Terminating  Financial
Institution (after  application of Collections  thereto pursuant to Sections 2.2
and 2.3) all rights and obligations of such  Terminating  Financial  Institution
hereunder shall be terminated and such Terminating  Financial  Institution shall
no longer be a "Financial  Institution" hereunder;  provided,  however, that the
provisions of Article X shall continue in effect for its benefit with respect to
Purchaser Interests held by such Terminating  Financial Institution prior to its
termination as a Financial Institution.

                                  ARTICLE XIV.

                                  MISCELLANEOUS

     Section 14.1 Waivers and Amendments.

     (a) No  failure  or  delay on the part of the  Agent  or any  Purchaser  in
exercising any power,  right or remedy under this  Agreement  shall operate as a
waiver  thereof,  nor shall any single or partial  exercise  of any such  power,
right or remedy preclude any other further  exercise  thereof or the exercise of
any other power,  right or remedy. The rights and remedies herein provided shall
be cumulative and  nonexclusive  of any rights or remedies  provided by law. Any
waiver of this Agreement  shall be effective  only in the specific  instance and
for the specific purpose for which given.

     (b) No provision of this Agreement may be amended,  supplemented,  modified
or waived  except in writing in accordance  with the  provisions of this Section
14.1(b).  Conduit,  Seller  and the  Agent,  at the  direction  of the  Required
Financial  Institutions,  may enter into written modifications or waivers of any
provisions of this Agreement,  provided,  however,  that no such modification or
waiver shall:

          (i)  without the consent of each  affected  Purchaser,  (A) extend the
     Liquidity  Termination  Date  or the  date of any  payment  or  deposit  of
     Collections  by Seller or the  Servicer,  (B) reduce the rate or extend the
     time of payment of Yield or any CP Costs (or any  component  of Yield or CP
     Costs),  (C)  reduce any fee  payable  to the Agent for the  benefit of the
     Purchasers, (D) except pursuant to Article XII hereof, change the amount of
     the Capital of any Purchaser,  any Financial  Institution's  Pro Rata Share
     (except  pursuant to Sections 13.1 or 13.5) or any Financial  Institution's
     Commitment,  (E) amend,  modify or waive any provision of the definition of
     Required Financial  Institutions or this Section 14.1(b), (F) consent to or
     permit  the  assignment  or  transfer  by Seller of any of its  rights  and
     obligations  under this  Agreement,  (G) change the definition of "Past Due
     Trigger  Ratio,"  "Delinquency  Trigger Ratio,"  "Dilution  Horizon Ratio,"
     "Dilution  Ratio,"  "Dilution  Reserve  Percentage,"  "Dilution  Volatility
     Component," "Expected Dilution Ratio," "Eligible Receivable," "Loss Horizon
     Ratio," "Loss Ratio," "Loss Reserve Percentage" or "Purchase Limit," or (H)
     amend or modify any  defined  term (or any  defined  term used  directly or
     indirectly in such defined term) used in clauses (A) through (G) above in a
     manner that would circumvent the intention of the restrictions set forth in
     such clauses; or

          (ii) without the written consent of the then Agent,  amend,  modify or
     waive any  provision of this  Agreement if the effect  thereof is to affect
     the rights or duties of such Agent.

Notwithstanding  the  foregoing,  (i)  without  the  consent  of  the  Financial
Institutions, but with the consent of Seller, the Agent may amend this Agreement
solely to add additional  Persons as Financial  Institutions  hereunder and (ii)
the Agent,  the  Required  Financial  Institutions  and  Conduit  may enter into
amendments to modify any of the terms or provisions of Article XI,  Article XII,
Section 14.13 or any other  provision of this  Agreement  without the consent of
Seller,  provided that such  amendment has no negative  impact upon Seller.  Any
modification  or waiver made in accordance with this Section 14.1 shall apply to
each of the Purchasers  equally and shall be binding upon Seller, the Purchasers
and the Agent.

     Section  14.2  Notices.  Except  as  provided  in this  Section  14.2,  all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other  parties  hereto at their  respective  addresses  or
telecopy  numbers  set forth on the  signature  pages  hereof  or at such  other
address or telecopy number as such Person may hereafter  specify for the purpose
of  notice  to each of the  other  parties  hereto.  Each  such  notice or other
communication  shall be  effective  (i) if given by  telecopy,  upon the receipt
thereof,  (ii) if given by mail,  three (3)  Business  Days  after the time such
communication is deposited in the mail with first class postage prepaid or (iii)
if given by any other  means,  when  received at the address  specified  in this
Section 14.2. Seller hereby authorizes the Agent to effect purchases and Tranche
Period and Discount  Rate  selections  based on  telephonic  notices made by any
Person  whom the Agent in good faith  believes to be acting on behalf of Seller.
Seller agrees to deliver  promptly to the Agent a written  confirmation  of each
telephonic notice signed by an authorized officer of Seller; provided,  however,
the absence of such  confirmation  shall not affect the validity of such notice.
If the written  confirmation  differs  from the action  taken by the Agent,  the
records of the Agent shall govern absent manifest error.

     Section  14.3  Ratable  Payments.  If any  Purchaser,  whether by setoff or
otherwise,  has payment made to it with respect to any portion of the  Aggregate
Unpaids  owing to such  Purchaser  (other  than  payments  received  pursuant to
Section 10.2 or 10.3) in a greater  proportion  than that  received by any other
Purchaser  entitled to receive a ratable share of such Aggregate  Unpaids,  such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of such  Aggregate  Unpaids held by the other  Purchasers  so
that after such purchase each Purchaser will hold its ratable proportion of such
Aggregate Unpaids;  provided that if all or any portion of such excess amount is
thereafter  recovered from such Purchaser,  such purchase shall be rescinded and
the  purchase  price  restored  to the  extent  of such  recovery,  but  without
interest.

     Section 14.4 Protection of Ownership Interests of the Purchasers.

     (a) Seller agrees that from time to time, at its expense,  it will promptly
execute and deliver all  instruments and documents,  and take all actions,  that
may be  necessary  or  desirable,  or that the Agent may  request,  to  perfect,
protect or more fully evidence the Purchaser  Interests,  or to enable the Agent
or the  Purchasers to exercise and enforce their rights and remedies  hereunder.
At any time  after the  occurrence  and  during  the  continuance  of a Servicer
Default,  the Agent may,  or the Agent may  direct  Seller or the  Servicer  to,
notify the Obligors of  Receivables,  at Seller's  expense,  of the ownership or
security  interests of the  Purchasers  under this Agreement and may also direct
that payments of all amounts due or that become due under any or all Receivables
be made  directly  to the  Agent or its  designee.  Seller or the  Servicer  (as
applicable)  shall,  at any Purchaser's  request,  withhold the identity of such
Purchaser in any such notification.

     (b) If any Seller Party fails to perform any of its obligations  hereunder,
the Agent or any Purchaser may (but shall not be required to) perform,  or cause
performance of, such obligations,  and the Agent's or such Purchaser's costs and
expenses incurred in connection therewith shall be payable by Seller as provided
in Section 10.3. Each Seller Party irrevocably  authorizes the Agent at any time
and from time to time in the sole  discretion  of the Agent,  and  appoints  the
Agent as its  attorney-in-fact,  to act on  behalf of such  Seller  Party (i) to
execute on behalf of Seller as debtor and to file financing statements necessary
or  desirable  in the Agent's  sole  discretion  to perfect and to maintain  the
perfection and priority of the interest of the Purchasers in the Receivables and
(ii) to file a carbon,  photographic or other  reproduction of this Agreement or
any financing statement with respect to the Receivables as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the  perfection  and priority of the interests of the
Purchasers in the Receivables.  This appointment is coupled with an interest and
is irrevocable.

     Section 14.5 Confidentiality.

     (a) Each Seller  Party and each  Purchaser  shall  maintain and shall cause
each of its  employees  and  officers to maintain  the  confidentiality  of this
Agreement and the other confidential or proprietary  information with respect to
the Agent and Conduit and their respective  businesses obtained by it or them in
connection with the  structuring,  negotiating and execution of the transactions
contemplated  herein,  except that such Seller Party and such  Purchaser and its
officers and employees may disclose such  information to such Seller Party's and
such Purchaser's external  accountants,  financial advisors and attorneys and as
required  by any  applicable  law  (including,  without  limitation,  applicable
securities laws) or order of any judicial or administrative proceeding.

     (b)  Anything  herein to the  contrary  notwithstanding,  each Seller Party
hereby consents to the disclosure of any nonpublic  information  with respect to
it (i) to the Agent, the Financial  Institutions or Conduit by each other,  (ii)
by the  Agent  or the  Purchasers  to any  prospective  or  actual  assignee  or
participant  of any of  them  and  (iii)  by the  Agent  to any  rating  agency,
Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to Conduit or any entity organized for the purpose of purchasing, or
making  loans  secured  by,  financial  assets  for  which  Bank One acts as the
administrative  agent  and  to  any  officers,  directors,   employees,  outside
accountants and attorneys of any of the foregoing,  provided each such Person is
informed  of the  confidential  nature of such  information.  In  addition,  the
Purchasers and the Agent may disclose any such nonpublic information pursuant to
any  law,  rule,  regulation,  direction,  request  or  order  of any  judicial,
administrative or regulatory authority or proceedings (whether or not having the
force or effect of law).

     Section 14.6 Bankruptcy Petition.  (a) Seller, the Servicer,  the Agent and
each Financial  Institution  hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all outstanding senior
indebtedness of Conduit, it will not institute against, or join any other Person
in instituting  against,  Conduit any bankruptcy,  reorganization,  arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any state of the United States.

     (b) The Servicer,  the Agent and each Purchaser hereby covenants and agrees
that,  prior to the date that is one year and one day after the  payment in full
of all outstanding Aggregate Unpaids, it will not institute against, or join any
other Person in  instituting  against,  Seller any  bankruptcy,  reorganization,
arrangement,  insolvency or liquidation  proceedings or other similar proceeding
under the laws of the United States or any state of the United States.

     Section  14.7  Limitation  of  Liability.  Except with respect to any claim
arising out of the willful misconduct or gross negligence of Conduit,  the Agent
or any  Financial  Institution,  no claim may be made by any Seller Party or any
other Person against  Conduit,  the Agent or any Financial  Institution or their
respective Affiliates,  directors,  officers, employees, attorneys or agents for
any special, indirect, consequential or punitive damages in respect of any claim
for  breach of  contract  or any other  theory of  liability  arising  out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event occurring in connection therewith; and each Seller Party hereby waives,
releases, and agrees not to sue upon any claim for any such damages,  whether or
not accrued and whether or not known or suspected to exist in its favor.

     Section 14.8 CHOICE OF LAW. THIS AGREEMENT  SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF ILLINOIS.

     Section 14.9 CONSENT TO JURISDICTION.  EACH SELLER PARTY HEREBY IRREVOCABLY
SUBMITS  TO THE  NON-EXCLUSIVE  JURISDICTION  OF ANY  UNITED  STATES  FEDERAL OR
ILLINOIS  STATE COURT  SITTING IN CHICAGO,  ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR ANY  DOCUMENT  EXECUTED BY SUCH
PERSON  PURSUANT TO THIS  AGREEMENT  AND EACH SELLER  PARTY  HEREBY  IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING  MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY  WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT  FORUM.  NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING  PROCEEDINGS  AGAINST ANY
SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
ANY SELLER  PARTY  AGAINST THE AGENT OR ANY  PURCHASER  OR ANY  AFFILIATE OF THE
AGENT OR ANY PURCHASER INVOLVING,  DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF,  RELATED TO, OR  CONNECTED  WITH THIS  AGREEMENT OR ANY DOCUMENT
EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS  AGREEMENT  SHALL BE BROUGHT ONLY
IN A COURT IN CHICAGO, ILLINOIS.

     Section  14.10 WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER  SOUNDING IN TORT,  CONTRACT OR  OTHERWISE)  IN ANY WAY ARISING OUT OF,
RELATED TO, OR  CONNECTED  WITH THIS  AGREEMENT,  ANY  DOCUMENT  EXECUTED BY ANY
SELLER  PARTY  PURSUANT  TO  THIS  AGREEMENT  OR  THE  RELATIONSHIP  ESTABLISHED
HEREUNDER OR THEREUNDER.

     Section 14.11 Integration; Binding Effect; Survival of Terms.

     (a) This Agreement and each other  Transaction  Document  contain the final
and complete  integration  of all prior  expressions  by the parties hereto with
respect to the subject matter hereof and shall  constitute the entire  agreement
among the parties hereto with respect to the subject  matter hereof  superseding
all prior oral or written understandings.

     (b) This  Agreement  shall be binding  upon and inure to the benefit of the
parties hereto and their respective  successors and permitted assigns (including
any trustee in  bankruptcy).  This  Agreement  shall create and  constitute  the
continuing  obligations of the parties  hereto in accordance  with its terms and
shall remain in full force and effect until  terminated in  accordance  with its
terms;  provided,  however, that the rights and remedies with respect to (i) any
breach of any  representation  and warranty made by any Seller Party pursuant to
Article V, (ii) the  indemnification  and payment  provisions  of Article X, and
(iii)  Sections  14.5 and  14.6  shall  be  continuing  and  shall  survive  any
termination of this Agreement.

     Section  14.12  Counterparts;   Severability;   Section  References.   This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate 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.  Any provisions of this  Agreement  which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.  Unless otherwise expressly indicated, all references herein
to  "Article,"  "Section,"  "Schedule"  or  "Exhibit"  shall mean  articles  and
sections of, and schedules and exhibits to, this Agreement.

     Section  14.13  Bank  One  Roles.   Each  of  the  Financial   Institutions
acknowledges that Bank One acts, or may in the future act, (i) as administrative
agent for Conduit or any Financial Institution, (ii) as issuing and paying agent
for the Commercial Paper,  (iii) to provide credit or liquidity  enhancement for
the timely payment for the  Commercial  Paper and (iv) to provide other services
from time to time for Conduit or any Financial  Institution  (collectively,  the
"Bank One Roles").  Without limiting the generality of this Section 14.13,  each
Financial  Institution hereby  acknowledges and consents to any and all Bank One
Roles and agrees that in connection  with any Bank One Role,  Bank One may take,
or  refrain  from  taking,  any  action  that  it,  in  its  discretion,   deems
appropriate,  including, without limitation, in its role as administrative agent
for  Conduit,  and the  giving of notice  to the Agent of a  mandatory  purchase
pursuant to Section 13.1.

     Section 14.14 Limitation on Recourse; Grant of Security Interest.

     (a)  Except as  specifically  provided  in this  Agreement,  each sale of a
Purchaser  Interest  hereunder  is made  without  recourse to Seller;  provided,
however, that (i) Seller shall be liable to each Purchaser and the Agent for all
representations,  warranties,  covenants and indemnities made by Seller pursuant
to the terms of this  Agreement,  and (ii) such sale does not  constitute and is
not  intended to result in an  assumption  by any  Purchaser or the Agent or any
assignee  thereof of any  obligation  of any Seller Party or  Originator  or any
other Person arising in connection with the Receivables,  the Related  Security,
or the  related  Invoices,  or any  other  obligations  of any  Seller  Party or
Originator.

     (b) In addition to any ownership  interest which the Agent may from time to
time acquire pursuant hereto,  Seller hereby grants to the Agent for the ratable
benefit of the  Purchasers  a valid and  perfected  security  interest in all of
Seller's right, title and interest in, to and under all Receivables now existing
or hereafter arising, the Collections,  each Lock-Box,  each Collection Account,
all  Related   Security,   all  other  rights  and  payments  relating  to  such
Receivables,  and all  proceeds of any  thereof  prior to all other liens on and
security  interests  therein to secure the  prompt and  complete  payment of the
Aggregate  Unpaids.  The Agent and the Purchasers shall have, in addition to the
rights and remedies  that they may have under this  Agreement,  all other rights
and remedies  provided to a secured  creditor under the UCC and other applicable
law, which rights and remedies shall be cumulative.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.

P&L RECEIVABLES COMPANY, LLC

By:  /s/ Joseph C. Meek
     ----------------------------------
Name: Joseph C. Meek
Title: Director and Assistant Treasurer

Address: P&L Receivables Company, LLC
         701 Market Street, Suite 700
         St. Louis, MO 63101
         Attn:  Joseph Meek
                Assistant Treasurer
         Phone: (314) 588-2794
         Fax:   (314) 588-2795

P&L Coal Holdings Corporation

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

Address: P&L Coal Holdings Corporation
         701 Market Street, Suite 700
         St. Louis, MO 63101
         Attn:  Steven F. Schaab
                Vice President and Treasurer
         Phone: (314) 342-7575
         Fax:   (314) 342-7740

<PAGE>

INTERNATIONAL SECURITIZATION CORPORATION

By:  /s/ Leo V. Loughead
----------------------------------
Name:  Leo V. Loughead
Title:  Authorized Signatory

Address: c/o Bank One, NA, as Agent
         Asset Backed Finance
         Suite IL1-0079, 1-19
         1 Bank One Plaza
         Chicago, Illinois  60670-0079
         Fax:  (312) 732-1844

BANK ONE, NA, as a Financial Institution and as Agent

By:  /s/ Leo V. Loughead
----------------------------------
Name:  Leo V. Loughead
Title:  Vice President

Address: Bank One, NA
         Asset Backed Finance
         Suite IL1-0596, 1-21
         1 Bank One Plaza
         Chicago, Illinois  60670-0596
         Fax:  (312) 732-4487
(a)

<PAGE>
                                    EXHIBIT I

                                   DEFINITIONS

     As used in this  Agreement,  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):

     "Accrual  Period"  means each  calendar  month,  provided  that the initial
Accrual Period  hereunder  means the period from (and including) the date of the
initial purchase hereunder to (and including) the last day of April, 2000.

     "Acquisition Amount" means, on the date of any purchase from Conduit of one
or more  Purchaser  Interests  pursuant to Section  13.1,  with  respect to each
Financial Institution,  the lesser of (a) such Financial  Institution's Pro Rata
Share of the sum of (i) the lesser of (A) the Adjusted  Liquidity  Price of each
such Purchaser  Interest and (B) the Capital of each such Purchaser Interest and
(ii) all accrued and unpaid CP Costs for each such  Purchaser  Interest  and (b)
such Financial Institution's unused Commitment.

     "Adjusted  Funded Amount" means, in determining the Conduit  Transfer Price
for any Purchaser  Interest,  an amount equal to the Adjusted Liquidity Price of
each such Purchaser Interest.

     "Adjusted Liquidity Price" means an amount equal to:

        |---               |---           ---|   ---|
        |                  |      NDR        |      |
     RI |  (i) DC + (ii)   | -------------   |      |
        |                  |      1.06       |      |
        |---               |---           ---|   ---|

     where:

     RI  =  the  undivided  percentage  interest  evidenced  by  such  Purchaser
Interest.

     DC = the Deemed Collections.

     NDR = the  Outstanding  Balance of all Receivables as to which any payment,
or part thereof,  has not remained  unpaid for 91 days or more from the original
due date for such payment.

Each of the foregoing  shall be determined from the most recent Weekly Report or
Monthly Supplement, as the case may be, received from the Servicer.

     "Adverse Claim" means a lien, security interest, charge or encumbrance,  or
other right or claim in, of or on any Person's  assets or properties in favor of
any other Person.

     "Affected  Financial  Institution"  has the  meaning  specified  in Section
12.1(c).

     "Affiliate" means, with respect to any Person, any other Person directly or
indirectly  controlling,  controlled  by,  or under  direct or  indirect  common
control with,  such Person or any  Subsidiary of such Person.  A Person shall be
deemed to control another Person if the  controlling  Person owns 10% or more of
any class of voting securities of the controlled  Person or possesses,  directly
or  indirectly,  the power to direct or cause the direction of the management or
policies of the controlled Person,  whether through ownership of securities,  by
contract or otherwise.

     "Agent" has the meaning set forth in the preamble to this Agreement.

     "Aggregate  Capital"  means,  on any date of  determination,  the aggregate
amount of Capital of all Purchaser Interests outstanding on such date.

     "Aggregate Reduction" has the meaning specified in Section 1.3.

     "Aggregate  Reserves" means, on any date of  determination,  the sum of the
Loss Reserve, the Yield and Servicing Reserve and the Dilution Reserve.

     "Aggregate  Unpaids"  means, at any time, an amount equal to the sum of all
accrued and unpaid fees under the Fee Letter, CP Costs, Yield, Aggregate Capital
and all other unpaid Obligations (whether due or accrued) at such time.

     "Agreement" means this Receivables Purchase Agreement, as it may be amended
or modified and in effect from time to time.

     "Amortization  Date" means the  earliest to occur of (i) the  Business  Day
immediately  prior to the  occurrence  of an  Amortization  Event  set  forth in
Section 9.1(d)(ii), (ii) the Business Day specified in a written notice from the
Agent following the occurrence of any other  Amortization  Event, (iii) the date
of the Agent's receipt of written notice from Seller that it wishes to terminate
the facility evidenced by this Agreement, (iv) the "Termination Date" as defined
in the Receivables  Contribution  Agreement,  or (v) the "Sale Termination Date"
with respect to any Material Originator under the Receivables Sale Agreement.

     "Amortization Event" has the meaning specified in Article IX.

     "Assignment Agreement" has the meaning set forth in Section 12.1(b).

     "Authorized  Officer"  means,  with respect to any Person,  its  president,
corporate controller, treasurer or chief financial officer.

     "Bank  One"  means  Bank  One,  NA  in  its  individual  capacity  and  its
successors.

     "Broken Funding Costs" means for any Purchaser  Interest which: (i) has its
Capital  reduced  without  compliance  by Seller  with the  notice  requirements
hereunder or (ii) does not become  subject to an Aggregate  Reduction  following
the delivery of any Reduction  Notice or (iii) is assigned under Section 13.1 or
terminated  prior to the date on which it was  originally  scheduled  to end; an
amount equal to the excess, if any, of (A) the CP Costs or Yield (as applicable)
that would have  accrued  during the  remainder  of the  Tranche  Periods or the
tranche periods for Commercial  Paper  determined by the Agent to relate to such
Purchaser  Interest (as  applicable)  subsequent to the date of such  reduction,
assignment  or  termination  (or in respect of clause (ii) above,  the date such
Aggregate Reduction was designated to occur pursuant to the Reduction Notice) of
the  Capital  of such  Purchaser  Interest  if  such  reduction,  assignment  or
termination  had not occurred or such Reduction  Notice had not been  delivered,
over  (B) the sum of (x) to the  extent  all or a  portion  of such  Capital  is
allocated  to  another  Purchaser  Interest,  the  amount  of CP  Costs or Yield
actually accrued during the remainder of such period on such Capital for the new
Purchaser  Interest,  and (y) to the extent  such  Capital is not  allocated  to
another  Purchaser  Interest,  the income,  if any, actually received during the
remainder of such period by the holder of such Purchaser Interest from investing
the portion of such Capital not so allocated  (and the  Purchasers  agree to use
reasonable  efforts to maximize the proceeds of such  investment).  In the event
that the amount  referred  to in clause (B)  exceeds  the amount  referred to in
clause (A), the  relevant  Purchaser  or  Purchasers  agree to pay to Seller the
amount  of such  excess.  All  Broken  Funding  Costs  shall be due and  payable
hereunder upon demand.

     "Business  Day" means any day on which banks are not authorized or required
to close in New York,  New York or Chicago,  Illinois and The  Depository  Trust
Company of New York is open for business,  and, if the  applicable  Business Day
relates to any  computation or payment to be made with respect to the LIBO Rate,
any day on which  dealings  in dollar  deposits  are  carried  on in the  London
interbank market.

     "Capital" of any Purchaser  Interest  means,  at any time, (A) the Purchase
Price of such Purchaser  Interest,  minus (B) the sum of the aggregate amount of
Collections  and other  payments  received  by the Agent  which in each case are
applied to reduce such Capital in  accordance  with the terms and  conditions of
this Agreement; provided that such Capital shall be restored (in accordance with
Section 2.5) in the amount of any  Collections or other payments so received and
applied if at any time the  distribution  of such  Collections  or payments  are
rescinded, returned or refunded for any reason.

     "Change of Control" means:  (a) with respect to P&L, the acquisition by any
Person (other than a Principal),  or two or more Persons (other than Principals)
acting in concert, of beneficial  ownership (within the meaning of Rule 13d-3 of
the Securities  and Exchange  Commission  under the  Securities  Exchange Act of
1934) of 20% or more of the outstanding  shares of voting securities of P&L, (b)
with respect to Seller,  P&L ceases to own, directly or indirectly,  100% of the
outstanding  membership interests of Seller, or (c) with respect to any Material
Originator,  P&L ceases to have beneficial ownership (as defined in clause (a)),
directly  or  indirectly,  of at least 75% of the  outstanding  shares of voting
securities of such Material Originator.

     "Charged-Off  Receivable"  means a Receivable:  (i) as to which the Obligor
thereof  has taken  any  action,  or  suffered  any event to occur,  of the type
described in Section  9.1(d) (as if  references to Seller Party therein refer to
such Obligor);  (ii) as to which the Obligor  thereof,  if a natural person,  is
deceased,  (iii) which,  consistent with the Credit and Collection Policy, would
be written off Seller's books as  uncollectible,  (iv) which has been identified
by Seller as  uncollectible  or (v) as to which any  payment,  or part  thereof,
remains  unpaid  for  more  than 90 days  from  the  original  due date for such
payment.

     "Collection Account" means each concentration account,  depositary account,
lock-box  account or similar  account in which any  Collections are collected or
deposited and which is listed on Exhibit IV.

     "Collection Account Agreement" means an agreement substantially in the form
of  Exhibit  VI among  an  Originator,  the  Seller  Parties,  the  Agent  and a
Collection Bank.

     "Collection  Bank" means, at any time, any of the banks holding one or more
Collection Accounts.

     "Collection Notice" means a notice, in substantially the form of Annex A to
Exhibit VI, from the Agent to a Collection Bank.

     "Collections"  means, with respect to any Receivable,  all cash collections
and other  cash  proceeds  in  respect of such  Receivable,  including,  without
limitation,  all yield,  Finance  Charges or other related  amounts  accruing in
respect  thereof and all cash proceeds of Related  Security with respect to such
Receivable.

     "Commercial  Paper" means  promissory notes of Conduit issued by Conduit in
the commercial paper market.

     "Commitment" means, for each Financial Institution,  the commitment of such
Financial  Institution  to purchase  Purchaser  Interests from (a) Seller or (b)
Conduit,  in an  amount  equal to (i) in the  aggregate,  the  amount  set forth
opposite such Financial  Institution's name on Schedule A to this Agreement,  as
such amount may be  modified in  accordance  with the terms  hereof  (including,
without  limitation,  any  termination of  Commitments  pursuant to Section 13.6
hereof) and (ii) with respect to any individual  purchase from Seller hereunder,
its Pro Rata Share of the Purchase Price therefor.

     "Commitment  Availability"  means at any time the positive  difference  (if
any) between (a) an amount equal to the aggregate  amount of the  Commitments at
such time minus (b) the Aggregate Capital at such time.

     "Concentration Limit" means, at any time (without duplication):

     (a) for Ontario Power Generation,  Inc., Ontario Hydro Services Company and
their  respective  Affiliates,  all  considered as if they were one and the same
Obligor,  the  lesser  of (i)  $8,000,000,  and  (ii)  5.00%  of  the  aggregate
Outstanding Balance of the Eligible Receivables;

     (b) for any other  Obligor and its  Affiliates,  considered as if they were
one and the same  Obligor,  4.00% of the  aggregate  Outstanding  Balance of the
Eligible  Receivables,  or such higher amount (a "Special  Concentration Limit")
for such Obligor designated by the Agent; provided that the Agent may (and will,
upon  direction  of the  Required  Financial  Institutions)  cancel any  Special
Concentration  Limit  upon not less than  three  (3)  Business  Days'  notice to
Seller;

     (c)  for  all  Receivables  of  which  the  Obligor  is a  government  or a
governmental subdivision or agency (unless the Agent is satisfied that all steps
have been taken to comply with the Federal  Assignment  of Claims Act of 1940 or
any similar  applicable state law), the lesser of (i) $35,000,000,  and (ii) 20%
of all  Receivables,  in each of the foregoing  cases,  for all such Receivables
considered as if they were owing from one and the same Obligor, and

     (d) for all  Receivables  which by their terms are due and payable in 31-60
days of the original  billing date  therefor,  an aggregate  amount equal to the
lesser of (i) $90,000,000, and (ii) 50% of all Receivables.

     "Conduit" has the meaning set forth in the preamble to this Agreement.

     "Conduit Residual" means the sum of the Conduit Transfer Price Reductions.

     "Conduit  Transfer Price" means,  with respect to the assignment by Conduit
of one or more  Purchaser  Interests to the Agent for the benefit of one or more
of the  Financial  Institutions  pursuant  to Section  13.1,  the sum of (i) the
lesser of (a) the Capital of each such  Purchaser  Interest and (b) the Adjusted
Funded Amount of each such Purchaser Interest and (ii) all accrued and unpaid CP
Costs for each such Purchaser Interest.

     "Conduit Transfer Price Deficit" has the meaning set forth in Section 13.5.

     "Conduit  Transfer Price Reduction" means in connection with the assignment
of a Purchaser Interest by Conduit to the Agent for the benefit of the Financial
Institutions,  the positive  difference (if any) between (i) the Capital of such
Purchaser  Interest  and (ii) the  Adjusted  Funded  Amount  for such  Purchaser
Interest.

     "Contingent  Obligation"  of a Person means any  agreement,  undertaking or
arrangement by which such Person  assumes,  guarantees,  endorses,  contingently
agrees to purchase or provide funds for the payment of, or otherwise  becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other  Person,  or  otherwise  assures any  creditor of such other Person
against loss,  including,  without  limitation,  any comfort  letter,  operating
agreement, take-or-pay contract or application for a letter of credit.

     "Contract" means, with respect to any Receivable, any and all contracts and
agreements  pursuant  to which such  Receivable  arises  other than any  Invoice
evidencing such Receivable.

     "CP Cost Billing  Date" means the 5th Business Day of each  calendar  month
hereafter.

     "CP Costs" means, for each day, the sum of (i) discount or yield accrued on
Pooled  Commercial Paper on such day, plus (ii) any and all accrued  commissions
in respect of placement  agents and Commercial  Paper  dealers,  and issuing and
paying agent fees incurred,  in respect of such Pooled Commercial Paper for such
day, plus (iii) other costs  associated  with funding  small or odd-lot  amounts
with respect to all receivable  purchase  facilities  which are funded by Pooled
Commercial  Paper for such day, minus (iv) any accrual of income net of expenses
received  on  such  day  from  investment  of  collections  received  under  all
receivable  purchase  facilities  funded  substantially  with Pooled  Commercial
Paper,  minus (v) any payment received on such day net of expenses in respect of
Broken  Funding  Costs related to the  prepayment  of any Purchaser  Interest of
Conduit  pursuant  to the terms of any  receivable  purchase  facilities  funded
substantially with Pooled Commercial Paper, in each case to the extent allocated
to  the  Capital  of the  Purchaser  Interests  hereunder.  In  addition  to the
foregoing  costs,  if Seller shall request any  Incremental  Purchase during any
period  of time  determined  by the  Agent in its sole  discretion  to result in
incrementally  higher CP Costs  applicable  to such  Incremental  Purchase,  the
Capital associated with any such Incremental Purchase shall, during such period,
be deemed to be funded by Conduit in a special  pool (which may include  capital
associated  with  other   receivable   purchase   facilities)  for  purposes  of
determining  such  additional CP Costs  applicable only to such special pool and
charged each day during such period against such Capital.

     "Credit   Agreement"   means  that  certain  Amended  and  Restated  Credit
Agreement, dated as of June 9, 1998, among P&L, as borrower, the several lenders
from time to time parties  thereto,  Lehman  Brothers Inc., as arranger,  Lehman
Commercial  Paper Inc., as syndication  agent,  Bank of America National Trust &
Savings  Association and The Fuji Bank,  Limited,  each as a documentation agent
and Bank One, NA (formerly  known as The First  National  Bank of  Chicago),  as
administrative agent, and shall include,  except as otherwise expressly provided
herein, such agreement as amended,  restated and/or otherwise modified from time
to time in accordance with the terms thereof.

     "Credit and Collection  Policy" means P&L's credit and collection  policies
and practices relating to Contracts,  Invoices and Receivables of any Originator
existing on the date hereof and  summarized in Exhibit VIII hereto,  as modified
from time to time in accordance with this Agreement.

     "Cut-Off Date" means March 24, 2000 and the last day of each calendar month
thereafter.

     "Deemed  Collections"  means the aggregate of all amounts Seller shall have
been deemed to have received as a Collection  of a  Receivable.  Seller shall be
deemed to have received a Collection (but only to the extent of the reduction or
cancellation  identified  below)  of  a  Receivable  if  at  any  time  (i)  the
Outstanding  Balance of any such Receivable is either (x) reduced as a result of
any defective or rejected goods,  any discount or any adjustment or otherwise by
any Seller Party or any  Originator  (other than cash  Collections on account of
the  Receivables)  or (y) reduced or canceled as a result of a setoff in respect
of any claim by any  Person  (whether  such  claim  arises  out of the same or a
related   transaction  or  an  unrelated   transaction)   or  (ii)  any  of  the
representations  or  warranties  in Article V were not true with  respect to any
Receivable at the time of initial purchase.

     "Default Fee" means with respect to any amount due and payable by Seller in
respect of any Aggregate  Unpaids,  an amount equal to the greater of (i) $1,000
and (ii) interest on any such unpaid Aggregate Unpaids at a rate per annum equal
to 2% above the Prime Rate.

     "Defaulting  Financial  Institution"  has the  meaning set forth in Section
13.5.

     "Delinquency  Trigger  Ratio"  means,  as of any  Cut-Off  Date,  the ratio
(expressed  as a  percentage)  computed by dividing (i) the sum of the aggregate
Outstanding  Balance of all Receivables  that were Delinquent  Receivables as of
such Cut-Off Date plus the aggregate Outstanding Balance of all Receivables that
were written off during the  Measurement  Period ended on such Cut-Off  Date, by
(ii) the aggregate  Outstanding  Balance of all  Receivables  as of such Cut-Off
Date.

     "Delinquent Receivable" means a Receivable as to which any payment, or part
thereof,  remains  unpaid for more than 30 days from the  original  due date for
such payment and which has not been written off as uncollectible.

     "Dilution  Horizon Ratio" means,  on any date of  determination,  an amount
calculated  by dividing  (a) the  aggregate  cumulative  sales  generated by the
Originators  during  the  Measurement  Period  ended  immediately  prior  to the
Measurement  Period  in  which  the  date  of  determination  falls,  by (b) the
aggregate  Outstanding Balance of all Eligible Receivables as of the most recent
Cut-off Date.

     "Dilution Ratio" means a percentage  equal to a fraction,  the numerator of
which  is  the  total  amount  of  decreases  in  Outstanding  Balances  of  the
Receivables due to Dilutions during the most recent Measurement  Period, and the
denominator of which is the amount of sales generated by the Originators  during
the Measurement Period one month prior to the most recent Measurement Period.

     "Dilution  Reserve"  means,  on any date,  an amount  equal to the Dilution
Reserve Percentage  multiplied by the Net Receivables Balance as of the close of
business of the Servicer on such date.

     "Dilution  Reserve  Percentage"  as of any Cut-Off  Date means a percentage
equal to the greater of (a) 3.00% and (b) the product of (i) the sum of (A) 2.25
times the Expected Dilution Ratio as of such Cut-Off Date, plus (B) the Dilution
Volatility  Component as of such Cut-Off  Date,  multiplied by (ii) the Dilution
Horizon Ratio as of such Cut-Off Date.

     "Dilution Volatility Component" means an amount (expressed as a percentage)
equal to the product of (i) the  difference  between  (a) the  highest  Dilution
Ratio over the past 12 Measurement  Periods and (b) the Expected Dilution Ratio,
and (ii) a fraction, the numerator of which is equal to the amount calculated in
(i)(a) of this  definition  and the  denominator of which is equal to the amount
calculated in (i)(b) of this definition.

     "Dilutions"  means,  at any time,  the  aggregate  amount of  reductions or
cancellations described in clause (i) of the definition of "Deemed Collections".

     "Discount Rate" means, the LIBO Rate or the Prime Rate, as applicable, with
respect to each Purchaser Interest of the Financial Institutions.

     "Effective  Date" means the Business Day on which all conditions  precedent
to the initial Incremental Purchase hereunder have been satisfied.

     "Eligible Receivable" means, at any time, a Receivable:

          (i) the Obligor of which (a) if a natural person, is a resident of the
     United  States,  (b) if a corporation or other  business  organization,  is
     either Ontario Power Generation,  Inc. or Ontario Hydro Services Company or
     is  organized  under  the  laws  of the  United  States  or  any  political
     subdivision  thereof  and has its  chief  executive  office  in the  United
     States, and (c) is not an Affiliate of any of the parties hereto,

          (ii) the Obligor of which is not the Obligor of  Receivables  of which
     more than 25% are Delinquent  Receivables,  it being understood that solely
     for purposes of this clause (ii), the portion of each Receivable owing from
     the Salt River Project Agricultural Improvement and Power District which is
     subject to a bona fide dispute over equipment  charges shall not constitute
     a Delinquent Receivable,

          (iii)  which  is  not  a   Charged-Off   Receivable  or  a  Delinquent
     Receivable,

          (iv)  which by its  terms  is due and  payable  within  60 days of the
     original billing date therefor and has not had its payment terms extended,

          (v) which is an "account"  within the meaning of Section  9-106 of the
     UCC of all applicable jurisdictions,

          (vi) which is denominated and payable only in United States dollars in
     the United States,

          (vii) which is  evidenced  by an internal or external  Invoice  issued
     pursuant to a Contract  which,  together with such  Receivable,  is in full
     force and effect and constitutes the legal, valid and binding obligation of
     the related Obligor enforceable against such Obligor in accordance with its
     terms  subject to no offset,  counterclaim  or other  defense  (other  than
     potential discharge in bankruptcy) (it being understood that only a portion
     of a Receivable equal to the amount of such offset, counterclaim or defense
     shall be deemed not to be an Eligible Receivable),

          (viii)  which  arises  under a  Contract  that (A) by its  terms or by
     virtue of Section 9-318(4) of the UCC of all applicable jurisdictions, does
     not  require the Obligor  under such  Contract to consent to the  transfer,
     sale or  assignment  of the rights to payment  thereunder  and (B) does not
     contain a  confidentiality  provision that purports to restrict the ability
     of any  Purchaser to exercise its rights under this  Agreement,  including,
     without  limitation,  its  right to  review  the  Invoice  evidencing  such
     Receivable,

          (ix) which arises under a Contract  that contains an obligation to pay
     a specified sum of money (subject to  adjustments  for quality and quantity
     of goods shipped), contingent only upon the sale of goods by an Originator,

          (x) which,  together  with the Contract and Invoice  related  thereto,
     does  not  contravene  any  law,  rule  or  regulation  applicable  thereto
     (including,  without  limitation,  any law, rule and regulation relating to
     truth in lending, fair credit billing, fair credit reporting,  equal credit
     opportunity,  fair debt  collection  practices and privacy) in any material
     respect  and  with  respect  to which no part of the  Contract  or  Invoice
     related  thereto is in violation of any such law, rule or regulation in any
     material respect,

          (xi) which  satisfies all  applicable  requirements  of the Credit and
     Collection Policy,

          (xii) which was  generated  in the ordinary  course of the  applicable
     Originator's business,

          (xiii)  which  arises  solely  from the  sale of goods to the  related
     Obligor  by an  Originator,  and not by any  other  Person  (in whole or in
     part),

          (xiv) as to which  the Agent has not  notified  Seller  that the Agent
     has, in the reasonable business judgment of the Agent, determined that such
     Receivable  or  class  of  Receivables  is not  acceptable  as an  Eligible
     Receivable,

          (xv)  which  is not  subject  to any  right  of  rescission,  set-off,
     counterclaim,   any  other  defense  (including  defenses  arising  out  of
     violations  of usury  laws) of the  applicable  Obligor  against P&L or any
     Originator (other than potential  discharge in bankruptcy),  any dispute or
     other Adverse Claim,  and the Obligor thereon holds no right as against P&L
     or any  Originator to cause P&L or any  Originator to repurchase  the goods
     the sale of which  shall have given rise to such  Receivable  (except  with
     respect to sale discounts  effected pursuant to the Contract,  or defective
     goods  returned in  accordance  with the terms of the  Contract)  (it being
     understood  that only the  portion of a  Receivable  equal to the amount of
     such set-off,  counterclaim,  defense, dispute, Adverse Claim or repurchase
     right shall be deemed not to be an Eligible Receivable),

          (xvi) as to which the  applicable  Originator  has satisfied and fully
     performed  all  obligations  on its part with  respect  to such  Receivable
     required  to be  fulfilled  by it, and no further  action is required to be
     performed by any Person with respect  thereto other than payment thereon by
     the applicable Obligor, and

          (xvii) all right,  title and interest to and in which has been validly
     transferred  by an  Originator  to P&L  under  and in  accordance  with the
     Receivables  Sale  Agreement,  and validly  contributed  by P&L directly to
     Seller under and in accordance with the Receivables Contribution Agreement,
     and  Seller has good and  marketable  title  thereto  free and clear of any
     Adverse Claim.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time.

     "Excess  Concentration  Balance"  means,  as of any  date,  the  sum of the
amounts  by which the  aggregate  Outstanding  Balance  of  Receivables  of each
Obligor and its Affiliates exceeds the Concentration Limit for such Obligor.

     "Expected  Dilution Ratio" means, on any date of determination:  (a) at all
times prior to April 30,  2000,  the  11-month  rolling  average of the Dilution
Ratio for the 11 Measurement  Periods then most recently  ended,  and (b) at all
times thereafter,  the 12-month rolling average of the Dilution Ratio for the 12
Measurement Periods then most recently ended.

     "Extension Fee" has the meaning set forth in Section 1.5.

     "Extension Request" has the meaning set forth in Section 1.5.

     "Facility Account" means Seller's Account No. 10-44403 at Bank One.

     "Facility  Termination  Date"  means  the  earliest  of (i)  the  Liquidity
Termination Date and (ii) the Amortization Date.

     "Federal Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as amended and any successor statute thereto.

     "Federal  Funds  Effective  Rate"  means,  for any  period,  a  fluctuating
interest  rate per  annum  for  each day  during  such  period  equal to (a) the
weighted  average of the rates on  overnight  federal  funds  transactions  with
members of the Federal  Reserve  System  arranged by federal funds  brokers,  as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal  Reserve Bank of New York in the Composite  Closing
Quotations  for  U.S.  Government  Securities;  or (b) if  such  rate  is not so
published for any day which is a Business Day, the average of the  quotations at
approximately  10:30  a.m.  (Chicago  time)  for such  day on such  transactions
received by the Agent from three federal  funds  brokers of recognized  standing
selected by it.

     "Fee  Letter"  means that  certain  letter  agreement  dated as of the date
hereof among Seller,  P&L and the Agent, as it may be amended or modified and in
effect from time to time.

     "Finance  Charges"  means,  with  respect  to  any  Invoice,  any  finance,
interest,  late payment charges or similar charges owing by an Obligor  pursuant
to such Invoice.

     "Financial  Institutions" has the meaning set forth in the preamble in this
Agreement.

     "Funding  Agreement"  means this  Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of Conduit.

     "Funding Source" means (i) any Financial  Institution or (ii) any insurance
company, bank or other funding entity providing liquidity, credit enhancement or
back-up  purchase  support or  facilities  to Conduit  in  connection  with this
Agreement (either alone or together with other similar facilities).

     "GAAP" means  generally  accepted  accounting  principles  in effect in the
United States of America as in effect from time to time.

     "Incremental  Purchase" means a purchase of one or more Purchaser Interests
which increases the total outstanding Aggregate Capital hereunder.

     "Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations  representing the deferred purchase price of property or
services  (other than accounts  payable  arising in the ordinary  course of such
Person's business payable on terms customary in the trade),  (iii)  obligations,
whether  or not  assumed,  secured by liens or payable  out of the  proceeds  or
production from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments, (v)
capitalized  lease  obligations,  (vi) net liabilities under interest rate swap,
exchange or cap agreements,  (vii) Contingent Obligations and (viii) liabilities
in respect of unfunded vested benefits under plans covered by Title IV of ERISA.

     "Independent  Director"  means a member of the Board of Directors of Seller
who is not at such time,  and has not been at any time during the preceding five
(5) years, (A) a director,  officer,  employee,  member, manager or affiliate of
Seller,  P&L, or any of their respective  Subsidiaries or Affiliates (other than
Seller),  or (B)  the  beneficial  owner  (at  the  time  of  such  individual's
appointment as an Independent  Director or at any time thereafter  while serving
as an  Independent  Director)  of any of the  outstanding  equity  interests  of
Seller,  P&L, or any of their  respective  Subsidiaries  or  Affiliates,  having
general voting rights.

     "Intercreditor  Agreement" means that certain Intercreditor Agreement dated
as of March 31, 2000, by and between the Agent and Bank One, NA, in its capacity
as  administrative  agent  under the  Credit  Agreement,  as such  Intercreditor
Agreement may be amended,  restated and/or otherwise  modified from time to time
in accordance with the terms thereof.

     "Invoice" means the invoice evidencing any Receivable.

     "LIBO  Rate"  means  the  rate  per  annum  equal to the sum of (i) (a) the
applicable British Bankers' Association Interest Settlement Rate for deposits in
U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two
Business Days prior to the first day of the relevant Tranche Period,  and having
a maturity  equal to such Tranche  Period,  provided that, (i) if Reuters Screen
FRBD is not available to the Agent for any reason,  the applicable LIBO Rate for
the relevant  Tranche  Period shall instead be the applicable  British  Bankers'
Association Interest Settlement Rate for deposits in U.S. dollars as reported by
any other generally  recognized  financial  information service as of 11:00 a.m.
(London time) two Business  Days prior to the first day of such Tranche  Period,
and having a maturity equal to such Tranche Period,  and (ii) if no such British
Bankers'  Association  Interest  Settlement Rate is available to the Agent,  the
applicable  LIBO Rate for the relevant  Tranche Period shall instead be the rate
determined  by the  Agent  to be the  rate at which  Bank  One  offers  to place
deposits in U.S. dollars with  first-class  banks in the London interbank market
at  approximately  11:00 a.m. (London time) two Business Days prior to the first
day of such Tranche Period,  in the approximate  amount to be funded at the LIBO
Rate and  having a maturity  equal to such  Tranche  Period,  divided by (b) one
minus  the  maximum   aggregate  reserve   requirement   (including  all  basic,
supplemental,  marginal or other reserves) which is imposed against the Agent in
respect of Eurocurrency liabilities,  as defined in Regulation D of the Board of
Governors  of the  Federal  Reserve  System  as in  effect  from  time  to  time
(expressed as a decimal),  applicable to such Tranche Period plus (ii) 2.25% per
annum. The LIBO Rate shall be rounded, if necessary,  to the next higher 1/16 of
1%.

     "Liquidity Termination Date" means March 29, 2001, as extended from time to
time pursuant to the terms hereof.

     "Lock-Box"  means each locked  postal box with  respect to which a bank who
has executed a Collection  Account  Agreement has been granted  exclusive access
for the purpose of retrieving  and processing  payments made on the  Receivables
and which is listed on Exhibit IV.

     "Loss  Horizon  Ratio"  means,  on any  date of  determination,  an  amount
calculated  by dividing  (a) the  aggregate  cumulative  sales  generated by the
Originators  during the two (2) Measurement  Periods ended  immediately prior to
the  Measurement  Period in which the date of  determination  falls,  by (b) the
aggregate  Outstanding Balance of all Eligible Receivables as of the most recent
Cut-off Date.

     "Loss Ratio"  means,  as of any Cut-Off  Date,  the ratio  (expressed  as a
percentage)  computed by dividing (x) the aggregate  amount of Receivables as to
which any payment,  or part thereof,  remains  unpaid for more than 90 days from
the  original due date for such  payment,  as of such Cut-Off Date and which has
not been written off as  uncollectible,  by (y) the aggregate sales generated by
the Originators during the Measurement Period occurring four (4) months prior to
the Measurement Period ending on such Cut-Off Date.

     "Loss  Reserve"  means,  on any date,  an amount  equal to the Loss Reserve
Percentage multiplied by the Net Receivables Balance as of the close of business
of the Servicer on such date.

     "Loss Reserve  Percentage" as of any Cut-Off Date means a percentage  equal
to the  greater of (a) 12% and (b) the  product  of (i) 2.25  times the  highest
three-month  rolling  average Loss Ratio  during the most recent 12  Measurement
Periods and (ii) the Loss Horizon Ratio.

     "Material  Adverse  Effect"  means a  material  adverse  effect  on (i) the
financial  condition  or  operations  of Seller,  (ii) the ability of any Seller
Party to perform  its  obligations  under this  Agreement,  (iii) the  legality,
validity or enforceability of this Agreement or any other Transaction  Document,
(iv) any Purchaser's interest in the Receivables generally or in any significant
portion of the Receivables, the Related Security or the Collections with respect
thereto,  or (v)  the  collectibility  of the  Receivables  generally  or of any
material portion of the Receivables.

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

     "Measurement Period" means a calendar month.

     "Monthly  Supplement"  means a report, in substantially the form of Annex A
to Exhibit IX hereto (appropriately completed), furnished by the Servicer to the
Agent pursuant to Section 8.5.

     "Net  Receivables  Balance" means,  at any time, the aggregate  Outstanding
Balance  of all  Eligible  Receivables  at  such  time  reduced  by  the  Excess
Concentration Balances at such time.

     "Non-Defaulting Financial Institution" has the meaning set forth in Section
13.5.

     "Non-Renewing  Financial  Institution" has the meaning set forth in Section
13.6(a).

     "Obligations" shall have the meaning set forth in Section 2.1.

     "Obligor" means a Person obligated to make payments pursuant to an Invoice.

     "Originators"  means,  collectively,  (a) Big Sky Coal Company,  a Delaware
corporation,  (b) Caballo  Coal  Company,  a Delaware  corporation,  (c) Eastern
Associated  Coal Corp.,  a West  Virginia  corporation,  (d)  Peabody  COALSALES
Company,  a  Delaware   corporation,   (e)  Peabody  Coal  Company,  a  Delaware
corporation,  (f) Peabody  Western Coal  Company,  a Delaware  corporation,  (g)
Powder River Coal Company,  a Delaware  corporation,  (h) Seneca Coal Company, a
Delaware  corporation,  and (i) Pine Ridge Coal Company, a Delaware corporation,
as the same may be modified by adding new  Originators or removing  Originators,
in each case with the prior written consent of Agent.

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

     "Participant" has the meaning set forth in Section 12.2.

     "Past  Due  Trigger  Ratio"  means,  as of  any  Cut-Off  Date,  the  ratio
(expressed  as a percentage)  computed by dividing (x) the  aggregate  amount of
Receivables  that are 1-30 days  past due as of such  Cut-Off  Date,  by (y) the
aggregate Outstanding Balance of all Receivables as of such Cut-Off Date.

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

     "PHC" means Peabody Holding Company, Inc., a New York corporation,  and its
successors.

     "Pooled  Commercial  Paper" means Commercial Paper notes of Conduit subject
to any particular pooling arrangement by Conduit, but excluding Commercial Paper
issued by Conduit  for a tenor and in an amount  specifically  requested  by any
Person in connection with any agreement effected by Conduit.

     "Potential  Amortization  Event" means an event which,  with the passage of
time or the giving of notice, or both, would constitute an Amortization Event.

     "Potential Servicer Default" means an event which, with the passage of time
or the giving of notice, or both, would constitute a Servicer Default.

     "Prime  Rate"  means a rate per annum  equal to the prime rate of  interest
announced from time to time by Bank One or its parent (which is not  necessarily
the lowest rate charged to any  customer),  changing when and as said prime rate
changes.

     "Principal" means Lehman Brothers Merchant Banking Partners II L.P., any of
its Affiliates and any executive officers of P&L as of the Effective Date.

     "Pro Rata Share" means, for each Financial Institution,  a percentage equal
to (i) the  Commitment  of  such  Financial  Institution,  divided  by (ii)  the
aggregate  amount of all  Commitments of all Financial  Institutions  hereunder,
adjusted as necessary to give effect to the application of the terms of Sections
13.5 or 13.6.

     "Proposed Reduction Date" has the meaning set forth in Section 1.3.

     "Purchase  Limit" means  $100,000,000 or such other amount as may from time
to time be agreed upon by Seller and the Purchasers.

     "Purchase Notice" has the meaning set forth in Section 1.2.

     "Purchase Price" means,  (a) with respect to any Incremental  Purchase of a
Purchaser Interest,  the amount paid to Seller for such Purchaser Interest which
shall  not  exceed  the  least of (i) the  amount  requested  by  Seller  in the
applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the
applicable  purchase date and (iii) the excess,  if any, of the Net  Receivables
Balance (less the Aggregate  Reserves) on the applicable  purchase date over the
aggregate  outstanding  amount of Aggregate Capital determined as of the date of
the most recent Weekly Report or Monthly Supplement, as applicable,  taking into
account  such  proposed  Incremental  Purchase and (b) with respect to any other
Purchaser Interest, the amount allocated thereto in accordance with the terms of
this Agreement.

     "Purchaser  Interest" means, at any time, an undivided percentage ownership
interest  (computed as set forth below)  associated with a designated  amount of
Capital,  selected  pursuant  to the  terms  and  conditions  hereof in (i) each
Receivable  arising  prior  to  the  time  of the  most  recent  computation  or
recomputation of such undivided interest, (ii) all Related Security with respect
to each such  Receivable,  and (iii) all Collections  with respect to, and other
proceeds of, each such Receivable. Each such undivided percentage interest shall
equal:

                                        C
                             ----------------------
                                    NRB - AR

     where:

     C = the Capital of such Purchaser Interest.

     AR = the Aggregate Reserves.

     NRB = the Net Receivables Balance.

Such undivided  percentage ownership interest shall be initially computed on its
date of  purchase.  Thereafter,  until the  Amortization  Date,  each  Purchaser
Interest shall be automatically  recomputed (or deemed to be recomputed) on each
day prior to the Amortization Date. The variable  percentage  represented by any
Purchaser  Interest as computed  (or deemed  recomputed)  as of the close of the
Business Day immediately  preceding the Amortization  Date shall remain constant
at all times thereafter.

     "Purchasers" means Conduit and each Financial Institution.

     "Purchasing  Financial  Institution"  has the  meaning set forth in Section
12.1(b).

     "Receivable"  means  all  indebtedness  and other  obligations  owed to any
Originator  (before  giving  effect  to any  transfer  or  conveyance  under the
Receivables   Sale  Agreement,   the  Receivables   Contribution   Agreement  or
hereunder), as such indebtedness and other obligations may be adjusted from time
to time, including, without limitation, any indebtedness, obligation or interest
constituting  an  account,  chattel  paper,  instrument  or general  intangible,
arising  in  connection  with  the  sale of coal by an  Originator  and  further
includes,  without  limitation,  the obligation to pay any Finance  Charges with
respect thereto.  Indebtedness and other rights and obligations arising from any
one transaction,  including,  without limitation,  indebtedness and other rights
and  obligations  represented  by an  individual  invoice,  shall  constitute  a
Receivable  separate from a Receivable  consisting of the indebtedness and other
rights and obligations  arising from any other  transaction;  provided  further,
that any  indebtedness,  rights or  obligations  referred to in the  immediately
preceding  sentence  shall be a  Receivable  regardless  of whether  the account
debtor,  the  applicable  Originator,  P&L or Seller  treats such  indebtedness,
rights or obligations as a separate payment obligation.

     "Receivables   Contribution   Agreement"  means  that  certain  Receivables
Contribution  Agreement,  dated as of March 31, 2000, between P&L and Seller, as
the same may be amended, restated or otherwise modified from time to time.

     "Receivables Sale Agreement" means that certain Receivables Sale Agreement,
dated as of March 31, 2000,  among the  Originators  and P&L, as the same may be
amended, restated or otherwise modified from time to time.

     "Records"  means,  with respect to any  Receivable,  all Invoices and other
documents, books, records and other information (including,  without limitation,
computer  programs,  tapes,  disks,  punch cards,  data processing  software and
related  property and rights,  but  excluding  the  Contracts)  relating to such
Receivable, any Related Security therefor and the related Obligor.

     "Reduction Notice" has the meaning set forth in Section 1.3.

     "Reduction  Percentage"  means, for any Purchaser  Interest acquired by the
Financial  Institutions from Conduit for less than the Capital of such Purchaser
Interest, a percentage equal to a fraction the numerator of which is the Conduit
Transfer  Price  Reduction for such  Purchaser  Interest and the  denominator of
which is the Capital of such Purchaser Interest.

     "Regulatory Change" has the meaning set forth in Section 10.2(a).

     "Reinvestment" has the meaning set forth in Section 2.2.

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

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

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

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

     (iv) all Records related to such Receivable,

     (v) all of  Seller's  right,  title  and  interest  in,  to and  under  the
Receivables  Contribution Agreement and Receivables Sale Agreement in respect of
such Receivable, and

     (vi) all proceeds of any of the foregoing;

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

     "Required Capital Amount" means, at any time, 3.00% of the Purchase Limit.

     "Required   Financial   Institutions"   means,   at  any  time,   Financial
Institutions with Commitments in excess of 66-2/3% of the Purchase Limit.

     "Required Notice Period" means the number of days required notice set forth
below applicable to the Aggregate Reduction indicated below:

     Aggregate Reduction        Required Notice Period
     -------------------        ----------------------
     < $100,000,000             2 Business Days
     $100,000,000 +             5 Business Days

     "Response Date" has the meaning set forth in Section 1.5.

     "Restricted  Junior Payment" means (i) any dividend or other  distribution,
direct or  indirect,  on account of any  membership  interests  of Seller now or
hereafter outstanding,  except a dividend payable solely in membership interests
of Seller,  (ii) any redemption,  retirement,  sinking fund or similar  payment,
purchase or other acquisition for value,  direct or indirect,  of any membership
interests  of  Seller  now  or  hereafter  outstanding,  (iii)  any  payment  or
prepayment of principal of, premium, if any, or interest,  fees or other charges
on or with respect to, and any  redemption,  purchase,  retirement,  defeasance,
sinking fund or similar payment and any claim for rescission with respect to any
indebtedness for borrowed money or similar  obligation not constituting  part of
the  Obligations  or the  Aggregate  Unpaids,  (iv) any payment  made to redeem,
purchase,  repurchase or retire,  or to obtain the surrender of, any outstanding
warrants,  options or other rights to acquire membership interests of Seller now
or  hereafter  outstanding,  and (v) any  payment of  management  fees by Seller
(except for reasonable management fees to P&L or its Affiliates in reimbursement
of actual management services performed).

     "Seller" has the meaning set forth in the preamble to this Agreement.

     "Seller  Parties"  has  the  meaning  set  forth  in the  preamble  to this
Agreement.

     "Servicer"  means at any time the  Person  (which  may be the  Agent)  then
authorized  pursuant  to  Article  VIII  to  service,   administer  and  collect
Receivables.

     "Servicer Default" means the occurrence of any one or more of the following
events:

          (a) The  Servicer  shall  fail  (i) to make  any  payment  or  deposit
     required  hereunder  when due and, for any such payment or deposit which is
     not in respect of Capital, such failure continues for one (1) Business Day,
     or (ii) to perform or observe any term,  covenant or agreement hereunder in
     any  material  respect  (other  than as  referred  to in clause (i) of this
     paragraph (a) and paragraph (e) of this  definition) and such failure shall
     continue for three (3) consecutive Business Days;

          (b) Any representation,  warranty,  certification or statement made by
     the Servicer in this Agreement,  any other  Transaction  Document or in any
     other  document  delivered  pursuant  hereto or thereto shall prove to have
     been incorrect in any material respect when made or deemed made;

          (c) The occurrence of any Event of Default under and as defined in the
     Credit Agreement as in effect on the date of this Agreement  (regardless of
     whether the same remains in effect) and as  hereafter  amended or otherwise
     modified from time to time in accordance with the terms thereof;  provided,
     however,  that no  amendment,  waiver or  modification  of any provision of
     Section 6, 7 or 8 of such Credit  Agreement (or of any defined term used in
     any such  provision)  shall be  effective  for  purposes of this clause (c)
     unless Bank One, NA has expressly consented thereto;

          (d) The  Servicer  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 (ii) any  proceeding  shall be  instituted  by or against  the  Servicer
     seeking to  adjudicate it bankrupt or  insolvent,  or seeking  liquidation,
     winding up, reorganization,  arrangement, adjustment, protection, relief or
     composition  of it or its  debts  under  any law  relating  to  bankruptcy,
     insolvency or reorganization or relief of debtors,  or seeking the entry of
     an order for  relief or the  appointment  of a  receiver,  trustee or other
     similar official for it or any substantial part of its property and, in the
     case  of  any  such  proceedings  instituted  against  the  Servicer,  such
     proceedings shall remain  undismissed for 60 consecutive  calendar days, or
     (iii) the Servicer shall take any corporate  action to authorize any of the
     actions set forth in clauses (i) or (ii) above in this subsection (d);

          (e) A Change of Control shall occur with respect to the Servicer;

          (f) (i) One or more  final  judgments  for the  payment of money in an
     amount in excess of $25,000,000, individually or in the aggregate, shall be
     entered  against the  Servicer on claims not covered by  insurance or as to
     which  the  insurance  carrier  has  denied  its  responsibility,  and such
     judgment  shall  continue   unsatisfied  and  in  effect  for  thirty  (30)
     consecutive days without a stay of execution;

          (g) This  Agreement  shall  terminate  in whole or in part  (except in
     accordance  with its terms),  or shall cease to be  effective  or to be the
     legally valid, binding and enforceable  obligation of the Servicer (subject
     to the exceptions set forth in Section 5.1(f));

          (h) The occurrence of any Amortization Event; or

          (i) Any occurrence  which results in a material  adverse effect on (i)
     the  financial  condition or  operations  of Servicer and its  Subsidiaries
     taken as a whole,  (ii) the ability of Servicer to perform its  obligations
     under this Agreement or (iii) the legality,  validity or  enforceability of
     this  Agreement or any other  Transaction  Document for which  Servicer has
     obligations.

     "Servicing Fee" has the meaning set forth in Section 8.6.

     "Settlement  Date" means (A) Thursday of each week  hereafter  (or, if such
day is not a Business Day, the next  succeeding  Business Day), and (B) the last
day of the relevant Tranche Period in respect of each Purchaser  Interest of the
Financial Institutions.

     "Subsidiary"  of a Person  means (i) any  corporation  more than 50% of the
outstanding  securities  having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its  Subsidiaries or by such Person and one or more of its  Subsidiaries,  or
(ii) any partnership,  association,  limited liability company, joint venture or
similar business  organization  more than 50% of the ownership  interests having
ordinary  voting  power  of which  shall at the time be so owned or  controlled.
Unless otherwise  expressly  provided,  all references  herein to a "Subsidiary"
shall mean a Subsidiary of Seller.

     "Termination Date" has the meaning set forth in Section 2.2.

     "Termination Percentage" has the meaning set forth in Section 2.2.

     "Terminating  Financial  Institution"  has the meaning set forth in Section
13.6(a).

     "Terminating Tranche" has the meaning set forth in Section 4.3(b).

     "Tranche  Period" means,  with respect to any Purchaser  Interest held by a
Financial Institution:

     (a) if Yield for such Purchaser  Interest is calculated on the basis of the
LIBO Rate, a period of one,  two,  three or six months,  or such other period as
may be mutually agreeable to the Agent and Seller,  commencing on a Business Day
selected by Seller or the Agent pursuant to this Agreement.  Such Tranche Period
shall  end  on the  day  in  the  applicable  succeeding  calendar  month  which
corresponds  numerically to the beginning day of such Tranche Period,  provided,
however,  that  if  there  is no  such  numerically  corresponding  day in  such
succeeding month, such Tranche Period shall end on the last Business Day of such
succeeding month; or

     (b) if Yield for such Purchaser  Interest is calculated on the basis of the
Prime Rate, a period  commencing on a Business Day selected by Seller  (provided
that no such period shall exceed one month).

If any  Tranche  Period  would end on a day which is not a  Business  Day,  such
Tranche Period shall end on the next succeeding Business Day, provided, however,
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding  Business Day falls in a new month,  such Tranche Period shall end on
the  immediately  preceding  Business Day. In the case of any Tranche Period for
any Purchaser  Interest which commences before the  Amortization  Date and would
otherwise end on a date  occurring  after the  Amortization  Date,  such Tranche
Period shall end on the  Amortization  Date. The duration of each Tranche Period
which  commences  after  the  Amortization  Date  shall be of such  duration  as
selected by the Agent.

     "Transaction Documents" means, collectively,  this Agreement, each Purchase
Notice, the Receivables  Contribution Agreement, the Receivables Sale Agreement,
the Intercreditor Agreement,  each Collection Account Agreement, the Fee Letter,
the  Subordinated  Notes (as defined in the Receivables  Sale Agreement) and all
other instruments, documents and agreements executed and delivered in connection
herewith.

     "UCC" means the Uniform  Commercial  Code as from time to time in effect in
the specified jurisdiction.

     "Weekly  Report" means a report,  in  substantially  the form of Exhibit IX
hereto  (appropriately  completed),  furnished  by the  Servicer  to  the  Agent
pursuant to Section 8.5.

     "Yield"  means for each  respective  Tranche  Period  relating to Purchaser
Interests of the Financial  Institutions,  an amount equal to the product of the
applicable  Discount Rate for each Purchaser Interest  multiplied by the Capital
of such  Purchaser  Interest for each day elapsed  during such  Tranche  Period,
annualized on a 360 day basis.

     "Yield and  Servicing  Reserve"  means,  on any date, an amount equal to 2%
multiplied  by the  Outstanding  Balance of all Eligible  Receivables  as of the
close of business of the Servicer on such date.

     "Yield Payment Date" means with respect to each  Purchaser  Interest of the
Financial  Institutions  accruing Yield, the last day of the applicable  Tranche
Period;  provided that as to any Tranche Period of more than three months, Yield
shall be payable at three-month intervals.

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

                                                                   Exhibit 10.32

                           FIRST AMENDMENT TO LEASE
                           ------------------------

    This FIRST AMENDMENT TO LEASE ("Amendment") is made to be effective as of
the ____ day of November, 1999, by and between KILROY REALTY, L.P., a Delaware
limited partnership ("Landlord") and APPLIED MICRO CIRCUITS CORPORATION, a
Maryland corporation ("Tenant"), with reference to the following facts:

                               R E C I T A L S:
                               - - - - - - - -

    A.   Landlord and Tenant entered into that certain Lease dated February 26,
1999 (the "Lease"), for certain premises (the "Demised Premises"), more
particularly described in the Lease.

    B.   Capitalized terms used in this Amendment and not otherwise defined
herein shall have the meaning ascribed to them in the Lease.

    C.   Pursuant to the Lease, Landlord is required to complete construction
of the Building within twelve (12) months of the date of Tenant's Advance
Notice. Tenant has provided Landlord with such Advance Notice, and Landlord and
Tenant have commenced the design and construction of the Building. The draft
Preliminary Plans being reviewed by Landlord and Tenant indicate that the
rentable square footage of the Building will be approximately 62,415.

    D.   Landlord and Tenant desire to enter into this Amendment, subject to
the terms and conditions set forth herein, to (i) redefine the Building to
reflect the estimated increased square footage, (ii) confirm the Target
Commencement Date of October 11, 2000, (iii) modify the initial per square foot
Base Rent payable under the Lease, (iv) delete the provision of the Lease which
provides that the Base Rent be reduced in the event Tenant delivers its Advance
Notice, (v) reduce the anticipated parking ratio for the Demised Premises as a
result of the increased square footage of the Demised Premises, and (vi) make
certain other modifications to the Lease, as more particularly set forth below.

    NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant hereby agree to amend the
Lease, as follows:

    1.   Building. Pursuant to the current Preliminary Plans under review, it
         --------
is estimated that the rentable square footage of the Building will equal
approximately 62,415 square feet. Accordingly, all references in the Lease to
the estimated rentable square footage of the Building are hereby revised to
equal 62,415 square feet. The actual rentable square footage of the Building
shall be confirmed, and appropriate adjustments to Base Rent made, upon
Substantial Completion, as more particularly set forth in the Lease.

                                       1
<PAGE>

    2.   Target Commencement Date. As a result of Tenant's delivery of the
         ------------------------
Advance Notice, Landlord and Tenant hereby agree that the Target Commencement
Date is October 11, 2000.

    3.   Base Rent. Notwithstanding anything in the Lease to the contrary,
         ---------
Landlord and Tenant agree that the initial Base Rent shall equal $1.42 per
rentable square foot of the Building. Such Base Rent shall be increased every
twenty four (24) months by a factor of six percent (6%). The Base Rent schedule
set forth in Section 3.1 of the Lease is hereby deleted in its entirety and the
following Base Rent schedule is inserted in lieu thereof:

         Period         Annual Base Rent         Monthly Base Rent
         ------         ----------------         -----------------

       Months 1-24       $1,063,551.60              $ 88,629.30

       Months 25-48      $1,127,364.72              $ 93,947.06

       Months 49-72      $1,195,006.56              $ 99,583.88

       Months 73-96      $1,266,706.92              $105,558.91

       Months 97-120     $1,342,709.28              $111,892.44

    In consideration for Landlord agreeing to reduce the initial per square
foot Base Rent, any provisions of the Lease which required that Base Rent be
reduced in the event Tenant delivers an Advance Notice, are hereby deleted in
its entirety.

    4.   Parking Ratio. Notwithstanding anything to the contrary contained
         -------------
in the Lease, the estimated parking ratio for the Premises is hereby reduced to
equal approximately 3.5 parking spaces per 1,000 rentable square feet of the
Building.

    5.   Tenant Improvement Allowance. Landlord and Tenant hereby agree
         ----------------------------
that, notwithstanding the increase in the Building's estimated rentable square
footage, the Allowance shall be fixed at $1,450,000 and shall not be adjusted
based on the actual square footage of the Building.

    6.   Site Plan. The Site Plan attached to the Lease as a portion of
         ---------
Exhibit "B" is hereby deleted in its entirety and the Site Plan attached hereto
-----------
is hereby substituted therefor. Accordingly, any references in the Lease to the
Site Plan shall refer to such replacement Site Plan attached hereto.

    7.   Counterparts. This Amendment may be executed in multiple
         ------------
counterparts, all of which together shall constitute one and the same Amendment.

    8.   Effect of Amendment. This Amendment and all terms herein are
         -------------------
effective as of the date hereof subject to the terms and conditions set forth
herein. Except as expressly amended hereby, all terms and conditions of the
Lease shall continue in full force and effect throughout the Lease Term. The
Lease, as amended hereby, constitutes the entire agreement of

                                       2
<PAGE>

the parties and no further modification of the Lease shall be binding and
effective unless evidenced by an agreement, in writing, signed by both Landlord
and Tenant.

    IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment
as of the date first above written.

"Landlord"                                   KILROY REALTY, L.P.,
                                             a Delaware limited partnership

                                             BY: Kilroy Realty Corporation,
                                                 a Maryland corporation
                                                 Its General Partner

                                                 By: /s/ Steve Scott
                                                    ----------------------
                                                    Name: STEVE SCOTT
                                                    ----------------------
                                                    Its: SUP
                                                    ----------------------
                                                 By: [ILLEGIBLE]^^
                                                    ---------------------------
                                                 Name:
                                                      -------------------------
                                                      EXECUTIVE VICE PRESIDENT
                                                 Its: CHIEF OPERATING OFFICER
                                                     --------------------------

"Tenant"                                     APPLIED MICRO CIRCUITS CORPORATION,
                                             a Maryland corporation
                                             By: /s/ William E. Bendjsit
                                                --------------------------
                                             Name: WILLIAM E. BENDJSIT
                                                  ------------------------
                                             Title: VP/ CFO
                                                   -----------------------
                                             By:
                                                --------------------------
                                             Name:
                                                  ------------------------
                                             Title:
                                                   -----------------------

<PAGE>

                           [FLOORPLAN APPEARS HERE]

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