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                                                               Execution Version

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Exhibit 4.27

                           PEABODY ENERGY CORPORATION

                          6 7/8% SENIOR NOTES DUE 2013

                                    INDENTURE

                           Dated as of March 21, 2003

                          US BANK NATIONAL ASSOCIATION
                                     Trustee

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                  INDENTURE dated as of March 21, 2003 between Peabody Energy
Corporation, a Delaware corporation (the "COMPANY") and US Bank National
Association, as Trustee (the "TRUSTEE").

                  The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the 6 7/8%
Senior Notes due 2013 (the "NOTES").

                                   ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.          DEFINITIONS.

                  "144A Global Note" means a global note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.

                  "Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

                  "Additional Assets" means (i) any property or assets (other
than Capital Stock, Indebtedness or rights to receive payments over a period
greater than 180 days, other than with respect to coal supply contract
restructurings) that is usable by the Company or a Restricted Subsidiary in a
Permitted Business or (ii) the Capital Stock of a Person that is at the time, or
becomes, a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary.

                  "Additional Notes" means an unlimited amount of Notes (other
than Initial Notes or Exchange Notes) issued under this Indenture in accordance
with Sections 2.02 and 4.09 hereof.

                  "Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"CONTROL" (including, with correlative meanings, the terms "CONTROLLING,"
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or

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otherwise; provided that beneficial ownership of 10% or more of the Voting Stock
of a Person shall be deemed to be control.

                  "Agent" means any Registrar, Paying Agent or co-Registrar.

                  "Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Clearstream that apply to such
transfer, redemption or exchange.

                  "Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practices (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole will be governed by the
provisions of Section 4.15 and/or Section 5.01 hereof and not by the provisions
of Section 4.10 hereof, and (ii) the issue or sale by the Company or any of its
Restricted Subsidiaries of Equity Interests of any of the Company's Restricted
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $5.0 million or (b) for Net Proceeds in excess of $5.0
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (i) a transfer of assets by the Company to a Restricted
Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that
is permitted by, or an Investment that is not prohibited by, Section 4.07
hereof, (iv) a disposition of Cash Equivalents or obsolete, worn out or no
longer useful equipment, (v) foreclosures on assets, (vi) the sale or discount,
in each case without recourse, of accounts receivable arising in the ordinary
course of business, but only in connection with the compromise or collection
thereof and (vii) the factoring of accounts receivable arising in the ordinary
course of business pursuant to arrangements customary in the industry.

                  "Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.

                  "Board of Directors" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.

                  "Black Beauty" means, collectively, Black Beauty Coal Company
and its Subsidiaries, and Black Beauty Equipment Company and its Subsidiaries.

                  "Business Day" means any day other than a Legal Holiday.

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                  "Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.

                  "Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

                  "Cash Equivalents" means (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed or insured
by the U.S. Government or any agency thereof, (b) certificates of deposit and
time deposits with maturities of one year or less from the date of acquisition
and overnight bank deposits of any lender under the Credit Agreement or of any
commercial bank having capital and surplus in excess of $500.0 million, (c)
repurchase obligations of any lender under the Credit Agreement or of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than 90 days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-2 by S&P or P-2 by Moody's, or
carrying an equivalent rating by a nationally recognized rating agency if both
of S&P and Moody's cease publishing ratings of investments, (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of one year or less from the date of acquisition
backed by standby letters of credit issued by any lender under the Credit
Agreement or any commercial bank satisfying the requirements of clause (b) of
this definition or (g) shares of money market mutual or similar funds, at least
95% of the assets of which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.

                  "Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to any "PERSON" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than a Principal or a Related
Party of a Principal (as defined below), (ii) the adoption of a plan relating to
the liquidation or dissolution of the Company, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "PERSON" (as defined above), other than the
Principals and their Related Parties, becomes the "BENEFICIAL OWNER" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the Voting Stock of the

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Company (measured by voting power rather than number of shares) or (iv) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.

                  "Change of Control Triggering Event" means the occurrence of
both a Change of Control and a Rating Decline with respect to the Notes.

                  "Clearstream" means Clearstream Banking S.A. and any successor
thereto.

                  "Company" means Peabody Energy Corporation, and any and all
successors thereto.

                  "Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus (i)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (ii) consolidated
interest expense of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued and whether or not capitalized (including, without
limitation, amortization of debt issuance costs, deferred financing fees and
original issue discount, noncash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iii) an amount equal to any extraordinary loss plus any net loss
realized in connection with an Asset Sale (to the extent such losses were
deducted in computing such Consolidated Net Income), plus (iv) depreciation,
depletion, amortization (including amortization of goodwill and other
intangibles) and other noncash expenses (including, without limitation,
writedowns and impairment of property, plant and equipment and intangibles and
other long- lived assets) (excluding any such noncash expense to the extent that
it represents an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Restricted Subsidiaries for such period to the extent that such
depreciation, depletion, amortization and other noncash expenses were deducted
in computing such Consolidated Net Income, minus (v) noncash items increasing
such Consolidated Net Income for such period (other than accruals in accordance
with GAAP). Notwithstanding the foregoing, the provision for taxes on the income
or profits of, and the depreciation, depletion and amortization and other
noncash expenses of, a Restricted Subsidiary that is not a Subsidiary Guarantor
shall be added to Consolidated Net Income to compute Consolidated Cash Flow only
to the extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.

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                  "Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income of any Unrestricted Subsidiary, any
Person that is not a Subsidiary or any Person accounted for by the equity method
of accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof, (ii) the Net Income of any Restricted Subsidiary that is not a
Subsidiary Guarantor shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a transaction accounted for in a manner similar to a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, provided, however, that such Net Income shall not be excluded for
purposes of calculating the Fixed Charge Coverage Ratio, and (iv) the cumulative
effect of a change in accounting principles shall be excluded.

                  "Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date hereof or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

                  "Corporate Trust Office of the Trustee" shall be the address
of the Trustee specified in Section 12.02 hereof or such other address as to
which the Trustee may give notice to the Company.

                  "Credit Agreement" means that certain Credit Agreement, dated
as of March 21, 2003 by and among the Company, as borrower, Wachovia Securities,
Inc., Fleet Securities, Inc. and Lehman Brothers Inc. as Arrangers, Wachovia
Bank, National Association and Lehman Commercial Paper Inc., as the Syndication
Agents, Fleet National Bank, as the Administrative Agent, Morgan Stanley Senior
Funding, Inc. and US Bank National Association, as Documentation Agents, and the
other lenders party thereto, including any related notes, guarantees, collateral
documents, letters of credit, instruments and agreements executed in connection
therewith (and any appendices, annexes, exhibits or schedules to any of the
foregoing), and in each case as amended, restated, amended and restated,
modified, supplemented, renewed, refunded, replaced, restructured, repaid or
refinanced from time to time (whether with the original agents, arrangers and
lenders or other agents, arrangers and lenders or otherwise, whether provided
under the original credit agreement or other Credit Facilities or otherwise,
whether for a greater or lesser principal amount, whether with greater or lesser
interest and fees and whether including more or less collateral or guarantors).
Indebtedness under the Credit Agreement outstanding on the date on which notes
are first issued and authenticated under the indenture shall be deemed to have
been incurred on such date in

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reliance on, and to be permitted by, the exception provided by clause (i) of the
definition of Permitted Indebtedness.

                  "Credit Facilities" means, with respect to the Company or any
of its Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, amended
and restated, modified, supplemented, renewed, refunded, replaced, refinanced,
repaid or restructured in whole or in part from time to time.

                  "Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.

                  "Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.

                  "Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof, in
the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.

                  "Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

                  "Designated Noncash Consideration" means the fair market value
of noncash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officer's Certificate, setting
forth the basis of such valuation, executed by the principal executive officer
and the principal financial officer of the Company, less the amount of cash or
Cash Equivalents received in connection with a sale of such Designated Noncash
Consideration.

                  "Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date on which the Notes mature;
provided, however, that any Capital Stock that would constitute Disqualified
Stock solely because the Holders thereof have the right to require the Company
to repurchase such Capital Stock upon the occurrence of a Change of Control
Triggering Event or an Asset Sale shall not constitute Disqualified Stock if the
terms of such Capital Stock provide that the Company may not repurchase or
redeem any

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such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 4.07 hereof.

                  "Distribution Compliance Period" means the 40-day distribution
compliance period as defined in Regulation S.

                  "Domestic Subsidiary" means a Subsidiary that is (i) formed
under the laws of the United States of America or a state or territory thereof
or (ii) as of the date of determination, treated as a domestic entity or a
partnership or a division of a domestic entity for United States federal income
tax purposes.

                  "Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).

                  "Equity Offering" means any public or private sale of equity
securities (excluding Disqualified Stock) of the Company, other than any private
sales to an Affiliate of the Company.

                  "Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.

                  "Exchange Offer" means the registration by the Company under
the Securities Act of the Exchange Notes pursuant to a Registration Statement
pursuant to which the Company offers the holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such outstanding Transfer
Restricted Securities held by such holders for Exchange Notes in an aggregate
principal amount equal to the aggregate principal amount of the Transfer
Restricted Securities validly tendered in such exchange offer by such holders.

                  "Exchange Offer Registration Statement" means the Registration
Statement relating to the Exchange Offer, including the related Prospectus.

                  "Existing Indebtedness" means up to $1,253.0 million in
aggregate principal amount of Indebtedness of the Company and its Restricted
Subsidiaries (other than Indebtedness under the Credit Agreement, the Notes, the
May 1998 Senior Notes, the Senior Subordinated Notes, the Subsidiary Guarantees,
the May 1998 Senior Note Guarantees and the Subordinated Subsidiary Guarantees)
in existence on the date hereof, until such amounts are repaid.

                  "Fixed Charge Coverage Ratio" means with respect to any
specified Person for any period, the ratio of the Consolidated Cash Flow of such
Person and its

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Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the specified
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees,
repays, repurchases or redeems any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems preferred stock subsequent
to the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated and on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, repayment, repurchase or redemption
of Indebtedness, or such issuance, repurchase or redemption of preferred stock,
and the use of the proceeds therefrom as if the same had occurred at the
beginning of the applicable four-quarter reference period.

                  In addition, for purposes of calculating the Fixed Charge
Coverage Ratio:

                  (1)      acquisitions that have been made by the specified
Person or any of its Restricted Subsidiaries, including through mergers,
consolidations or otherwise (including acquisitions of assets used in a
Permitted Business) and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date will be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period, including any
pro forma expense and cost reductions and other operating improvements that have
occurred or are reasonably expected to occur, in the reasonable judgment of the
chief financial officer of the Company (regardless of whether those cost savings
or operating improvements could then be reflected in pro forma financial
statements in accordance with Regulation S-X promulgated under the Securities
Act or any other regulation or policy of the SEC related thereto);

                  (2)      the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, will be excluded; and

                  (3)      the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted Subsidiaries
following the Calculation Date.

                  "Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of original issue discount,
noncash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letters of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations, but excluding amortization of debt

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issuance costs) and (ii) the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period, and (iii) any
interest expense on the portion of Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all
dividend payments, whether or not in cash, on any series of preferred stock of
such Person or any of its Restricted Subsidiaries, other than dividend payments
on Equity Interests payable solely in Equity Interests of the Company (other
than Disqualified Stock) or to the Company or a Restricted Subsidiary of the
Company, times (b) a fraction, the numerator of which is one and the denominator
of which is one minus the effective combined federal, state and local tax rate
of such Person for such period, expressed as a decimal, in each case, for the
Company and its Restricted Subsidiaries on a consolidated basis and in
accordance with GAAP.

                  "Foreign Subsidiaries" means Subsidiaries of the Company that
are not Domestic Subsidiaries.

                  "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date hereof.

                  "Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.

                  "Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.

                  "Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.

                  "Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.

                  "Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange, interest rate or
commodity swap agreements, currency exchange, interest rate or commodity cap
agreements and currency exchange, interest rate or commodity collar agreements
and (ii) other agreements or arrangements designed to protect such Person
against fluctuations in currency exchange, interest rates

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or commodity prices, in each case for the purpose of risk management and not for
speculation.

                  "Holder" means a Person in whose name a Note is registered.

                  "IAI Global Note" means the Global Note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

                  "Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, if and to the extent any of the foregoing (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person,
but excluding from the definition of "Indebtedness," any of the foregoing that
constitutes (1) an accrued expense, (2) trade payables and (3) Obligations in
respect of reclamation, workers' compensation, including black lung, pensions
and retiree health care, in each case to the extent not overdue for more than 90
days. The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount, and (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness.

                  "Indenture" means this Indenture, as amended or supplemented
from time to time.

                  "Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.

                  "Initial Notes" means $650.0 million in aggregate principal
amount of Notes issued under this Indenture on the date hereof.

                  "Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, who are not also QIBs.

                  "Investment Grade Rating" means a rating equal to or higher
than Baa3 (or the equivalent) by Moody's or BBB- (or the equivalent) by S&P.

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                  "Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the form
of direct or indirect loans (including guarantees of any portion of Indebtedness
or other obligations), advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Restricted Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Restricted Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the fair market value of the Equity
Interests of such Restricted Subsidiary not sold or disposed of in an amount
determined as provided in Section 4.07 hereof.

                  "Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York, the city in which the Corporate
Trust Office of the Trustee is located or at a place of payment with respect to
the Notes are authorized by law, regulation or executive order to remain closed.
If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue on such payment for the intervening period.

                  "Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.

                  "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction), but excluding any of the foregoing arising as a result of a sale,
contribution, disposition or any other transfer of accounts, chattel paper,
payment intangibles, promissory notes and/or related assets otherwise permitted
under the terms hereof.

                  "Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.

                  "Marketable Securities" means, with respect to any Asset Sale,
any readily marketable equity securities that are (i) traded on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq National Market; and
(ii) issued by a corporation having a total equity market capitalization of not
less than $250.0 million; provided that the excess of (A) the aggregate amount
of securities of any one such corporation held by the Company and any Restricted
Subsidiary over (B) ten times the

                                       11

<PAGE>

average daily trading volume of such securities during the 20 immediately
preceding trading days shall be deemed not to be Marketable Securities; as
determined on the date of the contract relating to such Asset Sale.

                  "May 1998 Senior Note Guarantee" means the Guarantees of the
May 1998 Senior Notes by each of the subsidiary guarantors pursuant to the May
1998 Senior Note Indenture and any additional Guarantee of the May 1998 Senior
Notes to be executed by any Subsidiary of the Company pursuant to that
indenture.

                  "May 1998 Senior Note Indenture" means the indenture among the
Company, the subsidiary guarantors party thereto, US Bank National Association,
as successor to State Street Bank and Trust Company, as Trustee, dated as of May
18, 1998, governing the May 1998 Senior Notes.

                  "May 1998 Senior Notes" means the Company's Series A and
Series B 8 7/8% Senior Notes due 2008.

                  "Moody's" means Moody's Investors Service, Inc., or any
successor to the rating agency business thereof.

                  "Net Income" means, with respect to any Person, the net income
or loss of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain or loss, together with any related provision for taxes on such gain or
loss, realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or
loss, together with any related provision for taxes on such extraordinary or
nonrecurring gain or loss.

                  "Net Proceeds" means the aggregate proceeds (cash or property)
received by the Company or any of its Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any noncash consideration received in any Asset Sale) or
the sale or disposition of any Investment, net of the direct costs relating to
such Asset Sale, sale or disposition, (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.

                  "Non-Guarantor Subsidiaries" means (i) Black Beauty; (ii) the
Specified Subsidiaries, (iii) the Company's future Unrestricted Subsidiaries and
(iv) the Company's current and future Foreign Subsidiaries.

                                       12

<PAGE>

                  "Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) other than a pledge of the Equity Interests of any
Unrestricted Subsidiaries, (b) is directly or indirectly liable (as a guarantor
or otherwise) other than by virtue of a pledge of the Equity Interests of any
Unrestricted Subsidiaries, or (c) constitutes the lender; and (ii) no default
with respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity.

                  "Non-U.S. Person" means a Person who is not a U.S. Person.

                  "Notes" has the meaning assigned to it in the preamble to this
Indenture.

                  "Obligations" means any principal, premium (if any), interest,
penalties, fees, charges, expenses, indemnifications, reimbursement obligations,
damages, Guarantees and other liabilities and amounts payable under the
documentation governing any Indebtedness or in respect thereto.

                  "Offering" means the offering of the Notes by the Company.

                  "Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice President of such Person.

                  "Officer's Certificate" means a certificate signed on behalf
of the Company by an Officer of the Company who must be a vice-president, the
principal financial officer, the treasurer or the principal accounting officer
of the Company, that meets the requirements of Sections 12.04 and 12.05 hereof.

                  "Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Sections
12.04 and 12.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.

                  "Participant" means, with respect to the Depositary, Euroclear
or Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively, and, with respect to The Depository Trust Company,
shall include Euroclear and Clearstream.

                  "Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.

                                       13

<PAGE>

                  "Permitted Business" means coal production, coal mining, coal
brokering, coal transportation, mine development, power marketing, electricity
generation, power/energy sales and trading, energy transactions/asset
restructurings, risk management products associated with energy, fuel/power
integration and other energy-related businesses, ash disposal, environmental
remediation and development of related real estate assets, coal, natural gas,
petroleum or other fossil fuel exploration, production, marketing,
transportation and distribution, and other related businesses and activities of
the Company and its Subsidiaries as of the date hererof and any business or
activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.

                  "Permitted Investments" means (a) any Investment in the
Company or in a Restricted Subsidiary of the Company; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company or (ii) such Person, in one
transaction or a series of related transactions, is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (d) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company; (e) any
Investment existing on the date hereof (an "EXISTING INVESTMENT") and any
Investment that replaces, refinances or refunds an Existing Investment, provided
that the new Investment is in an amount that does not exceed the amount
replaced, refinanced or refunded and is made in the same Person as the
Investment replaced, refinanced or refunded, (f) advances to employees not in
excess of $10.0 million outstanding at any one time; (g) Hedging Obligations
permitted under clause (viii) of Section 4.09 hereof; (h) loans and advances to
officers, directors and employees for business-related travel expenses, moving
expenses and other similar expenses, in each case incurred in the ordinary
course of business; (i) any Investment in a Permitted Business (whether or not
an Investment in an Unrestricted Subsidiary) having an aggregate fair market
value, when taken together with all other Investments made pursuant to this
clause (i), does not exceed in aggregate amount the sum of (1) 15% of Total
Assets at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value) plus (2) 100% of the Net Proceeds from the sale or
disposition of any Investment previously made pursuant to this clause (i) or
100% of the amount of any dividend, distribution or payment from any such
Investment, net of income taxes paid or payable in respect thereof, in each case
up to the amount of the Investment that was made pursuant to this clause (i) and
50% of the amount of such Net Proceeds or 50% of such dividends, distributions
or payments, in each case received in excess of the amount of the Investments
made pursuant to this clause (i); (j) guarantees (including Guarantees) of
Indebtedness permitted under Section 4.09 hereof; (k) any Investment acquired by
the Company or any of its Restricted Subsidiaries (A) in exchange for any other
Investment or accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other Investment or
accounts

                                       14

<PAGE>

receivable or (B) as a result of the transfer of title with respect to any
secured Investment in default as a result of a foreclosure by the Company or any
of its Restricted Subsidiaries with respect to such secured Investment; (l) any
Investments in joint ventures in an amount, taken together will all other
Investments made pursuant to this clause (l), that does not exceed $100.0
million at the time outstanding; and (m) that portion of any Investment by the
Company or a Restricted Subsidiary in a Permitted Business to the extent that
the Company or such Restricted Subsidiary will receive in a substantially
concurrent transaction an amount in cash equal to the amount of such Investment
(or the fair market value of such Investment), net of any obligation to pay
taxes or other amounts in respect of the receipt of such cash; provided that the
receipt of such cash does not carry any obligation by the Company or such
Restricted Subsidiary to repay or return such cash; provided, however, that with
respect to any Investment, the Company may, in its sole discretion, allocate all
or any portion of any Investment to one or more of the above clauses so that the
entire Investment would be a Permitted Investment.

                  "Permitted Liens" means (i) Liens securing Indebtedness under
Credit Facilities that were permitted by the terms of this Indenture to be
incurred; (ii) Liens in favor of the Company; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Company or any Restricted Subsidiary of the Company; provided that such Liens
were in existence prior to the contemplation of such merger or consolidation and
do not extend to any assets other than those of the Person merged into or
consolidated with the Company; (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other kinds of social security; (vii)
Liens existing on the date hereof; (viii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (ix)
Liens on assets of Subsidiary Guarantors to secure Senior Debt of such
Subsidiary Guarantors that was permitted by this Indenture to be incurred; (x)
Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that (a) are
not incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of business)
and (b) do not in the aggregate materially detract from the value of the
property or materially impair the use thereof in the operation of business by
the Company or such Restricted Subsidiary; (xi) Liens on assets of Foreign
Subsidiaries to secure Indebtedness that was permitted by this Indenture to be
incurred; (xii) statutory liens of landlords, mechanics, suppliers, vendors,
warehousemen, carriers or other like Liens arising in the ordinary course of
business; (xiii) judgment Liens not giving rise to an Event of Default so long
as any appropriate legal proceeding that may have been duly initiated for the
review of such

                                       15

<PAGE>

judgment shall not have been finally terminated or the period within which such
legal proceeding may be initiated shall not have expired; (xiv) easements,
rights-of-way, zoning and similar restrictions and other similar encumbrances or
title defects incurred or imposed, as applicable, in the ordinary course of
business and consistent with industry practices which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto (as such property is used by the Company
or its Subsidiaries) or interfere with the ordinary conduct of the business of
the Company or such Subsidiaries; provided, however, that any such Liens are not
incurred in connection with any borrowing of money or any commitment to loan any
money or to extend any credit; (xv) Liens to secure Indebtedness (including
Capital Lease Obligations) permitted by clause (vi) of the second paragraph of
Section 4.09 hereof and other purchase money Liens to finance property or assets
of the Company or any Restricted Subsidiary acquired in the ordinary course of
business; provided that such Liens are only secured by such property or assets
so acquired or improved (including, in the case of the acquisition of Capital
Stock of a Person who becomes a Restricted Subsidiary, Liens on the assets of
the Person whose Capital Stock was so acquired); (xvi) Liens securing
Indebtedness under Hedging Obligations; provided that such Liens are only
secured by property or assets that secure the Indebtedness subject to the
Hedging Obligation; (xvii) Liens to secure Indebtedness permitted by clause
(xii) of the second paragraph of Section 4.09 hereof; and (xviii) Liens on the
Equity Interests of Unrestricted Subsidiaries securing Obligations of
Unrestricted Subsidiaries not otherwise prohibited by this Indenture.

                  "Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest and premium, if any, on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.

                                       16

<PAGE>

                  "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.

                  "Principals" means Lehman Brothers Merchant Banking Partners
II L.P., any of its respective Affiliates and executive officers of the Company
as of the date hereof.

                  "Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.

                  "Prospectus" means a prospectus included in a Registration
Statement as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.

                  "QIB" means a "qualified institutional buyer" as defined in
Rule 144A.

                  "Rating Agency" means each of S&P and Moody's, or if S&P or
Moody's or both shall not make a rating on the notes publicly available, a
nationally recognized statistical rating agency or agencies, as the case may be,
selected by the Company (as certified by a resolution of its Board of Directors)
which shall be substituted for S&P or Moody's or both, as the case may be.

                  "Rating Date" means the date which is 90 days prior to the
earlier of:

                  (a)      a Change of Control, and

                  (b)      public notice of the occurrence of a Change of
Control or of the intention of the Company to effect a Change of Control.

                  "Rating Decline" means the occurrence of the following on, or
within, 90 days before or after the earlier of: (i) the date of public notice of
the occurrence of a Change of Control or (ii) public notice of the intention of
the Company to effect a Change of Control (which 90-day period shall be extended
so long as the rating of the Notes is under publicly announced consideration for
possible downgrade by any of the Rating Agencies):

                  (a)      in the event the Notes are assigned an Investment
Grade Rating by both Rating Agencies on the Rating Date, the rating of the Notes
by one of the Rating Agencies shall be below an Investment Grade Rating; or

                  (b)      in the event the Notes are rated below an Investment
Grade Rating by at least one of the Rating Agencies on the Rating Date, the
rating of the Notes by at least one of the Rating Agencies shall be decreased by
one or more gradations (including gradations within rating categories as well as
between rating categories).

                                       17

<PAGE>

                  "Registration Default" has the meaning assigned to that term
in the Registration Rights Agreement.

                  "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 21, 2003, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements between the Company and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.

                  "Regulation S" means Regulation S promulgated under the
Securities Act.

                  "Regulation S Global Note" means the global note in the form
of Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of Notes sold in reliance on Regulation S.

                  "Related Party" with respect to any Principal means (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).

                  "Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.

                  "Restricted Definitive Note" means a Definitive Note bearing
the Private Placement Legend.

                  "Restricted Global Note" means a Global Note bearing the
Private Placement Legend.

                  "Restricted Investment" means any Investment other than a
Permitted Investment.

                  "Restricted Period" means the 40-day restricted period as
defined in Regulation S.

                                       18

<PAGE>

                  "Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.

                  "Rule 144" means Rule 144 promulgated under the Securities
Act.

                  "Rule 144A" means Rule 144A promulgated under the Securities
Act.

                  "Rule 903" means Rule 903 promulgated under the Securities
Act.

                  "Rule 904" means Rule 904 promulgated the Securities Act.

                  "S&P's" means Standard & Poor's Rating Group, Inc., or any
successor to the rating agency business thereof.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Senior Subordinated Note Indenture" means the indenture,
among the Company, the subsidiary guarantors party thereto, US Bank National
Association, as successor to State Street Bank and Trust Company, as Trustee,
dated as of May 18, 1998, governing the Senior Subordinated Notes.

                  "Senior Subordinated Notes" means the Company's 9 5/8% Series
B Senior Subordinated Notes due 2008.

                  "Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.

                  "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.

                  "Specified Subsidiaries" means Newhall Funding Company, CL
Hartford, L.L.C., CL Power Sales Three, L.L.C., CP Power Sales Sixteen, L.L.C.,
PG Power Sales Ones, L.L.C., PG Power Sales Two, L.L.C., PG Power Sales Three,
L.L.C., PG Power Sales Four, L.L.C., PG Power Sales Five, L.L.C., PG Power Sales
Six, L.L.C., PG Power Sales Seven, L.L.C., PG Power Sales Eight, L.L.C., PG
Power Sales Nine, L.L.C., PG Power Sales Ten, L.L.C., PG Power Sales Eleven,
L.L.C., PG Power Sales Twelve, L.L.C., PG Investments One, L.L.C., PG
Investments Two, L.L.C., PG Investments Three, L.L.C., PG Investments Four,
L.L.C., PG Investments Five, L.L.C., PG Investments Six, L.L.C., P&L Receivables
Company, LLC and United Minerals Company, LLC.

                  "Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or

                                       19

<PAGE>

principal was scheduled to be paid in the original documentation governing such
Indebtedness, and shall not include any contingent obligations to repay, redeem
or repurchase any such interest or principal prior to the date originally
scheduled for the payment thereof.

                  "Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).

                  "Subsidiary Guarantee" means the Guarantee of the notes by
each of the Subsidiary Guarantors pursuant to this Indenture and any additional
Guarantee of the notes to be executed by any Subsidiary of the Company pursuant
to Section 4.16.

                  "Subsidiary Guarantors" means all of the Company's existing
Domestic Subsidiaries, except for Black Beauty and the Specified Subsidiaries,
and any other Subsidiary that executes a Subsidiary Guarantee in accordance with
the provisions of the Indenture, and their respective successors and assigns.

                  "Subordinated Subsidiary Guarantees" means the Guarantees of
the Senior Subordinated Notes by each of the Subsidiary Guarantors pursuant to
the Senior Subordinated Note Indenture and any additional Guarantee of the
Senior Subordinated Notes to be executed by any Subsidiary of the Company
pursuant to that indenture.

                  "TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.

                  "Total Assets" means the total assets of the Company and its
Restricted Subsidiaries on a consolidated basis determined in accordance with
GAAP, as shown on the most recently available consolidated balance sheet of the
Company and its Restricted Subsidiaries.

                  "Treasury Rate" means the yield to maturity at the time of the
computation of the United States Treasury securities with a constant maturity
(as compiled by and published in the most recent Federal Reserve Statistical
Release H.15(519), which has become publicly available at least two Business
Days prior to the date fixed for redemption (or if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the then remaining average life to March 15, 2008; provided,
however, that if the average life of such Note is not equal to the constant
maturity of the United States Treasury security for which weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation

                                       20

<PAGE>

(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the average life of such Note is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.

                  "Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.

                  "Unrestricted Definitive Note" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.

                  "Unrestricted Global Note" means a permanent global Note in
the form of Exhibit A attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.

                  "Unrestricted Subsidiary" means (i) the Specified Subsidiaries
and (ii) any Subsidiary that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent
that such Person: (a) has no Indebtedness other than Non-Recourse Debt; (b) is
not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any obligation (x) to subscribe for additional Equity Interests in Unrestricted
Subsidiaries or (y) to maintain or preserve such Person's net worth (except with
respect to Permitted Investments); and (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; provided, however, that the
Company and its Restricted Subsidiaries may guarantee the performance of
Unrestricted Subsidiaries in the ordinary course of business except for
guarantees of Obligations in respect of borrowed money. Any such designation by
the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officer's Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.07 hereof.

                  "U.S. Person" means a U.S. person as defined in Rule 902(k)
under the Securities Act.

                  "Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.

                                       21

<PAGE>

                  "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.

SECTION 1.02.          OTHER DEFINITIONS.

<TABLE>
<CAPTION>
                                                                              Defined in
         Terms                                                                 Section
         -----                                                                 -------
<S>                                                                           <C>
"Affiliate Transaction".....................................................     4.11
"Asset Sale Offer"..........................................................     3.09
"Authentication Order"......................................................     2.02
"Benefited Party"...........................................................    10.01
"Change of Control Offer"...................................................     4.15
"Change of Control Payment".................................................     4.15
"Change of Control Payment Date"............................................     4.15
"Covenant Defeasance".......................................................     8.03
"Event of Default"..........................................................     6.01
"Excess Proceeds"...........................................................     4.10
"incur".....................................................................     4.09
"Investment Grade Date".....................................................     4.18
"Legal Defeasance"..........................................................     8.02
"Make Whole Premium"........................................................     3.07
"Offer Amount"..............................................................     3.09
"Offer Period"..............................................................     3.09
"Paying Agent"..............................................................     2.03
"Permitted Debt"............................................................     4.09
"Purchase Date".............................................................     3.09
"Registrar".................................................................     2.03
"Restricted Payments".......................................................     4.07
</TABLE>

SECTION 1.03.          INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

                  Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.

                  The following TIA terms used in this Indenture have the
following meanings:

                  "Indenture securities" means the Notes;

                  "Indenture security Holder" means a Holder of a Note;

                                       22

<PAGE>

                  "Indenture to be qualified" means this Indenture;

                  "Indenture Trustee" or "institutional Trustee" means the
Trustee; and

                  "obligor" on the Notes and the Subsidiary Guarantees means the
Company and the Subsidiary Guarantors, respectively, and any successor obligor
upon the Notes and the Subsidiary Guarantees, respectively.

                  All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.

SECTION 1.04.          RULES OF CONSTRUCTION.

                  Unless the context otherwise requires:

                  (1)      a term has the meaning assigned to it;

                  (2)      an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;

                  (3)      "or" is not exclusive;

                  (4)      words in the singular include the plural, and in the
plural include the singular;

                  (5)      provisions apply to successive events and
transactions; and

                  (6)      references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time.

                                   ARTICLE II

                                    THE NOTES

SECTION 2.01.          FORM AND DATING.

                  (a)      GENERAL. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto, which is
hereby incorporated in and expressly made part of this Indenture. The Notes may
have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof. The terms and
provisions contained in the Notes shall constitute, and are hereby expressly
made, a part of this Indenture and the Company, the Subsidiary Guarantors and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby. However, to the extent any

                                       23

<PAGE>

provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

                  (b)      FORM OF NOTES. The Notes shall be issued initially in
global form and shall be substantially in the form of Exhibit A attached hereto
(including the Global Note Legend thereon and the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Notes issued in definitive form
shall be substantially in the form of Exhibit A attached hereto (but without the
Global Note Legend thereon and without the "Schedule of Exchanges of Interests
in the Global Note" attached thereto). Each Global Note shall represent such of
the outstanding Notes as shall be specified therein and each shall provide that
it shall represent the aggregate principal amount of outstanding Notes from time
to time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.

                  (c)      BOOK-ENTRY PROVISIONS. This Section 2.01(c) shall
only apply to Global Notes deposited with the Trustee, as custodian for the
Depositary. Participants and Indirect Participants shall have no rights under
this Indenture with respect to any Global Note held on their behalf by the
Depositary or by the Trustee as the custodian for the Depositary or under such
Global Note, and the Depositary shall be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Participants or Indirect Participants, the Applicable Procedures or the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Note.

SECTION 2.02.          EXECUTION AND AUTHENTICATION.

                  (a)      One Officer shall sign the Notes for the Company by
manual or facsimile signature.

                  (b)      If an Officer whose signature is on a Note no longer
holds that office at the time a Note is authenticated, the Note shall
nevertheless be valid.

                  (c)      A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence that
the Note has been authenticated under this Indenture.

                                       24

<PAGE>

                  (d)      The Trustee shall, upon a written order of the
Company signed by an Officer (an "AUTHENTICATION ORDER"), authenticate Notes for
original issue.

                  (e)      The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.

                  (f)      The Company may issue an unlimited amount of
Additional Notes from time to time after the offering of the Initial Notes,
subject to Section 4.09 hereof. The Initial Notes, the Exchange Notes and any
Additional Notes subsequently issued under this Indenture shall be treated as a
single class for all purposes under this Indenture, including, without
limitation, waivers, amendments, redemptions and offers to purchase.

SECTION 2.03.          REGISTRAR AND PAYING AGENT.

                  (a)      The Company shall maintain an office or agency where
Notes may be presented for registration of transfer or for exchange
("REGISTRAR") and an office or agency where Notes may be presented for payment
("PAYING AGENT"). The Registrar shall keep a register of the Notes and of their
transfer and exchange. The Company may appoint one or more co-Registrars and one
or more additional paying agents. The term "REGISTRAR" includes any co-Registrar
and the term "PAYING AGENT" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any Agent
not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.

                  (b)      The Company initially appoints The Depository Trust
Company ("DTC") to act as Depositary with respect to the Global Notes.

                  (c)      The Company initially appoints the Trustee to act as
the Registrar and Paying Agent and to act as Custodian with respect to the
Global Notes.

SECTION 2.04.          PAYING AGENT TO HOLD MONEY IN TRUST.

                  (a)      The Company shall require each Paying Agent other
than the Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Trustee all money held by the Paying Agent for
the payment of principal, premium or Liquidated Damages, if any, or interest on
the Notes, and will notify the Trustee of any default by the Company in making
any such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the

                                       25

<PAGE>

Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.

SECTION 2.05.          HOLDER LISTS.

                  (a)      The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes and the Company shall otherwise comply with TIA Section 312(a).

SECTION 2.06.          TRANSFER AND EXCHANGE.

                  (a)      TRANSFER AND EXCHANGE OF GLOBAL NOTES. A Global Note
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes
will be exchanged by the Company for Definitive Notes if (1) the Company
delivers to the Trustee notice from the Depositary that it is unwilling or
unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 120 days after the date of
such notice from the Depositary or (2) the Company in its sole discretion
determines that the Global Notes (in whole but not in part) should be exchanged
for Definitive Notes and deliver a written notice to such effect to the Trustee.
Upon the occurrence of any of the preceding events in (1) or (2) above,
Definitive Notes shall be issued in denominations of $1,000 or integral
multiples thereof and in such names as the Depositary shall instruct the
Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as
provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

                  (b)      TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE
GLOBAL NOTES. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also

                                       26

<PAGE>

shall require compliance with either clause (i) or (ii) below, as applicable, as
well as one or more of the other following clauses, as applicable:

                           (i)      Transfer of Beneficial Interests in the Same
Global Note. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however, that
prior to the expiration of the Distribution Compliance Period, transfers of
beneficial interests in the Regulation S Global Note may not be made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note. No written orders or instructions shall
be required to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).

                           (ii)     All Other Transfers and Exchanges of
Beneficial Interests in Global Notes. In connection with all transfers and
exchanges of beneficial interests that are not subject to Section 2.06(b)(i)
above, the transferor of such beneficial interest must deliver to the Registrar
either (A)(1) a written order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable Procedures directing
the Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant account
to be credited with such increase or (B)(1) a written order from a Participant
or an Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such Definitive Note
shall be registered to effect the transfer or exchange referred to in (B)(1)
above. Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be
deemed to have been satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes. Upon instruction from the
Depository in accordance with the Applicable Procedures and delivery of any
applicable certificate required to be delivered to the Trustee by the terms of
Sections 2.06(b)(iii) or (iv) or Section 2.06(c)(i) or (ii), as applicable, the
Trustee shall adjust the principal amount of the relevant Global Note(s)
pursuant to Section 2.06(h) hereof.

                           (iii)    Transfer of Beneficial Interests in a
Restricted Global Note to Another Restricted Global Note. A beneficial interest
in any Restricted Global Note may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in another Restricted Global Note
if the transfer complies with the requirements of Section 2.06(b)(ii) above and
the Registrar receives the following:

                                       27

<PAGE>

                                    (A)      if the transferee will take
                  delivery in the form of a beneficial interest in the 144A
                  Global Note, then the transferor must deliver a certificate in
                  the form of Exhibit B hereto, including the certifications in
                  item (1) thereof;

                                    (B)      if the transferee will take
                  delivery in the form of a beneficial interest in the
                  Regulation S Global Note, then the transferor must deliver a
                  certificate in the form of Exhibit B hereto, including the
                  certifications in item (2) thereof; and

                                    (C)      if the transferee will take
                  delivery in the form of a beneficial interest in the IAI
                  Global Note, then the transferor must deliver a certificate in
                  the form of Exhibit B hereto, including the certifications and
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable.

                           (iv)     Transfer and Exchange of Beneficial
Interests in a Restricted Global Note for Beneficial Interests in an
Unrestricted Global Note. A beneficial interest in any Restricted Global Note
may be exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note if the
exchange or transfer complies with the requirements of Section 2.06(b)(ii) above
and:

                                    (A)      such exchange or transfer is
                  effected pursuant to the Exchange Offer in accordance with the
                  Registration Rights Agreement and the holder of the beneficial
                  interest to be transferred, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal or via the Depositary's
                  book-entry system that it is not (1) a broker-dealer, (2) a
                  Person participating in the distribution of the Exchange Notes
                  or (3) a Person who is an affiliate (as defined in Rule 144)
                  of the Company;

                                    (B)      such transfer is effected pursuant
                  to the Shelf Registration Statement in accordance with the
                  Registration Rights Agreement;

                                    (C)      such transfer is effected by a
                  Participating Broker-Dealer pursuant to the Exchange Offer
                  Registration Statement in accordance with the Registration
                  Rights Agreement; or

                                    (D)      the Registrar receives the
                  following:

                                             (1)      if the holder of such
                           beneficial interest in a Restricted Global Note
                           proposes to exchange such beneficial interest for a
                           beneficial interest in an Unrestricted Global Note, a

                                       28

<PAGE>

                           certificate from such holder in the form of Exhibit C
                           hereto, including the certifications in item (1)(a)
                           thereof; or

                                             (2)      if the holder of such
                           beneficial interest in a Restricted Global Note
                           proposes to transfer such beneficial interest to a
                           Person who shall take delivery thereof in the form of
                           a beneficial interest in an Unrestricted Global Note,
                           a certificate from such holder in the form of Exhibit
                           B hereto, including the certifications in item (4)
                           thereof;

                  and, in each such case set forth in this clause (D), if the
                  Registrar so requests or if the Applicable Procedures so
                  require, an Opinion of Counsel in form reasonably acceptable
                  to the Registrar to the effect that such exchange or transfer
                  is in compliance with the Securities Act and state "blue sky"
                  laws and that the restrictions on transfer contained herein
                  and in the Private Placement Legend are no longer required in
                  order to maintain compliance with the Securities Act.

                  If any such transfer is effected pursuant to clause (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
clause (B) or (D) above.

                           (v)      Transfer or Exchange of Beneficial Interests
in Unrestricted Global Notes for Beneficial Interests in Restricted Global Notes
Prohibited. Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.

                  (c)      TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR
DEFINITIVE NOTES.

                           (i)      Beneficial Interests in Restricted Global
Notes to Restricted Definitive Notes. If any holder of a beneficial interest in
a Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:

                                    (A)      if the holder of such beneficial
                  interest in a Restricted Global Note proposes to exchange such
                  beneficial interest for a Restricted Definitive Note, a
                  certificate from such holder in the form of Exhibit C hereto,
                  including the certifications in item (2)(a) thereof;

                                       29

<PAGE>

                                    (B)      if such beneficial interest is
                  being transferred to a QIB in accordance with Rule 144A, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (1) thereof;

                                    (C)      if such beneficial interest is
                  being transferred to a Non-U.S. Person in an offshore
                  transaction in accordance with Rule 903 or Rule 904, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                                    (D)      if such beneficial interest is
                  being transferred pursuant to an exemption from the
                  registration requirements of the Securities Act in accordance
                  with Rule 144 under the Securities Act, a certificate to the
                  effect set forth in Exhibit B hereto, including the
                  certifications in item (3)(a) thereof;

                                    (E)      if such beneficial interest is
                  being transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in clauses (B)
                  through (D) above, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications, certificates
                  and Opinion of Counsel required by item (3)(d) thereof, if
                  applicable;

                                    (F)      if such beneficial interest is
                  being transferred to the Company or any of its Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof; or

                                    (G)      if such beneficial interest is
                  being transferred pursuant to an effective registration
                  statement under the Securities Act, a certificate to the
                  effect set forth in Exhibit B hereto, including the
                  certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall mail or deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.

                                       30

<PAGE>

                           (ii)     Beneficial Interests in Restricted Global
Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an Unrestricted
Definitive Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:

                                    (A)      such exchange or transfer is
                  effected pursuant to the Exchange Offer in accordance with the
                  Registration Rights Agreement and the holder of such
                  beneficial interest, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  broker-dealer, (2) a Person participating in the distribution
                  of the Exchange Notes or (3) a Person who is an affiliate (as
                  defined in Rule 144) of the Company;

                                    (B)      such transfer is effected pursuant
                  to the Shelf Registration Statement in accordance with the
                  Registration Rights Agreement;

                                    (C)      such transfer is effected by a
                  Participating Broker-Dealer pursuant to the Exchange Offer
                  Registration Statement in accordance with the Registration
                  Rights Agreement; or

                                    (D)      the Registrar receives the
                  following:

                                             (1)      if the holder of such
                           beneficial interest in a Restricted Global Note
                           proposes to exchange such beneficial interest for an
                           Unrestricted Definitive Note, a certificate from such
                           holder in the form of Exhibit C hereto, including the
                           certifications in item (1)(b) thereof; or

                                             (2)      if the holder of such
                           beneficial interest in a Restricted Global Note
                           proposes to transfer such beneficial interest to a
                           Person who shall take delivery thereof in the form of
                           an Unrestricted Definitive Note, a certificate from
                           such holder in the form of Exhibit B hereto,
                           including the certifications in item (4) thereof;

                           and, in each such case set forth in this clause (D),
                           if the Registrar so requests or if the Applicable
                           Procedures so require, an Opinion of Counsel in form
                           reasonably acceptable to the Registrar to the effect
                           that such exchange or transfer is in compliance with
                           the Securities Act and state "blue sky" laws and that
                           the restrictions on transfer contained herein and in
                           the Private Placement Legend are no longer required
                           in order to maintain compliance with the Securities
                           Act.

                                       31

<PAGE>

                           (iii)    Beneficial Interests in Unrestricted Global
Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial interest for
a Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute
and the Trustee shall authenticate and mail or deliver to the Person designated
in the instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall mail or deliver
such Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial interest
pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement
Legend.

                  (d)      TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR
BENEFICIAL INTERESTS.

                           (i)      Restricted Definitive Notes to Beneficial
Interests in Restricted Global Notes. If any Holder of a Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following documentation:

                                    (A)      if the Holder of such Restricted
                  Definitive Note proposes to exchange such Note for a
                  beneficial interest in a Restricted Global Note, a certificate
                  from such Holder in the form of Exhibit C hereto, including
                  the certifications in item (2)(b) thereof;

                                    (B)      if such Restricted Definitive Note
                  is being transferred to a QIB in accordance with Rule 144A, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (1) thereof;

                                    (C)      if such Restricted Definitive Note
                  is being transferred to a Non-U.S. Person in an offshore
                  transaction in accordance with Rule 903 or Rule 904, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (2) thereof;

                                    (D)      if such Restricted Definitive Note
                  is being transferred pursuant to an exemption from the
                  registration requirements of the Securities Act in accordance
                  with Rule 144, a certificate to the effect

                                       32

<PAGE>

                  set forth in Exhibit B hereto, including the certifications in
                  item (3)(a) thereof;

                                    (E)      if such Restricted Definitive Note
                  is being transferred to an Institutional Accredited Investor
                  in reliance on an exemption from the registration requirements
                  of the Securities Act other than those listed in clauses (B)
                  through (D) above, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications, certificates
                  and Opinion of Counsel required by item (3)(d) thereof, if
                  applicable;

                                    (F)      if such Restricted Definitive Note
                  is being transferred to the Company or any of its
                  Subsidiaries, a certificate to the effect set forth in Exhibit
                  B hereto, including the certifications in item (3)(b) thereof;
                  or

                                    (G)      if such Restricted Definitive Note
                  is being transferred pursuant to an effective registration
                  statement under the Securities Act, a certificate to the
                  effect set forth in Exhibit B hereto, including the
                  certifications in item (3)(c) thereof,

         the Trustee shall cancel the Restricted Definitive Note, increase or
         cause to be increased the aggregate principal amount of, in the case of
         clause (A) above, the appropriate Restricted Global Note, in the case
         of clause (B) above, the 144A Global Note, in the case of clause (C)
         above, the Regulation S Global Note, and in all other cases, the IAI
         Global Note.

                           (ii)     Restricted Definitive Notes to Beneficial
Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note only
if:

                                    (A)      such exchange or transfer is
                  effected pursuant to the Exchange Offer in accordance with the
                  Registration Rights Agreement and the Holder, in the case of
                  an exchange, or the transferee, in the case of a transfer,
                  certifies in the applicable Letter of Transmittal that it is
                  not (1) a broker-dealer, (2) a Person participating in the
                  distribution of the Exchange Notes or (3) a Person who is an
                  affiliate (as defined in Rule 144) of the Company;

                                    (B)      such transfer is effected pursuant
                  to the Shelf Registration Statement in accordance with the
                  Registration Rights Agreement;

                                       33

<PAGE>

                                    (C)      such transfer is effected by a
                  Participating Broker-Dealer pursuant to the Exchange Offer
                  Registration Statement in accordance with the Registration
                  Rights Agreement; or

                                    (D)      the Registrar receives the
                  following:

                                             (1)      if the Holder of such
                           Definitive Notes proposes to exchange such Notes for
                           a beneficial interest in the Unrestricted Global
                           Note, a certificate from such Holder in the form of
                           Exhibit C hereto, including the certifications in
                           item (1)(c) thereof; or

                                             (2)      if the Holder of such
                           Definitive Notes proposes to transfer such Notes to a
                           Person who shall take delivery thereof in the form of
                           a beneficial interest in the Unrestricted Global
                           Note, a certificate from such Holder in the form of
                           Exhibit B hereto, including the certifications in
                           item (4) thereof;

                  and, in each such case set forth in this clause (D), if the
                  Registrar so requests or if the Applicable Procedures so
                  require, an Opinion of Counsel in form reasonably acceptable
                  to the Registrar to the effect that such exchange or transfer
                  is in compliance with the Securities Act and state "blue sky"
                  laws and that the restrictions on transfer contained herein
                  and in the Private Placement Legend are no longer required in
                  order to maintain compliance with the Securities Act.

                  Upon satisfaction of the conditions of any of the clauses in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.

                           (iii)    Unrestricted Definitive Notes to Beneficial
Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive
Note may exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Unrestricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or transfer,
the Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of the
Unrestricted Global Notes.

                           (iv)     Transfer or Exchange of Unrestricted
Definitive Notes to Beneficial Interests in Restricted Global Notes Prohibited.
An Unrestricted Definitive Note cannot be exchanged for, or transferred to
Persons who take delivery thereof in the form of, beneficial interests in a
Restricted Global Note.

                           (v)      Issuance of Unrestricted Global Notes. If
any such exchange or transfer from a Definitive Note to a beneficial interest is
effected pursuant to

                                       34

<PAGE>

clauses (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global
Note has not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of Definitive Notes so transferred.

                  (e)      TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR
DEFINITIVE NOTES. Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by its attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).

                           (i)      Restricted Definitive Notes to Restricted
Definitive Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form of a
Restricted Definitive Note if the Registrar receives the following:

                                    (A)      if the transfer will be made
                  pursuant to Rule 144A, then the transferor must deliver a
                  certificate in the form of Exhibit B hereto, including the
                  certifications in item (1) thereof;

                                    (B)      if the transfer will be made
                  pursuant to Rule 903 or Rule 904, then the transferor must
                  deliver a certificate in the form of Exhibit B hereto,
                  including the certifications in item (2) thereof; and

                                    (C)      if the transfer will be made
                  pursuant to any other exemption from the registration
                  requirements of the Securities Act, then the transferor must
                  deliver a certificate in the form of Exhibit B hereto,
                  including the certifications, certificates and Opinion of
                  Counsel required by item (3) thereof, if applicable.

                           (ii)     Restricted Definitive Notes to Unrestricted
Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted Definitive Note
if:

                                    (A)      such exchange or transfer is
                  effected pursuant to the Exchange Offer in accordance with the
                  Registration Rights Agreement and the Holder, in the case of
                  an exchange, or the transferee, in the case of a transfer,
                  certifies in the applicable Letter of Transmittal that it is
                  not (1) a broker-dealer, (2) a Person participating in the
                  distribution of the

                                       35

<PAGE>

                  Exchange Notes or (3) a Person who is an affiliate (as defined
                  in Rule 144) of the Company;

                                    (B)      any such transfer is effected
                  pursuant to the Shelf Registration Statement in accordance
                  with the Registration Rights Agreement;

                                    (C)      any such transfer is effected by a
                  Participating Broker-Dealer pursuant to the Exchange Offer
                  Registration Statement in accordance with the Registration
                  Rights Agreement; or

                                    (D)      the Registrar receives the
                  following:

                                             (1)      if the Holder of such
                           Restricted Definitive Notes proposes to exchange such
                           Notes for an Unrestricted Definitive Note, a
                           certificate from such Holder in the form of Exhibit C
                           hereto, including the certifications in item (1)(d)
                           thereof; or

                                             (2)      if the Holder of such
                           Restricted Definitive Notes proposes to transfer such
                           Notes to a Person who shall take delivery thereof in
                           the form of an Unrestricted Definitive Note, a
                           certificate from such Holder in the form of Exhibit B
                           hereto, including the certifications in item (4)
                           thereof;

                  and, in each such case set forth in this clause (D), if the
                  Registrar so requests, an Opinion of Counsel in form
                  reasonably acceptable to the Registrar to the effect that such
                  exchange or transfer is in compliance with the Securities Act
                  and state "blue sky" laws and that the restrictions on
                  transfer contained herein and in the Private Placement Legend
                  are no longer required in order to maintain compliance with
                  the Securities Act.

                           (iii)    Unrestricted Definitive Notes to
Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may
transfer such Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register such a
transfer, the Registrar shall register the Unrestricted Definitive Notes
pursuant to the instructions from the Holder thereof.

                  (f)      EXCHANGE OFFER. Upon the occurrence of the Exchange
Offer in accordance with the Registration Rights Agreement, the Company shall
issue and, upon receipt of an Authentication Order in accordance with Section
2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes
in an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (A) they are not
broker-dealers, (B) they are not participating in a distribution of the Exchange
Notes and (C) they are not affiliates (as defined in Rule 144) of the Company,

                                       36

<PAGE>

and accepted for exchange in the Exchange Offer and (ii) Unrestricted Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes tendered for acceptance by Persons who made the
foregoing certification and accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and mail or deliver to the Persons designated by the Holders of
Restricted Definitive Notes so accepted Unrestricted Definitive Notes in the
appropriate principal amount.

                  (g)      LEGENDS. The following legends shall appear on the
face of all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

                           (i)      Private Placement Legend.

                                    (A)      Except as permitted by clause (B)
                  below, each Global Note and each Definitive Note (and all
                  Notes issued in exchange therefor or substitution thereof)
                  shall bear the legend in substantially the following form:

                  "THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE BY ITS
ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT,
PRIOR TO (A) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS
PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY
PREDECESSOR OF THIS NOTE) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE
OF THE COMPANY WERE THE OWNERS OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE)
AND (B) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE
"RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (I) TO THE COMPANY, (II) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (III) FOR SO LONG AS THE
NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT

                                       37

<PAGE>

PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (IV) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (V) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, AND THE REGISTRAR
SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (IV) OR (V) TO REQUIRE THAT AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO THE COMPANY, THE TRUSTEE AND THE REGISTRAR IS
COMPLETED AND DELIVERED BY THE TRANSFEROR. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."

                                    (B)      Notwithstanding the foregoing, any
                  Global Note or Definitive Note issued pursuant to clauses
                  (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii),
                  (e)(iii) or (f) to this Section 2.06 (and all Notes issued in
                  exchange therefor or substitution thereof) shall not bear the
                  Private Placement Legend.

                           (ii)     Global Note Legend. Each Global Note shall
bear a legend in substantially the following form:

                  "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.

                  UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY
OR ITS AGENT FOR

                                       38

<PAGE>

REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN."

                  (h)      CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At
such time as all beneficial interests in a particular Global Note have been
exchanged for Definitive Notes or a particular Global Note has been redeemed,
repurchased or cancelled in whole and not in part, each such Global Note shall
be returned to or retained and cancelled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Note or for Definitive Notes, the principal amount of Notes represented by such
Global Note shall be reduced accordingly and an endorsement shall be made on
such Global Note by the Trustee or by the Depositary at the direction of the
Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.

                  (i)      GENERAL PROVISIONS RELATING TO TRANSFERS AND
EXCHANGES.

                           (i)      To permit registrations of transfers and
exchanges, the Company shall execute Global Notes and Definitive Notes, and the
Trustee shall authenticate Global Notes and Definitive Notes upon the Company's
order(including an Authentication Order given pursuant to Section 2.02) or at
the Registrar's request (in connection with any transfer or exchange of Notes
pursuant to this Section 2.06).

                           (ii)     No service charge shall be made to a Holder
of a beneficial interest in a Global Note or to a Holder of a Definitive Note
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).

                           (iii)    All Global Notes and Definitive Notes issued
upon any registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes or
Definitive Notes surrendered upon such registration of transfer or exchange.

                                       39

<PAGE>

                           (iv)     Neither the Registrar nor the Company shall
be required (A) to issue, to register the transfer of or to exchange any Notes
during a period beginning at the opening of business 15 days before the day of
any selection of Notes for redemption under Section 3.02 hereof and ending at
the close of business on the day of selection, (B) to register the transfer of
or to exchange any Note so selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part or (C) to register the
transfer of or to exchange a Note between a record date and the next succeeding
Interest Payment Date.

                           (v)      Prior to due presentment for the
registration of a transfer of any Note, the Trustee, any Agent and the Company
may deem and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of principal of
and interest on such Notes and for all other purposes, and none of the Trustee,
any Agent or the Company shall be affected by notice to the contrary.

                           (vi)     The Trustee shall authenticate Global Notes
and Definitive Notes in accordance with the provisions of Section 2.02 hereof.

                           (vii)    All certifications, certificates and
Opinions of Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be submitted
by facsimile.

                           (viii)   The Trustee is hereby authorized to enter
into a letter of representation with the Depositary in the form provided by the
Company and to act in accordance with such letter.

                           (ix)     Notwithstanding anything contained herein to
the contrary, neither the Trustee nor the Registrar shall be responsible for
ascertaining whether any purchase or transfer complies with the registration
provisions of or exemptions from the Securities Act or other state, federal
securities laws that may be applicable; provided, however, that if a certificate
is specifically required by the express terms of this Section 2.06 to be
delivered to a Trustee by a purchaser or required by the express terms of this
Section 2.06 to be delivered to a Trustee by a purchaser or transferee of a
Note, the Trustee shall be under a duty to receive and examine the same to
determine whether it confirms on its face to the requirements of this Section
2.06 and shall promptly notify the party delivering the same if such transfer
does not comply with such terms.

SECTION 2.07.          REPLACEMENT NOTES.

                  If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the

                                       40

<PAGE>

Trustee, any Agent and any authenticating agent from any loss that any of them
may suffer if a Note is replaced. The Company may charge for its expenses in
replacing a Note.

                  Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.

SECTION 2.08.          OUTSTANDING NOTES.

                  (a)      The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.

                  (b)      If a Note is replaced pursuant to Section 2.07
hereof, it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide purchaser.

                  (c)      If the principal amount of any Note is considered
paid under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.

                  (d)      If the Paying Agent (other than the Company, a
Subsidiary or an Affiliate of any thereof) holds, on a redemption date or
maturity date, money sufficient to pay Notes payable on that date, then on and
after that date such Notes shall be deemed to be no longer outstanding and shall
cease to accrue interest.

SECTION 2.09.          TREASURY NOTES.

                  In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee knows are so owned shall be so disregarded.

SECTION 2.10.          TEMPORARY NOTES.

                  Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay,

                                       41

<PAGE>

the Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.

                  Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.

SECTION 2.11.          CANCELLATION.

                  The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.

SECTION 2.12.          DEFAULTED INTEREST.

                  If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.

SECTION 2.13.          CUSIP NUMBERS.

                  The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use CUSIP numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or the
omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.

                                       42

<PAGE>

                                  ARTICLE III

                            REDEMPTION AND PREPAYMENT

SECTION 3.01.          NOTICES TO NOTE TRUSTEE.

                  If the Company elects to redeem Notes pursuant to the
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days (unless a later date is agreed to by the Trustee at its option)
but not more than 60 days before a redemption date, an Officer's Certificate
setting forth (i) the clause of this Indenture pursuant to which the redemption
shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed, (iv) the redemption price and (v) the CUSIP numbers of the Notes to be
redeemed.

SECTION 3.02.          SELECTION OF NOTES TO BE REDEEMED.

                  If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate (subject in any case to the Applicable Procedures of the Depository,
with respect to any Global Notes). In the event of partial redemption by lot,
the particular Notes to be redeemed shall be selected, unless otherwise provided
herein (or as otherwise provided in the Applicable Procedures, if applicable),
not less than 30 nor more than 60 days prior to the redemption date by the
Trustee from the outstanding Notes not previously called for redemption.

                  The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.

SECTION 3.03.          NOTICE OF REDEMPTION.

                  Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address, except that
redemption notices may be mailed more than 60 days prior to a redemption date if
the notice is issued in connection with a defeasance of the Notes pursuant to
Article VIII hereof or a satisfaction and discharge of this Indenture pursuant
to Article XI.

                                       43

<PAGE>

                  The notice shall identify the Notes to be redeemed, including
the CUSIP numbers, and shall state:

                  (a)      the redemption date;

                  (b)      as applicable, the redemption price pursuant to
Section 3.07(c) or (d), as the case may be, or if the redemption is made
pursuant to Section 3.07(b) a calculation of the redemption price;

                  (c)      if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note;

                  (d)      the name and address of the Paying Agent;

                  (e)      that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;

                  (f)      that, unless the Company defaults in making such
redemption payment and interest and Liquidated Damages, if any, on Notes called
for redemption ceases to accrue on and after the redemption date;

                  (g)      the paragraph of the Notes or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and

                  (h)      that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.

                  At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days, or such shorter
period allowed by the Trustee, prior to the redemption date, an Officer's
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in this Section 3.03.

SECTION 3.04.          EFFECT OF NOTICE OF REDEMPTION.

                  Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.

SECTION 3.05.          DEPOSIT OF REDEMPTION PRICE.

                  One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the

                                       44

<PAGE>

Paying Agent shall promptly return to the Company any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary to
pay the redemption price of, and accrued interest on, all Notes to be redeemed.

                  If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.

SECTION 3.06.          NOTES REDEEMED IN PART.

                  Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.

SECTION 3.07.          OPTIONAL REDEMPTION.

                  (a)      The Notes will be subject to redemption at any time
at the option of the Company, in whole or in part, upon not less than 30 nor
more than 60 days' notice to Holders.

                  (b)      Prior to March 15, 2008, the Notes will be redeemable
at a redemption price equal to 100% of the principal amount thereof plus the
applicable Make Whole Premium, plus, to the extent not included in the Make
Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to
the date of redemption. For purposes of the foregoing, "MAKE WHOLE PREMIUM"
means, with respect to a Note, an amount equal to the excess of (1) the present
value of the remaining interest, premium, if any, and principal payments due on
such Note as if such Note were redeemed on March 15, 2008, computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (2) the
outstanding principal amount of such Note.

                  (c)      On or after March 15, 2008, the Notes will be
redeemable at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon and Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on March 15 of the years indicated below:

                                       45

<PAGE>

<TABLE>
<CAPTION>
Year                                                      Percentage
<C>                                                       <C>
2008...............................................        103.438%
2009...............................................        102.292%
2010...............................................        101.146%
2011 and thereafter................................        100.000%
</TABLE>

                  (d)      Notwithstanding the provisions of clauses (a), (b)
and (c) of this Section 3.07, during the first 36 months after the date hereof,
the Company may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes issued under this Indenture at a redemption price of
106.875% of the principal amount thereof, plus accrued and unpaid interest
thereon and Liquidated Damages, if any, to the redemption date, with the net
cash proceeds of one or more Equity Offerings; provided that at least 65% of the
aggregate principal amount of Notes issued remain outstanding immediately after
the occurrence of such redemption (excluding Notes held by the Company and its
Subsidiaries); and provided, further, that such redemption shall occur within
120 days of the date of the closing of such Equity Offering.

                  (e)      Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Section 3.01 through 3.06 hereof.

SECTION 3.08.          MANDATORY REDEMPTION.

                  The Company shall not be required to make mandatory redemption
or sinking fund payments with respect to the Notes.

SECTION 3.09.          OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.

                  In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an offer to all Holders to purchase Notes
(an "ASSET SALE OFFER"), it shall follow the procedures specified below.

                  The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "OFFER PERIOD"). No
later than five Business Days after the termination of the Offer Period (the
"PURCHASE DATE"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "OFFER AMOUNT")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.

                  If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.

                                       46

<PAGE>

                  Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset
Sale Offer shall be made to all Holders. The notice, which shall govern the
terms of the Asset Sale Offer, shall state:

                           (i)      that the Asset Sale Offer is being made
pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the
Asset Sale Offer shall remain open;

                           (ii)     the Offer Amount, the purchase price and the
Purchase Date;

                           (iii)    that any Note not tendered or accepted for
payment shall continue to accrete or accrue interest;

                           (iv)     that, unless the Company defaults in making
such payment, any Note accepted for payment pursuant to the Asset Sale Offer
shall cease to accrete or accrue interest after the Purchase Date;

                           (v)      that Holders electing to have a Note
purchased pursuant to an Asset Sale Offer may only elect to have all of such
Note purchased and may not elect to have only a portion of such Note purchased;

                           (vi)     that Holders electing to have a Note
purchased pursuant to any Asset Sale Offer shall be required to surrender the
Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;

                           (vii)    that Holders shall be entitled to withdraw
their election if the Company, the depositary or the Paying Agent, as the case
may be, receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;

                           (viii)   that, if the aggregate principal amount of
Notes surrendered by Holders exceeds the Offer Amount, the Company shall select
the Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and

                                       47

<PAGE>

                           (ix)     that Holders whose Notes were purchased only
in part shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry transfer).

                  On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officer's Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.

                  Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.

                                   ARTICLE IV

                                    COVENANTS

SECTION 4.01.          PAYMENT OF NOTES.

                  The Company or a Subsidiary Guarantor shall pay or cause to be
paid the principal of, premium, if any, and interest and Liquidated Damages, if
any, on the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest and Liquidated Damages, if any, shall
be considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due
date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest and Liquidated Damages, if any, then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.

                  The Company or a Subsidiary Guarantor shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal at the rate equal to the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including postpetition
interest in any proceeding under any Bankruptcy

                                       48

<PAGE>

Law) on overdue installments of interest and Liquidated Damages (without regard
to any applicable grace period) at the same rate to the extent lawful.

                  Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.

SECTION 4.02.          MAINTENANCE OF OFFICE OR AGENCY.

                  The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-Registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.

                  The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

                  The Company hereby designates the office of the Trustee
located at 100 Wall Street, Suite 1600, New York, New York 10005 as one such
office or agency of the Company in accordance with Section 2.03.

SECTION 4.03.          REPORTS.

                  (a)      Whether or not required by the rules and regulations
of the SEC, so long as any Notes are outstanding, the Company shall furnish to
the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Company and
its consolidated Subsidiaries (showing in reasonable detail, either on the face
of the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report

                                       49

<PAGE>

thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports, in each case, within the time
periods specified in the SEC's rules and regulations. In addition, whether or
not required by the rules and regulations of the SEC, the Company shall file a
copy of all such information and reports with the SEC for public availability
within the time periods specified in the SEC's rules and regulations (unless the
SEC will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. The Company shall at
all times comply with TIA Section 314(a).

                  (b)      For so long as any Notes remain outstanding, the
Company and the Subsidiary Guarantors shall furnish to the Holders and to
securities analysts and prospective investors, upon their request, the
information, if any, required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.

SECTION 4.04.          COMPLIANCE CERTIFICATE.

                  (a)      The Company and each Subsidiary Guarantor (to the
extent that such Subsidiary Guarantor is so required under the TIA) shall
deliver to the Trustee, within 90 days after the end of each fiscal year, an
Officer's Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.

                  (b)      So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article IV or Article V hereof or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.

                                       50

<PAGE>

                  (c)      The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, as soon as possible, but in no event later
than five days after any Officer becoming aware of (i) any Default or Event of
Default, an Officer's Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto;
and (ii) any Registration Default, an Officer's Certificate specifying such
Registration Default, the date thereof and the action the Company is taking or
proposing to take in respect thereof.

SECTION 4.05.          TAXES.

                  The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.

SECTION 4.06.          STAY, EXTENSION AND USURY LAWS.

                  The Company and each of the Subsidiary Guarantors covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Company and each of the Subsidiary Guarantors (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.

SECTION 4.07.          RESTRICTED PAYMENTS.

                  The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving
the Company or any of its Restricted Subsidiaries) or to the direct or indirect
holders of the Company's or any of its Restricted Subsidiaries' Equity Interests
in their capacity as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company); (ii) purchase,
redeem or otherwise acquire or retire for value (including, without limitation,
in connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company; (iii)
make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Notes or any Subsidiary Guarantee, except a payment of interest or principal
at Stated Maturity or Indebtedness permitted under clause (vii) of Section 4.09
hereof or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through

                                       51

<PAGE>

(iv) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at
the time of and after giving effect to such Restricted Payment:

                  (a)      no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; and

                  (b)      the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof; and

                  (c)      such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and its Subsidiaries
after the date of the May 1998 Senior Note Indenture (excluding Restricted
Payments permitted by clauses (ii), (iii), (iv), (v), (ix), (x) and (xi) of the
next succeeding paragraph), is less than the sum, without duplication, of (i)
50% of the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter commencing
after the date of the May 1998 Senior Note Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net cash proceeds received by the Company (including the fair
market value of any Permitted Business or assets used or useful in a Permitted
Business to the extent acquired in consideration of Equity Interests (other than
Disqualified Stock) of the Company) since the date of the May 1998 Senior Note
Indenture as a contribution to its common equity capital or from the issue or
sale of Equity Interests of the Company (other than Disqualified Stock and other
than sales to a Subsidiary of the Company) or from the issue or sale of
convertible or exchangeable Disqualified Stock or convertible or exchangeable
debt securities of the Company that have been converted into or exchanged for
such Equity Interests (other than Disqualified Stock or debt securities sold to
a Subsidiary of the Company), plus (iii) to the extent that any Restricted
Investment that reduced the amount available for Restricted Payments under this
clause (c) is sold for cash or otherwise liquidated or repaid for cash or any
dividend or payment is received by the Company or a Restricted Subsidiary after
the date of the date of the May 1998 Senior Note Indenture in respect of such
Investment, 100% of the amount of Net Proceeds or dividends or payments
(including the fair market value of property) received in connection therewith,
up to the amount of the Restricted Investment that reduced this clause (c), as
the case may be, and thereafter 50% of the amount of Net Proceeds or dividends
or payments (including the fair market value of property) received in connection
therewith (except that the amount of dividends or payments received in respect
of payments of Obligations in respect of such Investments, such as taxes, shall
not increase the amounts under this clause (c)), plus (iv) to the extent that
any Unrestricted Subsidiary of the Company is redesignated as a Restricted
Subsidiary after the date hereof, 100% of the fair market value of the Company's
Investment in such Subsidiary as of the date of such redesignation up to the
amount of the Restricted Investments made in

                                       52

<PAGE>

such Subsidiary that reduced this clause (c) and 50% of the excess of the fair
market value of the Company's Investment in such Subsidiary as of the date of
such redesignation over (1) the amount of the Restricted Investment that reduced
this clause (c) and (2) any amounts that increased the amount available as a
Permitted Investment; provided, further, that any amounts that increase this
clause (c) shall not duplicatively increase amounts available as Permitted
Investments.

                  The foregoing provisions will not prohibit:

                           (i)      the payment of any dividend within 60 days
         after the date of declaration thereof, if at said date of declaration
         such payment would have complied with the provisions of the this
         Indenture;

                           (ii)     the redemption, repurchase, retirement,
         defeasance or other acquisition of any subordinated Indebtedness or
         Equity Interests of the Company in exchange for, or out of the net
         cash proceeds of the substantially concurrent sale (other than to a
         Restricted Subsidiary of the Company) of, other Equity Interests of
         the Company (other than any Disqualified Stock); provided that the
         amount of any such net cash proceeds that are utilized for any such
         redemption, repurchase, retirement, defeasance or other acquisition
         shall be excluded from clause (c)(ii) of the preceding paragraph;

                           (iii)    the defeasance, redemption, repurchase or
         other acquisition of subordinated Indebtedness with the net cash
         proceeds from an incurrence of Permitted Refinancing Indebtedness;

                           (iv)     dividends or distributions by a Restricted
         Subsidiary of the Company so long as, in the case of any dividend or
         distribution payable on or in respect of any class or series of
         securities issued by a Restricted Subsidiary, the Company or a
         Restricted Subsidiary receives at least its pro rata share of such
         dividend or distribution in accordance with its Equity Interests in
         such class or series of securities;

                           (v)      Investments in Unrestricted Subsidiaries
         having an aggregate fair market value not to exceed the amount, at
         the time of such Investment, substantially concurrently contributed
         in cash or Cash Equivalents to the common equity capital of the
         Company after the date hereof; provided that any such amount
         contributed shall be excluded from the calculation made pursuant to
         clause (c) above;

                           (vi)     the payment of dividends on the Company's
         Common Stock in an amount which, when combined with all such
         dividends, does not exceed $35.0 million in the aggregate in any
         calendar year;

                           (vii)    the repurchase, redemption or other
         acquisition or retirement for value of any Equity Interests of the
         Company or any Restricted

                                       53

<PAGE>

         Subsidiary of the Company held by any present or former employee or
         director of the Company (or any of its Restricted Subsidiaries)
         pursuant to any management equity subscription agreement or stock
         option agreement or any other management or employee benefit plan in
         effect as of the date hereof; provided that (A) the aggregate price
         paid for all such repurchased, redeemed, acquired or retired Equity
         Interests shall not exceed $5.0 million in any twelve-month period
         (with unused amounts in any calendar year being carried over to
         succeeding calendar years subject to a maximum (without giving effect
         to the following proviso) of $10.0 million in any calendar year);
         provided further that such amount in any calendar year may be
         increased by an amount not to exceed (x) the cash proceeds from the
         sale of Equity Interests of the Company or a Restricted Subsidiary to
         members of management and directors of the Company and its
         Subsidiaries that occurs after the date hereof, plus (y) the cash
         proceeds of key- man life insurance policies received by the Company
         and its Restricted Subsidiaries after the date hereof, less (z) the
         amount of any Restricted Payments previously made pursuant to clauses
         (x) and (y) of this subparagraph (vii) and, provided further, that
         cancellation of Indebtedness owing to the Company from members of
         management of the Company or any of its Restricted Subsidiaries in
         connection with a repurchase of Equity Interests of the Company or a
         Restricted Subsidiary will not be deemed to constitute a Restricted
         Payment for purposes of this covenant or any other provision of this
         Indenture and (B) no Default or Event of Default shall have occurred
         and be continuing immediately after such transaction;

                           (viii)   repurchases of Equity Interests deemed to
         occur upon exercise of stock options if such Equity Interests
         represent a portion of the exercise price of such options;

                           (ix)     the repurchase, redemption or other
         acquisition or retirement for value of the Senior Subordinated Notes;

                           (x)      the repurchase, redemption or other

         acquisition or retirement for value of the 5% Subordinated Note; and

                           (xi)     other Restricted Payments not otherwise
         prohibited by this Section 4.07 in an aggregate amount not to exceed
         $25.0 million under this clause (xi).

                  As of the date hereof, all of the Company's Subsidiaries,
other than the Specified Subsidiaries, are Restricted Subsidiaries. The Board of
Directors may designate any Restricted Subsidiary to be an Unrestricted
Subsidiary if such designation would not cause a Default. For purposes of making
such determination, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated shall be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this Section 4.07. All such outstanding Investments shall
be

                                       54

<PAGE>

deemed to constitute Investments in an amount equal to the fair market value of
such Investments at the time of such designation. Such designation will only be
permitted if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.

                  If, at any time, any Unrestricted Subsidiary would fail to
meet the requirements in the definition of "UNRESTRICTED SUBSIDIARY" as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.

                  The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any noncash Restricted Payment or any adjustment made
pursuant to paragraph (c) of this Section 4.07 shall be determined by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $25.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officer's
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed.

                  If any Restricted Investment is sold or otherwise liquidated
or repaid or any dividend or payment is received by the Company or a Restricted
Subsidiary and such amounts may be credited to clause (c) above, then such
amounts will be credited only to the extent of amounts not otherwise included in
Consolidated Net Income and that do not otherwise increase the amount available
as a Permitted Investment.

SECTION 4.08.          DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
                       RESTRICTED SUBSIDIARIES.

                  The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary that is not a Subsidiary Guarantor to
(i)(a) pay dividends or make any other

                                       55

<PAGE>

distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries. However, the
foregoing restrictions will not apply to encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date hereof,
(b) the Credit Agreement, (c) this Indenture, the Notes and the Subsidiary
Guarantees, (d) applicable law or any applicable rule, regulation or order, (e)
any instrument governing Indebtedness or Capital Stock of a Person acquired by
the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (f) customary
non-assignment provisions in leases and other agreements entered into in the
ordinary course of business and consistent with past practices, (g) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (h) any agreement for the sale of a Restricted Subsidiary
that restricts distributions by that Restricted Subsidiary pending its sale, (i)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced, (j) secured Indebtedness otherwise permitted
to be incurred pursuant to the provisions of Section 4.12 hereof that limits the
right of the debtor to dispose of the assets securing such Indebtedness, (k)
provisions with respect to the disposition or distribution of assets or property
in joint venture agreements and other similar agreements entered into in the
ordinary course of business, (l) restrictions on cash or other deposits or net
worth imposed by customers or lessors under contracts or leases entered into in
the ordinary course of business and (m) any encumbrances or restrictions imposed
by any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings of the contracts,
instruments or obligations referred to in clauses (a) through (l) above,
provided that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good faith
judgment of the Company's Board of Directors, not materially more restrictive in
the aggregate with respect to such dividend and other payment restrictions than
those (considered as a whole) contained in the dividend or other payment
restrictions prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing.

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SECTION 4.09.          INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
                       STOCK.

                  The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "INCUR" ) any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its Subsidiaries to issue any shares of preferred stock; provided,
however, that the Company may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock and the Company's Restricted Subsidiaries may
incur Indebtedness or issue Disqualified Stock or preferred stock if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued would have been at least 2.0 to
1.0, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred, or
the Disqualified Stock or preferred stock had been issued, as the case may be,
at the beginning of such four-quarter period.

                  The provisions of the first paragraph of this Section 4.09
will not prohibit the incurrence of any of the following items of Indebtedness
(collectively, "PERMITTED DEBT"):

                           (i)      the incurrence by the Company of additional
         Indebtedness under any Credit Facilities (and the Guarantee thereof
         by the Subsidiary Guarantors); provided that the aggregate principal
         amount of all Indebtedness outstanding under this clause (i) after
         giving effect to such incurrence does not exceed an amount equal to
         $1,050.0 million;

                           (ii)     the incurrence by the Company and its

         Restricted Subsidiaries of the Existing Indebtedness;

                           (iii)    the incurrence by the Company and the
         Subsidiary Guarantors of Indebtedness represented by the notes issued
         pursuant to this offering, and any Exchange Notes issued in respect
         of notes outstanding under the indenture;

                           (iv)     (A) the Guarantee by the Company or any of
         the Subsidiary Guarantors of Indebtedness of the Company or a
         Restricted Subsidiary of the Company or (B) the incurrence of
         Indebtedness of a Restricted Subsidiary to the extent that such
         Indebtedness is supported by a letter of credit, in each case that
         was permitted to be incurred by another provision of this covenant;

                           (v)      the incurrence by the Company or any of its
         Restricted Subsidiaries of Indebtedness (including Capital Lease
         Obligations) to finance the acquisition (including by direct
         purchase, by lease or indirectly by the acquisition of the Capital
         Stock of a Person that becomes a Restricted Subsidiary as a result

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         of such acquisition) or improvement of property (real or personal) in
         an aggregate principal amount which, when aggregated with the
         principal amount of all other Indebtedness then outstanding pursuant
         to this clause (v) and including all Permitted Refinancing
         Indebtedness incurred to refund, refinance or replace any
         Indebtedness incurred pursuant to this clause (v), does not exceed an
         amount equal to 5% of Total Assets at the time of such incurrence;

                           (vi)     the incurrence by the Company or any of its
         Restricted Subsidiaries of Permitted Refinancing Indebtedness in
         exchange for, or the net proceeds of which are used to refund,
         refinance or replace Indebtedness (other than intercompany
         Indebtedness) that was permitted by this Indenture to be incurred
         under the first paragraph hereof or clauses (ii), (iii) or (vi) of
         this paragraph;

                           (vii)    the incurrence by the Company or any of its
         Restricted Subsidiaries of intercompany Indebtedness between or among
         the Company and any of its Restricted Subsidiaries; provided,
         however, that (i) if the Company is the obligor on such Indebtedness,
         such Indebtedness is expressly subordinated to the prior payment in
         full in cash of all Obligations with respect to the Notes and (ii)(A)
         any subsequent issuance or transfer of Equity Interests that results
         in any such Indebtedness being held by a Person other than the
         Company or a Restricted Subsidiary thereof and (B) any sale or other
         transfer of any such Indebtedness to a Person that is not either the
         Company or a Restricted Subsidiary thereof shall be deemed, in each
         case, to constitute an incurrence of such Indebtedness by the Company
         or such Restricted Subsidiary, as the case may be, that was not
         permitted by this clause (vii);

                           (viii)   the incurrence by the Company or any of its
         Restricted Subsidiaries of Hedging Obligations that are incurred in
         the ordinary course of business for the purpose of risk management
         and not for the purpose of speculation;

                           (ix)     the incurrence by the Company's Unrestricted
         Subsidiaries of Non-Recourse Debt, provided, however, that if any
         such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
         Subsidiary, such event shall be deemed to constitute an incurrence of
         Indebtedness by a Restricted Subsidiary of the Company that was not
         permitted by this clause (ix), and the issuance of preferred stock by
         Unrestricted Subsidiaries;

                           (x)      the incurrence of Indebtedness solely in
         respect of performance, surety and similar bonds and letters of
         credit or completion or performance guarantees (including, without
         limitation, performance guarantees pursuant to coal supply agreements
         or equipment leases), to the extent that such incurrence does not
         result in the incurrence of any obligation for the payment of
         borrowed money to others;

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                           (xi)     the incurrence of Indebtedness arising from
         agreements of the Company or a Restricted Subsidiary providing for
         indemnification, adjustment of purchase price or similar obligations,
         in each case, incurred or assumed in connection with the disposition
         of any business, assets or a Subsidiary; provided, however that (i)
         such Indebtedness is not reflected on the balance sheet of the
         Company or any Restricted Subsidiary (contingent obligations referred
         to in a footnote to financial statements and not otherwise reflected
         on the balance sheet will not be deemed to be reflected on such
         balance sheet for purposes of this clause (i)) and (ii) the maximum
         assumable liability in respect of all such Indebtedness shall at no
         time exceed the gross proceeds including noncash proceeds (the fair
         market value of such noncash proceeds being measured at the time
         received and without giving effect to any subsequent changes in
         value) actually received by the Company and its Restricted
         Subsidiaries in connection with such disposition; and

                           (xii)    the incurrence by the Company or any of its
         Restricted Subsidiaries of additional Indebtedness in an aggregate
         principal amount (or accreted value, as applicable) at any time
         outstanding, including all Permitted Refinancing Indebtedness
         incurred to refund, refinance or replace any Indebtedness incurred
         pursuant to this clause (xii), not to exceed $350.0 million.

                  The Company shall not incur, and shall not permit its
Restricted Subsidiaries to incur, any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of the Company or such Restricted Subsidiary unless such Indebtedness is also
contractually subordinated in right of payment to the Notes, or the Subsidiary
Guarantees, as the case may be, on substantially identical terms; provided,
however, that no Indebtedness of the Company or any Restricted Subsidiary shall
be deemed to be contractually subordinated in right of payment to any other
Indebtedness of the Company or any Restricted Subsidiary solely by virtue of
being unsecured.

                  For purposes of determining compliance with this Section 4.09,
in the event that an item of proposed Indebtedness, including Acquired Debt,
meets the criteria of more than one of the categories of Permitted Debt
described in clauses (i) through (xii) above or is entitled to be incurred
pursuant to the first paragraph of this Section 4.09, the Company shall, in its
sole discretion, classify or reclassify such item of Indebtedness in any manner
that complies with this Section 4.09. For the purposes of determining compliance
with any dollar-denominated restriction on the incurrence of Indebtedness
denominated in a foreign currency, the dollar-equivalent principal amount of
such Indebtedness incurred pursuant thereto shall be calculated based on the
relevant currency exchange rate in effect on the date that such Indebtedness was
incurred. Accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
will not be deemed to be an incurrence of Indebtedness or an

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<PAGE>

issuance of Disqualified Stock for purposes of this Section 4.09; provided, in
each such case, that the amount thereof is included in Fixed Charges of the
Company as accrued.

SECTION 4.10.          ASSET SALES.

                  The Company will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or
the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value as determined in
good faith by the Company of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefore
received by the Company or such Subsidiary is in the form of cash, Cash
Equivalents or Marketable Securities; provided that the following amounts shall
be deemed to be cash: (w) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases the Company or such Restricted Subsidiary from further
liability, (x) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash within 180 days
following the closing of such Asset Sale (to the extent of the cash received),
(y) any Designated Noncash Consideration received by the Company or any of its
Restricted Subsidiaries in such Asset Sale; provided that the aggregate fair
market value (as determined above) of such Designated Noncash Consideration,
taken together with the fair market value at the time of receipt of all other
Designated Noncash Consideration received pursuant to this clause (y) less the
amount of Net Proceeds previously realized in cash from prior Designated Noncash
Consideration is less than 10% of Total Assets at the time of the receipt of
such Designated Noncash Consideration (with the fair market value of each item
of Designated Noncash Consideration being measured at the time received and
without giving effect to subsequent changes in value) and (z) Additional Assets
received in an exchange of assets transaction.

                  Within 360 days after the receipt of any cash Net Proceeds
from an Asset Sale, the Company or such Restricted Subsidiary, at its option,
may apply such cash Net Proceeds, at its option, (a) to repay Indebtedness of
the Company or any Restricted Subsidiary that is not subordinated in right of
payment to Indebtedness under a Credit Facility, (b) to the acquisition of a
majority of the assets of, or a majority of the Voting Stock of, another
Permitted Business, the making of a capital expenditure or the acquisition of
other assets or Investments that are used or useful in a Permitted Business or
(c) to apply the cash Net Proceeds from such Asset Sale to an Investment in
Additional Assets. Any cash Net Proceeds from Asset Sales that are not applied
or invested as provided in the first sentence of this paragraph will be deemed
to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds
exceeds $20.0 million, the Company will be required to make an offer to all
Holders of Notes and all holders of other Indebtedness that ranks equally with
the Notes containing provisions similar to those set forth herein with respect
to offers to purchase or redeem with the proceeds of

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<PAGE>

sales of assets (an "ASSET SALE OFFER") to purchase the maximum principal amount
of Notes and such other Indebtedness that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest thereon and Liquidated Damages
thereon, if any, to the date of purchase, in accordance with the procedures set
forth herein and such other Indebtedness. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If
the aggregate principal amount of Notes and such other Indebtedness tendered
into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes and such other Indebtedness
to be purchased on a pro rata basis. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero.

                  The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent those laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of this Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the indenture by virtue of such
conflict.

SECTION 4.11.          TRANSACTIONS WITH AFFILIATES.

                  The Company will not, and will not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each, an "AFFILIATE TRANSACTION"), unless:

                           (i)      the Affiliate Transaction is on terms that
         are materially no less favorable to the Company or the relevant
         Restricted Subsidiary than those that would have been obtained in a
         comparable transaction by the Company or such Restricted Subsidiary
         with an unrelated Person; and

                           (ii)     the Company delivers to the Trustee:

                           (a)      with respect to any Affiliate Transaction or
                                    series of related Affiliate Transactions
                                    involving aggregate consideration in excess
                                    of $15.0 million, a resolution of the Board
                                    of Directors set forth in an Officer's
                                    Certificate certifying that such Affiliate
                                    Transaction complies with clause (i) above
                                    and that such Affiliate Transaction has been
                                    approved by a majority of the disinterested
                                    members of the Board of Directors; and

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<PAGE>

                           (b)      with respect to any Affiliate Transaction or
                                    series of related Affiliate Transactions
                                    involving aggregate consideration in excess
                                    of $25.0 million, an opinion as to the
                                    fairness to the Holders of such Affiliate
                                    Transaction from a financial point of view
                                    issued by an accounting, appraisal or
                                    investment banking firm of national
                                    standing.

                  Notwithstanding the foregoing, the following items shall not
be deemed to be Affiliate Transactions: (i) any employment agreement or other
compensation plan or arrangement for employees entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted Subsidiary;
(ii) transactions between or among the Company and/or its Restricted
Subsidiaries, (iii) payment of reasonable fees to officers, directors, employees
or consultants of the Company; (iv) Restricted Payments that are permitted by,
and Investments that are not prohibited by, Section 4.07 hereof; (v)
indemnification payments made to officers, directors and employees of the
Company or any Restricted Subsidiary pursuant to charter, bylaw, statutory or
contractual provisions; (vi) the payment of customary annual management,
consulting and advisory fees and related expenses to Lehman Merchant Bank and
its Affiliates; (vii) payments by the Company or any of its Restricted
Subsidiaries to Lehman Merchant Bank and its Affiliates made for any financial
advisory, financing, underwriting or placement services or in respect of other
investment banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of the
Board of Directors of the Company in good faith; (viii) the existence of, or the
performance by the Company or any of its Restricted Subsidiaries of its
obligations under the terms of, any stockholders' agreement (including any
registration rights agreement or purchase agreement related thereto) to which it
is a party as of the date hereof and any similar agreements which it may enter
into thereafter; provided, however, that the existence of, or the performance by
the Company or any of its Restricted Subsidiaries of obligations under any
future amendment to any such existing agreement or under any similar agreement
entered into after the date hereof shall only be permitted by this clause (viii)
to the extent that the terms of any such amendment or new agreement are not
otherwise disadvantageous to the Holders in any material respect; (ix)
transactions with Unrestricted Subsidiaries, customers, clients, suppliers,
joint venture partners or purchasers or sellers of goods or services, in each
case in the ordinary course of business (including, without limitation, pursuant
to joint venture agreements) and otherwise in compliance with the terms of this
Indenture which are, in the aggregate (taking into account all the costs and
benefits associated with such transactions), materially no less favorable to the
Company or its Restricted Subsidiaries than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person, in the reasonable determination of the Board of Directors of
the Company or the senior management thereof, or are on terms at least as
favorable as might reasonably have been obtained at such time from an
unaffiliated party; (x) guarantees of performance by the Company and its
Restricted Subsidiaries of Unrestricted Subsidiaries in the ordinary course of
business, except for guarantees of Obligations in respect of

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<PAGE>

borrowed money; and (xi) pledges of Equity Interests of Unrestricted
Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries.

SECTION 4.12.          LIENS.

                  The Company will not and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
cause or suffer to exist or become effective with respect to any Indebtedness
any Lien of any kind (other than Permitted Liens) upon any of their property or
assets, now owned or hereafter acquired, unless all payments due under this
Indenture and the notes are secured on an equal and ratable basis (or, if the
Lien secured Indebtedness subordinated to the Notes or the Subsidiary
Guarantees, then senior to the obligations so secured) with the obligations so
secured until such time as such obligations are no longer secured by a Lien.

SECTION 4.13.          BUSINESS ACTIVITIES.

                  The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than Permitted Businesses, except to
such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.

SECTION 4.14.          CORPORATE EXISTENCE.

                  Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.

SECTION 4.15.          OFFER TO REPURCHASE UPON CHANGE OF CONTROL TRIGGERING
                       EVENT.

                  (a)      Upon the occurrence of a Change of Control Triggering
Event, each Holder of Notes will have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes pursuant to the offer described below (the "CHANGE OF
CONTROL OFFER") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase (the "CHANGE OF CONTROL PAYMENT").
Within ten days following any Change of Control Triggering Event, the Company
will mail a notice to each holder describing the transaction or transactions
that constitute the Change of Control Triggering Event and offering to
repurchase notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later

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<PAGE>

than 60 days from the date such notice is mailed (the "CHANGE OF CONTROL PAYMENT
DATE"), pursuant to the procedures required by the indenture and described in
such notice. The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the notes as a result of a Change of Control Triggering Event. To
the extent that the provisions of any securities laws or regulations conflict
with the Change of Control Triggering Event provisions of the indenture, the
Company will comply with the applicable securities laws and regulations and will
not be deemed to have breached its obligations under the Change of Control
Triggering Event provisions of this Indenture by virtue of such conflict.

                  (b)      On the Change of Control Payment Date, the Company
will, to the extent lawful, (1) accept for payment all notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
paying agent an amount equal to the Change of Control Payment in respect of all
notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the Notes so accepted together with an Officer's Certificate
stating the aggregate principal amount of notes or portions thereof being
purchased by the Company. The Paying Agent will promptly mail to each Holder of
Notes so tendered the Change of Control Payment for such Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each holder a new note equal in principal amount to any unpurchased portion
of the notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with the provisions of this covenant, but in any event within 90 days following
a Change of Control Triggering Event, the Company will either repay all
outstanding Senior Debt other than the Notes or obtain the requisite consents,
if any, under all agreements governing outstanding Senior Debt other than the
Notes to permit the repurchase of Notes required by this Section 4.15. The
Company will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date.

                  The Change of Control Triggering Event provisions described
above shall be applicable whether or not any other provisions of this Indenture
are applicable.

                  (c)      Notwithstanding anything to the contrary in this
Section 4.15, the Company will not be required to make a Change of Control Offer
upon a Change of Control Triggering Event if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth herein applicable to a Change of Control Offer made by
the Company and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer or if the Company exercises its option to purchase
the Notes.

SECTION 4.16.          ADDITIONAL SUBSIDIARY GUARANTEES.

                  If the Company or any of its Domestic Subsidiaries shall
acquire or create another Domestic Subsidiary after the date hereof and such
Domestic Subsidiary provides a guarantee under the Credit Agreement, then such
newly acquired or created Domestic

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Subsidiary shall execute a supplemental indenture in form and substance
substantially similar to Exhibit F hereto providing that such Domestic
Subsidiary shall become a Subsidiary Guarantor under this Indenture, provided,
however, this Section 4.16 shall not apply to any Domestic Subsidiary that has
been properly designated as an Unrestricted Subsidiary in accordance with this
Indenture for so long as it continues to constitute an Unrestricted Subsidiary.

SECTION 4.17.          PAYMENTS FOR CONSENTS.

                  The Company shall not, and shall not permit, any of its
Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of this Indenture or the Notes unless such consideration
is offered to be paid or is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.

SECTION 4.18.          COVENANT TERMINATION.

                  Upon the first date upon which the notes have an Investment
Grade Rating from both of the Rating Agencies and no Default or Event of Default
has occurred and is continuing under the indenture (the "INVESTMENT GRADE
DATE"), the Company and its Restricted Subsidiaries will cease to be subject to
the provisions of the indenture described below, which will be deemed to be
terminated as of and from such date, under the following captions:

Section 4.07;
Section 4.08;
Section 4.09;
Section 4.10;
Section 4.11;
Section 4.13; and
Section 4.17;

provided, however, that the provisions of the indenture described below under
the following captions will not be so terminated:

Section 4.03;
Section 4.12;
Section 4.15;
Section 4.16 (except as set forth in that Section); and
Section 5.01 (except as set forth in that Section).

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                                   ARTICLE V

                                   SUCCESSORS

SECTION 5.01.          MERGER, CONSOLIDATION OR SALE OF ASSETS.

                  The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Registration Rights Agreement, the Notes and this Indenture
pursuant to a supplemental Indenture in a form reasonably satisfactory to the
Trustee; (iii) immediately after such transaction no Default or Event of Default
exists; and (iv) except in the case of a merger of the Company with or into a
Restricted Subsidiary of the Company, immediately after giving pro forma effect
to such transaction, as if such transaction had occurred at the beginning of the
applicable four-quarter period, (A) the entity surviving such consolidation or
merger would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 or (B) the Fixed Charge Coverage Ratio for the Company
or the entity or Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made would, immediately after
giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, would be not less than such
Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries
immediately prior to such transaction; provided, however, that this clause (iv)
shall no longer be applicable from and after any Investment Grade Date. The
Company may not, directly or indirectly, lease all or substantially all of its
properties or assets, in one or more related transactions, to any other Person.
The provisions of this Section 5.01 will not be applicable to a sale,
assignment, transfer, conveyance or other disposition of assets between or among
the Company and its Restricted Subsidiaries.

                  Notwithstanding the foregoing clause (iv), (i) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (ii) the Company may merge with an
Affiliate that has no significant assets or liabilities and was formed solely
for the purpose of changing the jurisdiction of organization of the Company in
another State of the United States or the form of organization of the Company so
long as the amount of Indebtedness of the Company and its Restricted
Subsidiaries is not increased thereby and provided that the successor

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assumes all the obligations of the Company under the Registration Rights
Agreement, the Notes and this Indenture pursuant to a supplemental indenture in
a form reasonably satisfactory to the Trustee.

SECTION 5.02.          SUCCESSOR CORPORATION SUBSTITUTED.

                  Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "COMPANY" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.

                                   ARTICLE VI

                              DEFAULTS AND REMEDIES

SECTION 6.01.          EVENTS OF DEFAULT.

                  An "EVENT OF DEFAULT" occurs if:

                  (a)      the Company defaults in the payment when due of
interest on, or Liquidated Damages, if any, with respect to, the Notes and such
default continues for a period of 30 days;

                  (b)      the Company defaults in the payment when due of
principal of or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon redemption (including in connection with an offer to
purchase) or otherwise;

                  (c)      the Company or any of its Subsidiaries fails to make
the offer required or to purchase any of the Notes as required by Sections 4.10
and/or 4.15 hereof;

                  (d)      the Company fails to comply for 30 days after written
notice to the Company by the Trustee with any of the provisions of Sections 4.07
or 4.09 hereof; or the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes for
60 days after written notice to the Company by the Trustee or the Holders of at
least 25% in aggregate principal amount of the Notes then outstanding voting as
a single class;

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                  (e)      a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of the Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the date of this Indenture, which default results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of such Indebtedness aggregates $50.0 million or
more;

                  (f)      a final judgment or final judgments for the payment
of money are entered by a court or courts of competent jurisdiction against the
Company or any of its Subsidiaries that are Restricted Subsidiaries or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds $50.0
million;

                  (g)      the Company or any of its Significant Subsidiaries
that are Restricted Subsidiaries or any group of Restricted Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary pursuant to or
within the meaning of Bankruptcy Law:

                           (i)      commences a voluntary case,

                           (ii)     consents to the entry of an order for relief
         against it in an involuntary case,

                           (iii)    consents to the appointment of a custodian
         of it or for all or substantially all of its property,

                           (iv)     makes a general assignment for the benefit
         of its creditors, or

                           (v)      generally is not paying its debts as they
         become due; or

                  (h)      a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:

                           (i)      is for relief against the Company or any of
         its Significant Subsidiaries that are Restricted Subsidiaries or any
         group of Restricted Subsidiaries that, taken as a whole, would
         constitute a Significant Subsidiary in an involuntary case;

                           (ii)     appoints a custodian of the Company or any
         of its Significant Subsidiaries that are Restricted Subsidiaries or any
         group of Restricted Subsidiaries that, taken as a whole, would
         constitute a Significant Subsidiary or

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         for all or substantially all of the property of the Company or any of
         its Significant Subsidiaries that are Restricted Subsidiaries or any
         group of Restricted Subsidiaries that, taken as a whole, would
         constitute a Significant Subsidiary; or

                           (iii)    orders the liquidation of the Company or any
         of its Significant Subsidiaries that are Restricted Subsidiaries or any
         group of Restricted Subsidiaries that, taken as a whole, would
         constitute a Significant Subsidiary;

         and the order or decree remains unstayed and in effect for 60
         consecutive days; or

                  (i)      except as permitted by this Indenture, any Subsidiary
Guarantee is held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any Subsidiary
Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall
deny or disaffirm its obligations under such Subsidiary Guarantor's Subsidiary
Guarantee.

SECTION 6.02.          ACCELERATION.

                  If any Event of Default (other than an Event of Default
specified in clause (g) or (h) of Section 6.01 hereof with respect to the
Company, any Significant Subsidiary that is a Restricted Subsidiary or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes may declare all
the Notes to be due and payable immediately; provided, that so long as any
Indebtedness permitted to be incurred pursuant to the Credit Agreement shall be
outstanding, such acceleration shall not be effective until the earlier of (i)
an acceleration of any such Indebtedness under the Credit Agreement or (ii) five
Business Days after receipt by the Company of written notice of such
acceleration of the Notes. Upon any such declaration, the Notes shall become due
and payable immediately. Notwithstanding the foregoing, if an Event of Default
specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the
Company, any of its Significant Subsidiaries that are Restricted Subsidiaries or
any group of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, all outstanding Notes shall be due and payable without
further action or notice. The Holders of a majority in aggregate principal
amount of the then outstanding Notes by written notice to the Trustee may on
behalf of all of the Holders rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal, interest or premium that has
become due solely because of the acceleration) have been cured or waived.

SECTION 6.03.          OTHER REMEDIES.

                  If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.

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                  The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.

SECTION 6.04.          WAIVER OF PAST DEFAULTS.

                  Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by written notice to the Trustee may on
behalf of the Holders of all of the Notes waive an existing Default or Event of
Default and its consequences hereunder, except a continuing Default or Event of
Default in the payment of the principal of, premium and Liquidated Damages, if
any, or interest on, the Notes; provided, however, that after any acceleration,
but before a judgment or decree based on acceleration is obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the Notes
then outstanding may rescind and annul such acceleration if all Events of
Default, other than the nonpayment of accelerated principal, premium, Liquidated
Damages, if any, or interest, have been cured or waived as provided in this
Indenture. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.

SECTION 6.05.          CONTROL BY MAJORITY.

                  Subject to Section 7.01, in case an Event of Default shall
occur and be continuing, the Trustee will be under no obligation to exercise any
of its rights or powers under this Indenture at the request or direction of any
of the Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity against any loss, liability or expense. Subject to Section 7.07, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Notes. Notwithstanding the foregoing, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.

SECTION 6.06.          LIMITATION ON SUITS.

                  A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:

                           (a)      the Holder of a Note gives to the Trustee
         written notice of a continuing Event of Default;

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                           (b)      the Holders of at least 25% in principal
         amount of the then outstanding Notes make a written request to the
         Trustee to pursue the remedy;

                           (c)      such Holder of a Note or Holders of Notes
         offer and, if requested, provide to the Trustee indemnity satisfactory
         to the Trustee against any loss, liability or expense;

                           (d)      the Trustee does not comply with the request
         within 60 days after receipt of the request and the offer and, if
         requested, the provision of indemnity; and

                           (e)      during such 60-day period the Holders of a
         majority in principal amount of the then outstanding Notes do not give
         the Trustee a direction inconsistent with the request.

                           (f)      A Holder of a Note may not use this
         Indenture to prejudice the rights of another Holder of a Note or to
         obtain a preference or priority over another Holder of a Note.

SECTION 6.07.          RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.

                  Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.

SECTION 6.08.          COLLECTION SUIT BY TRUSTEE.

                  If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as Trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

SECTION 6.09.          TRUSTEE MAY FILE PROOFS OF CLAIM.

                  The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes),

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its creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.

SECTION 6.10.          PRIORITIES.

                  If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:

                  First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;

                  Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages, if
any, and interest, respectively; and

                  Third: to the Company or to such party as a court of competent
jurisdiction shall direct.

                  The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.

SECTION 6.11.          UNDERTAKING FOR COSTS.

                  In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due

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regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.

                                  ARTICLE VII

                                     TRUSTEE

SECTION 7.01.          DUTIES OF TRUSTEE.

                  (a)      If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.

                  (b)      Except during the continuance of an Event of Default:

                           (i)      the duties of the Trustee shall be
determined solely by the express provisions of this Indenture and the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and

                           (ii)     in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.

                  (c)      The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

                           (i)      this paragraph does not limit the effect of
paragraph (b) of this Section;

                           (ii)     the Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts; and

                           (iii)    the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.

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                  (d)      Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), (c), (e) and (f) of this Section and Section 7.02.

                  (e)      No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.

                  (f)      The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.

SECTION 7.02.          RIGHTS OF TRUSTEE.

                  (a)      The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.

                  (b)      Before the Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officer's Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.

                  (c)      The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.

                  (d)      The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or within
the rights or powers conferred upon it by this Indenture.

                  (e)      Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company or any
Subsidiary Guarantor shall be sufficient if signed by an Officer of the Company
or the Subsidiary Guarantor issuing such demand, request or notice.

                  (f)      The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.

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                  (g)      The Trustee shall not be deemed to have notice of any
Default or Event of Default or Registration Default unless a Responsible Officer
of the Trustee has actual knowledge thereof or unless written notice of any
event which is in fact such a Default or Event of Default or Registration
Default is received by a Responsible Officer of the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the specific Default or
Event of Default or Registration Default, the Notes and this Indenture.

                  (h)      Any permissive right of power granted to the Trustee
shall not be construed to be a duty.

                  (i)      The Trustee shall not be required to give any bond or
surety in respect of the performance of its power and duties hereunder.

                  (j)      The Trustee shall have no duty to inquire as to the
performance of the Company's covenants herein.

SECTION 7.03.          INDIVIDUAL RIGHTS OF TRUSTEE.

                  The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as Trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.

SECTION 7.04.          TRUSTEE'S DISCLAIMER.

                  The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.

SECTION 7.05.          NOTICE OF DEFAULTS.

                  If a Default or Event of Default occurs and is continuing and
if it is known to a Responsible Officer of the Trustee, the Trustee shall mail
to Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Notes.

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SECTION 7.06.          REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.

                  Within 60 days after each March 15 beginning with the March 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c).

                  A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange.

SECTION 7.07.          COMPENSATION AND INDEMNITY.

                  The Company and the Subsidiary Guarantors shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a Trustee of an express trust. The Company
and the Subsidiary Guarantors shall reimburse the Trustee promptly upon request
for all reasonable disbursements, advances and expenses incurred or made by it
in addition to the compensation for its services. Such expenses shall include
the reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel.

                  The Company and the Subsidiary Guarantors shall indemnify the
Trustee against, and shall hold the Trustee harmless for and from, any and all
losses, liabilities or expenses (including reasonable attorneys fees and
expenses) incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company and the Subsidiary
Guarantors (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company and the Subsidiary Guarantors or any Holder or
any other person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent any such loss,
liability or expense may be attributable to its negligence or bad faith. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company and the Subsidiary Guarantors of its obligations hereunder. The Company
shall defend the claim and the Trustee shall reasonably cooperate in the
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.

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                  The obligations of the Company and the Subsidiary Guarantors
under this Section 7.07 are joint and several and shall survive the satisfaction
and discharge of this Indenture.

                  To secure the Company's and the Subsidiary Guarantors' payment
obligations in this Section, the Trustee shall have a Lien prior to the Notes on
all money or property held or collected by the Trustee, except that held in
trust to pay principal and interest on particular Notes. Such Lien shall survive
the satisfaction and discharge of this Indenture.

                  When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.

                  The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.

SECTION 7.08.          REPLACEMENT OF TRUSTEE.

                  A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.

                  The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:

                           (i)      the Trustee fails to comply with Section
7.10 hereof;

                           (ii)     the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Trustee under
any Bankruptcy Law;

                           (iii)    a custodian or public officer takes charge
of the Trustee or its property; or

                           (iv)     the Trustee becomes incapable of acting.

                  If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

                  If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes

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of at least 10% in principal amount of the then outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.

                  If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

                  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.

SECTION 7.09.          SUCCESSOR TRUSTEE BY MERGER, ETC.

                  If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.

SECTION 7.10.          ELIGIBILITY; DISQUALIFICATION.

                  There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate Trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100.0 million as set forth in its most recent published annual report of
condition.

This Indenture shall always have a Trustee who satisfies the requirements of TIA
Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b).

SECTION 7.11.          PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

                  The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.

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                                  ARTICLE VIII

                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 8.01.          OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.

                  The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officer's Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article VIII.

SECTION 8.02.          LEGAL DEFEASANCE AND DISCHARGE.

                  Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
and to have each Subsidiary Guarantor's obligation discharged with respect to
its Subsidiary Guarantee on the date the conditions set forth below are
satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the
other Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Article II and Section 4.02 hereof,
(c) the rights, powers, trusts, duties, liabilities and immunities of the
Trustee hereunder and the Company's and the Subsidiary Guarantors' obligations
in connection therewith and (d) this Article VIII. Subject to compliance with
this Article VIII, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.

SECTION 8.03.          COVENANT DEFEASANCE.

                  Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company and each Subsidiary
Guarantor shall, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, be released from their obligations under the covenants
contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16 and
4.17 hereof with respect to the outstanding Notes on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "COVENANT
DEFEASANCE"), and the Notes shall thereafter be deemed not "outstanding" for the

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purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company and each Subsidiary Guarantor may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.

SECTION 8.04.          CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

                  The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:

                  In order to exercise either Legal Defeasance or Covenant
Defeasance:

                  (a)      the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S.
dollars, non-callable Government Securities, or a combination of cash in U.S.
dollars and non-callable Government Securities, in amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, interest or premium, if any, and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;

                  (b)      in the case of an election under Section 8.02 hereof,
the Company shall deliver to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee (subject to customary exceptions and exclusions)
confirming that (a) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (b) since the date of this
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel will
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;

                  (c)      in the case of an election under Section 8.03 hereof,
the Company shall deliver to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee (subject to customary exceptions and exclusions)
confirming that the Holders of the

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outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;

                  (d)      no Default or Event of Default shall have occurred
and be continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of the
proceeds of which will be used to defease the Notes pursuant to this Article
VIII concurrently with such incurrence) or insofar as Sections 6.01(g) or
6.01(h) hereof are concerned, at any time in the period ending on the effective
date of such defeasance;

                  (e)      such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;

                  (f)      the Company shall have delivered to the Trustee, at
or prior to the effective date of such defeasance, an opinion of counsel to the
effect that, assuming no intervening bankruptcy of the Company between the date
of deposit and the 91st day following the deposit and assuming that no Holder is
an "insider" of the Company under applicable bankruptcy law, after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;

                  (g)      the Company shall have delivered to the Trustee an
Officer's Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and

                  (h)      the Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.

SECTION 8.05.          DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
                       TRUST; OTHER MISCELLANEOUS PROVISIONS.

                  Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying Trustee, collectively for purposes of this Section
8.05, the "TRUSTEE") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums

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due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.

                  The Company and the Subsidiary Guarantors shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the cash or non-callable Government Securities deposited
pursuant to Section 8.04 hereof or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the outstanding Notes.

                  Anything in this Article VII to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.

SECTION 8.06.          REPAYMENT TO COMPANY.

                  Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as Trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

SECTION 8.07.          REINSTATEMENT.

                  If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium, if any, or interest on any Note
following

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the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.

                                   ARTICLE IX

                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01.          WITHOUT CONSENT OF HOLDERS OF NOTES.

                  Notwithstanding Section 9.02 of this Indenture, the Company,
the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture, the Subsidiary Guarantees or the Notes without the consent of any
Holder of a Note:

                  (a)      to cure any ambiguity, defect or inconsistency;

                  (b)      provide for the assumption by a successor corporation
of the obligations of the Company under this Indenture in the case of a merger
or consolidation or sale of all or substantially all of the Company's assets;

                  (c)      provide for uncertificated Notes in addition to or in
place of certificated Notes;

                  (d)      make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any such Holder;

                  (e)      make any change to comply with any requirement of the
SEC in order to effect or maintain the qualification of this Indenture under the
TIA;

                  (f)      to provide for the issuance of Additional Notes in
accordance with the limitations set forth in this Indenture as of the date
hereof; or

                  (g)      to allow any Subsidiary Guarantor to execute a
supplemental Indenture and/or a Subsidiary Guarantee with respect to the Notes.

                  Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company and
the Subsidiary Guarantors in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into such amended or
supplemental Indenture that affects its own rights, duties, liabilities or
immunities under this Indenture or otherwise.

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SECTION 9.02.          WITH CONSENT OF HOLDERS OF NOTES.

                  Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture (including Sections 3.09,
4.10 and 4.15 hereof), the Subsidiary Guarantees and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes, including Additional Notes, if any, then outstanding voting
as a single class (including consents obtained in connection with a tender offer
or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (except a continuing
Default or Event of Default in the payment of interest, premium, Liquidated
Damages, if any, or the principal of, the Notes, except a payment default
resulting from an acceleration that has been rescinded) or compliance with any
provision of this Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the Notes, including Additional
Notes, if any, then outstanding voting as a single class (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Notes). Section 2.08 hereof shall determine which Notes are considered
to be "outstanding" for purposes of this Section 9.02.

                  Upon the request of the Company accompanied by a Board
Resolution of the Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
directly affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.

                  The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such Holders
remain Holders after such record date; provided, that unless such consent shall
have become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
cancelled and of no further effect.

                  It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.

                  After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders to such Holder's
address appearing in the Security Register a notice briefly describing the
amendment, supplement or waiver.

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Any failure of the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes, including
Additional Notes, if any, then outstanding voting as a single class may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. Without the consent of each Holder, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

                  (a)      reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;

                  (b)      reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;

                  (c)      make any change in the provisions of Sections 4.10 or
4.15;

                  (d)      reduce the rate of or change the time for payment of
interest on any Note;

                  (e)      waive a Default or Event of Default in the payment of
principal of, or interest or premium, or Liquidated Damages, if any, on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the then outstanding Notes and
a waiver of the payment default that resulted from such acceleration);

                  (f)      make any Note payable in money other than that stated
in the Note;

                  (g)      make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of, or interest or premium or Liquidated Damages,
if any, on the Notes;

                  (h)      waive a redemption payment with respect to any Note
(other than a payment required by Section 4.10 or 4.15 hereof);

                  (i)      release any Subsidiary Guarantor from any of its
obligations under its Subsidiary Guarantee or this Indenture, except in
accordance with the terms hereof; or

                  (j)      make any change in the preceding amendment and waiver
provisions.

SECTION 9.03.          COMPLIANCE WITH TRUST INDENTURE ACT.

                  Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.

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SECTION 9.04.          REVOCATION AND EFFECT OF CONSENTS.

                  Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

SECTION 9.05.          NOTATION ON OR EXCHANGE OF NOTES.

                  The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

                  Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.

SECTION 9.06.          TRUSTEE TO SIGN AMENDMENTS, ETC.

                  The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article IX if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental Indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon an Officer's Certificate and an Opinion
of Counsel stating that the execution of such amended or supplemental Indenture
is authorized or permitted by this Indenture and that such amended or
supplemental indenture is the legal, valid and binding obligations of the
Company enforceable against it in accordance with its terms, subject to
customary exceptions and that such amended or supplemental indenture complies
with the provisions hereof (including Section 9.03).

                                   ARTICLE X

                              SUBSIDIARY GUARANTEES

SECTION 10.01.         GUARANTEE.

                  Subject to this Article X, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the

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Company hereunder or thereunder, that: (a) the principal of and interest on the
Notes will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the Notes, if any, if lawful, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Subsidiary Guarantors shall be jointly and severally obligated to pay the
same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of
payment and not a guarantee of collection.

                  Each Subsidiary Guarantor hereby agrees that its obligations
with regard to this Subsidiary Guarantee shall be joint and several,
unconditional, irrespective of the validity or enforceability of the Notes or
the obligations of the Company under this Indenture, the absence of any action
to enforce the same, the recovery of any judgment against the Company or any
other obligor with respect to this Indenture, the Notes or the Obligations of
the Company under this Indenture or the Notes, any action to enforce the same or
any other circumstances (other than complete performance) which might otherwise
constitute a legal or equitable discharge or defense of a Subsidiary Guarantor.
Each Subsidiary Guarantor further, to the extent permitted by law, waives and
relinquishes all claims, rights and remedies accorded by applicable law to
guarantors and agrees not to assert or take advantage of any such claims, rights
or remedies, including but not limited to: (a) any right to require any of the
Trustee, the Holders or the Company (each a "BENEFITED PARTY"), as a condition
of payment or performance by such Subsidiary Guarantor, to (1) proceed against
the Company, any other guarantor (including any other Subsidiary Guarantor) of
the Obligations under the Subsidiary Guarantees or any other Person, (2) proceed
against or exhaust any security held from the Company, any such other guarantor
or any other Person, (3) proceed against or have resort to any balance of any
deposit account or credit on the books of any Benefited Party in favor of the
Company or any other Person, or (4) pursue any other remedy in the power of any
Benefited Party whatsoever; (b) any defense arising by reason of the incapacity,
lack of authority or any disability or other defense of the Company including
any defense based on or arising out of the lack of validity or the
unenforceability of the Obligations under the Subsidiary Guarantees or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of the Company from any cause other than payment in full of the
Obligations under the Subsidiary Guarantees; (c) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; (d) any defense based upon any Benefited Party's errors or omissions
in the administration of the Obligations under the Subsidiary Guarantees, except
behavior which amounts to bad faith; (e)(1) any principles or provisions of law,
statutory or otherwise, which are or might be in conflict with the terms of the
Subsidiary Guarantees

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and any legal or equitable discharge of such Subsidiary Guarantor's obligations
hereunder, (2) the benefit of any statute of limitations affecting such
Subsidiary Guarantor's liability hereunder or the enforcement hereof, (3) any
rights to set-offs, recoupments and counterclaims and (4) promptness, diligence
and any requirement that any Benefited Party protect, secure, perfect or insure
any security interest or lien or any property subject thereto; (f) notices,
demands, presentations, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of the Subsidiary
Guarantees, notices of default under the Notes or any agreement or instrument
related thereto, notices of any renewal, extension or modification of the
Obligations under the Subsidiary Guarantees or any agreement related thereto,
and notices of any extension of credit to the Company and any right to consent
to any thereof; (g) to the extent permitted under applicable law, the benefits
of any "One Action" rule and (h) any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of the Subsidiary Guarantees.
Each Subsidiary Guarantor hereby covenants that its Subsidiary Guarantee shall
not be discharged except by complete performance of the obligations contained in
its Subsidiary Guarantee and this Indenture.

                  If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Subsidiary Guarantors or any custodian,
trustee, liquidator or other similar official acting in relation to either the
Company or the Subsidiary Guarantors, any amount paid by either to the Trustee
or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.

                  Each Subsidiary Guarantor agrees that it shall not be entitled
to any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Section 6.02 hereof for the purposes of this
Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby and
(y) in the event of any declaration of acceleration of such obligations as
provided in Section 6.02 hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Subsidiary Guarantors for
the purpose of this Subsidiary Guarantee. The Subsidiary Guarantors shall have
the right to seek contribution from any non-paying Subsidiary Guarantor so long
as the exercise of such right does not impair the rights of the Holders under
the Subsidiary Guarantee.

SECTION 10.02.         LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.

                  Each Subsidiary Guarantor, and by its acceptance of Notes,
each Holder, hereby confirms that it is the intention of all such parties that
the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Subsidiary

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Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and
the Subsidiary Guarantors hereby irrevocably agree that the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee and this Article X shall be
limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Subsidiary
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Subsidiary Guarantor in respect of the obligations of such
other Subsidiary Guarantor under this Article X, result in the obligations of
such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.

SECTION 10.03.         EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.

                  To evidence its Subsidiary Guarantee set forth in Section
10.01, each Subsidiary Guarantor hereby agrees that a notation of such
Subsidiary Guarantee substantially in the form included in Exhibit E shall be
endorsed by an Officer of such Subsidiary Guarantor on each Note authenticated
and delivered by the Trustee and that this Indenture shall be executed on behalf
of such Subsidiary Guarantor by its President or one of its Vice Presidents.

                  Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 10.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.

                  If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.

                  The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary
Guarantors.

                  In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.16 hereof, the Company shall cause such Subsidiaries to execute supplemental
Indentures to this Indenture and Subsidiary Guarantees in accordance with
Section 4.16 hereof and this Article X, to the extent applicable.

SECTION 10.04.         SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN
                       TERMS.

                  No Subsidiary Guarantor may consolidate with or merge with or
into (whether or not such Subsidiary Guarantor is the surviving Person) another
Person whether or not affiliated with such Subsidiary Guarantor unless:

                                       89

<PAGE>

                  (a)      subject to Section 10.05 hereof, the Person formed by
or surviving any such consolidation or merger (if other than a Subsidiary
Guarantor or the Company) unconditionally assumes all the obligations of such
Subsidiary Guarantor, pursuant to a supplemental Indenture in form and substance
reasonably satisfactory to the Trustee, under the Notes, this Indenture, the
Registration Rights Agreement and the Subsidiary Guarantee on the terms set
forth herein or therein;

                  (b)      immediately after giving effect to such transaction,
no Default or Event of Default exists; and

                  (c)      the Company would be permitted, immediately after
giving effect to such transaction, to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof.

                  In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental Indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of Indenture to be performed
by the Subsidiary Guarantor, such successor Person shall succeed to and be
substituted for the Subsidiary Guarantor with the same effect as if it had been
named herein as a Subsidiary Guarantor. Such successor Person thereupon may
cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon
all of the Notes issuable hereunder which theretofore shall not have been signed
by the Company and delivered to the Trustee. All the Subsidiary Guarantees so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.

                  Except as set forth in Articles IV and V hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Subsidiary
Guarantor with or into the Company or another Subsidiary Guarantor, or shall
prevent any sale or conveyance of the property of a Subsidiary Guarantor as an
entirety or substantially as an entirety to the Company or another Subsidiary
Guarantor.

SECTION 10.05.         RELEASES FOLLOWING SALE OF ASSETS.

                  In the event of (a) a sale or other disposition of all of the
assets of any Subsidiary Guarantor, by way of merger, consolidation or
otherwise, (b) a sale or other disposition of all of the capital stock of any
Subsidiary Guarantor or (c) the designation of a Subsidiary Guarantor as an
Unrestricted Subsidiary in accordance with the terms of the Indenture, then such
Subsidiary Guarantor (in the event of a sale or other disposition, by way of
merger, consolidation or otherwise, of all of the capital stock of such
Subsidiary Guarantor) or the corporation acquiring the property (in the event of
a sale or other disposition of all or substantially all of the assets of such
Subsidiary Guarantor) will

                                       90

<PAGE>

be released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of this Indenture, including without
limitation Section 4.10 hereof. Upon delivery by the Company to the Trustee of
an Officer's Certificate and an Opinion of Counsel to the effect that such sale
or other disposition was made by the Company in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof,
the Trustee shall execute any documents reasonably required in order to evidence
the release of any Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee.

                  Any Subsidiary Guarantor not released from its obligations
under its Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of any
Subsidiary Guarantor under this Indenture as provided in this Article X.

                                   ARTICLE XI

                           SATISFACTION AND DISCHARGE

SECTION 11.01.         SATISFACTION AND DISCHARGE.

                  This Indenture will be discharged and will cease to be of
further effect as to all Notes issued hereunder, when:

                  (a)      either:

                           (i)      all Notes that have been authenticated
(except lost, stolen or destroyed Notes that have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust and
thereafter repaid to the Company) have been delivered to the Trustee for
cancellation; or

                           (ii)     all Notes that have not been delivered to
the Trustee for cancellation have become due and payable by reason of the
mailing of a notice of redemption or otherwise or will become due and payable
within one year and the Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust solely for the benefit of the
Holders, cash in U.S. dollars and non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient without consideration
of any reinvestment of interest, to pay and discharge the entire indebtedness on
the Notes not delivered to the Trustee for cancellation for principal, interest,
premium, if any, and accrued interest and Liquidated Damages, if any, to the
date of maturity or redemption;

                  (b)      no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other

                                       91

<PAGE>

instrument to which the Company or any Subsidiary Guarantor is a party or by
which the Company or any Subsidiary Guarantor is bound;

                  (c)      the Company has paid or caused to be paid all sums
payable by it under this Indenture; and

                  (d)      the Company has delivered irrevocable instructions to
the Trustee under this Indenture to apply the deposited money and/or
non-callable Government Securities toward the payment of the Notes at maturity
or the redemption date, as the case may be.

                  The Company shall deliver an Officer's Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.

SECTION 11.02.         DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
                       TRUST; OTHER MISCELLANEOUS PROVISIONS.

                  Subject to Section 11.03 hereof, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 11.02, the
"Trustee") pursuant to Section 11.01 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest and
Additional Interest, if any, but such money need not be segregated from other
funds except to the extent required by law.

SECTION 11.03.         REPAYMENT TO COMPANY.

                  Subject to applicable laws, any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest or Liquidated Damages,
if any, on any Note and remaining unclaimed for two years after such principal,
and premium, if any, or interest or Liquidated Damages, if any, has become due
and payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder shall thereafter
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.

                                       92

<PAGE>

                                  ARTICLE XII

                                  MISCELLANEOUS

SECTION 12.01.         TRUST INDENTURE ACT CONTROLS.

                  If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.

SECTION 12.02.         NOTICES.

                  Any notice or communication by the Company, any Subsidiary
Guarantor or the Trustee to the others is duly given if in writing and delivered
in Person or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address.

                  If to the Company and/or any Subsidiary Guarantor:

                           Peabody Energy Corporation
                           701 Market Street
                           St. Louis, Missouri 63101-1826
                           Telecopier No.: (314) 342-3419
                           Attention: Chief Legal Officer

                  With a copy to:

                           Simpson Thacher & Bartlett
                           425 Lexington Avenue
                           New York, New York 10017-3954 75
                           Telecopier No. (212) 455-2502
                           Attention: Rise B. Norman, Esq.

                  If to the Trustee:

                           US Bank National Association
                           Goodwin Square
                           225 Asylum Street, 23rd Floor
                           EX-CT-SS
                           Hartford, Connecticut 06103
                           Telecopier No.: (860) 241-6881
                           Attention: Philip J. Kane, Jr.

                                       93

<PAGE>

                  The Company, any Subsidiary Guarantor or the Trustee, by
notice to the others may designate additional or different addresses for
subsequent notices or communications.

                  All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery;
provided, however, that any notice of communication to the Trustee shall not be
deemed to be received by it until actually received by it at the Corporate Trust
Office of the Trustee.

                  Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.

                  If a notice or communication addressed to a party other than
the Trustee is mailed in the manner provided above within the time prescribed,
it is duly given, whether or not the addressee receives it.

                  If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.

SECTION 12.03.         COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
                       NOTES.

                  Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).

SECTION 12.04.         CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

                  Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:

                  (a)      an Officer's Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and

                  (b)      an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05

                                       94

<PAGE>

hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.

SECTION 12.05.         STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

                  Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:

                           (i)      a statement that the Person making such

         certificate or opinion has read such covenant or condition;

                           (ii)     a brief statement as to the nature and scope
         of the examination or investigation upon which the statements or
         opinions contained in such certificate or opinion are based;

                           (iii)    a statement that, in the opinion of such
         Person, he or she has made such examination or investigation as is
         necessary to enable him to express an informed opinion as to whether
         or not such covenant or condition has been satisfied; and

                           (iv)     a statement as to whether or not, in the

         opinion of such Person, such condition or covenant has been satisfied.

SECTION 12.06.         RULES BY TRUSTEE AND AGENTS.

                  The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.

SECTION 12.07.         NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
                       AND STOCKHOLDERS.

                  No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Subsidiary Guarantor or Person
controlling such Persons, as such, shall have any liability for any obligations
of the Company or of the Subsidiary Guarantors or any Person controlling such
Person under the Notes, this Indenture, the Subsidiary Guarantees or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the SEC that such a waiver is
against public policy.

                                       95

<PAGE>

SECTION 12.08.         GOVERNING LAW.

                  THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.

SECTION 12.09.         NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

                  This Indenture may not be used to interpret any other
Indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such Indenture, loan or debt agreement may not be used to
interpret this Indenture.

SECTION 12.10.         SUCCESSORS.

                  All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.

SECTION 12.11.         SEVERABILITY.

                  In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

SECTION 12.12.         COUNTERPART ORIGINALS.

                  The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.

SECTION 12.13.         TABLE OF CONTENTS, HEADINGS, ETC.

                  The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.

                         [Signatures on following page]

                                       96

<PAGE>

                                   SIGNATURES

Dated as of March 21, 2003
                                   ISSUER:

                                   Peabody Energy Corporation

                                   By: _______________________________
                                       Name:  Steven F. Schaab
                                       Title: Vice President and Treasurer

                                   GUARANTORS

                                   AFFINITY MINING COMPANY
                                   ARID OPERATIONS INC.
                                   BEAVER DAM COAL COMPANY
                                   BIG RIDGE, INC.
                                   BIG SKY COAL COMPANY
                                   BLACK WALNUT COAL COMPANY
                                   BLUEGRASS COAL COMPANY
                                   CABALLO COAL COMPANY
                                   CHARLES COAL COMPANY
                                   CLEATON COAL COMPANY
                                   COAL PROPERTIES CORP.
                                   COOK MOUNTAIN COAL COMPANY
                                   COTTONWOOD LAND COMPANY
                                   CYPRUS CREEK LAND COMPANY
                                   CYPRUS CREEK LAND RESOURCES, LLC
                                   EACC CAMPS, INC.
                                   EASTERN ASSOCIATED COAL CORP.
                                   EASTERN ROYALTY CORP.
                                   GALLO FINANCE COMPANY
                                   GOLD FIELDS CHILE, S.A.
                                   GOLD FIELDS MINING CORPORATION
                                   GOLD FIELDS OPERATING CO.-ORTIZ
                                   GRAND EAGLE MINING, INC.
                                   HAYDEN GULCH TERMINAL, INC.
                                   HIGHLAND MINING COMPANY
                                   HILLSIDE MINING COMPANY
                                   INDEPENDENCE MATERIAL HANDLING COMPANY
                                   INTERIOR HOLDINGS CORP.
                                   JAMES RIVER COAL TERMINAL COMPANY
                                   JARRELL'S BRANCH COAL COMPANY
                                   JUNIPER COAL COMPANY
                                   KAYENTA MOBILE HOME PARK, INC.

<PAGE>

                                   LOGAN FORK COAL COMPANY
                                   MARTINKA COAL COMPANY
                                   MIDCO SUPPLY AND EQUIPMENT CORPORATION
                                   MOUNTAIN VIEW COAL COMPANY
                                   MUSTANG ENERGY COMPANY, L.L.C.
                                   NORTH PAGE COAL CORP.
                                   OHIO COUNTY COAL COMPANY
                                   PEABODY AMERICA, INC.
                                   PEABODY ARCHVEYOR, L.L.C.
                                   PEABODY COALSALES COMPANY
                                   PEABODY COALTRADE, INC.
                                   PEABODY COAL COMPANY
                                   PEABODY DEVELOPMENT COMPANY
                                   PEABODY DEVELOPMENT LAND HOLDINGS, LLC
                                   PEABODY ENERGY GENERATION HOLDING COMPANY
                                   PEABODY ENERGY INVESTMENTS, INC.
                                   PEABODY ENERGY SOLUTIONS, INC.
                                   PEABODY HOLDING COMPANY, INC.
                                   PEABODY NATURAL GAS, LLC
                                   PEABODY RECREATIONAL LANDS, L.L.C.
                                   PEABODY SOUTHWESTERN COAL COMPANY
                                   PEABODY TERMINALS, INC.
                                   PEABODY VENEZUELA COAL CORP.
                                   PEABODY-WATERSIDE DEVELOPMENT, L.L.C.
                                   PEABODY WESTERN COAL COMPANY
                                   PINE RIDGE COAL COMPANY
                                   POND CREEK LAND RESOURCES, LLC
                                   POND RIVER LAND COMPANY
                                   PORCUPINE PRODUCTION, LLC
                                   PORCUPINE TRANSPORTATION, LLC
                                   POWDER RIVER COAL COMPANY
                                   PRAIRIE STATE GENERATING COMPANY, LLC
                                   RIO ESCONDIDO COAL CORP.
                                   RIVER'S EDGE MINING, INC.
                                   RIVERVIEW TERMINAL COMPANY
                                   SENECA COAL COMPANY
                                   SENTRY MINING COMPANY
                                   SNOWBERRY LAND COMPANY
                                   STAR LAKE ENERGY COMPANY, L.L.C.

                                       98

<PAGE>

                                   STERLING SMOKELESS COAL COMPANY
                                   THOROUGHBRED, L.L.C.
                                   THOROUGHBRED GENERATING COMPANY, LLC
                                   THOROUGHBRED MINING COMPANY, L.L.C.
                                   YANKEETOWN DOCK CORPORATION

                                   By: _________________________________________

                                   Name:  Steven F. Schaab
                                   Title: Vice President

                                   COLONY BAY COAL COMPANY
                                   By: Eastern Associated Coal Corp., its
                                       general partner

                                   By: _________________________________________

                                   Name:  Steven F. Schaab
                                   Title: Vice President

                                   By: Charles Coal Company, its general partner

                                   By: _________________________________________

                                   Name:  Steven F. Schaab
                                   Title: Vice President

                                   PATRIOT COAL COMPANY, L.P.

                                   By: Bluegrass Coal Company, its managing
                                       partner

                                   By: _________________________________________

                                   Name:  Steven F. Schaab
                                   Title: Vice President

                                       99

<PAGE>

                                   PEABODY NATURAL RESOURCES COMPANY

                                   By: Gold Fields Mining Corporation, its
                                       general partner

                                   By: _________________________________________

                                   Name:  Steven F. Schaab
                                   Title: Vice President

                                   By: Peabody America, Inc., its general
                                       partner

                                   By: _________________________________________

                                   Name:  Steven F. Schaab
                                   Title: Vice President

                                      100

<PAGE>

                                   TRUSTEE

                                   US Bank National Association

                                   By: _________________________________________

                                   Name:  Philip J. Kane, Jr.
                                   Title: Vice President

                                      101

<PAGE>

                                                                       EXHIBIT A

                                 (Face of Note)

                          6 7/8% SENIOR NOTES DUE 2013

                                                            CUSIP ______________
NO. ___                                                           $_____________
                           PEABODY ENERGY CORPORATION

promises to pay to CEDE & CO., INC. or registered assigns, the principal sum of
_________________ Dollars ($______________) on_____, 2013.

Interest Payment Dates: March 15 and September 15, commencing September 15,
2003.

Record Dates: March 1 and September 1.

Dated:  ______________, 2003.

<PAGE>

                  IN WITNESS WHEREOF, the Issuer has caused this Note to be
signed manually or by facsimile by its duly authorized officer.

                                   PEABODY ENERGY CORPORATION

                                   By: _________________________________________
                                       Name:
                                       Title

This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:

US Bank National Association
as Trustee

By: _____________________________
    Authorized Signatory

Dated _____________, 20__

                                       2

<PAGE>

                                 (Back of Note)

                              6 7/8% Notes due 2013

[Insert the Global Note Legend, if applicable, pursuant to the terms of the
Indenture]

[Insert the Private Placement Legend, if applicable, pursuant to the terms of
the Indenture]

Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

                  1.       INTEREST. Peabody Energy Corporation, a Delaware
corporation (the "COMPANY"), promises to pay interest on the principal amount of
this Note at 6 7/8% per annum from March 21, 2003 until maturity and shall pay
the Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on March 15 and September 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"INTEREST PAYMENT DATE"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be September 15, 2003. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.

                  2.       METHOD OF PAYMENT. The Company will pay interest on
the Notes (except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Notes at the close of business on the March 1 or
September 1 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer

                                       3

<PAGE>

instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

                  3.       PAYING AGENT AND REGISTRAR. Initially, US Bank
National Association, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.

                  4.       INDENTURE. The Company issued the Notes under an
Indenture dated as of March 21, 2003 ("INDENTURE") between the Company and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company.

                  5.       The principal on the Notes shall be due and payable
on March 15, 2013.

                  6.       OPTIONAL REDEMPTION.

                  (a)      The Notes will be subject to redemption at any time
at the option of the Company, in whole or in part, upon not less than 30 nor
more than 60 days' notice to Holders in the manner provided in the Indenture.

                  (b)      Prior to March 15, 2008, the Notes will be redeemable
at a redemption price equal to 100% of the principal amount thereof plus the
applicable Make Whole Premium, plus, to the extent not included in the Make
Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to
the date of redemption. For purposes of the foregoing, "MAKE WHOLE PREMIUM"
means, with respect to a Note, an amount equal to the excess of (1) the present
value of the remaining interest, premium, if any, and principal payments due on
such Note as if such Note were redeemed on March 15, 2008, computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (2) the
outstanding principal amount of such Note.

                  (c)      On or after March 15, 2008, the Notes are redeemable
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on March 15 of the years indicated below:

                                       4

<PAGE>

<TABLE>
<CAPTION>
Year                                                            Percentage
----                                                            ----------
<C>                                                             <C>
2008                                                             103.438%
2009                                                             102.292%
2010                                                             101.146%
2011 and thereafter                                              100.000%
</TABLE>

                  (d)      Notwithstanding the provisions of clauses (a), (b)
and (c) of this Paragraph 6, during the first 36 months after the date hereof,
the Company may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes issued under this Indenture at a redemption price of
106.875% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date, with the net cash
proceeds of one or more Equity Offerings; provided that at least 65% of the
aggregate principal amount of Notes issued remain outstanding immediately after
the occurrence of such redemption (excluding Notes held by the Company and its
Subsidiaries); and provided, further, that such redemption shall occur within
120 days of the date of the closing of such Equity Offering.

                  (e)      Any redemption pursuant to this Paragraph 6 shall be
made pursuant to the provisions of Article III of the Indenture.

                  7.       MANDATORY REDEMPTION.

The Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.

                  8.       REPURCHASE AT OPTION OF HOLDER.

                  (a)      If there is a Change of Control Triggering Event, the
Company shall be required to make an offer (a "CHANGE OF CONTROL Offer") to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
each Holder's Notes at a purchase price equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase (the "CHANGE OF CONTROL PAYMENT"). Within 10
days following any Change of Control Triggering Event, the Company shall mail a
notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.

                  (b)      If the Company or a Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $20.0 million, the Company shall commence an offer to all
Holders of Notes (as "ASSET SALE OFFER") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes (including any
Additional Notes) that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
fixed for the closing of such offer, in accordance with the procedures set forth
in the Indenture. To the extent that the aggregate amount of Notes (including
any Additional Notes) tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company (or such Subsidiary) may use such deficiency for
general

                                       5

<PAGE>

corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.

                  9.       NOTICE OF REDEMPTION. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.

                  10.      DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.

                  11.      PERSONS DEEMED OWNERS. The registered Holder of a
Note may be treated as its owner for all purposes.

                  12.      AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Subsidiary Guarantees or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes and Additional Notes, if any,
voting as a single class, and any existing default or compliance with any
provision of the Indenture, the Subsidiary Guarantees or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes and Additional Notes, if any, voting as a single class.
Without the consent of any Holder of a Note, the Indenture, the Subsidiary
Guarantees or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or Subsidiary Guarantor's obligations to Holders of the Notes in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act, to provide for the Issuance of
Additional Notes in accordance with the limitations set forth in the Indenture,
or to

                                       6

<PAGE>

allow any Subsidiary Guarantor to execute a supplemental Indenture to the
Indenture and/or a Subsidiary Guarantee with respect to the Notes.

                  13.      DEFAULTS AND REMEDIES. An "EVENT OF DEFAULT" occurs
if: (i) the Company defaults in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes and such default
continues for a period of 30 days; (ii) the Company defaults in the payment when
due of principal of or premium, if any, on the Notes when the same becomes due
and payable at maturity, upon redemption (including in connection with an offer
to purchase) or otherwise; (iii) the Company or any of its Subsidiaries fails to
make the offer required or to purchase any of the Notes as required by Sections
4.10 and/or 4.15 of the Indenture; (iv) the Company fails to comply for 30 days
after written notice to the Company by the Trustee with any of the provisions of
Sections 4.07 or 4.09 of the Indenture; or the Company fails to observe or
perform any other covenant, representation, warranty or other agreement in the
Indenture or the Notes for 60 days after written notice to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding voting as a single class; (v) a default occurs under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of the Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the date hereof, which
default results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness aggregates
$50.0 million or more; (vi) a final judgment or final judgments for the payment
of money are entered by a court or courts of competent jurisdiction against the
Company or any of its Subsidiaries that are Restricted Subsidiaries or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds $50.0
million; (vii) certain events of bankruptcy or insolvency occur with respect to
the Company or any of its Significant Subsidiaries that are Restricted
Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law; or (viii) except as permitted by the Indenture, any Subsidiary
Guarantee is held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any Subsidiary
Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall
deny or disaffirm its obligations under such Subsidiary Guarantor's Subsidiary
Guarantee.

                  If any Event of Default (other than an Event of Default
specified in clause (g) or (h) of Section 6.01 of the Indenture with respect to
the Company, any Significant Subsidiary that is a Restricted Subsidiary or any
group of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes may declare all
the Notes to be due and payable immediately; provided, that so long as any
Indebtedness permitted to be incurred pursuant to the Credit Agreement shall be
outstanding, such acceleration shall not be effective until the earlier of (i)
an acceleration

                                       7

<PAGE>

under any such Indebtedness under the Credit Agreement or (ii) five Business
Days after receipt by the Company of written notice of such acceleration of the
Notes. Upon any such declaration, the Notes shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (g) or (h) of Section 6.01 of the Indenture occurs with respect to the
Company, any of its Significant Subsidiaries that are Restricted Subsidiaries or
any group of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, all outstanding Notes shall be due and payable without
further action or notice. The Holders of a majority in aggregate principal
amount of the then outstanding Notes by written notice to the Trustee may on
behalf of all of the Holders rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal, interest or premium that has
become due solely because of the acceleration) have been cured or waived.

                  14.      TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.

                  15.      NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder, of the Company, as such, shall not have
any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

                  16.      AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

                  17.      ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).

                  18.      CUSIP NUMBERS. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.

                                       8

<PAGE>

                  The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:

                  Peabody Energy Corporation
                  701 Market Street
                  St. Louis, Missouri 63101-1826
                  Attention: Chief Legal Officer

                                       9

<PAGE>

                                 ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to

________________________________________________________________________________
               (Insert assignee's soc. sec. or other tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

              (Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
as agent to transfer this Note on the books of the Issuer. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: ______________
                                   Your Signature: _____________________________
                                   (Sign exactly as your name appears on the
                                   face of this Note)

                                   Signature Guarantee: ________________________

                                   Signatures must be guaranteed by an
                                   "eligible guarantor institution"
                                   meeting the requirements of the
                                   Registrar, which requirements
                                   include membership or participation
                                   in the Security Transfer Agent
                                   Medallion Program ("STAMP") or such
                                   other "signature guarantee program"
                                   as may be determined by the
                                   Registrar in addition to, or in
                                   substitution for, STAMP, all in
                                   accordance with the Securities
                                   Exchange Act of 1934, as amended

                                       10

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

                  If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:

                  [ ] Section 4.10           [ ] Section 4.15

                  If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $________

Date:________________
                                   Your Signature: _____________________________
                                       (Sign exactly as your name appears on
                                               the face of this Note)

                                   Tax Identification No: ______________________

                                   _____________________________________________
                                   Signature Guarantee:

                                   Signatures must be guaranteed by an
                                   "eligible guarantor institution"
                                   meeting the requirements of the
                                   Registrar, which requirements
                                   include membership or participation
                                   in the Security Transfer Agent
                                   Medallion Program ("STAMP") or such
                                   other "signature guarantee program"
                                   as may be determined by the
                                   Registrar in addition to, or in
                                   substitution for, STAMP, all in
                                   accordance with the Securities
                                   Exchange Act of 1934, as amended

<PAGE>

              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

                  The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:

<TABLE>
<CAPTION>
                                                         Principal
                  Amount of          Amount of             Amount                Signature of
                 decrease in        increase in        of this Global            authorized
                  Principal          Principal          Note following           signatory of
Date of         Amount of this     Amount of this       such decrease             Trustee or
Exchange         Global Note        Global Note         (or increase)           Note Custodian
--------        --------------     --------------      ---------------          --------------
<S>             <C>                <C>                 <C>                      <C>
</TABLE>

                                       12

<PAGE>

                                    EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Peabody Energy Corporation
701 Market Street
St. Louis, Missouri 63101-1826

US Bank National Association
Goodwin Square
225 Asylum Street, 23rd Floor
EX-CT-SS
Hartford, Connecticut 06103
Attn: Philip J. Kane, Jr
      Vice President

Re: 6 7/8% Notes due 2013

                  Reference is hereby made to the Indenture, dated as of March
21, 2003 (the "INDENTURE"), among Peabody Energy Corporation, as issuer (the
"ISSUER"), the Subsidiary Guarantors party thereto and US Bank National
Association, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.

                  ___________________, (the "TRANSFEROR") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in
the principal amount of $___________ in such Note[s] or interests (the
"TRANSFER"), to ___________________________ (the "TRANSFEREE"), as further
specified in Annex A hereto. In connection with the Transfer, the Transferor
hereby certifies that:

                             [CHECK ALL THAT APPLY]

                  1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "SECURITIES ACT"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the

<PAGE>

restrictions on transfer enumerated in the Private Placement Legend printed on
the 144A Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.

                  2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a Person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(a) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Distribution Compliance Period, the transfer is not being made
to a U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.

                  3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF
A BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

                         (a) [ ] such Transfer is being effected pursuant to and
         in accordance with Rule 144 under the Securities Act;

                                       or

                         (b) [ ] such Transfer is being effected to the Issuer
         or a subsidiary thereof;

                                       2

<PAGE>

                                       or

                         (c) [ ] such Transfer is being effected pursuant to an
         effective registration statement under the Securities Act and in
         compliance with the prospectus delivery requirements of the Securities
         Act;

                                       or

                         (d) [ ] such Transfer is being effected to an
         Institutional Accredited Investor and pursuant to an exemption from the
         registration requirements of the Securities Act other than Rule 144A,
         Rule 144 or Rule 904, and the Transferor hereby further certifies that
         it has not engaged in any general solicitation within the meaning of
         Regulation D under the Securities Act and the Transfer complies with
         the transfer restrictions applicable to beneficial interests in a
         Restricted Global Note or Restricted Definitive Notes and the
         requirements of the exemption claimed, which certification is supported
         by (1) a certificate executed by the Transferee in the form of Exhibit
         D to the Indenture and (2) if such Transfer is in respect of a
         principal amount of Notes at the time of transfer of less than
         $250,000, an Opinion of Counsel provided by the Transferor or the
         Transferee (a copy of which the Transferor has attached to this
         certification), to the effect that such Transfer is in compliance with
         the Securities Act. Upon consummation of the proposed transfer in
         accordance with the terms of the Indenture, the transferred beneficial
         interest or Definitive Note will be subject to the restrictions on
         transfer enumerated in the Private Placement Legend printed on the IAI
         Global Note and/or the Definitive Notes and in the Indenture and the
         Securities Act.

                  4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

                         (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i)
         The Transfer is being effected pursuant to and in accordance with Rule
         144 under the Securities Act and in compliance with the transfer
         restrictions contained in the Indenture and any applicable blue sky
         securities laws of any state of the United States and (ii) the
         restrictions on transfer contained in the Indenture and the Private
         Placement Legend are not required in order to maintain compliance with
         the Securities Act. Upon consummation of the proposed Transfer in
         accordance with the terms of the Indenture, the transferred beneficial
         interest or Definitive Note will no longer be subject to the
         restrictions on transfer enumerated in the Private Placement Legend
         printed on the Restricted Global Notes, on Restricted Definitive Notes
         and in the Indenture.

                         (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S.
         (i) The Transfer is being effected pursuant to and in accordance with
         Rule 903 or Rule 904 under the Securities Act and in compliance with
         the transfer restrictions contained in the Indenture and any applicable
         blue sky securities laws of any state

                                       3

<PAGE>

         of the United States and (ii) the restrictions on transfer contained in
         the Indenture and the Private Placement Legend are not required in
         order to maintain compliance with the Securities Act. Upon consummation
         of the proposed Transfer in accordance with the terms of the Indenture,
         the transferred beneficial interest or Definitive Note will no longer
         be subject to the restrictions on transfer enumerated in the Private
         Placement Legend printed on the Restricted Global Notes, on Restricted
         Definitive Notes and in the Indenture.

                         (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER
         EXEMPTION. (i) The Transfer is being effected pursuant to and in
         compliance with an exemption from the registration requirements of the
         Securities Act other than Rule 144, Rule 903 or Rule 904 and in
         compliance with the transfer restrictions contained in the Indenture
         and any applicable blue sky securities laws of any State of the United
         States and (ii) the restrictions on transfer contained in the Indenture
         and the Private Placement Legend are not required in order to maintain
         compliance with the Securities Act. Upon consummation of the proposed
         Transfer in accordance with the terms of the Indenture, the transferred
         beneficial interest or Definitive Note will not be subject to the
         restrictions on transfer enumerated in the Private Placement Legend
         printed on the Restricted Global Notes or Restricted Definitive Notes
         and in the Indenture.

                  This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer.

                                            ____________________________________
                                                [Insert Name of Transferor]

                                            By: ________________________________
                                                Name:
                                                Title:

                                            Dated: _____________________________

                                       4

<PAGE>

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:
                                    [CHECK ONE OF (a) OR (b)]

         (a)      [ ] a beneficial interest in the:

                  (i)      [ ] 144A Global Note (CUSIP _________), or

                  (ii)     [ ] Regulation S Global Note (CUSIP _________), or

                  (iii)    [ ] IAI Global Note (CUSIP ________); or

         (b)      [ ] a Restricted Definitive Note.

2.       After the Transfer the Transferee will hold:

[CHECK ONE]

         (a)      [ ] a beneficial interest in the:

                  (i)      [ ] 144A Global Note (CUSIP ________), or

                  (ii)     [ ] Regulation S Global Note (CUSIP ________), or

                  (iii)    [ ] IAI Global Note (CUSIP ________); or

                  (iv)     [ ] Unrestricted Global Note (CUSIP ________); or

         (b)      [ ] a Restricted Definitive Note; or

         (c)      [ ] an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

                                       5

<PAGE>

                                    EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Peabody Energy Corporation
701 Market Street
St. Louis, Missouri 63101-1826

US Bank National Association
Goodwin Square
225 Asylum Street, 23rd Floor
EX-CT-SS
Hartford, Connecticut 06103
Attn: Philip J. Kane, Jr
      Vice President

Re: 6 7/8% Notes due 2013

                  Reference is hereby made to the Indenture, dated as of March
21, 2003 (the "INDENTURE"), among Peabody Energy Corporation, as issuer (the
"COMPANY"), the Subsidiary Guarantors and US Bank National Association, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

                  _____________ (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$_____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:

                  1.       EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

                  (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Restricted Global Note and pursuant to and in accordance with the United States
Securities Act of 1933, as amended (the "SECURITIES ACT"), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest in an Unrestricted Global Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

<PAGE>

                  (b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted
Definitive Note is being acquired for the Owner's own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Note and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted Definitive
Note is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.

                  (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

                  (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

                  2.       EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

                  (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on

                                       2

<PAGE>

transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Note and in the Indenture and the Securities Act.

                  (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE
TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [CIRCLE ONE] 144A Global Note, Regulation S Global Note, IAI Global Note
with an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Definitive Note and pursuant to and in accordance
with the Securities Act, and in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the relevant Restricted Global Note and
in the Indenture and the Securities Act.

                                       3

<PAGE>

                  This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.

                                            ____________________________________
                                                [Insert Name of Transferor]

                                            By: ________________________________
                                                Name:
                                                Title:

                                            Dated: _____________________________

                                       4

<PAGE>

                                    EXHIBIT D

                            FORM OF CERTIFICATE FROM
                   ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Peabody Energy Corporation
701 Market Street
St. Louis, Missouri 63101-1826

US Bank National Association
Goodwin Square
225 Asylum Street, 23rd Floor
EX-CT-SS
Hartford, Connecticut 06103
Attn: Philip J. Kane, Jr
      Vice President

Re: 6 7/8% Notes due 2013

                  Reference is hereby made to the Indenture, dated as of March
21, 2003 (the "INDENTURE"), among Peabody Energy Corporation, as issuer (the
"COMPANY"), the Subsidiary Guarantors and US Bank National Association, as
Trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

                  In connection with our proposed purchase of $____________
aggregate principal amount of:

                  (a)      [ ] a beneficial interest in a Global Note, or

                  (b)      [ ] a Definitive Note,

                  we confirm that:

                  1.       We understand that any subsequent transfer of the
Notes or any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").

                  2.       We understand that the offer and sale of the Notes
have not been registered under the Securities Act, and that the Notes and any
interest therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company

<PAGE>

or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities
Act to a "QUALIFIED INSTITUTIONAL BUYER" (as defined therein), (c) to an
institutional "ACCREDITED INVESTOR" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
you and to the Company a signed letter substantially in the form of this letter
and, if such transfer is in respect of a principal amount of Notes, at the time
of transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance with
the Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
144(k) under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.

                  3.       We understand that, on any proposed resale of the
Notes or beneficial interest therein, we will be required to furnish to you and
the Company such certifications, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.

                  4.       We are an institutional "ACCREDITED INVESTOR" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the Notes,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.

                  5.       We are acquiring the Notes or beneficial interest
therein purchased by us for our own account or for one or more accounts (each of
which is an institutional "ACCREDITED INVESTOR") as to each of which we exercise
sole investment discretion.

                                       2

<PAGE>

                  You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.

                                            ____________________________________
                                                [Insert Name of Transferor]

                                            By: ________________________________
                                                Name:
                                                Title:

Dated: __________________

                                       3

<PAGE>

                                    EXHIBIT E

                    FORM OF NOTATION OF SUBSIDIARY GUARANTEE

                  For value received, each Subsidiary Guarantor (which term
includes any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture dated as of March 21, 2003 (the "INDENTURE")
among Peabody Energy Corporation, the Subsidiary Guarantors listed on Schedule I
thereto and US Bank National Association, as Trustee (the "TRUSTEE"), (a) the
due and punctual payment of the principal of, premium, if any, and interest on
the Notes (as defined in the Indenture), whether at maturity, by acceleration,
redemption or otherwise, the due and punctual payment of interest on overdue
principal and premium, and, to the extent permitted by law, interest, and the
due and punctual performance of all other obligations of the Company to the
Holders or the Trustee all in accordance with the terms of the Indenture and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. The obligations of the Subsidiary
Guarantors to the Holders of Notes and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly set forth in Article X of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Subsidiary Guarantee. Each Holder of a Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose; provided,
however, that the Indebtedness evidenced by this Subsidiary Guarantee shall
cease to be so subordinated and subject in right of payment upon any defeasance
of this Note in accordance with the provisions of the Indenture.

                                            AFFINITY MINING COMPANY
                                            ARID OPERATIONS INC.
                                            BEAVER DAM COAL COMPANY
                                            BIG RIDGE, INC.
                                            BIG SKY COAL COMPANY
                                            BLACK WALNUT COAL COMPANY
                                            BLUEGRASS COAL COMPANY
                                            CABALLO COAL COMPANY
                                            CHARLES COAL COMPANY
                                            CLEATON COAL COMPANY
                                            COAL PROPERTIES CORP.
                                            COOK MOUNTAIN COAL COMPANY
                                            COTTONWOOD LAND COMPANY
                                            CYPRUS CREEK LAND COMPANY
                                            CYPRUS CREEK LAND RESOURCES, LLC
                                            EACC CAMPS, INC.

<PAGE>

                                            EASTERN ASSOCIATED COAL CORP.
                                            EASTERN ROYALTY CORP.
                                            GALLO FINANCE COMPANY
                                            GOLD FIELDS CHILE, S.A.
                                            GOLD FIELDS MINING CORPORATION
                                            GOLD FIELDS OPERATING CO.-ORTIZ
                                            GRAND EAGLE MINING, INC.
                                            HAYDEN GULCH TERMINAL, INC.
                                            HIGHLAND MINING COMPANY
                                            HILLSIDE MINING COMPANY
                                            INDEPENDENCE MATERIAL HANDLING
                                               COMPANY
                                            INTERIOR HOLDINGS CORP.
                                            JAMES RIVER COAL TERMINAL COMPANY
                                            JARRELL'S BRANCH COAL COMPANY
                                            JUNIPER COAL COMPANY
                                            KAYENTA MOBILE HOME PARK, INC.
                                            LOGAN FORK COAL COMPANY
                                            MARTINKA COAL COMPANY
                                            MIDCO SUPPLY AND EQUIPMENT
                                               CORPORATION
                                            MOUNTAIN VIEW COAL COMPANY
                                            MUSTANG ENERGY COMPANY, L.L.C.
                                            NORTH PAGE COAL CORP.
                                            OHIO COUNTY COAL COMPANY
                                            PEABODY AMERICA, INC.
                                            PEABODY ARCHVEYOR, L.L.C.
                                            PEABODY COALSALES COMPANY
                                            PEABODY COALTRADE, INC.
                                            PEABODY COAL COMPANY
                                            PEABODY DEVELOPMENT COMPANY
                                            PEABODY DEVELOPMENT LAND HOLDINGS,
                                               LLC
                                            PEABODY ENERGY GENERATION HOLDING
                                               COMPANY
                                            PEABODY ENERGY INVESTMENTS, INC.
                                            PEABODY ENERGY SOLUTIONS, INC.
                                            PEABODY HOLDING COMPANY, INC.
                                            PEABODY NATURAL GAS, LLC
                                            PEABODY RECREATIONAL LANDS, L.L.C.
                                            PEABODY SOUTHWESTERN COAL COMPANY
                                            PEABODY TERMINALS, INC.
                                            PEABODY VENEZUELA COAL CORP.

                                       2

<PAGE>

                                            PEABODY-WATERSIDE DEVELOPMENT,
                                               L.L.C.
                                            PEABODY WESTERN COAL COMPANY
                                            PINE RIDGE COAL COMPANY
                                            POND CREEK LAND RESOURCES, LLC
                                            POND RIVER LAND COMPANY
                                            PORCUPINE PRODUCTION, LLC
                                            PORCUPINE TRANSPORTATION, LLC
                                            POWDER RIVER COAL COMPANY
                                            PRAIRIE STATE GENERATING COMPANY,
                                               LLC
                                            RIO ESCONDIDO COAL CORP.
                                            RIVER'S EDGE MINING, INC.
                                            RIVERVIEW TERMINAL COMPANY
                                            SENECA COAL COMPANY
                                            SENTRY MINING COMPANY
                                            SNOWBERRY LAND COMPANY
                                            STAR LAKE ENERGY COMPANY, L.L.C.
                                            STERLING SMOKELESS COAL COMPANY
                                            THOROUGHBRED, L.L.C.
                                            THOROUGHBRED GENERATING COMPANY, LLC
                                            THOROUGHBRED MINING COMPANY, L.L.C.
                                            YANKEETOWN DOCK CORPORATION

                                            By: ________________________________

                                            Name:  Steven F. Schaab
                                            Title: Vice President

                                            COLONY BAY COAL COMPANY
                                            By: Eastern Associated Coal Corp.,
                                                its general partner

                                            By: ________________________________

                                            Name:  Steven F. Schaab
                                            Title: Vice President

                                            By: Charles Coal Company, its
                                                general partner

                                            By: ________________________________

                                       3

<PAGE>

                                            Name:  Steven F. Schaab
                                            Title: Vice President

                                            PATRIOT COAL COMPANY, L.P.

                                            By: Bluegrass Coal Company, its
                                                managing partner

                                            By: ________________________________

                                            Name:  Steven F. Schaab
                                            Title: Vice President

                                            PEABODY NATURAL RESOURCES COMPANY

                                            By: Gold Fields Mining Corporation,
                                                its general partner

                                            By: ________________________________

                                            Name:  Steven F. Schaab
                                            Title: Vice President

                                            By: Peabody America, Inc., its
                                                general partner

                                            By: ________________________________

                                            Name:  Steven F. Schaab
                                            Title: Vice President

                                       4

<PAGE>

                                    EXHIBIT F

                         FORM OF SUPPLEMENTAL INDENTURE
               TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS

                  Supplemental Indenture (this "SUPPLEMENTAL INDENTURE"), dated
as of ________________, among __________________ (the "GUARANTEEING
SUBSIDIARY"), a subsidiary of Peabody Energy Corporation (or its permitted
successor), a Delaware corporation (the "COMPANY"), the Company, the other
Subsidiary Guarantors (as defined in the Indenture referred to herein) and US
Bank National Association, as Trustee under the Indenture referred to below (the
"TRUSTEE").

                               W I T N E S S E T H

                  WHEREAS, the Company has heretofore executed and delivered to
the Trustee an Indenture (the "INDENTURE"), dated as of March 21, 2003 providing
for the issuance of an unlimited amount of 6 7/8% Notes due 2013 (the "NOTES");

                  WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental Indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company's Obligations under the Notes
and the Indenture on the terms and conditions set forth herein (the "SUBSIDIARY
GUARANTEE"); and

                  WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.

                  NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

                  1.       CAPITALIZED TERMS. Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.

                  2.       AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary
hereby agrees as follows:

                  (a)      Along with all Subsidiary Guarantors named in the
                           Indenture, to jointly and severally Guarantee to each
                           Holder of a Note authenticated and delivered by the
                           Trustee and to the Trustee and its successors and
                           assigns, irrespective of the validity and
                           enforceability of the Indenture, the Notes or the
                           obligations of the Company hereunder or thereunder,
                           that:

                           (i)      the principal of and interest on the Notes
                                    will be promptly paid in full when due,
                                    whether at maturity, by acceleration,

<PAGE>

                                    redemption or otherwise, and interest on the
                                    overdue principal of and interest on the
                                    Notes, if any, if lawful, and all other
                                    obligations of the Company to the Holders or
                                    the Trustee hereunder or thereunder will be
                                    promptly paid in full or performed, all in
                                    accordance with the terms hereof and
                                    thereof; and

                           (ii)     in case of any extension of time of payment
                                    or renewal of any Notes or any of such other
                                    obligations, that same will be promptly paid
                                    in full when due or performed in accordance
                                    with the terms of the extension or renewal,
                                    whether at stated maturity, by acceleration
                                    or otherwise. Failing payment when due of
                                    any amount so guaranteed or any performance
                                    so guaranteed for whatever reason, the
                                    Subsidiary Guarantors shall be jointly and
                                    severally obligated to pay the same
                                    immediately.

                  (b)      The obligations hereunder shall be unconditional,
                           irrespective of the validity, regularity or
                           enforceability of the Notes or the Indenture, the
                           absence of any action to enforce the same, any waiver
                           or consent by any Holder of the Notes with respect to
                           any provisions hereof or thereof, the recovery of any
                           judgment against the Company, any action to enforce
                           the same or any other circumstance which might
                           otherwise constitute a legal or equitable discharge
                           or defense of a Subsidiary Guarantor.

                  (c)      The following is hereby waived: diligence
                           presentment, demand of payment, filing of claims with
                           a court in the event of insolvency or bankruptcy of
                           the Company, any right to require a proceeding first
                           against the Company, protest, notice and all demands
                           whatsoever.

                  (d)      This Subsidiary Guarantee shall not be discharged
                           except by complete performance of the obligations
                           contained in the Notes and the Indenture.

                  (e)      If any Holder or the Trustee is required by any court
                           or otherwise to return to the Company, the Subsidiary
                           Guarantors, or any custodian, Trustee, liquidator or
                           other similar official acting in relation to either
                           the Company or the Subsidiary Guarantors, any amount
                           paid by either to the Trustee or such Holder, this
                           Subsidiary Guarantee, to the extent theretofore
                           discharged, shall be reinstated in full force and
                           effect.

                  (f)      The Guaranteeing Subsidiary shall not be entitled to
                           any right of subrogation in relation to the Holders
                           in respect of any obligations

                                       2

<PAGE>

                           guaranteed hereby until payment in full of all
                           obligations guaranteed hereby.

                  (g)      As between the Subsidiary Guarantors, on the one
                           hand, and the Holders and the Trustee, on the other
                           hand, (x) the maturity of the obligations guaranteed
                           hereby may be accelerated as provided in Article 6 of
                           the Indenture for the purposes of this Subsidiary
                           Guarantee, notwithstanding any stay, injunction or
                           other prohibition preventing such acceleration in
                           respect of the obligations guaranteed hereby, and (y)
                           in the event of any declaration of acceleration of
                           such obligations as provided in Article 6 of the
                           Indenture, such obligations (whether or not due and
                           payable) shall forthwith become due and payable by
                           the Subsidiary Guarantors for the purpose of this
                           Subsidiary Guarantee.

                  (h)      The Subsidiary Guarantors shall have the right to
                           seek contribution from any non-paying Subsidiary
                           Guarantor so long as the exercise of such right does
                           not impair the rights of the Holders under the
                           Subsidiary Guarantee.

                  (i)      Pursuant to Section 10.04 of the Indenture, after
                           giving effect to any maximum amount and any other
                           contingent and fixed liabilities that are relevant
                           under any applicable Bankruptcy or fraudulent
                           conveyance laws, and after giving effect to any
                           collections from, rights to receive contribution from
                           or payments made by or on behalf of any other
                           Subsidiary Guarantor in respect of the obligations of
                           such other Subsidiary Guarantor under Article 10 of
                           the Indenture shall result in the obligations of such
                           Subsidiary Guarantor under its Subsidiary Guarantee
                           not constituting a fraudulent transfer or conveyance.

                  3.       EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary
agrees that the Subsidiary Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.

                  4.       GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON
CERTAIN TERMS.

                  (a)      The Guaranteeing Subsidiary may not consolidate with
                           or merge with or into (whether or not such Subsidiary
                           Guarantor is the surviving Person) another
                           corporation, Person or entity whether or not
                           affiliated with such Subsidiary Guarantor unless:

                           (i)      subject to Section 10.04 of the Indenture,
                                    the Person formed by or surviving any such
                                    consolidation or merger (if other than a
                                    Subsidiary Guarantor or the Company)

                                       3

<PAGE>

                                    unconditionally assumes all the obligations
                                    of such Subsidiary Guarantor, pursuant to a
                                    supplemental Indenture in form and substance
                                    reasonably satisfactory to the Trustee,
                                    under the Notes, the Indenture and the
                                    Subsidiary Guarantee on the terms set forth
                                    herein or therein; and

                           (ii)     immediately after giving effect to such
                                    transaction, no Default or Event of Default
                                    exists.

                  (b)      In case of any such consolidation, merger, sale or
                           conveyance and upon the assumption by the successor
                           corporation, by supplemental Indenture, executed and
                           delivered to the Trustee and satisfactory in form to
                           the Trustee, of the Subsidiary Guarantee endorsed
                           upon the Notes and the due and punctual performance
                           of all of the covenants and conditions of the
                           Indenture to be performed by the Subsidiary
                           Guarantor, such successor corporation shall succeed
                           to and be substituted for the Subsidiary Guarantor
                           with the same effect as if it had been named herein
                           as a Subsidiary Guarantor. Such successor corporation
                           thereupon may cause to be signed any or all of the
                           Subsidiary Guarantees to be endorsed upon all of the
                           Notes issuable hereunder which theretofore shall not
                           have been signed by the Company and delivered to the
                           Trustee. All the Subsidiary Guarantees so issued
                           shall in all respects have the same legal rank and
                           benefit under the Indenture as the Subsidiary
                           Guarantees theretofore and thereafter issued in
                           accordance with the terms of the Indenture as though
                           all of such Subsidiary Guarantees had been issued at
                           the date of the execution hereof.

                  (c)      Except as set forth in Articles 4 and 5 of the
                           Indenture, and notwithstanding clauses (a) and (b)
                           above, nothing contained in the Indenture or in any
                           of the Notes shall prevent any consolidation or
                           merger of a Subsidiary Guarantor with or into the
                           Company or another Subsidiary Guarantor, or shall
                           prevent any sale or conveyance of the property of a
                           Subsidiary Guarantor as an entirety or substantially
                           as an entirety to the Company or another Subsidiary
                           Guarantor.

                  5.       RELEASES.

                  (a)      In the event of a sale or other disposition of all of
                           the assets of any Subsidiary Guarantor, by way of
                           merger, consolidation or otherwise, or a sale or
                           other disposition of all to the capital stock of any
                           Subsidiary Guarantor, then such Subsidiary Guarantor
                           (in the event of a sale or other disposition, by way
                           of merger, consolidation or otherwise, of all of the
                           capital stock of such Subsidiary Guarantor) or the
                           corporation acquiring the property (in

                                       4

<PAGE>

                           the event of a sale or other disposition of all or
                           substantially all of the assets of such Subsidiary
                           Guarantor) will be released and relieved of any
                           obligations under its Subsidiary Guarantee; provided
                           that the Net Proceeds of such sale or other
                           disposition are applied in accordance with the
                           applicable provisions of the Indenture, including
                           without limitation Section 4.10 of the Indenture.
                           Upon delivery by the Company to the Trustee of an
                           Officer's Certificate and an Opinion of Counsel to
                           the effect that such sale or other disposition was
                           made by the Company in accordance with the provisions
                           of the Indenture, including without limitation
                           Section 4.10 of the Indenture, the Trustee shall
                           execute any documents reasonably required in order to
                           evidence the release of any Subsidiary Guarantor from
                           its obligations under its Subsidiary Guarantee.

                  (b)      Any Subsidiary Guarantor not released from its
                           obligations under its Subsidiary Guarantee shall
                           remain liable for the full amount of principal of and
                           interest on the Notes and for the other obligations
                           of any Subsidiary Guarantor under the Indenture as
                           provided in Article 10 of the Indenture.

                  6.       NO RECOURSE AGAINST OTHERS. No past, present or
future director, officer, employee, incorporator, stockholder or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of the Company or any Guaranteeing Subsidiary under the Notes, any Subsidiary
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.

                  7.       NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.

                  8.       COUNTERPARTS. The parties may sign any number of
copies of this Supplemental Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement.

                  9.       EFFECT OF HEADINGS. The Section headings herein are
for convenience only and shall not affect the construction hereof.

                  10.      THE TRUSTEE. The Trustee shall not be responsible in
any manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.

                                       5

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.

Dated: __________________
                                            [Guaranteeing Subsidiary]

                                            By: ________________________________
                                                Name:
                                                Title:

                                            Peabody Energy Corporation

                                            By: ________________________________
                                                Name:
                                                Title:

                                            [EXISTING SUBSIDIARY NOTE
                                            GUARANTORS]

                                            By: ________________________________
                                                Name:
                                                Title:

                                            US Bank National Association
                                             as Trustee

                                            By: ________________________________
                                                Name:
                                                Title:

                                       6

<PAGE>

                                   Schedule I

                        SCHEDULE OF SUBSIDIARY GUARANTORS

                  The following schedule lists each Subsidiary Guarantor under
the Indenture as of the Issue Date:

 1.      Affinity Mining Company, a West Virginia corporation
 2.      Arid Operations Inc., a Delaware corporation
 3.      Beaver Dam Coal Company, a Delaware corporation
 4.      Big Ridge, Inc., an Illinois corporation
 5.      Big Sky Coal Company, a Delaware corporation
 6.      Black Walnut Coal Company, a Delaware corporation
 7.      Bluegrass Coal Company, a Delaware corporation
 8.      Caballo Coal Company, a Delaware corporation
 9.      Charles Coal Company, a Delaware corporation
10.      Cleaton Coal Company, a Delaware corporation
11.      Coal Properties Corp., a Delaware corporation
12.      Colony Bay Coal Company, a West Virginia general partnership
13.      Cook Mountain Coal Company, a Delaware corporation
14.      Cottonwood Land Company, a Delaware corporation
15.      Cyprus Creek Land Company, a Delaware corporation
16.      Cyprus Creek Land Resources, LLC, a Delaware limited liability company
17.      EACC Camps, Inc., a West Virginia corporation
18.      Eastern Associated Coal Corp., a West Virginia corporation
19.      Eastern Royalty Corp., a Delaware corporation
20.      Gallo Finance Company, a Delaware corporation
21.      Gold Fields Chile, S.A., a Delaware corporation
22.      Gold Fields Mining Corporation, a Delaware corporation
23.      Gold Fields Operating Co.-Ortiz, a Delaware corporation
24.      Grand Eagle Mining, Inc., a Kentucky corporation
25.      Hayden Gulch Terminal, Inc., a Delaware corporation
26.      Highland Mining Company, a Delaware corporation
27.      Hillside Mining Company, a West Virginia corporation
28.      Independence Material Handling Company, a Delaware corporation
29.      Interior Holdings Corp., a Delaware corporation
30.      James River Coal Terminal Company, a Delaware corporation
31.      Jarrell's Branch Coal Company, a Delaware corporation
32.      Juniper Coal Company, a Delaware corporation
33.      Kayenta Mobile Home Park, Inc., a Delaware corporation
34.      Logan Fork Coal Company, a Delaware corporation
35.      Martinka Coal Company, a Delaware corporation
36.      Midco Supply and Equipment Corporation, an Illinois corporation
37.      Mountain View Coal Company, a Delaware corporation
38.      Mustang Energy Company, L.L.C., a Delaware limited liability company
39.      North Page Coal Corp., a West Virginia corporation

<PAGE>

40.      Ohio County Coal Company, a Kentucky corporation
41.      Patriot Coal Company, L.P., a Delaware limited partnership
42.      Peabody America, Inc., a Delaware corporation
43.      Peabody Archveyor, L.L.C., a Delaware limited liability company
44.      Peabody COALSALES Company, a Delaware corporation
45.      Peabody COALTRADE, Inc., a Delaware corporation
46.      Peabody Coal Company, a Delaware corporation
47.      Peabody Development Company, a Delaware corporation
48.      Peabody Development Land Holdings, LLC, a Delaware limited liability
           company
49.      Peabody Energy Generation Holding Company, a Delaware corporation
50.      Peabody Energy Investments, Inc., a Delaware corporation
51.      Peabody Energy Solutions, Inc., a Delaware corporation
52.      Peabody Holding Company, Inc., a New York corporation
53.      Peabody Natural Gas, LLC, a Delaware limited liability company
54.      Peabody Natural Resources Company, a Delaware general partnership
55.      Peabody Recreational Lands, L.L.C., a Delaware limited liability
           company
56.      Peabody Southwestern Coal Company, a Delaware corporation
57.      Peabody Terminals, Inc., a Delaware corporation
58.      Peabody Venezuela Coal Corp., a Delaware corporation
59.      Peabody-Waterside Development, L.L.C., a Delaware limited liability
           company
60.      Peabody Western Coal Company, a Delaware corporation
61.      Pine Ridge Coal Company, a Delaware corporation
62.      Pond Creek Land Resources, LLC, a Delaware limited liability company
63.      Pond River Land Company, a Delaware corporation
64.      Porcupine Production, LLC, a Delaware limited liability company
65.      Porcupine Transportation, LLC, a Delaware limited liability company
66.      Powder River Coal Company, a Delaware corporation
67.      Prairie State Generating Company, LLC, a Delaware limited liability
           company
68.      Rio Escondido Coal Corp., a Delaware corporation
69.      River's Edge Mining, Inc., a Delaware corporation
70.      Riverview Terminal Company, a Delaware corporation
71.      Seneca Coal Company, a Delaware corporation
72.      Sentry Mining Company, a Delaware corporation
73.      Snowberry Land Company, a Delaware corporation
74.      Star Lake Energy Company, L.L.C., a Delaware limited liability company
75.      Sterling Smokeless Coal Company, a West Virginia corporation
76.      Thoroughbred, L.L.C., a Delaware limited liability company
77.      Thoroughbred Generating Company, LLC, a Delaware limited liability
           company
78.      Thoroughbred Mining Company, L.L.C., a Delaware limited liability
           company
79.      Yankeetown Dock Corporation, an Indiana corporation

                                       2

<PAGE>

                             CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
                                                             Note
Trust Indenture Act Section                            Indenture Section
<S>                                                    <C>
        310 (a) (1)                                          7.10
        (a) (2)                                              7.10
        (a) (3)                                              N.A.
        (a) (4)                                              N.A.
        (a) (5)                                              7.10
        (i) (b)                                              7.10
       (ii) (c)                                              N.A.
        311 (a)                                              7.11
        (b)                                                  7.11
      (iii) (c)                                              N.A.
        312 (a)                                              2.05
        (b)                                                  12.03
       (iv) (c)                                              12.03
        313 (a)                                              7.06
        (b) (2)                                              7.07
        (v) (c)                                              7.06;
                                                             12.02

       (vi) (d)                                              7.06
        314 (a)                                              4.03;
                                                             12.02

        (c) (1)                                              12.04
        (c) (2)                                              12.04
        (c) (3)                                              N.A.
      (vii) (e)                                              12.05
        (f)                                                  N.A.
        315 (a)                                              7.01
        (b)                                                  7.05,
                                                             12.02

        (A) (c)                                              7.01
        (d)                                                  7.01
        (e)                                                  6.11
  316 (a) (last sentence)                                    2.09
      (a) (1) (A)                                            6.05
      (a) (1) (B)                                            6.04
      (a) (2)                                                N.A.
      (b)                                                    6.07
      (B) (c)                                                2.12
  317 (a) (1)                                                6.08
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                             Note
Trust Indenture Act Section                            Indenture Section
<S>                                                    <C>
          (a) (2)                                            6.09
          (b)                                                2.04
          318 (a)                                            12.01
          (b)                                                N.A.
          (c)                                                12.01
</TABLE>

N.A. means not applicable.
* This Cross-Reference Table is not part of the Indenture.

                                       4

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         PAGE
<S>                                                                                                      <C>
ARTICLE I             DEFINITIONS AND INCORPORATION BY REFERENCE.......................................    1

         Section 1.01.         Definitions.............................................................    1

         Section 1.02.         Other Definitions.......................................................   22

         Section 1.03.         Incorporation by Reference of Trust Indenture Act.......................   22

         Section 1.04.         Rules of Construction...................................................   23

ARTICLE II            THE NOTES........................................................................   23

         Section 2.01.         Form and Dating.........................................................   23

         Section 2.02.         Execution and Authentication............................................   24

         Section 2.03.         Registrar and Paying Agent..............................................   25

         Section 2.04.         Paying Agent to Hold Money in Trust.....................................   25

         Section 2.05.         Holder Lists............................................................   26

         Section 2.06.         Transfer and Exchange...................................................   26

         Section 2.07.         Replacement Notes.......................................................   40

         Section 2.08.         Outstanding Notes.......................................................   41

         Section 2.09.         Treasury Notes..........................................................   41

         Section 2.10.         Temporary Notes.........................................................   41

         Section 2.11.         Cancellation............................................................   42

         Section 2.12.         Defaulted Interest......................................................   42

         Section 2.13.         Cusip Numbers...........................................................   42

ARTICLE III           REDEMPTION AND PREPAYMENT........................................................   43

         Section 3.01.         Notices to Note Trustee.................................................   43

         Section 3.02.         Selection of Notes to be Redeemed.......................................   43

         Section 3.03.         Notice of Redemption....................................................   43

         Section 3.04.         Effect of Notice of Redemption..........................................   44

         Section 3.05.         Deposit of Redemption Price.............................................   44

         Section 3.06.         Notes Redeemed in Part..................................................   45

         Section 3.07.         Optional Redemption.....................................................   45

         Section 3.08.         Mandatory Redemption....................................................   46

         Section 3.09.         Offer to Purchase by Application of Excess Proceeds.....................   46
</TABLE>

                                       i

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                         PAGE
<S>                                                                                                      <C>
ARTICLE IV            COVENANTS........................................................................   48

         Section 4.01.         Payment of Notes........................................................   48

         Section 4.02.         Maintenance of Office or Agency.........................................   49

         Section 4.03.         Reports.................................................................   49

         Section 4.04.         Compliance Certificate..................................................   50

         Section 4.05.         Taxes...................................................................   51

         Section 4.06.         Stay, Extension and Usury Laws..........................................   51

         Section 4.07.         Restricted Payments.....................................................   51

         Section 4.08.         Dividend and Other Payment Restrictions Affecting
                               Restricted Subsidiaries.................................................   55

         Section 4.09.         Incurrence of Indebtedness and Issuance of Preferred Stock..............   57

         Section 4.10.         Asset Sales.............................................................   60

         Section 4.11.         Transactions With Affiliates............................................   61

         Section 4.12.         Liens...................................................................   63

         Section 4.13.         Business Activities.....................................................   63

         Section 4.14.         Corporate Existence.....................................................   63

         Section 4.15.         Offer To Repurchase Upon Change of Control Triggering Event.............   63

         Section 4.16.         Additional Subsidiary Guarantees........................................   64

         Section 4.17.         Payments for Consents...................................................   65

         Section 4.18.         Covenant Termination....................................................   65

ARTICLE V             SUCCESSORS.......................................................................   66

         Section 5.01.         Merger, Consolidation or Sale of Assets.................................   66

         Section 5.02.         Successor Corporation Substituted.......................................   67

ARTICLE VI            DEFAULTS AND REMEDIES............................................................   67

         Section 6.01.         Events of Default.......................................................   67

         Section 6.02.         Acceleration............................................................   69

         Section 6.03.         Other Remedies..........................................................   69

         Section 6.04.         Waiver of Past Defaults.................................................   70
</TABLE>

                                       ii

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                         PAGE
<S>                                                                                                      <C>
         Section 6.05.         Control by Majority.....................................................   70

         Section 6.06.         Limitation on Suits.....................................................   70

         Section 6.07.         Rights of Holders of Notes to Receive Payment...........................   71

         Section 6.08.         Collection Suit by Trustee..............................................   71

         Section 6.09.         Trustee May File Proofs of Claim........................................   71

         Section 6.10.         Priorities..............................................................   72

         Section 6.11.         Undertaking for Costs...................................................   72

ARTICLE VII           TRUSTEE..........................................................................   73

         Section 7.01.         Duties of Trustee.......................................................   73

         Section 7.02.         Rights of Trustee.......................................................   74

         Section 7.03.         Individual Rights of Trustee............................................   75

         Section 7.04.         Trustee's Disclaimer....................................................   75

         Section 7.05.         Notice of Defaults......................................................   75

         Section 7.06.         Reports by Trustee to Holders of the Notes..............................   76

         Section 7.07.         Compensation and Indemnity..............................................   76

         Section 7.08.         Replacement of Trustee..................................................   77

         Section 7.09.         Successor Trustee by Merger, etc........................................   78

         Section 7.10.         Eligibility; Disqualification...........................................   78

         Section 7.11.         Preferential Collection of Claims Against Company.......................   78

ARTICLE VIII          LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................................   79

         Section 8.01.         Option to Effect Legal Defeasance or Covenant Defeasance................   79

         Section 8.02.         Legal Defeasance and Discharge..........................................   79

         Section 8.03.         Covenant Defeasance.....................................................   79

         Section 8.04.         Conditions to Legal or Covenant Defeasance..............................   80

         Section 8.05.         Deposited Money and Government Securities to be Held in
                               Trust; Other Miscellaneous Provisions...................................   81

         Section 8.06.         Repayment to Company....................................................   82

         Section 8.07.         Reinstatement...........................................................   82

ARTICLE IX            AMENDMENT, SUPPLEMENT AND WAIVER.................................................   83
</TABLE>

                                       iii

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                         PAGE
<S>                                                                                                      <C>
         Section 9.01.         Without Consent of Holders of Notes.....................................   83

         Section 9.02.         With Consent of Holders of Notes........................................   84

         Section 9.03.         Compliance with Trust Indenture Act.....................................   85

         Section 9.04.         Revocation and Effect of Consents.......................................   86

         Section 9.05.         Notation on or Exchange of Notes........................................   86

         Section 9.06.         Trustee to Sign Amendments, etc.........................................   86

ARTICLE X             SUBSIDIARY GUARANTEES............................................................   86

         Section 10.01.        Guarantee...............................................................   86

         Section 10.02.        Limitation on Subsidiary Guarantor Liability............................   88

         Section 10.03.        Execution and Delivery of Subsidiary Guarantee..........................   89

         Section 10.04.        Subsidiary Guarantors May Consolidate, etc., on Certain Terms...........   89

         Section 10.05.        Releases Following Sale of Assets.......................................   90

ARTICLE XI            SATISFACTION AND DISCHARGE.......................................................   91

         Section 11.01.        Satisfaction and Discharge..............................................   91

         Section 11.02.        Deposited Money and Government Securities to be
                               Held in Trust; Other Miscellaneous Provisions...........................   92

         Section 11.03.        Repayment to Company....................................................   92

ARTICLE XII           MISCELLANEOUS....................................................................   93

         Section 12.01.        Trust Indenture Act Controls............................................   93

         Section 12.02.        Notices.................................................................   93

         Section 12.03.        Communication by Holders of Notes with Other Holders of Notes...........   94

         Section 12.04.        Certificate and Opinion as to Conditions Precedent......................   94

         Section 12.05.        Statements Required in Certificate or Opinion...........................   95

         Section 12.06.        Rules by Trustee and Agents.............................................   95

         Section 12.07.        No Personal Liability of Directors, Officers, Employees
                               and Stockholders........................................................   95

         Section 12.08.        Governing Law...........................................................   95

         Section 12.09.        No Adverse Interpretation of Other Agreements...........................   96
</TABLE>

                                       iv

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                         PAGE
<S>                                                                                                      <C>
         Section 12.10.        Successors..............................................................   96

         Section 12.11.        Severability............................................................   96

         Section 12.12.        Counterpart Originals...................................................   96

         Section 12.13.        Table of Contents, Headings, etc........................................   96
</TABLE>

                                       v
<PAGE>

EXHIBITS

<TABLE>
<S>               <C>
Exhibit A         FORM OF NOTE
Exhibit B         FORM OF CERTIFICATE OF TRANSFER
Exhibit C         FORM OF CERTIFICATE OF EXCHANGE
Exhibit D         FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
                  ACCREDITED INVESTOR
Exhibit E         FORM OF SUBSIDIARY GUARANTEE
Exhibit F         FORM OF SUPPLEMENTAL INDENTURE

SCHEDULES
Schedule I        Schedule of Subsidiary Guarantors
</TABLE><PAGE>

                                                                  EXECUTION COPY

EXHIBIT 10.43

                                 $1,050,000,000

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                      AMONG

                           PEABODY ENERGY CORPORATION,
                             A DELAWARE CORPORATION,
                                  AS BORROWER,

                               THE SEVERAL LENDERS
                        FROM TIME TO TIME PARTIES HERETO,

                     WACHOVIA BANK, NATIONAL ASSOCIATION AND
                          LEHMAN COMMERCIAL PAPER INC.,
                             AS SYNDICATION AGENTS,

                             FLEET SECURITIES, INC.,
                          WACHOVIA SECURITIES, INC. AND
                              LEHMAN BROTHERS INC.,
                                  AS ARRANGERS,

                              FLEET NATIONAL BANK,
                             AS ADMINISTRATIVE AGENT

                                       AND

                     MORGAN STANLEY SENIOR FUNDING, INC. AND
                         U.S. BANK NATIONAL ASSOCIATION,
                             AS DOCUMENTATION AGENTS

                           DATED AS OF MARCH 21, 2003

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   Page
                                                                                                                   ----
<S>                                                                                                                <C>
SECTION 1.        DEFINITIONS....................................................................................    2

      1.1         Defined Terms..................................................................................    2
      1.2         Other Definitional Provisions..................................................................   23
      1.3         Interrelationship with First Restated Credit Agreement.........................................   23
      1.4         Confirmation of Existing Obligations...........................................................   24

SECTION 2.        AMOUNT AND TERMS OF COMMITMENTS AND LOANS......................................................   24

      2.1         Commitments....................................................................................   24
      2.2         Procedure for Borrowing........................................................................   26
      2.3         Commitment Fee.................................................................................   26
      2.4         Termination or Reduction of Revolving Credit Commitments.......................................   27
      2.5         Repayment of Loans; Evidence of Debt...........................................................   27
      2.6         Optional Prepayments; Mandatory Prepayments and Reduction of Commitments.......................   29
      2.7         Conversion and Continuation Options............................................................   30
      2.8         Minimum Amounts and Maximum Number of Tranches.................................................   31
      2.9         Interest Rates and Payment Dates...............................................................   31
      2.10        Computation of Interest and Fees...............................................................   31
      2.11        Inability to Determine Interest Rate...........................................................   32
      2.12        Pro Rata Treatment and Payments................................................................   32
      2.13        Illegality.....................................................................................   33
      2.14        Requirements of Law............................................................................   33
      2.15        Taxes..........................................................................................   34
      2.16        Indemnity......................................................................................   36
      2.17        Replacement of Lenders.........................................................................   37
      2.18        Certain Fees...................................................................................   37
      2.19        Certain Rules Relating to the Payment of Additional Amounts....................................   37

SECTION 3.        LETTERS OF CREDIT..............................................................................   38

      3.1         L/C Commitment.................................................................................   38
      3.2         Procedure for Issuance of Letters of Credit....................................................   38
      3.3         Fees, Commissions and Other Charges............................................................   39
      3.4         L/C Participation..............................................................................   39
      3.5         Reimbursement Obligation of the Borrower.......................................................   40
      3.6         Obligations Absolute...........................................................................   40
      3.7         Letter of Credit Payments......................................................................   41
      3.8         Application....................................................................................   41

SECTION 4.        REPRESENTATIONS AND WARRANTIES.................................................................   41

      4.1         Financial Statements and Condition.............................................................   41
      4.2         No Change......................................................................................   41
      4.3         Corporate Existence............................................................................   42
      4.4         Corporate Power; Authorization; Enforceable Obligations; No Conflict...........................   42
      4.5         No Legal Bar...................................................................................   42
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                                <C>
      4.6         Litigation; Compliance with Laws; Reserves.....................................................   42
      4.7         No Default.....................................................................................   43
      4.8         Ownership and Location of Property; Liens......................................................   43
      4.9         Intellectual Property..........................................................................   44
      4.10        Taxes..........................................................................................   44
      4.11        Federal Regulations............................................................................   44
      4.12        ERISA; Coal Act; Black Lung Act................................................................   44
      4.13        Investment Company Act; Other Regulations......................................................   45
      4.14        Subsidiaries and Other Investments.............................................................   45
      4.15        Purpose of Loans...............................................................................   46
      4.16        Environmental Matters..........................................................................   46
      4.17        Collateral Documents...........................................................................   47
      4.18        Accuracy and Completeness of Information.......................................................   47
      4.19        Solvency.......................................................................................   48
      4.20        Labor Matters..................................................................................   48
      4.21        Insurance......................................................................................   48
      4.22        Coal Supply Agreements.........................................................................   48
      4.23        Mines..........................................................................................   48
      4.24        Titled Equipment...............................................................................   48
      4.25        Acts of God....................................................................................   49
      4.26        Surety Bonds...................................................................................   49

SECTION 5.        CONDITIONS PRECEDENT...........................................................................   49

      5.1         Effective Date.................................................................................   49
      5.2         Conditions to a Credit Event...................................................................   52

SECTION 6.        AFFIRMATIVE COVENANTS..........................................................................   52

      6.1         Financial Statements...........................................................................   52
      6.2         Certificates; Other Information................................................................   53
      6.3         Payment of Obligations.........................................................................   54
      6.4         Existence; Businesses and Properties...........................................................   54
      6.5         Insurance......................................................................................   55
      6.6         Inspection of Properties; Books and Records; Discussions.......................................   56
      6.7         Notices........................................................................................   56
      6.8         Mining and Environmental Laws..................................................................   57
      6.9         Further Assurances.............................................................................   57
      6.10        Additional Collateral..........................................................................   57
      6.11        Foreign Jurisdictions..........................................................................   60
      6.12        Maintenance of Collateral; Alterations.........................................................   60
      6.13        Use of Proceeds................................................................................   60
      6.14        Preparation of Environmental Reports...........................................................   60
      6.15        Maintenance of Coal Reserves...................................................................   61
      6.16        Coal Supply Agreements.........................................................................   61
      6.17        Exploration and Reserves.......................................................................   61
      6.18        Certain Long Term Liabilities and Environmental Reserves.......................................   61
      6.19        Unrestricted Subsidiaries......................................................................   61
      6.20        Partner Support Percentage; Total Project Cost.................................................   61
      6.21        Black Beauty...................................................................................   62
      6.22        Liens..........................................................................................   62
</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                                <C>
      6.23        Existing Notes.................................................................................   62

SECTION 7.        NEGATIVE COVENANTS.............................................................................   62

      7.1         Financial Condition Covenants..................................................................   62
      7.2         Limitation on Indebtedness.....................................................................   63
      7.3         Limitation on Liens............................................................................   65
      7.4         Limitation on Guarantee Obligations............................................................   67
      7.5         Limitation on Fundamental Changes..............................................................   68
      7.6         Limitation on Sale of Assets...................................................................   68
      7.7         Dividends and Distributions; Restrictions on Ability of Restricted Subsidiaries to Pay
                  Dividends......................................................................................   70
      7.8         Limitation on Capital Expenditures.............................................................   71
      7.9         Limitation on Investments, Loans and Advances..................................................   71
      7.10        Limitation on Optional Payments and Modifications of Instruments and Agreements................   73
      7.11        Limitation on Transactions with Affiliates.....................................................   73
      7.12        Limitation on Sale and Leaseback Transactions..................................................   74
      7.13        Limitation on Changes in Fiscal Year...........................................................   74
      7.14        Limitation on Negative Pledge Clauses..........................................................   74
      7.15        Limitation on Lines of Business................................................................   75

SECTION 8.        EVENTS OF DEFAULT..............................................................................   75

SECTION 9.        THE AGENTS.....................................................................................   78

      9.1         Appointment....................................................................................   78
      9.2         Delegation of Duties...........................................................................   79
      9.3         Exculpatory Provisions.........................................................................   79
      9.4         Reliance by Agents.............................................................................   79
      9.5         Notice of Default..............................................................................   79
      9.6         Non-Reliance on Agents and Other Lenders.......................................................   79
      9.7         Indemnification................................................................................   80
      9.8         Agents, in Their Individual Capacities.........................................................   80
      9.9         Successor Administrative Agent, Syndication Agents and Documentation Agents....................   80
      9.10        Duties of Arrangers, Documentation Agents and Syndication Agents...............................   81

SECTION 10.       MISCELLANEOUS..................................................................................   81

      10.1        Amendments and Waivers.........................................................................   81
      10.2        Notices........................................................................................   82
      10.3        No Waiver; Cumulative Remedies.................................................................   85
      10.4        Survival of Representations and Warranties.....................................................   85
      10.5        Payment of Expenses and Taxes..................................................................   85
      10.6        Successors and Assigns; Participations and Assignments.........................................   86
      10.7        Adjustments; Set-off...........................................................................   89
      10.8        Counterparts...................................................................................   89
      10.9        Severability...................................................................................   89
      10.10       Integration....................................................................................   89
      10.11       GOVERNING LAW..................................................................................   89
      10.12       SUBMISSION TO JURISDICTION; WAIVERS............................................................   90
</TABLE>

                                       iii

<PAGE>

<TABLE>
<S>                                                                                                                <C>
      10.13       Acknowledgements...............................................................................   90
      10.14       WAIVERS OF JURY TRIAL..........................................................................   90
      10.15       Confidentiality................................................................................   91
      10.16       Prudential Note................................................................................   91
      10.17       Existing Agreements Superseded.................................................................   91
      10.18       Delivery of Lender Addenda.....................................................................   91
</TABLE>

                                       iv

<PAGE>

EXHIBITS

Exhibit A-1                Form of Term Note
Exhibit A-2                Form of Revolving Credit Note
Exhibit A-3                Form of Swing Line Note
Exhibit B                  Form of Guarantee and Collateral Agreement
Exhibit C-1                Form of Legal Opinion of Simpson Thacher & Bartlett
Exhibit C-2                Form of Legal Opinion of Jeffery Klinger, Esq.
Exhibit D                  Form of Notice of Borrowing
Exhibit E                  Form of Certificate of Non-U.S. Lender
Exhibit F                  Form of Assignment and Acceptance
Exhibit G                  Form of Subordination Agreement
Exhibit H                  Form of Lender Addendum

SCHEDULES

Schedule I                 Pricing Grids
Schedule II                Coal Act
Schedule III               Black Lung Act
Schedule IV                Retiree Welfare Benefits
Schedule V                 Unrestricted Subsidiaries
Schedule 4.4               Required Consents
Schedule 4.5               No Legal Bar
Schedule 4.6               Material Litigation
Schedule 4.8(a)(i)         Owned Real Property
Schedule 4.8(a)(ii)        Mortgages and Fixture Filings
Schedule 4.8(b)            Leased Real Property
Schedule 4.9               Intellectual Property Claims
Schedule 4.14(a)           Subsidiaries
Schedule 4.14(b)           Joint Ventures
Schedule 4.15              Refinanced Indebtedness
Schedule 4.16              Environmental Matters
Schedule 4.17              Filing Jurisdictions
Schedule 4.21              Existing Insurance
Schedule 4.22              Coal Supply Agreements
Schedule 4.23              Mines
Schedule 7.2(e)            Existing Indebtedness
Schedule 7.3(f)            Existing Liens
Schedule 7.4               Existing Guarantee Obligations
Schedule 7.7               Operating Leases
Schedule 7.9(e)            Existing Investments

                                        v

<PAGE>

                  THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
March 21, 2003, among Peabody Energy Corporation, a Delaware corporation (the
"Borrower"), the several lenders from time to time parties hereto (the
"Lenders"), Fleet Securities, Inc., Wachovia Securities, Inc. and Lehman
Brothers Inc., each as arranger (in such capacity, the "Arrangers"), Wachovia
Bank, National Association and Lehman Commercial Paper Inc., each as syndication
agent (in such capacity, the "Syndication Agents"), Morgan Stanley Senior
Funding, Inc. and U.S. Bank National Association, each as documentation agents
(in such capacity, the "Documentation Agents") and Fleet National Bank, as
administrative agent for the Agents (as defined below) and the Lenders (in such
capacity, the "Administrative Agent"), AMENDS AND RESTATES IN FULL the Amended
and Restated Credit Agreement, dated as of June 9, 1998 (as amended prior to the
date hereof, the "First Restated Credit Agreement"), among the Borrower, the
lenders party thereto on the Effective Date (the "Original Lenders"), Lehman
Commercial Paper Inc., as syndication agent, Lehman Brothers Inc., as arranger,
The First National Bank of Chicago, as administrative agent and Bank of America
National Trust & Savings Association and The Fuji Bank, Limited, each as
documentation agent; this amendment and restatement of the First Restated Credit
Agreement, as amended, supplemented, restated or otherwise modified from time to
time, the "Credit Agreement".

                              W I T N E S E T H :

                  WHEREAS, the Original Lenders previously extended credit to
the Borrower under the First Restated Credit Agreement to (i) finance the
acquisition of certain subsidiaries and certain minority interests and related
fees and expenses, (ii) provide cash collateral for certain letters of credit of
the acquired subsidiaries and (iii) to finance the working capital and other
general corporate needs of the Borrower and its Restricted Subsidiaries in the
ordinary course of business and to make certain investments permitted
thereunder;

                  WHEREAS, on the Effective Date the Borrower intends to borrow
the Term Loans, a portion of the proceeds of which will be used to repay a
portion of the Indebtedness outstanding under the Existing Notes;

                  WHEREAS, the Borrower has requested that the First Restated
Credit Agreement be amended and restated in full as set forth herein;

                  WHEREAS, the Original Lenders are willing so to amend and
restate the First Restated Credit Agreement and to continue to extend credit to
the Borrower, upon and subject to the terms and conditions set forth herein;

                  WHEREAS, it is the intent of the Borrower, the Original
Lenders, the Lenders and the Agents that this Credit Agreement amend and restate
in its entirety the First Restated Credit Agreement and that, from and after the
Effective Date, the First Restated Credit Agreement shall be of no force and
effect except to evidence the terms and conditions under which the Borrower
heretofore has incurred obligations and liabilities to the Original Lenders and
the agents under the First Restated Credit Agreement (as evidenced by the First
Restated Credit Agreement and the books and records of the agents thereunder);
and

                  WHEREAS, this Credit Agreement is made in renewal, amendment,
restatement and modification of, but not in extinguishment of, the obligations
under the First Restated Credit Agreement.

<PAGE>

                  NOW, THEREFORE, the parties hereto hereby agree as follows:

SECTION 1.        DEFINITIONS

                  1.1      Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:

                  "Adjustment Date": the fifth day following the receipt by the
Administrative Agent of the financial statements for the most recently completed
fiscal period furnished pursuant to subsection 6.1(a) or (b), as the case may
be, and the compliance certificate with respect to such financial statements
furnished pursuant to subsection 6.2(c). For purposes of determining the
Applicable Margin and the Commitment Fee Rate, the first "Adjustment Date" shall
mean the date on which the financial statements for the fiscal quarter ended
June 30, 2003 furnished pursuant to subsection 6.1(b) and the related compliance
certificate furnished pursuant to subsection 6.2(c) are delivered to the
Administrative Agent pursuant to subsection 6.1(b) and 6.2(c), respectively.

                  "Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, either to (a) vote 10% or more
of the securities having ordinary voting power for the election of directors of
such Person or (b) direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.

                  "Agents": the collective reference to the Arrangers, the
Syndication Agents, the Documentation Agents and the Administrative Agent.

                  "Aggregate Outstanding Extensions of Credit": as to any Lender
with respect to any Type of Loan at any time, an amount equal to the sum of (a)
the aggregate principal amount of all Loans of such Type made by such Lender
then outstanding and (b) in the case of Revolving Credit Loans, such Lender's
Commitment Percentage of the L/C Obligations then outstanding.

                  "Agreement": this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.

                  "Applicable Margin": at any time, the percentages set forth on
Schedule I under the relevant column heading opposite the level of the
Consolidated Total Obligations to Consolidated EBITDA Ratio most recently
determined; provided that (a) the Applicable Margins commencing on the Effective
Date shall be those set forth in Schedule I opposite a Consolidated Total
Obligations to Consolidated EBITDA Ratio captioned > or = 2.75x" until the first
Adjustment Date, (b) the Applicable Margins determined for any Adjustment Date
(including the first Adjustment Date) shall remain in effect until a subsequent
Adjustment Date for which the Consolidated Total Obligations to Consolidated
EBITDA Ratio falls within a different level and (c) if the financial statements
and related compliance certificate for any fiscal period are not delivered by
the date due pursuant to subsections 6.1 and 6.2, the Applicable Margins shall
be (i) for the first 35 days subsequent to such due date, the Applicable Margin
in effect prior to such due date and (ii) thereafter, those set forth opposite a
Consolidated Total Obligations to Consolidated EBITDA Ratio captioned
> or = 3.75x" in either case, until the date of delivery of such financial
statements and compliance certificate.

                  "Application": an application or request, in such form as the
Issuing Lender may specify from time to time and delivered by such means
(including, without limitation, by facsimile or other means of electronic
transmission or pursuant to a computerized system established by the Issuing
Lender) as the

                                        2

<PAGE>

Issuing Lender and the Borrower may from time to time agree, requesting the
Issuing Lender to issue a Letter of Credit.

                  "Approved Project": as specified in a written notice delivered
by the Borrower to the Administrative Agent, either, but not both, of the
Thoroughbred Power Generation Project or the Prairie State Power Generation
Project.

                  "Asset Sale": any sale, sale and leaseback, or other
disposition by any Person or any Subsidiary thereof of any of its property or
assets, including the stock of any Subsidiary of such Person, except (i) sales
and dispositions permitted by subsection 7.6 (other than subsection 7.6(b), (e),
(k)(other than as set forth in clause (ii) of this definition) or (m)) and (ii)
a sale and leaseback of property or assets consummated within 180 days of the
initial acquisition of such property or assets by such Person or its Subsidiary.

                  "Assignee": as defined in subsection 10.6(c).

                  "Assignment and Acceptance": as defined in subsection 10.6(c).

                  "Attributable Debt": in respect of a sale and leaseback
transaction resulting in a Financing Lease, at the time of determination, the
present value (discounted at the rate of interest implicit in such transaction,
determined in accordance with GAAP) of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such sale and
leaseback transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).

                  "Available Commitment": as to any Lender and any Type of Loan,
at any time, an amount equal to the excess, if any, of (a) such Lender's
Commitment with respect to such Type of Loan minus (b) such Lender's Aggregate
Outstanding Extensions of Credit with respect to such Type of Loan.

                  "Base Rate": for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the per annum rate of interest in
effect for such day as announced from time to time by the Administrative Agent
as its "Base Rate" or the substantial equivalent of any thereof.

                  "Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Base Rate.

                  "Black Beauty": Black Beauty Coal Company, an Indiana general
partnership.

                  "Black Beauty Acquisition": the acquisition by the Borrower or
one of its Restricted Subsidiaries of all of the outstanding Capital Stock of
Black Beauty Resources, Inc., which as of the Effective Date owns all of the
outstanding Capital Stock of Black Beauty not already owned by the Borrower or
such Restricted Subsidiary.

                  "Black Beauty Collateral Event": the grant of a perfected,
first priority Lien (subject only to Permitted Liens) to the Administrative
Agent for the ratable benefit of the Secured Parties on substantially all of the
assets and property of Black Beauty.

                  "Black Beauty Condition": as defined in subsection 6.10(e).

                  "Black Beauty Debt": the revolving credit facility of Black
Beauty, maturing in April 2004.

                                        3

<PAGE>

                  "Black Lung Act": collectively, the Black Lung Benefits
Revenue Act of 1977, as amended and the Black Lung Benefits Reform Act of 1977,
as amended.

                  "Blanket Grantor": a Credit Party that has granted a
perfected, first priority Lien (subject only to Permitted Liens) on
substantially all of its assets to the Administrative Agent for the ratable
benefit of the Secured Parties.

                  "Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2 as a date on which the Borrower requests the Lenders
to make Loans hereunder.

                  "Business": as defined in subsection 4.16(b).

                  "Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York, or Boston, Massachusetts,
are authorized or required by law to close and, if the applicable Business Day
relates to LIBOR Loans, any day on which dealings are carried on in the
applicable London interbank market.

                  "Capital Expenditures": for any fiscal period, the aggregate
of all expenditures that, in conformity with GAAP (but excluding capitalized
interest), are or are required to be included as additions during such period to
property, plant or equipment reflected on the consolidated balance sheet of the
Borrower and its Subsidiaries, excluding the non-cash component of any federal
coal lease obligations during such period.

                  "Capital Lease Obligations": of any Person as of the date of
determination, the aggregate liability of such Person under Financing Leases
reflected on a balance sheet of such Person under GAAP.

                  "Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.

                  "Cash Equivalents": (a) securities with maturities of one year
or less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of deposit
and time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any Lender or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of clause
(b) of this definition, having a term of not more than 90 days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-2 by S&P
or P-2 by Moody's, or carrying an equivalent rating by a nationally recognized
rating agency if both of S&P and Moody's cease publishing ratings of
investments, (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's, (f) securities with maturities of one year or less from
the date of acquisition backed by standby letters of credit issued by any Lender
or any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which invest
principally in assets satisfying the requirements of clauses (a) through (f) of
this definition.

                  "Change in Control": (i) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), excluding

                                        4

<PAGE>

LBMBP II and its Affiliates shall (x) become, or obtain rights (whether by means
or warrants, options or otherwise) to become, the "beneficial owner" (as defined
in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of
a greater percentage of the outstanding common stock of the Borrower than the
percentage of such common stock owned by LBMBP II and its Affiliates or (y) have
the power to vote or direct the voting of securities having a majority of the
ordinary voting power for the election of directors or managers of the Borrower
(determined on a fully diluted basis) or (ii) a "Change of Control" (as defined
in the Senior Notes Indenture as in effect on the Effective Date).

                  "Class": (i) Lenders having Revolving Credit Loan Exposure and
(ii) Lenders having Term Loan Exposure.

                  "Coal": all of the coal owned or leased by any Credit Party
and (i) located on, under, or within, or (ii) produced and severed from, the
properties owned or leased by any Credit Party.

                  "Coal Act": the Coal Industry Retiree Health Benefits Act of
1992, as amended.

                  "Coal Supply Agreements": those contracts now in effect or
hereafter entered into by the Borrower or any of its Subsidiaries for the sale,
purchase, exchange, processing or handling of Coal with an initial term of more
than one year.

                  "Code": the Internal Revenue Code of 1986, as amended from
time to time.

                  "Collateral": all assets of the Credit Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by this
Agreement or any Security Document.

                  "Collateral Account": as defined in subsection 6.23.

                  "Collateral Amount": as defined in subsection 7.6.

                  "Commitment": as to any Lender, such Lender's Term Loan
Commitment and Revolving Credit Commitment.

                  "Commitment Fee Rate": at any time, the rate per annum set
forth on Schedule I under the relevant column heading opposite the level of the
Usage Ratio as of such date.

                  "Commitment Letter": the letter agreement dated as of March 3,
2003, among the Borrower, and the Arrangers, the Administrative Agent and the
Syndication Agents.

                  "Commitment Percentage": as to the Commitment of any Lender
with respect to any Type of Loan at any time, the percentage which the
Commitment of such Lender with respect to such Type of Loan then constitutes of
the aggregate Commitments with respect to such Type of Loan (or, at any time
after such Commitments shall have expired or terminated, the percentage which
the aggregate amount of the Aggregate Outstanding Extensions of Credit of such
Lender with respect to such Type of Loan constitutes of the aggregate amount of
the Aggregate Outstanding Extensions of Credit of all Lenders with respect to
such Type of Loan).

                  "Commitment Period": the period from and including the
Effective Date to but not including the Revolving Loan Termination Date or such
earlier date on which the Revolving Credit Commitments shall terminate as
provided herein.

                                        5

<PAGE>

                  "Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 (b) or (c) of the Code.

                  "Consolidated": consolidation in accordance with GAAP, but
excluding any Unrestricted Subsidiary.

                  "Consolidated Cash Interest Expense": as of the last day of
any fiscal quarter, the amount of interest expense and letter of credit fees and
commissions (in each case payable in cash) of the Borrower and its Restricted
Subsidiaries determined in accordance with GAAP, for the four fiscal quarters
ended on such date; provided that Consolidated Cash Interest Expense shall
exclude prepayment premiums and penalties in connection with the redemption of
the Existing Notes.

                  "Consolidated EBITDA": as of the last day of any fiscal
quarter, Consolidated Net Income for such quarter (excluding without
duplication, (w) noncash compensation expenses related to common stock and other
equity securities issued to employees, (x) extraordinary or non-recurring gains
and losses in accordance with GAAP, (y) gains or losses on discontinued
operations and (z) any FAS 121 writedowns, in each case for such quarter), plus
(i) consolidated interest expense for such quarter, determined in accordance
with GAAP, plus (ii) any minority interests share of income and losses, plus
(iii) to the extent deducted in computing such Consolidated Net Income, the sum
of all income taxes, depreciation, depletion and amortization of property,
plant, equipment and intangibles, plus (iv) any debt extinguishment costs plus
(v) non-cash charges due to cumulative effects of changes in accounting
principles, in each case for such quarter; provided, however that for the
purposes of this Agreement, EBITDA derived from broker and trading operations
shall not be included in Consolidated EBITDA as of the last day of any fiscal
quarter to the extent that such EBITDA derived from broker and trading
operations (accounted for on a mark to market basis) exceeded 20% of
Consolidated EBITDA as of the last day of any fiscal quarter.

                  "Consolidated EBITDA to Consolidated Cash Interest Expense
Ratio": as of any date of determination, the ratio of Consolidated EBITDA to
Consolidated Cash Interest Expense for the preceding four fiscal quarters ended
on such date.

                  "Consolidated Net Income": for any fiscal period, net income
of the Borrower and its Restricted Subsidiaries for such period, determined in
accordance with GAAP.

                  "Consolidated Secured Debt": at any date, all Consolidated
Total Obligations of the Borrower and its Consolidated Subsidiaries that are
secured by a Lien.

                  "Consolidated Secured Debt to Consolidated EBITDA Ratio": as
of any date of determination, the ratio of Consolidated Secured Debt to
Consolidated EBITDA for the preceding four fiscal quarters ended on such date.

                  "Consolidated Total Debt": at any date, all indebtedness of
the Borrower and its Restricted Subsidiaries outstanding on such date for
borrowed money, obligations pursuant to standby letters of credit (other than
Designated Letters of Credit), the deferred purchase price of property (other
than (i) current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices and accrued expenses incurred
in the ordinary course of business, (ii) obligations under federal coal leases,
(iii) obligations under coal leases which may be terminated at the discretion of
the lessee and (iv) deferred purchase obligations in connection with the
acquisition of the Martinka mine)

                                        6

<PAGE>

and all obligations of the Borrower and its Restricted Subsidiaries in respect
of Financing Leases; provided, that Consolidated Total Debt shall not include,
in any event, Non-Recourse Debt.

                  "Consolidated Total Obligations": at any date, the sum of (a)
Consolidated Total Debt plus (b) Project Guarantee Obligations plus (c) amounts
due under securitization programs of any Credit Party (other than the Existing
Securitization) permitted pursuant to subsections 7.2 and 7.6.

                  "Consolidated Total Obligations to Consolidated EBITDA Ratio":
as of any date of determination, the ratio of Consolidated Total Obligations to
Consolidated EBITDA for the preceding four fiscal quarters ended on such date.

                  "Consolidated Working Capital": at any date, the excess of (a)
the sum of all amounts (other than cash and Cash Equivalents) that would, in
accordance with GAAP, be set forth opposite the caption "total current assets"
(or any like caption) on a consolidated balance sheet of the Borrower and its
Restricted Subsidiaries at such date minus (b) the sum of all amounts that
would, in accordance with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Borrower and its Restricted Subsidiaries on such date (excluding, to the extent
it would otherwise be included under current liabilities, any short-term
Consolidated Total Debt and the current portion of any long-term Consolidated
Total Debt).

                  "Constitutional Documents": as to any Person, the articles or
certificate of incorporation and by-laws, partnership agreement, limited
liability company agreement, shareholders agreement or other organizational
documents of such Person.

                  "Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

                  "Credit Documents": this Agreement, the Notes, the
Applications, the Subordination Agreement and the Security Documents.

                  "Credit Event": the obligation of any Lender to make a Loan or
of the Issuing Lender to issue a Letter of Credit.

                  "Credit Parties": the Borrower and each Subsidiary of the
Borrower which is a party to a Credit Document.

                  "Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.

                  "Default Rate": as defined in subsection 2.9(c).

                  "Designated Letters of Credit": letters of credit issued with
respect to mine reclamation, workers compensation and other employee benefit
liabilities.

                  "Dollars" and "$": dollars in lawful currency of the United
States of America.

                  "EBITDA": for any Person, as of the last day of any fiscal
quarter, Net Income of such Person for such quarter (excluding without
duplication, (w) noncash compensation expenses related to common stock and other
equity securities issued to employees, (x) extraordinary or non-recurring gains
and losses in accordance with GAAP, (y) gains or losses on discontinued
operations and (z) any FAS 121

                                        7

<PAGE>

writedowns, in each case, for such quarter), plus (i) consolidated interest
expense for such quarter, determined in accordance with GAAP, plus (ii) any
minority interests share of income and losses plus (iii) to the extent deducted
in computing such Net Income, the sum of all income taxes, depreciation,
depletion and amortization of property, plant, equipment and intangibles, in
each case, for such quarter plus (iv) any debt extinguishment costs plus (v)
non-cash charges due to cumulative effects of changes in accounting principles,
in each case for such quarter.

                  "Effective Date": the first date on which all of the
conditions precedent set forth in subsection 5.1 have been satisfied.

                  "EPC Contract": a turn-key engineering, procurement and
construction contract among the Borrower (or one of its Affiliates) and one or
more nationally recognized construction contractors that provides for a
guaranteed fixed price and completion date for the Approved Project, and that
contains performance and completion obligations that are usual and customary for
engineering, procurement and construction contracts for projects substantially
similar to the Approved Project (as reasonably determined by the Administrative
Agent).

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

                  "Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.

                  "Excess Cash Flow": for any fiscal year of the Borrower, the
excess of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) the net decrease, if any, in Consolidated Working Capital
during such fiscal year, (iii) to the extent deducted in computing such
Consolidated Net Income, non-cash interest expense, depreciation, depletion and
amortization for such fiscal year, (iv) extraordinary non-cash losses during
such fiscal year subtracted in the determination of Consolidated Net Income for
such fiscal year, (v) net decrease in deferred income tax assets or net increase
in deferred income tax liabilities of the Borrower and its Restricted
Subsidiaries for such fiscal year, (vi) non-cash losses in connection with asset
dispositions whether or not constituting extraordinary losses and (vii) non-cash
ordinary losses in excess of (b) the sum, without duplication, of (i) the
aggregate amount of permitted cash Capital Expenditures made by the Borrower and
its Restricted Subsidiaries during such fiscal year, (ii) the net increase, if
any, in Consolidated Working Capital during such fiscal year, (iii) the
aggregate amount of payments of principal in respect of any Indebtedness not
prohibited hereunder during such fiscal year (other than prepayments of
Revolving Credit Loans not accompanied by reductions of the Commitments and
prepayments of other short-term lines of credit), (iv) net increase in deferred
income tax assets or net decrease in deferred income tax liabilities of the
Borrower and its Restricted Subsidiaries for such fiscal year, (v) extraordinary
non-cash gains during such fiscal year added in the determination of
Consolidated Net Income for such fiscal year, (vi) non-cash gains in connection
with asset dispositions whether or not constituting extraordinary gains and
(vii) non-cash ordinary gains.

                  "Excess Cash Flow Payment Date": in respect of any fiscal
year, the date on which the Borrower is required to deliver audited financial
statements for such fiscal year to each Lender pursuant to subsection 6.1(a).

                  "Existing Notes": the Borrower's 8 7/8% Senior Notes, due 2008
and 9 5/8% Senior Subordinated Notes, due 2008.

                                        8

<PAGE>

                  "Existing Securitization": the accounts receivable
securitization financing of P&L Receivables Company LLC, existing as of the
Effective Date.

                  "Federal Funds Rate": means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighed
average of the per annum rates on overnight Federal funds transactions with
member banks of the Federal Reserve System arranged by Federal funds brokers as
published by the Federal Reserve Bank of New York for such day (or, if such rate
is not so published for any day, the average of the rates quoted by three
federal funds brokers to the Administrative Agent on such day on such
transactions).

                  "Final Maturity Date": March 21, 2010.

                  "Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.

                  "First Restated Credit Agreement": as defined in the preamble
hereto.

                  "Foreign Subsidiary": any Subsidiary which is organized under
the laws of any jurisdiction outside the United States or under the laws of the
U.S. Virgin Islands, excluding any such Subsidiary that is, as of the date of
determination, treated as (i) a domestic entity or (ii) a partnership or a
division of a domestic entity, in each case for United States federal income tax
purposes.

                  "FRB": means the Board of Governors of the Federal Reserve
System, and any governmental authority succeeding to any of its principal
functions.

                  "GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time; provided, that with respect to
Australian Subsidiaries of the Borrower, "GAAP" shall mean generally accepted
accounting principles in Australia to the extent such principles are permitted
to be applied in accordance with generally accepted accounting principles in the
United States of America. In the event that any "Accounting Change" (as defined
below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
the Borrower and the Administrative Agent agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such Accounting Changes
as if such Accounting Changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Borrower, the
Administrative Agent and the Required Lenders, all financial covenants,
standards and terms in this Agreement shall continue to be calculated or
construed as if such Accounting Changes had not occurred. "Accounting Changes"
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the Securities and Exchange Commission.

                  "Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

                  "Guarantee and Collateral Agreement": the Amended and Restated
Guarantee and Collateral Agreement, dated as of the date hereof, substantially
in the form of Exhibit B, among the Borrower, the Subsidiaries from time to time
party thereto and the Administrative Agent, for the benefit

                                        9

<PAGE>

of the Secured Parties, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

                  "Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to the
extent the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation in order to induce the creation of such obligation, in either
case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, reimbursement obligations under letters of credit and any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include (i) indemnification or reimbursement
obligations under or in respect of Surety Bonds or Designated Letters of Credit,
(ii) ordinary course performance guarantees by any Credit Party of the
obligations (other than for the payment of borrowed money) of any other Credit
Party and (iii) endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.

                  "Hedge Agreement": any Interest Rate Agreement, and any
currency future or option contract, commodities future or option contract for
materials used in the ordinary course of business and other similar agreements.

                  "Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices and accrued expenses incurred in the ordinary course of business), (b)
any other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person under
Financing Leases, (d) all obligations of such Person in respect of acceptances
issued or created for the account of such Person, (e) all liabilities secured by
any Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, (f) all Attributable
Debt of such Person with respect to sale and leaseback transactions of such
Person, (g) obligations of such Person in respect of Hedge Agreements (on a net
basis with respect to any counterparty), (h) all obligations of such Person for
Production Payments from property operated by or on behalf of such Person and
(i) all Guarantee Obligations of such Person that have been deemed to be
Indebtedness in accordance with subsection 7.4(a).

                  "Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.

                                       10

<PAGE>

                  "Insolvent": pertaining to a condition of Insolvency.

                  "Interest Payment Date": (a) as to any Base Rate Loan, the
last Business Day of each March, June, September and December, (b) as to any
LIBOR Loan having an Interest Period of three months or less, the last Business
Day of such Interest Period, and (c) as to any LIBOR Loan having an interest
period longer than three months, (i) each Business Day which is three months or
a whole multiple thereof after the first day of such Interest Period and (ii)
the last Business Day of such Interest Period.

                  "Interest Period": with respect to any LIBOR Loan:

                           (a)      initially, the period commencing on the
         borrowing or conversion date, as the case may be, with respect to such
         LIBOR Loan and ending one, two, three or six, and to the extent
         available to all the Lenders, nine or twelve months thereafter, as
         selected by the Borrower in its notice of borrowing or notice of
         conversion, as the case may be, given with respect thereto; and

                           (b)      thereafter, each period commencing on the
         last day of the preceding Interest Period applicable to such LIBOR Loan
         and ending one, two, three or six, and to the extent available to all
         the Lenders, nine or twelve months thereafter, as selected by the
         Borrower by irrevocable notice to the Administrative Agent not less
         than three Business Days prior to the last day of the then current
         Interest Period with respect thereto;

provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:

                           (i)      if any Interest Period pertaining to a LIBOR
         Loan would otherwise end on a day that is not a Business Day, such
         Interest Period shall be extended to the next succeeding Business Day
         unless the result of such extension would be to carry such Interest
         Period into another calendar month, in which event such Interest Period
         shall end on the immediately preceding Business Day;

                           (ii)     any Interest Period for any Loan that would
         otherwise extend beyond the Termination Date of such Loan shall end on
         the Termination Date of such Loan;

                           (iii)    any Interest Period pertaining to a LIBOR
         Loan that begins on the last Business Day of a calendar month (or on a
         day for which there is no numerically corresponding day in the calendar
         month in which such Interest Period would otherwise be scheduled to
         end) shall end on the last Business Day of the appropriate calendar
         month; and

                           (iv)     no Interest Period with respect to any
         portion of any Term Loan shall extend beyond a date on which the
         Borrower is required to make a scheduled payment of principal of Term
         Loans unless the sum of (a) the aggregate principal amount of Term
         Loans that are Base Rate Loans plus (b) the aggregate principal amount
         of Term Loans that are LIBOR Rate Loans with Interest Periods expiring
         on or before such date equals or exceeds the principal amount required
         to be paid on Term Loans on such date.

                  "Interest Rate Agreement": any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
future or option contract, or other similar agreement or arrangement.

                                       11

<PAGE>

                  "Interest Rate Agreement Obligations": the obligations of the
Borrower or any of its Subsidiaries to make payments to counterparties under
Interest Rate Agreements in the event of the occurrence of a termination event
thereunder.

                  "Investments": as defined in subsection 7.9.

                  "Issuing Lender": such Lender or Lenders that agree to act as
Issuing Lender at the request of the Administrative Agent and the Borrower.

                  "Joint Venture": any Person (other than a Subsidiary) in which
the Borrower and its Subsidiaries collectively hold an ownership interest.

                  "LBMBP II": Lehman Brothers Merchant Banking Partners II L.P.,
a Delaware limited partnership.

                  "L/C Fee Payment Date": the last Business Day of each March,
June, September and December.

                  "L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit which have not then been reimbursed pursuant to subsection 3.5.

                  "L/C Participants": the collective reference to all the
Revolving Credit Lenders other than the Issuing Lender.

                  "Lender" and "Lenders": as defined in the preamble hereto and
including the Issuing Lender and the Swing Line Lender; provided that the term
"Lenders", when used in the context of a particular Commitment, shall mean
Lenders having that Commitment.

                  "Lender Addendum": with respect to any Lender to be a party
hereto on the date hereof (other than by assignment) that is not an Original
Lender, a Lender Addendum, substantially in the form of Exhibit H, to be
executed and delivered by such Lender on the Effective Date as provided in
subsection 10.18.

                  "Letters of Credit": as defined in subsection 3.1(a).

                  "LIBOR": with respect to each day during each Interest Period,
the rate appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such service, or any successor to or substitute for such
service, providing rate quotations comparable to those currently provided on
such page of such service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to commencement of such Interest Period, as
the rate of interest for dollar deposits in the approximate amount of the Loan
to be made or continued as, or converted into, a LIBOR Rate Loan and having a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then LIBOR shall be the rate of interest
per annum determined by the Administrative Agent to be the arithmetic mean
(rounded upward to the next 1/16th of 1%) of the rates of interest per annum
notified to the Administrative Agent by each Reference Bank as the rate of
interest at which dollar deposits in the approximate amount of the amount of the
Loan to be made or continued as, or converted into, a LIBOR Rate Loan by such
Reference Bank and having a maturity comparable to such Interest Period would be

                                       12

<PAGE>

offered to such Reference Bank in the London interbank market at its request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.

                  "LIBOR Loans": Loans the rate of interest applicable to which
is based upon the LIBOR Rate.

                  "LIBOR Rate": means, for any Interest Period, with respect to
LIBOR Loans comprising part of the same borrowing, the rate of interest per
annum (rounded upward to the next 1/16th of 1%) determined by the Administrative
Agent as follows:

                           LIBOR Rate =                       LIBOR
                                                              -----
                                                 1.00 - LIBOR Reserve Percentage

                  "LIBOR Reserve Percentage": for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable to any
Lender) under regulations issued from time to time by the FRB for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities").

                  "Lien": any mortgage, deed of trust, charge, pledge,
hypothecation, assignment, easement, deposit arrangement, encumbrance, lien
(statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement and any Financing Lease having substantially the same
economic effect as any of the foregoing).

                  "Loan": any loan made by any Lender pursuant to this
Agreement.

                  "Martinka mine": the closed deep mine located in Marion
County, West Virginia, also known as the Tygart River Mine.

                  "Material Adverse Effect": a material adverse effect on (a)
the business, assets, operations, property or condition (financial or otherwise)
of the Borrower and its Restricted Subsidiaries taken as a whole, (b) the
validity or enforceability of this or any of the other Credit Documents or the
rights or remedies of the Agents or the Lenders hereunder or thereunder or (c)
the value of the Collateral taken as a whole or the ability of the Agents and
the Lenders to realize thereon.

                  "Materials of Environmental Concern": any hazardous or toxic
substances, materials or wastes, defined or regulated as such in or under, or
that could give rise to liability under, any applicable Mining and Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls,
urea-formaldehyde insulation, gasoline or petroleum (including crude oil or any
fraction thereof) or petroleum products.

                  "Mine": any excavation or opening into the earth now and
hereafter made from which Coal is or can be extracted on or from any of the
properties owned or leased by any Credit Party, together with all appurtenances,
fixtures, structures, improvements, and all tangible property of whatsoever kind
or nature in connection therewith, including without limitation the Mines
described in Schedule 4.23.

                  "Mining and Environmental Laws": any and all applicable
current and future federal, state, local and foreign statutes, laws,
regulations, guidances, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions

                                       13

<PAGE>

or common law causes of action relating to mining operations and activities or
to the environment or to emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes or to the reclamation of lands. Mining and Environmental
Laws shall include, but not be limited to the Federal Coal Leasing Amendments
Act, the Surface Mining Control and Reclamation Act, all other land reclamation
and use statutes and regulations, the Federal Coal Mine Health and Safety Act,
the Comprehensive Environmental Response, Compensation, and Liability Act; the
Resource Conservation and Recovery Act; the Toxic Substances Control Act; the
Federal Water Pollution Control Act; the Hazardous Materials Transportation Act;
the Clean Air Act; the Safe Drinking Water Act; the Occupational Safety and
Health Act; the Federal Insecticide, Fungicide and Rodenticide Act; the
Endangered Species Act, the Black Lung Act and the Coal Act, each as amended,
and their state and local counterparts or equivalents.

                  "Mining and Environmental Permits": any and all permits,
licenses, registrations, notifications, exemptions and any other authorization
required under any applicable Mining and Environmental Law.

                  "Moody's": Moody's Investor's Service, Inc., or any successor
entity.

                  "Mortgages": the collective reference to the mortgages, deeds
of trust, fixture filings (whether recorded as part of such mortgages or deeds
of trust or as separate instruments), assignments of rent, and any other
functionally similar instruments or agreements, securing the obligations under
the Credit Documents, and covering certain real property (whether owned or
leased) of the Borrower or the appropriate Restricted Subsidiary as contemplated
hereunder, to be executed and delivered by the Borrower or such Restricted
Subsidiary in form and substance reasonably satisfactory to the Agents, as the
same may be amended, supplemented or otherwise modified from time to time
(individually, a "Mortgage").

                  "Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 3(37) or Section 4001(a)(3) of ERISA.

                  "Net Income": for any Person for any fiscal period, net income
of such Person for such period, determined in accordance with GAAP.

                  "Net Proceeds": the aggregate cash proceeds (including Cash
Equivalents) received by the Borrower or any of its Restricted Subsidiaries in
respect of:

                           (a)      any issuance after the Effective Date by the
         Borrower or any of its Restricted Subsidiaries of (i) indebtedness for
         borrowed money and (ii) any other indebtedness of the Borrower or its
         Restricted Subsidiaries evidenced by a note, bond, debenture or similar
         instrument;

                           (b)      any Asset Sale by the Borrower or any
         Restricted Subsidiary; and

                           (c)      any cash payments received in respect of
         promissory notes or other evidences of indebtedness delivered to the
         Borrower or such Restricted Subsidiary in respect of any such Asset
         Sale;

                                       14

<PAGE>

in each case net of (without duplication) (i) (A) in the case of an Asset Sale,
the amount required to repay any Indebtedness (other than the Loans) secured by
a Lien on any assets of the Borrower or a Subsidiary of the Borrower that are
sold or otherwise disposed of in connection with such Asset Sale and (B)
reasonable and appropriate amounts established by the Borrower or such
Subsidiary, as the case may be, as a reserve against liabilities associated with
such Asset Sale and retained by the Borrower or such Subsidiary, (ii) the
reasonable expenses (including legal fees and brokers' and underwriters'
commissions, lenders fees, credit enhancement fees, accountants' fees,
investment banking fees, survey costs, title insurance premiums and other
customary fees, in any case, paid to third parties or, to the extent permitted
hereby, Affiliates) incurred in effecting such issuance or sale and (iii) any
taxes reasonably attributable to such sale and reasonably estimated by the
Borrower or such Subsidiary to be actually payable.

                  "Non-Excluded Taxes":  as defined in subsection 2.15(a).

                  "Non-Recourse Debt" means Indebtedness (i) as to which neither
the Borrower nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) other than a pledge of the equity interests of any
Unrestricted Subsidiary, (b) is directly or indirectly liable (as a guarantor or
otherwise) other than by virtue of a pledge of the equity interests of any
Unrestricted Subsidiary, or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against any Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Obligations) of the Borrower or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders thereunder will not have any recourse to the Capital Stock or assets of
the Borrower or any of its Restricted Subsidiaries (other than the equity
interests of any Unrestricted Subsidiary).

                  "Non-U.S. Lender":  as defined in subsection 2.15(b).

                  "Notes": the collective reference to the Term Notes, the
Revolving Credit Notes and the Swing Line Note, if any, evidencing Loans.

                  "Notice of Borrowing": as defined in subsection 2.2.

                  "Obligations": as defined in the Security Documents.

                  "Operating Equipment": all surface and subsurface machinery,
equipment, facilities and other property of every kind or nature now owned or
hereafter acquired (by purchase or lease) by the Borrower or any Subsidiary,
which are useful for the processing or transportation of Coal, including, but
not by way of limitation, all hoisting shafts, air shafts, draglines, miners,
longwall units, engines, boilers, dynamos, generators, belts and conveyor belts
and other electrical apparatus, drills, machinery and tipples, store houses and
other buildings of every kind, used in connection with the Mines; and all
trucks, shovels, endloaders, dozers, loaders, tools, supplies, equipment and
personal property of every kind or nature now owned or hereafter acquired by the
Borrower or any Subsidiary for use, or used in connection with the Mines or the
processing and transportation of Coal.

                  "Original Lender": as defined in the preamble to this
Agreement.

                  "Participants": as defined in subsection 10.6(b).

                                       15

<PAGE>

                  "Partner Support": the guarantee or such other credit support
as required by the Qualified Project Lenders provided by each of the Project
Partners in support of the Project Construction Financing.

                  "Partner Support Amount": the dollar amount of the aggregate
Partner Support.

                  "Partner Support Percentage": the Partner Support Amount
divided by the total dollar amount, including accrued interest and fees, of the
Project Construction Financing.

                  "Patent Security Agreements": the agreements dated as of June
9, 1998 by certain Credit Parties in favor of the Administrative Agent (as
defined in the First Restated Credit Agreement), for the benefit of the Agents
(as defined in the First Restated Credit Agreement) and the Original Lenders, as
amended, modified, restated, supplemented and in effect from time to time.

                  "PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any successor thereto.

                  "Permitted Liens": Liens permitted to exist under subsection
7.3.

                  "Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.

                  "PHCI": Peabody Holding Company, Inc., a New York corporation.

                  "Plan": at a particular time, any employee benefit plan as
defined in Section 3(3) of ERISA which the Borrower or any Commonly Controlled
Entity maintains, administers, contributes to or is required to contribute to,
or under which the Borrower or any Commonly Controlled Entity could reasonably
be expected to incur any liability.

                  "Prairie State Power Generation Project" or "Prairie State":
that certain project to construct and operate an approximately 1,500 megawatt
capacity coal-fired electricity generation plant on an approximately 1,150 acre
reclaimed mine site owned by an Affiliate of the Borrower in Washington County,
Illinois. Prairie States shall be fueled with coal substantially extracted from
coal reserves owned or contributed by the Borrower or one of its Affiliates by a
coal mining facility to be constructed as part of the Prairie State Power
Generation Project, both of which shall be located immediately adjacent to the
power generation facility.

                  "Production Payments": with respect to any Person, all
production payment obligations and other similar obligations with respect to
coal and other natural resources of such Person that are recorded as a liability
or deferred revenue on the financial statements of such Person in accordance
with GAAP.

                  "Project Construction Financing": limited recourse loans,
advances or lease proceeds provided by the Qualified Project Lenders sufficient
to provide at least 70% of the Total Project Cost.

                  "Project Entity": the partnership or corporation formed for
the purpose of constructing and operating the Approved Project.

                  "Project Guarantee Obligation": the guarantee by one or more
of the Credit Parties in support of the Project Construction Financing, provided
that the amount of such Project Guarantee

                                       16

<PAGE>

Obligation shall represent no larger a percentage of the Partner Support Amount
than the Borrower's percentage equitable ownership interest in the Project
Entity.

                  "Project Guarantee Obligations Conditions Precedent": the
following conditions:

                  (i)      the Borrower (or an Affiliate thereof) shall have
                           executed a partnership agreement reasonably
                           satisfactory to the Administrative Agent establishing
                           the Project Entity with one or more Qualified
                           Partners (together with the Borrower, the "Project
                           Partners"), at least one of which shall be a
                           Qualified Operating Partner with an economic interest
                           in the Project Entity of not less than 25%;

                  (ii)     the Borrower shall hold no more than a 50% economic
                           and voting interest in the Project Entity;

                  (iii)    the EPC Contract shall have been executed and
                           delivered by the Project Entity and each other party
                           thereto;

                  (iv)     the Project Entity shall have received written
                           financing commitments from Qualified Project Lenders
                           for the Project Construction Financing, such
                           commitments subject only to provision of (a)
                           documented Partner Support as required by the
                           Qualified Project Lenders and (b) receipt of
                           financing commitments for permanent take-out
                           financing;

                  (v)      the Project Entity shall have received documented
                           evidence reasonably satisfactory to the
                           Administrative Agent of Partner Support from each of
                           the Qualified Partners executed substantially
                           simultaneously with the Project Guarantee Obligation;
                           and

                  (vi)     receipt by the Administrative Agent and the
                           Syndication Agents of a satisfactory report from a
                           reputable and experienced industry consultant,
                           reasonably satisfactory to the Administrative Agent
                           and the Syndication Agents, confirming the
                           feasibility and economic viability of the Approved
                           Project.

                  "Project Partners": as defined in the definition of "Project
Guarantee Obligations Conditions Precedent".

                  "Properties": as defined in subsection 4.16.

                  "Prudential Note": that certain 5% Subordinated Income Note
Due March 1, 2007, made by PHCI in favor of The Prudential Insurance Company of
America (as successor-in-interest to Kennecott Copper Corporation), dated June
30, 1977 (as amended by Amendment No. 1 dated as of February 8, 1991, and
Amendment No. 2 dated as of September 9, 1992), in a principal amount as of the
Effective Date of approximately $90,000,000.

                  "Purchase Agreement": the Purchase Agreement, dated as of
March 14, 2003, among the Borrower, the guarantors named therein, Lehman
Brothers Inc., Morgan Stanley & Co. Incorporated and the other initial
purchasers named therein.

                  "Qualified Operating Partner": a Qualified Partner that is a
nationally recognized operator of coal-fired power generation plants and
otherwise reasonably satisfactory to the Arrangers.

                                       17

<PAGE>

                  "Qualified Partner": a corporation or financial institution
rated at least BBB and Baa2 by S&P and Moody's, respectively, and otherwise
reasonably satisfactory to the Arrangers.

                  "Qualified Project Lenders": one or more financial
institutions rated at least BBB+ and Baa1 by S&P and Moody's, respectively, with
tangible capital of no less than $500,000,000 and with specific experience in
the financing of projects substantially similar to the Approved Project.

                  "Reference Bank": each of the Administrative Agent and
Wachovia Bank, National Association.

                  "Refinancing Indebtedness": as defined in subsection 7.2(i).

                  "Refunded Swing Line Loan": as defined in subsection
2.1(b)(iii).

                  "Register": as defined in subsection 10.6(d).

                  "Registration Rights Agreement": the Registration Rights
Agreement, dated as of March 21, 2003, among the Borrower, the guarantors named
therein and the initial purchasers named therein.

                  "Regulation H": Regulation H of the FRB as in effect from time
to time.

                  "Regulation U": Regulation U of the FRB as in effect from time
to time.

                  "Regulation X": Regulation X of the FRB as in effect from time
to time.

                  "Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to subsection 3.5 for amounts drawn under
Letters of Credit.

                  "Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

                  "Reportable Event": any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under the regulations of the PBGC.

                  "Required Lenders": at any time, Lenders the Commitment
Percentages for all Types of Loans of which aggregate more than 50%.

                  "Requirement of Law": as to any Person, the Constitutional
Documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

                  "Requisite Class Lenders": at any time, (a) for the Class
Lenders having Term Loan Exposure, Lenders having or holding more than 50% of
the aggregate Term Loan Exposure of all Lenders and (b) for the Class Lenders
having Revolving Credit Loan Exposure, Lenders having or holding more than 50%
of the aggregate Revolving Credit Loan Exposure of all Lenders.

                  "Responsible Officer": the chief executive officer, the
president or any vice president of the Borrower or, with respect to financial
matters, the chief financial officer or treasurer of the Borrower.

                                       18

<PAGE>

                  "Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary. For the avoidance of
doubt, as of the Effective Date Black Beauty is a Restricted Subsidiary.

                  "Revolving Credit Commitment": the commitment of a Lender, as
set forth in the Register (with respect to any Original Lender that is also a
Lender hereunder on the Effective Date) or as set forth on Schedule 1 to the
Lender Addendum delivered by such Lender (or, as the case may be, in the
Assignment and Acceptance pursuant to which such Lender became a party hereto,
as the same may be changed from time to time pursuant to the terms hereof) to
make Revolving Credit Loans to the Borrower pursuant to subsection 2.1(a)(ii)
and, to issue and/or purchase participations in Letters of Credit pursuant to
Section 3; and "Revolving Credit Commitments" means such commitments of all
Lenders in the aggregate, which shall be $600,000,000.

                  "Revolving Credit Lender": any Lender having a Revolving
Credit Commitment or a Revolving Credit Loan outstanding.

                  "Revolving Credit Loans": the Loans made (or deemed made) by
Revolving Credit Lenders to the Borrower pursuant to subsection 2.1(a)(ii).

                  "Revolving Credit Loan Exposure": with respect to any Lender
as of any date of determination, (i) if there are no outstanding Letters of
Credit or Revolving Credit Loans, that Lender's Revolving Credit Commitment, and
(ii) otherwise, the sum of (a) the aggregate outstanding principal amount of the
Revolving Credit Loans of that Lender plus (b) in the event that Lender is an
Issuing Lender, the aggregate face amount in respect of all Letters of Credit
issued by that Lender (in each case net of any participations purchased by other
Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus
(c) in the event that such Lender is the Swing Line Lender, the aggregate
principal amount of Swing Line Loans made by such Lender then outstanding (net
of any participations purchased by other Lenders in such Swing Line Loans) plus
(d) the aggregate amount of all participations purchased by that Lender in any
outstanding Swing Line Loans or Letters of Credit or any unreimbursed drawings
under any Letters of Credit.

                  "Revolving Credit Note": as defined in subsection 2.5(g)(B).

                  "Revolving Loan Termination Date": March 21, 2008.

                  "S&P": Standard and Poor's Ratings Group, or any successor
entity.

                  "Secured Parties": collectively, the Agents, the Lenders and,
with respect to any Specified Hedge Agreement, any affiliate of any Lender party
thereto (or any Person that was a Lender or an affiliate thereof when such
Specified Hedge Agreement was entered into) that has agreed to be bound by the
provisions of Section 7.2 of the Guarantee and Collateral Agreement as if it
were a party thereto and by the provisions of Section 9 hereof as if it were a
Lender party hereto.

                  "Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Patent Security Agreements, the
Trademark Security Agreement, the Mortgages and all other security documents now
or hereafter delivered to the Administrative Agent in connection with this
Agreement granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower under the First Restated Credit
Agreement and/or this Agreement and under any of the other Credit Documents or
to secure any guarantee of any such obligations and liabilities.

                                       19

<PAGE>

                  "Senior Notes": $650,000,000 in aggregate principal amount of
the Borrower's 6 7/8% Senior Notes, due 2013 (the "Initial Senior Notes"),
issued on the Effective Date, and the senior notes of the Borrower, having the
same principal amount and other terms as the Initial Senior Notes, issued in
exchange for the Initial Senior Notes as contemplated by the Senior Notes
Documents.

                  "Senior Notes Documents": the Senior Notes Indenture, the
Registration Rights Agreement, the Purchase Agreement and the Senior Notes.

                  "Senior Notes Indenture": the Indenture, dated as of March 21,
2003, among the Borrower, the guarantors named therein and US Bank National
Association, as trustee, pursuant to which the Senior Notes are issued.

                  "Similar Business": coal production, coal mining, coal
brokering, coal transportation, mine development, electricity generation,
power/energy sales and other energy related businesses, coal supply contract
restructurings, ash disposal, environmental remediation, coal and coal bed
methane exploration, production, marketing, transportation and distribution,
real estate development and other related businesses, and activities of the
Borrower and its Subsidiaries as of the date hereof and any business or activity
that is reasonably similar thereto or a reasonable extension, development or
expansion thereof or ancillary thereto.

                  "Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.

                  "Specified Hedge Agreement": any Hedge Agreement (a) entered
into by (i) the Borrower or any of its Subsidiaries and (ii) any Lender or any
affiliate thereof, or any Person that was a Lender or an affiliate thereof when
such Hedge Agreement was entered into as counterparty and (b) which has been
designated by such Lender and the Borrower, by notice to the Administrative
Agent and the Syndication Agents not later than 90 days after the execution and
delivery thereof by the Borrower or such Subsidiary, as a Specified Hedge
Agreement; provided that the designation of any Hedge Agreement as a Specified
Hedge Agreement shall not create in favor of any Lender or affiliate thereof
that is a party thereto any rights in connection with the management or release
of any Collateral or of the obligations of any Guarantor under the Guarantee and
Collateral Agreement.

                  "Specified Subsidiary": any Subsidiary whose EBITDA determined
for the fiscal quarter most recently ended prior to the time of determination
hereunder was greater than or equal to 20% of the Consolidated EBITDA of the
Borrower and its Subsidiaries for such fiscal quarter, as determined in
accordance with GAAP.

                  "Subordination Agreement": the Amended and Restated
Subordination Agreement, dated as of the date hereof, substantially in the form
of Exhibit G, among the Credit Parties, as subordinated creditors, in favor of
the Agents and the Lenders, as senior creditors, pursuant to which all
Indebtedness of any Credit Party to any other Credit Party is subordinated to
the Obligations.

                  "Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, directly or indirectly, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.

                                       20

<PAGE>

                  "Surety Bonds": surety bonds obtained by the Borrower or any
Restricted Subsidiary in the ordinary course of business consistent with past
practice and the indemnification or reimbursement obligations of the Borrower or
such Restricted Subsidiary in connection therewith as to which reserves with
respect to the underlying obligations are maintained in accordance with GAAP.

                  "Swing Line Lender": means Fleet National Bank or such other
Lender that agrees to act as Swing Line Lender at the request of the
Administrative Agent and the Borrower.

                  "Swing Line Loans": as defined in subsection 2.1(b).

                  "Swing Line Note": as defined in subsection 2.1(b)(ii).

                  "Tangible Assets": at any date, (a) the sum of all amounts
that would, in accordance with GAAP, be set forth opposite the caption "total
assets" (or any like caption) on a consolidated balance sheet of the Borrower
and its Restricted Subsidiaries at such date minus (b) the sum of all amounts
that would, in accordance with GAAP, be set forth opposite the captions
"goodwill" or other intangible categories (or any like caption) on a
consolidated balance sheet of the Borrower and its Restricted Subsidiaries on
such date.

                  "Term Lender": any Lender having a Term Loan Commitment or a
Term Loan outstanding.

                  "Term Loans": the Loans made by Term Lenders to the Borrower
pursuant to subsection 2.1(a)(i).

                  "Term Loan Commitment": the commitment of a Term Lender, as
set forth in the Register (with respect to any Original Lender that is also a
Lender hereunder on the Effective Date) or as set forth on Schedule 1 to the
Lender Addendum delivered by such Lender (or, as the case may be, in the
Assignment and Acceptance pursuant to which such Lender became a party hereto,
as the same may be changed from time to time pursuant to the terms hereof), to
make a Term Loan to the Borrower pursuant to subsection 2.1(a)(i); and "Term
Loan Commitments" means such commitments of all Term Lenders in the aggregate,
which shall be $450,000,000.

                  "Term Loan Exposure": with respect to a Lender of a Term Loan
as of any date of determination, (i) prior to the termination of all of a
Lender's Commitment with respect to the Term Loans, that Lender's Commitment
with respect to Term Loans (or any portion thereof that has not been terminated)
plus the outstanding principal amount of the Term Loan of that Lender, and (ii)
after the termination of all of a Lender's Commitment with respect to the Term
Loans, the outstanding principal amount of the Term Loan of that Lender.

                  "Term Loan Termination Date": March 21, 2010.

                  "Term Note": as defined in subsection 2.5(g)(A).

                  "Termination Date": (i) with respect to Term Loans, the Term
Loan Termination Date and (ii) with respect to Revolving Credit Loans and Swing
Line Loans, the Revolving Loan Termination Date.

                  "Thoroughbred Power Generation Project" or "Thoroughbred":
that certain project to construct and operate an approximately 1,540 megawatt
capacity coal-fired electricity generation plant on an approximately 4,100 acre
reclaimed mine site owned by an Affiliate of the Borrower in Muhlenberg

                                       21

<PAGE>

County, Kentucky. Thoroughbred shall be fueled with coal substantially extracted
from coal reserves owned or contributed by the Borrower or one of its Affiliates
at a coal mining facility to be constructed as part of the Thoroughbred Power
Generation Project, both of which shall be located immediately adjacent to the
power generation facility.

                  "Title Opinion": as defined in subsection 6.10(c).

                  "Title Policy": as defined in subsection 6.10(c).

                  "Total Assets": the total assets of the Borrower and its
Consolidated Subsidiaries, as shown on the most recently available Consolidated
balance sheet of the Borrower.

                  "Total Commitments": the sum of the Revolving Credit
Commitments and the Term Loan Commitments.

                  "Total Project Cost": the aggregate funds necessary to bring
the Approved Project into commercial operation, including, without limitation,
interest and other financing costs incurred during the construction period, as
specified in the EPC Contract.

                  "Trademark Security Agreement": the agreement dated as of June
9, 1998 by a certain Credit Party in favor of the Administrative Agent (as
defined in the First Restated Credit Agreement), for the benefit of the Agents
(as defined in the First Restated Credit Agreement) and the Original Lenders, as
amended, modified, restated, supplemented and in effect from time to time.

                  "Tranche": the collective reference to certain LIBOR Loans,
the then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day); Tranches may be identified as "LIBOR Tranches".

                  "Transferee": as defined in subsection 10.6(f).

                  "TXU Europe": TXU Europe Limited, a Company organized under
the laws of the England and Wales.

                  "Type": a Revolving Credit Loan, a Term Loan or a Swing Line
Loan.

                  "Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.

                  "Unrestricted Subsidiary": any Subsidiary of the Borrower that
the Borrower notifies the Administrative Agent in writing is an "Unrestricted
Subsidiary", including, as of the Effective Date, those entities listed on
Schedule V hereto, but only to the extent that such Subsidiary (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not a party to any agreement,
contract, arrangement or understanding with the Borrower or any Restricted
Subsidiary of the Borrower except as expressly permitted by subsection 7.11; (c)
is a Person with respect to which neither the Borrower nor any of its Restricted
Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional equity interests in such Person, except with respect to Investments
permitted under subsection 7.9(l), or (y) to maintain or preserve such Person's
financial condition (except with respect to performance guarantees expressly
permitted under subsection 7.4(f)) or to cause such Person to achieve any
specified levels of operating results; and (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any

                                       22

<PAGE>

Indebtedness of the Borrower or any of its Restricted Subsidiaries. If, at any
time, any Unrestricted Subsidiary would fail to meet the foregoing requirements
as an Unrestricted Subsidiary (or is redesignated by the Borrower as a
Restricted Subsidiary), it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement, any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of
such date and any Investments in such Subsidiary shall be deemed to be
Investments in a Restricted Subsidiary of the Borrower as of such date (and, if
such Indebtedness or Investments are not permitted to be incurred hereunder the
Borrower shall be in default under this Agreement). At the time of any
designation by the Borrower of any Restricted Subsidiary as an Unrestricted
Subsidiary, such designation shall be deemed (A) an Investment in an
Unrestricted Subsidiary in an amount equal to the sum of (i) the net worth of
such designated Restricted Subsidiary immediately prior to such designation
(such net worth to be calculated without regard to any Guarantee Obligation
incurred by such designated Restricted Subsidiary with respect to the
Obligations) and (ii) the aggregate principal amount of any Indebtedness owed by
such designated Restricted Subsidiary to the Borrower or any other Restricted
Subsidiary immediately prior to such designation, all calculated, except as set
forth in the parenthetical to clause (i), on a consolidated basis in accordance
with GAAP and (B) an Asset Sale which must comply with the provisions of
subsections 7.6(b), (l) or (n).

                  "Upstream Payment": as defined in subsection 7.7.

                  "U.S. Taxes": any tax, assessment, or other charge or levy and
any liabilities with respect thereto, including any penalties, additions to tax,
fines or interest thereon, imposed by or on behalf of the United States or any
taxing authority thereof.

                  "Usage Ratio": as of any date, the ratio of (a) the principal
amount of all Revolving Credit Loans and L/C Obligations outstanding on such
date to (b) the aggregate Revolving Credit Commitments on such date, as
determined by the Administrative Agent.

                  1.2      Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in any Credit Document or any certificate or other
document made or delivered pursuant hereto.

                  (b)      As used herein and in any Credit Document, and any
certificate or other document made or delivered pursuant hereto, accounting
terms relating to the Borrower and its Subsidiaries not defined in subsection
1.1 and accounting terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.

                  (c)      The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, subsection, Schedule and Exhibit references are to this Agreement
unless otherwise specified.

                  (d)      The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

                  1.3      Interrelationship with First Restated Credit
Agreement. As stated in the preamble hereof, this Credit Agreement is intended
to amend and restate the provisions of the First Restated Credit Agreement and,
notwithstanding any substitution of Notes as of the Effective Date, except as
expressly modified herein, (a) all of the terms and provisions of the First
Restated Credit Agreement shall continue to apply for the period prior to the
Effective Date, including any determinations of payment dates, interest rates,
Events of Default or any amount that may be payable to the Agents (as defined in
the First Restated Credit Agreement) or the Original Lenders (or their assignees
or

                                       23

<PAGE>

replacements hereunder), and (b) the Obligations (as defined in the First
Restated Credit Agreement) under the First Restated Credit Agreement shall
continue to be paid or prepaid on or prior to the Effective Date, and be secured
by the Collateral, and shall from and after the Effective Date continue to be
owing and be subject to the terms of this Credit Agreement. All references in
the Notes and the other Credit Documents to (i) the First Restated Credit
Agreement or the "Credit Agreement" shall be deemed to include references to
this Credit Agreement and (ii) the "Lenders" or a "Lender" or to the "Agents" or
any Agent shall mean such terms as defined in this Credit Agreement. As of the
Effective Date all of the covenants set forth in the First Restated Credit
Agreement are of no further force and effect, it being understood that all
obligations of the Borrower with respect to the Obligations (as defined in the
First Restated Credit Agreement) shall be governed by this Credit Agreement from
and after the Effective Date.

                  1.4      Confirmation of Existing Obligations. The Borrower
hereby (i) confirms and agrees that it is truly and justly indebted to the
Lenders (as assignees of the Original Lenders) in the aggregate amount of the
Obligations (as defined in the First Restated Credit Agreement) outstanding
immediately prior to the Effective Date, including, without limitation, all
accrued and unpaid interest, fees and expenses that are due and owing in respect
thereto, (ii) reaffirms and admits the validity and enforceability of this
Agreement and the other Credit Documents (including the granting of liens and
security interests in the Collateral) and all of its obligations thereunder and
(iii) agrees and admits that, as of the date hereof, it has no defenses to, or
offsets or counterclaim against, any of its obligations to the Agents or any
Lender under the Credit Documents of any kind whatsoever.

Section 2.        AMOUNT AND TERMS OF COMMITMENTS AND LOANS

                  2.1      Commitments. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make the loans described in
this subsection 2.1(a), as applicable, to the Borrower.

                           (i)      Term Loans. Each Term Lender severally
agrees to make a term loan to the Borrower on the Effective Date in an aggregate
principal amount equal to such Lender's Term Loan Commitment. Amounts borrowed
under this subsection 2.1(a)(i) and subsequently repaid may not be reborrowed.

                           (ii)     Revolving Credit Loans. To the extent that
any Revolving Credit Loans are outstanding under the First Restated Credit
Agreement on the Effective Date, each Revolving Credit Lender shall be deemed to
have made Revolving Credit Loans to the Borrower on the Effective Date in an
aggregate principal amount equal to such Lender's Commitment Percentage of all
Revolving Credit Loans outstanding on the Effective Date. In addition, subject
to the immediately following sentence, each Revolving Credit Lender severally
agrees to make revolving credit loans to the Borrower, from time to time during
the Commitment Period, in an aggregate principal amount at any one time
outstanding which, when added to the aggregate principal amount of outstanding
Swing Line Loans made by such Lender (or in which such Lender has purchased a
participation) and such Lender's Commitment Percentage of (A) the then
outstanding L/C Obligations and (B) any Revolving Credit Loans then outstanding,
does not exceed the amount of such Lender's Revolving Credit Commitment. During
the Commitment Period, the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans, in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.

                  (b)      (i)      Subject to the terms and conditions hereof,
the Swing Line Lender agrees to make swing line loans (individually, a "Swing
Line Loan"; collectively, the "Swing Line Loans") to the Borrower from time to
time during the Commitment Period in an aggregate principal amount at any one
time outstanding not to exceed $50,000,000; provided, that no Swing Line Loan
shall be made if, after giving effect thereto and to the simultaneous use of the
proceeds thereof, the aggregate principal amount

                                       24

<PAGE>

of Revolving Credit Loans then outstanding plus the aggregate principal amount
of Swing Line Loans then outstanding, plus the aggregate amount of L/C
Obligations then outstanding would exceed the Revolving Credit Commitments of
the Revolving Credit Lenders. Until the Revolving Loan Termination Date, amounts
borrowed by the Borrower under this subsection 2.1(b) may be repaid and
reborrowed. All Swing Line Loans shall be made as Base Rate Loans and may not be
converted into LIBOR Loans. In order to borrow a Swing Line Loan, the Borrower
shall give the Swing Line Lender, with a copy to the Administrative Agent,
irrevocable notice (which notice must be received by the Swing Line Lender prior
to 12:00 Noon, New York City time) on the requested Borrowing Date specifying
the amount of the requested Swing Line Loan which shall be in a minimum amount
of $500,000 or whole multiples of $100,000 in excess thereof. The proceeds of
the Swing Line Loan will be made available by the Swing Line Lender to the
Borrower at the office of the Swing Line Lender by crediting the account of the
Borrower at such office with such proceeds.

                           (ii)     If requested by the Swing Line Lender, the
Swing Line Loans shall be evidenced by a promissory note of the Borrower,
substantially in the form of Exhibit A-3 (the "Swing Line Note"), with
appropriate insertions, payable to the order of the Swing Line Lender and
representing the obligation of the Borrower to pay the unpaid principal amount
of the Swing Line Loans, with interest thereon as prescribed in subsection 2.9.
The Swing Line Note shall (i) be dated the Effective Date, (ii) be stated to
mature on the Revolving Loan Termination Date and (iii) bear interest, payable
on the dates specified in 2.9, for the period from the date thereof to the
Revolving Loan Termination Date on the unpaid principal amount thereof from time
to time outstanding at the applicable interest rate per annum specified in
subsection 2.9.

                           (iii)    The Swing Line Lender, at any time in its
sole and absolute discretion, may on behalf of the Borrower (which hereby
irrevocably directs the Swing Line Lender to act on its behalf) request each
Lender, including the Swing Line Lender, to make a Revolving Credit Loan (which
shall be a Base Rate Loan) in an amount equal to such Lender's Commitment
Percentage with respect to Revolving Credit Loans of the Swing Line Loans (the
"Refunded Swing Line Loans") outstanding on the date such notice is given.
Unless any of the events described in subsection 8(f) shall have occurred (in
which event the procedures of subsection 2.1(b)(iv) shall apply) each Lender
shall, not later than 12:00 P.M., New York City time, on the Business Day next
succeeding the date on which such notice is given, make available to the Swing
Line Lender in immediately available funds the amount equal to the Revolving
Credit Loan to be made by such Lender. The proceeds of such Revolving Credit
Loans shall be immediately applied to repay the Refunded Swing Line Loans. Upon
any request by the Swing Line Lender to the Lender pursuant to this subsection
2.1(b)(iii), the Administrative Agent shall promptly give notice to the Borrower
of such request.

                           (iv)     If prior to the making of a Revolving Credit
Loan pursuant to subsection 2.1(b)(iii) one of the events described in
subsection 8(f) shall have occurred, each Lender will, on the date such Loan was
to have been made, purchase an undivided participating interest in the Swing
Line Loans in an amount equal to its Commitment Percentage with respect to
Revolving Credit Loans. Each Lender will immediately transfer to the Swing Line
Lender, in immediately available funds, the amount of its participation.

                           (v)      Whenever, at any time after the Swing Line
Lender has received from any Lender such Lender's participating interest in a
Swing Line Loan, the Swing Line Lender receives any payment on account thereof,
the Swing Line Lender will distribute to such Lender its participating interest
in such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's participating interest was
outstanding and funded); provided, however, that in the event that such payment
received by the Swing Line Lender is required to be returned, such

                                       25

<PAGE>

Lender will return to the Swing Line Lender any portion thereof previously
distributed by the Swing Line Lender to it.

                           (vi)     Each Lender's obligation to purchase
participating interests pursuant to subsection 2.1(b)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (a) any set-off, counterclaim, recoupment, defense or other right
which such Lender or the Borrower may have against the Swing Line Lender, any
other Lender or anyone else for any reason whatsoever, (b) the occurrence or
continuance of any Default or Event of Default; (c) any adverse change in the
condition (financial or otherwise) of the Borrower; (d) any breach of this
Agreement by the Borrower or any other Lender; or (e) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.

                  (c)      Except for Swing Line Loans, which shall be Base Rate
Loans, the Loans may from time to time be (i) LIBOR Loans, (ii) Base Rate Loans
or (iii) a combination thereof, as determined by the Borrower and notified to
the Administrative Agent in accordance with subsections 2.2 and 2.7, provided
that no Revolving Credit Loan shall be made as a LIBOR Loan after the day that
is one month prior to the Termination Date with respect to such Loan.

                  2.2      Procedure for Borrowing. The Borrower may borrow
under the Commitments during the Commitment Period on any Business Day, provided
that the Borrower shall give the Administrative Agent irrevocable notice
substantially in the form attached as Exhibit D (a "Notice of Borrowing") (which
notice must be received by the Administrative Agent prior to (a) 11:00 A.M., New
York City time, three Business Days prior to the requested Borrowing Date, in
the case of LIBOR Loans, (b) 11:00 A.M., New York City time, one Business Day
prior to the requested Borrowing Date in the case of a Base Rate Loan and, (c)
11:00 A.M., New York City time, on the requested Borrowing Date in the case of a
Swing Line Loan), specifying (i) the amount to be borrowed of each Type of Loan,
(ii) the requested Borrowing Date, (iii) whether the borrowing is to be of LIBOR
Loans, Base Rate Loans or a combination thereof and (iv) if the borrowing is to
be entirely or partly of LIBOR Loans, the respective lengths of the initial
Interest Periods therefor. Each borrowing under the Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans (other than Swing Line
Loans), $2,000,000 or a whole multiple of $100,000 in excess thereof (or, if the
then Available Commitments are less than $2,000,000, such lesser amount), (y) in
the case of Swing Line Loans, as provided in subsection 2.1(b)(i) and (z) in the
case of LIBOR Loans, $5,000,000 or a whole multiple of $100,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each applicable Lender thereof. Each such Lender
will make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in subsection 10.2 prior to 11:00 A.M., New York
City time (in the case of LIBOR Loans) or 2:30 P.M., New York City time (in the
case of Base Rate Loans), on the Borrowing Date requested by the Borrower in
funds immediately available to the Administrative Agent. Such borrowing will
then be made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Lenders and in like
funds as received by the Administrative Agent. All notices given by the Borrower
under this subsection 2.2 may be made by telephonic notice promptly confirmed in
writing.

                  2.3      Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the first day of the Commitment
Period to and including the Revolving Loan Termination Date, computed at the
Commitment Fee Rate on the average daily amount of the Available Commitment of
such Revolving Credit Lender during the period for which payment is made,
payable in arrears within 15 days after the last Business Day of each March,
June, September and December and on the Revolving Loan Termination Date,
commencing on the first of such dates to occur after the date hereof.

                                       26

<PAGE>

                  2.4      Termination or Reduction of Revolving Credit
Commitments. The Borrower shall have the right, upon not less than three
Business Days' written notice to the Administrative Agent, to terminate the
Revolving Credit Commitments or, from time to time, to reduce the amount of the
Revolving Credit Commitments ratably among the Revolving Credit Lenders;
provided that no such termination or reduction shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Credit Loans made
on the effective date thereof, the aggregate principal amount of the Revolving
Credit Loans then outstanding, when added to the then outstanding L/C
Obligations and the outstanding Swing Line Loans, would exceed the Revolving
Credit Commitments then in effect. Any such reduction shall be in an amount
equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and
shall reduce permanently the Revolving Credit Commitments then in effect.

                  2.5      Repayment of Loans; Evidence of Debt.

                  (a)      Scheduled Payments of Term Loans. The Borrower shall
make principal payments on the Term Loans on March 31, June 30, September 30 and
December 31 of each year, commencing on June 30, 2003, in the amounts set forth
opposite the corresponding Payment Date as follows:

<TABLE>
<CAPTION>
                                   Scheduled Repayment of
Payment Date                             Term Loans
------------                             ----------
<S>                                <C>
  6/30/03                               $  1,125,000
  9/30/03                               $  1,125,000
  12/31/03                              $  1,125,000
  3/31/04                               $  1,125,000
  6/30/04                               $  1,125,000
  9/30/04                               $  1,125,000
  12/31/04                              $  1,125,000
  3/31/05                               $  1,125,000
  6/30/05                               $  1,125,000
  9/30/05                               $  1,125,000
  12/31/05                              $  1,125,000
  3/31/06                               $  1,125,000
  6/30/06                               $  1,125,000
  9/30/06                               $  1,125,000
  12/31/06                              $  1,125,000
  3/31/07                               $  1,125,000
  6/30/07                               $  1,125,000
  9/30/07                               $  1,125,000
  12/31/07                              $  1,125,000
  3/31/08                               $  1,125,000
  6/30/08                               $  1,125,000
  9/30/08                               $  1,125,000
  12/31/08                              $  1,125,000
  3/31/09                               $  1,125,000
  6/30/09                               $105,750,000
  9/30/09                               $105,750,000
  12/31/09                              $105,750,000
  Termination Date                      $105,750,000
</TABLE>

                                       27

<PAGE>

provided that the scheduled installments of principal of the Term Loans set
forth above shall be reduced in connection with any voluntary or mandatory
prepayments of the Term Loans in accordance with subsection 2.6 (as provided in
such subsection); and provided further that the Term Loans and all other amounts
owed hereunder with respect to the Term Loans shall be paid in full no later
than the Termination Date, and the final installment payable by the Borrower in
respect of the Term Loans on such date shall be in an amount, if such amount is
different from that specified above, sufficient to repay all amounts owing by
the Borrower under this Agreement with respect to the Term Loans.

                  (b)      Payments on Revolving Credit Loans and Swing Line
Loans. The Borrower hereby unconditionally promises to pay to the Administrative
Agent on the Revolving Loan Termination Date (or such earlier date on which the
Loans become due and payable pursuant to Section 8) (i) for the account of each
Revolving Credit Lender the then unpaid principal amount of each Revolving
Credit Loan of such Lender and all other amounts owing to such Lender hereunder
with respect to such Revolving Credit Loan and (ii) for the account of the Swing
Line Lender (and each other Revolving Credit Lender that has purchased a
participation in then outstanding Swing Line Loans) the then unpaid principal
amount of Swing Line Loans and all other amounts owed to such Lender hereunder
with respect to the Swing Line Loans.

                  (c)      Interest. The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date such Loans are made until payment in full thereof at
the rates per annum, and on the dates, set forth in subsection 2.9.

                  (d)      Recording. Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Borrower to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.

                  (e)      Register. The Administrative Agent shall maintain the
Register pursuant to subsection 10.6(d), and a subaccount therein for each
Lender, in which shall be recorded (i) the amount of each Loan and each
Obligation evidenced by a Note made hereunder, the Type thereof, whether each
such Loan is a Base Rate Loan or a LIBOR Loan and each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) both the amount of any sum received by the Administrative Agent hereunder
from the Borrower and each Lender's share thereof.

                  (f)      Prima Facie Evidence. The entries made in the
Register and the accounts of each Lender maintained pursuant to subsection
2.5(e) shall, to the extent permitted by applicable law, be prima facie evidence
of the existence and amounts of the obligations of the Borrower therein
recorded; provided, however, that the failure of any Lender or the
Administrative Agent to maintain the Register or any such account, or any error
therein, shall not in any manner affect the obligation of the Borrower to repay
(with applicable interest) the Loans made to the Borrower by such Lender in
accordance with the terms of this Agreement.

                  (g)      Notes. The Borrower agrees that upon the request to
the Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing (A) the Term Loans of
such Lender, substantially in the form of Exhibit A-1 with appropriate
insertions as to date and principal amount (a "Term Note"), and/or (B) the
Revolving Credit Loans of such Lender, substantially in the form of Exhibit A-2
with appropriate insertions as to date and principal amount ("Revolving Credit
Note").

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<PAGE>

                  2.6      Optional Prepayments; Mandatory Prepayments and
Reduction of Commitments. (a) Subject to subsection 2.16, the Borrower may
at any time and from time to time prepay any Loans, in whole or in part, without
premium or penalty, upon irrevocable notice to the Administrative Agent prior to
11:00 A.M., New York City time, three Business Days prior to the date of
prepayment, specifying the date and amount of prepayment, the Type of Loan to be
prepaid (which loans shall be prepaid on a pro rata basis among the applicable
Lenders) and whether the prepayment is of LIBOR Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Administrative Agent shall promptly
notify each applicable Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with any amounts payable pursuant to subsection 2.16. Partial
prepayments shall be in an aggregate principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof.

                  (b)      (i)      If, subsequent to the Effective Date, the
Borrower or any of its Subsidiaries shall incur or permit the incurrence of any
Indebtedness (other than Indebtedness permitted pursuant to subsection 7.2),
100% of the Net Proceeds thereof shall be promptly applied toward the prepayment
of the Loans as set forth in clause (iv) of this subsection 2.6(b). Nothing in
this paragraph (b) shall be deemed to permit any Indebtedness not permitted by
subsection 7.2.

                           (ii)     If, subsequent to the Effective Date, the
Borrower or any of its Restricted Subsidiaries shall receive Net Proceeds from
any Asset Sale or series of related Asset Sales in excess of $500,000, such Net
Proceeds shall be promptly applied toward the prepayment of the Loans as set
forth in clause (iv) of this subsection 2.6(b); provided that Net Proceeds from
any Asset Sales shall not be required to be so applied to the extent that such
Net Proceeds are (A) used by the Borrower or such Restricted Subsidiary to
acquire assets to be employed in the business of the Borrower or its Restricted
Subsidiaries or a Similar Business of the Borrower or its Restricted
Subsidiaries or (B) used by the Borrower or such Restricted Subsidiary to the
extent permitted by subsection 7.9, to acquire (i) equity interests in a Person
engaged in a Similar Business or (ii) assets constituting a business unit of a
Person engaged in a Similar Business, in each case within 358 days of receipt
thereof, but if such Net Proceeds are not so used, 100% of the amount of such
Net Proceeds not so used shall be applied toward the prepayment of the Loans as
set forth in clause (iv) of this subsection 2.6(b) on the earlier of (x) the
359th day after receipt of such Net Proceeds and (y) the date on which the
Borrower has determined that such Net Proceeds shall not be so used.

                           (iii)    If there is Excess Cash Flow for any fiscal
year and the Consolidated Total Obligations to Consolidated EBITDA Ratio as of
the last day of such fiscal year was greater than or equal to 3.0 to 1.0, 50% of
such Excess Cash Flow shall be applied toward the prepayment of the Loans as set
forth in clause (iv) of this subsection 2.6(b) on the Excess Cash Flow Payment
Date for such fiscal year, unless waived as provided below. If there is Excess
Cash Flow for any fiscal year and the Consolidated Total Obligations to
Consolidated EBITDA Ratio as of the last day of such fiscal year was less than
3.0 to 1.0 and greater than or equal to 2.0 to 1.0, 25% of such Excess Cash Flow
shall be applied toward the prepayment of the Loans as set forth in clause (iv)
of this subsection 2.6(b) on the Excess Cash Flow Payment Date for such fiscal
year, unless waived as provided below. Notwithstanding the foregoing, in the
case of Term Loans, each Term Lender shall have the right to waive such Lender's
right to receive any portion of any prepayment made under this subsection
2.6(b)(iii). The Borrower shall notify the Administrative Agent of the amount of
the prepayment from Excess Cash Flow at least three Business Days prior to the
related Excess Cash Flow Payment Date. In the event any such Term Lender desires
to waive such Lender's right to receive any such mandatory prepayment, such
Lender shall so advise the Administrative Agent no later than the close of
business on the Excess Cash Flow Payment Date. In the event that any such Lender
waives such Lender's right to any such mandatory prepayment, the Administrative
Agent shall apply the amount so waived to the repayment of outstanding Revolving

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<PAGE>

Credit Loans on a pro rata basis (without any permanent reduction in the
Revolving Credit Commitments) and shall then return any remainder of the amount
so waived to the Borrower.

                           (iv)     Any mandatory prepayments of the Loans
pursuant to this subsection 2.6 (other than waived mandatory prepayments covered
by the preceding subsection 2.6(b)(iii)) shall be applied (y) first, to the Term
Loans to reduce the unpaid scheduled installments of principal of the Term Loans
on a pro rata basis and (z) thereafter to the repayment of Revolving Credit
Loans on a pro rata basis.

                           (v)      If after giving effect to any reduction of
the Revolving Credit Commitments under subsection 2.4, the aggregate outstanding
principal amount of Swing Line Loans plus the aggregate outstanding principal
amount of Revolving Credit Loans plus the aggregate outstanding amount of L/C
Obligations, shall exceed the aggregate amount of the Revolving Credit
Commitments, such reduction shall be accompanied by prepayment in the amount of
such excess to be applied (x) first, to the outstanding Swing Line Loans and (y)
second, to outstanding Revolving Credit Loans (in each case, together with any
amounts payable under subsection 2.16); provided that if the aggregate principal
amount of Swing Line Loans and Revolving Credit Loans then outstanding is less
than the amount of such excess (because Letters of Credit constitute a portion
of such excess), the Borrower shall immediately, without notice or demand, to
the extent of the balance of such excess, replace outstanding Letters of Credit
and/or deposit an amount (but in no event greater than such balance) in a cash
collateral account satisfactory to the Administrative Agent established for the
benefit of the Issuing Lender and the L/C Participants. The Borrower hereby
grants to the Administrative Agent, for the benefit of the Issuing Lender and
the L/C Participants, a security interest in such cash collateral account and
cash collateral to secure all obligations of the Borrower under this Agreement
and the other Credit Documents.

                  2.7      Conversion and Continuation Options. (a) The
Borrower may elect from time to time to convert LIBOR Loans to Base Rate Loans,
by giving the Administrative Agent prior irrevocable notice of such election at
or before 11:00 A.M. New York City time, on the Business Day immediately
preceding the date of the proposed conversion and of the amount and Type of Loan
to be converted, provided that any such conversion of LIBOR Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans (other than Swing Line
Loans) to LIBOR Loans by giving the Administrative Agent prior irrevocable
notice of such election at or before 11:00 A.M., New York City time, on the
third Business Day immediately preceding the date of the proposed conversion and
of the amount and Type of Loan to be converted. Any such notice of conversion to
LIBOR Loans shall specify the length of the initial Interest Period or Interest
Periods therefor. Upon receipt of any such notice the Administrative Agent shall
promptly notify each applicable Lender thereof. All or any part of outstanding
LIBOR Loans and Base Rate Loans may be converted as provided herein, provided
that (i) no Loan may be converted into a LIBOR Loan when any Event of Default
has occurred and is then continuing and the Required Lenders have determined in
their sole discretion not to permit such conversion and (ii) no Loan may be
converted into a LIBOR Loan after the date that is one month prior to the
Termination Date with respect to such Loan.

                  (b)      Any LIBOR Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Loans and of
the amount and Type of Loan to be continued, provided that no LIBOR Loan may be
continued as such (i) when any Event of Default has occurred and is then
continuing and the Required Lenders have determined in their sole discretion not
to permit such continuation or (ii) after the date that is one month prior to
the Termination Date with respect to such Loan and provided, further, that if
the Borrower shall fail to give such notice or if such

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<PAGE>

continuation is not permitted such Loans shall be automatically converted to
Base Rate Loans on the last day of such then expiring Interest Period.

                  (c)      All notices given by the Borrower under this
subsection 2.7 may be made by telephonic notice promptly confirmed in writing.

                  2.8      Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Loans comprising each LIBOR Tranche shall be equal to $10,000,000
or a whole multiple of $1,000,000 in excess thereof. All Loans hereunder may be
converted or continued into Base Rate Loans without reference to the minimum
principal amount requirements for new Base Rate Borrowings set forth in
subsection 2.2 above. In no event shall there be more than 15 LIBOR Tranches
outstanding at any time.

                  2.9      Interest Rates and Payment Dates. (a) Each LIBOR
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the LIBOR Rate determined for such day plus
the Applicable Margin.

                  (b)      Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.

                  (c)      If all or a portion of (i) any principal of any Loan,
(ii) any interest payable thereon, (iii) any commitment fee, (iv) any other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise) or (v) any other Event of Default has
occurred and is continuing and, in the case of this clause (v), the
Administrative Agent and one of the Syndication Agents together have notified
the Borrower of their intention to impose the Default Rate, the principal of the
Loans and any such overdue interest, commitment fee or other amount shall bear
interest at a rate per annum (the "Default Rate") which is (x) in the case of
principal, the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this subsection plus 2% or (y) in the case of any such
overdue interest, commitment fee or other amount, the rate described in
paragraph (b) of this subsection plus 2%, in each case from the date of such
non-payment until such overdue principal, interest, commitment fee or other
amount is paid in full (as well after as before judgment).

                  (d)      Interest shall be payable with respect to each Loan
in arrears on each Interest Payment Date and on the Termination Date with
respect to such Loan, provided that interest accruing pursuant to paragraph (c)
of this subsection shall be payable from time to time on demand.

                  2.10     Computation of Interest and Fees. (a) Interest on
Base Rate Loans and fees shall be calculated on the basis of a 365- (or 366-, as
the case may be) day year for the actual days elapsed; all other interest shall
be calculated on the basis of a 360-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a LIBOR Rate. Any change in the interest rate
on a Loan resulting from a change in the Base Rate or the LIBOR Reserve
Percentage shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.

                  (b)      Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the

                                       31

<PAGE>

Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 2.9(a) or (c).

                  2.11     Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:

                  (a)      the Administrative Agent shall have determined (which
         determination shall be conclusive and binding upon the Borrower) that,
         by reason of circumstances affecting the eurodollar market, adequate
         and reasonable means do not exist for ascertaining the LIBOR Rate for
         such Interest Period, or

                  (b)      the Administrative Agent shall have received notice
         from the Required Lenders that the LIBOR Rate determined or to be
         determined for such Interest Period will not adequately and fairly
         reflect the cost to such Lenders (as conclusively certified by such
         Lenders) of making or maintaining their affected Loans during such
         Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any LIBOR Loans requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to LIBOR Loans shall be
converted to or continued as Base Rate Loans and (z) any outstanding LIBOR Loans
shall be converted, on the first day of such Interest Period, to Base Rate
Loans. Until such notice has been withdrawn in writing by the Administrative
Agent (which the Administrative Agent agrees to do when the Administrative Agent
has determined, or has been instructed by the Required Lenders that, the
circumstances that prompted the delivery of such notice no longer exist), no
further LIBOR Loans shall be made or continued as such, nor shall the Borrower
have the right to convert Base Rate Loans to LIBOR Loans.

                  2.12     Pro Rata Treatment and Payments. (a) Each
borrowing by the Borrower from the Revolving Credit Lenders hereunder, each
payment by the Borrower on account of any commitment fee hereunder and any
reduction of the Revolving Credit Commitments of Revolving Credit Lenders shall
be made pro rata according to the respective Commitment Percentages of the
Revolving Credit Lenders. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on any Term Loans or the
Revolving Credit Loans, and any application by the Administrative Agent of the
proceeds of any Collateral, shall be made pro rata according to the respective
outstanding principal amounts of such Loans then held by the Lenders. All
payments (including prepayments) to be made by the Borrower hereunder in respect
of any Loan, whether on account of principal, interest, Reimbursement
Obligations, fees, expenses or otherwise, shall be made without set off or
counterclaim and shall be made prior to 11:00 A.M., New York City time, on the
due date thereof to the Administrative Agent, for the account of the Lenders
with respect to such Loans, at the Administrative Agent's office specified in
subsection 10.2, in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the applicable Lenders
promptly upon receipt in like funds as received. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension.

                  (b)      Unless the Administrative Agent shall have been
notified in writing by any Lender prior to a borrowing that such Lender will not
make the amount that would constitute its Commitment Percentage of such
borrowing available to the Administrative Agent, the Administrative Agent may
assume that such Lender is making such amount available to the Administrative
Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the

                                       32

<PAGE>

Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Rate for the
period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted to any
Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's Commitment
Percentage of such borrowing is not made available to the Administrative Agent
by such Lender within three Business Days of such Borrowing Date, the
Administrative Agent shall also be entitled to recover such amount with interest
thereon at the rate per annum applicable to Base Rate Loans hereunder, on
demand, from the Borrower. The failure of any Lender to make any Loan to be made
by it shall not relieve any other Lender of its obligation hereunder to make its
Loan on such Borrowing Date.

                  2.13     Illegality. Notwithstanding any other provision
herein, if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain LIBOR Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make LIBOR Loans, continue LIBOR Loans as
such and convert Base Rate Loans to LIBOR Loans shall forthwith be cancelled and
(b) such Lender's Loans then outstanding as LIBOR Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a LIBOR Loan occurs on a
day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 2.16. If circumstances subsequently change so
that any affected Lender shall determine that it is no longer so affected, such
Lender will promptly notify the Borrower and the Administrative Agent, and upon
receipt of such notice, the obligations of such Lender to make or continue LIBOR
Loans or to convert Base Rate Loans into LIBOR Loans shall be reinstated.

                  2.14     Requirements of Law. (a) If the adoption of or
any change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:

                           (i)      shall subject any Lender to any tax of any
         kind whatsoever with respect to this Agreement, any Note, any Letter of
         Credit, any Application or any LIBOR Loan made by it, or change the
         basis of taxation of payments to such Lender in respect thereof (except
         for Non-Excluded Taxes that are covered by subsection 2.15 and changes
         in the rate of net income taxes (including branch profits taxes and
         minimum taxes) or franchise taxes (imposed in lieu of net income taxes)
         of such Lender);

                           (ii)     shall impose, modify or hold applicable any
         reserve, special deposit, compulsory loan or similar requirement
         against assets held by, deposits or other liabilities in or for the
         account of, advances, loans or other extensions of credit by, or any
         other acquisition of funds by, any office of such Lender which is not
         otherwise included in the determination of the LIBOR Rate hereunder; or

                           (iii)    shall impose on such Lender any other
         condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining LIBOR Loans or issuing or participating in Letters of
Credit or to reduce any amount receivable hereunder in respect thereof, then, in
any such case, the Borrower shall promptly pay such Lender upon written demand
such

                                       33

<PAGE>

additional amount or amounts as will compensate such Lender for such increased
cost or reduced amount receivable; provided that before making any such demand,
each Lender agrees to 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 LIBOR lending office if
the making of such designation would allow the Lender or its LIBOR lending
office to continue to perform its obligations to make LIBOR Loans or to continue
to fund or maintain LIBOR Loans and avoid the need for, or reduce the amount of,
such increased cost. If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower,
through the Administrative Agent, of the event by reason of which it has become
so entitled. If the Borrower so notifies the Administrative Agent within five
Business Days after any Lender notifies the Borrower of any increased cost
pursuant to the foregoing provisions of this Section, the Borrower may convert
all LIBOR Loans of such Lender then outstanding into Base Rate Loans in
accordance with the terms hereof.

                  (b)      If any Lender shall have determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Borrower (with a copy to the Administrative Agent) of a
prompt written request therefor, the Borrower shall promptly pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction.

                  (c)      If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled; provided that the Borrower shall not be
required to compensate a Lender pursuant to this subsection for any increased
costs or reductions incurred more than 90 days prior to the date that such
Lender notifies the Borrower of the Requirement of Law giving rise to such
increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the Requirement of Law giving
rise to such increased costs or reductions is retroactive, then the 90-day
period referred to above shall be extended to include the period of retroactive
effect thereof. A certificate as to any additional amounts payable pursuant to
this subsection, showing the calculation thereof in reasonable detail, submitted
by such Lender to the Borrower (with a copy to the Administrative Agent) shall
be conclusive in the absence of manifest error. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.

                  2.15     Taxes. (a) Except as provided in this subsection
2.15, all payments made by the Borrower under this Agreement and any Notes shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority ("Taxes"),
excluding Taxes on net income (including, without limitation, branch profits
taxes and minimum taxes) and franchise taxes (imposed in lieu of net income
taxes) imposed on any Agent or any Lender as a result of a present or former
connection between such Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
such Agent or such Lender having executed, delivered or performed its
obligations or received a

                                       34

<PAGE>

payment under, or enforced, this Agreement or any Note). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld or deducted from
any amounts payable to any Agent or any Lender hereunder or under any Note, the
amounts so payable to such Agent or such Lender shall be increased to the extent
necessary to yield to such Agent or such Lender (after payment of all
Non-Excluded Taxes) the amount of interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender that is not a United States person as defined in Section
7701(a)(30) of the Code with respect to any Taxes that are imposed on amounts
payable to such Lender at the time such Lender becomes a party to this Agreement
or that are attributable to such Lender's failure at any time to comply with the
requirements of paragraph (b) of this subsection. Whenever any Non-Excluded
Taxes are so required to be withheld or deducted, the Borrower shall make any
such required withholding or deduction and remit the full amount withheld or
deducted to the relevant authority in accordance with applicable law, and, as
promptly as possible thereafter, the Borrower shall send to the relevant Agent
for its own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the Borrower showing
payment thereof or, if such official receipt was not received, any other proof
of payment reasonably satisfactory to such Agent and Lender.

                  (b)      Each Lender, Assignee and Participant that is not a
United States person as defined in Section 7701(a)(30) of the Code (a "Non-U.S.
Lender") shall deliver to the Borrower and the Administrative Agent, and if
applicable, the assigning Lender (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) on or
before the date on which it becomes a party to this Agreement (or, in the case
of a Participant, on or before the date on which such Participant purchases the
related participation) either:

                  (A)      two duly completed and signed copies of either
         Internal Revenue Service Form W-8BEN (relating to such Non-U.S. Lender
         and entitling it to a complete exemption from or a reduction in
         withholding of U.S. Taxes on all amounts to be received by such
         Non-U.S. Lender pursuant to this Agreement and the other Credit
         Documents under an applicable treaty) or Internal Revenue Service Form
         W-8ECI (relating to all amounts to be received by such Non-U.S. Lender
         pursuant to this Agreement and the other Credit Documents), or
         successor and related applicable forms, as the case may be; or

                  (B)      in the case of a Non-U.S. Lender that is not a "bank"
         within the meaning of Section 881(c)(3)(A) of the Code and that cannot
         comply with the requirements of clause (A) hereof, (x) a statement in
         the form of Exhibit E (or such other form of statement as shall be
         reasonably requested by the Borrower (or, in the case of a Participant,
         the applicable Lender) from time to time) to the effect that such
         Non-U.S. Lender is eligible for a complete exemption from withholding
         of U.S. Taxes under Code Section 871(h) or 881(c), and (y) two duly
         completed and signed copies of Internal Revenue Service Form W-8BEN or
         successor and related applicable form.

Further, each Non-U.S. Lender agrees (i) to deliver, upon request, to the
Borrower and the Administrative Agent, and if applicable, the assigning Lender
(or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) two further duly completed and signed
copies of such Internal Revenue Service Forms W-8BEN or W-8ECI, as the case may
be, or successor and related applicable forms, on or before the date that any
such form expires or becomes obsolete and promptly after the occurrence of any
event requiring a change from the most recent form(s) previously delivered by it
to the Borrower (or, in the case of a Participant, to the Lender from which the
related participation shall have been purchased) in accordance with applicable
U.S. laws and regulations and (ii) in the case of a Non-U.S. Lender that
delivers a statement in the form of Exhibit E (or such other form of statement
as shall

                                       35

<PAGE>

have been requested by the Borrower), to deliver to the Borrower and the
Administrative Agent, and if applicable, the assigning Lender, such additional
statements and forms as shall be reasonably requested by the Borrower (or, in
the case of a Participant, the applicable Lender) from time to time unless, in
any such case, any change in law or regulation has occurred subsequent to the
date such Lender (or Participant) became a party to this Agreement (or in the
case of a Participant, the date on which such Participant purchased the related
participation) which renders all such forms inapplicable or which would prevent
such Lender (or Participant) from properly completing and executing any such
form with respect to it and such Lender (or Participant) promptly notifies the
Borrower and the Administrative Agent (or, in the case of a Participant, the
Lender from which the related participation shall have been purchased) if it is
no longer able to deliver, or if it is required to withdraw or cancel, any form
or statement previously delivered by it pursuant to this subsection 2.15(b). The
Borrower hereby agrees that for so long as a Lender that is a Non-U.S. Lender
complies with this subsection 2.15(b), the Borrower shall not withhold any
amounts from any payments made pursuant to this Agreement to such Non-U.S.
Lender, unless the Borrower reasonably determines that it is required by law to
withhold or deduct any amounts from any payments made to such Non-U.S. Lender
pursuant to this Agreement.

                  (c)      The Borrower will indemnify each Agent and each
Lender for the full amount of Non-Excluded Taxes paid by such Agent or such
Lender, as the case may be, and any liability for penalties, interest and
expenses (including reasonable attorney's fees and expenses) arising therefrom
or with respect thereto, whether or not such Non-Excluded Taxes were correctly
or legally asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability prepared by an Agent or a Lender, absent
manifest error, shall be final after the date such Agent or such Lender, as the
case may be, makes written demand therefor.

                  (d)      If any Agent or any Lender receives a refund with
respect to Non-Excluded Taxes paid by the Borrower, which in the sole discretion
and good faith judgment of such Lender or Agent is allocable to such payment, it
shall promptly pay such refund to the extent allocable to payment of
Non-Excluded Taxes to the Borrower, net of all out-of-pocket expenses of such
Lender incurred in obtaining such refund, if all the payments due under this
subsection 2.15 have been paid in full; provided, however, that the Borrower
agrees to promptly return such amount, net of any incremental additional costs,
to the applicable Agent or Lender, as the case may be, if it receives notice
from the applicable Agent or Lender that such Agent or Lender is required to
repay such refund.

                  (e)      In addition to its agreements under paragraph (b) of
this subsection, each Lender and each Agent shall, at the request of the
Borrower, use best efforts to provide any certificate or document that such
Lender or Agent could legally provide without any material burden on its part
and that would reduce (or avoid) any Non-Excluded Taxes on payments to it made
under this Agreement or any Notes.

                  (f)      The agreements in this subsection 2.15 shall survive
the termination of this Agreement and the payment of all Loans and other amounts
payable hereunder.

                  2.16     Indemnity. The Borrower agrees to indemnify each
Lender and to hold each Lender harmless from any loss or expense which such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of LIBOR Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of LIBOR Loans on
a day which is not the last day of an Interest Period with respect thereto (but
excluding loss of margin). Such indemnification under this subsection 2.16 may
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so prepaid, or not so

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borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (but excluding loss of margin) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all amounts
payable thereunder.

                  2.17     Replacement of Lenders. If at any time (a) the
Borrower becomes obligated to pay additional amounts described in subsection
2.14 or 2.15 as a result of any condition described in such subsections, or any
Lender ceases to make LIBOR Loans pursuant to subsection 2.13, (b) any Lender
becomes insolvent and its assets become subject to a receiver, liquidator,
trustee, custodian or other Person having similar powers or (c) any Lender
becomes a "Nonconsenting Lender" (hereinafter defined), then the Borrower may,
on ten Business Days' prior written notice to the Administrative Agent and such
Lender, replace such Lender by causing such Lender to (and such Lender shall)
assign pursuant to subsection 10.6 all of its rights and obligations under this
Agreement to a Lender or other financial institution selected by the Borrower
and acceptable to the Administrative Agent for a purchase price equal to the
outstanding principal amount of such Lender's Loans and all accrued interest and
fees and other amounts payable hereunder (including amounts payable under
subsection 2.16 as though such Loans were being paid instead of being
purchased); provided that (i) neither the Administrative Agent nor any Lender
shall have any obligation to the Borrower to find a replacement Lender or other
such entity and (ii) in no event shall the Lender hereby replaced be required to
pay or surrender to such replacement Lender or other entity any of the fees
received by such Lender hereby replaced pursuant to this Agreement. In the case
of a replacement of a Lender to which the Borrower becomes obligated to pay
additional amounts pursuant to subsection 2.14 or 2.15, the Borrower shall pay
such additional amounts to such Lender prior to such Lender being replaced and
the payment of such additional amounts shall be a condition to the replacement
of such Lender. In the event that (x) the Borrower or the Administrative Agent
has requested the Lenders to consent to a departure or waiver of any provisions
of the Credit Documents or to agree to any amendment thereto, (y) the consent,
waiver or amendment in question requires the agreement of all Lenders in
accordance with the terms of subsection 10.1 and (z) the Required Lenders have
agreed to such consent, waiver or amendment, then any Lender who does not agree
to such consent, waiver or amendment shall be deemed a "Nonconsenting Lender."

                  2.18     Certain Fees. Borrower agrees to pay to the
Administrative Agent, for its own account, a non-refundable administration fee
in an amount previously agreed to with the Administrative Agent, payable in
advance on the Effective Date and annually in advance on each anniversary
thereof prior to the earlier of (x) the Final Maturity Date and (y) the payment
in full of all Loans and all other amounts owing under this Agreement and the
termination of all Commitments.

                  2.19     Certain Rules Relating to the Payment of Additional
Amounts. (a) Upon the request, and at the expense, of the Borrower, each
Lender to which the Borrower is required to pay any additional amount pursuant
to subsection 2.14 or 2.15 shall, at the option of such Lender, either (A)
forego payment of such additional amount from the Borrower or (B) reasonably
afford the Borrower the opportunity to contest, and reasonably cooperate with
the Borrower in contesting, the imposition of any Non-Excluded Taxes giving rise
to such payment; provided that (i) such Lender shall not be required to afford
the Borrower the opportunity to so contest unless the Borrower shall have
confirmed in writing to such Lender its obligation to pay such amounts pursuant
to this Agreement and (ii) the Borrower shall reimburse such Lender for its
out-of-pocket costs, including attorneys' and accountants' fees and
disbursements incurred in so cooperating with the Borrower in contesting the
imposition of such Non-Excluded Taxes.

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<PAGE>

                  (b)      Each Lender agrees that if it makes any demand for
payment under subsection 2.14 or 2.15(a), or if any adoption or change of the
type described in subsection 2.13 shall occur with respect to it, it will 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, as
determined in its reasonable discretion) to designate a different lending office
if the making of such a designation would allow the Lender to continue to make
and maintain LIBOR Loans and would reduce or obviate the need for the Borrower
to make payments under subsection 2.14 or 2.15(a), or would eliminate or reduce
the effect of any adoption or change described in subsection 2.13.

Section 3.        LETTERS OF CREDIT

                  3.1      L/C Commitment. (a) Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements of the
Revolving Credit Lenders set forth in subsection 3.4(a), agrees to issue letters
of credit ("Letters of Credit") for the account of the Borrower on any Business
Day during the Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided that the Issuing Lender shall not issue any
Letter of Credit if, after giving effect to such issuance, the Available
Commitment with respect to Revolving Credit Loans of all Revolving Credit
Lenders less the aggregate principal amount of the Swing Line Loans then
outstanding would be less than zero.

                  (b)      Each Letter of Credit shall (i) be denominated in
Dollars, (ii) be a standby letter of credit issued to support obligations of the
Borrower or any of its Restricted Subsidiaries, contingent or otherwise and
(iii) expire no later than the earlier of (x) the date that is 12 months after
the date of its issuance and (y) the fifth Business Day prior to the Revolving
Loan Termination Date; provided that any Letter of Credit with an expiration
date occurring up to twelve months after such Letter of Credit's date of
issuance may be automatically renewable for subsequent 12-month periods (but in
no event later than the fifth Business Day prior to the Revolving Loan
Termination Date).

                  (c)      Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.

                  (d)      The Issuing Lender shall not at any time be obligated
to issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits imposed by,
any applicable Requirement of Law or any policies of the Issuing Lender.

                  3.2      Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request that the Issuing Lender issue a Letter of
Credit at any time prior to the fifth Business Day prior to the Revolving Loan
Termination Date by delivering to the Issuing Lender with a copy to the
Administrative Agent at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may reasonably request. Upon receipt of any Application, the Issuing Lender will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower and the Administrative Agent (with copies for each
Lender) promptly following the issuance thereof.

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<PAGE>

                  3.3      Fees, Commissions and Other Charges. (a) The
Borrower shall pay to the Administrative Agent, for the account of the Issuing
Lender and the L/C Participants, a letter of credit fee with respect to each
Letter of Credit, computed for the period from and including the date of
issuance of such Letter of Credit to the expiration date of such Letter of
Credit at a rate per annum equal to the Applicable Margin then in effect for
LIBOR Revolving Credit Loans, of the aggregate maximum drawable amount of
Letters of Credit outstanding from time to time, payable in arrears within 15
days following each L/C Fee Payment Date and on the Revolving Loan Termination
Date. Such fee shall be payable to the Administrative Agent to be shared ratably
among the Revolving Credit Lenders in accordance with their respective
Commitment Percentages with respect to Revolving Credit Loans. In addition, the
Borrower shall pay to the Administrative Agent, for the sole account of the
Issuing Lender, a fee equal to the greater of (i) $150 and (ii) 0.125% per annum
of the aggregate maximum drawable amount of Letters of Credit outstanding from
time to time, payable quarterly in arrears within 15 days following each L/C Fee
Payment Date and on the Revolving Loan Termination Date.

                  (b)      In addition to the foregoing fees and commissions,
the Borrower shall pay or reimburse the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing Lender in
issuing, effecting payment under, amending or otherwise administering any Letter
of Credit.

                  (c)      The Administrative Agent shall, promptly following
its receipt thereof, distribute to the Issuing Lender and the L/C Participants
all fees and commissions received by the Administrative Agent for their
respective accounts pursuant to this subsection.

                  3.4      L/C Participation. (a) The Issuing Lender
irrevocably agrees to sell and hereby sells to each L/C Participant, and, to
induce the Issuing Lender to issue Letters of Credit hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Lender, on the terms and conditions hereinafter
stated, for such L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Commitment Percentage with respect to Revolving
Credit Loans from time to time in effect in the Issuing Lender's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's then
Commitment Percentage with respect to Revolving Credit Loans of the amount of
such draft, or any part thereof, which is not so reimbursed; provided that, if
such demand is made prior to 11:00 A.M., New York City time, on a Business Day,
such L/C Participant shall make such payment to the Issuing Lender prior to the
end of such Business Day and otherwise such L/C Participant shall make such
payment on the next succeeding Business Day.

                  (b)      If any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to subsection 3.4(a) in respect of
any unreimbursed portion of any payment made by the Issuing Lender under any
Letter of Credit is paid to the Issuing Lender within three Business Days after
the date such payment is due, such L/C Participant shall pay to the Issuing
Lender on demand an amount equal to the product of (i) such amount, times (ii)
the daily average Federal Funds Rate, as quoted by the Issuing Lender, during
the period from and including the date such payment is required to the date on
which such payment is immediately available to the Issuing Lender, times (iii) a
fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any such amount required to be
paid by any L/C Participant pursuant to subsection 3.4(a) is not in fact made
available to the Issuing Lender by such L/C Participant within three Business
Days after the date such payment is due, the Issuing Lender shall be entitled to
recover from such L/C Participant, on demand,

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<PAGE>

such amount with interest thereon calculated from such due date at the rate per
annum applicable to Base Rate Loans hereunder. A certificate of the Issuing
Lender submitted to any L/C Participant with respect to any amounts owing under
this subsection shall be conclusive in the absence of manifest error.

                  (c)      Whenever, at any time after the Issuing Lender has
made payment under any Letter of Credit and has received from any L/C
Participant its pro rata share of such payment in accordance with subsection
3.4(a), the Issuing Lender receives any payment related to such Letter of Credit
(whether directly from the Borrower or otherwise, including proceeds of
collateral applied thereto by the Issuing Lender), or any payment of interest on
account thereof, the Issuing Lender will, if such payment is received prior to
11:00 A.M., New York City time, on a Business Day, distribute to such L/C
Participant its pro rata share thereof prior to the end of such Business Day and
otherwise the Issuing Lender will distribute such payment on the next succeeding
Business Day; provided, however, that in the event that any such payment
received by the Issuing Lender and distributed to the L/C Participants shall be
required to be returned by the Issuing Lender, each such L/C Participant shall
return to the Issuing Lender the portion thereof previously distributed by the
Issuing Lender to it.

                  3.5      Reimbursement Obligation of the Borrower. (a) The
Borrower agrees to reimburse the Issuing Lender on the same Business Day on
which the Issuing Lender notifies the Borrower of the date and amount of a draft
presented under any Letter of Credit and paid by the Issuing Lender provided
such notice is received by 1:00 P.M., New York City time, on such Business Day,
and the next Business Day if such notice is received after such time. The
Issuing Lender shall provide notice to the Borrower on each Business Day on
which a draft is presented and paid by the Issuing Lender indicating the amount
of (i) such draft so paid and (ii) any taxes, fees, charges or other costs or
expenses incurred by the Issuing Lender in connection with such payment. Each
such payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States of America and in
immediately available funds.

                  (b)      Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this subsection from the date a draft
presented under any Letter of Credit is paid by the Issuing Lender until payment
in full (i) at the rate which would be payable on any Loans that are Base Rate
Loans at such time until such payment is required to be made pursuant to
subsection 3.5(a), and (ii) thereafter, at the rate which would be payable on
any Loans that are Base Rate Loans at such time which were then overdue.

                  3.6      Obligations Absolute. (a) The Borrower's
obligations under subsection 3.5(a) shall be absolute and unconditional under
any and all circumstances and irrespective of any set-off, counterclaim or
defense to payment which the Borrower may have or have had against the Issuing
Lender, any L/C Participant or any beneficiary of a Letter of Credit.

                  (b)      The Borrower also agrees with the Issuing Lender that
the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under subsection 3.5(a) shall not be affected by,
among other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged (unless the Issuing Lender has actual knowledge of
such invalidity, fraud or forgery), or (ii) any dispute between or among the
Borrower and any beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred or (iii) any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee.

                  (c)      Neither the Issuing Lender nor any L/C Participant
shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however

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<PAGE>

transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Lender's gross negligence or willful misconduct.

                  (d)      The Borrower agrees that any action taken or omitted
by the Issuing Lender under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the
Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of the Issuing Lender or any L/C
Participant to the Borrower.

                  3.7      Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Issuing Lender shall
promptly notify the Borrower and the Administrative Agent of the date and amount
thereof. If any draft shall be presented for payment under any Letter of Credit,
the responsibility of the Issuing Lender to the Borrower in connection with such
draft shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment appear on their face to be in conformity with such Letter of Credit.

                  3.8      Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall govern and control.

SECTION 4.        REPRESENTATIONS AND WARRANTIES

                  To induce the Agents, the Issuing Lender, the Swing Line
Lender and the Lenders to enter into this Agreement and to make (or continue to
make) the Loans and issue or participate in the Letters of Credit, the Borrower
hereby represents and warrants to the Agents, the Issuing Lender, the Swing Line
Lender and each Lender that:

                  4.1      Financial Statements and Condition. The audited
consolidated balance sheets of the Borrower and its consolidated Subsidiaries as
at December 31, 2002, December 31, 2001 and March 31, 2001, and the related
consolidated statements of income and of cash flows for the fiscal periods ended
on such dates, reported on by and accompanied by a report from Ernst & Young LLP
present fairly, in all material respects and on the basis disclosed in the
footnotes to such financial statements, the consolidated financial condition of
the Borrower and its consolidated Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal periods then ended. All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
the aforementioned firm of accountants and disclosed therein). The Borrower and
its Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including, without limitation, any interest
rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, that are not reflected in the most recent financial
statements (or in the notes thereto) referred to in this paragraph. During the
period from December 31, 2002 to and including the date hereof there has been no
disposition by the Borrower and its Consolidated Subsidiaries of any material
part of its business or property and no purchase or other acquisition of any
business or property (including Capital Stock of any other Person) material in
relation to the consolidated financial condition of the Borrower and its
consolidated Subsidiaries at December 31, 2002.

                  4.2      No Change. Since December 31, 2002, there has been no
development, event or circumstance which has had or could reasonably be expected
to have a Material Adverse Effect.

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<PAGE>

                  4.3      Corporate Existence. The Borrower and each of its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization (i) as of the Effective Date
and (ii) with respect to the Borrower and its Restricted Subsidiaries, on the
Effective Date and on each Borrowing Date, (b) has the corporate (or equivalent)
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged except, with respect to Unrestricted Subsidiaries, where
the failure to have such power, authority and legal right could not reasonably
be expected to have a Material Adverse Effect and (c) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except to the extent that the failure to
so qualify could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

                  4.4      Corporate Power; Authorization; Enforceable
Obligations; No Conflict. The Borrower and each of its Restricted Subsidiaries
has the corporate (or equivalent) power and authority, and the legal right, to
make, deliver and perform the Credit Documents to which it is a party and, in
the case of the Borrower, to borrow hereunder and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions of this
Agreement and to authorize the execution, delivery and performance of such
Credit Documents. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Credit Documents to
which the Borrower and each other Credit Party is a party (including, without
limitation, the collateral assignment of the Coal Supply Agreements listed on
Schedule 4.22 to the Administrative Agent for the benefit of the Secured Parties
and the mortgaging of all real property intended by the Credit Agreement to be
mortgaged to the Administrative Agent for the benefit of the Secured Parties),
except those set forth on Schedule 4.4. This Agreement and each other Credit
Document have been duly executed and delivered on behalf of the Borrower and
each other Credit Party. This Agreement and each other Credit Document to which
it is a party constitute legal, valid and binding obligations of each Credit
Party party thereto enforceable against each such Credit Party, as the case may
be, in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

                  4.5      No Legal Bar. Except as set forth on Schedule 4.5 or
as could not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, the execution, delivery and performance of each Credit
Document by the Borrower and each Restricted Subsidiary party thereto, the
borrowing and use of the proceeds of the Loans and the consummation of the
transactions contemplated by the Credit Documents and the Senior Notes
Documents: (a) will not violate any Requirement of Law or any Contractual
Obligation applicable to or binding, the Borrower or any Restricted Subsidiary
or any of their respective properties or assets and (b) will not result in the
creation or imposition of any Lien on any of its properties or assets pursuant
to any Requirement of Law applicable to it or any of its Contractual
Obligations, except for the Liens arising under the Credit Documents.

                  4.6      Litigation; Compliance with Laws; Reserves. (a)
There are not any actions, suits or proceedings at law or in equity or by or
before any Governmental Authority now pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary or any
business, property or rights of any such person (i) that expressly involve any
Credit Document or (ii) except to the extent set forth on Schedule 4.6, as to
which there is a reasonable possibility of any adverse determination and that,
in either case could reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.

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<PAGE>

                  (b)      To the extent required by GAAP, the Borrower and its
Subsidiaries maintain adequate reserves for (i) future costs associated with any
lung disease claim alleging pneumoconiosis or silicosis or arising out of
exposure or alleged exposure to coal dust or the coal mining environment, (ii)
future costs associated with retiree and health care benefits, (iii) future
costs associated with reclamation of disturbed acreage, removal of facilities
and other closing costs in connection with its mining operations and (iv) future
costs associated with other potential environmental liabilities.

                  (c)      None of the Borrower or any of its Subsidiaries or
any of its respective material properties or assets is in violation of, nor will
the continued operation of its material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning, building,
Mining and Environmental Law, ordinance, code or approval or any building or
mining permits), or is in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect.

                  4.7      No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.

                  4.8      Ownership and Location of Property; Liens. (a)
Schedule 4.8(a)(i) lists completely and correctly as of the Effective Date all
material real property (including surface rights and coal and other mineral
rights) owned by the Borrower and the other Credit Parties (other than Black
Beauty) and Schedule 4.8(a)(ii) sets forth reasonably specific locations of the
properties for which a Mortgage or fixture filing has been granted pursuant to
the First Restated Credit Agreement. As of the Effective Date, (i) with respect
to each parcel of real property listed on Schedule 4.8(a)(ii), the Borrower or
its applicable Restricted Subsidiary has good record title in fee simple to such
parcel, except for defects in title to such parcel which do not or will not have
a material adverse effect on the (A) marketability, (B) title insurability, or
(C) operation and intended use, of such parcel; and (ii) with respect to all
other real property listed on Schedule 4.8(a)(i), the Borrower and its
applicable Restricted Subsidiaries have good record title in fee simple, except,
with respect to this clause (ii), for defects in title which could not
reasonably be expected to result in a Material Adverse Effect.

                  (b)      Schedule 4.8(b) lists completely and correctly as of
the Effective Date (A) all material real property (including surface rights and
coal and other mineral rights) leased by the Borrower and the other Credit
Parties (other than Black Beauty) and (B) the lessors thereof. As of the
Effective Date, (i)(A) with respect to each parcel of real property listed on
Schedule 4.8(b) for which a Mortgage has been granted pursuant to the First
Restated Credit Agreement, the Borrower or its applicable Restricted Subsidiary
has a valid and enforceable leasehold interest, except where such lack of
validity or enforceability does not or will not have a material adverse effect
on the (x) title insurability or (y) operation and intended use, of such parcel,
and (B) with respect to all other real property listed on Schedule 4.8(b), the
Borrower and its applicable Restricted Subsidiaries have valid and enforceable
leasehold interests, except, with respect to this clause (B), where such lack of
validity or enforceability could not reasonably be expected to have a Material
Adverse Effect; (ii)(A) with respect to each parcel of real property listed on
Schedule 4.8(b) for which a Mortgage has been granted pursuant to the First
Restated Credit Agreement, the Borrower or its applicable Restricted Subsidiary
possesses the leasehold interest(s) necessary for the operation of the
applicable Mine(s) currently being operated on such parcel, and each of its
rights under the applicable lease(s), contracts, rights-of-way and easements
necessary for the operation of such Mine(s) is in full force and effect, except
to the extent that failure to maintain such lease(s), contracts, rights of way
and easements in full force and effect does not and will not have a material
adverse effect on the operation and intended use of such parcel by the Borrower
or such Restricted Subsidiary, and (B) with respect to all other real property
listed on Schedule 4.8(b), the Borrower and its Restricted Subsidiaries possess
all leasehold interests necessary for the operation of the

                                       43

<PAGE>

Mines currently being operated by each of them, and each of their respective
rights under the leases, contracts, rights-of-way and easements necessary for
the operation of such Mines are in full force and effect, except to the extent,
with respect to this clause (B), that failure to maintain such leases,
contracts, rights of way and easements in full force and effect could not
reasonably be expected to have a Material Adverse Effect; (iii)(A) with respect
to each parcel of real property listed on Schedule 4.8(b) for which a Mortgage
is required hereunder, neither the Borrower nor its applicable Restricted
Subsidiary is in default under any of the applicable instruments or agreements
described in clauses 4.8(b)(i) and 4.8(b)(ii) above, except for any defaults
which, in the aggregate, do not or will not have a material adverse effect on
the operation and intended use of such parcel, and (B) with respect to all other
real property listed on Schedule 4.8(b), neither the Borrower nor its Restricted
Subsidiaries is in default under any of the applicable instruments or agreements
described in clauses 4.8(b)(i) and 4.8(b)(ii) above, except, with respect to
this clause (B), for any defaults which, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect; (iv) each of the Borrower and its
Restricted Subsidiaries possesses all licenses, permits (including, but not
limited to, all Mining and Environmental Permits necessary for the operation of
the Mines being operated by each of them in accordance with applicable Mining
and Environmental Laws) or franchises which are necessary to carry out its
business as presently conducted, except where failure to possess such licenses,
permits or franchises could not, in the aggregate, be reasonably expected to
have a Material Adverse Effect, and neither the Borrower nor any Restricted
Subsidiary is in violation in any material respect of any such license, permit
or franchise.

                  4.9      Intellectual Property. Each of the Borrower and its
Restricted Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). To the best of the Borrower's knowledge, and except as
set forth on Schedule 4.9, no claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim which could reasonably be
expected to have a Material Adverse Effect. The use of such Intellectual
Property by the Borrower and its Restricted Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

                  4.10     Taxes. Each of the Borrower and its Subsidiaries, and
any other affiliate with joint and several liability for taxes, has filed or
caused to be filed all Federal, state, local and other material tax returns or
materials required to have been filed by it and has paid or caused to be paid
all taxes due and payable by it pursuant thereto and all assessments received by
it (other than any taxes or assessments the amount or validity of which are
currently being contested in good faith and for which adequate reserves are
maintained on the books of the Borrower or such affiliate), except where the
failure to do any of the foregoing could not reasonably be expected to result in
a Material Adverse Effect; no tax Lien has been filed, and, to the knowledge of
the Borrower, no claim is being asserted, with respect to any such tax, fee or
other charge.

                  4.11     Federal Regulations. No part of the proceeds of any
Loans has been or will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation U
and Regulation X of the Board of Governors of the Federal Reserve System as now
and from time to time hereafter in effect.

                  4.12     ERISA; Coal Act; Black Lung Act. Except as could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect: no Reportable Event has occurred with respect to any Single
Employer Plan; all contributions required to be made with respect to a Plan have
been timely made; none of the Borrower or any of its Subsidiaries nor any
Commonly Controlled

                                       44

<PAGE>

Entity has incurred any material liability to or on account of a Plan pursuant
to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212
of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or, to the
knowledge of the Borrower, reasonably expects to incur any liability (including
any indirect, contingent or secondary liability) under any of the foregoing
Sections with respect to any Plan; no termination of, or institution of
proceedings to terminate or appoint a trustee to administer, a Single Employer
Plan has occurred; and each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code (except that with respect to any
Multiemployer Plan, such representation is deemed made only to the knowledge of
the Borrower). No "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA), extension of any amortization
period (within the meaning of Section 412 of the Code) or Lien in favor of the
PBGC or a Plan has arisen or has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect to any
Single Employer Plan. Neither the Borrower nor any Commonly Controlled Entity
currently intends to undertake a complete or partial withdrawal (as described in
ERISA section 4203 and 4205, respectively) from any Multiemployer Plan for which
there is any outstanding liability; if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which this representation
is made or deemed made, the Borrower anticipates that there would be a
withdrawal liability in an amount which would be reasonably likely to have a
Material Adverse Effect. To the best knowledge of the Borrower, no such
Multiemployer Plan is in Reorganization or Insolvent. The Borrower, its
Subsidiaries and its "related persons" (as defined in the Coal Act) are in
compliance in all material respects with the Coal Act and none of the Borrower,
its Subsidiaries or its related persons has any liability under the Coal Act
except with respect to premiums or other payments required thereunder which have
been paid when due and except to the extent that the liability thereunder could
not reasonably be expected to have a Material Adverse Effect. The Borrower and
its Subsidiaries are in compliance in all material respects with the Black Lung
Act, and neither the Borrower nor its Subsidiaries has any liability under the
Black Lung Act except with respect to premiums, contributions or other payments
required thereunder which have been paid when due and except to the extent that
the liability thereunder could not reasonably be expected to have a Material
Adverse Effect.

                  4.13     Investment Company Act; Other Regulations. Neither
the Borrower nor any Restricted Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935. None of the Borrower or any of its
Restricted Subsidiaries is subject to regulation under the Federal Power Act or
any other Federal or State statute or regulation (other than Regulation X) which
limits its ability to incur Indebtedness.

                  4.14     Subsidiaries and Other Investments. (a) Schedule
4.14(a) sets forth as of the Effective Date a list of all direct and indirect
Subsidiaries of the Borrower and the percentage ownership interest of the
Borrower (and each Subsidiary) therein. The shares of Capital Stock or other
ownership interests so indicated in Schedule 4.14(a) are owned by the Borrower
(or such Subsidiaries), directly or indirectly, and, with respect to Restricted
Subsidiaries only, are fully paid and non-assessable and free and clear of all
Liens, except for Permitted Liens.

                  (b)      Schedule 4.14(b) sets forth as of the Effective Date
a list of all Joint Ventures and other minority investments to which the
Borrower or any Subsidiary is a party, including a listing of each other Person
party to such Joint Venture or investment and the Borrower's or such
Subsidiary's percentage interest therein. The shares of Capital Stock or other
ownership interests so indicated in Schedule 4.14(b) are owned by the Borrower
or such Subsidiary, directly or indirectly, and except with respect to
Unrestricted Subsidiaries, are fully paid and non-assessable and free and clear
of all Liens, except for Permitted Liens.

                                       45

<PAGE>

                  4.15     Purpose of Loans. The proceeds of the Loans shall be
used by the Borrower (i) (A) to refinance the existing Indebtedness of the
Borrower and Black Beauty listed on Schedule 4.15 and (B) on the Effective Date
to consummate a portion of a tender offer for the Existing Notes and (ii) for
working capital purposes and other general corporate purposes, including,
without limitation, to make Investments permitted under subsection 7.9. In
addition, a portion of the proceeds of the Term Loans may be used by the
Borrower to finance the Black Beauty Acquisition and related fees and expenses.

                  4.16     Environmental Matters.

                  Except as listed on Schedule 4.16, or as would not,
individually or in the aggregate, be expected to result in a Material Adverse
Effect:

                  (a)      The facilities and properties currently or formerly
         owned, leased or operated by the Borrower or any of its Subsidiaries
         (the "Properties") do not contain, and have not previously contained,
         any Materials of Environmental Concern in amounts or concentrations
         which (i) constitute or constituted a violation of, or (ii) could
         reasonably be expected to give rise to liability under, any applicable
         Mining and Environmental Law.

                  (b)      None of the Borrower nor any of its Subsidiaries has
         received any notice of violation, alleged violation, non-compliance,
         liability or potential liability regarding environmental matters or
         compliance with Mining and Environmental Laws with regard to any of the
         Properties or the business operated by the Borrower or any of its
         Subsidiaries (the "Business"), or any prior business for which the
         Borrower has, or may reasonably be alleged to have, retained liability
         under any Mining and Environmental Law, nor does the Borrower have
         knowledge or reason to believe that any such notice will be received or
         is being threatened.

                  (c)      Materials of Environmental Concern have not been
         transported or disposed of from the Properties in violation of, or in a
         manner or to a location which could reasonably be expected to give rise
         to liability under, any applicable Mining and Environmental Law, nor
         have any Materials of Environmental Concern been generated, treated,
         stored or disposed of at, on or under any of the Properties in
         violation of, or in a manner that could reasonably be expected to give
         rise to liability under, any applicable Mining and Environmental Law.

                  (d)      No judicial proceeding or governmental or
         administrative action is pending or, to the knowledge of the Borrower,
         threatened under any Mining and Environmental Law to which the Borrower
         or any Subsidiary is or, to the knowledge of the Borrower, will be
         named as a party or with respect to the Properties or the Business, nor
         are there any consent decrees or other decrees, consent orders,
         administrative orders or other orders, or other similar administrative
         or judicial requirements outstanding under any Mining and Environmental
         Law with respect to the Properties or the Business.

                  (e)      There has been no release or threat of release of
         Materials of Environmental Concern at or from the Properties, or
         arising from or related to the operations of the Borrower or any
         Subsidiary in connection with the Properties or otherwise in connection
         with the Business, in violation of or in amounts or in a manner that
         could reasonably give rise to liability under any applicable Mining and
         Environmental Laws.

                  (f)      The Properties and all operations at the Properties
         are in compliance in all respects with all applicable Mining and
         Environmental Laws, and there is no contamination at, under or about
         the Properties or violation of any applicable Mining and Environmental
         Law with

                                       46

<PAGE>

         respect to the Properties or the Business that could interfere with the
         continued operation of the Properties or materially impair the fair
         saleable value thereof.

                  (g)      The Borrower and its Subsidiaries hold and are in
         compliance with all Mining and Environmental Permits necessary for
         their operations.

                  (h)      No Lien relating to or in connection with any Mining
         and Environmental Law has been filed or has been attached to any
         Property.

                  (i)      The Borrower has delivered, or otherwise made
         available, to the Lenders copies of all written environmental reports,
         audits and assessments concerning the Properties and the Business in
         the custody or control of the Borrower which are material to the
         Business of the Borrower and the Subsidiaries taken as a whole,
         including any prior business for which the Borrower or any of its
         Subsidiaries has, or may reasonably be alleged to have, retained
         liability under any Mining and Environmental Law.

                  4.17     Collateral Documents. (a) The Guarantee and
Collateral Agreement is effective to create in favor of the Administrative
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the pledged stock and other equity ownership
interests described therein and, when stock certificates representing or
constituting the pledged stock and other equity ownership interests described
therein are delivered to the Administrative Agent, such security interest shall,
subject to the existence of Permitted Liens, constitute a perfected first lien
on, and security interest in, all right, title and interest of the pledgor party
thereto in the pledged stock or other equity ownership interests described
therein.

                  (b)      The Guarantee and Collateral Agreement is effective
to create in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral described therein. Uniform Commercial Code financing statements have
been filed in each of the jurisdictions listed on Part I of Schedule 4.17 (which
lists fixture filings as well), or arrangements have been made for such filing
in such jurisdictions, and upon such filings, and upon the taking of possession
by the Administrative Agent of any such Collateral the security interests in
which may be perfected only by possession, such security interests will, subject
to the existence of Permitted Liens, constitute perfected first priority Liens
on, and security interests in, all right, title and interest of the debtor party
thereto in the collateral described therein.

                  (c)      Any and all consents or approvals (whether pursuant
to Requirements of Law or any contract or other agreement or instrument) which
are required, necessary or prudent to perfect a security interest in each of the
Mortgages required hereunder, have been obtained. Each of the Mortgages is
effective to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable lien on the real
property or leasehold interest described therein and such liens constitute first
priority liens on the real property or leasehold interest described therein,
subject only to the existence of Liens as permitted by subsection 7.3(a), (e),
(f), (g) and (j).

                  4.18     Accuracy and Completeness of Information. No fact is
known to the Borrower or any of its Subsidiaries which has had or could
reasonably be expected to have a Material Adverse Effect, which has not been
disclosed to the Lenders by the Borrower or its Subsidiaries in writing prior to
the date hereof. No document furnished or statement made in writing to the
Lenders by the Borrower or any Subsidiary in connection with the negotiation,
preparation or execution of this Agreement or any of the other Credit Documents,
taken as a whole, contains any untrue statement of a material fact or omits to
state any such material fact necessary in order to make the statements contained
therein not misleading in

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<PAGE>

the context in which such statements are made. The Senior Notes Documents
constitute all of the material agreements relating to the Senior Notes.

                  4.19     Solvency. As of the Effective Date and after giving
effect to the Black Beauty Acquisition and the other transactions contemplated
by this Credit Agreement and the Senior Notes Documents, the Borrower was
"Solvent," in that (a) the property, at a fair valuation, of the Borrower and
its Subsidiaries, taken together as a single entity, exceeded their debts, (b)
the present fair salable value of the assets of the Borrower and its
Subsidiaries, taken together as a single entity, was greater than the amount
that will be required to pay their probable debts as such debts become absolute
and matured, and (c) the Borrower did not intend to, and did not believe that
the Borrower and its Subsidiaries, taken together as a single entity, would,
incur debts or liabilities beyond the their ability to pay as such debts and
liabilities mature. For purposes of this subsection, "debt" means "liability on
a claim" and "claim" means any (i) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured.

                  4.20     Labor Matters. There are no strikes, stoppages,
slowdowns or other labor disputes or controversies pending or, to the Borrower's
knowledge, overtly threatened against the Borrower or any of its Subsidiaries
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. The hours worked and payments made to employees of the
Borrower and each of its Subsidiaries (and their predecessors) have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law, except to the extent such violations could not, or in the aggregate, be
reasonably expected to have a Material Adverse Effect.

                  4.21     Insurance. Schedule 4.21 sets forth a true, complete
and correct description of all material insurance maintained by the Borrower or
by the Borrower for its Subsidiaries as of the Effective Date. As of such date,
such insurance is in full force and effect and all premiums have been duly paid
(unless such premium is being contested in good faith; provided that the policy
to which such premium relates is not canceled or in imminent danger of
cancellation as a result of such contest). The Borrower and its Restricted
Subsidiaries have insurance in such amounts and covering such risks and
liabilities as are in accordance with normal industry practice.

                  4.22     Coal Supply Agreements. Schedule 4.22 sets forth a
complete and accurate list of all Coal Supply Agreements to which the Borrower
or any other Credit Party is a party as of the Effective Date, including the
counterparty to each such agreement, which, by their terms, do not prohibit a
collateral assignment thereof to the Administrative Agent for the ratable
benefit of the Secured Parties or would not, upon such assignment or attempted
assignment require notice to any other party thereto. As of the Effective Date,
each such Coal Supply Agreement is in full force and effect, except to the
extent that the failure to be in full force and effect could not reasonably be
expected to have a Material Adverse Effect.

                  4.23     Mines. Schedule 4.23 sets forth a complete and
accurate list of all Mines (including addresses and the owner and operator
thereof) owned or operated by the Borrower or any of its Restricted Subsidiaries
as of the Effective Date.

                  4.24     Titled Equipment. The value of all vehicles, rolling
stock and other Operating Equipment owned by the Borrower or any of its
Restricted Subsidiaries as of the Effective Date and covered by certificates of
title is not, in the aggregate, material to the Borrower and its Subsidiaries
taken as a whole.

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<PAGE>

                  4.25     Acts of God. Neither the Business nor the Properties
has been affected by any fire, explosion, accident, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which could reasonably be expected to
have a Material Adverse Effect.

                  4.26     Surety Bonds. All surety, reclamation and similar
bonds required to be maintained by the Borrower or any of its Restricted
Subsidiaries under any Requirement of Law or Contractual Obligation are in full
force and effect and were not and will not be terminated, suspended, revoked or
otherwise adversely affected by virtue of the consummation of the financing
hereunder and under the Senior Notes Documents; provided that (i) self-bonding
permitted under Requirements of Law prior to the Effective Date may be required
to be replaced following the Effective Date with surety bonds, (ii) the cost of
such bonds may be increased and (iii) certain of such bonds may be terminated,
suspended or revoked, provided that, taken together, the events specified in
clauses (i), (ii) and (iii) above will not have a Material Adverse Effect. All
required guarantees of, and letters of credit with respect to, such surety,
reclamation and similar bonds are in full force and effect except where such
failure to be in full force and effect could not reasonably be expected to have
a Material Adverse Effect.

SECTION 5.        CONDITIONS PRECEDENT

                  5.1      Effective Date. The effectiveness of this Agreement
shall be subject to the satisfaction of each of the following conditions
precedent:

                  (a)      The Administrative Agent shall have received (i) a
         copy of the certificate of incorporation (or equivalent Constitutional
         Document), including all amendments thereto, of each Credit Party,
         certified as of a recent date by the Secretary of State of the state of
         its organization, and a certificate as to the good standing of such
         Credit Party as of a recent date, from such Secretary of State; (ii) a
         certificate of the Secretary or Assistant Secretary of each Credit
         Party dated the Effective Date and certifying (A) that attached thereto
         is a true and complete copy of the by-laws (or equivalent
         Constitutional Document) of such Credit Party as in effect on the
         Effective Date and at all times since a date prior to the date of the
         resolutions described in clause (B) below, (B) that attached thereto is
         a true and complete copy of resolutions duly adopted by the Board of
         Directors (or equivalent governing body) of such Credit Party
         authorizing the execution, delivery and performance of the Credit
         Documents to which such Credit Party is a party, the borrowings
         hereunder (in the case of the Borrower), the granting by it of the
         Liens created pursuant to the Security Documents to which it is a
         party, and that such resolutions have not been modified or rescinded
         and that the Constitutional Documents of such Credit Party have not
         been amended since the date of the last amendment thereto shown on the
         certificate of good standing furnished pursuant to clause (i) above,
         and (C) as to the incumbency and specimen signature of each officer
         executing any Credit Document or any other document delivered in
         connection herewith on behalf of the Borrower; and (iii) a certificate
         of a Responsible Officer (other than the Secretary or Assistant
         Secretary executing the certificate pursuant to clause (ii) above) as
         to the incumbency and specimen signature of such Secretary or Assistant
         Secretary.

                  (b)      The Borrower and each Restricted Subsidiary that owns
         or operates any of the real property Collateral (including any of the
         mines located on or under such real property) or conducts any business
         material to the Credit Parties taken as a whole shall be duly qualified
         as a foreign corporation and in good standing under the laws of each
         jurisdiction where its ownership, lease or operation of property or the
         conduct of its business requires such qualification, except to the
         extent that the failure to so qualify could not, in the aggregate,
         reasonably be expected to have a Material Adverse Effect, and the
         Administrative Agent shall have received certificates of good

                                       49

<PAGE>

         standing with respect to the Borrower and the other Credit Parties
         issued by the Secretary of State (or other relevant officers) of each
         such jurisdiction, each dated as of a recent date.

                  (c)      The Administrative Agent shall have received from the
         Borrower, the other Credit Parties, the Lenders and the Agents
         duly-executed signature pages to each Credit Document to which each
         such Person is a party (including, without limitation, this Agreement,
         the Notes (if any), the Guarantee and Collateral Agreement and any
         other Security Document) and each such Credit Document shall be in full
         force and effect.

                  (d)      The Administrative Agent shall have received the
         following executed legal opinions:

                           (i)      the executed legal opinion of Simpson
         Thacher & Bartlett, counsel to the Borrower and special New York
         counsel to the other Credit Parties, substantially in the form of
         Exhibit C-1;

                           (ii)     the executed legal opinion of Jeffery
         Klinger, Esq., special Missouri counsel to the Borrower and in-house
         counsel to the other Credit Parties, substantially in the form of
         Exhibit C-2; and

                           (iii)    the executed legal opinions of local counsel
         to the Borrower and the other Credit Parties in the states of Illinois,
         Kentucky, New Mexico, Wyoming, and West Virginia regarding perfection
         of security interests in Collateral located in such jurisdictions.

Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agents may reasonably
require.

                  (e)      The Administrative Agent shall have received UCC
         financing statement amendments with respect to certain UCC-1 financing
         statements and fixture filings originally executed and delivered by the
         Credit Parties under the First Restated Credit Agreement and fully
         executed amendments to the Mortgages originally executed and delivered
         by the Credit Parties under the First Restated Credit Agreement, in
         each case reflecting the amendment and restatement of the First
         Restated Credit Agreement by this Agreement, as well as any other
         instruments and documents in form and substance reasonably satisfactory
         to the Administrative Agent necessary or, in the opinion of the
         Administrative Agent, desirable to perfect, or continue the perfection
         of, the Administrative Agent's security interest in any Collateral
         granted by the Credit Parties pursuant to the Security Documents.

                  (f)      The Administrative Agent shall have received (i)
         evidence reasonably satisfactory to it that the Agents and the Lenders
         have been named as additional insureds on all liability insurance
         policies of the Borrower and its Restricted Subsidiaries and that the
         Administrative Agent has been named as loss payee on all property and
         casualty insurance policies of the Borrower and its Restricted
         Subsidiaries and (ii) the other information required under subsection
         6.5(b) to be delivered to the Administrative Agent on the Effective
         Date.

                  (g)      Each assignment of a Loan and/or a Commitment by the
         Original Lenders to a Lender contemplated to occur on or prior to the
         Effective Date shall have been consummated.

                  (h)      The Lenders and the Agents shall have received
         payment in full for all fees required to be paid and expenses for which
         invoices have been presented on or before the

                                       50

<PAGE>

         Effective Date (including, without limitation, the fees and expenses of
         legal counsel to the Administrative Agent and the Syndication Agents).

                  (i)      The Administrative Agent shall have received a
         certificate, signed by a Responsible Officer of the Borrower, dated the
         Effective Date and confirming that the representations and warranties
         set forth herein and in the other Credit Documents are true and correct
         in all material respects as of such date, except to the extent such
         representations and warranties expressly relate solely to an earlier
         date.

                  (j)      On the Effective Date, no Default or Event of Default
         shall have occurred and be continuing.

                  (k)      No event shall have occurred since December 31, 2002
         that could reasonably be expected to have a Material Adverse Effect.

                  (l)      The Administrative Agent shall have received the
         results of a recent lien, tax lien, judgment and litigation search in
         each of the jurisdictions or offices in which UCC financing statements
         or other filings or recordations should be made to evidence or perfect
         (with the priority required under the Credit Documents) security
         interests in all Collateral, and such search shall reveal no Liens on
         any of the assets of the Borrower or its Subsidiaries except for (i)
         Permitted Liens, (ii) Liens to be released on the Effective Date and
         (iii) Liens subject to the provisions of subsection 6.22.

                  (m)      The Administrative Agent shall have received the
         certificates representing the shares of Capital Stock pledged pursuant
         to the Guarantee and Collateral Agreement, together with an undated
         stock power for each such certificate executed in blank by a duly
         authorized officer of the pledgor thereof.

                  (n)      The Lenders shall have received copies of the balance
         sheets and statements of income and cash flows referred to in
         subsection 4.1.

                  (o)      The Lenders shall have received a report from
         Marshall Miller and Associates confirming and validating the
         methodology for establishing and calculating the coal reserves as
         reported in the Borrower's Form 10-K for the period ending December 31,
         2002, which shall be in form and substance reasonably satisfactory to
         the Administrative Agent and the Syndication Agents.

                  (p)      The Lenders shall have received financial projections
         prepared by the Borrower for the Borrower and its Subsidiaries,
         including, without limitation, income statements, balance sheets and
         cash flow statements for the calendar years 2003 through 2007, which
         shall be in form and substance reasonably satisfactory to the Lenders.

                  (q)      On the Effective Date, the senior secured
         Indebtedness of the Borrower shall be rated at least BB+ by S&P and Ba1
         by Moody's.

                  (r)      The Lenders shall have received evidence that, on and
         after the Effective Date, Black Beauty shall be a guarantor of the
         Obligations pursuant to the Guarantee and Collateral Agreement, Black
         Beauty shall be a Restricted Subsidiary under this Agreement and all of
         the Capital Stock of Black Beauty owned by any Credit Party shall be
         pledged to the Administrative Agent for the ratable benefit of the
         Secured Parties.

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<PAGE>

                  (s)      On the Effective Date, the Borrower shall have
         consummated a portion of a tender offer for and retired a portion of
         the Existing Notes on terms and conditions satisfactory to the
         Administrative Agent.

                  (t)      On the Effective Date, the Borrower shall have
         received not less than $650,000,000 in gross proceeds from the sale of
         the Senior Notes on terms and conditions reasonably satisfactory to the
         Administrative Agent.

                  (u)      The Administrative Agent and the Syndication Agents
         shall have received such other documents, agreements, certificates and
         information as it shall reasonably request.

                  5.2      Conditions to a Credit Event. The obligation of any
Lender or of the Issuing Lender on the occasion of any Credit Event is subject
to the satisfaction of the following conditions:

                  (a)      The Administrative Agent shall have received a Notice
         of Borrowing at least three (3) Business Days in advance of the date of
         such Credit Event (subject to any shorter notice periods provided for
         in subsection 2.2) or, in the case of the issuance of a Letter of
         Credit, the Issuing Lender, the Administrative Agent shall have
         received an Application requesting the issuance of such Letter of
         Credit at least three (3) Business Days in advance of the date of such
         Credit Event.

                  (b)      On the date of such requested Credit Event, the
         representations and warranties set forth herein and in the other Credit
         Documents shall be true and correct in all material respects on and as
         of such date, except for representations and warranties expressly
         stated to relate solely to a specific earlier date, in which case such
         representations and warranties shall have been true and correct in all
         material respects as of such earlier date.

                  (c)      At the time of and immediately after such Credit
         Event, no Default or Event of shall have occurred and be continuing.

                  (d)      No event shall have occurred since the immediately
         preceding Credit Event that could reasonably be expected to have a
         Material Adverse Effect.

SECTION 6.        AFFIRMATIVE COVENANTS

                  The Borrower hereby agrees that, so long as the Commitments
remain in effect or any amount is owing to any Lender or any Agent hereunder or
under any other Credit Document, the Borrower shall, and shall cause each of its
Subsidiaries (or, where specified, Restricted Subsidiaries) to:

                  6.1      Financial Statements. Furnish to the Administrative
Agent:

                  (a)      as soon as available, but in any event within 90 days
         after the end of each fiscal year of the Borrower beginning with the
         fiscal year ending on December 31, 2003, a copy of the consolidated
         balance sheet of (i) the Borrower and its consolidated Subsidiaries and
         (ii) the Borrower and its Consolidated Subsidiaries, in each case as at
         the end of such year and the related consolidated and Consolidated
         statements of income and retained earnings and of cash flows for such
         year, setting forth in each case in comparative form the figures for
         the previous year and, in the case of statements delivered under clause
         (i), reported on without a "going concern" or like qualification or
         exception, or qualification arising out of the scope of the audit, by
         independent certified public accountants of nationally recognized
         standing and, in the case of statements delivered under clause (ii),
         certified by a Responsible Officer;

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<PAGE>

                  (b)      as soon as available, but in any event not later than
         45 days after the end of each of the first three quarterly periods of
         each fiscal year of the Borrower, (i) the unaudited consolidated
         balance sheet of the Borrower and its consolidated Subsidiaries and
         (ii) the Consolidated balance sheet of the Borrower and its
         Consolidated Subsidiaries, in each case as at the end of such quarter
         and the related unaudited consolidated and Consolidated statements of
         income and retained earnings and of cash flows of the Borrower and its
         applicable Subsidiaries for such quarter and the portion of the fiscal
         year through the end of such quarter, setting forth in each case in
         comparative form the figures for the previous year, certified by a
         Responsible Officer as being fairly stated in all material respects
         (subject to normal year-end audit adjustments).

                  All such financial statements shall be complete and correct in
all material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by such accountants or
officer, as the case may be, and disclosed therein).

                  6.2      Certificates; Other Information. Furnish to the
Administrative Agent:

                  (a)      concurrently with the delivery of the financial
         statements referred to in subsection 6.1(a)(i), a certificate of the
         independent certified public accountants reporting on such financial
         statements stating that, in performing their audit, nothing came to
         their attention that caused them to believe that the Borrower failed to
         comply with the provisions of subsection 7.1, except as specified in
         such certificate;

                  (b)      concurrently with the delivery of the financial
         statements referred to in subsections 6.1(a)(ii) and (b), a certificate
         of a Responsible Officer stating that, to the best of such Officer's
         knowledge, during such period (i) no Restricted Subsidiary has been
         formed or acquired (or, if any such Subsidiary has been formed or
         acquired, the Borrower has complied with the requirements of subsection
         6.10 with respect thereto), (ii) neither of the Borrower nor any of its
         Restricted Subsidiaries has changed its legal name or its jurisdiction
         of organization without complying with the requirements of this
         Agreement and the Security Documents with respect thereto and (iii)
         such Officer has obtained no knowledge of any Default or Event of
         Default except as specified in such certificate;

                  (c)      concurrently with the delivery of financial
         statements pursuant to subsection 6.1(a)(ii) (and, in the case of the
         following clauses (ii) and (iii), concurrently with the delivery of the
         financial statements referred to in subsection 6.1(b)), a certificate
         of a Responsible Officer of the Borrower setting forth, in reasonable
         detail, the computations, as applicable, of (i) Excess Cash Flow, (ii)
         Capital Expenditures and (iii) the covenants set forth in subsection
         7.1 and , as of such last day or for the fiscal period then ended, as
         the case may be;

                  (d)      not later than 60 days after the end of each fiscal
         year of the Borrower, a copy of summary projections by the Borrower of
         the operating budget and cash flow budget of the Borrower and its
         Subsidiaries for the succeeding fiscal year, such projections to be
         accompanied by a certificate of a Responsible Officer to the effect
         that such projections have been prepared based on assumptions believed
         by the Borrower to be reasonable;

                  (e)      within five days after the same are sent, copies of
         all financial statements and reports which the Borrower or any of its
         Restricted Subsidiaries sends to its stockholders, and within five days
         after the same are filed, copies of all financial statements and other
         reports which

                                       53

<PAGE>

         the Borrower or any of its Subsidiaries may make to, or file with, the
         Securities and Exchange Commission or any successor or analogous
         Governmental Authority; and

                  (f)      promptly, such additional financial and other
         information as any Lender may from time to time reasonably request.

                  6.3      Payment of Obligations. With respect to the Borrower
and each of its Restricted Subsidiaries, pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, or otherwise in accordance
with customary industry practice, as the case may be, all its material
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or such Restricted Subsidiary, as the case may be.

                  6.4      Existence; Businesses and Properties. (a) Do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect the legal existence of the Borrower and each Restricted Subsidiary,
except as otherwise expressly permitted under subsections 7.5 and 7.6.

                  (b)      With respect to the Borrower and its Restricted
Subsidiaries, maintain, preserve, protect, and keep all Collateral and all other
property used or useful and necessary in the conduct of its business in good
condition (ordinary wear and tear and damage by fire or other casualty or taking
by condemnation excepted) and in compliance with all applicable material
Requirements of Law.

                  (c)      Keep in full force and effect all of its material
leases and other material contract rights, and all material rights of way,
easements and privileges necessary or appropriate for the proper operation of
the Mines being operated by the Borrower or a Restricted Subsidiary.

                  (d)      Obtain and comply with each permit, license,
authorization and other governmental approval necessary to recover Coal from any
Mine being operated by the Borrower or a Restricted Subsidiary and observe the
requirements thereof in all material respects, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.

                  (e)      Cause each Mine being operated by the Borrower or a
Restricted Subsidiary to be operated, maintained, developed and mined and cause
the associated processing plants and other fixed and operating assets to be
operated and maintained, in a workmanlike manner, as would a prudent coal mine
operator, and in accordance with generally accepted mining practices and all
applicable Requirements of Law, including but not limited to applicable Mining
and Environmental Laws, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.

                  (f)      Cause the Operating Equipment, the processing plants
associated with the Mines being operated by the Borrower or a Restricted
Subsidiary and other fixed and operating assets to be kept in effective
operating condition, and all repairs, renewals, replacements, addition and
improvements thereof or thereto needful to the production, processing and
transportation of Coal from any such Mine or associated properties to be
promptly made, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

                  (g)      Pay or cause to be paid when due all expenses
incurred in connection with the maintenance, development, operation and
protection of processing plants associated with the Mines being operated by the
Borrower or a Restricted Subsidiary and other fixed and operating assets, except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

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<PAGE>

                  6.5      Insurance. (a) Maintain with financially sound
and reputable insurance companies insurance (including, without limitation, all
required surety, reclamation and similar bonds) on all its property in at least
such amounts and against at least such risks (but including in any event public
liability, cargo loss and business interruption) as are usually insured against
in the same general area by companies engaged in the same or a similar business;
and furnish to the Administrative Agent, upon written request, full information
as to the insurance carried except to the extent that the failure to do any of
the foregoing with respect to any such property could not reasonably be expected
to result in a Material Adverse Effect, or, in the case of the Borrower and any
Restricted Subsidiary, materially adversely affect the value or usefulness of
such property; provided that in any event the Borrower will maintain, and will
cause each of its Restricted Subsidiaries to maintain, to the extent obtainable
on commercially reasonable terms, (i) property and casualty insurance on all
real and personal property on an all risks basis (including the perils of flood
and quake), covering the repair or replacement cost of all such property and
consequential loss coverage for business interruption and extra expense (which
shall be limited to fixed construction expenses and such other business
interruption expenses as are otherwise generally available to similar
businesses), and (ii) public liability insurance. All such insurance with
respect to the Borrower and its Restricted Subsidiaries shall be provided by
insurers or reinsurers which (x) in the case of United States insurers and
reinsurers, have an A.M. Best policyholders rating of not less than A- with
respect to primary insurance and B+ with respect to excess insurance and (y) in
the case of non-United States insurers or reinsurers, the providers of at least
80% of such insurance have either an ISI policyholders rating of not less than
A, an A.M. Best policyholders rating of not less than A- or a surplus of not
less than $500,000,000 with respect to primary insurance, and an ISI
policyholders rating of not less than BBB with respect to excess insurance, or,
if the relevant insurance is not available from such insurers, such other
insurers as the Administrative Agent may approve in writing. All insurance shall
provide that no cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof.

                  (b)      The Borrower and its Restricted Subsidiaries will
deliver to the Administrative Agent on behalf of the Lenders, (i) on the
Effective Date a certificate dated such date showing the amount of insurance
coverage as of such date, (ii) upon request of any Lender through the
Administrative Agent from time to time full information as to the insurance
carried, (iii) promptly following receipt of notice from any insurer, a copy of
any notice of cancellation or material change in coverage from that existing on
the Effective Date, (iv) forthwith, notice of any cancellation or nonrenewal of
coverage by the Borrower or any Subsidiary, and (v) promptly after such
information is available to the Borrower, full information as to any claim for
an amount in excess of $2,500,000 with respect to any property and casualty
insurance policy maintained by the Borrower or any Restricted Subsidiary. The
Agents and the Lenders shall be named as additional insureds on all such
liability insurance policies of the Borrower and its Restricted Subsidiaries and
the Administrative Agent shall be named as loss payee on all property and
casualty insurance policies of the Borrower and its Restricted Subsidiaries. Any
proceeds from any such insurance policy in respect of any claim, or any
condemnation award or other compensation in respect of a condemnation (or any
transfer or disposition of property in lieu of condemnation) for which the
Borrower or any of its Restricted Subsidiaries receives a condemnation award or
other compensation shall be paid to the Borrower or the Restricted Subsidiary;
provided that any such proceeds paid to the Borrower or any Restricted
Subsidiary with respect to, and to the extent of, a loss attributable to any
Unrestricted Subsidiary or its property shall be paid to such Unrestricted
Subsidiary; provided further that: (A) the Borrower or the Restricted Subsidiary
will use such proceeds, condemnation award or other compensation to repair,
restore or replace the assets which were the subject of such claim within 12
months after receipt thereof (and a Responsible Officer shall deliver a
certificate specifying in reasonable detail such usage not later than the last
day of such relevant period), and (B) if, at the time of the receipt of such
proceeds, condemnation award or other compensation, an Event of Default has
occurred and is continuing, the aggregate amount of all such proceeds,
condemnation award or other compensation shall be paid to the Administrative
Agent and held as Collateral for application in accordance with the Security

                                       55

<PAGE>

Documents; and provided further that, to the extent that any amount of such
proceeds, condemnation award or other compensation are not used or committed
during the time period specified in proviso (A) above, then, if requested by
notice from the Required Lenders to the Borrower, all such remaining uncommitted
proceeds, condemnation award or other compensation shall be paid to the
Administrative Agent and held as Collateral for application in accordance with
the Security Documents.

                  6.6      Inspection of Properties; Books and Records;
Discussions. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities; and permit representatives of any Lender to visit and inspect any of
its properties and examine any of its books, records, agreements, contracts and
the like (except to the extent (i) any such access is restricted by a
Requirement of Law or (ii) any such agreements, contracts or the like are
subject to a written confidentiality agreement with a non-Affiliate that
prohibits the Borrower or any of its Subsidiaries from granting such access to
the Lenders; provided that, with respect to such confidentiality restrictions
affecting the Borrower or any of its Restricted Subsidiaries, a Responsible
Officer is made available to such Lender to discuss such confidential
information to the extent permitted) at any reasonable time and upon reasonable
notice on a Business Day and as often as may reasonably be desired by any Lender
and to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers and employees of
the Borrower and its Subsidiaries and with its independent certified public
accountants; provided that the Administrative Agent or such Lender shall notify
the Borrower prior to any contact with such accountants and give the Borrower
the opportunity to participate in such discussions; provided, further, that the
Borrower shall notify the Administrative Agent of any such visits, inspections
or discussions prior to each occurrence thereof.

                  6.7      Notices. Promptly give notice to the Administrative
Agent and each Lender of:

                  (a)      the occurrence of any Default or Event of Default;

                  (b)      any (i) default or event of default under any
         material Contractual Obligation of the Borrower or any of its
         Restricted Subsidiaries, (ii) litigation, investigation or proceeding
         which may exist at any time between the Borrower or any of its
         Subsidiaries and any Governmental Authority, which in either case,
         could reasonably be expected to have a Material Adverse Effect or (iii)
         any material asset sale by the Borrower or a Restricted Subsidiary
         (describing in reasonable detail the assets sold, the consideration
         received therefor and the proposed use of the proceeds thereof);

                  (c)      any other litigation or proceeding affecting the
         Borrower or any of its Restricted Subsidiaries in which the amount
         involved is $10,000,000 or more and not covered by insurance; and

                  (d)      the following events that, individually or in the
         aggregate, would be reasonably likely to have a Material Adverse
         Effect, as soon as possible and in any event within 20 days after the
         Borrower knows or has reason to know thereof: (i) the incurrence or
         expected incurrence of an accumulated funding deficiency or the filing
         or expected filing of an application to the Secretary of the Treasury
         for a waiver or modification of the minimum funding standard (including
         any required installment payments) or an extension or expected
         extension of any amortization period under Section 412 of the Code with
         respect to a Plan, the creation of any Lien or the expected creation of
         any Lien in favor of the PBGC or a Plan, and the reassumption or
         expected reassumption by the Seller of sponsorship of any Single
         Employer Plan, (ii) the occurrence or expected occurrence of any
         Reportable Event with respect to any Plan (other than a Multiple
         Employer Plan), or any withdrawal from or expected withdrawal from, or
         the

                                       56

<PAGE>

         termination, Reorganization or Insolvency, or expected termination,
         Reorganization or Insolvency of, any Multiemployer Plan, or a failure
         or reasonably expected failure to make any required contribution to a
         Plan, (iii) the institution or the expected institution of proceedings
         by the PBGC or any Person (including any employer) with respect to the
         withdrawal from, or the termination, Reorganization or Insolvency of,
         any Single Employer Plan or Multiemployer Plan, (iv) the incurrence or
         expected incurrence of any liability pursuant to (A) the Coal Act
         (other than with respect to required premiums or other payments which
         are timely paid), or (B) the Black Lung Act (other than with respect to
         required premiums, contributions or other payments which are timely
         paid), or (v) any adoption of, assumption of, amendment of, or
         modification of any employee welfare benefit plan (as defined in
         Section 3(1) of ERISA) that provides benefits to retired employees
         (other than as required by Section 601 of ERISA or the Coal Act which
         on a FAS 106 basis results in the incurrence or expected incurrence of
         any increased liability with respect thereto).

Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.

                  6.8      Mining and Environmental Laws. Except as would not
reasonably be expected to have a Material Adverse Effect: (a)(i) Comply in
all respects with all applicable Mining and Environmental Laws, and obtain,
comply in all respects with, and maintain any and all Mining and Environmental
Permits necessary for its operations as conducted and as planned; and (ii) take
all reasonable efforts to ensure that all of its tenants, subtenants,
contractors, subcontractors, and invitees comply in all respects with all
applicable Mining and Environmental Laws, and obtain, comply in all respects
with and maintain any and all Mining and Environmental Permits, applicable to
any of them. Notwithstanding the foregoing, upon learning of any actual or
suspected noncompliance covered above, the Borrower or one or more of its
Subsidiaries, as appropriate, shall promptly undertake all reasonable efforts to
achieve compliance; and

                  (b)      Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions in each case
required under applicable Mining and Environmental Laws and promptly comply in
all respects with all lawful orders and directives of all Governmental
Authorities regarding applicable Mining and Environmental Laws except to the
extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect.

                  6.9      Further Assurances. With respect to the Borrower and
its Restricted Subsidiaries, upon the reasonable request of the Administrative
Agent, promptly perform or cause to be performed any and all acts and execute or
cause to be executed any and all documents (including, without limitation,
financing statements and continuation statements) for filing under the
provisions of the Uniform Commercial Code or any other Requirement of Law which
are necessary or advisable to maintain in favor of the Administrative Agent, for
the benefit of the Secured Parties, Liens on the Collateral that are duly
perfected in accordance with all applicable Requirements of Law.

                  6.10     Additional Collateral. (a) With respect to any
assets (other than (w) any assets described in subsection 6.10(b), (x) assets of
Black Beauty, which are governed by subsection 6.10(e), (y) immaterial assets a
Lien on which cannot be perfected by physical delivery to the Administrative
Agent or by filing UCC-1 financing statements, and (z) assets constituting
interests in real property) acquired on or after the Effective Date by the
Borrower or any of its Restricted Subsidiaries existing on the Effective Date or
owned by any Credit Party that becomes a Restricted Subsidiary after the
Effective Date and which has elected in writing to the Administrative Agent to
be irrevocably bound by the provisions of this

                                       57

<PAGE>

subsection 6.10(a), in each case which assets are not already subject to the
Lien created by any of the Security Documents, promptly (and in any event within
thirty (30) days after the acquisition thereof): (i) execute and deliver to the
Administrative Agent such amendments to the relevant Security Documents or such
other documents as the Administrative Agent shall deem necessary or advisable to
grant to the Administrative Agent, for the benefit of the Secured Parties, a
Lien on such assets, (ii) take all actions necessary or advisable to cause such
Lien to be duly perfected in accordance with all applicable Requirements of Law,
including, without limitation, the delivery of the applicable assets to the
Administrative Agent or the filing of financing statements in such jurisdictions
as may be requested by the Administrative Agent, and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i) and (ii) of this subsection
6.10(a), which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.

                  (b)      With respect to any Person that, on or subsequent to
the Effective Date, (x) becomes a direct or indirect Restricted Subsidiary, (y)
ceases to be a Foreign Subsidiary but retains its Restricted Subsidiary status,
or (z) ceases to be an Unrestricted Subsidiary but retains its, or otherwise
qualifies hereunder for, Subsidiary status, as applicable: (i) no later than
thirty (30) days after the date such Person becomes such a Subsidiary, execute
and deliver to the Administrative Agent, for the benefit of the Secured Parties,
such amendments to the Guarantee and Collateral Agreement as the Administrative
Agent shall deem necessary or advisable to grant to the Administrative Agent,
for the benefit of the Secured Parties, a Lien on the Capital Stock of such
Restricted Subsidiary which is owned by the Borrower or any of its Restricted
Subsidiaries, provided that with respect to any Restricted Subsidiary which is
not wholly owned by a Credit Party or any Affiliate thereof, a Lien on the
Capital Stock of such Restricted Subsidiary shall not be required to the extent
that the grant of such Lien is prohibited by the Constitutional Documents of
such Restricted Subsidiary, (ii) no later than thirty (30) days after the date
such Person becomes such a Subsidiary, deliver to the Administrative Agent the
certificates, if any, representing such Capital Stock, together with undated
stock powers executed and delivered in blank by a duly authorized officer of the
Borrower or such Restricted Subsidiary, as the case may be, (iii) cause such
Restricted Subsidiary no later than thirty (30) days after the date such Person
becomes such a Subsidiary, to become a party to the Guarantee and Collateral
Agreement (solely for the purpose of guaranteeing the Obligations and not for
the purpose of granting a Lien on the assets of such Restricted Subsidiary to
the Administrative Agent) and the Subordination Agreement, in each case pursuant
to documentation which is in form and substance reasonably satisfactory to the
Administrative Agent, and (iv) within thirty (30) days of the date such Person
becomes such a Subsidiary, if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described in
clauses (i), (ii) and (iii) of this subsection 6.10(b), which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent. Notwithstanding the foregoing, (1) no Foreign Subsidiary
of the Borrower shall be required to execute the Guarantee and Collateral
Agreement, (2) no more than 65% of the Capital Stock of or equity interests in
any direct Foreign Subsidiary of the Borrower or any of its Subsidiaries (and
none of the Capital Stock of or equity interests in any indirect Foreign
Subsidiary), or any other of its Subsidiaries if more than 65% of the assets of
such Subsidiary are securities of foreign companies (such determination to be
made on the basis of fair market value), shall be required to be pledged
hereunder, (3) no Unrestricted Subsidiary shall be required to become a party to
the Guarantee and Collateral Agreement and (4) the Capital Stock of Unrestricted
Subsidiaries pledged to the Administrative Agent pursuant to the Guarantee and
Collateral Agreement shall be released as provided in subsection 8.16 thereof.

                  (c)      At all times after the Borrower and its Restricted
Subsidiaries have recognized, collectively, an asset "impairment loss" (as such
term is contemplated by and pursuant to F.A.S. 121 ("Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"))
(or more than one such asset impairment loss) with respect to Collateral
totaling in the aggregate Fifty

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Million Dollars ($50,000,000.00) or more, as promptly as reasonably practical
but in any event no later than ninety (90) days after each such recognition in
excess of such initial $50,000,000, the Borrower at its sole cost and expense
shall have delivered or caused to be delivered to the Administrative Agent (i)
one or more Mortgages with respect to real property interests owned by Borrower
or any of its Restricted Subsidiaries (other than leased real property located
in the State of Arizona, the mortgaging of which would require the consent of
the lessor thereof and with respect to which the Borrower has determined in good
faith, after consultation with the Administrative Agent, that the seeking of
such consent would be materially disadvantageous to its business) which (A) are
not already subject to any Mortgage, (B) which have been selected by the
Administrative Agent in its reasonable discretion, and (C) have a total value
(as reasonably determined by the Administrative Agent) at least equal to the
dollar value of such "impairment loss" recognition, such Mortgages in each case
to be executed and delivered by a duly authorized officer of the mortgagor party
thereto, with a counterpart or a conformed copy for each Lender, (ii) a legal
opinion in form and substance, and from counsel licensed to practice in the
jurisdiction in which each such Mortgage is to be recorded, reasonably
satisfactory to the Administrative Agent, including, without limitation, an
opinion that such Mortgage is a legal, valid and binding instrument, enforceable
according to its terms, (iii) as selected by the Administrative Agent in its
reasonable discretion (the exercise of which shall take into account industry
practices in the area in which each such Mortgage is to be recorded), with
respect to each parcel covered by the applicable Mortgage encumbering such real
property, either (A) a mortgagee's title policy (or policies) (each such policy
satisfying the requirements of this subsection 6.10(c), a "Title Policy") dated
a date reasonably satisfactory to the Administrative Agent, which such
policy(ies) shall (1) be in an amount reasonably satisfactory to the
Administrative Agent; (2) ensure that the Mortgage insured thereby creates a
valid first Lien on such parcel free and clear of all defects and encumbrances,
except for liens permitted by subsections 7.3(a), (e), (f), (g), and (j) such
other liens and defects as may be approved in writing by the Administrative
Agent; (3) name the Administrative Agent for the benefit of the Secured Parties
as the insured thereunder; (4) be in the form of ALTA Loan Policy - 1992; (5)
contain such endorsements and affirmative coverage as the Administrative Agent
may reasonably request and (6) be issued by title companies reasonably
satisfactory to the Administrative Agent (including any such title companies
acting as co-insurers or reinsures, at the option of the Administrative Agent),
and the Administrative Agent shall have received evidence reasonably
satisfactory to it that all premiums in respect of each such policy, and all
charges for mortgage recording tax, if any, have been paid or (B) a legal
opinion from local counsel in the jurisdiction of such Mortgage, in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent, including, without limitation, an opinion that the mortgagor who is named
in such Mortgage holds legal and valid title to the interests secured thereby,
free and clear of all defects and encumbrances, except for liens permitted by
subsections 7.3(a), (e), (f), (g) and (j), and such other liens and defects
approved by and/or acceptable to the Administrative Agent (a "Title Opinion")
and (iv) a certificate executed by an officer of the Borrower or the Restricted
Subsidiary, as applicable, issued to the Administrative Agent, certifying that
at the time of such certification the fair market value of the real property
interests which are being secured pursuant to this clause 6.10(c)(vii) equal or
exceed the amount of the applicable "impairment loss" recognition, and that such
recognition is in all other respects in accordance with GAAP.

                  (d)      If required pursuant to Regulation H, the Borrower
shall deliver to the Administrative Agent (A) a policy of or certificate
evidencing flood insurance which (i) covers the parcel of improved real property
which is encumbered by the applicable Mortgage, (ii) is written in an amount not
less than the outstanding principal amount of the indebtedness secured by such
Mortgage which is reasonably allocable to such parcel of improved real property
or the maximum limit of coverage made available with respect to the particular
type of property under the National Flood Insurance Act of 1968, whichever is
less, and (iii) will be renewed annually at least for a series of terms ending
not earlier than the maturity of the Indebtedness secured by such Mortgage and
(B) confirmation that the Borrower has received the notice required pursuant to
Section 208(e)(3) of Regulation H.

                                       59

<PAGE>

                  (e)      If at any time following the consummation of the
Black Beauty Acquisition the Borrower's senior secured Indebtedness is rated BB-
or below by S&P or Ba3 or below by Moody's (the "Black Beauty Condition"),
promptly (i) cause a Lien to be granted to the Administrative Agent for the
ratable benefit of the Secured Parties and perfected on substantially all of the
assets and property of Black Beauty, its wholly owned Subsidiaries and its
non-wholly owned Subsidiaries with respect to which any equity interests not
owned by Black Beauty are owned directly or indirectly by a Credit Party, (ii) a
Mortgage with respect to each of the real property interests held by Black
Beauty, its wholly owned Subsidiaries and its non-wholly owned Subsidiaries with
respect to which any equity interests not owned by Black Beauty are owned
directly or indirectly by a Credit Party, executed and delivered by a duly
authorized officer of the mortgagor party thereto, with a counterpart or a
conformed copy for each Lender, (iii) a legal opinion in form and substance, and
from counsel licensed to practice in the jurisdiction in which such Mortgage is
to be recorded, reasonably satisfactory to the Administrative Agent, including,
without limitation, an opinion that such Mortgage is a legal, valid and binding
instrument, enforceable according to its terms (subject to customary
exceptions), and (iv) either a Title Policy or a Title Opinion, to be selected
by the Administrative Agent in its reasonable discretion, the exercise of which
shall take into account industry practices in the area in which such Mortgage is
to be recorded .

                  (f)      If at any time prior to the occurrence of the Black
Beauty Collateral Event (i) Black Beauty shall no longer be a Restricted
Subsidiary and (ii) the Black Beauty Condition shall exist, then the Borrower
shall promptly cause a Lien to be granted to the Administrative Agent for the
ratable benefit of the Secured Parties and perfected on assets of a Credit Party
whose aggregate value, in the reasonable opinion of the Administrative Agent
(after consultation with the Borrower), shall be equal to the value of assets on
which a Lien would have been granted to the Administrative Agent if Black Beauty
had been a Restricted Subsidiary upon the occurrence of the Black Beauty
Condition.

                  (g)      The Borrower hereby represents and warrants that the
real property interests described on Schedule 4.8(a)(ii) constitute
substantially all of the real property interests owned or controlled by the
Borrower or any of its Restricted Subsidiaries with respect to (i) the operating
mines (including coal reserves) known or referred to by the Borrower or any of
its Restricted Subsidiaries as the Rawhide Mine, the Caballo Mine, the North
Antelope/Rochelle Mine Complex and the Black Mesa/Kayenta Mine Complex, and (ii)
the coal reserves known or referred to by the Borrower or its Restricted
Subsidiaries as the Belleville Reserves and the Beaver Dam Reserves.

                  6.11     Foreign Jurisdictions. Maintain qualification as a
foreign corporation in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to do so
qualify could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.

                  6.12     Maintenance of Collateral; Alterations. Refrain from
committing any waste on any Collateral, except in the ordinary course of its
business, or make any material change in the use of any Collateral, provided
that, unless otherwise permitted by, and subject to the other provisions of,
this Agreement, any Credit Party may sell or lease to any other Person all or
any portion of any item of Collateral that the Borrower has determined in good
faith is not used or useful in such Credit Party's operating business.

                  6.13     Use of Proceeds. Use the proceeds of the Loans only
for the purposes specified in subsection 4.15.

                  6.14     Preparation of Environmental Reports. If an Event of
Default caused by reason of a breach of subsection 4.16 or 6.8 (with respect to
compliance with Mining and Environmental Laws)

                                       60

<PAGE>

shall have occurred and be continuing, at the reasonable request of the Required
Lenders through the Administrative Agent, the Borrower shall provide to the
Lenders within 60 days after such request, at the expense of the Borrower, an
environmental site assessment report for the Properties which are the subject of
such default prepared by an environmental consulting firm reasonably acceptable
to the Administrative Agent and indicating the presence or absence of Hazardous
Materials and the estimated cost of any compliance or remedial action in
connection with such Properties.

                  6.15     Maintenance of Coal Reserves. Maintain at all times
available Coal reserves, or the rights to acquire coal from third parties,
sufficient to fulfill its requirements under existing Coal Supply Agreements.

                  6.16     Coal Supply Agreements. At all times comply fully
with all of the terms and conditions of its Coal Supply Agreements, the
nonperformance with which could reasonably be expected to have a Material
Adverse Effect. The Borrower and each of its Subsidiaries shall further perform
any and all actions necessary to maintain all Coal Supply Agreements material to
its business in full force and effect. To the extent practicable and
commercially reasonable (provided that in no circumstance shall the Borrower or
any of its Restricted Subsidiaries be required to incur any additional costs or
impair any existing or potential business relationship), neither the Borrower
nor any of its Restricted Subsidiaries shall after the Effective Date enter into
any Coal Supply Agreements which do not provide that such Coal Supply Agreements
are assignable to the Lenders without the consent of any other party to such
Coal Supply Agreement.

                  6.17     Exploration and Reserves. All primary and basic
exploration data and information pertaining to the Mines will be preserved where
reasonable in accordance with customary industry practice and in a sound and
careful manner for future use and review. All such information together with all
other reserve reports and maps, analysis and, upon reasonable notice,
engineering and operating data and similar information pertaining to the Mines
being operated by any Credit Party shall be available at all reasonable times
for inspection and review by authorized representatives of the Administrative
Agent (except to the extent (i) any such access is restricted by a Requirement
of Law or (ii) any such data, information or the like are subject to a written
confidentiality agreement with a non-Affiliate that prohibits the Borrower or
any of its Subsidiaries from granting such access to the Lenders; provided that,
with respect to the Borrower or any of its Restricted Subsidiaries, a
Responsible Officer is made available to such Lender to discuss such
confidential information to the extent permitted).

                  6.18     Certain Long Term Liabilities and Environmental
Reserves. To the extent required by GAAP, maintain adequate reserves for (i)
future costs associated with any lung disease claim alleging pneumoconiosis or
silicosis or arising out of exposure or alleged exposure to coal dust or the
coal mining environment, (ii) future costs associated with retiree and health
care benefits, (iii) future costs associated with reclamation of disturbed
acreage, removal of facilities and other closing costs in connection with its
mining operations and (iv) future costs associated with other potential
environmental liabilities.

                  6.19     Unrestricted Subsidiaries. No Restricted Subsidiary
may be owned in whole or in part by an Unrestricted Subsidiary.

                  6.20     Partner Support Percentage; Total Project Cost. Cause
(i) the Partner Support Percentage to represent the maximum recourse of the
Project Construction Lenders to the Project Partners, (ii) the Partner Support
Percentage to not exceed 60% of the Total Project Cost and (iii) the Total
Project Cost to not exceed $2,600,000,000 in the case of Thoroughbred and
$2,600,000,000 in the case of Prairie States, without the consent of the
Administrative Agent and Required Lenders.

                                       61

<PAGE>

                  6.21     Black Beauty. (i) Endeavor in good faith to
consummate the Black Beauty Acquisition as promptly after the Effective Date as
commercially reasonable, (ii) on the Effective Date, issue a notice of
prepayment to the holders of the Black Beauty Debt and (iii) repay or cause to
be repaid in full all Black Beauty Debt within 45 days following the Effective
Date.

                  6.22     Liens. Cause the prompt release and discharge of, or
take other action as may be reasonably satisfactory to the Administrative Agent
with respect to, Liens (other than Permitted Liens) reflected in the results of
the lien searches required pursuant to subsection 5.1(l).

                  6.23     Existing Notes. (a) On the Effective Date, deposit
into a collateral account opened by the Administrative Agent (the "Collateral
Account") proceeds of the Term Loans (and/or the Senior Notes) in an amount
sufficient to repay in full all Existing Notes other than the Existing Notes
repaid on the Effective Date. The Borrower hereby grants to the Administrative
Agent, for the benefit of the Secured Parties, a security interest in such
proceeds and the Collateral Account to secure all obligations of the Borrower
under this Agreement and the other Credit Documents. From time to time upon the
written request of the Borrower, the Administrative Agent shall release funds
from the Collateral Account to be used within one Business Day of such release
to repay or redeem Existing Notes. Amounts in the Collateral Account shall be
invested by the Administrative Agent at the direction of the Borrower in Cash or
Cash Equivalents.

                  (b) The Borrower will (i) on or before April 15, 2003, deliver
(or cause the delivery of) notice to the holders of all outstanding Existing
Notes of the exercise of optional prepayment of all such Existing Notes and (ii)
cause the repayment in full of all Existing Notes on or before May 31, 2003. Any
amounts remaining in the Collateral Account after May 31, 2003, will be returned
to the Borrower unless any Existing Notes remain outstanding, in which case such
amounts may be applied by the Administrative Agent to prepay the Loans in
accordance with subsection 2.6(b)(iv).

SECTION 7.        NEGATIVE COVENANTS

                  The Borrower hereby agrees that, so long as any portion of the
Commitments remain in effect or any amount is owing to any Lender or any of the
Agents hereunder or under any other Credit Document, the Borrower shall not, and
(except with respect to subsection 7.1) shall not permit any of its Restricted
Subsidiaries (and, with respect to subsections 7.2, 7.3 and 7.4, its
Unrestricted Subsidiaries) to, directly or indirectly:

                  7.1      Financial Condition Covenants.

                  (a)      Consolidated EBITDA to Consolidated Cash Interest
Expense Ratio. Permit the Consolidated EBITDA to Consolidated Cash Interest
Expense Ratio at the last day of any fiscal quarter to be less than 2.50:1.00.

                  (b)      Consolidated Total Obligations to Consolidated EBITDA
Ratio. Permit the Consolidated Total Obligations to Consolidated EBITDA Ratio at
the last day of any fiscal quarter to be greater than the ratio set forth below
opposite such date:

<TABLE>
<CAPTION>
Fiscal Quarter Ending               Ratio
---------------------               -----
<S>                                 <C>
      6/30/03                       4.25
      9/30/03                       4.25

      12/31/03                      4.25
      3/31/04                       4.25
</TABLE>

                                       62

<PAGE>

<TABLE>
<CAPTION>
Fiscal Quarter Ending               Ratio
---------------------               -----
<S>                                 <C>
      6/30/04                       4.00
      9/30/04                       4.00
      12/31/04                      4.00
      3/31/05                       4.00
      6/30/05                       3.75
      9/30/05                       3.75
      12/31/05                      3.75
      3/31/06                       3.75
      6/30/06                       3.50
      Thereafter                    3.50
</TABLE>

                  (c)      Consolidated Secured Debt to Consolidated EBITDA
Ratio. Permit the Consolidated Secured Debt to Consolidated EBITDA Ratio at the
last day of any fiscal quarter to be greater than 2.50:1.00.

                  7.2      Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness (including in respect of Interest Rate
Agreements) except:

                  (a)      (i) Indebtedness of the Borrower under the Credit
         Documents and (ii) Indebtedness evidenced by the Senior Notes;

                  (b)      Indebtedness of the Borrower and any Restricted
         Subsidiary incurred to finance the acquisition by the Borrower or a
         Restricted Subsidiary of fixed or capital assets (whether pursuant to a
         loan, a Financing Lease or otherwise) in an aggregate principal amount
         not exceeding $250,000,000 at any time outstanding;

                  (c)      Indebtedness of a Person which becomes a Restricted
         Subsidiary after the date hereof, provided that (i) such indebtedness
         existed at the time such Person became a Restricted Subsidiary and was
         not created in anticipation thereof, (ii) immediately after giving
         effect to the acquisition of such Person by the Borrower or its
         Restricted Subsidiary, no Default or Event of Default shall have
         occurred and be continuing, (iii) immediately after giving effect to
         the acquisition of such Person by the Borrower or its Restricted
         Subsidiary, the Borrower and its Restricted Subsidiaries shall be in
         pro forma compliance with the covenants contained in subsection 7.1,
         calculated based on the relevant financial statements delivered
         pursuant to subsection 6.1, as though such acquisition occurred at the
         beginning of the period covered thereby, as evidenced by a certificate
         of a Responsible Officer of the Borrower furnished to the
         Administrative Agent demonstrating such compliance; and (iv) at no time
         shall all such Indebtedness permitted under this subsection (c) exceed
         $300,000,000 in the aggregate outstanding.

                  (d)      additional Indebtedness of the Borrower and its
         Restricted Subsidiaries not otherwise permitted hereunder not exceeding
         an aggregate principal amount at any time outstanding equal to 15% of
         Tangible Assets minus the aggregate amount of outstanding Project
         Guarantee Obligations; provided, however, that immediately after giving
         effect to the incurrence of any such Indebtedness by the Borrower or
         its Restricted Subsidiary, (i) no Default or Event of Default shall
         have occurred and be continuing and (ii) the Borrower and its
         Restricted Subsidiaries shall be in pro forma compliance with the
         covenants contained in subsection 7.1, calculated based on the relevant
         financial statements delivered pursuant to subsection 6.1, as though
         such incurrence occurred at the beginning of the period covered
         thereby, as evidenced by

                                       63

<PAGE>

         a certificate of a Responsible Officer of the Borrower furnished to the
         Administrative Agent demonstrating such compliance; and

                  (e)      Indebtedness of the Borrower and its Restricted
         Subsidiaries (other than under subsection (a)) outstanding or committed
         on the Effective Date and reflected on Schedule 7.2(e), provided that,
         with respect to all Indebtedness of one Credit Party to another Credit
         Party, such Credit Parties have complied with the provisions of
         subsection 7.2(g);

                  (f)      Indebtedness in respect of Hedge Agreements incurred
         in the ordinary course of business and consistent with prudent business
         practice (in any case, for the purpose of risk management only and not
         for the purpose of speculation);

                  (g)      unsecured Indebtedness of any Credit Party to any
         other Credit Party that is a Blanket Grantor; provided, that (i) such
         Credit Parties have complied with the provisions of Subsection 6.10(b)
         and (ii) with respect to Indebtedness for borrowed money, there exists
         an instrument or instruments evidencing such Indebtedness and such
         instrument or instruments have been pledged to the Administrative
         Agent, for the benefit of the Secured Parties, pursuant to the terms of
         the Guarantee and Collateral Agreement;

                  (h)      Indebtedness secured by Permitted Liens;

                  (i)      extensions, renewals or refinancings of Indebtedness
         under subsections 7.2(a)(ii) and 7.2(c) and (e) so long as (i) such
         Indebtedness (the "Refinancing Indebtedness") is in an aggregate
         principal amount not greater than the aggregate principal amount of the
         Indebtedness being extended, renewed or refinanced plus the amount of
         any premiums required to be paid thereon and fees and expenses
         associated therewith, (ii) such Refinancing Indebtedness has a later or
         equal final maturity and a longer or equal weighted average life than
         the Indebtedness being extended, renewed or refinanced, (iii) the
         interest rate applicable to such Refinancing Indebtedness is a market
         interest rate (as determined in good faith by the Board of Directors of
         the Borrower) as of the time of such extension, renewal or refinancing,
         (iv) if the Indebtedness being extended, renewed or refinanced is
         subordinated to the Obligations, such Refinancing Indebtedness is
         subordinated to the extent of the Indebtedness being extended, renewed,
         or refinanced, (v) the covenants, events of default and other
         provisions thereof (including any guarantees thereof and security
         therefor), taken as a whole, are no less favorable to the Lenders than
         those contained in the Indebtedness being refinanced and (vi) at the
         time and after giving effect to such extension, renewal or refinancing,
         no Event of Default shall have occurred and be continuing;

                  (j)      Indebtedness of any Unrestricted Subsidiary
         consisting entirely of Non-Recourse Debt; provided, however, that if
         any such Indebtedness ceases to be Non-Recourse Debt of such
         Unrestricted Subsidiary, such event shall be deemed to constitute an
         incurrence of Indebtedness by a Restricted Subsidiary of the Borrower
         that was not permitted by this subsection 7.2(j);

                  (k)      Guarantee Obligations that have been deemed to be
         Indebtedness pursuant to subsection 7.4(a);

                  (l)      Indebtedness incurred pursuant to the Existing
         Securitization;

                  (m)      Indebtedness incurred in connection with a
         securitization transaction permitted by subsection 7.6(j);

                                       64

<PAGE>

                  (n)      subject to the provisions of subsection 6.23,
         Indebtedness under the Existing Notes not retired as of the Effective
         Date;

                  (o)      intercompany current liabilities incurred in the
         ordinary course of business in connection with cash management
         operations of the Borrower and its Subsidiaries; and

                  (p)      Indebtedness of Peabody Energy Australia Pty Ltd and
         Peabody COALTRADE Australia Pty Ltd to the Borrower in an aggregate
         amount not to exceed $50,000,000; provided that there exists an
         instrument or instruments evidencing such Indebtedness and such
         instrument or instruments have been pledged to the Administrative Agent
         for the benefit of the Secured Parties pursuant to the terms of the
         Guarantee and Collateral Agreement.

                  7.3      Limitation on Liens. Create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, except for:

                  (a)      Liens for taxes not yet due or which are being
         contested in good faith by appropriate proceedings, provided that
         adequate reserves with respect thereto are maintained on the books of
         the Borrower or its Subsidiaries, as the case may be, in conformity
         with GAAP;

                  (b)      carriers', warehousemen's, mechanics', materialmen's,
         repairmen's or other like Liens arising in the ordinary course of
         business which are not overdue for a period of more than 60 days or
         which are being contested in good faith by appropriate proceedings;

                  (c)      pledges or deposits in connection with workers'
         compensation, unemployment insurance and other social security
         legislation and deposits securing liability to insurance carriers under
         insurance or self-insurance arrangements;

                  (d)      (i) deposits to secure the performance of bids,
         surety bonds, trade contracts (other than for borrowed money), leases
         (other than Capital Lease Obligations), reclamation bonds, statutory
         obligations, surety and appeal bonds, performance bonds and other
         obligations of a like nature incurred in the ordinary course of
         business, (ii) Liens on assets not constituting Collateral to secure
         obligations under surety bonds obtained as required in connection with
         the entering into of new federal coal leases and (iii) Liens on other
         assets not constituting Collateral with a value not in excess of
         $100,000,000 at any time to secure obligations under other surety
         bonds;

                  (e)      easements, rights-of-way, zoning restrictions, other
         restrictions and other similar encumbrances previously or hereafter
         incurred in the ordinary course of business which, in the aggregate,
         are not substantial in amount and which do not in any case materially
         detract from the value of the property subject thereto or materially
         interfere with the ordinary conduct of the business of the Borrower or
         such Subsidiary, or which are set forth in any Title Policy delivered
         to the Administrative Agent pursuant to the terms of this Agreement;

                  (f)      Liens in existence on the Effective Date and listed
         on Schedule 7.3(f), securing Indebtedness permitted by subsection
         7.2(e);

                  (g)      Liens securing Indebtedness of the Borrower and its
         Restricted Subsidiaries permitted by subsection 7.2(b) incurred to
         finance the acquisition of fixed or capital assets, provided that (i)
         such Liens shall be created substantially simultaneously with the
         acquisition of such fixed or capital assets, (ii) such Liens do not at
         any time encumber any property other than the property financed by such
         Indebtedness (other than after acquired title in or on such property
         and proceeds of the existing collateral in accordance with the
         instrument creating such Lien) and

                                       65

<PAGE>

         (iii) the principal amount of Indebtedness secured by any such Lien
         shall at no time exceed 100% of the original purchase price of such
         property of such property at the time it was acquired;

                  (h)      Liens on the property or assets of a Person which
         becomes a Restricted Subsidiary after the date hereof securing
         Indebtedness permitted by subsection 7.2(c), provided that (i) such
         Liens existed at the time such entity became a Subsidiary and were not
         created in anticipation thereof, (ii) any such Lien is not expanded to
         cover any other property or assets of such Person (other than the
         proceeds of the property or assets subject to such Lien) or of the
         Borrower or any Restricted Subsidiary, and (iii) the amount of
         Indebtedness secured thereby is not increased;

                  (i)      Liens created pursuant to this Agreement and the
         Security Documents;

                  (j)      Liens on the property of the Borrower or any of its
         Subsidiaries, as a tenant under a lease or sublease entered into in the
         ordinary course of business by such Person, in favor of the landlord
         under such lease or sublease, securing the tenant's performance under
         such lease or sublease, as such Liens are provided to the landlord
         under applicable law and not waived by the landlord;

                  (k)      so long as no Default or Event of Default shall have
         occurred and be continuing under subsection 8(h), attachment or
         judgment Liens in an aggregate amount outstanding at any one time not
         in excess of $35,000,000;

                  (l)      Liens arising from precautionary Uniform Commercial
         Code financing statement filings with respect to operating leases or
         consignment arrangements entered into by the Borrower or any of its
         Restricted Subsidiaries in the ordinary course of business;

                  (m)      Liens in favor of a banking institution arising by
         operation of law encumbering deposits (including the right of set-off)
         held by such banking institutions incurred in the ordinary course of
         business and which are within the general parameters customary in the
         banking industry;

                  (n)      Liens securing Refinancing Indebtedness, to the
         extent that the Indebtedness being refinanced was originally secured in
         accordance with this subsection 7.3; provided that such Lien does not
         apply to any additional property or assets of the Borrower or any
         Subsidiary (other than the proceeds of the property or assets subject
         to such Lien);

                  (o)      Production Payments, royalties, dedication of
         reserves under supply agreements or similar rights or interests
         granted, taken subject to, or otherwise imposed on properties
         consistent with normal practices in the mining industry;

                  (p)      Liens on assets of (and Capital Stock and other
         equity interests in) Unrestricted Subsidiaries securing obligations of
         Unrestricted Subsidiaries not otherwise prohibited hereunder;

                  (q)      Liens (not otherwise permitted hereunder) which
         secure obligations not exceeding $25,000,000 in the aggregate at any
         time outstanding and which are not senior to the Liens created pursuant
         to this Agreement and the Security Documents; and

                  (r)      Liens on assets other than Collateral securing the
         net amount of Indebtedness under Hedge Agreements that are not
         Specified Hedge Agreements.

                                       66

<PAGE>

                  7.4      Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except:

                  (a)      Guarantee Obligations not otherwise permitted under
this subsection 7.4 incurred after the Effective Date in an aggregate amount not
to exceed $100,000,000 at any one time outstanding for the Borrower and its
Restricted Subsidiaries; provided, however, that (i) any such Guarantee
Obligations incurred by the Borrower and any of its Restricted Subsidiaries with
respect to the same transaction shall be treated as a single transaction for the
purposes of calculating the amount of Guarantee Obligations outstanding under
this subsection 7.4(a) and (ii) to the extent that Guarantee Obligations
incurred by the Borrower and any of its Restricted Subsidiaries under this
subsection 7.4(a) exceed $50,000,000 at any one time outstanding, such excess
shall be deemed to constitute Indebtedness;

                  (b)      guarantees made by the Subsidiaries of the Borrower
         pursuant to the Senior Notes Documents; provided that such Subsidiaries
         are parties to the Guarantee and Collateral Agreement;

                  (c)      Guarantee Obligations of the Credit Parties created
         under the Credit Documents;

                  (d)      the L/C Obligations;

                  (e)      Guarantee Obligations of the Borrower or any
         Subsidiary in respect of obligations of a Restricted Subsidiary or the
         Borrower permitted to be incurred by such Subsidiary or the Borrower by
         this Agreement;

                  (f)      Guarantee Obligations which are performance
         guarantees by the Borrower or any of its Restricted Subsidiaries of the
         ordinary course obligations (other than for the payment of borrowed
         money) of any Unrestricted Subsidiary in an aggregate amount not to
         exceed $150,000,000 at any one time outstanding; provided, however,
         that any such performance guarantee incurred by the Borrower and any of
         its Subsidiaries with respect to the same transaction shall be treated
         as a single transaction for the purpose of calculating the amount of
         obligations outstanding under this subsection 7.4(f);

                  (g)      indemnities in favor of the companies issuing title
         insurance policies insuring the Mortgages to induce such issuance;

                  (h)      indemnities made in the Commitment Letter, the Credit
         Documents and the Senior Notes Documents and in the Constitutional
         Documents of the Borrower and its Subsidiaries;

                  (i)      Guarantee Obligations of Unrestricted Subsidiaries in
         respect of the obligations of other Unrestricted Subsidiaries not
         otherwise prohibited hereunder;

                  (j)      Guarantee Obligations in respect of a letter of
         credit issued for the account of the Borrower and for benefit of the
         PBGC in a face amount not to exceed $37,000,000 and for which TXU
         Europe (or its successors) provides credit support;

                  (k)      Project Guarantee Obligations (subject to the
         satisfaction of the Project Guarantee Obligations Conditions Precedent)
         in an aggregate amount at any one time outstanding not to exceed (i)
         $375,000,000 minus (ii) the aggregate amount of Investments made in
         accordance with subsection 7.9(o); and

                                       67

<PAGE>

                  (l)      Guarantee Obligations in existence on the Effective
         Date and listed on Schedule 7.4.

                  7.5      Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, or make any material change in its present method of
conducting business (other than as provided in subsection 7.15), except:

                  (a)      any Restricted Subsidiary of the Borrower may be
         merged or consolidated with or into the Borrower (provided that the
         Borrower shall be the continuing or surviving corporation) or with or
         into any one or more wholly-owned Restricted Subsidiaries of the
         Borrower (provided that the wholly owned Subsidiary or Subsidiaries
         shall be the continuing or surviving corporations); provided that a
         Credit Party may only be merged or consolidated with or into another
         Credit Party and, if only one such Credit Party is a Blanket Grantor,
         the Blanket Grantor must be the surviving entity of such merger or
         consolidation;

                  (b)      any wholly-owned Restricted Subsidiary may sell,
         lease, transfer or otherwise dispose of any or all of its assets (upon
         voluntary liquidation or otherwise) to the Borrower or any other
         wholly-owned Restricted Subsidiary of the Borrower that is a Credit
         Party; provided that a Blanket Grantor shall not sell, lease, transfer
         or otherwise dispose of any or all of its assets (upon voluntary
         liquidation or otherwise) to a Credit Party that is not a Blanket
         Grantor;

                  (c)      the Black Beauty Acquisition; and

                  (d)      any transaction which would be permitted as an
         Investment pursuant to subsection 7.9.

                  7.6      Limitation on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Restricted Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person other
than the Borrower or any wholly-owned Subsidiary that is a Credit Party and a
Blanket Grantor, except:

                  (a)      the sale or other disposition of obsolete or worn out
         property in the ordinary course of business;

                  (b)      the sale for fair market value (as determined in good
         faith by the Borrower (and evidenced in a resolution of the Board of
         Directors of the Borrower delivered to the Administrative Agent with
         respect to any such sale determined to have a fair market value in
         excess of $100,000,000, provided that if the Board of Directors
         receives a fairness opinion with respect to such sale, a copy of such
         opinion shall be delivered to the Administrative Agent)) of any
         property or assets not otherwise permitted by this subsection 7.6;
         provided that the Net Proceeds thereof shall be applied pursuant to
         subsection 2.6(b)(ii); provided, further, that the aggregate fair
         market value of all such Asset Sales during each year does not exceed
         ten percent (10%) of the Total Assets of the Borrower and its
         Restricted Subsidiaries (determined immediately prior to the time of
         each such sale);

                  (c)      as permitted pursuant to subsection 7.5(b);

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                  (d)      the sale, lease, transfer or exchange of inventory
         (including Coal and related products and mining equipment) in the
         ordinary course of business;

                  (e)      subject to subsection 6.5, transfers resulting from
         any casualty or condemnation of property or assets;

                  (f)      intercompany sales or transfers (among Credit Parties
         (other than (a) to Black Beauty prior to the consummation of the Black
         Beauty Acquisition and the occurrence of the Black Beauty Collateral
         Event) and (b) with respect to Collateral, from a Blanket Grantor to a
         Credit Party that is not a Blanket Grantor) of assets made in the
         ordinary course of business;

                  (g)      licenses, leases or subleases of tangible property in
         the ordinary course of business;

                  (h)      any consignment arrangements or similar arrangements
         for the sale of assets in the ordinary course of business;

                  (i)      the sale or discount of overdue accounts receivable
         arising in the ordinary course of business, but only in connection with
         the compromise or collection thereof;

                  (j)      (A) the sale or discount of accounts receivable
         without recourse arising in the ordinary course of business, (B) the
         sale or discount of accounts receivable pursuant to the Existing
         Securitization and (C) the sale or discount of accounts receivable
         pursuant to a securitization involving any Credit Party, provided,
         however, that in the case of clause (C), (i) all obligations of such
         Credit Party arising pursuant to such securitizations shall be included
         in the calculation of Consolidated Total Obligations and (ii) the
         aggregate dollar value of all uncollected accounts receivable
         transferred pursuant to such securitizations at any time shall not
         exceed $50,000,000;

                  (k)      the sale of any assets in connection with any sale
         and leaseback transaction otherwise permitted by subsection 7.12;

                  (l)      the sale or transfer of property or assets to the
         extent constituting an Investment permitted under subsection 7.9;

                  (m)      the restructuring, renegotiation or termination of
         any Coal Supply Agreements resulting in the Borrower or its Restricted
         Subsidiaries receiving in a single transaction, or series of related
         transactions, cash proceeds of no greater than $75,000,000; and

                  (n)      an exchange or "swap" of assets of the Borrower or
         any of its Restricted Subsidiaries for the assets (including ownership
         interests and excluding cash) of a Person other than the Borrower or a
         Restricted Subsidiary; provided that (A) the assets received by the
         Borrower or such Restricted Subsidiary will be used or useful in a
         Similar Business and (B) the Borrower or such Restricted Subsidiary
         receives reasonably equivalent value for such assets, such equivalent
         value to be demonstrated to the Administrative Agent (i) in a
         certificate of a Responsible Officer of the Borrower or such Restricted
         Subsidiary if the fair market value of the assets received by the
         Borrower or such Restricted Subsidiary is no greater than $100,000,000
         or (ii) in a resolution of the Board of Directors of the Borrower or
         such Restricted Subsidiary if the fair market value of the assets
         received by the Borrower or such Restricted Subsidiary is greater than
         $100,000,000, provided that if the Board of Directors receives a
         fairness opinion with respect to such exchange or "swap", a copy of
         such opinion shall be delivered to the

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<PAGE>

         Administrative Agent; provided, further, that the fair market value of
         all such assets exchanged or "swapped" in any fiscal year of the
         Borrower does not exceed ten percent (10%) of the Total Assets of the
         Borrower and its Restricted Subsidiaries (determined immediately prior
         to the time of each such exchange or swap);

provided, however, that with respect to any conveyance, sale, lease, assignment,
transfer, exchange, "swap" or disposition of any assets of the Borrower or its
Restricted Subsidiaries that constitutes Collateral to Persons that are not
Blanket Grantors (including, without limitation, by virtue of the designation of
a Blanket Grantor as an Unrestricted Subsidiary as otherwise permitted
hereunder, but other than pursuant to subsections 7.6(a), (d), (e), (g), (h),
(i) or (j)), no more than the sum (the "Collateral Amount") of (i) 5% of the
Total Assets of the Borrower and its Restricted Subsidiaries (determined
immediately prior to the time of each such conveyance, sale, lease, assignment,
transfer, exchange, "swap", disposition or designation) and (ii) the net amount
by which the Total Commitments have been permanently reduced at such time, may
be so conveyed, sold, leased, assigned, transferred or disposed of in the
aggregate following the Effective Date and during the term of this Agreement
without the Borrower replacing within 90 days after the Collateral Amount is
exceeded (pursuant to subsections 2.6(b)(ii), 7.6(n) or otherwise) such assets
so conveyed, sold, leased, assigned, transferred, exchanged, "swapped," disposed
of or designated in excess of the Collateral Amount with other assets to be
included as Collateral on a dollar-for-dollar basis (as valued by the
Administrative Agent (or its experts) in its reasonable discretion (but at the
expense of the Borrower)) and provided further that to the extent such assets so
conveyed, sold, leased, assigned, transferred, exchanged, "swapped," disposed of
or designated in excess of the Collateral Amount constitute real property, the
Borrower shall either (A) replace such assets with other real property to be
included as Collateral on a dollar-for-dollar basis (as valued by the
Administrative Agent (or its experts) in its reasonable discretion (but at the
expense of the Borrower)) or (B) prepay the Term Loans in an amount equal to the
value of such real property (as valued by the Administrative Agent (or its
experts) in its reasonable discretion (but at the expense of the Borrower)),
which shall be applied first to the Term Loans to reduce the unpaid scheduled
installments of principal of the Term Loans on a pro rata basis and thereafter
to the repayment of Revolving Credit Loans on a pro rata basis.

                  7.7      Dividends and Distributions; Restrictions on Ability
of Restricted Subsidiaries to Pay Dividends. (a) Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
with respect to any shares of its Capital Stock or directly or indirectly
redeem, purchase, retire or otherwise acquire for value (or permit any
Subsidiary to purchase or acquire) any shares of any class of its Capital Stock
or set aside any amount for any such purpose, except that, so long as no Default
or Event of Default has occurred and is continuing, the Borrower may (i) pay
dividends on its common stock in an amount not to exceed in any fiscal year
$50,000,000 plus 25% of the Borrower's cumulative Net Income for such fiscal
year, as reflected on the Borrower's most recent quarterly financial statements
and (ii) repurchase the Borrower's Capital Stock in an amount not to exceed
$100,000,000 during the term of this Agreement; provided, however, that (A) any
amounts available to pay dividends pursuant to the preceding clause (i) but not
used for such purpose and (B) 25% of the proceeds actually received by the
Borrower from the issuance of additional Capital Stock at any time following the
Effective Date, may be used to repurchase the Borrower's Capital Stock without
being counted against the $100,000,000 limit pursuant to clause (ii).
Notwithstanding any of the foregoing, any Restricted Subsidiary may declare and
pay dividends or make other distributions to its equity holders on a pro rata
basis.

                  (b)      Permit its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Restricted Subsidiary to
(i) pay any dividends or make any other distributions on its Capital Stock or
any other interest or (ii) make or repay any loans or advances to the Borrower
or the parent of such Restricted

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Subsidiary (subclauses (i) and (ii) are collectively referred to as an "Upstream
Payment"); provided, however, that the foregoing shall not restrict any
encumbrances or restrictions:

                           (i)      existing on the Effective Date under
         Indebtedness set forth on Schedule 7.2(e) or under Operating Leases set
         forth on Schedule 7.7;

                           (ii)     contained in any debt instrument relating to
         a Person acquired after the Effective Date; provided that (A) such
         encumbrances and restrictions are not applicable to any Person other
         than such Person or property or assets acquired, (B) such instrument
         was in existence at the time of such acquisition, and (C) the Borrower
         reasonably believes at the time of such acquisition that the terms of
         such instrument will not encumber or restrict the ability of such
         acquired Person to make an Upstream Payment in manner that would
         adversely affect the Borrower's ability to perform its obligations
         under the Credit Documents when due;

                           (iii)    incurred in connection with any Indebtedness
         permitted pursuant to subsection 7.2 (including any permitted
         extension, refinancing, renewal or replacement of Indebtedness
         contemplated by clauses (i) and (ii) above); provided that, (A) the
         Borrower reasonably believes at the time such Indebtedness is incurred
         that the terms of such Indebtedness will not restrict the ability of
         the Person incurring such Indebtedness to make an Upstream Payment in a
         manner that would adversely affect the Borrower's ability to perform
         its obligations under the Credit Documents when due and (B) such
         Indebtedness (other than Non-Recourse Debt of Unrestricted
         Subsidiaries) contains no express encumbrances or restrictions on the
         ability of such Person to make an Upstream Payment;

                           (iv)     contained in agreements relating to the sale
         of a Subsidiary not prohibited hereunder pending such sale, provided,
         that such encumbrances and restrictions apply only to the Subsidiary
         that is to be sold and that such sale is otherwise permitted hereunder;
         and

                           (v)      existing under, or by reason of, applicable
         law.

                  7.8      Limitation on Capital Expenditures. Make or commit to
make Capital Expenditures in respect of the purchase or other acquisition of
fixed or capital assets (excluding with respect to any such asset acquired in
connection with normal replacement and maintenance programs properly charged to
current operations, any assets acquired with the proceeds from insurance for
casualty or condemnation losses whether or not paid with the proceeds from
insurance policies, any assets purchased with the intent to enter into a
permitted sale and leaseback transaction resulting in an operating lease
pursuant to subsection 7.12(b) and reinvestments of the proceeds of Asset Sales
permitted by subsection 2.6(b)(ii)) except for Capital Expenditures in the
ordinary course of business not exceeding $350,000,000 in the aggregate for the
Borrower and its Restricted Subsidiaries during any fiscal year of the Borrower;
provided, that any amount for any fiscal year not so expended in such fiscal
year may be carried over for expenditure in the immediately following fiscal
year.

                  7.9      Limitation on Investments, Loans and Advances. Make
any advance, loan (excluding intercompany current liabilities incurred in the
ordinary course of business in connection with the cash management operations of
the Borrower and its Subsidiaries), extension of credit or capital contribution
to, or purchase any stock, bonds, notes, debentures or other securities of or
any assets constituting a business unit of, or make any other investment in, any
Person ("Investments"), except:

                  (a)      extensions of trade credit in the ordinary course of
         business;

                  (b)      Investments in Cash Equivalents;

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                  (c)      loans and advances to employees of the Borrower or
         its Restricted Subsidiaries for travel, entertainment and relocation
         expenses in the ordinary course of business in an aggregate amount for
         the Borrower and its Restricted Subsidiaries not to exceed $10,000,000
         at any one time outstanding;

                  (d)      Investments by the Borrower or its Restricted
         Subsidiaries in Persons that are, or become by virtue of such
         Investment (and compliance with subsection 6.10), Blanket Grantors and
         investments by such Subsidiaries in the Borrower and in other
         Subsidiaries that are Blanket Grantors;

                  (e)      Investments in existence on the Effective Date set
         forth on Schedule 7.9(e) and extensions, renewals, modifications,
         restatements or replacements thereof; provided that no such extension,
         renewal, modification or restatement shall increase the amount of the
         original loan, advance or investment;

                  (f)      promissory notes and other similar non-cash
         consideration received by the Borrower and its Restricted Subsidiaries
         in connection with the dispositions permitted by subsection 7.6(b);

                  (g)      Investments (including debt obligations and Capital
         Stock) received in connection with the bankruptcy or reorganization of
         suppliers and customers of the Borrower and its Restricted Subsidiaries
         and in settlement of delinquent obligations of, and other disputes
         with, such customers and suppliers arising in the ordinary course of
         business;

                  (h)      so long as no Event of Default has occurred and is
         continuing, in addition to the other Investments permitted by this
         subsection 7.9, Investments in an aggregate amount not exceeding
         $100,000,000 (net of dividends and any other distributions paid in
         respect thereof), at cost, without regard to any write down or write up
         thereof;

                  (i)      Investments in the nature of Production Payments,
         royalties, dedication of reserves under supply agreements or similar
         rights or interests granted, taken subject to, or otherwise imposed on
         properties with normal practices in the mining industry;

                  (j)      (i) Investments in Joint Ventures in existence on the
         Effective Date and set forth on Schedule 4.14(b) hereto and (ii) in
         addition to the Investments permitted under clause (i) hereof, and,
         with respect to Credit Parties that are not Blanket Grantors, under
         subsection 7.9(l), Investments in Joint Ventures and Credit Parties
         which are not Blanket Grantors in an amount not to exceed, in the
         aggregate outstanding at any time (net of dividends and any other
         distributions paid in respect thereof), five percent (5%) of the Total
         Assets of the Borrower and its Restricted Subsidiaries (determined
         immediately prior to the time of each such Investment);

                  (k)      Investments in any assets constituting a business
         unit received by the Borrower or its Restricted Subsidiaries by virtue
         of an asset exchange or swap with a third party permitted by subsection
         7.6(n) or acquired as a permitted Capital Expenditure under subsection
         7.8;

                  (l)      in addition to the Investments permitted by under
         subsection 7.9(o), and, with respect to Credit Parties that are not
         Blanket Grantors under subsection 7.9(j), Investments in Unrestricted
         Subsidiaries and Credit Parties which are not Blanket Grantors, in an
         amount not to exceed in the aggregate outstanding at any time (net of
         dividends and any other distributions paid in respect thereof) and five
         percent (5%) of the Total Assets of the Borrower and its Restricted
         Subsidiaries (determined immediately prior to the time of each such
         Investment);

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<PAGE>

                  (m)      Hedge Agreements permitted under subsection 7.2(f);

                  (n)      so long as no Event of Default has occurred and is
         continuing, Investments consisting of purchases of Senior Notes
         pursuant to the provisions of subsection 7.10(a);

                  (o)      any Investment in the Project Entity in an amount not
         to exceed at any time (i) the lesser of (A) $375,000,000 and (B) the
         Credit Parties' pro rata share of 30% of Total Project Costs minus (ii)
         the aggregate amount of Project Guarantee Obligations incurred in
         accordance with subsection 7.4(k); and

                  (p)      subject to the provisions of subsection 7.2(p),
         Investments by the Borrower in Peabody Energy Australia Pty Ltd and
         Peabody COALTRADE Australia Pty Ltd in an aggregate amount not to
         exceed $50,000,000.

                  7.10     Limitation on Optional Payments and Modifications of
Instruments and Agreements. (a) Make any optional payment or prepayment on
or redemption or purchase of, or deliver any funds to any trustee for the
prepayment, redemption or defeasance of, the Senior Notes (whether upon
acceleration of the maturity thereof, upon a "Change of Control" (as defined in
the Senior Notes Indenture) or otherwise), provided that the Borrower may (i)
prepay the Senior Notes in connection with a refinancing of such notes on terms
no less favorable to the Borrower and the Lenders and (ii) make any other
optional payment, prepayment, redemption, purchase or defeasance during the term
of this Agreement in an aggregate amount not in excess of $100,000,000, or (b)
amend, modify or change, or consent or agree to any amendment, modification or
change to any of the material terms of any Senior Notes Documents (other than
any such amendment, modification or change which would extend the maturity or
reduce the amount of any payment of principal thereof or which would reduce the
rate or extend the date for payment of interest thereon).

                  (b)      Amend its Constitutional Documents in any manner
which could adversely affect the rights of the Lenders under the Credit
Documents or their ability to enforce the same.

                  (c)      Modify or amend, or waive any provision or condition
contained in, any of the Senior Notes Documents in any manner that could
reasonably be expected to be adverse to the Lenders.

                  7.11     Limitation on Transactions with Affiliates. (a)
Enter into any transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate unless such transaction is (i) otherwise permitted under this
Agreement, (ii) in the ordinary course of the Borrower's or such Restricted
Subsidiary's business and (iii) upon fair and not materially less favorable
terms to the Borrower or such Restricted Subsidiary, as the case may be, than it
reasonably believes it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate; provided that satisfaction of the
foregoing clause (iii) shall be demonstrated to the Administrative Agent (i) in
a certificate of a Responsible Officer of the Borrower or such Restricted
Subsidiary if the fair market value of the property or service purchased, sold,
leased or exchanged by the Borrower or such Restricted Subsidiary is no greater
than $10,000,000 (ii) in a resolution of the Board of Directors of the Borrower
or such Restricted Subsidiary if the fair market value of the property or
service purchased, sold, leased or exchanged by the Borrower or such Restricted
Subsidiary is greater than $10,000,000 but no greater than $25,000,000 or (iii)
at the Borrower's expense in an opinion of an independent valuation firm
selected by the Administrative Agent and reasonably acceptable to the Borrower
if the fair market value of the property or service purchased, sold, leased or
exchanged by the Borrower or such Restricted Subsidiary is greater than
$25,000,000. Notwithstanding the foregoing, any such transaction which is
determined to be materially less favorable to the Borrower or a Restricted
Subsidiary than the Borrower or such Restricted Subsidiary reasonably believes
it would obtain in a

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<PAGE>

comparable arm's length transaction nevertheless shall be permitted if the
excess consideration being paid to such Affiliate would otherwise be permitted
at such time as an Investment in such Affiliate under subsection 7.9 and, upon
consummation of such transaction, such excess consideration being paid to such
Affiliate shall constitute an Investment for the purposes of calculating
compliance with subsection 7.9;

                  (b)      In addition, notwithstanding the foregoing, the
Borrower and its Restricted Subsidiaries shall be entitled to make the following
payments and/or to enter into the following transactions:

                           (i)      the payment of reasonable and customary fees
         and reimbursement of expenses payable to directors of the Borrower;

                           (ii)     the employment arrangements with respect to
         the procurement of services of directors, officers and employees in the
         ordinary course of business and the payment of reasonable fees in
         connection therewith;

                           (iii)    payments to directors and officers of the
         Borrower and its Subsidiaries in respect of the indemnification of such
         Persons in such respective capacities from and against any and all
         liabilities, obligations, losses, damages, penalties, actions,
         judgments, suits, costs, expenses or disbursements, as the case may be,
         pursuant to the Constitutional Documents or other corporate action of
         the Borrower or its Restricted Subsidiaries, respectively, or pursuant
         to applicable law;

                           (iv)     transactions described in the Senior Notes
         Documents;

                           (v)      Investments in Unrestricted Subsidiaries,
         Joint Ventures and the Project Entity permitted by subsection 7.9.

                           (vi)     transactions among Credit Parties; provided
         that a Blanket Grantor may not transfer (by way of sale, investment,
         dividend or otherwise) Collateral to a Credit Party that is not a
         Blanket Grantor except pursuant to a provision of this Agreement that
         would permit such sale, investment, dividend or other payment to be
         made to a non-Credit Party.

                  7.12     Limitation on Sale and Leaseback Transactions. Enter
into any arrangement with any Person providing for the leasing by the Borrower
or any Restricted Subsidiary of real or personal property which has been or is
to be sold or transferred by the Borrower or such Restricted Subsidiary to such
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of the
Borrower or such Restricted Subsidiary; provided that the Borrower or a
Restricted Subsidiary may enter into sale and leaseback transactions with sale
prices not to exceed $100,000,000 in the aggregate during the term of this
Agreement.

                  7.13     Limitation on Changes in Fiscal Year. Permit the
fiscal year of the Borrower to end on a day other than December 31.

                  7.14     Limitation on Negative Pledge Clauses. Enter into
with any Person any agreement, other than (a) this Agreement, (b) the Senior
Notes Documents and (c) any industrial revenue bonds, purchase money mortgages,
Financing Leases permitted by this Agreement or agreements evidencing
Indebtedness permitted by subsection 7.2(b), (c) or (i) (to the extent
refinancing Indebtedness incurred under subsection 7.2(c)) (in which cases, any
prohibition or limitation shall only be effective against the assets financed
thereby other than after acquired title in or on such property and proceeds of
the existing collateral in accordance with the instrument creating such Lien),
which prohibits or limits the

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<PAGE>

ability of the Borrower or any of its Restricted Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired.

                  7.15     Limitation on Lines of Business. Enter into or engage
in any business, either directly or through any Subsidiary, except for Similar
Businesses.

SECTION 8.        EVENTS OF DEFAULT

                  If any of the following events shall occur and be continuing:

                  (a)      The Borrower shall fail to pay any principal of any
         Loan or any Reimbursement Obligation when due in accordance with the
         terms thereof or hereof; or the Borrower shall fail to pay any interest
         on any Loan, or any other amount payable hereunder, within five days
         after any such interest or other amount becomes due in accordance with
         the terms thereof or hereof; or

                  (b)      any representation or warranty made or deemed made by
         the Borrower or any other Credit Party herein or in any other Credit
         Document or which is contained in any certificate, document or
         financial or other statement furnished by it at any time under or in
         connection with this Agreement or any such other Credit Document shall
         prove to have been incorrect in any material respect on or as of the
         date made or deemed made; or

                  (c)      the Borrower or any other Credit Party shall default
         in the observance or performance of any agreement contained in
         subsection 6.4(a), 6.4(d), 6.5(a) (first sentence only), 6.7(d), 6.10
         or 6.13 or Section 7 of this Agreement or subsection 5.5, 5.6, 5.7,
         5.8(b), 5.9(a) or 5.10 of the Guarantee and Collateral Agreement; or

                  (d)      the Borrower or any other Credit Party shall default
         in the observance or performance of any other agreement contained in
         this Agreement or any other Credit Document (other than as provided in
         paragraphs (a) through (c) of this Section), and such default shall
         continue unremedied for a period of 30 days (unless a shorter cure
         period therefor is provided therein); or

                  (e)      the Borrower or any of its Restricted Subsidiaries
         shall (i) default (w) in any payment under any coal lease, (x) in any
         payment of principal of or interest of any Indebtedness (other than the
         Loans, the L/C Obligations and any intercompany debt) or the net
         obligations under any Interest Rate Agreement or (y) in the payment of
         any Guarantee Obligation (excluding any guaranties of the Obligations),
         beyond the period of grace, if any, provided in the instrument or
         agreement under which such lease, Indebtedness, Interest Rate Agreement
         obligation or Guarantee Obligation was created; or (ii) default in the
         observance or performance of any other agreement or condition relating
         to any such lease, Indebtedness, Interest Rate Agreement obligation or
         Guarantee Obligation or contained in any instrument or agreement
         evidencing, securing or relating thereto, or, other than with respect
         to a lease, any other event shall occur or condition exist, the effect
         of which default or other event or condition is to cause, or to permit
         the lessor under such lease or the holder or holders of such
         Indebtedness or beneficiary or beneficiaries of such Guarantee
         Obligation (or a trustee or agent on behalf of such holder or holders
         or beneficiary or beneficiaries) to cause, with the giving of notice if
         required, such lease to be terminated (and such lease is actually
         terminated), such Indebtedness to become due prior to its stated
         maturity or such Guarantee Obligation to become payable; provided,
         however, that no Default or Event of Default shall exist under this
         paragraph unless (i) the aggregate amount of lease payment obligations,
         Indebtedness, Interest Rate Agreement obligations and/or Guarantee
         Obligations in respect of which any default or other event or condition
         referred to in this

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<PAGE>

         paragraph shall have occurred shall be equal to at least $50,000,000,
         (ii) such default continues for a period in excess of 10 days and (iii)
         with respect to defaults under coal leases only, the termination of
         such lease could reasonably be expected to result in a Material Adverse
         Effect; or

                  (f)      (i) the Borrower, any of its Restricted Subsidiaries
         or any of its Specified Subsidiaries shall commence any case,
         proceeding or other action (A) under any existing or future law of any
         jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
         reorganization or relief of debtors, seeking to have an order for
         relief entered with respect to it, or seeking to adjudicate it a
         bankrupt or insolvent, or seeking reorganization, arrangement,
         adjustment, winding-up, liquidation, dissolution, composition or other
         relief with respect to it or its debts, or (B) seeking appointment of a
         receiver, trustee, custodian, conservator or other similar official for
         it or for all or any substantial part of its assets, the Borrower, any
         of its Restricted Subsidiaries or any of its Specified Subsidiaries
         shall make a general assignment for the benefit of its creditors; or
         (ii) there shall be commenced against the Borrower, any of its
         Restricted Subsidiaries or any of its Specified Subsidiaries, any case,
         proceeding or other action of a nature referred to in clause (i) above
         which (A) results in the entry of an order for relief or any such
         adjudication or appointment or (B) remains undismissed, undischarged or
         unbonded for a period of 60 days; or (iii) there shall be commenced
         against the Borrower, any of its Restricted Subsidiaries or any of its
         Specified Subsidiaries, any case, proceeding or other action seeking
         issuance of a warrant of attachment, execution, distraint or similar
         process against all or any substantial part of its assets which results
         in the entry of an order for any such relief which shall not have been
         vacated, discharged, or stayed or bonded pending appeal within 60 days
         from the entry thereof; or (iv) the Borrower, any of its Restricted
         Subsidiaries or any of its Specified Subsidiaries shall take any action
         in furtherance of, or indicating its consent to, approval of, or
         acquiescence in, any of the acts set forth in clause (i), (ii), or
         (iii) above; or (v) the Borrower, any of its Restricted Subsidiaries or
         any of its Specified Subsidiaries shall generally not, or shall be
         unable to, or shall admit in writing its inability to, pay its debts as
         they become due; or

                  (g)      (i) the Borrower, any Subsidiary or any Commonly
         Controlled Entity has incurred or is likely to incur a liability in
         connection with any "prohibited transaction" (as defined in Section 406
         of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
         "accumulated funding deficiency" (as defined in Section 302 of ERISA),
         whether or not waived, shall exist with respect to any Plan or any Lien
         in favor of the PBGC or a Plan shall arise on the assets of the
         Borrower or any Commonly Controlled Entity, (iii) a Reportable Event
         shall occur with respect to, or proceedings shall commence to have a
         trustee appointed, or a trustee shall be appointed, to administer or to
         terminate, any Single Employer Plan, (iv) any Single Employer Plan
         shall terminate for purposes of Title IV of ERISA, (v) the Borrower or
         any Commonly Controlled Entity shall, or in the reasonable opinion of
         the Administrative Agent is reasonably likely to, incur any liability
         in connection with a withdrawal from, or the Insolvency or
         Reorganization of, a Multiemployer Plan, (vi) the Borrower, its
         Subsidiaries or its "related persons" as defined in the Coal Act, shall
         be required to make during any fiscal year payments pursuant to the
         Coal Act that, in the aggregate, exceed the amount set forth on
         Schedule II with respect to such fiscal year, (vii) the Borrower or its
         Subsidiaries shall be required to make during any fiscal year payments
         pursuant to federal and state Black Lung Act claims in excess of the
         amount set forth on Schedule III with respect to such fiscal year,
         (viii) the Borrower or its Subsidiaries shall be required to make
         during any fiscal year payments pursuant to any employee welfare
         benefit plan (as defined in Section 3(1) of ERISA) that provides
         benefits to retired employees (other than as required by Section 601 of
         ERISA or the Coal Act) that, in the aggregate, exceed the amount set
         forth on Schedule IV with respect to such fiscal year or (ix) any other
         similar event or condition shall occur or exist with respect to a Plan
         that is not in the ordinary course; and in each case in clauses

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         (i) through (ix) above, such event or condition, together with all
         other such events or conditions, if any, could reasonably be expected
         to have a Material Adverse Effect; or

                  (h)      one or more judgments or decrees shall be entered
         against the Borrower or any of its Restricted Subsidiaries involving in
         the aggregate a liability (not paid or fully covered by insurance
         (which coverage has been acknowledged by the appropriate insurers)) of
         $50,000,000 or more, and all such judgments or decrees shall not have
         been vacated, discharged, stayed or bonded pending appeal within 60
         days from the entry thereof; or

                  (i)      one or more surety, reclamation or similar bonds
         securing obligations of the Borrower or any Subsidiary (or any required
         guarantees thereof or required letters of credit with respect thereto)
         with an aggregate face amount of $100,000,000 or more shall be actually
         terminated, suspended or revoked and not replaced within 30 days of
         such termination, suspension or revocation; provided that the Borrower
         or any Subsidiary shall be permitted to replace such surety bonds with
         self-bonding obligations to the extent permitted by any Person to which
         the obligations secured by such bonds are owed) prior to full
         satisfaction of the obligations secured by such bonds; or

                  (j)      (i) any of the Security Documents shall cease, for
         any reason, to be in full force and effect (unless released by the
         Administrative Agent at the direction of the requisite Lenders or as
         otherwise permitted under this Agreement or the other Credit
         Documents), or the Borrower or any other Credit Party which is a party
         to any of the Security Documents shall so assert or (ii) the Lien
         created by any of the Security Documents shall cease to be enforceable
         and of the same effect and priority purported to be created thereby
         (and, if such invalidity is such so as to be amenable to cure without
         materially disadvantaging the position of the Administrative Agent and
         the Lenders, as the case may be, as secured parties thereunder, the
         Credit Party shall have failed to cure such invalidity within 30 days
         after notice from the Administrative Agent); or

                  (k)      the Guarantee Obligation of any Credit Party under
         the Credit Documents shall be held in any judicial proceeding to be
         unenforceable or invalid or shall cease for any reason to be in full
         force and effect or any Credit Party or any Person acting on behalf of
         any Credit Party, shall deny or disaffirm its obligations under such
         Guarantee Obligation; or

                  (l)      there shall have occurred a Change in Control; or

                  (m)      an event has occurred which entitles the beneficiary
         of the Project Guarantee Obligation to make a demand for payment
         thereunder, and such demand has actually been made,

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section above with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice of default to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement (including, without

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limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) and the Notes to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Upon an Event of Default
hereunder, the Agents and the Lenders shall also have all of the rights granted
to them under the Security Documents and applicable law. Upon an Event of
Default, and at the request of the Administrative Agent, for each real property
interest (including coal reserves) selected by the Administrative Agent which is
owned or leased by the Borrower or any of its Restricted Subsidiaries (other
than with respect to leased real property located in the State of Arizona, the
mortgaging of which would require the consent of the lessor thereof and with
respect to which the Borrower has determined in good faith, after consultation
with the Administrative Agent, that the seeking of such consent would be
materially disadvantageous to its business), the Borrower shall promptly (i)
deliver to the Administrative Agent, a Mortgage, executed and delivered by a
duly authorized officer of the mortgagor party thereto, with a counterpart or a
conformed copy for each Lender, and (ii) with respect to each such Mortgage,
comply with all other requirements in connection with the delivery thereof as
set forth in subsections 6.10(c)(i)(B) and 6.10(c)(i)(C).

                  With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral and cash collateral account to secure all obligations of the Borrower
under this Agreement and the other Credit Documents. Amounts held in such cash
collateral account shall be applied by the Administrative Agent to the payment
of drafts drawn under such Letters of Credit, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay other obligations of the Borrower hereunder and
under the Notes. After all such Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been satisfied and
all other obligations of the Borrower hereunder and under the Notes shall have
been paid in full, the balance, if any, in such cash collateral account shall be
returned to the Borrower. The Borrower shall execute and deliver to the
Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, such further documents and instruments as the Administrative Agent
may request to evidence the creation and perfection of such security interest in
such cash collateral account.

                  EXCEPT AS EXPRESSLY PROVIDED ABOVE IN THIS SECTION,
PRESENTMENT, DEMAND, PROTEST AND ALL OTHER NOTICES OF ANY KIND ARE HEREBY
EXPRESSLY WAIVED.

SECTION 9.        THE AGENTS

                  9.1      Appointment. Each Lender hereby irrevocably
designates and appoints each of the Agents as the agent of such Lender under
this Agreement and the other Credit Documents, and each such Lender irrevocably
authorizes each of the Agents, in such capacity, to take such action on its
behalf under the provisions of this Agreement and the other Credit Documents and
to exercise such powers and perform such duties as are expressly delegated to
such Agent by the terms of this Agreement and the other Credit Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, none
of the Agents shall have any duties or responsibilities, except those expressly
set forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Credit Document or otherwise exist
against any of the Agents.

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                  9.2      Delegation of Duties. The Agents may execute any of
their duties under this Agreement and the other Credit Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. None of the Agents shall be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.

                  9.3      Exculpatory Provisions. Neither any of the Agents nor
any of their officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Credit Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Credit Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by such Agent under or in connection with, this Agreement or
any other Credit Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Credit
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. None of the Agents shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the properties, books or records of the Borrower.

                  9.4      Reliance by Agents. The Agents shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other 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 the Borrower), independent accountants and other
experts selected by such Agent. The Agents may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with such
Agent. Except as expressly provided in this Agreement, the Agents shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Credit Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Agents shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Credit Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.

                  9.5      Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that any Agent
receives such a notice, such Agent shall give notice thereof to the Lenders.
Each Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided that
unless and until such Agent shall have received such directions, such Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.

                  9.6      Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither any of the Agents nor any of their officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by any of the Agents
hereafter taken, including any review of the affairs of the Borrower, shall be
deemed to

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constitute any representation or warranty by any of the Agents to any Lender.
Each Lender represents to each of the Agents that it has, independently and
without reliance upon any of the Agents or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Borrower and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon any of the
Agents or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Credit Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and credit worthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by any of the
Agents hereunder (or copies of which have been provided to the Administrative
Agent pursuant to this Agreement), none of the Agents shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Credit Party which may come
into the possession of such Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.

                  9.7      Indemnification. The Lenders agree to indemnify each
of the Agents in their respective capacities as such (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to their respective Commitment Percentages with
respect to all Types of Loans in effect on the date on which indemnification is
sought, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against any of the Agents in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any of the
Agents under or in connection with any of the foregoing; provided that no Lender
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Loans and all other amounts payable hereunder.

                  9.8      Agents, in Their Individual Capacities. The Agents
and their respective Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower as though the Agents
were not acting in such capacities hereunder and under the other Credit
Documents. With respect to the Loans made or renewed by it and any Note issued
to it and with respect to any Letter of Credit issued or participated in by it,
each Agent shall have the same rights and powers under this Agreement and the
other Credit Documents as any Lender and may exercise the same as though it were
not an Agent, and the terms "Lender" and "Lenders" shall include the Agents in
their individual capacities.

                  9.9      Successor Administrative Agent, Syndication Agents
and Documentation Agents. The Administrative Agent may resign as Administrative
Agent upon 30 days' notice to the Lenders. If the Administrative Agent shall
resign as Administrative Agent under this Agreement and the other Credit
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent (provided that it shall
have been approved by the Borrower, which approval shall not be unreasonably
withheld), shall succeed to the rights, powers and duties of the Administrative
Agent hereunder. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Administrative

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Agent's giving of notice of resignation, the retiring Administrative Agent may,
on behalf of the Required Lenders, appoint a successor Administrative Agent,
which shall be a Lender, and if no Lender shall be willing to serve, be a
commercial bank having a combined capital and surplus of at least $500,000,000.
Any Documentation Agent or any Syndication Agent may resign as Documentation
Agent or Syndication Agent, as the case may be, upon 30 days' notice to the
Administrative Agent, and upon such resignation, the Administrative Agent may
appoint a replacement Documentation Agent or Syndication Agent, as the case may
be, from among the Lenders, which shall succeed to the rights, powers and duties
of the Documentation Agent or Syndication Agent hereunder, as the case may be.
Effective upon such foregoing appointment and approval, the term "Administrative
Agent" or "Documentation Agent" or "Syndication Agent" as the case may be, shall
mean or include such successor agent, and the former Administrative Agent's or
Syndication Agent's or Documentation Agent's, as the case may be, rights, powers
and duties as Administrative Agent or Syndication Agent or Documentation Agent,
as the case may be, shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or Documentation Agent or
Syndication Agent, as the case may be, or any of the parties to this Agreement
or any holders of the Loans. After any retiring Administrative Agent's or
Documentation Agent's or Syndication Agent's resignation as Administrative Agent
or Documentation Agent or Syndication Agent, as the case may be, the provisions
of this Section 9 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent or Documentation Agent or
Syndication Agent, as the case may be, under this Agreement and the other Credit
Documents. In connection with the appointment of any successor Administrative
Agent hereunder, the Borrower shall, and shall cause each of the Credit Parties
to, promptly execute such documents, instruments, amendments and the like (such
as, without limitation, UCC-3 amendments) necessary to effect such succession
and preserve the Agents' and the Lenders' rights hereunder, under the other
Credit Documents and in the Collateral.

                  9.10     Duties of Arrangers, Documentation Agents and
Syndication Agents. Except as expressly set forth herein, each Arranger, each
Syndication Agent and each Documentation Agent, in its respective capacity as
such, shall have no duties or responsibilities, and shall incur no liabilities,
under this Agreement or the other Credit Documents.

SECTION 10.       MISCELLANEOUS

                  10.1     Amendments and Waivers. Neither this Agreement nor
any other Credit Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent may, from time to time, (a) enter
into with the Borrower written amendments, supplements or modifications hereto
and to the other Credit Documents for the purpose of adding any provisions to
this Agreement or the other Credit Documents or changing in any manner the
rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive,
on such terms and conditions as the Required Lenders or the Administrative
Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Credit Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) reduce the amount or
extend any scheduled date of payment or maturity of any Loan or any L/C
Obligation under subsection 3.5, extend the expiration of any Letter of Credit
beyond the Revolving Loan Termination Date, or reduce the stated rate or amount
of any interest or fee payable hereunder or extend the scheduled date of any
payment thereof, in each case without the consent of each Lender directly
affected thereby, or increase any commitment of any Lender or extend the expiry
of any commitment of any Lender without the consent of such Lender, or (ii)
amend, modify or waive any provision of this subsection or reduce the percentage
specified in the definition of Required Lenders or Requisite Class Lenders, or
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Credit Documents, in each case

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without the written consent of all the Lenders, or (iii) release all or
substantially all of the Collateral or release all or substantially all of the
Credit Parties from their Guarantee Obligations under the Credit Documents
without the consent of all Lenders, or (iv) amend, modify or waive any provision
of Section 9 without the written consent of the Administrative Agent and any
other Agent prejudiced thereby, (v) amend, modify or waive any provision of
subsection 2.1(b), any other provision of this Agreement relating to the Swing
Line Loans or the Swing Line Note without the written consent of the Swing Line
Lender, or (vi) amend, modify or waive any provision of this Agreement or any
other Credit Document which would directly and adversely affect the Arrangers or
the Agents or the Issuing Lender or the Swing Line Lender without the written
consent of the Arrangers, the Agents or the Issuing Lender or the Swing Line
Lender, as the case may be. In addition to the foregoing, no amendment,
modification, termination or waiver of any provision of subsection 2.5 or
subsection 2.6 which has the effect of changing any interim scheduled payments,
voluntary or mandatory prepayments (or the applications thereof or any right to
waive such payment) or Commitment reductions applicable to any Class (an
"Affected Class") in a manner that disproportionately disadvantages such Class
relative to the other Class shall be effective without the written concurrence
of the Requisite Class Lenders of the Affected Class (it being understood and
agreed that any amendment, modification, termination or waiver of any provision
which only postpones or reduces any interim scheduled payment, voluntary or
mandatory prepayment or Commitment reduction from those set forth in subsection
2.6 with respect to only one Class shall be deemed to not disproportionately
disadvantage the other Class and, therefore, shall not require the consent of
Requisite Class Lenders of such other Class). Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Borrower, the Lenders, the Agents and the Issuing
Lender and all future holders of the Loans. Any extension of a Letter of Credit
by the Issuing Lender shall be treated hereunder as an issuance of a new Letter
of Credit. In the case of any waiver, the Borrower, the Lenders and the Agents
and the Issuing Lender shall be restored to their former positions and rights
hereunder and under the other Credit Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon. Notwithstanding the foregoing, this Agreement may
be amended (or amended and restated) with the written consent of the Required
Lenders, the Arrangers, the Administrative Agent, the Syndication Agents and the
Borrower (x) to add one or more additional credit facilities to this Agreement
and to permit the extensions of credit from time to time outstanding thereunder
and the accrued interest and fees in respect thereof (collectively, the
"Additional Extensions of Credit") to share ratably in the benefits of this
Agreement and the other Credit Documents with the Term Loans and Revolving
Credit Loans and the accrued interest and fees in respect thereof and (y) to
include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders and Requisite Class Lenders; provided,
however, that no such amendment shall permit the Additional Extensions of Credit
to share ratably with or with preference to the Term Loans in the application of
mandatory prepayments without the consent of the Requisite Class Lenders or
otherwise to share ratably with or with preference to the Revolving Credit Loans
without the consent of the Requisite Class Lenders.

                  10.2     Notices. Except as otherwise expressly set forth
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by facsimile transmission)
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given or made (a) in the case of delivery by hand, when delivered, (b) in
the case of delivery by mail, three days after being deposited in the mails,
postage prepaid, or (c) in the case of delivery by facsimile transmission, when
sent and receipt has been confirmed, addressed as follows in the case of the
Borrower, the Administrative Agent, either Syndication Agent or either
Documentation Agent, and to such other address as may be hereafter notified by
the respective parties hereto:

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                  The Borrower or any of its Subsidiaries:

                           Peabody Energy Corporation
                           701 Market Street
                           St. Louis, MO 63101
                           Attention:  Steve Schaab
                           Fax:  (314) 342-7740

                  The Administrative Agent:

                           Fleet National Bank
                           100 Federal Street
                           Mailstop MADE10009H
                           Boston, MA 02110
                           Attention:  David Lundberg
                           Fax:  (617) 434-3652

                                    with a copy to:

                                   Christopher R. Plaut
                                   Latham & Watkins LLP
                                   885 Third Avenue
                                   New York, NY 100022
                                   Fax:  (212) 751-4864

                  The Documentation Agents:

                           U.S. Bank National Association
                           7th & Washington, 12th Floor
                           St. Louis, MO 63101
                           Attn: Eric Hartman
                           Fax:  (314) 418-3859

                           Morgan Stanley Senior Funding, Inc.
                           750 Seventh Avenue, 11th Floor
                           New York, NY 10020
                           Fax:  (212) 507-3138

                  The Syndication Agents:

                           Wachovia Bank, National Association
                           301 South College Street
                           Charlotte, NC 28288
                           Attention:  Stephan Hyde
                           Fax:  (704) 383-8494

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                                   with a copy to:

                                   James T. Hedrick, Jr.
                                   Kennedy Covington Lobdell & Hickman, L.L.P.
                                   214 N. Tryon Street, 47th Floor
                                   Charlotte, NC 28202
                                   Fax:  (704) 331-7598

                                   and

                           Lehman Commercial Paper Inc.
                           745 Seventh Avenue
                           New York, NY 10019
                           Attention:  Francis Chang
                           Fax:  (646) 758-3864

                                    with a copy to:

                                   Christopher R. Plaut
                                   Latham & Watkins LLP
                                   885 Third Avenue
                                   New York, NY 100022
                                   Fax:  (212) 751-4864

                  The Arrangers:

                           Fleet Securities, Inc.
                           100 Federal Street
                           Mailstop MADE10011
                           Boston, MA 02110
                           Attention:  Jennifer Dumas
                           Fax:  (617) 434-6669

                                    with a copy to:

                                   Christopher R. Plaut
                                   Latham & Watkins LLP
                                   885 Third Avenue
                                   New York, NY 100022
                                   Fax:  (212) 751-4864

                           Wachovia Securities, Inc.
                           301 South College Street
                           Charlotte, NC 28288
                           Attention:  Stephan Hyde
                           Fax:  (704) 383-8494

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                                   with a copy to:

                                   James T. Hedrick, Jr.
                                   Kennedy Covington Lobdell & Hickman, L.L.P.
                                   214 N. Tryon Street, 47th Floor
                                   Charlotte, NC 28202
                                   Fax:  (704) 331-7598

                                   and

                           Lehman Brothers Inc.
                           745 Seventh Avenue
                           New York, NY 10019
                           Attention:  Francis Chang
                           Fax:  (646) 758-3864

                                    with a copy to:

                                   Christopher R. Plaut
                                   Latham & Watkins LLP
                                   885 Third Avenue
                                   New York, NY 100022
                                   Fax:  (212) 751-4864

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.7, 2.12 or 3.2 shall not
be effective until received, and provided further that any notices required to
be given to all the Lenders hereunder may be effected by delivery of notice to
the Administrative Agent as provided above, followed by distribution of such
notice by the Administrative Agent to the Lenders through IntraLinks (or another
similar electronic system customarily used by financial institutions).

                  10.3     No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of any Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Credit Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

                  10.4     Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Credit Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.

                  10.5     Payment of Expenses and Taxes. The Borrower agrees
(a) to pay or reimburse each Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Credit Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees, charges and disbursements of a single counsel for the Agents
(in addition to any local and foreign counsel), (b) to pay or reimburse each
Lender and each Agent

                                       85

<PAGE>

for all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Credit Documents and
any such other documents and any "workout" hereunder or thereunder, including,
without limitation, the fees and disbursements of counsel to each Lender and of
counsel to any Agent, (c) to pay, indemnify, and hold each Lender and each Agent
and each Issuing Lender harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Credit Documents and any such other
documents, and (d) to pay, defend, indemnify, and hold each Lender and each
Agent and each Issuing Lender harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement or the other Credit Documents or the use of the proceeds of the Loans
in connection with the Black Beauty Acquisition, including, without limitation,
any of the foregoing relating to the violation of, noncompliance with or
liability under, any Mining and Environmental Law applicable to the activities
of the Borrower, any of its Subsidiaries or any of the Properties or Businesses
or any prior businesses for which the Borrower has, or may reasonably be alleged
to have retained liability (all the foregoing in this clause (d), collectively,
the "indemnified liabilities"). The Borrower shall have no obligation hereunder
to any Agent or the Issuing Lender or any Lender with respect to otherwise
indemnified liabilities arising from the gross negligence or willful misconduct
of such Agent or the Issuing Lender or such Lender. The agreements in this
subsection shall survive repayment of the Loans and all other amounts payable
hereunder.

                  10.6     Successors and Assigns; Participations and
Assignments.      (a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Agents and their respective successors
and assigns, except that the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of
each Lender.

                  (b)      Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender or any other interest of such Lender hereunder and under
the other Credit Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Credit Documents, and the Borrower and the Agents shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Credit Documents. No
Lender shall be entitled to create in favor of any Participant, in the
participation agreement pursuant to which such Participant's participating
interest shall be created or otherwise, any right to vote on, consent to or
approve any matter relating to this Agreement or any other Credit Document
except for those specified in clauses (i) and (ii) of the proviso to subsection
10.1. The Borrower agrees that if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall, to the
maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement; provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in subsection
10.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that
each Participant shall be entitled to the benefits of subsections 2.14, 2.15 and
2.16 with respect to its participation in the Letters of Credit, the Commitments

                                       86

<PAGE>

and the Loans outstanding from time to time as if it was a Lender; provided that
in the case of subsection 2.15, such Participant shall have complied with the
requirements of said Section; provided, further, that no Participant shall be
entitled to receive any greater amount pursuant to any such subsection than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.

                  (c)      Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof (including, without
limitation, in the case of any Lender that is an investment fund which is
regularly engaged in making, purchasing or investing in loans or securities, any
other such fund which is under common (or affiliated) management with such
Lender or advised by the same investment advisor as such Lender), or, with the
consent of the Borrower, the Issuing Lender (with respect to assignments of
Revolving Credit Commitments and Revolving Credit Loans only) and the
Administrative Agent (which in each case shall not be unreasonably withheld or
delayed), to any other Person (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Credit Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit F (an
"Assignment and Acceptance"), executed by such Assignee, such assigning Lender
(and, in the case of an Assignee that is not then a Lender or an affiliate
thereof (including, without limitation, in the case of a fund, another fund
under common (or affiliated) management therewith or advised by the same
investment advisor as a Lender), by the Borrower, the Issuing Lender (with
respect to assignments of Revolving Credit Commitments and Revolving Credit
Loans only) and the Administrative Agent or advised by the same investment
advisor as a Lender) and delivered to the Administrative Agent for its
acceptance and recording in the Register, provided that, (A) in the case of any
such assignment to a Person other than a Lender or any affiliate thereof
(including, without limitation, in the case of a fund, another fund under common
(or affiliated) management therewith), either (x) such assignment is of all the
rights and obligations of the assigning Lender or (y) the sum of the aggregate
principal amount of the Loans, the aggregate amount of the L/C Obligations and
the aggregate amount of the unused Commitments being assigned is not less than
$1,000,000 (in the aggregate, in the case of contemporaneous assignments to
affiliated funds) (or such lesser amount as may be agreed to by the Borrower and
the Administrative Agent), (B) in the case of any such assignment to a Person
other than a Lender or any affiliate thereof (including, without limitation, in
the case of a fund, another fund under common (or affiliated) management
therewith), each Assignee which is a Non-U.S. Lender shall comply with the
provisions of subsection 2.15(b) hereof and (C) any assignment to an Assignee as
to which the Borrower has no right of consent under this subsection shall not be
permitted if it would at the time of assignment thereof result in additional
cost to the Borrower under subsection 2.14 or 2.15. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (f) of this
subsection to the contrary, the consent of the Borrower shall not be required
for any assignment (i) of Term Loans or (ii) which occurs at any time when any
of the events described in Section 8 shall have occurred and be continuing.

                  (d)      The Administrative Agent, on behalf of the Borrower,
shall maintain at the address of the Administrative Agent referred to in
subsection 10.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and Commitments of and principal amounts of the Loans of each Type owing
to, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest

                                       87

<PAGE>

error, and the Borrower, the Administrative Agent and the Lenders shall treat
each Person whose name is recorded in the Register as the owner of a Loan, any
Note evidencing such Loan or other Obligation hereunder as the owner thereof for
all purposes of this Agreement and the other Credit Documents, notwithstanding
any notice to the contrary. Any assignment of any Loan, whether or not evidenced
by a Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of an Obligation evidenced by a Note shall
be registered in the Register only upon surrender for registration of assignment
or transfer of the Note evidencing such Obligation, duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed by)
the holder thereof and accompanied by a duly executed Assignment and Acceptance;
thereupon, at the request of the Assignee, one or more new Notes shall be issued
to the designated Assignee and the old Note shall be returned by the
Administrative Agent to the Borrower marked "cancelled."

                  (e)      Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and, in the case of an Assignee
that is not then a Lender or an affiliate thereof (including, without
limitation, in the case of a fund, another fund under common (or affiliated)
management therewith), by the Borrower, the Issuing Lender (with respect to
assignments of Revolving Credit Commitments and Revolving Credit Loans only) and
the Administrative Agent) together with payment by the assigning Lender or the
Assignee to the Administrative Agent of a registration and processing fee of
$2,500 (provided that no such payment shall be required with respect to
assignments to an Assignee which is already a Lender; provided, further, that
with respect to one or more substantially concurrent assignments by a Lender to
an affiliate or affiliates thereof or to Persons under common (or affiliated)
management with such Lender, only one such fee shall be payable), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower.

                  (f)      The Borrower authorizes each Lender to disclose to
any Participant or Assignee (each, a "Transferee") and any prospective
Transferee, subject to the provisions of subsection 10.15, any and all financial
information in such Lender's possession concerning the Borrower and its
Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.

                  (g)      If, pursuant to this subsection 10.6, any interest in
this Agreement or any Loan is transferred to any Transferee which would be a
Non-U.S. Lender upon the effectiveness of such transfer, the assigning Lender
shall cause such Transferee, concurrently with the effectiveness of such
transfer, (i) to represent to the assigning Lender (for the benefit of the
assigning Lender, the Administrative Agent and the Borrower) that under
applicable law and treaties no U.S. Taxes will be required to be withheld by the
Administrative Agent, the Borrower or the assigning Lender with respect to any
payments to be made to such Transferee in respect of the Loans, (ii) to furnish
to the assigning Lender (and, in the case of any Assignee registered in the
Register, the Administrative Agent and the Borrower such Internal Revenue
Service Forms required to be furnished pursuant to subsection 2.15(b) and (iii)
to agree (for the benefit of the assigning Lender, the Administrative Agent and
the Borrower) to be bound by the provisions of subsection 2.15(b).

                  (h)      For the avoidance of doubt, the parties to this
Agreement acknowledge that the provisions of this subsection and subsection
2.5(g) concerning assignments of Loans and Notes relate only to absolute
assignments and that such provisions do not prohibit assignments creating
security interests, including, without limitation, (i) any pledge or assignment
by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with
applicable law and (ii) the assignment or pledge by any

                                       88

<PAGE>

Lender that is a fund of all or any portion of its rights under this Agreement
to secure such Lender's Indebtedness; provided that, no such assignment under
this clause (h) shall release the assignor Lender from its obligations
hereunder.

                  10.7     Adjustments; Set-off. (a) If any Lender (a
"benefitted Lender") shall at any time receive any payment of all or part of its
Loans or the Reimbursement Obligations owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
subsection 8(f), or otherwise), in a greater proportion than any such payment to
or collateral received by any other Lender, if any, in respect of such other
Lender's Loans or the Reimbursement Obligations owing to it, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans or the
Reimbursement Obligations owing to it, or shall provide such other Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.

                  (b)      In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application.

                  10.8     Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.

                  10.9     Severability. Any provision of this Agreement which
is 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.

                  10.10    Integration. This Agreement and the other Credit
Documents represent the agreement of the Borrower, the Agents and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by any Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Credit Documents.

                  10.11    GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                                       89

<PAGE>

                  10.12    SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER
HEREBY IRREVOCABLY AND UNCONDITIONALLY:

                  (a)      SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
         ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT
         DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF
         ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL
         JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE
         UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
         APPELLATE COURTS FROM ANY THEREOF;

                  (b)      CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
         BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
         HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
         SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
         INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

                  (c)      AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
         PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
         CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
         PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 10.2 OR
         AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN
         NOTIFIED PURSUANT THERETO;

                  (d)      AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
         EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
         LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND

                  (e)      WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
         ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
         PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY,
         PUNITIVE OR CONSEQUENTIAL DAMAGES.

                  10.13    Acknowledgements. The Borrower hereby acknowledges
that:

                  (a)      it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents;

                  (b)      none of the Arrangers, the Agents or the Lenders has
any fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Credit Documents, and the
relationship between any of the Agents and the Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and

                  (c)      no joint venture is created hereby or by the other
Credit Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.

                  10.14    WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE
LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING

                                       90

<PAGE>

RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.

                  10.15    Confidentiality. Each Lender agrees to keep
confidential all non-public information provided to it by the Borrower pursuant
to this Agreement that is designated by the Borrower in writing as confidential
(excluding any such information already in the possession of such Lender or
provided to such Lender by a third party not in violation of this Agreement
which, in either case, is not, to the knowledge of such Lender, subject to a
confidentiality agreement); provided that nothing herein shall prevent any
Lender from disclosing any such information (i) to any Agent or any other Lender
or any of its Affiliates, (ii) to any Transferee or prospective Transferee or to
any direct or indirect contractual counterparties in swap agreements or such
contractual counterparties' professional advisors which receives such
information and agrees to be bound by the confidentiality provisions hereof,
(iii) to its employees, directors, agents, attorneys, accountants and other
professional advisors, (iv) upon the request or demand of any Governmental
Authority having jurisdiction over such Lender, (v) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (vi) which has been publicly disclosed other
than in breach of this Agreement, (vii) to the National Association of Insurance
Commissioners or any similar organization or any nationally-recognized rating
agency that requires access to information about such Lender's investment
portfolio in connection with ratings issued with respect to such Lender, or
(viii) in connection with the exercise of any remedy hereunder. Notwithstanding
the foregoing, each party hereto may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Credit Agreement and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
tax treatment and tax structure.

                  10.16    Prudential Note. For the avoidance of doubt, the
parties hereto hereby agree that the Obligations of the Borrower and the other
Credit Parties hereunder and under the other Credit Documents (including,
without limitation, all Indebtedness of the Borrower hereunder and of the other
Credit Parties (including, without limitation, PHCI) under the Guarantee and
Collateral Agreement) is "Senior Debt," as such term is defined in the
Prudential Note.

                  10.17    Existing Agreements Superseded. As set forth in
subsection 1.3 hereof, the First Restated Credit Agreement is superseded by this
Credit Agreement, which has been executed in renewal, amendment, restatement and
modification, but not in extinguishment of, the obligations under the First
Restated Credit Agreement.

                  10.18    Delivery of Lender Addenda. Each initial Lender that
is not an Original Lender shall become a party to this Agreement by delivering
to the Administrative Agent a Lender Addendum duly executed by such Lender, the
Borrower and the Administrative Agent.

                            [SIGNATURE PAGES FOLLOW]

                                       91

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.

                                    PEABODY ENERGY CORPORATION
                                        as Borrower

                                    By:_________________________________________
                                       Name:
                                       Title:

                                    FLEET NATIONAL BANK,
                                        as Administrative Agent and as a Lender

                                    By:_________________________________________
                                       Name:
                                       Title:

                                    WACHOVIA BANK, NATIONAL ASSOCIATION,
                                        as Syndication Agent

                                    By:_________________________________________
                                       Name:
                                       Title:

                                    LEHMAN COMMERCIAL PAPER INC.,
                                        as Syndication Agent

                                    By:_________________________________________
                                       Name:
                                       Title:

                                    FLEET SECURITIES, INC.,
                                        as Arranger

                                    By:_________________________________________
                                       Name:
                                       Title:

<PAGE>

                                    WACHOVIA SECURITIES, INC.,
                                        as Arranger

                                    By:_________________________________________
                                       Name:
                                       Title:

                                    LEHMAN BROTHERS INC.,
                                        as Arranger

                                    By:_________________________________________
                                       Name:
                                       Title:

                                    MORGAN STANLEY SENIOR FUNDING, INC.,
                                        as Documentation Agent

                                    By:_________________________________________
                                       Name:
                                       Title:

                                    U.S. BANK NATIONAL ASSOCIATION,
                                        as Documentation Agent

                                    By:_________________________________________
                                       Name:
                                       Title:

<PAGE>

                                                                      Schedule I

                                                             to Credit Agreement

                                  Pricing Grids

<TABLE>
<CAPTION>
 CONSOLIDATED         REVOLVING          REVOLVING
    TOTAL          CREDIT FACILITY    CREDIT FACILITY        TERM LOAN          TERM LOAN
OBLIGATIONS TO        APPLICABLE        APPLICABLE           APPLICABLE         APPLICABLE
 CONSOLIDATED          MARGIN -       MARGIN - BASE        MARGIN - LIBOR     MARGIN - BASE
 EBITDA RATIO        LIBOR RATE            RATE                 RATE               RATE
--------------     ---------------    ---------------      --------------     -------------
<S>                <C>                <C>                  <C>                <C>
< or = 3.75x            2.500%              1.500%             2.500%             1.500%
< or = 3.25x            2.250%              1.250%             2.500%             1.500%
< or = 2.75x            2.000%              1.000%             2.500%             1.500%
< or = 2.25x            1.750%              0.750%             2.250%             1.250%
< or = 2.25x            1.500%              0.500%             2.250%             1.250%
</TABLE>

<TABLE>
<CAPTION>
  USAGE RATIO              COMMITMENT
                              FEE
-------------              ----------
<S>                        <C>
< or = 66.67%                 0.250%
< or = 33.33%                 0.375%
      <33.33%                 0.500%
</TABLE>

                                     S-IV-1

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