Document:

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                                                                    EXHIBIT 10.7

                          SUBSCRIPTION ESCROW AGREEMENT

         Subscription Escrow Agreement (the "Escrow Agreement") dated as of the
effective date (the "Effective Date") set forth on schedule 1 attached hereto
("Schedule 1") by and between the corporation identified on Schedule 1 (the
"Issuer") and JPMorgan Trust Company, N.A. as escrow agent hereunder (the
"Escrow Agent").

WHEREAS, the Issuer has filed a registration statement on Form S-1 under the
Securities Act of 1933, as amended, with the Securities and Exchange Commission,
(the "Registration Statement"), relating to the subscription for and sale of
shares of common stock ("Units"), par value $0.001 per share, in the Issuer,
with a minimum aggregate investment required of 1,500,000 Units (the "Minimum
Subscription Amount") and a maximum aggregate investment of 2,000,000 Units (the
"Maximum Subscription Amount"), at a price of $10.00 per Unit;

WHEREAS, the Issuer proposes to establish an escrow fund to be held by the
Escrow Agent until the sale of Units terminates;

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:

1. APPOINTMENT. The Issuer hereby appoints the Escrow Agent as its escrow agent
for the purposes set forth herein, and the Escrow Agent hereby accepts such
appointment under the terms and conditions set forth herein.

2. ESTABLISHMENT OF ESCROW ACCOUNT. On or before the date of the commencement of
the Offering ("Commencement Date"), the Issuer shall establish an account with
the Escrow Agent, which account shall have the Escrow Account Name set forth on
schedule I attached hereto ("Escrow Fund"). The Issuer agrees to notify Escrow
Agent in writing of the Commencement Date of the offering, which notification
may be made via first class mail, overnight delivery, or facsimile at the
address or facsimile number provided on schedule I. The Issuer will instruct
subscribers to make the Subscription Funds, by check or money order, payable to
the Escrow Fund. Any check received that is not made payable to the Escrow Fund
shall be returned to the person or entity submitting same.

3. RECEIPT AND DEPOSIT OF SUBSCRIPTION FUNDS. The Issuer will instruct
subscribers to send a check or money order for the Subscription Funds directly
to the Lockbox Account established by JPMorgan Chase Bank ("Bank") via first
class mail or overnight delivery. Wire transfers and cash payments will not be
accepted. The Subscription Funds shall be accompanied by a written stock order
form, in the form attached hereto as Exhibit A ("Stock Order Form"), which form
shall set forth, among other things, the name, and address and taxpayer ID
number or social security number of the subscriber, the number of Units of the
Issuer subscribed for, and the amount paid therefor. The Bank will deposit such
funds into the Escrow Fund. The Bank will establish and maintain a computer file
containing a list of all subscriptions, including the subscriber's name and
taxpayer ID number or social security number, and number of Units for each
subscription ("Subscription List"). It shall not be the responsibility of the
Bank to verify that the amount of Subscription Funds accompanying a Stock Order
Form corresponds to the amount due for the number of Units subscribed for on
such Stock Order Form. The Bank shall make the Subscription List available for
review by the Issuer on a daily basis via electronic means. The Bank shall
forward the original Stock Order Forms to the Issuer on a weekly basis via first
class mail or overnight delivery at the address provided on schedule I. The
Escrow Agent shall return any funds received prior to the Commencement Date to
the subscriber at the address provided by on the Stock Order Form accompanying
the funds which information will be provided by Issuer.

4. INVESTMENT OF ESCROW FUND. During the term of this Escrow Agreement, the
Escrow Fund shall be invested and reinvested by the Escrow Agent in the
investment indicated on Schedule 1 or such other investments as shall be
directed in writing by the Issuer and as shall be acceptable to the Escrow
Agent. All investment orders involving U.S. Treasury obligations, commercial
paper and other direct investments will be executed through JPMorgan Fleming
Asset Management (JPMFAM), in the investment management division of JPMorgan
Chase. Subject to principles of best execution, transactions are effected on
behalf of the Escrow Fund through broker-dealers selected by JPMFAM. In this
regard, JPMFAM seeks to attain the best overall result for the Escrow Fund,
taking into consideration quality of service and reliability. An agency fee will
be assessed in connection with each

This document contains information that is confidential and the property of
JPMorgan Chase Bank. It may not be copied, published or used, in whole or in
part, for any purpose other than as expressly authorized by JPMorgan Chase Bank.
(C) JPMorgan Chase Bank 2001. All Rights Reserved.

<PAGE>

transaction. Periodic statements will be provided to Issuer reflecting
transactions executed on behalf of the Escrow Fund. The Issuer, upon written
request, will receive a statement of transaction details upon completion of any
securities transaction in the Escrow Fund without any additional cost. The
Escrow Agent shall have the right to liquidate any investments held in order to
provide funds necessary to make required payments under this Escrow Agreement.
The Escrow Agent shall have no liability for any loss sustained as a result of
any investment in an investment indicated on Schedule 1 or any investment made
pursuant to the instructions of the parties hereto or as a result of any
liquidation of any investment prior to its maturity or for the failure of the
parties to give the Escrow Agent instructions to invest or reinvest the Escrow
Fund. The proceeds of any investment of the Escrow Fund shall accrue to the
benefit of the Issuer and shall be disbursed in accordance with the terms of
paragraph 5 below.

5. DISPOSITION AND TERMINATION.

         (i) Escrow Period and Term of Agreement. The escrow period ("Escrow
Period") shall begin on the Commencement Date and shall terminate upon the
earlier to occur of the following: (a) such time as the Escrow Agent shall have
disbursed the funds in the Escrow Fund to the Issuer pursuant to section (iv) of
this paragraph 5; or (b) the Offering Closing Date as defined hereinafter,
("Termination Date"), whereupon Subscription Funds shall be disbursed as set
forth in section (iv) of this paragraph 5.

         (ii) Escrow Fund Ownership. The Issuer understands and agrees that
during the Escrow Period, the Issuer shall not be entitled to any funds on
deposit in the Escrow Fund (except as released to the Issuer pursuant to section
(iv) of this paragraph 5), and no such funds shall become the property of the
Issuer or any other entity nor shall such funds be subject to the debts of the
Issuer or any other entity (except as released to the Issuer pursuant to section
iv of this paragraph 5). The term of this Agreement shall end upon the earliest
to occur of 5(i)(a) or 5(i)(b) above. The termination of this Agreement is
required to be confirmed by the Issuer in writing, provided that the failure to
do so shall not affect the termination of this Agreement.

         (iii) Notification to Issuer of Escrow Fund Balance. Once the Escrow
Agent is in receipt of collected Subscription Funds totaling at least the
Minimum Subscription Amount, the Escrow Agent shall notify the Issuer of same in
writing. Once the Escrow Agent is in receipt of collected Subscription Funds
totaling at least the Maximum Subscription Amount, the Escrow Agent shall again
notify the Issuer of same in writing.

         (iv) Closing of the Offering. The Issuer may close the offering at any
time within 90 days of the Commencement Date. If the Issuer does not close the
offering within 90 days of the Commencement Date, the offering will terminate
automatically at 5:00 p.m., Chicago time, on the 90th day or first business day
thereafter. The foregoing notwithstanding, the Issuer may extend the duration of
the offering by post-effective amendment to the registration statement. If such
extension occurs, the Issuer will notify the Escrow Agent in writing that the
offering duration has been extended at the time such extension becomes
effective. The Issuer agrees to notify the Escrow Agent in writing of the
closing date of the offering (the "Offering Closing Date") and the amount of
subscriptions received. Upon receipt by the Escrow Agent of such written
notification from Issuer, the following procedure will take place.

         a.       If the Issuer has received subscriptions for at least the
                  Minimum Subscription Amount by the Offering Closing Date but
                  has not received subscriptions exceeding the Maximum
                  Subscription Amount, the Escrow Fund, along with all accrued
                  interest thereon, will be promptly paid to or credited to the
                  account of, or otherwise transferred to the Issuer pursuant to
                  instructions from the Issuer.

         b.       If the Issuer has received subscriptions in an amount
                  exceeding the Maximum Subscription Amount, the Maximum
                  Subscription Amount will be promptly paid to or credited to
                  the account of, or otherwise transferred to the Issuer
                  pursuant to instructions from the Issuer. Additionally, the
                  Issuer shall calculate the allocation of Units according to
                  the rules outlined in the Prospectus and shall provide written
                  instructions to the Escrow Agent for the refund of
                  Subscription Funds in excess of the Maximum Subscription
                  Amount within 10 days of the closing of the offering. Accrued
                  interest on the Escrow Fund shall be paid to the Issuer
                  pursuant to the Issuer's instructions. No interest shall be
                  paid to subscribers.

This document contains information that is confidential and the property of
JPMorgan Chase Bank. It may not be copied, published or used, in whole or in
part, for any purpose other than as expressly authorized by JPMorgan Chase Bank.
(C) JPMorgan Chase Bank 2001. All Rights Reserved.

<PAGE>

         c.       If the Issuer has not received subscriptions for at least the
                  Minimum Subscription Amount, the Escrow Agent shall distribute
                  to each subscriber the appropriate Subscriber Investment
                  Amount pursuant to written instructions of the Issuer within
                  10 days of the closing of the offering. No interest shall be
                  paid to subscribers. Instructions shall include the name,
                  address & amount of fund to be returned to the subscribers.
                  Fees owed to the Escrow Agent pursuant to this Agreement may
                  be deducted by Escrow Agent from interest, and the remaining
                  balance shall be paid to the Issuer.

6. ESCROW AGENT. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no duties shall be implied. The Escrow Agent
shall have no liability under and no duty to inquire as to the provisions of any
agreement other than this Escrow Agreement. The Escrow Agent may rely upon and
shall not be liable for acting or refraining from acting upon any written
notice, instruction or request furnished to it hereunder and believed by it to
be genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall be under no duty to inquire into or investigate the
validity, accuracy or content of any such document. The Escrow Agent shall have
no duty to solicit any payments which may be due it or the Escrow Fund. The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith except to the extent that a court of competent jurisdiction determines
that the Escrow Agent's gross negligence or willful misconduct was the primary
cause of any loss to the Issuer. The Escrow Agent may execute any of its powers
and perform any of its duties hereunder directly or through agents or attorneys
(and shall be liable only for the careful selection of any such agent or
attorney) and may consult with counsel, accountants and other skilled persons to
be selected and retained by it. The Escrow Agent shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other skilled persons. In
the event that the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands from any party hereto
which, in its opinion, conflict with any of the provisions of this Escrow
Agreement, it shall be entitled to refrain from taking any action and its sole
obligation shall be to keep safely all property held in escrow until it shall be
directed otherwise in writing by all of the other parties hereto or by a final
order or judgment of a court of competent jurisdiction. Anything in this Escrow
Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Escrow Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of action.

7. SUCCESSION. The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving 10 days advance notice in writing of such
resignation to the other parties hereto specifying a date when such resignation
shall take effect. The Escrow Agent shall have the right to withhold an amount
equal to any amount due and owing to the Escrow Agent, plus any costs and
expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow
Agent in connection with the termination of the Escrow Agreement. Any
corporation or association into which the Escrow Agent may be merged or
converted or with which it may be consolidated, or any corporation or
association to which all or substantially all the escrow business of the Escrow
Agent's corporate trust line of business may be transferred, shall be the Escrow
Agent under this Escrow Agreement without further act.

8. FEES. The Issuer agrees to (i) pay the Escrow Agent upon execution of this
Agreement and from time to time thereafter reasonable compensation for the
services to be rendered hereunder, which unless otherwise agreed in writing
shall be as described in Schedule 1 attached hereto, and (ii) pay or reimburse
the Escrow Agent upon request for all expenses, disbursements and advances,
including reasonable attorney's fees and expenses, incurred or made by it in
connection with the preparation, execution, performance, delivery modification
and termination of this Agreement.

9. INDEMNITY. The Issuer shall indemnify, defend and save harmless the Escrow
Agent and its directors, officers, agents and employees (the "indemnitees") from
all loss, liability or expense (including the fees and expenses of in house or
outside counsel) arising out of or in connection with (i) the Escrow Agent's
execution and performance of this Escrow Agreement, except in the case of any
indemnitee to the extent that such loss, liability or expense is due to the
gross negligence or willful misconduct of such indemnitee, or (ii) its following
any instructions or other directions from the Issuer, except to the extent that
its following any such instruction or direction is expressly forbidden by the
terms hereof. The parties hereto acknowledge that the foregoing indemnities
shall survive the resignation or removal of the Escrow Agent or the termination
of this Escrow Agreement. The parties hereby

This document contains information that is confidential and the property of
JPMorgan Chase Bank. It may not be copied, published or used, in whole or in
part, for any purpose other than as expressly authorized by JPMorgan Chase Bank.
(C) JPMorgan Chase Bank 2001. All Rights Reserved.

<PAGE>

grant the Escrow Agent a lien on, right of set-off against and security interest
in the Escrow Fund for the payment of any claim for indemnification,
compensation, expenses and amounts due hereunder.

10. TINS. The Issuer represents that its correct TIN assigned by the Internal
Revenue Service ("IRS") or any other taxing authority is set forth in Schedule
1. Upon execution of this Agreement, the Issuer shall provide the Escrow Agent
with a fully executed W-8 or W-9 ITS form, which shall include the Issuer's TIN.
All interest or other income earned under the Escrow Agreement shall be
allocated and/or paid as directed in a joint written direction of the Issuer and
reported by the recipient to the Internal Revenue Service or any other taxing
authority. Notwithstanding such written directions, Escrow Agent shall report
and, as required withhold any taxes as it determines may be required by any law
or regulation in effect at the time of the distribution. In the absence of
timely direction, all proceeds of the Escrow Fund shall be retained in the
Escrow Fund and reinvested from time to time by the Escrow Agent as provided in
Section 3. In the event that any earnings remain undistributed at the end of any
calendar year, Escrow Agent shall report to the Internal Revenue Service or such
other authority such earnings as it deems appropriate or as required by any
applicable law or regulation or, to the extent consistent therewith, as directed
in writing by the Issuer. In addition, Escrow Agent shall withhold any taxes it
deems appropriate and shall remit such taxes to the appropriate authorities.

11. NOTICES. All communications hereunder shall be in writing and shall be
deemed to be duly given and received:

         (i) upon delivery if delivered personally or upon confirmed transmittal
         if by facsimile;

         (ii) on the next Business Day (as hereinafter defined) if sent by
         overnight courier; or

         (iii) four (4) Business Days after mailing if mailed by prepaid
         registered mail, return receipt requested, to the appropriate notice
         address set forth on Schedule 1 or at such other address as any party
         hereto may have furnished to the other parties in writing by registered
         mail, return receipt requested.

Notwithstanding the above, in the case of communications delivered to the Escrow
Agent pursuant to (ii) and (iii) of this Section 10, such communications shall
be deemed to have been given on the date received by the Escrow Agent. In the
event that the Escrow Agent, in its sole discretion, shall determine that an
emergency exists, the Escrow Agent may use such other means of communication as
the Escrow Agent deems appropriate. "Business Day" shall mean any day other than
a Saturday, Sunday or any other day on which the Escrow Agent located at the
notice address set forth on Schedule 1 is authorized or required by law or
executive order to remain closed.

12. SECURITY PROCEDURES. In the event funds transfer instructions are given
(other than in writing at the time of execution of this Escrow Agreement, as
indicated in Schedule 1 attached hereto), whether in writing, by telecopier or
otherwise, the Escrow Agent is authorized to seek confirmation of such
instructions by telephone call-back to the person or persons designated on
schedule 2 hereto ("Schedule 2"), and the Escrow Agent may rely upon the
confirmation of anyone purporting to be the person or persons so designated. The
persons and telephone numbers for call-backs may be changed only in a writing
actually received and acknowledged by the Escrow Agent. If the Escrow Agent is
unable to contact any of the authorized representatives identified in Schedule
2, the Escrow Agent is hereby authorized to seek confirmation of such
instructions by telephone call-back to any one or more of your executive
officers, ("Executive Officers"), which shall include the titles of Chief
Financial Officer and Treasurer, as the Escrow Agent may select. Such "Executive
Officer" shall deliver to the Escrow Agent a fully executed Incumbency
Certificate, and the Escrow Agent may rely upon the confirmation of anyone
purporting to be any such officer. The Escrow Agent and the beneficiary's bank
in any funds transfer may rely solely upon any account numbers or similar
identifying numbers provided by the Purchaser or the Seller to identify (i) the
beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The
Escrow Agent may apply any of the escrowed funds for any payment order it
executes using any such identifying number, even when its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a bank
other than the beneficiary's bank or an intermediary bank designated. The
parties to this Escrow Agreement acknowledge that these security procedures are
commercially reasonable.

13. MISCELLANEOUS. The provisions of this Escrow Agreement may be waived,
altered, amended or supplemented, in whole or in part, only by a writing signed
by all of the parties hereto. Neither this Escrow Agreement nor any right or
interest hereunder may be assigned in whole or in part by any party, except as
provided in Section 6, without the prior consent of the other parties. This
Escrow Agreement shall be governed by and

This document contains information that is confidential and the property of
JPMorgan Chase Bank. It may not be copied, published or used, in whole or in
part, for any purpose other than as expressly authorized by JPMorgan Chase Bank.
(C) JPMorgan Chase Bank 2001. All Rights Reserved.

<PAGE>

construed under the laws of the State of New York. Each party hereto irrevocably
waives any objection on the grounds of venue, forum non-conveniens or any
similar grounds and irrevocably consents to service of process by mail or in any
other manner permitted by applicable law and consents to the jurisdiction of the
courts located in the State of New York. The parties further hereby waive any
right to a trial by jury with respect to any lawsuit or judicial proceeding
arising or relating to this Escrow Agreement. No party to this Escrow Agreement
is liable to any other party for losses due to, or if it is unable to perform
its obligations under the terms of this Escrow Agreement because of, acts of
God, fire, floods, strikes, equipment or transmission failure, or other causes
reasonably beyond its control. This Escrow Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
the date set forth in Schedule 1.

                                JPMORGAN TRUST COMPANY, N.A.
                                AS ESCROW AGENT

                                By: /s/ JoAnne Osborn
                                    --------------------------------------------
                                    Jo Anne Osborn, Vice President

                                ISSUER

                                By: /s/ Martin P. Gilmore
                                    --------------------------------------------
                                    Martin P. Gilmore, President

This document contains information that is confidential and the property of
JPMorgan Chase Bank. It may not be copied, published or used, in whole or in
part, for any purpose other than as expressly authorized by JPMorgan Chase Bank.
(C) JPMorgan Chase Bank 2001. All Rights Reserved.

<PAGE>

                                   Schedule 1

EFFECTIVE DATE: August 3, 2004

NAME OF ISSUER: LightFirst Inc.
ISSUER NOTICE ADDRESS: P. O. Box 59481, Schaumburg, IL 60159
ISSUER OVERNIGHT DELIVERY ADDRESS: 25 Northwest Point, Suite 700, Elk Grove
Village, IL 60007
ISSUER FACSIMILE NUMBER: (847) 640-1818
ISSUER TIN: 36-443-7640
WIRING INSTRUCTIONS:

ESCROW ACCOUNT NAME: JPMorgan Chase Trust

MINIMUM SUBSCRIPTION AMOUNT: $15,000,000
MAXIMUM SUBSCRIPTION AMOUNT: $20,000,000

INVESTMENT:                         [specify]

        [x]      JPMorgan Chase Bank Money Market Account;

        [ ]      A trust account with JPMorgan Chase Bank;

        [ ]      A money market mutual fund, including without limitation the
                 JPMorgan Funds or any other mutual fund for which the Escrow
                 Agent or any affiliate of the Escrow Agent serves as investment
                 manager, administrator, shareholder servicing agent and/or
                 custodian or subcustodian, notwithstanding that (i) the Escrow
                 Agent or an affiliate of the Escrow Agent receives fees from
                 such funds for services rendered, (ii) the Escrow Agent charges
                 and collects fees for services rendered pursuant to this Escrow
                 Agreement, which fees are separate from the fees received from
                 such funds, and (iii) services performed for such funds and
                 pursuant to this Escrow Agreement may at times duplicate those
                 provided to such funds by the Escrow Agent or its affiliates.

                 Fund

        [ ]      Such other investments as Issuer and Escrow Agent may from time
                 to time mutually agree upon in a writing executed and delivered
                 by the Issuer accepted by the Escrow Agent.

This document contains information that is confidential and the property of
JPMorgan Chase Bank. It may not be copied, published or used, in whole or in
part, for any purpose other than as expressly authorized by JPMorgan Chase Bank.
(C) JPMorgan Chase Bank 2001. All Rights Reserved.

<PAGE>

ESCROW AGENT NOTICE ADDRESS:        JoAnne Osborn
                                    Vice President
                                    JPMorgan Trust Company, N.A.
                                    Institutional Trust Services
                                    One Oxford Centre
                                    301 Grant Street, St. 1100
                                    Pittsburgh, PA 15219
                                    Phone No.:412-291-2027
                                    Fax No.: 412-291-2070

ESCROW AGENT'S COMPENSATION:        ANNUAL ADMINISTRATION FEE: $3,000. WITHOUT
                                    PRORATION OF PARTIAL YEAR

OUT-OF-POCKET EXPENSES:             6% OF THE AMOUNT OF THE ANNUAL
                                    ADMINISTRATION FEE

This document contains information that is confidential and the property of
JPMorgan Chase Bank. It may not be copied, published or used, in whole or in
part, for any purpose other than as expressly authorized by JPMorgan Chase Bank.
(C) JPMorgan Chase Bank 2001. All Rights Reserved.

<PAGE>

                                   SCHEDULE 2

                     TELEPHONE NUMBER(s) FOR CALL-BACKS AND
           PERSON(s) DESIGNATED TO CONFIRM FUNDS TRANSFER INSTRUCTIONS

If to Issuer:

         Name                                                 Telephone Number
-----------------------                                       ----------------

1.   Martin P. Gilmore                                         (847) 640-8880

2.   Angele R. Kuenster                                        (847) 640-8880

This document contains information that is confidential and the property of
JPMorgan Chase Bank. It may not be copied, published or used, in whole or in
part, for any purpose other than as expressly authorized by JPMorgan Chase Bank.
(C) JPMorgan Chase Bank 2001. All Rights Reserved.<PAGE>

                                                                   EXHIBIT 10.57

                          FOURTH SUPPLEMENTAL INDENTURE

      FOURTH SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
April 22, 2004, by and among the entities listed on Schedule 1 attached hereto
(the "Guaranteeing Subsidiaries"), each being 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").

                                   WITNESSETH

      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"), as
supplemented by a First Supplemental Indenture, dated as of May 7, 2003; Second
Supplemental Indenture, dated as of September 30, 2003; and Third Supplemental
Indenture, dated as of February 24, 2004;

      WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiaries shall execute and deliver to the Trustee a
supplemental indenture pursuant to which the Guaranteeing Subsidiaries shall
unconditionally guarantee all of the Company's Obligations under the Notes 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 Subsidiaries 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 Subsidiaries hereby agree 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:

<PAGE>

                  (i)   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

                  (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. Each Subsidiary Giarantor agrees that this
                  is a guarantee of payment and not a guarantee of collection.

            (b)   The obligations hereunder shall be joint and several and
                  unconditional, irrespective of the validity or enforceability
                  of the Notes or the obligations of the Company under 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.

                                       2

<PAGE>

            (f)   The Guaranteeing Subsidiaries 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.

            (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
                  Subsidiary Guarantee not constituting a fraudulent transfer or
                  conveyance.

      3. EXECUTION AND DELIVERY. Each of the Guaranteeing Subsidiaries 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 Subsidiaries may not consolidate with or
                  merge with or into (whether or not such Senior Subordinated
                  Note 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)
                        unconditionally assumes all the obligations of such

                                       3

<PAGE>

                        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 the event of a sale or
                  other disposition of all or substantially all of the assets of

                                       4
<PAGE>

                  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
Subsidiaries, as such, shall have any liability for any obligations of the
Company or any of the Guaranteeing Subsidiaries 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 Subsidiaries and the Company.

                                       5

<PAGE>

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

PEABODY ENERGY CORPORATION                  US BANK NATIONAL ASSOCIATION
("COMPANY")                                 ("TRUSTEE")

By: ________________________________        By: ________________________________
Name:  Walter L. Hawkins, Jr.               Name:  Philip G. Kane, Jr.
Title: Vice President and Treasurer         Title: Vice President

EXISTING SUBSIDIARY GUARANTORS:

                                         AFFINITY MINING COMPANY
                                         ARCLAR COMPANY, LLC
                                         ARID OPERATIONS INC.
                                         BEAVER DAM COAL COMPANY
                                         BIG RIDGE, INC.
                                         BIG SKY COAL COMPANY
                                         BLACK BEAUTY COAL COMPANY
                                         BLACK BEAUTY EQUIPMENT COMPANY
                                         BLACK BEAUTY HOLDING COMPANY, LLC
                                         BLACK BEAUTY MINING, INC.
                                         BLACK BEAUTY RESOURCES, INC.
                                         BLACK BEAUTY UNDERGROUND, INC.
                                         BLACK HILLS MINING COMPANY, LLC
                                         BLACK STALLION COAL COMPANY, LLC
                                         BLACK WALNUT COAL COMPANY
                                         BLUEGRASS COAL COMPANY
                                         BTU VENEZUELA, LLC
                                         BTU WORLDWIDE, INC.
                                         CABALLO COAL COMPANY
                                         CHARLES COAL COMPANY
                                         CLEATON COAL COMPANY
                                         COAL PROPERTIES CORP.
                                         COLONY BAY COAL COMPANY
                                         COOK MOUNTAIN COAL COMPANY
                                         COTTONWOOD LAND COMPANY
                                         CYPRUS CREEK LAND COMPANY
                                         CYPRUS CREEK LAND RESOURCES, LLC
                                         EACC CAMPS, INC.
                                         EAGLE COAL COMPANY
                                         EASTERN ASSOCIATED COAL CORP.
                                         EASTERN ROYALTY CORP.
                                         EMPIRE MARINE, LLC
                                         FALCON COAL COMPANY
                                         GALLO FINANCE COMPANY
                                         GIBCO MOTOR EXPRESS, LLC

                                       6

<PAGE>

                                         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
                                         HIGHWALL MINING SERVICES COMPANY
                                         HILLSIDE MINING COMPANY
                                         INDEPENDENCE MATERIAL HANDLING
                                            COMPANY
                                         INDIAN HILL COMPANY
                                         INTERIOR HOLDINGS CORP.
                                         JAMES RIVER COAL TERMINAL COMPANY
                                         JARRELL'S BRANCH COAL COMPANY
                                         JUNIPER COAL COMPANY
                                         KANAWHA RIVER VENTURES I, LLC
                                         KAYENTA MOBILE HOME PARK, INC.
                                         LOGAN FORK COAL COMPANY
                                         MARTINKA COAL COMPANY
                                         MIDCO SUPPLY AND EQUIPMENT
                                            CORPORATION
                                         MIDWEST COAL ACQUISITION CORP.
                                         MOUNTAIN VIEW COAL COMPANY
                                         MUSTANG ENERGY COMPANY, L.L.C.
                                         NORTH PAGE COAL CORP.
                                         OHIO COUNTY COAL COMPANY
                                         PATRIOT COAL COMPANY, L.P.
                                         PDC PARTNERSHIP HOLDINGS, INC.
                                         PEABODY AMERICA, INC.
                                         PEABODY ARCHVEYOR, L.L.C.
                                         PEABODY COAL COMPANY
                                         PEABODY COALSALES COMPANY
                                         PEABODY COALTRADE, INC.
                                         PEABODY DEVELOPMENT COMPANY, LLC
                                         PEABODY DEVELOPMENT LAND HOLDINGS, LLC
                                         PEABODY ENERGY GENERATION HOLDING
                                         PEABODY ENERGY INVESTMENTS, INC.
                                         PEABODY ENERGY SOLUTIONS, INC.
                                         PEABODY HOLDING COMPANY, INC.
                                         PEABODY NATURAL GAS, LLC
                                         PEABODY NATURAL RESOURCES COMPANY
                                         PEABODY POWERTREE INVESTMENTS, 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
                                         PEC EQUIPMENT COMPANY, LLC

                                       7

<PAGE>

                                         PINE RIDGE COAL COMPANY
                                         POINT PLEASANT DOCK COMPANY, LLC
                                         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.
                                         RIVERS 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
                                         SUGAR CAMP PROPERTIES
                                         THOROUGHBRED, L.L.C.
                                         THOROUGHBRED GENERATING COMPANY, LLC
                                         THOROUGHBRED MINING COMPANY, L.L.C.
                                         WILLIAMSVILLE COAL COMPANY, LLC
                                         YANKEETOWN DOCK CORPORATION

                                         By: _________________________________
                                            Name: Walter L. Hawkins, Jr.
                                            Title:  Vice President

                                       8

<PAGE>

NEW GUARANTEEING SUBSIDIARIES:

                                            BTU EMPIRE CORPORATION

                                            By: _______________________________
                                            Name: Walter L. Hawkins, Jr.
                                            Title: Vice President & Treasurer

                                            BTU WESTERN RESOURCES, INC.

                                            By: _______________________________
                                            Name: Walter L. Hawkins, Jr.
                                            Title: Vice President & Treasurer

                                            COLORADO YAMPA COAL COMPANY

                                            By: _______________________________
                                            Name: Walter L. Hawkins, Jr.
                                            Title: Vice President & Treasurer

                                            SHOSHONE COAL CORPORATION

                                            By: _______________________________
                                            Name: Walter L. Hawkins, Jr.
                                            Title: Vice President & Treasurer

                                            TWENTYMILE COAL COMPANY

                                            By: _______________________________
                                            Name: Walter L. Hawkins, Jr.
                                            Title: Vice President & Treasurer

                                       9

<PAGE>

                                   SCHEDULE 1

                          NEW GUARANTEEING SUBSIDIARIES

BTU EMPIRE CORPORATION, a Delaware corporation
BTU WESTERN RESOURCES, INC., a Delaware corporation
COLORADO YAMPA COAL COMPANY, a Delaware corporation
SHOSHONE COAL CORPORATION, a Delaware corporation
TWENTYMILE COAL COMPANY, a Delaware corporation

                                       10

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