Exhibit 10.1

EXECUTION COPY

SEPARATION AGREEMENT, PLAN OF REORGANIZATION AND DISTRIBUTION

by and between

PEABODY ENERGY CORPORATION

and

PATRIOT COAL CORPORATION

Dated as of October 22, 2007

SEPARATION AGREEMENT, PLAN OF REORGANIZATION AND DISTRIBUTION

ARTICLE I DEFINITIONS					1
Section 1.01.		Definitions			1
ARTICLE II REORGANIZATION; CONVEYANCE OF CERTAIN ASSETS; ASSUMPTION OF CERTAIN LIABILITIES; CERTAIN PAYMENTS; AND TRANSITION ARRANGEMENTS					13
Section 2.01.		Reorganization			13
Section 2.02.		Conveyance of Assets; Discharge of Liabilities			13
Section 2.03.		Ancillary Agreements			15
Section 2.04.		Issuance of Patriot Common Stock			16
Section 2.05.		Resignations			16
Section 2.06.		Limitation of Liability			16
Section 2.07.		Novation of Liabilities; Consents			17
Section 2.08.		Assignment of Promissory Notes			18
ARTICLE III the DISTRIBUTION					18
Section 3.01.		Cooperation Prior to the Distribution			18
Section 3.02.		Conditions Precedent to the Distribution			19
Section 3.03.		The Distribution			20
ARTICLE IV COVENANTS					20
Section 4.01.		Bank Accounts			20
Section 4.02.		Guaranteed Patriot and PEC Liabilities			21
Section 4.03.		Insurance			23
Section 4.04.		No Hire; No Solicit			26
Section 4.05.		Legal Names and Signage			26
Section 4.06.		Auditors and Audits; Annual and Quarterly Financial Statements and Accounting			27
Section 4.07.		No Restrictions on Post-Closing Competitive Activities; Corporate Opportunities			29
Section 4.08.		Right of Offset			31
Section 4.09.		[Intentionally Omitted]			31
Section 4.10.		Prairie State Permits			31
ARTICLE V LITIGATION MATTERS					32
Section 5.01.		Case Allocation			32
Section 5.02.		Litigation cooperation			34
ARTICLE VI INDEMNIFICATION					34
Section 6.01.		Patriot Indemnification of the PEC Group			34
Section 6.02.		PEC Indemnification of Patriot Group			35
Section 6.03.		Contribution			35
Section 6.04.		Insurance and Third Party Obligations			35
Section 6.05.		Indemnification Obligations Net of Insurance Proceeds and Other Amounts on a Net-Tax Basis			36
Section 6.06.		Notice and Payment of Claims			36
Section 6.07.		Notice and Defense of Third Party Claims			37
ARTICLE VII EMPLOYEE MATTERS					38
Section 7.01.		Employee Matters Agreement			38
ARTICLE VIII TAX MATTERS					38

Section 8.01.		Tax Separation Agreement			38
ARTICLE IX ACCOUNTING MATTERS					38
Section 9.01.		Intercompany Accounts			38
ARTICLE X INTELLECTUAL PROPERTY MATTERS					39
Section 10.01.		Software License Agreement			39
ARTICLE XI TRANSITION Services					39
Section 11.01.		Transition Services Agreement			39
ARTICLE XII REAL PROPERTY MATTERS					39
Section 12.01.		Real Property Agreements			39
ARTICLE XIII INFORMATION; SEPARATION OF DATA					39
Section 13.01.		Provision of Corporate Records			39
Section 13.02.		Access to Information			39
Section 13.03.		Retention of Records			40
Section 13.04.		Confidentiality			40
Section 13.05.		Privileged Matters			41
Section 13.06.		Ownership of Information			43
Section 13.07.		Separation of Data			43
ARTICLE XIV INTEREST ON PAYMENTS					43
Section 14.01.		Interest			43
ARTICLE XV MISCELLANEOUS					44
Section 15.01.		Expenses			44
Section 15.02.		Notices			44
Section 15.03.		Amendment and Waiver			45
Section 15.04.		Entire Agreement			45
Section 15.05.		Consolidation, Merger, Etc.; Parties in Interest; Termination			45
Section 15.06.		Further Assurances and Consents			46
Section 15.07.		Severability			46
Section 15.08.		Governing Law; Jurisdiction			46
Section 15.09.		Counterparts			46
Section 15.10.		Third Party Beneficiaries			46
Section 15.11.		Specific Performance			46
Section 15.12.		Limitations of Liability			47
Section 15.13.		Force Majeure			47
Section 15.14.		Construction			47
Section 15.15		Disputes			47

Exhibits:
Exhibit A		Table of Patriot Entities
Exhibit B		Employee Matters Agreement
Exhibit C		Real Property Agreements
Exhibit D		Software License Agreement
Exhibit E-1		Coal Act Liability Assumption Agreement
Exhibit E-2		NBCWA Liability Assumption Agreement
Exhibit E-3		Salaried Employee Liability Assumption Agreement
Exhibit F		Tax Separation Agreement
Exhibit G		Transition Services Agreement
Exhibit H		Master Equipment Sublease Agreement
Exhibit I		Common Interest Agreement
Exhibit J-1		Coal Supply Agreement I
Exhibit J-2		Coal Supply Agreement II
Exhibit J-3		Master Coal Supply Agreement
Exhibit K		Administrative Services Agreement
Exhibit L		TECO Overriding Royalty Agreement
Exhibit M		DTA Throughput Agreement
Exhibit 2.01		Restructuring Steps

Schedules:
Schedule 1.1(a)		Assumed Patriot Liabilities
Schedule 1.1(b)		Patriot Contracts
Schedule 1.1(c)		Patriot Liabilities
Schedule 1.1(d)		Patriot Liabilities related to Indebtedness
Schedule 2.02(g)		Conveyance of Assets
Schedule 2.06(b)		Limitation of Liability
Schedule 2.08(a)		Promissory Notes
Schedule 3.02(q)		Released Obligations
Schedule 4.01(a)		Patriot Bank Accounts
Schedule 4.02(a)		Guaranteed Patriot Liabilities
Schedule 4.02(b)		Guaranteed PEC Liabilities
Schedule 4.10(a)		Prairie State Reorganization Steps
Schedule 4.10(b)		Prairie State Permits
Schedule 5.01(a)		Patriot Actions
Schedule 5.01(b)		PEC Actions
Schedule 5.01(e)		Joint Actions
Schedule 9.01(a)		Intercompany Accounts
Schedule 15.01		Expenses to be paid by Patriot

SEPARATION AGREEMENT, PLAN OF REORGANIZATION AND DISTRIBUTION

     SEPARATION AGREEMENT, PLAN OF REORGANIZATION AND DISTRIBUTION (this “Agreement”), dated as of October 22, 2007, by and between Peabody Energy Corporation, a Delaware corporation (“PEC”) and Patriot Coal Corporation, a Delaware corporation (“Patriot” and together with PEC, the “Parties”, and each individually, a “Party”).

RECITALS

     A. Patriot is a wholly-owned subsidiary of PEC formed for the purpose of taking title to the stock of certain PEC subsidiaries, the assets and liabilities of which constitute the coal mining business of PEC in West Virginia, all coal mines and certain coal reserves in Kentucky and certain coal reserves in the states of Ohio and Illinois.

     B. The Board of Directors of PEC has determined that it is in the best interests of PEC and its shareholders to transfer and assign to Patriot effective at and after the Effective Time (as defined herein) and as a contribution to the capital of Patriot, the capital stock of the PEC subsidiaries that currently operate the Patriot Business (as defined herein) as listed in Exhibit A hereto and certain related assets and to receive in exchange therefor shares of Patriot Common Stock (as defined herein).

     C. The Board of Directors of PEC has further determined that it is in the best interests of PEC and its shareholders to make a distribution (the “Distribution”) to the holders of PEC Common Stock (as defined herein) of all of the outstanding shares of Patriot Common Stock at the rate of one share of Patriot Common Stock for every ten shares of PEC Common Stock outstanding as of the Record Date (as defined herein).

     D. The Parties intend that the Contribution (as defined herein) constitute a reorganization described in Section 368(a)(1)(D) of the Code (as defined herein) and that the Distribution not be taxable to PEC or its shareholders pursuant to Section 355 of the Code.

     E. The Parties have determined that it is necessary and desirable to set forth the principal corporate transactions required to effect the Contribution and the Distribution and to set forth other agreements that will govern certain other matters following the Distribution.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements and covenants contained in this Agreement and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I
DEFINITIONS

     Section 1.01. Definitions . As used herein, the following terms have the following meaning:

     “Action” means any claim, suit, arbitration, inquiry, proceeding, or investigation by or before any court, governmental or other regulatory or administrative agency or commission or any other tribunal.

     “Administrative Services Agreement” means the Administrative Services Agreement, substantially in the form of Exhibit K hereto, entered into at or prior to the Effective Time, between Patriot and Peabody Holding Company, LLC, a wholly-owned subsidiary of PEC (“Peabody Holding”), as amended from time to time.

     “Affiliate” means, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person. For the purposes of this definition, “control”, when used with respect to any specified Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract or otherwise.

     “Ancillary Agreements” means all of the written agreements, instruments, understandings, assignments and other arrangements (other than this Agreement) entered into in connection with the transactions contemplated hereby, including, without limitation, the Employee Matters Agreement, the Tax Separation Agreement, the Transition Services Agreement, the Software License Agreement, the Real Property Agreements, the Liability Assumption Agreements, the Master Equipment Sublease Agreement, the Administrative Services Agreement, the Common Interest Agreement, the TECO Overriding Royalty Agreement, the DTA Throughput Agreement, the Coal Supply Agreements and other documents relating to the transfer of assets and liabilities in contemplation of the Contribution and Distribution.

     “Applicable Rate” means the Prime Rate plus 2.0% per annum.

     “Assets” means all properties, rights, contracts, leases and claims, of every kind and description, wherever located, whether tangible or intangible, and whether real, personal or mixed.

     “Assumed Patriot Liabilities” means those Patriot Liabilities assumed by PEC as set forth on Schedule 1.1(a) .

     “Black Lung Benefit Guarantees” is defined in Section 4.02(a)(iv).

     “Black Lung Benefit Liabilities” means (i) liabilities in respect of the Black Lung Benefits Revenue Act of 1977 and the Black Lung Benefits Reform Act of 1977, as amended in 1981, and (ii) liabilities in respect of occupational disease workers compensation liabilities and traumatic workers compensation liabilities (including, without limitation, in respect of black lung disease) arising under state law, in each case with respect to any member of the Patriot Group.

     “BofA” is defined in Section 15.01.

     “Claims Administration” means the administration of claims made under the Third Party Policies, including the reporting of claims to the unaffiliated, third-party insurance carriers that

issued the Third Party Policies, management and defense of such claims, negotiating the resolution of such claims, and providing for appropriate releases upon settlement of such claims.

     “Coal Supply Agreements” means (i) the Coal Supply Agreement I, substantially in the form of Exhibit J-1 hereto, entered into at or before the Effective Time between COALSALES II, LLC and Patriot Coal Sales LLC, (ii) the Coal Supply Agreement II, substantially in the form of Exhibit J-2 hereto, entered into at of before the Effective Time between COALSALES, LLC and Patriot Coal Sales LLC, and (iii) each agreement entered into by Patriot Coal Sales LLC, substantially in the form of the Master Coal Supply Agreement attached hereto as Exhibit J-3 , each of which as amended from time to time.

     “Code” means the United States Internal Revenue Code of 1986, as amended.

     “Commission” means Securities and Exchange Commission.

     “Common Interest Agreement” means the Common Interest Agreement, substantially in the form of Exhibit I hereto, entered into at or prior to the Effective Time, between PEC and Patriot, as amended from time to time.

     “Confidential Information” means all business or operational information concerning a Party and/or its subsidiaries (including (i) earnings reports and forecasts, (ii) macro-economic reports and forecasts, (iii) business and strategic plans, (iv) general market evaluations and surveys, (v) litigation presentations and risk assessments, (vi) budgets, (vii) financing and credit-related information, (viii) specifications, ideas and concepts for products and services, (ix) quality assurance policies, procedures and specifications, (x) customer information, (xi) Software, (xii) training materials and information, and (xiii) all other know-how, methodology, procedures, techniques and trade secrets related to design, development and operational processes) which, prior to or following the Effective Time, has been disclosed by a Party or its subsidiaries to the other Party or its subsidiaries, in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other (except to the extent that such information can be shown to have been (i) in the public domain through no action of such Party or its subsidiaries or (ii) lawfully acquired from other sources by such Party or its subsidiaries to which it was furnished; provided , however , in the case of clause (ii) that, to the furnished Party’s knowledge, such sources did not provide such information in breach of any confidentiality obligations).

     “Contribution” is defined in Section 2.01.

     “Distribution” is defined in the recitals to this Agreement.

     “Distribution Agent” means American Stock Transfer & Trust Company, in its capacity as agent for PEC in connection with the Distribution.

     “Distribution Date” means the date upon which the Distribution shall be effective, as determined by the Board of Directors of PEC, or such committee of such Board of Directors as shall be designated by the Board of Directors of PEC.

     “DTA Throughput Agreement” means the Throughput Agreement, substantially in the form of Exhibit M hereto, entered into at or before the Effective Time between Peabody Terminals, LLC, James River Coal Terminal, LLC and Patriot Coal Sales LLC, as amended from time to time.

     “Effective Time” means 11:59 p.m. New York time on the Distribution Date.

     “Employee Matters Agreement” means the Employee Matters Agreement, substantially in the form of Exhibit B hereto, entered into at or prior to the Effective Time between PEC and Patriot, as amended from time to time.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Force Majeure” means, with respect to a Party, an event beyond the reasonable control of such Party (or any Person acting on its behalf), which by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes acts of God, storms, floods, earthquakes, hurricanes, riots, pandemics, fires, sabotage, strikes, lockouts, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism.

     “Form 10” means the registration statement on Form 10 filed by Patriot with the Commission to effect the registration of the Patriot Common Stock pursuant to the Exchange Act, as such registration statement may be amended from time to time.

     “Fort” is defined in Section 4.09(a).

     “Governmental Entity” means any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any official thereof.

     “Group” means the PEC Group or the Patriot Group, as the context so requires.

     “Guaranteed Patriot Liabilities” means the Patriot Liabilities on which any member of the PEC Group is an obligor by reason of any guarantee or contractual commitment, including Liabilities under any contract assumed by any member of the Patriot Group from any member of the PEC Group with respect to which any member of the PEC Group remains liable.

     “Guaranteed PEC Liabilities” means (i) the PEC Liabilities on which any member of the Patriot Group is an obligor by reason of any guarantee or contractual commitment, including Liabilities under any contract assumed by any member of the PEC Group from any member of the Patriot Group with respect to which any member of the Patriot Group remains liable, and (ii) the Assumed Patriot Liabilities.

     “Indebtedness” means (i) any indebtedness for borrowed money or the deferred purchase price of property as evidenced by a note, bonds or other instruments, (ii) obligations as lessee

under capital leases, (iii) obligations secured by any mortgage, pledge, security interest, encumbrance, lien or charge of any kind existing on any asset owned or held by any Person, whether or not such Person has assumed or becomes liable for the obligations secured thereby, (iv) any obligation under any interest rate swap agreement, (v) accounts payable, (vi) reimbursement obligations with respect to surety and performance bonds or letters of credit, and (vii) obligations under direct or indirect guarantees of (including obligations, contingent or otherwise, to assure a creditor against loss in respect of) indebtedness or obligations of the kinds referred to in clauses (i), (ii), (iii), (iv), (v) and (vi) above.

     “Indemnifiable Loss” means any and all damage, loss, liability, and expense (including, without limitation, reasonable expenses of investigation and reasonable attorneys’ fees and expenses) in connection with any and all Actions or threatened Actions.

     “Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), communications and materials otherwise related to or made or prepared in connection with or in preparation for any legal proceeding, and other technical, financial, employee or business information or data.

     “Information Statement” means the information statement required by the Commission to be sent to each holder of PEC Common Stock in connection with the Distribution, and prepared in accordance with the Exchange Act.

     “Insurance Administration” means, with respect to each Third Party Policy: (i) the accounting for premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles and self-insured retentions, as appropriate, under the terms and conditions of such Third Party Policy; (ii) the reporting to the relevant unaffiliated, third-party insurer that issues such Third Party Policy of any losses or claims which may be covered by such Third Party Policy; and (iii) the distribution of Insurance Proceeds related to such Third Party Policy, subject to the terms of Section 4.03.

     “Insurance Proceeds” means those monies (i) received by an insured from an unaffiliated third-party insurer under any Third Party Policy, or (ii) paid by such third-party insurer on behalf of an insured under any Third Party Policy, in either case net of any applicable premium adjustment, retrospectively-rated premium, deductible, self-insured retentions, or cost of reserve paid or held by or for the benefit of such insured.

     “Insured Claims” means those Liabilities that, individually or in the aggregate, are covered within the terms and conditions of any of the Third Party Policies, whether or not subject to deductibles, co-insurance, uncollectibility or retrospectively-rated premium adjustments.

     “Intellectual Property” means all intellectual property and industrial property rights of any kind or nature, including all United States and foreign (i) patents, patent applications, patent disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) Trademarks, (iii) copyrights, whether statutory or common law, registered or unregistered and published or unpublished, (iv) rights of publicity, (v) moral rights and rights of attribution and integrity, (vi) rights in Software, (vii) trade secrets and all other confidential information, know-how, inventions, improvements, proprietary processes, formulae, models and methodologies, (viii) rights to personal information, (ix) telephone numbers and internet protocol addresses, (x) rights, priorities and privileges arising under applicable law in the foregoing and in other similar intangible assets, (xi) applications and registrations for the foregoing, and (xii) rights and remedies against past, present, and future infringement, misappropriation, or other violation of the foregoing.

     “Intercompany Accounts” means any receivable, payable or loan between any member of the PEC Group, on the one hand, and any member of the Patriot Group, on the other hand that exists prior to the Effective Time and is reflected in the Records of the relevant members of the PEC Group and the Patriot Group, except for any such receivable, payable or loan that arise pursuant to this Agreement or any Ancillary Agreement.

     “IRS” means the United States Internal Revenue Service.

     “Joint Action” means any current or future Action with respect to which it is unclear at the onset of such Action whether Liabilities will arise primarily in connection with the Patriot Business or the PEC Business, including any of the Actions listed on Schedule 5.01(e) .

     “KELLC” is defined in Section 4.09(a).

     “Law” means any United States or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).

     “Liabilities” means any and all claims, debts, liabilities and obligations, absolute or contingent, matured or not matured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, including all costs and expenses relating thereto, and including, without limitation, those debts, liabilities and obligations arising under this Agreement or any Ancillary Agreement, any law, rule, regulation, action, order or consent decree of any governmental entity or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking.

     “Liability Assumption Agreements” means each of (i) the Coal Act Liability Assumption Agreement, substantially in the form of Exhibit E-1 hereto, (ii) the NBCWA Liability Assumption Agreement, substantially in the form of Exhibit E-2 hereto, and (iii) the Salaried Employee Liability Assumption Agreement, substantially in the form of Exhibit E-3 hereto, in each case entered into at or before the Effective Time between Patriot and Peabody Holding, as amended from time to time.

     “Master Equipment Sublease Agreement” means the Master Equipment Sublease Agreement, substantially in the form of Exhibit H hereto, entered into at or before the Effective

Time between PEC Equipment Company, LLC and Patriot Leasing Company LLC, as amended from time to time.

     “NYSE” means the New York Stock Exchange.

     “Other Party’s Marks” is defined in Section 4.05(a).

     “Party” is defined in the preamble to this Agreement.

     “Patriot” is defined in the preamble to this Agreement.

     “Patriot Accounts” is defined in Section 4.01(a).

     “Patriot Action” means any current or future Action relating primarily to the Patriot Business in which one or more members of the PEC Group is a defendant or the party against whom a claim or investigation is directed, including any of the Actions listed on Schedule 5.01(a) , but excluding any Joint Action.

     “Patriot Articles” means the articles of incorporation of Patriot in the form filed as an exhibit to the Form 10 at the time it becomes effective.

     “Patriot Assets” means:

          (a) the capital stock or partnership interest, as applicable, of any of the entities listed in Exhibit A;

          (b) the Real Property Assets;

          (c) the Patriot Contracts; and

          (d) except as otherwise provided in an Ancillary Agreement, all Assets that are (i) owned of record or held in the name of a member of the Patriot Group on the Distribution Date, (ii) treated for internal financial reporting purposes of PEC prior to the Distribution Date or on the Patriot Business Balance Sheet as owned by a member of the Patriot Group, (iii) on the Distribution Date used exclusively by one or more members of the Patriot Group, or (iv) transferred to a member of the Patriot Group pursuant to any Ancillary Agreement.

     “Patriot Business” means the business comprised of the Patriot Assets and the Patriot Liabilities.

     “Patriot Business Balance Sheet” means the consolidated balance sheet of the Patriot Group as of the Effective Time, which balance sheet shall be prepared by PEC on a basis consistent with PEC’s historical practices for the preparation of subsidiary balance sheets.

     “Patriot Bylaws” means the bylaws of Patriot in the form filed as an exhibit to the Form 10 at the time it becomes effective.

     “Patriot Common Stock” means the outstanding shares of common stock, $.01 par value, of Patriot.

     “Patriot Contracts” means the following agreements or arrangements to which PEC or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, except for any such agreement or arrangement or part thereof (i) that is expressly contemplated not to be transferred or assigned by any member of the PEC Group to Patriot, or (ii) that is expressly contemplated to be transferred or assigned to (or remain with) any member of the PEC Group, in each case, pursuant to any provision of this Agreement or any Ancillary Agreement:

     (i) any agreement or arrangement entered into in the name of, or expressly on behalf of, any division, business unit or member of the Patriot Group;

     (ii) any agreement or arrangement that relates primarily to the Patriot Business;

     (iii) any agreement or arrangement representing capital or lease obligations of facilities or equipment primarily used by any member of the Patriot Group;

     (iv) any agreement or arrangement or part thereof that is otherwise expressly contemplated pursuant to this Agreement or any of the Ancillary Agreements to be retained by, transferred or assigned to, any member of the Patriot Group;

     (v) any guarantee, indemnity, representation or warranty of any member of the Patriot Group; and

     (vi) the agreements or arrangements listed or described on Schedule 1.1(b) .

     “Patriot Group” means Patriot and any of the entities listed in Exhibit A, any of their respective subsidiaries and any subsidiary or division of any member of the PEC Group that is included in the assets of the Patriot Business as reflected in the pro forma combined balance sheet of Patriot as of June 30, 2007 contained in the Information Statement.

     “Patriot Liabilities” means:

     (i) the Liabilities listed or described on Schedule 1.1(c) and any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained, assumed or retired by any member of the Patriot Group;

     (ii) any and all Liabilities of PEC, Patriot, or any of their respective Affiliates, primarily relating to, arising out of or resulting from:

     (A) the operation or conduct of the Patriot Business, as conducted at any time prior to, or the ownership or use of the Patriot Assets, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative of PEC, Patriot, or any of their respective Affiliates (whether or not such act or failure to act is or was within such Person’s authority)); or

     (B) the operation or conduct of any business conducted by any member of the Patriot Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative of Patriot, or any of its Affiliates after the Effective Time (whether or not such act or failure to act is or was within such Person’s authority));

     (iii) except as otherwise expressly provided in this Agreement or any Ancillary Agreement, Liabilities set forth on the Patriot Business Balance Sheet;

     (iv) any and all Liabilities to the extent relating to, arising out of or resulting from any terminated, sold, discontinued or divested entity, business, real property, or Asset formerly and primarily owned or managed by, or associated with any member of the Patriot Group or the Patriot Business, or arising out of the sale thereof;

     (v) any Liabilities relating to or arising out of the acquisition (whether through an acquisition of stock or assets or a merger, share exchange or other form of business combination) of any business prior to the Effective Time by any member of the Patriot Group, except to the extent such Liabilities arise out of or are based upon the issuance of securities of PEC in any such business combination transaction;

     (vi) Liabilities arising under or in connection with the Form 10, except to the extent such Liabilities arise out of or are based upon information about PEC included in the sections of the Information Statement attached as Exhibit 99.1 to the Form 10 entitled “Summary—Our Company,” Summary—Summary of the Spin-Off,” and “The Spin-Off—Reasons for the Spin-Off;”

     (vii) any and all Liabilities, including those Liabilities listed on Schedule 1.1(d) , relating to, arising out of or resulting from any Indebtedness (including debt securities and asset-backed debt) of any member of the Patriot Group (whether incurred prior to, on or after the Effective Time);

     (viii) any and all Liabilities of the guarantor under the Guaranteed Patriot Liabilities;

     (x) any and all Liabilities relating to, resulting from, or arising out of any Action that is primarily related to the Patriot Business, including any Patriot Action;

     (xi) any and all obligations of an insured Person under each Third Party Patriot Policy and each Third Party Policy to the extent related to or arising out of the Patriot Business; and

     (xii) any and all obligations relating to (A) labor or Mine Safety and Health Administration matters arising out of the operations of PCC at Randolph South prior to the Distribution Date or (B) labor matters arising out of the operations of PCC at Randolph North prior to the Distribution Date.

Notwithstanding the foregoing, the Patriot Liabilities shall in any event not include:

     (A) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained or assumed by any member of the PEC, including any Liabilities set forth on Schedule 1.1(a) or any Liabilities that are the subject of the Liability Assumption Agreements;

     (B) any Liabilities related or attributable to, or arising in connection with, the employment, service, termination of employment or termination of service of Patriot employees, which shall be exclusively governed by the Employee Matters Agreement;

     (C) any Liabilities related or attributable to, or arising in connection with, Taxes or Tax returns, which shall be exclusively governed by the Tax Separation Agreement; and

     (D) the Assumed Patriot Liabilities and any Liabilities of the guarantor under the Guaranteed PEC Liabilities.

     FOR THE AVOIDANCE OF DOUBT, NO LIABILITY SHALL BE A PATRIOT LIABILITY SOLELY AS A RESULT OF PATRIOT OR ANY OTHER MEMBER OF THE PATRIOT GROUP BEING NAMED AS PARTY TO, OR IN, ANY ACTION.

     “Patriot Revolving Credit Agreement” means the Revolving Credit Agreement among various lenders and Patriot, which provides for up to $500 million of availability.

     “PCC” shall mean Peabody Coal Company, LLC.

     “PEC” is defined in the preamble to this Agreement.

     “PEC Accounts” is defined in Section 4.01(a).

     “PEC Action” means any current or future Action that does not relate primarily to the Patriot Business and in which one or more members of the Patriot Group is a defendant or the party against whom any claim or investigation is directed, including any of the Actions listed on Schedule 5.01(b) , but excluding any Joint Action.

     “PEC Asset” means:

          (a) the capital stock of each member of the PEC Group; and

          (b) except as otherwise provided in an Ancillary Agreement, all Assets of any member of the PEC Group or the Patriot Group that are not Patriot Assets.

     “PEC Business” means the business now or formerly conducted by PEC and its present and former subsidiaries, joint ventures and partnerships, other than the Patriot Business.

     “PEC Common Stock” means the outstanding shares of common stock, $0.01 par value, of PEC.

     “PEC Group” means PEC and its subsidiaries, joint ventures and partnerships, excluding any member of the Patriot Group.

     “PEC Liabilities” means (i) Liabilities of any member of the PEC Group under this Agreement or any Ancillary Agreement, (ii) the Assumed Patriot Liabilities, (iii) any other Liabilities of any member of the Patriot Group or the PEC Group, whether arising before, at, or after the Effective Time, that do not constitute Patriot Liabilities and (iv) any and all obligations relating to (A) permit or environmental matters, or other reclamation liabilities, relating to Randolph South or Randolph North, whether arising prior to or subsequent to the Distribution, (B) permit matters arising out of the operations by any member of the Peabody Group under any of the permits set forth on Schedule 4.10(b) subsequent to the Distribution Date but prior to the transfer of all the permits set forth on Schedule 4.10(b) to a member of the Peabody Group or (C) the requirement of Patriot or any of its Affiliates, including PCC, to make any payment under the Prairie State Bonds after the Distribution Date as a result of either (1) the failure of PEC or any of its Affiliates to meet its obligations underlying the Prairie State Bonds or (2) the failure of PCC or any of its Affiliates to be fully released from the Prairie State Bonds.

     “Person” means any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

     “Plan” shall have the meaning set forth in the Employee Matters Agreement.

     “Policies” means insurance policies and insurance agreements or arrangements of any kind (other than life and benefits policies, agreements or arrangements), including primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, property and casualty, business interruption, workers’ compensation and employee dishonesty insurance policies, bonds and self-insurance company arrangements, together with the rights, benefits and privileges thereunder.

     “Prairie State Bonds” is defined in Section 4.10(a).

     “Prime Rate” means the rate of interest announced by Bank of America, Inc. from time to time as its “prime rate,” “prime lending rate,” “base rate” or similar reference rate. In the event the Prime Rate is discontinued as a standard, the holder hereof shall designate a comparable reference rate as a substitute therefor. For purposes hereof, the Prime Rate in effect at the close of business on each business day of Bank of America, Inc. shall be the Prime Rate for that day and any immediately succeeding non-business day or days.

     “Real Property Agreements” means all deeds, subleases, releases, assignments, consents and agreements relating to the conveyance to Patriot of the Real Property Assets and the division of real property and interests therein between members of the PEC Group and members of the Patriot Group entered into as of or prior to the Distribution Date substantially in the form of Exhibit C hereto, in each case as amended from time to time.

     “Real Property Assets” means the real property owned or controlled by the PEC Group which shall be conveyed to the Patriot Business and conveyed by Patriot to the PEC Group pursuant to the Real Property Agreements.

     “Record Date” means the date designated by or under the authority of PEC’s Board of Directors as the record date for determining the shareholders of PEC entitled to receive the Distribution.

     “Records” means any agreements, documents, books, records or files.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Sell Agreement” is defined in Section 4.09(a).

     “Senior Credit Facility” means the Senior Secured Credit Facility to be entered into by Patriot in connection with the Distribution, as amended, restated, modified, renewed, refunded replaced or refinanced in whole or in part from time to time.

     “Snowberry” is defined in Section 2.08(a).

     “Software” means all computer programs (whether in source code, object code, or other form), algorithms, databases, compilations and data, and technology supporting the foregoing, and all documentation, including flowcharts and other logic and design diagrams, technical, functional and other specifications, and user and training materials related to any of the foregoing.

     “Software License Agreement” means the Software License Agreement, substantially in the form of Exhibit D hereto, entered into at or before the Effective Time between PEC and Patriot, as amended from time to time.

     “Tax” shall have the meaning given to such term in the Tax Separation Agreement.

     “Tax Separation Agreement” means the Tax Separation Agreement, substantially in the form of Exhibit F hereto, entered into at or before the Effective Time between PEC and Patriot, as amended from time to time.

     “TECO Overriding Royalty Agreement” means the Cooperation Agreement and Ratification of Assignment of Overriding Royalty Interest Payment Obligations to Tampa Electric Company – Henderson Reserves, substantially in the form of Exhibit L hereto, entered into at or prior to the Effective Time, between PCC, Highland Mining Company, LLC and Midwest Coal Reserves of Kentucky, LLC.

     “Third Party Claim” means a claim or demand made against a PEC Indemnitee or a Patriot Indemnitee by any Person who is not a Party or an Affiliate of a Party as to which such PEC Indemnitee or Patriot Indemnitee, as applicable, is or may be entitled to indemnification pursuant to this Agreement.

     “Third Party Patriot Policies” means all Policies, whether or not in force on the Effective Time, issued by unaffiliated third-party insurers to PEC, Patriot, or any of their respective Affiliates that cover risks that relate exclusively to the Patriot Business.

     “Third Party Policies” means all Policies, whether or not in force on the Effective Time, issued by unaffiliated third-party insurers to PEC, Patriot or any of their respective Affiliates that cover risks that relate to both the PEC Business and the Patriot Business.

     “Trademarks” means all United States and foreign trademarks, service marks, corporate names, trade names, domain names, logos, slogans, designs, trade dress and other similar identifiers of source or origin, whether registered or unregistered, together with the goodwill connected with the use of and symbolized by any of the foregoing.

     “Transition Services Agreement” means the Transition Services Agreement, substantially in the form of Exhibit G hereto, entered into at or prior to the Effective Time between PEC and Patriot, as amended from time to time.

ARTICLE II
REORGANIZATION; CONVEYANCE OF CERTAIN ASSETS;
ASSUMPTION OF CERTAIN LIABILITIES;
CERTAIN PAYMENTS; AND TRANSITION ARRANGEMENTS

          Section 2.01. Reorganization . Prior to the Distribution Date PEC shall, and shall cause its respective subsidiaries to, use commercially reasonable efforts to complete the reorganization steps described in Exhibit 2.01 hereto. On or prior to the Distribution Date and effective as of the Effective Time, PEC shall contribute to Patriot all of the Patriot Assets in exchange for a number of shares of Patriot Common Stock that when combined with the shares of Patriot Common Stock already owned by PEC shall equal all the shares to be distributed as provided in Section 3.03 below (the “Contribution”).

          Section 2.02. Conveyance of Assets; Discharge of Liabilities . Except as otherwise expressly provided herein or in any of the Ancillary Agreements:

          (a) Effective as of the Effective Time (i) all Patriot Assets are intended to be and shall become Assets of the Patriot Group, (ii) all Patriot Liabilities are intended to be and shall become the Liabilities of the Patriot Group, and (iii) all other Assets and Liabilities of PEC and its subsidiaries are intended to be and shall remain exclusively the Assets and Liabilities of the PEC Group.

          (b) Effective as of the Effective Time, PEC agrees to transfer or cause to be transferred to Patriot or to such other members of the Patriot Group as Patriot may designate all right, title and interest of the PEC Group in and to all of the Patriot Assets.

          (c) Patriot agrees that, effective as of the Effective Time, it will transfer or cause to be transferred to PEC or to such other member of the PEC Group as PEC may designate all right, title and interest of the Patriot Group in and to all Assets that are not Patriot Assets.

          (d) Patriot agrees that it will, or will cause another member of the Patriot Group designated by Patriot to, (i) assume any of the Patriot Liabilities for which a member of the Patriot Group is not the obligor, effective as of the Effective Time, and (ii) timely pay and discharge all of the Patriot Liabilities, at and after the Effective Time.

          (e) PEC agrees that it will, or will cause another member of the PEC Group designated by PEC to, (i) assume any of the PEC Liabilities for which a member of the PEC Group is not the obligor, effective as of the Effective Time, and (ii) timely pay and discharge all of the PEC Liabilities, at and after the Effective Time.

          (f) PEC agrees that, on the Distribution Date, it will, or will cause another member of the PEC Group designated by PEC to, make to Patriot a payment of $19,407,495.24 in respect of the Black Lung Case and an additional cash contribution of $30,000,000.

          (g) In the event that any conveyance of an Asset, including conveyance of any Asset listed in Schedule 2.02(g) , required hereby is not effected at or before the Effective Time, the obligation to transfer such Asset shall continue past the Effective Time and shall be accomplished as soon thereafter as practicable.

          (h) If any Asset may not be transferred by reason of the requirement to obtain the consent of any third party and such consent has not been obtained by the Effective Time, then (unless otherwise expressly agreed by PEC and Patriot) such Asset shall not be transferred until such consent has been obtained. PEC and Patriot, as the case may be, shall (i) cause the owner of such Asset to use commercially reasonable efforts to provide to the appropriate member of the other Group all the rights and benefits under such Asset, (ii) cause such owner to enforce such Asset for the benefit of such member, and (iii) cause such member to assume all obligations of such Asset, in each case to the extent that such action does not cause a breach or default under such Asset. Both parties shall otherwise cooperate and use commercially reasonable efforts to provide the economic and operational equivalent of an assignment or transfer of the Asset as of the Effective Time.

          (i) From and after the Effective Time, each Party shall promptly transfer or cause the members of its Group promptly to transfer to the other Party or the appropriate member of the other Party’s Group, from time to time, any property received that is an Asset of the other Party or a member of its Group. Without limiting the foregoing, funds received by a member of one Group upon the payment of accounts receivable that belong to a member of the other Group shall be transferred to the other Group by wire transfer as promptly as practicable after the receiving party becomes aware of having received such funds.

          (j) Except as expressly set forth in this Agreement, any Ancillary Agreement, or any instrument or document contemplated by this Agreement or any Ancillary Agreement, neither any member of the PEC Group nor any member of the Patriot Group has made or shall be deemed to have made any representation or warranty as to (i) the Assets, business or Liabilities retained, transferred or assumed as contemplated hereby or thereby, (ii) any consents or approvals required in connection with the transfer or assumption by such party of any Asset or Liability contemplated by this Agreement, (iii) the value or freedom from any lien, claim, equity or other encumbrance of, or any other matter concerning, any Assets of such Party, (iv) the absence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other Asset of such Party, or (v) the legal sufficiency of any assignment, document or instrument delivered to convey title to any Asset transferred. EXCEPT AS MAY BE EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, ALL ASSETS WERE, OR ARE BEING, TRANSFERRED,

OR ARE BEING RETAINED, ON AN “AS IS”, “WHERE IS” BASIS AND THE RESPECTIVE TRANSFEREES WILL BEAR THE ECONOMIC AND LEGAL RISKS THAT ANY CONVEYANCE OR OTHER TRANSFER SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE A TITLE THAT IS FREE AND CLEAR OF ANY LIEN, CLAIM, EQUITY OR OTHER ENCUMBRANCE.

          Section 2.03. Ancillary Agreements . Concurrently with the execution of this Agreement, PEC and Patriot (or their appropriate subsidiaries) will execute and deliver:

               (a) A duly executed Employee Matters Agreement substantially in the form of Exhibit B hereto;

               (b) A duly executed copy of each of the Real Property Agreements substantially in the form of Exhibit C hereto;

               (c) A duly executed Software License Agreement substantially in the form of Exhibit D hereto;

               (d) A duly executed copy of each of the Liability Assumption Agreements substantially in the form of Exhibits E-1 , E-2 or E-3 , as applicable;

               (e) A duly executed Tax Separation Agreement substantially in the form of Exhibit F hereto;

               (f) A duly executed Transition Services Agreement substantially in the form of Exhibit G hereto;

               (g) A duly executed Master Equipment Sublease Agreement substantially in the form of Exhibit H hereto;

               (h) A duly executed Common Interest Agreement substantially in the form of Exhibit I hereto;

               (i) A duly executed copy of each of the Coal Supply Agreements, substantially in the form of Exhibits J-1 , J-2 or J-3 , as applicable;

               (j) A duly executed Administrative Services Agreement, substantially in the form of Exhibit K hereto;

               (k) A duly executed TECO Overriding Royalty Agreement, substantially in the form of Exhibit L hereto;

               (l) A duly executed DTA Throughput Agreement, substantially in the form of Exhibit M hereto; and

               (m) Such other agreements, leases, subleases, documents, or instruments as the Parties may agree are necessary or desirable in order to achieve the purposes hereof.

          Section 2.04. Issuance of Patriot Common Stock . On or before the Distribution Date, and in exchange for the transfer by PEC to Patriot of the stock and assets as provided above, and the surrender for reissue of all certificates representing outstanding Patriot Common Stock, Patriot will issue and deliver to PEC a certificate representing shares of Patriot Common Stock constituting all the shares to be distributed as provided in Section 3.03 below.

          Section 2.05. Resignations .

               (a) On the Distribution Date, Patriot will deliver or cause to be delivered to PEC resignations of each individual who will be an employee of Patriot or another member of the Patriot Group from and after the Distribution Date and who is an officer or director of PEC or any of its subsidiaries or affiliates not constituting a member of the Patriot Group immediately prior to the Distribution Date.

               (b) On the Distribution Date, PEC will deliver or cause to be delivered to Patriot resignations of each individuals who will be an employee of PEC or another member of the PEC Group from and after the Distribution Date and who is an officer or director of Patriot or any of its subsidiaries or affiliates not constituting a member of the PEC Group immediately prior to the Distribution Date.

          Section 2.06. Limitation of Liability .

               (a) Except as otherwise expressly provided in this Agreement, no Party or any member of such Party’s Group shall have any Liability to any other Party or any member of each other Party’s Group in the event that any Information exchanged or provided pursuant to this Agreement (but excluding any such information included in the Form 10) which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate.

               (b) Except as provided in Section 4.02, Section 9.01 or as set forth in subsection (c) below, neither Party nor any member of such Party’s Group shall have any Liability to any other Party or any member of such other Party’s Group based upon, arising out of or resulting from any agreement, arrangement, course of dealing or understanding existing on or prior to the Effective Time (other than this Agreement or any Ancillary Agreement or any agreement entered into in connection herewith or therewith in order to consummate the transactions contemplated hereby or thereby), and each Party hereby terminates, and shall cause all members in its Group to terminate, any and all agreements, arrangements, course of dealings or understandings between it or any members in its Group and the other Party, or any members of its Group, effective as of the Effective Time (other than this Agreement or any Ancillary Agreement or any agreement entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby), unless such agreement, arrangement, course of dealing or understanding is set forth in any Ancillary Agreement or on Schedule 2.06(b) , and any such Liability, whether or not in writing, which is not reflected in any Ancillary Agreement or on such Schedule, is hereby irrevocably cancelled, released and waived effective as of the Effective Time. No such terminated agreement, arrangement, course of dealing or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Effective Time.

               (c) The provisions of Section 2.06(b) shall not apply to any of the following agreements, arrangements, course of dealings or understandings (or to any of the provisions thereof):

          (i) any agreement or arrangement to which any Person other than the Parties and their respective Affiliates is a Party (it being understood that to the extent that the rights and obligations of the Parties and the members of their respective Groups under any such agreements or arrangements constitute PEC Assets or Patriot Assets, PEC Liabilities, or Patriot Liabilities, such agreements or arrangements shall be assigned or retained pursuant to this Article II); and

          (ii) any agreements, arrangements, commitments or understandings to which any non-wholly-owned subsidiary or non-wholly-owned Affiliate of PEC or Patriot is a Party.

          Section 2.07. Novation of Liabilities; Consents .

               (a) Each Party, at the request of the other Party, shall use commercially reasonable efforts to obtain, or to cause to be obtained, any consent, release, substitution or amendment required to novate or assign all obligations under agreements, arrangements, licenses and other obligations or Liabilities for which a member of such Party’s Group and a member of the other Party’s Group are jointly or severally liable and that do not constitute Liabilities of such other Party as provided in this Agreement (such other Party, the “Other Party”), or to obtain in writing the unconditional release of all parties to such arrangements (other than any member of the Group who assumed or retained such Liability as set forth in this Agreement), so that, in any such case, the members of the applicable Group will be solely responsible for such Liabilities; provided , however , that no Party shall be obligated to pay any consideration therefor to any third party from whom any such consent, substitution or amendment is requested (unless such Party is fully reimbursed by the requesting Party).

               (b) If the Parties are unable to obtain, or to cause to be obtained, any such required consent, release, substitution or amendment, the Other Party or a member of such Other Party’s Group shall continue to be bound by such agreement, arrangement, license or other obligation that does not constitute a Liability of such Other Party and, unless not permitted by Law or the terms thereof, as agent or subcontractor for such Party, the Party or member of such Party’s Group who assumed or retained such Liability as set forth in this Agreement (the “Liable Party”) shall, or shall cause a member of its Group to, pay, perform and discharge fully all the obligations or other Liabilities of such Other Party or member of such Other Party’s Group thereunder from and after the Effective Time; provided , however , that the Other Party shall not be obligated to extend, renew or otherwise cause such agreement, arrangement, license or other obligation to remain in effect beyond the term in effect as of the Effective Time. The Liable Party shall indemnify each Other Party and the members of such Other Party’s Group and hold each of them harmless against any and all Liabilities arising in connection therewith; provided , that the Liable Party shall have no obligation to indemnify the Other Party or any member of such Other Party’s Group with respect to any matter to the extent that such Other Party has engaged in any knowing violation of Law, fraud or misrepresentation in connection therewith. The Other Party shall, without further

consideration, promptly pay and remit, or cause to be promptly paid or remitted, to the Liable Party or to another member of the Liable Party’s Group, all money, rights and other consideration received by it or any member of its Group in respect of such performance by the Liable Party (unless any such consideration is an Asset of such Other Party pursuant to this Agreement). If and when any such Consent, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the Other Party shall promptly assign, or cause to be assigned, all rights, obligations and other Liabilities thereunder of any member of such Other Party’s Group to the Liable Party or to another member of the Liable Party’s Group without payment of any further consideration and the Liable Party, or another member of such Liable Party’s Group, without the payment of any further consideration, shall assume such rights and Liabilities.

          Section 2.08. Assignment of Promissory Notes .

               (a) On the Distribution Date, PEC will assign to Snowberry Land Company (“Snowberry”), a Delaware corporation and a member of the Patriot Group all of its rights as the payee under those promissory notes listed on Schedule 2.08(a) .

               (b) On the Distribution Date, PEC will cause Peabody Investments Corp., a Delaware corporation and a member of the PEC Group, to assign to Patriot or a designated member of the Patriot Group all of its rights as lender and payee under the Loan Agreement, dated June 15, 2006, with Kanawha Eagle Coal, LLC, as the borrower.

ARTICLE III
THE DISTRIBUTION

          Section 3.01. Cooperation Prior to the Distribution .

               (a) PEC and Patriot shall prepare, and PEC shall mail to the holders of PEC Common Stock, the Information Statement, which shall set forth appropriate disclosure concerning Patriot, the Distribution and any other appropriate matters. PEC and Patriot shall also prepare, and Patriot shall file with the Commission, the Form 10, which shall include the Information Statement. PEC and Patriot shall use commercially reasonable efforts to cause the Form 10 to become effective under the Exchange Act.

               (b) PEC shall, as the sole shareholder of Patriot, approve and adopt the Patriot employee benefit plans contemplated by the Employee Matters Agreement and PEC and Patriot shall cooperate in preparing, filing with the Commission under the Securities Act and causing to become effective not later than the Distribution Date any registration statements or amendments thereto that are appropriate to reflect the establishment of or amendments to any employee benefit plan of Patriot contemplated by the Employee Matters Agreement, including without limitation, a Form S-8 with respect thereto.

               (c) PEC and Patriot shall take all such action as may be necessary or appropriate under the securities or blue sky laws of states or other political subdivisions of the United States in connection with the transactions contemplated by this Agreement or any Ancillary Agreement.

               (d) Patriot shall prepare, file, and use all reasonable efforts to cause to be approved prior to the Record Date, the application to permit listing of the Patriot Common Stock on the New York Stock Exchange.

               (e) PEC and Patriot shall take all such actions as may be deemed reasonably necessary to secure a favorable ruling from the IRS that the Distribution is not taxable to PEC or its shareholders pursuant to Section 355 of the Code.

          Section 3.02. Conditions Precedent to the Distribution . In no event shall the Distribution occur unless the following conditions shall have been satisfied or, in the case of any condition other than the condition set forth in Section 3.02(q) below, waived by PEC:

               (a) PEC’s Board of Directors or a duly appointed committee thereof, shall, in its sole discretion, have established the Record Date and the Distribution Date and any appropriate procedures in connection with the Distribution;

               (b) all necessary regulatory approvals shall have been received;

               (c) the Information Statement shall have been mailed to the holders of PEC Common Stock;

               (d) the Form 10 shall have become effective under the Exchange Act, and all registration statements referred to under Section 3.01(b) shall have become effective under the Securities Act;

               (e) the Patriot Board of Directors, as named in the Form 10, shall have been elected by PEC, as sole shareholder of Patriot, and the Patriot Articles and Patriot Bylaws shall have been adopted and be in effect;

               (f) the Patriot Common Stock shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance;

               (g) PEC and Patriot shall have taken all such action as may be necessary or appropriate under the securities or blue sky laws of states or other political subdivisions of the United States in connection with the transactions contemplated by this Agreement or any Ancillary Agreement;

               (h) PEC shall have received a favorable private letter ruling from the IRS that the Contribution constitutes a reorganization pursuant to Section 368(a)(1)(D) of the Code and that the Distribution will not be taxable to PEC or its shareholders pursuant to Section 355 of the Code, and such ruling shall continue in effect;

               (i) Patriot shall have entered into the Patriot Revolving Credit Agreement;

               (j) PEC shall have received a tax opinion from Ernst & Young LLP, in form and substance satisfactory to PEC;

               (k) PEC shall have received a solvency opinion from Duff & Phelps, in form and substance satisfactory to PEC, regarding Patriot after the Distribution;

               (l) Patriot shall have established insurance arrangements with insurers of recognized financial responsibility for Policies in such amounts and covering such risks as is adequate for the conduct of the Patriot Business and the value of Patriot’s properties and as is customary for companies engaged in similar businesses in similar industries;

               (m) the transactions described in Section 2.01 shall have occurred;

               (n) no order, injunction, or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect;

               (o) PEC and Patriot shall each have performed its obligations under this Agreement and each Ancillary Agreement, which are required to be performed prior to or at the time of the Distribution;

               (p) the Parties shall have consummated those other transactions in connection with the Distribution that are contemplated by the Information Statement to be consummated prior to or at the time of the Distribution and are not specifically referred to in this Agreement or the Ancillary Agreements identified in Sections 2.03(a) — (f); and

               (q) all members of the Patriot Group shall have been released from their obligations as guarantors with respect to the guarantees listed or described on Schedule 3.02(q) .

          Section 3.03. The Distribution . On or before the Distribution Date, subject to satisfaction or waiver of the conditions set forth in this Agreement, PEC shall deliver to the Distribution Agent a certificate or certificates representing all of the then outstanding shares of Patriot Common Stock held by the PEC Group, endorsed in blank, and shall instruct the Distribution Agent, except as otherwise provided in Sections 3.04 and 3.05, to distribute to each holder of record of PEC Common Stock on the Record Date one share of Patriot Common Stock for each ten shares of PEC Common Stock so held either by crediting the holder’s brokerage account or by delivering a certificate or certificates representing such shares. Patriot agrees to provide all certificates for shares of Patriot Common Stock that the Distribution Agent shall require in order to effect the Distribution.

ARTICLE IV
COVENANTS

          Section 4.01. Bank Accounts .

               (a) The Parties agree to take, or cause the respective members of their respective Groups to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all agreements or arrangements governing each bank and brokerage account owned by Patriot or any other member of the Patriot Group (the “Patriot Accounts”), including all Patriot Accounts listed or described on Schedule 4.01(a) , so that such

Patriot Accounts, if currently linked (whether by automatic withdrawal, automatic deposit, or any other authorization to transfer funds from or to, hereinafter “linked”) to any bank or brokerage account owned by PEC or any other member of the PEC Group (the “PEC Accounts”) are de-linked from the PEC Accounts. From and after the Effective Time, no current or former employee of any member of the PEC Group shall have any authority to access or control any Patriot Account other than those who will be Patriot employees.

               (b) The Parties agree to take, or cause the respective members of their respective Groups to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all agreements or arrangements governing the PEC Accounts so that such PEC Accounts, if currently linked to a Patriot Account, are de-linked from the Patriot Accounts. From and after the Effective Time, no current or former employee of any member of the Patriot Group shall have any authority to access or control any PEC Account.

               (c) With respect to any outstanding checks issued by PEC, Patriot, or any of their respective subsidiaries prior to the Effective Time, such outstanding checks shall be honored following the Effective Time by the entity or Group owning the account on which the check is drawn.

               (d) As between the two Parties (and the members of their respective Groups) all payments and reimbursements received after the Effective Time by any Party (or member of its Group) that relate to a business, Asset or Liability of another Party (or member of its Group), shall be held by such Party in trust for the use and benefit of the Party entitled thereto (at the expense of the Party entitled thereto) and, promptly upon receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause the applicable member of its Group to pay over to the other Party the amount of such payment or reimbursement without right of set-off.

          Section 4.02. Guaranteed Patriot and PEC Liabilities .

          (a) (i) Patriot shall use commercially reasonable efforts (excluding payment of money or incurrence of Liabilities) to obtain as promptly as practicable after the Distribution Date the release of all members of the PEC Group from any obligations with respect to Guaranteed Patriot Liabilities, including removing all members of the PEC Group from their obligations as guarantors with respect to the guarantees listed or described on Schedule 4.02(a) . In no event shall any member of the Patriot Group take any action with respect to any Guaranteed Patriot Liabilities which could be reasonably expected to adversely affect the PEC Group members in any way, including, without limitation, extending the term of any Guaranteed Patriot Liabilities or increasing the liability guaranteed thereunder, unless the guarantee or obligation of all PEC Group members is released as to any extended or modified liability obligations under such Guaranteed Patriot Liabilities or PEC otherwise consents in writing.

          (ii) If at any time any member of the PEC Group is required by any governmental agency to arrange or provide letters of credit, surety bonds or other credit arrangements, in support of Guaranteed Patriot Liabilities constituting Black Lung

Benefit Liabilities, then Patriot shall provide such letters of credit, surety bonds or other credit arrangements, at its expense.

          (iii) Until such time as Patriot shall have no amounts recorded in its most recent audited balance sheet in respect of Black Lung Benefit Liabilities, Patriot shall use best efforts to maintain sufficient capacity under the Senior Credit Facility to permit it to obtain (subject to the satisfaction of the conditions precedent contained therein) letters of credit in an aggregate amount equal to not less than the amount of Black Lung Benefit Liabilities recorded in its most recent audited balance sheet, less the amount of letters of credit provided by Patriot to any governmental agency in respect of Guaranteed Patriot Liabilities constituting Black Lung Benefit Liabilities.

          (iv) If (x) at any time prior to June 30, 2011, any member of the Patriot Group shall have failed to pay any Black Lung Benefit Liabilities when due and any member of the PEC Group remains obligated with respect to Guaranteed Patriot Liabilities constituting Black Lung Benefit Liabilities (such PEC Group obligations, the “Black Lung Benefit Guarantees”) or (y) on June 30, 2011, any member of the PEC Group remains obligated under any Black Lung Benefit Guarantees, then commencing on the date of such failure (in the case of clause (x)) or on July 1, 2011 (in the case of clause (y)) and continuing in either case until the date on which no member of the PEC Group has any obligation under any Black Lung Benefit Guarantee, upon the written request of PEC, Patriot shall use best efforts to obtain letters of credit in favor of PEC in an amount specified by PEC, which amount shall be (at PEC’s sole option) up to the amount recorded by Patriot in its most recent audited consolidated balance sheet in respect of Guaranteed Patriot Liabilities constituting Black Lung Benefits, less the amount of letters of credit provided by Patriot to any governmental agency in respect of Guaranteed Patriot Liabilities constituting Black Lung Benefit Liabilities.

          (v) Patriot shall provide prompt written notice to Peabody in the event that (A) any issuer of a letter of credit required pursuant to this Section 4.02(a) notifies Patriot that it does not intend to renew any letter of credit provided pursuant hereto or (B) Patriot’s capacity to obtain letters of credit under its Senior Credit Facility or otherwise is not sufficient, or is not expected to be sufficient, to permit Patriot to meet or to continue to meet its obligations under this Section 4.02(a).

          (b) PEC shall use commercially reasonable efforts (excluding payment of money or incurrence of Liabilities) to obtain as promptly as practicable after the Distribution Date the release of all members of the Patriot Group from any obligations with respect to Guaranteed PEC Liabilities to which they have not been released as of the Distribution Date, including removing all members of the Patriot Group from their obligations as guarantors with respect to the guarantees listed or described on Schedule 4.02(b) . In no event shall any member of the PEC Group take any action with respect to any Guaranteed PEC Liabilities which could be reasonably expected to adversely affect the Patriot Group members in any way including, without limitation, extending the term of any Guaranteed PEC Liabilities or increasing the liability guaranteed thereunder, unless the guarantee or obligation of all Patriot Group members is released as to any extended or modified liability obligations under such Guaranteed PEC Liabilities or Patriot otherwise consents in writing.

               (c) In the event that any PEC Group member is required to pay or otherwise satisfy any Guaranteed Patriot Liabilities, without limiting any of PEC’s rights and remedies against Patriot under this Agreement or otherwise, in order to secure Patriot’s indemnity obligations to PEC hereunder in respect of such Guaranteed Patriot Liabilities, PEC shall be entitled to all the rights of the payee in any property of any member of the Patriot Group pledged as security for such Guaranteed Patriot Liabilities.

               (d) In the event that Patriot Group member is required to pay or otherwise satisfy any Guaranteed PEC Liabilities, without limiting any of Patriot’s rights and remedies against PEC under this Agreement or otherwise, in order to secure PEC’s indemnity obligations to Patriot hereunder in respect of such Guaranteed PEC Liabilities, Patriot shall be entitled to all the rights of the payee in any property of any member of the PEC Group pledged as security for such Guaranteed PEC Liabilities.

          Section 4.03. Insurance .

               (a) Directors and Officers and Fiduciary Liability Policies. Following the Distribution, PEC will maintain directors’ and officers’ liability and fiduciary liability insurance coverage for a period of six (6) years from the Distribution Date for the directors and officers of Patriot who were directors or officers of PEC or members of the PEC Group as of the Distribution Date for acts as directors and officers of members of the PEC Group during periods prior to the Distribution Date.

               (b) Third Party Policies.

               (i) With respect to Third Party Policies, if an occurrence for which coverage is available under such Third Party Policies happens prior to the Effective Time, and a claim arising therefrom has been or is eventually asserted against Patriot or any other member of the Patriot Group and such claim is reported by Patriot to the carrier, with a copy to PEC, in accordance with the reporting provision of the applicable policy, then PEC will, or will cause the members of the PEC Group that are insured thereunder to, (A) continue to provide Patriot and any other member of the Patriot Group with access to and coverage under the applicable Third Party Policies and (B) reasonably cooperate with Patriot and take commercially reasonable actions as may be necessary or advisable to assist Patriot in submitting such claims under the applicable Third Party Policies, provided that Patriot shall be responsible for its portion of any deductibles or self-insured retentions or co-payments legally due and owing relating to such claims. For the avoidance of doubt, if an occurrence for which coverage is available under such Third Party Policies happens after the Effective Time, or a claim arising from an occurrence prior to the Effective Time is not reported by Patriot to PEC on or before the date when such occurrence must be reported to the carrier under the applicable Third Party Policy, then no payment for any damages, costs of defense, or other sums with respect to such claim shall be available to Patriot under such Third Party Policies.

               (ii) With respect to all Third Party Policies, Patriot agrees and covenants (on behalf of itself and each other member of the Patriot Group, and each other Affiliate of Patriot) not to make any claim or assert any rights against PEC and any other

member of the PEC Group (including the captive insurance companies that are insured under the Third Party Policies), or the unaffiliated third-party insurers of such Third Party Policies, except as expressly provided under this Section 4.03(b).

          (c) Administration of Third Party Policies; Other Matters.

          (i) From and after the Effective Time, Patriot or a member of the Patriot Group shall be responsible for the administration of all Third Party Patriot Policies and Patriot shall be responsible for any premium adjustments, audits, deductible bills, collateral, Taxes and claims handling charges or other expenses associated with Third Party Patriot Policies.

          (ii) With respect to all Third Party Policies, from and after the Effective Time, the agent for the applicable policy shall be responsible for the Insurance Administration and Claims Administration of such Third Party Policies; provided that the retention of such administrative responsibilities by an agent of Peabody is in no way intended to limit, inhibit or preclude any right to insurance coverage for any Insured Claim of a named insured under such Third Party Policies as contemplated by the terms of this Agreement; provided , further , that the retention of such administrative responsibilities by an agent of Peabody shall not relieve the Person submitting any Insured Claim of the primary responsibility for reporting such Insured Claim accurately, completely and in a timely manner, or of such Person’s authority to settle any such Insured Claim within any period permitted or required by the relevant Third Party Policy. PEC or any member of the PEC Group or any agent of PEC shall not settle any Insured Claim of Patriot or any member of the Patriot Group under the Third Party Policies without first obtaining the approval of Patriot or another member of the Patriot Group. Such approval shall not be unreasonably withheld, delayed or conditioned. Patriot shall have the right to utilize its broker to advocate for their interest.

          (iii) Where Patriot Liabilities are specifically covered under a Third Party Policy for periods prior to the Effective Time, or where such Third Party Policy covers claims made after the Effective Time with respect to an occurrence prior to the Effective Time, then from and after the Effective Time, Patriot may claim coverage for Insured Claims under such Third Party Policy as and to the extent that such insurance is available up to the full extent of the applicable limits of liability of such Third Party Policy (and may receive any Insurance Proceeds with respect thereto as contemplated by Section 4.03(b) or Section 4.03(c)(v)), subject to the terms of this Section 4.03(c).

          (iv) Except as set forth in this Section 4.03(c), PEC and Patriot shall not be liable to one another (or any of the members of their respective Groups) for claims, or portions of claims, not reimbursed by insurers under any Third Party Policy for any reason not within the control of PEC or Patriot, including coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency of any insurance carrier(s), Third Party Policy limitations or restrictions, any coverage disputes, any failure to timely file a claim by PEC or Patriot (or any of the members of their respective Groups), or any defect in such claim or its processing. The liability of PEC and Patriot to one another for such claims is expressly limited to the amount of

Insurance Proceeds received with respect to such claims and allocated to the respective Parties in accordance with Section 4.03(c)(v). It is expressly understood that the foregoing provisions in this Section 4.03(c)(iv) shall not limit any Party’s liability to any other Party for indemnification pursuant to Article VI.

          (v) Except as otherwise provided in Section 4.03(b), Insurance Proceeds received with respect to claims, costs and expenses under the Third Party Policies shall be paid, as appropriate, to PEC with respect to the PEC Liabilities, and Patriot, with respect to Patriot Liabilities. In the event that the aggregate limits on any Third Party Policies are exceeded by the aggregate of outstanding Insured Claims by the Parties or members of their respective Groups, the Parties agree to allocate the Insurance Proceeds received thereunder based upon their respective percentage of the total of their bona fide claims which were covered under such Third Party Policy, and any Party who has received Insurance Proceeds in excess of such Party’s respective percentage of Insurance Proceeds shall pay to the other Party the appropriate amount so that each Party will have received its respective percentage of Insurance Proceeds pursuant hereto. Each of the Parties agrees to use commercially reasonable efforts to maximize available coverage under those Third Party Policies applicable to it, and to take all commercially reasonable steps to recover from all other responsible parties in respect of an Insured Claim to the extent coverage limits under a Third Party Policy have been exceeded or would be exceeded as a result of such Insured Claim.

          (vi) In the event that the Parties or members of their respective Groups have bona fide claims under any Third Party Policy arising from the same occurrence and for which a deductible or self-insured retention is payable, the Parties agree that the aggregate amount of the deductible or self-insured retention paid shall be borne by the Parties in the same proportion which the Insurance Proceeds received by each such Party bears to the total Insurance Proceeds received under the applicable Third Party Policy pursuant to Section 4.03(c)(v), and any Party who has paid more than such allocable share of the deductible or self-insured retention shall be entitled to receive from the other Party an appropriate amount so that each Party has borne its allocable share of the deductible or self-insured retention pursuant hereto.

          (d) Agreement for Waiver of Conflict and Shared Defense. In the event that Insured Claims of both Parties exist relating to the same occurrence, the Parties shall jointly defend and waive any conflict of interest necessary to the conduct of the joint defense. Nothing in this Section 4.03 shall be construed to limit or otherwise alter in any way the obligations of the Parties, including those created by this Agreement, by operation of Law or otherwise.

          (e) Cooperation. The Parties agree to use (and cause the members in their respective Groups to use) all commercially reasonable efforts to cooperate with respect to the various insurance matters contemplated by this Section 4.03.

          (f) Miscellaneous.

          (i) Nothing in this Agreement shall be deemed to restrict Patriot or PEC, or any members of their respective Groups, from acquiring at its own expense any

insurance Policy in respect of any Liabilities or covering any period. Except as otherwise provided in this Agreement, from and after the Effective Time, Patriot and PEC shall be responsible for obtaining and maintaining their respective insurance programs for their risk of loss and such insurance arrangements shall be separate programs apart from each other and each will be responsible for its own deductibles and self-insured retentions for such insurance programs.

          (ii) Each of the Parties intends by this Agreement that a third-party Person, including a third-party insurer or reinsurer, or other third-party Person that, in the absence of the Agreement would otherwise be obligated to pay any claim or satisfy any indemnity or other obligation, shall not be relieved of the responsibility with respect thereto and shall not be entitled to a “windfall” (i.e., avoidance of the obligation that such Person would have in the absence of this Agreement). To the extent that any such Person would receive such a windfall, the Parties shall negotiate in good faith concerning an amendment of this Agreement.

          Section 4.04. No Hire; No Solicit . None of PEC or Patriot or any member of their respective Groups will from the Effective Time through and including the one-year anniversary of the Effective Time, without the prior written consent of the other Party, either directly or indirectly, on their own behalf or in the service or on behalf of others, (i) solicit, aid, induce or encourage any individual who is an employee of a member of the other Party’s Group to leave his or her employment, or (ii) hire any individual who is an employee of a member of the other Party’s Group; provided , however , that nothing in this Section 4.04 shall be deemed to prohibit, any general solicitation for employment through advertisements and search firms not specifically directed at employees of such other applicable Party; provided further , that the applicable Party has not encouraged or advised such firm to approach any such employee.

          Section 4.05. Legal Names and Signage . (a) Except as otherwise specifically provided in any Ancillary Agreement, each Party shall exercise commercially reasonable efforts to cease (and cause all of the other members of its Group to cease), as soon as reasonably practicable after the Distribution Date, but in any event within six (6) months thereafter: (i) making any use of any names or Trademarks that include (A) any of the Trademarks of the other Party or such other Party’s subsidiaries or Affiliates (including, in the case of Patriot, “Peabody Energy” or “Peabody Energy Corporation” or any other name or Trademark containing the word “Peabody”) and (B) any names or Trademarks related thereto including any names or Trademarks confusingly similar thereto or dilutive thereof (with respect to each Party, such Trademarks of the other Party or any of such other Party’s subsidiaries or Affiliates, the “ Other Party Marks ”), and (ii) holding themselves out as having any affiliation with the other Party or such other Party’s subsidiaries or Affiliates; provided , however , that the foregoing shall not prohibit any Party or any member of a Party’s Group from (1) stating in any advertising or any other communication that it is formerly a PEC affiliate or (2) making use of any Other Party Mark in a manner that would constitute “fair use” under applicable Law if any unaffiliated third party made such use or would otherwise be legally permissible for any unaffiliated third party without the consent of the Party owning such Other Party Mark. In furtherance of the foregoing, as soon as practicable, but in no event later than three (3) months following the Effective Time, each Party shall (and cause all of the other members of its Group to) remove, strike over or otherwise obliterate all Other Party Marks from all of such Party’s and its subsidiaries’ and

Affiliates’ assets and other materials, including any vehicles, business cards, schedules, stationery, packaging materials, displays, signs, promotional materials, manuals, forms, websites, email, computer software and other materials and systems; provided , however , that Patriot shall promptly after the Effective Time post a disclaimer on the “www.patriotcoal.com” website informing its customers that as of the Effective Time and thereafter Patriot, and not PEC, is responsible for the operation of the Patriot Business, including such website and any applicable services. Any use by any Party or any of such Party’s Subsidiaries or Affiliates of any of the Other Party Marks as permitted in this Section 4.05 is subject to their compliance with all quality control and related requirements and guidelines in effect for the Other Party Marks as of the Effective Time.

               (b) Notwithstanding the foregoing requirements of Section 4.05(a) , if any Party or any member of such Party’s Group exercised good faith efforts to comply with Section 4.05(a) but is unable, due to regulatory or other circumstance beyond its control, to effect a legal name change in compliance with applicable Law such that an Other Party Mark remains in such Party’s or its Group member’s legal name, then such Party or its relevant Group member will not be deemed to be in breach hereof as long as it continues to exercise good faith efforts to effectuate such name change and does effectuate such name change within nine (9) months after the Effective Time, and, in such circumstances, such Party or Group member may continue to include in its assets and other materials references to the Other Party Mark that is in such Party’s or Group member’s legal name which includes references to “Patriot Coal” or “Peabody Energy” as applicable, but only to the extent necessary to identify such Party or Group member and only until such Party’s or Group member’s legal name can be changed to remove and eliminate such references.

               (c) Notwithstanding the foregoing requirements of Section 4.05(a), Patriot shall not be required to change any name including the word “Peabody” in any third-party contract or license, or in property records with respect to real or personal property, if an effort to change the name is commercially unreasonable; provided , however , that (i) Patriot on a prospective basis from and after the Effective Time shall change the name in any new or amended third-party contract or license or property record and (ii) Patriot shall not advertise or make public any continued use of the “Peabody” name permitted by this Section 4.05(c).

          Section 4.06. Auditors and Audits; Annual and Quarterly Financial Statements and Accounting .

               (a) Each Party agrees that during the period ending one hundred and eighty (180) days following the Effective Time and in any event solely with respect to the preparation and audit of each of the Party’s financial statements for any of the years ended December 31, 2007, 2006 and 2005, the printing, filing and public dissemination of such financial statements, the audit of each Party’s internal control over financial reporting related to such financial statements and such Party’s management’s assessment thereof, if applicable, and each Party’s management’s assessment of such Party’s disclosure controls and procedures related to such financial statements:

               (i) Annual Financial Statements. Each Party shall provide to the other Party on a timely basis all information reasonably required to meet its schedule for the

preparation, printing, filing, and public dissemination of its annual financial statements and, to the extent applicable to such Party, for management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with all applicable provisions of Regulation S-K, including, without limitation, Items 307 and 308 of Regulation S-K and, to the extent applicable to such party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the Commission’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder (such assessments and audit being referred to as the “Internal Control Audit and Management Assessments”). Without limiting the generality of the foregoing, each Party will provide all required financial and other Information with respect to itself and its Subsidiaries to its auditors in a sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps and perform all reviews necessary to provide sufficient assistance to the other Party’s auditors with respect to information to be included or contained in the other Party’s annual financial statements and to permit the other Party’s auditors and management to complete the Internal Control Audit and Management Assessments.

               (ii) Access to Personnel and Records. With respect to the 2007 fiscal year of each of PEC and Patriot, if PEC and Patriot use a different independent auditor then each audited Party shall authorize, and use commercially reasonable efforts to cause, its respective auditors to make available to the other Party’s auditors (the other Party’s auditors, collectively, the “Other Party’s Auditors”) both the personnel who performed or are performing the annual audits of such audited party (each such Party with respect to its own audit, the “Audited Party”) and work papers related to the annual audits of such Audited Party, in all cases within a reasonable time prior to such Audited Party’s auditors’ opinion date, so that the Other Party’s Auditors are able to perform the procedures they consider necessary to take responsibility for the work of the Audited Party’s auditors as it relates to their auditors’ report on such other Party’s financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its annual financial statements. In such an event, each Party shall make available to the Other Party’s Auditors and management its personnel and Records in a reasonable time prior to the Other Party’s Auditors’ opinion date and the other party’s management’s assessment date so that the Other Party’s Auditors and the other Party’s management are able to perform the procedures they consider necessary to conduct the Internal Control Audit and Management Assessments.

               (b) In the event a Party restates any of its financial statements that includes such Party’s audited or unaudited financial statements with respect to any balance sheet date or period of operation between January 1, 2004 and December 31, 2007, such Party will deliver to the other Party a substantially final draft, as soon as the same is prepared, of any report to be filed by such first Party with the Commission that includes such restated audited or unaudited financial statements (the “Amended Financial Report”); provided , however , that such first Party may continue to revise its Amended Financial Report prior to its filing thereof with the Commission, which changes will be delivered to the other Party as soon as reasonably practicable; provided , further , however , that such first Party’s financial personnel will actively consult with the other Party’s financial personnel regarding any changes which such first Party

may consider making to its Amended Financial Report and related disclosures prior to the anticipated filing of such report with the Commission, with particular focus on any changes which would have an effect upon the other Party’s financial statements or related disclosures. Each Party will reasonably cooperate with, and permit and make any necessary employees available to, the other Party, in connection with the other Party’s preparation of any Amended Financial Reports.

               (c) If any Party or member of its respective Group is required, pursuant to Rule 3-09 of Regulation S-X or otherwise, to include in its Exchange Act filings audited financial statements or other information of the other Party or member of the other Party’s Group, the other Party shall use commercially reasonable efforts (i) to provide such audited financial statements or other information, and (ii) to cause its outside auditors to consent to the inclusion of such audited financial statements or other information in the Party’s Exchange Act filings.

               (d) Nothing in this Section 4.06 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business; provided , however , that in the event that a Party is required under this Section 4.06 to disclose any such information, such Party shall use commercially reasonable efforts to seek to obtain such third party’s consent to the disclosure of such information.

          Section 4.07. No Restrictions on Post-Closing Competitive Activities; Corporate Opportunities .

               (a) Except as expressly provided herein or in any of the Ancillary Agreements, it is the explicit intent of each of the Parties that this Agreement shall not include any non-competition or other similar restrictive arrangements with respect to the range of business activities that may be conducted by the Parties. Accordingly, each of the Parties acknowledges and agrees that nothing set forth in this Agreement shall be construed to create any explicit or implied restriction or other limitation on (i) the ability of the other Party hereto to engage in any business or other activity that competes with the business of such Party, or (ii) the ability of the other Party to engage in any specific line of business or engage in any business activity in any specific geographic area.

               (b) Except as expressly provided herein or in any of the Ancillary Agreements, PEC and the PEC Group shall have the right to, and shall have no duty not to, (i) engage in the same or similar business activities or lines of business as Patriot or any other member of the Patriot Group, (ii) do business with any client or customer of Patriot or any other member of the Patriot Group, and (iii) employ or otherwise engage any officer or employee of Patriot or any other member of the Patriot Group, and neither PEC nor the PEC Group nor any officer or director thereof shall be liable to Patriot or any other member of the Patriot Group or any of Patriot’s stockholders for breach of any fiduciary duty by reason of any such activities of PEC or any other member of the PEC Group or of such person’s participation therein.

               (c) Except as expressly provided in the Ancillary Agreements, Patriot and the Patriot Group shall have the right to, and shall have no duty not to, (i) engage in the same or similar business activities or lines of business as PEC or any other member of the PEC Group, (ii) do business with any client or customer of PEC or any other member of the PEC Group, and (iii) employ or otherwise engage any officer or employee of PEC or any other member of the PEC Group, and neither Patriot nor the Patriot Group nor any officer or director thereof shall be liable to PEC or any other member of the PEC Group or any of PEC’s stockholders for breach of any fiduciary duty by reason of any such activities of Patriot or the Patriot Group or of such person’s participation therein.

               (d) In the event that PEC or any other member of the PEC Group acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both PEC or any other member of the PEC Group and Patriot or any other member of the Patriot Group, neither PEC nor any other member of the PEC Group nor any agent or advisor thereof shall have any duty to communicate or present such corporate opportunity to Patriot or any other member of the Patriot Group and shall not be liable to Patriot or any other member of the Patriot Group or to Patriot’s stockholders for breach of any fiduciary duty as a stockholder of Patriot by reason of the fact that PEC or any other member of the PEC Group pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to Patriot or any other member of the Patriot Group.

               (e) In the event that Patriot or any other member of the Patriot Group acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both PEC or any other member of the PEC Group and Patriot or any other member of the Patriot Group, neither Patriot nor any other member of the Patriot Group nor any agent or advisor thereof shall have any duty to communicate or present such corporate opportunity to PEC or any other member of the PEC Group and shall not be liable to PEC or any other member of the PEC Group or to PEC’s stockholders for breach of any fiduciary duty as a stockholder of Patriot by reason of the fact that Patriot or any other member of the Patriot Group pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to PEC or any other member of the PEC Group.

               (f) For the purposes of this Section 4.07, “corporate opportunities” of Patriot or any other member of the Patriot Group shall include, but not be limited to, business opportunities (i) that Patriot or any other member of the Patriot Group is financially able to undertake, (ii) that are, by their nature, in a line of business of Patriot or any other member of the Patriot Group, including the Patriot Business, (iii) that are of practical advantage to Patriot or any other member of the Patriot Group, (iv) in which Patriot or any other member of the Patriot Group has an interest or a reasonable expectancy, and (v) in which, by embracing the opportunities, Patriot or any other member of the Patriot Group will cause the self-interest of PEC or any other member of the PEC Group or any of their officers or directors to be brought into conflict with that of Patriot or any other member of the Patriot Group, and “corporate opportunities” of PEC or any other member of the PEC Group shall include, but not be limited to, business opportunities (i) that PEC or any other member of the PEC Group is financially able to undertake, (ii) that are, by their nature, in a line of business of PEC or any other

member of the PEC Group, (iii) that are of practical advantage to PEC or any other member of the PEC Group, (iv) in which PEC or any other member of the PEC Group have an interest or a reasonable expectancy, and (v) in which, by embracing the opportunities, PEC or any other member of the PEC Group will cause the self-interest of Patriot or any other member of the Patriot Group or any of their officers or directors to be brought into conflict with that of PEC or any other member of the PEC Group.

          Section 4.08. Right of Offset .

               (a) To the extent PEC or any other member of the PEC Group has the right to receive any amounts hereunder, including under the provisions of Article VI, or under any Ancillary Agreement or under any other arrangement between any member of the PEC Group and Patriot or any other member of the Patriot Group, then PEC may satisfy such amounts out of and shall have a right of off-set against any amounts then currently due from Patriot or any other member of the Patriot Group to PEC or any other member of the PEC Group hereunder or thereunder. For the avoidance of doubt, the parties acknowledge that expenses payable by Patriot pursuant to Section 15.01 of this agreement may be offset against amounts payable to Patriot pursuant to Section 2.02(f). PEC shall be entitled to offset from the amount to be contributed by it to Patriot pursuant to Section 2.02(f) of this Agreement an amount representing PEC’s estimate of expenses to be paid by Patriot pursuant to Section 15.01 hereof. The parties shall conduct a final accounting for such expenses within 60 days of the Distribution Date and related payments required to be made by either Patriot or PEC to the extent the expenses determined by such final accounting are higher or lower, respectively, than PEC’s estimate, shall be made not later than 90 days after the Distribution Date.

               (b) To the extent Patriot or any other member of the Patriot Group has the right to receive any amounts hereunder, including under the provisions of Article VI, or under any Ancillary Agreement or under any other arrangement between any member of the Patriot Group and PEC or any other member of the PEC Group, then Patriot may satisfy such amounts out of and shall have a right of off-set against any amounts then currently due from PEC or any other member of the PEC Group to Patriot or any other member of the Patriot Group hereunder or thereunder

          Section 4.09. [Intentionally Omitted] .

          Section 4.10. Prairie State Permits .

               (a) After the Distribution Date, PEC shall use its commercially reasonable efforts to cause a member of the Peabody Group to apply for, and diligently pursue, the transfer of the permits held by PCC and set forth on Schedule 4.10(b) and to cause in connection with such transfers the replacement of each surety bond, letter of credit or other similar arrangement (collectively, “ Prairie State Bonds ”) with respect to the permits set forth on Schedule 4.10(b) by posting, or causing another party to post, a new bond in form and substance satisfactory to the applicable beneficiary of such Prairie State Bond.

               (b) Patriot will use commercially reasonable efforts to (i) execute and deliver such further instruments and documents and take such other actions as PEC may

reasonably request in order to effectuate the transfer of the permits identified in Schedule 4.10(b) and (ii) take, or cause to be taken, all actions, and do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable laws, regulations and agreements or otherwise to consummate and make effective such transfers, including, without limitation, using commercially reasonable efforts to obtain any consents and approvals, make any filings and applications and remove any liens, claims, equity or other encumbrance on an Asset necessary or desirable in order to effect such transfers; provided that neither Patriot nor any of its Affiliates shall be obligated to pay any consideration therefor (except for filing fees and other similar charges) to any third party from whom such consents, approvals and amendments are requested or to take any action or omit to take any action if the taking of or the omission to take such action would be unreasonably burdensome to Patriot or the Patriot Group or the business thereof. PEC shall (i) use commercially reasonable efforts to cooperate with Patriot in order to effect the transfer of the permits identified in Schedule 4.10(b) and (ii) promptly reimburse Patriot or its Affiliate, as the case may be, for any filing fee or other similar charge paid to a third party from whom such consents, approvals and amendments are requested.

ARTICLE V
LITIGATION MATTERS

          Section 5.01. Case Allocation .

               (a) As of the Distribution Date, Patriot shall, and, as applicable, shall cause the other members of the Patriot Group to, (i) diligently conduct, at its sole cost and expense, the defense of the Patriot Actions, including the Patriot Actions listed on Schedule 5.01(a) and any applicable future Patriot Actions; (ii) notify PEC of material litigation developments related to the Patriot Actions; and (iii) agree not to file any cross claim or institute separate legal proceedings against PEC in relation to the Patriot Actions.

               (b) As of the Distribution Date, PEC shall, and, as applicable, shall cause the other members of the PEC Group to, (i) diligently conduct, at its sole cost and expense, the defense of the PEC Actions, including the PEC Actions listed on Schedule 5.01(b) and any applicable future PEC Actions; (ii) notify Patriot of material litigation developments related to the PEC Actions; and (iii) agree not to file any cross claim or institute separate legal proceedings against Patriot in relation to the PEC Actions.

               (c) Notwithstanding anything in this Section 5.01 to the contrary, PEC shall have the right to participate in the defense of any Patriot Action and to be represented by attorneys of its own choosing and at its sole cost and expense, and Patriot shall have the right to participate in the defense of any PEC Action and to be represented by attorneys of its own choosing and at its sole cost and expense.

               (d) Patriot shall indemnify and hold harmless PEC and other members of the PEC Group against Liabilities arising in connection with Patriot Actions, and PEC shall indemnify and hold harmless Patriot and other members of the Patriot Group against Liabilities arising in connection with PEC Actions, in each case, in accordance with the indemnification provisions of Article VI.

               (e) As of the Distribution Date, PEC shall, and, as applicable, shall cause the other members of the PEC Group to, (i) diligently conduct the defense of the Joint Actions; (ii) notify Patriot of material litigation developments related to the Joint Actions; and (iii) agree not to file any cross claim or institute separate legal proceedings against Patriot in relation to the Joint Actions; provided that if it becomes clear that a Joint Action relates primarily to the Patriot Business then from and after such time such Joint Action shall instead be deemed to be a Patriot Action subject to clause (a) above; and provided , further , that if it becomes clear that a Joint Action does not relate primarily to the Patriot Business then from and after such time such Joint Action shall instead be deemed to be a PEC Action subject to clause (b) above. PEC and Patriot shall regularly meet to review and discuss the progress of the Joint Actions and the classification thereof. Any dispute regarding whether an Action remains a Joint Action shall be settle pursuant to the dispute resolution mechanics of Section 15.15.

               (f) Until such time as the respective Liabilities of the members of the PEC Group and Patriot Group are determined in connection with any Joint Action, PEC and Patriot shall each pay 50% of the cost and expenses associated with the defense of such Joint Action. The parties agree that, to effect the foregoing sharing arrangement, counsel in connection with any Joint Action shall be instructed to render separate bills to PEC and to Patriot. In the event that PEC pays any costs or expenses that are the responsibility of Patriot hereunder, Patriot shall promptly reimburse PEC for such amounts. Patriot shall have the right to employ separate counsel to represent it and members of the Patriot Group if Patriot shall have reasonably concluded that there may be a legal defense available to members of the Patriot Group that are different from or in addition to those available to PEC or representation of both PEC (or any member of the PEC Group) and Patriot (or any member of the Patriot Group) by the same counsel would be inappropriate due to actual or potential differing interests between them, in which case fees and expenses of such counsel incurred by Patriot shall be included in the amounts allocated by the next sentence of this paragraph (f). Upon the determination of Liability of the members of the PEC Group and Patriot Group in connection with any Joint Action, Patriot shall indemnify and hold harmless PEC and other members of the PEC Group against the portion of such Liabilities relating primarily to the Patriot Business, and PEC shall indemnify and hold harmless Patriot and other members of the Patriot Group against the portion of such Liabilities relating primarily to the PEC Business, including, in each case, the costs and expenses associated with the defense of such Joint Action since the beginning of such Joint Action, which shall be allocated between PEC and Patriot in proportion to the Liability with respect to such Joint Action of members of the PEC Group, on the one hand, and members of the Patriot Group, on the other hand. Indemnification pursuant to this Section 5.01(f) shall be in accordance with the indemnification provisions of Article VI.

               (g) [Intentionally Omitted].

               (h) [Intentionally Omitted].

               (i) As of the Distribution Date, PEC shall assume the responsibility of litigating the case of Clintwood Elkhorn Mining Co. v. United States, pending before the United States Court of Appeals for the Federal Circuit (the “ Black Lung Case ”). PEC shall receive and have the benefit of all of the proceeds of the Black Lung Case, including interest, and shall be responsible for the payment of attorneys’ fees and costs.

               (j) As of the Distribution Date, PEC shall assume the responsibility of litigating Consolidated Coal Co. v. United States , No. 01-254C, pending in the United States Court of Federal Claims (the “ Federal Reclamation Case ”). PEC shall receive and have the benefit of all of the proceeds of the Federal Reclamation Case, including interest, and shall be responsible for the payment of attorneys’ fees and costs in connection with the Federal Reclamation Case.

          Section 5.02. Litigation cooperation .

               (a) Each of PEC and Patriot agrees that at all times from and after the Effective Time, if an Action currently exists or is commenced by a third-party with respect to which a Party (or any member of such Party’s respective Group) is a named defendant but such Action is otherwise not a Liability allocated to such named Party under this Agreement or any Ancillary Agreement, then the other Party shall use commercially reasonable efforts to cause the named but not liable defendant to be removed from such Action and such defendant shall not be required to make any payments or contribution in connection therewith.

               (b) If, in the case of any Action involving a matter contemplated by Section 5.01, there is a conflict of interest between the Parties, or in the event that any Third Party Claim seeks equitable relief which would restrict or limit the future conduct of the non-responsible Party or such Party’s business or operations, such Party shall be entitled to retain, at the responsible Party’s expense, separate counsel as required by the applicable rules of professional conduct (which counsel shall be reasonably acceptable to the responsible Party) and to participate in (but not control) the defense, compromise, or settlement of that portion of the Third Party Claim that seeks equitable relief with respect to the named Party.

               (c) PEC and Patriot shall each use commercially reasonable efforts to make available to the other, upon written request, its officers, directors, employees and agents, and the officers, directors, employees and agents of its subsidiaries, as witnesses to the extent that such individuals may reasonably be required in connection with any legal, administrative or other proceedings arising out of the business of the other, or of any entity that is part of the other Party’s Group in which the requesting Party or a member of its Group may be involved. The requesting Party shall bear all out-of-pocket costs and expenses in connection therewith. On and after the Effective Time, in connection with any matter contemplated by this Section 5.02(c), the Parties will maintain any attorney-client privilege or work product immunity of any member of any Group as required by the Common Interest Agreement.

ARTICLE VI
INDEMNIFICATION

          Section 6.01. Patriot Indemnification of the PEC Group . On and after the Distribution Date, Patriot shall indemnify, defend and hold harmless each member of the PEC Group, and each of their respective directors, officers, employees and agents (the “PEC Indemnitees”) from and against any and all Indemnifiable Losses incurred or suffered by any of the PEC Indemnitees and arising out of, or due to, (a) the failure of Patriot or any member of the Patriot Group to pay, perform or otherwise discharge, any of the Patriot Liabilities and (b) any untrue statement or alleged untrue statement of any material fact contained in the preliminary or

final Form 10, the preliminary or final Information Statement or any amendment or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (other than the information about PEC included in the sections of the Information Statement attached as Exhibit 99.1 to the Form 10 entitled “Summary — Our Business,” “Summary – Summary of the Spin-Off,” and “The Spin-Off - Reasons for the Spin-Off,” or any amendment or supplement thereto); provided , that Patriot shall have no obligation to indemnify PEC or any other member of the PEC Group with respect to any matter to the extent that such party has engaged in any knowing violation of Law, fraud or misrepresentation in connection therewith.

          Section 6.02. PEC Indemnification of Patriot Group . On and after the Distribution Date, PEC shall indemnify, defend and hold harmless each member of the Patriot Group and each of their respective directors, officers, employees and agents (the “Patriot Indemnitees”) from and against any and all Indemnifiable Losses incurred or suffered by any of the Patriot Indemnitees and arising out of, or due to, (a) the failure of PEC or any member of the PEC Group to pay, perform or otherwise discharge, any of the PEC Liabilities and (b) any untrue statement or alleged untrue statement of any material fact regarding PEC included in the sections of the Information Statement attached as Exhibit 99.1 to the Form 10 entitled “Summary – Our Business,” “Summary — The Spin-Off,” and “The Spin-Off — Reasons for the Spin-Off,” or any amendment or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided , that PEC shall have no obligation to indemnify Patriot or any other member of the Patriot Group with respect to any matter to the extent that such party has engaged in any knowing violation of Law, fraud or misrepresentation in connection therewith.

          Section 6.03. Contribution . In circumstances in which the indemnity agreements provided for in Sections 6.01(b) and 6.02(b) are unavailable or insufficient, for any reason, to hold harmless an indemnified party in respect of any Indemnifiable Losses arising thereunder, each indemnifying party, in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such indemnified party as a result of such Indemnifiable Losses, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such Indemnifiable Losses, as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by Patriot or PEC, the Parties’ relative intents, knowledge, access to information and opportunity to correct or prevent such statement or omission, and any other equitable considerations appropriate in the circumstances.

          Section 6.04. Insurance and Third Party Obligations . No insurer or any other third party shall be, by virtue of the foregoing indemnification provisions, (a) entitled to a benefit it would not be entitled to receive in the absence of such provisions, (b) relieved of the responsibility to pay any claims to which it is obligated, or (c) entitled to any subrogation rights with respect to any obligation hereunder.

          Section 6.05. Indemnification Obligations Net of Insurance Proceeds and Other Amounts on a Net-Tax Basis .

               (a) Any Liability subject to indemnification or contribution pursuant to this Article VI, will (i) be net of Insurance Proceeds that actually reduce the amount of the Liability, (ii) be net of any proceeds received by an Indemnified Party from any third party for indemnification for such Liability that actually reduce the amount of the Liability (“Third Party Proceeds”) and (iii) will be determined on a Net-Tax Basis. Accordingly, the amount which any Indemnifying Party is required to pay pursuant to this Article VI to any Indemnified Party will be reduced by any Insurance Proceeds or Third Party Proceeds theretofore actually recovered by or on behalf of the Indemnified Party in respect of the related Liability. If an Indemnified Party receives a payment required by this Agreement from an Indemnifying Party in respect of any Liability (an “Indemnity Payment”) and subsequently receives Insurance Proceeds or Third Party Proceeds, then the Indemnified Party will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or Third Party Proceeds had been received, realized or recovered before the Indemnity Payment was made.

               (b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification and contributions provisions hereof, have any subrogation rights with respect thereto. The Indemnified Party shall use commercially reasonable efforts to seek to collect or recover any third-party Insurance Proceeds and any Third Party Proceeds to which the Indemnified Party is entitled in connection with any Liability for which the Indemnified Party seeks contribution or indemnification pursuant to this Article VI; provided that the Indemnified Party’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

               (c) The term “Net-Tax Basis” as used in this Article VI means that, in determining the amount of the payment necessary to indemnify any party against, or reimburse any party for, Liabilities, the amount of such Liabilities will be determined net of any theoretical reduction in Tax realizable (assuming a hypothetical effective tax rate of 40%) by the Indemnified Party as the result of sustaining or paying such Liabilities after taking into account any Tax incurred on the receipt of Insurance Proceeds, and the amount of such Indemnity Payment will be increased (i.e., “grossed up”) by the amount necessary to satisfy any income or franchise Tax liabilities that will be incurred by the Indemnified Party as a result of its receipt of, or right to receive, such Indemnity Payment (as so increased), so that the Indemnified Party is put in the same net after-Tax economic position as if it had not incurred such Liabilities, in each case without taking into account any impact on the Tax basis that an Indemnified Party has in its assets.

          Section 6.06. Notice and Payment of Claims . If any PEC or Patriot Indemnitee (the “Indemnified Party”) determines that it is or may be entitled to indemnification by a Party (the “Indemnifying Party”) under this Article VI (other than in connection with any Action or claim subject to Section 6.07), the Indemnified Party shall deliver to the Indemnifying Party a written notice specifying, to the extent reasonably practicable, the basis for its claim for indemnification and the amount for which the Indemnified Party reasonably believes it is entitled

to be indemnified. After the Indemnifying Party shall have been notified of the amount for which the Indemnified Party seeks indemnification, the Indemnifying Party shall, within 30 days after receipt of such notice, pay the Indemnified Party such amount in cash or other immediately available funds (or reach agreement with the Indemnified Party as to a mutually agreeable alternative payment schedule) unless the Indemnifying Party objects to the claim for indemnification or the amount thereof. If the Indemnifying Party does not give the Indemnified Party written notice objecting to such claim and setting forth the grounds therefor within the same 30 day period, the Indemnifying Party shall be deemed to have acknowledged its liability for such claim and the Indemnified Party may exercise any and all of its rights under applicable law to collect such amount.

          Section 6.07. Notice and Defense of Third Party Claims . Promptly following the earlier of (a) receipt of notice of the commencement by a third party of any Action against or otherwise involving any Indemnified Party or (b) receipt of information from a third party alleging the existence of a claim against an Indemnified Party, in either case, with respect to which indemnification may be sought pursuant to this Agreement (a “Third Party Claim”), the Indemnified Party shall give the Indemnifying Party written notice thereof. The failure of the Indemnified Party to give notice as provided in this Section 6.07 shall not relieve the Indemnifying Party of its obligations under this Agreement, except to the extent that the Indemnifying Party is prejudiced by such failure to give notice. Within 30 days after receipt of such notice, the Indemnifying Party shall by giving written notice thereof to the Indemnified Party, (a) acknowledge, as between the parties hereto, liability for, and at its option elect to assume the defense of such Third Party Claim at its sole cost and expense or (b) object to the claim of indemnification set forth in the notice delivered by the Indemnified Party pursuant to the first sentence of this Section 6.07 setting forth the grounds therefor; provided that if the Indemnifying Party does not within the same 30 day period give the Indemnified Party written notice acknowledging liability or objecting to such claim and setting forth the grounds therefor, the Indemnifying Party shall be deemed to have acknowledged, as between the parties hereto, its liability to the Indemnified Party for such Third Party Claim. Any contest of a Third Party Claim as to which the Indemnifying Party has elected to assume the defense shall be conducted by attorneys employed by the Indemnifying Party and reasonably satisfactory to the Indemnified Party; provided that the Indemnified Party shall have the right to participate in such proceedings and to be represented by attorneys of its own choosing at the Indemnified Party’s sole cost and expense. If the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party may settle or compromise the claim without the prior written consent of the Indemnified Party; provided that the Indemnifying Party may not agree to any such settlement pursuant to which any remedy or relief, other than monetary damages for which the Indemnifying Party shall be responsible hereunder, shall be applied to or against the Indemnified Party, without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld. If the Indemnifying Party does not assume the defense of a Third Party Claim for which it has acknowledged liability for indemnification under Article VI, the Indemnified Party may require the Indemnifying Party to reimburse it on a current basis for its reasonable expenses of investigation, reasonable attorney’s fees and reasonable out-of-pocket expenses incurred in defending against such Third Party Claim, and the Indemnifying Party shall be bound by the result obtained with respect thereto by the Indemnified Party; provided that the Indemnifying Party shall not be liable for any settlement effected without its consent, which consent shall not be unreasonably withheld. The Indemnifying Party shall pay to the Indemnified Party in cash the

amount for which the Indemnified Party is entitled to be indemnified (if any) within 15 days after the final resolution of such Third Party Claim (whether by the final nonappealable judgment of a court of competent jurisdiction or otherwise), or, in the case of any Third Party Claim as to which the Indemnifying Party has not acknowledged liability, within 15 days after such Indemnifying Party’s objection has been resolved by settlement, compromise or the final nonappealable judgment of a court of competent jurisdiction.

ARTICLE VII
EMPLOYEE MATTERS

          Section 7.01. Employee Matters Agreement . All matters relating to or arising out of any employee benefit, compensation or welfare arrangement in respect of any present and former employee of the PEC Group or the Patriot Group shall be governed by the Employee Matters Agreement substantially in the form of Exhibit B hereto, except as may be expressly stated herein. In the event of any inconsistency with respect to such matters between the Employee Matters Agreement and this Agreement or any Ancillary Agreement, the Employee Matters Agreement shall govern to the extent of the inconsistency.

ARTICLE VIII
TAX MATTERS

          Section 8.01. Tax Separation Agreement . All matters relating to Taxes shall be governed exclusively by the Tax Separation Agreement substantially in the form of Exhibit F hereto, except as may be expressly stated herein. In the event of any inconsistency with respect to such matters between the Tax Separation Agreement and this Agreement or any Ancillary Agreement, the Tax Separation Agreement shall govern to the extent of the inconsistency.

ARTICLE IX
ACCOUNTING MATTERS

          Section 9.01. Intercompany Accounts (a).

               (a) Each Intercompany Account outstanding immediately prior to the Effective Time, in any general ledger account of PEC, Patriot or any of their respective Affiliates, other than those set forth on Schedule 9.01(a) , shall be satisfied and/or settled by the relevant members of the PEC Group and the Patriot Group no later than the Effective Time by (i) forgiveness by the relevant obligor, (ii) one or a related series of distributions of and/or contributions to capital, or (iii) cash payment by the relevant obligor to the relevant obligee, in each case as agreed to by the Parties.

               (b) To the extent intercompany accounts are not satisfied in accordance with Section 9.01(a), each Intercompany Account outstanding immediately prior to the Effective Time under any of the general ledger accounts of PEC, Patriot or any of their respective Affiliates set forth on Schedule 9.01(a) shall continue to be outstanding after the Effective Time and thereafter (i) shall be an obligation of the relevant Party (or the relevant member of such Party’s Group), each responsible for fulfilling its (or a member of such Party’s Group’s) obligations in accordance with the terms and conditions applicable to such obligation, and

(ii) shall be for each relevant Party (or the relevant member of such Party’s Group) an obligation to a third-party and shall no longer be an Intercompany Account.

ARTICLE X
INTELLECTUAL PROPERTY MATTERS

          Section 10.01. Software License Agreement . All matters relating to the ownership and right to use intellectual property, other than trademarks or as provided in Section 13.07, shall be governed exclusively by the Software License Agreement substantially in the form of Exhibit D hereto. In the event of any inconsistency with respect to such matters between the Software License Agreement and this Agreement or any Ancillary Agreement, the Software License Agreement shall govern to the extent of the inconsistency.

ARTICLE XI
TRANSITION SERVICES

          Section 11.01. Transition Services Agreement . All matters relating to the provision of support and other services by the PEC Group to the Patriot Group after the Effective Time covered by the Transition Services Agreement, other than as provided in Section 13.07, shall be governed exclusively by the Transition Services Agreements substantially in the form of Exhibit G hereto, except as may be expressly stated herein. In the event of any inconsistency with respect to such matters between the Transition Services Agreement and this Agreement or any Ancillary Agreement, the Transition Services Agreement shall govern to the extent of the inconsistency.

ARTICLE XII
REAL PROPERTY MATTERS

          Section 12.01. Real Property Agreements . All matters relating to real property to be owned, leased, subleased, occupied, or shared by the PEC Group or the Patriot Group after the Effective Time shall be governed by the Real Property Agreements substantially in the form of Exhibit C hereto. In the event of any inconsistency with respect to such matters between the Real Property Agreements and this Agreement or any Ancillary Agreement, the Real Property Agreements shall govern to the extent of the inconsistency.

ARTICLE XIII
INFORMATION; SEPARATION OF DATA

          Section 13.01. Provision of Corporate Records . As soon as practicable following the Effective Time, PEC and Patriot shall each arrange for the provision to the other of existing corporate documents (e.g. minute books, stock registers, stock certificates, documents of title, contracts, etc.) in its possession relating to the other or its business and affairs or to any other entity that is part of such other’s respective Group or to the business and affairs of such other entity.

          Section 13.02. Access to Information . From and after the Effective Time, PEC and Patriot shall each afford the other and its accountants, counsel and other designated representatives reasonable access (including using commercially reasonable efforts to give

access to Persons possessing information) and duplicating rights during normal business hours to all records, books, contracts, instruments, computer data and other data and information in its possession relating to the business and affairs of the other or a member of its Group (other than data and information subject to an attorney/client or other privilege), insofar as such access is reasonably required by the other including, without limitation, for audit, accounting and litigation purposes.

          Section 13.03. Retention of Records . Except as otherwise required by law or agreed to in writing, each Party shall, and shall cause the members of its Group to, retain all information relating to the other’s business in accordance with the past practice of such Party. Notwithstanding the foregoing, either Party may destroy or otherwise dispose of any information at any time in accordance with the corporate record retention policy maintained by such Party with respect to its own records.

          Section 13.04. Confidentiality .

               (a) Notwithstanding any termination of this Agreement, for a period of five (5) years from the Effective Time the Parties shall hold, and shall cause each of their respective subsidiaries to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence, and not to disclose or release or use, for any ongoing or future commercial purpose, without the prior written consent of the other Party, any and all Confidential Information concerning any other Party; provided , that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information for our auditing and other non-commercial purposes and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if the Parties or any of their respective subsidiaries are required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of Law or stock exchange rule, (iii) as required in connection with any legal or other proceeding by one Party against any other Party, or (iv) as necessary in order to permit a Party to prepare and disclose its financial statements, or other required disclosures; provided , further , that each Party (and members of its Group as necessary) may use, or may permit use of, Confidential Information of the other Party in connection with such first Party performing its obligations, or exercising its rights, under this Agreement or any Ancillary Agreement. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, each Party, as applicable, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which such Parties will cooperate in obtaining. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential Information is required to be disclosed shall or shall cause the other applicable Party or Parties to furnish, or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded such information.

               (b) Notwithstanding anything to the contrary set forth herein, (i) the Parties shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information and (ii) confidentiality obligations provided for in any agreement between each Party or its Subsidiaries and their respective employees shall remain in full force and effect. Notwithstanding anything to the contrary set forth herein, Confidential Information of any Party in the possession of and used by any other Party as of the Effective Time may continue to be used by such Party in possession of the Confidential Information in and only in the operation of the PEC Business or the Patriot Business, as the case may be; provided , such Confidential Information may be used only so long as the Confidential Information is maintained in confidence and not disclosed in violation of Section 13.04(a). Such continued right to use may not be transferred (directly or indirectly) to any third party without the prior written consent of the applicable Party, except pursuant to Section 15.05(b).

               (c) Each Party acknowledges that it and the other members of its Group may have in their possession confidential or proprietary information of third parties that was received under confidentiality or non-disclosure agreements with such third party prior to the Effective Time. Such Party will hold, and will cause the other members of its Group and their respective representatives to hold, in strict confidence the confidential and proprietary information of third parties to which they or any other member of their respective Groups has access, in accordance with the terms of any agreements entered into prior to the Effective Time between one or more members of the such Party’s Group (whether acting through, on behalf of, or in connection with, the separated businesses) and such third parties.

               (d) Upon the written request of a Party, the other Party shall promptly, (i) deliver to such requesting Party all original Confidential Information (whether written or electronic) concerning such requesting Party and/or its Subsidiaries, and (ii) if specifically requested by such requesting Party, destroy any copies of such Confidential Information (including any extracts there from). Upon the written request of such requesting Party, the other Party shall cause one of its duly authorized officers to certify in writing to such requesting Party that the requirements of the preceding sentence have been satisfied in full.

          Section 13.05. Privileged Matters .

               (a) The Parties recognize that legal and other professional services that have been and will be provided prior to the Effective Time have been and will be rendered for the collective benefit of each of the members of the PEC Group and the Patriot Group, and that each of the members of the PEC Group and the Patriot Group should be deemed to be the client with respect to such pre-separation services for the purposes of asserting all privileges which may be asserted under applicable Law.

               (b) The Parties recognize that legal and other professional services will be provided following the Effective Time which will be rendered solely for the benefit of PEC or Patriot, as the case may be. With respect to such post-separation services, the Parties agrees as follows:

               (i) PEC shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the PEC Business, whether or not the privileged information is in the possession of or under the control of PEC or Patriot. PEC shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting PEC Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by PEC, whether or not the privileged information is in the possession of or under the control of PEC or Patriot; and

               (ii) Patriot shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the Patriot Business, whether or not the privileged information is in the possession of or under the control of PEC or Patriot. Patriot shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting Patriot Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by Patriot, whether or not the privileged information is in the possession of or under the control of PEC or Patriot.

               (c) The Parties agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 13.05, with respect to all privileges not allocated pursuant to the terms of Section 13.05(b). All privileges relating to any claims, proceedings, litigation, disputes, or other matters which involve both PEC and Patriot in respect of which both Parties retain any responsibility or Liability under this Agreement, shall be subject to a shared privilege among them.

               (d) No Party may waive any privilege which could be asserted under any applicable Law, and in which any other Party has a shared privilege, without the consent of the other Party, which shall not be unreasonably withheld or delayed or as provided in subsections (e) or (f) below. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within twenty (20) days after notice upon the other Party requesting such consent. Each Party shall use its reasonable best efforts to preserve any privilege held by the other party if that privilege is a shared privilege or has been allocated to the other party pursuant to Section 13.05(b).

               (e) In the event of any litigation or dispute between or among any of the Parties, or any members of their respective Groups, either such Party may waive a privilege in which the other Party or member of such Group has a shared privilege, without obtaining the consent of the other Party; provided , that such waiver of a shared privilege shall be effective only as to the use of information with respect to the litigation or dispute between the relevant Parties and/or the applicable members of their respective Group’s, and shall not operate as a waiver of the shared privilege with respect to third parties.

               (f) If a dispute arises between the Parties or their respective subsidiaries regarding whether a privilege should be waived to protect or advance the interest of either Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any

prejudice to the rights of the other Party, and shall not unreasonably withhold consent to any request for waiver by the other Party. Each Party specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

               (g) Upon receipt by either Party or by any subsidiary thereof of any subpoena, discovery or other request which arguably calls for the production or disclosure of information subject to a shared privilege or as to which the other Party has the sole right hereunder to assert a privilege, or if either Party obtains knowledge that any of its or any of its Subsidiaries’ current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably calls for the production or disclosure of such privileged information, such Party shall promptly notify the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it or they may have under this Section 13.05 or otherwise to prevent the production or disclosure of such privileged information.

               (h) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of PEC and Patriot as set forth in Section 13.04 and Section 13.05, to maintain the confidentiality of privileged information and to assert and maintain all applicable privileges. Nothing provided for herein or in any Ancillary Agreement shall be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.

          Section 13.06. Ownership of Information . Any Information owned by one Party or any of its subsidiaries that is provided to a requesting Party pursuant to Article VI, Article XV, or this Article XIII shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such information.

          Section 13.07. Separation of Data . Patriot acknowledges and agrees that PEC may, after the Effective Time, delete or cause to be deleted any Information which does not relate to the Patriot Business which is contained in, stored in or accessible through any Software provided to Patriot under the Software License Agreement, the Transition Services Agreement or otherwise. The foregoing will not be deemed to be a violation of any provision of this Agreement, the Software License Agreement, or the Transition Services Agreement. The provisions of Section 13.04 apply to Patriot’s use of any such Information prior to its deletion.

ARTICLE XIV
INTEREST ON PAYMENTS

          Section 14.01. Interest . Except as otherwise expressly provided in this Agreement or an Ancillary Agreement, all payments by one Party to the other under this Agreement or any Ancillary Agreement shall be paid by company check or wire transfer of immediately available funds to an account in the United States designated by the recipient, within thirty (30) days after receipt of an invoice or other written request for payment setting forth the specific amount due and a description of the basis therefor in reasonable detail. Any amount remaining unpaid beyond its due date, including disputed amounts that are ultimately determined to be payable, shall bear interest at a rate of simple interest per annum equal to the Applicable Rate. Notwithstanding anything to the contrary contained herein or in any Ancillary Agreement, in no

event shall the amount or rate of interest due and payable exceed the maximum amount or rate of interest allowed by applicable law and, in the event any such excess payment is made or received, such excess sum shall be credited as a payment of principal (or if no principal shall remain outstanding, shall be refunded).

ARTICLE XV
MISCELLANEOUS

          Section 15.01. Expenses . Except as set forth on Schedule 15.01 or as specifically provided in this Agreement or any Ancillary Agreement, PEC shall pay (a) all costs and expenses incurred in connection with the spin-off and the transactions contemplated by this Agreement (including transfer taxes and the fees and expenses of the Distribution Agent and of all counsel, accountants and financial and other advisors), (b) all costs and expenses incurred in connection with the preparation, execution, delivery and implementation of this Agreement and the Ancillary Agreements, (c) all costs and expenses incurred by Patriot (including fees and expenses of all counsel, accountants and financial advisors) in connection with Patriot’s Senior Credit Facility, (d) all costs and expenses payable by Patriot to Bank of America, N.A. or Banc of America Securities LLC (collectively, “ BofA ”) pursuant to the Senior Secured Credit Facility Commitment Letter and Fee Letter, in each case dated September 24, 2007, entered into by Patriot with BofA, representing amounts owed to BofA in connection with the establishment of Patriot’s Senior Credit Facility in respect of the preparation, due diligence, syndication and closing of all loan documentation (including, without limitation, the legal fees of counsel to BofA) and amounts owed to BofA in respect of underwriting and administrative agency fees, and (e) all legal, filing, accounting, printing, and other expenses in connection with the preparation, printing and filing of the Form 10 and the Information Statement.

     Either Party may, by written notice delivered to the other Party in accordance with this Section 15.02, change the address to which delivery of any notice shall thereafter be made.

          Section 15.03. Amendment and Waiver . This Agreement may not be altered or amended, nor may any rights hereunder be waived, except by an instrument in writing executed by the Party or Parties to be charged with such amendment or waiver. No waiver of any terms, provision or condition of or failure to exercise or delay in exercising any rights or remedies under this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, provision, condition, right or remedy or as a waiver of any other term, provision or condition of this Agreement.

          Section 15.04. Entire Agreement . This Agreement, together with the Ancillary Agreements, constitutes the entire understanding of the Parties hereto with respect to the subject matter hereof, superseding all negotiations, prior discussions and prior agreements and understandings relating to such subject matter. To the extent that the provisions of this Agreement are inconsistent with the provisions of any Ancillary Agreement with respect to the subject matter thereof, the provisions of such Ancillary Agreement shall prevail to the extent of the inconsistency.

          Section 15.05. Consolidation, Merger, Etc.; Parties in Interest; Termination .

               (a) Neither Party (referred to in this Section 15.05(a) as a “Transferring Party”) shall consolidate with or merge into any other entity or convey, transfer or lease all or any substantial portion of its properties and assets to any entity, unless, in each case, the other party to such transaction expressly assumes, by a written agreement, executed and delivered to the other Party hereto, in form reasonably satisfactory to such other Party, all of the Liabilities of the Transferring Party under this Agreement and the Ancillary Agreements and the due and punctual performance or observance of every agreement and covenant of this Agreement and Ancillary Agreements on the part of the Transferring Party to be performed or observed.

               (b) Neither of the Parties hereto may assign its rights or delegate any of its duties under this Agreement without the prior written consent of each other Party. This Agreement shall be binding upon, and shall inure to the benefit of, the Parties hereto and their respective successors and permitted assigns. Nothing contained in this Agreement, express or implied, is intended to confer any benefits, rights or remedies upon any Person other than members of the PEC Group and the Patriot Group and the PEC Indemnitees and Patriot Indemnitees under Article VI hereof.

               (c) This Agreement (including Article VI hereof) may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Distribution by and in the sole discretion of PEC without the approval of Patriot or the shareholders of PEC. In the event of such termination, neither Party shall have any liability of any kind arising from such termination to the other Party or any other Person. After the Distribution, this Agreement may not be terminated except by an agreement in writing signed by the Parties; provided , however , that Article VI shall not be terminated or amended after the Distribution in respect of any PEC Indemnitee or Patriot Indemnitee without the consent of such Person.

          Section 15.06. Further Assurances and Consents . In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties hereto will use commercially reasonable efforts to (a) execute and deliver such further instruments and documents and take such other actions as any other Party may reasonably request in order to effectuate the purposes of this Agreement and to carry out the terms hereof and (b) take, or cause to be taken, all actions, and do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable laws, regulations and agreements or otherwise to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, using commercially reasonable efforts to obtain any consents and approvals, make any filings and applications and remove any liens, claims, equity or other encumbrance on an Asset of the other Party necessary or desirable in order to consummate the transactions contemplated by this Agreement; provided that no Party hereto shall be obligated to pay any consideration therefor (except for filing fees and other similar charges) to any third party from whom such consents, approvals and amendments are requested or to take any action or omit to take any action if the taking of or the omission to take such action would be unreasonably burdensome to the Party or its Group or the business thereof.

          Section 15.07. Severability . In the event that any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and the Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

          Section 15.08. Governing Law; Jurisdiction . This Agreement shall be construed in accordance with, and governed by, the laws of the State of Delaware, without regard to the conflicts of law rules of such state. Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the courts of the State of Missouri or any federal court with subject matter jurisdiction located in the City of St. Louis (and any appeals court therefrom) in the event any dispute arises out of this Agreement or any Ancillary Agreement or any transaction contemplated hereby or thereby, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (c) agrees that it will not bring any action relating to this Agreement or any Ancillary Agreement or any transaction contemplated hereby or thereby in any court other than such courts.

          Section 15.09. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same Agreement.

          Section 15.10. Third Party Beneficiaries . Except as provided in Article VI and except as specifically provided in any Ancillary Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

          Section 15.11. Specific Performance . The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance

with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to provisional or temporary injunctive relief in accordance therewith in any court of the United States, this being in addition to any other remedy or relief to which they may be entitled.

          Section 15.12. Limitations of Liability . Notwithstanding anything in this Agreement to the contrary, no Indemnifying Party shall be liable to an Indemnified Party for any special, indirect, incidental, punitive, consequential, exemplary, statutorily-enhanced or similar damages in excess of compensatory damages (provided that any such liability with respect to a Third Party Claim shall be considered direct damages) arising in connection with the transactions contemplated by this Agreement or the Ancillary Agreements.

          Section 15.13. Force Majeure . No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other Party of the nature and extent of any such Force Majeure condition, and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as reasonably practicable.

          Section 15.14. Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

          Section 15.15. Disputes .

               (a) Except as otherwise provided in any Ancillary Agreement, all disputes, controversies or claims between members of the PEC Group and the Patriot Group, which are parties to this Agreement or any Ancillary Agreement, arising out of or relating to this Agreement or any Ancillary Agreement or the performance by the parties of its or their terms, whether based on contract, tort, statute or otherwise, including, but not limited to, disputes in connection with claims by third parties (collectively, “Disputes”), shall be resolved only in accordance with the provisions of this Section 15.15; provided , however , that nothing contained herein shall preclude any party to a Dispute from seeking or obtaining (i) injunctive relief to prevent an actual or threatened breach of any of the provisions of this Agreement or any Ancillary Agreement, or (ii) equitable or other judicial relief to enforce the provisions of this Section 15.15 hereof or to preserve the status quo pending resolution of Disputes hereunder.

               (b) Any party or parties to a Dispute of either Group may give the parties to the Dispute of the other Group written notice of the Dispute initiating the procedures hereunder. Within ten days after delivery of the notice of a Dispute, the receiving parties shall submit to the other a written response. The notice and the response shall include a statement of each party’s respective position and a summary of arguments supporting that position and the name and title of the executive who will represent the claimants and of any other individual

who will accompany such executive in resolving the Dispute. Within twenty (20) days after delivery of the first notice, the executives of both Groups shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, and shall negotiate in good faith to attempt to resolve the Dispute. All reasonable requests for information made by one party to the another will be honored. If the Dispute has not been resolved by negotiation within forty (40) days of the notice of the Dispute, the board of directors of PEC and Patriot shall appoint independent committees that will negotiate in good faith to attempt to resolve the Dispute.

               (c) If the Dispute has not been resolved by negotiation within sixty (60) days of the notice of Dispute, the Dispute may, by mutual consent of both Parties, be submitted for resolution by a panel of three arbitrators conducted in accordance with the CPR Rules for Non-Administered Arbitration or AAA Rules (the “Rules”), as modified by this Section 15.15. The Claimants acting jointly, on the one hand, and the Respondents acting jointly, on the other hand, shall each appoint one arbitrator within fourteen (14) days after the Claimants give an arbitration notice. The two arbitrators so appointed shall designate the third arbitrator by mutual agreement within 30 days after the arbitration notice is given. If the two arbitrators so appointed fail to designate the third arbitrator within such period, then any Party may request the International Institute for Conflict Prevention & Resolution (“CPR”) to appoint the third arbitrator within fourteen (14) days after such request. The third arbitrator shall be a lawyer licensed to practice in the State of Missouri who shall not be related to, employed by, affiliated with or have had a substantial or ongoing business relationship with any member of either Group. Notwithstanding the foregoing, if the amount in dispute is less than $5,000,000, then the Claimants and Respondents shall appoint, together, a single arbitrator, reasonably acceptable to them, licensed to practice in the State of Missouri who shall not be related to, employed by, affiliated with or have had a substantial or ongoing business relationship with any member of either Group.

               (d) The arbitration shall be conducted in St. Louis, Missouri (or at any other place agreed upon by the parties and the arbitrators). The parties will facilitate the arbitration by: (i) making available to one another and to the arbitrators for examination, inspection and extraction all documents, books, records and personnel under their control if determined by the arbitrators to be relevant to the dispute; (ii) conducting arbitration hearings to the greatest extent possible on successive days; and (iii) observing strictly the time periods established by this Section 15.15, the Rules or by the arbitrators for submission of evidence or briefs. All issues in connection with the Dispute, including procedural issues, shall be decided by the concurrence of at least two arbitrators, and all decisions by the arbitrators shall be accompanied by a written opinion setting forth the findings of fact and conclusions of law relied upon in reaching the decision. The panel of arbitrators s hall decide the issues submitted to it in accordance with the language and commercial purposes of this Agreement or the relevant Ancillary Agreement (as applicable); provided that all questions of law shall be governed by the internal laws of the State of Delaware, without regard to its conflict of laws rules. The arbitrators’ decision shall be final and binding as to all matters at issue in the Dispute; provided , however , if necessary such decision may be enforced by either party in any court having jurisdiction over the parties or the subject matter of the Dispute. Unless the arbitrators shall assess the costs and expenses of the arbitration proceeding and of the parties differently,

each party shall pay its costs and expenses incurred in connection with the arbitration proceeding, and the costs and expenses of the arbitrators shall be shared equally by the parties.

[Signatures appear on following page.]

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.

		PEABODY ENERGY CORPORATION
		By:		/s/ Richard A. Navarre   Name: Richard A. Navarre
				Title: Executive Vice President
		PATRIOT COAL CORPORATION
		By:		/s/ Richard M. Whiting
				Name: Richard M. Whiting
				Title: President & Chief Executive Officer

Exhibit 10.2

EXECUTION COPY

TAX SEPARATION AGREEMENT

          This TAX SEPARATION AGREEMENT is dated as of October 22, 2007, by and among Peabody Energy Corporation (“Peabody”), a Delaware corporation, and Patriot Coal Corporation (“Spinco”), a Delaware corporation.

          WHEREAS, as of the date hereof, Peabody is the common parent of an affiliated group of domestic corporations within the meaning of Section 1504(a) of the Code, and the members of the affiliated group have heretofore joined in filing consolidated federal income Tax returns (the “Affiliated Group”);

          WHEREAS, Peabody intends to distribute all of the outstanding shares of stock of Spinco pro rata to the holders of Peabody common stock in a transaction that qualifies under sections 355 and 368 of the Code; and

          WHEREAS, as a result of the Distribution, the Parties desire to enter into this Tax Separation Agreement to provide for certain Tax matters, including the assignment of responsibility for the preparation and filing of Tax Returns, the payment of and indemnification for Taxes (including Taxes with respect to the Distribution and related transactions as contemplated in the other Transaction Agreements), entitlement to refunds of Taxes, and the prosecution and defense of any Tax controversies;

          NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I. DEFINITIONS

          SECTION 1.1. General . Capitalized terms used in this Agreement and not defined herein shall have the meanings that such terms have in the Separation Agreement. As used in this Agreement, the following terms shall have the following meanings:

          “Affiliated Group” shall have the meaning specified in the preamble hereof.

          “Agreement” shall mean this Tax Separation Agreement.

     “Business Day” or “Business Days” shall mean a day which is not a Saturday, Sunday or a day on which banks in New York City are authorized or required by law to close.

     “Closing of the Books Method” shall mean the apportionment of items between portions of a taxable period based on a closing of the books and records on the Distribution Date (as if the Distribution Date was the end of the taxable period), provided that , any items not susceptible to such apportionment shall be apportioned on the basis of elapsed days during the relevant portion of the taxable period.

     “Code” shall mean the Internal Revenue Code of 1986, as amended.

     “Confidentiality Agreement” shall mean any agreement pursuant to which the parties named therein have agreed to terms under which they were permitted to review certain financial information relating to Spinco or the Spinco Business.

     “Consolidated Return” shall mean any Tax Return relating to Income Taxes filed pursuant to Section 1502 of the Code, or any comparable combined, consolidated, or unitary group Tax Return relating to Income Taxes filed under state or local tax law which, in each case, includes Peabody and at least one subsidiary.

     “Contribution” shall have the meaning specified in the Separation Agreement.

     “Distribution” shall have the meaning specified in the Separation Agreement.

     “Distribution Date” shall mean the Business Day on which the Distribution is effected.

     “Distribution-Related Liability” shall mean any liability subject to indemnification pursuant to Section 4.3.

     “Final Determination” shall mean the final resolution of liability for any Tax for any taxable period, including any related interest or penalties, by or as a result of: (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (ii) a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or comparable agreement under the laws of other jurisdictions which resolves the entire Tax liability for any taxable period; or (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Tax.

     “Income Tax” shall mean any income, franchise or similar Taxes imposed on (or measured by) net income or net profits.

     “Income Tax Returns” shall mean all Tax Returns relating to Income Taxes.

     “Indemnification Tax Benefit” shall have the meaning specified in Section 2.4(b).

     “Indemnified Tax” shall have the meaning specified in Section 2.4(b).

     “IRS” shall mean the Internal Revenue Service.

     “Opinion” shall mean the opinion delivered by Ernst & Young LLP pursuant to Section 3.02(j) of the Separation Agreement.

     “Other Tax” shall mean any Tax other than an Income Tax.

     “Party” shall mean either Peabody or Spinco, as the case maybe.

     “Payment Period” shall have the meaning specified in Section 2.4(c).

     “Peabody” shall have the meaning specified in the preamble hereof.

     “Proceeding” shall mean any audit, examination or other proceeding brought by a Taxing Authority with respect to Taxes.

     “Prohibited Acts” shall have the meaning specified in Section 4.2.

     “Refund” shall have the meaning specified in Section 2.2.

     “Restricted Period” shall mean the two-year period commencing on the Distribution Date.

     “Retained Liabilities” shall mean the Liabilities covered by the “Liability Assumption Agreements” as defined in the Separation Agreement.

     “Retained Liability Payment” shall have the meaning specified in Section 2.6.

     “Retained Liability Tax Benefit” shall have the meaning specified in Section 2.6.

     “Ruling” shall mean the private letter ruling issued by the IRS to Peabody dated September 26, 2007, , attached hereto as Exhibit A, and any supplemental rulings related thereto.

     “Separation Agreement” shall mean the agreement entitled “Separation Agreement, Plan of Reorganization and Distribution,” entered into by Peabody and Spinco dated as of October 22, 2007.

     “Spinco” shall have the meaning set forth in the preamble hereof.

     “Spinco Business” shall have the same meaning as “Patriot Business” as defined in the Separation Agreement.

     “Spinco Pre-Closing NOL” shall mean any net operating loss from a taxable period ending on or before the Distribution Date that is allocated to Spinco after the Distribution Date under applicable Law.

     “Spinco Pre-Closing Tax Credit” shall mean any credit to which Section 383 of the Code (or any corresponding provision under state, local or foreign Law) applies from a taxable period ending on or before the Distribution Date that is allocated to Spinco after the Distribution Date under applicable Law.

     “Straddle Period” shall mean any taxable period commencing prior to, and ending after, the Distribution Date.

     “Tax” or “Taxes” shall mean any federal, state, local or foreign income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add on minimum, ad valorem, transfer or excise tax, or any

other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, imposed by any Taxing Authority.

     “Taxing Authority” shall mean any governmental authority (whether United States or non-United States, and including, any state, municipality, political subdivision or governmental agency) responsible for the imposition of any Tax.

     “Tax Returns” shall mean all reports or returns (including information returns and amended returns) required to be filed or that may be filed for any period with any Taxing Authority in connection with any Tax or Taxes (whether domestic or foreign).

          SECTION 1.2. References; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. The words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, such Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

ARTICLE II.   ALLOCATION OF TAX LIABILITIES

          SECTION 2.1.   Indemnity . (a) Subject to Article IV and without duplication, Peabody shall indemnify Spinco from all liability for (i) Income Taxes of Spinco or any other member of the Affiliated Group with respect to taxable periods ending on or before the Distribution Date and (ii) Income Taxes of Spinco or relating to the Spinco Business for any Straddle Period, but only to the extent attributable to the portion of the Straddle Period ending on or before the Distribution Date. Taxes for a Straddle Period shall be apportioned in accordance with the Closing of the Books Method.

          (b) Spinco shall indemnify Peabody from all liability for Other Taxes (excluding any such Taxes covered by Section 4.5(g)) of Spinco or relating to the Spinco Business for any taxable period.

          SECTION 2.2.   Refunds . (a) Subject to Section 3.5, if a Party receives a refund, offset, credit, or other benefit (including interest received thereon) (a “Refund”) of Tax which the other Party would have been obligated to indemnify had the Refund been a payment, then the Party receiving the Refund shall promptly pay the amount of the Refund to the other Party, less reasonable costs and expenses incurred in connection with such Refund, including any Taxes on such Refund or interest thereon.

          (b) Each Party shall, if reasonably requested by the other Party, cause the relevant entity to file for and use its reasonable best efforts to obtain and expedite the receipt of any Refund to which such requesting Party is entitled under this Section 2.2.

          SECTION 2.3.   Contests .

          (a)   In the case of any Proceeding that relates to Taxes for which Peabody is responsible under Section 2.1 hereof, Peabody shall have the right to control, in its sole discretion, the conduct of such Proceeding. Subject to the foregoing, Spinco shall have the right to participate jointly in any Proceeding if the consequences of the resolution of such Proceeding could reasonably be expected to affect the tax liability of Spinco for any tax period following the Distribution.

          (b)   In the case of any Proceeding that relates to Taxes for which Spinco is responsible under Section 2.1 hereof, Spinco shall have the sole right to control the conduct of such Proceeding.

          (c)   In the case of any Proceeding that relates to a Straddle Period of Spinco or the Spinco Business the parties shall use reasonable efforts to cause such Proceeding to be bifurcated between the period ending on the Distribution Date and the period beginning after the Distribution Date. If the parties are able to cause the audit to be so bifurcated, then Sections 2.3(a) and (b) hereof shall govern the control of such Proceedings. To the extent that the parties are unable to cause such bifurcation, Peabody and Spinco shall jointly control such Proceeding.

          (d)   After the Distribution Date, each Party shall promptly notify the other Party in writing upon receipt of written notice of the commencement of any Proceeding or of any demand or claim upon it, which, if determined adversely, would be grounds for indemnification from such other Party pursuant to Section 2.1 or could reasonably be expected to have an adverse Tax effect on the other Party. Each Party shall, on a timely basis, keep the other Party informed of all developments in the Proceeding and provide such other Party with copies of all pleadings, briefs, orders, and other correspondence pertaining thereto.

          SECTION 2.4.   Treatment of Payments; After Tax Basis

          (a) Peabody and Spinco agree to treat any indemnification payments (other than payments of interest pursuant to Section 2.4(c)) pursuant to this Agreement, including any payments made pursuant to Section 2.6, as either a capital contribution or a distribution, as the case may be, between Peabody and Spinco occurring immediately prior to the Distribution, and to challenge in good faith any other characterization of such payments by any Taxing Authority. If, notwithstanding such good faith efforts, the receipt or accrual of any such payment (other than payments of interest pursuant to Section 2.4(c)) results in taxable income to the indemnified Party, such payment shall be increased so that, after the payment of any Taxes with respect to the payment, the indemnified Party shall have realized the same net amount it would have realized had the payment not resulted in taxable income.

          (b) To the extent that any liability for Taxes that is subject to indemnification under Section 2.1 (an “Indemnified Tax”) gives rise to an Indemnification Tax Benefit to the indemnified Party in any taxable period, the indemnified Party will promptly remit to the indemnifying Party the amount of any such Indemnification Tax Benefit actually realized. For purposes of

this Agreement, “Indemnification Tax Benefit” means a reduction in the amount of Taxes that are required to be paid or increase in refund due, whether resulting from a deduction, from reduced gain or increased loss from disposition of an asset, or otherwise. For purposes of this Agreement, an indemnified Party will be deemed to have actually realized an Indemnification Tax Benefit at the time the amount of Taxes such indemnified Party is required to pay is reduced or the amount of any refund due is increased. The amount of any Indemnification Tax Benefit in this Section 2.4(b) shall be calculated by comparing (i) the indemnified Party’s actual Tax liability taking into account any Indemnified Tax with (ii) what the indemnified Party’s Tax liability would have been without taking into account any Indemnified Tax. If, pursuant to this Agreement, the indemnified Party makes a remittance to the indemnifying Party of any Indemnification Tax Benefit and all or part of such Indemnification Tax Benefit is subsequently disallowed, the indemnifying Party will promptly pay to the indemnified Party that portion of such remittance equal to the portion of the Indemnification Tax Benefit that is disallowed.

          (c) Payments made pursuant to this Agreement that are not made within the period prescribed in this Agreement or, if no period is prescribed, within thirty (30) days after demand for payment is made (the “Payment Period”) shall bear interest for the period from and including the date immediately following the last date of the Payment Period through and including the date of payment at a per annum rate equal to the Applicable Rate. Such interest will be payable at the same time as the payment to which it relates and shall be calculated on the basis of a year of 365 days and the actual number of days for which due.

          SECTION 2.5.   Agent . Subject to the other applicable provisions of this Agreement, Spinco hereby irrevocably designates Peabody as its sole and exclusive agent and attorney-in-fact to take such action (including execution of documents) as Peabody, in its sole discretion, may deem appropriate in any and all matters (including audits) relating to any Income Tax Return for which Peabody has an indemnification obligation under Section 2.1.

          SECTION 2.6.   Retained Liabilities . To the extent that any payments made by Peabody in respect of the Retained Liabilities (a “Retained Liability Payment”) gives rise to a Retained Liability Tax Benefit to Spinco in any taxable period, Spinco will promptly remit to Peabody the amount of any such Retained Liability Tax Benefit actually realized. For purposes of this Agreement, “Retained Liability Tax Benefit” means a reduction in the amount of Taxes that are required to be paid or increase in refund due, whether resulting from a deduction, credit, increased basis, or otherwise. For purposes of this Agreement, Spinco will be deemed to have actually realized a Retained Liability Tax Benefit at the time the amount of Taxes Spinco is required to pay is reduced or the amount of any refund due is increased. The amount of any Retained Liability Tax Benefit in this Section 2.6 shall be calculated by comparing (i) Spinco’s actual Tax liability taking into account any Retained Liability Payment with (ii) what Spinco’s Tax liability would have been without taking into account any Retained Liability Payment. If, pursuant to this Agreement, Spinco makes a remittance to Peabody of any Retained Liability Tax Benefit and all or part of such Retained Liability Tax Benefit is subsequently disallowed, Peabody will promptly pay to Spinco that portion of such remittance equal to the portion of the Retained Liability Tax Benefit that is disallowed.

ARTICLE III.   RETURNS AND TAXES ATTRIBUTABLE TO SPINCO

          SECTION 3.1.   Peabody’s Responsibility for the Preparation of Tax Returns and for the Payment of Taxes .

          (a)   Peabody shall prepare and file or cause to be prepared and filed all Tax Returns of Spinco or relating to the Spinco Business that are due on or before the Distribution Date (taking into account any valid extensions thereof and including any Tax Returns for the short year ending on the Distribution Date) and all Income Tax Returns of the Affiliated Group.

          (b)   With respect to Income Tax Returns that are to be prepared and filed by Peabody pursuant to the preceding paragraph (including separate Tax returns of Spinco included in a Consolidated Return but not including any Tax Returns for the short year ending on the Distribution Date) Peabody shall provide a copy of such Tax Returns to Spinco no later than the Distribution Date. With respect to Tax Returns for the short year ending on the Distribution Date, Peabody shall provide to Spinco the following:

            (i)   An estimate of taxable income (loss) and the components of such taxable income (loss) to be reported on such Tax Returns no later than two and one-half months after the Distribution Date and any updates to such estimates as they occur and become available;

            (ii)   A copy of such Tax Returns to Spinco not later than thirty (30) days prior to the due date for filing of such Tax Returns. Spinco shall have the right to review such Tax Returns and to review all work papers and procedures used to prepare any such Tax Returns. If Spinco, within ten (10) days after delivery of any such Tax Returns, notifies Peabody in writing of any objections Spinco has to positions taken or statements made in such Tax Returns that could reasonably be expected to have a material adverse impact on Spinco, Peabody agrees to consider such objections in good faith. If Spinco does not so notify Peabody of any objection, Spinco shall be considered to have consented to the filing of such Tax Returns.

          (c)   To the extent that Spinco or the Spinco Business is included in any Consolidated Return for a taxable period that includes the Distribution Date, Peabody shall include in such Consolidated Return the results of Spinco and the Spinco Business on the basis of the Closing of the Books Method. To the extent permitted by law or administrative practice with respect to other Income Tax Returns, the taxable period relating to Spinco or the Spinco Business shall be treated as ending on the Distribution Date, and if the taxable period does not, in fact, end on the Distribution Date, the Parties shall apportion all tax items between the portions of the taxable period before and after the Distribution Date on the Closing of the Books Method.

          (d) Where Peabody prepares and files or causes to be prepared and filed a Tax Return that reflects information related to Spinco or the Spinco Business pursuant to paragraphs (a) and (c) of this Section 3.1, the portions of such Tax Returns relating to Spinco shall be submitted to Spinco no later than thirty (30) days prior to the due date (including extensions) for filing of such Tax Returns (or if such due date is within 45 days following the Distribution Date, as promptly as practicable following the Distribution Date). Within ten (10) days after delivery of any such portions of any Tax Return, Spinco shall provide comments to Peabody in writing to the extent Spinco objects to any statements that could reasonably be expected to adversely impact it, and Peabody agrees to consider such objections in good faith. If Spinco does not so notify Peabody of any objection, Spinco shall be considered to have consented to the filing of such Tax Return.

          SECTION 3.2.   Spinco’s Responsibility for the Preparation of Tax Returns and for the Payment of Taxes. Spinco shall prepare and file or cause to be prepared and filed all Tax Returns relating to Taxes of Spinco or the Spinco Business that have not been filed before the Distribution Date, except for Income Tax Returns of the Affiliated Group and Income Tax Returns of Spinco for any Straddle Period as described in Sections 3.1 and 3.3.

          SECTION 3.3.   Responsibility for the Preparation of Straddle Period Income Tax Returns and for the Payment of Straddle Period Income Taxes. Peabody shall prepare and file or cause to be prepared and filed all Income Tax Returns of Spinco for any Straddle Period. All such Income Tax Returns that are to be prepared and filed by Peabody pursuant to this paragraph shall be submitted to Spinco not later than thirty (30) days prior to the due date for filing of such Tax Returns (or if such due date is within 45 days following the Distribution Date, as promptly as practicable following the Distribution Date). Spinco shall have the right to review such Tax Returns and to review all work papers and procedures used to prepare any such Tax Return. If Spinco, within ten (10) business days after delivery of any such Tax Return, notifies Peabody in writing that it objects to any of the items in such Tax Return, Peabody and Spinco shall attempt in good faith to resolve the dispute and, if they are unable to do so, the disputed items shall be resolved (within a reasonable time, taking into account the deadline for filing such Tax Return) by an internationally recognized independent accounting firm chosen by both Peabody and Spinco. Upon resolution of all such items, the relevant Straddle Period Tax Return shall be filed on that basis. The costs, fees and expenses of such accounting firm shall be borne equally by Peabody and Spinco.

          SECTION 3.4.   Manner of Preparation . All Income Tax Returns filed on or after the Distribution Date shall be prepared in a manner that is consistent with the Ruling and the Opinion, or any other rulings obtained from other Taxing Authorities in connection with the Distribution (in the absence of a Final Determination to the contrary) and shall be filed on a timely basis (including pursuant to extensions) by the Party responsible for such filing under this Agreement. In the absence of a Final Determination to the contrary, a controlling change in law or circumstances, or accounting method changes pursuant to applications that are approved by the Internal Revenue Service, all Income Tax Returns of Spinco for tax periods commencing prior to the Distribution Date shall be prepared on a basis consistent with the elections, accounting methods, conventions, assumptions and principles of taxation used with respect to the Spinco Business for the most recent taxable periods for which Tax Returns of the Affiliated Group have been filed.

          SECTION 3.5.   Carrybacks . Spinco agrees not to carry back any net operating losses, capital losses or credits for any taxable period ending after the Distribution Date to a taxable period, or portion thereof, ending on or before the Distribution Date. To the extent that Spinco is required by applicable law to carry back any such net operating losses, capital losses or credits, any refund of Taxes attributable to such carryback shall be for Peabody’s account.

          SECTION 3.6.   Retention of Records; Cooperation; Access.

          (a)   Peabody and Spinco shall, and shall cause each of their Subsidiaries to retain adequate records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns required to be filed by Peabody or

Spinco and for any Proceeding relating to such Tax Returns or to any Taxes payable by Peabody or Spinco.

          (b)   Peabody and Spinco shall, and shall cause each of their Subsidiaries to cooperate and provide reasonable access to (i) all records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns required to be filed by Peabody or Spinco and for any Proceeding relating to such Tax Returns or to any Taxes payable by Peabody or Spinco and (ii) its personnel and premises, for the purpose of the preparation, review or audit of such Tax Returns, or in connection with any Proceeding, as reasonably requested by either Peabody or Spinco.

          (c)   The obligations set forth above in Sections 3.6(a) and 3.6(b) shall continue until the longer of (i) the time of a Final Determination or (ii) expiration of all applicable statutes of limitations, to which the records and information relate. For purposes of the preceding sentence, each Party shall assume that no applicable statute of limitations has expired unless such Party has received notification or otherwise has actual knowledge that such statute of limitations has expired.

          SECTION 3.7.   Confidentiality; Ownership of Information; Privileged Information . The provisions of Article XIII of the Separation Agreement relating to confidentiality of information, ownership of information, privileged information and related matters shall apply with equal force to any records and information prepared and/or shared by and among the Parties in carrying out the intent of this Agreement.

          SECTION 3.8.   Sections 382 and 383 Limitations. Peabody agrees to make a timely and valid election under Treasury Regulation Section 1.1502-95 and Section 1.1502-98 (and any corresponding elections under state, local or foreign Law) to allocate to Spinco a portion of the “consolidated section 382 limitation” and “consolidated section 383 credit limitation” (as those terms are defined under the Treasury Regulations issued pursuant to Code Section 1502) (and any corresponding limitations under state, local or foreign Law) of the Affiliated Group in an amount that is equal to the sum of all applicable Spinco Pre-Closing NOLs and Spinco Pre-Closing Tax Credits, respectively; provided , that Peabody shall not be required to adjust any such allocation made pursuant to this Section 3.8 as the result of any adjustment by the IRS (or applicable governmental authority) to any Spinco Pre-Closing NOL or Spinco Pre-Closing Tax Credit.

ARTICLE IV.   DISTRIBUTION AND RELATED TAX MATTERS

          Notwithstanding anything herein to the contrary, the provisions of this Article IV shall govern all matters among the parties hereto related to a Distribution-Related Liability.

          SECTION 4.1.   Compliance with the Ruling. Spinco and Peabody hereby confirm and agree to comply with any and all covenants, agreements and representations in the Ruling applicable to Spinco and Peabody, respectively (including but not limited, in the case of Spinco, to agreeing that Spinco will not cease the active conduct of its trade or business within the meaning of Section 355(b) of the Code).

          SECTION 4.2.   Opinion Requirement for Major Transactions Undertaken by Spinco During the Restricted Period . Spinco agrees that during the Restricted Period it will not

(i) merge or consolidate with or into any other corporation, (ii) liquidate or partially liquidate (within the meaning of such terms as defined in Section 346 and Section 302, respectively, of the Code), (iii) sell or transfer all or substantially all of its assets (within the meaning of Rev. Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of related transactions, or sell or transfer any portion of its assets that would violate the “continuity of business enterprise” requirement of Treas. Reg. §1.368-1(d), (iv) redeem or otherwise repurchase any of its capital stock other than pursuant to open market stock repurchase programs meeting the requirements of section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B. 696, or (v) enter into any negotiations, agreements or arrangements with respect to transactions or events (including any transactions described in Sections 4.2(i)-(iv) (and, for this purpose, including any redemptions made pursuant to open market stock repurchase programs), stock issuances, pursuant to the exercise of options or otherwise, option grants, capital contributions or acquisitions, entering into any partnership or joint venture arrangements, or a series of such transactions or events, but excluding the Distribution) that may cause the Distribution to be treated as part of a plan pursuant to which one or more persons acquire directly or indirectly stock of Spinco representing a “50-percent or greater interest” therein within the meaning of Section 355(d)(4) of the Code (collectively the “Prohibited Acts”). Notwithstanding the foregoing, Spinco may take any of the Prohibited Acts, subject to Section 4.3, if (x) Spinco first obtains (at its expense) an opinion in form and substance reasonably acceptable to Peabody of a nationally recognized law firm reasonably acceptable to Peabody, which opinion may be based on usual and customary factual representations or (y) at Spinco’s request, Peabody (at the expense of Spinco) obtains a supplemental ruling from the Internal Revenue Service, that such Prohibited Act or Acts, and any transaction related thereto, will not (a) affect any of the conclusions set forth in the Ruling, including (i) the qualification of the Contribution under Section 368 of the Code, (ii) the qualification of the Distribution under Section 355 of the Code, and (iii) the nonrecognition of gain to Peabody in the Contribution and the Distribution or (b) cause the stock of Spinco distributed in the Distribution to fail to be treated as qualified property pursuant to Section 355(e) of the Code. Spinco may also take any of the Prohibited Acts, subject to Section 4.3, with the consent of Peabody in its sole and absolute discretion. During the Restricted Period, Spinco shall provide all information reasonably requested by Peabody relating to any transaction involving an acquisition (directly or indirectly) of 5% or more of Spinco stock. Spinco will provide Peabody with notice of all acquisitions (direct or indirect) within the meaning of Section 355(e) of the Code once the aggregate amount of such transactions exceeds 25% of Spinco stock.

          SECTION 4.3.   Indemnification by Spinco . If Spinco takes any action or enters into any agreement to take any action, including any of the Prohibited Acts as defined in Section 4.2 of this Agreement, or if there is a breach by Spinco of Section 4.1 hereof, or if there is any direct or indirect acquisition of Spinco stock, and as a result (i) the Distribution shall fail to qualify under Section 355 of the Code, (ii) the stock of Spinco distributed in the Distribution shall fail to be treated as qualified property pursuant to Section 355(e) of the Code or (iii) the Contribution fails to qualify under Section 368 of the Code or Peabody recognizes any gain in connection with the Contribution, then Spinco shall indemnify and hold harmless Peabody against any and all Taxes imposed upon or incurred by Peabody (and any Taxes of Peabody shareholders to the extent Peabody is liable with respect to such Taxes, whether to a Taxing Authority, to a shareholder or to any other person) as a result, unless such Taxes would, in any event, have been imposed upon or incurred by Peabody without regard to such actions, breaches or events, as determined at such time. To the extent Peabody recognizes income under clauses

(i), (ii) or (iii) of the preceding sentence and such income is offset by net operating losses of Peabody, the amount of Taxes for which Spinco shall indemnify and hold harmless Peabody under this Section 4.3 shall be determined as if such income had not been offset by such net operating losses. Peabody shall be indemnified and held harmless under this Section 4.3 without regard to whether an opinion or supplemental ruling pertaining to the action pursuant to Section 4.2 was obtained, and without regard to whether Peabody gave its consent to such action pursuant to Section 4.2 or otherwise.

          SECTION 4.4.   Information Sharing . On or before the Distribution Date, Peabody agrees to furnish Spinco with: (i) a copy of all Confidentiality Agreements, and (ii) a list of persons who may be deemed, in Peabody’s sole judgment, to have reached an agreement, understanding or arrangement, or to have engaged in substantial negotiations with Peabody concerning a potential acquisition of Spinco or the Spinco Business or any portion thereof at the time of the Distribution within the meaning of Treas. Reg. § 1.355-7(d). Notwithstanding the foregoing, Spinco shall not be relieved of any obligation under Section 4.2 or any liability to Peabody under Section 4.3 with respect to any person not included in the list described in subsection (ii) herein.

          SECTION 4.5.   Procedural Matters .

          (a)   Notice . If either Spinco or Peabody receives any written notice of deficiency, claim or adjustment or any other written communication from a Taxing Authority that may result in a Distribution-Related Liability, the Party receiving such notice or communication shall promptly give written notice thereof to the other Party, provided that any delay by Peabody in so notifying Spinco shall not relieve Spinco of any liability to Peabody hereunder except to the extent Spinco is materially and adversely prejudiced by such delay. Peabody undertakes and agrees that from and after such time as Peabody obtains knowledge that any representative of a Taxing Authority has begun to investigate or inquire into the Distribution (whether or not such investigation or inquiry is a formal or informal investigation or inquiry), Peabody shall (i) notify Spinco thereof, provided that any delay by Peabody in so notifying Spinco shall not relieve Spinco of any liability to Peabody hereunder except to the extent Spinco is materially and adversely prejudiced by such delay, (ii) consult with Spinco from time to time as to the conduct of such investigation or inquiry, (iii) provide Spinco with copies of all correspondence between Peabody or its representatives and such Taxing Authority or any representative thereof pertaining to such investigation or inquiry and (iv) cooperate with Spinco to permit a representative (reasonably satisfactory to Peabody) of Spinco to be present and participate in all meetings with such Taxing Authority or any representative thereof pertaining to such investigation or inquiry, provided , that any costs relating to Spinco’s representation at such meetings shall be borne by Spinco.

          (b)   Written Acknowledgment . Promptly upon receipt of notice as provided in Section 4.5(a), Spinco shall respond in writing to Peabody as to whether the liability asserted in the notice of deficiency, claim or adjustment or other written communication would, if imposed upon or incurred by Peabody or its Subsidiaries, be a Distribution-Related Liability. If Spinco believes in good faith that such liability may not be a Distribution-Related Liability, Spinco shall set forth in writing to Peabody the grounds for such belief. For the avoidance of doubt, Spinco will satisfy the requirements of this Section 4.5(b) if it believes in good faith that there is insufficient information

to determine whether such liability would, if imposed or incurred on Peabody or its subsidiaries, be a Distribution-Related Liability.

          (c)   Tax Proceedings Controlled by Spinco . Any Proceeding that may result in a Distribution-Related Liability, which is acknowledged as such by Spinco pursuant to the first sentence of Section 4.5(b), shall be conducted in accordance with this Section 4.5(c).

            (i)   Promptly upon Spinco’s written acknowledgment that the asserted liability is a Distribution-Related Liability pursuant to Section 4.5(b), Spinco may assume and direct the defense or settlement of the Proceeding, provided that Spinco shall permit a representative of Peabody to be present and participate in all hearings before any court and in all meetings with the relevant Taxing Authority or any representative thereof pertaining to such Proceeding (with any costs solely relating to Peabody’s representation at such meetings to be borne by Peabody), provided further that , if Spinco fails to prosecute the Proceeding in a reasonably diligent manner, Peabody may (at Spinco’s expense and subject to the provisions in Section 4.5(d)) assume and direct the defense or settlement of the Proceeding. If the Distribution-Related Liability is grouped with other unrelated asserted liabilities or issues in the Proceeding, Peabody and Spinco shall use their respective reasonable best efforts to cause the Distribution-Related Liability to be the subject of a separate Proceeding. If such severance is not possible, Spinco shall assume, direct and be responsible only for the matters relating to the Distribution-Related Liability and Peabody shall assume, direct and be responsible for all other matters.

            (ii)   Upon request, during the course of the Proceeding, Spinco shall from time to time furnish Peabody with evidence reasonably satisfactory to Peabody of its ability to pay the full amount of the Distribution-Related Liability. If at any time during such Proceeding, Peabody reasonably determines, after due investigation, that Spinco may not be able to pay the full amount of the Distribution-Related Liability, if required, then Spinco shall be required to furnish a guarantee or performance bond satisfactory to Peabody in an amount equal to the amount of the Distribution-Related Liability asserted by the Taxing Authority. If Spinco fails to furnish such guarantee or bond, Peabody may assume control of the Proceedings in accordance with Section 4.5(d).

            (iii)   Spinco shall pay all expenses directly related to the Distribution-Related Liability, including but not limited to reasonable fees for attorneys, accountants, expert witnesses or other consultants retained by it and, to the extent that any such expenses have been or are paid by Peabody or any of its Subsidiaries, Spinco shall promptly reimburse Peabody or such subsidiary therefor.

            (iv)   Peabody shall, at Spinco’s sole cost (including but not limited to any reasonable out-of-pocket costs incurred by Peabody), take such action as Spinco may reasonably request (including but not limited to the execution of powers of attorney for one or more persons designated by Spinco and the filing of a petition, complaint, amended Tax Return or claim for refund) in contesting the Distribution-Related Liability. Spinco shall, on a timely basis, keep Peabody informed of all developments in the Proceeding and provide Peabody with copies of all pleadings, briefs, orders, and other written papers pertaining thereto.

            (v)   Subject to satisfaction of the conditions herein set forth, Spinco may direct Peabody to settle the Distribution-Related Liability on such terms and for such amount as Spinco may direct. Peabody may condition such settlement on receipt, prior to the settlement, from Spinco of the indemnity payment with respect to the Distribution-Related Liability less any amounts to be paid directly by Spinco to the Taxing Authority. Spinco may direct Peabody, at Spinco’s expense, to pay an asserted deficiency for the Distribution-Related Liability out of funds provided by Spinco, and to file a claim for refund. Peabody shall not pay (unless otherwise required by a proper notice of assessment and after prompt notification to Spinco of Peabody’s receipt of notice and demand for payment) any portion of the Distribution-Related Liability without the written consent of Spinco, which shall not be unreasonably withheld.

          (d)   Tax Proceedings Controlled by Peabody . In the event that (i) Spinco does not provide Peabody with the written acknowledgment contemplated by Section 4.5(b) to the effect that Spinco confirms that the asserted liability is a Distribution-Related Liability within thirty (30) days following receipt of notice provided in Section 4.5(a), or (ii) following such confirmation, Spinco fails within thirty (30) days following request therefor to furnish to Peabody evidence of its ability to pay the full amount of the Distribution-Related Liability, or (iii) Peabody reasonably believes after due investigation that Spinco may not be able to pay the full amount of the Distribution-Related Liability, if required, and Spinco fails to furnish a guarantee or performance bond satisfactory to Peabody in an amount equal to the amount of the Distribution-Related Liability then being asserted by the Taxing Authority, or (iv) should Spinco fail to prosecute the Proceeding in a reasonably diligent manner, then Peabody may assume control of the Proceeding upon the following terms: (1) Peabody will diligently defend against the claim of the Taxing Authority, including the pursuit of the appeal of any adverse determinations to the appropriate tribunal (unless advised in writing by independent outside counsel at Spinco’s sole cost in its reasonable judgment that Peabody would not prevail upon any such appeal) and shall employ such resources, including independent counsel, in conducting such defense as are reasonably commensurate to the nature and magnitude of the claim; (2) Peabody will consult with Spinco as to the conduct of all Proceedings, will provide Spinco with copies of all protests, pleadings, briefs, filings, correspondence and similar materials relative to the Proceedings and will permit a representative of Spinco to be present and participate in all meetings with the relevant Taxing Authority and all hearings before any court; and (3) Peabody will not settle, compromise or concede any claim that would result in a Distribution-Related Liability without Spinco’s consent, not to be unreasonably withheld. Subject to the above, any such Proceeding shall be controlled and directed exclusively by Peabody and any related expenses incurred by any member of the PEC Group, including but not limited to, reasonable fees for attorneys, accountants, expert witnesses or other consultants directly related to the Distribution-Related Liability shall be reimbursed by Spinco, if Spinco admits or is found to have incorrectly failed to acknowledge the asserted liability as a Distribution-Related Liability as provided in Section 4.5(b); provided, however, that Peabody will not be required to pursue the claim in the federal district court, Court of Claims or any state court if as a prerequisite to such Court’s jurisdiction, it is required to pay the asserted liability unless the funds necessary to invoke such jurisdiction are provided by Spinco at no cost to Peabody.

          (e)   Time and Manner of Payment . Unless otherwise agreed in writing, Spinco shall pay to Peabody the amount with respect to a Distribution-Related Liability (less any amount paid directly by Spinco to the Taxing Authority or made available to Peabody under Section 4.5(d)) at

least two (2) Business Days prior to the date payment of the Distribution-Related Liability is to be made to the Taxing Authority. Such payment shall be paid by Spinco to Peabody by wire transfer of immediately available funds to an account designated by Peabody by written notice to Spinco prior to the due date of such payment. If Spinco delays making payment beyond the due date hereunder, Spinco shall pay interest to Peabody on the amount unpaid at the rate of the monthly average of the “prime rate” as published in the Wall Street Journal for each day and the actual number of days for which any amount due hereunder is unpaid; provided, however, that this provision for interest shall not be construed to give Spinco the right to defer payment beyond the due date hereunder.

          (f)   Refund of Amounts Paid by Spinco . Should Peabody or any other member of the Affiliated Group receive a refund in respect of amounts paid by Spinco to any Taxing Authority on Peabody’s behalf or paid by Spinco to Peabody for payment to a Taxing Authority with respect to a Distribution-Related Liability, or should any such amounts that would otherwise be refundable to Peabody be applied or credited by the Taxing Authority to obligations of Peabody unrelated to a Distribution-Related Liability, then Peabody shall, promptly following receipt (or notification of credit), remit such refund (including any statutory interest that is included in such refund or credited amount) to Spinco.

          (g)   Transfer Taxes . Peabody shall bear any and all stamp, duty, transfer, sales and use or similar Taxes incurred in connection with the Contribution and Distribution.

          (h) Cooperation . Subject to the provisions of Section 3.7, Peabody and Spinco shall reasonably cooperate with one another in a timely manner with respect to any Tax matter covered by this Agreement, including any Proceeding described in Section 2.3. Peabody and Spinco agree that such cooperation shall include, without limitation, making available to the other Party, during normal business hours, all books, records and information, officers and employees (without substantial interruption of employment) necessary or useful in connection with any such Tax matter. The Party requesting or otherwise entitled to any books, records, information, officers or employees pursuant to this Section 4.5(h) shall bear all reasonable out-of-pocket costs and expenses (except reimbursement of salaries, employee benefits and general overhead) incurred in connection with providing such books, records, information, officers or employees.

          (h)   Supplemental Rulings . Peabody shall provide Spinco a copy of and an opportunity to comment upon any supplemental ruling sought from the Internal Revenue Service with respect to the Ruling and no supplemental ruling request shall be made without Spinco’s consent if such supplemental ruling would materially expand Spinco’s indemnification obligations under Section 4.3.

ARTICLE V.   MISCELLANEOUS

          SECTION 5.1.   Complete Agreement; Construction . This Agreement shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

          SECTION 5.2.   Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by both Parties.

          SECTION 5.3.   Survival of Agreements . Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Date.

          SECTION 5.4.   Notices . All notices and other communications hereunder shall be in writing and hand delivered or mailed by registered or certified mail (return receipt requested) or sent by any means of electronic message transmission with delivery confirmed (by voice or otherwise) to the Parties at the following addresses (or at such other addresses for a Party as shall be specified by like notice) and will be deemed given on the date on which such notice is received:

To Peabody:

Peabody Energy Corporation
701 Market Street
St. Louis, MO 63101
Attention: Alexander Schoch
Executive Vice President – Law
Fax: 314-342-3419

To Spinco:

Patriot Coal Corporation
12312 Olive Boulevard, Suite 400
St. Louis, MO 63101
Attention: Joseph W. Bean
Senior Vice President, General Counsel and Corporate Secretary
Fax:

          SECTION 5.5.   Waivers . The failure of any Party to require strict performance by the other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

          SECTION 5.6.   Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by the Parties hereto.

          SECTION 5.7.   Assignment . This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party hereto without the prior written consent of the other Party hereto, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void.

          SECTION 5.8.   Successors and Assigns . The provisions to this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

          SECTION 5.9.   Additional Members . Any new members of the Affiliated Group shall automatically become a Party to this Agreement upon becoming members.

          SECTION 5.10.   Third Party Beneficiaries . This Agreement is solely for the benefit of the Parties hereto and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

          SECTION 5.11.   Title and Headings . Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

          SECTION 5.12.   Exhibits . The Exhibits to this Agreement shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

          SECTION 5.13.   GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES.

          SECTION 5.14.   Consent to Jurisdiction . The Parties hereto hereby agree that the appropriate forum and venue for any disputes between any of the Parties hereto arising out of this Agreement shall be any state or federal court sitting in St. Louis, Missouri and each of the Parties hereto hereby submits to the personal jurisdiction of any such court. The foregoing shall not limit the rights of any Party to obtain execution of judgment in any other jurisdiction.

          SECTION 5.15.   Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

[remainder of page intentionally left blank]

          IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

Exhibit 10.3

EXECUTION COPY

SECTION 9711 COAL ACT LIABILITIES
ASSUMPTION AGREEMENT

     This SECTION 9711 COAL ACT LIABILITIES ASSUMPTION AGREEMENT (“Agreement”) is made on the 22nd day of October, 2007 by and between Peabody Holding Company, LLC (“PHC”), a Delaware limited liability company with principal offices at 701 Market Street, St. Louis, MO 63101, Patriot Coal Corporation (“Patriot”), a Delaware corporation with principal offices at 12312 Olive Boulevard, Suite 400, St. Louis, Missouri, and, solely with respect to its obligations under Section 7 hereof, Peabody Energy Corporation (“PEC”), a Delaware corporation with principal offices at 701 Market Street, St. Louis, MO 63101 (each of the foregoing being sometimes referred to hereinafter individually as “a party” or jointly as “the parties”).

RECITALS

     WHEREAS, contemporaneously herewith, all of the shares of common stock of Patriot have been distributed to the stockholders of PEC, PHC’s ultimate parent company, and Patriot will indirectly own all of the capital stock of certain Transferred Companies (as defined below); and

     WHEREAS, the Transferred Companies, as defined below, have obligations to provide healthcare to eligible retirees and their eligible dependents pursuant to the Coal Act (as defined below); and

     WHEREAS, notwithstanding the transfer of ownership, PHC will remain a “related person” to the Transferred Companies as the term “related person” is defined in Section 9701 of the Coal Act; and,

     WHEREAS, as a “related person” within the meaning of the Coal Act to the Transferred Companies, PHC will remain liable for the provision of healthcare benefits to eligible retirees and their eligible dependents under the Coal Act; and

     WHEREAS, PHC and Patriot desire to provide for the continued payment for the healthcare benefits in accordance with the requirements of certain provisions of the Coal Act and with the retiree healthcare plans adopted pursuant to those provisions of the Coal Act;

     WHEREAS, PHC has agreed to assume the liabilities for the provision of such healthcare benefits; and

     WHEREAS, contemporaneously herewith PHC and Patriot have entered an Administrative Service Agreement pursuant to which Patriot will take certain actions necessary and appropriate for the administration of any Coal Act Plans (as defined below) and delivery of benefits constituting Section 9711 Coal Act Liabilities (as defined below).

     NOW, THEREFORE, in consideration of the mutual promises, covenants and

agreements contained herein, the parties do hereby agree as follows:

     Section 1. Defined Terms .

     (a) The term “Coal Act” shall mean the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701 — 9722, as may be amended, modified or replaced from time to time.

     (b) The term “Section 9711 Coal Act Liabilities” shall mean amounts the Transferred Companies are required to pay in order to provide healthcare benefits to those retirees of the Transferred Companies, identified on Attachment A hereto, and their eligible dependents who, as of the Effective Date of this Agreement, were receiving benefits from a health plan maintained by the Transferred Companies pursuant to Section 9711 of the Coal Act and remain eligible for such benefits. PHC shall not assume liability for payments to any individual not listed on Attachment A (other than any eligible dependent of an individual listed on Attachment A) and for any individual listed on Attachment A including any eligible dependent who becomes ineligible for such benefits (but only for costs arising from and after the time such individual becomes ineligible).

     (c) The term “Coal Act Plan” shall mean a plan for the provision of benefits in accordance with the Coal Act.

     (d) The term “Effective Date” shall mean the date first hereinabove entered.

     (e) The term “Patriot Group” shall mean Patriot and the Transferred Companies, as defined herein.

     (f) The term “Transferred Companies” shall mean Affinity Mining Company, Colony Bay Coal Company, Eastern Associated Coal, LLC, Martinka Coal Company, LLC, Mountain View Coal Company, LLC, Peabody Coal Company, LLC, Pine Ridge Coal Company, LLC, and Sterling Smokeless Coal Company, LLC, and each of their respective successors.

     Section 2. Assumption of Section 9711 Coal Act Liabilities .

     (a) PHC assumes, and agrees to pay and discharge when due in accordance herewith, the Section 9711 Coal Act Liabilities.

     (b) Patriot shall instruct each third party administrator to deliver each invoice with respect to Section 9711 Coal Act Liabilities directly to PHC in accordance with such third party administrator’s normal billing cycle, and PHC shall pay each such invoice in full (solely to the extent such amounts relate to the Section 9711 Coal Act Liabilities) by wire transfer in immediately available funds when due. PHC shall pay the fees of the third-party administrators of the medical and prescription drug services to the retirees identified on Attachment A when due. The parties hereto acknowledge that the current practice is to include such fees in the last invoice of the month related to such medical or prescription drug services.

     Section 3. Mutual Cooperation . Each of PHC and Patriot will use their commercially reasonable efforts to cooperate with each other to give full effect to the transactions contemplated by this Agreement. If PHC provides written notice that any amounts were paid under this

agreement in excess of the actual Section 9711 Coal Act Liabilities, Patriot will use its commercially reasonable efforts to recover such excess amounts for PHC’s benefit.

     Section 4. Settlement of Claims . Patriot shall immediately notify PHC when Patriot or any of its subsidiaries are sued by the UMWA or a former employee or his or her eligible dependents regarding the Section 9711 Coal Act Liabilities. Patriot may not settle any such dispute without the prior written consent of PHC, not to be unreasonably withheld or delayed. If Patriot settles any such claim without the prior written consent of PHC, then PHC shall not be liable for reimbursement of any amounts paid by Patriot as a result of such un-consented settlement under this Agreement.

     Section 5. PHC Right to Pursue a Claim or Defense . If PHC determines that Patriot or any of the Transferred Companies is failing to pursue with reasonable diligence a claim or defense related to any Section 9711 Coal Act Liabilities, it shall notify Patriot in writing of such failure. If Patriot fails or refuses to pursue such claim or defense diligently within thirty (30) days of such notice, then PHC at its option may elect to pursue such claim or defense at its cost in the name of Patriot or the affected Transferred Company. Any contest assumed by PHC pursuant to this provision shall be conducted by attorneys employed or retained by PHC (subject to the right of Patriot to participate in such prosecution or defense at Patriot’s cost) and PHC may settle or compromise the claim or defense without the consent of Patriot or the affected Transferred Company, so long as such settlement or compromise does not include any payment or other obligation of Patriot or its controlled affiliates. PHC, Patriot and the Transferred Companies shall use their commercially reasonable efforts to cooperate with each other in the continued prosecution or defense of any such claim, including the provision of witnesses and production of documents.

     Section 6. Maintenance of Books and Records; Inspection . Patriot shall, at all times during the continuance of this Agreement, maintain full and complete books of account and other records with respect to all activities under this Agreement including, but not limited to, records of all payments made in connection with, or as a result of, such activities and all contracts entered and evaluations performed with respect to payment of Section 9711 Coal Act Liabilities. PHC shall, at all times during the continuance of this Agreement, have the right to inspect, copy, and/or audit all account books and other records with respect to this Agreement at Patriot’s offices and during regular business hours; provided that (i) PHC is not entitled to inspect such books and records more than once every six months, (ii) PHC shall provide at least forty-eight (48) hours advance notification, including reasonable detail of the materials to be reviewed, and (iii) no such inspection or audit shall unreasonably interfere with the normal and regular conduct of Patriot’s business.

     Section 7. PEC Guarantee . PEC hereby irrevocably and unconditionally guarantees the prompt and full payment by PHC of all amounts owed by it under this Agreement, subject to its right of setoff set forth in the Separation Agreement, Plan of Reorganization and Distribution, dated as of October 22, 2007 (the “Separation Agreement”) by and between PEC and Patriot. Such guaranty shall be a guaranty of payment and not merely of collection, and shall not be conditioned or contingent upon the pursuit of any remedies against PHC. The liability of PEC under this guaranty shall, to the fullest extent permitted under applicable law, be absolute, unconditional and irrevocable. PEC hereby waives any and all notice of the creation, renewal,

extension or accrual of any of the guaranteed obligations and notice of or proof of reliance by Patriot upon this guaranty or acceptance of this guaranty. The guaranteed obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this guaranty. When pursuing its rights and remedies hereunder against PEC, Patriot shall be under no obligation to pursue such rights and remedies it may have against PHC or any right of offset with respect thereto, and any failure by Patriot to pursue such other rights or remedies or to collect any payments from PHC or to realize upon or to exercise any such right of offset shall not relieve PEC of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Patriot. PEC irrevocably waives acceptance hereof, presentment, demand, protest, promptness, diligence, obligation to protect, secure or perfect any security interest and any notice. Patriot shall not be obligated to file any claim relating to any guaranteed obligation in the event that PHC becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of Patriot to so file shall not affect PEC’s obligations hereunder. In the event that any payment to Patriot in respect of any guaranteed obligation is rescinded or must otherwise be returned for any reason whatsoever, PEC shall remain liable hereunder with respect to the guaranteed obligation as if such payment had not been made, and the guaranty shall be reinstated and shall continue even if otherwise terminated.

     Section 8. Indemnification . PHC agrees that it shall indemnify, defend and hold harmless Patriot and its respective affiliates and the successors, assigns, employees, officers, directors and agents of each, from and against any claims, actions or causes of action, damages, penalties, fines, assessments, attorney fees or other costs or expenses principally resulting from the failure of PHC to timely pay and discharge the Section 9711 Coal Act Liabilities.

     Section 9. Resolution of Disputes . Any party or parties to a dispute or disagreement under this Agreement (“Covered Dispute”) (including but not limited to any issue as to the arbitrability of such Covered Dispute) may give the other parties to the Covered Dispute written notice of the Covered Dispute initiating the provisions hereunder. Within ten days after delivery of the notice of a Covered Dispute, the receiving parties shall submit to the other a written response. The notice and the response shall include a statement of each party’s respective position and a summary of arguments supporting that position and the name and title of the executive who will represent the claimants and of any other individual who will accompany such executive in resolving the Covered Dispute. Within twenty (20) days after delivery of the first notice, such executives shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, and shall negotiate in good faith to attempt to resolve the Covered Dispute. All reasonable requests for information made by one party to the other will be honored. If the Covered Dispute has not been resolved by negotiation within thirty (30) days of the first notice of the Covered Dispute, the parties to the Covered Dispute may, by their mutual consent, submit the Covered Dispute to arbitration in St. Louis, Missouri. Arbitration of any Covered Dispute shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect on the date of the first notice of the Covered Dispute. The parties agree to use 3 arbitrators for any Covered Dispute in excess of Two Million Dollars ($2,000,000.00). Any decision of the arbitrator (or arbitrators) agreed upon or appointed and acting pursuant to this Section 9 shall be final and binding upon the parties and judgment may be entered thereon, upon the application of any of the parties, by any court of competent jurisdiction. The arbitrator may also award reasonable attorney’s fees and the costs of the arbitration to the prevailing party. This Section 9 shall not preclude any of the parties from seeking a temporary

restraining order, preliminary injunction or other temporary injunctive relief necessary to enforce this Section 9 or protect rights under this Agreement. If the parties do not mutually agree to arbitrate the Covered Dispute, the Covered Dispute shall be resolved pursuant to Section 15.08 of the Separation Agreement.

     Section 10. Waiver . The failure of any party to comply with any of its obligations or agreements or to fulfill any conditions contained in this Agreement may be excused only by a written waiver from the other parties. Failure by any party to exercise, or delay by any party in exercising, any right under this Agreement shall not operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder by a party preclude any other or future exercise of that right or any other right hereunder by such party.

     Section 11. Notices . All notices, requests or other communications required or permitted hereunder shall be given in writing by hand delivery, registered mail, certified mail or overnight courier, return receipt requested, postage prepaid, to the party to receive the same at its respective address set forth below, or at such other address as may from time to time be designated by such party to the others in accordance with this Section 11.

If to Patriot, to:

Joseph W. Bean
Senior Vice President, General Counsel and Corporate Secretary
Patriot Coal Corporation
12312 Olive Boulevard, Suite 400
St. Louis, MO 63141
Fax:

If to PHC, to:

Alexander Schoch, Esq.
Executive Vice President Law and Chief Legal Officer
Peabody Holding Company, LLC
701 Market Street
St. Louis, MO 63101
Fax: 314-342-3419

All such notices and communications hereunder shall be deemed given when received, as evidenced by the acknowledgment of receipt issued with respect thereto by the applicable postal authorities or the signed acknowledgment of receipt of the person to whom such notice or communication shall have been addressed or his or her authorized representative.

     Section 12. No Third-Party Beneficiaries . Except for the Transferred Companies, neither this Agreement nor any provision hereof shall create any right in favor of or impose any obligation upon any person or entity other than the parties hereto and their respective successors and permitted assigns. Without limiting the generality of the foregoing, this Agreement is not intended to, and does not, create any rights, third party or otherwise, on behalf of the United Mine Workers of America Combined Benefit Fund, the 1992 Fund, the 1993 Fund, the United Mine

Workers of America, any retiree or dependent, or any other person or individual. No third party shall be entitled to any subrogation rights with respect to any obligation of any party under this Agreement.

     Section 13. Captions and Paragraph Headings . Captions and paragraph headings are used hereinafter for convenience only and are not a part of this Agreement and shall not be used in construing it.

     Section 14. Entire Agreement . The making, execution and delivery of this Agreement by the parties has been induced by no representations, statements, warranties or agreements other than those herein expressed. Notwithstanding any provisions in any other agreement, this Agreement, together with the Separation Agreement and the other agreements contemplated thereby, including without limitation the Administrative Services Agreement, dated as of October 22, 2007, by and between PHC and Patriot, embodies the entire understanding of the parties and their respective subsidiaries and affiliates relating to the matters set forth herein. This Agreement may be modified only by a written instrument executed by the parties. The parties make no representation or warranties with respect to the subject matter of this Agreement not expressly set forth in this Agreement. This Agreement supersedes and terminates all other discussions, negotiations, understandings, arrangements and agreements between or among PHC, Patriot, the Transferred Companies, or any respective affiliated companies, entities or persons relating to the subject matter hereof.

     Section 15. Assignability . Neither of the parties hereto may assign this Agreement without the prior written consent of the other parties, which consent will not be unreasonably withheld or delayed. Any impermissible attempted assignment of this Agreement without such prior written consent shall be void, and the party assigning or attempting to assign this Agreement shall remain bound by and obligated by this Agreement as if no assignment or attempted assignment had occurred.

     Section 16. Successors and Assigns . This Agreement and the provisions hereof shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the parties hereto.

     Section 17. Severability . In the event one or more of the provisions of this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision was not a part of this Agreement.

     Section 18. Counterparts . This Agreement may be executed in any number of duplicate counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

     Section 19. Governing Law . The parties hereto have agreed that the validity, construction, operation and effect of any and all of the terms and provisions of this Agreement shall be determined and enforced in accordance with the laws and regulations of the State of Delaware, without giving effect to principles of conflicts of law thereunder.

     IN WITNESS WHEREOF, the parties hereto have caused this Section 9711 Coal Act Liabilities Assumption Agreement to be duly executed by one of their respective officers duly authorized and directed as of the date first written above.

PEABODY HOLDING COMPANY, LLC						PATRIOT COAL CORPORATION
By:		/s/ Richard A. Navarre				By:		/s/ Richard M. Whiting
		Name: Richard A. Navarre						Name: Richard M. Whiting
		Title: Executive Vice President						Title: President & Chief Financial Officer

Solely for purposes of Section 7 hereof: PEABODY ENERGY CORPORATION
By:		/s/ Richard A. Navarre
		Name: Richard A. Navarre
		Title: Executive Vice President

Exhibit 10.4

EXECUTION COPY

NBCWA INDIVIDUAL EMPLOYER PLAN
LIABILITIES ASSUMPTION AGREEMENT

     This NBCWA INDIVIDUAL EMPLOYER PLAN LIABILITIES ASSUMPTION AGREEMENT (“Agreement”) is made on the 22nd day of October, 2007 by and between Peabody Holding Company, LLC (“PHC”), a Delaware limited liability company with principal offices at 701 Market Street, St. Louis, MO 63101, Patriot Coal Corporation (“Patriot”), a Delaware corporation with principal offices at 12312 Olive Boulevard, Suite 400, St. Louis, Missouri, Peabody Coal Company, LLC (“PCC”), a Delaware limited liability company with principal offices at 12312 Olive Boulevard, Suite 400, St. Louis, Missouri, and, solely with respect to its obligations under Section 7 hereof, Peabody Energy Corporation (“PEC”), a Delaware corporation with principal offices at 701 Market Street, St. Louis, MO 63101 (each of the foregoing being sometimes referred to hereinafter individually as “a party” or jointly as “the parties”).

RECITALS

     WHEREAS, contemporaneously herewith, all of the shares of common stock of Patriot have been distributed to the stockholders of PEC, PHC’s ultimate parent company, and Patriot will indirectly own all of the capital stock of PCC; and

     WHEREAS, PCC is signatory to a collective bargaining agreement with the International Union, United Mine Workers of America known as the National Bituminous Coal Wage Agreement of 2007 (“NBCWA”); and

     WHEREAS, PCC has an obligation to provide retiree healthcare pursuant to its “me too” labor contract which incorporates by reference Article XX of the NBCWA; and

     WHEREAS, the parties desire that PCC continue to provide the retiree healthcare required by Article XX of the NBCWA (or any successor PCC labor contract);

     WHEREAS, PHC has agreed to assume the liabilities of PCC for provision of healthcare pursuant to Article XX of the NBCWA (or any successor PCC labor contract) to certain retirees and their eligible dependents to the extent expressly set forth in this Agreement; and

     WHEREAS, contemporaneously herewith PHC and Patriot have entered an Administrative Service Agreement pursuant to which Patriot will take certain actions necessary and appropriate for the administration of any NBCWA Individual Employer Plans (as defined below) and delivery of benefits constituting NBCWA Individual Employer Plan Liabilities (as defined below).

     NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, the parties do hereby agree as follows:

     Section 1. Defined Terms .

     (a) The term “Effective Date” shall mean the date first hereinabove entered.

     (b) The term “NBCWA” shall mean the National Bituminous Coal Wage Agreement of 2007, as may be amended, supplemented or replaced from time to time (subject to the proviso of the definition of “NBCWA Individual Employer Plan Liabilities”).

     (c) The term “NBCWA Individual Employer Plan” shall mean a plan for the provision of healthcare benefits to retirees of PCC and their eligible dependents maintained by PCC pursuant to Article XX of the NBCWA.

     (d) The term “NBCWA Individual Employer Plan Liabilities” shall mean amounts PCC pays for benefits to those retirees of PCC identified on Attachment A hereto, and such retirees’ eligible dependents, under the terms of the NBCWA Individual Employer Plan, provided that such retirees had vested in a right to receive retiree health benefits under the NBCWA Individual Employer Plan as of December 31, 2006 and that such retirees were retired from coal mine employment as of December 31, 2006 and did not thereafter return to employment with any company signatory to a labor agreement which requires the employer to provide health benefits to its UMWA retirees. Changes to benefit levels, cost containment programs, plan design or other such modifications contained in PCC’s future UMWA labor agreements that are applicable to the retirees and eligible dependents subject to this Agreement shall be included for the purposes of the definition of “NBCWA Individual Employer Plan Liabilities”; provided that, for purposes of any successor PCC labor contract, “NBCWA Individual Employer Plan Liabilities” shall be based on benefits that are the lesser of (i) benefits provided in any future UMWA labor agreement with Eastern Associated Coal, LLC or any successor of Eastern Associated Coal, LLC and (ii) benefits provided in any future NBCWA labor agreement or any successor labor agreement and offered to Eastern Associated Coal, LLC or any successor of Eastern Associated Coal, LLC, or which Eastern Associated Coal, LLC or any successor of Eastern Associated Coal, LLC had the opportunity to sign.

     Section 2. PHC Assumption of Liabilities .

     (a) PHC assumes, and agrees to pay and discharge when due in accordance herewith, the NBCWA Individual Employer Plan Liabilities.

     (b) Patriot shall instruct each third party administrator to deliver each invoice with respect to the NBCWA Individual Employer Plan Liabilities directly to PHC in accordance with such third party administrator’s normal billing cycle, and PHC shall pay each such invoice in full (solely to the extent such amounts relate to the NBCWA Individual Employer Plan Liabilities) by wire transfer in immediately available funds when due. PHC shall pay the fees of the third-party administrators of the medical and prescription drug services to the retirees identified on Attachment A, and their eligible dependents, when due. The parties hereto acknowledge that the current practice is to include such fees in the last invoice of the month related to such medical or prescription drug services.

     Section 3. Mutual Cooperation . Each of PHC, Patriot and PCC will use their commercially reasonable efforts to cooperate with each other to give full effect to the transactions contemplated by this Agreement. If PHC provides written notice that any amounts

were paid under this agreement in excess of the actual NBCWA Individual Employer Plan Liabilities, Patriot and PCC will use its commercially reasonable efforts to recover such excess amounts for PHC’s benefit.

     Section 4. Settlement of Claims . Patriot shall immediately notify PHC when Patriot or any of its subsidiaries is sued by the UMWA or a former employee or his or her eligible dependents or when an administrative claim has been filed with the trustees under the NBCWA, in each case regarding the NBCWA Individual Employer Plan Liabilities. Patriot and PCC may not settle any such dispute without the prior written consent of PHC, not to be unreasonably withheld or delayed. If Patriot or PCC settles any such claim without the prior written consent of PHC, then PHC shall not be liable for reimbursement of any amounts paid by Patriot or PCC as a result of such un-consented settlement under this Agreement.

     Section 5. PHC Right to Pursue a Claim or Defense . If PHC determines that Patriot and/or PCC is failing to pursue with reasonable diligence a claim or defense related to any NBCWA Individual Employer Plan Liabilities, it shall notify Patriot and/or PCC in writing of such failure. If Patriot and/or PCC fails or refuses to pursue such claim or defense diligently within thirty (30) days of such notice, then PHC at its option may elect to pursue such claim or defense at its cost in the name of Patriot or PCC. Any contest assumed by PHC pursuant to this provision shall be conducted by attorneys employed or retained by PHC (subject to the right of Patriot and/or PCC to participate in such prosecution or defense at Patriot’s or PCC’s cost) and PHC may settle or compromise the claim or defense without the consent of Patriot and/or PCC, so long as such settlement or compromise does not include any payment or other obligation of Patriot, PCC or their respective controlled affiliates. PHC, Patriot and PCC shall use their commercially reasonable efforts to cooperate with each other in the continued prosecution or defense of any such claim, including the provision of witnesses and production of documents.

     Section 6. Maintenance of Books and Records; Inspection . Patriot shall, at all times during the continuance of this Agreement, maintain full and complete books of account and other records with respect to all activities under this Agreement including, but not limited to, records of all payments made in connection with, or as a result of, such activities and all contracts entered and evaluations performed with respect to payment of NBCWA Individual Employer Plan Liabilities. PHC shall, at all times during the continuance of this Agreement, have the right to inspect, copy, and/or audit all account books and other records with respect to this Agreement at Patriot’s offices and during regular business hours; provided that (i) PHC is not entitled to inspect such books and records more than once every six months, (ii) PHC shall provide at least forty-eight (48) hours advance notification, including reasonable detail of the materials to be reviewed, and (iii) no such inspection or audit shall unreasonably interfere with the normal and regular conduct of Patriot’s business.

     Section 7. PEC Guarantee . PEC hereby irrevocably and unconditionally guarantees the prompt and full payment by PHC of all amounts owed by it under this Agreement, subject to its right of setoff set forth in the Separation Agreement, Plan of Reorganization and Distribution, dated as of October 22, 2007 (the “Separation Agreement”) by and between PEC and Patriot. Such guaranty shall be a guaranty of payment and not merely of collection, and shall not be conditioned or contingent upon the pursuit of any remedies against PHC. The liability of PEC under this guaranty shall, to the fullest extent permitted under applicable law, be absolute,

unconditional and irrevocable. PEC hereby waives any and all notice of the creation, renewal, extension or accrual of any of the guaranteed obligations and notice of or proof of reliance by Patriot or PCC upon this guaranty or acceptance of this guaranty. The guaranteed obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this guaranty. When pursuing its rights and remedies hereunder against PEC, neither Patriot nor PCC shall be under any obligation to pursue such rights and remedies it may have against PHC or any right of offset with respect thereto, and any failure by Patriot or PCC to pursue such other rights or remedies or to collect any payments from PHC or to realize upon or to exercise any such right of offset shall not relieve PEC of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Patriot or PCC. PEC irrevocably waives acceptance hereof, presentment, demand, protest, promptness, diligence, obligation to protect, secure or perfect any security interest and any notice. Neither Patriot nor PCC shall be obligated to file any claim relating to any guaranteed obligation in the event that PHC becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of Patriot or PCC to so file shall not affect PEC’s obligations hereunder. In the event that any payment to Patriot or PCC in respect of any guaranteed obligation is rescinded or must otherwise be returned for any reason whatsoever, PEC shall remain liable hereunder with respect to the guaranteed obligation as if such payment had not been made, and the guaranty shall be reinstated and shall continue even if otherwise terminated.

     Section 8. Indemnification . PHC agrees that it shall indemnify, defend and hold harmless each of Patriot, PCC and their respective affiliates and the successors, assigns, employees, officers, directors and agents of each, from and against any claims, actions or causes of action, damages, penalties, fines, assessments, attorney fees or other costs or expenses principally resulting from the failure of PHC to timely pay and discharge the NBCWA Individual Employer Plan Liabilities.

     Section 9. Resolution of Disputes . Any party or parties to a dispute or disagreement under this Agreement (“Covered Dispute”) (including but not limited to any issue as to the arbitrability of such Covered Dispute) may give the other parties to the Covered Dispute written notice of the Covered Dispute initiating the provisions hereunder. Within ten days after delivery of the notice of a Covered Dispute, the receiving parties shall submit to the other a written response. The notice and the response shall include a statement of each party’s respective position and a summary of arguments supporting that position and the name and title of the executive who will represent the claimants and of any other individual who will accompany such executive in resolving the Covered Dispute. Within twenty (20) days after delivery of the first notice, such executives shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, and shall negotiate in good faith to attempt to resolve the Covered Dispute. All reasonable requests for information made by one party to the other will be honored. If the Covered Dispute has not been resolved by negotiation within thirty (30) days of the first notice of the Covered Dispute, the parties to the Covered Dispute may, by their mutual consent, submit the Covered Dispute to arbitration in St. Louis, Missouri. Arbitration of any Covered Dispute shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect on the date of the first notice of the Covered Dispute. The parties agree to use 3 arbitrators for any Covered Dispute in excess of Two Million Dollars ($2,000,000.00). Any decision of the arbitrator (or arbitrators) agreed upon or appointed and acting pursuant to this Section 9 shall be final and binding upon the parties and judgment

may be entered thereon, upon the application of any of the parties, by any court of competent jurisdiction. The arbitrator may also award reasonable attorney’s fees and the costs of the arbitration to the prevailing party. This Section 9 shall not preclude any of the parties from seeking a temporary restraining order, preliminary injunction or other temporary injunctive relief necessary to enforce this Section 9 or protect rights under this Agreement. If the parties do not mutually agree to arbitrate the Covered Dispute, the Covered Dispute shall be resolved pursuant to Section 15.08 of the Separation Agreement.

     Section 10. Waiver . The failure of any party to comply with any of its obligations or agreements or to fulfill any conditions contained in this Agreement may be excused only by a written waiver from the other parties. Failure by any party to exercise, or delay by any party in exercising, any right under this Agreement shall not operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder by a party preclude any other or future exercise of that right or any other right hereunder by such party.

     Section 11. Notices . All notices, requests or other communications required or permitted hereunder shall be given in writing by hand delivery, registered mail, certified mail or overnight courier, return receipt requested, postage prepaid, to the party to receive the same at its respective address set forth below, or at such other address as may from time to time be designated by such party to the others in accordance with this Section 11.

If to Patriot, to:

Joseph W. Bean
Senior Vice President, General Counsel and Corporate Secretary
Patriot Coal Corporation
12312 Olive Boulevard, Suite 400
St. Louis, MO 63141
Fax:

If to PCC, to:

Joseph W. Bean
Senior Vice President, General Counsel and Corporate Secretary
Patriot Coal Corporation
12312 Olive Boulevard, Suite 400
St. Louis, MO 63141
Fax:

If to PHC, to:

Alexander Schoch, Esq.
Executive Vice President Law and Chief Legal Officer
Peabody Holding Company, LLC
701 Market Street
St. Louis, MO 63101
Fax: 314-342-3419

All such notices and communications hereunder shall be deemed given when received, as evidenced by the acknowledgment of receipt issued with respect thereto by the applicable postal authorities or the signed acknowledgment of receipt of the person to whom such notice or communication shall have been addressed or his or her authorized representative.

     Section 12. No Third-Party Beneficiaries . Neither this Agreement nor any provision of it shall create any right in favor of or impose any obligation upon any person or entity other than the parties hereto and their respective successors and permitted assigns. Without limiting the generality of the foregoing, this Agreement is not intended to, and does not, create any rights, third party or otherwise, on behalf of the United Mine Workers of America, any retiree or dependent, or any other person or individual. No third party shall be entitled to any subrogation rights with respect to any obligation of any party under this Agreement.

     Section 13. Captions and Paragraph Headings . Captions and paragraph headings are used hereinafter for convenience only and are not a part of this Agreement and shall not be used in construing it.

     Section 14. Entire Agreement . The making, execution and delivery of this Agreement by the parties has been induced by no representations, statements, warranties or agreements other than those herein expressed. Notwithstanding any provisions in any other agreement, this Agreement, together with the Separation Agreement and the other agreements contemplated thereby, including without limitation the Administrative Services Agreement, dated as of October 22, 2007, by and between PHC and Patriot, embodies the entire understanding of the parties and their respective subsidiaries and affiliates relating to the matters set forth herein. This Agreement may be modified only by a written instrument executed by the parties. The parties make no representation or warranties with respect to the subject matter of this Agreement not expressly set forth in this Agreement. This Agreement supersedes and terminates all other discussions, negotiations, understandings, arrangements and agreements between or among PHC and Patriot, or any respective affiliated companies, entities or persons relating to the subject matter hereof.

     Section 15. Assignability . Neither of the parties hereto may assign this Agreement without the prior written consent of the other parties, which consent will not be unreasonably withheld or delayed. Any impermissible attempted assignment of this Agreement without such prior written consent shall be void, and the party assigning or attempting to assign this Agreement shall remain bound by and obligated by this Agreement as if no assignment or attempted assignment had occurred.

     Section 16. Successors and Assigns . This Agreement and the provisions hereof shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the parties hereto.

     Section 17. Severability . In the event one or more of the provisions of this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other

provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision was not a part of this Agreement.

     Section 18. Counterparts . This Agreement may be executed in any number of duplicate counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

     Section 19. Governing Law . The parties hereto have agreed that the validity, construction, operation and effect of any and all of the terms and provisions of this Agreement shall be determined and enforced in accordance with the laws and regulations of the State of Delaware, without giving effect to principles of conflicts of law thereunder.

     IN WITNESS WHEREOF, the parties hereto have caused this NBCWA Individual Employer Plan Liabilities Assumption Agreement to be duly executed by one of their respective officers duly authorized and directed as of the date first written above.

PEABODY HOLDING COMPANY, LLC						PATRIOT COAL CORPORATION
By:		/s/ Richard A. Navarre				By:		/s/ Richard M. Whiting
		Name: Richard A. Navarre						Name: Richard M. Whiting
		Title: Executive Vice President						Title: President & Chief Financial Officer
Solely for purposes of Section 7 hereof: PEABODY ENERGY CORPORATION						PEABODY COAL COMPANY LLC
By:		/s/ Richard A. Navarre				By:		/s/ Mark N. Schroeder
		Name: Richard A. Navarre						Name: Mark N. Schroeder
		Title: Executive Vice President						Title: Vice President & Treasurer

Exhibit 10.5

EXECUTION COPY

SALARIED EMPLOYEE
LIABILITIES ASSUMPTION AGREEMENT

     This SALARIED EMPLOYEE LIABILITIES ASSUMPTION AGREEMENT (“Agreement”) is made on the 22nd day of October, 2007 by and between Peabody Holding Company, LLC (“PHC”), a Delaware limited liability company with principal offices at 701 Market Street, St. Louis, MO 63101, Patriot Coal Corporation (“Patriot”), a Delaware corporation with principal offices at 12312 Olive Boulevard, Suite 400, St. Louis, Missouri, Peabody Coal Company, LLC (“PCC”), a Delaware limited liability company with principal offices at 12312 Olive Boulevard, Suite 400, St. Louis, Missouri, and, solely with respect to its obligations under Section 7 hereof, Peabody Energy Corporation (“PEC”), a Delaware corporation with principal offices at 701 Market Street, St. Louis, MO 63101 (each of the foregoing being sometimes referred to hereinafter individually as “a party” or jointly as “the parties”).

RECITALS

     WHEREAS, contemporaneously herewith, all of the shares of common stock of Patriot have been distributed to the stockholders of PEC, PHC’s ultimate parent company, and Patriot will indirectly own all of the capital stock of PCC; and

     WHEREAS, PCC is obligated under the Peabody Investments Corp. and Affiliates Welfare Benefit Plan (the “Salaried Employer Plans”) to provide retiree healthcare to certain of its retirees and their eligible dependents; and

     WHEREAS, the parties desire that PCC continue to provide the retiree healthcare required by the Salaried Employer Plans;

     WHEREAS, PHC has agreed to assume the liabilities of PCC for provision of healthcare pursuant to the Salaried Employer Plans to certain retirees and their eligible dependents to the extent expressly set forth in this Agreement; and

     WHEREAS, contemporaneously herewith PHC and Patriot have entered into an Administrative Service Agreement pursuant to which Patriot will take certain actions necessary and appropriate for the administration of the Salaried Employer Plans to certain retirees and their eligible dependents and delivery of benefits constituting Salaried Employee Liabilities (as defined below), except as provided in Section 2(c).

     NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, the parties do hereby agree as follows:

     Section 1. Defined Terms .

     (a) The term “Effective Date” shall mean the date first hereinabove entered.

     (b) The term “Salaried Employee Liabilities” shall mean the amounts PCC is obligated either to pay for healthcare benefits to, or to reimburse for the purchase of healthcare insurance by, former employees of PCC who retired on or prior to December 31, 2006, each as identified on Attachment A hereto, and such retirees’ eligible dependents, under the terms of the Salaried Employer Plans as in effect on the date hereof.

     Section 2. PHC Assumption of Liabilities .

     (a) PHC assumes, and agrees to pay and discharge when due in accordance herewith, the Salaried Employee Liabilities.

     (b) With respect to former employees of PCC who retired on or prior to December 31, 2006 who receive healthcare benefits from PCC, and their eligible dependents, Patriot shall instruct each third party administrator to deliver each invoice with respect to the Salaried Employee Liabilities directly to PHC in accordance with such third party administrator’s normal billing cycle, and PHC shall pay each such invoice in full (solely to the extent such amounts relate to the Salaried Employee Liabilities) by wire transfer in immediately available funds when due. PHC shall pay the fees of the third-party administrators of the medical and prescription drug services to the retirees identified on Attachment A, and their eligible dependents, when due. The parties hereto acknowledge that the current practice is to include such fees in the last invoice of the month related to such medical or prescription drug services.

     (c) With respect to former employees of PCC who retired (i) on or after January 1, 2003 and on or prior to December 31, 2004, but who were not eligible for retirement prior to January 1, 2003, or (ii) on or after January 1, 2005 and on or prior to December 31, 2006, PCC shall instruct such retirees to send reimbursement claims to purchase healthcare insurance to PHC and PHC shall pay such reimbursement claims (solely to the extent such amounts relate to the Salaried Employee Liabilities) by check promptly following receipt of such request.

     Section 3. Mutual Cooperation . Each of PHC, Patriot and PCC will use their commercially reasonable efforts to cooperate with each other to give full effect to the transactions contemplated by this Agreement. If PHC provides written notice that any amounts were paid under this agreement in excess of the actual Salaried Employee Liabilities, Patriot and PCC will use its commercially reasonable efforts to recover such excess amounts for PHC’s benefit.

     Section 4. Settlement of Claims . Patriot shall immediately notify PHC when Patriot or any of its subsidiaries is sued by a former employee or his or her eligible dependents regarding the Salaried Employee Liabilities. Patriot and PCC may not settle any such dispute without the prior written consent of PHC, not to be unreasonably withheld or delayed. If Patriot or PCC settles any such claim without the prior written consent of PHC, then PHC shall not be liable for reimbursement of any amounts paid by Patriot or PCC as a result of such un-consented settlement under this Agreement.

Section 5. PHC Right to Pursue a Claim or Defense . If PHC determines that Patriot and/or PCC is failing to pursue with reasonable diligence a claim or defense related to any Salaried Employee Liabilities, it shall notify Patriot and/or PCC in writing of such failure. If

Patriot and/or PCC fails or refuses to pursue such claim or defense diligently within thirty (30) days of such notice, then PHC at its option may elect to pursue such claim or defense at its cost in the name of Patriot or PCC. Any contest assumed by PHC pursuant to this provision shall be conducted by attorneys employed or retained by PHC (subject to the right of Patriot and/or PCC to participate in such prosecution or defense at Patriot’s or PCC’s cost) and PHC may settle or compromise the claim or defense without the consent of Patriot and/or PCC, so long as such settlement or compromise does not include any payment or other obligation of Patriot, PCC or their respective controlled affiliates. PHC, Patriot and PCC shall use their commercially reasonable efforts to cooperate with each other in the continued prosecution or defense of any such claim, including the provision of witnesses and production of documents.

     Section 6. Maintenance of Books and Records; Inspection . Patriot shall, at all times during the continuance of this Agreement, maintain full and complete books of account and other records with respect to all activities under this Agreement including, but not limited to, records of all payments made in connection with, or as a result of, such activities and all contracts entered and evaluations performed with respect to payment of Salaried Employee Liabilities. PHC shall, at all times during the continuance of this Agreement, have the right to inspect, copy, and/or audit all account books and other records with respect to this Agreement at Patriot’s offices and during regular business hours; provided that (i) PHC is not entitled to inspect such books and records more than once every six months, (ii) PHC shall provide at least forty-eight (48) hours advance notification, including reasonable detail of the materials to be reviewed, and (iii) no such inspection or audit shall unreasonably interfere with the normal and regular conduct of Patriot’s business.

     Section 7. PEC Guarantee . PEC hereby irrevocably and unconditionally guarantees the prompt and full payment by PHC of all amounts owed by it under this Agreement, subject to its right of setoff set forth in the Separation Agreement, Plan of Reorganization and Distribution, dated as of October 22, 2007 (the “Separation Agreement”) by and between PEC and Patriot. Such guaranty shall be a guaranty of payment and not merely of collection, and shall not be conditioned or contingent upon the pursuit of any remedies against PHC. The liability of PEC under this guaranty shall, to the fullest extent permitted under applicable law, be absolute, unconditional and irrevocable. PEC hereby waives any and all notice of the creation, renewal, extension or accrual of any of the guaranteed obligations and notice of or proof of reliance by Patriot or PCC upon this guaranty or acceptance of this guaranty. The guaranteed obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this guaranty. When pursuing its rights and remedies hereunder against PEC, neither Patriot nor PCC shall be under any obligation to pursue such rights and remedies it may have against PHC or any right of offset with respect thereto, and any failure by Patriot or PCC to pursue such other rights or remedies or to collect any payments from PHC or to realize upon or to exercise any such right of offset shall not relieve PEC of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Patriot or PCC. PEC irrevocably waives acceptance hereof, presentment, demand, protest, promptness, diligence, obligation to protect, secure or perfect any security interest and any notice. Neither Patriot nor PCC shall be obligated to file any claim relating to any guaranteed obligation in the event that PHC becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of Patriot or PCC to so file shall not affect PEC’s obligations hereunder. In the event that any payment to Patriot or PCC in respect of any guaranteed

obligation is rescinded or must otherwise be returned for any reason whatsoever, PEC shall remain liable hereunder with respect to the guaranteed obligation as if such payment had not been made, and the guaranty shall be reinstated and shall continue even if otherwise terminated.

     Section 8. Indemnification . PHC agrees that it shall indemnify, defend and hold harmless each of Patriot, PCC and their respective affiliates and the successors, assigns, employees, officers, directors and agents of each, from and against any claims, actions or causes of action, damages, penalties, fines, assessments, attorney fees or other costs or expenses principally resulting from the failure of PHC to timely pay and discharge the Salaried Employee Liabilities.

     Section 9. Resolution of Disputes . Any party or parties to a dispute or disagreement under this Agreement (“Covered Dispute”) may give the other parties to the Covered Dispute written notice of the Covered Dispute initiating the provisions hereunder. Within ten days after delivery of the notice of a Covered Dispute, the receiving parties shall submit to the other a written response. The notice and the response shall include a statement of each party’s respective position and a summary of arguments supporting that position and the name and title of the executive who will represent the claimants and of any other individual who will accompany such executive in resolving the Covered Dispute. Within twenty (20) days after delivery of the first notice, such executives shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, and shall negotiate in good faith to attempt to resolve the Covered Dispute. All reasonable requests for information made by one party to the other will be honored. If the Covered Dispute has not been resolved by negotiation within thirty (30) days of the first notice of the Covered Dispute, the parties to the Covered Dispute may, by their mutual consent, submit the Covered Dispute to arbitration in St. Louis, Missouri. Arbitration of any Covered Dispute shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect on the date of the first notice of the Covered Dispute. Any decision of the arbitrator (or arbitrators) agreed upon or appointed and acting pursuant to this Section 9 shall be final and binding upon the parties and judgment may be entered thereon, upon the application of any of the parties, by any court of competent jurisdiction. The arbitrator may also award reasonable attorney’s fees and the costs of the arbitration to the prevailing party. This Section 9 shall not preclude any of the parties from seeking a temporary restraining order, preliminary injunction or other temporary injunctive relief necessary to enforce this Section 9 or protect rights under this Agreement. If the parties do not mutually agree to arbitrate the Covered Dispute, the Covered Dispute shall be resolved pursuant to Section 15.08 of the Separation Agreement.

     Section 10. Waiver . The failure of any party to comply with any of its obligations or agreements or to fulfill any conditions contained in this Agreement may be excused only by a written waiver from the other parties. Failure by any party to exercise, or delay by any party in exercising, any right under this Agreement shall not operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder by a party preclude any other or future exercise of that right or any other right hereunder by such party.

     Section 11. Notices . All notices, requests or other communications required or permitted hereunder shall be given in writing by hand delivery, registered mail, certified mail or overnight courier, return receipt requested, postage prepaid, to the party to receive the same at its respective address set forth below, or at such other address as may from time to time be

designated by such party to the others in accordance with this Section 11.

If to Patriot, to:

Joseph W. Bean
Senior Vice President, General Counsel and Corporate Secretary
Patriot Coal Corporation
12312 Olive Boulevard, Suite 400
St. Louis, MO 63141
Fax:

If to PCC, to:

Joseph W. Bean
Senior Vice President, General Counsel and Corporate Secretary
Patriot Coal Corporation
12312 Olive Boulevard, Suite 400
St. Louis, MO 63141
Fax:

If to PHC, to:

Alexander Schoch, Esq.
Executive Vice President Law and Chief Legal Officer
Peabody Holding Company, LLC
701 Market Street
St. Louis, MO 63101
Fax: 314-342-3419

All such notices and communications hereunder shall be deemed given when received, as evidenced by the acknowledgment of receipt issued with respect thereto by the applicable postal authorities or the signed acknowledgment of receipt of the person to whom such notice or communication shall have been addressed or his or her authorized representative.

     Section 12. No Third-Party Beneficiaries . Neither this Agreement nor any provision of it shall create any right in favor of or impose any obligation upon any person or entity other than the parties hereto and their respective successors and permitted assigns. Without limiting the generality of the foregoing, this Agreement is not intended to, and does not, create any rights, third party or otherwise, on behalf of any retiree or dependent, or any other person or individual. No third party shall be entitled to any subrogation rights with respect to any obligation of any party under this Agreement.

     Section 13. Captions and Paragraph Headings . Captions and paragraph headings are used hereinafter for convenience only and are not a part of this Agreement and shall not be used in construing it.

     Section 14. Entire Agreement . The making, execution and delivery of this Agreement by the parties has been induced by no representations, statements, warranties or agreements other than those herein expressed. Notwithstanding any provisions in any other agreement, this Agreement, together with the Separation Agreement and the other agreements contemplated thereby, including without limitation the Administrative Services Agreement, dated as of October 22, 2007, by and between PHC and Patriot, embodies the entire understanding of the parties and their respective subsidiaries and affiliates relating to the matters set forth herein. This Agreement may be modified only by a written instrument executed by the parties. The parties make no representation or warranties with respect to the subject matter of this Agreement not expressly set forth in this Agreement. This Agreement supersedes and terminates all other discussions, negotiations, understandings, arrangements and agreements between or among PHC and Patriot, or any respective affiliated companies, entities or persons relating to the subject matter hereof.

     Section 15. Assignability . Neither of the parties hereto may assign this Agreement without the prior written consent of the other parties, which consent will not be unreasonably withheld or delayed. Any impermissible attempted assignment of this Agreement without such prior written consent shall be void, and the party assigning or attempting to assign this Agreement shall remain bound by and obligated by this Agreement as if no assignment or attempted assignment had occurred.

     Section 16. Successors and Assigns . This Agreement and the provisions hereof shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the parties hereto.

     Section 17. Severability . In the event one or more of the provisions of this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision was not a part of this Agreement.

     Section 18. Counterparts . This Agreement may be executed in any number of duplicate counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

     Section 19. Governing Law . The parties hereto have agreed that the validity, construction, operation and effect of any and all of the terms and provisions of this Agreement shall be determined and enforced in accordance with the laws and regulations of the State of Delaware, without giving effect to principles of conflicts of law thereunder.

     IN WITNESS WHEREOF, the parties hereto have caused this Salaried Employee Liabilities Assumption Agreement to be duly executed by one of their respective officers duly authorized and directed as of the date first written above.

PEABODY HOLDING COMPANY, LLC						PATRIOT COAL CORPORATION
By:		/s/ Richard A. Navarre				By:		/s/ Richard M. Whiting
		Name: Richard A. Navarre						Name: Richard M. Whiting
		Title: Executive Vice President						Title: President & Chief Financial Officer
Solely for purposes of Section 7 hereof:						PEABODY COAL COMPANY LLC
PEABODY ENERGY CORPORATION
By:		/s/ Richard A. Navarre				By:		/s/ Mark N. Schroeder
		Name: Richard A. Navarre						Name: Mark N. Schroeder
		Title: Executive Vice President						Title: Vice President & Treasurer

Exhibit 10.6

Execution Version

COAL SUPPLY AGREEMENT

     This Coal Supply Agreement (this “ Agreement ”) is made and entered into as of October 22, 2007 (the “ Execution Date ”) by and between COALSALES II, LLC, FORMERLY KNOWN AS PEABODY COALSALES COMPANY (hereinafter “ COALSALES II ”), and PATRIOT COAL SALES LLC, a Delaware limited liability company (“ Patriot ”).

RECITALS:

A.		COALSALES II currently purchases coal from one or more affiliates of Patriot for resale to COALSALES II’s customers (each such customer, an “ End Customer ”; and each contract for the sale of coal from COALSALES II to an End Customer, an “ End Customer Contract ”).
B.		Patriot operates one or more coal mines designated as approved sources as set forth in the the terms and conditions in Exhibit A attached hereto (such terms and conditions, the “ Exhibit A Terms ”); and such mine(s) have supplied coal to COALSALES II to enable COALSALES II to fulfill its supply obligations under the End Customer Contract(s).
C.		Immediately prior to the Effective Date (which, for purposes hereof, shall be October 31, 2007, and, when relevant, 11:59 p.m. on such date), COALSALES II and Patriot were both indirect subsidiaries of Peabody Energy Corporation. Commencing on or after the Effective Date, as a result of a spin-off transaction, Patriot will no longer be an indirect subsidiary of Peabody Energy Corporation.
D.		It is the intent of the parties to allow COALSALES II to continue to meet its obligations under the End Customer Contract(s) with respect to Specification “A” coal by purchasing Specification “A” coal from Patriot in accordance with the terms and conditions of this Agreement.

AGREEMENT:

     NOW, THEREFORE, COALSALES II and Patriot agree as follows:

1.

INCORPORATION OF EXHIBIT A TERMS

	1.1		Incorporation of Exhibit A Terms. It is the intent of the parties that, except where expressly provided otherwise in the body this Agreement, the Exhibit A Terms (including the rights, obligations and benefits of “Seller” and “Buyer” thereunder) shall apply to Patriot as if Patriot were the named “Seller” thereunder, and to COALSALES II as if COALSALES II were the named “Buyer” thereunder. Accordingly, the Exhibit A Terms are hereby incorporated by reference into this Agreement, with the same force and effect as if fully set forth herein, subject to the modifications thereto set forth below.
	1.2		No Assignment or Privity. For the avoidance of doubt, this Agreement does not constitute a subcontract, delegation or assignment by COALSALES II of the End Customer Contract(s), and there will be no privity of contract between End Customer(s) and Patriot under or in respect of the End Customer Contract(s).

	1.3		Communications For Scheduling, Transportation, and Related Activities. Patriot shall have the right, without obtaining the prior written consent of COALSALES II, to communicate directly with End Customer for any purposes and/or activities which by their nature require direct communication between Patriot and End Customer, such as scheduling and transportation, but expressly excluding any communications that a reasonable person would perceive as detrimental to COALSALES II’s interests under the End Customer Contract(s) including, without limitation, communications relating to pricing, amendments to the End Customer Contract(s), termination of the End Customer Contract(s), or any material modifications to price, quality, or quantity terms. Patriot shall promptly notify COALSALES II of all substantive communications exchanged between Patriot and End Customer in relation to the End Customer Contract(s). Where End Customer’s direct involvement is necessary to effectuate the scheduling and transportation of the coal, Patriot shall be responsible for making the necessary arrangements with End Customer to satisfy the obligations of COALSALES II under the End Customer Contract(s) that address the specific performance obligations expected from End Customer related to coal shipped to End Customer hereunder. Under no circumstances shall COALSALES II be liable to Patriot for damages of any kind arising out of or relating to End Customer’s failure to meet any of its obligations relating to the scheduling and transportation of coal; provided, that if Patriot has any claims or defenses arising under COALSALES II’s rights in connection with a failure of the End Customer to satisfy its performance obligations under the End Customer Contract(s), COALSALES II shall, subject to Section 1.6 hereof, use commercially reasonable efforts to pursue all such rights and defenses on Patriot’s behalf or for the benefit of Patriot.
	1.4		Assumption of Rights, Remedies, Responsibilities and Obligations. In furtherance of the foregoing, Patriot hereby assumes toward COALSALES II all obligations and responsibilities that the “Seller” has toward the “Buyer” under the Exhibit A Terms; and COALSALES II will have the benefit of all rights and remedies against Patriot that the “Buyer” has against the “Seller” under the Exhibit A Terms, in each case subject to the modifications set forth below. Likewise, except for certain obligations for which End Customer may assume direct responsibility pursuant to separate communications between Patriot and End Customer as set forth in Sections 1.3 and 4.3 hereof, COALSALES II hereby assumes toward Patriot all obligations and responsibilities that the “Buyer” has toward the “Seller” under the Exhibit A Terms; and Patriot will have the benefit of all rights and remedies against COALSALES II that the “Seller” has against the “Buyer” under the Exhibit A Terms, in each case subject to the modifications set forth below. For the sake of clarity, the Exhibit A Terms, as modified by the body of this Agreement, will apply to Specification “A” coal that is resold by COALSALES II.

	1.5		Conflicting Terms. If there is a conflict or inconsistency between a provision of the Exhibit A Terms and a provision of the body of this Agreement, the provision of the body of this Agreement will control.
	1.6		Legal Proceedings. In addition to all other rights and remedies available under this Agreement, including the Exhibit A Terms, the following shall apply:

	(a)		COALSALES II will use commercially reasonable efforts to defend its rights against End Customer(s) under the End Customer Contract(s) and to pursue all necessary legal action to enforce its rights against End Customer(s) under the End Customer Contract(s); provided, however, that COALSALES II shall have the right, in its sole discretion, to determine whether or not it will pursue or defend a given legal action; and in the event COALSALES II determines not to pursue or defend a given legal action, it shall notify Patriot of such determination. COALSALES II agrees that in the course of defending or pursuing its rights against End Customer(s) under the End Customer Contract(s) that it will exercise commercially reasonable efforts to avoid taking any actions that it knows or would reasonably be expected to know would be detrimental to Patriot without first advising Patriot of such actions. Notwithstanding the foregoing, nothing in this Section 1.6(a) will be construed to limit any right that Patriot may have against COALSALES II under this Agreement as a result of such action by, or inaction of, COALSALES II.
	(b)		If the parties are co-defendants in any legal proceeding arising out of the End Customer Contract(s), the parties agree to work together in good faith and in the spirit of mutual cooperation to defend such action in a manner beneficial to both parties, provided, that each party shall have the right to engage counsel of its choosing, and will bear the costs of its own legal defense.

2.

COAL PREPAYMENT 2008-2011

2.1

Monthly Prepayment; Prepayment Supply Period. As consideration for Patriot’s entering in to this Agreement, subject to fulfillment by Patriot of its obligations hereunder, and as additional consideration for coal deliveries to be made during the period beginning January 1, 2008 and ending December 31, 2011 (the “ Prepayment Supply Period ”), COALSALES II shall pay to Patriot forty eight (48) equal, monthly, non-refundable payments in the amount of $1,041,666 (each a “ Monthly Prepayment ”), beginning on December 20, 2007 and continuing through November 20, 2011. Each Monthly Prepayment shall represent consideration for the coal deliveries made to COALSALES II during the month of the Prepayment Supply Period immediately following the month in which such Monthly Prepayment is due and payable. (By way of example, the Monthly Prepayment made on December 20, 2007 shall represent consideration

			for the coal deliveries made during January, 2008 of the Prepayment Supply Period, and each Monthly Prepayment thereafter shall likewise be applied as consideration for each consecutive month of the Prepayment Supply Period). In the event no coal deliveries are made during a given month of the Prepayment Supply Period, the Monthly Prepayment made with respect to that month shall not be refunded, but shall be applied as additional consideration for coal deliveries made during the following month of the Prepayment Supply Period. The Monthly Prepayments shall entitle COALSALES II to a first priority right for production for quantities to be delivered under this Agreement from the sources and reserves of coal for Specification “A” coal shown on Exhibit 1 of the Exhibit A Terms, except, that if Patriot experiences an event of force majeure, as that term is described in Article XII of the Exhibit A Terms, deliveries shall be distributed in accordance with the terms of Article XII of the Exhibit A Terms. For the avoidance of doubt, the Monthly Prepayment is in addition to, and shall not serve as a reduction of, any amounts due and payable by COALSALES II under Sections 4.7 and 4.8.
	2.2		Taxes and Royalties . If at any point in time Patriot notifies COALSALES II in writing that it is obligated to pay federal, state or local taxes (except for taxes on Patriot’s income or property), or private royalties as a result of a Monthly Prepayment received, then COALSALES II shall promptly reimburse Patriot for all such taxes or royalties assessed against and actually paid by Patriot related to such Monthly Prepayment.

3.		GENERAL MODIFICATIONS TO EXHIBIT A TERMS
		The purpose of this Agreement is to allow COALSALES II to continue to meet its obligations under the End Customer Contract(s) with respect to Specification “A” coal by purchasing Specification “A” coal from Patriot in accordance with the terms and conditions agreed to hereunder. Accordingly, this Agreement will be construed and performed in furtherance of such purpose notwithstanding that the parties may not have adequately modified the Exhibit A Terms.
		The following provisions of this Article 3 set forth general modifications to be made to, and rules of construction to be applied to, the Exhibit A Terms.

3.1

Notices and Information. To the extent certain provisions of the Exhibit A Terms require that the “Buyer” or the “Seller” provide the other with notice within a period of two (2) business days or less, for purposes of incorporating such requirement into this Agreement, each party hereto shall use commercially reasonable efforts to promptly relay such notice to the other party, taking into consideration the notice requirement under the Exhibit A Terms. In all other situations under the Exhibit A Terms requiring the “Buyer” to provide notice or information to the “Seller” within a period of time greater than two (2) business days, for purposes of incorporating such requirement into this Agreement, such period of time shall be extended by two (2) business days to account for the possibility that End Customer(s) may not provide such notice or information to

			COALSALES II under the End Customer Contract(s) until the end of the specified period, provided, however, that upon receipt of any notice given by End Customer, COALSALES II will use commercially reasonable efforts to promptly forward such notice to Patriot. Likewise, except for any provisions under the Exhibit A Terms requiring two (2) business days’ or less notice, whenever the Exhibit A Terms require the “Seller” to provide notice or information to the “Buyer” within a specified period of time, for purposes of incorporating such requirement into this Agreement, such period of time shall be shortened by two (2) business days to enable COALSALES II sufficient time to provide the same notice or information to End Customer(s) under the End Customer Contract(s).
	3.2		Confidentiality. To the extent that Patriot has possession or knowledge of the terms of existing End Customer Contract(s), Patriot covenants that during the term of this Agreement and continuing after termination of this Agreement until otherwise permitted in writing by COALSALES II, it will hold the End Customer Contract(s) and the information contained therein in strictest confidence and will protect the End Customer Contract(s) from any unauthorized disclosure. Except as expressly provided for herein, Patriot will not disclose to any third parties any information of any nature, specific or general, pertaining to the End Customer Contract(s), and will only disclose such information to those of its employees who have a need to know in order for Patriot to perform its obligations hereunder. In the event Patriot has a legitimate business and/or financial need to disclose the terms of the End Customer Contract(s) to a third party, Patriot shall promptly notify COALSALES II of the circumstances necessitating the need to disclose, and COALSALES II shall act in good faith and use commercially reasonable efforts to obtain the End Customer’s written consent to Patriot’s disclosure of the End Customer Contract(s) under those limited circumstances. The foregoing notwithstanding, either party may disclose the terms of this Agreement to such party’s lenders, counsel, accountants or prospective permitted purchasers, directly or indirectly, of all or substantially all of such party’s assets or of any rights under this Agreement, in each case who have agreed to keep such terms confidential, or in order to comply with any applicable law, order, regulation or exchange rule; provided, such party shall notify the other party of any proceeding of which it is aware which may result in disclosure and use reasonable efforts to prevent or limit the disclosure.
	3.3		Audit and Inspection Rights. Whenever the End Customer Contract(s) grants End Customer(s) the right to conduct an audit or inspection of, or access to coal production facilities, processes, books, records, or otherwise, End Customer(s) will be entitled, as applicable, to enforce or exercise such audit, inspection and/or access rights against Patriot. If COALSALES II has the right under an End Customer Contract to conduct any inspections of an End Customer’s books, records, or premises, such right does not directly pass through to Patriot under this Agreement; however, Patriot may request such inspection rights from COALSALES II, and COALSALES II shall contact that End Customer and use commercially reasonable efforts to obtain that End Customer’s consent to such request. In the event End Customer refuses Patriot’s request to inspect,

			COALSALES II shall be obligated to promptly conduct the inspection on Patriot’s behalf and at Patriot’s sole expense, and shall report the results of such inspection to Patriot promptly upon completion, provided, that disclosure of such results does not violate the terms of confidentiality under the End Customer Contract(s). Notwithstanding the foregoing, this Section 3.3 does not eliminate or modify COALSALES II’s audit, inspection or access rights under the Exhibit A Terms with respect to Patriot or Patriot’s facilities, processes, books or records.
	3.4		Rejected Deliveries. If, pursuant to the Exhibit A Terms, COALSALES II exercises its right to reject any non-conforming coal shipments or to suspend deliveries, COALSALES II shall, subject to the notice provisions set forth in Section 3.1 hereof, notify Patriot. Patriot will, at its sole expense, take all necessary measures to correct the conditions giving rise to the failure of the coal to conform to specifications under the Exhibit A Terms, and will reimburse COALSALES II for any and all costs and expenses incurred by COALSALES II as a result of Patriot’s shipment of non-conforming coal. COALSALES II and Patriot will work together in good faith to expeditiously resolve any disputes arising from non-conforming coal or suspended shipments. If, however, an End Customer exercises its right to hold COALSALES II in anticipatory breach of its End Customer Contract as a result of Patriot’s failure to provide conforming coal pursuant to this Agreement, and not as a result of any action or inaction of COALSALES II, Patriot shall indemnify COALSALES II in accordance with the terms of Section 3.8 hereof for any damages arising on or after the Effective Date hereof that are pursued by End Customer against COALSALES II by reason of such breach.
	3.5		References to End Customer Contract(s). Notwithstanding anything in this Agreement to the contrary, references herein to the End Customer Contract(s) shall not expand Patriot’s liability to COALSALES II beyond the liability Patriot has to COALSALES II according to the terms and conditions of this Agreement.
	3.6		Assignment. Neither party shall assign this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, either party may, without the need of consent from the other party (and without relieving itself from liability hereunder), (a) transfer, sell, pledge, encumber, or assign this Agreement or the account, revenues or proceeds hereof in connection with any financing or other financial arrangement; (b) transfer or assign this Agreement to an affiliate of such party; or (c) transfer or assign this Agreement to any person or entity succeeding to all or substantially all of the assets of such party by way of merger, reorganization, or otherwise, provided, however, that in each such case, any such assignee shall agree in writing to be bound by the terms and conditions hereof, and that no such assignment shall in any way relieve the assignor from liability or full performance under this Agreement.
	3.7		Venue and Dispute Resolution. Subject to Article 6 of this Agreement, venue for the resolution of disputes between COALSALES II and Patriot under this

			Agreement will lie exclusively in the federal courts of jurisdiction in the Eastern District of Missouri.
	3.8		Indemnification. Subject to the limitations in Article XVIII of the Exhibit A Terms, each party hereto (as the “ Indemnifying Party ”) shall indemnify, defend and hold harmless the other party, its directors, officers, employees, agents and affiliates (collectively, the “ Indemnified Party ”) from and against any and all suits, actions, legal or administrative proceedings, claims, demands, actual damages, fines, punitive damages, losses, costs, liabilities, interest, and attorneys’ fees (including any such fees and expenses incurred in enforcing this indemnity) incurred by the Indemnified Party arising from a breach by the Indemnifying Party of its obligations to the Indemnified Party under this Agreement.
	3.9		Specification “A” Coal and Sourcing. It is understood and agreed by the parties hereto that this Agreement applies solely to Specification “A” coal, as defined in the Exhibit A Terms, and such coal shall be supplied from the sources and reserves of coal for Specification “A” coal shown on Exhibit 1 of the Exhibit A Terms plus any additional sources approved pursuant to this Agreement.

4.		SPECIFIC MODIFICATIONS TO EXHIBIT A TERMS
		The following provisions of this Article 4 set forth specific modifications to be made to specified provisions of the Exhibit A Terms. All references to sections or pages are to sections or pages of the Exhibit A Terms, unless specifically indicated otherwise.

	4.1		Definitions. All defined terms in the Exhibit A Terms shall have the same meanings under this Agreement; and all capitalized terms herein that are not otherwise defined shall have the meaning ascribed to them in the Exhibit A Terms.
	4.2		Article 1, Section 1 (Term of Agreement).

	(a)		Original and Extended Terms . The Original Term (as defined in the Exhibit A Terms) when applied to this Agreement shall commence on the Effective Date hereof and continue until December 31, 2012. If it is determined that an existing End Customer has the valid right to extend its End Customer Contract, and if End Customer exercises such right, on or before January 1, 2012 to extend the term of that End Customer Contract (the “ Extended Term ”), then the term of this Agreement will likewise be extended for the same period of time. In such event, COALSALES II shall notify Patriot of the Extended Term and the volume of coal tonnage required under such Extended Term (if known) within 10 business days after COALSALES II’s receipt of End Customer’s notice to extend the term of its End Customer Contract.
	(b)		Expiration of this Agreement . This Agreement will expire upon the later of (a) the end of the Original Term or (b) the end of the Extended Term, subject to earlier termination as provided under Section 4.2(c) hereof.

			Following expiration of this Agreement, neither party hereto shall have, after the effective date of such expiration, any further obligation under this Agreement to the other, provided, however, that such expiration shall not affect any rights or obligations of each party existing under this Agreement for coal shipped or required to be shipped prior to the effective date of said expiration.
	(c)		Early Termination of this Agreement . If COALSALES II exercises its rights under Article VI, Section 3(c)(i) or Article IX, Section 2 of the Exhibit A Terms to terminate this Agreement prior to the expiration of the Original Term or Extended Term, then (i) Article 2 and Sections 3.8 and 4.12 hereof shall survive termination of this Agreement and (ii) neither party hereto shall have, after the effective date of such early termination, any further obligation under this Agreement to the other, provided, however, that such early termination shall not affect any rights or obligations of each party existing under this Agreement for coal shipped prior to the effective date of said termination.

	4.3		Article II (Quantities and Deliveries; Related Communications). For purposes of ensuring the seamless delivery of the coal to End Customer(s), Patriot shall comply with the Seller obligations under Article II of the Exhibit A Terms, including, without limitation, all requirements as to quantity, delivery, specifications, quality, loading, transport, delivery, and establishment of a demurrage account. For Specification “A” coal to be shipped to End Customer(s), all required notices and other communications related to the foregoing shall be made by Patriot directly to End Customer(s) within the stated notice period. In addition to its obligation to communicate directly with the End Customer(s) to fulfill the Seller obligations under Article II of the Exhibit A Terms, Patriot may, pursuant to Section 1.3 of this Agreement, exchange information directly with End Customer(s) at the address(es) provided to it by COALSALES II for purposes of coordinating transportation, scheduling, loading days, quantity, delivery and any other details for which End Customer(s) must have direct involvement. Subject to Section 1.3 hereof, Patriot agrees that any and all decisions made between Patriot and End Customer(s) as a result of such direct communications are outside of COALSALES II’s control, and as such, COALSALES II disclaims all responsibility for, and any and all liability for damages incurred by Patriot, or claimed against Patriot by End Customer(s), arising from the scheduling and transportation of the coal between End Customer(s) and Patriot. To the extent copies of any written communications under the End Customer Contract(s) in connection with scheduling, transportation and related activities are required by Patriot to perform its obligations hereunder, COALSALES shall provide Patriot with copies of such communications.
	4.4		Article II, Section 1 (Quantity and Maximum Quantity Coal Purchases). The terms “ Contract Year ” and “ Contract Half Year ” when referenced under this Agreement shall have the same meaning ascribed to it under Article II, Section 1(a) of the Exhibit A Terms. The term “ Quantity ” when used under this

Agreement shall mean the amount of coal to be purchased by COALSALES II from Patriot under this Agreement for a particular Contract Half Year. For each Contract Half Year, the Quantity of coal purchased shall equal the quantity shown in the following chart with respect to that same Contract Half Year.

	4.5		Article II, Sections 3 and 4 (Approved Rail and Barge Shipping Origins). Patriot shall comply at all times with the Exhibit A Terms regarding railcars and barges provided by End Customer, the approved rail and barge shipping origin(s) listed on Exhibit 1, Minimum Trainload Requirements and Maximum Load Limit Requirements of the Exhibit A Terms, all of which shall be communicated by COALSALES II to Patriot along with any changes thereto as requested by COALSALES II pursuant to its rights under this Agreement. Any penalties arising from Patriot’s failure to comply with the foregoing requirements, except those caused by End Customer, shall be paid by Patriot to COALSALES II who shall pass along such payments to End Customer. Any changes desired by Patriot to the approved rail or barge shipping origin(s) listed on Exhibit 1 of the Exhibit A Terms are subject to the prior written consent of COALSALES II, and all increased transportation, barging, and/or handling costs arising therefrom shall be borne solely by Patriot. If prior consent of End Customer is required for COALSALES II to make such change under the End Customer Contract, COALSALES II shall exercise commercially reasonable efforts to gain End Customer’s consent, and if such consent is obtained, COALSALES II will grant its consent to make the change under this Agreement.
	4.6		Article III, Section 1(b) (Substitution Rights). Patriot may, at any time during the course of this Agreement, request the right to provide coal to COALSALES II from substitute sources, and COALSALES II shall have the right, in its sole

			discretion, to grant or deny such request, provided, however, that if COALSALES II is not fully utilizing the substitution rights provided to it under the End Customer Contract(s), the parties agree to meet periodically to discuss alternatives to optimize the substitution rights under the End Customer Contract(s) to the mutual benefit of the parties. Notwithstanding anything to the contrary in this Agreement, Patriot shall not have any liability nor have any obligation and/or responsibilities with respect to coal supplied by COALSALES II from sources other than Patriot under this Agreement to satisfy the delivery requirements under the End Customer Contract(s). For purposes of clarity, the Quantity of coal to be supplied under this Agreement shall not be reduced by deliveries of coal under the End Customer Contract(s) by COALSALES II from any sources not provided by Patriot. In addition, should End Customer claim a force majeure event under the End Customer Contract(s) during any period of time when COALSALES II is supplying coal from any sources not provided by Patriot under the End Customer Contract(s), then COALSALES II shall prorate among Patriot and such other sources any reduction in deliveries claimed by End Customer resulting from such force majeure event in proportion to the quantity of scheduled shipments from Patriot and such other sources during the period of the such force majeure event.
	4.7		Article IV (Payment). For coal purchased hereunder that is shipped to End Customer(s) under existing End Customer Contract(s) having destination weights and analyses, promptly after receipt from End Customer(s) of weight, analytical, and pricing data for a given half-month, as required under the End Customer Contract(s), COALSALES II shall submit such information to Patriot; and Patriot shall, as soon as commercially practicable after receipt of such information, prepare and submit to COALSALES II the invoice for the half-month that corresponds to such information. For all other coal purchased hereunder, certified origin weights and analysis provided by Patriot shall govern payment and quality adjustments will be determined based upon formulas set forth in the Exhibit A Terms utilizing such certified origin weights and analyses. All invoices shall be submitted by Patriot directly to COALSALES II at the billing address(s) provided by COALSALES II (e.g. mail, facsimile and EDI as applicable), in accordance with the same procedures governing COALSALES II’s submission of invoices to End Customer under the Exhibit A Terms. COALSALES II shall have twenty two (22) calendar days after the close of such half-month to submit payment to Patriot. Patriot agrees that in the event of a payment dispute between COALSALES II and End Customer, it will cooperate fully with COALSALES II and will take all reasonable measures to assist COALSALES II in resolving any issues with End Customer relating to invoices, payment, and collection of all outstanding amounts due from End Customer.
	4.8		Article VI, Sections 1 — 4 (Base Price and Base Price Adjustments).

(a)

Relationship of Monthly Prepayments to Price . For purposes of clarity, the Monthly Prepayment obligations of COALSALES II under Article 2 hereof shall not be credited against the Patriot Base Price or the Patriot Selling Price, nor shall the Patriot Base Price or the Patriot Selling Price

			be reduced as a consequence of the Monthly Prepayments made under Article 2.
	(b)		Patriot Base Price During Original Term . The “ Patriot Base Price ” for quantities of Specification “A” coal purchased by COALSALES II hereunder during a given Contract Year in the Original Term shall equal the Patriot Base Price set forth in the following table:

	(c)		[Intentionally blank]
	(d)		Patriot Selling Price During Original Term . The “ Patriot Selling Price ” per ton at which COALSALES II will purchase coal from Patriot under this Agreement during the Original Term will equal:

	(i)		the Patriot Base Price per ton (as determined above under this Section 4.8),
	(ii)		adjusted pursuant to Article VI of the Exhibit A Terms, and
	(iii)		adjusted for quality pursuant to Section 4.10 of this Agreement.

4.9

Article VI, Section 3(c) (Changes in Law). With respect to changes of law occurring during the period from November 1, 2007 through and inclusive of December 31, 2008: (i) Base Price adjustments for changes in laws pursuant to Article VI, Section 3(c) of the Exhibit A Terms shall be made only to the extent that COALSALES II is able to recover such adjustments from End Customer(s) on an End Customer by End Customer basis; and (ii) COALSALES II shall use commercially reasonable efforts to obtain the consent of End Customer(s) to such adjustments. With respect to End Customer Contracts entered into after November 1, 2007, COALSALES II shall use commercially reasonable efforts to

			include in such contracts a right to adjust prices for changes in laws similar to Article VI, Section 3 of the Exhibit A Terms.
	4.10		Article VII — Adjustment of Price for Quality. Premiums and penalties per ton to be paid or credited by COALSALES II to Patriot under this Agreement shall be calculated on the Base Price charged by COALSALES II to End Customer under the formulas set forth in Article VII of the Exhibit A Terms.
	4.11		Article XIX (Notices). Notices provided for or required herein shall be given by postage prepaid, certified mail, addressed as follows:

5.

PATRIOT SELLING PRICE DURING EXTENDED TERM

	5.1		Scope of Article 5 . This Article 5 governs the price of coal purchased by COALSALES II from Patriot under this Agreement during the Extended Term, if any. The price of coal purchased by COALSALES II from Patriot under this Agreement during the Original Term will be governed by Section 4.8.
	5.2		Extended Term Pricing Periods . For purposes of determining the Market Price (as defined below), and consequently the Patriot Base Price and Patriot Selling Price, during the Extended Term, the Extended Term will be divided into the following three pricing periods:

	(1)		The “ First Extended Term Price Period ” will commence upon the start of the Extended Term and, if the Extended Term is longer than 24 months, will end at the end of the 24 th month of the Extended Term.
	(2)		If the Extended Term is longer than 24 months, the “ Second Extended Term Price Period ” will commence upon the end of the First Extended Term Price Period and, if the Extended Term is longer than 48 months, will end at the end of the 48 th month of the Extended Term.
	(3)		If the Extended Term is longer than 48 months, the “ Third Extended Term Price Period ” will commence upon the end of the Second Extended Term Price Period and will end upon the expiration of the Extended Term.

The First, Second and Third Extended Term Price Periods will each be referred to herein as an “ Extended Term Price Period ”.

5.3

Determination of Market Price.

	(a)		“ Market Price ” per ton of Specification “A” coal for each Extended Term Price Period will be determined: (i) by mutual agreement of the parties in accordance with Section 5.3(b) hereof during the First Negotiation Period (as defined in Section 5.3(b)(i) hereof); (ii) if the parties are unable to mutually agree upon a Market Price after the First Negotiation Period, then the Market Price will be determined by mutual agreement of the parties in accordance with Section 5.3(b) hereof during the Second Negotiation Period (as defined in Section 5.3(b)(ii) hereof); or (iii) if the parties are unable to mutually agree upon a Market Price after the Second Negotiation Period, then the Market Price will be determined pursuant Sections 5.3(c) through 5.7 hereof.
	(b)		During the First Negotiation Period and, if necessary, the Second Negotiation Period, the parties shall meet regularly and work together exercising good faith attempts to reach a mutually agreed Market Price for Specification “A” coal, which Market Price shall not be adjusted pursuant to Section 5.7.

	(i)		The “ First Negotiation Period ” shall mean (1) for the First Extended Term Price Period, the period January 15, 2012 through March 1, 2012, (2) for the Second Extended Term Price Period, the period January 15, 2014 through March 1, 2014, and (3) for the Third Extended Term Price Period, the period January 15, 2016 through March 1, 2016.
	(ii)		The “ Second Negotiation Period ” shall mean (1) for the First Extended Term Price Period, the period May 1, 2012 through May 31, 2012, (2) for the Second Extended Term Price Period, the period May 1, 2014 through May 31, 2014, and (3) for the Third Extended Term Price Period, the period May 1, 2016 through May 31, 2016.

(c)

If the parties are unable to mutually agree upon a Market Price under Section 5.3(b) hereof after the Second Negotiation Period, then the Market Price will be determined in accordance with this Section 5.3(c). Commencing on the first day of each Market Price Period (as defined in Section 5.3(c)(i)), for each business day during which data is available, COALSALES II will calculate the simple average of the daily “bid” and “ask” prices from the three “Approved Pricing Sources” (as defined in Section 5.3(c)(ii)) for the Central Appalachian CSX-BSK 12,500 Btu/lb <1% sulfur rail product for the applicable Extended Term Price Period. This average will be the “ Index Based Market Price ”.

(i)

“ Market Price Period ” shall mean (1) for the First Extended Term Price Period, the period February 1, 2012 through May 31,

			2012, (2) for the Second Extended Term Price Period, the period February 1, 2014 through May 31, 2014, and (3) for the Third Extended Term Price Period, the period February 1, 2016 through May 31, 2016.
	(ii)		The three “ Approved Pricing Sources ” under this Agreement are: ICAP United, Inc.; Evolution Markets, Inc.; and TFS Energy, LLC. If any of the foregoing Approved Pricing Sources is discontinued, altered or otherwise becomes unavailable, then either party may suggest a replacement, but if the parties are unable to agree upon a replacement, the Index Based Market Price shall be determined using the average of the remaining two Approved Pricing Sources. If two of the three Approved Pricing Sources are discontinued, altered or otherwise become unavailable, the parties shall work in good faith to choose one mutually agreeable replacement broker source (which shall thereafter be deemed an Approved Pricing Source); and the Index Based Market Price shall henceforth be determined using the average of the remaining Approved Pricing Source and the newly appointed Approved Pricing Source. If the parties are unable to reach agreement within a reasonable period of time as to such replacement Approved Pricing Source, the matter shall be determined by arbitration in accordance with Section 6.3 of this Agreement.

5.4

SO 2 Adjustment . The Index Based Market Price shall be adjusted to reflect a sulfur value of 1.2lbs SO 2 /MMBtu.

5.7

Market Price During Extended Term . If the Market Price is being determined pursuant to Section 5.3(c) hereof, then the Market Price per ton during each Extended Term Price Period will equal:

	(a)		the Index Based Market Price per ton for that Extended Price Term Period, as determined under Section 5.3(c),
	(b)		plus the “SO 2 Adjustment” determined under Section 5.4,
	(c)		plus the “Btu Adjustment” determined under Section 5.5, and
	(d)		plus “Patriot’s Premium” determined under Section 5.6.

COALSALES II will provide the Market Price, along with the calculation thereof pursuant to this Section 5.7, to Patriot within fifteen (15) days following the Second Negotiation Period, and Patriot will provide written notice of its acceptance or rejection of the Market Price to COALSALES II no later than June 30 th of that year. In the event Patriot rejects COALSALES II’s calculation of the Market Price, then the calculation of Market Price will be determined by one or more arbitrators in an arbitration proceeding pursuant to Article 6 of this Agreement, and such determination will be final and binding upon the parties. Such arbitration proceeding must be completed within 90 days after commencement.

	5.8		Patriot Base Price During Extended Term . The “ Patriot Base Price ” will equal the Market Price for each Extended Term Price Period.
	5.9		Patriot Selling Price During Extended Term . The “ Patriot Selling Price ” per ton at which COALSALES II will purchase coal from Patriot under this Agreement during each Extended Term Price Period will equal:

	(a)		the Patriot Base Price per ton for that Extended Term Price Period, as determined under Section 5.8, and
	(b)		adjusted for quality pursuant to Section 4.11 of this Agreement.
			For the sake of clarity, during the Extended Term, the Patriot Selling Price will not be reduced pursuant to Article V of the Exhibit A Terms.

6.

RESOLUTION OF DISPUTES

	6.1		Notice of Dispute . Disputes arising pursuant to this Agreement shall be resolved in accordance with this Section. Either party may invoke the procedures of this Section by written notice to the other party claiming the existence of a dispute and describing the nature of that dispute (the “ Dispute Notice ”).
	6.2		Resolution of Disputes . Any dispute between the parties arising under this Agreement first shall be referred for resolution to a senior representative of each

			party. Upon receipt of a notice describing the dispute, designating the notifying party’s senior representative and indicating that the dispute is to be resolved by the parties’ senior representatives under this Agreement, the other party shall promptly designate its senior representative to the notifying party. The senior representatives so designated shall attempt to resolve the dispute on an informal basis as promptly as practicable. The parties agree that they shall negotiate expeditiously in good faith in an effort to resolve any disputes arising under this Agreement. In the event a dispute cannot be resolved by negotiation within thirty (30) days after the date that the Dispute Notice was received by the other party, or within such other period as the parties may jointly agree, the parties agree to consider the use of a mini-trial or other informal procedure such as umpire settlement (“ Informal Procedure ”) to resolve the dispute. An Informal Procedure shall be utilized only if the parties agree in writing on the procedures to be followed and whether the resulting determination shall be binding. All disputes that are resolved by negotiation or through a binding Informal Procedure shall be acknowledged in writing by both parties. Any dispute that is not resolved nor committed to final and binding resolution by means of an Informal Procedure within ninety (90) days of the date the Dispute Notice was received by the other party may, within one hundred (100) days of the date of the Dispute Notice, be referred to arbitration by either party and the same shall be resolved not later than one hundred fifty (150) days after such referral to arbitration in accordance with Section 6.3 below. A disputed matter that is not submitted to arbitration as provided herein shall be deemed to have been waived.
	6.3		Arbitration. Any controversies or claims arising out of or relating to this Agreement or the breach hereof which are not resolved by negotiations between the parties, or which is not committed to final and binding resolution by means of an Informal Procedure, shall be determined by arbitration in accordance with Commercial Arbitration Rules of the American Arbitration Association; provided, however, the arbitrator(s) selected shall be a person knowledgeable of the subject matter of the arbitration. Judgment may be entered on the arbitration award in any court having jurisdiction. Unless otherwise agreed in writing by COALSALES II and Patriot, performance of their respective obligations under this Agreement shall be continued in full by the parties during the arbitration process. The parties stipulate that this Agreement constitutes a contract evidencing a transaction involving commerce and that this section is enforceable under the Federal Arbitration Act (9 U.S.C.A. §§ 1 et seq.).

[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURES ON NEXT PAGE.]

     IN WITNESS WHEREOF, COALSALES II and Patriot have executed this Agreement as of the Execution Date.

Exhibit A

Table of Contents

ARTICLE		TITLE		Page
I		Term of Agreement			2
II		Quantities & Deliveries			2
III		Specifications, Quality & Weight			12
IV		Payment			19
V		Price			20
VI		Base Price & Base Price Adjustments			20
VII		Adjustment of Price for Quality			25
VIII		Sampling and Analysis			27
IX		[Intentionally blank]			30
X		Major Technological Improvements			30
XI		Administrative Program			31
XII		Force Majeure			32
XIII		Warranties and Dedication			34
XIV		Buyer’s Right to Market Coal with Origin Weights and Analyses			35
XV		[Intentionally blank]			35
XVI		Government Compliance Certificate			36
XVII		[Intentionally blank]			36
XVIII		Waiver and Limitation of Damages			36
XIX		[Intentionally blank]			37
XX		[Intentionally blank]			37
XXI		Confidentiality			37
XXII		Finality			37
XXIII		Governing Law			38
Exh. 1		Seller’s Production Source(s), Reserves of Coal, Approved Coal, Approved Rail Shipping Origin(s), and Approved Barge Shipping Origins			39
Exh. 2		West Virginia Severance Tax			41
Exh. 3		Government Contractor Compliance Certificate			42

ARTICLE I

TERM OF AGREEMENT

      Section 1. The term of this Agreement shall be for the period commencing October 31, 2007, and continuing through and including December 31, 2012, (hereinafter “original term”) except as provided elsewhere in this Agreement.

      Section 2. Provided this Agreement is still in effect, Buyer shall have the optional right, but not the obligation, to extend the term of this Agreement for a period of up to sixty (60) months beyond the original term (such extended period hereinafter referred to as “extended term”) for coal produced from reserves of coal dedicated to this Agreement. Buyer shall give written notice of its election to extend the term for such additional period on or before January 1, 2012. Such notice by Buyer shall designate the length of the extended term. If such optional right of Buyer is exercised, all provisions of this Agreement shall continue in full force and effect over the extended term designated by Buyer.

ARTICLE II

QUANTITIES & DELIVERIES

      Section 1. (a) For the purposes of this Agreement, the term “Contract Year” shall be defined as the period commencing January 1 of each calendar year and ending December 31 of each calendar year. Each following Contract Year shall commence on January 1 thereof and continue for a 12-month period thereafter. Each Contract Year shall consist of two Contract Half-Year periods, which shall respectively consist of the first six (6) months and the last six (6) months of each calendar year.

          (b) Seller shall supply coal meeting the requirements of Specification “A” coal.

          (c) At least sixty (60) calendar days prior to the beginning of each Contract Half-Year, Seller shall propose to Buyer, in writing, a schedule of monthly deliveries and shipping origin for such Contract Half-Year (the “scheduled quantity”); such proposed schedule shall provide for deliveries in approximately equal monthly quantities, and unless Seller is notified otherwise by Buyer, such schedule of monthly quantity obligations shall be accepted and implemented by both parties hereunder. It is acknowledged that such scheduled shipping origins (but not monthly quantity obligations) are to be provided for planning purposes and may be adjusted from time to time in accordance with the following sentence. Seller may by notice in writing by the twentieth (20 ^th ) day of the month prior to shipment, change the scheduled shipping origins for any subsequent month; provided, however, such changes shall not increase or decrease the total amount required to be delivered in such month.

      Section 2. The term “ton” shall mean a net ton of 2,000 pounds avoirdupois weight.

      Section 3. (a) Except as provided in Article II, Section 4, Seller shall cause the coal that is to be delivered hereunder to be loaded into carrier- or Buyer-provided railcars (at Buyer’s option) at approved rail shipping origin(s) (hereinafter the “approved rail shipping origin”), as described on Exhibit 1, attached hereto and hereby made a part hereof, and properly consign such shipment in accordance with Section 5 of this Article and in accordance with Buyer’s or any of its existing End Customer’s rail transportation contract(s), as amended or superseded. New amendments or provisions to such rail transportation contract placing new or revised requirements on Seller regarding the loading of railcars and/or consignment of shipments hereunder, other than that provided for herein, shall be subject to Seller’s approval which shall not be unreasonably withheld.

     Seller shall not have the right to ship coal to be delivered under this Agreement from any rail shipping origin other than the approved rail shipping origin(s) listed on Exhibit 1, unless Seller shall first have obtained Buyer’s written approval of such additional shipping origin. Title to the coal and risk of loss thereof shall pass to Buyer as the loaded railcars are pulled from any such origin.

     Seller shall add on each Bill of Lading or Mine Card documents such notation(s) as may be designated by Buyer to Seller. Seller shall cause the loadings to be tendered in unit train consignments each consisting of at least ninety (90) railcars, which shall be tendered in unit train consignments of at least ninety-six (96) railcars. If Seller is unable to load any railcar that has been placed for loading due to an unserviceable condition of a railcar, and has notified the railroad and Buyer of such unserviceable condition, Seller shall be relieved of any penalties for failure to comply with the minimum train size requirements that are attributable to such unserviceable railcar. Should Seller be limited to seventy-five (75) railcars at any approved rail shipping origin, and tender unit train consignments consisting of between seventy-five (75) and ninety (90) railcars, then Seller shall pay Buyer an amount equal to one-half of one percent (0.5%) of the Base Price for each ton of coal in such unit train.

     Seller shall provide, maintain, and operate at each approved rail shipping origin (except as further provided herein) a unit train loading facility, including coal storage and track to facilitate the proper loading of each unit train within twenty-four (24) hours of actual or constructive placement by the railroad. Seller agrees to operate said loading facility(ies) on a twenty-four (24) hours per day, seven (7) days per week basis.

     Seller agrees to load each unit train to comply with the Buyer’s Minimum Trainload Requirements and Maximum Load Limit requirements. To comply with Buyer’s Minimum

Trainload Requirements, Seller shall load each unit train of coal to full visible capacity and an average lading weight of at least ninety-eight (98) tons per steel railcar and one hundred seven (107) tons per aluminum railcar if such railcars are Buyer-provided railcars. Seller shall load each unit train to a minimum of ninety-eight percent (98%) of the total marked load capacity of all the railcars in the unit train if such railcars are carrier-provided railcars. Additionally, Seller recognizes that Buyer shall be assessed a penalty by the railroad for phantom tons in the event that Seller fails to load each unit train to a lading weight of ninety-eight percent (98%) of the total of the marked load limit of all the railcars in the unit train. To comply with Buyer’s Maximum Load Limit Requirements, Seller shall not load any railcar in excess of a gross load limit, including lading and railcar, of 270,000 pounds. Buyer shall have the right to alter the Minimum Trainload Requirements and Maximum Load Limit Requirements by giving Seller seven (7) days prior written notice; provided, however, Buyer’s Minimum Trainload Requirements shall not require Seller to load railcars to within two (2) tons of the Maximum Load Limit Requirement.

     If Seller fails to comply with the foregoing origin loading requirements and/or the Maximum Load Limit Requirements, Seller shall pay to Buyer the penalty charges assessed by the railroad. The charges will be those actually paid to the railroad and will not exceed those published in the railroad’s Freight Tariff No. ICC-CSXT-8200, Series, in effect when such charges were incurred. If Seller fails to comply with Buyer’s Minimum Trainload Requirement, then Seller shall pay to Buyer a penalty charge of $0.03 per ton or part of a ton that the average lading weight per railcar falls short of the Minimum Trainload Requirement times the actual number of tons in the unit train.

     (b) Should Buyer, in accordance with the terms of Article III of this Agreement, reject any railcar load(s) of coal in any shipment, Seller shall arrange for the removal of such rejected railcar(s). All costs assessed by the railroad, including but not limited to reconsignment charges, transportation charges, and demurrage charges, shall be to the account of Seller. In addition, if the rejected railcar(s) of coal are Buyer-provided railcar(s), then Seller shall also pay the per diem and mileage charges as defined in the Car Hire Tables of the Official Railway Equipment Register, ICC-REF-6411 Series, as amended. Such per diem charges shall be effective as of the first 7:00 AM following Buyer’s rejection until the railcar(s) are unloaded at a destination specified by Seller and then returned to a destination specified by (or by the railroad, if applicable) for further utilization. Such mileage charges shall be based on the loaded and empty miles traveled by the rejected railcar(s) from the point of rejection to such specified return destination.

     (c) During periods of freezing temperatures, Buyer shall provide notice on a weekly basis, regarding freeze-proofing. When directed by Buyer to use freeze-proofing agents, Seller shall cause these agents to be properly applied during loading in sufficient quantity for the coal to comply with the free flowing requirements (when received at the consigned destination) expressed elsewhere in this Agreement, and Seller shall include the statement “Freeze Treatment Applied” on the shipping manifests. For each ton of coal delivered under this Agreement to which such freeze-proofing has been applied in strict accordance herewith, an amount of one and one-half percent (1.5%) of the Base Price applicable thereto shall be added to the Selling Price of such coal.

     (d) Seller shall indemnify, save harmless, and defend Buyer, its agents, and its affiliates (all referred to in this sentence as “Buyer”) from and against any liabilities, expenses,

claims, and all other obligations whatsoever, including without limitation, all judgments rendered against and all fines and penalties imposed upon Buyer (whether severally, or in combination with others) and any reasonable attorneys’ fees and any other costs of litigation (all of which are hereinafter referred to as “liabilities”) arising out of injuries or death to any person(s), or damage to any property, caused by or related to, in whole or in part, the railcars furnished hereunder (as applicable), between the time that such railcars are delivered to Seller or Seller’s agent and the time that custody thereof is properly returned to Buyer (or to Buyer’s agent carrier, if applicable), except for that portion of any such liabilities that rise out of Buyer’s contributing negligent acts or negligent omissions. Any injury or death to person(s) or damage to property as hereinbefore described shall be reported to Buyer by Seller immediately upon the occurrence thereof, and confirmed in writing as soon as possible.

      Section 4. If, during any calendar month(s), Buyer and Seller mutually agree to deliver all or any portion of the scheduled quantity obligation of Specification “A” coal FOB barge rather than FOB rail, Seller shall load such Specification “A” coal into Buyer-provided barges. Seller shall load all Specification “A” coal to be delivered hereunder into Buyer-provided barges at the approved barge shipping origin(s) (hereinafter the “approved barge shipping origin”) as described on Exhibit 1, attached hereto and hereby made a part hereof, at which time delivery and title for coal conforming to this Agreement shall pass to Buyer. Such barge shipments shall be tendered by Seller loaded to each barge’s normal draft capacity (each such barge of coal hereinafter referred to as “bargeload lot”) unless otherwise directed by Buyer or its agents.

     The loading, switching, movement, and fleeting of barges between the time Buyer delivers the barges and the time Buyer picks up the barges shall be at Seller’s risk and expense.

     Except for the movement between Anker Rail & River Terminal and Dippel Barge Facility, Seller shall not move, nor permit the movement of, any barge(s) provided by Buyer, or its agent, to any other location once the barge(s) are delivered at an approved barge shipping origin for loading, unless otherwise agreed to by Buyer. The movement of any barge(s) requested by Seller and approved by Buyer shall be arranged and directed by Buyer at Seller’s expense.

     In the event that an approved barge shipping origin is utilized by more than one supplier of coal to Buyer, Buyer shall arrange for the allocation and placement of barges on a weekly basis in response to the suppliers’ reasonable requests. Barge requests are to be made by Seller under this Agreement so as to provide for approximately equal weekly shipments in fulfillment of Seller’s monthly quantity obligation hereunder.

     Seller shall not have the right to ship coal to be delivered under this Agreement from any barge shipping origin other than the approved barge shipping origin(s) unless Seller shall first have obtained Buyer’s written approval of such proposed shipping origin. Such written approval shall not be unreasonably withheld and shall further be conditioned upon Seller’s agreement to pay any increase in barging and/or handling costs that would be incurred by Buyer for shipments made from the proposed shipping origin as compared to the Alloy Dock at Milepost 89.7 on the Kanawha River.

     (a) It shall be Seller’s obligation to provide adequate dock and harbor facilities at the approved barge shipping origin(s), to load barges in accord to Buyer’s or its agent’s request, and to dispatch and otherwise comply with reasonable requirements of Buyer or its agent’s barging and operating schedule.

     Seller shall indemnify, save harmless, and defend Buyer, its agents, and its affiliates (all referred to in this sentence as “Buyer”) from and against any liabilities, expenses, claims, and all other obligations whatsoever, including without limitation, all judgments rendered against and all fines and penalties imposed upon Buyer (whether severally, or in combination with others) and any reasonable attorneys’ fees and any other costs of litigation (all of which are hereinafter referred to as “liabilities”) arising out of injuries or death to any person(s), or damage to any property, caused by or related to, in whole or in part, the barges furnished hereunder, between the time that such barges are delivered to Seller or Seller’s agent and the time that custody thereof is properly returned to Buyer (or to Buyer’s agent carrier, if applicable), except for that portion of any such liabilities that arise out of Buyer’s contributing negligent acts or negligent omissions. Any injury or death to person(s) or damage to property as hereinbefore described shall be reported to Buyer by Seller immediately upon the occurrence thereof, and confirmed in writing as soon as possible.

     (b) Seller shall be responsible for all loss of, or damage to, any barge provided hereunder and for the loss of any coal in said barge (other than damage or loss due to normal wear and tear, latent or patent defects in the barge existing at the time of delivery) occurring after such barge has been delivered to Seller at the approved barge shipping origin and while in the custody, control, and possession of Seller. Seller shall reimburse Buyer for the cost to Buyer of repairing or replacing any such barge in an amount not to exceed its replacement value at the time of its loss or damage. Said replacement value shall be defined as the remaining year of life of said barge, divided by the expected life of said barge when new, and multiplied by the current market value of a new barge having similar design and capacity at the time of loss or damage. A barge shall be deemed to have been delivered to Seller and be in Seller’s custody, control, and

possession, when it has been secured by or on behalf of Buyer or its agent at an approved barge shipping origin to await loading and shall be deemed to be picked up when untied for pick up by or on behalf of Buyer from such approved barge shipping origin.

     Seller shall have the right, but not the duty, to refuse to load any barges which Seller considers unseaworthy or contain an excessive amount of residual coal or extraneous material or are otherwise in unserviceable condition upon delivery to Seller. In such event, Seller shall promptly notify Buyer.

     (c) Seller shall be allowed three (3) free loading days for the loading of each barge delivered by Buyer to an approved barge shipping origin. A loading day shall commence at 7:00 AM of a calendar day and end at 7:00 AM the next calendar day. The first free loading day shall commence at the later of 7:00 AM of a calendar day immediately following the delivery of said barge, or 7:00 AM on the delivery date of the barge for loading specified in Seller’s notice.

     (d) The three (3) free loading days for a barge delivered shall end seventy-two (72) consecutive hours after they commenced. Actual loading days for a barge shall commence concurrently with the commencement of the three (3) free loading days and shall continue until the barge has been loaded and Buyer has been advised that the barge is loaded and available at the approved barge shipping origin for pick up by Buyer or its agent.

     (e) Seller shall maintain a demurrage account in which debits and credits for the loading of barges shall be recorded. One credit for each barge delivered to be loaded with coal shall be recorded in the demurrage account for each loading day for which the actual loading time for the barge is less than the free loading days for the barge set forth above, and one debit for each barge delivered to be loaded with coal shall be recorded in the demurrage account for each loading day, or part of a loading day, for which the actual loading time for the barge is

greater than the free loading days provided above for loading the barge, and for each demurrage day accrued for each barge in a bargeload shipment rejected by Buyer as hereinafter provided.

     (f) At the end of each calendar quarter throughout the term of this Agreement, the demurrage account shall be balanced and settled as follows: Credits in the demurrage account shall be used to cancel debits in the demurrage account with one credit canceling one debit. Seller shall pay to Buyer the daily barge demurrage rate of $100.00 (which amount shall be adjusted in an amount proportional to the adjustments to the Base Price under Article VI hereof), for each debit in a demurrage account not so cancelled. There shall not be a payment for credits in the demurrage account. Excess credits in a demurrage account accumulated during each calendar quarter which remain unused following the balancing and settlement of the demurrage account shall be cancelled.

     (g) Should Buyer, in accordance with the terms of Article III of this Agreement, reject any bargeload lot(s) as provided for herein, Seller shall pay all barge transportation cost(s) associated with the shipment of such rejected bargeload lot(s), including the daily barge demurrage rate effective as of the first 7:00 AM following Buyer’s rejection and all other costs incurred by Buyer with respect to said shipment(s) from the time said bargeload lot(s) is (are) rejected until the barge(s) is (are) unloaded at a location designated by Seller and subsequently transported to a destination specified by Buyer for further utilization.

      Section 5. The coal to be delivered hereunder shall be properly consigned by Seller (Rail Freight Collect if shipped by rail) for rail or barge delivery to Buyer’s designated destination (also referred to in this Agreement as “Plant”). Buyer shall notify Seller of the designated destination of shipments, and Seller, at its own risk and expense, shall have the right to have an observer present at the unloading of such shipments.

      Section 6. For each unit train or bargeload lot shipment of coal hereunder, Seller, within twenty-four (24) hours of the completion of loading of such shipment, shall provide via computer or telecopier (actual method specified by Buyer) to the applicable consigned destination, and to Buyer, a shipping notice showing unit train and railcar number(s) or barge number(s), estimated weight of the coal in each railcar or barge, shipping date, the rail shipping origin or the barge shipping origin from which shipment was consigned.

      Section 7. Seller shall sample and analyze the coal as it is loaded into each unit train or bargeload (lot(s) and notify Buyer, by telecopy, and/or Telex of the type of coal being shipped (i.e., Specification “A”) and the short proximate (calorific value per pound, percent moisture, percent ash, and percent sulfur) average analytical results of each unit train lot shipment or bargeload lot shipment, including the identifying number of the railcars or barges comprising such lot, within one (1) business day after the coal is loaded into the unit train or bargeload lot for delivery.

ARTICLE III

SPECIFICATIONS, QUALITY & WEIGHT

      Section 1. The coal to be delivered hereunder shall be produced at approved production source(s) as defined in Exhibit 1. Seller shall have no right to deliver coal under this Agreement from any other production source without Buyer’s written consent that Seller may do so, which consent shall not be unreasonably withheld.

     In the event that Seller desires to supply coal from any other production source, Seller shall notify Buyer in writing of such proposed new source, documenting as follows: location of mineral tract(s); status of all legal interests in such tract(s); coal seam(s) designation (by tract[s]); typical proximate analysis from such seam(s); typical ultimate analysis from such seam(s); typical ash mineral analysis from such seam(s); trace element analysis from such

seam(s); analysis of fusion temperatures, both in oxidizing and reducing atmospheres, from such seam(s); an analysis of the sulfur forms from such seam(s); an analysis of Hardgrove grindability for such seam(s); and any other pertinent information requested by Buyer.

     Seller shall not have the right to ship coal under this Agreement from any such proposed new production source except upon Buyer’s written approval of Seller’s request pursuant to the preceding paragraph, which shall be based upon Buyer’s reasonable determination of the suitability of such proposed source for Buyer’s purposes hereunder. Buyer shall require prior to its approval that: (i) the coal would meet the requirements of Article III, Section 2 and the “Contracted” specifications of Article III, Section 3 of this Agreement; (ii) none of the aforementioned analyses (proximate, ultimate, ash mineral, trace element, fusion temperatures, sulfur forms, or grindability) differ in material respect from the coal from production sources initially approved in Exhibit 1; (iii) Seller owns or controls the reserves from which such coal would be produced; (iv) the reserves of coal are located in the state of West Virginia; and (v) the supplying of such coal shall not result in a higher delivered price (¢/MMBtu) to Buyer than the coal shipped from the Harris loadout (OPSL No. 65289).

          In the event that Buyer gives written approval for such new source, subsequent shipments from such source shall be subject to this Agreement in all respects.

      Section 2. The coal to be delivered hereunder shall have a maximum top size of two inches (2”), and shall be free flowing and free of extraneous material upon uploading at Buyer’s Plant.

      Section 3. The coal from each respective approved rail shipping origin based upon the applicable analyses obtained pursuant to Article VIII, shall meet the following “Contracted” specifications under the table entitled “ SPECIFICATION A ” on a Contract Half-Month basis

(except for lbs. SO ₂ /MMBtu on both a Contracted and Suspension Half-Month weighted average basis, and for Volatile Matter on a Contracted Half-Month weighted average basis, which shall be additionally based on the combined weighted average of all shipping origins for Specification “A” coal as further provided for in footnote ***). Further, for the purposes of this Article, the following “Suspension” specifications under the table “ SPECIFICATION A ” shall also be applicable to the coal from each such respective origin on the indicated bases.

      Section 4. In addition to all other remedies at law or in equity, except as specifically limited elsewhere in this Agreement, and in addition to the price adjustments provided for in Article VII, Buyer shall have the following rights and remedies upon Seller’s failure to conform with the requirements as set forth in Sections 1, 2, and 3 of this Article and/or Article II, Section 1.

     (a) Buyer shall have the right to reject any shipment if the coal in such shipment fails to conform to any requirement set forth in Article III, Sections 1 or 2. Buyer shall also have the right to reject a shipment if the coal in such shipment fails to conform to any requirement set forth in Article III, Section 3, applicable to said shipment. Should Buyer elect to exercise such right of rejection, it shall notify Seller of its election, such notification to be promptly confirmed in writing.

     (b) Buyer shall have the right to suspend further shipments of coal hereunder from any approved shipping origin(s) in the event the coal quality from such shipping origin(s) fails to meet the defined minimum or exceeds the defined maximum “Suspension” specifications as set forth in Section 3 of this Article, or if the coal fails to conform to any requirement set forth in Sections 1 or 2 of this Article and/or Article II, Section 1. Should Buyer exercise such right to suspend further shipments, Buyer shall notify Seller in writing within twenty (20) calendar days after the day or half-month period in which such failure occurs.

     (c) Upon receipt of Buyer’s notice of suspension, Seller shall suspend further shipments from such shipping origin(s) and make every reasonable effort to correct the conditions giving rise to the shipment(s) of coal failing to conform to specifications. Seller shall inform Buyer in writing on a weekly basis of such corrective actions taken by Seller.

     During such suspension, Seller shall, upon prior notice and subject to Seller’s reasonable safety requirements, permit Buyer’s full access to the mine(s) designated in Exhibit 1, and to all relevant engineering data and facilities related to such shipping origin(s). Buyer shall have the right, but not the duty, to participate in discussions relating to the matter and to recommend procedures to correct said matter.

     Such suspension shall continue until Seller provides buyer with assurances in writing that are acceptable to Buyer (such acceptance not to be unreasonably withheld) stating that the conditions causing shipment of nonconforming coal have been corrected and that Seller can and shall deliver coal meeting Article III, Sections 1 and 2 and Article II, Section 1 requirements and meeting all of the applicable specifications of Article III, Section 3.

     Upon receipt by Buyer of Seller’s satisfactory written assurances, shipments shall be resumed at the rate specified in Article II.

     (d) In the event that: (i) Seller fails to provide Buyer with satisfactory assurances within thirty (30) days after the date of Buyer’s notice of suspension as described in Article III, Section 4(b); or (ii) having provided such assurances, Seller fails to correct such conditions and resume shipments in the ensuing thirty (30) days thereafter; or (iii) after such resumption of shipments, Seller’s subsequent deliveries from the suspended shipping origin(s) at any time during the ensuing sixty (60) days fall below the minimum or exceed the maximum applicable “Suspension” specifications in Article III, Section 3, or fail to conform to the requirements of

Article III, Sections 1 and 2, and Article II, Section 1; then Buyer shall have the right to hold Seller in anticipatory breach of this Agreement and enforce any and all claims for past, present, and future damages incurred or to be incurred by reason of such breach, subject to the limitation of consequential damages as specified in Article XVIII, Section 2.

     (e) Whether shipments suspended pursuant to Article III, Section 4(b) hereof shall be made up shall be subject to Buyer’s sole discretion, subject to a mutually agreeable schedule so that such make up tonnage shall be shipped no later than 365 calendar days following the date of the resumption of deliveries after such suspension.

     (f) Seller shall, at all times, exercise reasonable care and diligence in its efforts to ship to Buyer coal which conforms to the “Contracted” specifications of Section 3 of this Article III.

      Section 5. The weight of the coal delivered pursuant to this Agreement shall be determined by Buyer at its expense. For rail deliveries, the accuracy of scale(s) shall be maintained between + 0.20 percent. Scale(s) shall be calibrated at least once every six (6) months in accordance with the guidelines established by the national Institute of Standards and Technology Handbook #44. Such calibrations shall be performed by a party, mutually agreeable to Buyer and Seller, in accordance with the aforementioned guidelines. For barge deliveries, conveyor belt scales at the barge unloading facility(ies) shall be calibrated once each month to maintain them to within + 0.50 percent accuracy. The testing and calibration of such conveyor belt shall be accomplished in accordance with the guidelines outlined in the National Institute of Standard and Technology Handbook #44, or other procedures which shall be mutually acceptable to Seller and Buyer. At Seller’s request, which Seller may make from time to time,

Buyer shall inform Seller of the result of such testing and calibration. It shall be the responsibility of Buyer to arrange and schedule scale calibrations when required.

     Buyer shall give prompt notice by telephone or telegram and confirm such notice in writing to Seller if and when any scales are discovered to be in error beyond the limits established above. During any period when such scales are inoperable, determination of the quantities of coal delivered shall be made by a procedure to be established by agreement of Buyer and Seller. Seller shall have the right, but not the duty, to have a representative present at any and all times to observe the determination of weights and/or recalibration or testing of scales; however, Buyer shall not be obligated to notify Seller to be present. If Seller should at any time question the accuracy of the weights thus determined, Seller shall so advise Buyer and confirm the same in writing. Buyer shall arrange to test the scales and shall give written notice to Seller of the date of such test so that Seller may have a representative present. If such test shows the scales to be in error, they shall be adjusted to the required accuracy established above. If such test requested by Seller shows the scales to be within the applicable limits established above for the respective scale, then Seller shall pay all costs of such test, otherwise Buyer shall pay all such cost.

     If, upon testing pursuant to the above paragraph, the scales are determined to be in error beyond the limits established above, an adjustment of the payment to Seller shall be made based on the assumption that the condition causing the scales to be in error beyond such limits shall have existed with respect to all coal unloaded on and after thirty (30) calendar days prior to Seller’s notification to Buyer that Seller questions the accuracy of the weights, or the date of the previous scale calibration, whichever is later. Such adjustments shall be in an amount equal to the difference in the weights as specified in the applicable invoices and the weights that would

have been obtained had the scales not been inaccurate, multiplied by the price per ton as stated in said invoices.

     If, upon any regular calibration of the scales, the scales are determined to be in error beyond the limits established above, an adjustment shall be made in the same manner provided in the preceding paragraph, such adjustment to be based on the assumption that the condition causing the scales to be in error beyond such limits shall have existed with respect to all shipments weighed on and after a date thirty (30) calendar days prior to such determination, or the date of the previous scale calibration, whichever is later.

     Any payments due by either party to the other, as a result of adjustments made pursuant to this Article III, Section 5, shall be paid within thirty (30) calendar days from the date of the determination thereof.

ARTICLE IV

PAYMENT

     Buyer shall pay Seller by wire transfer (recipient account per Seller’s advice) in United States Funds for all coal received, unloaded, taken into account, and accepted hereunder.

     Buyer shall submit to Seller the weight, analytical, and pricing data on such coal taken into account and accepted during each half-month within five (5) working days after each such half-month. Thereafter, Seller shall mail to Buyer, within two (2) working days of receipt of such information, an invoice (referencing the contract number designated by Buyer), in triplicate, covering such half-month unloadings.

     Buyer shall make payment to Seller within twenty (20) calendar days after the close of such half-month, provided Seller’s invoice is submitted in accordance with the preceding paragraph.

     For the purpose of this Agreement, “month” shall mean a calendar month and “half-month” shall mean either the first fifteen (15) calendar days of a month or the calendar days in a month after the fifteenth (15 ^th ) calendar day thereof, as the case may be.

ARTICLE V

PRICE

     For coal accepted hereunder, the FOB railcar or FOB barge price for all approved shipping origins to be paid to Seller by Buyer (hereinafter “Selling Price”) for each ton thereof shall be the then applicable Base Price (as determined under Article VI) plus or minus such other charges or credits to the Base Price as determined pursuant to Article VII, and Article II, Section 3, if applicable.

ARTICLE VI

BASE PRICE & BASE PRICE ADJUSTMENTS

      Section 1. The initial Base Price shall be $45.00 per ton, effective November 1, 2007. Such Base Price shall be subject to adjustments in accordance with the provisions hereinafter set forth in this Article VI.

      Section 2. The Base Price shall be redetermined, to the nearest tenth of a cent by the methods prescribed in Section 3 of this Article. The Base Price as so adjusted shall be the Base Price applicable to any coal shipped on and after the effective date of any such adjustment and shall remain in effect until the Base Price is again adjusted pursuant to this Article.

      Section 3. Adjustable Components.

     (a) [Intentionally blank]

     (b)  Assessments Components . The Assessments Component shall be adjusted effective on the first day of the next half-month following the effective date of any change occurring after November 1, 2007 (except when such change is effective on the first day of a

month in which case the Assessments Component shall be adjusted as of such date) in the assessment to Seller for Federal Reclamation Fee, Federal Black Lung Excise Tax, West Virginia Special Reclamation Tax, and West Virginia Mines and Minerals Operations Fund Tax, as further defined in this Section 3(b). Such amounts shall be adjusted for any related tax credits allowed Seller. For the purposes of calculating price adjustments under this Section 3(b), all adjustments shall be deemed to be based on those assessments applicable to underground mining.
The initial amounts of the Federal Reclamation Fee and the Federal Black Lung Excise Tax as shown in Section 4 below are net of a four percent (4%) deduction for moisture content in excess of inherent moisture ($.135 — $.005 = $.130 Federal Reclamation Fee, and $1.100 — $0.044 = $1.056 Federal Black Lung Excise Tax). In the event of an adjustment to the base amounts of $0.150 per ton and $1.100 per ton for the Federal Reclamation Fee and the Federal Black Lung Excise Tax respectively, the adjusted amounts pursuant to this Section 3(b) shall reflect said four percent (4%) deduction for moisture content in excess of inherent moisture. Said four percent (4%) deduction shall be fixed and firm for the term of this Agreement.

     (c)  Changes in Law . Seller hereby certifies that to the best of its knowledge the approved production source(s) are in good faith compliance with the rules, practices, and standards issued by any governmental agency with respect to legislation, regulations, rules, or mandates which were in effect either by interim or final rules, or passed, adopted, or promulgated but to go into later effect, as of November 1, 2007.

     (i) In the event of the enactment, modification, revision, or changes in the interpretation as set forth in a legally enforceable written policy memorandum from the applicable governmental entity or decision by a court of competent jurisdiction of any federal, state or local legislation, regulations, rules, or mandates issued pursuant thereto, including but

not limited to the Federal Mine Safety & Health Act of 1977 and the Surface Mining Control and Reclamation Act of 1977, after November 1, 2007, which affect the bituminous coal industry with respect to reclamation; conservation; environmental protection; mine safety; mine working conditions and practices; ventilation; health; occupational hazards; research, reclamation, and conservation of mined area; or other aspects of coal production, and which increases or decreases Seller’s cost of producing coal under this Agreement, an equitable adjustment will be made to the current Base Price to recognize such changed cost; provided, however, there shall be no changes made in the Base Price hereunder for changed costs related to labor related benefits or taxes, real or personal property taxes, corporate net income and franchise taxes, Federal Reclamation Fee, Federal Black Lung Excise Tax, West Virginia Special Reclamation Tax, and West Virginia Mines and Minerals Operations Fund Tax, inasmuch as the exclusive adjustments for such items are provided for in Subsection (a) and (b) hereof, (should any such item listed for exclusion become known by a different name, or should a new tax or assessment be levied for the same purpose(s), there shall likewise be no change under this Subsection (c) for any such item).

     Buyer shall have the right, but not the obligation, to terminate this Agreement should any such adjustment cause the Base Price to be increased by more than twenty-five percent (25%) of its then current amount or should the total of all such adjustments under this Section 3(c) cause the Base Price to be increased by more than fifty percent (50%) of its initial amount as of November 1, 2007. Should Buyer terminate the Agreement as provided in the prior sentence, Seller may nullify such termination by giving written notice to Buyer within ten (10) calendar days after receiving Buyer’s notice of such termination that Seller permanently waives its right to the amount of such adjustment which is in excess of any such limits, as applicable.

     If any of the foregoing governmental actions cause Seller to incur any increase in costs as hereinbefore described, then Seller shall consider and, if in its good faith judgment determines it is warranted (as further defined), contest or appeal the legal basis of such actions and/or its application to Seller, with the objective of mitigating any resulting increase in the Base Price under this Article. Seller shall consult with Buyer in conjunction with making such determination, which shall be based upon, by way of illustration but not of limitation, the likelihood of prevailing in such action and by the economic impact, absent such contest or appeal, upon such Base Price.

     Seller shall notify Buyer in the event of any governmental action applicable under this Article and shall submit detailed documentation to allow determination of any such adjustment. Notwithstanding Article XI, Section 3, if Seller and Buyer are unable to agree within ninety (90) days of receipt by Buyer of Seller’s documentation as to the amount the price per ton should be adjusted or as to whether the event is applicable, then the matter shall be submitted to a firm of mining engineers and/or independent certified public accountants mutually agreeable to the parties for final determination, which shall be binding upon the parties. The costs associated with any such mining engineers’ and/or certified public accountants’ review shall be shared equally by the Buyer and Seller.

     If upon agreement or final determination, an adjustment in the cost per ton is found to be appropriate, appropriate credit for such amount on all tons shipped and accepted on and after the effective date of any such change resulting in such price adjustment, plus interest computed on the basis of the prime rate in effect at Citibank, N.A., commencing sixty (60) days after the effective date of such change, shall be made to the party to whom the benefit of such credit is due; provided, however, that Seller shall not be entitled to any such credit for such tonnage

delivered prior to the date upon which Seller’s written request for such adjustment is received by Buyer, nor for interest for a period of sixty (60) days subsequent to such date of Buyer’s receipt.

     (ii) If Buyer elects to terminate this Agreement under the provisions of this Article VI, Section 3(c), then neither party shall have, after the effective date of such termination, any further obligation under this Agreement; provided, however, that such termination shall not affect any rights or obligations of Buyer or Seller existing under this Agreement for coal shipped or required to be shipped prior to the effective date of said termination.

     (d)  West Virginia Severance Tax Component . The Base Price includes a component for West Virginia Severance Tax in the amount of five percent (5.00%) of the Base Price. Any time there is a change in any of the Base Price Components or a change in the Severance Tax rate, a new Severance Tax Component shall be calculated in accordance with the formula set forth in Exhibit 2, attached hereto and hereby made a part hereof. Such components shall be adjusted for any related tax credits allowed Seller.

		Initial Amount
Component		Per Ton of Base Price				Comments
Unadjusted Fixed Portion			41.621
Assessments
a. Federal Reclamation Fee			.130			Shall be adjusted pursuant to Article VI, Section3(b)
b. Federal Black Lung Excise Tax			1.056
c. WV Special Reclamation Tax			.030
d. WV Mines and Minerals Operations Fund Tax			.020
Changes in Law			0.000			Shall be adjusted pursuant to Article VI, Section3(c)
WV Severance Tax			2.143			Shall be adjusted pursuant to Article VI, Section 3(d)
INITIAL FOB BASE PRICE		$	45.000

ARTICLE VII
ADJUSTMENT OF PRICE FOR QUALITY

     In order for the Selling Price to accommodate variations in calorific value and the sulfur dioxide value of the coal delivered hereunder, there shall be an amount added to or subtracted from the Base Price as provided in this Article.

provided, however, that no premium shall be paid for the increment, if any, by which the calorific value of such coal exceeds the Guaranteed Btu by 1000 Btu per pound.

      Section 3. An initial amount of three dollars ($3.00) per ton, subject to adjustment of such initial amount as provided herein, shall be deducted from the Base Price to arrive at the Selling Price for each unit train lot or bargeload lot (or a composite of two (2) or more bargeload lots) of coal shipped having a sulfur dioxide (SO ₂ ) value greater than the maximum SO ₂

Applicable Lot “Suspension” specification applicable under Article III, Section 3. This deduction shall be in addition to the Btu quality adjustment as provided in Sections 1 and 2 of this Article and to Buyer’s other remedies as provided in Article III of this Agreement.

At any time such shipments occur, the percentage change (carried out four decimal places, e.g., 6.124% shall be 0.0612) between the initial Base Price and the adjusted Base Price applicable to such coal shall be multiplied by three dollars ($3.00) and the amount obtained (rounded to the nearest tenth of a cent) shall be added to or subtracted from, as the case may be, the three dollars ($3.00) in lieu of any such previous adjustment thereto and the amount thus obtained shall be the applicable Selling Price deduction for SO ₂ quality of such coal.

ARTICLE VIII
SAMPLING AND ANALYSES

      Section 1. All coal delivered hereunder shall be sampled by Buyer using a mechanical sampling system before it is commingled with other coal and approximately at the time it is weighed. The sampling party shall determine, by proper analyses made in its laboratory

and at its expense, the “as-received” quality and characteristics of the coal. The sampling and analyses shall be performed in accordance with methods approved by the American Society for Testing and Materials (ASTM), or such other method as may be mutually acceptable. Except as otherwise provided in this Article, the results of the sampling and analyses by the sampling party shall be accepted as the quality and characteristics of the coal delivered hereunder.

      Section 2. Seller shall have the right to have a representative present at any and all times to observe the sampling and to receive a split of the resultant laboratory pulp when sampling is being performed pursuant to Section 1 above, and Seller may also analyze the coal either from its own samples or from samples taken by Buyer. Buyer shall retain the remaining portion of the laboratory pulp of each coal sample until the twentieth (20 ^th ) day following the calendar half-month in which the applicable lot of coal represented by such sample was unloaded at the Plant so that Seller (and/or a commercial laboratory employed by Seller) may obtain and analyze a portion of such laboratory pulp. Seller’s analytical results obtained from such pulp portion, however, shall not be relevant for any purpose under the Agreement.

      Section 3. The results of the sampling and analyses by Buyer shall be accepted as the quality and characteristics of the coal delivered hereunder at each respective consigned destination; provided, however, that if Seller should at any time question the correctness of either the sampling or the analyses made by Buyer, Seller shall have the right to have up to two (2) unit trains of coal or up to six (6) bargeload lot(s) of coal hereunder individually sampled and analyzed by a commercial testing laboratory, mutually chose, and using mutually acceptable procedures. The results of such commercial testing laboratory’s sampling and analyses shall be accepted as the quality and characteristics of such coal. If the average of one or more of the coal quality parameter values of the gross samples separately collected and analyzed by the

commercial testing laboratory differ by more than the ASTM (or other mutually agreed methodology) reproducibility tolerance ranges for such respective coal quality parameter, when compared to the average values of the gross samples separately collected and analyzed by the Buyer when both sets of samples have been taken from the same delivery of coal, then Buyer shall pay such charges of such commercial testing laboratory, otherwise Seller shall pay such charges.

      Section 4. Unless Seller challenges, pursuant to Section 3 of this Article, the accuracy of either the sampling or analyses made by Buyer by written notice to Buyer within thirty (3) calendar days after receipt of Buyer’s notice of such analytical results, Seller shall be deemed to have waived all claims with respect to such sampling and analyses.

      Section 5. Coal received, unloaded, and taken into account that is not sampled but not analyzed for reasons beyond Buyer’s control shall be taken into account as follows: If during any half-month at least seventy-five (75) percent (by weight) of coal delivered from an approved shipping origin at a respective consigned destination during such period has been sampled and analyzed, then the weighted average analytical results of such samples shall be applicable to all coal delivered from such shipping origin to such consigned destination during such half-month period. If at least seventy-five (75) percent (by weight) of coal delivered from an approved shipping origin at a consigned destination during any such half-month period has not been sampled and analyzed, then the weighted average analytical results of the portion of sampled and analyzed coal shall apply to such portion, and the weighted average analytical result of the last preceding four (4) half-months in which at least seventy-five (75) percent (by weight) of the coal delivered from such shipping origin to such consigned destination was sampled and analyzed

shall be applicable to such portion of the coal delivered from such shipping origin which was not sampled and/or was not analyzed for such half-month period.

ARTICLE IX
[Intentionally blank]

ARTICLE X
MAJOR TECHNOLOGICAL IMPROVEMENTS

     The parties hereto recognize that major technological improvements during the term hereof in mining, hauling, handling, or processing coal may provide Seller the opportunity to reduce its costs of supplying coal hereunder. Seller agrees to consider the introduction of any such new technology in mining, hauling, handling, or processing coal at the approved production sources and shall implement such new technology if feasible. The Selling Price for all coal delivered from any approved production source where any such new technology is introduced shall be reduced by fifty percent (50%) of the difference between Seller’s normal production, hauling, handling, and processing costs per ton without such new technology and such production, hauling, handling, and processing costs per ton subsequent to the implementation of such new technology, including depreciation of any related capital expenditures(s), amortization of any costs related to installation of such new technology, and a rate of return on such expenditures and costs at the then existing prime rate of Citibank, N.A., prorated over the normal useful life of any such capital expenditure(s).

     The Selling Price hereunder shall not be reduced pursuant to this Article X based on Seller’s use in the approved production sources of any technology, if such technology was generally available for commercial use in the mining industry as of November 1, 2007.

ARTICLE XI
ADMINISTRATIVE PROGRAM

      Section 1. [Intentionally blank]

      Section 2. In the event that supervening events or circumstances shall render inapplicable any of the methods set forth in Article VI for computing price adjustments hereunder, the parties hereto shall meet promptly to consider and agree upon new and revised methods appropriate to the circumstances then prevailing.

      Section 3. Seller and Buyer shall keep accurate up-to-date records and books of account showing all costs, payments, price revisions, credits, debits, weights, analyses, and all other data required of each of them for the purpose of administering this Agreement.

     Each time the price is to be revised in accordance with Article VI and at any other reasonable time upon ten (10) days notice from Buyer, Seller shall furnish to Buyer a detailed statement (a “claim”) showing Seller’s calculations of the price which should then be in effect under the provisions of this Agreement.

     Buyer shall make a preliminary review of the claim within a reasonable amount of time. Upon completion of Buyer’s preliminary review, Buyer may submit to Seller a letter explaining the differences, if any, in the price as shown on the claim and the price as determined by Buyer’s preliminary review. Buyer shall then submit a letter agreement to Seller for its review and countersignature to establish a tentative price adjustment. The price adjustment as agreed to in the fully executed letter agreement, either a debit or credit, shall be processed using Buyer’s normal payment procedures and, if necessary, a tentative retroactive adjustment shall be made by payment to the party to whom such tentative adjustment is due.

     From time to time, representatives of Buyer shall audit Seller’s claim(s) and recommend final price adjustments associated with such claim(s). Thereafter, Buyer shall submit a letter

agreement to Seller for its review and countersignature to establish a final price adjustment. The price adjustment as agreed to in the fully executed letter agreement, either a debit or credit, shall be processed using buyer’s normal payment procedures and, if necessary, a final retroactive adjustment shall be made by payment to the party to whom such final adjustment is due.

      Section 4. Buyer and its designated representatives and/or agents including its auditors, engineers, and geologists, shall at reasonable times, upon reasonable notice, have access to the mine(s) producing coal under this Agreement; to all support facilities and to all records pertaining to the coal reserves covered by this Agreement); to all records pertaining to transportation costs, the determination of weights, and to any adjustments in price under this Agreement; and to all records relating to the sampling and analytical determinations made pursuant to Article VIII of this Agreement.

ARTICLE XII
FORCE MAJEURE

     No party shall be subject to liability to the other party for the failure to perform in conformity with this Agreement where such failure results from an event or occurrence beyond the control of the party affected thereby (and, in regard to Seller’s failure, is due solely to an event or occurrence pertaining to the approved production source[s] making then current deliveries to Buyer), such as without limitation, acts of God, war, insurrection, riots, nuclear disaster, strikes, labor disputes, threats of violence, labor and material shortages, fires, explosions, floods, river water levels or freeze-ups, breakdowns or damage to mines, plants, equipment or facilities (including emergency outages or an extension of a scheduled outage of equipment or facilities to make repairs to avoid breakdowns thereof or damage thereto), interruptions to or slowdowns in transportation, railcar shortages, barge shortages, river lock outages, embargoes, orders or acts of civil or military authority, laws, regulations, or

administrative rulings. The provisions of the above sentence shall not excuse a party from performing unless such party shall give written notice to the other party and furnish full information as to the cause of the force majeure event and probable extent thereof within thirty (30) calendar days after such cause occurs. Failure to give such notice and furnish such information within the time specified shall be deemed a waiver of all rights under this Article for such period of time during which notice was not given. No suspension or reduction by reasons of force majeure shall invalidate the remainder of this Agreement but, on the removal of the cause, shipments shall resume at the specified rate. (During such periods when a force majeure event or occurrence claimed by Seller results in a reduction in shipments, shipments from the affected production source(s) for ultimate delivery under this Agreement shall not be reduced below the pro rata share which the average rate of such shipments therefrom pursuant to this Agreement for the six (6) months preceding the force majeure event bears to the total contractual commitments to all parties from such production source(s) as of the date of the force majeure event.) Deficiencies in shipments under this Article shall be made upon in accordance with a mutually agreeable schedule. Delivery of make up tonnage shall be scheduled so that such deliveries shall be shipped no later than 365 calendar days following the date of the termination of the force majeure event which gave rise to the suspension or reduction of shipments to be made up; provided, however, that the delivery rate for any make up tons shall not exceed twenty-five thousand (25,000) tons per month, unless otherwise required by Buyer and agreed to by Seller.

     Without limiting the generality of this Article, in the event of a partial or total curtailment of the generating capacity at the Plant or partial or total curtailment of transmission or distribution of electricity therefrom, or any other force majeure event pertaining to Buyer, Buyer

shall be relieved under this Article from its obligation to accept any portion or all deliveries form Seller based upon the quantity of Seller’s coal scheduled for delivery under this Agreement during the period over which such force majeure event or occurrence exists or existed.

     Seller shall furnish Buyer a monthly statement by the fifteenth (15 ^th ) day of the calendar month setting force the amount of tonnage not shipped because of force majeure causes asserted during the preceding calendar month, and shall inform Buyer in writing on a weekly basis during the duration of such force majeure event as to the progress of the alleviation thereof.

     Nothing herein contained shall be construed as requiring Seller or Buyer to accede to any demands of labor, or labor unions, or suppliers, or other parties which Seller or Buyer considers unacceptable.

ARTICLE XIII
WARRANTIES AND DEDICATION

     In addition to all other warranties and representations made by Seller in this Agreement, Seller represents and warrants that (i) Seller has sufficient reserves of coal as defined in Exhibit 1 to satisfy the quantity and quality provisions of this Agreement during the original term hereof, including, but not limited to any elections of Buyer as to quantity under Article II, Section 1; (ii) Seller is or will be, at the time specified for the first delivery of coal hereunder, in good faith compliance with all laws and regulations regarding the mining and sale of coal (notices and orders issued under the Federal Coal Mine Health and Safety Act and State and Federal Reclamation Acts excepted); and (iii) Seller has filed or will have filed in a timely manner to have obtained by said time all licenses, permits, certificates, and other documents necessary for it to fulfill its obligations hereunder. Seller shall furnish, within thirty (30) days of Buyer’s request, which Buyer may make from time to time and at any time, to Buyer a statement

indicating the amount of reserves that remain to fulfill the quantity and quality requirements of this Agreement.

     Seller covenants that it will, and does hereby, dedicate to this Agreement such quantity of said coal reserves and appurtenant facilities as is required for the full performance of Seller’s obligations hereunder during the original term (including Buyer’s options of quantity) and that Seller will not sell nor contract to sell to others nor take for its own use coal from said reserves in such quantity and quality as to jeopardize its ability to deliver the total quantity and quality of coal called for by this Agreement. Nothing in this Article XIII shall be construed as preventing Seller from mining and selling coal from said reserves to others nor from utilizing said facilities provided Seller complies with the foregoing provisions with respect thereto.

ARTICLE XIV
BUYER’S RIGHT TO MARKET COAL WITH ORIGIN WEIGHTS AND ANALYSES

     Buyer reserves the right, at any time, and from time to time, at its sole discretion to sell to any person, firm, or corporation whether or not associated or affiliated with Buyer any or all coal purchased by Buyer under this Agreement where origin weights and analyses by Seller apply.

     In the event of any such sales by Buyer, and Buyer does not sample, analyze, and weigh said coal, Seller’s analyses and weights shall govern for the purpose of payment to Seller, subject to Buyer’s right, at Buyer’s sole risk and expense, to examine Seller’s sample, analyses, and weight records and to have representatives present when Seller performs the sampling, analyses, and weighing; provided, that in the event that Buyer challenges in writing the accuracy of the sampling, analyses, or weights of Seller, then buyer shall have all of the rights and obligations of “Seller” pursuant to Article III, Section 5 and Article VIII of this Agreement, and Seller shall have all of the rights and obligations of “Buyer” under such provisions.

ARTICLE XV
[Intentionally blank]

ARTICLE XVI
GOVERNMENT COMPLIANCE CERTIFICATE

Seller hereby agrees that it does, and for the term of this Agreement will, comply with the duties of “SELLER” under the “Government Contractor Compliance Certificate,” attached hereto and hereby made a part hereof marked Exhibit 3.

ARTICLE XVII
EMPLOYEE INTEREST

     Seller represents to Buyer that Seller has not given and will not give, directly or indirectly, anything of value to any employee or other representative of Buyer or its subsidiaries or affiliates with the view of securing this Agreement or obtaining favorable treatment with respect to the performance of this Agreement. If such representation is untrue, or becomes untrue, Buyer shall have the right to terminate this Agreement, to sue for damages, and to take such other action as may be provided by law. If Seller obtains knowledge at any time that any such employee has a direct or indirect interest in Seller or its affiliates, it will immediately inform Buyer of such fact.

ARTICLE XVIII
WAIVER AND LIMITATION OF DAMAGES

      Section 1. The failure of any party to insist in any one or more instances upon strict performance of any of the provisions of this Agreement or to take advantage of any of its rights hereunder shall not be construed as a future waiver of any such provisions or the relinquishment of any such rights, but the same shall continue and remain in full force and effect for the term of this Agreement.

      Section 2. Neither Seller nor Buyer shall be liable for any special, incidental, or consequential damages which exceed, in the aggregate, twenty-five million dollars ($25,000,000.00) for the entire term of this Agreement.

ARTICLE XIX
[Intentionally blank]

ARTICLE XX
[Intentionally blank]

ARTICLE XXI
CONFIDENTIALITY

     The parties and their agents or representatives who, by this Agreement or otherwise, obtain any documents or other information relative to this Agreement, shall, except for the acceptable disclosure of information to other affiliated companies which shall also keep the same confidential, keep confidential the terms and conditions of this Agreement, the transactions provided for herein, and any such documents or other information unless readily ascertainable from public information or sources, requested by a regulatory commission, or required by law to be disclosed.

ARTICLE XXII
FINALITY

     This Agreement is intended as the final, complete, and exclusive statement of the terms of the Agreement between the parties. The parties agree that parol or extrinsic evidence may not be used to vary or contradict the express terms of this Agreement. This Agreement shall not be amended or modified and no waiver of any provision hereof shall be effective, unless set forth in a written instrument authorized and executed with the same formality as this Agreement.

     The titles of the articles and sections of this Agreement have been inserted as a matter of convenience for reference only.

ARTICLE XXIII
GOVERNING LAW

     This Agreement shall be construed, enforced, and performed in accordance with the laws of the State of West Virginia.

EXHIBIT 1
Page 1 of 2
Revision Effective November 1, 1995

SELLER’S PRODUCTION SOURCE(S), RESERVES OF COAL, APPROVED RAIL
SHIPPING ORIGIN(S), AND APPROVED BARGE SHIPPING ORIGIN(S)

     The production source(s) and reserves of coal to which reference is made to in Section 1 of Article III and in Article XIII, respectively, consist of the following:

Sources and Reserves of Coal for Specification “A” Coal:

1)

Big Mountain Complex (as depicted on the map attached hereto and hereby made a part hereof) extracting the reserves consisting of the Kittanning, Coalburg, Stockton, Dorothy, Chilton, and Hernshaw seams of coal in Boone County, West Virginia.

2)

Colony Bay Mine (as depicted on the map attached hereto and hereby made a part hereof) extracting the reserves consisting of the Kittanning, Coalburg, and Stockton seams of coal in Boone County, West Virginia.

3)

Rocklick Complex (as depicted on the map attached hereto and hereby made a part hereof) extracting the reserves consisting of the Winifrede, Hernshaw, and No. 2 Gas seams of coal in Boone County, West Virginia.

4)

Wells Complex (as depicted on the map attached hereto and hereby made a part hereof) extracting the reserves consisting of the Powellton, No. 2 Gas, and Eagle seams of coal in Boone County, West Virginia.

5)

Harris Mine (as depicted on the map attached hereto and hereby made a part hereof) extracting the reserves consisting of the Eagle and No. 2 Gas seams of coal in Boone County, West Virginia.

6)

Robin Hood Complex (as depicted on the map attached hereto and hereby made a part hereof) extracting the reserves consisting of the Dorothy, Williamson, Chilton, and Kittanning seams of coal in Boone County, West Virginia.

7)

NuEast Mine (as depicted on the map attached hereto and hereby made a part hereof) extracting the reserves consisting of the Kittanning, Clarion, Stockton, Coalburg, Winifred, No. 2 Gas, Powellton, and Eagle seams of coal in Kanawha, Fayette, and Boone Counties, West Virginia.

8)

Cook Mountain Reserve (as depicted on the map attached hereto and hereby made a part hereof) extracting the reserves consisting of the Kittanning, Stockton-Lewiston, and Coalburg seams of coal in Boone County, West Virgina.

EXHIBIT 1
Page 2 of 2
Revision Effective May 1, 1996

SELLER’S PRODUCTION SOURCE(S), RESERVES OF COAL,
APPROVED RAIL SHIPPING ORIGIN(S), AND
APPROVED BARGE SHIPPING ORIGIN(S)

Approved Rail Shipping Origin(s) for Specification “A” Coal :

Facility		Origin rail Station		OPSL No.
Big Mountain Wells Rocklick Colony Bay Harris Robin Hood Cook Mountain Cook Mountain		Prenter, WV Wells Prep Plant, WV Lick, WV Wharton, WV Harris, WV Robin Hood, WV Wells Prep Plant, WV Robin Hood, WV		CSXT 64790 CSXT 65275 CSXT 65288 CSXT 65285 CSXT 65289 CSXT 65325 CSXT 65275 CSXT 65325

Exhibit 2

WEST VIRGINIA SEVERANCE TAX

     Whenever there is any change in the Base Price or a change in the West Virginia Severance Tax Rate, a new West Virginia Severance Tax subcomponent shall be calculated and the Base Price shall be adjusted to reflect such change in accordance with the following:

Exhibit 3

Government Compliance Certificate