AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

 

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                                                                    EXHIBIT 10.2

 

               AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

 

                         DATED AS OF SEPTEMBER 30, 2005

 

                                  BY AND AMONG

 

                          P&L RECEIVABLES COMPANY, LLC,

                                    AS SELLER

 

                                       AND

 

                           PEABODY ENERGY CORPORATION,

                               AS INITIAL SERVICER

 

                                       AND

 

                               ARCLAR COMPANY, LLC

                            BLACK BEAUTY COAL COMPANY

                             TWENTYMILE COAL COMPANY

                              CABALLO COAL COMPANY

                          EASTERN ASSOCIATED COAL, LLC

                                COALSALES II, LLC

                            PEABODY COAL COMPANY, LLC

                          PEABODY WESTERN COAL COMPANY

                            POWDER RIVER COAL COMPANY

                          PEABODY HOLDING COMPANY, INC.

                                 COALTRADE, LLC

                          COALTRADE INTERNATIONAL, LLC

                                 COALSALES, LLC,

                                AS SUB-SERVICERS

 

                                       AND

 

                       MARKET STREET FUNDING CORPORATION,

                                    AS ISSUER

 

                                       AND

 

          THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTIES HERETO,

                               AS LC PARTICIPANTS

 

                                       AND

 

                         PNC BANK, NATIONAL ASSOCIATION,

                         AS ADMINISTRATOR AND AS LC BANK

 

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                                 TABLE OF CONTENTS

 

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ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES...............................      2

   Section 1.1   Purchase Facility...........................................      2

   Section 1.2   Making Purchases............................................      3

   Section 1.3   Purchased Interest Computation..............................      4

   Section 1.4   Settlement Procedures.......................................      5

   Section 1.5   Fees.                                                              8

   Section 1.6   Payments and Computations, Etc..............................      8

   Section 1.7   Increased Costs.............................................      8

   Section 1.8   Requirements of Law.........................................      9

   Section 1.9   Inability to Determine Euro-Rate............................     10

   Section 1.10 Extension of the Liquidity Termination Date and

                   Scheduled Commitment Termination Date....................     11

   Section 1.11 Letters of Credit...........................................     12

   Section 1.12 Issuance of Letters of Credit...............................     12

   Section 1.13 Requirements For Issuance of Letters of Credit..............     13

   Section 1.14 Disbursements, Reimbursement................................     13

   Section 1.15 Repayment of Participation Advances.........................     14

   Section 1.16 Documentation...............................................     14

   Section 1.17 Determination to Honor Drawing Request......................     14

   Section 1.18 Nature of Participation and Reimbursement Obligations.......     15

   Section 1.19 Indemnity...................................................     16

   Section 1.20 Liability for Acts and Omissions............................     16

 

ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS...     18

   Section 2.1   Representations and Warranties; Covenants...................     18

   Section 2.2   Termination Events..........................................     18

 

ARTICLE III. INDEMNIFICATION................................................     18

   Section 3.1   Indemnities by the Seller...................................     18

   Section 3.2   Indemnities by the Servicer.................................     20

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                                TABLE OF CONTENTS

                                   (continued)

 

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ARTICLE IV. ADMINISTRATION AND COLLECTIONS..................................     21

   Section 4.1   Appointment of the Servicer.................................     21

   Section 4.2   Duties of the Servicer......................................     22

   Section 4.3   Lock-Box Arrangements.......................................     23

   Section 4.4   Enforcement Rights..........................................     23

   Section 4.5   Responsibilities of the Seller..............................     24

   Section 4.6   Servicing Fee...............................................     24

   Section 4.7   Authorization and Action of the Administrator...............     25

   Section 4.8   Nature of Administrator's Duties............................     25

   Section 4.9   UCC Filings.................................................     25

   Section 4.10 Administrator's Reliance, Etc...............................     26

   Section 4.11 Administrator and Affiliates................................     26

   Section 4.12 Purchase Decision...........................................     27

   Section 4.13 Indemnification.............................................     27

   Section 4.14 Successor Administrator.....................................     27

 

ARTICLE V. MISCELLANEOUS....................................................     28

   Section 5.1   Amendments, Etc.............................................     28

   Section 5.2   Notices, Etc................................................     28

   Section 5.3   Successors and Assigns; Assignability; Participations.......     29

   Section 5.4   Costs, Expenses and Taxes...................................     30

   Section 5.5   No Proceedings; Limitation on Payments......................     31

   Section 5.6   Confidentiality.............................................     31

   Section 5.7   GOVERNING LAW AND JURISDICTION..............................     31

   Section 5.8   Execution in Counterparts...................................     32

   Section 5.9   Survival of Termination; Non-Waiver.........................     32

    Section 5.10 WAIVER OF JURY TRIAL........................................     32

   Section 5.11 Entire Agreement............................................     32

   Section 5.12 Headings....................................................     33

   Section 5.13 Issuer's Liabilities........................................     33

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                                TABLE OF CONTENTS

                                   (continued)

 

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EXHIBIT I       DEFINITIONS

EXHIBIT II      CONDITIONS OF PURCHASES

EXHIBIT III     REPRESENTATIONS AND WARRANTIES

EXHIBIT IV      COVENANTS

EXHIBIT V       TERMINATION EVENTS

SCHEDULE I      CREDIT AND COLLECTION POLICY

SCHEDULE II     LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS

SCHEDULE III    TRADE NAMES

SCHEDULE IV     OFFICE LOCATIONS

ANNEX A         FORM OF INFORMATION PACKAGE

ANNEX B         FORM OF PURCHASE NOTICE

ANNEX C         FORM OF PAYDOWN NOTICE

ANNEX D         FORM OF COMPLIANCE CERTIFICATE

ANNEX E         FORM OF LETTER OF CREDIT APPLICATION

ANNEX F         FORM OF TOTAL LEVERAGE CERTIFICATE

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     This AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (as amended,

supplemented or otherwise modified from time to time, this "Agreement") is

entered into as of September 30, 2005, by and among P&L RECEIVABLES COMPANY,

LLC, a Delaware limited liability company, as seller (the "Seller"), PEABODY

ENERGY CORPORATION, a Delaware corporation ("Peabody"), as initial servicer (in

such capacity, collectively, together with its successors and permitted assigns

in such capacity, the "Servicer"), ARCLAR COMPANY, LLC, an Indiana limited

liability company, BLACK BEAUTY COAL COMPANY, an Indiana partnership, TWENTYMILE

COAL COMPANY, a Delaware corporation, CABALLO COAL COMPANY, a Delaware

corporation, EASTERN ASSOCIATED COAL, LLC, a West Virginia limited liability

company, COALSALES II, LLC, a Delaware limited liability company, PEABODY COAL

COMPANY, LLC, a Delaware limited liability company, PEABODY WESTERN COAL

COMPANY, a Delaware corporation, POWDER RIVER COAL COMPANY, a Delaware

corporation, PEABODY HOLDING COMPANY, INC., a New York corporation, COALTRADE,

LLC, a Delaware limited liability company, COALTRADE INTERNATIONAL, LLC, a

Delaware limited liability company, COALSALES, LLC, a Delaware limited liability

company (each a "Sub-Servicer" and collectively the "Sub-Servicers"), MARKET

STREET FUNDING CORPORATION, a Delaware corporation (together with its successors

and permitted assigns, the "Issuer"), THE FINANCIAL INSTITUTIONS LISTED ON THE

SIGNATURE PAGES HEREOF (together with their successors and permitted assigns in

such capacity, the "LC Participants"), PNC BANK, NATIONAL ASSOCIATION, a

national banking association ("PNC"), as administrator (in such capacity,

together with its successors and assigns in such capacity, the "Administrator")

and as issuer of Letters of Credit (in such capacity, together with its

successors and assigns in such capacity, the "LC Bank").

 

     PRELIMINARY STATEMENTS. Certain terms that are capitalized and used

throughout this Agreement are defined in Exhibit I. References in the Exhibits

hereto to the "Agreement" refer to this Agreement, as amended, supplemented or

otherwise modified from time to time.

 

      The Seller desires to sell, transfer and assign an undivided variable

percentage interest in a pool of receivables, and the Purchasers desire to

acquire such undivided variable percentage interest, as such percentage interest

shall be adjusted from time to time based upon, in part, reinvestment payments

that are made by the Purchasers.

 

     This Agreement amends and restates in its entirety, as of the Closing Date,

the Receivables Purchase Agreement, dated as of February 20, 2002 (as amended,

restated, supplemented or otherwise modified prior to the date hereof, the

"Original Agreement"), among the Seller, the Servicer, the Sub-Servicers, the

Issuer and the Administrator. Notwithstanding the amendment and restatement of

the Original Agreement by this Agreement, (i) the Seller and Servicer shall

continue to be liable to PNC, the Issuer or any other Indemnified Party or

Affected Person (as such terms are defined in the Original Agreement) for fees

and expenses which are accrued and unpaid under the Original Agreement on the

date hereof (collectively, the "Original Agreement Outstanding Amounts") and all

agreements to indemnify such parties in connection with events or conditions

arising or existing prior to the effective date of this Agreement and (ii) the

security interest created under the Original Agreement shall remain in full

force and effect as security for such Original Agreement Outstanding Amounts

until such Original Agreement

 

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Outstanding Amounts shall have been paid in full. Upon the effectiveness of this

Agreement, each reference to the Original Agreement in any other document,

instrument or agreement shall mean and be a reference to this Agreement. Nothing

contained herein, unless expressly herein stated to the contrary, is intended to

amend, modify or otherwise affect any other instrument, document or agreement

executed and/or delivered in connection with the Original Agreement.

 

     In consideration of the mutual agreements, provisions and covenants

contained herein, the parties hereto agree as follows:

 

                                   ARTICLE I.

                       AMOUNTS AND TERMS OF THE PURCHASES

 

     Section 1.1 Purchase Facility.

 

     (a) On the terms and conditions hereinafter set forth, the Issuer hereby

agrees to purchase, and make reinvestments in and, if so requested in accordance

with and subject to the terms of this Agreement, the LC Bank hereby agrees to

issue Letters of Credit in return for (and each LC Participant hereby severally

agrees to make participation advances in connection with any draws under such

Letters of Credit equal to such LC Participant's Pro Rata Share thereof),

undivided variable percentage ownership interests with regard to the Purchased

Interest from the Seller from time to time from the date hereof to the Facility

Termination Date.

 

     The Seller may, subject to the remainder of this paragraph (a) and the

other requirements and conditions herein, use the proceeds of any purchase or

reinvestment by the Issuer, hereunder, to satisfy its Reimbursement Obligation

to the LC Bank and the LC Participants (ratably, based on the outstanding

amounts funded by the LC Bank and each such LC Participant) pursuant to Section

1.14 below.

 

     In addition, in the event the Seller fails to reimburse the LC Bank and

each applicable LC Participant for the full amount of any drawing under any

Letter of Credit on the applicable Drawing Date (out of its own funds available

therefor, or otherwise, at such time), pursuant to Section 1.14, then the Seller

shall, automatically (and without the requirement of any further action on the

part of any Person hereunder), be deemed to have requested a new purchase from

the Issuer on such date, pursuant to the terms hereof, in an amount equal to the

amount of such Reimbursement Obligation at such time. Subject to the limitations

on funding set forth in the remainder of this paragraph (a), below (and

otherwise herein), the Issuer shall fund such deemed purchase request and

deliver the proceeds thereof directly to the Administrator to be immediately

distributed (ratably) to the LC Bank and the applicable LC Participants in

satisfaction of the Seller's Reimbursement Obligation pursuant to Section 1.14,

below, to the extent of the amounts permitted to be funded by the Issuer, at

such time, hereunder.

 

     Notwithstanding anything set forth in this paragraph (a), or otherwise

herein to the contrary, under no circumstances shall any Purchaser make any such

purchase or reinvestment (including, without limitation, any deemed purchases by

the Issuer pursuant to the immediately preceding paragraphs of this Section

1.1(a)), or issue any Letter of Credit, as applicable, if, after giving effect

to such purchase, reinvestment or issuance, the (i) aggregate outstanding amount

of

 

 

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the Capital funded by such Purchaser shall exceed (A) the Commitment set forth

opposite its name on the signature page hereto, as the same may be reduced from

time to time pursuant to Section 1.1(b), minus (B) in the case of any LC

Participant such LC Participant's Pro Rata Share of the face amount of any

outstanding Letters of Credit or (ii) the aggregate outstanding Capital plus the

LC Participation Amount would exceed the Purchase Limit.

 

     (b) The Seller may, upon at least 30 days' written notice to the

Administrator, terminate the purchase facility provided in this Section in whole

or, upon at least 10 Business Days' written notice, from time to time,

irrevocably reduce in part the unused portion of the Purchase Limit; provided,

that each partial reduction shall be in the amount of at least $5,000,000, or an

integral multiple of $1,000,000 in excess thereof, and that, unless terminated

in whole, the Purchase Limit shall in no event be reduced below $50,000,000.

Each reduction in the Commitments hereunder shall be made ratably among the LC

Participants in accordance with their respective Pro Rata Shares. The

Administrator shall promptly advise the Purchasers of any notice pursuant to

this Section 1.1(b); it being understood that (in addition to and without

limiting any other requirements for termination, prepayment and/or the funding

of the LC Collateral Account hereunder) no such termination or reduction shall

be effective unless and until (i) in the case of a termination, the amount on

deposit in the LC Collateral Account is at least equal to the then outstanding

LC Participation Amount and (ii) in the case of a partial reduction, the amount

on deposit in the LC Collateral Account is at least equal to the difference

between the then outstanding LC Participation Amount and the Purchase Limit as

so reduced by such partial reduction.

 

     Section 1.2 Making Purchases.

 

     (a) Each Funded Purchase (but not reinvestment) of undivided percentage

ownership interests with regard to the Purchased Interest hereunder shall be

made upon the Seller's irrevocable written notice in the form of Annex B (the

"Purchase Notice") delivered to the Administrator in accordance with Section 5.2

(which notice must be received by the Administrator before 11:00 a.m., New York

City time) at least two Business Days before the requested purchase date, which

notice shall specify: (A) the amount requested to be paid to the Seller (such

amount, which shall not be less than $300,000 and shall be in integral multiples

of $100,000, being the Capital relating to the undivided percentage ownership

interest then being purchased), (B) the date of such Funded Purchase (which

shall be a Business Day), and (C) the pro forma calculation of the Purchased

Interest after giving effect to the increase in Capital.

 

     (b) On the date of each Funded Purchase (but not reinvestment) of undivided

percentage ownership interests with regard to the Purchased Interest hereunder,

the Issuer shall, upon satisfaction of the applicable conditions set forth in

Exhibit II, make available to the Seller in same day funds, at Wachovia Bank,

N.A., account number 2000014815108, ABA No. 051400549, an amount equal to the

Capital relating to the undivided percentage ownership interest then being

purchased.

 

     (c) Effective on the date of each Funded Purchase pursuant to this Section

and each reinvestment pursuant to Section 1.4, the Seller hereby sells and

assigns to the Administrator for the benefit of the Purchasers (ratably based on

the sum of the Capital plus the LC Participation

 

 

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Amount outstanding at such time) an undivided percentage ownership interest in:

(i) each Pool Receivable then existing, (ii) all Related Security with respect

to such Pool Receivables, and (iii) all Collections with respect to, and other

proceeds of, such Pool Receivables and Related Security.

 

     (d) To secure all of the Seller's obligations (monetary or otherwise) under

this Agreement and the other Transaction Documents to which it is a party,

whether now or hereafter existing or arising, due or to become due, direct or

indirect, absolute or contingent, the Seller hereby grants to the Administrator

(for the benefit of the Purchasers and their assigns) a security interest in all

of the Seller's right, title and interest (including any undivided interest of

the Seller) in, to and under all of the following, whether now or hereafter

owned, existing or arising: (i) all Pool Receivables, (ii) all Related Security

with respect to such Pool Receivables, (iii) all Collections with respect to

such Pool Receivables, (iv) the Lock-Box Accounts and all amounts on deposit

therein, and all certificates and instruments, if any, from time to time

evidencing such Lock-Box Accounts and amounts on deposit therein, (v) all rights

(but none of the obligations) of the Seller under the Sale Agreement and the

Contribution Agreement, (vi) the Servicer Note, and (vii) all proceeds of, and

all amounts received or receivable under any or all of, the foregoing

(collectively, the "Pool Assets"). The Administrator (on behalf of the

Purchasers and their assigns) shall have, with respect to the Pool Assets, and

in addition to all the other rights and remedies available to the Administrator,

all the rights and remedies of a secured party under any applicable UCC.

 

     (e) Whenever the LC Bank issues a Letter of Credit pursuant to Section 1.12

hereof, each LC Participant shall, automatically and without further action of

any kind upon the effective date of issuance of such Letter of Credit, have

irrevocably deemed to make a Funded Purchase hereunder in the event that such

Letter of Credit is subsequently drawn and such drawn amount shall not have been

reimbursed pursuant to Section 1.14 upon such draw. All such Funded Purchases

shall comprise Base Rate Portions of Capital in an amount equal to the amount of

such draw (without regard to the numerical requirements set forth in Section

1.2(a)), shall be made ratably by the LC Participants according to their Pro

Rata Shares and shall accrue Discount. In the event that any Letter of Credit

expires or is surrendered without being drawn (in whole or in part) then, in

such event, the foregoing commitment to make Funded Purchases shall expire with

respect to such Letter of Credit and the LC Participation Amount shall

automatically reduce by the amount of the Letter of Credit which is no longer

outstanding.

 

     Section 1.3 Purchased Interest Computation.

 

          The Purchased Interest shall be initially computed on the date of the

initial purchase hereunder. Thereafter, until the Facility Termination Date, the

Purchased Interest shall be automatically recomputed (or deemed to be

recomputed) on each Business Day other than a Termination Day. The Purchased

Interest as computed (or deemed recomputed) as of the day before the Facility

Termination Date shall thereafter remain constant. The Purchased Interest shall

become zero when the Capital thereof and Discount thereon shall have been paid

in full, the LC Participation Amount has been cash collateralized in full, all

the amounts owed by the Seller and the Servicer hereunder to the Issuer, the LC

Bank, the LC Participants, the Administrator and

 

 

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any other Indemnified Party or Affected Person are paid in full, and the

Servicer shall have received the accrued Servicing Fee thereon.

 

     Section 1.4 Settlement Procedures.

 

     (a) The collection of the Pool Receivables shall be administered by the

Servicer in accordance with this Agreement. The Seller shall provide to the

Servicer on a timely basis all information needed for such administration,

including notice of the occurrence of any Termination Day and current

computations of the Purchased Interest.

 

     (b) The Servicer shall, on each day on which Collections of Pool

Receivables are received (or deemed received) by the Seller or the Servicer:

 

               (i) set aside and hold in trust (and shall, at the request of the

Administrator, segregate in a separate account approved by the Administrator)

for the Administrator (for the benefit of the Purchasers), out of the percentage

of Collections represented by the Purchased Interest, first, an amount equal to

the Discount accrued through such day for each Portion of Capital and not

previously set aside, second, an amount equal to the fees set forth in the Fee

Letter accrued and unpaid through such day, and third, to the extent funds are

available therefor, an amount equal to the Purchasers' Share of the Servicing

Fee accrued through such day and not previously set aside,

 

               (ii) subject to Section 1.4(f), if such day is not a Termination

Day, remit to the Seller, on behalf of the Purchasers, the remainder of the

percentage of Collections represented by the Purchased Interest (to the extent

representing a return on Capital); such remainder shall be automatically

reinvested in Pool Receivables, and in the Related Security, Collections and

other proceeds with respect thereto; provided, however, that if the Purchased

Interest would exceed 100%, then the Servicer shall not remit such remainder to

the Seller, but shall set aside and hold in trust for the ratable benefit of the

Purchasers (and shall, at the request of the Administrator, segregate in a

separate account approved by the Administrator) a portion of such Collections

that, together with the other Collections set aside pursuant to this paragraph,

shall equal the amount necessary to reduce the Purchased Interest to 100%,

 

               (iii) if such day is a Termination Day, set aside, segregate and

hold in trust for the benefit of the Purchasers (and shall, at the request of

the Administrator, segregate in a separate account approved by the

Administrator) the entire remainder of the Purchasers' Share of the Collections;

provided, that if amounts are set aside and held in trust on any Termination Day

of the type described in clause (a) of the definition of "Termination Day" and,

thereafter, the conditions set forth in Section 2 of Exhibit II are satisfied or

waived by the Administrator, such previously set-aside amounts shall, to the

extent representing a return on Capital, be reinvested in accordance with clause

(ii) on the day of such subsequent satisfaction or waiver of conditions, and

 

               (iv) release to the Seller (subject to Section 1.4(f)) for its

own account any Collections in excess of: (w) amounts required to be reinvested

in accordance with clause (ii) or the proviso to clause (iii) plus (x) the

amounts that are required to be set aside pursuant to

 

 

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clause (i), the proviso to clause (ii) and clause (iii) plus (y) the Seller's

Share of the Servicing Fee accrued and unpaid through such day and all

reasonable and appropriate out-of-pocket costs and expenses of the Servicer for

servicing, collecting and administering the Pool Receivables plus (z) all other

amounts owed by the Seller under this Agreement to the Issuer, the LC Bank, any

LC Participant, the Administrator, and any other Indemnified Party or Affected

Person.

 

     (c) The Servicer shall deposit into the Administration Account (or such

other account designated by the Administrator), on each Settlement Date,

Collections held for the Purchasers pursuant to clause (b)(i) or (f) plus the

amount of Collections then held for the Purchasers pursuant to clauses (b)(ii)

and (iii) of Section 1.4; provided, that if Peabody or an Affiliate thereof is

the Servicer, such day is not a Termination Day and the Administrator has not

notified Peabody (or such Affiliate) that such right is revoked, Peabody (or

such Affiliate) may retain the portion of the Collections set aside pursuant to

clause (b)(i) that represents the Purchasers' Share of the Servicing Fee. On the

last day of each Settlement Period, the Administrator will notify the Servicer

by facsimile of the amount of Discount accrued with respect to each Portion of

Capital during such Settlement Period or portion thereof.

 

     (d) Upon receipt of funds deposited into the Administration Account

pursuant to clause (c), the Administrator shall cause such funds to be

distributed as follows:

 

               (i) if such distribution occurs on a day that is not a

Termination Day and the Purchased Interest does not exceed 100%, first to the

Purchasers ratably (based on their respective Portions of Capital funded

thereby) in payment in full of all accrued Discount and fees (other than

Servicing Fees) with respect to each Portion of Capital, and second, if the

Servicer has set aside amounts in respect of the Servicing Fee pursuant to

clause (b)(i) and has not retained such amounts pursuant to clause (c), to the

Servicer (payable in arrears on each Settlement Date) in payment in full of the

Purchasers' Share of accrued Servicing Fees so set aside, and

 

                (ii) if such distribution occurs on a Termination Day or on a day

when the Purchased Interest exceeds 100%, first to the Purchasers ratably (based

on their respective Portions of Capital funded thereby) in payment in full of

all accrued Discount with respect to each Portion of Capital, second to the

Purchasers ratably (based on their respective Portions of Capital funded

thereby) in payment in full of Capital (or, if such day is not a Termination

Day, the amount necessary to reduce the Purchased Interest to 100%), third, to

the LC Collateral Account for the benefit of the LC Bank and the LC

Participants, the amount necessary to cash collateralize the LC Participation

Amount until the amount of cash collateral held in such LC Collateral Account

equals the aggregate outstanding amount of the LC Participation Amount, fourth,

to the Servicer in payment in full of all accrued Servicing Fees, and fifth, if

the Capital and accrued Discount with respect to each Portion of Capital have

been reduced to zero, and all accrued Servicing Fees payable to the Servicer

have been paid in full, to the Purchasers ratably (based on their respective

Portions of Capital funded thereby), the Administrator and any other Indemnified

Party or Affected Person in payment in full of any other amounts owed thereto by

the Seller hereunder.

 

 

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After the Capital, Discount, fees payable pursuant to the Fee Letter and

Servicing Fees with respect to the Purchased Interest, and any other amounts

payable by the Seller and the Servicer to the Purchasers, the Administrator or

any other Indemnified Party or Affected Person hereunder, have been paid in

full, and (on and after a Termination Day) after the LC Participation Amount has

been cash collateralized in full, all additional Collections with respect to the

Purchased Interest shall be paid to the Seller for its own account.

 

     (e) For the purposes of this Section 1.4:

 

               (i) if on any day the Outstanding Balance of any Pool Receivable

is reduced or adjusted as a result of any defective, rejected, returned,

repossessed or foreclosed goods or services, or any revision, cancellation,

allowance, rebate, discount or other adjustment made by the Seller or any

Affiliate of the Seller, or any setoff or dispute between the Seller or any

Affiliate of the Seller and an Obligor, the Seller shall be deemed to have

received on such day a Collection of such Pool Receivable in the amount of such

reduction or adjustment;

 

               (ii) if on any day any of the representations or warranties in

Section l(g) or (n) of Exhibit III is not true with respect to any Pool

Receivable, the Seller shall be deemed to have received on such day a Collection

of such Pool Receivable in full;

 

                (iii) except as provided in clause (i) or (ii), or as otherwise

required by applicable law or the relevant Contract, all Collections received

from an Obligor of any Receivable shall be applied to the Receivables of such

Obligor in the order of the age of such Receivables, starting with the oldest

such Receivable, unless such Obligor designates in writing its payment for

application to specific Receivables; and

 

               (iv) if and to the extent the Administrator or any Purchaser

shall be required for any reason to pay over to an Obligor (or any trustee,

receiver, custodian or similar official in any Insolvency Proceeding) any amount

received by it hereunder, such amount shall be deemed not to have been so

received by the Administrator or such Purchaser but rather to have been retained

by the Seller and, accordingly, the Administrator or such Purchaser, as the case

may be, shall have a claim against the Seller for such amount, payable when and

to the extent that any distribution from or on behalf of such Obligor is made in

respect thereof

 

     (f) If at any time the Seller shall wish to cause the reduction of Capital

(but not to commence the liquidation, or reduction to zero, of the entire

Capital of the Purchased Interest), the Seller may do so as follows:

 

               (i) the Seller shall give the Administrator and the Servicer

written notice in the form of Annex C (the "Paydown Notice") (A) at least two

Business Days' prior to the date of such reduction for any reduction of Capital

less than or equal to $20,000,000 and (B) at least five Business Days' prior to

the date of such reduction for any reduction of Capital greater than

$20,000,000, in each case such notice shall include the amount of such reduction

and the proposed date on which such reduction shall commence;

 

 

                                        7

 

<PAGE>

 

               (ii) on the proposed date of the commencement of such reduction

and on each day thereafter, the Servicer shall cause Collections not to be

reinvested until the amount thereof not so reinvested shall equal the desired

amount of reduction; and

 

               (iii) the Servicer shall hold such Collections in trust for the

Purchaser, for payment to the Administrator on the next Settlement Date

immediately following the current Settlement Period or such other date approved

by the Administrator, and Capital shall be deemed reduced in the amount to be

paid to the Administrator only when in fact finally so paid; provided, that the

amount of any such reduction shall be not less than $300,000 and shall be an

integral multiple of $100,000.

 

     Section 1.5 Fees.

 

          The Seller shall pay to the Administrator for the benefit of the

Issuer, the LC Bank and each LC Participant, certain fees in the amounts and on

the dates set forth in that certain amended and restated fee letter agreement,

dated the date hereof, among Peabody, the Seller and the Administrator (as such

letter agreement may be amended, supplemented or otherwise modified from time to

time, the "Fee Letter").

 

      Section 1.6 Payments and Computations, Etc.

 

     (a) All amounts to be paid or deposited by the Seller or the Servicer

hereunder shall be made without reduction for offset or counterclaim and shall

be paid or deposited no later than noon (New York City time) on the day when due

in same day funds to the Administration Account. All amounts received after noon

(New York City time) will be deemed to have been received on the next Business

Day.

 

     (b) The Seller or the Servicer, as the case may be, shall, to the extent

permitted by law, pay interest on any amount not paid or deposited by the Seller

or the Servicer, as the case may be, when due hereunder, at an interest rate

equal to 2.0% per annum above the Base Rate, payable on demand.

 

     (c) All computations of interest under clause (b) and all computations of

Discount, fees and other amounts hereunder shall be made on the basis of a year

of 360 (or 365 or 366, as applicable, with respect to Discount or other amounts

calculated by reference to the Base Rate) days for the actual number of days

elapsed. Whenever any payment or deposit to be made hereunder shall be due on a

day other than a Business Day, such payment or deposit shall be made on the next

Business Day and such extension of time shall be included in the computation of

such payment or deposit.

 

     Section 1.7 Increased Costs.

 

     (a) If the Administrator, the LC Bank, the Issuer, any Purchaser, any

Liquidity Bank, any other Program Support Provider or any of their respective

Affiliates (each an "Affected Person") reasonably determines that the existence

of or compliance with: (i) any law or regulation or any change therein or in the

interpretation or application thereof, in each case

 

 

                                        8

 

<PAGE>

 

adopted, issued or occurring after the date hereof, or (ii) any request,

guideline or directive from any central bank or other Governmental Authority

(whether or not having the force of law) issued or occurring after the date of

this Agreement, affects or would affect the amount of capital required or

expected to be maintained by such Affected Person, and such Affected Person

determines that the amount of such capital is increased by or based upon the

existence of any commitment to make purchases of (or otherwise to maintain the

investment in) Pool Receivables or issue any Letter of Credit related to this

Agreement or any related liquidity facility, credit enhancement facility and

other commitments of the same type, then, upon demand by such Affected Person

(with a copy to the Administrator), the Seller shall promptly pay to the

Administrator, for the account of such Affected Person, from time to time as

specified by such Affected Person, additional amounts sufficient to compensate

such Affected Person in the light of such circumstances, to the extent that such

Affected Person reasonably determines such increase in capital to be allocable

to the existence of any of such commitments. A certificate as to such amounts

submitted to the Seller and the Administrator by such Affected Person shall be

conclusive and binding for all purposes, absent manifest error.

 

     (b) If, due to either: (i) the introduction of or any change in or in the

interpretation of any law or regulation or (ii) compliance with any guideline or

request from any central bank or other Governmental Authority (whether or not

having the force of law), there shall be any increase in the cost to any

Affected Person of agreeing to purchase or purchasing, or maintaining the

ownership of, the Purchased Interest in respect of which Discount is computed by

reference to the Euro-Rate, then, upon demand by such Affected Person, the

Seller shall promptly pay to such Affected Person, from time to time as

specified by such Affected Person, additional amounts sufficient to compensate

such Affected Person for such increased costs. A certificate as to such amounts

submitted to the Seller and the Administrator by such Affected Person shall be

conclusive and binding for all purposes, absent manifest error.

 

     (c) If such increased costs affect the related Affected Person's portfolio

of financing transactions, such Affected Person shall use reasonable averaging

and attribution methods to allocate such increased costs to the transactions

contemplated by this Agreement.

 

      Section 1.8 Requirements of Law.

 

          If any Affected Person reasonably determines that the existence of or

compliance with: (a) any law or regulation or any change therein or in the

interpretation or application thereof, in each case adopted, issued or occurring

after the date hereof, or (b) any request, guideline or directive from any

central bank or other Governmental Authority (whether or not having the force of

law) issued or occurring after the date of this Agreement:

 

               (i) does or shall subject such Affected Person to any tax of any

kind whatsoever with respect to this Agreement, any increase in the Purchased

Interest or in the amount of Capital relating thereto, or does or shall change

the basis of taxation of payments to such Affected Person on account of

Collections, Discount or any other amounts payable hereunder (excluding taxes

imposed on the overall or branch pre-tax net income of such Affected Person, and

franchise taxes imposed on such Affected Person, by the jurisdiction under the

laws of which such Affected Person is organized or otherwise is considered doing

business (unless the

 

 

                                        9

 

<PAGE>

 

Affected Person would not be considered doing business in such jurisdiction, but

for having entered into, or engaged in the transactions in connection with, this

Agreement or any other Transaction Document) or a political subdivision

thereof),

 

               (ii) does or shall impose, modify or hold applicable any reserve,

special deposit, compulsory loan or similar requirement against assets held by,

or deposits or other liabilities in or for the account of, purchases, advances

or loans by, or other credit extended by, or any other acquisition of funds by,

any office of such Affected Person that are not otherwise included in the

determination of the Euro-Rate or the Base Rate hereunder, or

 

               (iii) does or shall impose on such Affected Person any other

condition, and the result of any of the foregoing is: (A) to increase the cost

to such Affected Person of agreeing to purchase or purchasing or maintaining the

ownership of undivided percentage ownership interests with regard to, or issuing

any Letter of Credit in respect of, the Purchased Interest (or interests

therein) or any Portion of Capital, or (B) to reduce any amount receivable

hereunder (whether directly or indirectly), then, in any such case, upon demand

by such Affected Person, the Seller shall promptly pay to such Affected Person

additional amounts necessary to compensate such Affected Person for such

additional cost or reduced amount receivable. All such amounts shall be payable

as incurred. A certificate from such Affected Person to the Seller and the

Administrator certifying, in reasonably specific detail, the basis for,

calculation of, and amount of such additional costs or reduced amount receivable

shall be conclusive and binding for all purposes, absent manifest error;

provided, however, that no Affected Person shall be required to disclose any

confidential or tax planning information in any such certificate.

 

     Section 1.9 Inability to Determine Euro-Rate.

 

     (a) If the Administrator determines before the first day of any Settlement

Period (which determination shall be final and conclusive) that, by reason of

circumstances affecting the interbank eurodollar market generally, deposits in

dollars (in the relevant amounts for such Settlement Period) are not being

offered to banks in the interbank eurodollar market for such Settlement Period,

or adequate means do not exist for ascertaining the Euro-Rate for such

Settlement Period, then the Administrator shall give notice thereof to the

Seller. Thereafter, until the Administrator notifies the Seller that the

circumstances giving rise to such suspension no longer exist, (a) no Portion of

Capital shall be funded at the Alternate Rate determined by reference to the

Euro-Rate and (b) the Discount for any outstanding Portions of Capital then

funded at the Alternate Rate determined by reference to the Euro-Rate shall, on

the last day of the then current Settlement Period, be converted to the

Alternate Rate determined by reference to the Base Rate.

 

     (b) If, on or before the first day of any Settlement Period, the

Administrator shall have been notified by any Affected Person that, such

Affected Person has determined (which determination shall be final and

conclusive) that, any enactment, promulgation or adoption of or any change in

any applicable law, rule or regulation, or any change in the interpretation or

administration thereof by a governmental authority, central bank or comparable

agency charged with the interpretation or administration thereof, or compliance

by such Affected Person with any guideline, request or directive (whether or not

having the force of law) of any such authority,

 

 

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<PAGE>

 

central bank or comparable agency shall make it unlawful or impossible for such

Affected Person to fund or maintain any Portion of Capital at the Alternate Rate

and based upon the Euro-Rate, the Administrator shall notify the Seller thereof.

Upon receipt of such notice, until the Administrator notifies the Seller that

the circumstances giving rise to such determination no longer apply, (a) no

Portion of Capital shall be funded at the Alternate Rate determined by reference

to the Euro-Rate and (b) the Discount for any outstanding Portions of Capital

then funded at the Alternate Rate determined by reference to the Euro-Rate shall

be converted to the Alternate Rate determined by reference to the Base Rate

either (i) on the last day of the then current Settlement Period if such

Affected Person may lawfully continue to maintain such Portion of Capital at the

Alternate Rate determined by reference to the Euro-Rate to such day, or (ii)

immediately, if such Affected Person may not lawfully continue to maintain such

Portion of Capital at the Alternate Rate determined by reference to the

Euro-Rate to such day.

 

     Section 1.10 Extension of the Liquidity Termination Date and Scheduled

     Commitment Termination Date.

 

          Provided that no Termination Event or Unmatured Termination Event

exists and is continuing, Seller may request an extension of the Purchase

Termination Date under the Liquidity Agreement and the Scheduled Commitment

Termination Date hereunder (each such date, as used herein, respectively, the

"Liquidity Termination Date") by submitting a request for an extension (each, an

"Extension Request") to the Administrator no more than 210 days prior to the

Liquidity Termination Date then in effect. Each Extension Request must specify

the new Liquidity Termination Date requested by Seller and the date (which must

be at least 30 days after the Extension Request is delivered to the

Administrator) as of which the Administrator and the Liquidity Banks and/or LC

Participants, as applicable, must respond to the Extension Request (the

"Response Date"). The new Liquidity Termination Date shall, in any case, be no

more than 364 days after the Response Date, including the Response Date as one

of the days in the calculation of the days elapsed. Promptly upon receipt of an

Extension Request, the Administrator shall notify the Liquidity Banks and/or LC

Participants, as applicable, of the contents thereof and shall request each

Liquidity Bank and/or LC Participant, as applicable, to approve the Extension

Request. Each Liquidity Bank and/or LC Participant, as applicable, approving the

Extension Request shall deliver its written approval to the Administrator no

later than the Response Date (it being understood that the Liquidity Banks

and/or LC Participants, as applicable, may accept or decline such Extension

Request in their sole discretion and on such terms as they may elect), whereupon

the Administrator shall notify Seller within one (1) Business Day thereafter as

to whether all Liquidity Banks and/or LC Participants, as applicable, have

approved the Extension Request. In the event that all Liquidity Banks and/or LC

Participants, as applicable, shall approve such Extension Request, the Liquidity

Banks and/or LC Participants, as applicable, shall enter into such documents as

the Liquidity Banks and/or LC Participants, as applicable, may deem necessary or

appropriate to reflect such extension, all reasonable costs and expenses

incurred by the Liquidity Banks and/or LC Participants, as applicable, and the

Administrator in connection therewith (including reasonable Attorneys' Costs)

shall be paid by the Seller, the Administrator shall promptly notify the Seller

and the Liquidity Banks and/or LC Participants, as applicable, of the new

Liquidity Termination Date, and the Seller shall pay to the Administrator for

the account of each of the Liquidity Banks and/or LC Participants, as

applicable, a fully-earned and non-refundable extension fee of $2,500.

 

 

                                        11

 

<PAGE>

 

In the event that the Liquidity Banks and/or LC Participants, as applicable,

decline the Extension Request, the Administrator shall so notify the Seller of

such determination; provided, however, that the failure of the Administrator to

so notify the Seller of the determination to decline any Extension Request shall

not affect the understanding and agreement that the Liquidity Banks and/or LC

Participants, as applicable, shall be deemed to have refused to grant such

Extension Request in the event that the Administrator fails to affirmatively

notify the Seller, in writing, of the approval of such Extension Request.

 

     Section 1.11 Letters of Credit.

 

          Subject to the terms and conditions hereof, the LC Bank shall issue or

cause the issuance of standby Letters of Credit ("Letters of Credit") on behalf

of Seller (and, if applicable, on behalf of, or for the account of, the Servicer

or any Sub-Servicer); provided, however, that the LC Bank will not be required

to issue or cause to be issued any Letters of Credit to the extent that the

issuance of such Letters of Credit would then cause the sum of (i) the

outstanding Capital plus (ii) the LC Participation Amount to exceed the Purchase

Limit. The LC Participation Amount shall not exceed in the aggregate, at any

time, the aggregate of the Commitments of the LC Bank and the LC Participants.

All amounts drawn upon Letters of Credit shall accrue Discount. Letters of

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

 

     Section 1.12 Issuance of Letters of Credit.

 

     (a) The Seller may request the LC Bank, upon two (2) Business Days' prior

written notice submitted on or before 11:00 a.m., New York time, to issue a

Letter of Credit by delivering to the Administrator, the LC Bank's form of

Letter of Credit Application (the "Letter of Credit Application"), substantially

in the form of Annex E attached hereto completed to the satisfaction of the

Administrator and the LC Bank; and, such other certificates, documents and other

papers and information as the Administrator may reasonably request. The Seller

also has the right to give instructions and make agreements with respect to any

Letter of Credit Application and the disposition of documents, and to agree with

the Administrator upon any amendment, extension or renewal of any Letter of

Credit.

 

     (b) Each Letter of Credit shall, among other things, (i) provide for the

payment of sight drafts or other written demands for payment when presented for

honor thereunder in accordance with the terms thereof and when accompanied by

the documents described therein and (ii) have an expiry date not later than

twelve (12) months after such Letter of Credit's date of issuance and in no

event later than the Facility Termination Date. Each Letter of Credit shall be

subject either to the Uniform Customs and Practice for Documentary Credits (1993

Revision), International Chamber of Commerce Publication No. 500, and any

amendments or revisions thereof adhered to by the LC Bank ("UCP 500") or the

International Standby Practices (ISP98-International Chamber of Commerce

Publication Number 590), and any amendments or revisions thereof adhered to by

the LC Bank (the "ISP98 Rules"), as determined by the LC Bank.

 

     (c) The Administrator shall promptly notify the LC Bank , at its address

for notices hereunder, and each LC Participant of the request by the Seller for

a Letter of Credit hereunder,

 

 

                                       12

 

<PAGE>

 

and shall provide the LC Bank with the Letter of Credit Application delivered to

the Administrator by the Seller pursuant to paragraph (a), above, by the close

of business on the day received or if received on a day that is not a Business

Day or on any Business Day after 11:00 a.m. New York time on such day, on the

next Business Day.

 

     Section 1.13 Requirements For Issuance of Letters of Credit.

 

     The Seller shall authorize and direct the LC Bank to name the Seller as the

"Applicant" or "Account Party" of each Letter of Credit.

 

     Section 1.14 Disbursements, Reimbursement.

 

     (a) Immediately upon the issuance of each Letter of Credit, each LC

Participant shall be deemed to, and hereby irrevocably and unconditionally

agrees to, purchase from the LC Bank a participation in such Letter of Credit

and each drawing thereunder in an amount equal to such LC Participant's Pro Rata

Share of the face amount of such Letter of Credit and the amount of such

drawing, respectively.

 

     (b) In the event of any request for a drawing under a Letter of Credit by

the beneficiary or transferee thereof, the LC Bank will promptly notify the

Administrator and the Seller of such request. Provided that it shall have

received such notice, the Seller shall reimburse (such obligation to reimburse

the LC Bank shall sometimes be referred to as a "Reimbursement Obligation") the

LC Bank prior to 12:00 p.m., New York time on each date that an amount is paid

by the LC Bank under any Letter of Credit (each such date, a "Drawing Date") in

an amount equal to the amount so paid by the LC Bank. In the event the Seller

fails to reimburse the LC Bank for the full amount of any drawing under any

Letter of Credit by 12:00 p.m., New York time, on the Drawing Date, the LC Bank

will promptly notify each LC Participant thereof, and the Seller shall be deemed

to have requested that a Funded Purchase be made by the LC Bank and the LC

Participants to be disbursed on the Drawing Date under such Letter of Credit,

subject to the amount of the unutilized portion of the Purchase Limit. Any

notice given by the LC Bank pursuant to this Section may be oral if immediately

confirmed in writing; provided that the lack of such an immediate confirmation

shall not affect the conclusiveness or binding effect of such notice.

 

     (c) Each LC Participant shall upon any notice pursuant to subclause (b)

above make available to the LC Bank an amount in immediately available funds

equal to its Pro Rata Share of the amount of the drawing, whereupon the LC

Participants shall each be deemed to have made a Funded Purchase in that amount.

If any LC Participant so notified fails to make available to the LC Bank the

amount of such LC Participant's Pro Rata Share of such amount by no later than

2:00 p.m., New York time on the Drawing Date, then interest shall accrue on such

LC Participant's obligation to make such payment, from the Drawing Date to the

date on which such LC Participant makes such payment (i) at a rate per annum

equal to the Federal Funds Rate during the first three days following the

Drawing Date and (ii) at a rate per annum equal to the rate applicable to

Capital on and after the fourth day following the Drawing Date. The LC Bank will

promptly give notice of the occurrence of the Drawing Date, but failure of the

LC Bank to give any such notice on the Drawing Date or in sufficient time to

enable any LC Participant to

 

 

                                       13

 

<PAGE>

 

effect such payment on such date shall not relieve such LC Participant from its

obligation under this subclause (c), provided that such LC Participant shall not

be obligated to pay interest as provided in this subclauses (i) and (ii) above

until and commencing from the date of receipt of notice from the LC Bank or the

Administrator of a drawing. Each LC Participant's Commitment shall continue

until the last to occur of any of the following events: (A) the LC Bank ceases

to be obligated to issue or cause to be issued Letters of Credit hereunder; (B)

no Letter of Credit issued hereunder remains outstanding and uncancelled or (C)

all Persons (other than the Seller) have been fully reimbursed for all payments

made under or relating to Letters of Credit.

 

     Section 1.15 Repayment of Participation Advances.

 

     (a) Upon (and only upon) receipt by the LC Bank for its account of

immediately available funds from the Seller (i) in reimbursement of any payment

made by the LC Bank under a Letter of Credit with respect to which any LC

Participant has made a participation advance to the LC Bank, or (ii) in payment

of Discount on the Funded Purchases made or deemed to have been made in

connection with any such draw, the LC Bank will pay to each LC Participant,

ratably (based on the outstanding drawn amounts funded by each such LC

Participant in respect of such Letter of Credit), in the same funds as those

received by the LC Bank; it being understood, that the LC Bank shall retain a

ratable amount of such funds that were not the subject of any payment in respect

of such Letter of Credit by any LC Participant.

 

     (b) If the LC Bank is required at any time to return to the Seller, or to a

trustee, receiver, liquidator, custodian, or any official in any insolvency

proceeding, any portion of the payments made by the Seller to the LC Bank

pursuant to this Agreement in reimbursement of a payment made under the Letter

of Credit or interest or fee thereon, each LC Participant shall, on demand of

the LC Bank, forthwith return to the LC Bank the amount of its Pro Rata Share of

any amounts so returned by the LC Bank plus interest at the Federal Funds Rate.

 

     Section 1.16 Documentation.

 

          The Seller agrees to be bound by the terms of the Letter of Credit

Application and by the LC Bank's interpretations of any Letter of Credit issued

for the Seller and by the LC Bank's written regulations and customary practices

relating to letters of credit, though the LC Bank's interpretation of such

regulations and practices may be different from the Seller's own. In the event

of a conflict between the Letter of Credit Application and this Agreement, this

Agreement shall govern. It is understood and agreed that, except in the case of

gross negligence or willful misconduct by the LC Bank, the LC Bank shall not be

liable for any error, negligence and/or mistakes, whether of omission or

commission, in following the Seller's instructions or those contained in the

Letters of Credit or any modifications, amendments or supplements thereto.

 

     Section 1.17 Determination to Honor Drawing Request.

 

          In determining whether to honor any request for drawing under any

Letter of Credit by the beneficiary thereof, the LC Bank shall be responsible

only to determine that the

 

 

                                       14

 

<PAGE>

 

documents and certificates required to be delivered under such Letter of Credit

have been delivered and that they comply on their face with the requirements of

such Letter of Credit and that any other drawing condition appearing on the face

of such Letter of Credit has been satisfied in the manner so set forth.

 

     Section 1.18 Nature of Participation and Reimbursement Obligations.

 

          Each LC Participant's obligation in accordance with this Agreement to

make participation advances as a result of a drawing under a Letter of Credit,

and the obligations of the Seller to reimburse the LC Bank upon a draw under a

Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be

performed strictly in accordance with the terms of this Article I under all

circumstances, including the following circumstances:

 

               (i) any set-off, counterclaim, recoupment, defense or other right

which such LC Participant may have against the LC Bank, the Administrator, the

Issuer, the Seller or any other Person for any reason whatsoever;

 

               (ii) the failure of the Seller or any other Person to comply with

the conditions set forth in this Agreement for the making of a purchase,

reinvestments, requests for Letters of Credit or otherwise, it being

acknowledged that such conditions are not required for the making of

participation advances hereunder;

 

               (iii) any lack of validity or enforceability of any Letter of

Credit;

 

               (iv) any claim of breach of warranty that might be made by the

Seller, the LC Bank or any LC Participant against the beneficiary of a Letter of

Credit, or the existence of any claim, set-off, defense or other right which the

Seller, the LC Bank or any LC Participant may have at any time against a

beneficiary, any successor beneficiary or any transferee of any Letter of Credit

or the proceeds thereof (or any Persons for whom any such transferee may be

acting), the LC Bank, any LC Participant, the Issuer or any other Person,

whether in connection with this Agreement, the transactions contemplated herein

or any unrelated transaction (including any underlying transaction between the

Seller or any Subsidiaries of the Seller or any Affiliates of the Seller and the

beneficiary for which any Letter of Credit was procured);

 

               (v) the lack of power or authority of any signer of, or lack of

validity, sufficiency, accuracy, enforceability or genuineness of, any draft,

demand, instrument, certificate or other document presented under any Letter of

Credit, or any such draft, demand, instrument, certificate or other document

proving to be forged, fraudulent, invalid, defective or insufficient in any

respect or any statement therein being untrue or inaccurate in any respect, even

if the Administrator or the LC Bank has been notified thereof;

 

               (vi) payment by the LC Bank under any Letter of Credit against

presentation of a demand, draft or certificate or other document which does not

comply with the terms of such Letter of Credit other than as a result of the

gross negligence or willful misconduct of the LC Bank;

 

 

                                        15

 

<PAGE>

 

               (vii) the solvency of, or any acts or omissions by, any

beneficiary of any Letter of Credit, or any other Person having a role in any

transaction or obligation relating to a Letter of Credit, or the existence,

nature, quality, quantity, condition, value or other characteristic of any

property or services relating to a Letter of Credit;

 

               (viii) any failure by the LC Bank or any of the LC Bank's

Affiliates to issue any Letter of Credit in the form requested by the Seller,

unless the LC Bank has received written notice from the Seller of such failure

within three Business Days after the LC Bank shall have furnished the Seller a

copy of such Letter of Credit and such error is material and no drawing has been

made thereon prior to receipt of such notice;

 

               (ix) any Material Adverse Effect on the Seller, any Originator or

any Affiliates thereof;

 

               (x) any breach of this Agreement or any Transaction Document by

any party thereto;

 

                (xi) the occurrence or continuance of an Insolvency Proceeding

with respect to the Seller, any Originator or any Affiliate thereof;

 

               (xii) the fact that a Termination Event or an Unmatured

Termination Event shall have occurred and be continuing;

 

               (xiii) the fact that this Agreement or the obligations of Seller

or Servicer hereunder shall have been terminated; and

 

               (xiv) any other circumstance or happening whatsoever, whether or

not similar to any of the foregoing.

 

     Nothing in this Section 1.18 shall relieve the LC Bank from liability for

its gross negligence or willful misconduct, as determined by a final

non-appealable judgment of a court of competent jurisdiction.

 

     Section 1.19 Indemnity.

 

           In addition to other amounts payable hereunder, the Seller hereby

agrees to protect, indemnify, pay and save harmless the Administrator, the LC

Bank, each LC Participant and any of the LC Bank's Affiliates that have issued a

Letter of Credit from and against any and all claims, demands, liabilities,

damages, taxes, penalties, interest, judgments, losses, costs, charges and

expenses (including Attorney Costs) which the Administrator, the LC Bank, any LC

Participant or any of their respective Affiliates may incur or be subject to as

a consequence, direct or indirect, of the issuance of any Letter of Credit,

other than as a result of (a) the gross negligence or willful misconduct of the

party to be indemnified as determined by a final judgment of a court of

competent jurisdiction or (b) the wrongful dishonor by the LC Bank of a proper

demand for payment made under any Letter of Credit, except if such dishonor

resulted from any act or omission, whether rightful or wrongful, of any present

or future de

 

 

                                        16

 

<PAGE>

 

jure or de facto Governmental Authority (all such acts or omissions herein

called "Governmental Acts").

 

     Section 1.20 Liability for Acts and Omissions.

 

          As between the Seller, on the one hand, and the Administrator, the LC

Bank, the LC Participants and the Issuer, on the other, the Seller assumes all

risks of the acts and omissions of, or misuse of the Letters of Credit by, the

respective beneficiaries of such Letters of Credit. In furtherance and not in

limitation of the respective foregoing, none of the Administrator, the LC Bank,

the LC Participants or the Issuer shall be responsible for: (i) the form,

validity, sufficiency, accuracy, genuineness or legal effect of any document

submitted by any party in connection with the application for an issuance of any

such Letter of Credit, even if it should in fact prove to be in any or all

respects invalid, insufficient, inaccurate, fraudulent or forged (even if the LC

Bank shall have been notified thereof); (ii) the validity or sufficiency of any

instrument transferring or assigning or purporting to transfer or assign any

such Letter of Credit or the rights or benefits thereunder or proceeds thereof,

in whole or in part, which may prove to be invalid or ineffective for any

reason; (iii) the failure of the beneficiary of any such Letter of Credit, or

any other party to which such Letter of Credit may be transferred, to comply

fully with any conditions required in order to draw upon such Letter of Credit

or any other claim of the Seller against any beneficiary of such Letter of

Credit, or any such transferee, or any dispute between or among the Seller and

any beneficiary of any Letter of Credit or any such transferee; (iv) errors,

omissions, interruptions or delays in transmission or delivery of any messages,

by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;

(v) errors in interpretation of technical terms; (vi) any loss or delay in the

transmission or otherwise of any document required in order to make a drawing

under any such Letter of Credit or of the proceeds thereof; (vii) the

misapplication by the beneficiary of any such Letter of Credit of the proceeds

of any drawing under such Letter of Credit; or (viii) any consequences arising

from causes beyond the control of the Administrator, the LC Bank, the LC

Participants and the Issuer, including any Governmental Acts, and none of the

above shall affect or impair, or prevent the vesting of, any of the LC Bank's

rights or powers hereunder. Nothing in the preceding sentence shall relieve the

LC Bank from liability for its gross negligence or willful misconduct, as

determined by a final non-appealable judgment of a court of competent

jurisdiction, in connection with actions or omissions described in such clauses

(i) through (viii) of such sentence. In no event shall the Administrator, the LC

Bank, the LC Participants, the Issuer or their respective Affiliates, be liable

to the Seller or any other Person for any indirect, consequential, incidental,

punitive, exemplary or special damages or expenses (including without limitation

attorneys' fees), or for any damages resulting from any change in the value of

any property relating to a Letter of Credit.

 

          Without limiting the generality of the foregoing, the Administrator,

the LC Bank, the LC Participants and the Issuer and each of its Affiliates (i)

may rely on any written communication believed in good faith by such Person to

have been authorized or given by or on behalf of the applicant for a Letter of

Credit; (ii) may honor any presentation if the documents presented appear on

their face to comply with the terms and conditions of the relevant Letter of

Credit; (iii) may honor a previously dishonored presentation under a Letter of

Credit, whether such dishonor was pursuant to a court order, to settle or

compromise any

 

 

                                       17

 

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claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement

to the same extent as if such presentation had initially been honored, together

with any interest paid by the LC Bank or its Affiliates; (iv) may honor any

drawing that is payable upon presentation of a statement advising negotiation or

payment, upon receipt of such statement (even if such statement indicates that a

draft or other document is being delivered separately), and shall not be liable

for any failure of any such draft or other document to arrive, or to conform in

any way with the relevant Letter of Credit; (v) may pay any paying or

negotiating bank claiming that it rightfully honored under the laws or practices

of the place where such bank is located; and (vi) may settle or adjust any claim

or demand made on the Administrator, the LC Bank, the LC Participants, the

Issuer or their respective Affiliates, in any way related to any order issued at

the applicant's request to an air carrier, a letter of guarantee or of indemnity

issued to a carrier or any similar document (each an "Order") and honor any

drawing in connection with any Letter of Credit that is the subject of such

Order, notwithstanding that any drafts or other documents presented in

connection with such Letter of Credit fail to conform in any way with such

Letter of Credit.

 

          In furtherance and extension and not in limitation of the specific

provisions set forth above, any action taken or omitted by the LC Bank under or

in connection with the Letters of Credit issued by it or any documents and

certificates delivered thereunder, if taken or omitted in good faith and without

gross negligence or willful misconduct, as determined by a final non-appealable

judgment of a court of competent jurisdiction, shall not put the LC Bank under

any resulting liability to the Seller, any LC Participant or any other Person.

 

                                    ARTICLE II.

          REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS

 

     Section 2.1 Representations and Warranties; Covenants.

 

          Each of the Seller, Peabody and the Servicer hereby makes the

representations and warranties, and hereby agrees to perform and observe the

covenants, applicable to it set forth in Exhibits III and IV, respectively.

 

     Section 2.2 Termination Events.

 

          If any of the Termination Events set forth in Exhibit V shall occur,

the Administrator may, by notice to the Seller, declare the Facility Termination

Date to have occurred (in which case the Facility Termination Date shall be

deemed to have occurred); provided, that automatically upon the occurrence of

any event (without any requirement for the passage of time or the giving of

notice) described in paragraph (f) of Exhibit V, the Facility Termination Date

shall occur. Upon any such declaration, occurrence or deemed occurrence of the

Facility Termination Date, the Purchasers and the Administrator shall have, in

addition to the rights and remedies that they may have under this Agreement, all

other rights and remedies provided after default under the Illinois UCC and

under other applicable law, which rights and remedies shall be cumulative.

 

 

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                                   ARTICLE III

                                 INDEMNIFICATION

 

     Section 3.1 Indemnities by the Seller.

 

          Without limiting any other rights that the Administrator, the

Purchasers, the Liquidity Banks, any Program Support Provider or any of their

respective Affiliates, employees, officers, directors, agents, counsel,

successors, transferees or permitted assigns (each, an "Indemnified Party") may

have hereunder or under applicable law, the Seller hereby agrees to indemnify

each Indemnified Party from and against any and all claims, damages, expenses,

costs, losses and liabilities (including Attorney Costs) (all of the foregoing

being collectively referred to as "Indemnified Amounts") arising out of or

resulting from this Agreement (whether directly or indirectly), the use of

proceeds of purchases or reinvestments, the ownership of the Purchased Interest,

or any interest therein, or in respect of any Receivable, Related Security or

Contract, excluding, however: (a) Indemnified Amounts to the extent resulting

from gross negligence or willful misconduct on the part of such Indemnified

Party or its officers, directors, agents, counsel, successors, transferees or

permitted assigns, (b) any indemnification which has the effect of recourse for

the non-payment of the Receivables to any indemnitor (except as otherwise

specifically provided under Section 1.4 (e) and this Section 3.1), or (c)

overall net income taxes or franchise taxes imposed on such Indemnified Party by

the jurisdiction under the laws of which such Indemnified Party is organized or

any political subdivision thereof. Without limiting or being limited by the

foregoing, and subject to the exclusions set forth in the preceding sentence,

the Seller shall pay on demand (which demand shall be accompanied by

documentation of the Indemnified Amounts, in reasonable detail) to each

Indemnified Party any and all amounts necessary to indemnify such Indemnified

Party from and against any and all Indemnified Amounts relating to or resulting

from any of the following:

 

               (i) the failure of any Receivable included in the calculation of

the Net Receivables Pool Balance as an Eligible Receivable to be an Eligible

Receivable, the failure of any information contained in an Information Package

to be true and correct, or the failure of any other information provided to any

Purchaser or the Administrator with respect to Receivables or this Agreement to

be true and correct,

 

               (ii) the failure of any representation, warranty or statement

made or deemed made by the Seller (or any of its officers) under or in

connection with this Agreement to have been true and correct as of the date made

or deemed made in all respects when made,

 

               (iii) the failure by the Seller to comply with any applicable

law, rule or regulation with respect to any Pool Receivable or the related

Contract, or the failure of any Pool Receivable or the related Contract to

conform to any such applicable law, rule or regulation,

 

               (iv) the failure to vest in the Administrator (on behalf of the

Purchasers) a valid and enforceable: (A) perfected undivided percentage

ownership interest, to the extent of the Purchased Interest, in the Receivables

in, or purporting to be in, the Receivables Pool and the other Pool Assets, or

(B) first priority perfected security interest in the Pool Assets, in each case,

free and clear of any Adverse Claim,

 

 

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<PAGE>

 

               (v) the failure to have filed, or any delay in filing, financing

statements or other similar instruments or documents under the UCC of any

applicable jurisdiction or other applicable laws with respect to any Receivables

in, or purporting to be in, the Receivables Pool and the other Pool Assets,

whether at the time of any purchase or reinvestment or at any subsequent time,

 

               (vi) any dispute, claim, offset or defense (other than discharge

in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable

in, or purporting to be in, the Receivables Pool (including a defense based on

such Receivable or the related Contract not being a legal, valid and binding

obligation of such Obligor enforceable against it in accordance with its terms),

or any other claim resulting from the sale of the goods or services related to

such Receivable or the furnishing or failure to furnish such goods or services

or relating to collection activities with respect to such Receivable (if such

collection activities were performed by the Seller or any of its Affiliates

acting as Servicer or by any agent or independent contractor retained by the

Seller or any of its Affiliates),

 

               (vii) any failure of the Seller (or any of its Affiliates acting

as the Servicer) to perform its duties or obligations in accordance with the

provisions hereof or under the Contracts,

 

               (viii) any products liability or other claim, investigation,

litigation or proceeding arising out of or in connection with merchandise,

insurance or services that are the subject of any Contract,

 

               (ix) the commingling of Collections at any time with other funds,

 

               (x) the use of proceeds of purchases or reinvestments, or

 

               (xi) any reduction in Capital as a result of the distribution of

Collections pursuant to Section 1.4(d), if all or a portion of such

distributions shall thereafter be rescinded or otherwise must be returned for

any reason.

 

      Section 3.2 Indemnities by the Servicer.

 

          Without limiting any other rights that the Administrator, any

Purchasers, any Liquidity Banks, any Program Support Provider or any other

Indemnified Party may have hereunder or under applicable law, the Servicer

hereby agrees to indemnify each Indemnified Party from and against any and all

Indemnified Amounts arising out of or resulting from (whether directly or

indirectly): (a) the failure of any information contained in an Information

Package to be true and correct, or the failure of any other information provided

to any such Indemnified Party by, or on behalf of, the Servicer to be true and

correct, (b) the failure of any representation, warranty or statement made or

deemed made by the Servicer (or any of its officers) under or in connection with

this Agreement to have been true and correct as of the date made or deemed made

in all respects when made, (c) the failure by the Servicer to comply with any

applicable law, rule or regulation with respect to any Pool Receivable or the

related Contract, (d) any dispute, claim, offset or defense of the Obligor to

the payment of any Receivable in, or purporting to be in, the Receivables Pool

resulting from or related to the

 

 

                                        20

 

<PAGE>

 

collection activities with respect to such Receivable, or (e) any failure of the

Servicer to perform its duties or obligations in accordance with the provisions

hereof.

 

                                   ARTICLE IV.

                         ADMINISTRATION AND COLLECTIONS

 

     Section 4.1 Appointment of the Servicer.

 

     (a) The servicing, administering and collection of the Pool Receivables

shall be conducted by the Person so designated from time to time as the Servicer

in accordance with this Section. Until the Administrator gives notice to Peabody

(in accordance with this Section) of the designation of a new Servicer, Peabody

is hereby designated as, and hereby agrees to perform the duties and obligations

of, the Servicer pursuant to the terms hereof. Upon the occurrence of a

Termination Event, the Administrator may designate as Servicer any Person

(including itself) to succeed Peabody or any successor Servicer, on the

condition in each case that any such Person so designated shall agree to perform

the duties and obligations of the Servicer pursuant to the terms hereof.

 

     (b) Upon the designation of a successor Servicer as set forth in clause

(a), Peabody agrees that it will terminate its activities as Servicer hereunder

in a manner that the Administrator determines will facilitate the transition of

the performance of such activities to the new Servicer, and Peabody shall

cooperate with and assist such new Servicer. Such cooperation shall include

access to and transfer of related records and use by the new Servicer of all

licenses, hardware or software necessary or desirable to collect the Pool

Receivables and the Related Security.

 

     (c) Peabody acknowledges that, in making their decision to execute and

deliver this Agreement, the Administrator and the Purchasers have relied on

Peabody's agreement to act as Servicer hereunder. Accordingly, Peabody agrees

that it will not voluntarily resign as Servicer.

 

     (d) The Servicer may and hereby does delegate its duties and obligations

hereunder to the Originators as subservicer (each a "Sub-Servicer"); provided,

that, in such delegation: (i) each such Sub-Servicer shall and hereby does agree

in writing to perform the duties and obligations of the Servicer pursuant to the

terms hereof, (ii) the Servicer shall remain primarily liable for the

performance of the duties and obligations so delegated, (iii) the Seller, the

Administrator and the Purchasers shall have the right to look solely to the

Servicer for performance, and (iv) the terms of any agreement with any

Sub-Servicer shall and hereby do provide that the Administrator may terminate

such agreement upon the termination of the Servicer hereunder by giving notice

of its desire to terminate such agreement to the Servicer (and the Servicer

shall provide appropriate notice to each such Sub-Servicer); provided, however,

that if any such delegation is to any Person other than Arclar Company, LLC,

Black Beauty Coal Company, Twentymile Coal Company, Caballo Coal Company,

Eastern Associated Coal, LLC, COALSALES II, LLC, Peabody Coal Company, LLC,

Peabody Western Coal Company, Powder River Coal Company, Peabody Holding

Company, Inc., COALTRADE, LLC, COALTRADE International, LLC, or COALSALES, LLC,

the Administrator shall have consented in writing in advance to such delegation.

 

 

                                       21

 

<PAGE>

 

     Section 4.2 Duties of the Servicer.

 

     (a) The Servicer shall take or cause to be taken all such action as may be

necessary or advisable to administer and collect each Pool Receivable from time

to time, all in accordance with this Agreement and all applicable laws, rules

and regulations, with reasonable care and diligence, and in accordance with the

Credit and Collection Policies. The Servicer shall set aside, for the accounts

of the Seller and the Purchasers, the amount of the Collections to which each is

entitled in accordance with Article I. The Servicer may, in accordance with the

applicable Credit and Collection Policy, extend the maturity of any Pool

Receivable and extend the maturity or adjust the Outstanding Balance of any

Defaulted Receivable as the Servicer may determine to be appropriate to maximize

Collections thereof; provided, however, that: for the purposes of this

Agreement, (i) such extension shall not change the number of days such Pool

Receivable has remained unpaid from the date of the invoice date related to such

Pool Receivable, (ii) such extension or adjustment shall not alter the status of

such Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or

limit the rights of any of the Purchasers or the Administrator under this

Agreement and (iii) if a Termination Event has occurred and is continuing and

Peabody or an Affiliate thereof is serving as the Servicer, Peabody or such

Affiliate may make such extension or adjustment only upon the prior approval of

the Administrator. The Seller shall deliver to the Servicer and the Servicer

shall hold for the benefit of the Seller and the Administrator (individually and

for the benefit of the Purchasers), in accordance with their respective

interests, all records and documents (including computer tapes or disks) with

respect to each Pool Receivable. Notwithstanding anything to the contrary

contained herein, the Administrator may direct the Servicer (whether the

Servicer is Peabody or any other Person) to commence or settle any legal action

to enforce collection of any Pool Receivable or to foreclose upon or repossess

any Related Security.

 

     (b) The Servicer shall, as soon as practicable following actual receipt of

collected funds, turn over to the Seller the collections of any indebtedness

that is not a Pool Receivable, less, if Peabody or an Affiliate thereof is not

the Servicer, all reasonable and appropriate out-of-pocket costs and expenses of

such Servicer of servicing, collecting and administering such collections. The

Servicer, if other than Peabody or an Affiliate thereof, shall, as soon as

practicable upon demand, deliver to the Seller all records in its possession

that evidence or relate to any indebtedness that is not a Pool Receivable, and

copies of records in its possession that evidence or relate to any indebtedness

that is a Pool Receivable.

 

     (c) The Servicer's obligations hereunder shall terminate on the later of:

(i) the Facility Termination Date, (ii) the date on which no Capital of or

Discount in respect of the Purchased Interest shall be outstanding, (iii) the

date the LC Participation Amount is cash collateralized in full and (iv) the

date on which all amounts required to be paid to the Purchasers, the

Administrator and any other Indemnified Party or Affected Person hereunder shall

have been paid in full.

 

     After such termination, if Peabody or an Affiliate thereof was not the

Servicer on the date of such termination, the Servicer shall promptly deliver to

the Seller all books, records and related materials that the Seller previously

provided to the Servicer, or that have been obtained by the Servicer, in

connection with this Agreement.

 

 

                                       22

 

<PAGE>

 

     Section 4.3 Lock-Box Arrangements.

 

          Prior to the initial purchase hereunder, the Seller shall enter into

Lock-Box Agreements with all of the Lock-Box Banks and deliver original

counterparts thereof to the Administrator. Upon the occurrence of a Termination

Event, the Administrator may at any time thereafter give notice to each Lock-Box

Bank that the Administrator is exercising its rights under the Lock-Box

Agreements to do any or all of the following: (a) to have the exclusive

ownership and control of the Lock-Box Accounts transferred to the Administrator

and to exercise exclusive dominion and control over the funds deposited therein,

(b) to have the proceeds that are sent to the respective Lock-Box Accounts

redirected pursuant to the Administrator's instructions rather than deposited in

the applicable Lock-Box Account, and (c) to take any or all other actions

permitted under the applicable Lock-Box Agreement. The Seller hereby agrees that

if the Administrator at any time takes any action set forth in the preceding

sentence, the Administrator shall have exclusive control of the proceeds

(including Collections) of all Pool Receivables and the Seller hereby further

agrees to take any other action that the Administrator may reasonably request to

transfer such control. Any proceeds of Pool Receivables received by the Seller

or the Servicer thereafter shall be sent immediately to the Administrator. The

parties hereto hereby acknowledge that if at any time the Administrator takes

control of any Lock-Box Account, the Administrator shall not have any rights to

the funds therein in excess of the unpaid amounts due to the Administrator, the

Purchasers or any other Person hereunder, and the Administrator shall distribute

or cause to be distributed such funds in accordance with Section 4.2(b) and

Article I (in each case as if such funds were held by the Servicer thereunder).

 

     Section 4.4 Enforcement Rights.

 

     (a) At any time following the occurrence and during the continuation of a

Termination Event:

 

               (i) the Administrator may direct the Obligors that payment of all

amounts payable under any Pool Receivable is to be made directly to the

Administrator or its designee,

 

               (ii) the Administrator may instruct the Seller or the Servicer to

give notice of the Purchasers' interest in Pool Receivables to each Obligor,

which notice shall direct that payments be made directly to the Administrator or

its designee, and the Seller or the Servicer, as the case may be, shall give

such notice at the expense of the Seller or the Servicer, as the case may be;

provided, that if the Seller or the Servicer, as the case may be, fails to so

notify each Obligor, the Administrator (at the Seller's or the Servicer's, as

the case may be, expense) may so notify the Obligors, and

 

               (iii) the Administrator may request the Servicer to, and upon

such request the Servicer shall: (A) assemble all of the records necessary or

desirable to collect the Pool Receivables and the Related Security, and transfer

or license to a successor Servicer the use of all software necessary or

desirable to collect the Pool Receivables and the Related Security, and make the

same available to the Administrator or its designee at a place selected by the

Administrator, and (B) segregate all cash, checks and other instruments received

by it from time

 

 

                                       23

 

<PAGE>

 

to time constituting Collections in a manner acceptable to the Administrator

and, promptly upon receipt, remit all such cash, checks and instruments, duly

endorsed or with duly executed instruments of transfer, to the Administrator or

its designee.

 

     (b) The Seller hereby authorizes the Administrator, and irrevocably

appoints the Administrator as its attorney-in-fact with full power of

substitution and with full authority in the place and stead of the Seller, which

appointment is coupled with an interest, to take any and all steps in the name

of the Seller and on behalf of the Seller necessary or desirable following the

occurrence and during the continuation of a Termination Event, in the

determination of the Administrator, to collect any and all amounts or portions

thereof due under any and all Pool Assets, including endorsing the name of the

Seller on checks and other instruments representing Collections and enforcing

such Pool Assets. Notwithstanding anything to the contrary contained in this

subsection, none of the powers conferred upon such attorney-in-fact pursuant to

the preceding sentence shall subject such attorney-in-fact to any liability if

any action taken by it shall prove to be inadequate or invalid, nor shall they

confer any obligations upon such attorney-in-fact in any manner whatsoever.

 

     Section 4.5 Responsibilities of the Seller.

 

     (a) Anything herein to the contrary notwithstanding, the Seller shall: (i)

perform all of its obligations, if any, under the Contracts related to the Pool

Receivables to the same extent as if interests in such Pool Receivables had not

been transferred hereunder, and the exercise by the Administrator or any

Purchaser of their respective rights hereunder shall not relieve the Seller from

such obligations, and (ii) pay when due any taxes, including any sales taxes

payable in connection with the Pool Receivables and their creation and

satisfaction. Neither the Administrator nor any Purchaser shall have any

obligation or liability with respect to any Pool Asset, nor shall any of them be

obligated to perform any of the obligations of the Seller, Peabody or any

Originator thereunder.

 

     (b) Peabody hereby irrevocably agrees that if at any time it shall cease to

be the Servicer hereunder, it shall act (if the then-current Servicer so

requests) as the data-processing agent of the Servicer and, in such capacity,

Peabody shall conduct the data-processing functions of the administration of the

Receivables and the Collections thereon in substantially the same way that

Peabody conducted such data-processing functions while it acted as the Servicer.

 

     Section 4.6 Servicing Fee.

 

     (a) Subject to clause (b), the Servicer shall be paid a fee equal to 1.00%

per annum (the "Servicing Fee Rate") of the daily average aggregate Outstanding

Balance of the Pool Receivables. The Purchasers' Share of such fee shall be paid

through the distributions contemplated by Section 1.4(d), and the Seller's Share

of such fee shall be paid by the Seller on each Monthly Settlement Date.

 

     (b) If the Servicer ceases to be Peabody or an Affiliate thereof, the

servicing fee shall be the greater of: (i) the amount calculated pursuant to

clause (a), and (ii) an alternative amount specified by the successor Servicer

not to exceed 110% of the aggregate reasonable costs and

 

 

                                       24

 

<PAGE>

 

expenses incurred by such successor Servicer in connection with the performance

of its obligations as Servicer.

 

     Section 4.7 Authorization and Action of the Administrator.

 

          Each Purchaser hereby accepts the appointment of and irrevocably

authorizes the Administrator to take such action as agent on its behalf and to

exercise such powers as are delegated to the Administrator by the terms hereof,

together with such powers as are reasonably incidental thereto. The

Administrator shall not be required to take any action which exposes such

Administrator to personal liability or which is contrary to this Agreement or

applicable law. The appointment and authority of the Administrator hereunder

shall terminate at the latest of the Facility Termination Date, the date on

which no Capital of or Discount in respect of the Purchased Interest shall be

outstanding, the date the LC Participation Amount is cash collateralized in full

or the date all other amounts owed by the Seller under this Agreement to any

Purchaser, the Administrator and any other Indemnified Party or Affected Person

shall be paid in full.

 

     Section 4.8 Nature of Administrator's Duties.

 

          The Administrator shall have no duties or responsibilities except

those expressly set forth in this Agreement or in the other Transaction

Documents. The duties of the Administrator shall be mechanical and

administrative in nature. The Administrator shall not have, by reason of this

Agreement, a fiduciary relationship in respect of any Purchaser. Nothing in this

Agreement or any of the Transaction Documents, express or implied, is intended

to or shall be construed to impose upon the Administrator any obligations in

respect of this Agreement or any of the Transaction Documents except as

expressly set forth herein or therein. The Administrator shall not have any duty

or responsibility, either initially or on a continuing basis, to provide any

Purchaser with any credit or other information with respect to the Seller, any

Originator, any Sub-Servicer or the Servicer, whether coming into its possession

before the date hereof or at any time or times thereafter. If the Administrator

seeks the consent or approval of the Purchasers to the taking or refraining from

taking any action hereunder, the Administrator shall send notice thereof to each

Purchaser. The Administrator shall promptly notify each Purchaser any time that

the Purchasers have instructed the Administrator to act or refrain from acting

pursuant hereto.

 

     Section 4.9 UCC Filings.

 

          Each of the Seller and the Purchasers expressly recognizes and agrees

that the Administrator may be listed as the assignee or secured party of record

on the various UCC filings required to be made hereunder in order to perfect the

transfer of the Purchased Interest from the Seller to the Purchasers, that such

listing shall be for administrative convenience only in creating a record or

nominee owner to take certain actions hereunder on behalf of the Purchasers and

that such listing will not affect in any way the status of the Purchasers as the

beneficial owners of the Purchased Interest. In addition, such listing shall

impose no duties on the Administrator other than those expressly and

specifically undertaken in accordance with this Section 4.9.

 

 

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<PAGE>

 

     Section 4.10 Administrator's Reliance, Etc.

 

          Neither the Administrator nor any of its directors, officers, agents

or employees shall be liable for any action taken or omitted to be taken by it

as Administrator under or in connection with this Agreement except for its own

gross negligence or willful misconduct. Without limiting the foregoing, the

Administrator: (i) may consult with legal counsel (including counsel for the

Seller), independent public accountants and other experts selected by it and

shall not be liable for any action taken or omitted to be taken in good faith by

it in accordance with the advice of such counsel, accountants or experts; (ii)

makes no warranty or representation to any Purchaser and shall not be

responsible to any Purchaser for any statements, warranties or representations

made in or in connection with this Agreement; (iii) shall not have any duty to

ascertain or to inquire as to the performance or observance of any of the terms,

covenants or conditions of this Agreement on the part of the Seller, the

Servicer, any Sub-Servicer or any Originator or to inspect the property

(including the books and records) of the Seller, the Servicer, any Sub-Servicer

or any Originator; (iv) shall not be responsible to any Purchaser for the due

execution, legality, validity, enforceability, genuineness, sufficiency, or

value of this Agreement, or any other instrument or document furnished pursuant

hereto; and (v) shall incur no liability under or in respect of this Agreement

or any other Transaction Document by acting upon any notice (including notice by

telephone), consent, certificate or other instrument or writing (which may be by

telex) believed by it to be genuine and signed or sent by the proper party or

parties. The Administrator may at any time request instructions from the

Purchasers with respect to any actions or approvals which by the terms of this

Agreement or of any of the other Transaction Documents the Administrator is

permitted or required to take or to grant, and if such instructions are promptly

requested, the Administrator shall be absolutely entitled to refrain from taking

any action or to withhold any approval and shall not be under any liability

whatsoever to any Person for refraining from any action or withholding any

approval under any of the Transaction Documents until it shall have received

such instructions from the Issuer and the Majority LC Participants (or, where

expressly required hereunder, from the Required LC Participants or all of the LC

Participants). Without limiting the foregoing, neither the Issuer, the LC Bank

nor any LC Participant shall have any right of action whatsoever against the

Administrator as a result of the Administrator acting or refraining from acting

under this Agreement or any of the other Transaction Documents in accordance

with the instructions of the Issuer and the Majority LC Participants (or, where

expressly required hereunder, the Required LC Participants or all of the LC

Participants).

 

     Section 4.11 Administrator and Affiliates.

 

          To the extent that the Administrator or any of its Affiliates is or

shall become an LC Participant hereunder, the Administrator or such Affiliate,

in such capacity, shall have the same rights and powers under this Agreement as

would any other LC Participant hereunder and may exercise the same as though it

were not the Administrator. The Administrator and its Affiliates may generally

engage in any kind of business with the Seller, any Originator, Peabody, any

Sub-Servicer or the Servicer, any of their respective Affiliates and any Person

who may do business with or own securities of the Seller, any Originator,

Peabody, any Sub-Servicer or the Servicer or any of their respective Affiliates,

all as if it were not the Administrator hereunder and without any duty to

account therefor to the Issuer or the LC Participants.

 

 

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     Section 4.12 Purchase Decision.

 

          Each of the Purchasers acknowledges that it has, independently and

without reliance upon the Administrator, the LC Bank or any LC Participant and

based on such documents and information as it has deemed appropriate, made its

own evaluation and decision to enter into this Agreement and, to the extent it

so determines, to issue Letters of Credit and/or to purchase an undivided

ownership interest in Receivables hereunder. Each Purchaser also acknowledges

that it will, independently and without reliance upon the Administrator, the LC

Bank or any LC Participant, and based on such documents and information as it

shall deem appropriate at the time, continue to make its own decisions in taking

or not taking action under this Agreement.

 

     Section 4.13 Indemnification.

 

          Each LC Participant agrees to indemnify the Administrator and the LC

Bank (to the extent not reimbursed by the Seller or the Servicer), ratably

according to its Pro Rata Share, from and against any and all liabilities,

obligations, losses, damages, penalties, actions, judgments, suits, costs,

expenses, or disbursements of any kind or nature whatsoever which may be imposed

on, incurred by, or asserted against the Administrator in any way relating to or

arising out of this Agreement or any action taken or omitted by the

Administrator under this Agreement; provided, however, that no LC Participant

shall be liable for any portion of such liabilities, obligations, losses,

damages, penalties, actions, judgments, suits, costs, expenses, or disbursements

resulting from the Administrator's or the LC Bank's gross negligence or willful

misconduct, as determined by a final non-appealable judgment of a court of

competent jurisdiction. Without limiting the generality of the foregoing, each

LC Participant agrees to reimburse the Administrator and the LC Bank, ratably

according to their Pro Rata Shares, promptly upon demand, for any out-of-pocket

expenses (including reasonable counsel fees) incurred by the Administrator or

the LC Bank in connection with the administration, modification, amendment or

enforcement (whether through negotiations, legal proceedings or otherwise) of,

or legal advice in respect of its rights or responsibilities under, this

Agreement.

 

     Section 4.14 Successor Administrator.

 

          The Administrator may resign at any time by giving thirty days' notice

thereof to the Purchasers, the Seller and the Servicer. Upon any such

resignation, the Issuer and the Majority LC Participants shall have the right to

appoint a successor Administrator approved by the Seller (which approval will

not be unreasonably withheld or delayed). If no successor Administrator shall

have been so appointed and accepted such appointment within 30 days after the

retiring Administrator's giving of notice of resignation, then the retiring

Administrator may appoint a successor Administrator approved by the Seller

(which approval will not be unreasonably withheld or delayed), which successor

Administrator shall be either (i) a commercial bank having a combined capital

and surplus of at least $250,000,000 or (ii) an Affiliate of such an institution

Upon the acceptance of any appointment as an Administrator hereunder by a

successor Administrator, such successor Administrator shall thereupon succeed to

and become vested with all of the rights, powers, privileges and duties of the

retiring Administrator, and the retiring Administrator shall be discharged from

any further duties and

 

 

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obligations under this Agreement. After any retiring Administrator's resignation

hereunder as Administrator, the provisions of this Article IV shall inure to its

benefit as to any actions taken or omitted to be taken by it while it was an

Administrator under this Agreement.

 

                                   ARTICLE V.

                                  MISCELLANEOUS

 

     Section 5.1 Amendments, Etc.

 

          No amendment or waiver of any provision of this Agreement or any other

Transaction Document, or consent to any departure by the Seller or the Servicer

therefrom, shall be effective unless in a writing signed by the Administrator,

the LC Bank and the Majority LC Participants; provided, however, that no such

amendment shall (i) decrease the outstanding amount of, or extend the repayment

of or any scheduled payment date for the payment of, any Discount in respect of

any Portion of Capital or any fees owed to a Purchaser without the prior written

consent of such Purchaser; (ii) forgive or waive or otherwise excuse any

repayment of Capital without the prior written consent of each Purchaser

affected thereby; (iii) increase the Commitment of any Purchaser without its

prior written consent; (iv) amend or modify the Pro Rata Share of any LC

Participant without its prior written consent; (v) amend or modify the

provisions of this Section 5.1 or the definition of "Majority LC Participants"

or "Required LC Participants" without the prior written consent of the LC Bank

and all LC Participants; (vi) waive any Termination Event arising from an Event

of Bankruptcy with respect to Seller, the Servicer, any Sub-Servicer or any

Originator; (vii) without the prior written consent of the LC Participant

affected thereby, waive, amend or otherwise modify the definition of Scheduled

Commitment Termination Date for such LC Participant; (viii) amend, modify or

otherwise affect the rights or duties of the Administrator or the LC Bank

hereunder without the prior written consent of the Administrator or the LC Bank,

as the case may be; and (ix) amend, waive or modify any definition or provision

expressly requiring the consent of the Required LC Participants without the

prior written consent of the LC Bank and the Required LC Participants, and, in

the case of any amendment, by the other parties thereto; and then such

amendment, waiver or consent shall be effective only in the specific instance

and for the specific purpose for which given. No failure on the part of the

Issuer or the Administrator to exercise, and no delay in exercising any right

hereunder shall operate as a waiver thereof, nor shall any single or partial

exercise of any right hereunder preclude any other or further exercise thereof

or the exercise of any other right.

 

     Section 5.2 Notices, Etc.

 

          All notices and other communications hereunder shall, unless otherwise

stated herein, be in writing (which shall include facsimile communication) and

be sent or delivered to each party hereto at its address set forth under its

name on the signature pages hereof or at such other address as shall be

designated by such party in a written notice to the other parties hereto.

Notices and communications by facsimile shall be effective when sent (and shall

be followed by hard copy sent by first class mail), and notices and

communications sent by other means shall be effective when received.

 

 

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     Section 5.3 Successors and Assigns; Assignability; Participations.

 

     (a) Whenever in this Agreement any of the parties hereto is referred to,

such reference shall be deemed to include the successors and assigns of such

party; all covenants, promises and agreements by or on behalf of any parties

hereto that are contained in this Agreement shall bind and inure to the benefit

of their respective successors and assigns. The Seller may not assign or

transfer any of its rights or obligations hereunder without the written consent

of the Administrator, the LC Bank and the Required LC Participants. Each of the

LC Participants, with the prior written consent of the Administrator, the LC

Bank and of the Seller (such consent not to be unreasonably withheld), may

assign any of its interests, rights and obligations hereunder to an Eligible

Assignee; provided, that (i) the Commitment amount to be assigned by any such LC

Participant hereunder shall not be less than $5,000,000 and (ii) prior to the

effective date of any such assignment, the assignee and assignor shall have

executed and delivered to the Administrator and the LC Bank an assignment and

acceptance agreement in form and substance satisfactory to the Administrator and

the LC Bank. Upon the effectiveness of any such permitted assignment, (i) the

assignee thereunder shall, to the extent of the interests assigned to it, be

entitled to the interests, rights and obligations of an LC Participant under

this Agreement and (ii) the assigning LC Participant shall, to the extent of the

interest assigned, be released from any further obligations under this

Agreement.

 

     (b) Notwithstanding anything contained in paragraph (a) of this Section

5.3, each of the LC Bank and each LC Participant may sell participations in all

or any part of any Funded Purchase or Funded Purchases made by such LC

Participant to another bank or other entity so long as (A) no such grant of a

participation shall, without the consent of the Seller, require the Seller to

file a registration statement with the Securities and Exchange Commission and

(B) no holder of any such participation shall be entitled to require such LC

Participant to take or omit to take any action hereunder except that such LC

Participant may agree with such participant that, without such participant's

consent, such LC Participant will not consent to an amendment, modification or

waiver referred to in clauses (i) through (vi) of Section 5.1. Any such

participant shall not have any rights hereunder or under the Transaction

Documents except that such participant shall have rights under Sections 1.7, 1.8

and 1.9 hereunder as if it were an LC Participant; provided that no such

participant shall be entitled to receive any payment pursuant to such sections

which is greater in amount than the payment which the transferor LC Participant

would have otherwise been entitled to receive in respect of the participation

interest so sold.

 

     (c) This Agreement and the Issuer's rights and obligations herein

(including ownership of the Purchased Interest or an interest therein) shall be

assignable, in whole or in part, by the Issuer and its successors and assigns

with the prior written consent of the Seller; provided, however, that such

consent shall not be unreasonably withheld; and provided further, that no such

consent shall be required if the assignment is made to PNC, any Affiliate of PNC

(other than a director or officer of PNC), any Liquidity Bank or other Program

Support Provider or any Person that is: (i) in the business of issuing Notes and

(ii) associated with or administered by PNC or any Affiliate of PNC. Each

assignor may, in connection with the assignment, disclose to the