EXHIBIT 3.6 SECOND AMENDED AND RESTATED OPERATING AGREEMENT

EXHIBIT 3.6

SECOND AMENDED AND RESTATED OPERATING AGREEMENT

SUGAR CAMP COAL, LLC

TO BE KNOWN AS

ARCLAR COMPANY, LLC

AS OF

JANUARY 1, 2002

DATED

DECEMBER 28, 2001

TABLE OF CONTENTS

SECTION PAGE

1. Formation................................................................................. -2-
1.1 Formation....................................................................... -2-

2. Name and Office........................................................................... -2-
2.1 Name and Insignia............................................................... -2-
2.2 Principal Office -2-

3. Purposes; Non-Competition; Term........................................................... -2-
3.1 Purposes........................................................................ -3-
3.2 Other Activities; Non-Competition............................................... -3-
3.3 Term -5-
3.4 Property of Ownership........................................................... -5-

4. Capital Contributions..................................................................... -5-
4.1 Class A Capital Accounts........................................................ -5-
4.2 Class B Capital Account......................................................... -6-
4.3 No Liability of Members......................................................... -6-
4.4 No Interest on Capital Contributions............................................ -6-
4.5 No Withdrawal of Capital........................................................ -6-
4.6 Capital Accounts................................................................ -6-

5. Accounting................................................................................ -7-
5.1 Books and Records............................................................... -7-
5.2 Fiscal Year..................................................................... -7-
5.3 Reports......................................................................... -7-
5.4 Budget and Business Plan........................................................ -7-
5.5 Tax Returns..................................................................... -8-
5.6 Member's Request for Additional Information..................................... -8-
5.7 Tax Matters Partner............................................................. -8-
5.8 Revaluation of Company Property................................................. -9-

6. Bank Accounts and Excess Funds............................................................ -9-
6.1 Bank Accounts.................................................................. -9-
6.2 Investment of Excess Funds...................................................... -9-

7. Allocation of Net Income and loss......................................................... -9-
7.1 Net Income and Net Loss......................................................... -9-
7.2 Allocation for Financial Reporting Purposes..................................... -12-

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TABLE OF CONTENTS

SECTION PAGE

7.3 Allocation of Excess Nonrecourse Liabilities.................................... -12-
7.4 Allocations in Event of Transfer................................................ -12-

8. Distributive Shares....................................................................... -12-
8.1 Distributive Shares............................................................. -12-
8.2 Elections....................................................................... -12-
8.3 Partnership Treatment........................................................... -13-

9. Distributions............................................................................. -13-
9.1 Net Cash Flow................................................................... -13-
9.2 Distribution of Net Cash Flow................................................... -13-
9.3 Property Distributions.......................................................... -14-

10. Company Management...................................................................... -14-
10.1 Membership Committee........................................................... -14-
10.2 Service Agreements............................................................. -15-
10.3 Related Parry Transactions..................................................... -15-
10.4 Acts by Members................................................................ -15-

11. Officers................................................................................ -15-
11.1 Required Officers.............................................................. -15-
11.2 Duties of Officers............................................................. -16-
11.3 Appointment and Term of Office................................................. -16-
11.4 Resignation and Removal of Officers............................................ -16-
11.5 Contract Rights of Officers.................................................... -16-
11.6 Chief Executive Officer........................................................ -16-
11.7 President...................................................................... -16-
11.8 Vice-President................................................................. -17-
11.9 Treasurer...................................................................... -17-
11.10 Secretary..................................................................... -17-
11.11 Assistant Treasurers and Assistant Secretaries................................ -17-
11.12 Compensation.................................................................. -18-

12. Standard of Care of Officers; Indemnification............................................ -18-
12.1 Standard of Care............................................................... -18-
12.2 Indemnification................................................................ -18-

13. dissolution and termination of class b membership........................................ -19-
13.1 Dissolution.................................................................... -19-

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TABLE OF CONTENTS

SECTION PAGE

13.2 Liquidation and Winding Up Upon Dissolution.................................... -20-
13.3 Distributions Upon Liquidation................................................. -20-
13.4 No Negative Capital Account Make-Up Required................................... -20-

14. Assignment............................................................................... -21-
14.1 Assignment of Member's Interest................................................ -21-
14.2 [RESERVED]..................................................................... -21-
14.3 [RESERVED]..................................................................... -21-
14.4 Substitute Members............................................................. -21-
14.5 Additional Members............................................................. -21-
14.6 Xxxxxx X. Xxxxxx Secrecy and Noncompetition.................................... -22-

15. Relationship with Company................................................................ -22-
15.1 Promotion of Company........................................................... -22-
15.2 Information.................................................................... -22-
15.3 Confidentiality................................................................ -23-

16. Governing Law............................................................................ -23-

17. Arbitration.............................................................................. -23-

18. Notices.................................................................................. -24-
18.1 Addresses...................................................................... -24-
18.2 Effective Xxxx................................................................. -24-

19. Miscellaneous............................................................................ -24-
19.1 Binding on Successors.......................................................... -24-
19.2 Amendments..................................................................... -25-
19.3 Waiver and Consent............................................................. -25-
19.4 Waiver and Dissolution Under the Act........................................... -25-
19.5 Relationship of the Members.................................................... -25-
19.6 Further Assurances............................................................. -25-
19.7 Severability................................................................... -25-
19.8 Agreement in Counterparts...................................................... -25-
19.9 Entire Agreement............................................................... -25-
19.10 No Third Party Beneficiary.................................................... -25-
19.11 Captions; Section References.................................................. -26-

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GLOSSARY OF DEFINED TERMS

DEFINED TERM SECTION

Act............................................................................. 1.1
Adjusted Class B Capital Account Balance........................................ 9.2
Affiliate....................................................................... 3.2(e)
Agreement....................................................................... Preamble
Arclar.......................................................................... Recital
Black Beauty.................................................................... Preamble
Capital Account................................................................. 4.1(b)
Class A Member.................................................................. 1
Class A Membership.............................................................. 1
Class A Percentage Interest..................................................... 7.1(a)(2)
Class B Capital Account......................................................... 4.6
Class B Membership.............................................................. I
Class B Merger.................................................................. I
Class B Priority Distribution................................................... 9.2(a)
Class B Priority Distribution Amounts........................................... 9.2
Class B Residual Distributions.................................................. 9.2(c)
Code............................................................................ 4.1 (b)
Company......................................................................... Recital
Contributed Assets.............................................................. 7.1 (g)
Fiscal Year..................................................................... 5.2
Xxxxxx Controlling Member....................................................... 14.6(a)
Xxxxxx.......................................................................... Preamble
Illinois........................................................................ Recital
Liquidators..................................................................... 13.2 (a)
Member.......................................................................... Preamble
Members......................................................................... Preamble
Membership Committee............................................................ 10.1(a)
Membership Interest............................................................. 4.l (b)
Neco............................................................................ Recital
Net Cash Flow................................................................... 9.1
Operating Agreement............................................................. Recital
Percentage Interest............................................................. 7.1(a)
Project Area.................................................................... 3.1
Restricted Period............................................................... 14.6 (a)
Tax Matters Partner............................................................. 5.7
SCC............................................................................. Recital

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SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
SUGAR CAMP COAL, L.L.C.

THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT ("Agreement") is
made and entered into as of the 28th day of December, 2001, by and among (i)
BLACK BEAUTY COAL COMPANY, an Indiana partnership, with its principal office at
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx, 00000 ("Black Beauty"), as a Class
A Member, and (ii) XXXXXX ENERGY, L.L.C., an Illinois limited liability company,
with its principal office at 00 X. Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000
("Xxxxxx") as a Class A Member and a Class B Member. The parties hereto are
hereinafter collectively referred to as the "Members" and each individually as a
"Member". For purposes of this Agreement, the term "Member" shall include any
party then acting in such capacity in accordance with the terms of this
Agreement.

RECITALS:

A. Black Beauty and SCC Holding, LLC, an Indiana limited
liability company ("SCC"), entered into an Operating Agreement dated as of
October 31, 1997, as subsequently amended and restated on March 23, 2000 and
thereafter amended by a First Amendment to Amended and Restated Operating
Agreement ("Operating Agreement") with respect to the formation of an Indiana
limited liability company known as Sugar Camp Coal, LLC (the "'Company").

B. SCC was subsequently liquidated and Black Beauty and Neco Land
Co., an Illinois corporation ("Neco"), as the members of SCC, were assigned
SCC's interest in the Company.

C. On March 23, 2000, Xxxxxx contributed to the Company his
interest in Arclar Company, L.L.C. ("Arclar") and was admitted as a Member of
the Company and Neco's interest in the Company was subsequently redeemed.

D. On the date hereof, the parties have agreed to contribute
additional capital to the Company and have created a new class of membership
having the rights and obligations set forth herein.

E. Effective January 1, 2002, Arclar and Black Beauty Illinois,
L.L.C. will merge into the Company, and the Company will change its name to
Arclar Company, LLC.

F. The parties desire to amend and restate the Operating
Agreement in its entirety.

AGREEMENT:

Now, THEREFORE, the parties hereby agree as follows:

I. RECLASSIFICATION OF CAPITAL AND MEMBERSHIP. The Capital
Account balances and Interests pre-existing as of the date hereof shall be
designated as "Class A Capital Account" balances and "Class A Percentage
Interests," as more particularly set forth herein, and shall be held in
connection with membership rights designated as "Class A Membership." Black
Beauty shall be a Class A Member holding a 75% Class A Percentage Interest and
Xxxxxx shall be a Class A Member holding a 25% Class A Percentage Interest. The
Company hereby creates a new class of membership, designated as "Class B
Membership," having the rights and obligations set forth herein. Xxxxxx shall be
the sole Class B Member, holding all rights and obligations related thereto.

II. AMENDED AND RESTATED AGREEMENT. The Operating Agreement is
hereby amended and restated in its entirety to read as follows:

1.FORMATION.

1.1 FORMATION. The Members have formed the Company under the
Indiana Business Flexibility Act ("Act") for the purposes and term set out in
this Agreement. To effect the formation of the Company, the Members have
executed and duly recorded Articles of Organization.

0.XXXX AND OFFICE.

2.1 NAME AND INSIGNIA. The Company will do business under the
name "Sugar Camp Coal, LLC" through December 31, 2001, Effective January 1,
2002, the Company will do business under the name Arclar Company, LLC." The
Members shall execute and file such documents as shall be required under the
laws of each state in which the Company is required or desires to be qualified
to do business.

2.2 PRINCIPAL OFFICE. The principal office of the Company
shall initially be at 00 X. Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The
principal office may hereafter from time to time be moved to such other place as
may be designated by the Membership Committee (which Committee is described in
Section 10.1). The books and records of the Company shall be maintained at the
Company's principal place of business, or such other location as determined by
the Membership Committee. The Company shall designate an agent for service of
process in Indiana in accordance with the provisions of the Act.

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3. PURPOSES; NON-COMPETITION; TERM.

3.1 PURPOSES. The Company is formed to conduct coal mining,
processing, marketing and shipping businesses and shall limit its coal mining,
reserve holdings and all other physical operations (other than office
operations) solely to (i) Gallatin, Saline, Xxxxxxxxxx and Xxxxxx Counties in
Illinois, (ii) Union and Xxxxxxx in Kentucky, and (iii) any other areas in which
the Members unanimously agree to conduct mining operations (the areas referred
to in (i) through (iii) above are hereinafter referred to as the "Project
Area"). The purposes of the Company are limited to the following coal-related
purposes:

(a) The acquisition of coal reserves in the Project
Area;

(b) The development and conduct of underground
mining, processing and shipping operations relative to the acquired coal
reserves, either directly with employees of the Company or through contract
miners;

(c) The permitting and bonding (either directly or
through one of its Members) of all coal mining, processing and shipping
operations on or relating to the acquired coal reserves and the completion of
reclamation obligations relative to the coal mining, processing or shipping
operations conducted on or relating to the acquired coal reserves;

(d) The purchasing, selling, brokering, processing
and/or shipping of coal from whatever source in the Project Area;

(e) The acquisition of existing businesses, operating
solely in the Project Area, relating to the mining, processing, selling or
shipping of coal;

(f) To employ personnel necessary for the conduct of
the business of the Company;

(g) The investment of the income earned by the
Company prior to distribution to the Members;

(h) The borrowing of money, the leasing of assets
and/or the granting of liens and security interests in assets of the Company;
and

(i) All other activities necessary, appropriate,
incidental or desirable in connection with the foregoing, or otherwise
contemplated in this Agreement.

The purposes of the Company shall not be extended, by implication or otherwise,
beyond the purposes set forth in this Section 3.1 without the approval of all of
the Members.

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3.2 OTHER ACTIVITIES; NON-COMPETITION.

(a) Neither Xxxxxx nor its Affiliates (as hereinafter
defined) shall, directly or indirectly, engage in, or possess an interest in,
any other business venture relating to the holding of coal reserves or the
mining, processing, marketing or shipping of coal, of any nature and description
whatsoever, independently or with others, within the Project Area; provided,
however, that nothing herein shall prohibit Power, Inc. from engaging in the
business in which it is currently engaged. The restrictions set out in this
Section 3.2(a) shall be in effect until the first to occur of (i) the Company
being dissolved and liquidated or (ii) Black Beauty, or an Affiliate of Black
Beauty, directly or indirectly, acquiring all of the ownership interests in
xxxxxx.

(b) Except as provided in Section 3.2(c), Black
Beauty and all current and future Affiliates of Black Beauty may engage in, or
possess an interest in, other business ventures of any nature and description
whatsoever, independently or with others, whether or not competitive with those
of the Company, and neither Xxxxxx nor any Affiliate of Xxxxxx, nor any member,
officer, director or employee of Xxxxxx, shall have any rights by virtue of this
Agreement in and to such independent ventures, or to the income or profits
derived therefrom.

(c) In addition to the restrictions set forth in
Section 3.2(a), neither Member, nor any Affiliate of either Member, shall
compete with the Company in the acquisition, development, mining, processing or
shipping of coal within the Project Area. The limitation set forth in this
Section 3.2(c) is only intended to restrict activities wholly or partially
located within the Project Area. It is the intention and agreement of the
Members that if the Company does not elect to pursue a coal-related business
opportunity located in the Project Area, neither Member, nor any of their
Affiliates, shall pursue such coal related business opportunity within the
Project Area. The restrictions set out in this Section 3.2(c) shall be in effect
until the first to occur of (i) the Company being dissolved and liquidated or
(ii) Black Beauty, or an Affiliate of Black Beauty, directly or indirectly,
acquiring all of the ownership interests in Xxxxxx. Neither Black Beauty, nor
any current or future Affiliate of Black Beauty, shall be in violation of the
restriction of this Section 3.2(c) or otherwise under this Agreement for coal
related or other activities in the Project Area if the properties involved in
such activity (i) are acquired by Black Beauty or any current or future
Affiliate of Black Beauty incidental to a transaction involving primarily
properties outside of the Project Area, or (ii) are owned or controlled by an
entity which becomes an Affiliate of Black Beauty in a transaction not
structured to avoid the restrictions of this Section 3.2(c); provided, however,
that if Black Beauty or an Affiliate of Black Beauty acquires any coal
properties in the Project Area under (i) or (ii) above, such acquiring entity
shall offer to convey such properties to the Company at the actual cost of
acquisition of such properties incurred by such entity, or for such other
consideration to which the Company and such entity may agree. Black Beauty may
not use its vote as a Member to prevent the Company from acquiring such
properties at the actual cost of acquisition incurred by Black Beauty if Xxxxxx
desires, in its discretion, to complete such acquisition. Further, the
restrictions set out herein shall not prohibit, limit or restrict the marketing
and sale of coal produced within the Project Area.

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(d) Each Member shall be liable for the acts of any
of its Affiliates which are in violation of the terms of this Section 3.2,
without regard to the legal relationship between such Member and such Affiliate.

(e) For purposes of this Agreement, the term
"Affiliate" shall mean any individual, corporation, partnership, limited
liability company or other entity which, directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, another individual, corporation, partnership, limited liability company or
other entity. For this purpose, control shall mean 50% or more of the voting
interests or equity interests of an entity. Notwithstanding the foregoing, the
term Affiliate, in reference to Black Beauty, shall not include Peabody Holding
Company, Inc. or any entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
Peabody Holding Company, Inc.

(f) The panics stipulate that in the event that a
court determines, contrary to the agreement of the parties as set forth in this
Section 3.2, that any of the terms of their agreement not to compete with the
other are unreasonable or contrary to public policy or invalid or enforceable
for any reason of fact, law or equity, then such court shall limit the
application of any such provision or term or modify any provision or term to
that which it finds reasonable, valid or enforceable, and shall enforce such
provisions as so limited or modified.

3.3 TERM. The duration of the Company is perpetual, or until
liquidation in accordance with the terms of this Agreement or as required by the
Act.

3.4 PROPERTY OF OWNERSHIP. All assets and property owned by
the Company, whether real or personal, tangible or intangible, shall be held in
the name of the Company unless otherwise determined by the Membership Committee.

4. CAPITAL CONTRIBUTIONS.

4. 1 CLASS A CAPITAL ACCOUNTS.

(a) The Capital Account (as herein after defined)
balances of Black Beauty and Xxxxxx pre-existing as of the date hereof shall be
designated as Class A Capital Account balances.

(b) On or before December 31, 2001 Black Beauty shall
contribute to the Company additional cash in the amount of $2,250,000 in respect
of its Class A Capital Account and Xxxxxx shall contribute to the Company
additional cash in the amount of $750,000 in respect of its Class A Capital
Account.

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4.2 CLASS B CAPITAL ACCOUNT. On or before December 31, 2001
Xxxxxx shall contribute cash in the amount of $3 million in respect of its Class
B Capital Account.

4.3 NO LIABILITY OF MEMBERS. Except as otherwise specifically
provided in the Act, or as may exist under separate existing written agreements
as to a Member, no Member shall have any personal liability for the obligations
of the Company. Further, no Member shall be obligated To contribute additional
capital to the Company, unless all of the Members in their sole and absolute
discretion, agree to contribute additional capital to the Company.

4.4 NO INTEREST ON CAPITAL CONTRIBUTIONS. No Member shall be
entitled to interest on any capital contributions made to the Company.

4.5 NO WITHDRAWAL OF CAPITAL. No Member shall be entitled to
withdraw any part of its capital contributions to the Company, or receive any
distributions from the Company, except as provided in this Agreement. No Member
shall be entitled to demand or receive any property from the Company other than
cash, except as otherwise expressly provided for herein.

4.6 CAPITAL ACCOUNTS. There shall be established on the books
of the Company a capital account ("Capital Account") for each Member. The
Capital Account of Black Beauty shall be designated as a Class A Capital Account
and the Capital Account of Xxxxxx shall be divided into two subaccounts,
designated as a "Class A Capital Account" and a "Class B Capital Account,"
respectively. It is the intention of the Members that such Capital Account be
maintained in accordance with the provisions of Treas. Reg. Section
1.704-1(b)(2)(iv), and this Agreement shall be so construed. Accordingly, such
Capital Account shall initially be credited with the initial capital
contribution of the Member with respect to that class of membership and
thereafter shall be increased by (i) any cash or the fair market value of any
property contributed by such Member (net of any liabilities assumed by the
Company or to which the contributed property is subject) with respect to that
class of membership and (ii) the amount of all net income (whether or not exempt
from tax) and gain allocated to such Member hereunder with respect to that class
of membership, and decreased by (i) the amount of all net losses allocated to
such Member hereunder (including expenditures described in section 705(a)(2)(B)
of the Internal Revenue Code of 1986, as amended ("Code") with respect to that
class of membership, or treated as such an expenditure by reason of Treas. Reg,
Section 1.704-1(b)(2)(iv)(i)) and (ii) the amount of cash, and the fair market
value of property (net of any liabilities assumed by such Member or to which the
distributed property is subject), distributed to such Member pursuant to this
Agreement with respect to that class of membership. If the Company has made an
election under section 754 of the Code, Capital Accounts shall also be adjusted
to the extent required by Treas. Reg. Section 1.704-l(b)(2)(iv)(m). If a Member
transfers all or any part of such Member's interest (capital, profits and
otherwise) in the Company ("Membership Interest") in accordance with the terms
of this Agreement, the Capital Account of the transferor shall become the
Capital Account of the transferee to the extent of the Membership Interest
transferred.

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5. ACCOUNTING.

5.1 BOOKS AND RECORDS. The Membership Committee shall cause
the Company to maintain full and accurate books and records at the Company's
principal place of business, showing all receipts and expenditures, assets and
liabilities, net income or loss, and all other records necessary for recording
the Company' s business and affairs, including those required to be kept under
the Act and those sufficient to record the allocations and distributions to the
Members provided for in this Agreement. Such books and records shall be
maintained in accordance with generally accepted accounting principles;
provided, however, that adequate records concerning the maintenance of Capital
Accounts in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv) shall be
simultaneously maintained by the Company. Such books and records shall be open
to the inspection and examination of each Member by its duly authorized
representatives at all reasonable times, and may be copied by the Member.

5.2 FISCAL YEAR. The fiscal year of the Company shall end on
December 31 of each year ("Fiscal Year").

5.3 REPORTS.

(a) Within 75 days after the close of each Fiscal
Year of the Company, the Company shall furnish to each Member a report of the
business and operations of the Company during such Fiscal Year. Unless otherwise
agreed to by the Membership Committee, such report shall contain financial
statements prepared by the Company which are audited by certified public
accountants employed by the Company with the consent of both Members.

(b) Within 25 business days after the close of each
calendar month, the Company shall furnish to each Member a report of the
business and operations of the Company for such calendar month. Unless otherwise
agreed to by the Membership Committee, such report shall. contain unaudited
financial statements prepared by the Company, be in such form as the Membership
Committee may require and shall include a balance sheet as of the end of such
calendar month, a statement of the net income or net loss of the Company for
such calendar month and such other information as in the judgment of the
Membership Committee shall be reasonably necessary for the Members to be advised
of the results of the Company's operations and its financial condition. The
Company shall provide to the Members within 5 business days of the end of each
calendar month a "flash" estimate of income and expense for the previous
calendar month. Notwithstanding the time periods provided for in Section 5.3(a)
and this Section 5.3(b), the Members hereby agree to cooperate to shorten such
time periods to meet Black Beauty's reporting requirements.

5.4 BUDGET AND BUSINESS PLAN. Each Fiscal Year, the Membership
Committee shall establish the date by which the Company shall submit to the
Membership Committee an annual budget, delegation of authority and business plan
for the next succeeding Fiscal Year of the

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Company as well as a ten year business plan for the Company. The date for
submission established by the Membership Committee shall accommodate the
budgeting process of both Members; provided, however, that the Company shall
have at least 60 days advance notice from the Membership Committee of the date
for submission of the budget and business plans. All budgets and business plans
required to be submitted by the Company to the Membership Committee pursuant to
this Section 5.4 shall be approved, or modified and then approved, by the
Membership Committee, and the Membership Committee shall thereafter conduct the
business of the Company in accordance with the annual budget, business plan and
delegation of authority approved by the Membership Committee, unless otherwise
directed by the Membership Committee. Either Member may suggest for inclusion in
the budget capital projects. All such capital projects must be specifically
approved by the unanimous consent of the Membership Committee prior to the
commencement of expenditures for such capital projects.

5.5 TAX RETURNS. The Membership Committee shall cause all
required Federal, state and local income, franchise, property and other tax
returns, including information returns, to be timely filed with the appropriate
office of the relevant taxing jurisdiction or agency. In order to accommodate
the following provision regarding review of drafts of the Federal and state
income tax returns of the Company, the Company (if necessary) shall seek each
year a three month extension of the date on which such returns must be filed.
With respect to the Federal and state income tax returns of the Company, the
Company shall submit to each Member drafts of the proposed returns as soon as
possible, but in no event later than February 28 of each year, to permit review
and approval of such returns by each Member prior to filing. All expenses
incurred in connection with such tax returns and information returns, as well as
for the reports referred to in Section 5.3, shall be expenses of the Company.

5.6 MEMBER'S REQUEST FOR ADDITIONAL INFORMATION. The Company
shall also furnish to any Member such other reports of the Company's operations
and conditions as may reasonably be requested by either of the Members.

5.7 TAX MATTERS PARTNER. Xxxxxx shall be the "Tax Matters
Partner" (as that term is defined in the Code) for the Company. The Tax Matters
Partner shall have the authority granted a tax matters partner under the Code,
but the Tax Matters Partner shall not take any action binding upon another
Member without first notifying, and receiving the concurrence of, such Member.
All expenses of the Tax Matters Partner incurred in serving as Tax Matters
Partner shall be Company expenses and shall be paid by the Company. The Company
shall indemnify the Tax Matters Partner for, and hold the Tax Matters Partner
harmless from, any and all judgments, fines, amounts paid in settlement and
expenses (including attorneys' fees) reasonably incurred by the Tax Matters
Partner in any civil, criminal or investigative proceeding in which the Tax
Matters Partner is involved or threatened to be involved by reason of being the
Tax Matters Partner, provided that the Tax Matters Partner acted in good faith,
within what the Tax Matters Partner reasonably believed to be within the scope
of the Tax Matters Partner's authority and for a purpose which the Tax Matters
Partner

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reasonably believed to be in the best interests of the Company or the Members.
The Tax Matters Partner shall not be indemnified under this provision against
any liability to the Company or its Members to which the Tax Matters Partners
would otherwise be subject by reason of gross negligence or willful misconduct
or for failure to obtain a Member's consent in accordance with the provisions of
this Section 5.7. Nothing herein shall be deemed an election by the Company or
the Members to be subject to the partnership level audit provisions of section
6221 et seq. of the Code.

5.8 REVALUATION OF COMPANY PROPERTY. If there shall occur (i)
an acquisition of a Membership Interest for more than a de minimis capital
contribution, or (ii) a distribution (other than a de minimis distribution) to a
Member in consideration for a Membership Interest, the Member Committee may
revalue the assets of the Company at their then fair market value and adjust the
Capital Accounts of the Members in the same manner as provided in Section 9.3 in
the case of a property distribution. If there is a reallocation pursuant to this
Section 5.8, then net income and net loss shall thereafter be adjusted for
allocations of depreciation (cost recovery) and gain or loss in accordance with
the provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(f) and (g), and the
Members' distributive shares of depreciation (cost recovery) and gain or loss
computed in accordance with the principles of section 704(c) of the Code and the
regulations promulgated thereunder using the method selected by the Membership
Committee.

6. BANK ACCOUNTS AND EXCESS FUNDS.

6.1 BANK ACCOUNTS. All funds of the Company shall be deposited
in its name into such checking or savings accounts, time certificates,
short-term money market funds or other investment as shall be designated by the
Membership Committee. Withdrawals therefrom shall be made upon such signature or
signatures (or other authorization form) as determined by the Membership
Committee. Company funds shall not be commingled with those of any other person
or entity.

6.2 INVESTMENT OF EXCESS FUNDS. the company may invest excess
funds not required in the Company's business, and not required to be distributed
pursuant to the terms of this Agreement, in short-term United States Government
obligations maturing within 1 year or in other securities selected by the
Membership Committee.

7. ALLOCATION OF NET INCOME AND LOSS.

7.1 Net Income and Net Loss.

(a) Except as otherwise provided herein, the net
income of the Company for each Fiscal Year shall be allocated to the Members as
follows:

(1) First, to the Class B Member an amount
of such net income equal

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to the Net Cash Flow (as hereinafter defined) of the Company for such Fiscal
Year distributed as Class B Priority Distributions (as hereinafter defined) with
respect to such Fiscal Year.

(2) Second, to the Class A Members in
proportion to their Class A Percentage Interests, subject to Section 7.1(a)(3)
and Section 7.1(h). Black Beauty's Class A Percentage Interest is 75% and Xxxxxx
Class A Percentage Interest is 25%.

(3) With respect to the Fiscal Year ending
December 31, 2001, if Xxxxxx so elects by giving written notice to Black Beauty
on or before April 15 following such Fiscal Year, all net income allocable to
the Class A Members for such Fiscal Year shall be allocated 100% to Black
Beauty.

(b) Notwithstanding anything herein to the contrary,
if a Member has a deficit balance in such Member's Capital Account (excluding
from such Member's deficit Capital Account any amount which such Member is
obligated to restore in accordance with Treas. Reg Section 1.704-1(b)(2)(ii)(c),
as well as any amount such Member is treated as obligated to restore under
Treas. Reg. Sections 1.704-2(g)(1) and 1.704-2(i)(5)) and unexpectedly receives
an adjustment, allocation or distribution described in Treas. Reg. Section
1.704-1(b)(2)(ii)(d)(4)(5)or(6), then such Member will be allocated items of
income and gain in an amount and manner sufficient to eliminate the deficit
balance in such Member's Capital Account as quickly as possible. If there is an
allocation to a Member pursuant to this Section 7.1(b), then future allocations
of net income pursuant to Section 7.1 (a) shall be adjusted so that those
Members who were allocated less income, or a greater amount of loss, by reason
of the allocation made pursuant to this Section 7 1 (b), shall be allocated
additional net income in an equal amount. It is the intention of the parties
that the provisions of this Section 7.1 (b) constitute a "qualified income
offset" within the meaning of Treas. Reg. Section 1.704-1 (b)(2)(ii)(d), and
such provisions shall be so construed.

(c) If there is a net decrease in the Company's
Minimum Gain (within the meaning of Treas. Reg. Section 1704-2(b)(2)) or Partner
Nonrecourse Debt Minimum Gain (within the meaning of Treas. Reg Section
1.704-2(i)(3)) during any Fiscal Year, each Member shall be allocated, before
any other allocations hereunder, items of income and gain for such Fiscal Year
(and subsequent Fiscal Years, if necessary), in an amount equal to such Member's
share (determined in accordance with Treas. Reg. Sections 1.704-2(g) and
1.704-2(i)(5), as applicable) of the net decrease in the Company's Minimum Gain
or Partner Nonrecourse Debt Minimum Gain, as applicable, for such Fiscal Year;
provided, however, that no such allocation shall be required if any of the
exceptions set forth in Treas. Reg. Section 1.704-2(f) apply. It is the
intention of the parties that this provision constitute a "minimum gain
chargeback" within the meaning of Treas. Reg. Sections 1.704-2(f) and
1.704-2(i)(4), and this provision shall be so construed.

(d) Notwithstanding anything herein to the contrary,
the Company's partner nonrecourse deductions (within the meaning of Treas. Reg.
Section 1.704-2(i)(2)) shall be allocated solely

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to the Member who has the economic risk of loss with respect to the partner
nonrecourse liability related thereto in accordance with the provisions of
Treas. Reg. Section 1.704-2(i)(1).

(e) Notwithstanding the provisions of Section 7.1(i),
no net losses shall be allocated to a Member if such allocation would result in
such Member having a deficit balance in such Member's Capital Account (excluding
from such Member's deficit Capital Account any amount such Member is obligated
to restore in accordance with Treas. Reg. Section 1.704-1(b)(2)(ii)(c), as well
as any amount such Member is treated as obligated to restore under Treas. Reg.
Sections 1.704-2(g)(1) and 1.704-2(i)(5)). In such case, the net loss that would
have been allocated to such Member shall be allocated to the other Members to
whom such loss can be allocated without violation of the provisions of this
Section 7.1(e) in proportion to their respective Allocation Interests among
themselves.

(f) Notwithstanding the provisions of Section 7.1(a),
to the extent losses are allocated to the Members by virtue of Section 7.1(e),
the net income of the Company thereafter recognized shall be allocated to such
Members (in proportion to the losses previously allocated to them pursuant to
Section 7.1(e) until such time as the net income of the Company allocated to
them pursuant to this Section 7.1(f) equals the net losses allocated to them
pursuant to Section 7.1(e).

(g) For Federal state and local income tax purposes
only, with respect to any assets contributed by a Member to the Company
("Contributed Assets") which have an agreed fair market value on the date of
their contribution which differs from the Member's adjusted basis therefor as of
the date of contribution, the allocation of depreciation and gain or loss with
respect to such Contributed Assets shall be determined in accordance with the
provisions of Section 704(c) of the Code and the regulations promulgated
thereunder using the traditional method within the meaning of Treas. Reg.
Section 1.704-3(b). For purposes of this Agreement, an asset shall be deemed a
Contributed Asset if it has a basis determined, in whole or in part, by
reference to the basis of a Contributed Asset (including an asset previously
deemed to be a Contributed Asset pursuant to this sentence). Notwithstanding the
foregoing, if the gain from the sale of any Contributed Asset is being reported
on the installment method for income tax purposes, then the total amount of gain
which is to be recognized by each of the Members in accordance with the above
provision in all taxable years shall be computed and the amount of gain to be
recognized by each of the Members in each year shall be in proportion to the
total gain to be recognized by each of the Members in all taxable years.

(h) Notwithstanding anything herein to the contrary,
in the year in which the Company either (i) begins the sale of all, or
substantially all, of its assets, or (ii) the Members agree to dissolve the
Company, the net income of the Company to be allocated to the Class A Members
shall be allocated as follows:

(1) First, all of such net income to be
allocated to the Class A Members, and, if there is insufficient net income, then
an amount of the gross income of the

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Company, shall be allocated to Xxxxxx until Xxxxxx' Class A Capital Account
equals 25% of the aggregate Class A Capital Accounts.

(2) Second, the balance of the net income of
the Company to be allocated to the Class A Members shall be allocated to the
Class A Members in accordance with their respective Class A Percentage
Interests.

(i) Except as otherwise provided herein, the net loss
of the Company for each Fiscal Year shall be allocated to the Class A Members in
accordance with their respective Class A Percentage Interests.

7.2 ALLOCATION FOR FINANCIAL REPORTING PURPOSES. Solely for
financial reporting purposes, the net income and net loss of the Company to be
allocated to the Class A Members shall be allocated 100% to Black Beauty.

7.3 ALLOCATION OF EXCESS NONRECOURSE LIABILITIES. For purposes
of section 752 of the Code and the regulations thereunder, the excess
nonrecourse liabilities of the Company (within the meaning of Treas. Reg.
Section 1.752-3(a)(3)), if any, shall be allocated to each Member in accordance
with their respective Percentage Interests.

7.4 ALLOCATIONS IN EVENT OF TRANSFER. In the event of (i) the
transfer of a Member's Membership Interest (in accordance with and subject to
the provisions of this Agreement) in the Company, (ii) the admission of a new
Member, or (iii) the making by the Members of disproportionate capital
contributions, at any time other than the end of a Fiscal Year, the periods
before and after such transfer, admission or disproportionate capital
contributions shall be treated as separate fiscal years, and the Company's net
income, net loss and credits for each of such deemed separate fiscal years shall
be allocated in accordance with the Members' respective Percentage Interests for
each of such deemed separate fiscal years.

8. DISTRIBUTIVE SHARES.

8.1 DISTRIBUTIVE SHARES. For purposes of Subchapter K of the
Code, the distributive shares of the Members of each item of Company taxable
income, gains, losses, deductions or credits for any Fiscal Year shall be in the
same proportions as their respective shares of the net income or loss of the
Company allocated to them pursuant to Section 7.1. Notwithstanding the
foregoing, to the extent not inconsistent with the allocation of gain provided
for in Section 7.1, gain recognized by the Company which represents recapture of
depreciation, cost recovery or depletion deductions for Federal income tax
purposes shall be allocated in accordance with the provisions of Treas. Reg.
Section 1.1245-1 (e) (without regard to whether real property or personal
property is involved).

8.2 ELECTIONS. Any and all elections required or permitted to
be made by the Company

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under the Code, including the election provided for in section 754 of the Code,
shall be made in accordance with the decisions of the Membership Committee.

8.3 PARTNERSHIP TREATMENT. It is intended that the Company
shall be treated as a partnership for purposes of Federal, state and local
income tax or other taxes, and the Members shall not take any position or make
any election, in a tax return or otherwise, inconsistent with such treatment.

9. DISTRIBUTIONS.

9.1 NET CASH FLOW. For purposes of this Agreement, the term
"Net Cash Flow" for any period shall mean the excess, if any, of (a) the sum of
(i) the gross receipts (excluding loan proceeds) of the Company for such period
plus (ii) any funds released by the Membership Committee from previously
established reserves referred to in (b)(iii) below, over (b) the sum of (i) all
cash operating expenses paid by the Company for such period, including, but not
by way of limitation, salaries, taxes, interest, insurance premiums, royalties,
rentals, utilities and fees, (ii) all amounts paid by the Company in such period
on account of the principal of any debts or liabilities of the Company and (iii)
reasonable reserves for working capital and future expenditures and to maintain
Company finances in compliance with financing covenants, as shall be determined
from time to time by the Membership Committee. Notwithstanding the foregoing, to
the extent that any of the payments described in (b)(i) or (ii) above are paid
from capital contributions, from loan proceeds or from previously established
reserves, such payments shall not be taken into account in determining Net Cash
Flow for such period.

9.2 DISTRIBUTION OF NET CASH FLOW. Subject to applicable bank
financing covenants, the Net Cash Flow of the Company for each Fiscal Year
(other than Net Cash Flow arising in connection with the liquidation of the
Company, which Net Cash Flow shall be distributed as provided in Section 13.3)
shall, unless otherwise agreed to by both Members, be distributed within 90 days
following the close of each Fiscal Year, to the extent not previously
distributed. Subject to applicable bank financing covenants, unless otherwise
agreed to by the Members, the Net Cash Flow of the Company for each month shall
be distributed within 30 days following the close of each month. All such
distribution shall be made to the Members as follows:

(a) First, to the Class B Member to satisfy all accrued and
undistributed Class B Priority Distribution Amounts (as defined below) (such
distributions, "Class B Priority Distributions").

(b) Second, to the Class A Members proportionate to their
Class A Percentage Interests, an amount equal to forty percent (40%) of the net
income of the Company allocated to the Class A Members with respect to such
Fiscal Year.

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(c) Third, to the Class B Member until the Adjusted Class B
Capital Account Balance (as defined below) is zero (such distributions, "Class B
Residual Distributions").

(d) Fourth, to the Class A Members proportionate to their
Class A Percentage Interests.

As used herein, "Class B Priority Distribution Amounts" equals an
amount accruing each day from December 31, 2001, equal to 8.25% divided by 365
multiplied by the Adjusted Class B Capital Account Balance as of such date.
"Adjusted Class B Capital Account Balance" means $3 Million minus distributions
pursuant to Section 9.2(c).

9.3 PROPERTY DISTRIBUTIONS. If any property of the Company,
other than cash, is distributed by the Company to a Member (in connection with
the liquidation of the Company or otherwise), then the fair market value of such
property shall be used for purposes of determining the amount of such
distribution. The difference, if any, of such fair market value over (or under)
the value at which such property is carried on the books of the Company shall be
credited or charged to the Capital Accounts of the Members in accordance with
the ratio in which the Members share in the gain and loss of the Company
pursuant to Section 7.1. The fair market value of the property distributed shall
be agreed to by the Members; provided, however, that if the Members cannot so
agree, the issue shall be submitted to arbitration as provided in Section 17. If
any such property is distributed other than in exchange for a Membership
Interest, such property shall be distributed in the same manner as if it were
Net Cash Flow.

10. COMPANY MANAGEMENT.

10.1 MEMBERSHIP COMMITTEE.

(a) Except as expressly provided otherwise herein,
management of the Company shall be vested in a committee ("Membership
Committee"). The Membership Committee shall consist of Black Beauty and Franks.
All xxxxxx of the Company shall be exercised by or under the authority of, and
the business and affairs of the Company shall be managed under the direction of,
the Members through the Membership Committee. The Members, acting through the
Membership Committee, shall have authority over all of the Company's actions. Mo
Member (nor any officer, director or employee of any Member), acting alone,
shall be authorized to engage in any activity or take any action on behalf of
the Company without the express written authorization of the Membership
Committee.

(b) Each Member shall be entitled to one vote on
decisions or actions of the Membership Committee.

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Members. An action of the Membership Committee shall be by a resolution adopted
at a Membership Committee meeting or, without a meeting, by a written consent
signed by each of the Members.

(d) Meetings of the Membership Committee shall be
held at least quarterly unless the Membership Committee otherwise agrees.
Meetings of the Membership Committee shall also be held upon call by any Member.
Each Member must be present to constitute a quorum and convene a meeting of the
Membership Committee. Each Member may invite to the meetings of the Membership
Committee such attorneys and advisors as such Member deems appropriate. Meetings
of the Membership Committee may, if both Members consent, be held by telephone
conferences in which each Member can hear all other Members, or in such other
manner as shall be agreed to by the Members.

(e) The Membership Committee is authorized to adopt
rules concerning the conduct of the affairs of the Membership Committee and the
Company.

10.2 SERVICE AGREEMENTS. To the extent and for the period that
it is not practicable or economic to include in the staff of the Company
personnel capable of providing certain management and staff services required by
the Company, the Company, through the Membership Committee, may enter into
appropriate service agreements with Black Beauty and/or Xxxxxx, or any of their
Affiliates for such services. The Membership Committee shall establish policies
as to the use of such services.

10.3 RELATED PARTY TRANSACTIONS. The fact that one of the
Members is directly or indirectly interested in, or connected with, any person,
firm or corporation employed by the Company to render or perform a service, or
to or from whom The Company may purchase, sell or lease property, shall not
prohibit the Company from employing such person, firm or corporation, or from
otherwise dealing with him or it, provided (i) it is on terms no less
advantageous to the Company than are available from an unrelated third party and
(ii) the Company has received approval of each such transaction in advance from
the Membership Committee if the proposed transaction is material and is other
than in the ordinary course of business.

10.4 ACTS BY MEMBERS. Except for rights vested in the Members
under this Agreement, neither Member shall take, or commit the Company to take,
any action, either in its own name in respect of the Company or in the name of
the Company, unless the Membership Committee has approved the same. Neither
Member may initiate or conduct any negotiations to sell all of the Membership
Interests or to sell all, or substantially all, of the assets of the Company,
without, in each case, the prior written consent of the other Member.

11. OFFICERS.

11.1 REQUIRED OFFICERS. The Company shall have the officers
appointed by the

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Membership Committee in accordance with this Agreement. A duly appointed officer
may appoint one or more officers or assistant officers if authorized by the
Membership Committee. The same individual may simultaneously hold more than one
office in the Company. Section 11.10 delegates to the Secretary, if such office
be created and filled, the required responsibility of preparing minutes of the
Management Committee's and Members' meetings and for authenticating records of
the Company. If such office shall not be created and filled, then the Membership
Committee shall delegate to one of the officers of the Company such
responsibility.

11.2 DUTIES OF OFFICERS. Each officer of the Company shall
have the authority and shall perform the duties set forth in this Agreement for
such office or, to the extent consistent with this Agreement, the duties
prescribed by the Membership Committee or by direction of an officer authorized
by the Membership Committee 10 prescribe the duties of other officers.

11.3 APPOINTMENT AND TERM OF OFFICE. The officers of the
Company shall be appointed by the Membership Committee from time to time.

11.4 RESIGNATION AND REMOVAL OF OFFICERS. An officer may
resign at any time by delivering notice to the Company. A resignation shall be
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
Company accepts the future effective date, the Membership Committee may fill the
pending vacancy before the effective date if the Membership Committee provides
that the successor shall not take office until the effective date. The
Membership Committee may remove any officer at any time with or without cause.

11.5 CONTRACT RIGHTS OF OFFICERS. Appointment of an officer or
agent shall not of itself create contract rights. An officer's removal shall not
affect the officer's contract rights, if any, with the Company. An officer's
resignation shall not affect the Company's contract rights, if any, with the
officer.

11.6 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, if
that office be created and filled, shall be the chief executive officer of the
Company and, in general, shall have such authority as a chief executive officer
of an Indiana corporation would have, and such other duties as may be prescribed
by the Membership Committee from time to time The Chief Executive Officer shall
preside at all meetings of the Members.

11.7 PRESIDENT. The President, if that office be created and
filled, shall be the chief executive officer of the Company, unless a chief
executive officer has been appointed in accordance with Section 11.6. The
President may sign any deeds, mortgages, bonds, contracts or other instruments
which the Membership Committee has authorized to be executed, except in cases
where the signing and execution thereof shall be expressly delegated by the
Membership Committee or by this Agreement to some other officer or agent of the
Company, or shall be required by law to be

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otherwise signed or executed. The President shall, in general, perform all
duties incident to the office of President of an Indiana corporation and such
other duties as may be prescribed by the Membership Committee or the Chief
Executive Officer from time to time. Unless otherwise ordered by the Membership
Committee, the President shall have full power and authority on behalf of the
Company to attend, act and vote in person or by proxy at any meetings of
shareholders of any corporation in which the Company may hold stock, and at any
such meeting shall hold and may exercise all rights incident to the ownership of
such stock which the Company, as owner, would have had and could have exercised
if present. The Membership Committee may confer like powers on any other person
or persons.

11.8 VICE-PRESIDENT. In the absence of the President, or in
the event of the President's death, inability or refusal to act, the
Vice-President (or, in the event there be more than one Vice-President, the
Vice-Presidents in order designated at the time of their appointment, or in the
absence of any designation, then in the order of their appointment), if that
office be created and filled, shall perform the duties of the President and when
so acting shall have all the powers of, and be subject to all the restrictions
upon, the President. A Vice-President shall perform such duties as from time to
time may be assigned to such person by the Chief Executive Officer, the
President or by the Membership Committee.

11.9 TREASURER. The Treasurer, if that office be created and
filled, shall have charge and custody of, and be responsible for, all funds and
securities of the Company, receive and give receipts for monies due and payable
to the Company from any source whatsoever, and deposit all such monies in the
name of the Company in such banks, trust companies and other depositories as
shall be selected in accordance with the provisions of Section 6.1, and in
general, perform all the duties incident to the office of Treasurer of an
Indiana corporation and such other duties as from time to time may be assigned
to such person by the Chief Executive Officer, the President or the Membership
Committee. If required by the Membership Committee, the Treasurer shall give a
bond for the faithful discharge of such officer's duties in such sum and with
such surety or sureties as the Membership Committee shall determine.

11.10 SECRETARY. The Secretary, if that office be created and
filled, shall keep the minutes of the Members' meetings and of the Membership
Committee's meetings in one or more books provided for that purpose, see that
all notices are duly given, be custodian of the Company records, be responsible
for authenticating records of the Company, keep a register of the mailing
address of each Member, which shall be furnished to the Secretary by each
Member, have general charge of the transfer books of the Company, and, in
general, perform all duties incident to the office of Secretary of an Indiana
corporation and such other duties as from time to time may be assigned to such
person by the Chief Executive Officer, the President or the Membership
Committee.

11.11 ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.

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(a) ASSISTANT TREASURER. The Assistant Treasurer, if
that office be created and filled, shall, if required by the Membership
Committee, give bond for the faithful discharge of such officer's duty in such
sum and with such surety as the Membership Committee shall determine.

(b) ADDITIONAL DUTIES. The Assistant Treasurers and
Assistant Secretaries, in general, shall perform such additional duties as shall
be assigned to them by the Treasurer or the Secretary, respectively, or by the
Chief Executive Officer, the President or the Membership Committee.

11.12 Compensation. The compensation of the officers of the
Company shall be fixed from time to time by the Membership Committee.

12. STANDARD OF CARE OF OFFICERS; INDEMNIFICATION.

12.1 STANDARD OF CARE. The officers of the Company shall not
be liable, responsible or accountable in damages to any Member or the Company
for any act or omission on behalf of the Company performed or omitted by them in
good faith and in a manner reasonably believed by them to be in the best
interests of the Company and, in the case of a criminal proceeding, had no
reasonable cause to believe that the conduct was unlawful.

12.2 INDEMNIFICATION.

(a) To the fullest extent permitted by the Act, the
Company shall indemnify each officer of the Company against reasonable expenses
(including reasonable attorneys' fees), judgments, taxes, penalties, fines
(including any excise tax assessed with respect to an employee benefit plan) and
amounts paid in settlement (collectively "Liability"), incurred by such person
in connection with defending any threatened, pending or completed action, suit
or proceeding (whether civil, criminal, administrative or investigative, and
whether formal or informal) to which such person is, or is threatened to be
made, a party because such person is or was an officer of the Company, or is or
was serving at the request of the Company as a director, officer, partner,
member, employee or agent of another domestic or foreign corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, provided
that (i) the officer acted in good faith and in a manner reasonably believed by
the officer to be in the best interests of the Company or, in the case of an
employee benefit plan, the interests of the participants and beneficiaries, (ii)
in the case of a criminal proceeding, the officer had no reasonable cause to
believe the conduct unlawful, (iii) in connection with a proceeding brought by
or in the right of the Company, the officer was not adjudged liable to the
Company, and (iv) the officer was not adjudged liable in a proceeding charging
improper personal benefit. An officer shall be considered to be serving an
employee benefit plan at the Company's request if such person's duties to the
Company also impose duties on or otherwise involve services by such person to
the plan or to participants in or beneficiaries of the plan.

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(b) To the fullest extent authorized or permitted by
the Act, the Company shall pay or reimburse reasonable expenses (including
reasonable attorneys' fees) incurred by an officer who is a party to a
proceeding in advance of final disposition of such proceeding if:

(1) The officer furnishes the Company a
written affirmation of their good faith belief that they have met the standard
of conduct described in Section 12.1;

(2) The officer furnishes the Company a
written undertaking, executed personally or on the officer's behalf, to repay
the advance if it is ultimately determined that the officer did not meet the
standard of conduct. Such undertaking shall be an unlimited general obligation
of the officer, but shall not be required to be secured and may be accepted
without reference to financial ability to make repayment.

(3) A determination is made that the facts
then known to those making the determination would not preclude indemnification
under the provisions of this Section 12.2.

(c) The indemnification against Liability and
advancement of expenses provided by, or granted pursuant to, this Section 12.2
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement may be entitled under any agreement, action of
Members or otherwise, both as to action in their official capacity and as to
action in another capacity while holding such office of the Company, shall
continue as to a person who has ceased to be an officer of the Company, and
shall inure to the benefit of the heirs, executors and administrators of such a
person.

(d) Any repeal or modification of this Section 12.2
by the Members shall not adversely affect any right or protection of an officer
of the Company under this Section 12.2 with respect to any act or omission
occurring prior to the time of such repeal or modification.

13. DISSOLUTION AND TERMINATION OF CLASS B MEMBERSHIP.

13.1 DISSOLUTION. The Company shall dissolve upon, but not
before, the first to occur of the following:

(a) The unanimous consent of the Members to dissolve
the Company; or

(b) The dissolution of the Company under the Act by
virtue of an event which cannot be waived by the parties.

The Company may only be dissolved in accordance with the foregoing and the
Members waive dissolution of the Company on account of any event described in
the Act which may be superseded

-19-

by the terms of this Agreement. Dissolution of the Company shall be effective
upon the date on which the event giving rise to the dissolution occurs, but the
Company shall not terminate until the assets of the Company have been
distributed as provided in Section 13.3. Prior to the liquidation and
termination of the Company, the business of the Company, and the obligations of
the Members relative to the Company, shall continue to be governed by this
Agreement.

13.2 LIQUIDATION AND WINDING UP UPON DISSOLUTION. If the
Company is dissolved, the Company shall be wound up and liquidated in accordance
with the requirements of law and the following provisions:

(a) The right to wind up the Company's affairs and to
supervise its liquidation shall be exercised jointly by all Members
("Liquidators").

(b) Upon dissolution, the Liquidators shall insure
that an account is taken as soon as practicable of all property, assets and
liabilities of the Company.

(d) The assets and property of the Company or the
proceeds of any sale thereof, together with payments received pursuant to
Section 13.2(c), shall be applied by the Liquidators in accordance with Section
13.3.

13.3 DISTRIBUTIONS UPON LIQUIDATION. Upon the dissolution of
the Company, the assets of the Company to be sold shall be liquidated in an
orderly fashion and the proceeds thereof, and the property to be distributed in
kind, shall be distributed, on or before the later to occur of (i) the close of
the Company's taxable year, or (ii) 90 days following the date of such
dissolution, as follows:

(a) First, to the payment and discharge of all of the
Company's debts and liabilities, to the necessary expenses of liquidation, to
the establishment of a cash reserve for the completion of the reclamation
obligations of the Company and to the establishment of a cash reserve which the
Liquidators determine to create for unmatured and/or contingent liabilities and
obligations of the Company.

(b) Second, to the Members in accordance with their
respective Capital Accounts; provided, however, that if the Liquidators
establish any reserves in accordance with the provisions of Section 13.3(a),
then the distributions pursuant to this Section 13.3(b) (including distributions
of such reserve) shall be pro rata in accordance with the balances of die
Members' Capital Accounts.

13.4 NO NEGATIVE CAPITAL ACCOUNT MAKE-UP REQUIRED. No Member
shall be required

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to contribute any property to the Company or any third party by reason of having
a negative Capital Account.

13.5 TERMINATION OF CLASS B MEMBERSHIP. When the Adjusted
Class B Capital Account Balance of the Class B Member is reduced to zero by
virtue of the payment of $3 Million of Class B Residual Distributions, and all
Class B Priority Distribution Amounts have been distributed in full, such class
of membership and all rights related thereto shall terminate.

14. ASSIGNMENT.

14.1 ASSIGNMENT OF MEMBER'S INTEREST. Except in respect of
that certain option held by Peabody Holding Company, Inc. to acquire the
Membership Interests of Xxxxxx in the Company, no Member may sell, assign,
pledge, grant a security interest in, encumber or otherwise dispose of all or
any part of its Membership Interest in the Company nor withdraw from the
Company. Any purported withdrawal, sale, assignment, transfer, pledge, grant,
encumbrance or disposition which is not in compliance with this Section 14 shall
be null and void ab initio and of no force and effect.

14.2 [RESERVED]

14.3 [RESERVED]

14.4 SUBSTITUTE MEMBERS. No assignee of a Member's Membership
Interest shall have the right to become a substitute Member unless all of the
following conditions are satisfied:

(a) the fully executed and acknowledged written
instrument of assignment has been filed with the Company setting forth the
intention of the assignor that the assignee become a substitute Member in place
of the assignor with respect to the Membership Interest assigned;

(b) the assignor and assignee execute and acknowledge
such other instruments as the Members deem necessary or desirable to effect such
admission, including, but not limited to, the written acceptance and adoption by
the assignee of the provisions of this Agreement; and

(c) all of the Members have consented to the
assignment and substitution, which shall be in their sole and absolute
discretion.

14.5 Additional Members. Additional Members may be admitted to
the Company only at such times and on such terms as specified by the existing
Members and only upon the unanimous written consent of all existing Members.

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14.6 XXXXXX X. XXXXXX SECRECY AND NONCOMPETITION.

(a) For a period concluding three years after Xxxxxx
no longer owns an interest in the Company ("Restricted Period"), Xxxxxx X.
Xxxxxx ("Xxxxxx Controlling Member") shall not, directly or indirectly, engage
in, own, manage, operate, join, control, lend money or other assistance to, or
participate in or be connected with, as an officer, employee, member, partner,
stockholder, consultant or otherwise, any individual, partnership, firm,
corporation, limited liability company or other business organization or entity
engaged in: (i) the mining of coal, whether underground or surface, within the
Illinois counties of Gallatin, Saline, Xxxxxx or Xxxxxxxxxx, or the Kentucky
counties of Union or Xxxxxxx; or (ii) the marketing of coal mined or the
acquisition, leasing or ownership (whether by lease or in fee) of any coal
reserves, mineral rights or surface rights, within the areas of the Illinois
counties of Gallatin, Saline, Xxxxxx or Xxxxxxxxxx, or the Kentucky counties of
Union or Xxxxxxx.

(b) The Xxxxxx Controlling Member acknowledges that a
breach of any of the covenants or obligations contained in this Section 14.6 may
result in material and irreparable injury to the Company or its affiliates or
subsidiaries for which there is no adequate remedy at law, and that injury and
damages to the Company, its affiliates or subsidiaries, resulting from a breach
will be immeasurable. Without limiting the rights or remedies, both legal and
equitable, available to the Company in the event of an actual or threatened
breach, the Company shall be entitled to seek and obtain a temporary restraining
order and/or a preliminary or permanent injunction against the Xxxxxx
Controlling Member, which shall prevent the Xxxxxx Controlling Member from
engaging in any activities prohibited by this Section 14.6, or to seek and
obtain such other relief against the Franks Controlling Member as may be
required to specifically enforce any of the covenants or obligations contained
in this Section 14.6. The Xxxxxx Controlling Member hereby agrees and consents
that injunctive relief may be sought ex parte in any state or federal court of
record in the State of Indiana, in the state and county in which the violation
occurs, or in any other court of competent jurisdiction, at the election of the
Company.

15. RELATIONSHIP WITH COMPANY.

15.1 PROMOTION OF COMPANY. Each Member shall use reasonable
efforts to promote the activities of the Company and to ensure its success.

15.2 INFORMATION. Subject to any applicable restriction of
law, both Members shall be fully and currently informed of the activities of the
Company. To the extent that there are any applicable laws or regulations which
would have the effect of limiting the right of a Member to be so informed, the
other Member shall use all reasonable efforts to obtain waivers thereof in favor
of the Company and the Member so limited and, failing the obtaining of such
waivers, the Members shall make such arrangements as shall be practicable to
preserve to the Company the benefits of the contracts or projects to which such
secrecy agreements or laws or regulations relate.

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15.3 CONFIDENTIALITY.

(a) Each Member agrees not to divulge, communicate,
use to the detriment of the Company or for the benefit of any other person, or
misuse in any way, any confidential information or trade secrets of the Company,
including personnel information, secret processes, know-how, customer lists,
formulas or other technical data, except as may be required by law; provided,
however, that this prohibition shall not apply to (i) any information which,
through no improper action of such Member, is publicly available or generally
known in the industry, (ii) any information which is disclosed upon the consent
of the Membership Committee or (iii) any information which the Member is
required to disclose in a judicial proceeding. Each Member acknowledges and
agrees that any information or data such Member has acquired on any of these
matters or items were received in confidence and as a fiduciary of the Company.
Nothing herein shall restrict the ability of a Member to disclose information to
an Affiliate or Peabody Holding Company, Inc., so long as they do not use that
information to the detriment of the Company.

(b) It is agreed among the parties that the Company
would be irreparably damaged by reason of any violation of the provisions of
Section 15.3(a), and that any remedy at law for a breach of such provisions
would be inadequate. Therefore, the Company shall be entitled to seek and obtain
injunctive or other equitable relief (including, but not limited to, a temporary
restraining order, a temporary injunction or a permanent injunction) against any
Member for a breach or threatened breach of such provisions and without the
necessity of proving actual monetary loss. It is expressly understood among the
parties that this injunctive or other equitable relief shall not be the
Company's exclusive remedy for any breach of the provisions of Section 15.3(a)
and the Company shall be entitled to seek any other relief or remedy that the
Company may have by contract, statute, law or otherwise for any breach hereof,
and it is agreed that the Company shall also be entitled to recover its
attorneys' fees and expenses in any successful action or suit against any Member
relating to any such breach.

16. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Indiana without regard
to its conflict of laws rules.

17. ARBITRATION. Any claim or dispute between the Members which arises
out of or relates to this Agreement shall be arbitrable; provided, however, that
no business decision of the Membership Committee shall be arbitrable. All such
arbitrable matters shall arbitrated in accordance with the rules of the American
Arbitration Association. The arbitration shall be held in Evansville, Indiana
before a panel of three arbitrators, each of whom shall be chosen from a panel
selected by the American Arbitration Association. Each of the parties to the
dispute shall select one arbitrator from the panel and the two arbitrators so
selected shall select the third arbitrator. The decision of the arbitrators
shall be final and binding upon the Members and the Company and judgment thereon
may be entered in any court of competent jurisdiction. The cost of such
arbitration shall be borne equally by the Members. The pendency of any
arbitration proceeding shall stay any right of a

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Member to take any action in regard to the other Member which is based upon a
claim involved in the matter being arbitrated, but such stay shall not affect
the obligations of the parties hereunder to continue with performance of this
Agreement except to the extent of the matter being arbitrated.

18. NOTICES.

18.1 Addresses. All notices, consents, elections, requests,
reports, demands and other communications hereunder shall be in writing and
shall be personally delivered against a written receipt, mailed by registered or
certified, first-class mail, postage prepaid, sent by confirmed facsimile
transmission (fax) or by a reputable overnight courier service such as Federal
Express addressed as follows:

If to Black Beauty: Black Beauty Coal Company
000 Xxxxx Xxxxx Xxx.
Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
Fax: 812/000-0000

If to Xxxxxx: Xxxxxx Energy, L.L.C.
00 X. Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: 618/000-0000

or to such other address or to such other person as a Member shall have last
designated by notice to the other Member.

18.2. EFFECTIVE DATE. All notices, consents, elections,
demands and requests shall be effective upon being properly personally
delivered, upon being delivered to a reputable messenger service, upon
transmission of a confirmed fax, or upon being deposited in the United States
mail in the manner provided in Section 18.1. However, the time period in which a
response to any such notice, demand or request must be given shall commence to
run from the date of personal delivery, the date of delivery by a reputable
messenger service, the date on the confirmation of a fax, or the date on the
return receipt, as applicable. If a Member refuses to accept delivery of any
notice sent in accordance with Section 18.1, such Member shall nevertheless be
deemed to have received such notice for purposes of this Section 18.2 on the
date such refusal first occurred.

19. MISCELLANEOUS.

19.1 BINDING ON SUCCESSORS. Except as otherwise provided in
this Agreement, this

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Agreement shall be binding upon, and inure to the benefit of, the Members and
their successors and assigns.

19.2 AMENDMENTS. This Agreement shall not be amended or
modified except with the unanimous consent of the Members as evidenced by a
written instrument executed by all Members.

19.3 WAIVER AND CONSENT. No consent or waiver, express or
implied, by a Member to or of any breach or default by the other Member in the
performance of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other Member of the same or any other obligation of such Member hereunder.

19.4 WAIVER AND DISSOLUTION UNDER THE ACT. Any dissolution of
the Company shall occur only as provided herein, and each Member hereby waives
and renounces its rights, if any, under the Act to seek a court decree of
dissolution, to seek the appointment of a liquidator of the Company and to seek
a partition of any Company property.

19.5 RELATIONSHIP OF THE MEMBERS. The relationship between the
Members shall be limited to the performance of the transactions contemplated by
this Agreement and by the Formation Agreement (including the Closing Documents
referred to therein), and in accordance with their terms. Nothing herein shall
be construed to authorize a Member to act as general agent for the other Member.

19.6 FURTHER ASSURANCES. The Members shall execute and deliver
such further instruments and do such further acts and things as may be required
to carry out the intent and purpose of this Agreement.

19.7 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person or circumstance, is invalid or unenforceable
to any extent, the remainder of this Agreement, and the application of such
provisions to other persons or circumstances, shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.

19.8 AGREEMENT IN COUNTERPARTS. This Agreement may be executed
in as many counterparts as may be deemed necessary and convenient. Each
counterpart when so executed shall be deemed an original, but all counterparts
shall constitute one and the same instrument.

19.9 ENTIRE AGREEMENT. This Agreement, the Formation Agreement
and the Closing Documents referred to in the Formation Agreement, contain the
entire agreement between the parties hereto relative to the Company. Exhibits
are incorporated into this Agreement by reference.

19.10 NO THIRD PARTY BENEFICIARY. This Agreement is made
solely and specifically between and for the benefit of the parties hereto, and
their respective permitted successors and

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assigns, and no other person will have any rights, interest, or claims hereunder
or be entitled to any benefits under or on account of this Agreement as a third
party beneficiary or otherwise.

19.11 CAPTIONS; SECTION REFERENCES. Section titles or captions
contained in this Agreement are inserted only as a matter of convenience and
reference, and in no way define, limit, extend or describe the scope of this
Agreement, or the intent of any provision hereof. All references herein to
Sections shall refer to Sections of this Agreement unless the context clearly
requires otherwise.

IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first written above.

BLACK BEAUTY COAL COMPANY

By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Title: President
("Black Beauty")

XXXXX ENERGY, L.L.C.

By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Title: President
("Xxxxxx")

Xxxxxx X. Xxxxxx, individually, joins in the execution of this
Agreement to evidence his agreement to be bound by the provisions of Section
14.6.

/s/ Xxxxxx X. Xxxxxx
-------------------------------------------
XXXXXX X. XXXXXX

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EXHIBIT 3.6 SECOND AMENDED AND RESTATED OPERATING AGREEMENT

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