EXHIBIT 10.1

                                  June 5, 2000
Steven F. Leer
2 Bellerive Country Club Grounds
St. Louis, MO 63141

Dear Steve:

          Arch Coal, Inc. considers the establishment and maintenance of a sound
and vital  management  to be  essential to  protecting  and  enhancing  the best
interests  of the  Company and its  shareholders.  In this  regard,  the Company
recognizes  that,  as is the case  with  many  publicly-held  corporations,  the
possibility  of a Change in  Control  of the  Company  does  exist and that such
possibility,  and the uncertainty and questions which a Change in Control of the
Company may raise among  management,  may result in the departure or distraction
of management personnel to the detriment of the Company and its shareholders. In
addition,  difficulties  in  attracting  and  retaining  new  senior  management
personnel may be experienced. Accordingly, on the basis of the recommendation of
the Personnel and Compensation  Committee of the Board, the Board has determined
that appropriate  steps should be taken to reinforce and encourage the continued
attention  and  dedication  of  certain  members  of the  Company's  management,
including you, to their assigned  duties without  distraction in the face of the
potentially disruptive circumstances arising from the possibility of a Change in
Control of the Company.

          In order to encourage you to remain in the employ of the Company, this
Agreement sets forth those benefits which the Company will provide to you in the
event your  employment  with the Company (1) is terminated  without Cause during
the term of this Agreement, or (2) you resign for Good Reason following a Change
in Control of the Company under the circumstances described below.

SECTION A.            DEFINITIONS

          1. "Agreement" shall mean this letter agreement.

          2.  "Average  Annual  Bonus"  shall be the higher of the current  year
     bonus  earned or the average  annual  bonus paid to you or earned by you in
     the three full calendar years  proceeding the Date of  Termination.  If you
     have not been employed by the Company for three full  calendar  years prior
     to the Date of Termination, but were employed by Ashland Coal, Inc. or ARCO
     Coal Company  prior to your  employment  by the  Company,  any annual bonus
     earned or paid by such predecessor  company shall be used to determine your
     Average Annual Bonus. If you have not been employed by the Company, Ashland
     Coal,  Inc. or ARCO Coal Company for three full calendar years prior to the
     Date of  Termination,  your Average  Annual Bonus shall be a percentage  of
     your  highest  annual  salary in effect at any time during the term of this
     Agreement  equal to the average  percentage of annual base pay earned as an
     annual  bonus  by  all   executives  of  the  Company  at  your   Incentive
     Compensation level in the three years proceeding the Date of Termination.

         3. "Board" shall mean the Company's Board of Directors.

         4.  "Cause"  shall  occur  hereunder  only  upon  (A) the  willful  and
     continued  failure by you  substantially  to perform  your  duties with the
     Company (other than any such failure  resulting from your incapacity due to
     physical  or  mental  illness)  after  a  written  demand  for  substantial
     performance is delivered to you by the Board which specifically  identifies
     the  manner  in which the Board  believes  that you have not  substantially
     performed your duties,  (B) the willful engaging by you in gross misconduct
     materially and demonstrably injurious to the Company after a written demand
     to cease such  misconduct  is  delivered  to you by the Board,  or (C) your
     conviction  of or  the  entering  of a  plea  of  nolo  contendere  to  the
     commission  of a felony  involving  moral  turpitude.  For purposes of this
     paragraph,  no act,  or  failure to act,  on your part shall be  considered
     "willful"  unless done, or omitted to be done, by you not in good faith and
     without  reasonable  belief that your  action or  omission  was in the best
     interest of the Company.  Notwithstanding  the foregoing,  you shall not be
     deemed to have been  terminated for Cause unless and until there shall have
     been  delivered  to  you  a  copy  of a  resolution  duly  adopted  by  the
     affirmative vote of not less than  three-quarters  of the entire membership
     of the Board at a meeting  of the Board  called  and held for the  purpose,
     among others (after at least 20 days prior notice to you and an opportunity
     for you,  together  with your  counsel,  to be heard before the Board),  of
     finding  that (i) in the good  faith  opinion  of the Board  you  failed to
     perform  your  duties  or  engaged  in  misconduct  as set  forth  above in
     subparagraph  (A) or (B) of this  paragraph,  and that you did not  correct
     such failure or cease such misconduct after being requested to do so by the
     Board, or (ii) as set forth in subparagraph (C) of this paragraph, you have
     been  convicted  of or  have  entered  a plea  of  nolo  contendere  to the
     commission of a felony involving moral turpitude.

         5.  "Change in Control"  shall be deemed to have  occurred if (i) there
     shall be consummated (A) any  consolidation,  merger,  or share exchange of
     the  Company  in which  the  Company  is not the  continuing  or  surviving
     corporation or pursuant to which shares of the Company's Common Stock would
     be converted into cash,  securities or other property,  other than a merger
     of the  Company  in  which  the  holders  of  the  Company's  Common  Stock
     immediately prior to the merger have  substantially the same  proportionate
     ownership of common stock of the surviving  corporation  immediately  after
     the merger,  or (B) any sale,  lease,  exchange or other  transfer  (in one
     transaction or a series of related  transactions)  of all or  substantially
     all of the assets of the Company,  or (ii) the  shareholders of the Company
     shall approve any plan or proposal for the  liquidation  or  dissolution of
     the  Company,  or (iii) at any time during a period of two (2)  consecutive
     years,  "Continuing  Directors" shall cease for any reason to constitute at
     least a majority of the Board.  For such  purpose,  "Continuing  Directors"
     shall be  directors  who were in office at the  beginning  of such two year
     period and new directors  whose  election or nomination for election by the
     Company's shareholders was approved by a vote of at least two-thirds of the
     Continuing Directors then in office.

         6. "COBRA" shall mean the Consolidated  Omnibus Budget  Reconciliation
     Act, as amended.

         7.  "Common  Stock" shall mean the common  stock,  par value $0.01 per
     share, of the Company.

         8.  "Company"  shall  mean Arch Coal,  Inc.  and any  successor  to its
     business  and/or assets which executes and delivers the agreement  provided
     for in Section F,  paragraph 1 hereof or which  otherwise  becomes bound by
     all the terms and provisions of this Agreement by operation of law.

         9.  "Competitive  Activity"  shall  have  the  meaning  as set forth in
     Section D, paragraph 4.

         10.  "Competitive  Operation"  shall have the  meaning  as set forth in
     Section D, paragraph 4.

         11.  "Confidential  Information" shall mean information relating to the
     Company's,  its divisions' and Subsidiaries' and their successors' business
     practices and business interests,  including,  but not limited to, customer
     and supplier  lists,  business  forecasts,  business and  strategic  plans,
     financial and sales information, information relating to products, process,
     equipment,   operations,   marketing   programs,   research,   or   product
     development,  engineering records, computer systems and software, personnel
     records or legal records.

         12.  "Date  Of  Termination"  shall  mean:  (A) if  this  Agreement  is
     terminated for Disability, thirty (30) days after the Notice of Termination
     is given by the Company to you  (provided  that you shall not have returned
     to the  performance of your duties on a full-time  basis during such thirty
     (30) day period),  (B) if your  employment is terminated for Good Reason by
     you,  the date  specified  in the  Notice of  Termination,  and (C) if your
     employment is terminated  for any other reason,  the date on which a Notice
     of Termination is received by you unless a later date is specified.

         13.  "Disability"  shall occur when: if, as a result of your incapacity
     due to  physical  or mental  illness,  you shall have been absent from your
     duties with the Company for six (6)  consecutive  months and shall not have
     returned to full-time  performance  of your duties  within thirty (30) days
     after written notice is given to you by the Company.

          14. "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
     amended.

          15. "Excise Tax" shall have the meaning as set forth in Section E.

          16. "Good Reason" shall mean:

          (a)  without your express written consent, the assignment to you after
               a Change in Control of the  Company,  of any duties  inconsistent
               with,  or a significant  diminution  of, your  position,  duties,
               responsibilities  or status with the Company immediately prior to
               a Change in  Control  of the  Company,  or a  diminution  in your
               titles or offices as in effect  immediately  prior to a Change in
               Control of the Company or any removal of you from, or any failure
               to reelect you to, any of such positions;

          (b)  a  reduction  by the  Company  in  your  base  salary  in  effect
               immediately  prior to a Change in  Control  of the  Company  or a
               failure by the Company to increase (within fifteen months of your
               last  increase in base salary) your base salary after a Change in
               Control  of the  Company  in an  amount  which  is  substantially
               similar,  on  a  percentage  basis,  to  the  average  percentage
               increase in base salary for all corporate officers of the Company
               during the preceding twelve (12) months;

          (c)  the  failure by the  Company to  continue  in effect any  thrift,
               stock  ownership,  pension,  life insurance,  health,  dental and
               accident or disability plan in which you are participating or are
               eligible to participate at the time of a Change in Control of the
               Company  (or  plans  providing  you  with  substantially  similar
               benefits),  except  as  otherwise  required  by the terms of such
               plans as in effect at the time of any  Change in  Control  of the
               Company,  or the taking of any action by the Company  which would
               adversely affect your  participation in or materially reduce your
               benefits  under any of such plans or deprive you of any  material
               fringe  benefits  enjoyed  by you at the  time of the  Change  in
               Control of the  Company or the  failure by the Company to provide
               you with  the  number  of paid  vacation  days to  which  you are
               entitled in accordance with the vacation  policies of the Company
               in  effect  at the time of a Change in  Control  of the  Company,
               unless a comparable plan is substituted therefor;

          (d)  the failure by the  Company to  continue in effect any  incentive
               plan or arrangement (including without limitation,  the Company's
               incentive  compensation  plan,  annual bonus and contingent bonus
               arrangements  and  credits  and the right to receive  performance
               awards and similar incentive  compensation benefits) in which you
               are  participating  at the time of a  Change  in  Control  of the
               Company  (or  to   substitute   and   continue   other  plans  or
               arrangements  providing you with substantially similar benefits),
               except as  otherwise  required  by the terms of such  plans as in
               effect at the time of any Change in Control of the Company;

          (e)  the  failure  by the  Company to  continue  in effect any plan or
               arrangement  to receive  securities  of the  Company  (including,
               without  limitation,  any  plan or  arrangement  to  receive  and
               exercise stock options,  stock  appreciation  rights,  restricted
               stock or grants  thereof or to acquire stock or other  securities
               of the Company) in which you are  participating  at the time of a
               Change in Control of the Company (or to  substitute  and continue
               plans or arrangements  providing you with  substantially  similar
               benefits),  except  as  otherwise  required  by the terms of such
               plans as in effect at the time of any  Change in  Control  of the
               Company,  or the taking of any action by the Company  which would
               adversely affect your  participation in or materially reduce your
               benefits under any such plan;

          (f)  the relocation of the Company's  principal executive offices to a
               location  outside  the  St.  Louis   metropolitan  area,  or  the
               Company's  requiring you to be based  anywhere other than at your
               current  location or at the location of the  Company's  principal
               executive or divisional  offices,  except for required  travel on
               the Company's business to an extent substantially consistent with
               your present  business travel  obligations,  or, in the event you
               consent  to  any  such  relocation  of  the  Company's  principal
               executive or  divisional  offices,  the failure by the Company to
               pay  (or  reimburse  you  for)  all  reasonable  moving  expenses
               incurred by you relating to a change of your principal  residence
               in connection  with such  relocation and to indemnify you against
               any loss (defined as the difference between the actual sale price
               of  such   residence  and  the  greater  of  (a)  your  aggregate
               investment  in such  residence,  or (b) the fair market  value of
               such   residence  as  determined  by  a  real  estate   appraiser
               reasonably  satisfactory to both you and the Company) realized in
               the sale of your principal  residence in connection with any such
               change of residence;

          (g)  any  breach by the  Company  of any  material  provision  of this
               Agreement; or

          (h)  any  failure  by the  Company to obtain  the  assumption  of this
               Agreement by any successor or assign of the Company.

          17. "Gross-up  Payment" shall have the meaning as set forth in Section
     E.

          18. "Notice of  Termination"  shall mean a notice which shall indicate
     the specific termination  provision in this Agreement relied upon and shall
     set forth in  reasonable  detail  the facts and  circumstances  claimed  to
     provide a basis for termination of your  employment  under the provision so
     indicated.

          19. "Payment" shall have the meaning as set forth in Section E.

          20. "Person" shall have the meaning as set forth in Sections 13(d) and
     14(d)(2) of the Exchange Act.

          21.  "Qualifying  Termination"  shall  mean  the  termination  of your
     employment after a Change in Control of the Company while this Agreement is
     in  effect,  unless  such  termination  is (a) by reason  of your  death or
     Disability, (b) by the Company for Cause, or (c) by you other than for Good
     Reason.

          22. "Salary  Continuation  Period" shall have the meaning set forth in
     Section C, paragraph 1.

          23.  "Significant  Stockholder"  shall  mean  any  shareholder  of the
     Company who, immediately prior to the Effective Date, owned more than 5% of
     the common stock of the company.

          24.  "Subsidiary" shall mean any corporation of which more than 20% of
     the  outstanding  capital  stock  having  ordinary  voting power to elect a
     majority of the board of directors  of such  corporation  (irrespective  of
     whether or not at the time  capital  stock of any other class or classes of
     such  corporation  shall or might have voting power upon the  occurrence of
     any  contingency)  is at the  time  directly  or  indirectly  owned  by the
     Company,  by the Company and one or more other  Subsidiaries,  or by one or
     more other Subsidiaries.

SECTION B.                    TERM AND BENEFITS

         This  Agreement  shall be in  effect  from the  date  you  accept  this
Agreement until December 31, 2001 and shall  automatically  renew for successive
one (1) year  periods  on the first day of each  month.  This  Agreement  may be
terminated  by either  party  provided  that at least  fifteen (15) days advance
written  notice is given by either  party to the other party hereto prior to the
commencement  of the next  succeeding  one (1)  year  period  at which  time the
Agreement shall terminate at the end of the next succeeding one (1) year period.
During the term of employment hereunder,  you agree to devote your full business
time and  attention  to the  business and affairs of the Company and to use your
best efforts, skills and abilities to promote its interests.

         In the event of your retirement, at your election or in accordance with
the Company's generally applicable  retirement policies,  as in effect from time
to time, this Agreement shall automatically terminate, without additional notice
to you, as of the effective date of your retirement.  Notwithstanding  the first
sentence of this paragraph and the first sentence of this Section B, if a Change
in Control of the  Company  should  occur while you are still an employee of the
Company  and while  this  Agreement  is in  effect,  then this  Agreement  shall
continue  in effect from the date of such Change in Control of the Company for a
period  of two  years.  Prior  to a  Change  in  Control  of the  Company,  your
employment  may be terminated by the Company for Cause at any time pursuant to a
Notice of Termination.  In such event, you shall not be entitled to the benefits
provided  hereunder.   No  benefits  shall  be  payable  hereunder  unless  your
employment  is  terminated  without  Cause or there  shall have been a Change in
Control of the  Company and your  employment  by the  Company  shall  thereafter
terminate in accordance with Section D hereof.

SECTION C.            TERMINATION PRIOR TO CHANGE IN CONTROL

          1. COMPENSATION PRIOR TO A CHANGE IN CONTROL. If you are terminated by
     the Company  without Cause during the term of this Agreement and prior to a
     Change in Control of the Company, you shall be entitled to receive:

          (a)  payment of the higher of; (1) your  salary  immediately  prior to
               your Date of  Termination,  or (2) your highest salary during the
               prior three fiscal years  preceding the fiscal year in which your
               Date of  Termination  occurs,  for a period of one (1) year after
               your Date of Termination ("Salary Continuation Period");

          (b)  continuation  of your  and  your  eligible  dependents'  existing
               participation  at regular  employee rates, in effect from time to
               time,  in all of the  Company's  medical,  dental  and group life
               plans  and  other  programs  in  which  you  were   participating
               immediately  prior to your Date of Termination  during the Salary
               Continuation  Period,  after  which  time you and  your  eligible
               dependents  will be eligible  for coverage  under  COBRA.  In the
               event  that  your  continued  participation  in any such  plan or
               program is for  whatever  reason  impossible,  the Company  shall
               arrange  upon  comparable  terms to  provide  you  with  benefits
               substantially equivalent on an after tax basis to those which you
               and your eligible dependents are, or become,  entitled to receive
               under such plans and programs;

          (c)  if and when  payments  are made,  payment in cash of any pro-rata
               portion (up through your Date Of  Termination) of any amounts you
               would have received  under the Company's  performance  unit/share
               plans, Annual Incentive  Compensation Plan, and any other similar
               executive  compensation  plan in  which  you  were a  participant
               immediately prior to your Date of Termination;

          (d)  provide  for  payment  in cash an  amount  equal to your  Average
               Annual  Bonus paid or payable  during the prior  three (3) fiscal
               years preceding the fiscal year in which your Date of Termination
               occurs;

          (e)  continuation  of your  existing  participation  in the  Company's
               thrift   plan,   cash   balance   pension   plan,   non-qualified
               supplemental   pension  plan,  deferred   compensation  plan  and
               financial counseling services plan during the Salary Continuation
               Period  (payments made pursuant to paragraph 1(a) and 1(c) hereof
               shall be deemed includable  compensation under these plans to the
               same  extent as if you had  remained  an active  employee  of the
               company  and the  payments  were made for base  salary and annual
               bonus, respectively);

          (f)  outplacement services substantially similar to those historically
               offered by the  Company to  displaced  senior  executives;  for a
               period not to exceed the Salary Continuation Period;

          (g)  pay to you an amount equal to the value of all unused, earned and
               accrued vacation as of your Date of Termination; and

          (h)  provide for the  immediate  vesting of all stock  options held by
               you,  as of your Date of  Termination,  under any  Company  stock
               option plan and all such options shall be exercisable  during the
               Salary Continuation Period and for 120 days thereafter.

     However,  in the event that your  employment with the Company is terminated
during  the term of this  Agreement  and  prior to a Change  in  Control  of the
Company and such  termination  is not a termination  without  Cause  (including,
without  limitation,  termination  by  reason  of  your  voluntary  termination,
retirement, death, or Disability), or if your employment is terminated for Cause
during the term of this  Agreement,  you shall not be  entitled  to receive  any
benefits under this Agreement.

          2.  RELEASE.  In exchange  for the  benefits  herein,  you  completely
     release the Company to the fullest extent  permitted by law from all claims
     you may have against the Company on your Date of Termination  except claims
     related to (a) claims for  benefits  to which you are  entitled  under this
     Agreement and (b) any  applicable  worker's  compensation  or  unemployment
     compensation.

          3. PAYMENT OF BENEFITS.  Unless otherwise  provided in this Agreement,
     in the applicable  compensation or stock option plan or program,  or unless
     you otherwise elect, all payments shall be made to you in a single lump sum
     within thirty (30) days after your Date of Termination. Notwithstanding the
     payment of benefits  hereunder in a lump sum, the benefits stated herein to
     continue through the Salary  Continuation Period shall continue through the
     period.  These benefits are in addition to all accrued and vested  benefits
     to  which  you  are  entitled  to  under  any of the  Company's  plans  and
     arrangements,  including but not limited to, the accrued vested benefits to
     which  you are  eligible  for and  entitled  to  receive  under  any of the
     Company's  qualified and non-qualified  benefit or retirement plans, or any
     successor plans in effect on your Date of Termination hereunder.

          4. NO DUTY TO  MITIGATE.  You shall not be required  to  mitigate  the
     amount  of any  payment  provided  for in this  Section  by  seeking  other
     employment or otherwise,  nor shall the amount of any payment  provided for
     in this Section be reduced by any compensation  earned by you as the result
     of  employment  by  another  employer  after your Date of  Termination,  or
     otherwise.  Except as provided  herein,  the Company shall have no right to
     set off  against  any amount  owing  hereunder  any claim which it may have
     against you.

SECTION D.            TERMINATION FOLLOWING CHANGE IN CONTROL

          1.  QUALIFYING  TERMINATION.  If  your  termination  is  a  Qualifying
     Termination,  you shall be entitled to receive the
     payments and benefits provided in this Section.

          2. NOTICE OF  TERMINATION.  Except as provided in Section F, paragraph
     1, any termination of your employment  following a Change in Control of the
     Company shall be communicated by written Notice of Termination to the other
     party  hereto.  No  termination  shall be effective  without such Notice of
     Termination.

          3.   COMPENSATION   UPON  TERMINATION   AFTER  A  CHANGE  IN  CONTROL.

          (a)  If your termination is a Qualifying Termination, then the Company
               shall  pay to you as  severance  pay (and  without  regard to the
               provisions of any benefit or incentive  plan), in a lump sum cash
               payment  on  the  fifth   (5th)  day   following   your  Date  of
               Termination,  an amount  equal to three (3) times the  higher of;
               (1) your salary immediately prior to your Date of Termination, or
               (2) your highest  salary  during the prior three (3) fiscal years
               preceding  the  fiscal  year in which  your  Date of  Termination
               occurs or, if greater, the prior three (3) fiscal years preceding
               the fiscal  year in which the  Change in  Control of the  Company
               occurs.

          (b)  If your  termination  is a  Qualifying  Termination,  the Company
               shall,  in addition  to the  payments  required by the  preceding
               paragraph:

               (i)  provide  for   continuation   of  your  and  your   eligible
                    dependents'  participation  at regular  employee  rates,  in
                    effect from time to time, in all of the  Company's  medical,
                    dental and group life plans and other  programs in which you
                    were  participating   immediately  prior  to  your  Date  of
                    Termination  for a period of three  years  from your Date of
                    Termination,   after  which  time  you  and  your   eligible
                    dependents will be eligible for coverage under COBRA. In the
                    event that your continued  participation in any such plan or
                    program is for whatever reason impossible, the Company shall
                    arrange upon  comparable  terms to provide you with benefits
                    substantially  equivalent  on an  after  tax  basis to those
                    which  you and your  eligible  dependents  are,  or  become,
                    entitled to receive under such plans and programs;

               (ii) provide  for  full  payment  in  cash  of  any   performance
                    unit/share  awards in existence on your Date of  Termination
                    less  any   amounts   paid  to  you  under  the   applicable
                    performance  unit/share plan upon a Change in Control of the
                    Company  pursuant to the  provisions of such plan;  plus any
                    pro rate  portion (up through your date of  termination)  of
                    any  amounts  you would have  received  under the  Company's
                    Incentive  Compensation Plan and any other similar executive
                    compensation   plan  in  which   you   were  a   participant
                    immediately prior to your Date of Termination;

               (iii)provide  for  payment  in cash of an  amount  equal to three
                    times your Average  Annual Bonus paid or payable  during the
                    prior three (3) fiscal  years  preceding  the fiscal year in
                    which your Date of  Termination  occurs or, if greater,  the
                    prior three (3) fiscal  years  preceding  the fiscal year in
                    which the Change in Control of the Company occurs;

               (iv) provide   those   benefits   or   compensation   under   any
                    compensation plan, arrangement or agreement not in existence
                    as of the date  hereof but which may be  established  by the
                    Company  prior to your Date of  Termination  at such time as
                    payments  are made  thereunder  to the same extent as if you
                    had been a  full-time  employee  on the date  such  payments
                    would otherwise have been made or benefits vested;

               (v)  for three (3) years after your Date of Termination,  provide
                    and  pay for  outplacement  services,  by a firm  reasonably
                    acceptable  to you, that have  historically  been offered to
                    displaced   employees   generally   by  the  Company   under
                    substantially  the  same  terms  and  fee  structure  as  is
                    consistent  with an employee in your then  current  position
                    (or,  if  higher,  your  position  immediately  prior to the
                    Change in Control of the Company);

               (vi) for three (3) years after your Date of Termination,  provide
                    and  pay  for  financial  planning   services,   by  a  firm
                    reasonably  acceptable to you, that have  historically  been
                    offered  to you under  substantially  the same terms and fee
                    structure  as is  consistent  with an  employee in your then
                    current position (or, if higher,  your position  immediately
                    prior to the Change in Control of the Company);

               (vii)pay to you an  amount  equal  to the  value  of all  unused,
                    earned and accrued  vacation as of your Date of  Termination
                    pursuant to the  Company's  policies  in effect  immediately
                    prior to the Change in Control of the Company; and

               (viii) provide  for the  immediate  vesting of all stock  options
                    held by you,  as of your  Date  of  Termination,  under  any
                    Company  stock  option  plan and all such  options  shall be
                    exerciseable for the remaining terms of the options.

               (ix) payments made pursuant to  paragraphs  3.(a) and  3.(b)(iii)
                    hereof  shall be deemed  includable  compensation  under the
                    Company's   thrift   plan,   cash  balance   pension   plan,
                    non-qualified   supplemental   pension   plan  and  deferred
                    compensation  plan as if you had remained an active employee
                    of the  Company and  payments  were made for base salary and
                    annual bonus, respectively.

          4.  RELEASE.  In exchange  for the  benefits  herein,  you  completely
     release the Company to the fullest extent  permitted by law from all claims
     you may have against the Company on your Date of Termination  except claims
     related to (a) claims for  benefits  to which you are  entitled  under this
     Agreement and (b) any  applicable  worker's  compensation  or  unemployment
     compensation.

          5. PAYMENT OF BENEFITS. Unless otherwise provided in this Agreement or
     in the applicable  compensation or stock option plan or program,  or unless
     you otherwise  elect,  all payments shall be made to you within thirty (30)
     days after your Date of Termination.  These benefits are in addition to all
     accrued and vested  benefits to which you are  entitled to under any of the
     Company's plans and arrangements, including but not limited to, the accrued
     vested benefits to which you are eligible for and entitled to receive under
     any of the  Company's  qualified  and  non-qualified  benefit or retirement
     plans,  or any  successor  plans  in  effect  on your  Date of  Termination
     hereunder.

          6. NO DUTY TO  MITIGATE.  You shall not be required  to  mitigate  the
     amount  of any  payment  provided  for in this  Section  by  seeking  other
     employment or otherwise,  nor shall the amount of any payment  provided for
     in this Section be reduced by any compensation  earned by you as the result
     of  employment  by  another  employer  after your Date of  Termination,  or
     otherwise.  Except as provided  herein,  the Company shall have no right to
     set off  against  any amount  owing  hereunder  any claim which it may have
     against you.

          7. COMPETITIVE ACTIVITY. In consideration of the foregoing,  you agree
     that if your employment is terminated during the term of this Agreement and
     after a Change in Control of the Company,  then during a period  ending six
     (6) months  following your Date of Termination  you shall not engage in any
     Competitive Activity;  provided,  you shall not be subject to the foregoing
     obligation if the Company breaches a material  provision of this Agreement.
     If you choose to engage in any Competitive Activity during that period, the
     Company  shall be entitled to recover any  benefits  paid to you under this
     Agreement.  For purposes of this  Agreement,  "Competitive  Activity" shall
     mean your participation, without the written consent of the General Counsel
     of  the  Company,  in  the  management  of any  business  operation  of any
     enterprise  if  such  operation  (a  "Competitive  Operation")  engages  in
     substantial and direct  competition  with any business  operation  actively
     conducted by the Company or its divisions and  Subsidiaries on your Date of
     Termination.  For purposes of this paragraph, a business operation shall be
     considered a  Competitive  Operation if such  business  sells a competitive
     product or service which constitutes (i) 15% of that business's total sales
     or (ii) 15% of the total sales of any individual  subsidiary or division of
     that  business  and,  in either  event,  the  Company's  sales of a similar
     product or service constitutes (i) 15% of the total sales of the Company or
     (ii) 15% of the total sales of any individual Subsidiary or division of the
     Company.  Competitive  Activity shall not include (i) the mere ownership of
     securities in any enterprise,  or (ii)  participation  in the management of
     any enterprise or any business operation thereof,  other than in connection
     with a Competitive Operation of such enterprise.

SECTION E.            ADDITIONAL PAYMENTS BY THE COMPANY

         Notwithstanding  anything  to the  contrary in this  Agreement,  in the
event that any payment or  distribution  by the Company to or for your  benefit,
whether paid or payable or distributed or distributable pursuant to the terms of
this  Agreement or otherwise (a  "Payment"),  would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest or penalties, are hereinafter collectively referred to as
the  "Excise  Tax"),  the  Company  shall pay to you an  additional  payment  (a
"Gross-up  Payment")  in an amount  such that after  payment by you of all taxes
(including  any  interest or  penalties  imposed  with  respect to such  taxes),
including any income, employment and Excise Tax imposed on any Gross-up Payment,
you retain an amount of the  Gross-up  Payment  equal to the Excise Tax  imposed
upon the Payments. You and the Company shall make an initial determination as to
whether a Gross-up  Payment  is  required  and the  amount of any such  Gross-up
Payment.  If you and the Company can not agree on whether a Gross-up  Payment is
required  or the  amount  thereof,  then an  independent  nationally  recognized
accounting  firm,  appointed by you, shall  determine the amount of the Gross-up
Payment.  The Company shall pay all expenses  which you may incur in determining
the  Gross-up  Payment.  You shall notify the Company in writing of any claim by
the Internal Revenue Service which, if successful,  would require the Company to
make a  Gross-up  Payment  (or a  Gross-up  Payment  in excess of that,  if any,
initially  determined  by the Company and you) within ten days of the receipt of
such claim.  The Company  shall notify you in writing at least ten days prior to
the due date of any response  required with respect to such claim if it plans to
contest the claim.  If the  Company  decides to contest  such  claim,  you shall
cooperate fully with the Company in such action; provided,  however, the Company
shall bear and pay  directly or  indirectly  all costs and  expenses  (including
additional  interest and penalties)  incurred in connection with such action and
shall indemnify and hold you harmless, on an after-tax basis, for any Excise Tax
or income tax, including interest and penalties with respect thereto, imposed as
a result of the Company's  action.  If, as a result of the Company's action with
respect to a claim,  you receive a refund of any amount paid by the Company with
respect to such claim, you shall promptly pay such refund to the Company. If the
Company  fails to timely  notify you whether it will  contest  such claim or the
Company determines not to contest such claim, then the Company shall immediately
pay to you the portion of such claim,  if any, which it has not previously  paid
to you.

SECTION F.                     MISCELLANEOUS

          1.  ASSUMPTION  OF  AGREEMENT.  The Company will require any successor
     (whether  direct or indirect,  by purchase,  merger,  consolidation,  share
     exchange or otherwise) to all or  substantially  all of the business and/or
     assets of the Company,  by agreement in form and substance  satisfactory to
     you,  expressly to assume and agree to perform  this  Agreement in the same
     manner and to the same extent that the Company would be required to perform
     it if no such succession had taken place.  Failure of the Company to obtain
     such agreement prior to the effectiveness of any such succession shall be a
     breach of a material  provision of this  Agreement and shall entitle you to
     compensation  in the  same  amount  and on the same  terms as you  would be
     entitled  pursuant to Section D, except that for  purposes of  implementing
     the  foregoing,  the date on which any such  succession  becomes  effective
     shall be deemed your Date of  Termination  without a Notice of  Termination
     being given.

          2. CONFIDENTIALITY.  All Confidential Information which you acquire or
     have  acquired  in  connection  with or as a result of the  performance  of
     services  for the  Company,  whether  under this  Agreement or prior to the
     effective date of this Agreement,  shall be kept secret and confidential by
     you unless (a) the Company otherwise consents, (b) the Company breaches any
     material  provision of this Agreement,  or (c) you are legally  required to
     disclose   such   Confidential   Information   by  a  court  of   competent
     jurisdiction. This covenant of confidentiality shall extend beyond the term
     of this  Agreement and shall survive the  termination of this Agreement for
     any reason.  If you breach this  covenant of  confidentiality,  the Company
     shall be  entitled  to  recover  from any  benefits  paid to you under this
     Agreement its damages resulting from such breach.

          3.  EMPLOYMENT.  You agree to be bound by the terms and  conditions of
     this Agreement and to remain in the employ of the Company during any period
     following any public announcement by any Person of any proposed transaction
     or transactions which, if effected,  would result in a Change in Control of
     the  Company  until a Change in Control  of the  Company  has taken  place.
     However,  nothing  contained in this Agreement shall impair or interfere in
     any way with the right of the  Company to  terminate  your  employment  for
     Cause prior to a Change in Control of the Company.

          4. ARBITRATION. Any controversy or claim arising out of or relating to
     this  Agreement,  or the breach  thereof,  shall be settled  exclusively by
     arbitration in accordance with the Center for Public  Resources'  Model ADR
     Procedures  and  Practices,  and  judgment  upon the award  rendered by the
     arbitrator(s)  may be entered  in any court  having  jurisdiction  thereof.
     Notwithstanding  the  foregoing,  the Company shall not be restricted  from
     seeking  equitable  relief,  including  injunctive  relief  as set forth in
     paragraph  5 of  this  Section,  in the  appropriate  forum.  Any  cost  of
     arbitration will be paid by the Company. In the event of a dispute over the
     existence of Good Reason or Cause after a Change in Control of the Company,
     the Company  shall  continue to pay your salary,  bonuses and plan benefits
     pending resolution of the dispute.  If you prevail in the arbitration,  the
     remaining  amounts due to you under this  Agreement  are to be  immediately
     paid to you.

          5. INJUNCTIVE RELIEF. You acknowledge and agree that the remedy of the
     Company at law for any breach of the covenants and agreements  contained in
     paragraph  2 of  this  Section  and in  Section  D,  paragraph  4  will  be
     inadequate,  and that the Company  will be entitled  to  injunctive  relief
     against any such breach or any threatened,  imminent,  probable or possible
     breach.  You  represent  and agree that such  injunctive  relief  shall not
     prohibit you from earning a livelihood acceptable to you.

          6. NOTICE.  For the purposes of this Agreement,  notices and all other
     communications provided for in this Agreement shall be in writing and shall
     be deemed to have been duly given when delivered or mailed by United States
     registered mail, return receipt  requested,  postage prepaid,  addressed to
     the  respective  addresses  set forth on the first page of this  Agreement,
     provided that all notices to the Company shall be directed to the attention
     of the General  Counsel of the Company,  or to such other address as either
     party may have  furnished to the other in writing in  accordance  herewith,
     except  that  notices of change of  address  shall be  effective  only upon
     receipt.

          7.  INDEMNIFICATION.  The Company  will  indemnify  you to the fullest
     extent  permitted  by the laws of the State of  Missouri  and the  existing
     By-laws of the  Company,  in respect of all your  services  rendered to the
     Company  and  its  divisions  and  Subsidiaries   prior  to  your  Date  of
     Termination.  You shall be  entitled  to the  protection  of any  insurance
     policies the Company now or hereafter  maintains  generally for the benefit
     of its  directors,  officers and  employees  (but only to the extent of the
     coverage  afforded by the existing  provisions of such policies) to protect
     against all costs, charges and expenses whatsoever incurred or sustained by
     you in connection  with any action,  suit or proceeding to which you may be
     made a party by reason of your being or having been a director,  officer or
     employee of the Company or any of its divisions or Subsidiaries during your
     employment therewith.

          8. FURTHER ASSURANCES. Each party hereto agrees to furnish and execute
     such additional  forms and documents,  and to take such further action,  as
     shall  be  reasonably  and  customarily  required  in  connection  with the
     performance of this Agreement or the payment of benefits hereunder.

          9.  MISCELLANEOUS.  No  provision of this  Agreement  may be modified,
     waived or  discharged  unless such  waiver,  modification  or  discharge is
     agreed  to in  writing  signed  by  you  and  such  officer(s)  as  may  be
     specifically  designated by the Board.  No waiver by either party hereto at
     any time of any breach by the other party  hereto of, or  compliance  with,
     any condition or provision of this  Agreement to be performed by such other
     party  shall be deemed a waiver of  similar  or  dissimilar  provisions  or
     conditions at the same or at any prior or subsequent time. No agreements or
     representations, oral or otherwise, express or implied, with respect to the
     subject  matter  hereof  have been made by either  party  which are not set
     forth expressly in this Agreement.

          10.  TERMINATION OF OTHER AGREEMENTS.  Upon execution by both parties,
     this  Agreement  shall   terminate  all  prior   employment  and  severance
     agreements between you and the Company and its divisions or Subsidiaries.

          11. SEVERABILITY.  The invalidity or unenforceability of any provision
     of this Agreement  shall not affect the validity or  enforceability  of any
     other  provision  of this  Agreement,  which shall remain in full force and
     effect.

          12.  COUNTERPARTS.  This  Agreement  may be  executed  in one or  more
     counterparts,  each of which shall be deemed to be an  original  but all of
     which together will constitute one and the same instrument.

          13. LEGAL FEES AND  EXPENSES.  Any other  provision of this  Agreement
     notwithstanding,  the Company  shall pay all legal fees and expenses  which
     you may incur as a result of the Company's  unsuccessful  contesting of the
     validity,  enforceability  or your  interpretation  of,  or  determinations
     under, any part of this Agreement.

          14. GOVERNING LAW. This Agreement shall be governed in all respects by
     the laws of the State of Missouri.

          15. AGREEMENT  BINDING ON SUCCESSORS.  This Agreement shall be binding
     upon and inure to the  benefit of the parties  hereto and their  respective
     successors and assigns. This Agreement shall inure to the benefit of and be
     enforceable   by  your  personal  or  legal   representatives,   executors,
     administrators,  successors, heirs, distributees, devisees and legatees. If
     you should die while any amounts would still be payable to you hereunder if
     you had continued to live,  all such  amounts,  unless  otherwise  provided
     herein,  shall be paid in  accordance  with the terms of this  Agreement to
     your devisee,  legatee, or other designee or, if there be no such designee,
     to your estate.

          16. HEADINGS. All Headings are inserted for convenience only and shall
     not affect any construction or interpretation of this Agreement.

     If this Agreement  correctly sets forth our agreement on the subject matter
hereof,  please  sign  and  return  to the  Company  the  enclosed  copy of this
Agreement which will then constitute our agreement on this matter.

                                           Sincerely,

                                           ARCH COAL, INC.


                                           By:/s/ Bradley M. Allbritten



ACCEPTED this

day of                     ,19



/s/Steven F. Leer
---------------------
Employee