Exhibit 4.2


 


Execution
Copy




 





 


 


AMENDED
AND RESTATED


STOCKHOLDERS
AGREEMENT


among


FOUNDATION
COAL HOLDINGS, INC.,


FIRST
RESERVE FUND IX, L.P.,


BLACKSTONE
FCH CAPITAL PARTNERS IV L.P.,


BLACKSTONE
FAMILY INVESTMENT PARTNERSHIP IV-A L.P.,


AMCI
ACQUISITION, LLC


and


THE
OTHER PARTIES IDENTIFIED HEREIN


Dated as of October 4, 2004




 





 

















 


TABLE OF CONTENTS


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
   

  	
  1.1.

  	
  Defined
  Terms

  	
  1

  
	
   

  	
  1.2.

  	
  Other Definitional
  Provisions; Interpretation

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II TRANSFERS

  	
  7

  
	
   

  	
  2.1.

  	
  Limitations on Transfer.

  	
  7

  
	
   

  	
  2.2.

  	
  Void
  Transfers

  	
  8

  
	
   

  	
  2.3.

  	
  Legend

  	
  8

  
	
   

  	
  2.4.

  	
  Management
  Stockholders Put Right.

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  BOARD OF DIRECTORS

  	
  10

  
	
   

  	
  3.1.

  	
  Board
  of Directors

  	
  10

  
	
   

  	
  3.2.

  	
  Approval
  Rights

  	
  13

  
	
   

  	
  3.3.

  	
  Payments to Directors;
  Reimbursements

  	
  15

  
	
   

  	
  3.4.

  	
  Board
  Committees

  	
  15

  
	
   

  	
  3.5.

  	
  VCOC

  	
  15

  
	
   

  	
  3.6.

  	
  Stockholder
  Action

  	
  15

  
	
   

  	
  3.7.

  	
  Fiduciary
  Duties

  	
  15

  
	
   

  	
  3.8.

  	
  Stockholder
  Approval of Parachute Payments

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV
  BOOKS AND RECORDS

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V
  REPRESENTATIONS AND WARRANTIES

  	
  17

  
	
   

  	
  5.1.

  	
  Representations
  of Each of the Parties

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI
  MISCELLANEOUS

  	
  18

  
	
   

  	
  6.1.

  	
  Competitive Opportunity

  	
  18

  
	
   

  	
  6.2.

  	
  Additional
  Securities Subject to Agreement

  	
  18

  
	
   

  	
  6.3.

  	
  Indemnification

  	
  18

  
	
   

  	
  6.4.

  	
  Other Stockholders
  Agreements

  	
  19

  
	
   

  	
  6.5.

  	
  Assignment and Binding
  Effect

  	
  19

  
	
   

  	
  6.6.

  	
  Notices

  	
  19

  
	
   

  	
  6.7.

  	
  Governing
  Law

  	
  21

  
	
   

  	
  6.8.

  	
  Arbitration

  	
  21

  
	
   

  	
  6.9.

  	
  Entire
  Agreement

  	
  21

  
	
   

  	
  6.10.

  	
  Counterparts

  	
  21

  
	
   

  	
  6.11.

  	
  Severability

  	
  21

  
	
   

  	
  6.12.

  	
  Amendment and Modification

  	
  21

  
	
   

  	
  6.13.

  	
  Waiver

  	
  22

  
	
   

  	
  6.14.

  	
  Further
  Assurances

  	
  22

  
	
   

  	
  6.15.

  	
  Specific Enforcement

  	
  22

  
	
   

  	
  6.16.

  	
  Successors

  	
  22

  
	
   

  	
  6.17.

  	
  Computation
  of Time

  	
  22

  
	
   

  	
  6.18.

  	
  Confidentiality.

  	
  22

  
	
   

  	
  6.19.

  	
  Management
  Stockholder’s Services

  	
  23

  
	
   

  	
  6.20.

  	
  New Stockholders to
  become Parties

  	
  23

  
						



 

















 


	
   

  	
  6.21.

  	
  Effectiveness

  	
  23

  



 


2

















 


AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT


AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT (this “Agreement”), dated as of October 4,
2004, by and among Foundation Coal Holdings, Inc., a Delaware corporation
formerly known as FC 1 Corp. (the “Company”),
Blackstone FCH Capital Partners IV L.P., a Delaware limited partnership (“Blackstone FCH”), Blackstone Family
Investment Partnership IV-A L.P., a Delaware limited partnership (“BFIP IV”, together with Blackstone FCH,
“Blackstone”), First
Reserve Fund IX, L.P., a Delaware limited partnership (“FRF” and, together with Blackstone, the
“Sponsor Stockholders”),
AMCI Acquisition, LLC, a Pennsylvania  limited
liability company (“AMCI”)
and the persons listed on Annex I hereto (the “Management Stockholders”) (the Sponsor Stockholders, AMCI
and Management Stockholders, collectively, the “Stockholders”).


BACKGROUND


1.             The Stockholders are party to a
Stockholders Agreement dated as of August 17, 2004 (the “Original Stockholders Agreement”).


2.             In contemplation of the
consummation of a Qualified IPO, the Stockholders wish to set forth certain
understandings regarding the relationship among the Company and its
stockholders and to amend and restate the Original Stockholders Agreement.


3.             In consideration of the mutual
covenants and agreements herein contained, the parties hereto agree to amend
and restate the Original Stockholders Agreement as follows:


ARTICLE
I


 


DEFINITIONS


 


1.1.         Defined Terms.  As used in
this Agreement, the following capitalized terms shall have the meanings
ascribed to them below:


“Affiliate” has the meaning ascribed
thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the
date hereof.


“Agreement” has the meaning specified in
the Preamble.


“AMCI Investor Group” means AMCI and its
Permitted Transferees.


“Blackstone Investor Group” means
Blackstone FCH and BFIP IV and their respective Permitted Transferees.


“Blackstone Directors” has the
meaning specified in Section 3.1(a).


“Board” means the Board of Directors
of the Company.


 

















 


“Chairman” has the meaning specified in
Section 3.1(c).


“Closing Date” means July 30, 2004.


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


“Common Stock” means the common stock,
par value $.01 per share, of the Company and any securities issued in respect
thereof, or in substitution therefor, in connection with any split, dividend,
spin-off or combination, or any reclassification, recapitalization, merger,
consolidation, exchange or other similar reorganization or business
combination.


“Common Stock Equivalents” means any
stock, warrants, rights, calls, options, debt or other securities exchangeable
or exercisable for or convertible into Common Stock.  Any reference herein to the number of Common Stock Equivalents shall
be deemed to refer to the number of shares of Common Stock into which such
Common Stock Equivalents are exchangeable or exercisable or convertible into.


“Company” has the meaning specified in
the Preamble.


“Competitive Opportunity” has the
meaning specified in Section 6.1.


“Confidential Information” has the
meaning specified in Section 6.18(c).


“Control” (including its correlative
meanings, “Controlled by” and “under common Control with”) means possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise) of a Person.


“Covered Shares” means all shares of
Common Stock owned of record or beneficially by AMCI on the date hereof and any
shares of Common Stock acquired by AMCI after the date hereof and prior to a
Qualified IPO, whether upon exercise of options, warrants, conversion of other
convertible securities or otherwise.


“Delaware Law” means the Delaware
General Corporation Law, as amended from time to time.


“Dispute” has the meaning specified in
Section 6.8.


“Effective Date” has the meaning
specified in Section 6.21.


“Encumbrance” means any charge, claim,
community or other marital property interest, right of first option, right of
first refusal, restriction on use, mortgage, pledge, lien, encumbrance, receipt
of income, charge, restriction on transfer or other security or equity
interest.


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


 


2

















 


“Family Group,” with respect to any
natural person, means such natural person’s spouse and descendants (whether
natural or adopted) and any trust solely for the benefit of such natural person
and/or such natural person’s spouse and/or descendants.


“Financing
Default” means an event which would constitute (or with
notice or lapse of time or both would constitute) an event of default (which
event of default has not been cured) under or would otherwise violate or breach
(i) any financing arrangement of the Company or any of its Subsidiaries in
effect as of the time of the aforementioned event, and any extensions,
renewals, refinancings or refundings thereof in whole or in part; and
(ii) any provision of the Company’s or any of its Subsidiary’s
constitutional documents.


“First Reserve Directors” has the
meaning specified in Section 3.1(a).


“FRC Investor Group” means FRF and its
Permitted Transferees.


“Governmental Authority” means any
nation or government, any state or other political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.


“Group” has the meaning assigned to such
term in Section 13(d)(3) of the Exchange Act.


“Incentive Plan” has the meaning
specified in Section 2.4(a).


“Indemnitee” has the meaning specified
in Section 6.3.


“Independent Appraiser” means a
recognized firm of public accountants or other valuation experts not having any
commercial relationship with the Company that shall be selected by the Company
and subject to the consent of the Person requesting the retention of such firm,
which consent shall not be unreasonably withheld.


“Investor Group” means any of the AMCI
Investor Group, Blackstone Investor Group or FRC Investor Group.


“Investor Stockholders” means those
Stockholders who are members of an Investor Group.


“Issuer Common Stock” means common stock
of the same class as that offered to the public in a Qualified IPO or any securities
into which such common stock is exchanged, converted or reclassified, including
pursuant to any merger, reorganization or reclassification.


“Joint Director” has the meaning
specified in Section 3.1(a).


“Law” means any statute, law,
regulation, ordinance, rule, injunction, order, decree, governmental approval,
directive, requirement, or other governmental restriction or any similar form
of decision of, or determination by, or any interpretation or administration of
any of the foregoing by, any governmental authority.


“Losses” has the meaning specified in
Section 6.3.


 


3

















 


“Manager Permitted Transfer” has the
meaning specified in Section 2.1(a).


“Manager Permitted Transferee” means,
with respect to any Management Stockholder, (i) a transferee in a Transfer upon
the death of such Management Stockholder to his/her executors, administrators,
testamentary trustees, legatees or beneficiaries (ii) subject to this
Agreement, only in connection with a Transfer by such Management Stockholder
for estate planning purposes by such Management Stockholder, a limited
partnership, limited liability company, trust or custodianship, the
beneficiaries of which may include only such Management Stockholder, his/her
spouse or domestic partner (or ex-spouse or domestic partner), his/her lineal
descendants (including adopted) or his/her siblings and their lineal
descendants (including adopted), but only if, in the case of clause (i) and
(ii), such Person becomes a party to, and is bound to the same extent as the
transferor by the terms of, this Agreement.


“Option” has the meaning specified in
Section 2.4(a).


“Option Exercise Put Right” has the
meaning specified in Section 2.4(a).


“Permitted Transferee” means (a) in the
case of a natural person, any individual who received a Stockholder’s share of
Common Stock pursuant to applicable Laws of descent and distribution or any
individual who is a member of such Stockholder’s Family Group and, (b) in the
case of an entity, any Affiliate of such entity who is transferee of a
Stockholder’s share of Common Stock.


“Person” means an individual, a
partnership, a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization and
a governmental entity or any department, agency or political subdivision
thereof.


“Public Offering” means any firm
commitment underwritten public offering of Common Stock pursuant to an
effective registration statement under the Securities Act, other than pursuant
to a registration statement on Form S-4 or Form S-8 or other limited purpose
form.


“Public Share FMV”, per share of Issuer
Common Stock, means the arithmetic mean of the high and low prices per share as
reported on such date on the composite tape of the principal national
securities exchange on which such shares are listed or admitted to trading, or,
if no composite tape exists for such national securities exchange on such date,
then on the principal national securities exchange on which such shares are
listed or admitted to trading, or, if the shares are not listed or admitted on
a national securities exchange, the arithmetic mean of the per share closing
bid price and per share closing asked price on such date as quoted on the
National Association of Securities Dealers Automated Quotation System (or such
market in which such prices are regularly quoted) (the “NASDAQ”), or, if no sale of shares
shall have been reported on such composite tape or such national securities
exchange on such date or quoted on the NASDAQ on such date, then the
immediately preceding date on which sales of the shares have been so reported
or quoted shall be used to calculate the Public Share FMV.


“Qualified IPO” means a public offering
and sale of equity securities of the Company (or any other entity or entities
created through any Solvent Reorganization or designated by the Board), as the
case may be, in any transaction or series of related transactions, pursuant to
one or more effective registration statements (other than on Form S-4, S-8 or
their equivalents) filed


 


4

















 


under
the Securities Act which yield aggregate net proceeds to the Company (or any
other entity or entities created through any Solvent Reorganization or designated
by the Board) or the Holders participating therein, or both, in excess of $50
million.


“Qualifying Sponsor Group” means, at any
time, each Sponsor Group that is entitled to designate at least two Directors
pursuant to Section 3.1 (b) at such time so long as (a) at least one of such
designees is serving as a Director at such time and (b) the Sponsor Groups
collectively own at least 20% of the total outstanding shares of Common Stock
at such time.


“Registration Rights Agreement” means
that certain Registration Rights Agreement, dated as of the date hereof, by and
among the Company and the Stockholders, as it may be amended, supplemented or
restated from time to time.


“Remaining Tax Liability” has the
meaning specified in Section 2.4(a).


“Restricted Securities” means all
Securities other than (i) Securities that have been registered in an effective
registration statement pursuant to the Securities Act and (ii) Securities which
the holder thereof may Transfer in a transaction that is exempt from, or not subject
to, the registration requirements of the Securities Act.


“Securities” means shares of Common
Stock or Common Stock Equivalents or other securities of the Company, other
than debt securities that are not Common Stock Equivalents, whether owned on the
date hereof or hereafter acquired.


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


“Services” means (i) a Management
Stockholder’s employment if the Management Stockholder is an employee of the
Company or any of its Affiliates, (ii) a Management Stockholder’s services as a
consultant, if the Management Stockholder is a consultant to the Company or any
of its Affiliates and (iii) a Management Stockholder’s services as a
non-employee director, if the Management Stockholder is a non-employee member
of the Board or the board of directors of an Affiliate; provided  however
that unless otherwise determined by the Board or the compensation committee of
the Board, a change in a Management Stockholder’s status from employee to
non-employee (other than with respect to a director of the Company or an
Affiliate) shall constitute a termination of “Services” hereunder.


“Solvent Reorganization” means any
solvent reorganization of the Company, including by merger, consolidation,
recapitalization, Transfer or sale of shares or assets, or contribution of
assets and/or liabilities, or any liquidation, exchange of securities, conversion
of entity, migration of entity, formation of new entity, or any other transaction
or group of related transactions (in each case other than to or with an
non-Affiliated Third Party), in which:


(A)                              all holders of
the same class of equity securities of the Company are offered the same
consideration in respect of such equity securities;


(B)                                the
Stockholders’ pro rata indirect economic interests in the Company, relative to
each other and all other holders of Securities, are preserved; and


 


5

















 


(C)                                the rights of
the Stockholders under this Agreement and the Registration Rights Agreement are
preserved in all material respects.


“Sponsor Group” means the Blackstone
Investor Group or the FRC Investor Group.


“Sponsor Stockholders” means those
Stockholders who are members of a Sponsor Group.


“Subsidiary” means, with respect to any
Person, any corporation, limited liability company, partnership, association or
other business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, representatives or trustees
thereof is at the time owned or Controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a limited liability company, partnership, association or
other business entity, a majority of the total voting power of stock (or
equivalent ownership interest) of the limited liability company, partnership,
association or other business entity is at the time owned or Controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that
Person or a combination thereof.  For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority
of limited liability company, partnership, association or other business entity
gains or losses or shall be or Control the managing director or general partner
of such limited liability company, partnership, association or other business
entity.


“Third Party” means a Person other than
the Stockholders and their respective Affiliates.


“Transfer” has the meaning set forth in
Section 2.1(a).


“Treasury Regulations” means the final
or temporary regulations that have been issued by the U.S. Department of
Treasury pursuant to its authority under the Code, and any successor regulations.


“VCOC Stockholder” has the meaning
specified in Section 3.5.


1.2.         Other Definitional
Provisions; Interpretation.  (a)  The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, Subsection, Schedule and Exhibit references are to this Agreement
unless otherwise specified.  Any pronoun
used herein shall be deemed to cover all genders.


(b)           The headings in this Agreement are included for
convenience of reference only and shall not limit or otherwise affect the
meaning or interpretation of this Agreement.


(c)           The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.


 


6

















 


(d)           Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words
“without limitation”.


(e)           The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.


ARTICLE
II


 


TRANSFERS


 


2.1.         Limitations on Transfer.


(a)   Following a
Qualified IPO and the expiration of any related underwriter or Company
“lock-up” period (as provided for in Section 3(a) of the Registration
Rights Agreement or otherwise) which is applicable to such Management
Stockholder, no Management Stockholder shall directly or indirectly, sell,
transfer, pledge or otherwise dispose of any economic, voting or other rights
in or to (each, a “Transfer”) its Securities except
pursuant to (i) (x) Section 2.4, (y) a Transfer to a Manager Permitted
Transferee (subject to the extent applicable, to the provisions of Section
2.1(b), (c) and (d) or (z) a Transfer to the Company or a Sponsor Stockholder
or its Affiliates (each a “Manager Permitted Transfer”), (ii) a
Transfer in accordance with the Registration Rights Agreement or (iii) a
Transfer conducted in accordance with the requirements of Rule 144 or its
successor promulgated under the Securities Act or pursuant to an effective
registration statement.


(b)   Except for
Transfers in connection with a Public Offering (or any effective registration
statement) and Transfers in accordance with the requirements of Rule 144 or its
successor under the Securities Act or Transfers by Management Stockholders to
the Company in accordance with any written agreement with the Company, no
Transfer shall be effective unless (i) the Transferee agrees to be bound by the
terms and conditions of this Agreement, and any related agreements previously
approved by the Board or the Stockholders in accordance with this Agreement,
(ii) it complies in all respects with the applicable provisions of this
Agreement, (iii) it complies in all respects with applicable federal and state
securities laws, including the Securities Act and (iv) it is made in compliance
with all applicable Company policies and restrictions (including any trading
“window periods” or other policies regulating insider trading).  A Sponsor Stockholder may deem any
Transferee of any of its Securities to be a member of its Sponsor Group at the
time of the related Transfer so long as such transferring Sponsor Stockholder
receives the written consent of the Sponsor Stockholders that are not
Affiliates of the transferring Sponsor Stockholder.  In such event, the Transferee shall have all rights under this
Agreement and the Registration Rights Agreement which would have otherwise
inured to the benefit of the transferring Sponsor Stockholder in respect of the
transferred Securities.


(c)   No Transfer by any Management Stockholder may
be made pursuant to this Article II (except under Section 2.4 or pursuant to an
effective registration statement under the Securities Act or in accordance with
the requirements of Rule 144 promulgated under the Securities Act so long as
such Management Stockholder provides such documentation and certifications as
the Company may reasonably require in connection with such Transfer) unless


 


7

















 


and until such Management
Stockholder has first delivered to the Company an opinion of counsel
(reasonably acceptable in form and substance to the Company) that neither
registration nor qualification under the Securities Act and applicable state
securities laws is required in connection with such Transfer.


(d)   No holder of Securities shall grant any proxy
or become party to any voting trust or other agreement that is inconsistent
with, conflicts with or violates any provision of this Agreement.


2.2.         Void Transfers. 
Any
Transfer or attempted Transfer of any Securities in violation of any provision
of this Agreement or any other agreement with the Company shall be null and
void, and the Company shall not record such Transfer on its books or, to the
fullest extent permitted by Law, treat any purported Transferee of such
Securities as the owner thereof for any purpose.


2.3.         Legend. 
(a)  Each certificate (if certificated) evidencing shares of
Common Stock and each instrument issued in exchange for or upon the Transfer of
any shares of Common Stock shall be stamped or otherwise imprinted with a
legend in substantially the following form, or such similar legend as may be
specified in any other agreement with the Company:


“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.


“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN TRANSFER AND OTHER RESTRICTIONS
SET FORTH IN THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, DATED AS OF
OCTOBER 4, 2004 AMONG FOUNDATION COAL HOLDINGS, INC. AND CERTAIN OF ITS
STOCKHOLDERS AND, AMONG OTHER THINGS, MAY NOT BE OFFERED OR SOLD EXCEPT IN
COMPLIANCE WITH SUCH TRANSFER RESTRICTIONS. 
A COPY OF SUCH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY
AND IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR.  THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF
THE AFORESAID AGREEMENT.”


 


8

















 


(b)           In the event that any shares of Common Stock shall cease
to be Restricted Securities, the Company shall, upon the written request of the
holder thereof, issue to such holder a new certificate evidencing such shares
of Common Stock without the first paragraph of the legend required by Section
2.3(a) endorsed thereon.  In the event
that any shares of Common Stock shall cease to be subject to the restrictions
on transfer set forth in this Agreement, the Company shall, upon the written
request of the holder thereof, issue to such holder a new certificate
evidencing such shares of Common Stock without the legend required by the
second paragraph of Section 2.3(a).


2.4.         Management
Stockholders Put Right.


(a)           If any Management Stockholder’s Services to the Company or
any Subsidiary is terminated (i) due to the Disability or death of the
Management Stockholder, (ii) by the Company or its Subsidiaries without Cause
or (iii) by the Management Stockholder for a Good Reason, prior to the date the
shares of Common Stock under the Company 2004 Stock Incentive Plan (the “Incentive
Plan”) are registered and “freely tradable” following an
initial public offering of equity securities of the Company, and any such
Management Stockholder exercises an option to purchase shares of Common Stock
granted under the Incentive Plan (an “Option”) held by him
or her, then each such Management Stockholder shall have the right ( the “Option
Exercise Put Right”) for 210 days following the date of such
exercise to sell to the Company and the Company shall be required to purchase,
on one occasion, a number of shares of Common Stock having a Fair Market Value
(based on the Public Share FMV) equal to the remaining tax liability (above the
minimum required withholding tax liability) incurred by each such Management
Stockholder) upon such exercise (the “Remaining Tax Liability”).  For purposes of this Section 2.4, (i) shares
of Common Stock shall not be “freely tradable” if the shares are subject to an
underwriters’ lock-up agreement and (ii) the methodology used in determining
Fair Market Value of the Common Stock for purposes of this Section 2.4 shall be
the same methodology used in determining the Management Stockholder’s
reportable compensation upon exercise of the Option.


(b)           Each Management Stockholder who desires to sell his or her
shares of Common Stock which may be sold pursuant to this Section 2.4, shall
not later than 210 days after the exercise of the Option (provided that the
Option Exercise Put Right may not be exercised prior to 181 days following such
Management Stockholder’s exercise of the Option to the extent that the Management
Stockholder intends to utilize his or right to sell the shares of Common Stock
to the Company received in connection with the exercise), send a written notice
to the Company of an intention to sell such shares of Common Stock, together
with a representation detailing the calculation of the Remaining Tax Liability,
which calculation shall be reasonably acceptable to the Company.


(c)           Within three (3) Business Days of any Management
Stockholder tendering shares of Common Stock subject to the Option Exercise Put
Right, the Company shall pay to such Management Stockholder the purchase price
for such shares of Common Stock by delivery of funds deposited to an account
designated by such Management Stockholder, a bank a cashier’s check, a
certified check or a company check of the Company for the purchase price.


 


9

















 


(d)           Notwithstanding anything to the contrary elsewhere herein,
the Company shall not be obligated to purchase any shares of Common Stock with
respect to this Section 2.4, (i) to the extent that the purchase of
such shares of Common Stock (together with any other purchases of shares of
Common Stock pursuant to similar provisions in any other agreements with other
investors of which the Company has at such time been given or has given notice)
would result (x) in a violation of any Law, policy, writ or judgment
promulgated or entered by any governmental authority applicable to the Company
or any of its Subsidiaries or any of its or their assets or (y) after giving
effect thereto (including any dividends or other distributions or loans from a
Subsidiary of the Company to the Company in connection therewith), in a
Financing Default, or (ii) if immediately prior to such purchase of shares
of Common Stock, there exists a Financing Default which prohibits such purchase
(including any dividends or other distributions or loans from a Subsidiary of
the Company to the Company in connection therewith).


(e)           Defined Terms.  Any Capitalized term used in this Section 2.4 and not otherwise
defined in this Agreement shall have the meaning assigned to it in the
Employment Agreement dated as of July 30, 2004 between the Manager and
Foundation Coal Corporation as in effect on the date hereof.


ARTICLE
III


 


BOARD OF DIRECTORS


 


3.1.         Board of Directors. 
The parties agree as follows:


(a)           On the Effective Date, the Board shall consist of eight
(8) directors (individually, a “Director”
and, collectively, the “Directors”),
of whom:


(i)            three (3) shall be designees of Blackstone FCH (such persons,
the “Blackstone Directors”);


(ii)           three (3) shall be designees of the FRC Investor Group
(such persons, the “First Reserve Directors”);


(iii)          one (1) designee shall be appointed jointly by Blackstone
FCH and the FRC Investor Group (the “Joint Director”); and


(iv)          one (1) designee, who shall be “independent” as such term
is defined in Section 303A of the NYSE Listed Company Manual, who shall be
appointed by the Board and be reasonably acceptable to the Blackstone FCH
Investor Group and the FRC Investor Group.


(b)           (i)            Blackstone
FCH shall be entitled to designate three (3) Blackstone Directors to serve on
the Board; provided that at such time (if any) as the aggregate number
of shares of Common Stock and Common Stock Equivalents (on an as-converted basis)
beneficially owned by the members of the Blackstone Investor Group is less than
66 2/3% of the aggregate number of shares of Common Stock and Common Stock
Equivalents (on an as-converted basis) then beneficially owned by the members
of the FRC Investor Group, then Blackstone shall be entitled to designate only
two (2) Directors to serve on the Board and shall cause one of its


 


10

















 


Directors to promptly resign from the Board so that
Blackstone FCH shall not have more Directors serving on the Board at any time
than it would be entitled to have pursuant to Section 3.1(b)(i); provided
further that at such time (if any) as the aggregate number of shares of
shares of Common Stock and Common Stock Equivalents (on an as-converted basis)
beneficially owned by the members of the Blackstone Investor Group is less than
33 1/3% of the aggregate number of shares of Common Stock and Common Stock
Equivalents (on an as-converted basis) beneficially held by the members of the
FRC Investor Group, then Blackstone shall be entitled to designate only one (1)
Director to serve on the Board and shall cause such number of its Directors to
promptly resign from the Board so that Blackstone FCH shall not have more
Directors serving on the Board at any time than it would be entitled to have
pursuant to this Section 3.2(b)(i); provided further that at such time
as the members of the Blackstone Investor Group cease to beneficially own any
shares of Common Stock or Common Stock Equivalents, then Blackstone shall not
be entitled to designate any Directors to serve on the Board and shall cause
all of its Directors to promptly resign.


(ii)           The FRC Investor Group shall be entitled to designate the
three (3) First Reserve Directors to serve on the Board; provided that
at such time (if any) as the aggregate number of shares of Common Stock and
Common Stock Equivalents (on an as converted basis) beneficially owned by the
members of the FRC Investor Group is less than 66 2/3% of the aggregate number of
shares of Common Stock and Common Stock Equivalents (on an as converted basis)
then beneficially owned by the members of the Blackstone Investor Group, then
the FRC Investor Group shall be entitled to designate only two (2) Directors to
serve on the Board and shall cause one of its Directors to promptly resign from
the Board so that FRC Investor Group shall not have more Directors serving on
the Board at any time than it would be entitled to have pursuant to this
Section 3.1(b)(ii); provided further that at such time (if any) as the
aggregate number of shares of Common Stock and Common Stock Equivalents (on an
as converted basis) owned by the members of the FRC Investor Group is less than
33 1/3% of the aggregate number of shares of Common Stock and Common Stock
Equivalents (on an as converted basis) then held by the members of the
Blackstone Investor Group, then the FRC Investor Group shall be entitled to
designate only one (1) Director to serve on the Board and shall cause such
number of its Directors to promptly resign from the Board so that the FRC
Investor Group shall no have more Directors serving on the Board at any time
that it would be entitled to have pursuant to this Section 3.1(b)(ii); provided
further that at such time as the members of the FRC Investor Group cease to
hold any shares of Common Stock or Common Stock Equivalents, then the FRC
Investor Group shall not be entitled to designate any Directors to serve on the
Board and shall cause all of its Directors to promptly resign.


(iii)          From and after the date hereof, Blackstone FCH and the FRC
Investor Group shall be entitled to jointly designate the one (1) Joint
Director; provided that at such time (if any) that either the Blackstone
Investor Group or the FRC Investor Group ceases to hold any shares of Common
Stock or Common Stock Equivalents, the Sponsor Stockholder continuing to hold
shares of Common Stock or Common Stock Equivalents shall be entitled to
designate the Joint Director.  In the
event Blackstone FCH and the FRC Investor Group are entitled to jointly
designate the Joint Director and fail to agree on such designation, no Joint
Director shall be designated and shall remain vacated until a new Joint
Director is designated.


 


11

















 


(iv)          To the extent that either Blackstone FCH or FRC Investor
Group, as the case may be, loses the right to designate one or more Directors
pursuant to the provisions of Section 3.1(b), the Board will take such action
so as to reduce the size of the Board.


(v)           In connection with an Initial Public Offering or as
otherwise required by applicable federal and state securities laws, the Board
shall be expanded to include such additional independent directors as may be
required by the rules of any exchange on which the shares are traded, with such
independent directors to be selected by the Board and to be reasonably
acceptable to the Blackstone FCH Group (so long as the Blackstone FCH Group
constitutes a Qualifying Sponsor Group) and the FRC Investor Group (so long as the
FRC Investor Group constitutes a Qualifying Sponsor Group).


(c)           Chairman.  A Chairman of the Board (the “Chairman”) may, from
time to time, be appointed by the Directors from among themselves.  The Chairman of the initial Board shall be
William E. Macaulay.  The Chairman, if
appointed, will preside over meetings of the Board.


(d)           Voting. 
Each Director, including the Chairman, shall have a single vote,
provided any Director may, subject to applicable Law, give any other Director a
proxy to represent such first Director in any matters.  Any vote, consent or other action of the
Board may be undertaken with the unanimous written consent (in lieu of meeting)
of the Directors, in each case who have been appointed and who are then in office.


(e)           Removal and Replacement.  Each of the Sponsor Stockholders shall be entitled at any time
(with or without cause) to cause any or all of the Directors designated by such
Sponsor Stockholder pursuant to Section 3.1(b) to be removed from the Board
and, so long as such Sponsor Stockholder holds Securities, the Joint Director
designated pursuant to Section 3.1(b) to be removed from the Board, and in such
event such Sponsor Stockholder will take such action as is required to
effectuate such removal.  A Director may
be removed only by the Sponsor Stockholder that designated such Director to the
Board.  The Joint Director may be
removed by either Sponsor Stockholder so long as such Sponsor Stockholder
continues to hold Securities.  In the
event that a vacancy is created at any time by the death, disability,
retirement, resignation or removal (with or without cause) of any Director, or,
if prior to his or her appointment to the Board, any Director-designee of a
Sponsor Stockholder or a Joint Director-designee indicates that he or she is
unwilling or unable to serve as a Director, then (i) the Sponsor Stockholder
that had appointed such Director (or designee) shall cause, or in the case of
the Joint Director, both Sponsor Stockholders, so long as each holds
Securities, shall jointly cause, the vacancy created thereby to be filled by an
appropriate individual as soon as reasonably practicable and (ii) the Board
shall not take any material action over the objection of such Sponsor
Stockholder with a pending vacancy on the Board without such Sponsor
Stockholder’s consent until a replacement Director has been appointed by the
appropriate Sponsor Stockholder pursuant to clause (i) of this sentence
and elected to the Board.


3.2.         Approval Rights. 
(a)  In addition to any vote or consent of the Board or the
stockholders of the Company required by Law or the Charter and not withstanding
anything in this Agreement to the contrary the Company shall not, and shall not
permit any of its Subsidiaries to, take any of the following actions, or enter
into any arrangement or contract to do


 


12

















 


any of the following actions, without the approval of
a majority of the Board (which for this purpose shall require approval by at
least one of the Directors designated solely by the FRC Investor Group who is
also an officer of First Reserve Corporation for so long as the FRC Investor
Group constitutes a Qualifying Sponsor Group and at least one of the Directors
appointed solely by Blackstone FCH for so long as the Blackstone Investor
constitutes a Qualifying Sponsor Group), which approvals may be withheld by the
Directors designated by the FRC Investor Group or the Directors appointed by
Blackstone FCH for any reason or no reason:


(i)            the appointment, removal or termination of the Chief
Executive Officer of the Company or any of its Subsidiaries and any officer
that reports directly to the Chief Executive Officer of the Company or any of
its Subsidiaries or entering into, modifying or terminating any employment
contract with, or changing the compensation of (including any bonus payment),
the Chief Executive Officer of the Company or any of its Subsidiaries or any
officer that reports directly to the Chief Executive Officer of the Company or
any of its Subsidiaries;


(ii)           creation, any authorization, or issuance of any class,
series or shares of stock or any other Securities in the Company or any
Subsidiary or any right, warrant or option to acquire or security convertible
into or exchangeable for, any such Securities (including (i) in connection with
any initial Public Offering by the Company or any of its Subsidiaries and (ii)
pursuant to the filing of a registration statement under the Securities Act
other than in accordance with the Registration Rights Agreement) and the terms
(including price) thereof, or the redemption, repurchase, or other acquisition
of any of the foregoing;


(iii)          any declaration or payment of dividends or similar payments
or other distributions on or purchase, repurchase or redemption of Securities
of any of the Company or any of its Subsidiaries and other than payments or
distributions on, or purchases, repurchases or redemptions of, Securities held
solely by the Company or a Subsidiary;


(iv)          any purchase, sale, lease, Encumbrance, Transfer or other acquisition
or disposition of assets of the Company or any of its Subsidiaries having an
aggregate value in excess of $20 million, or any merger, consolidation,
conversion, business combination or joint venture involving any of the Company
or any of its Subsidiaries that is not contained in the materials approved
pursuant to clause (ix) of this Section 3.2(a);


(v)           any change, through any acquisition, disposition of assets
or otherwise, in the nature of the business of the Company or any of its
Subsidiaries, or the entry by the Company or any of its Subsidiaries into a new
line of business;


(vi)          any transaction involving the Company or any of its
Subsidiaries, on the one hand, and any Investor Stockholder or any Affiliate of
an Investor Stockholder (other than the Company or any of its Subsidiaries), on
the other;


(vii)         any incurrence by the Company or any of its Subsidiaries of
indebtedness in excess of $20 million, including any guarantees, suretyship
obligations and other contingent indebtedness that is not contained in the
materials approved pursuant to clause (ix) of this Section 3.2(a);


 


13

















 


(viii)        the commencement, negotiation and/or
settlement of any claim, demand, action, suit, investigation or proceeding that
has an estimated value of greater than $5 million per claim, demand, action,
suit, investigation or proceeding or related series thereof;


(ix)           the approval of the operating budget, capital budget
and/or business plan of the Company and its Subsidiaries;


(x)            any material change in (i) accounting policies or
procedures of the Company or any of its Subsidiaries unless required under
United States generally accepted accounting principles or (ii) tax elections of
the Company or any of its Subsidiaries;


(xi)           any change of the Company’s auditor;


(xii)          the adoption of any plan or proposal for a complete or
partial liquidation or dissolution of the Company or any of its Subsidiaries or
any reorganization or recapitalization of the Company or any of its Subsidiaries
or commencement of any case, proceeding or action seeking relief under any
existing or future laws relating to bankruptcy, insolvency, conversatorship or
relief of debtors with respect to the Company or any of its Subsidiaries;


(xiii)         the incurrence of any unbudgeted
capital expenditure by the Company or any of its Subsidiaries in excess of $10
million individually or in the aggregate;


(xiv)        the formation or acquisition of a Subsidiary or any joint
venture, or any acquisition of any equity or membership interest in any
partnership, limited partnership, limited liability company or other entity;


(xv)         any change to the tax structure of the Company or any of its
Subsidiaries, including any change in the Company’s organizational form;


(xvi)        any split, combination or other reclassification of the
Common Stock;


(xvii)       any change in the rights, preferences and
priorities of the Common Stock;


(xviii)      any amendment to this Agreement or any
other governing document of the Company or any of its Subsidiaries; and


(xix)         any sale of 100% of Securities of the Company.


3.3.         Payments to Directors;
Reimbursements.  All Directors will be entitled to
reimbursement of their reasonable out-of-pocket expenses incurred in connection
with their attendance at Board meetings and such reasonable and customary fees
as may be authorized by the Board, provided, however, that should the Board
authorize the payment of any such fees, each Director shall receive the same
fee as each of the other Directors.


3.4.         Board Committees. 
The Board shall organize an Audit Committee, a Compensation Committee
and such other committees of the Board as it deems reasonably necessary to
effectively govern the Company. As long as the FRC Investor Group constitutes a
Qualifying Sponsor Group then it shall have the right to appoint the chairman
of each committee


 


14

















 


of
the Board except that the as long as the Blackstone Investor Group constitutes
a Qualifying Sponsor Group it shall have the right to appoint the chairman of
the Compensation Committee for such time as the Chairman shall be a Director
appointed by the FRC Investor Group.  As
long each Sponsor Group constitutes a Qualifying Sponsor Group and except as
may be required by applicable Law or any exchange or over the counter market on
which the Securities of the Company are listed or quoted, as the case may be,
each Sponsor Stockholder shall have representation on all committees of the
Board that is as nearly proportionate to such Sponsor Stockholder’s representation
on the Board as possible.


3.5.         VCOC.  In the event
that the Company ceases to qualify as an “operating company” (as defined in the
first sentence of 29 C.F.R. § 2510.3-101(c)), then the Company and each
Stockholder will cooperate in good faith to take all reasonable action
necessary to provide that the investment (or at least 51% of the investment
valued at cost) of each Stockholder that qualifies as a “venture capital
operating company” (as defined in 29 C.F.R. § 2510.3-101(d)) (a “VCOC Stockholder”) shall continue to qualify as a
“venture capital investment” (as defined in 29 C.F.R. § 2510.3-101(d)).


3.6.         Stockholder Action.  For as long
as either the FRC Investor Group or the Blackstone Investor Group constitutes a
Qualifying Sponsor Group, then except as required by Law, each member of the
Blackstone Investor Group and the FRC Investor Group shall be obligated to vote
all of the Common Stock held by such Person in favor of any person designated
to serve as Director pursuant to Section 3.1(b). For so long as the AMCI
Investor Group is provided, pursuant to a separate agreement with the Company,
all information regarding the Company and its Subsidiaries which is made
available to the First Reserve Directors in their capacity as such, each member
of the AMCI Investor Group shall be obligated to vote all of the Common Stock
held by such Person in favor of any person designated to serve as Director
pursuant to Section 3.1(b)


3.7.         Fiduciary Duties. 
To the extent permitted by Delaware Law, notwithstanding anything to the
contrary in this Agreement, each Stockholder agrees that any fiduciary duty
imposed under Delaware Law (including the duty of loyalty and the duty of care)
on the Investor Stockholders and the Directors shall be defined, limited and eliminated
as provided in this Section 3.7.  (For
the avoidance of doubt, this Section 3.7 is not intended to create any duties
on the part of any Stockholder who is not an Investor Stockholder but shall
also not be deemed to limit any duties which are otherwise imposed on such
Stockholder under Delaware law or which are created pursuant to an express
agreement with such Stockholder.)


(a)           Certain Potential Conflicts.  Each Stockholder acknowledges that:


(i)            each Investor Stockholder and its
Affiliates may engage in material business transactions with the Company or its
Subsidiaries; and


(ii)           the directors, officers, and/or
employees of an Investor Stockholder and its Affiliates may serve as directors,
officers and/or employees of the Company or its Subsidiaries.


 


15

















 


(b)           Limitation of Liability.  To the fullest extent permitted by Law, no Investor Stockholder
or its respective Affiliates or any director, officer or employee of any
Investor Stockholder or its Affiliates who may serve as an officer, director
and/or employee of the Company or its Subsidiaries shall be liable to the
Company or its Subsidiaries:


(i)            by reason of any business decision
or transaction undertaken by such Investor Stockholder or its Affiliates which
may be adverse to the interests of the Company or its Subsidiaries;


(ii)           by reason of any activity undertaken
by such Investor Stockholder or its Affiliates or by any other Person in which
such Investor Stockholder or their respective Affiliates may have an investment
or other financial interest which is in competition with the Company or its
Subsidiaries; or


(iii)          by reason of any transaction with such
Investor Member or its Affiliates, or any transaction in which such Investor
Member or its Affiliates shall have a financial interest, unless the party
seeking to assert such liability shall prove, by clear and convincing evidence,
that such transaction could not have been the product of rationale business
judgment at the time and under the circumstances it was authorized by the Board
or a committee thereof.


(c)           Competing Activities.  Except as otherwise expressly provided in a written agreement
between the Company and any Investor Stockholder:


(i)            such Investor Stockholder or its Affiliates may engage or
invest in, independently or with others, any business activity of any type or
description, including without limitation those that might be the same as or
similar to the Company’s business, and which from time to time compete,
directly or indirectly, with the Company, and, without limiting the foregoing,
the Stockholders acknowledge that the Investor Stockholders and their
respective Affiliates may in their sole discretion pursue such competing
business without disclosure of such competition to the Company;


(ii)           neither the Company, any subsidiary of the Company nor any
other Stockholder shall have any right in or to the activities described in
Section 3.7(c)(i) or to receive or share in any income or proceeds derived
therefrom; and


(iii)          to the extent required by applicable Law in order to
effectuate the purpose of this provision, the Company shall have no interest or
expectancy, and specifically renounces any interest or expectancy, in any such
business activities or ventures.


 


16

















 


3.8.         Stockholder Approval of Parachute Payments.  Each
Stockholder agrees that, upon the recommendation of the Board, such Stockholder
will, whether by action taken at any meeting of Stockholders or by written
consent, give any consent, approval, vote or proxy or take such other action
that may be required pursuant to Section 280G of the Code, so that the cash
value of any payments to be made to employees of the Company or any of its
Subsidiaries or affiliates, as determined thereunder, will not constitute
“parachute payments” within the meaning of the Code.


ARTICLE
IV


 


BOOKS AND RECORDS


 


The
Company  shall, and shall cause its
Subsidiaries to, keep proper books or records and accounts, in which full
correct entries shall be made of all financial transactions and the assets and
business of the Company and each of its Subsidiaries in accordance with
generally accepted accounting principles.


ARTICLE
V


 


REPRESENTATIONS AND WARRANTIES


 


5.1.         Representations of Each of the
Parties. 
Except as otherwise specified below, each of the parties hereto
represents and warrants solely with respect to itself to each of the other
parties hereto as follows:


(a)           Due Organization and Good Standing.  Each party (other than any individual person
a party hereto) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization.


(b)           Authority Relative to This Agreement.  Each party has all necessary power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder.  Each person executing and
delivering this Agreement is duly authorized to execute and deliver this
Agreement on behalf of such party.  The
execution and delivery of this Agreement by it has been duly and validly authorized
by all requisite action and no other proceedings on its part are necessary to
authorize this Agreement.  This
Agreement has been duly and validly executed and delivered by it and, assuming
the due authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of it.


(c)           No Conflict.  The execution, delivery, and performance by
it of this Agreement do not and shall not violate any applicable Law or
conflict with or constitute a default, breach, or violation of the terms,
conditions, or provisions of any contract, agreement or instrument to which
such party is subject which would prevent such party from performing any of its
obligations hereunder or thereunder.


(d)           Required Filings and Consents.  The execution and delivery by it of this
Agreement do not, and the performance of this Agreement will not, require any
Governmental Authorization, except for (i) any such Governmental Authorizations
as have been already


 


17

















 


obtained or made or (ii) where failure to obtain any
such Governmental Authorizations would not prevent or materially delay it from
performing any of its obligations under this Agreement.


ARTICLE
VI


 


MISCELLANEOUS


 


6.1.         Competitive Opportunity. 
If any Director acquires knowledge (other than solely in the Director’s
capacity as a Director) of a potential transaction or matter which may be an
investment or business opportunity or prospective economic or competitive
advantage in which the Company could have an interest or expectancy (a “Competitive Opportunity”) or otherwise is then exploiting any
Competitive Opportunity, the Company will have no interest in, and no
expectation that, such Competitive Opportunity be offered to it, any such
interest or expectation being hereby renounced so that each Director shall (i)
have no duty to communicate or present such Competitive Opportunity to the
Company and (ii) have the right to hold any such Competitive Opportunity for
such Director’s (and its agents’, partners’ or affiliates’) own account and
benefit; or to recommend, assign or otherwise transfer or deal in such
Competitive Opportunity to Persons other than the Company or any affiliate of
the Company.  For the avoidance of
doubt, this Section 6.1 shall not limit the Company’s independent ability to
pursue a Competitive Opportunity, nor shall this Section 6.1 operate to limit
the duties or obligations of any of the Management Stockholders.


6.2.         Additional Securities Subject to
Agreement.  Each Stockholder agrees that any other
Securities which it shall hereafter acquire by means of a stock split, stock
dividend, distribution, exercise of stock options or warrants or otherwise
shall be subject to the terms hereof.


6.3.         Indemnification.  The Company
agrees to indemnify and hold harmless the Stockholders, their respective
directors and officers and their respective Affiliates (and the directors,
officers, Stockholders, partners, Affiliates and controlling persons thereof)
(each, an “Indemnitee”)
from and against any and all liability, including all obligations, costs,
fines, claims, actions, injuries, demands, suits, judgments, proceedings,
investigations, arbitrations (including stockholder claims, actions, injuries,
demands, suits, judgments, proceedings, investigations or arbitrations) and
expenses, including accountant’s and attorney’s fees and expenses (together the
“Losses”), incurred by any
Indemnitee before or after the date of this Agreement and arising out of,
resulting from, or relating to (i), (ii) any litigation to which any Indemnitee
is made a party in its capacity as a stockholder or owner of securities of the
Company (or a partner, director, officer, Affiliate or controlling person of
any Indemnitee) or (iii) any franchise taxes imposed on the Stockholders.  The Company also agrees to reimburse each
Indemnitee for any reasonable expenses incurred by such Indemnitee in
connection with the maintenance of its books and records, preparation of tax
returns and delivery of tax information to its partners, Stockholders or
shareholders in connection with the applicable Investor Stockholder’s
investment in the Company.


 


18

















 


6.4.         Other Stockholders
Agreements.  Each of the Management Stockholders and the
Company agrees that the Management Members Agreement dated as of July 30, 2004
to which it is a party is hereby terminated and of no further force and effect.


6.5.         Assignment and Binding Effect. 
Neither the Company nor any Stockholder shall assign all or any part of
this Agreement without the prior written consent of the other.  This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties pursuant to
this paragraph.


6.6.         Notices. 
Any notice, demand, request, waiver, or other communication under this
Agreement shall be personally served in writing, shall be deemed to have been
given on the date of service, and shall be addressed as follows:


	
  To the Company:

  	
   

  	
  Foundation Coal
  Holdings, Inc.

  999 Corporate
  Boulevard

  Linthicum
  Heights, Maryland 21090

  Attention:
  General Counsel

  Fax: (410)
  689-7601

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  The Blackstone
  Group

  345 Park Avenue,
  31st Floor

  New York, NY
  10154

  Attention: David
  Foley

  Fax: (212)
  583-5712

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  First Reserve
  Corporation 

  One Lafayette
  Place

  Greenwich, CT
  06830

  Attention: Alex
  Krueger

  Fax: (203)
  661-6729

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Simpson Thacher
  & Bartlett LLP

  425 Lexington
  Avenue

  New York,
  NY  10017]

  Attention: David
  Lieberman

  Fax: (212)
  455-2502

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bartlit Beck
  Herman Palenchar & Scott LLP 

  1899 Wynkoop
  Street, Suite 800

  Denver, CO 80202

  Attention: James
  L. Palenchar

  Fax: (303)
  592-3140

  



 


19

















 


	
  To Blackstone Investor Group:

  	
   

  	
  The Blackstone
  Group

  345 Park Avenue,
  31st Floor

  New York, NY
  10154

  Attention: David
  Foley

  Fax: (212)
  583-5712

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Simpson Thacher &
  Bartlett LLP

  425 Lexington Avenue

  New York, NY  10017

  Attention: David
  Lieberman

  Fax: (212) 455-2502

  
	
   

  	
   

  	
   

  
	
  To FRC Investor Group:

  	
   

  	
  First Reserve
  Corporation

  One Lafayette
  Place

  Greenwich, CT
  06830

  Attention: Alex
  Krueger

  Fax: (203)
  661-6729

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Bartlit Beck
  Herman Palenchar & Scott LLP

  1899 Wynkoop
  Street, Suite 800

  Denver, CO 80202

  Attention: James
  L. Palenchar

  Fax: (303)
  592-3140

  
	
   

  	
   

  	
   

  
	
  To AMCI Investor Group:

  	
   

  	
  AMCI Acquisition,
  LLC

  475 Steamboat
  Road

  Greenwich, CT
  06830

  Attention:  Hans Mende

  Fax:  (203) 625-9231

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  McGuireWoods LLP
  One James Center

  901 East Cary
  Street

  Richmond, VA
  23219

  Attention:  Leslie A. Grandis

  Fax: (804)
  698-2069

  
	
   

  	
   

  	
   

  
	
  To Any Other Stockholder:

  	
   

  	
  Addressed to the
  Stockholder

  c/o: Foundation Coal
  Holdings, Inc.

  999 Corporate Boulevard

  Linthicum Heights,
  Maryland 21090

  Attention: General Counsel

  Fax: (410) 689-7601

  



6.7.         Governing Law.  THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF
THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES WHICH
WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.


 


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6.8.         Arbitration.  Any dispute, controversy or claim arising out of or relating to
this Agreement or the Registration Rights Agreement (a “Dispute”), shall be settled by binding
arbitration in accordance with the commercial arbitration rules of the Center
for Public Resources.  Any such Dispute
shall be consolidated, to the extent practicable, in any arbitration with any
dispute, claim or controversy of any other Stockholder unless the arbitrator
decides that such consolidation cannot occur. 
The arbitration shall be conducted in New York City, New York, and any
court having jurisdiction thereof may be immediately issue judgment on the
arbitration award.  The Stockholders
agree that the arbitration provided for in this Section 6.8 shall be the
exclusive means to resolve all Disputes.


6.9.         Entire Agreement. 
This Agreement and the Registration Rights Agreement set forth the
entire understanding and agreement of the parties hereto and supersede any and
all other understandings, term sheets, negotiations or agreements between the
parties hereto relating to the subject matter of this Agreement and the
Registration Rights Agreement.


6.10.       Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute a single agreement.


6.11.       Severability.  In the event that any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable, the same shall not affect any other
provision of this Agreement, but this Agreement shall be construed in a manner
which, as nearly as possible, reflects the original intent of the parties.


6.12.       Amendment and Modification.  From the date hereof, this Agreement may
only be modified or amended by the agreement of the Sponsor Stockholders.  Notwithstanding anything to the contrary in
this Section 6.12, any modification or amendment of this Agreement which
adversely affects any Stockholder disproportionately relative to the other
Stockholders shall require the agreement of the affected Stockholder.


6.13.       Waiver.  Any party hereto may (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in any document delivered pursuant hereto,
and (iii) waive compliance with any of the agreements or conditions
contained herein.  Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party granting such waiver
but such waiver or failure to insist upon strict compliance with such
representation or warranty, obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
future failure.


6.14.       Further
Assurances.  Subject to
the terms and conditions of this Agreement, each of the parties hereto will use
its reasonable efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
Laws and regulations, to consummate and make effective the provisions of this
Agreement.


6.15.       Specific Enforcement.  The
Stockholders and the Company acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions


 


21

















 


to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they may be entitled at law or
in equity.


6.16.       Successors.  Permitted Transferees are entitled to all of
the rights and subject to all of the obligations of the transferor hereunder
from whom they received their Securities regardless of whether the Agreement
elsewhere so expressly provides.


6.17.       Computation
of Time.  In computing
any period of time under this Agreement, the day of the act, event or default
from which the designated period of time begins to run shall not be
included.  The last day of the period so
computed shall be included, unless it is a Saturday, Sunday or legal holiday,
in which event the period shall run until the end of the next day which is not
a Saturday, Sunday or legal holiday.


6.18.       Confidentiality.


(a)           Each Stockholder recognizes and acknowledges that the
Company’s trade secrets, proprietary information, and Confidential Information
(as defined in Section 6.18(c) below), as they may exist from time to time, are
valuable, special and unique assets of the Company’s business.  Except as otherwise required by law, each
Stockholder agrees to hold as the Company’s property, all memoranda, books,
papers, letters, and other data, and all copies thereof and therefrom, in any
way relating to the Company’s business and affairs, whether made by such
Stockholder or otherwise coming into such Stockholder’s possession, and at the
time such Stockholder ceases to be a Stockholder for any reason, to deliver the
same to the Company.


(b)           Each Stockholder hereby agrees that such Stockholder will
not at any time during the period such Stockholder is a Stockholder or
thereafter disclose to any third party (other than in the ordinary course of
business of the Company) or use for the benefit of such Stockholder or any
third party any Confidential Information (as such term is defined in Section
6.18 below), except (i) as otherwise required by law, or (ii) as previously
authorized by the Board in writing.


(c)           As used in this Agreement, “Confidential
Information” shall mean information which is not generally
known to the public in the form available to Stockholders and which was or is
used, developed or obtained by the Company relating to the business of the
Company, or research and development, including, but not limited to, all
investor, client, portfolio company or customer lists, marketing strategies and
techniques, trade secrets, engineering or other know-how or other information
pertaining to the financial condition, business, research and development or
prospects of the Company.


6.19.       Management Stockholder’s Services.  Nothing
contained in this Agreement shall be deemed to obligate the Company or any
Subsidiary to employ or retain any Management Stockholder any capacity
whatsoever or to prohibit or restrict the Company (or any Subsidiary) from
terminating the Services of the Management Stockholder at any time or for any
reason whatsoever, with or without Cause.


6.20.       New Stockholders to become Parties.  Each Sponsor Stockholder shall cause any
Transferee of a Sponsor Stockholder who is deemed pursuant to Section 2.1(b) to
be a


 


22

















 


member of such Transferring Sponsor Stockholder to
become a party to this Agreement as an “Investor Stockholder” by executing a counterpart to this
Agreement or a written instrument agreeing to be bound by the provisions
hereof.  The Company shall cause any
Person who is an employee of the Company or any of its Subsidiaries who is
granted stock options by the Company (an “Optionholder”) but who is not already a Stockholder at the time of
such grant to either (i) become a party to this Agreement by executing a
counterpart to this Agreement and, in such case, will designate such party as a
“Management
Stockholder”
for all purposes of this Agreement or (ii) otherwise become subject to the
limitations on transfers contained in Section 2.1 pursuant to a separate
written agreement.  Each such
Optionholder shall become a Management Stockholder under this Agreement upon
the exercise of any options.  Prior to
becoming a Stockholder, each Optionholder shall have no rights under this
Agreement other than those specifically set forth herein.


6.21.       Effectiveness.  This Agreement will become effective (the “Effective Date”) upon the consummation
of a Qualified IPO, prior to the consummation of a Qualified IPO the Original
Stockholders Agreement shall continue and remain in full force and effect and
binding upon the parties thereto.


 


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IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
individuals whose names appear below and by the duly authorized representatives
of each party hereto as of the first date written.


	
   

  	
  FOUNDATION COAL HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg A. Walker

  
	
   

  	
   

  	
  Name:

  	
  Greg A. Walker

  
	
   

  	
   

  	
  Title:

  	
  Senior V.P. — General
  Counsel and Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BLACKSTONE FCH CAPITAL PARTNERS
  IV L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Blackstone Management
  Associates IV L.L.C., its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ David I. Foley

  
	
   

  	
   

  	
   

  	
   

  	
  Name: 

  	
  David I. Foley

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BLACKSTONE FAMILY INVESTMENT
  PARTNERSHIP IV-A L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Blackstone Management
  Associates IV L.L.C., its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David I. Foley

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  David I. Foley

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  	
   

  
										



 


24

















 


	
   

  	
  FIRST RESERVE FUND IX, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  First Reserve GP IX,
  L.P., its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  First Reserve GP IX,
  Inc., its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William E. Macaulay

  
	
   

  	
   

  	
   

  	
  Name: William E.
  Macaulay

  	
   

  
	
   

  	
   

  	
   

  	
  Title:   Chairman and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AMCI
  ACQUISITION, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Hans J.
  Mende

  
	
   

  	
   

  	
  Name: Hans J.
  Mende

  
	
   

  	
   

  	
  Title:   President

  
								



 


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  Management Stockholders:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ Dr. Klaus
  Dieter-Beck

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dr. Klaus Dieter-Beck

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ James J. Bryja

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James J. Bryja

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ James A. Olsen

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James A. Olsen

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ Michael R. Peelish

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Michael R. Peelish

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ James F. Roberts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James F. Roberts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ John R. Tellmann

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  John R. Tellmann

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ Greg A. Walker

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Greg A. Walker

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/ Frank J. Wood

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Frank J. Wood

  



 


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