**EXHIBIT 10.1**

 

**FORM OF INDEPENDENT DIRECTOR**

 

**RESTRICTED STOCK AGREEMENT**

 

**FOUNDATION COAL HOLDINGS, INC.2004 STOCK INCENTIVE PLAN**

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**RESTRICTED STOCK AGREEMENT**

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THIS AGREEMENT, is made effective as of                    (the “**Date of Grant**”),between Foundation Coal Holdings, Inc. (the “**Company**”) and                               .(the “**Participant**”).

 

RECITALS:

 

WHEREAS, the Company has adopted the Foundation CoalHoldings, Inc. 2004 Stock Incentive Plan, as from time to time amended(the “**Plan**”), the terms ofwhich are hereby incorporated by reference and made a part of this Agreement;and

 

WHEREAS, the Committee has determined that it wouldbe in the best interests of the Company and its stockholders to grant therestricted Shares provided for herein to Participant pursuant to the Plan andthe terms set forth herein;

 

NOW, THEREFORE, in consideration of the mutualcovenants hereinafter set forth, the parties agree as follows:

 

# 1.             **Definitions**. Whenever the following terms are used in this Agreement, they shall havethe meanings set forth below. Capitalized terms not otherwise defined herein shall have the samemeanings as in the Plan.

 

## (a)           **Cause**:  “Cause”shall mean (i) Participant’s continued failure substantially to performParticipant’s duties (other than as a result of total or partial incapacity dueto physical or mental illness) for a period of ten (10) days followingwritten notice by the Company to Participant of such failure, (ii) dishonestyin the performance of Participant’s duties, (iii) Participant’s convictionof, or plea of nolocontendere to, a crime constituting (x) afelony under the laws of the United States or any state thereof or (y) amisdemeanor involving moral turpitude or (iv) Participant’s willfulmalfeasance or willful misconduct in connection with Participant’s duties orany act or omission which is injurious to the financial condition or businessreputation of the Company or any of its Affiliates.

 

## (b)           **Disability**:  “Disability”shall mean Participant becomes physically or mentally incapacitated and istherefore unable for a period of six (6) consecutive months or for anaggregate of nine (9) months in any twenty-four (24) consecutive monthperiod to perform Participant’s duties.

 

# 2.             **Grantof Shares. **The Company hereby grants to Participant                 Shares, subject to adjustment as set forth in the Plan.  The Participant agrees to be bound by allterms and conditions of this Agreement and the Plan, as amended from time totime.

 

# 3.             **Restrictionson Transfer of Shares.**  Except as otherwise determined by theCommittee, the Shares cannot be sold, assigned, transferred, pledged,hypothecated or otherwise disposed of during the Restriction Period, and anysuch purported assignment, transfer, pledge or encumbrance shall be void andunenforceable against the Company; provided that the designation of abeneficiary shall not constitute an assignment, transfer, pledge orencumbrance.  For purposes of thisAgreement, the Restriction Period shall mean the period from the Date of Grantuntil the fifth (5th) anniversary of the Date of Grant; provided,however, that, subject to the Participant’s continued service as adirector of the Company, the Restriction Period shall lapse with respect totwenty percent (20%) of the Shares on December 31, 2005 and with respectto an additional twenty percent (20%) on each anniversary thereof, until theShares are 100% vested.  Notwithstandingthe foregoing, upon a Change in Control, the Restriction Period shall lapsewith respect to the Restricted Stock, and the Restricted Stock shall thereby befree of such restrictions.

 

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# 4.             **Forfeitureof Shares.**  If Participant’s Employment shall terminateprior to the expiration of the Restriction Period for any reason, any Shareswith respect to which the Restriction Period has not yet lapsed (the “**Restricted Stock**”) shall, upon such termination of service,be forfeited by Participant to the Company, without the payment of anyconsideration or further consideration by the Company, and neither Participantnor any successors, heirs, assigns, or personal representatives of Participantshall thereafter have any further rights or interest in the Restricted Stock orunder this Agreement, and Participant’s name shall thereupon be deleted fromthe list of the Company’s stockholders with respect to the Restricted Stock.

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# 5.             **Dividends;Voting. **If Participant is a shareholder of record onany applicable record date, Participant shall receive any dividends on theShares granted hereunder when paid regardless of whether the restrictionsimposed by Paragraph **Error!Reference source not found.**hereof have lapsed.  If Participant is ashareholder of record on any applicable record date, Participant shall have theright to vote the Shares granted hereunder regardless of whether therestrictions imposed by Paragraph **Error!Reference source not found.**hereof have lapsed.

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# 6.             **NoRight to Continued Employment**.  Neither the Plan nor this Agreement shall beconstrued as giving Participant the right to be retained as a non-employeedirector of the Company or any Affiliate.

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# 7.             **Legendon Certificates**.  The certificates representing the Sharesshall be subject to such stop transfer orders and other restrictions as theCommittee may determine is required by the rules, regulations, and otherrequirements of the Securities and Exchange Commission, any stock exchange uponwhich such Shares are listed, any applicable federal or state laws and theCompany’s Certificate of Incorporation and Bylaws, and the Committee may causea legend or legends to be put on any such certificates to make appropriatereference to such restrictions.  Inaddition, the certificates representing the Shares shall be issued bearing arestrictive legend that sets forth the restrictions on transfer, forfeitureprovisions and other terms and conditions to which the Shares are subjectpursuant to this Agreement.

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# 8.             **SecuritiesLaws**.  Upon the acquisition of any Shares hereunder,Participant will make or enter into such written representations, warrantiesand agreements as the Committee may reasonably request in order to comply withapplicable securities laws or with this Agreement.  The granting of Shares hereunder shall besubject to all applicable laws, rules and regulations and to suchapprovals of any governmental agencies as may be required.

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# 9.             **Notices**.  Anynotice under this Agreement shall be addressed to the Company in care of itsGeneral Counsel, addressed to the principal executive office of the Company andto Participant at the address last appearing in the personnel records of theCompany for Participant or to either party at such other address as eitherparty hereto may hereafter designate in writing to the other.  Any such notice shall be deemed effectiveupon receipt thereof by the addressee.

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# 10.           **EntireAgreement**.  This Agreement, together with theStockholders Agreement and the Plan, embodies the entire agreement between theparties hereto with respect to the subject matter hereof and supersedes allprior oral or written agreements and understandings relating to the subjectmatter hereof.

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# 11.           **GoverningLaw**.  This Agreement shall be governed by andconstrued in accordance with the laws of the State of Delaware without regardto conflicts of laws.

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# 12.           **Signaturein Counterparts**.  This Agreement may be signed in counterparts,each of which shall be an original, with the same effect as if the signaturesthereto and hereto were upon the same instrument.

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IN WITNESS WHEREOF, this Agreement has been executedand delivered by the parties hereto.

 
|   | FOUNDATION COAL HOLDINGS, INC.                           |
|--------|----------------------------------------------------------|
|   |                                                     |
|   |                                                     |
|   | By:                                                      |   |   |
|   |                                                     |
|   |    Its: Sr. VP Safety and Human Resources |
|   |                                                     |
|   |                                                     |
|   |                                                     |   |
|   | Participant’s  Name                                 |
|        |                                                          |  |  |  |

 

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