EXHIBIT 10.9
FC 1 CORP.
2004 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, is made effective as of August 10, 2004 (the "Date of Grant"),
between FC 1 Corp. (the "Company") and
(the
"Participant").
R E C I T A L S:
WHEREAS, the Company has adopted the Plan (as defined below), the terms of which
are hereby incorporated by reference and made a part of this Agreement; and
WHEREAS, the Committee has determined that it would be in the best interests of
the Company and its stockholders to grant the Options provided for herein to the
Participant pursuant to the Plan and the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows:
1.
DEFINITIONS.
WHENEVER THE FOLLOWING
TERMS ARE USED IN THIS AGREEMENT, THEY SHALL HAVE THE MEANINGS SET FORTH BELOW.
CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE SAME MEANINGS AS
IN THE PLAN.
(A)
ACTUAL CASH COSTS:
IN RESPECT OF A FISCAL
YEAR, WITH RESPECT TO EACH MINE, TOTAL OPERATING EXPENSES, EXCLUDING (I) ALL
DEPRECATION, DEPLETION, IMPAIRMENT AND AMORTIZATION EXPENSE, (II) ALL ALLOCATED
AND UNALLOCATED CORPORATE OVERHEAD EXPENSE, (III) PURCHASED COAL EXPENSE,
(IV) INVENTORY VARIANCES, (V) ASSET RETIREMENT OBLIGATION ACCRETION EXPENSE AND
(VI) ALL ROYALTY PAYMENTS, TAXES AND EXPENSES WHICH ARE DIRECTLY RELATED TO
REVENUES.
(B)
ACTUAL COST PER TON:
IN RESPECT OF A FISCAL
YEAR, THE SUM OF THE MINE COST PER TON WITH RESPECT TO EACH MINE OF THE COMPANY.
(C)
ACTUAL EBITDA:
"EBITDA" AS DEFINED IN THE
CREDIT AGREEMENT DATED AS OF JULY 30, 2004 BY AND AMONG FOUNDATION PA COAL
COMPANY, AS BORROWER, FC 2 CORP. AND FOUNDATION COAL CORPORATION, AS GUARANTORS,
AND THE LENDERS NAMED THEREIN AS IN EFFECT ON THE DATE HEREOF.
(D)
ACTUAL FREE CASH FLOW:
IN RESPECT OF A
FISCAL YEAR, EBITDA LESS THE SUM OF CAPITAL EXPENDITURES AS SET FORTH IN THE
COMPANY'S AUDITED FINANCIAL STATEMENTS; PROVIDED THAT THE BOARD OF DIRECTORS MAY
MAKE SUCH EQUITABLE ADJUSTMENTS TO CAPITAL EXPENDITURES AS IT REASONABLY DEEMS
TO BE APPROPRIATE IN ORDER TO ACHIEVE THE INTENTION OF THIS AGREEMENT AFTER
GIVING EFFECT TO SIGNIFICANT EVENTS INCLUDING, WITHOUT LIMITATION, ACQUISITIONS,
DISPOSITIONS, MERGERS OR SIMILAR TRANSACTIONS.
(E)
ACTUAL PRODUCTION:
IN RESPECT OF A FISCAL
YEAR, THE SUM OF (I) TONS PRODUCED IN EAST AND (II) TONS PRODUCED IN WEST
DIVIDED BY 5.
(F)
CAUSE:
"CAUSE" AS DEFINED IN THE
EMPLOYMENT AGREEMENT, INCLUDING ALL OF THE PROCEDURES DESCRIBED THEREIN
APPLICABLE TO A TERMINATION BY THE COMPANY FOR CAUSE.
(G)
DISABILITY:
"DISABILITY" AS DEFINED IN THE
EMPLOYMENT AGREEMENT, INCLUDING ALL OF THE PROCEDURES DESCRIBED THEREIN
APPLICABLE TO A TERMINATION FOR DISABILITY.
(H)
EMPLOYMENT AGREEMENT:
THE EMPLOYMENT
AGREEMENT BETWEEN THE PARTICIPANT AND FOUNDATION COAL CORPORATION, DATED
JULY 30, 2004.
(I)
EXPIRATION DATE:
THE TENTH ANNIVERSARY
OF THE DATE OF GRANT.
(J)
GOOD REASON:
"GOOD REASON" AS DEFINED
IN THE EMPLOYMENT AGREEMENT, INCLUDING ALL OF THE PROCEDURES DESCRIBED THEREIN
APPLICABLE TO A TERMINATION BY THE PARTICIPANT FOR GOOD REASON.
(K)
MINE COST