Document:

Exhibit 10.7

 

Amendment Number 1 to

EMPLOYMENT AGREEMENT

 

THIS AMENDMENT, is made effective as of November 1,
2005, between Foundation Coal Corporation (the “Company”) and Greg A. Walker
(the “Participant”).

 

R
E  C  I  T  A  L  S:

 

WHEREAS, the Company executed an Employment
Agreement with the Participant dated July 30, 2004 (the “Employment
Agreement”); and

 

WHEREAS, the Compensation Committee of the
Board of Directors of the Company (“Committee”) has considered the Performance
Targets contained in the Employment Agreement; and

 

WHEREAS, the Committee established an ad hoc
subcommittee of the Board of Directors to review the Actual Cost Per Ton and
Target Cost Per Ton Performance Target and to make a recommendation to the
Committee; and

 

WHEREAS, after consultation with the ad hoc
subcommittee, management presented to the Committee an alternative to the cost
per ton related Performance Target and proposed an “EBITDA/Revenue” Margin; and

 

WHEREAS, the Committee has reviewed the
information presented and has determined that it would be in the best interests
of the Company and its Stockholders to amend the Employment Agreement to
replace the “cost per ton” Performance Target with an “EBITDA/Revenue Margin”
Performance Target;

 

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

 

Exhibit A - (Performance Vesting) shall
be amended as follows:

 

Replace “Cost per ton” with “EBITDA/Revenue Margin.”

 

Schedule II (Performance Targets) shall
be amended as follows:

 

Replace the “Actual Cost Per Ton” paragraph with the following
paragraph:

 

Actual EBITDA/Revenue Margin:  In respect of a fiscal year, the Actual
EBITDA divided by the Revenue as reported in the December 31st audited
Statement of Consolidated Operations and Comprehensive Income (Loss) multiplied
by 100 to result in a percentage.

 

1

 

Replace the “Target Cost Per Ton” paragraph with the following
paragraph:

 

“Target EBITDA/Revenue Margin” means,
in respect of any fiscal year, the Target EBITDA divided by the Revenue as
reported in the December 31st audited Statement of Consolidated
Operations and Comprehensive Income (Loss) multiplied by 100 to result in a
percentage.  The Margin shall be 20% with
respect of 2004 through 2008; provided that the Board may make such
equitable adjustments to Margin 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.”

 

Except as otherwise noted in this Amendment Number 1, all other terms
and conditions of the Employment Agreement remain as originally written.  In the event of any inconsistency between the
terms of this Amendment Number 1 and the terms of the Employment Agreement, the
terms of this Amendment Number 1 shall be controlling.

 

IN WITNESS WHEREOF, this Amendment has been
executed this 1st day of November 2005 and delivered by the parties
hereto.

 

 

	
   

  	
  Foundation Coal Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Greg A. Walker

  

 

2Exhibit 10.8

 

Amendment Number 1 to

EMPLOYMENT AGREEMENT

 

THIS AMENDMENT, is made effective as of November 1,
2005, between Foundation Coal Corporation (the “Company”) and Frank J. Wood
(the “Participant”).

 

R
E  C  I  T  A  L  S:

 

WHEREAS, the Company executed an Employment
Agreement with the Participant dated July 30, 2004 (the “Employment
Agreement”); and

 

WHEREAS, the Compensation Committee of the
Board of Directors of the Company (“Committee”) has considered the Performance
Targets contained in the Employment Agreement; and

 

WHEREAS, the Committee established an ad hoc
subcommittee of the Board of Directors to review the Actual Cost Per Ton and
Target Cost Per Ton Performance Target and to make a recommendation to the
Committee; and

 

WHEREAS, after consultation with the ad hoc
subcommittee, management presented to the Committee an alternative to the cost
per ton related Performance Target and proposed an “EBITDA/Revenue” Margin; and

 

WHEREAS, the Committee has reviewed the
information presented and has determined that it would be in the best interests
of the Company and its Stockholders to amend the Employment Agreement to
replace the “cost per ton” Performance Target with an “EBITDA/Revenue Margin”
Performance Target;

 

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

 

Exhibit A - (Performance Vesting) shall
be amended as follows:

 

Replace “Cost per ton” with “EBITDA/Revenue Margin.”

 

Schedule II (Performance Targets) shall
be amended as follows:

 

Replace the “Actual Cost Per Ton” paragraph with the following
paragraph:

 

Actual EBITDA/Revenue Margin:  In respect of a fiscal year, the Actual
EBITDA divided by the Revenue as reported in the December 31st audited
Statement of Consolidated Operations and Comprehensive Income (Loss) multiplied
by 100 to result in a percentage.

 

1

 

Replace the “Target Cost Per Ton” paragraph with the following
paragraph:

 

“Target EBITDA/Revenue Margin” means,
in respect of any fiscal year, the Target EBITDA divided by the Revenue as
reported in the December 31st audited Statement of Consolidated
Operations and Comprehensive Income (Loss) multiplied by 100 to result in a
percentage.  The Margin shall be 20% with
respect of 2004 through 2008; provided that the Board may make such
equitable adjustments to Margin 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.”

 

Except as otherwise noted in this Amendment Number 1, all other terms
and conditions of the Employment Agreement remain as originally written.  In the event of any inconsistency between the
terms of this Amendment Number 1 and the terms of the Employment Agreement, the
terms of this Amendment Number 1 shall be controlling.

 

IN WITNESS WHEREOF, this Amendment has been
executed this 1st day of November 2005 and delivered by the parties
hereto.

 

 

	
   

  	
  Foundation Coal Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Frank J. Wood

  

 

2EXHIBIT 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 Per Ton:  With respect to each mine, the Actual Cash
Cost for such mine during a fiscal year divided by the tons produced by such
mine for such fiscal year multiplied by a fraction, the numerator of which is
the tons produced by such mine for such fiscal year and the denominator of
which is the Actual Production for such fiscal year.

 

(l)                                     Options:  Collectively, the Time Option and Performance
Option to purchase Shares granted under this Agreement.

 

(m)                               Performance Option:  An Option with respect to which the terms and
conditions are set forth in Section 3(b) of this Agreement.

 

(n)                                 Performance Actual:  Each of the Actual Free Cash Flow, the Actual
Cost Per Ton, Actual EBITDA and Actual Production.

 

(o)                                 Performance Target:  Each of the Target Free Cash Flow, the Target
Cost Per Ton, Target EBITDA and Target Production.

 

(p)                                 Plan:  The FC 1 Corp. 2004 Stock Incentive
Plan, as from time to time amended.

 

(q)                                 Target Free Cash Flow:  $65.6 million in respect of 2004,
$120.6 million in respect of 2005, $192.1 million in respect of 2006,
$92.4 million in respect of 2007 and $154.0 million in respect of
2008; provided that the Board may make such equitable adjustments to
Target Free Cash Flow 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.

 

(r)                                    Target Cost Per Ton:  $19.92 in respect of 2004, $19.42 in respect
of 2005, $19.78 in respect of 2006, $19.56 in respect of 2007 and $20.07 in
respect of 2008; provided that the Board may make such equitable
adjustments to Target Cost Per Ton as it

 

2

 

reasonably deems to be
appropriate in order to achieve the intention of this agreement after giving
effect to (i) variances between the budgeted production of each mine (as
set forth on Exhibit A) and the actual production of such mine and (ii) significant
events including, without limitation, acquisitions, dispositions, mergers or
similar transactions.

 

(s)                                  Target EBITDA:  $160.3 million in respect of 2004,
$245.6 million in respect of 2005, $275.9 million in respect of 2006,
$270.8 million in respect of 2007 and $222.1 million in respect of
2008; provided, that the Board of Directors may make any adjustment to
EBITDA as it reasonably deems to be appropriate (including adjustments made as
a result of acquisitions, dispositions, mergers, recapitalizations,
reorganizations, consolidations, spin-offs, distributions, other extraordinary
transactions, other changes in the structure of the Company or any of its
Affiliates, or significant capital expenditures so that Target EBITDA equitably
reflects the basis for determining Actual EBITDA for the period in question).

 

(t)                                    Target Production:  27.8 million tons in respect of 2004,
29.5 million tons in respect of 2005, 29.8 million tons in respect of
2006, 28.9 million tons in respect of 2007 and 29.1 million tons in
respect of 2008; provided that the Board of Directors may make such
equitable adjustments to Target Production 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.

 

(u)                                 Time Option:  An Option with respect to which the terms and
conditions are set forth in Section 3(a) of this Agreement.

 

(v)                                 Vested Portion:  At any time, the portion of an Option which
has become vested, as described in Section 3 of this Agreement.

 

2.                                       Grant of Options.  The
Company hereby grants to the Participant the right and option to purchase, on
the terms and conditions hereinafter set forth, the number of Shares subject to
the Time Option and Performance Option set forth on Schedule A attached
hereto, subject to adjustment as set forth in the Plan.  The exercise price of the Shares subject to
the Time Option shall be $10.00 per Share and the exercise price of the Shares
subject to the Performance Options shall be $17.50 per Share, each subject to
adjustment as set forth in the Plan (in each case, the “Option
Price”).  The Options are
intended to be nonqualified stock options, and are not intended to be treated
as ISOs that comply with Section 422 of the Code.

 

3.                                       Vesting of the Options.

 

(a)                                  Vesting
of the Time Option.

 

(i)                                     In General.  Subject to the Participant’s continued
Employment with the Company and its Affiliates (except as provided in Section 4(a)),
the Time Option shall vest and become exercisable with respect to twenty
percent (20%) of the Shares subject to such Time Option on December 31,
2004 and shall vest and become exercisable with respect to an additional twenty
percent (20%) of the Shares subject to the Time Option on each December 31
thereafter, until such Shares subject to the Time Option are one hundred
percent (100%) vested and exercisable.

 

3

 

(ii)                                  Change in Control.  Notwithstanding the foregoing, upon a Change
in Control, the Time Option shall, to the extent not previously cancelled or
expired, immediately become one hundred percent (100%) vested and
exercisable.

 

(b)                                 Vesting
of the Performance Option.

 

(i)                                     In
General.  Subject to the Participant’s
continued Employment with the Company and its Affiliates, the Performance
Option, to the extent not previously canceled or expired, shall become fully
vested and exercisable with respect to one hundred percent (100%) of the
Shares subject to the Performance Option on the eighth anniversary of the Date
of Grant.

 

(ii)                                  Acceleration.  Notwithstanding the foregoing and subject to
the Participant’s continued Employment with the Company and its Affiliates
(except as provided in Section 4(a)), the Performance Option shall vest
and become exercisable with respect to five percent (5%) of the Shares
subject to the Performance Option on December 31, 2004 and an additional
five percent (5%) of the Shares on each of the first four anniversaries of
such date (December 31, 2004 and each such anniversary, an “Accelerated Vesting Date”) to the
extent that any Performance Actual for a fiscal year ending on an Accelerated
Vesting Date equals or exceeds (or in the case of Actual Cost Per Ton, equals
or is less than) the applicable Performance Target for such fiscal year.  For the avoidance of doubt, if each of the
Performance Actuals for a particular fiscal year equal or exceed (or in the
case of Actual Cost Per Ton, equals or is less than) the applicable Performance
Target, then twenty percent (20%) of the Shares subject to the Performance
Option shall vest and become exercisable on the Accelerated Vesting Date for
such fiscal year.

 

(iii)                               Catch-Up.  Notwithstanding the foregoing and subject to
the Participant’s continued Employment with the Company and its Affiliates
(except as provided in Section 4(a)), if a Performance Actual does not equal of exceed (or
in the case of Actual Cost Per Ton, equals or is less than) the applicable Performance
Target with respect to any fiscal year (a “Missed Year”) but the sum of the
Performance Actuals for the Missed Year and the subsequent fiscal year (the “Excess Year”) equals or exceeds (or
in the case of Actual Cost Per Ton, equals or is less than) the sum of the applicable
Performance Targets for such Missed Year and Excess Year, then the Performance
Option shall vest and become exercisable with respect to five percent (5%)
of the Shares subject to the Performance Option in respect of such Missed Year
on the Accelerated Vesting Date of the Excess Year.

 

(iv)                              Change in Control.  Notwithstanding the foregoing, upon a Change
in Control, the Performance Option shall, to the extent not previously
cancelled or expired, become vested and exercisable with respect to one hundred
percent (100%) of the number of Shares subject to the Performance Option
that have not become eligible for accelerated vesting pursuant to Section 3(b)(ii) (including,
the Shares eligible for accelerated vesting for the fiscal year in which the
Change in Control occurs) if, and only if, the value realized by the Investors
with respect to their investment in the Company and Foundation Coal Holdings
LLC (the “LLC”), whether prior to or in
the Change in

 

4

 

Control transaction, and including amounts received through
distributions (excluding tax and regular quarterly dividends) or disposition of
their interests in units in the LLC or Shares (other than Shares received in
exchange for units of the LLC in connection with the merger of the LLC into the
Company) of the Company represents a two times or greater return to the
Investors on their invested capital.

 

(c)                                  Termination
of Employment.

 

(i)                                     General.  Other than as described in Sections 3(c)(ii) and
(iii), if the Participant’s Employment with the Company and its Affiliates
terminates for any reason, the Option, to the extent not then vested and
exercisable, shall expire and be immediately canceled by the Company without
consideration.

 

(ii)                                  Time Option.  Notwithstanding Section 3(a) and 3(c)(i),
in the event that the Participant’s Employment is terminated by the Company
without Cause, by the Participant with Good Reason, or due to death or
Disability, to the extent not previously cancelled or expired, the Time Option
shall immediately become vested and exercisable as to Shares subject to the
Time Option that would have otherwise vested and become exercisable in the
calendar year in which such termination of Employment occurs.  Any portion of the Time Option which becomes
vested and exercisable pursuant to this Section 3(c)(ii) shall be
considered part of the Vested Portion of the Option, and shall expire as
described in Section 4(a)(i) or (iv), as applicable.

 

(iii)                               Performance Option.  Notwithstanding Section 3(b) and 3(c)(i),
in the event that the Participant’s Employment is terminated by the Company
without Cause or by the Participant with Good Reason and a Performance Target
is achieved with respect to the year of such termination, to the extent not
previously cancelled or expired, the Performance Option shall become vested and
exercisable in the Shares subject to the Performance Option that would have
vested and become exercisable upon the achievement of such Performance Target
as if the Participant’s Employment continued through the end of such year,
including as to those Shares which would have become vested and exercisable in
respect of a Missed Year as a result of the achievement of such Performance
Target.  The portion of the Performance
Option which is available to vest following termination of employment in
accordance with this Section 3(c)(iii) shall not be cancelled upon
the Participant’s termination of employment, but instead shall remain
outstanding until expiration in accordance with Section 4(a)(iv).

 

4.                                       Exercise of Options.

 

(a)                                  Period
of Exercise.  Subject to the
provisions of the Plan and this Agreement, the Participant may exercise all or
any part of the Vested Portion of an Option at any time prior to the Expiration
Date.  Notwithstanding the foregoing, if
the Participant’s Employment terminates prior to the Expiration Date, the
Vested Portion of an Option shall remain exercisable only for the period set
forth below (and shall expire upon termination of such period):

 

5

 

(i)                                     Death or
Disability.  If the Participant’s
Employment with the Company and its Affiliates is terminated due to the
Participant’s death or Disability, the Participant may exercise the Vested
Portion of an Option for a period ending on the earlier of (A) one year
following the date of such termination and (B) the Expiration Date; and

 

(ii)                                  Termination by the
Company without Cause or Termination by the Participant.  If the Participant’s Employment with the Company
and its Affiliates is terminated (a) by the Company without Cause or (b) by
the Participant with Good Reason, the Participant may exercise the Vested
Portion of an Option for a period ending on the earlier of (A) 90 days
(120 days if such termination occurs prior to an initial registered public
offering of the Shares (an “IPO”))
following the date of such termination and (B) the Expiration Date; and

 

(iii)                               Termination by the
Company for Cause.  If the
Participant’s Employment with the Company and its Affiliates is terminated by
the Company for Cause, the Vested Portion of an Option shall immediately
terminate in full and cease to be exercisable; and

 

(iv)                              Performance Catch-Up.  Notwithstanding the foregoing, (1) if
the Participant’s termination of Employment for any reason other than by the
Company for Cause occurs after the close of a fiscal year but prior to the date
on which the Participant is advised by the Company whether a Performance Actual
equals or exceeds (or in the case of Actual Cost Per Ton, equals or is less
than) the applicable Performance Target in respect of such fiscal year (the “Target Determination Date”), the
portion of the Performance Option which is available to vest on account of such
fiscal year’s performance (including the portion attributable to a Missed Year,
if any) will expire (A) on the Target Determination Date, in respect of
the portion of such Performance Option as to which a Performance Target was not
attained (unless the application of clause (2) below would result in
a later termination date), and (B) 90 days (120 days prior to an IPO)
following the Target Determination Date in respect of the portion of such
Performance Option as to which a Performance Target was attained, and (2) if
a Participant’s termination of Employment by the Company without Cause or by
the Participant for Good Reason occurs during a fiscal year, then the portion
of the Performance Option which is available to vest on account of such fiscal
year’s performance in accordance with Section 3(c)(iii) (including
the portion attributable to a Missed Year, if any) will expire (A) on the
Target Determination Date, in respect of the portion of such Performance Option
as to which the Performance Target was not attained and (B) 90 days
(120 days prior to an IPO) following the Target Determination Date in
respect of the portion of such Performance Option which becomes vested in
accordance with Section 3(c)(iii).

 

(v)                                 Termination of
Employment Prior to Change in Control.  Notwithstanding the foregoing, if the Participant’s
Employment is terminated by the Company without Cause and a Change in Control
occurs within 180 days following such termination, the Vested Portion of
an Option shall be recalculated taking into account the Change in Control as if
such Change in Control had occurred immediately prior to the

 

6

 

termination of the Participant, and any portion of an Option that
becomes a Vested Portion pursuant to this Section 4(a)(v) shall be
exercisable for a period of 90 days (120 days prior to an IPO)
following such Change in Control.  The
Company shall use reasonable best efforts to notify the Participant of such
Change in Control in a timely manner so as to permit the Participant to
exercise the Option.

 

(b)                                 Method
of Exercise.

 

(i)                                     Subject to Section 4(a) of
this Agreement, the Vested Portion of an Option may be exercised by delivering
to the Company at its principal office written notice of intent to so exercise;
provided that the Option may be exercised with respect to whole Shares
only.  Such notice shall specify the
number of Shares for which the Option is being exercised and, other than as
described in clause (C) or (D) of the following sentence, shall
be accompanied by payment in full of the aggregate Option Price in respect of
such Shares.  Payment of the aggregate
Option Price may be made (A) in cash, or its equivalent, (B) by
transferring to the Company Shares or units of the LLC having a Fair Market
Value equal to the aggregate Option Price for the Shares being purchased; provided
that such Shares or units meet such requirements as may be necessary in order
for the Company to not incur adverse accounting consequences on account of such
transfer (as reasonably determined by the Company), (C) if there is a public
market for the Shares at the time of payment, subject to such rules as may
be established by the Committee, through delivery of irrevocable instructions
to a broker to sell the Shares otherwise deliverable upon the exercise of the
Option and deliver promptly to the Company an amount equal to the aggregate
Option Price, (D) to the extent it does not result in adverse accounting
treatment to the Company (as reasonably determined by the Company), by having
Shares that would otherwise have been delivered to the Participant upon
exercise of an Option withheld by the Company or (E) such other method as
approved by the Committee.  No
Participant shall have any rights to dividends or other rights of a stockholder
with respect to the Shares subject to an Option until the Participant has given
written notice of exercise of the Option, paid in full for such Shares or
otherwise completed the exercise transaction as described in the preceding
sentence and, if applicable, has satisfied any other conditions imposed pursuant
to this Agreement.

 

(ii)                                  Notwithstanding any
other provision of the Plan or this Agreement to the contrary, absent an
available exemption to registration or qualification, an Option may not be
exercised prior to the completion of any registration or qualification of the
Option or the Shares under applicable state and federal securities or other
laws, or under any ruling or regulation of any governmental body or national
securities exchange that the Committee shall in its sole reasonable discretion
determine to be required by such laws, rulings or regulations.

 

(iii)                               Upon the Company’s
determination that an Option has been validly exercised as to any of the
Shares, the Company shall issue certificates in the Participant’s name for such
Shares.  However, the Company shall not
be liable to the Participant for damages relating to any reasonable delays in
issuing the certificates to the Participant or any loss by the Participant of
the certificates.

 

7

 

(iv)                              In the event of the
Participant’s death, the Vested Portion of an Option shall remain vested and
exercisable by the Participant’s executor or administrator, or the person or
persons to whom the Participant’s rights under this Agreement shall pass by
will or by the laws of descent and distribution as the case may be, to the
extent set forth in Section 4(a) of this Agreement.  Any heir or legatee of the Participant shall
take rights herein granted subject to the terms and conditions hereof.

 

(v)                                 As a condition to the
exercise of any Option evidenced by this Agreement, the Participant shall
execute the Stockholders Agreement.

 

5.                                       No Right to Continued Employment.  Neither the Plan nor this Agreement shall be
construed as giving the Participant the right to be retained in the employ of,
or in any consulting relationship to, the Company or any Affiliate.  Further, the Company or its Affiliate may at
any time dismiss the Participant or discontinue any consulting relationship,
free from any liability or any claim under the Plan or this Agreement, except
as otherwise expressly provided herein.

 

6.                                       Legend on Certificates. 
The certificates representing the Shares purchased by exercise of an
Option shall be subject to such stop transfer orders and other restrictions as
the Committee may determine is required by the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which such Shares are listed, any applicable federal or state laws and the
Company’s Certificate of Incorporation and Bylaws, and the Committee may cause
a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

 

7.                                       Transferability. 
Unless otherwise determined by the Committee, an Option may not be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by the Participant otherwise than by will or by the laws of descent
and distribution, and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate; provided that the designation of a
beneficiary shall not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance.  During
the Participant’s lifetime, an Option is exercisable only by the Participant.

 

8.                                       Withholding.  The
Participant may be required to pay to the Company or its Affiliate and the
Company or its Affiliate shall have the right and is hereby authorized to
withhold from any payment due or transfer made under the Option or under the
Plan or from any compensation or other amount owing to a Participant the amount
(in cash, Shares, other securities, other Awards or other property) of any
applicable withholding taxes in respect of the Option, its exercise, or any
payment or transfer under the Option or under the Plan and to take such action
as may be necessary in the option of the Company to satisfy all obligations for
the payment of such taxes.  The
Participant may pay a portion or all of such withholding taxes by having Shares
with a Fair Market Value equal to the statutory minimum withholding liability
withheld by the Company from any Shares that would have otherwise been
deliverable upon the exercise of the Option.

 

8

 

9.                                       Securities Laws.  Upon
the acquisition of any Shares pursuant to the exercise of an Option, the
Participant will make or enter into such written representations, warranties
and agreements as the Committee may reasonably request in order to comply with
applicable securities laws or with this Agreement.  As soon as practicable following an IPO, the
Company shall use its commercially reasonable efforts to file a registration
statement on Form S-8 (or any successor thereof) with respect to the
Shares subject to the Plan.

 

10.                                 Notices.  Any notice
under this Agreement shall be addressed to the Company in care of its General
Counsel, addressed to the principal executive office of the Company and to the
Participant at the address last appearing in the personnel records of the
Company for the Participant or to either party at such other address as either
party hereto may hereafter designate in writing to the other.  Any such notice shall be deemed effective
upon receipt thereof by the addressee.

 

11.                                 Entire Agreement/Employment Agreement.  This Agreement, together with the
Stockholders Agreement, contains the entire understanding of the parties with
respect to the grant of equity awards pursuant to Exhibit A of the
Employment Agreement and this Agreement supercedes the terms of Exhibit A
of the Employment Agreement.  The
Participant acknowledges that the differences between the Performance Targets
set forth herein and the performance targets set forth in Exhibit A of the
Employment Agreement are the result of inadvertent errors in the calculations
of such Performance Targets.

 

12.                                 Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to conflicts of laws.

 

13.                                 Options Subject to Plan and Stockholders Agreement.  By entering into this Agreement the
Participant agrees and acknowledges that the Participant has received and read
a copy of the Plan and the Stockholders Agreement.  The Options and the Shares received upon exercise
of the Options are subject to the Plan and the Stockholders Agreement.  The terms and provisions of the Plan and the
Stockholders Agreement as each may be amended from time to time are hereby
incorporated by reference.  In the event
of a conflict between any term or provision contained herein and a term or
provision of the Plan or the Stockholders Agreement, the applicable terms and
provisions of the Plan or the Stockholders Agreement will govern and
prevail.  In the event of a conflict
between any term or provision of the Plan and any term or provision of the
Stockholders Agreement, the applicable terms and provisions of the Stockholders
Agreement will govern and prevail.

 

14.                                 Signature in Counterparts. 
This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.

 

9

 

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

 

	
   

  	
  FC 1 CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Its

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Participant

  
						

 

 

EXHIBIT A

 

Schedule A

 

The number of
Shares subject to each Option is set forth below:

 

Time Option:                                                                                                                           [        ]

 

Performance Option:                                                                                [        ]

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