Document:

EXHIBIT 10.5

                                   FC 1 CORP.
                            2004 STOCK INCENTIVE PLAN

         1. Purpose of the Plan.

         The purpose of the Plan is to aid the Company (as defined below) and
its Affiliates (as defined below) in recruiting and retaining key employees,
directors or consultants of outstanding ability and to motivate such employees,
directors or consultants to exert their best efforts on behalf of the Company
and its Affiliates by providing compensation and incentives through the granting
of Awards (as defined below). The Company expects that it will benefit from the
added interest which such key employees, directors or consultants will have in
the welfare of the Company as a result of their proprietary interest in the
Company's success.

         2. Definitions.

         The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:

         (a) "ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, or any successor statute
thereto.

         (b) "AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person or any other Person designated by the Committee in which any Person
has an interest.

         (c) "AWARD" means any Option, Stock Appreciation Right, or Other
Stock-Based Award granted pursuant to the Plan.

         (d) "AWARD AGREEMENT" means any written agreement, contract, or other
instrument or document evidencing any
Award, which may, but need not, be executed or acknowledged by a Participant.

         (e) "BOARD OF DIRECTORS" means the Board of Directors of the Company.

         (f) "CHANGE IN CONTROL" means the consummation of any transaction
(including any merger or consolidation) the result of which is that (i) any
Group (excluding the Investors and their Affiliates) or Person (other than an
Investor or its Affiliates) becomes the beneficial owner, directly or
indirectly, of more than 25% of the voting securities of the Company or its
successor entity and, in such event, the Investors do not retain majority voting
control over the Board of Directors and the boards of directors of each
Subsidiary of the Company, (ii) any Group (excluding the Investors and their
Affiliates) or Person (other than an Investor or its Affiliate) becomes the
beneficial owner, directly or indirectly, of more than 50% of the voting
securities of the Company or its successor entity or (iii) any Person, other
than an Investor or an Affiliate of an Investor, becomes the beneficial owner,
directly or indirectly, of all or substantially all of the assets of the Company
or its successor entity.

         (g) "CODE" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.

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         (h) "COMMITTEE" means a committee of the Board of Directors designated
by the Board of Directors or absent such a designation, the Board of Directors.

         (i) "COMPANY" means FC 1 Corp., a Delaware corporation.

         (j) "EFFECTIVE DATE" means the date the Board of Directors adopts the
Plan.

         (k) "EMPLOYMENT" (i) a Participant's employment if the Participant is
an employee of the Company or any of its Affiliates, (ii) a Participant's
services as a consultant, if the Participant is a consultant to the Company or
any of its Affiliates and (iii) a Participant's services as an non-employee
director, if the Participant is a non-employee member of the Board of Directors
or the board of directors of an Affiliate of the Company; provided however that
unless otherwise determined by the Committee, a change in a Participant's status
from employee to non-employee (unless the Participant is a director of the
Company or its Affiliate) shall constitute a termination of employment
hereunder.

         (l) "FAIR MARKET VALUE" means on a given date, (i) if there is a public
market for the Shares on such date, the arithmetic mean of the high and low
prices of the Shares 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, and (ii) if there
is no public market for the Shares on such date, the Fair Market Value shall be
the fair value of the Shares determined from time to time in good faith by the
Board of Directors using its reasonable business judgment.

         (m) "GROUP" shall have the meaning assigned to such term in Section
13(d)(3) of the Exchange Act.

         (n) "INVESTORS" means AMCI Acquisition, LLC, Blackstone FCH Capital
Partners IV L.P, Blackstone Capital Partners IV-A L.P., Blackstone Family
Investment Partnership IV-A L.P. and First Reserve Fund IX, L.P.

         (o) "ISO" means an Option that is also an incentive stock option
granted pursuant to Section 6(d) of the Plan.

         (p) "OPTION" means a stock option granted pursuant to Section 6 of the
Plan.

         (q) "OPTION PRICE" means the purchase price per Share of an Option, as
determined pursuant to Section 6(a) of the Plan.

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         (r) "OTHER STOCK-BASED AWARD" means any award granted under Section 8
of the Plan.

         (s) "PARTICIPANT" means an employee, director or consultant of the
Company or its Affiliates who is selected by the Committee to receive an Award
under the Plan.

         (t) "PERSON" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, governmental body or other entity of any
kind.

         (u) "PLAN" means the FC 1 2004 Stock Incentive Plan.

         (v) "SHARES" means shares of common stock, par value $0.01 per share,
of the Company.

         (w) "STOCK APPRECIATION RIGHT" means any right granted under Section 7
of the Plan.

         (x) "STOCKHOLDERS AGREEMENT" means the Stockholders Agreement among the
Company, Participants and other parties thereto.

         (y) "SUBSIDIARY" means a subsidiary corporation, as defined in Section
424(f) of the Code.

         3. Shares Subject to the Plan.

         The total number of Shares which may be issued under the Plan is
1,938,462. The Shares may consist, in whole or in part, of unissued Shares or
treasury Shares. The issuance of Shares or the payment of cash to a Participant
upon the exercise of an Award shall reduce the total number of Shares available
under the Plan, as applicable. Shares which are subject to Awards which
terminate or lapse may be granted again under the Plan.

         4. Administration.

         The Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part as it determines; provided, however, that
the Board of Directors may, in its sole discretion, take any action designated
to the Committee under this Plan as it may deem necessary. Awards may, in the
discretion of the Committee, be made under the Plan in assumption of, or in
substitution for, outstanding Awards previously granted by the Company or its
Affiliates or a company acquired by the Company or with which the Company
combines. The number of Shares underlying such substitute awards shall be
counted against the aggregate number of Shares available for Awards under the
Plan. The Committee is authorized to interpret the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, and to make any other
determinations that it deems necessary or desirable for the administration of
the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent the
Committee deems necessary or desirable. Any decision of the Committee in the
interpretation and administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final, conclusive

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and binding on all parties concerned (including, but not limited to,
Participants and their beneficiaries or successors). The Committee shall have
the full power and authority to establish the terms and conditions of any Award
consistent with the provisions of the Plan and the terms and conditions set
forth in the applicable Award Agreement. The Committee shall also have the full
power and authority to waive any such terms and conditions at any time
(including, without limitation, accelerating or waiving any vesting conditions
or payment dates). The Committee shall require payment of any amount it may
determine to be necessary to withhold for federal, state, local or other taxes
as a result of the exercise of an Award. The Participant may elect to 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 received by the
Participant.

         5. Limitations.

         No Awards may be granted under the Plan after the tenth anniversary of
the Effective Date, but Awards theretofore granted may extend beyond that date.

         6. Options.

         Options granted under the Plan shall be, as determined by the
Committee, non-qualified stock options or ISOs for federal income tax purposes,
as evidenced by the related Award Agreements, and shall be subject to the
foregoing and the following terms and conditions as set forth in the applicable
Award Agreement:

         (a) Option Price. The Option Price shall be determined by the
Committee, but, with respect to ISOs, shall not be less than 100% of the Fair
Market Value of the Shares on the date an Option is granted.

         (b) Exercisability. Options granted under the Plan shall be exercisable
at such time and upon such terms and conditions as may be determined by the
Committee, but in no event shall an Option be exercisable more than ten years
after the date it is granted.

         (c) Exercise of Options. Except as otherwise provided in the Plan or in
an Award Agreement, an Option may be exercised for all, or from time to time any
part, of the Shares for which it is then exercisable. Except as otherwise
provided in an Award Agreement, no Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the aggregate Option Price and
any withholding amount required therefor is received by the Company. Except as
otherwise provided in an Award Agreement, payment of the aggregate Option Price
may be made (i) in cash, or its equivalent, (ii) by transferring Shares or other
equity securities of the Company or its Affiliates having a Fair Market Value
equal to the aggregate Option Price for the Shares being purchased to the
Company and satisfying such other requirements as may be imposed by the
Committee; provided that such Shares or equity securities have been held by the
Participant for no less than six months (or such other period as established
from time to time by the Committee or generally accepted accounting principles),
(iii) if there is a public market for the Shares at such time, 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

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Option Price, (iv) 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 (v) 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 Shares subject to an Option until the Participant
has given written notice of exercise of the Option, paid in full for such Shares
and, if applicable, has satisfied any other conditions imposed by the Committee
pursuant to the Plan.

         (d) ISOs. The Committee may grant Options under the Plan that are
intended to be ISOs. Such ISOs shall comply with the requirements of Section 422
of the Code. No ISO may be granted to any Participant who at the time of such
grant is not an employee of the Company or of any of its Subsidiaries. In
addition, no ISO may be granted to any Participant who at the time of such grant
owns more than 10% of the total combined voting power of all classes of stock of
the Company or of any of its Subsidiaries, unless (i) the Option Price for such
ISO is at least 110% of the Fair Market Value of a Share on the date the ISO is
granted and (ii) the date on which such ISO terminates is a date not later than
the day preceding the fifth anniversary of the date on which the ISO is granted.
Any Participant who disposes of Shares acquired upon the exercise of an ISO
either (I) within two years after the date of grant of such ISO or (II) within
one year after the transfer of such Shares to the Participant, shall notify the
Company of such disposition and of the amount realized upon such disposition.
All Options granted under the Plan are intended to be non-qualified stock
options, unless the applicable Award Agreement expressly states that the Option
is intended to be an ISO. If an Option is intended to be an ISO, and if for any
reason such Option (or portion thereof) shall not qualify as an ISO, then, to
the extent of such nonqualification, such Option (or portion thereof) shall be
regarded as a non-qualified stock option granted under the Plan; provided that
such Option (or portion thereof) otherwise complies with the Plan's requirements
relating to non-qualified stock options. In no event shall any member of the
Committee, the Company or any of its Affiliates (or their respective employees,
officers or directors) have any liability to any Participant (or any other
Person) due to the failure of an Option to qualify for any reason as an ISO.

         (e) Attestation. Wherever in this Plan or any Award Agreement a
Participant is permitted to pay the Option Price or taxes relating to the
exercise of an Option by delivering Shares, the Participant may, subject to
procedures satisfactory to the Committee, satisfy such delivery requirement by
presenting proof of beneficial ownership of such Shares, in which case the
Company shall treat the Option as exercised without further payment and shall
withhold such number of Shares from the Shares acquired by the exercise of the
Option.

         7. Stock Appreciation Rights.

         (a) Grant. Subject to the provisions of the Plan, the Committee shall
have the sole and complete authority to determine the Participants to whom Stock
Appreciation Rights shall be granted, the number of Shares to be covered by each
Stock Appreciation Right, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. Stock Appreciation Rights granted
in tandem with or in addition to an Award may be granted either at the same time
as the Award or at a later time.

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         (b) Exercise and Payment. A Stock Appreciation Right shall entitle the
Participant to receive an amount equal to the product of (i) the excess of (A)
the Fair Market Value of a Share on the date of exercise of the Stock
Appreciation Right over (B) the grant price per Share, times (ii) the number of
Shares covered by the Stock Appreciation Right. The Committee shall determine
whether a Stock Appreciation Right shall be settled in cash, Shares or a
combination of cash and Shares.

         (c) Other Terms and Conditions. Subject to the terms of the Plan and
any applicable Award Agreement, the Committee shall determine, at or after the
grant of a Stock Appreciation Right, the term, methods of exercise, methods and
form of settlement, and any other terms and conditions of the Stock Appreciation
Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised prior to such determination as well as Stock Appreciation
Rights granted or exercised thereafter. The Committee may impose such conditions
or restrictions on the exercise of any Stock Appreciation Right as it shall deem
appropriate.

         8. Other Stock-Based Awards.

         The Committee, in its sole discretion, may grant Awards of Shares,
rights to purchase Shares, Awards of restricted Shares, Awards of phantom stock
units and other Awards that are valued in whole or in part by reference to, or
are otherwise based on the Fair Market Value of, Shares ("OTHER STOCK-BASED
AWARDS"). Such Other Stock-Based Awards shall be in such form, and dependent on
such conditions, as the Committee shall determine, including, without
limitation, the right to receive one or more Shares (or the equivalent cash
value of such Shares) upon the completion of a specified period of service, the
occurrence of an event and/or the attainment of performance objectives. Other
Stock-Based Awards may be granted alone or in addition to any other Awards
granted under the Plan. Subject to the provisions of the Plan, the Committee
shall determine: (a) to whom and when Other Stock-Based Awards will be made; (b)
the number of Shares to be awarded under (or otherwise related to) such Other
Stock-Based Awards; (c) whether such Other Stock-Based Awards shall be settled
in cash, Shares or a combination of cash and Shares; and (d) all other terms and
conditions of such Other Stock-Based Awards (including, without limitation, the
vesting provisions thereof and provisions ensuring that all Shares so awarded
and issued shall be fully paid and non-assessable).

         9. Adjustments Upon Certain Events.

         Notwithstanding any other provisions in the Plan to the contrary, the
following provisions shall apply to all Awards granted under the Plan:

         (a) Generally. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or transaction or exchange of Shares or other corporate exchange, or any
distribution to shareholders of Shares other than regular cash dividends or any
transaction similar to the foregoing, the Committee without liability to any
person shall make such substitution or adjustment as it deems to be equitable,
as to (i) the number or kind of Shares

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or other securities issued or reserved for issuance pursuant to the Plan or
pursuant to outstanding Awards, (ii) the Option Price and/or (iii) any other
affected terms of such Awards.

         (b) Change in Control. In the event of a Change in Control after the
Effective Date, the Committee may, in its sole discretion, provide for the (i)
termination of an Award upon the consummation of the Change in Control, but only
if such Award has vested and been paid out or the Participant has been permitted
to exercise the Option in full for a period of not less than 30 days prior to
the Change in Control, (ii) acceleration of all or any portion of an Award,
(iii) payment of an amount (in cash or, in the discretion of the Committee, in
the form of consideration paid to shareholders of the Company in connection with
such Change in Control) in exchange for the cancellation of an Award, which, in
the case of Options and Stock Appreciation Rights, shall equal the excess, if
any, of the Fair Market Value of the Shares subject to such Options or Stock
Appreciation Rights over the aggregate Option Price or grant price of such
Option or Stock Appreciation Rights, and/or (iv) issuance of substitute Awards
that will substantially preserve the otherwise applicable terms of any affected
Awards previously granted hereunder.

         10. No Right to Employment or Awards.

         The granting of an Award under the Plan shall impose no obligation on
the Company or any of its Affiliates to continue the employment of a Participant
and shall not lessen or affect the Company's or its Affiliates' rights to
terminate the employment of such Participant. No Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committee's determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).

         11. Successors and Assigns.

         The Plan shall be binding on all successors and assigns of the Company
and a Participant, including without limitation, the estate of such Participant
and the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.

         12. Nontransferability of Awards.

         Unless otherwise determined by the Committee, an Award shall not be
transferable or assignable by the Participant other than by will or by the laws
of descent and distribution. An Award exercisable after the death of a
Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.

         13. Awards Subject to the Plan; Plan Subject to Stockholders Agreement.

         In the event of a conflict between any term or provision contained in
the Plan and a term or provision in any Award Agreement, the applicable terms
and provisions of the Plan will govern and prevail. In the event of a conflict
between any term or provision of the Plan and

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any term or provision of the Stockholders Agreement, the applicable terms and
provisions of the Stockholders Agreement will govern and prevail.

         14. Severability.

         If any provision of the Plan or any Award is, becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or
Award, or would disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to conform
to the applicable laws, or if it cannot be construed or deemed amended without,
in the determination of the Committee, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award shall remain in
full force and effect.

         15. Amendments or Termination.

         (a) Amendments or Termination of the Plan. The Committee may amend,
alter or discontinue the Plan, but no amendment, alteration or discontinuation
shall be made which, without the written consent of a Participant, holder or
beneficiary of an Award, would diminish any of the rights of the Participant,
holder or beneficiary under any Award theretofore granted or transferred to such
Participant, holder or beneficiary under the Plan; provided, however, that the
Committee may amend the Plan in such manner as it deems necessary to permit the
granting of Awards meeting the requirements of the Code or other applicable
laws.

         (b) Amendments to Awards. The Committee may waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Award theretofore granted, prospectively or retroactively;
provided that no waiver, amendment, alteration, suspension, discontinuation,
cancellation or termination shall impair the rights of any Participant or any
holder or beneficiary of any Award theretofore granted without the written
consent of the affected Participant, holder or beneficiary.

         16. Governing Law.

         The Plan shall be governed by and construed in accordance with the laws
of the State of Delaware, without regard to conflicts of laws.

         17. Effectiveness of the Plan.

         The Plan shall be effective as of the Effective Date.Exhibit 10.6

                              EMPLOYMENT AGREEMENT

                                 (JAMES ROBERTS)

     EMPLOYMENT AGREEMENT (the "Agreement") dated July 30, 2004 by and between
Foundation Coal Corporation (the "Company") and James Roberts ("Executive").

     WHEREAS, RAG Coal International AG and American Coal Acquisition Corp.
("ACA") have entered into a Stock Purchase Agreement, dated as of May 24, 2004
(the "Purchase Agreement") pursuant to which, after giving effect to the
transactions contemplated by the Purchase Agreement, the Company will be a
subsidiary of ACA or one of its affiliates;

     WHEREAS, Executive is currently employed by the Company and has entered
into an employment agreement dated January 1, 2003 between Executive and the
Company (the "Prior Employment Agreement) and the Company desires that Executive
continue to be employed by the Company and to enter into this Agreement
embodying the terms of Executive's employment;

     WHEREAS, Executive desires to continue to be employed by the Company and to
enter into this Agreement;

     In consideration of the premises and mutual covenants herein and for other
good and valuable consideration, the parties agree as follows:

     1. Effectiveness; Term of Employment.

         a. Effectiveness. This Agreement shall constitute a binding agreement
between the parties as of the date hereof; provided, that notwithstanding any
other provision of this Agreement, the operative provisions of this Agreement
shall become effective only upon the Closing Date (as defined in the Purchase
Agreement (such date being hereinafter referred to as the "Effective Date")). In
the event the Purchase Agreement is terminated for any reason without the
Closing Date having occurred, this Agreement shall be terminated without further
obligation or liability of either party.

         b. Term. Subject to the provisions of Section 7 of this Agreement,
Executive shall be employed by the Company for a period commencing on the
Effective Date and ending on the third anniversary of the Effective Date (the
"Employment Term") on the terms and subject to the conditions set forth in this
Agreement; provided, however, that commencing with the third anniversary of the
Effective Date and on each anniversary thereafter (each an "Extension Date"),
the Employment Term shall be automatically extended for an additional one-year
period, unless the Company or Executive provides the other party hereto 60 days
prior written notice before the next Extension Date that the Employment Term
shall not be so extended.

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     2. Position.

         a. During the Employment Term, Executive shall serve as the Company's
President and Chief Executive Officer. In such position, Executive shall be the
most senior executive of the Company, shall report directly to the Board of
Directors of the Company (the "Board") and shall have such duties and authority
as shall be determined from time to time by the Board. Executive shall also
serve as a member of the Board and, to the extent that Executive holds an equity
interest in Foundation Coal Holdings, LLC (the "LLC"), the Board of Directors of
the LLC (the "LLC Board"). During the Employment Term, Executive will devote
Executive's full business time and best efforts to the performance of
Executive's duties hereunder and will not engage in any other business,
profession or occupation for compensation or otherwise which would conflict or
interfere with the rendition of such services either directly or indirectly,
without the prior written consent of the Board; provided that nothing herein
shall preclude Executive from (i) subject to the prior approval of the Board
(which shall not unreasonably be withheld), accepting appointment to or continue
to serve on any board of directors or trustees of any business corporation, (ii)
engaging in charitable activities and community affairs or (iii) managing his
personal investments and affairs; provided in each case, and in the aggregate,
that such activities do not conflict or interfere with the performance of
Executive's duties hereunder or conflict with Section 9.

     3. Base Salary. During the Employment Term, the Company shall pay Executive
a base salary at the annual rate of $600,000, payable in regular installments in
accordance with the Company's usual payment practices. Executive shall be
entitled to increases (but not decreases) in Executive's base salary, if any, as
may be determined from time to time in the sole discretion of the Board and the
Board shall be obligated to annually review Executive's base salary for
increases but not decreases. Executive's annual base salary, as in effect from
time to time, is hereinafter referred to as the "Base Salary."

     4. Annual Bonus. With respect to each full calendar year of the Company
during the Employment Term, Executive shall be eligible to earn an annual bonus
award (an "Annual Bonus") based upon the achievement of certain individual and
Company performance targets established by the Board, in consultation with
Executive (such targets to be established no later than 90 days following the
beginning of the year in which they relate) as set forth below;

------------------------------------------------------------------------------
COMPANY PERFORMANCE        PERCENT OF BASE   INDIVIDUAL         PERCENT OF
                           SALARY            PERFORMANCE        BASE SALARY
------------------------------------------------------------------------------
125% of Target               131.25%         Maximum              43.75%
------------------------------------------------------------------------------
100% of Target               56.25%          Target               18.75%
------------------------------------------------------------------------------
85% of Target                28.125%         Below Target         9.375%
------------------------------------------------------------------------------
Below 85% of Target          0.00%
------------------------------------------------------------------------------
Straight line interpolation between each percentage.

     provided, that Executive shall be eligible for an Annual Bonus for the full
calendar year 2004 (the "2004 Bonus"); provided, that Executive agrees that
Executive shall not be entitled to any other annual bonus for calendar year 2004
under any other plan, program,

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agreement or arrangement of the Company. The Company Performance targets for the
2004 Bonus shall be based (i) two-thirds on target free cash flow (cash from
operations and cash from investing activities plus net interest expense plus
taxes paid plus the Capex True-Up (as defined in the Purchase Agreement)
(including related post-closing adjustments)) generated following the Effective
Date through December 31, 2004, pursuant to the Q1 forecast and (ii) one-third
based on target EBITDA (as defined in the credit agreement among the Company,
Citicorp North America, Inc and the other parties thereto, dated July 30, 2004)
for the entire 2004 calendar year, pursuant to the Q1 forecast.

     5. Employee Benefits.

         a. During the Employment Term, Executive shall be entitled to
participate in the Company's employee benefit plans (other than annual bonus
plans) as in effect from time to time (collectively "Employee Benefits"), on
terms no less favorable than those generally made available to other senior
executives of the Company. In addition, the Company shall pay Executive up to a
maximum of $8,000.00 per year for a disability plan selected and maintained by
Executive and the Company shall provide Executive with an automobile in
accordance with the policies of the Company. Executive will be provided with
four (4) weeks of paid vacation.

         b. The Company shall be unconditionally obligated to issue the options
described on Exhibit A on the terms and conditions set forth therein, as soon as
practicable following the date hereof. The Company and Executive agree to
document and finalize, or cause to be documented and finalized, the grant of
stock options pursuant to a stock incentive plan to be adopted by FC 1 Corp. (as
well as any other supporting documentation) on terms set forth on Exhibit A as
soon as practicable following the date hereof.

     6. Business Expenses. During the Employment Term, reasonable travel and
other expenses incurred by Executive in the performance of Executive's duties
hereunder shall be reimbursed by the Company in accordance with Company
policies.

     7. Termination. The Employment Term and Executive's employment hereunder
may be terminated by either party at any time and for any reason; provided that
Executive will be required to give the Company at least 60 days advance written
notice of any resignation of Executive's employment. Notwithstanding any other
provision of this Agreement, the provisions of this Section 7 shall exclusively
govern Executive's rights upon termination of employment with the Company and
its affiliates.

         a. By the Company For Cause or By Executive Resignation Without Good
Reason.

         (i) The Employment Term and Executive's employment hereunder may be
terminated by the Company for Cause (as defined below) and shall terminate
automatically upon Executive's resignation without Good Reason (as defined in
Section 7(c)). Any termination of Executive's employment by the Company for
Cause shall be effective only upon the vote of a majority of the members of the
Board (other than Executive).

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         (ii) For purposes of this Agreement, "Cause" shall mean (A) Executive's
continued and willful, intentional or grossly negligent failure to substantially
perform Executive's duties hereunder (other than as a result of total or partial
incapacity due to physical or mental illness), (B) Executive's conviction of, or
plea of nolo contendere to a crime constituting (x) a felony under the laws of
the United States or any state thereof or (y) a misdemeanor involving moral
turpitude, deceit, dishonesty or fraud that relates to the Company property, (C)
the willful, intentional or grossly negligent conduct of Executive which is
demonstrably and materially injurious to the Company, monetarily or otherwise or
(D) Executive's material breach of the provisions of Sections 8 or 9 of this
Agreement. For purposes of this definition of Cause, no act, or failure to act,
on Executive's part shall be deemed willful, intentional or grossly negligent if
Executive acted in good faith and in a manner that Executive reasonably believed
to be in, or not opposed to, the best interests of the Company.

         (iii) If Executive's employment is terminated by the Company for Cause,
or if Executive resigns without Good Reason, Executive shall be entitled to
receive:

               (A) the Base Salary through the date of termination;

               (B) any Annual Bonus earned but unpaid as of the date of
     termination for any previously completed fiscal year;

               (C) reimbursement for any unreimbursed business expenses properly
     incurred by Executive in accordance with Company policy prior to the date
     of Executive's termination; and

               (D) such Employee Benefits, if any, as to which Executive may be
     entitled under the employee benefit plans of the Company (the amounts
     described in clauses (A) through (D) hereof being referred to as the
     "Accrued Rights").

         Following such termination of Executive's employment by the Company for
Cause or resignation by Executive without Good Reason, except as set forth in
this Section 7(a)(iii), Executive shall have no further rights to any
compensation or any other benefits under this Agreement.

         b. Disability or Death.

         (i) The Employment Term and Executive's employment hereunder shall
terminate upon Executive's death. If Executive becomes physically or mentally
incapacitated so as to be unable to perform the essential functions of
Executive's duties (such incapacity is hereinafter referred to as "Disability"),
then (A) the Board may allow another officer of the Company to perform
Executive's duties and responsibilities during the period of such Disability,
and (B) if such Disability continues for one hundred twenty (120) consecutive
days or one hundred eighty (180) days during any consecutive three hundred sixty
(360) day period, the Board may terminate Executive's employment under this
Agreement. If any question shall arise as to whether, during any period
Executive is disabled so as to be unable to perform the essential functions of
Executive's then existing position or positions with or without reasonable
accommodation, Executive may, and at the request of the Company shall, submit to
the Company a certification in reasonable detail by a physician selected by the
Company, to whom

                                                                               5

Executive or Executive's guardian has no reasonable objection, as to whether
Executive is so disabled and how long such disability is expected to continue,
and such certification shall for the purposes of this Agreement be conclusive of
the issue. Executive shall cooperate with any reasonable request of the
physician in connection with such certification. If such question shall arise
and Executive shall fail to submit such certification, the Company's
determination of such issue shall be binding on Executive. Nothing in this
Section 7(b) shall be construed to waive Executive's rights, if any, under
existing law including, without limitation, the Family and Medical Leave Act of
1993, 29 U.S.C. ss.2601 et seq. and the Americans with Disabilities Act, 42
U.S.C. ss.12101 et seq.

         (ii) Upon termination of Executive's employment hereunder for either
Disability or death, Executive or Executive's estate (as the case may be) shall
be entitled to receive:

               (A) the Accrued Rights; and

               (B) seventy-five percent (75%) of the Base Salary (the "Target
     Annual Bonus") multiplied by a fraction, the numerator of which is the
     number of days of the calendar year of termination that shall have elapsed
     through the date of Executive's termination of employment and the
     denominator of which is 365.

         Following Executive's termination of employment due to death or
Disability, except as set forth in this Section 7(b)(ii), Executive shall have
no further rights to any compensation or any other benefits under this
Agreement.

         c. By the Company Without Cause or Resignation by Executive for Good
Reason.

         (i) The Employment Term and Executive's employment hereunder may be
terminated by the Company without Cause or by Executive's resignation for Good
Reason.

         (ii) For purposes of this Agreement, "Good Reason" shall mean (A) the
failure of the Company to pay or cause to be paid Executive's Base Salary or
Annual Bonus, when due hereunder or (B) any substantial diminution in
Executive's authority or responsibilities from those described in Section 2
hereof, (C) the requirement by the Company that Executive's principal office be
located outside the greater Baltimore, Maryland metropolitan area, (D) prior to
a public offering of the securities (x) of the Company with respect to the Board
or (y) the LLC with respect to the LLC Board, the failure of Executive to be
elected or reelected to the Board or, to the extent Executive holds an equity
interest in the LLC, the LLC Board (other than as a result of Executive's
termination of employment for any reason or Executive's mental or physical
incapacity) or following a public offering of the securities (x) of the Company
with respect to the Board or (y) the LLC with respect to the LLC Board, the
failure to nominate Executive as a member of the Board or, to the extent
Executive holds an equity interest in the LLC, the LLC Board (other than as a
result of Executive's termination of employment for any reason or Executive's
mental or physical incapacity) or (E) any failure of the Company to obtain the
assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the business or assets of the Company
upon a merger, consolidation, sale or similar transaction (other than an
assumption that occurs by operation of law); provided that any

                                                                               6

of the events described in clauses (A) through (E) of this Section 7(c)(ii)
shall constitute Good Reason only if the Company fails to cure such event within
30 days after receipt from Executive of written notice of the event which
constitutes Good Reason.

         (iii) If Executive's employment is terminated by the Company without
Cause (other than by reason of death or Disability) or if Executive resigns for
Good Reason, Executive shall be entitled to receive:

               (A) the Accrued Rights;

               (B) the Target Annual Bonus multiplied by a fraction, the
     numerator of which is the number of days of the calendar year of
     termination that shall have elapsed through the date of Executive's
     termination of employment and the denominator of which is 365; and

               (C) subject to Executive's continued compliance with the
     provisions of Sections 8 and 9, the product of (i) sum of (x) the Base
     Salary and (y) the Target Annual Bonus multiplied by (ii) a fraction, the
     numerator of which is the greater of (x) the number of full months
     remaining in the Employment Term and (y) twenty-four and the denominator of
     which is twelve, payable in equal bi-monthly installments over the
     Restricted Period (as defined in Section 8) in accordance with the
     Company's usual payroll practices; provided that the aggregate amount
     described in this clause (C) shall be reduced, but not below zero, by the
     present value of any other cash severance or cash termination benefits
     payable to Executive under any other plans, programs or arrangements of the
     Company or its affiliates, including, without limitation, any severance
     plan of the Company in which Executive is entitled to participate.

         Following Executive's termination of employment by the Company without
Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
7(c)(iii), Executive shall have no further rights to any compensation or any
other benefits under this Agreement.

         d. Expiration of Employment Term.

         (i) Election Not to Extend the Employment Term. In the event either
party elects not to extend the Employment Term pursuant to Section 1, unless
Executive's employment is earlier terminated pursuant to paragraphs (a), (b) or
(c) of this Section 7, Executive's termination of employment hereunder (whether
or not Executive continues as an employee of the Company thereafter) shall be
deemed to occur on the close of business on the day immediately preceding the
next scheduled Extension Date and Executive shall be entitled to receive the
Accrued Rights.

         Following such termination of Executive's employment hereunder as a
result of either party's election not to extend the Employment Term, except as
set forth in this Section 7(d)(i), Executive shall have no further rights to any
compensation or any other benefits under this Agreement.

                                                                               7

         (ii) Continued Employment Beyond the Expiration of the Employment Term.
Unless the parties otherwise agree in writing, continuation of Executive's
employment with the Company beyond the expiration of the Employment Term shall
be deemed an employment at-will and shall not be deemed to extend any of the
provisions of this Agreement and Executive's employment may thereafter be
terminated at will by either Executive or the Company; provided that the
provisions of Sections 8, 9 and 10 of this Agreement shall survive any
termination of this Agreement or Executive's termination of employment
hereunder.

         e. Notice of Termination. Any purported termination of employment by
the Company or by Executive (other than due to Executive's death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 12(j) hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.

         f. Board/Committee Resignation. Upon termination of Executive's
employment for any reason, Executive agrees to resign, as of the date of such
termination and to the extent applicable, from the Board and the LLC Board (and
any committees thereof) and the Board of Directors (and any committees thereof)
of any of the Company's affiliates.

     8. Non-Competition.

         a. Executive acknowledges and recognizes the highly competitive nature
of the businesses of the Company and its affiliates and accordingly agrees as
follows:

     (1) During the Employment Term and for a period of one year following the
date Executive ceases to be employed by the Company for any reason, other than
due to the Company's failure to renew the Employment Term pursuant to Section
1(b) (the "Restricted Period"), Executive will not, whether on Executive's own
behalf or on behalf of or in conjunction with any person, firm, partnership,
joint venture, association, corporation or other business organization, entity
or enterprise whatsoever ("Person"), directly or indirectly solicit or assist in
soliciting in competition with the Company, the business of any customer of the
Company or prospective customer of the Company:

         (i)      with whom Executive had personal contact or dealings on behalf
                  of the Company during the one year period preceding
                  Executive's termination of employment;

         (ii)     with whom employees reporting to Executive have had personal
                  contact or dealings on behalf of the Company during the one
                  year immediately preceding Executive's termination of
                  employment; or

         (iii)    for whom Executive had direct or indirect responsibility
                  during the one year immediately preceding Executive's
                  termination of employment.

                                                                               8

     (2) During the Restricted Period, Executive will not directly or
indirectly:

         (i)      engage in any coal-related business that competes with the
                  business of the Company or its affiliates (including, without
                  limitation, businesses which the Company or its affiliates
                  have specific plans to conduct in the future and as to which
                  Executive is aware of such planning) in the United States (a
                  "Competitive Business");

         (ii)     enter the employ of, or render any services to, any Person (or
                  any division or controlled or controlling affiliate of any
                  Person) who or which engages in a Competitive Business;

         (iii)    acquire a financial interest in, or otherwise become actively
                  involved with, any Competitive Business, directly or
                  indirectly, as an individual, partner, shareholder, officer,
                  director, principal, agent, trustee or consultant; or

         (iv)     interfere with, or attempt to interfere with, business
                  relationships (whether formed before, on or after the date of
                  this Agreement) between the Company or any of its affiliates
                  and customers, clients, suppliers partners, members or
                  investors of the Company or its affiliates.

     (3) Notwithstanding anything to the contrary in this Agreement, Executive
may, directly or indirectly own, solely as an investment, securities of any
Person engaged in the business of the Company or its affiliates which are
publicly traded on a national or regional stock exchange or on the
over-the-counter market if Executive (i) is not a controlling person of, or a
member of a group which controls, such person and (ii) does not, directly or
indirectly, own 5% or more of any class of securities of such Person.

     (4) During the Employment Term and, for a period of two years following the
date Executive ceases to be employed by the Company, Executive will not, whether
on Executive's own behalf or on behalf of or in conjunction with any Person,
directly or indirectly:

         (i)      solicit or encourage any employee of the Company or its
                  affiliates to leave the employment of the Company or its
                  affiliates; or

         (ii)     hire any such employee who was employed by the Company or its
                  affiliates as of the date of Executive's termination of
                  employment with the Company or who left the employment of the
                  Company or its affiliates coincident with, or within one year
                  prior to or after, the termination of Executive's employment
                  with the Company.

                                                                               9

     (5) During the Restricted Period, Executive will not, directly or
indirectly, solicit or encourage to cease to work with the Company or its
affiliates any consultant then under contract with the Company or its
affiliates.

         b. It is expressly understood and agreed that although Executive and
the Company consider the restrictions contained in this Section 8 to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this Agreement is an unenforceable restriction against Executive, the provisions
of this Agreement shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such maximum extent as such
court may judicially determine or indicate to be enforceable. Alternatively, if
any court of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

     9. Confidentiality; Intellectual Property.

         a. Confidentiality.

         (i) Executive will not at any time (whether during or after Executive's
employment with the Company) (x) retain or use for the benefit, purposes or
account of Executive or any other Person; or (y) disclose, divulge, reveal,
communicate, share, transfer or provide access to any Person outside the Company
(other than its professional advisers who are bound by confidentiality
obligations), any non-public, proprietary or confidential information
--including without limitation trade secrets, know-how, research and
development, software, databases, inventions, processes, formulae, technology,
designs and other intellectual property, information concerning finances,
investments, profits, pricing, costs, products, services, vendors, customers,
clients, partners, investors, personnel, compensation, recruiting, training,
advertising, sales, marketing, promotions, government and regulatory activities
and approvals -- concerning the past, current or future business, activities and
operations of the Company, its subsidiaries or affiliates and/or any third party
that has disclosed or provided any of same to the Company on a confidential
basis ("Confidential Information") without the prior written authorization of
the Board; provided, that Executive may disclose such information to Executive's
legal and/or financial advisor for the limited purpose of enforcing Executive's
rights under this Agreement; provided, that Executive shall request that such
legal and/or financial advisors not disclose such information.

         (ii) "Confidential Information" shall not include any information that
is (a) generally known to the industry or the public other than as a result of
Executive's breach of this covenant or any breach of other confidentiality
obligations by third parties; (b) made legitimately available to Executive by a
third party without breach of any confidentiality obligation; or (c) required by
law to be disclosed; provided that Executive shall give prompt written notice to
the Company of such requirement, disclose no more information than is so
required, and cooperate with any attempts by the Company to obtain a protective
order or similar treatment.

         (iii) Except as required by law, Executive will not disclose to anyone,
other than Executive's immediate family, legal or financial advisors or members
of the Company's senior management, the existence or contents of this Agreement;
provided that Executive may

                                                                              10

disclose to any prospective future employer the provisions of Sections 8 and 9
of this Agreement provided they agree to maintain the confidentiality of such
terms.

         (iv) Upon termination of Executive's employment with the Company for
any reason, Executive shall (x) cease and not thereafter commence use of any
Confidential Information or intellectual property (including without limitation,
any patent, invention, copyright, trade secret, trademark, trade name, logo,
domain name or other source indicator) owned or used by the Company, its
subsidiaries or affiliates; (y) immediately destroy, delete, or return to the
Company, at the Company's option, all originals and copies in any form or medium
(including memoranda, books, papers, plans, computer files, letters and other
data) in Executive's possession or control (including any of the foregoing
stored or located in Executive's office, home, laptop or other computer, whether
or not Company property) that contain Confidential Information or otherwise
relate to the business of the Company, its affiliates and subsidiaries, except
that Executive may retain only those portions of any personal notes, notebooks
and diaries that do not contain any Confidential Information; and (z) notify and
fully cooperate with the Company regarding the delivery or destruction of any
other Confidential Information of which Executive is or becomes aware.

         b. Intellectual Property.

         (i) If Executive has created, invented, designed, developed,
contributed to or improved any works of authorship, inventions, intellectual
property, materials, documents or other work product (including without
limitation, research, reports, software, databases, systems, applications,
presentations, textual works, content, or audiovisual materials) ("Works"),
either alone or with third parties, prior to Executive's employment by the
Company, that are relevant to or implicated by such employment ("Prior Works"),
Executive hereby grants the Company a perpetual, non-exclusive, royalty-free,
worldwide, assignable, sublicensable license under all rights and intellectual
property rights (including rights under patent, industrial property, copyright,
trademark, trade secret, unfair competition and related laws) therein for all
purposes in connection with the Company's current and future business.

         (ii) If Executive creates, invents, designs, develops, contributes to
or improves any Works, either alone or with third parties, at any time during
Executive's employment by the Company and within the scope of such employment
and/or with the use of any the Company resources ("Company Works"), Executive
shall promptly and fully disclose same to the Company and hereby irrevocably
assigns, transfers and conveys, to the maximum extent permitted by applicable
law, all rights and intellectual property rights therein (including rights under
patent, industrial property, copyright, trademark, trade secret, unfair
competition and related laws) to the Company to the extent ownership of any such
rights does not vest originally in the Company.

         (iii) Executive agrees to keep and maintain adequate and current
written records (in the form of notes, sketches, drawings, and any other form or
media requested by the Company) of all Company Works. The records will be
available to and remain the sole property and intellectual property of the
Company at all times.

         (iv) Executive shall take all requested actions and execute all
requested documents (including any licenses or assignments required by a
government contract) at the

                                                                              11

Company's expense (but without further remuneration) to assist the Company in
validating, maintaining, protecting, enforcing, perfecting, recording, patenting
or registering any of the Company's rights in the Prior Works and Company Works.
If the Company is unable for any other reason to secure Executive's signature on
any document for this purpose, then Executive hereby irrevocably designates and
appoints the Company and its duly authorized officers and agents as Executive's
agent and attorney in fact, to act for and in Executive's behalf and stead to
execute any documents and to do all other lawfully permitted acts in connection
with the foregoing.

         (v) Executive shall not improperly use for the benefit of, bring to any
premises of, divulge, disclose, communicate, reveal, transfer or provide access
to, or share with the Company any confidential, proprietary or non-public
information or intellectual property relating to a former employer or other
third party without the prior written permission of such third party. Executive
shall comply with all relevant policies and guidelines of the Company regarding
the protection of confidential information and intellectual property and
potential conflicts of interest. Executive acknowledges that the Company may
amend any such policies and guidelines from time to time, and that Executive
remains at all times bound by their most current version that has been
communicated to Executive.

         (vi) The provisions of Section 9 shall survive the termination of
Executive's employment for any reason.

     10. Specific Performance. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 8 or Section 9 would be inadequate and the Company would
suffer irreparable damages as a result of such breach or threatened breach. In
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to cease making any payments or providing
any benefit otherwise required by this Agreement and obtain equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.

     11. Gross-Up.

         a. In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Company, any of its affiliates, or
one or more trusts established by the Company for the benefit of its employees,
to or for the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement, any other plan,
arrangement or agreement with the Company or any of its affiliates, or
otherwise) other than any benefit or payment Executive is entitled to receive in
connection with any equity interest (including, without limitation, any option
to purchase such equity interest) held by Executive in the LLC or any of its
subsidiaries and/or successors (or any securities received in connection with
such equity interest) (a "Payment") is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")or any
interest or penalties are incurred by Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of the Excise Tax imposed on the Payments and

                                                                              12

any income, employment and other taxes (and any interest and penalties imposed
with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

         b. All determinations required to be made under this Section 11,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Deloitte & Touche, LLP or such other nationally
recognized certified public accounting firm as may be designated by the Company
(the "Accounting Firm") which shall provide detailed supporting calculations
both to the Company and Executive within fifteen (15) business days of the
receipt of notice from Executive that there has been a Payment, or such earlier
time as is requested by the Company; provided, that for purposes of determining
the amount of any Gross-Up Payment, Executive shall be deemed to pay federal
income tax at the highest marginal rates applicable to individuals in the
calendar year in which any such Gross-Up Payment is to be made and deemed to pay
state and local income taxes at the highest effective rates applicable to
individuals in the state or locality of Executive's residence or place of
employment in the calendar year in which any such Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes that can be obtained
from deduction of such state and local taxes, taking into account limitations
applicable to individuals subject to federal income tax at the highest marginal
rates. All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section 11, shall
be paid by the Company to Executive (or to the appropriate taxing authority on
Executive's behalf) when the associated Excise Tax is due. If the Accounting
Firm determines that no Excise Tax is payable by Executive, it shall so indicate
to Executive in writing. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code, it is possible that the amount of the
Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf
of) Executive was lower than the amount actually due ("Underpayment"). In the
event that the Company exhausts its remedies pursuant to Section 11(c) and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Executive.

         c. Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of any Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall
not pay such claim prior to the expiration of the thirty day period following
the date on which Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies Executive in writing prior to the expiration of
such period that it desires to contest such claim, Executive shall (i) give the
Company any information reasonably requested by the Company relating to such
claim, (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company, (iii) cooperate with the Company
in good faith in order to effectively contest such claim and (iv) permit the
Company to participate in any proceedings relating to such claim;

                                                                              13

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 11(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, further, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall (to the extent permitted by
law) indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; provided, further, that if Executive is required to
extend the statute of limitations to enable the Company to contest such claim,
such extension shall be limited solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

         d. If, after the receipt by Executive of an amount paid or advanced by
the Company pursuant to this Section 11, Executive becomes entitled to receive
any refund with respect to a Gross-Up Payment, Executive shall (subject to the
Company's complying with the requirements of Section 11(c)) promptly pay to the
Company the amount of such refund received (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section 11(c), a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of the Gross-Up Payment required to be paid.

     12. Miscellaneous.

         a. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such jurisdiction. Except as provided in
Section 10 of this Agreement, any controversy or claim arising out of or
relating to this Agreement or Executive's employment with the Company or the
termination thereof shall be resolved by binding confidential arbitration, to be
held in New York, New York, in accordance with the Employee Dispute Resolution
Rules of the American Arbitration Association. Judgment upon the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof.
The costs and expenses incurred in connection with such arbitration shall be
borne by the party that does not prevail in such arbitration. Each party shall
be responsible for such party's legal fees and expenses incurred in connection
with such arbitration.

                                                                              14

         b. Legal Fees. The Company hereby will reimburse to Executive, or if
requested to pay directly, all reasonable legal fees, disbursements and other
charges (based on time charges but without premium) reasonably incurred by
Executive and other executives in connection with the negotiations, as well as
the preparation and execution of this Agreement, the employment agreements of
such other executives and the equity documents, not to exceed $125,000.

         c. Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties with respect to the subject matter herein
other than those expressly set forth herein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties hereto.

         d. No Mitigation; No Offset. In the event of any termination of
Executive's employment under Section 7 of this Agreement, Executive shall be
under no obligation to seek other employment and there shall be no offset
against amounts due Executive under this Agreement, or otherwise, on account of
any remuneration or other benefit attributable to any subsequent employment that
Executive may obtain.

         e. Indemnification; D&O Insurance. Executive shall be indemnified to
the same extent as other senior executives, officers and directors with respect
to Executive's service as an employee and director of the Company and the LLC.
During the Employment Term, the Company shall keep in place a directors and
officers' liability insurance policy (or policies) providing comprehensive
coverage to Executive to the extent that the Company provides such coverage for
any other senior executive, officer or director of the Company and following the
Employment Term, Executive shall be entitled to such coverage to the extent that
the Company provides such coverage for any other current and former senior
executive, officer or director of the Company.

         f. No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

         g. Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.

         h. Assignment. This Agreement, and all of Executive's rights and duties
hereunder, shall not be assignable or delegable by Executive. Any purported
assignment or delegation by Executive in violation of the foregoing shall be
null and void ab initio and of no force and effect. This Agreement shall be
assigned by the Company to a person or entity which is an affiliate or a
successor in interest to substantially all of the business operations of the
Company. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such affiliate or successor
person or entity.

                                                                              15

         i. Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

         j. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below in this Agreement, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.

     If to the Company:

     Foundation Coal Corporation
     999 Corporate Boulevard
     Linthicum Heights, Maryland  21090
     Attention:  General Counsel

     If to Executive:

     To the most recent address of Executive set forth in the personnel
     records of the Company.

         k. Representations.

         (i) Executive hereby represents to the Company that the execution and
delivery of this Agreement by Executive and the Company and the performance by
Executive of Executive's duties hereunder shall not constitute a breach of, or
otherwise contravene, the terms of any employment agreement or other agreement
or policy to which Executive is a party or otherwise bound.

         (ii) The Company represents and warrants that (A) it is fully
authorized by action of its Board (and of any other person or body whose action
is required) to enter into this Agreement and to perform its obligations under
it; (B) to the best of its knowledge and belief, the execution, delivery and
performance of this Agreement by the Company does not violate any law,
regulation, order, judgment or decree or any agreement, plan or corporate
governance document of the Company or its affiliates or shareholders; and (C) to
the best of its knowledge and belief, upon the execution and delivery of this
Agreement by the parties, this Agreement shall be the valid and binding
obligation of the Company, enforceable in accordance with its terms, except to
the extent enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally.

         l. Prior Agreements This Agreement supercedes all prior agreements and
understandings (including verbal agreements) between Executive and the Company
and/or its affiliates regarding the terms and conditions of Executive's
employment with the Company and/or its affiliates including, without limitation,
the Prior Employment Agreement.

                                                                              16

         m. Cooperation. Executive shall provide Executive's reasonable
cooperation in connection with any action or proceeding (or any appeal from any
action or proceeding) which relates to events occurring during Executive's
employment hereunder and does not unreasonably interfere with the Executive's
subsequent employment. This provision shall survive any termination of this
Agreement. The Company agrees to reimburse, in accordance with Company policies,
Executive promptly for Executive's reasonable and documented out-of-pocket
expenses incurred in connection with the cooperation obligation set forth in
this Section 12(m). Notwithstanding the foregoing the preceding cooperation
obligation shall not apply to any actions proceeding or controversy between
Executive and the Company or as to which it could reasonably be determined that
Executive's right to subsequently enforce Executive's rights under this
Agreement could be prejudiced.

         n. Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.

         o. 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.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

FOUNDATION COAL CORPORATION              JAMES ROBERTS

/s/ Greg A. Walker                       /s/ James Roberts
---------------------------------        ---------------------------------
By:  Greg A. Walker
Title:  Senior Vice President, General Counsel and Secretary

                                                                              17

                                                                       EXHIBIT A

                                   FC 1 CORP.
                          MANAGEMENT EQUITY TERM SHEET

OPTIONS

Amount:                Nonqualified options ("Options") to acquire 9% of the
                       outstanding shares of common stock ("Shares") of FC 1
                       Corp. (the "Company") will be granted to the members of
                       the senior management team listed on Schedule 1 (the
                       "Senior Managers"). 2.5% of the outstanding shares of
                       common stock will be granted as "Time Options" (i.e.,
                       options vesting as described under "Time Vesting" below)
                       and 6.5% of the outstanding shares of common stock will
                       be granted as "Performance Options" (i.e., options
                       vesting as described under "Performance Vesting" below).

Exercise Price:

                       The Time Options shall have a per share exercise price
                       equal to the imputed price per share of Company common
                       stock paid by the Investor Members (as defined in the
                       Amended and Restated Limited Liability Company Operating
                       Agreement of Foundation Coal Holdings, LLC (the "LLC
                       Agreement")) for their Class A Units (as defined in the
                       LLC Agreement) (the "Deal Price") and the Performance
                       Options shall have a per share exercise price equal to
                       1.75 times the Deal Price. The aggregate exercise price
                       of the Time Options is approximately $5,384,615, and the
                       aggregate exercise price of the Performance Options is
                       approximately $24,500,000. A Senior Manager may pay the
                       exercise price by any combination of (i) payment in cash
                       or its equivalent, (ii) following an IPO, through a
                       cashless "broker transaction" and (iii) to the extent it
                       does not result in adverse accounting treatment to the
                       Company, (A) tendering to the Company Shares or Class A
                       Units (as defined in the LLC Agreement) based on their
                       Fair Market Value or (B) having Shares that would
                       otherwise have been delivered to the Senior Manager upon
                       exercise of such Option withheld by the Company, based on
                       their Fair Market Value. The Company shall use its
                       commercially reasonable efforts to file an S-8, to the
                       extent available, with respect to the Shares subject to
                       Options, as soon as practicable following an initial
                       registered public offering of the Shares ("IPO"). A
                       Senior Manager shall have the right to --- satisfy the
                       minimum required withholding tax obligation due upon the
                       exercise of an Option by having Shares, with an aggregate
                       Fair Market Value (as defined below), as the date of such
                       exercise, equal to such withholding tax obligation,
                       withheld by the Company from any Shares that would
                       otherwise have been delivered to the Senior Manager upon
                       exercise of such Option.

Allocation:            The Time Options and Performance Options shall be
                       allocated and granted to employees in the respective
                       amounts set forth on Schedule 1.

                                                                              18

Time Vesting:          Subject to the Senior Managers continued employment, the
                       Time Options will vest and become exercisable with
                       respect to 20% of the shares subject to the Time Options
                       on each December 31 beginning on December 31, 2004 and
                       ending on December 31, 2008.

Performance Vesting:   Subject to the Senior Managers continued employment, the
                       Performance Options will vest and become exercisable on
                       the 8th anniversary of the date of grant, subject to
                       partial accelerated vesting each calendar year through
                       December 31, 2008, with respect to five percent (5%) of
                       the Shares subject to the Performance Options upon
                       achievement of each of the annual performance targets set
                       forth below (i.e., achievement of each performance target
                       for a particular year results in the five percent (5%)
                       vesting):

                       -  EBITDA

                       -  Production

                       -  Cost per ton

                       -  Free cash flow

                       Such targets are more fully set forth on Schedule II.

                       If a performance target is not achieved in any year (a
                       "Missed Year"), but the aggregate of such performance
                       target is achieved with respect to the Missed Year and
                       the following year (an "Excess Year"), 100% of the
                       Performance Options with respect to such performance
                       target that did not vest in the Missed Year shall vest.

Termination of         The Options will have a term of 10 years and the vested
Employment:            portion of the Options will expire (i) 90 days (120 days
                       prior to an IPO) following termination of employment for
                       any reason other than due to termination by the Company
                       for Cause (as defined below), death, or disability, (ii)
                       immediately upon termination by the Company for Cause and
                       (iii) 1 year following termination of employment due to
                       death or disability. Notwithstanding the foregoing, (i)
                       if a Senior Manager's termination of employment for any
                       reason other than by the Company for Cause occurs after
                       the close of a calendar year but prior to the date on
                       which the Senior Manager is advised by the Company
                       whether the performance targets in respect of such
                       calendar were attained (the "Target Determination Date"),
                       the portion of the Performance Option which is available
                       to vest on account of such calendar year's performance
                       will expire (A) on the Target Determination Date, in
                       respect of the portion of such Performance Option as to
                       which the performance targets were not attained (unless
                       the application of clause (ii) 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 the performance targets were attained, and (ii) if
                       a Senior Manager's termination of employment by the
                       Company without Cause or by the Senior Manager for

                                                                              19

                       Good Reason occurs during a calendar year, then the
                       portion of the Performance Option which is available to
                       vest on account of such calendar year's performance in
                       accordance with the third following paragraph will expire
                       (A) on the Target Determination Date, in respect of the
                       portion of such Performance Option as to which the
                       performance targets were 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 the third following paragraph.

                       Depending upon the circumstance of termination, the
                       Senior Manager may be entitled to the Option Exercise Put
                       Right as described below.

                       Other than as stated above, any unvested Options will be
                       forfeited upon a termination of the Senior Manager's
                       employment for any reason; provided, that, in the event
                       that a Senior Manager's employment is terminated by the
                       Company without Cause (as defined below) or by the Senior
                       Manager for Good Reason (as defined below), (x) the CEO
                       shall be deemed vested in 100% of his outstanding Time
                       Options upon such termination of employment and (y) the
                       other Senior Managers shall be deemed vested in any Time
                       Options that would have otherwise vested in the calendar
                       year in which such termination of employment occurs. In
                       the event of a termination of a Senior Manager's
                       employment due to death or disability, the Senior Manager
                       shall be deemed vested in any Time Options that would
                       otherwise have vested in the calendar year in which such
                       termination of employment occurs and the following
                       calendar year.

                       In the event of the termination of a Senior Manager's
                       employment by the Company without Cause or by a Senior
                       Manager for Good Reason, the Senior Managers shall become
                       vested in any Performance Options as to which the
                       performance targets are achieved for the year of
                       termination, or for a Missed Year due to performance for
                       the year of termination.

Option Exercise Put    In the event of a termination of a Senior Manager's
Right                  employment for any reason, other than (i) by the Company
                       for Cause or (ii) due to the Senior Manager's resignation
                       without Good Reason, upon exercise of an Option following
                       such termination of employment and prior to the date the
                       shares subject to the Option are registered and freely
                       tradable following an IPO of the Company's equity
                       securities (the "Put Exercise"), the Senior Manager will
                       have the right (the "Option Exercise Put Right") to
                       require the Company to purchase a number of Class A Units
                       or shares of common stock of the Company, in each case,
                       which, to the extent necessary to avoid adverse
                       accounting consequences, have been held by the Senior
                       Manager for at least six months with an aggregate Fair
                       Market Value, as of the date of such purchase, equal to
                       the remaining tax liability (above the minimum required
                       withholding tax liability) incurred by the Senior Manager
                       upon the exercise of such Option (the "Remaining Tax
                       Liability"). The Option Exercise Put Right may be
                       exercised by the Senior Manager at any time within 210
                       days following the Senior Manager's exercise of the
                       Option (under the circumstances described above)
                       (provided, that the

                                                                              20

                       Option Exercise Put Right may not be exercised prior to
                       181 days following the Senior Manager's exercise of the
                       Option to the extent that the Senior Manager intends to
                       require the Company to purchase the Shares received in
                       connection with the Put Exercise) by providing the
                       Company with written notice of exercise thereof and
                       written representation detailing the calculation of the
                       Remaining Tax Liability, which calculation shall be
                       reasonably acceptable to the Company. For the avoidance
                       of doubt, Shares will not be deemed to be "freely
                       tradable" for purposes of this paragraph if they are
                       subject to an underwriter's lockup agreement.

                       The Company shall pay the purchase price due upon the
                       exercise of the Option Exercise Put Right within 3
                       business days following the Senior Manger's tendering of
                       the related shares or Units by delivery of funds
                       deposited into an account designated by the Senior
                       Manager, a bank cashier's check, a certified check or a
                       company check of the Company for the purchase price.

                       Notwithstanding anything to the contrary elsewhere
                       herein, the Company shall not be obligated to pay for the
                       Units or shares purchased in connection with the exercise
                       of an Option Exercise Put Right (i) to the extent that
                       the purchase of such Units or shares 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 affiliates or any
                       of its or their assets or (y) after giving effect thereto
                       (including any dividends or other distributions or loans
                       from an affiliate of the Company to the Company in
                       connection therewith), in a financing default, or (ii) if
                       immediately prior to such purchase of Units or shares,
                       there exists a financing default which prohibits such
                       purchase (including any dividends or other distributions
                       or loans from an affiliate of the Company to the Company
                       in connection therewith).

Change of Control      Upon a Change of Control (as defined below) (i) all
Provisions:            unvested Time Options will vest and (ii) the unvested
                       Performance Options will vest with respect to the
                       performance year in which the Change of Control occurred
                       and the remaining performance years following the Change
                       of Control if, and only if, the value realized by the
                       Investor Members with respect to their investment in the
                       Company whether prior to or in the transaction, and
                       including amounts received through distributions
                       (excluding tax and regular quarterly dividends) or
                       disposition of their interests in Units of stock of the
                       Company represents a 2.0x or greater return to the
                       Investor Members on their invested capital. If a Senior
                       Manager is terminated by the Company without Cause prior
                       to a Change of Control and a Change of Control is
                       consummated by the Company within 180 days following the
                       termination of such Senior Manager, the vesting of the
                       Options with respect to such Senior Manager will be
                       recalculated taking into account the Change of Control as
                       if such Change of Control had occurred prior to the
                       termination of the Senior Manager.

Management             The shares issued in connection with the exercise of an
Shareholders           Option will be subject to the terms and conditions of a
                       management shareholders' agreement

                                                                              21

Agreement:             (described below).

MANAGEMENT SHAREHOLDERS AGREEMENT:

Any shares issued upon the conversion of Class A Units purchased and the shares
issued upon exercise of an Option (together, the "Shares") will be subject to
the following terms and conditions.

Representation:        Senior Managers will make customary representations
                       regarding investment intent, financial sophistication and
                       enforceability.

Transfer               Shares will be subject to a restriction on transfer prior
Restrictions:          to the earlier to occur of (i) one or more primary or
                       secondary public offerings that results in gross proceeds
                       to the Company or the holders participating therein in
                       excess of $50 million (a "Qualified IPO"), (ii) the
                       occurrence of a Change of Control and (iii) a period of
                       five years (the earliest of (i), (ii) or (iii), the
                       "Lapse Date").

                       The transfer restriction shall not apply to sales to the
                       Company and sales to the Investor Members or their
                       affiliates.

                       The transfer restriction shall not apply to sales in
                       accordance with the drag along and tag along rights (see
                       below) or transfers to family member or family trusts.

Right of First         If the Lapse Date occurs prior to Change of Control or an
Refusal:               IPO, the Company will have a right of first refusal on
                       any proposed sale of Shares until a Change of Control or
                       an IPO.

Drag Along             The Investor Members will have the right to drag along
                       Shares in the event of any private sale to a third party
                       in the same proportion as the Investor Member's Shares
                       are sold. The drag along rights shall be on substantially
                       the same terms as the drag along rights relating to the A
                       Units under the LLC Agreement and the Management Members
                       Agreement.

Tag Along:             The Senior Managers shall have the right to tag along in
                       the event of a private sale by the Investor Members to a
                       third party in the same proportion as the Investor
                       Member's Shares are sold. The tag along rights shall be
                       on substantially the same terms as the tag along rights
                       relating to the A Units under the LLC Agreement and the
                       Management Members Agreement.

Call Rights:           Shares shall be subject to call rights by the Company
                       upon the termination of the Senior Manager's employment
                       for any reason prior to a Qualified IPO. The call right
                       will be exercisable by the Company for a period of 210
                       days following the later of (x) such Senior Manager's
                       termination of employment or (y) in the case of Shares
                       issued upon the exercise of Options, the date of exercise
                       of such Options, and, if the Company does not exercise
                       such rights within the applicable 210 day period, the
                       Investor Members will have the right

                                                                              22

                       to call such Shares for a period of 30 days thereafter.

                       The purchase price for Shares will be the lower of cost
                       and Fair Market Value on date of exercise of the call
                       upon a termination of a Senior Manager's employment by
                       the Company for Cause.

                       The purchase price for Shares will be Fair Market Value
                       on date of exercise of the call upon a termination under
                       any other circumstances.

                       The purchase price may be paid in cash or by note payable
                       in installments of up to five years, bearing interest at
                       the prime lending rate in effect as of the date of
                       purchase on substantially the same terms as the call
                       rights applicable to the Class A Units under the
                       Management Members Agreement.

Fair Market            The Fair Market Value for the Company and Investor Member
Value                  call rights and Option Exercise Put Rights described
                       herein will be determined by the Board in good faith
                       (without any discounts with respect to a termination by
                       the Company without Cause, by the Senior Manager with
                       Good Reason, death or disability, but with a 25% discount
                       to reflect minority interest and illiquidity in the event
                       of a termination by the Company with Cause or by the
                       Senior Manager without Good Reason). If the Senior
                       Manager disagrees with the Boards determination, he or
                       she may require the Company to retain an independent
                       appraiser to determine the fair market value (evaluated
                       based on the discounts in the preceding sentence). The
                       Company will bear the cost of the appraisal unless the
                       appraised value is within 10% of the Board's
                       determination, in which case, the Senior Manager will
                       bear the cost of the appraisal. If a Senior Manager is
                       terminated by the Company without Cause prior to a Change
                       of Control or a Qualified IPO and a Change of Control or
                       a Qualified IPO is consummated by the Company within 180
                       days following the termination of such Senior Manager,
                       fair market value with respect to such Senior Manager
                       will be recalculated taking into account the Change of
                       Control or a Qualified IPO as if such Change of Control
                       or a Qualified IPO had occurred prior to the termination
                       of the Senior Manager. The methodology used in
                       determining the Fair Market Value of the Shares in
                       connection with the Option Exercise Put Right shall be
                       the same methodology used by the Company in determining
                       the Senior Manager's reportable compensation upon
                       exercise of an Option.

Voting Agreement:      Until the occurrence of the Lapse Date, the Senior
                       Managers will be obligated to vote any Shares with
                       respect to all matters in the same proportion as the
                       Shares held by the Investor Members are voted on such
                       matters.

Registration Rights:   Senior Managers will be given customary piggyback
                       registration rights (other than in the primary IPO)
                       substantially consistent with the Registration Rights
                       Agreement, subject to brokerage restrictions and lock-out
                       periods imposed by the underwriters; provided, that, with
                       respect to incidental registrations, the Senior Managers
                       will have priority after the Investor Members.

                                                                              23

Preemptive Rights:     Same as A Units until a Qualified IPO.

Definitions:           "Cause" has the meaning set forth in the employment
                       agreement between the applicable Senior Manager and the
                       Company or its affiliate to which this Exhibit A is
                       attached.

                       "Change of Control" has the meaning set forth in the LLC
                       Agreement.

                       "Good Reason" has the meaning set forth in the employment
                       agreement between the applicable Senior Manager and the
                       Company or its affiliate to which this Exhibit A is
                       attached.

                                                                              24

                                   SCHEDULE I
                          (ALLOCATION OF OPTION GRANTS)

SENIOR MANAGER                      PERCENT OF OUTSTANDING
----------------------------------------------------------
James F.  Roberts                           2.45%

Approximately 27.78% of the shares subject to each grant shall be Time Options
and approximately 72.22% of the shares subject to each grant shall be
Performance Options.

                                   SCHEDULE II
                              (PERFORMANCE TARGETS)

     "Actual Cost Per Ton" means, in respect of a fiscal year, the cost per ton
of coal to the Company determined on a basis consistent with the forecasts
utilized for the performance targets.

     "Actual EBITDA" has the meaning set forth 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.

     "Actual Free Cash Flow" means, in respect of a fiscal year, EBITDA less the
sum of capital expenditures as set forth in its audited financial statements.

     "Actual Production" means, in respect of a fiscal year, the sum of (i) tons
produced in East and (ii) tons produced in West divided by 5.

     "Target Free Cash Flow" means, $59.4 million in respect of 2004, $113.1
million in respect of 2005, $183.7 million in respect of 2006, $83.5 million in
respect of 2007 and $144.1 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.

     "Target Cost Per Ton" means, in respect of any fiscal year is to be based
on the cost per ton forecasts consistent with the forecast utilized for the
other performance targets.

     "Target EBITDA" means, $153.7 million in respect of 2004, $238.1 million in
respect of 2005, $267.6 million in respect of 2006, $261.9 million in respect of
2007 and $212.2 million in respect of 2008; provided, that the Board may make
any adjustment to EBITDA as it

                                                                               2

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 equitable reflects the basis for determining
Actual EBITDA for the period in question).

     "Target Production" means, 28.6 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 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.

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