SVP & General Counsel Employment Agreement -- Greg A. Walker

EXHIBIT 10.10 EMPLOYMENT AGREEMENT (GREG A. WALKER) EMPLOYMENT AGREEMENT (the "Agreement") dated July 30, 2004 by and betweenFoundation Coal Corporation (the "Company") and Greg A. Walker ("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 thetransactions contemplated by the Purchase Agreement, the Company will be asubsidiary of ACA or one of its affiliates; WHEREAS, Executive is currently employed by the Company and has enteredinto an employment agreement between Executive and the Company (the "PriorEmployment Agreement") and a change in control agreement between Executive andthe Company (together with the Prior Employment Agreement, the "PriorAgreements") and the Company desires that Executive continue to be employed bythe Company and to enter into this Agreement embodying the terms of Executive'semployment; WHEREAS, Executive desires to continue to be employed by the Company and toenter into this Agreement; In consideration of the premises and mutual covenants herein and for othergood and valuable consideration, the parties agree as follows: 1. Effectiveness; Term of Employment. a. Effectiveness. This Agreement shall constitute a binding agreementbetween the parties as of the date hereof; provided, that notwithstanding anyother provision of this Agreement, the operative provisions of this Agreementshall become effective only upon the Closing Date (as defined in the PurchaseAgreement (such date being hereinafter referred to as the "Effective Date")). Inthe event the Purchase Agreement is terminated for any reason without theClosing Date having occurred, this Agreement shall be terminated without furtherobligation 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 theEffective Date and ending on the second anniversary of the Effective Date (the"Employment Term") on the terms and subject to the conditions set forth in thisAgreement; provided, however, that commencing with the second anniversary of theEffective Date and on each anniversary thereafter (each an "Extension Date"),the Employment Term shall be automatically extended for an additional one-yearperiod, unless the Company or Executive provides the other party hereto 60 days'prior written notice before the next Extension Date that the Employment Termshall not be so extended. 2 2. Position. a. During the Employment Term, Executive shall serve as the Company'sSenior Vice President, General Counsel and Secretary. In such position,Executive shall be the most senior executive of the Company, shall reportdirectly to the Board of Directors of the Company (the "Board") and the ChiefExecutive Officer of the Company and shall have such duties and authority asshall be determined from time to time by the Board. During the Employment Term,Executive will devote Executive's full business time and best efforts to theperformance of Executive's duties hereunder and will not engage in any otherbusiness, profession or occupation for compensation or otherwise which wouldconflict or interfere with the rendition of such services either directly orindirectly, without the prior written consent of the Board; provided thatnothing herein shall preclude Executive from (i) subject to the prior approvalof the Board (which shall not unreasonably be withheld), accepting appointmentto or continue to serve on any board of directors or trustees of any businesscorporation, (ii) engaging in charitable activities and community affairs or(iii) managing his personal investments and affairs; provided in each case, andin the aggregate, that such activities do not conflict or interfere with theperformance of Executive's duties hereunder or conflict with Section 9. 3. Base Salary. During the Employment Term, the Company shall pay Executivea base salary at the annual rate of $230,397, payable in regular installments inaccordance with the Company's usual payment practices. Executive shall beentitled to increases (but not decreases) in Executive's base salary, if any, asmay be determined from time to time in the sole discretion of the Board and theBoard shall be obligated to annually review Executive's base salary forincreases but not decreases. Executive's annual base salary, as in effect fromtime to time, is hereinafter referred to as the "Base Salary." 4. Annual Bonus. With respect to each full calendar year of the Companyduring the Employment Term, Executive shall be eligible to earn an annual bonusaward (an "Annual Bonus") based upon the achievement of certain individual andCompany performance targets established by the Board, in consultation withExecutive (such targets to be established no later than 90 days following thebeginning of the year in which they relate) as set forth below;- ------------------------------------------------------------------------------COMPANY PERCENT OF INDIVIDUAL PERCENT OFPERFORMANCE BASE SALARY PERFORMANCE BASE SALARY- ------------------------------------------------------------------------------125% of Target 83.33% Maximum 41.67%- ------------------------------------------------------------------------------100% of Target 33.33% Target 16.67%- ------------------------------------------------------------------------------85% of Target 16.67% Below Target 8.33%- ------------------------------------------------------------------------------Below 85% of Target 0.00%- ------------------------------------------------------------------------------Straight line interpolation between each percentage.provided, that Executive shall be eligible for an Annual Bonus for the fullcalendar year 2004 (the "2004 Bonus"); provided, that Executive agrees thatExecutive shall not be entitled to any 3other annual bonus for calendar year 2004 under any other plan, program,agreement or arrangement of the Company. The Company Performance targets for the2004 Bonus shall be based (i) two-thirds on target free cash flow (cash fromoperations and cash from investing activities plus net interest expense plustaxes paid plus the Capex True-Up (as defined in the Purchase Agreement)(including related post-closing adjustments)) generated following the EffectiveDate through December 31, 2004, pursuant to the Q1 forecast and (ii) one-thirdbased 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 toparticipate in the Company's employee benefit plans (other than annual bonusplans) as in effect from time to time (collectively "Employee Benefits"), onterms no less favorable than those generally made available to other seniorexecutives of the Company. Executive will be provided with four (4) weeks ofpaid vacation. b. The Company shall be unconditionally obligated to issue the optionsdescribed on Exhibit A on the terms and conditions set forth therein, as soon aspracticable following the date hereof. The Company and Executive agree todocument and finalize, or cause to be documented and finalized, the grant ofstock options pursuant to a stock incentive plan to be adopted by FC 1 Corp. (aswell as any other supporting documentation) on terms set forth on Exhibit A assoon as practicable following the date hereof. 6. Business Expenses. During the Employment Term, reasonable travel andother expenses incurred by Executive in the performance of Executive's dutieshereunder shall be reimbursed by the Company in accordance with Companypolicies. 7. Termination. The Employment Term and Executive's employment hereundermay be terminated by either party at any time and for any reason; provided thatExecutive will be required to give the Company at least 60 days' advance writtennotice of any resignation of Executive's employment. Notwithstanding any otherprovision of this Agreement, the provisions of this Section 7 shall exclusivelygovern Executive's rights upon termination of employment with the Company andits affiliates. a. By the Company For Cause or By Executive Resignation Without GoodReason. (i) The Employment Term and Executive's employment hereunder may beterminated by the Company for Cause (as defined below) and shall terminateautomatically upon Executive's resignation without Good Reason (as defined inSection 7(c)). Any termination of Executive's employment by the Company forCause shall be effective only upon the vote of a majority of the members of theBoard (other than Executive). 4 (ii) For purposes of this Agreement, "Cause" shall mean (A)Executive's continued and willful, intentional or grossly negligent failure tosubstantially perform Executive's duties hereunder (other than as a result oftotal or partial incapacity due to physical or mental illness), (B) Executive'sconviction of, or plea of nolo contendere to a crime constituting (x) a felonyunder the laws of the United States or any state thereof or (y) a misdemeanorinvolving moral turpitude, deceit, dishonesty or fraud that relates to theCompany property, (C) the willful, intentional or grossly negligent conduct ofExecutive which is demonstrably and materially injurious to the Company,monetarily or otherwise or (D) Executive's material breach of the provisions ofSections 8 or 9 of this Agreement. For purposes of this definition of Cause, noact, or failure to act, on Executive's part shall be deemed willful, intentionalor grossly negligent if Executive acted in good faith and in a manner thatExecutive reasonably believed to be in, or not opposed to, the best interests ofthe Company. (iii) If Executive's employment is terminated by the Company forCause, or if Executive resigns without Good Reason, Executive shall be entitledto 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 forCause or resignation by Executive without Good Reason, except as set forth inthis Section 7(a)(iii), Executive shall have no further rights to anycompensation or any other benefits under this Agreement. b. Disability or Death. (i) The Employment Term and Executive's employment hereunder shallterminate upon Executive's death. If Executive becomes physically or mentallyincapacitated so as to be unable to perform the essential functions ofExecutive's duties (such incapacity is hereinafter referred to as "Disability"),then (A) the Board may allow another officer of the Company to performExecutive's duties and responsibilities during the period of such Disability,and (B) if such Disability continues for 120 consecutive days or 180 days duringany consecutive 360 day period, the Board may terminate Executive's employmentunder this Agreement. If any question shall arise as to whether, during anyperiod Executive is disabled so as to be unable to perform the essentialfunctions of Executive's then existing position or positions with or withoutreasonable accommodation, Executive may, and at the request of the Companyshall, submit to 5the Company a certification in reasonable detail by a physician selected by theCompany, to whom Executive or Executive's guardian has no reasonable objection,as to whether Executive is so disabled and how long such disability is expectedto continue, and such certification shall for the purposes of this Agreement beconclusive of the issue. Executive shall cooperate with any reasonable requestof the physician in connection with such certification. If such question shallarise and Executive shall fail to submit such certification, the Company'sdetermination of such issue shall be binding on Executive. Nothing in thisSection 7(b) shall be construed to waive Executive's rights, if any, underexisting law including, without limitation, the Family and Medical Leave Act of1993, 29 U.S.C. ss.2601 et seq. and the Americans with DisabilitieS Act, 42U.S.C. ss.12101 et seq. (ii) Upon termination of Executive's employment hereunder for eitherDisability or death, Executive or Executive's estate (as the case may be) shallbe entitled to receive: (A) the Accrued Rights; and (B) fifty percent (50%) 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 furtherrights to any compensation or any other benefits under this Agreement. c. By the Company Without Cause or Resignation by Executive for GoodReason. (i) The Employment Term and Executive's employment hereunder may beterminated by the Company without Cause or by Executive's resignation for GoodReason. (ii) For purposes of this Agreement, "Good Reason" shall mean (A) thefailure of the Company to pay or cause to be paid Executive's Base Salary orAnnual Bonus, when due hereunder or (B) any substantial diminution inExecutive's authority or responsibilities from those described in Section 2hereof, (C) the requirement by the Company that Executive's principal office belocated outside the greater Baltimore, Maryland metropolitan area or (D) anyfailure of the Company to obtain the assumption in writing of its obligation toperform this Agreement by any successor to all or substantially all of thebusiness or assets of the Company upon a merger, consolidation, sale or similartransaction (other than an assumption that occurs by operation of law); providedthat any of the events described in clauses (A) through (D) of this Section7(c)(ii) shall constitute Good Reason only if the Company fails to cure suchevent within 30 days after receipt from Executive of written notice of the eventwhich constitutes Good Reason. 6 (iii) If Executive's employment is terminated by the Company withoutCause (other than by reason of death or Disability) or if Executive resigns forGood 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) the 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) twelve 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 withoutCause (other than by reason of Executive's death or Disability) or byExecutive's resignation for Good Reason, except as set forth in this Section7(c)(iii), Executive shall have no further rights to any compensation or anyother benefits under this Agreement. d. Expiration of Employment Term. (i) Election Not to Extend the Employment Term. In the event eitherparty elects not to extend the Employment Term pursuant to Section 1, unlessExecutive's employment is earlier terminated pursuant to paragraphs (a), (b) or(c) of this Section 7, Executive's termination of employment hereunder (whetheror not Executive continues as an employee of the Company thereafter) shall bedeemed to occur on the close of business on the day immediately preceding thenext scheduled Extension Date and Executive shall be entitled to receive theAccrued Rights. Following such termination of Executive's employment hereunder as a resultof either party's election not to extend the Employment Term, except as setforth in this Section 7(d)(i), Executive shall have no further rights to anycompensation or any other benefits under this Agreement. (ii) Continued Employment Beyond the Expiration of the EmploymentTerm. Unless the parties otherwise agree in writing, continuation of Executive'semployment with the Company beyond the expiration of the Employment Term shallbe deemed an employment at- 7will and shall not be deemed to extend any of the provisions of this Agreementand Executive's employment may thereafter be terminated at will by eitherExecutive or the Company; provided that the provisions of Sections 8, 9 and 10of this Agreement shall survive any termination of this Agreement or Executive'stermination of employment hereunder. e. Notice of Termination. Any purported termination of employment bythe Company or by Executive (other than due to Executive's death) shall becommunicated by written Notice of Termination to the other party hereto inaccordance with Section 12(i) hereof. For purposes of this Agreement, a "Noticeof Termination" shall mean a notice which shall indicate the specifictermination provision in this Agreement relied upon and shall set forth inreasonable detail the facts and circumstances claimed to provide a basis fortermination of employment under the provision so indicated. f. Board/Committee Resignation. Upon termination of Executive'semployment for any reason, Executive agrees to resign, as of the date of suchtermination and to the extent applicable, from the Board and the LLC Board (andany 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 natureof the businesses of the Company and its affiliates and accordingly agrees asfollows: (1) During the Employment Term and for a period of nine monthsfollowing the date Executive ceases to be employed by the Company for anyreason, other than due to the Company's failure to renew the Employment Termpursuant to Section 1(b) (the "Restricted Period"), Executive will not, whetheron Executive's own behalf or on behalf of or in conjunction with any person,firm, partnership, joint venture, association, corporation or other businessorganization, entity or enterprise whatsoever ("Person"), directly or indirectlysolicit or assist in soliciting in competition with the Company, the business ofany 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 orindirectly: (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, securitiesof any Person engaged in the business of the Company or its affiliates which arepublicly traded on a national or regional stock exchange or on theover-the-counter market if Executive (i) is not a controlling person of, or amember of a group which controls, such person and (ii) does not, directly orindirectly, own 5% or more of any class of securities of such Person. (4) During the Employment Term and, for a period of two yearsfollowing the date Executive ceases to be employed by the Company, Executivewill not, whether on Executive's own behalf or on behalf of or in conjunctionwith 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 orindirectly, solicit or encourage to cease to work with the Company or itsaffiliates any consultant then under contract with the Company or itsaffiliates. b. It is expressly understood and agreed that although Executive andthe Company consider the restrictions contained in this Section 8 to bereasonable, if a final judicial determination is made by a court of competentjurisdiction that the time or territory or any other restriction contained inthis Agreement is an unenforceable restriction against Executive, the provisionsof this Agreement shall not be rendered void but shall be deemed amended toapply as to such maximum time and territory and to such maximum extent as suchcourt may judicially determine or indicate to be enforceable. Alternatively, ifany court of competent jurisdiction finds that any restriction contained in thisAgreement is unenforceable, and such restriction cannot be amended so as to makeit enforceable, such finding shall not affect the enforceability of any of theother restrictions contained herein. 9. Confidentiality; Intellectual Property. a. Confidentiality. (i) Executive will not at any time (whether during or afterExecutive'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 theCompany (other than its professional advisers who are bound by confidentialityobligations), any non-public, proprietary or confidential information- --including without limitation trade secrets, know-how, research anddevelopment, 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 activitiesand approvals -- concerning the past, current or future business, activities andoperations of the Company, its subsidiaries or affiliates and/or any third partythat has disclosed or provided any of same to the Company on a confidentialbasis ("Confidential Information") without the prior written authorization ofthe Board; provided, that Executive may disclose such information to Executive'slegal and/or financial advisor for the limited purpose of enforcing Executive'srights under this Agreement; provided, that Executive shall request that suchlegal and/or financial advisors not disclose such information. (ii) "Confidential Information" shall not include any information thatis (a) generally known to the industry or the public other than as a result ofExecutive's breach of this covenant or any breach of other confidentialityobligations by third parties; (b) made legitimately available to Executive by athird party without breach of any confidentiality obligation; or (c) required bylaw to be disclosed; provided that Executive shall give prompt written notice tothe Company of such requirement, disclose no more information than is sorequired, and cooperate with any attempts by the Company to obtain a protectiveorder or similar treatment. 10 (iii) Except as required by law, Executive will not disclose toanyone, other than Executive's immediate family, legal or financial advisors ormembers of the Company's senior management, the existence or contents of thisAgreement; provided that Executive may disclose to any prospective futureemployer the provisions of Sections 8 and 9 of this Agreement provided theyagree to maintain the confidentiality of such terms. (iv) Upon termination of Executive's employment with the Company forany reason, Executive shall (x) cease and not thereafter commence use of anyConfidential 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, itssubsidiaries or affiliates; (y) immediately destroy, delete, or return to theCompany, at the Company's option, all originals and copies in any form or medium(including memoranda, books, papers, plans, computer files, letters and otherdata) in Executive's possession or control (including any of the foregoingstored or located in Executive's office, home, laptop or other computer, whetheror not Company property) that contain Confidential Information or otherwiserelate to the business of the Company, its affiliates and subsidiaries, exceptthat Executive may retain only those portions of any personal notes, notebooksand diaries that do not contain any Confidential Information; and (z) notify andfully cooperate with the Company regarding the delivery or destruction of anyother 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, intellectualproperty, materials, documents or other work product (including withoutlimitation, research, reports, software, databases, systems, applicatio ...