THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Foundation Coal Holdings, Inc. (FCL)

4/11/2006 Proxy Information

Ancillary Agreements

In connection with the merger of Foundation Coal Holdings, LLC into our Company, we entered into the following ancillary agreements governing certain relationships between and among the parties after the closing of the Acquisition.

Stockholders Agreement

We entered into a stockholders agreement at the time of our formation. On October 4, 2004, we amended and restated our stockholders agreement with First Reserve, Blackstone and AMCI and certain management stockholders, the agreement became effective upon the consummation of our initial public offering. Foundation and its original stockholders prior to its initial public offering entered into a stockholders agreement, which was amended and restated on October 4, 2004, to become effective upon the consummation of our initial public offering. In addition to Foundation, the parties to the stockholders agreement were First Reserve, Blackstone, and AMCI and certain management stockholders. The stockholders agreement entitled Blackstone and First Reserve to designate three nominees for election to the board of directors. Blackstone and First Reserve also designated one joint nominee. Additional provisions noted that, if at any time, either Blackstone or First Reserve and their affiliates as a group beneficially owned less than 66 2/3% of the aggregate number of shares owned by the other, then such sponsor would be entitled only to designate two nominees for election to the board of directors, and if at any time either Blackstone or First Reserve and their affiliates as a group owned less than 33 1/3% of the aggregate number of shares owned by the other, then such sponsor would be entitled only to designate one nominee.

On February 18, 2006, the parties to the stockholders agreement entered into a termination agreement to terminate the stockholders agreement. The termination agreement further provides that the stockholders shall continue to have the right to indemnification as set forth in Section 6.3 of the stockholders agreement for any losses, and that such right to indemnification shall survive termination of the stockholders agreement pursuant to the terms of the termination agreement.

Registration Rights Agreement

The registration rights agreement provides that, in connection with a public offering and sale, each of First Reserve, Blackstone and AMCI will, in certain circumstances, have the ability to require us to register its shares of our common stock. In addition, in connection with other registered offerings by us, holders of shares of our common stock will have the ability to exercise certain piggyback registration rights with respect to such shares.

Coal Sales

From time to time, as is customary in our industry, we buy and sell coal from other producers. In connection therewith, we have commitments to sell from several of our mines approximately 500,000 tons of coal in the aggregate to Alpha Coal Sales, LLC, which may be deemed an affiliate of ours, at market prices, with an option to purchase up to 25,000 tons more upon agreement of the parties. The proposed transactions commenced in January 2005 and conclude in 2006. Any such sales are made on arm’s length terms and are therefore subject to our usual spot sales agreements, including customary pricing terms, quality adjustments, rejection and suspension rights and events of default. At the time the contract was executed, First Reserve and AMCI beneficially own approximately 55% and 45%, respectively, of the parent entity of Alpha Coal Sales, LLC. Subsequently, the parent of Alpha Coal Sales, LLC consummated an initial public offering resulting in a decrease in First Reserve and AMCI’s ownership interests.

On September 14, 2005, First Reserve, Foundation, and certain other shareholders of Foundation entered into an underwriting agreement (the “Underwriting Agreement”) with Morgan Stanley & Co. Incorporated

(“Morgan Stanley”) as representative of several underwriters (the “Underwriters”) providing for the sale by First Reserve of 4,250,000 shares of common stock to the Underwriters. On September 20, 2005, First Reserve completed the sale of these shares of common stock in a public offering. As a result, First Reserve’s ownership interest in Foundation was reduced to less than nine percent. On January 24, 2006, 4,154,045 shares of common stock of Foundation were distributed by First Reserve Fund to First Reserve’s limited and other partners. The 4,154,045 shares that were distributed represented all of the remaining shares of Foundation owned by First Reserve.

On September 14, 2005, AMCI , Foundation, and certain other Foundation shareholders entered into an underwriting agreement (the “Underwriting Agreement”) with Morgan Stanley & Co. Incorporated (“Morgan Stanley”) as representative of several underwriters (the “Underwriters”) providing for the sale by AMCI of 1,500,000 shares of common stock to the Underwriters. On September 20, 2005, AMCI completed the sale of these shares of common stock in a public offering. As a result, AMCI’s ownership interest in Foundation was reduced to less than five percent of our common stock.

On October 26, 2005, Hans J. Mende, AMCI’s president, resigned from Foundation’s board of directors. Mr. Mende was one of First Reserve’s designees to our board of directors pursuant to the stockholders agreement.