EMPLOYMENT AGREEMENT WITH CHARLES A. EBETINO

EXHIBIT-10.12

EMPLOYMENT AGREEMENT

     This AGREEMENT is entered into as of 11:59 p.m. New York time on the date set forth on the signature page hereof, by and between Patriot Coal Corporation, a Delaware corporation (the “Company”), and the undersigned executive (the “Executive”).

RECITALS

     To induce Executive to serve in the executive team position set forth on the signature page hereof, the Company desires to provide Executive with compensation and other benefits on the terms and subject to the conditions set forth in this Agreement.

     Executive is willing to accept such employment and perform services for the Company, on the terms and subject to the conditions hereinafter set forth.

     It is therefore hereby agreed by and between the parties as follows:

      1.  Employment .

      1.1 Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the term hereof in the executive team position set forth on the signature page hereof. In such capacity, Executive shall report to the Chief Executive Officer of the Company (the “CEO”) and shall have the customary powers, responsibilities and authorities of executives holding such positions in publicly-held corporations of the size, type and nature of the Company, as it exists from time to time, and as are assigned by the CEO.

      1.2 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment in the executive team position set forth on the signature page hereof commencing as of the date hereof (the “Commencement Date”) and agrees, subject to any period of vacation or sick leave, to devote his full business time and efforts to the performance of services, duties and responsibilities in connection therewith, subject at all times to review and control of the CEO.

      1.3 Nothing in this Agreement shall preclude Executive from engaging in trade association activities, charitable work and community affairs, from delivering lectures, fulfilling speaking engagements or teaching at educational institutions, from managing any investment made by him or his immediate family with respect to which Executive or such family member is not substantially involved with the management or operation of the entity in which Executive has invested (provided that no such investment in publicly traded equity securities or other property may exceed five percent (5%) of the equity of any entity, without the prior approval of the CEO or the Board of Directors of the Company (the “Board”)) or from serving, subject to the prior approval of the CEO or the Board, as a member of the board of directors or as a trustee of any other corporation, association or entity, to the extent that any of the above activities do not materially interfere with the performance of his duties hereunder. For purposes of the preceding

sentence, any approval by the CEO or the Board required therein shall not be unreasonably withheld.

      2.  Term of Employment . Executive’s term of employment under this Agreement (the “Term of Employment”) shall commence on the Commencement Date and, subject to termination as provided in this Agreement, shall have an initial term of two years (the “Initial Term”). Following the Initial Term, Executive’s employment shall be employment “at will” unless both parties elect to extend the Term of Employment. Following the Term of Employment, Executive shall be not entitled to any benefits upon any termination of employment except for the Accrued Obligations (as defined in Section 6.1 hereof); provided, however, if, following the Term of Employment, Executive’s employment is terminated by the Company other than for Cause (as defined in Section 6.3(b) hereof), Disability (as defined in Section 6.4 hereof) or death, Executive shall be entitled to the Severance Payment, Prorated Bonus and Continuation Benefits (all as defined in Section 6.2(a)).

      3.  Compensation .

      3.1 Salary . During the Term of Employment, the Company shall pay Executive a base salary (“Base Salary”) in the amount set forth on the signature page hereof. Such Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. During the Term of Employment, the Board and the CEO shall review in good faith, at least annually, Executive’s Base Salary in accordance with the Company’s customary procedures and practices regarding the salaries of senior executives and may, if determined by the Board to be appropriate, increase Executive’s Base Salary following such review. “Base Salary” for all purposes herein shall be deemed to be a reference to any such increased amount.

      3.2 Annual Bonus . In addition to his Base Salary, Executive shall, commencing with the 2007 calendar year and continuing for each calendar year thereafter during the Term of Employment, be eligible to receive an annual cash bonus (the “Bonus”) in accordance with a program to be developed by the Board, based on achievement of performance targets established by the Board in consultation with the CEO as soon as practicable at or after the beginning of the calendar year to which the performance targets relate. The target for the 2007 bonus amount shall be determined before or as soon as practicable after the Commencement Date. Executive’s target and maximum annual Bonus percentages are set forth on the signature page hereof. A Bonus award for any calendar year shall be payable to Executive at the time bonuses are paid to executive officers for such calendar year in accordance with the Company’s policies and practices as set by the Board in consultation with the CEO, but in no event later than March 15 of the calendar year following the later of (a) the calendar year in which the Bonus is earned or (b) the calendar year in which the Bonus is no longer subject to a substantial risk of forfeiture within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the guidance promulgated and in effect thereunder (“Section 409A”).

      4.  Employee Benefits .

4.1 Equity and Stock Options .

     (a) Executive shall receive an extended long-term incentive award (the “Extended Long Term Incentive Award”) with a value (as determined by the Compensation Committee of the Board in good faith) that is at least equal to the percentage of Executive’s initial Base Salary as set forth on the signature page hereof. Such award shall consist of stock options and restricted stock units, which will be granted on or about November 1, 2007. The stock options will be granted with an exercise price per share equal to the closing market price of a share of Company common stock on the grant date. The restricted stock units will be granted with a value per unit equal to the closing market price of a share of Company common stock on the grant date.

     (b) With respect to each calendar year during the Term of Employment, commencing with the 2008 calendar year, Executive shall receive equity-based compensation awards under the Company’s equity incentive plans (the “Annual Long Term Incentive Awards” and, together with the Extended Long Term Incentive Award, the “Long Term Incentive Awards”) with a value at least equal to the percentage of Executive’s Base Salary (as in effect on the date of such award) as set forth on the signature page hereof. The Annual Long Term Incentive Award with respect to the 2008 calendar year shall be made in the form of restricted stock on or about November 1, 2007, with a value per share that equals the closing market price of a share of Company common stock on the grant date. The Annual Long Term Incentive Award with respect to each calendar year after 2008 shall be made effective on the first business day of such calendar year.

     (c) As of the date of termination of Executive’s employment due to Executive’s Disability (as hereinafter defined) or death, or upon the occurrence of a change in control (as defined in the applicable equity-based plan or award) all outstanding Long Term Incentive Awards and any other equity-based awards granted to Executive by the Company shall become immediately and fully vested; provided, however, that any performance units granted to Executive shall not become fully vested upon a change in control unless otherwise provided in the applicable plan or award agreement. In the case of termination of Executive’s employment due to Executive’s Disability (as defined in Section 6.4) or death, any options held by Executive as of such date shall remain exercisable until at least the earlier of (i) the date that is one (1) year after the date of termination of Executive’s employment or (ii) the date on which the option would have expired solely by reason of the passage of time if Executive’s employment had not been terminated, provided that no option shall remain outstanding longer than the maximum time permitted by Section 409A.

     (d) The Long Term Incentive Awards shall be governed by separate grant agreements (together with any other agreement approved by the Board and designated by the Board as an “Ancillary Document” for purposes of this

Agreement, the “Ancillary Documents”). To the extent permitted by any applicable law and the rules of any exchange on which the Company’s stock is listed, in the event of any conflict between an Ancillary Document and the terms of this Agreement, the terms of this Agreement shall govern.

     (e) All Long Term Incentive Awards and any other equity-based awards granted to Executive by the Company shall be approved by a committee of the Board comprised of individuals who are both disinterested directors (within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and independent directors (within the meaning of applicable stock exchange rules) and shall be exempt from Section 16(b) of the Exchange Act by reason of Rule 16b-3 under the Exchange Act.

      4.2 Employee Benefit Programs, Plans and Practices; Perquisites . During the Term of Employment, the Company shall provide Executive with employee benefits and perquisites at a level (a) commensurate with his or her position in the Company and (b) at least as favorable to Executive as the Company provides to its other senior executives, including retirement benefits, health and welfare benefits (both active and retiree), the Continuation Benefits (as defined in Section 6.2(a)(2)), and other employee benefits and perquisites which the Company may make available to its senior executives from time to time. To the extent permitted by applicable law, applicable tax-qualification requirements, and any relevant benefit plan document, Executive’s service with Peabody Energy Corporation and its affiliates shall be taken into account for purposes of determining eligibility, vesting, level of benefits and benefit accruals under the Company’s benefit plans (except to the extent that such service credit would result in a duplication of benefits).

      4.3 Vacation . Executive shall be entitled to the number of business days paid vacation in each calendar year as determined in accordance with the Company’s applicable vacation policies, which shall be taken at such times as are reasonably consistent with Executive’s responsibilities hereunder.

      5.  Expenses . Subject to prevailing Company policy or such guidelines as may be established by the Board, the Company will reimburse Executive for all reasonable expenses incurred by Executive in carrying out his duties on behalf of the Company, provided that such reimbursement is not taxable income to Executive.

      6.  Termination of Employment .

      6.1 Termination of Employment for Any Reason . In the event of a termination of Executive’s employment for any reason, whether or not such termination occurs during the Term of Employment, the Company shall pay to Executive (a) within five (5) business days following the date of termination of Executive’s employment, a lump sum equal to (i) Executive’s Base Salary earned on or prior to the date of such termination but not yet paid to Executive in accordance with the Company’s customary procedures and practices regarding the salaries of executives, (ii) any business expenses incurred by Executive and not yet reimbursed by the Company under Section 5 above, as of the date of such termination, (iii) any vacation time accrued but unused as of the date

of such termination, and (iv) any Bonus earned but not yet paid for any calendar year prior to the date of such termination and (b) any benefits accrued and vested under any of the Company’s employee benefit programs, plans and practices on or prior to the date of termination of Executive’s employment (remuneration described in (a) and (b) above are collectively referred to as the “Accrued Obligations” herein) in accordance with the terms of such programs, plans and practices.

      6.2 Termination Not for Cause or for Good Reason . (a) The Company or Executive may terminate Executive’s Term of Employment at any time for any reason by providing written notice to the other party at least thirty (30) days (or such other number of days specified in this Agreement) in advance of the date of termination of Executive’s employment. If, during the Term of Employment, Executive terminates his or her employment for Good Reason, such notice shall describe the conduct Executive believes to constitute Good Reason and the Company shall have the opportunity to cure the Good Reason within thirty (30) days of receiving such notice. If the Company cures the conduct that is the basis for the potential termination for Good Reason within such thirty (30) day period, Executive’s notice of termination shall be deemed withdrawn.

If Executive’s employment is terminated (i) by the Company other than for Cause (as defined in Section 6.3(b) hereof), Disability (as defined in Section 6.4 hereof) or death or (ii) by Executive for Good Reason (as defined in Section 6.2(b) hereof), and such termination constitutes a Separation from Service (as hereinafter defined), the Company, as severance, shall pay to Executive an amount (the “Severance Payment”) equal to the product of (A) and (B):

(A) the sum of:

(I) Executive’s Base Salary, plus

(II) an additional amount equal to the greater of (x) Executive’s target Bonus for the calendar year of termination of Executive’s employment, or (y) the annual average of the actual Bonus awards paid to Executive by the Company for the three (3) calendar years preceding the date of termination of Executive’s employment (or, if Executive has not yet been employed by the Company pursuant to this Agreement for three (3) full calendar years as of the date his or her employment is terminated, for the two (2) year or one (1) year period, as applicable, for which he or she has been so employed and received a Bonus), plus

(III) an amount equal to six percent (6%) of Executive’s Base Salary;

multiplied by

(B) the greater of

(I) one (1) or

     (II) the number of calendar days during the period between the date that Executive’s employment is terminated and the date that Executive’s Term of Employment would otherwise expire under this Agreement by reason of the passage of time (the “Remaining Term”) divided by three hundred sixty five (365).

If (a) the original Term of Employment has expired or (b) the Remaining Term of the original Term of Employment is less than or equal to three hundred sixty five (365) days, the Company shall pay the Severance Payment to the Executive (I) one-half (1/2) of such Severance Payment in a lump sum payment on the six (6) month anniversary of Executive’s Separation from Service and (II) the remaining one-half (1/2) of the Severance Payment in six (6) equal monthly payments beginning on the seven (7) month anniversary of Executive’s Separation from Service

If the Remaining Term of the original Term of Employment is greater than three hundred sixty five (365) days, the Company shall pay the Severance Payment to the Executive in substantially equal installments when Base Salary would otherwise be due in accordance with Section 3.1 hereof through the end of the Remaining Term; provided , however , that the all payments otherwise payable in the first six (6) months after Executive’s Separation from Service shall be paid in a lump sum payment on the first regular pay date (as provided in Section 3.1 hereof) on or immediately after the six (6) month anniversary of Executive’s Separation from Service.

“Separation from Service” means a “separation from service,” as such term is defined under Section 409A.

In addition, if Executive’s employment is terminated (i) by the Company other than for Cause (as defined in Section 6.3(b) hereof), Disability (as defined in Section 6.4 hereof), or death or (ii) by Executive for Good Reason (as defined in Section 6.2(b)) and if such termination constitutes a Separation from Service,

(1) The Company shall pay to Executive a prorated bonus (the “Prorated Bonus”) for the calendar year of termination of Executive’s employment, calculated as the Bonus Executive would have received in such year based on actual performance multiplied by a fraction, the numerator of which is the number of business days during the calendar year of termination that Executive was employed and the denominator of which is the total number of business days during the calendar year of termination. The Prorated Bonus shall be payable when annual bonuses are paid to other senior executives of the Company, but in no event later than March 15 of the calendar year following the later of (a) the calendar year in which the Bonus is earned or (b) the calendar year in which the Bonus is no longer subject to a substantial risk of forfeiture within the meaning of Section 409A.

(2) The Company shall also continue to provide Executive, as though he or she remained actively employed, for a period ending on the later of (i) the date that the Remaining Term expires and (ii) the date that is one (1) year following

the date of termination of Executive’s employment (the “Benefit Continuation Period”), life insurance, group health coverage (including medical, dental, and vision benefits), accidental death & dismemberment coverage, and the health care flexible spending account (to the extent required to comply with COBRA continuation coverage requirements (collectively, the “Continuation Benefits”) in accordance with the applicable plan terms; provided , however , that any such coverage shall terminate to the extent that Executive is offered or obtains comparable benefits from any other employer during the Benefit Continuation Period; provided , further , that the amount of Continuation Benefits provided during one calendar year shall not affect the amount of Continuation Benefits provided during a subsequent calendar year (except with respect to health plan maximums), the Continuation Benefits may not be exchanged or substituted for other forms of compensation to Executive, and any reimbursement or payment under t