Foundation Coal Supplemental Executive Retirement Plan (Effective July 30, 2004)

Board of Directors

Change in Control

The acquisition by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange. Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either

the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or

the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”);

Individuals who, as of the Effective Date, constituted the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a member of the Board of Directors subsequent to the Effective Date, whose election or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board or of the shareholders who are Persons directly or indirectly owned by Foundation Coal Corporation shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial membership on the Board of Directors occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors or the shareholders who are Persons directly or indirectly owned by Foundation Coal Corporation; or

Approval by the shareholders of the Company of a reorganization, merger, or consolidation (a “Business Combination”), in each case, unless, following such Business Combination,

all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 80% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be,

no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and

at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or at the time of the action of the Board of Directors, in either case providing for such Business Combination; or

Approval by the shareholders of the Company of

a complete liquidation or dissolution of the Company, other than a complete liquidation or dissolution in connection with the transaction described in Section 1.4(c) above; or

the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation with respect to which following such sale or other disposition, (A) more than 80% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock, or Outstanding Company Voting Securities prior to the sale or disposition, and (C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or at the time of the action of the Board of Directors, in either case providing for such sale or other disposition of assets of the Company or were elected, appointed or nominated by the Board of Directors.

Trustee

the Participant’s vested Accrued Benefit payable under the Retirement Plan, minus

the vested Accrued Benefit that would have been payable under the Retirement Plan to the Participant (i) had the limitations of Section 415 and Section 401(a)(17) of the Code, as applicable, not been applied, and (ii) had any compensation, included in the year of deferral, which is deferred under any deferred compensation plan sponsored by the Company been included in the Participant’s Compensation for purposes of the Retirement Plan, minus

the Participant’s supplemental benefit under the RAG American Coal Supplemental Executive Retirement Plan, as set forth in Appendix A hereto.

Commencement of Supplemental. Benefit Payments

Change in Control

to maintain any records necessary in connection with the operation of the Plan;

to calculate the amount of benefits due to Participants and Beneficiaries;

to have the authority and discretion to interpret the Plan and other documents, to decide questions and disputes, to supply omissions, and to resolve inconsistencies and ambiguities arising under the Plan and other documents, which interpretations and decisions shall be final and binding on all Participants and Beneficiaries;

to retain counsel, employ agents, and provide for such clerical, accounting, actuarial, and consulting services as it deems necessary or desirable to assist it in the administration of the Plan;

to retain the right, authority, and discretion to make benefit payments and predetermination of benefit decisions upon appeal to the extent it has the authority to make such appeal determinations under Section 7.2;

to establish rules and regulations for the administration of the Plan; and

to otherwise administer the Plan in accordance with its terms.

A Participant or the Beneficiary or the duly authorized representative of either (a “claimant”) may file a claim for a benefit under the Plan to which the claimant believes that he is entitled. Such a claim must be in writing and delivered to the Committee by certified mail. Within 90 days after receipt of a claim, the Committee shall send to the claimant by certified mail, postage prepaid, notice of

If a claim for benefits made pursuant to Section 7.2(a) is denied, the Committee shall provide to the claimant written notice setting forth in a manner calculated to be understood by the claimant:

the specific reason or reasons for the denial;

the specific reference to pertinent Plan provisions upon which the denial is based;

a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material is necessary; and

an explanation of the claim review procedure.

Within 60 days after receipt by the claimant of written notification pursuant to Section 7.2(a) of the denial in whole or in part of a timely made claim pursuant to Section 7.2(a), the claimant, upon written application to the. Committee in person or by certified mail, postage prepaid, may request a review of such denial, may review pertinent documents, and may submit issues and comments in writing.

Upon receipt of the request for review, the Committee shall review the claim and denial and shall communicate its decision to the claimant. The decision on review shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision and specific references to the pertinent Plan provisions upon which the decision is based. The decision on review shall be made not later than 60 days after the Committee’s receipt of a request for review under this Section 7.2(c), unless special circumstances require an extension of time for processing, in which case a decision shall be rendered not later than 120 days after the Committee’s receipt of a request for review under this Section 7.2(c). If such extension is necessary, the claimant shall be given written notice of the extension prior to the expiration of the initial 60-day period. If notice of the decision on the review is not furnished in accordance with this Section 7.2(c), the claim shall be deemed denied.

The Board of Directors, the Committee, and the Company shall not be liable for any action or determination made in good faith thereby with respect to the Plan or the rights of any person under the Plan.

If the Committee is in doubt as to the right of any person to receive any amount, the Company may retain such amount, which shall continue to accrue interest, on the basis of the interest rate specified in the Retirement Plan, until the rights thereto are determined, or the Company may pay such amount into any court of appropriate jurisdiction, and such payment shall be a complete discharge of the liability of the Plan, the Board of Directors and the Committee therefor. Any payment made pursuant to this Section 9.2(b) shall be made as soon as practicable under the circumstances.

Calculate the participant's total retirement benefit

Calculate the portion of the participant’s retirement benefit that is payable under the Salaried Retirement Plan

Supplemental Benefit, payable at age 65, expressed as a single life annuity = $70,825 - $57,755 = $13,070 / year

Subtract out the supplemental benefit that was paid under the RAG American Coal Supplemental Executive Retirement Plan on August 1, 2004 = $9,600 / year

Supplemental Benefit, payable at age 65, expressed as a single life annuity = $13,070 - $9,600 = $3,470 / year

Adjust the amount of the Supplemental Benefit, payable at age 65, to reflect earlier payout at age 55

Because the Supplement Benefit is only paid in a single lump sum, convert the benefit payable from the Supplemental Benefit from a single life annuity to a single lump sum amount