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(WESTMORELAND COAL COMPANY LOGO)
    
    Number: GPC-001                                         Page 1 of 3Original Issue Date: 7/26/04WESTMORELAND COAL COMPANY
    
    Supersedes Policy IV-16 Dated 10/1/94Manual of Policies:
    
    Approved Issuing Officer:COMPENSATIONTitle:SEVERANCE POLICY
    
    Name: Christopher K. SeglemTitle: President & CEO
 1.
    
    POLICY STATEMENTIt is the policy of the Westmoreland Coal Company, (the Company, or Westmoreland) to pay
severance benefits under certain specific and limited circumstances, as defined by this policy,
to certain non-classified employees who are involuntarily terminated for reasons other than
cause and under certain conditions described herein. The purpose of severance is to aid
employees for hardships incurred upon loss of employment. This policy applies to
non-classified employees of Westmoreland Coal Company and all of its direct and indirect
subsidiaries.2.
    
    FUTURE OF THE POLICYAlthough the Company currently expects to continue the provisions of this policy, the Company
reserves the right to change or amend at any time, at its sole discretion, any and all terms
and conditions of this policy, or to terminate this policy in its entirety.3.
    
    PROCEDURE
 3.1
    
    ELIGIBILITYAll full-time non-union employees with six months of service and scheduled to work at
least 1,000 hours in a calendar year are eligible for severance benefits under this
policy, but only if their employment is terminated for one of the following reasons and
the employee waives any and all claims against the Company, its officers, directors and
employees, by signing an Employment Release and Settlement Agreement:
 3.1.1 Involuntary termination that is not for Cause.3.1.2 A reduction in work force.3.1.3 Liquidation of the Company.
 3.2
    
    INELIGIBILITYSeverance benefits will not be paid when termination occurs under the following
circumstances:
 3.2.1
    
    Voluntary termination by the employee (except for unused vacation).3.2.2
    
    For Cause.




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Title:
    
    No.
    
    Date Issued:
    
    Supersedes
    
    Page 2 of 3SEVERANCE POLICY
    
    GPC-001
    
    7/26/04
    
    Policy IV-19Dated 10/1/94
 3.2.2.1
    
    Unsatisfactory job performance.3.2.2.2
    
    Gross or willful misconduct that is injurious to the Company, or its
Subsidiaries or Affiliates, which includes but is not limited to an act or
acts constituting embezzlement, misappropriation of funds or property of the
Company, larceny, fraud, gross negligence, crime or crimes resulting in a
felony conviction, moral turpitude or behavior that brings the employee into
public disrepute, contempt, scandal or ridicule or that reflects unfavorably
upon the reputation or high moral or ethical standards of the Company or
violation of Company policy including but not limited to the policies set
forth on Code of Business Conduct and Fitness for Duty; willful
misrepresentation to the Companys directors, officers, managers,
supervisors, employees or third parties; or failure to meet the duties of
care and loyalty to the Company. For purposes of this paragraph, failure to
act on the participants part shall be considered willful if done by the
participant without a reasonable belief that the omission was in the best
interest of the Company.
 3.3
    
    DETERMINATION AND PAYMENT OF SEVERANCE PAYMENTSEmployees who meet the eligibility requirements of this policy and who execute and adhere
to an Employment Release and Settlement Agreement, wherein any and all claims against the
Company, its Officers, Directors, Managers and Employees are waived, will receive in
consideration for that agreement and their Westmoreland service, severance benefits
according to the following formula:
 a.)
    
    Hourly/Non-Exempt Severance pay equal to one (1) week of base
salary for every year of continuous and completed service to the Company with a
minimum of two weeks and a maximum of 26 weeks.b.)
    
    Salaried/Exempt Severance pay equal to two (2) weeks of base
salary for every year of continuous and completed service with a minimum of
four (4) weeks and a maximum of 36 weeks base salary.c.)
    
    Executives (VP/GM level and above) receive severance pay
equal to four (4) weeks of base salary for every year of continuous and
completed service with a minimum of eight (8) weeks and a maximum of 52 weeks.
 Length of service shall be determined based on original date of employment with
Westmoreland or, in the case of an acquired subsidiary, upon the date of employment with
the acquired subsidiary.Severance payments will be paid in equal installments on the normal payroll schedule and
shall be net of any tax, medical or other required withholdings.3.4
    
    CONTINUATION OF BENEFITSIn addition to the Severance Payment, eligible employees will receive payment for any
unused vacation up to the date of termination for the calendar year. Payment will not be
made for holidays or floating holidays.




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Title:
    
    No.
    
    Date Issued:
    
    Supersedes
    
    Page 3 of 3SEVERANCE POLICY
    
    GPC-001
    
    7/26/04
    
    Policy IV-19Dated 10/1/94
 In the event of termination, medical, vision, and dental benefits will continue for
the balance of the month in which discharge occurred, plus three (3) months.All other benefits will terminate in accordance with the respective plan documents.3.5
    
    SURVIVABILITY OF PAYMENTSThe commitments under this policy shall survive, to the extent permissible by law, upon
the bankruptcy, insolvency, liquidation or dissolution of the Company.