ALLIANCE GP, LLC

DIRECTORS ANNUAL RETAINER AND

DEFERRED COMPENSATION PLAN

Table of Contents

- i -

ALLIANCE GP, LLC

DIRECTORS ANNUAL RETAINER AND

DEFERRED COMPENSATION PLAN

Preamble

WHEREAS, to help attract and retain highly qualified individuals to serve as members of its Board of Directors, Alliance GP, LLC (the Company) desires to adopt a compensation plan for its non-employee directors, which provides for the payment of Annual Retainers and permits them to electively defer all or part of their Annual Retainers in Phantom Units;

NOW, THEREFORE, the Company does hereby adopt the Alliance GP, LLC Directors Annual Retainer and Deferred Compensation Plan (the Plan) as set forth herein, effective as of May 15, 2006.

1. DEFINITIONS

For purposes of the Plan, the following terms shall have the meanings indicated:

Account means a ledger or notional account established by the Company for a Director pursuant to Section 4.2.

Annual Retainer means, with respect to a year, the cash amount of the annual retainer for Directors for such year as established by the Board.

Beneficiary means the person(s) designated by a Director, on a form provided by and filed with the Company, to receive any benefits from the Plan payable in the event of his or her death. A Director may change his or her beneficiary designation at any time. If no Beneficiary is designated by the Director or no designated Beneficiary survives the Director, the Beneficiary shall be the Directors surviving spouse or, if none, his or her estate.

Board means the Board of Directors of the Company.

Committee means the Compensation Committee of the Board.

Common Units means the Common Units of the Partnership.

Director means a member of the Board who is not also an employee of the Company or an affiliate of the Company.

Fair Market Value means, as of any applicable date, the average closing sale price (or if unavailable the last reported bid price) of a Common Unit for the ten trading days immediately preceding such date, as reported on the principal exchange or market on which the Common Units are traded as reported in The Wall Street Journal or such other reporting service as approved by the Committee.

Partnership means Alliance Holdings GP, L.P.

1

Phantom Unit means a notional Common Unit. A Director shall not possess any rights of a common unitholder of the Partnership with respect to a Phantom Unit.

Termination means a Directors ceasing to be a member of the Board for any reason.

2. ADMINISTRATION

2.1 Committee. The Plan shall be administered by the Committee. The Committee shall have the complete authority and power to interpret the Plan, prescribe, amend and rescind rules relating to its administration, determine a Directors (or Beneficiarys) right to a payment, the amount of such payment, and to take all other actions necessary or desirable for the administration of the Plan. All actions and decisions of the Committee shall be final and binding upon all Directors, Beneficiaries and other persons.

3. DIRECTORS

3.1 Directors. Each Director automatically shall be a participant in Section 4.1 of the Plan and may elect to participate in the voluntary deferral program provided by Section 4.2 of the Plan.

4. BENEFITS

4.1 Payment of Annual Retainer. Subject to a deferral election having been made by the Director pursuant to Section 4.2, on the first business day of each calendar quarter beginning after the effective date of the Plan, the Company shall pay each person who is a Director on such date 25% of the Annual Retainer for such year. For the initial short calendar quarter beginning May 15, 2006, such payment shall be equal to 12 ¹/2% of the Annual Retainer. If a person first becomes a Director during a calendar quarter, such Director shall be paid a prorated amount (based on the number of days remaining in such calendar quarter) of the Annual Retainer otherwise payable for such full calendar quarter as soon as reasonably practical following the date he or she first becomes a Director.

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC