Exhibit 10.81

 

July 26, 2005

 

Mr. Ronald E. Smith

141 Druid Drive

McMurray, PA 15317

 

Dear Ron:

 

I am pleased to inform you that, if the Board of Consol Energy decides to go
forward with the potential transaction involving the sale of securities in CNX
Gas Corporation (“CNX Gas”), it is expected that you will be offered the newly
created position of Chief Operating Officer with CNX Gas. The terms and
conditions of the offer would be as follows:

 

Position

   Chief Operating Officer

Base Salary

   $380,000 Annually

One-Time Bonus Opportunity

   At the discretion of the CNX Gas Board of Directors, you will be eligible to
receive a one-time bonus.

Annual Short Term Target Incentive

Compensation Opportunity (“Bonus”)

   Your Bonus opportunity for 2005 performance is targeted at 75% of your Base
Annual Salary. For 2005, payment is to be based on performance criteria relating
to CONSOL Energy and CNX Gas and your performance with each entity in 2005. This
Bonus will be in lieu of any bonus you might have been entitled to receive if
you had remained an employee of CONSOL Energy in 2005. After 2005, the Bonus
payment is expected to be based on criteria relating to CNX Gas and your
performance with CNX Gas.

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Long Term Incentive Compensation

(LTIC)

   Participation in CNX Gas LTIC with an initial one-time grant of CNX Stock
Options excercisable for 266,667 shares of CNX Gas common Stock. It is
anticipated that beginning in 2006 you will receive annual grants of $630,000 in
the form of 75% CNX Gas Stock Options and 25% Restricted Stock Units. The grant
of the options is subject to compliance by CNX Gas with any applicable
securities law.

Vehicle Allowance

   $1,050 per month

Change of Control

   Eligible for coverage based on the terms and conditions outlined in the
Agreement to be provided to you.

 

Welfare, disability and retirement benefit programs made available to you
through CNX Gas as of the Effective Date will be substantially identical to
those currently sponsored by CONSOL Energy. You will receive credit for your
service recognized by CONSOL Energy (or its affiliates) under the benefit
programs offered by CNX Gas in which you become a participant, subject to such
adjustments or offsets, if any, necessary to avoid a duplication of benefits. As
you are aware, the terms and conditions of these benefit programs and of your
employment are subject to change at any time based on action by the sponsoring
company with regard to the benefit programs and by CNX Gas with regard to the
other terms and conditions of our employment.

 

This potential offer is contingent upon the CONSOL Energy and CNX Gas Boards of
Directors giving final approval to the sale of CNX Gas common stock, the
proceeds of which will be used to pay a special dividend to CONSOL Energy (the
“Financing”) in an amount equal to the total net proceeds from the Financing,
the closing of the Financing, and your being named as the COO of CNX Gas in the
final Offering Memorandum. As you are aware, the Financing is subject to final
approval of both Boards of Directors, after the marketing of the potential
transaction and after a final offering price is presented to each Board of
Directors for approval.

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I look forward to your participation in the initial and ongoing success of this
exciting new venture. Please signify your acceptance to this offer by signing in
the space provided below.

 

 

Sincerely,

/s/ Nicholas J. DeIuliis

Nicholas J. DeIuliis

CEO and President

CNX Gas Corporation

 

 

Accepted and Agreed to:

 

  /s/ Ronald E. Smith Ronald E. Smith