EXHIBIT 10.61

 

CONSOL ENERGY INC.

EQUITY INCENTIVE PLAN

AS AMENDED AND RESTATED

EFFECTIVE MAY 3, 2005

 

Capitalized terms shall have the meaning set forth in Section 16 of the Plan.

 

1.    Purpose.

 

The purposes of the CONSOL Energy Inc. Equity Incentive Plan as amended and
restated as set forth herein are to promote the interests of the Company and its
stockholders by (i) attracting and retaining Eligible Directors, executive
officers and other key employees and consultants of the Company and its
Affiliates; (ii) motivating such individuals by means of performance-related
incentives to achieve long-range performance goals; and (iii) enabling such
individuals to participate in the long-term growth and financial success of the
Company

 

2.    Administration.

 

(a)    Authority of Board.    The Plan shall be administered by the Board.
Subject to the terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Board by the Plan, the Board
shall have full power and authority to: (i) designate Participants; (ii)
determine the type or types of Awards to be granted to an eligible Employee;
(iii) determine the number of Shares to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with respect
to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Board; (vii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
(ix) advance the lapse of any waiting period, accelerate any exercise date,
waive or modify any restriction applicable to Awards (except those restrictions
imposed by law); and (x) make any other determination and take any other action
that the Board deems necessary or desirable for the administration of the Plan.
The Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Award Agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect, and it shall be
the sole and final judge of such expediency.

 

(b)    Board Discretion Binding.    Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Board, may be made at any time and shall be final, conclusive,
and binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, any stockholder and any
Employee.

 

(c)    Delegation to Committee.    Except with respect to Awards made pursuant
to Section 10 to Eligible Directors, the Board may delegate to the Committee any
or all authority for administration of the Plan. If authority is delegated to a
Committee, all references to the Board of Directors in the Plan shall mean and
relate to the Committee except (i) as otherwise provided by the Board of
Directors and (ii) that only the Board of Directors may amend or terminate the
Plan.

 

(d)    Delegation to Officer.    The Board or the Committee, as applicable, may
delegate to an executive officer of the Company authority to administer those
aspects of the Plan that do not involve the designation of

 

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individuals to receive awards or decisions concerning the timing, amounts or
other terms of awards. No officer to whom administrative authority has been
delegated pursuant to this provision may waive or modify any restriction
applicable to an award to such officer under the Plan.

 

(e)    No Liability.    No member of the Board or Committee shall be liable for
any action taken or determination made in good faith with respect to the Plan or
any Award granted hereunder.

 

3.    Shares Available for Awards; Limitations.

 

(a)    Shares Available.    Subject to adjustment as provided in Section 3(c),
the total number of Shares with respect to which Awards may be granted under the
Plan shall be 9,100,000, out of which 1,300,000 may be used with respect to
Awards other than Options. The total number of Shares which may be issued under
the Plan with respect to Stock Options shall be 9,100,000. If, after the
Effective Date, any Shares covered by an Award granted under the Plan, or to
which such an Award relates, are forfeited, or otherwise terminates or is
canceled without the delivery of Shares, then the Shares covered by such Award,
or to which such Award relates, or the number of Shares otherwise counted
against the aggregate number of shares with respect to which Awards may be
granted, to the extent of any such forfeiture, termination or cancellation,
shall again become Shares with respect to which Awards may be granted.

 

(b)    Limitations on Awards.    Subject to adjustment as provided in Section
3(c), the maximum number of Shares with respect to which Awards may be granted
to any Participant during a calendar year shall be 1,000,000 Shares. The maximum
annual number of shares in respect of which Restricted Stock Awards, Restricted
Stock Units, Performance Awards and Other Stock-Based Awards may be granted
under the Plan to any Participant is 325,000 and the maximum annual amount of
any Award settled in cash with respect to any Participant is $2 million.

 

(c)    Adjustments.    In the event that the Board determines that any dividend
or other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Board to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Board shall, in such manner as it
may deem equitable, (i) adjust any or all of (1) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
with respect to which Awards may be granted, (2) the maximum number of Shares
subject to an Award granted to a Participant pursuant to Section 3(b) of the
Plan, (3) the number of Shares or other securities of the Company (or number and
kind of other securities or property) subject to outstanding Awards, and (4) the
grant or exercise price with respect to any Award; (ii) if deemed appropriate,
provide for an equivalent award in respect of securities of the surviving entity
of any merger, consolidation or other transaction or event having a similar
effect; or (iii) if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award; provided, in each case, that (A) with respect to
Awards of Incentive Stock Options no such adjustment shall be authorized to the
extent that such authority would cause the Plan to violate Section 422(b)(1) of
the Code, as from time to time amended and (B) with respect to any Award no such
adjustment shall be authorized to the extent that such authority would be
inconsistent with the Plan’s meeting the requirements of Section 162(m), unless
otherwise determined by the Board.

 

(d)    Substitute Awards.    Any Shares underlying Substitute Awards shall not,
unless required by Section 16, be counted against the Shares available for
Awards under the Plan.

 

(e)    Sources of Shares Deliverable under Awards.    Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.

 

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4.    Eligibility.

 

Any Employee, including any officer or employee-director of the Company or any
Affiliate, who is not a member of the Committee, shall be eligible to be
designated a Participant. Eligible Directors shall be eligible for Awards as
described in Section 10.

 

5.    Stock Options.

 

(a)    Grant.    Subject to the provisions of the Plan, the Board shall have
sole and complete authority to determine the Participants to whom Options shall
be granted (provided that Incentive Stock Options may only be granted to
employees of the Company or a parent or subsidiary of the Company within the
meaning of Code Sections 424 (e) and (f)), the number of Shares to be covered by
each Option, the option price and the conditions and limitations applicable to
the exercise of the Option. The Board shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant
both types of options. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as may
be prescribed by Section 422 of the Code, as from time to time amended, and any
regulations implementing such statute.

 

(b)    Exercise Price.    The Board in its sole discretion shall establish the
exercise price at the time each Option is granted. Except in the case of
Substitute Awards, the exercise price of an Option may not be less than the Fair
Market Value on the Grant Date.

 

(c)    Exercise.    Each Option shall be exercisable at such times and subject
to such terms and conditions as the Board may, in its sole discretion, specify
in the applicable Award Agreement or thereafter. The Board may impose such
conditions with respect to the exercise of options, including without
limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable. Notwithstanding the foregoing, an Option
shall not be exercisable after the expiration of ten years from the Grant Date.

 

(d)    Payment.    No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price is received by the Company.
Such payment may be made in cash, or its equivalent, or by exchanging, actually
or constructively, Shares owned by the Participant (for any minimum period set
forth in the Award Agreement or as may be required to achieve fixed accounting
under then applicable U.S. GAAP and (which are not the subject of any pledge or
other security interest), or by a combination of the foregoing, provided that
the combined value of all cash and cash equivalents and the Fair Market Value of
any such Shares so tendered to the Company as of the date of such tender is at
least equal to such option price. A Participant may elect to pay all or any
portion of the aggregate exercise price by having Shares with a Fair Market
Value on the date of exercise equal to the aggregate exercise price withheld by
the Company or sold by a broker-dealer or, as provided in an Award Agreement, by
having Shares withheld with such value by the Company. Shares that are withheld
from an award to satisfy tax-withholding obligations, shares that are
surrendered to fulfill tax obligations incurred under the Plan, and shares
surrendered in payment of the option exercise price upon the exercise of an
option will not be available for reissuance under the Plan. Shares that are
purchased by the Company with proceeds that were paid to exercise options cannot
be added to the share reserve.

 

(e)    Restoration Options.    The Board may provide in an Award Agreement for
the automatic grant of a Restoration Option to a Participant who delivers Shares
in payment of the exercise price of any Option granted hereunder in accordance
with Section 5(d), or in the event that the withholding tax liability arising
upon exercise of any such Option or option by a Participant is satisfied through
the withholding by the Company of Shares otherwise deliverable upon exercise of
the Option. The grant of a Restoration Option shall be subject to the
satisfaction of such conditions or criteria as the Board in its sole discretion
shall establish from time to time. A Restoration Option shall entitle the holder
thereof to purchase a number of Shares equal to the number of such Shares so
delivered or withheld upon exercise of the original Option. A Restoration Option
shall have a per share exercise price of not less than 100% of the per Share
Fair Market Value on the Grant Date of such Restoration Option and such other
terms and conditions as the Board in its sole discretion shall determine.

 

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6.    Stock Appreciation Rights.

 

(a)    Grant.    Subject to the provisions of the Plan, the Board shall have
sole and complete authority to determine the Participants to whom Stock
Appreciation Rights shall be granted, the number of Shares to be covered by each
Stock Appreciation Right Award, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. Stock Appreciation Rights granted
in tandem with or in addition to an Award may be granted either at the same time
as the Award or, except in the case of Incentive Stock Options, at a later time.
Stock Appreciation Rights shall not be exercisable earlier than six months after
the Grant Date, and shall have a grant price no less that the Fair Market value
of Shares covered by the right on the Grant Date (except with respect to a
Substitute Award).

 

(b)    Exercise and Payment.    A Stock Appreciation Right shall entitle the
Participant to receive an amount equal to the excess of the Fair Market Value of
a Share on the date of exercise of the Stock Appreciation Right over the grant
price thereof. The Board shall determine whether a Stock Appreciation Right
shall be settled in cash, Shares or a combination of cash and Shares. Stock
Appreciation Rights to be settled in shares of Common Stock shall be counted in
full against the number of shares available for award under the Plan, regardless
of the number of Exercise Gain Shares issued upon settlement of the Stock
Appreciation Right.

 

(c)    Other Terms and Conditions.    Subject to the terms of the Plan and any
applicable Award Agreement, the Board shall determine, at or after the grant of
a Stock Appreciation Right, the term, (up to a maximum of ten years from the
Grant Date), methods of exercise, methods and form of settlement, and any other
terms and conditions of any Stock Appreciation Right. Any such determination by
the Board may be changed by the Board from time to time and may govern the
exercise of Stock Appreciation Rights granted or exercised prior to such
determination as well as Stock Appreciation Rights granted or exercised
thereafter. The Board may impose such conditions or restrictions on the exercise
of any Stock Appreciation Right as it shall deem appropriate.

 

7.    Restricted Stock and Restricted Stock Units.

 

(a)    Grant.    Subject to the provisions of the Plan, the Board shall have
sole and complete authority to determine the Participants to whom Shares of
Restricted Stock and Restricted Stock Units shall be granted, the number of
Shares of Restricted Stock and/or the number of Restricted Stock Units to be
granted to each Participant, the duration of the period during which, and the
conditions under which, the Restricted Stock and Restricted Stock Units may be
forfeited to the Company, and the other terms and conditions of such Awards.

 

(b)    Transfer Restrictions.    Shares of Restricted Stock and Restricted Stock
Units may not be sold, assigned, transferred, pledged or otherwise encumbered,
except, in the case of Restricted Stock, as provided in the Plan or the
applicable Award Agreements. Certificates issued in respect of Shares of
Restricted Stock shall be registered in the name of the Participant and
deposited by such Participant, together with a stock power endorsed in blank,
with the Company. Upon the lapse of the restrictions applicable to such Shares
of Restricted Stock, the Company shall deliver such certificates to the
Participant or the Participant’s legal representative.

 

(c)    Payment.    Each Restricted Stock Unit shall have a value equal to the
Fair Market Value of a Share. Restricted Stock Units shall be paid in cash,
Shares, other securities or other property, as determined in the sole discretion
of the Board, upon the lapse of the restrictions applicable thereto, or
otherwise in accordance with the applicable Award Agreement.

 

(d)    Dividends and Distributions.    Dividends and other distributions paid on
or in respect of any Shares of Restricted Stock or Restricted Stock Units may be
paid directly to the Participant, or may be reinvested in additional Shares of
Restricted Stock or in additional Restricted Stock Units, as determined by the
Board in its sole discretion.

 

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8.    Performance Awards.

 

(a)    Grant.    The Board shall have sole and complete authority to determine
the Employees who shall receive a “Performance Award,” which shall consist of a
right that is (i) denominated in cash or Shares, (ii) valued, as determined by
the Board, in accordance with the achievement of such performance goals during
such performance periods as the Board shall establish, and (iii) payable at such
time and in such form as the Board shall determine.

 

(b)    Terms and Conditions.    Subject to the terms of the Plan and any
applicable Award Agreement, the Board shall determine the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any Performance Award and the amount and kind of any payment or
transfer to be made pursuant to any Performance Award.

 

(c)    Payment of Performance Awards.    Performance Awards may be paid in a
lump sum or in installments following the close of the performance period or, in
accordance with procedures established by the Board, on a deferred basis.

 

9.    Other Stock-Based Awards.

 

The Board shall have authority to grant to Participants an “Other Stock-Based
Award,” which shall consist of any right that is (i) not an Award described in
Sections 5 through 8 above and (ii) an Award of Shares or an Award denominated
or payable in, valued in whole or in part by reference to, or otherwise based on
or related to, Shares (including, without limitation, securities convertible
into Shares), as deemed by the Board to be consistent with the purposes of the
Plan. Subject to the terms of the Plan and any applicable Award Agreement, the
Board shall determine the terms and conditions of any such Other Stock-Based
Award.

 

10.    Eligible Directors.

 

Except as otherwise determined by the Board in its sole discretion, Eligible
Directors shall receive Awards in accordance with this Section. Except as
otherwise provided in this Section, Awards to Eligible Directors shall be
subject to the remaining provisions of the Plan.

 

(a)    Initial Grant.    Each Eligible Director shall receive, upon initial
election to the Board as an Eligible Director, a Non-Qualified Stock Option to
acquire 4,000 Shares.

 

(b)    Annual Grants.    Effective as of the date of each annual meeting of the
Company’s shareholders at which directors are elected or reelected to the Board,
each Eligible Director who has not received a grant pursuant to paragraph (a)
above since the immediately preceding annual meeting of the Company’s
shareholders shall receive an Option to acquire 2,500 Shares.

 

(c)    Terms of Initial Grants and Annual Grants.    The exercise price per
Share of each Option granted to an Eligible Director shall be the Fair Market
Value of a Share on the Grant Date. Options shall vest ratably and become
exercisable in one-third increments on each anniversary of the Grant Date.
Except as otherwise provided in this paragraph, Options shall expire 10 years
from the Grant Date. Unvested Options shall immediately vest and become
exercisable if an individual ceases to be a director on account of death,
disability or retirement at normal retirement age for directors, and shall
remain exercisable until the normal expiration of the Option. Upon termination
as a director for any other reason other than Cause, unvested Options shall be
forfeited and vested Options shall remain exercisable for three months following
the termination date. Upon termination as a Director for Cause, all Options
(whether or not vested) shall be forfeited as of the termination date.

 

(d)    Deferred Stock Unit Grants.    The Board may grant Deferred Stock Units
to Eligible Directors in lieu of all or any portion of the annual retainer or
meeting fees otherwise payable to the Eligible Directors. Each Deferred Stock
Unit shall entitle the Eligible Director to receive one Share or an amount of
cash equal to the Fair

 

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Market Value of a Share on the payment date, on terms and conditions established
by the Board. The Board may also permit Eligible Directors to elect to receive
Deferred Stock Units in lieu of all or any portion of the annual retainer or
meeting fees otherwise payable to the Eligible Director in cash, or to defer
receipt of Shares or cash to be paid pursuant to Deferred Stock Units, in
accordance with a deferred compensation policy to be established by the Company.

 

(e)    Other Awards.    The Board in its sole discretion may grant other types
of Awards to Eligible Directors in lieu of all or any portion of any Initial
Grant and/or Annual Grant of Non-Qualified Stock Option described in paragraphs
(a) and (b) above.

 

11.    Termination of Employment/Service.

 

The Board shall have the full power and authority to determine the terms and
conditions that shall apply to any Award upon a termination of
employment/service, including a termination by the Company without Cause, by a
Participant voluntarily, or by reason of death, Disability or Retirement.

 

12.    Change in Control.

 

In the event that the Company engages in a transaction constituting a Change in
Control, the Board shall have complete authority and discretion, but not the
obligation, to accelerate the vesting of outstanding Awards and the termination
of restrictions on Shares. As part of any agreement in connection with a Change
in Control, the Board may also negotiate terms providing protection for
Participants, including, the assumption of any Awards outstanding under the Plan
or the substitution of similar awards for those outstanding under the Plan.

 

13.    Amendment and Termination.

 

(a)    Amendments to the Plan.    The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without stockholder approval if it would constitute a repricing of
an Option or a stock-settled Stock Appreciation Right or if such approval is
necessary to comply with any tax or regulatory requirement for which or with
which the Board deems it necessary or desirable to comply.

 

(b)    Amendments to Awards.    The Board may waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate,
any Award theretofore granted, prospectively or retroactively; provided that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation, or
termination that would adversely affect the rights of any Participant or any
holder or beneficiary of any Award theretofore granted shall not to that extent
be effective without the consent of the affected Participant, holder, or
beneficiary.

 

(c)    Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events.    The Board is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 3(c) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Board
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan; provided that no such adjustment shall be authorized to the
extent that such authority would be inconsistent with the Plan’s meeting the
requirements of Section 162(m) unless otherwise determined by the Board.

 

(d)    Cancellation.    Any provision of this Plan or any Award Agreement to the
contrary notwithstanding, the Board may cause any Award granted hereunder to be
canceled in consideration of a cash payment or alternative Award made to the
holder of such canceled Award equal in value to the Fair Market Value of such
canceled Award except to the extent that such payment would violate the
requirements of Section 409A of the Code.

 

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14.    General Provisions.

 

(a)    Dividend Equivalents.    In the sole and complete discretion of the
Board, an Award may provide the Participant with dividends or dividend
equivalents, payable in cash, Shares, other securities or other property on a
current or deferred basis.

 

(b)    Nontransferability.    Except to the extent provided in an Award
Agreement, no Award shall be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant, except by will or the laws
of descent and distribution.

 

(c)    No Rights to Awards.    No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Eligible Directors, consultants,
Participants, or holders or beneficiaries of Awards. The terms and conditions of
Awards need not be the same with respect to each recipient.

 

(d)    Share Certificates.    All certificates for Shares or other securities of
the Company or any Affiliate delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Board may deem advisable under the Plan or the rules,
regulations, and other requirements of the SEC, any stock exchange upon which
such Shares or other securities are then listed, and any applicable Federal or
state laws, and the Board may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

 

(e)    Withholding.    A Participant may be required to pay to the Company or
any Affiliate and the Company or any Affiliate shall have the right and is
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding or other taxes in
respect of an Award, its exercise, or any payment or transfer under an Award or
under the Plan and to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for the payment of such taxes. The
Board may provide for additional cash payments to holders of Awards to defray or
offset any tax arising from the grant, vesting, exercise, or payments of any
Award.

 

(f)    Award Agreements.    Each Award hereunder shall be evidenced by an Award
Agreement that shall be delivered to the Participant and shall specify the terms
and conditions of the Award and any rules applicable thereto.

 

(g)    No Limit on Other Compensation Arrangements.    Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for the
grant of options, restricted stock, Shares and other types of Awards provided
for hereunder (subject to stockholder approval if such approval is required),
and such arrangements may be either generally applicable or applicable only in
specific cases.

 

(h)    No Right to Employment.    The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any Liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

 

(i)    No Rights as Stockholder.    Subject to the provisions of the applicable
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be distributed under the
Plan until he or she has become the holder of such Shares. Notwithstanding the
foregoing, in connection with each grant of Restricted Stock hereunder, the
applicable Award shall specify if and to what extent the Participant shall not
be entitled to the rights of a stockholder in respect of such Restricted Stock.

 

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(j)    Governing Law.    The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware without giving
effect to the conflict of law principles thereof.

 

(k)    Severability.    If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Board, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Board, materially altering
the intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.

 

(l)    Other Laws.    The Board may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b), and any payment tendered to the
Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant,
holder, or beneficiary. Without limiting the generality of the foregoing, no
Award granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the Board in
its sole discretion has determined that any such offer, if made, would be in
compliance with all applicable requirements of the U.S. federal securities laws
and any other laws to which such offer, if made, would be subject.

 

(m)    No Trust or Fund Created.    Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.

 

(n)    No Fractional Shares.    No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Board shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.

 

(o)    Headings.    Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

 

(p)    Parachute Payments.    The Board may provide in an Award Agreement that
no amounts shall be paid or considered paid to the extent that any such payments
would be nondeductible by the Company under Code Section 280G.

 

15.    Term of the Plan.

 

(a)    Effective Date.    The Plan shall be effective as of the Effective Date
provided it has been approved by the Company’s stockholders within twelve months
of such date.

 

(b)    Expiration Date.    No Incentive Stock Option shall be granted under the
Plan after April 7, 2009 and no deferred stock units or awards other than
incentive stock options may be granted after the tenth anniversary of the
Effective Date. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under any such
Award shall, continue after the authority for grant of new Awards hereunder has
been exhausted.

 

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16.    Definitions.

 

As used in the Plan, the following terms shall have the meanings set forth
below:

 

“Affiliate” shall mean (i) any entity that, directly or indirectly, is
controlled by the Company, (ii) any entity in which the Company has a
significant equity interest and (iii) an Affiliate of the Company as defined in
Rule 12b-2 promulgated under Section 12 of the Exchange Act, in either case as
determined by the Committee.

 

“Annual Service Period” means an annual period determined by the Board, which
annual period shall be January 1 through December 31 or such other annual period
as may be designated from time to time by the Board.

 

“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit, Performance Award or other Stock-Based Award.

 

“Award Agreement” shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which shall not become effective
until executed or acknowledged by a Participant.

 

“Board” shall mean the Board of Directors of the Company.

 

“Cause” shall mean, unless otherwise defined in the applicable Award Agreement,
a determination by the Committee that a Participant has: (1) committed an act of
embezzlement, fraud, dishonesty or breach of fiduciary duty to the Company; (2)
deliberately and repeatedly violated the rules of the Company or the valid
instructions of the Board or an authorized officer of the Company; (3) made any
unauthorized disclosure of any of the material secrets or confidential
information of the Company; or (4) engaged in any conduct that could reasonably
be expected to result in material loss, damage or injury to the Company.

 

“Change in Control” shall mean, unless otherwise defined in the applicable Award
Agreement, the earliest to occur of: (1) any one “person” as such term is used
in Sections 13(d) and 14(d) of the Exchange Act (other than (A) the Company, (B)
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, and (C) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of Shares), or more than one “person” acting as a “group”, is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act)
of Shares that, together with the Shares held by such “person” or “group”,
possess more than 50% of the total Fair Market Value or total voting power of
the Shares; (2) a majority of members of the Board is replaced during any 12
month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board prior to the date of the appointment or
election; or (3) the sale of all or substantially all of the Company’s assets.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

 

“Committee” shall mean a committee of the Board designated by the Board to
administer the Plan. To the extent deemed appropriate by the Board, the
Committee shall be composed of not less than two individuals who are “outside
directors” within the meaning of Code Section 162(m) and “non-employee
directors” within the meaning of Section 16 and “independent directors” within
the meaning of Section 303A of the New York Stock Exchange Listed Company
Manual.

 

“Company” shall mean CONSOL Energy Inc.

 

“Deferred Stock Unit” means a right, granted to Eligible Directors in accordance
with Section 10, to acquire a Share for no consideration or some other amount
determined by the Board.

 

“Disability” shall mean, unless otherwise defined in the applicable Award
Agreement, a Participant’s inability, because of physical or mental incapacity
or injury (that has continued for a period of at least 12

 

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consecutive calendar months), to perform for the Company or an Affiliate
substantially the same services as he or she performed prior to incurring such
incapacity or injury.

 

“Effective Date” shall mean May 3, 2005.

 

“Eligible Director” means a director who is not an employee of the Company or
any of its Affiliates.

 

“Employee” shall mean an employee or consultant of the Company or of any
Affiliate, including any individual who enters into an employment agreement with
the Company or an Affiliate which provides for commencement of employment within
three months of the date of the agreement.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” shall mean the fair market value of the property or other
item being valued, as determined by the Committee in its sole discretion. Fair
Market Value with respect to the Shares, as of any date, shall mean (i) if the
Shares are listed on a securities exchange or are traded over the NASDAQ
National Market System, the closing sales price of the Shares on such exchange
or over such system on such date, or in the absence of reported sales on such
date, the closing sales price on the immediately preceding date on which sales
were reported, (ii) if the Shares are not so listed or traded, the mean between
the bid and offered prices of the Shares as quoted by the National Association
of Securities Dealers through NASDAQ for such date or (iii) in the event there
is no public market for the Shares, the fair market value as determined by the
Committee in its sole discretion.

 

“Grant Date” means, with respect to an Award, date on which the Board makes the
determination to grant such Award, or such other date as is determined by the
Board. Within a reasonable time thereafter, the Company will execute and deliver
an Award Agreement to the Participant.

 

“Incentive Stock Option” shall mean a right to purchase Shares from the Company
that is granted under Section 5 of the Plan and that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.

 

“Non-Qualified Stock Option” shall mean a right to purchase Shares from the
Company that is granted under Section 5 of the Plan and that is not intended to
be an Incentive Stock Option.

 

“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option
and shall include a Restoration Option.

 

“Other Stock-Based Award” shall mean any right granted under Section 9 of the
Plan.

 

“Participant” shall mean any Employee or Eligible Director who receives an Award
under the Plan.

 

“Performance Award” shall mean any right granted under Section 8 of the Plan.

 

“Person” shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.

 

“Plan” shall mean this CONSOL Energy Inc. Equity Incentive Plan as amended and
restated herein.

 

“Restoration Option” shall mean an Option granted pursuant to Section 5(e) of
the Plan.

 

“Restricted Stock” shall mean any Share granted under Section 7 of the Plan.

 

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“Restricted Stock Unit” shall mean any unit granted under Section 7 of the Plan.

 

“Retirement” shall mean with respect to a Participant other than an Eligible
Director retirement of a Participant from the employ or service of the Company
or any of its Affiliates in accordance with the terms of the applicable Company
retirement plan or, if a Participant is not covered by any such plan, retirement
on or after such Participant’s 65th birthday, unless otherwise defined in the
applicable Award Agreement.

 

“SEC” shall mean the Securities and Exchange Commission or any successor thereto
and shall include the staff thereof.

 

“Section 16” shall mean Section 16 of the Exchange Act and the rules promulgated
thereunder and any successor provision thereto as in effect from time to time.

 

“Section 162(m)” shall mean Section 162(m) of the Internal Revenue Code of 1986
and the rules promulgated thereunder or any successor provision thereto as in
effect from time to time.

 

“Shares” shall mean shares of the common stock, $.01 par value, of the Company,
or such other securities of the Company as may be designated by the Committee
from time to time.

 

“Stock Appreciation Right” shall mean any right granted under Section 6 of the
Plan.

 

“Substitute Awards” shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
the Company or with which the Company combines.

 

IN WITNESS WHEREOF, CONSOL Energy Inc. has executed this Plan on May 3, 2005.
CONSOL Energy Inc.

 

By:   /s/    J. BRETT HARVEY        

Its:

  Chief Executive Officer

 

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