Exhibit 10.45

 

[LOGO OF PNCBANK]

 

REIMBURSEMENT AGREEMENT

 

THIS REIMBURSEMENT AGREEMENT (this “Agreement”) is made as of this 10th day of
October, 2003, between CONSOL ENERGY, INC., a Delaware corporation with an
address of Consol Plaza, 1800 Washington Road, Pittsburgh, Pennsylvania
15241-1421 (the “Borrower”) and PNC BANK, NATIONAL ASSOCIATION, a national
banking association (the “Bank”).

 

Recitals:

 

A. The Borrower has requested that the Bank extend a letter of credit facility
to the Borrower not to exceed $185,365,850 and the Bank is willing to extend
such a credit facility to the Borrower pursuant to the terms and conditions set
forth herein.

 

B. By entering into this Agreement, the parties intend that the Borrower may
request, and the Bank, subject to the terms and conditions hereof, shall issue,
Letters of Credit (as defined below) up to the Letter of Credit Limit to secure
performance obligations of the Borrower and its affiliates and for such other
purposes as the Borrower may specify, all on the terms and subject to the
conditions set forth in this Agreement.

 

Agreement:

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and the
foregoing recitals which are incorporated herein, and with the intent to be
legally bound hereby, the Borrower and the Bank hereby agree as follows:

 

1. Letter(s) of Credit.

 

(a) Issuance of Letter of Credit. Subject to the terms and conditions hereof
(including those set forth in Section 18 hereof), and relying upon the
representations and warranties herein set forth, the Bank agrees to issue one or
more letters of credit (each a “Letter of Credit” and collectively, the “Letters
of Credit”) for the account of the Borrower within 5 Business Days after the
Borrower’s request therefor. The Letters of Credit shall be in form and
substance satisfactory to the Bank and to Borrower and shall be issued on the
following terms and conditions:

 

(i) the amount of the Letters of Credit outstanding at any time shall not exceed
the Letter of Credit Limit;

 

(ii) the initial term of each Letter of Credit shall not extend beyond the
expiration of Three Hundred and Sixty-Five (365) days after the issuance of the
Letter of Credit, unless otherwise agreed to by the Bank; provided that the term
of the Letter of Credit may be automatically extended pursuant to and in
accordance with the terms of the Letter of Credit;

 

(iii) each Letter of Credit shall be issued in accordance with the Bank’s then
current practices relating to the issuance by the Bank of letters of credit
including, but not limited to, the payment by the Borrower of all applicable
fees in accordance with this Section 1. The Letter of Credit will be issued
after all the conditions precedent to the issuance thereof have been satisfied;

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(iv) the Letters of Credit listed on Schedule 1(a)(iv) that is attached hereto
and made a part hereof shall be deemed to be issued hereunder and for the
account of the Borrower; and

 

(v) no Letter of Credit shall be issued after the Termination Date.

 

(b) Letter of Credit Fees. The Borrowers shall pay to the Bank:

 

(i) customary fees with respect to each Letter of Credit.

 

(ii) a standby commission equal to the face amount of each Letter of Credit
issued and outstanding hereunder multiplied by fifty (50) basis points per
annum, which fee shall be calculated on a daily basis and shall be paid
quarterly in arrears.

 

(iii) a fronting fee of fifteen (15) basis points for each Letter of Credit
based on the face amount of each Letter of Credit.

 

(c) Default Rate. Following the occurrence of an Event of Default (defined
below), the Borrower’s Indebtedness to the Bank hereunder shall bear interest
from such date at a rate per annum which is equal to two percent (2%) in excess
of the Base Rate. For purposes of this Agreement, the “Borrower’s Indebtedness”
shall mean all of the Borrower’s unreimbursed obligations to the Bank under this
Agreement and under the Letters of Credit, including the payment of principal,
interest, costs, fees and expenses as set forth therein.

 

2. Payments.

 

(a) The Bank shall provide notice to the Borrower as to each draft or other
payment demand made under each Letter of Credit and the date such payment is to
be made by the Bank. The Borrower shall repay promptly to the Bank, in
immediately available funds in United States dollars, the Letter of Credit
Reimbursement Obligation. In no event, however, shall the Borrower pay to the
Bank the Letter of Credit Reimbursement Obligation later than 11 a.m.,
Prevailing Time, on the date such payment is to be made by the Bank.
Notwithstanding the foregoing, in the event the Borrower does not promptly repay
the Bank the Letter of Credit Reimbursement Obligation within the time frame
required hereby, the Borrower hereby authorizes and directs the Bank to draw the
same from the Cash Collateral Account (defined below) to satisfy the Borrower’s
obligations to repay the Bank the Letter of Credit Reimbursement Obligation. If
the Letter of Credit call for the delivery by the Bank of an item other than
money, the Borrower shall deliver or cause to be delivered such item to the Bank
at such time, in advance of the time the Bank is to deliver such item, as the
Bank may reasonably require. All sums payable to the Bank under this subsection
that are not promptly paid by the Borrower to the Bank shall bear interest in
accordance with Section 1(c) and shall be payable on the last Business Day of
each month, from the date the corresponding amount is drawn under each Letter of
Credit until such sums are paid in full (it being understood and agreed that any
sum paid after 3:00 p.m. on a Business Day shall bear interest as if it was paid
at 9:00 a.m. on the next following Business Day), at the rate set forth and in
accordance with Section 1(c) hereof.

 

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(b) The Borrower will pay to the Bank, upon receipt of the Bank’s invoice
therefor, (i) all amounts payable to the Bank pursuant to this Agreement and the
Letters of Credit; provided that in no event shall the Borrower pay hereunder
interest in excess of the maximum rate permitted by applicable law; (ii) the
Bank’s fees as agreed in Section 1; and (iii) all charges and expenses paid or
incurred by the Bank or any of the Bank’s correspondents in connection with this
Agreement or the Letters of Credit, including all reasonable legal fees and
expenses of external counsel to the Bank.

 

(c) All amounts payable hereunder by the Borrower shall be paid to the Bank in
U.S. Dollars at its address set forth below or at such other place as the Bank
may give notice from time to time, in immediately available funds, without set
off, defense, recoupment, deduction, cross-claim or counterclaim of any kind;
and free and clear of, and without deduction for, any present or future Taxes.
If the Bank or the Borrower pay any Taxes, whether or not correctly or legally
assessed, the amounts payable hereunder shall be increased so that, after the
payment of such Taxes, the Bank shall have received an amount equal to the sum
the Bank would have received had no such Taxes been paid. To effect any payment
due hereunder, the Bank may debit the Cash Collateral Account (defined in
Section 13 below).

 

3. Nature of Obligations.

 

(a) The Borrower’s obligations to the Bank under this Agreement are absolute,
unconditional and irrevocable, and shall be paid and performed in accordance
with the terms hereof irrespective of any act, omission, event or condition,
including, without limitation (i) the form of, any lack of power or authority of
any signer of, or the lack of validity, sufficiency, accuracy, enforceability or
genuineness of (or any defect in or forgery of any signature or endorsement on)
any draft, demand, document, certificate or instrument presented in connection
with the Letters of Credit, or any fraud or alleged fraud in connection with the
Letters of Credit or any obligation underlying the Letters of Credit, in each
case, even if the Bank or any of their correspondents have been notified
thereof, (ii) any claim of breach of warranty that might be made by the Borrower
or the Bank against any beneficiary of the Letters of Credit, or the existence
of any claim, set off, recoupment, counterclaim, cross-claim, defense, or other
right that the Borrower may at any time have against any beneficiary, any
successor beneficiary, any transferee or assignee of the proceeds of the Letters
of Credit, the Bank or any correspondent or agent of the Bank, or any other
person, however arising; (iii) any acts or omissions by, or the solvency of, any
beneficiary of the Letters of Credit, or any other person having a role in any
transaction or obligation relating to the Letters of Credit; (iv) any failure by
the Bank to issue the Letters of Credit in the form requested by the Borrower,
unless the Bank receives written notice from the Borrower of such failure within
two (2) Business Days after the Borrower shall have received (by facsimile
transmission or otherwise) a copy of such Letter of Credit and such error is
material; and (v) any action or omission (including failure or compulsion to
honor a presentation under the Letter of Credit) by the Bank or any of their
correspondents in connection with the Letters of Credit, draft or other demand
for payment, document, or any property relating to the Letters of Credit, and
resulting from any censorship, law, regulation, order, control, restriction, or
the like, rightfully or wrongly exercised by any Governmental Authority, or from
any other cause beyond the reasonable control of the Bank or any of their
correspondents, or for any loss or damage to the Borrower or to anyone else, or
to any property of the Borrower or anyone else, resulting from any such action
or omission.

 

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(b) The Bank is authorized to honor any presentation under the Letters of Credit
without regard to, and without any duty on the Bank’s part to inquire into, any
transaction or obligation underlying the Letters of Credit, or any disputes or
controversies between the Borrower and any beneficiary of the Letters of Credit,
or any other person, notwithstanding that the Bank may have assisted the
Borrower in the preparation of the wording of the Letters of Credit or documents
required to be presented thereunder or that the Bank may be aware of any
underlying transaction or obligation or be familiar with any of the parties
thereto.

 

(c) The Borrower agrees that any action or omission by the Bank or any of the
Bank’s correspondents in connection with the Letters of Credit or presentation
thereunder shall be binding on the Borrower and shall not result in any
liability to the Bank or any of the Bank’s correspondents in the absence of the
gross negligence or willful misconduct of the Bank or the Bank’s correspondents,
as the case may be. Without limiting the generality of the foregoing, the Bank
and each of the Bank’s correspondents (i) may rely on any oral or other
communication believed in good faith by the Bank or such correspondent to have
been authorized or given by or on behalf of the Borrower; (ii) may honor any
presentation if the documents presented appear on their face substantially to
comply with the terms and conditions of the relevant Letter of Credit; (iii)
shall not be liable to the Borrower for any consequential, punitive or special
damages, or for any damages resulting from any change in the value of any
property relating to the Letters of Credit; (iv) may honor a previously
dishonored presentation under the Letters of Credit, whether such dishonor was
pursuant to a court order, to settle or compromise any claim of wrongful
dishonor, or otherwise, and shall be entitled to reimbursement to the same
extent as if such presentation had initially been honored, together with any
interest paid by the Bank; (v) may honor any drawing that is payable upon
presentation of a statement advising negotiation or payment, upon receipt of
such statement (even if such statement indicates that a draft or other document
is being separately delivered), and shall not be liable for any failure of any
such draft or other document to arrive, or to conform in any way with the
relevant Letter of Credit; (vi) may pay any paying or negotiating bank claiming
that it rightfully honored under the laws or practices of the place where such
bank is located; and (vii) may settle or adjust any claim or demand made on the
Bank in any way related to an Order; and honor any drawing in connection with
the Letters of Credit that is the subject of such Order, notwithstanding that
any drafts or other documents presented in connection with such Letter of Credit
fail to conform in any way with such Letter of Credit.

 

(d) If the Borrower or any other person seek to delay or enjoin the honor by the
Bank of a presentation under the Letters of Credit, the Bank shall have no
obligation to delay or refuse to honor the presentation until validly so ordered
by a court of competent jurisdiction.

 

4. Set Off. The Borrower grants the Bank a right of set off against, to the
fullest extent permitted under applicable law, all of the Borrower’s right,
title, and interest in and to the Cash Collateral Account (defined below) and to
take such action as the Bank may deem necessary to register in the name of the
Bank or the Bank’s nominee, or otherwise to transfer, all or any part of the
collateral. The Bank’s right of set off may be exercised without demand on or
notice to the Borrower. The Bank shall be deemed to have exercised the Bank’s
right of set off immediately upon the occurrence of an Event of Default (as
defined below), although the Bank may enter such set off on its books and
records at a later time. The Borrower waives mutuality and maturity of debt in
connection with such right of set off.

 

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5. Representations, Warranties, Covenants. The Borrower represents, warrants,
and covenants that (a) the Borrower is duly organized, validly existing and in
good standing under the laws of the jurisdiction of the Borrower’s organization
and duly qualified to do business in those jurisdictions in which the Borrower’s
ownership of property or the nature of the Borrower’s business activities makes
such qualification necessary; (b) the Borrower has the requisite power and
authority to execute and deliver this Agreement and to perform the Borrower’s
obligations hereunder; and all such action has been duly authorized by all
necessary proceedings on the Borrower’s part, and neither now nor hereafter
shall contravene or result in a breach of any organizational document of the
Borrower, any agreement, document, or instrument binding on the Borrower or the
Borrower’s property, or any law, treaty, regulation, or order of any
Governmental Authority, or require any notice, filing, or other action to or by
any Governmental Authority; (c) the most recent audited financial statements
dated as of the 31st day of December, 2002 and received from the Borrower by the
Bank prior to the date hereof fairly and accurately present, as of the date
thereof, the Borrower’s financial condition in accordance with generally
accepted accounting principles, and there has been and shall occur no material
adverse change in the financial condition or business operations of the Borrower
and its subsidiaries, taken as a whole, since the 31st day of December, 2002,
which could reasonably be expected to materially and adversely affect the
ability of the Borrower to perform its obligations under this Agreement; (d)
from time to time, the Borrower shall execute and deliver such further
instruments and agreements and take and permit such further actions as may be
reasonably necessary to carry out the provisions and purposes of this Agreement,
and the Borrower shall provide such evidence of compliance with the terms hereof
and such financial statements and other information concerning the Borrower’s
financial condition and/or business operations as the Bank may reasonably
request; (e) the Borrower and each transaction and obligation underlying the
Letters of Credit are and shall remain in compliance in all material respects
with all laws, treaties, rules, and regulations of any Governmental Authority,
including, without limitation, foreign exchange control, United States foreign
assets control, and currency reporting laws and regulations, now or hereafter
applicable; (f) this Agreement has been duly executed and delivered by the
Borrower and this Agreement is the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms; (g)
there are no pending or, to the knowledge of the Borrower, overtly threatened
actions, investigations or proceedings before any court, governmental authority
or arbitrator affecting the Borrower or any of its subsidiaries (A) as to which
there is a reasonable probability of an adverse determination, other than those
that, in the aggregate, would not have a material adverse effect on the
financial condition or business operations of the Borrower and its subsidiaries,
taken as a whole, or (B) which purport to affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby; (h) the Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Letter of Credit will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock; and (i) the Borrower is not an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.

 

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6. Events of Default. The occurrence of any of the following is an “Event of
Default” hereunder: (a) the Borrower’s failure to pay when due and within the
applicable cure period any obligation under this Agreement, the Letters of
Credit, or the Pledge Agreement (defined in Section 13 below); (b) the
Borrower’s failure to perform or observe when due and within the applicable cure
period any other term or covenant of this Agreement, the Letters of Credit, or
the Pledge Agreement, or any representation or warranty contained in this
Agreement, the Letters of Credit, or the Pledge Agreement or in any document
given now or hereafter by the Borrower in connection herewith is materially
false, erroneous, or misleading; or (c) the Borrower’s default on any other
indebtedness that individually or in the aggregate exceeds $25,000,000 and the
continuation thereof after the applicable cure period that causes the
acceleration thereof.

 

7. Remedies. Upon the occurrence of any Event of Default (a) the Bank may
exercise from time to time any of the rights and remedies available to the Bank
under this Agreement, under any other documents now or in the future evidencing
or securing obligations of the Borrower to the Bank, or under applicable law,
and all such remedies shall be cumulative and not exclusive; and (b) the
Borrower shall promptly deliver to the Bank in immediately available funds, as
collateral for any and all obligations of the Borrower to the Bank under this
Agreement and the Letters of Credit, an amount (taking into account the market
value of the Cash Collateral Account (defined below) then on deposit pursuant to
the Pledge Agreement (defined below)) equal to 102.5% of the maximum aggregate
amount then or at any time thereafter available to be drawn under the
outstanding Letters of Credit, and the Borrower hereby pledges to the Bank and
grants to the Bank a security interest in all such funds as security for such
obligations, acknowledges that the Bank shall at all times have control of such
funds and shall be authorized to give entitlement orders (as defined in the UCC)
with respect to such funds, without further consent of the Borrower or any other
person, and agree promptly to do all further things that the Bank may deem
necessary in order to grant and perfect the Bank’s security interest in such
funds, and (c) the Borrower agrees from time to time to deliver to the Bank, on
demand, such further agreements and instruments, as the Bank may require to
secure the Borrower’s obligations hereunder. The Borrower waives presentment,
protest, dishonor, notice of dishonor, demand, notice of protest, notice of
non-payment, and notice of acceptance of this Agreement, and any other notice or
demand of any kind from the Bank. Notwithstanding the foregoing or anything
herein to the contrary, upon the occurrence and continuance of any Event of
Default, no Letters of Credit may be issued hereunder.

 

8. Subrogation. The Bank, at its option, shall be subrogated to the Borrower’s
rights against any person who may be liable to the Borrower on any transaction
or obligation underlying the Letters of Credit, to the rights of any holder in
due course or person with similar status against the Borrower, and to the rights
of any beneficiary or any successor or assignee of any beneficiary.

 

9. Indemnification. The Borrower shall indemnify and hold the Bank and the
Bank’s affiliates and agents, and each of their respective officers, directors,
shareholders and employees (each, an “Indemnified Party”) harmless from and
against any and all claims, liabilities, losses, damages, Taxes, penalties,
interest, judgments, costs and expenses (including reasonable legal fees and
costs of external counsel to the Bank), which may be incurred by or awarded
against any Indemnified Party, and which arise out of or in connection with (a)
the Letters of Credit, this

 

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Agreement, or the preparation for a defense of any investigation, litigation, or
proceeding arising out of or in connection herewith or therewith (and
irrespective of who may be the prevailing party); (b) any payment or action
taken in connection with the Letters of Credit, including, without limitation,
any action or proceeding seeking to restrain any drawing under the Letters of
Credit or to compel or restrain any payment or any other action under the
Letters of Credit or this Agreement (and irrespective of who may be the
prevailing party); (c) the enforcement of this Agreement or the collection or
sale of any property or collateral; and (d) any act or omission of any
Governmental Authority or other cause beyond the Bank’s reasonable control;
except, in each case, to the extent such claim, liability, loss, damage, Tax,
penalty, interest, judgment, cost or expense is found by a final judgment of a
court of competent jurisdiction to have resulted from the Bank’s gross
negligence or willful misconduct.

 

10. Assignments by the Bank and Participations.

 

(a) Assignments. Subject to the remaining provisions of this Section, the Bank
may at any time, in the ordinary course of its commercial banking business, in
accordance with applicable Law, sell to one or more Eligible Banks (which
Eligible Banks may be affiliates of the Bank), a portion (but less than all) of
its rights and obligations under this Agreement then held by it; provided that
(i) the aggregate amount being assigned pursuant to each such assignment shall
in no event be less than $5,000,000 or an integral multiple of $1,000,000 in
excess thereof unless such assignment is being made to an affiliate of the Bank,
and (ii) if such Eligible Bank is not, prior to the date of such assignment, a
Credit Agreement Lender, such assignment shall be subject to the prior written
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed), unless an Event of Default shall have occurred and then be continuing,
in which case the Borrower’s consent shall not be required. From and after the
effective date of such transfer, the purchasing bank shall be a party hereto as
the Bank and, to the extent of its interest herein, shall have the rights and
obligations of the Bank hereunder with its commitment as set forth therein. Such
transfer shall be deemed to amend this Agreement to the extent, and only to the
extent, necessary to reflect the adjustment of commitments arising from the
purchase by such purchasing bank of a portion of the rights and obligations of
the Bank under this Agreement. On or prior to the effective date of such
transfer, if requested by the purchasing bank, the Borrower shall execute and
deliver to such purchasing bank a new reimbursement agreement and/or note to the
order of such purchasing bank in an amount equal to the commitment assumed by it
and purchased by it, and a new reimbursement agreement and/or note to the order
of the Bank in an amount equal to the commitment retained by it hereunder;
provided, however, that in the event of any conflict between the terms of any
such new reimbursement agreement(s) and/or note(s), the terms of this Agreement
shall govern.

 

(b) Assignment Register. The Bank shall maintain a copy of each assignment and a
register (the “Register”) for the recordation of the names and addresses of the
banks and the amount of the Letter of Credit Reimbursement Obligation owing to
each bank from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower and the Bank may treat each
Person whose name is recorded in the Register as the owner of the Letter of
Credit Reimbursement Obligation recorded therein for all purposes of this
Agreement.

 

(c) Participations. Subject to the remaining provisions of this Section, the
Bank may, in the ordinary course of its commercial banking business and in
accordance with applicable

 

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Law, at any time sell to one or more participants (which participants may be
affiliates of the Bank) participations in the Letters of Credit and the Letter
of Credit Reimbursement Obligation owing to the Bank, any commitment of the Bank
or any other interest of the Bank hereunder. In the event of any sale by the
Bank of a participation to a participant, the Bank’s obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, the
Bank shall remain solely responsible for the performance thereof, the Bank shall
remain the holder of any instrument made payable to it for all purposes under
this Agreement (including voting rights hereunder). The Borrower agrees that if
amounts outstanding under this Agreement, the Letters of Credit, or the Pledge
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, such participant
shall be deemed to have, to the extent permitted by applicable Law, a right of
setoff (as described in Section 4 of this Agreement) in respect of its
participation in amounts owing under this Agreement, the Letters of Credit, or
the Pledge Agreement to the same extent as if the amount of its participation
were owing directly to it as the Bank under this Agreement, the Letters of
Credit, or the Pledge Agreement; provided, however, that such right of setoff
shall be subject to the obligation of such participant to share with the Bank as
and to the extent provided in the applicable participation agreement.

 

11. Miscellaneous. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder shall be in accordance with the
Credit Agreement or shall be in writing, will be effective upon receipt, and
shall be delivered by registered mail, return receipt requested, by facsimile
transmission with confirmation of delivery, or by nationally recognized
overnight courier service, to the intended recipient at its address set forth in
this Agreement, or at such other address of which such party shall have given
notice to the other in accordance herewith. No delay or omission of the Bank to
exercise any right or power arising hereunder shall impair any such right or
power or be considered to be a waiver of any such right or power. No
modification, amendment or waiver of any provision of this Agreement, or consent
to any departure therefrom, will be effective unless made in a writing signed by
the Borrower and the Bank, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. If any
provision of this Agreement is found to be invalid by a court, all the other
provisions of the Agreement will remain in full force and effect. This Agreement
will be binding upon and inure to the benefit of the Borrower and the Bank and
their respective heirs, executors, administrators, successors and assigns;
provided, however, that the Borrower may not assign this Agreement in whole or
in part without the Bank’s prior written consent and the Bank may at any time
assign this Agreement in whole or in part with the Borrower’s prior written
consent, which shall not be unreasonably withheld. The Borrower hereby authorize
the Bank, from time to time, without notice to the Borrower, provide any
information pertaining to the financial condition, business operations or
creditworthiness of the Borrower to or at the direction of any Governmental
Authority, to any of the Bank’s correspondents, and the Bank’s affiliates, and
to any of their directors, officers, employees, auditors and professional
advisors, to any person which in the ordinary course of its business makes
credit reference inquiries, to any person which may succeed to or participate in
all or part of the Bank’s interest hereunder, and as may be necessary or
advisable for the preservation of the Bank’s rights hereunder. This is a
continuing Agreement and shall remain in full force and effect until no
obligations of the Borrower and no Letter of Credit remains outstanding
hereunder; provided, however, that termination of this Agreement shall not
release the Borrower from any payment or performance that is subsequently
rescinded or recouped, and the obligation to make any such payment or
performance shall continue until paid or performed as if no such payment or
performance ever occurred. Provisions concerning payment, indemnification,
Taxes, immunity, and jurisdiction shall survive the termination of this
Agreement.

 

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12. Definitions and Interpretation. For purposes of this Agreement, the terms
used herein shall have the meanings and interpretations set forth on Schedule
12, which is attached hereto and made a part hereof.

 

13. Collateral Security.

 

(a) As collateral security for the Borrower’s obligations to the Bank under this
Agreement and the Letters of Credit (the “Secured Obligations”), the Borrower
shall, on or prior to the date of this Agreement, deposit or cause to be
deposited with the Bank or an affiliate thereof as directed by the Bank, ONE
HUNDRED FIFTY-TWO MILLION ONE HUNDRED NINETY-THREE THOUSAND FIVE HUNDRED
SEVENTY-ONE and 00/100 Dollars ($152,193,571) in cash, which amount shall be
held by the Bank or such affiliate in an interest bearing cash collateral
account(s) established with the Bank, which shall include, but shall not be
limited to, Blackrock Account No. 25497 titled “PNC Bank, National Association,
Pledgee f/b/o Consol Energy, Inc.” (the “Cash Collateral Account”). This initial
funding of the Cash Collateral Account shall serve as the collateral security
for the Letters of Credit that are deemed to be issued hereunder and are set
forth on Schedule 1(a)(iv). Thereafter, prior to the requested issuance of any
Letter of Credit by the Bank hereunder or prior to the requested transfer of a
Credit Agreement LOC to this Agreement (which Credit Agreement LOC shall be
deemed to be issued hereunder), Borrower shall be required, as a condition
precedent to the issuance of such Letter of Credit, to deposit an amount equal
to 102.5% of the face amount of such requested Letter of Credit into the Cash
Collateral Account. The Cash Collateral Account shall always equal or exceed
102.5% of the aggregate amount of all of the Letters of Credit issued hereunder.
In the event and to the extent of any insufficiency, the Borrower shall, upon
the request of the Bank, deposit an additional amount into the Cash Collateral
Account so that the balance in the Cash Collateral Account shall equal 102.5% of
the aggregate amount of all of the Letters of Credit. The Bank shall have sole
dominion and control over all funds in the Cash Collateral Account and such
funds may be withdrawn only by the Bank. The Borrower shall have no control over
or withdrawal rights in respect of the Cash Collateral Account. Except as
otherwise provided herein, the Bank may, in its discretion, release to the
Borrower from time to time all or any part of the funds deposited in the Cash
Collateral Account, but the Bank shall have the right at any time to apply all
or any part of the funds on deposit in the Cash Collateral Account to the
payment of such portion of the Secured Obligations as may then be due and
payable, whether on account of principal or interest or otherwise as the Bank in
its discretion may elect, until all of the Borrower’s Secured Obligations are
paid in full. Notwithstanding the foregoing, any time that the amount in the
Cash Collateral Account exceeds 102.5% of the the aggregate amount of all of the
Letters of Credit issued and outstanding, the Borrower may make written request
to the Bank and the Bank shall release all or any portion, as requested by
Borrower, of the amount in the Cash Collateral Account that is in excess of
102.5% of the the aggregate amount of all of the Letters of Credit issued and
outstanding; provided, however, that if any Letters of Credit are subsequently
requested the Borrower understands that, as a condition precedent to the
issuance of such Letter of Credit, the Borrower shall be required to deposit an
amount equal to 102.5% of the face amount of such requested Letter of Credit
into the Cash Collateral Account in accordance with the foregoing provisions.
The Borrower hereby grants to the Bank a lien and security interest in and to
the Cash Collateral Account, as more particularly set forth in that

 

9

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certain Pledge Agreement dated as of even date herewith between the Borrower and
the Bank, as the same may be amended, modified, supplemented or replaced from
time to time (the “Pledge Agreement”) granting the Bank a first priority
perfected lien on the Borrower’s interest in and to the Cash Collateral Account
and all UCC-1 financing statements executed and filed with respect thereto which
security interest shall be prior and superior to all liens to the full extent
permitted by law.

 

(b) In the event any additional shares are issued to the Borrower as a stock
dividend or in lieu of interest on any of the Cash Collateral Account, as a
result of any split of any of the investment property or security entitlements
set forth in the Cash Collateral Account, by reclassification or otherwise, any
certificates evidencing any such additional shares will be immediately delivered
to the Bank and such shares will be subject to the Pledge Agreement and a part
of the Cash Collateral Account to the same extent as the original investment
property or security entitlements set forth in the Cash Collateral Account. At
any time after the occurrence of an Event of Default, the Bank shall be entitled
to retain in the Cash Collateral Account all cash or stock dividends, interest
and premiums declared or paid in connection with the Cash Collateral Account.

 

14. Waiver of Immunity. The Borrower acknowledges that this Agreement is entered
into, and each Letter of Credit will be issued, for commercial purposes and, if
the Borrower now or hereafter acquire any immunity (sovereign or otherwise) from
the jurisdiction of any court or from any legal process with respect to itself
or any of its property, the Borrower hereby irrevocably waives such immunity.

 

15. Jurisdiction. The Borrower hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court in the judicial district or the state
in which the Bank’s office set forth below is located, provided that nothing
contained in this Agreement will prevent the Bank from bringing any action,
enforcing any award or judgment, or exercising any right against the Borrower
individually, against any security, or against any property of the Borrower
within any other jurisdiction. The Borrower agrees that the venue provided above
is the most convenient forum for the Bank and the Borrower. The Borrower waives
any objection to venue and any objection based on a more convenient forum in any
action under this Agreement.

 

16. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK IRREVOCABLY WAIVE ALL RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS AGREEMENT, ANY LETTER OF CREDIT, ANY DOCUMENTS EXECUTED
IN CONNECTION WITH THIS AGREEMENT OR ANY LETTER OF CREDIT, OR ANY OBLIGATION OR
TRANSACTION UNDERLYING ANY OF THE FOREGOING. THE BORROWER AND THE BANK
ACKNOWLEDGE THAT THIS WAIVER IS KNOWING AND VOLUNTARY.

 

17. Governing Law. This Agreement and each Credit shall be interpreted,
construed, and enforced according to (a) the laws of the Commonwealth of
Pennsylvania, including, without limitation, the UCC; and (b) the UCP, which is
incorporated herein by reference and which shall control (to the extent not
prohibited by the law referred to in (a)) in the event of any inconsistent
provisions of such law. In the event that a body of law other than that set
forth above is applicable to the Letters of Credit, the Borrower shall be
obligated to pay and reimburse the Bank for any payment made under such Credit
if such payment is, in the Bank’s judgment, justified under either the law
governing this Agreement or the law governing such Credit.

 

10

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18. Conditions Precedent. The obligations of the Bank hereunder are subject to
the following conditions precedent:

 

(a) The obligation of the Bank to enter into this Agreement and to issue any
Letters of Credit hereunder is subject to the satisfaction of each of the
following conditions precedent (which must be satisfied prior to the date of
this Agreement and immediately prior to the issuance of each Letter of Credit):

 

(i) No Default. The Borrower shall have performed and complied in all material
respects with all agreements, covenants and conditions herein required to be
performed or complied with by the Borrower, and no condition or event shall
exist which constitutes or, which after the giving of notice or passage of time
or both, would constitute, an Event of Default.

 

(ii) Representations Correct. The representations and warranties contained
herein and otherwise made in writing by or on behalf of the Borrower in
connection with the transactions contemplated hereby shall be true and correct
in all material respects when made and at the time of the issuance of each
Letter of Credit, except events contemplated by or permitted pursuant to this
Agreement.

 

(iii) No Material Adverse Change. Prior to the date of this Agreement and prior
to the issuance of any Letter of Credit, there shall have been no Material
Adverse Change in the financial condition of the Borrower since the 31st day of
December, 2002.

 

(iv) Each request by the Borrower for the issuance of any Letter of Credit shall
constitute a representation and warranty by the Borrower that the conditions set
forth in this Section have been satisfied as of the date of such request.
Failure of the Bank to receive notice from the Borrower to the contrary before
such Letter of Credit is issued shall constitute a further representation and
warranty by the Borrower that the conditions referred to in this Section have
been satisfied as of the date such Letter of Credit is issued.

 

(b) The Borrower shall have caused to be delivered to the Bank prior to, or
simultaneously with, the date of execution and delivery of this Agreement, the
following:

 

(i) A duly executed Pledge Agreement, in form and substance satisfactory to the
Bank;

 

(ii) A duly executed Control Letter for Blackrock Funds, in form and substance
satisfactory to the Bank;

 

(iii) A duly executed Form U-1, in form and substance satisfactory to the Bank;

 

(iv) Duly executed Loan Documents (that are not set forth above), in form and
substance acceptable to the Bank;

 

11

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(v) With respect to the Borrower, a certificate (dated as of the date hereof) of
the Borrower’s corporate secretary or assistant secretary (i) as to the
incumbency and signatures of the officers of the Borrower signing the Loan
Documents, (ii) providing a true, correct and complete copy of the Borrower’s
articles of incorporation and bylaws and (iii) providing a true, correct and
complete copy of resolutions of the Borrower’s board of directors authorizing
the execution, delivery and performance of the Loan Documents to be delivered
pursuant hereto;

 

(vi) With respect to the Borrower, a certificate, as of the most recent date
practicable, of the Secretary of State of Delaware as to the good standing of
the Borrower;

 

(vii) Such UCC-1’s as the Bank may request in order to perfect the security
interests granted by the Borrowers to the Bank pursuant to the terms hereof;

 

(viii) A written opinion of counsel to the Borrower, dated as of the date hereof
and addressed to the Bank, in form and substance satisfactory to the Bank and
the Bank’s counsel;

 

(ix) Payment of such fees as are due on the closing date of this Agreement, as
well as the payment of all other fees and charges required herein, including
legal fees of the Bank, closing costs and similar matters pertinent hereto; and

 

(x) All legal details and proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory to the Bank and the Bank’s
counsel and the Bank shall have received all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions, in form and substance satisfactory to the Bank, as the Bank
may from time to time request.

 

19. POWER TO CONFESS JUDGMENT. THE BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD, AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT HEREUNDER, TO
APPEAR FOR THE BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT,
OR A SERIES OF JUDGMENTS, AGAINST THE BORROWER IN FAVOR OF THE BANK OR ANY
HOLDER HEREOF FOR THE ENTIRE PRINCIPAL BALANCE OUTSTANDING UNDER THIS AGREEMENT
AND THE LETTERS OF CREDIT, ALL ACCRUED INTEREST AND ALL OTHER AMOUNTS DUE
HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY’S COMMISSION OF THE
GREATER OF 10% OF SUCH PRINCIPAL AND INTEREST OR $1,000 ADDED AS A REASONABLE
ATTORNEY’S FEE, AND FOR DOING SO THIS AGREEMENT OR A COPY VERIFIED BY AFFIDAVIT
SHALL BE A SUFFICIENT WARRANT. THE BORROWER HEREBY FOREVER WAIVES AND RELEASES
ALL ERRORS IN SUCH PROCEEDINGS AND ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY
AND ALL APPRAISEMENT, STAY OR EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR
HEREAFTER ENACTED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT
RATE.

 

NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF
JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER,

 

12

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WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE INVALID,
VOIDABLE, OR VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE
EXERCISED FROM TIME TO TIME AS OFTEN AS THE BANK SHALL ELECT UNTIL SUCH TIME AS
THE BANK SHALL HAVE RECEIVED PAYMENTS IN FULL OF THE DEBT, INTEREST AND COSTS.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

13

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IN WITNESS WHEREOF, the parties hereto by their authorized agents with intent to
be legally bound hereby have executed this Agreement on the date first above
written.

 

BORROWER:

CONSOL ENERGY, INC.

By:

 

/s/    John M. Reilly        

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Name:

 

John M. Reilly

Title:

 

Treasurer

   

Consol Plaza

   

1800 Washington Road

   

Pittsburgh, Pennsylvania 15241-1421

   

Tax ID No.: 51-0337383

BANK:

PNC BANK, NATIONAL ASSOCIATION

By:

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Name:

 

 

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Title:

 

 

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One PNC Plaza

   

3rd Floor

   

249 Fifth Avenue

   

Pittsburgh, PA 15222

   

Fax: 412-762-             

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SCHEDULE 12

 

Definitions

 

In addition to other words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following respective meanings, unless
otherwise defined or the context otherwise clearly requires:

 

“Authority” shall mean any federal, state, local or foreign government or
political subdivision thereof, or any agency, regulatory authority, bureau,
central bank, commission, department or instrumentality of any of the foregoing,
or any court, tribunal, grand jury or arbitrator.

 

“Base Rate” shall mean ½% plus the higher of the Bank’s prime rate or the
Federal Funds rate.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
Bank in Pittsburgh, Pennsylvania, or any other city of which the Bank may give
the Borrower notice from time to time, are authorized or required by law to
close.

 

“Credit Agreement” means that certain Three year Credit Agreement among the
Credit Agreement Lenders and the Borrower dated as of the 16th day of September,
2002, as the same may be amended, modified, supplemented, and/or replaced from
time to time..

 

“Credit Agreement Lenders” means Citibank, N.A., as the administrative agent;
the Bank, as the initial issuing bank thereunder; and the other banks parties to
the Credit Agreement from time to time.

 

“Credit Agreement LOC” means a letter of credit originally issued under and
pursuant to the Credit Agreement.

 

“Dollars”, “dollars” or the symbol “$” shall mean lawful money of the United
States of America.

 

“Eligible Bank” means (a) any Credit Agreement Lender which is a commercial
bank, or (b) any other commercial bank having total assets in excess of
$5,000,000,000.

 

“Governmental Authority” means any de facto or de jure domestic or foreign
government, court, tribunal, agency, or other purported authority.

 

“Indebtedness” shall mean all of the obligations of Borrower to the Bank
pursuant to this Agreement.

 

“Law” shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
Authority.

 

“Letter of Credit Limit” at any time shall mean an amount equal to $185,365,850;
provided, however, that the Letter of Credit Limit shall be permanently and
automatically reduced by the face amount of any Letter of Credit issued (or
deemed to be issued) hereunder that is permanently retired.

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“Letter of Credit Reimbursement Obligation” with respect to the Letters of
Credit means the obligation of the Borrower to reimburse the Bank for Letter of
Credit Unreimbursed Draws, together with interest thereon.

 

“Letter of Credit Undrawn Availability” with respect to the Letters of Credit at
any time shall mean the maximum amount available to be drawn under such Letters
of Credit at such time or thereafter, regardless of the existence or
satisfaction of any conditions or limitations on drawing.

 

“Letter of Credit Unreimbursed Draws” with respect to the Letters of Credit at
any time shall mean the aggregate amount at such time of all payments made by
the Bank under the Letters of Credit, to the extent not repaid by the Borrower.

 

“Lien” shall mean any lien (statutory or otherwise), mortgage, pledge,
hypothecation, security interest, tax lien, encumbrance, conditional sale or
title retention arrangement, capitalized lease or any other interest in property
designed to secure the repayment of Indebtedness, whether arising by agreement
or under any Law or otherwise.

 

“Loan Documents” shall mean all or any of the agreements of the Borrower and the
Bank relating to this Agreement and any and all other agreements, instruments or
documents executed or delivered in connection herewith or therewith, and any and
all renewals, modifications, extensions, replacements or amendments hereto and
thereto.

 

“Material Adverse Change” shall mean any set of circumstances or events which
(a) has any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Documents, (b) is material
and adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Borrower and its subsidiaries, taken as a whole,
(c) impairs materially the ability of the Borrower to duly and punctually pay or
perform its obligations under the Loan Documents, or (d) impairs materially the
ability of the Bank, to the extent permitted, to enforce its legal remedies
pursuant to this Agreement or any other Loan Documents.

 

“Order” shall mean any order, writ, judgment, injunction or decree issued by any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, agency, bureau, body or entity of the United States of America or of
any state, county, municipality or other political subdivision located therein.

 

“Person” shall mean any individual, corporation, joint venture, general or
limited partnership, limited liability company, trust, association,
unincorporated organization or other business entity.

 

“Prevailing Time” means the prevailing time in Pittsburgh, Pennsylvania (or any
other city in the United States of which the Bank may have given the Borrower
notice) on the date in question.

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“Taxes” means all taxes, fees, duties, levies, imposts, deductions, charges or
withholdings of any kind (other than taxes on the Bank’s net income and
franchise taxes imposed on the Bank).

 

“Termination Date” means the 9th day of October, 2004 on which the Borrower’s
right to request a Letter of Credit terminates.

 

“UCP” means the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, and any
subsequent official revision thereof.

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SCHEDULE 12

 

Interpretation

 

Any reference herein to this Agreement, the Letter of Credit, or any other
instrument, agreement or document related hereto or thereto shall be deemed to
refer to an amendments, modifications, extensions and renewals hereof and
thereof. Except to the extent the context clearly otherwise requires, terms not
defined herein shall have the respective meanings ascribed to them by the UCP
or, if not defined therein, then by relevant provisions of the Uniform
Commercial Code (the “UCC”) of Pennsylvania or such other jurisdiction of which
the Bank may give the Borrower notice, with the definitions of Article 5 of the
UCC controlling over any conflicting definitions in other UCC Articles.
Determinations made by the Bank pursuant to the terms hereof shall be conclusive
absent manifest error.