Exhibit 10.1

EXECUTION COPY

CONSOL ENERGY INC.

EMPLOYEE NONQUALIFIED PERFORMANCE STOCK OPTION AGREEMENT

1. Nonqualified Stock Option. The Option granted is intended to be a
Non-Qualified Stock Option and not an Incentive Stock Option under Section 422
of the Internal Revenue Code, as amended (the “Code”) (capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in the Plan or
the cover sheet to which this Agreement is attached).

2. Vesting.

(a) Annual Vesting. Subject to Section 4 hereof and the achievement of certain
performance goals (the “Annual Performance Goals”) in each of the fiscal years
ending December 31, 2010, 2011, 2012 and 2013, respectively (each a “Performance
Period”), as set forth on Schedule A attached hereto, up to twenty-five percent
(25%) of the Option shall vest and become exercisable as set forth on Schedule A
in the first calendar year immediately following the end of the applicable
Performance Period on the date the Compensation Committee (the “Compensation
Committee”) of the Board of Directors certifies that the applicable Annual
Performance Goals with respect to such Performance Period as set forth on
Schedule A and other material terms of this Agreement have been achieved. For
purposes of this Agreement, the term “Vested Portion” of the Option means that
portion which: (i) shall have become exercisable pursuant to the terms of this
Agreement; (ii) shall not have been previously exercised; and (iii) shall not
have expired, been forfeited or otherwise canceled in accordance with the terms
hereof or the Plan. For purposes of this Agreement, the term “Non-Vested
Portion” of the Option means that portion of the Option that is not vested or
exercisable and which has not otherwise expired, been forfeited or canceled in
accordance with the terms hereof or the Plan.

(b) Catch-Up Vesting Opportunity. If the applicable Annual Performance Goals for
a particular Performance Period are not achieved and satisfied as of the end of
such Performance Period (a “Missed Year”), the Non-Vested Portion of the Option
attributable to the Missed Year shall nevertheless become fully vested if, as of
the end of the most recently completed Performance Period, the Annual
Performance Goals with respect to each completed Performance Period (including
any Missed Years) have been achieved on a cumulative basis, as certified by the
Compensation Committee (and subject to Section 4 hereof).

(c) Accelerated Vesting. Vesting with respect to any particular Performance
Period may be accelerated by the Compensation Committee, in its sole discretion,
if the Compensation Committee determines and certifies that the applicable
Annual Performance Goals have been achieved prior to the completion of the
applicable Performance Period (and subject to Section 4 hereof).

3. Exercise of Option.

(a) Subject to the provisions of the Plan and this Agreement (including
Section 4 hereof), the Optionee may exercise all or any part of the Vested
Portion of the Option at any time prior to the tenth anniversary of the Grant
Date (the “Expiration Date”); provided that the Option may be exercised with
respect to whole Shares only. In no event shall the Option be exercisable on or
after the Expiration Date.

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(b) To the extent set forth in subparagraph (a) above, the Option may be
exercised by delivering to the Company at its principal office, or to such other
location designated by the Company, written notice of intent to exercise. Such
notice shall specify the number of Shares for which the Option is being
exercised and shall be accompanied by payment in full, or adequate provision
therefor, of the aggregate Exercise Price Per Share (“Exercise Price”), and any
applicable withholding tax and fees. The payment of the Exercise Price shall be
made as indicated by Optionee on the election form: (i) in cash; (ii) by
certified check or bank draft payable to the order of the Company; (iii) by
personal check payable to the order of the Company; (iv) by tendering Shares,
actually or constructively (and which are not subject to any pledge or other
security interest); or (v) 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 the Exercise Price. The Optionee may also elect to pay all or any
portion of the Exercise Price by having Shares with a Fair Market Value on the
date of exercise equal to the Exercise Price withheld by the Company or sold by
a broker-dealer. Subject to the preceding sentence, the Optionee may elect to
sell all Shares to cover Option costs, taxes, and fees, and any remaining funds
will be issued to Optionee. The payment of withholding tax shall be subject to
Section 8 of this Agreement.

(c) Notwithstanding any other provision of the Plan or this Agreement to the
contrary, no Option may be exercised prior to the completion of any registration
or qualification of such Option or the Shares under applicable state and federal
securities or other laws, or under any ruling or regulation of any government
body or national securities exchange, that the Board shall in its sole
discretion determine to be necessary or advisable.

(d) Upon the Company’s determination that the Option has been validly exercised
as to any of the Shares, the Company shall issue or cause to be issued as
promptly as practicable certificates in the Optionee’s name for such Shares.
However, the Company shall not be liable to the Optionee for damages relating to
any delays in issuing the certificates or in the certificates themselves.

4. Termination of Employment.

(a) In the event that the Optionee’s employment with the Company (including any
Affiliate) is terminated for Cause (or in the event that the Optionee breaches
any of the covenants set forth in Sections 9 and 10 below), the Option (whether
vested or unvested) shall be deemed canceled and forfeited in its entirety on
the date of the Optionee’s termination of employment or breach of covenant, as
applicable. In addition, any Option exercised during the six month period prior
to such termination of employment or breach of covenant, as applicable, shall be
rescinded. Within 10 days after receiving notice of a rescission, the Optionee
shall pay to the Company an amount in cash equal to the gain realized by the
Optionee upon exercise of the Option. Such notice may be given at any time
within one year from the date of such exercise.

(b) Unless otherwise specifically provided by separate agreement between the
Company and the Optionee, in the event that the Optionee’s employment with the
Company (including any Affiliate) is terminated by the Optionee voluntarily or
by the Company (including any Affiliate) without Cause, the Non-Vested Portion
of the Option shall be deemed canceled and forfeited on the date of Optionee’s
termination of employment and the Vested Portion, if any, of the Option as of
the date of such termination shall remain exercisable for the lesser of (i) a
period of 90 days following such termination of employment or (ii) until the
Expiration Date, and, in either event, the Vested Portion shall thereafter be
deemed canceled and forfeited.

 

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(c) Notwithstanding the provisions of Section 4(b) concerning an employment
termination by the Company without Cause, in the event that the Optionee’s
employment with the Company (including any Affiliate) is terminated by reason of
a reduction in force as specified and implemented by the Company, the Non-Vested
Portion of the Option shall continue to vest to the extent earned as determined
at the end of each respective Performance Period or as otherwise provided
herein, and the Option shall remain exercisable until the Expiration Date. In
the event of such an employment termination by reason of a reduction in force,
the provisions of subparagraphs 9(a)(i) and (a)(ii) shall not apply.

(d) (i) Notwithstanding the provisions of Section 4(b) concerning a voluntary
termination, in the event that the Optionee’s employment with the Company
(including any Affiliate) is terminated by reason of an Early Retirement or a
Normal Retirement, as defined herein, the Non-Vested Portion of the Option shall
vest to the extent earned as determined at the end of each respective
Performance Period or as otherwise provided herein; provided, however, that if
the Optionee’s employment is terminated by reason of an Early Retirement or a
Normal Retirement before the one-year anniversary of the Date of Option Grant
(the “Grant Date”), the Non-Vested Portion of the Option shall be deemed
canceled and forfeited in its entirety on the date of the Optionee’s termination
of employment. For purposes of this Agreement and unless otherwise provided by
the Board at the time of such termination, the terms “Early Retirement” and
“Normal Retirement” shall have such meanings ascribed to them in the CONSOL
Energy Inc. Employee Retirement Plan, as amended, or any successor plan thereto
applicable to the Optionee (the “Retirement Plan”); provided, however, for
purposes of this Option, the Optionee shall not be considered to have terminated
employment on account of “Early Retirement” unless the Optionee shall also have
reached the age of fifty-five (55) as of the date of termination and completed
at least one year of continuous service with the Company (including any
Affiliate) after the Grant Date and the Optionee shall not be considered to have
terminated employment on account of “Normal Retirement” unless the Optionee
shall also have reached the age of sixty-two (62) and completed one year of
continuous service with the Company (including any Affiliate) after the Grant
Date.

(ii) In the event that the Optionee’s employment with the Company (including any
Affiliate) is terminated by reason of death, Incapacity Retirement or
Disability, the Non-Vested Portion of the Option shall vest to the extent earned
as determined at the end of each respective Performance Period or as otherwise
provided herein, and the Option shall remain exercisable until the Expiration
Date. For purposes of this Agreement and unless otherwise provided by the Board
at the time of such termination, the term “Incapacity Retirement” shall have
such meaning ascribed to it in the Retirement Plan.

5. Change in Control. Upon a Change in Control prior to the Optionee’s
termination of employment with the Company (including any Affiliate), the
Non-Vested Portion of the Option shall vest and, unless otherwise provided by
separate agreement between the Company and the Optionee, the Option shall remain
exercisable until the Expiration Date.

Unless otherwise provided by separate agreement between the Company and the
Optionee, in the event that any benefits under this Agreement, either alone or
together with any other payments or benefits otherwise owed to the Optionee by
the Company on or after a Change in Control would, in the Company’s good faith
opinion, be deemed under Section 280G of the Code, or any successor provision,
to be parachute payments, the benefits under this Agreement shall be reduced to
the extent necessary in the Company’s good faith opinion so that no portion of
the benefits provided herein shall be considered excess parachute payments under
Section 280G of the Code or any successor provision. The Company’s good faith
opinion shall be conclusive and binding upon the Optionee.

 

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6. No Right to Continued Employment: No Rights as a Shareholder. Neither the
Plan nor this Agreement shall confer on the Optionee any right to continued
employment with the Company (including any Affiliate). The Optionee shall not
have any rights as a shareholder with respect to any Shares subject to the
Option prior to the date of exercise of the Option.

7. Transferability. The Option is nontransferable and may not be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by the
Optionee, except by will or the laws of descent and distribution. No transfer of
the Option shall be effective to bind the Company unless the Company shall have
been furnished with written notice thereof and a copy of such evidence as the
Board may deem necessary to establish the validity of the transfer and the
acceptance by the transferee of the terms and conditions hereof.

8. Withholding. The Optionee agrees to make appropriate arrangements with the
Company for satisfaction of any applicable federal, state, local or foreign tax
withholding requirements or like requirements, including the payment to the
Company at the time of any exercise of the Option of all such taxes and
requirements, by submitting an election form to the Company. Optionee is hereby
authorized to instruct the Company to withhold from the Shares deliverable to
the Optionee upon any exercise of the Option the number of Shares having a Fair
Market Value equal to the applicable minimum statutory tax withholding
requirements as determined in accordance with the Plan; provided, however, in
the event the full amount of your taxes cannot be satisfied through share
withholding, the remaining amount must be paid by separate check delivered by
Optionee to the Company.

9. Non-Competition.

(a) The Optionee acknowledges and recognizes the highly competitive nature of
the business of the Company and its Affiliates and accordingly agrees that
during the term of the Optionee’s employment and for a period of two years after
the termination thereof:

(i) The Optionee will not directly or indirectly engage in any business which is
in competition with any line of business conducted by the Company or any of its
Affiliates, including, but not limited to, where such engagement is as an
officer, director, proprietor, employee, partner, investor (other than as a
holder of less than 1% of the outstanding capital stock of a publicly traded
corporation), consultant, advisor, agent or sales representative, in any
geographic region in which the Company or any of its Affiliates conducted any
such competing line of business;

(ii) The Optionee will not perform or solicit the performance of services for
any customer or client of the Company or any of its Affiliates;

(iii) The Optionee will not directly or indirectly induce any employee of the
Company or any of its Affiliates to (1) engage in any activity or conduct which
is prohibited pursuant to this subparagraph 9(a), or (2) terminate such
employee’s employment with the Company or any of its Affiliates. Moreover, the
Optionee will not directly or indirectly employ or offer employment (in
connection with any business which is in competition with any line of business
conducted by the Company or any of its Affiliates) to any person who was
employed by the Company or any of its Affiliates unless such person shall have
ceased to be employed by the Company or any of its Affiliates for a period of at
least 12 months; and

 

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(iv) The Optionee will not directly or indirectly assist others in engaging in
any of the activities, which are prohibited under subparagraphs (i) - (iii)
above.

(b) It is expressly understood and agreed that although the Optionee and the
Company consider the restrictions contained in this Section 9 to be reasonable,
if a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this Agreement
is an unenforceable restriction against the Optionee, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this Agreement
is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

10. Confidential Information and Trade Secrets. The Optionee and the Company
agree that certain materials, including, but not limited to, information, data
and other materials relating to customers, development programs, costs,
marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans or the
business and affairs of the Company and its Affiliates, constitute proprietary
confidential information and trade secrets. Accordingly, the Optionee will not
at any time during or after the Optionee’s employment with the Company
(including any Affiliate) disclose or use for the Optionee’s own benefit or
purposes or the benefit or purposes of any other person, firm, partnership,
joint venture, association, corporation or other business organization, entity
or enterprise other than the Company and any of its Affiliates, any proprietary
confidential information or trade secrets, provided that the foregoing shall not
apply to information which is not unique to the Company or any of its Affiliates
or which is generally known to the industry or the public other than as a result
of the Optionee’s breach of this covenant. The Optionee agrees that upon
termination of employment with the Company (including any Affiliate) for any
reason, the Optionee will immediately return to the Company all memoranda,
books, papers, plans, information, letters and other data, and all copies
thereof or therefrom, which in any way relate to the business of the Company and
its Affiliates, except that the Optionee may retain personal notes, notebooks
and diaries. The Optionee further agrees that the Optionee will not retain or
use for the Optionee’s account at any time any trade names, trademark or other
proprietary business designation used or owned in connection with the business
of the Company or any of its Affiliates.

11. Remedies. The Optionee acknowledges that a violation or attempted violation
on the Optionee’s part of Sections 9 and 10 will cause irreparable damage to the
Company and its Affiliates, and the Optionee therefore agrees that the Company
and its Affiliates shall be entitled as a matter of right to an injunction, out
of any court of competent jurisdiction, restraining any violation or further
violation of such promises by the Optionee or the Optionee’s employees, partners
or agents. The Optionee agrees that such right to an injunction is cumulative
and in addition to whatever other remedies the Company (including any Affiliate)
may have under law or equity.

12. Failure to Enforce Not A Waiver. The failure of the Company to enforce at
any time any provision of this Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.

13. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise
of the Option, the Optionee or the Optionee’s transferee, if applicable, will
make or enter into such written representations, warranties and agreements as
the Company may reasonably request in order to comply with applicable securities
laws, with this Agreement, or as the Company otherwise deems necessary or
advisable.

 

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14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of laws provisions thereof.

15. Amendments. This Agreement may be amended or modified at any time by an
instrument in writing signed by the parties hereto, or as otherwise provided
under the Plan. Notwithstanding, the Company may, in its sole discretion and
without the Optionee’s consent, modify or amend the terms and conditions of this
award, impose conditions on the timing and exercise of the Option, or take any
other action it deems necessary or advisable, to cause this award to be excepted
from Section 409A (or to comply therewith to the extent the Company determines
it is not excepted).

16. Notices. Any notice, request, instruction or other document given under this
Agreement shall be in writing and shall be addressed and delivered, in the case
of the Company, to the Secretary of the Company at the principal office of the
Company and, in the case of the Optionee, to the Optionee’s address as shown in
the records of the Company or to such other address as may be designated in
writing by either party.

17. Award Subject to Plan; Amendments to Award. This Award is subject to the
Plan. The terms and provisions of the Plan as it may be amended from time to
time are hereby incorporated herein by reference. In the event of a conflict
between any term or provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will govern and prevail.

18. Lapse of Offer. Any failure of the Optionee to sign and return this
Agreement to the Vice President of Human Resources within 60 days of the Date of
Option Grant will result in revocation of this Option and all provisions of this
Agreement will expire and will be canceled and forfeited.

19. Section 409A. This Option is intended to be excepted from coverage under
Section 409A and shall be interpreted and construed accordingly.
Notwithstanding, Optionee recognizes and acknowledges that Section 409A may
impose upon Optionee certain taxes or interest charges for which Optionee is,
and shall remain, solely responsible.

20. Entire Agreement. This Agreement and the Plan are intended to be the final,
complete, and exclusive statement of the terms of the agreement between Optionee
and the Company with regard to the subject matter of this Agreement. This
Agreement and the Plan supersede all other prior agreements, communications, and
statements, whether written or oral, express or implied, pertaining to that
subject matter. This Agreement and the Plan may not be contradicted by evidence
of any prior or contemporaneous statements or agreements, oral or written, and
may not be explained or supplemented by evidence of consistent additional terms.

21. Electronic Delivery of Documents.

(a) The Plan and related documents, which may include, but do not necessarily
include, the Plan prospectus, this Agreement and financial reports of the
Company, may be delivered to you electronically via CD-ROM or such other
delivery determined at the Company’s discretion.

 

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(b) Optionee acknowledges that, by receipt of this Award, Optionee has read this
Section 21 and consents to the electronic delivery of the Plan and related
documents, as described in this Section 21. Optionee acknowledges that Optionee
may receive from the Company a paper copy of any documents delivered
electronically at no cost if Optionee contacts Sue Modispacher by telephone at
(724) 485-4194, by e-mail suemodispacher@consolenergy.com or by mail to CONSOL
Energy Inc., CNX Center, 1000 CONSOL Energy Drive, Canonsburg, PA 15317.

By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described in this Agreement and in the Plan.

 

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Schedule A

Vesting Conditions

Number of Stock Options Granted:                     

Annual Performance Goals

The Annual Performance Goals with respect to each Performance Period shall mean
the total gas production goals (the “Gas Production Goals”) and the total gas
cost goals (the “Gas Cost Goals”) for each such Performance Period as set forth
below:

 

     2010
Performance Period    2011
Performance Period    2012
Performance Period    2013
Performance Period

Gas Production Goals (Bcf)

           

Gas Cost Goals ($/Mcf)

           

The 2010 Performance Period shall consist of the six (6) month period beginning
on July 1, 2010 and ending on December 31, 2010. The 2011, 2012 and 2013
Performance Periods shall each consist of the twelve (12) month period beginning
on January 1 and ending on December 31 of such year. The Committee may make
adjustments to the production and/or cost calculations in its sole discretion
that it deems necessary or appropriate.

Vesting

As demonstrated below, vesting with respect to each Performance Period will be
based 50% on the achievement of the Gas Production Goals and 50% on the
achievement of the Gas Cost Goals. Each Annual Performance Goal is mutually
exclusive of any other Annual Performance Goal (for example, in the 2010
Performance Period, if the Gas Production Goal is achieved, the shares
underlying the Option relating to the Gas Production Goal will vest even if the
Gas Cost Goal is not achieved for such period). Subject to the achievement of
the Annual Performance Goals for any particular Performance Period (as
determined and certified by the Compensation Committee) or as otherwise provided
in this Agreement, up to 25% of the Options shall vest as demonstrated below:
[Note: Table to be completed for each Participant once the number of options is
determined]

Number of Stock Options Eligible to Vest After Each Performance Period

 

     Based On
2010
Performance    Based On
2011
Performance    Based On
2012
Performance    Based On
2013
Performance    Total*

Gas Production Goals (50%)

              

Gas Cost Goals (50%)

              

Total

              

 

* Subject to the terms of the Agreement, including, but not limited to, the
achievement of the Annual Performance Goals for each of the Performance Periods
on a cumulative basis.

 

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