Document:

EX-10.2

 

Exhibit 10.2

EATON CORPORATION

2007 STOCK OPTION GRANT

NON-QUALIFIED STOCK OPTION AGREEMENT

(Non-Employee Director)

Name ____________________________________ (“Optionholder”)           Date of Grant ___________________________

Number of Shares _______________________         Option Price __________________________________________________

EATON CORPORATION, an Ohio corporation (the “Company”), hereby grants to the Optionholder, in
consideration of service by him or her as a member of the Board of Directors of the Company (the
“Board”), the option to purchase from the Company the number of common shares of the Company with a
par value of fifty cents each (the “Common Shares”) specified above from time to time during a
period which shall end at the close of business on the tenth anniversary of the date of the
granting of this option (such period being referred to as the “fixed term of the option”), unless
sooner terminated as hereinafter provided. For purposes of the foregoing sentence, “close of
business” shall mean 4:00 p.m. Eastern Time on the day of the tenth anniversary. However, if that
day falls on a Saturday, Sunday or other day when the principal stock exchange for the Common
Shares is closed for trading, “close of business” shall mean 4:00 p.m. Eastern Time on the nearest
preceding day when that stock exchange is open for trading. This option is subject to, and is
granted in accordance with, the 2002 Stock Plan (the “2002 Plan”), and upon the terms and
conditions herein set forth.

I. TERMS OF EXERCISE OF OPTION

     A. By the Optionholder While Serving as a Member of the Board.

This option shall become exercisable after a period of six months following the date of grant,
provided the Optionholder remains in continuous service as a member of the Board for that period.
The Optionholder, while serving as a member of the Board, may exercise this option at any time
after this option becomes exercisable, but not later than the end of the fixed term of the option.
The Governance Committee of the Board (the “Committee”) reserves the right to decide to what extent
leaves of absence for government service, illness, temporary disability, or other reasons shall not
be deemed to be an interruption of continuous service. Notwithstanding the foregoing provisions of
this Section I A, this option may be exercised after service on the Board ends as provided in
Section I B below.

     B. By the Optionholder When No Longer Serving as a Member of the Board.

The Optionholder may not exercise this option after he or she ceases to serve as a member of the
Board, except that if the Optionholder ceases to serve as a member of the Board after reaching the
retirement age designated by the then-current Board retirement policy or after at least ten years’
service on the Board, then he or she may exercise this option at any time after a period of six
months following the date of grant, but not later than the end of the fixed term of the option.

 

 

I. TERMS OF EXERCISE OF OPTION (continued)

     C. In case of the Death of the Optionholder.

If the Optionholder is entitled to exercise this option at the date of his or her death, then this
option may be exercised during the period of 12 months after the death of the Optionholder (but no
later than the end of the fixed term of the option) by the Optionholder’s estate or by a person or
persons who have acquired the right to exercise this option by bequest or inheritance. This option
may be so exercised only as to the number of Common Shares for which it could have been exercised
at the time the Optionholder died.

     D. Termination.

This option shall in no event be exercisable after the expiration of the fixed term of the option,
notwithstanding anything to the contrary in Sections I A, B or C above. The option hereby granted
shall be considered terminated, in whole or in part, to the extent that it can no longer be
exercised under the terms hereof or under the terms of the 2002 Plan, for the Common Shares
originally subject to this option, or in the event the Optionholder shall fail, within 60 days
after the date of the granting of this option, to deliver to the Company an acceptance of such
option executed by him or her.

     E. Acceleration — Change in Control.

Notwithstanding anything in Section I A or B to the contrary, this option shall become immediately
exercisable for all of the Common Shares subject to the option upon a change in control of the
Company (as defined below).

For purposes of this Agreement, a “change in control of the Company” shall be deemed to have
occurred if (i) a tender offer shall be made and consummated for the ownership of securities of the
Company representing 25% or more of the combined voting power of the Company’s then outstanding
voting securities, (ii) the Company shall be merged or consolidated with another corporation and as
a result of such merger or consolidation less than 75 % of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former shareholders of
the Company, other than affiliates (within the meaning of the Securities Exchange Act of 1934 (the
“Exchange Act”) of any party to such merger or consolidation, as the same shall have existed
immediately prior to such merger or consolidation, (iii) the Company shall sell substantially all
of its assets to another corporation which is not a wholly-owned subsidiary of the Company, (iv)
any “person” (as such term is used in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) is or
becomes the beneficial owner, directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company’s then outstanding securities; or (v) during
any period of two consecutive years, individuals who at the beginning of such period constitute the
Board cease for any reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company’s shareholders, of

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E. Acceleration — Change in Control. (continued)

each new director was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period. For purposes of this Agreement,
ownership of voting securities shall take into account and include ownership as determined by
applying the provisions of Rule 13d-3(d)(1) of the Exchange Act (as then in effect).

II. METHODS OF EXERCISING OPTION — RIGHTS AS SHAREHOLDERS

     A. This option shall be deemed exercised when the person(s) or estate entitled to exercise it
shall indicate the decision to do so, as to all or any part of the Common Shares for which it may
then be exercised, in a single writing for each exercise delivered to the Company at its principal
office and shall at that time tender to the Company payment in full for the Common Shares as to
which the option is exercised in cash or by a check which shall be paid upon presentment to the
bank upon which drawn or, with the approval of the Committee, by delivery to the Company of Common
Shares owned by the Optionholder, or by tender of a combination of cash (or a check as herein
described) and Common Shares. A partial exercise of this option shall not affect the right to
exercise it from time to time thereafter as to the remaining Common Shares subject to the option.

     B. No holder of this option shall have any rights as a shareholder with respect to any Common
Shares subject to the option unless and until he or she shall have received a certificate or
certificates for such Common Shares. Subject to compliance with all the terms and conditions
hereof and of the 2002 Plan, including all rules, regulations and determinations of the Committee,
the Company shall, as promptly as possible after any exercise of this option, deliver a certificate
or certificates for an appropriate number of Common Shares; provided, however, that no such
certificate or certificates shall be so delivered unless and until adequate provision has, in the
judgment of the Company, been made for any and all withholding taxes in respect of the exercise of
the option.

III. TRANSFER OF OPTION

Except as otherwise provided by the Committee, this option shall not be transferable otherwise than
by will or the law of descent and distribution.

IV. COMPLIANCE WITH LAWS, REGULATIONS AND RULES

The Company will use its best efforts to comply with all federal and state laws and regulations,
and all rules of domestic stock exchanges on which its Common Shares may be listed, which apply to
the issuance of the Common Shares subject to this option, and to obtain such consents and approvals
to such issuance which it deems advisable from federal and state bodies having jurisdiction of such
matters. However, anything herein to the contrary notwithstanding, this option shall not be
exercisable, and the Company shall not be obliged to issue or deliver any certificate for shares
subject to this option, if such exercise, issuance

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IV. COMPLIANCE WITH LAWS, REGULATIONS AND RULES (continued)

or delivery would violate any such laws, regulations or rules and unless and until such consents
and approvals have been obtained. Any share certificate issued to evidence Common Shares as to
which this option is exercised may bear such legends and statements as the Committee shall deem
advisable to assure compliance with federal and state laws and regulations.

If any person(s) or estate purporting to acquire the right to exercise this option by bequest or
inheritance shall attempt to exercise this option, the Committee may require reasonable evidence as
to the ownership of this option and may request such consents and releases of taxing authorities,
as the Committee may deem advisable.

V. ADJUSTMENT UPON CHANGE OF SHARES

In the event that the outstanding Common Shares shall be changed in number or class by reason of a
reorganization, merger, consolidation, reclassification, recapitalization, combination or exchange
of shares, stock split, spin off, stock dividend, rights offering or other event affecting Common
Shares, the number and class of Common Shares subject to this option and the price per share
payable upon exercise of this option shall be equitably adjusted as determined by the Committee so
as to reflect such change. No adjustment provided for in this Section V shall require the Company
to sell or transfer a fractional share. No exercise of any conversion rights by the holders of any
of the Company’s preferred shares or serial preferred shares or convertible indebtedness hereafter
issued shall call for any adjustment under this Section V.

VI. COMPETITION BY OPTIONHOLDER

In the event that the Optionholder within one year after exercise of any portion of this option
enters into an activity as employee, agent, officer, director, principal or proprietor which, in
the sole judgment of the Committee, is in competition with the Company or a subsidiary, the amount
by which the fair market value per share on the date of exercise of any such portion exceeds the
option price per Common Share hereunder, multiplied by the number of Common Shares subject to such
exercised portion, shall inure to the benefit of the Company; and the Optionholder shall pay the
same to the Company, unless the Committee in its sole discretion shall determine that such action
by the Optionholder is not inimical to the best interest of the Company or its subsidiaries.

VII. ENFORCEABILITY

This Agreement shall be binding upon and inure to the benefit of (1) the Company, and its
successors and assigns, and (2) the Optionholder and his or her personal representatives,
executors, administrators, legatees and distributees.

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VIII. STOCK OPTION PLAN CONTROLS

The terms and conditions of the 2002 Plan, as amended from time to time in accordance with the
provisions of Section 11 thereof, shall control the terms and conditions of this option, and
anything contained in this Agreement inconsistent with or in violation of the terms and conditions
of the 2002 Plan shall be of no force or effect and shall not be binding upon the Company or the
Optionholder.

IX. CONSTRUCTION

It is intended that acquisition of this option by the Optionholder shall qualify for exemption from
the provisions of Section 16(b) of the Exchange Act, and each and every provision of this Agreement
shall be construed, interpreted and administered so that the grant of this option shall so qualify.
Any provision of this Agreement that cannot be so construed interpreted and administered shall be
of no force or effect.

X. GOVERNING LAW

This Agreement shall be construed in accordance with the laws of the State of Ohio, except as
otherwise specifically provided herein.

	 	 	 	 	 	 	 
	 	 	 	 	EATON CORPORATION

	 

	 	 	 	By	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	And by	 	 
	 

	 	 	 	 	 	 

	ACCEPTANCE OF OPTION BY	 	 	 	 
	OPTIONHOLDER

	 	 	 	 
	Accepted by
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Signature

	 	 	 	 

	 	 	 	 	 	 	 
	Date
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

5EX-10.1

 

Exhibit 10.1

 

	 	 	 	 	 
	
 	 	CNX Gas Corporation

4000 Brownsville Road

South Park, PA 15129-9545
	 	 
	 

	 	phone:
	 	412/854-6701
	 

	 	fax:
	 	412/854-6777
	 

	 	e-mail:
	 	 nickdeiuliis@cnxgas.com
	 

	 	web:
	 	www.cnxgas.com
	 	 
	 	 	Nicholas J. DeIuliis

President and Chief Executive Officer

December 20, 2006

Mr. Mark D. Gibbons

108 Pinehurst Drive

Cranberry Township, PA 16066

Dear Mark:

     I am pleased to offer you the position of Senior Vice President and Chief Financial Officer of
CNX Gas Corporation.

     We believe that you will be a tremendous addition to our senior management team. You bring
the management skills, accounting background and, uniquely, knowledge of CNX Gas that makes you
ideal for this position. At the same time, we think that this position represents a tremendous
opportunity for you. We have gotten off to a fast start in the last year as a NYSE-listed public
company with a $4+ billion market capitalization, but we are even more excited about the future.
We are accelerating the development of our large undeveloped acreage position; the recently
completed Jewell Ridge Lateral pipeline gives us strategic options; and we continue to evaluate a
stream of acquisition opportunities. We look forward to your input into these and the many other
significant opportunities we see for the Company.

     The compensation package for this position and the more precise terms of this offer are
attached. We believe that the compensation package is very competitive. Consistent with our
Compensation Committee’s pay for performance philosophy, you will have a significant compensation
opportunity on both a short-term and long-term basis for superior performance. If we produce
value for our shareholders, the entire management team will be well compensated.

     We look forward to your acceptance of this position. If you accept, our Compensation
Committee must formally approve your appointment. I have discussed the matter with them and do not
expect an issue, but this offer is necessarily subject to that approval, which we will pursue
promptly.

 

     Please accept this offer by signing both copies of this letter, and return one signed copy to
my attention. The other copy is for your records. Of course, if you have any questions, you
should not hesitate to contact me.

     I look forward to you joining our team!

	 	 	 	 
	 

	 	Sincerely,
	 
	 	 
	 

	 	/s/ Nicholas J. DeIuliis
	 
	 	 
	 

	 	Nicholas J. DeIuliis
	 
	 	 
	 
	 	 
	 

	 	Agreed to this 20th day of December, 2006.
	 
	 	 
	 
	 	 
	 

	 	/s/ Mark D. Gibbons
	 

	 	 
	 

	 	Mark D. Gibbons

 

CONFIDENTIAL

Date: December 20, 2006

PROPOSED TERMS OF EMPLOYMENT

     The following are the terms on which you will be employed by CNX Gas Corporation.

	 	 	 	 	 
	 
	Position

	 	Senior Vice President and Chief Financial Officer

	 
	 	 	 	 
	 
	Job Grade

	 	106
	 
	 	 	 	 
	 
	Base Salary

	 	Your initial base salary will be $250,000 per year.
The base salary for this position must be approved
by the Compensation Committee of the Board of
Directors. Typically, base salaries for executive
officers are reviewed in April of each year. Your
base salary is subject to change as determined by
the Compensation Committee.

	 
	 	 	 	 
	 
	Annual Short Term Incentive
Compensation Opportunity
(“Bonus”)

	 	You will be eligible to participate in the
Company’s Short Term Incentive Plan for 2007. Your
bonus opportunity for 2007 will be targeted at 50%
of your base salary for achievement of 100% of the
corporate and individual performance criteria
established by the Compensation Committee and the
CEO.

	 
	 	 	 	 
	 
	Long Term Incentive Compensation

	 	You will be eligible to participate in the
Company’s Long-Term Incentive Compensation Program
for the performance period from your date of hire
to December 31, 2009. Your award will have a grant
date value of 250% of your base salary, or
$625,000. The number of performance share units
you receive under the program will be equal to
$625,000 divided by the average closing price of a
share of CXG stock on the NYSE for the ten trading
days ending on your date of hire.

	 
	 	 	 	 
	 
	Change of Control Agreement

	 	You will be eligible for a standard change of
control agreement, with a “2x” multiplier.

	 
	 	 	 	 
	 
	Vacation

	 	You are entitled to four weeks of vacation per year.

	 
	 	 	 	 
	 

 

	 	 	 	 	 
	 
	Investment (401(k)) Plan

	 	As an employee of CNX Gas, you will be eligible to
participate in the CONSOL Energy Investment Plan.
Under that Plan, CNX Gas will match your
contributions to the Plan up to 6% of your base
salary. In addition, CNX Gas will contribute 3% of
your base salary to the Plan, for which no
contribution on your part is required. These
contributions will be subject to IRS compensation
limits.

	 
	 	 	 	 
	 
	Health and Welfare Benefits

	 	You will be eligible for the same health and
welfare benefits to which all similarly situated
employees are entitled.

	 
	 	 	 	 
	 
	Status

	 	We look forward to you starting employment as soon
as possible to begin the transition to your
position as Senior Vice President and Chief
Financial Officer; however, your appointment to
that position will be effective only upon the
resignation of the current Chief Financial Officer
from that office. Upon your elevation to that
position, you will be an executive officer of CNX
Gas. As such, be aware that all compensation paid
to you will be publicly disclosed. Further, you
will be subject to certain restrictions on your
ability to purchase and sell CNX Gas common stock.

	 
	 	 	 	 
	 
	Physical Examination

	 	Pursuant to Company policy, your employment is
conditioned upon a physical examination, including
a drug test, and a background check. We would like
to schedule a physical at your earliest
convenience.

	 
	 	 	 	 
	 
	No Employment Agreement;
Compensation and Benefits
Subject to Change

	 	These terms of employment do not create any right
to continued employment. You will not have an
employment agreement. The compensation and
benefits described in these terms of employment are
subject to change in accordance with the
prerogatives of the Compensation Committee and the
terms of the applicable benefit plans and programs.

	 
	 	 	 	 
	 

Your acceptance of this offer of employment on the above terms is subject to the approval of the
Board of Directors of CNX Gas Corporation and its committees that are required to approve your
appointment. Management of CNX Gas intends to seek that approval promptly after your acceptance,
but your employment will not take effect unless and until that approval is obtained and your
appointment to the position of Senior Vice President and Chief Financial Officer will not occur
until the current Chief Financial Officer resigns from that position.

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