Exhibit 10.7
Execution
Copy
CNX GAS
CORPORATION
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION
AGREEMENT (this “
Agreement ”) is made as of
,
20 (the “Effective
Date”), by and between CNX Gas Corporation, a Delaware
corporation (the “ Company ”), and
(the
“ Indemnitee ”).
RECITALS:
A. It is essential that the Company retain and
attract as directors and officers the most capable persons
available.
B. The Indemnitee is (or is being elected as) a
director and/or officer of the Company and in that capacity is (or
will be) performing a valuable service for the Company.
C. The Company’s Bylaws (the “
Bylaws ”) contain a provision which provides
for indemnification of and advancement of expenses to the directors
and officers of the Company for liabilities and expenses they incur
in their capacities as such, and the Bylaws and section 145 of the
General Corporation Law of the State of Delaware (“
DGCL ”) provide that they are not exclusive of
any other rights to indemnification and advancement of
expenses.
D. In recognition of Indemnitee’s need for
protection against personal liability in order to enhance
Indemnitee’s service and continued service to the Company in
an effective manner, the potential difficulty in obtaining
satisfactory Directors and Officers Liability Insurance (“
D&O Insurance ”) coverage, and
Indemnitee’s reliance on the Bylaws, and in part to provide
Indemnitee with specific contractual assurance that the protection
promised by the Bylaws will be available to Indemnitee (regardless
of, among other things, any amendment to or revocation of the
Bylaws or any change in the composition of the Company’s
Board of Directors or acquisition transaction relating to the
Company), the Company desires to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitee to
the fullest extent permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company’s D&O
Insurance policies.
E. The Indemnitee is willing to serve and/or to
continue to serve, the Company, only on the condition that the
Company furnish the indemnity provided for herein.
NOW, THEREFORE,
in consideration of
Indemnitee’s service and/or continuing to serve the Company
directly, or, at its request, another enterprise and intending to
be legally bound hereby, the parties hereto agree as
follows:
1. Definitions
.
(a) A “ Change in
Control ” shall be deemed to occur upon the earliest
to occur after the date of this Agreement of any of the following
events:
(i) the acquisition after the date
hereof by any individual, entity or group (within the meaning of
section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “
Person ”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than 25% of the
combined voting power of the then outstanding
securities of the Company entitled to vote generally in the
election of its directors (“ Voting Stock
”); provided, however, that for purposes of this
Section 1(a)(i), the following acquisitions will not
constitute a Change in Control: (A) any issuance of Voting
Stock of the Company directly from the Company that is approved by
the Incumbent Board (as defined in Section 1(a)(ii), below),
(B) any acquisition by the Company and/or CONSOL Energy Inc.
(“ CONSOL ”) and any of their respective
subsidiaries of Voting Stock of the Company, (C) any
acquisition of Voting Stock of the Company by any employee benefit
plan (or related trust) sponsored or maintained by the Company, a
subsidiary or CONSOL and/or its subsidiaries, (D) any
acquisition of Voting Stock of the Company by an underwriter
holding securities of the Company in connection with a public
offering thereof, or (E) any acquisition of Voting Stock of
the Company by any Person pursuant to a Business Combination that
complies with clauses (A), (B) and (C) of
Section 1(a)(iii) below; or
(ii) other than at a time when
CONSOL and/or its subsidiaries beneficially own more than 50% of
the total Voting Stock of the Company, individuals who constitute
the Board as of the Effective Date (the “ Incumbent
Board ,” as modified by this Section 1(a)(ii)),
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a Director
subsequent to such date whose election, or nomination for election
by the Company’s stockholders, was approved by a vote of at
least two-thirds of the Directors then comprising the Incumbent
Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee
for director, without objection to such nomination) will be deemed
to have then been a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of Directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) consummation of a
reorganization, merger or consolidation of the Company or a direct
or indirect wholly owned subsidiary thereof, a sale or other
disposition (whether by sale, taxable or nontaxable exchange,
formation of a joint venture or otherwise) of all or substantially
all of the assets of the Company, or other transaction involving
the Company (each, a “ Business Combination
”), unless, in each case, immediately following such Business
Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners of Voting Stock of the
Company immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of the combined voting
power of the then outstanding shares of Voting Stock of the entity
resulting from such Business Combination or any direct or indirect
parent corporation thereof (including, without limitation, an
entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either
directly or through one or more subsidiaries), (B) no Person
other than the Company and/or CONSOL and/or their respective
subsidiaries beneficially owns 25% or more of the combined voting
power of the then outstanding shares of Voting Stock of the entity
resulting from such Business Combination or any direct or indirect
parent corporation thereof (disregarding all
“acquisitions” described in subsections (A) - (C) of
Section 1 (a) (i)), and (C) other than at a time
when CONSOL and/or its subsidiaries beneficially own more than 50%
of the total Voting Stock of the Company, at least a majority of
the members of the Board of Directors of the entity resulting from
such Business Combination or any direct or indirect parent
corporation thereof were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the
Board providing for such Business Combination;
(iv) approval by the stockholders of
the Company of a complete liquidation or dissolution of the
Company, except pursuant to a Business Combination that complies
with clauses (A), (B) and (C) of Section 1(a)(iii);
or
2
(v) other than at a time when CONSOL
and/or its subsidiaries beneficially own less than 50% of the total
Voting Stock of the Company, a Change in Control of CONSOL (defined
in Section 1(j) below).
(vi) Other Events. Other than
at a time when CONSOL and/or its subsidiaries beneficially own less
than 50% of the total Voting Stock of the Company, any other event
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (or in response to
any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934, as amended, whether or not the
Company is then subject to such reporting requirement.
(b) “ Corporate
Status ” describes the status of a person who is or
was a director, trustee, general partner, managing member, officer,
employee, agent or fiduciary of the Company.
(c) “ Disinterested
Director ” means a director of the Company who is not
and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) “ Expenses
” include all reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees and costs of experts, witness
fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all
other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute
or defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding. Expenses also include
(i) Expenses incurred in connection with any appeal resulting
from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond,
supersedeas bond or other appeal bond or their equivalent, and
(ii) for purposes of Section 12(d), Expenses incurred by
Indemnitee in connection with the interpretation, enforcement or
defense of Indemnitee’s rights under this Agreement or under
any D&O Insurance policies maintained by the Company. Expenses,
however, shall not include amounts paid in settlement by Indemnitee
or the amount of judgments or fines against Indemnitee.
(e) “ Independent
Counsel ” means a law firm, or a partner or member of
a law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained
to represent (i) the Company or Indemnitee in any matter
material to either such party (other than as Independent Counsel
with respect to matters concerning Indemnitee under this Agreement
or as Independent Counsel with respect to matters concerning other
indemnitees under other indemnification agreements), or
(ii) any other party to the Proceeding giving rise to a claim
for indemnification hereunder. Notwithstanding the foregoing, the
term “Independent Counsel” shall not include any person
who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.
(f) “ Interested
Shareholder ” means any person (other than the
Company or any subsidiary of the Company and other than any profit
sharing, employee stock ownership, or other employee benefit plan
of the Company or any subsidiary of the Company or any trustee of
or fiduciary with respect to any such plan when acting in such
capacity and other than CONSOL and its subsidiaries) who or
which:
(i) is at such time the beneficial
owner, directly or indirectly, of more than fifteen percent
(15%) of the voting power of the outstanding common stock of
the Company;
3
(ii) was at any time within the
two-year period immediately prior to such time the beneficial
owner, directly or indirectly, of more than fifteen percent
(15%) of the voting power of the then outstanding common stock
of the Company; or
(iii) is at such time an assignee of
or has otherwise succeeded to the beneficial ownership of any
shares of common stock of the Company which were at any time within
the two-year period immediately prior to such time beneficially
owned by any Interested Shareholder, if such assignment or
succession has occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of
the Securities Act of 1933, as amended.
(g) A “ Potential Change
of Control ” shall occur if:
(i) the Company enters into an
agreement or arrangement the consummation of which would result in
the occurrence of a Change of Control;
(ii) any Person (including the
Company) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a Change in
Control; or
(iii) the Board of Directors of the
Company adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change of Control has
occurred.
(h) “ Proceeding
” means any threatened, pending or completed action, suit,
arbitration, mediation, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or proceeding,
whether brought in the right of the Company or otherwise and
whether of a civil, criminal, administrative or investigative
nature, including any appeal therefrom and including without
limitation any such Proceeding pending as of the date of this
Agreement, in which Indemnitee was, is or will be involved as a
party, a potential party, a non-party witness or otherwise by
reason of (i) the fact that Indemnitee is or was a director or
officer of the Company, (ii) any action taken by Indemnitee or
any action or inaction on Indemnitee’s part while acting as a
director or officer of the Company, or (iii) the fact that he
or she is or was serving at the request of the Company as a
director, trustee, general partner, managing member, officer,
employee, agent or fiduciary of another corporation, partnership,
joint venture, trust, limited liability company or other
enterprise, in each case whether or not serving in such capacity at
the time any liability or Expense is incurred for which
indemnification or advancement of expenses can be provided under
this Agreement.
(i) “ Unaffiliated
Director ” means any member of the Board of Directors
of the Company who is unaffiliated with, and not a representative
of, an Interested Shareholder and who was a member of the Board of
Directors prior to the time that the Interested Shareholder became
an Interested Shareholder or became a member subsequently to fill a
vacancy created by an increase in the size of the Board of
Directors and did receive the favorable vote of two-thirds
(2/3) of the Unaffiliated Directors in connection with being
nominated for election by the shareholders to fill such vacancy or
in being elected by the Board of Directors to fill such vacancy,
and any successor of a Unaffiliated Director who is unaffiliated
with, and not a representative of, the Interested Shareholder and
is recommended or elected to succeed a Unaffiliated Director by a
majority of the Unaffiliated Directors then on the Board of
Directors.
(j) “ Change in Control
of CONSOL ” means the occurrence of any of the
following events:
(i) the acquisition after the date
hereof by any individual, entity or group (within the meaning of
section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “
Person ”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than 25% of the combined voting power of the then outstanding
Voting Stock of CONSOL; provided, however, that for purposes of
this
4
Section 1(j)(i), the following acquisitions
will not constitute a Change in Control of CONSOL: (A) any
issuance of Voting Stock of CONSOL directly from CONSOL that is
approved by the Incumbent Board of CONSOL (as defined in
Section 1(j)(ii), below), (B) any acquisition by CONSOL
and/or its subsidiaries of Voting Stock of CONSOL, (C) any
acquisition of Voting Stock of CONSOL by any employee benefit plan
(or related trust) sponsored or maintained by CONSOL and/or its
subsidiaries, (D) any acquisition of Voting Stock of CONSOL by
an underwriter holding securities of CONSOL in connection with a
public offering thereof, or (E) any acquisition of Voting
Stock of CONSOL by any Person pursuant to a Business Combination of
CONSOL that complies with clauses (A), (B) and (C) of
Section 1(j)(iii), below; or
(ii) individuals who constitute the
Board of Directors of CONSOL (the “ CONSOL
Board ”) as of the Effective Date (the “
Incumbent Board of CONSOL ,” as modified by
this Section 1(j)(ii)), cease for any reason to constitute at
least a majority of the CONSOL Board; provided, however, that any
individual becoming a director subsequent to such date whose
election, or nomination for election by CONSOL’s
stockholders, was approved by a vote of at least two-thirds of the
directors then comprising the Incumbent Board of CONSOL (either by
a specific vote or by approval of the proxy statement of CONSOL in
which such person is named as a nominee for director, without
objection to such nomination) will be deemed to have then been a
member of the Incumbent Board of CONSOL, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the CONSOL Board; or
(iii) consummation of a
reorganization, merger or consolidation of CONSOL, a sale or other
disposition (whether by sale, taxable or nontaxable exchange,
formation of a joint venture or otherwise) of all or substantially
all of the assets of CONSOL, or other transaction involving CONSOL
(each, a “ Business Combination of CONSOL
”), unless, in each case, immediately following such Business
Combination of CONSOL, (A) all or substantially all of the
individuals and entities who were the beneficial owners of Voting
Stock of CONSOL immediately prior to such Business Combination of
CONSOL beneficially own, directly or indirectly, more than 50% of
the combined voting power of the then outstanding shares of Voting
Stock of the entity resulting from such Business Combination of
CONSOL or any direct or indirect parent corporation thereof
(including, without limitation, an entity which as a result of such
transaction owns CONSOL or all or substantially all of
CONSOL’s assets either directly or through one or more
subsidiaries), (B) no Person other than CONSOL beneficially
owns 25% or more of the combined voting power of the then
outstanding shares of Voting Stock of the entity resulting from
such Business Combination of CONSOL or any direct or indirect
parent corporation thereof (disregarding all
“acquisitions” described in subsections (A) - (C) of
Section 1 (j)(i)), and (C) at least a majority of the
members of the board of directors of the entity resulting from such
Business Combination of CONSOL or any direct or indirect parent
corporation thereof were members of the Incumbent Board of CONSOL
at the time of the execution of the initial agreement or of the
action of the CONSOL Board providing for such Business Combination
of CONSOL; or
(iv) approval by the stockholders of
CONSOL of a complete liquidation or dissolution of CONSOL, except
pursuant to a Business Combination of CONSOL that complies with
clauses (A), (B) and (C) of
Section 1(j)(iii).
Reference to “ other
enterprises ” shall include employee benefit plans
and administrative committees thereof; references to “
fines ” shall include any excise taxes assessed
on a person with respect to any employee benefit plan; references
to “ serving at the request of the Company
” shall include any service as a director, officer, employee
or agent of the Company which imposes duties on, or involves
services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; a
person who acted in good faith and in a manner he or she
reasonably
5
believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner “ not opposed to the
best interests of the Company ” as referred to in
this Agreement; references to “ to the fullest extent
permitted by applicable law ” shall include, but not
be limited to: (i) the fullest extent permitted by the
provision of the DGCL that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision of any
amendment to or replacement of the DGCL and (ii) the fullest
extent authorized or permitted by any amendments to or replacements
of the DGCL adopted after the date of this Agreement that increase
the extent to which a corporation may indemnify its officers and
directors.
2. Indemnity in Third-Party
Proceedings . The
Company shall indemnify Indemnitee in accordance with the
provisions of this Section 2 if Indemnitee is, or is
threatened to be made, a party to or a participant in any
Proceeding, other than a Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this
Section 2, Indemnitee shall be indemnified to the fullest
extent permitted by applicable law against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in
connection with such Proceeding or any claim, issue or matter
therein, if Indemnitee acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best
interests of the Company and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that his or her
conduct was unlawful.
3. Indemnity in Proceedings by
or in the Right of the Company . The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 3 if Indemnitee
is, or is threatened to be made, a party to or a participant in any
Proceeding by or in the right of the Company to procure a judgment
in its favor. Pursuant to this Section 3, Indemnitee shall be
indemnified to the fullest extent permitted by applicable law
against all Expenses actually and reasonably incurred by Indemnitee
or on Indemnitee’s behalf in connection with such Proceeding
or any claim, issue or matter therein, if Indemnitee acted in good
faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Company. No indemnification
for Expenses shall be made under this Section 3 in respect of
any claim, issue or matter as to which Indemnitee shall have been
adjudged by a court of competent jurisdiction to be liable to the
Company, unless and only to the extent that the Delaware Court of
Chancery or any court in which the Proceeding was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification for
such expenses as the Delaware Court of Chancery or such other court
shall deem proper.
4. Indemnification for
Expenses of a Party Who is Wholly or Partly
Successful . To the
extent that Indemnitee is a party to or a participant in and is
successful (on the merits or otherwise) in defense of any
Proceeding or any claim, issue or matter therein, the Company shall
indemnify Indemnitee against all Expenses actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in
connection therewith. To the extent permitted by applicable law, if
Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, in defense of one or more
but less than all claims, issues or matters in such Proceeding, the
Company shall indemnify Indemnitee to the fullest extent permitted
by applicable law against all Expenses actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in
connection with each successfully resolved claim, issue or matter.
For purposes of this Section, the termination of any claim, issue
or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
5. Indemnification for
Expenses of a Witness . Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee, by reason of his or her
Corporate Status, is to be a witness or to be interviewed in any
threatened, pending or completed action, suit, arbitration,
mediation, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or proceeding to which
6
Indemnitee is not a party, Indemnitee shall be
indemnified to the fullest extent permitted by applicable law
against all Expenses actually and reasonably incurred by Indemnitee
or on Indemnitee’s behalf in connection therewith.
6. Additional
Indemnification . In
the event that applicable law permits indemnification in addition
to the indemnification provided in Sections 2, 3 and 4, the Company
shall indemnify Indemnitee to the fullest extent permitted by
applicable law if Indemnitee is, or is threatened to be made, a
party to or a participant in any Proceeding (including a Proceeding
by or in the right of the Company to procure a judgment in its
favor) against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee or on his
or her behalf in connection with the Proceeding or any claim, issue
or matter therein. To the extent that a change in Delaware law,
whether by statute or judicial decision, permits greater
indemnification or advancement of Expenses than would be
afforded
