Exhibit 10.6
CONSOL ENERGY INC.
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION
AGREEMENT (this “
Agreement ”) is made as of
, 20 , by and between CONSOL Energy
Inc., 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 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 or any Subsidiary, (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) 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 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) 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; or
(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).
(v) Other Events. 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.
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(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, supersede
as 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) who or which:
(i) is at such time the beneficial
owner, directly or indirectly, of more then fifteen percent
(15%) of the voting power of the outstanding common stock of
the Company;
(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;
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(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.
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
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
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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 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
currently under the Company’s certificate of incorporation
and bylaws and this Agreement, it is the intent of the
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parties hereto that Indemnitee shall enjoy by
this Agreement the greater benefits so afforded by such change,
subject to the restrictions expressly set forth herein or therein.
If the Indemnitee is entitled under any provision of this Agreement
to indemnification by the Company for some or a portion of
Expenses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Indemnitee for the portion
of such Expenses to which the Indemnitee is entitled.
7. Contribution
. To the fullest extent permissible
under applicable law, if the indemnification provided for in this
Agreement is unavailable to Indemnitee, then in respect of any
actual or threatened proceeding in which the Company is jointly
liable with Indemnitee (or would be if joined in such proceeding)
the Company, in lieu of indemnifying Indemnitee, shall contribute
to the amount incurred by Indemnitee, whether for Expenses,
judgments, fines or amounts paid or to be paid in settlement, in
connection with any claim relating to an indemnifiable event under
this Agreement, in such proportion as is deemed fair and reasonable
in light of all of the circumstances of such Proceeding in order to
reflect (i) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and transaction(s) giving
rise to such Proceeding; and (ii) the relative fault of
Indemnitee and the Company (and its other directors, officers,
employees and agents) in connection with such event(s) and
transaction(s).
8. Notification and Defense of
Claim .
(a) Indemnitee shall notify the
Company in writing of any matter with respect to which Indemnitee
intends to seek indemnification or advancement of Expenses as soon
as reasonably practicable following the receipt by Indemnitee of
written notice thereof. The written notification to the Company
shall include a description of the nature of the Proceeding and the
facts underlying the Proceeding. The failure by Indemnitee to
notify the Company will not relieve the Company from any liability
which it may have to Indemnitee hereunder or otherwise than under
this Agreement, and any delay in so notifying the Company shall not
constitute a waiver by Indemnitee of any rights. With respect to
any Proceeding as to which the Indemnitee has so notified the
Company:
(i) The Company will be entitled
to
