THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

CNX Gas Corporation (CXG)

3/21/2006 Proxy Information

CNX Gas has a number of intercompany agreements with CONSOL Energy. Provided below is a summary description of the master separation agreement between CNX Gas and CONSOL Energy and the other key agreements that relate to CNX Gas’ separation from CONSOL Energy which CNX Gas entered into as part of the separation from CONSOL Energy. References in this section to CONSOL Energy include its subsidiaries and references to CNX Gas include CNX Gas’ subsidiaries. These agreements are not the result of arm’s-length negotiation.

Overview

The master separation agreement contains the key provisions related to CNX Gas’ separation from CONSOL Energy. The other agreements referenced in the master separation agreement govern various interim and ongoing relationships between CONSOL Energy and CNX Gas. These agreements include:

• the master cooperation and safety agreement;

• the registration rights agreement;

• the tax sharing agreement; and

• the services agreement.

Master Separation Agreement

Contribution of Assets; Assumption of Liabilities. CONSOL Energy and certain of its affiliates transferred to CNX Gas the assets that were used exclusively in CONSOL Energy’s gas operations and other assets specifically listed in the agreement, subject to some specified exclusions. These assets included in particular coalbed methane and conventional oil and gas rights located in Virginia, Pennsylvania and northern West Virginia. All assets were transferred to CNX Gas on an “as-is-where-is” basis, which means that CNX Gas bears all the risk of a failure of title on any of the assets. In the event that both CNX Gas and CONSOL Energy have rights under certain contracts, the party that signed the contract will make available the rights and benefits of that contract to the other party, but only to the extent that the contract applies to the other party, and the other party will assume and discharge the liabilities related to those rights and benefits. CNX Gas assumed all of the liabilities related to those assets and the gas operations, even if those liabilities were as a result of activities occurring prior to the effective date of the separation of the businesses and regardless of whether such liabilities were the result of negligence or misconduct on the part of CONSOL Energy, subject to the following allocation of unknown liabilities, if any, asserted in writing by one or more third parties prior to the fifth anniversary following August 8, 2005: CNX Gas will be responsible for the first $10 million of aggregate unknown liabilities; CONSOL Energy will be responsible for the next $40 million of aggregate unknown liabilities; and CNX Gas will be responsible for any additional unknown liabilities over $50 million. CNX Gas will also be responsible for any unknown liabilities which were not asserted in writing during this five year period. Certain excluded liabilities which may have been related to gas operations were not assumed by CNX Gas and CNX Gas is being indemnified by CONSOL Energy with respect to these. Some of the excluded liabilities may have been incurred by CNX Gas subsidiaries, which would have to satisfy those liabilities if CONSOL Energy failed to satisfy them.

The coalbed methane and conventional oil and gas rights located in Virginia, Pennsylvania, northern West Virginia and Tennessee held by CNX Gas after separation from CONSOL Energy represent substantially all of CNX Gas’ proved reserves. In addition to the transfers made to CNX Gas in the separation, CONSOL Energy leased to CNX Gas pursuant to a master lease substantially all other coalbed methane and conventional oil and gas rights that CONSOL Energy and its majority-owned subsidiaries hold in the United States. These leased assets are principally located outside of Virginia, Pennsylvania, northern West Virginia and Tennessee. The master lease provided for a one-time payment of $50,000 at its inception. The master lease has 99-year term and by its terms no royalty is payable under the lease.

Special Dividend. In connection with the separation, CNX Gas paid a special dividend in an amount equal to the net proceeds from the private placement of the shares of CNX Gas, which was approximately $420.2 million, to CONSOL Energy.

Covenants. CNX Gas has agreed that, for so long as CONSOL Energy beneficially owns at least fifty percent (50%) of CNX Gas’ outstanding voting stock, CNX Gas will not take any action which would limit the ability of CONSOL Energy or its transferee to transfer its shares of CNX Gas common stock, and will not take any actions that could reasonably result in CONSOL Energy being in breach of or in default under any contract or agreement, including any action that would cause a default under CONSOL Energy’s debt instruments. Additionally, CNX Gas will not issue any additional capital stock without CONSOL Energy’s consent if after such issuance CONSOL Energy would own less than eighty percent (80%) of CNX Gas’ outstanding voting stock.

Option Rights. CNX Gas has granted CONSOL Energy the right to purchase shares of CNX Gas capital stock in two instances. First, CONSOL Energy has the right to purchase shares of CNX Gas capital stock in order to maintain a percentage ownership in CNX Gas capital stock of at least eighty percent (80%) for tax consolidation purposes. Second, CONSOL Energy has the right to purchase the required number of shares of CNX Gas capital stock so that it may effect a distribution of all of its CNX Gas shares to its stockholders as a tax-free spin-off. The exercise price for any CNX Gas shares purchased by CONSOL Energy is the then market price (defined as the average of the last sales price on each of the immediately preceding five trading days) on the securities exchange or quotation system on which CNX Gas stock is listed).

CNX Gas has agreed not to buy or sell any assets, dispose of any assets, or acquire any equity or debt securities of a third party in each case in excess of $30 million without CONSOL Energy’s prior consent.

Master Cooperation and Safety Agreement

The master cooperation and safety agreement contains the provisions related to the safe and economical operation of CNX Gas’ gas business and CONSOL Energy’s coal business where the parties have joint interests. The parties have agreed that to the extent there is any conflict between CNX Gas’ gas interests and CONSOL Energy’s coal interest in a joint location, CONSOL Energy’s coal operations shall generally prevail. CNX Gas has agreed to sign and deliver any waiver or consent necessary to allow coal mining operations of CONSOL Energy in the vicinity of any property or gas rights owned by CNX Gas and CONSOL Energy has agreed that CNX Gas has the right to capture gas from any well associated with CONSOL Energy’s property, subject to CONSOL Energy’s right to preclude CNX Gas from capturing gas with respect to any active mining area in order to promote safety for and productivity of its coal operations. CNX Gas will receive all proceeds from the capture of gas in all wells. In order to coordinate CNX Gas’ operational relationship with CONSOL Energy, the parties will coordinate CNX Gas’ annual drilling plan with CONSOL Energy’s ten year mine plan.

Tax Sharing Agreement

CONSOL Energy and CNX Gas entered into a tax sharing agreement. The tax sharing agreement governs the respective rights, responsibilities, and obligations of CONSOL Energy and CNX Gas with respect to certain tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes and related tax returns. The following is a general summary of the tax sharing agreement.

In general, under the tax sharing agreement, CONSOL Energy is responsible for the remittance of U.S. federal income taxes of the affiliated group of corporations, including CNX Gas, of which it is the common parent, and is responsible for the remittance of state income taxes to states in which CONSOL Energy is required to file, or elects to file a consolidated or combined state income tax return. Additionally, CNX Gas is obligated to pay to CONSOL Energy each year an amount equal to the amount of U.S. federal income tax and state income tax that CNX Gas would have incurred had CNX Gas filed a separate U.S. federal income tax return and separate state income tax returns in these states in which CNX Gas is included in a consolidated or combined state tax return filed by CONSOL Energy.

Services Agreement

The services agreement governs the provision by CONSOL Energy to CNX Gas of support services, such as cash management and debt service administration, accounting and tax, investor relations, payroll and human resources administration, legal, information technology, internal audit, real estate management and other general administrative functions. CNX Gas has also agreed to pay or reimburse CONSOL Energy for any out-of-pocket payments, costs and expenses associated with these services. The agreement shall extend until terminated by the mutual agreement of the parties.

Other Transactions

CNX Gas sells gas to CONSOL Energy on a basis reflecting the monthly average price received by CNX Gas from third party sales. CNX Gas also sells gas to Buchanan Generation, LLC, in which CNX Gas has a 50% interest, on both a market and a discounted basis, depending upon the circumstances. CNX Gas also purchases various supplies from CONSOL Energy’s wholly owned subsidiary Fairmont Supply; the cost of these items reflect current market prices and is included in cost of goods sold as arms-length transactions. Management of CNX Gas believes that these sales and purchases are on terms no less favorable than could be obtained from unaffiliated third parties, under similar circumstances. In the years ended December 31, 2005, 2004 and 2003. CNX Gas’ sales of gas to CONSOL Energy and Buchanan Generation, LLC were for $6.1, $22.0 and $32.6 million, respectively. In the years ended December 31, 2005, 2004 and 2003, CNX Gas’ purchases of supplies from Fairmont Supply equaled $135, $137 and $89 thousand, respectively. Management of CNX Gas expects that future sales of gas to CONSOL Energy and Buchanan Generation, LLC, and purchases of supplies from Fairmont Supply will be on terms no less favorable than could be obtained from unaffiliated third parties, under similar circumstances.

CNX Gas utilizes certain services and engages in operating transactions in the normal course of business with CONSOL Energy. The following represents a summary of the significant transactions of this nature:

Cash management services for CNX Gas are performed by CONSOL Energy. Balances for receivables and payables outstanding at December 31, 2005 are retained by CNX Gas, while balances outstanding at December 31, 2004 are considered by CNX Gas to be a capital contribution or a return of capital from CONSOL Energy. No interest has been charged or paid to CNX Gas under this arrangement. In the twelve months ended December 31, 2005, 2004 and 2003, CNX Gas paid net cash to CONSOL Energy of $16.6, $82.2 and $52.5 million, respectively. CNX Gas intends to satisfy CNX Gas’ future working capital requirements and fund CNX Gas’ future capital expenditures from cash from operations and CNX Gas’ existing credit facility. CNX Gas has developed its own banking relationships, although for a brief period of time following the separation it continued to participate in CONSOL Energy’s cash management system under which cash generated by CNX Gas’ operations was received into CONSOL Energy’s cash accounts and CNX Gas’ payables were paid from CONSOL Energy’s cash accounts. These transactions were treated as intercompany loans.

Prior to the separation from CONSOL Energy, CNX Gas and its subsidiaries had guaranteed CONSOL Energy’s $750 million revolving credit facility and 7.875% Notes due March 1, 2012 in the principal amount of approximately $250 million. In addition, the assets of CNX Gas’ subsidiaries as well as substantially all of the assets being contributed to CNX Gas by CONSOL Energy were subject to liens securing this revolving credit facility, the 7.875% Notes and CONSOL Energy’s 8.25% medium term notes due 2007 in the principal amount of approximately $45 million. Lastly, the principal gas subsidiary, CNX Gas Company LLC, participated and sold receivables in CONSOL Energy’s $125 million receivables facility. CONSOL Energy obtained the release of CNX Gas and its subsidiaries from these guarantees in connection with the separation of the companies as well as the release of these liens on the assets of the CNX Gas subsidiaries and the other assets being contributed to CNX Gas and terminated the participation of the principal gas subsidiary in CONSOL Energy’s receivables facility. Although released from the existing guarantee of the 7.875% Notes, the indenture for the 7.875% Notes requires CNX Gas to again guarantee the 7.875% Notes if CNX Gas borrows money or otherwise incurs indebtedness by issuing notes, bonds, debentures or similar instruments to third parties (excluding CONSOL Energy). As a result of entering into a new unsecured $200 million credit agreement with third party commercial lenders in October 2005, CNX Gas and its subsidiaries executed a supplemental indenture and are again guarantors of the 7.875% Notes. In addition, if CNX Gas were to grant liens to a lender as part of a future borrowing, the indenture and the agreement governing the 8.25% medium term notes require CNX Gas to ratably secure both the 7.875% Notes and the 8.25% medium term notes. CONSOL Energy has advised CNX Gas that, in accordance with its previously stated intention, CONSOL Energy sought to obtain an amendment to its indenture for the 7.875% Notes in order to obtain the release of CNX Gas and its subsidiaries as guarantors of the 7.875% Notes. However, based on its discussions with a number of the noteholders, CONSOL Energy has determined that it cannot obtain, at this time, an amendment of the indenture on commercially acceptable terms. Therefore, CONSOL Energy will not formally solicit the 7.875% noteholders for the release and, consequently, CNX Gas and its subsidiaries will remain guarantors of the 7.875% Notes.

General and administrative expenses contain fees of $5.7, $6.3 and $3.2 million for the twelve months ended December 31, 2005, 2004 and 2003, respectively, for certain accounting and administrative services provided by CONSOL Energy. These fees are allocated to CNX Gas based on annual estimated hours worked on CNX Gas and related companies versus total hours available.

CONSOL Energy currently incurs drilling costs related to gob gas production due to the necessity to de-gas coal mines in connection with production for safety reasons. CNX Gas estimates that the historical cost to CONSOL Energy of drilling these wells was as follows: $6.2 million in 2005, $9.1 million in 2004 and $9.3 million in 2003. CNX Gas captures and markets the gas from these wells and, therefore, benefits from this drilling activity, although it is not burdened with the cost to drill these gob wells. CNX Gas is responsible for the costs incurred to gather and deliver the gob gas to market. Unless CNX Gas chooses to drill, all gob well drilling costs are borne by CONSOL Energy and only the collection and processing costs are reflected in CNX Gas’ historical financial statements. Under CNX Gas’ master cooperation and safety agreement with CONSOL Energy retains this cost structure after CNX Gas’ separation from CONSOL Energy.

CONSOL Energy pays for metered power at certain mining operations in which CNX Gas conducts its operations. CNX Gas then reimburses CONSOL Energy for CNX Gas’ allocable share of such metered power on a monthly basis, which amounts to approximately $150,000 per month.

For service through December 31, 2005, CNX Gas employees participate in a non-contributory defined benefit pension plan administered by CONSOL Energy. Benefits for this plan are based primarily on years of service and employee’s pay near retirement. CNX Gas’ allocation of the pension expense under this plan was $526,000 up to the point of separation in 2005, and $1.4 and $1.0 million for the twelve months ended December 31, 2004 and 2003, respectively. CONSOL Energy’s allocation of the expense for this plan was based on the percentage of CNX Gas’ active employee salary wages compared to the total active employee salary wages covered by the plan. As of the date of separation, any incremental pension liability earned by CNX Gas salaried employees is the obligation of CNX Gas. Effective January 1, 2006, an amendment was made to the CONSOL Energy Retirement Plan that suspended all service accruals of CNX Gas employees in this plan. CNX Gas is in the process of implementing arrangements to provide for future service accruals under its own plan documents; CNX Gas anticipates that the terms and conditions of these arrangements will be substantially similar to those used by CONSOL Energy. As of this date, the lump sum benefits formula has been frozen for service and salaries and prospectively the lump sum option will not be offered for any benefits earned after January 1, 2006. Also the amount of future benefit accruals have been reduced and early retirement subsidies have been eliminated.

Employees may also elect to participate in a defined contribution investment plan administered by CONSOL Energy. Amounts charged to expense by CNX Gas for matching contributions in the investment plan were $442, $337 and $294 thousand for the twelve months ended December 31, 2005, 2004 and 2003, respectively. CONSOL Energy charges CNX Gas the actual matching amounts contributed by CONSOL Energy on behalf of CNX Gas’ employees.

Eligible employees may also participate in a long-term disability plan administered by CONSOL Energy. Benefits for this plan are based on a percentage of monthly earnings, offset by all other income benefits available to the disabled. CNX Gas’ allocation of the long-term disability plan expense under this plan was $228, $140 and $152 thousand for the twelve months ended December 31, 2005, 2004 and 2003, respectively. Allocation of the expense for this plan is based on the percentage of CNX Gas’ active salary employees compared to the total active salary employees covered by the plan.

CONSOL Energy has provided financial guarantees on behalf of CNX Gas. At December 31, 2005, these financial guarantees are as follows:

• CNX Gas has an agreement with CONOCO/Phillips, Inc. that guarantees the physical delivery of CNX Gas production through December 31, 2005. CONSOL Energy has guaranteed any unpaid obligations of CNX Gas to this sales agreement, up to $60 million.

• CONSOL Energy has an agreement with Dominion Field Services to guarantee any unpaid obligations of CNX Gas and Greene Energy (now merged into CNX Gas), pursuant to their gas sales agreements with Dominion Field Services. The maximum undiscounted future payments required pursuant to the agreement are as follows: (a) CNX Gas—$36 million, and (b) Greene Energy—$3 million.

• CONSOL Energy has an agreement with AEP Energy Services to unconditionally guarantee the full and prompt payment of all obligations of CNX Gas up to $30 million arising from AEP Energy Services’ purchase, sale or exchange of energy services or energy related commodities with respect to the sales agreement between CNX Gas and AEP Energy Services.

• CONSOL Energy guarantees the obligations of CNX Gas with respect to its gas derivative hedging activity under an International Swap and Derivative Association (ISDA) Agreement with Morgan Stanley Capital Group entered into in October 2003. The amount of this obligation fluctuates based on gas prices.

• CONSOL Energy is the guarantor of the agreement dated May 26, 2004 between CNX Gas and Equitable Energy, LLC, relating to the purchases and/or trades of natural gas and/or natural gas products, electric energy or capacity, financial derivatives or related contracts. CONSOL Energy has guaranteed any unpaid obligations of CNX Gas related to this agreement, up to $10 million. The guaranty shall be a continuing guaranty and CONSOL Energy has the right to terminate the guaranty by providing Equitable Energy, LLC 30 day’s written notice.

• CONSOL Energy guarantees the obligations of CNX Gas with respect to its gas derivative hedging activity under an International Swap and Derivative Association (ISDA) Agreement with Citibank entered into in December 2002. The amount of this obligation fluctuates based on gas prices.

• CNX Gas has an agreement dated December 31, 2004 with Baltimore Gas and Electric Company that guarantees the prompt and complete payment of all obligations and amounts owed to BGE related to the purchase and/or sale of natural gas. CONSOL Energy has guaranteed any unpaid obligations of CNX Gas related to this agreement, up to $3 million. The guarantee will continue in force until 30 days prior written notice is given from CONSOL Energy to Baltimore Gas and Electric Company.

• CONSOL Energy is the guarantor of the agreement dated October 22, 2004 between CNX Gas and East Tennessee Natural Gas LLC, relating to the sale, purchase, exchange, storage or transportation of natural gas. CONSOL Energy has guaranteed any unpaid obligation of CNX Gas related to this agreement, limited to $100,000 in the aggregate, plus reasonable costs and expenses incurred by East Tennessee Natural Gas LLC, in collecting the obligation and/or enforcing this guarantee. In the event that CNX Gas defaults in the payment of any of the obligations, within 30 days after receiving written notice from East Tennessee Natural Gas LLC, CONSOL Energy shall make such payment or otherwise cause the same to be paid.

• CONSOL Energy is the guarantor of the agreement between CNX Gas and Columbia Gas Transmission Corporation dated April 14, 2004, related to all natural gas transportation and services agreed to between CNX Gas and Columbia Gas Transmission. The amount of this obligation fluctuates based on transportation prices and contracted volumes.

• CONSOL Energy is the guarantor of the agreement between CNX Gas and TXU Portfolio Management Company dated March 9, 2005 with respect to obligations of CNX Gas up to $5 million.

• CONSOL Energy has an agreement dated October 29, 2004 with Sequent Energy Management to guarantee the obligations of CNX Gas relating to the purchase, sale or exchange of natural gas or other hydrocarbons or non-combustible gases. The amount of this obligation fluctuates based on gas prices and contracted volumes.

• CONSOL Energy guaranteed the obligations of CNX Gas up to a maximum amount of approximately $53 million under the agreements entered into between CNX Gas and East Tennessee related to the Jewell Ridge lateral gas pipeline.

With respect to the above guarantees which relate to contracts of one of CNX Gas’ subsidiaries, CNX Gas believes that based on CNX Gas’ publishing its own financial statements in conformity with SEC rules, the counterparties to those guarantees will release CONSOL Energy from its performance obligations. The remaining guarantees will then transfer to CNX Gas. Furthermore, CNX Gas does not believe this shift in guarantees will result in a material increase in cost to CNX Gas.