EXECUTIVE EMPLOYMENT AGREEMENT
THIS
EXECUTIVE AGREEMENT
(the
“Agreement”), is made as of September 2, 2005 (“Effective Date”), by and between
United Fuel and Energy Corporation, a Nevada corporation, and its wholly
owned
subsidiaries (collectively the “Company”), and Xxxxx XxXxxxxx (“Executive”).
RECITALS:
WHEREAS,
the
Company is currently engaged in the distribution of fuel products through
the
following methods: (a) gasoline and diesel sales through unattended re-fueling
stations for commercial vehicles and fleets (known as card-lock sites); (b)
wholesale distribution of gasoline and diesel products to commercial customers,
which include car dealers, gas stations, state and municipal government,
trucking companies, and oil field service companies; (c) wholesale distribution
of lubricant products (including gear oil, gas engine oil, heavy-duty motor
oil,
hydraulic oil, transmission oil, hi-temp [specialty] greases, and synthetics)
to
commercial customers, which include power generation facilities, gas engine
compressors, fleets, and oil field equipment; (d) stand-by bobtail trucking
services to oil field companies; and (e) sale and distribution, through bulk
plants, of regular propane (used in heating) and refrigerant propane (used
in
commercial facilities for chilling) to residential and commercial customers;
all
in the State of Texas and the eastern portion of the State of New Mexico
(the
“Business”); and
WHEREAS,
the
Company desires to employ Executive, and Executive desires to be employed
by the
Company, upon the terms and conditions hereinafter set forth;
NOW,
THEREFORE,
in
consideration of the covenants herein contained, and other good and valuable
consideration, the receipt and adequacy of which are hereby forever
acknowledged, the parties, with the intent of being legally bound hereby,
agree
as follows:
1. Term.
The term
of this Agreement shall commence on the Effective Date and shall end on the
date
which is the second anniversary of the Effective Date (the “Initial
Term”); provided,
however, that the term of this Agreement shall automatically be extended
beyond
the Initial Term for a one year period, effective upon the second anniversary
of
the Effective Date (the “Renewal Term”) unless either party notifies the other
by a date which is six (6) calendar months prior to the expiration of the
Initial Term (such date, the “Notification Date”) that such party desires not to
extend the Initial Term beyond the termination of the Initial Term. This
Agreement shall continue for successive one-year Renewal Terms unless and
until
either party gives six (6) months notice to the other of its desire not to
extend further the term of this Agreement beyond the end of the then-current
Renewal Term, or the Agreement is otherwise terminated pursuant to Section
5
hereof. The term of this Agreement, whether during the Initial Term or any
Renewal Term, shall be referred to as the “Term.”
2. Position
and Responsibilities.
2.1 Position.
Executive will be employed by the Company to render services to the Company
in
the position of President and Chief Executive Officer. In that capacity,
Executive shall perform such duties and responsibilities as are normally
related
to such position in accordance with the standards of the industry and any
additional duties now or hereafter assigned to Executive by the Company,
including, as properties are developed, responsibility for the Company’s
marketing, advertising, operations, human resources, and accounting functions.
Executive shall abide by all Company rules, policies, and practices as adopted
or modified, from time to time, in the Company’s sole discretion; and Executive
shall use his best efforts to promote the interests of the Company.
2.2 Principal
Place of Performance.
Executive shall be based in Midland, Texas, where the Company anticipates
it
will continue to maintain a principal place of business. Notwithstanding
this
principal place of employment, Executive shall engage in such travel that
is
necessary or beneficial to the promotion, development, financing, or operation
of the Business.
2.3 Other
Activities.
While
employed by the Company, Executive shall devote his business time, attention,
and skill to perform assigned duties, services, and responsibilities in a
diligent, loyal, and conscientious manner, and shall act at all times in
the
furtherance of the Company’s business and interests. Executive shall not, during
the term of this Agreement: engage, directly or indirectly, in any other
business activity (whether or not pursued for pecuniary advantage) which
might
interfere with Executive’s duties and responsibilities hereunder or create a
conflict of interest with the Company. The foregoing limitations shall not
be
construed to prohibit Executive from making personal investments in such
form or
manner as will neither require Executive’s services in the operation or affairs
of the companies or enterprises in which such investments are made nor violate
the terms of Section 4 hereof. The Company acknowledges that Executive will
from
time-to-time serve on the boards of philanthropic organizations or other
entities. Accordingly, the foregoing limitations shall not be construed to
prohibit Executive from serving on the boards of philanthropic organizations
or
of entities, provided that such service does not create a conflict of interest
with the Company. The determination of whether such activity violates this
provision rests solely with the discretion of the Board of Directors of the
Company.
2.4 No
Conflict.
Executive represents and warrants that Executive’s execution of this Agreement,
Executive’s employment with the Company, and the performance of Executive’s
proposed duties under this Agreement shall not violate any obligations Executive
may have to any other employer, person, or entity, including but not limited
to
any obligations with respect to proprietary or confidential information of
any
other person or entity. Further, Executive shall fully indemnify the Company,
including but not limited to reasonable attorneys’ fees, costs, and expenses of
investigation, for any claim by any third party that such third party may
now
have or may hereafter come to have against the Company, based upon or arising
out of any non-competition agreement, confidentiality agreement, or invention
or
secrecy agreement between Executive and such third party which was in existence
as of the date of this Agreement.
3. Compensation
and Benefits.
3.1 Base
Salary.
In
consideration of the services to be rendered under this Agreement, the Company
shall pay Executive an initial salary equivalent to Three Hundred Thousand
Dollars ($300,000.00) per year (“Base Salary”) in equal installments in
accordance with the Company’s standard payroll practices (but not less than
monthly). Such Base Salary shall be subject to such withholding or deductions
as
may be mutually agreed between the Company and Executive or as required by
law.
Executive’s Base Salary will be reviewed, from time to time, in accordance with
the established procedures of the Company for adjusting salaries for similarly
situated employees and may be adjusted (upward, but not downward), in the
sole
discretion of the Board of Directors of the Company.
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3.2 Stock
Options.
The
Executive shall be eligible to receive options to purchase 500,000 shares
of the
Common Stock of the Company. Such options shall be subject to the terms of
the
stock option plan under which the options are granted and the terms of the
award
agreement issued there under. These shares shall vest as follows 25% upon
signing, 25% on the 1st
anniversary date of this agreement and 50% on the second anniversary date
of
this agreement. These shares shall have an option exercise price of $1.50
per
share.
3.3 Fringe
Benefits.
Executive shall be entitled to participate in the pension and welfare benefit
plans that the Company generally makes available to its employees or other
executives. The Company reserves the right to terminate any benefit plan
for any
reason or no reason. Executive shall be entitled to four (4) weeks paid vacation
each year.
3.4 Business
Expenses.
Throughout the term of Executive’s employment hereunder, the Company shall
reimburse Executive for all reasonable and necessary travel, entertainment,
promotional, and other business expenses that may be incurred by Executive
in
the course of performing Executive’s duties. Authorized expenses shall be
reimbursed by the Company in accordance with policies and practices adopted,
from time to time, by the Company concerning expense reimbursement for employees
and shall be reimbursed upon timely presentation to the Company of an itemized
expense statement with respect thereto, including substantiation of expenses
incurred and such other documentation as may be required by the Company’s
reimbursement policies from time to time and in accordance with Internal
Revenue
Service guidelines.
3.5 Car
Allowance.
Executive shall receive a car allowance of one thousand dollars ($1,000.00)
per
month to
cover
expenses incurred in operating a vehicle for business travel and other purposes
related to Executive’s duties and responsibilities under this Agreement.
Executive agrees that the car allowance provided pursuant to this Section
is
intended to cover all expenses related to the operation of a motor vehicle
for
Company business purposes and that, therefore, Executive is not entitled
to
additional reimbursement for mileage, fuel, or other expenses pursuant to
Section 3.4.
3.6 Bonus
Plan.
As
additional compensation for employment under this Agreement the Executive
shall
be eligible to receive a cash bonus equal to one hunded(100%) percent of
the
Executive’s Base Salary provided that the Executive meets his Business
Management Objectives (“BMO”). The Executive’s BMO are set forth on Schedule
which is attached hereto and made part hereof.
3.7
Signing
Bonus The
executive will receive a signing bonus of $50,000.00 to be paid as cash flow
permits.
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4. Inventions
and Proprietary Information; Prohibition on Third Party
Information.
4.1 Employee
Confidential Information Agreement.
Executive shall sign and be bound by the terms of the Confidential Information
Agreement, annexed hereto as Exhibit 4.1, the execution of which is a condition
to Executive’s employment with the Company.
4.2 Non-Disclosure
of Third Party Information.
Executive represents and warrants and covenants that Executive shall not,
at any
time, disclose to the Company, or use, or induce the Company to use, any
proprietary or confidential information or trade secrets of others, including,
but not limited to, any proprietary information or trade secrets, if any,
of any
former employer if such disclosure or use would violate an obligation of
Executive or applicable law. Any violation of this provision shall be grounds
for Executive’s immediate termination for cause. Executive further specifically
and expressly acknowledges that no officer or other employee or representative
of the Company has requested or instructed Executive to disclose or use any
such
third party proprietary or confidential information or trade
secrets.
5. Termination;
Rights and Obligations on Termination.
5.1 Reasons
for Termination of Agreement.
This
Agreement and Executive’s employment may be terminated in any one of the
followings ways:
a. Death.
The
death of Executive shall immediately and automatically terminate this Agreement.
If Executive dies while employed by the Company, any unvested options granted
to
Executive under the Company’s stock option plan shall immediately vest and any
vested options may be exercised on or before the earlier of: (i) the option’s
expiration date or (ii) twelve months after the Executive’s death. Any option
that remains unexercised after this period shall be forfeited. If Executive
dies
while employed by the Company, the Company shall provide (at Company’s expense)
health insurance coverage to Executive’s spouse and dependent children for the
one (1) year period after the Executive’s death. Other than the benefits
described above, no further compensation or benefits shall be due or owing
upon
the Executive’s death.
b. Disability.
If, as
a result of incapacity due to physical or mental illness or injury, Executive
shall have been unable to perform Executive’s full-time duties hereunder for six
(6) consecutive months, then thirty (30) days after receiving written notice
(which notice may occur before or after the end of such six (6) month period,
but which shall not be effective earlier than the last day of such six (6)
month
period), the Company may terminate Executive’s employment hereunder provided
Executive is unable to resume Executive’s full-time duties at the conclusion of
such notice period. In the event this Agreement is terminated as a result
of
Executive’s disability, Executive shall receive from the Company, in a lump-sum
payment due within ten (10) days of the effective date of termination,
Executive’s Base Salary at the rate then in effect for whatever time period is
remaining under the Initial Term of this Agreement or for two (2) months,
whichever amount is lesser. Additionally, if Executive is terminated due
to a
disability, any unvested options granted to Executive under the Company’s stock
option plan shall immediately vest and any vested options may be exercised
on or
before the earlier of: (i) the option’s expiration date or (ii) three months
after the Executive’s termination due to the disability. Any option that remains
unexercised after this period shall be forfeited.
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c. Cause.
The
Company may terminate the Agreement immediately upon written notice to Executive
for “Cause,” which shall be: (i) Executive’s willful, material, and irreparable
breach of this Agreement; (ii) Executive’s gross negligence in the performance
of any of Executive’s material duties and responsibilities hereunder; (iii)
Executive’s non-performance (other than by reason of Disability) of any of
Executive’s material duties and responsibilities hereunder or of any reasonable,
lawful instructions from the Board of Directors of the Company continuing
for
ten (10) days after receipt by Executive of written notice of the need to
cure;
(iv) Executive’s dishonesty, fraud, or misconduct with respect to the business
or affairs of the Company which the Board of Directors of the Company determines
in good faith has been or is likely to be injurious to the interest, property,
operations, business, or reputation of the Company; (v) Executive’s conviction
of or plea of guilty or nolo contrendre to a felony or crime involving moral
turpitude; (vi) Executive’s violation of Section 2.4, Section 4.1 or Section 4.2
of this Agreement or, (vii) Executive's failure to meet and/or satisfy the
Business Management Objectives as set forth on Schedule 3.6. In the event
of a
termination for Cause, as enumerated above, Executive shall receive no severance
compensation.
d. Without
Cause.
At any
time after Executive’s commencement of employment, the Company may, without
Cause, terminate this Agreement and Executive’s employment, effective thirty
(30) days after written notice is provided to Executive. In the event Executive
is terminated by the Company without Cause, Executive shall receive from
the
Company beginning upon termination, a monthly, amount equal to the Base Salary
that would have been paid to Executive through the remaining Term of the
Agreement if the Executive had not been terminated (assuming that Executive
would receive no further increases in his Base Salary after his termination
of
employment). Additionally, the Company shall provide Executive with continued
life insurance and health care coverage (at the Company’s expense) that is
substantially equivalent to the coverage that was provided to the Executive
prior to the Executive’s termination for the one year period following the date
of the Executive’s termination. Finally, if Executive is terminated by the
Company without Cause, any unvested options granted to Executive under the
Company’s stock option plan shall immediately vest and any vested options may be
exercised on or before the earlier of: (i) the option’s expiration date or (ii)
three months after the Executive’s termination. Any option that remains
unexercised after this period shall be forfeited.
e. Resignation
or Retirement by Executive.
If
Executive resigns, retires, or otherwise terminates employment voluntarily,
Executive shall receive no severance compensation and if Executive resigns
within _______ days of the Effective Date of this agreement, Executive will
refund to Company all signing bonus paid to Executive under Paragraph 3.7
herein.
f. Change
in Control of the Company.
Executive’s employment may be terminated in the event of a “Change in Control”
of the Company (as defined in Section 11 of this Agreement) during the Term
of
this Agreement.
g. Superseding
Agreement.
This
Agreement shall be terminated immediately and automatically if the parties
enter
into another employment agreement which supersedes this Agreement. In the
event
the parties enter into a superseding agreement, no severance pay or other
compensation shall be due to Executive with respect to the termination of
this
Agreement.
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5.2 Survival
and Continuing Obligations.
Upon
termination of this Agreement, Executive shall be entitled to receive all
compensation earned and all reimbursements due through the effective date
of
termination. Additional compensation subsequent to termination, if any, will
be
due and payable to Executive only to the extent and in the manner expressly
provided in this Section 5. Executive shall cooperate with the Company in
the
winding up of pending work on behalf of the Company and the orderly transfer
of
work to other employees. Executive shall also cooperate with the Company
in the
defense of any action brought by any third party against the Company that
relates to Executive’s employment by the Company. All other rights and
obligations of the Company and Executive under this Agreement shall cease
as of
the effective date of termination; except that the Company’s obligations under
Section 5 herein and Executive’s obligation and other matters under Sections 4,
6, 7, and 8 herein shall survive such termination in accordance with their
terms.
6. Use
and Return of Company Property.
Executive acknowledges the Company’s proprietary rights and interests in its
tangible and intangible property. Accordingly, Executive agrees that upon
termination of Executive’s employment with the Company, for any reason, and at
any time, Executive shall deliver to the Company all Company property,
including: (a) all documents, contracts, writings, disks, diskettes, computer
files or programs, computer-generated materials, information, documentation,
or
data stored in any medium, recordings and drawings pertaining to trade secrets,
proprietary or confidential information, or other inventions and works of
the
Company; (b) all records, designs, plans, sketches, specifications, patents,
business plans, financial statements, accountings, flow charts, manuals,
notebooks, memoranda, lists, and other property delivered to or compiled
by
Executive, by or on behalf of the Company or any of its representatives,
vendors, or customers which pertain to the business of the Company, all of
which
shall be and remain the property of the Company, and shall be subject, at
all
times, to its discretion and control; (c) all equipment, devices, products,
and
tangible personal property entrusted to Executive by the Company; and (d)
all
correspondence, reports, records, notes, charts, advertisement materials,
and
other similar data pertaining to the business, activities, or future plans
of
the Company, in the possession or control of Executive, shall be delivered
promptly to the Company without request by it. Executive shall certify to
the
Company, in writing, within five (5) days of any request by the Company,
that
all such materials have been returned to the Company.
7. Disclosure
of Relationships or Agreements.
After
termination, Executive shall not disclose the specific terms of the Company’s
relationships or agreements with its respective vendors, financiers, or
customers that are not publicly known, whether in existence or proposed,
to any
person, firm, partnership, corporation, or business for any reason or purpose
whatsoever.
8. Non-Competition
and Non-Solicitation
8.1 Covenant
Not To Compete.
Executive hereby acknowledges and agrees that, during the term of Executive’s
employment with the Company: (i) the Company has expended and will continue
to
expend considerable time, expense, and organizational resources to develop
and
maintain its reputation and good will in the industry and among its customers
and clients and prospective customers and clients; (ii) the Company will
rely
upon the reputation and good will it has established to successfully continue
its Business; (iii) the Company will entrust such reputation and good will
to
Executive during the term of Executive’s employment and will provide Executive
with opportunities to become acquainted with the Company’s customers, clients,
suppliers, licensees, business partners, employees, contractors, and agents,
to
establish business relationships with them, and to have access to records
detailing their business activities with the Company; (iv) Executive has
become,
and will continue to become, familiar with the Company’s trade secrets and with
other Confidential Information, as defined in Exhibit 4.1; (v) Executive’s
services to the Company have been and will continue to be unique in nature
and
of extraordinary value to the Company; and (vi) the Company would be irreparably
damaged if Executive were to provide similar services, or reveal trade secrets
or Confidential information, to any person or entity competing with the Company
or engaged in a similar business. Accordingly, Executive agrees as
follows:
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8.1.1
For
a period of two (2) years
immediately following the termination of Executive’s employment, regardless of
whether Executive’s termination is voluntary or involuntary, with or without
cause, Executive shall not, within the geographic area set forth below, engage
as an officer, director, partner, consultant, employee, agent, principal,
individual owner or proprietor, or otherwise, either for himself or on behalf
of
any other person, firm, partnership, corporation, association, or other entity,
in any development, planning, marketing, sales, or management activities
in
direct competition with the Business (as defined in the Recitals above) in
which
the Company has been actively engaged during the term of Executive’s employment,
or which the Company has actively contemplated during the two (2) years
preceding the termination of Executive’s employment. This covenant not to
compete shall apply to the following geographical area: the entire area within
a
one hundred fifty (150) mile radius of Midland, Texas and within a one hundred
mile radius of any location where Company or its divisions, subdivisions,
or
affiliates operate a distribution center.
8.2
Non-Solicitation.
Executive acknowledges and agrees that the Company would be irreparably damaged
if Executive were to disrupt the Company’s relationships with its employees,
contractors, consultants, agents, or customers for purposes of engaging in
unfair competition with the Company. Accordingly, Employee agrees as
follows:
8.2.1
During Executive’s employment and for a period of two (2) years immediately
following the termination of Executive’s employment, regardless of whether
Executive’s termination is voluntary or involuntary, with or without cause,
Executive shall not, either for himself or on behalf of or in conjunction
with
any other person, partnership, corporation, organization, or other entity,
either solicit, divert, induce, or attempt to solicit, divert, or induce,
any
employee, contractor, consultant, vendor or agent of the Company to sever
or
alter his, her, or its relationship with the Company, its divisions,
subsidiaries, or affiliates, or otherwise interfere with or disrupt the
Company’s relationship with any of its employees, contractors, consultants,
vendors or agents.
8.2.2
During Executive’s employment and for a period of two (2) years immediately
following the termination of Executive’s employment, regardless of whether
Executive’s termination is voluntary or involuntary, with or without cause,
Executive shall not solicit, contact, divert, induce, or attempt to solicit,
contact, divert, or induce, any actual or prospective customer or client
of the
Company with whom Executive has had material contact (as defined below) during
the entire period of Executive's employment with the Company preceding the
termination of Executive’s employment to sever or alter his, her, or its
relationship with the Company or its subsidiaries, divisions, or affiliates
(including, without limitation, making any negative statements or communications
concerning the Company). For purposes of this section, “material contact” exists
between Executive and an actual or prospective customer or client of the
Company
if Executive: (i) personally dealt with such customer or client; (ii)
coordinated or supervised dealings with such customer or client; or (iii)
obtained Confidential Information about such customer or client in the ordinary
course of business through Executive’s association with the Company. The
restriction contained in this section shall not prevent Executive from accepting
business from customers or clients or prospective customers or clients of
the
Company who transfer their business in the absence of any conduct on the
part of
Executive that violates this covenant not to solicit.
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8.3
Reasonable
Restrictions.
Executive hereby acknowledges and agrees that the limits on his ability to
engage in activities that are competitive with the Company, as defined above,
are warranted in order to protect the Company’s trade secrets and Confidential
Information, and further, are warranted to protect the Company in developing
and
main-taining its reputation, goodwill, and status in the marketplace. Employee
specifically agrees that the time period, geographic scope, and nature of
the
restrictions set forth in Sections 8.1 and 8.2 are reasonable and necessary
to
protect the Company’s legitimate business interests and do not impose any
limitations greater than those necessary to protect those interests.
8.4.
Remedies.
Executive hereby acknowledges and agrees that the services Executive has
rendered and will continue to render to the Company are of a special and
unique
character, which gives this Agreement a peculiar value to the Company, and
further acknowledges and agrees that the loss of those services to a direct
competitor or the direct competition by Executive against the Company cannot
be
reasonably or adequately compensated for by damages in an action at law.
Executive further acknowledges and agrees that any breach or threatened breach
by Executive of any provision of Sections 4,6,7, or 8 of this Agreement shall
cause irreparable harm to the Company, which harm cannot be reasonably or
adequately compensated for by damages in an action at law. Accordingly, without
prejudice to the rights and remedies otherwise available to the Company,
Executive agrees that, in addition to any other right or remedy the Company
may
have, the Company shall be entitled to a temporary restraining order and
to a
preliminary and permanent injunction enjoining or restraining the breach
or
threatened breach of this Agreement by Executive, without the necessity of
proving the inadequacy of monetary damages or the posting of any bond or
security. Executive acknowledges and agrees that the preceding remedies shall
be
in addition to any and all other rights available to the Company at law or
in
equity. The failure of the Company to promptly institute legal action upon
any
breach of this Agreement shall not constitute a waiver of that or any other
breach hereof. Executive agrees to pay any and all court costs, attorneys’ fees,
and related expenses incurred by the Company in successfully enforcing any
provision of this Agreement, including without limitation, obtaining the
injunctive relief provided by this provision.
9. Indemnification;
Insurance.
9.1 Indemnification
of Executive.
Except
as otherwise provided in this Agreement or by applicable law, in the event
Executive is made a party to any threatened, pending, or contemplated action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by the Company against Executive), by reason of the
fact
that Executive is or was performing services under this Agreement, then the
Company shall indemnify Executive against all expenses (including attorneys’
fees), judgments, fines, and amounts paid in settlement, as actually and
reasonably incurred by Executive in connection therewith, except that nothing
in
this Section shall in any way relieve Executive of his obligation to the
Company
contained in Section 2.4 hereof. In the event that both Executive and the
Company are made a party to the same third party action, complaint, suit,
or
proceeding, the Company will engage competent legal representation, and
Executive will use the same representation, provided that if counsel selected
by
the Company shall have a conflict of interest that prevents such counsel
from
representing Executive, then the Company may engage separate counsel on
Executive’s behalf, and subject to the provisions of this Section 9, the Company
will pay all attorneys’ fees of such separate counsel. Further, while Executive
is expected at all times to use Executive’s best efforts to faithfully discharge
Executive’s duties under this Agreement, Executive cannot be held liable to the
Company for errors or omissions made in good faith except where Executive
has
exhibited gross, willful, or wanton negligence or misconduct, or has performed
criminal or fraudulent acts which materially damage the business of the Company
or where Executive has failed to perform in the best interests of the
Company.
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9.2 Insurance
Provided by Company.
As soon
as practicable after the Effective Date, the Company shall obtain a directors
and officers liability insurance policy covering all directors and officers
of
the Company, including Executive, which insurance policy shall provide adequate
insurance coverage for each of such persons, as shall be approved by the
Board
of Directors of the Company.
10. Assignment;
Binding Effect.
Executive understands that Executive has been selected for employment by
the
Company on the basis of Executive’s personal qualifications, experience, and
skills. Executive shall have no right to assign and shall not assign or purport
to assign any portion of Executive’s performance or any other rights or
obligations under this Agreement. This Agreement may be assigned or transferred
by the Company, and nothing in this Agreement shall prevent the consolidation,
merger, or sale of the Company or a sale of any or all or substantially all
of
its assets. Subject to the foregoing restriction on assignment by Executive,
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors, and assigns.
11. Change
in Control.
a. Definition.
A
“Change in Control” shall be deemed to have occurred under any one or more of
the following conditions:
i.
if,
within one year of any merger, consolidation, sale of a substantial part
of the
Company’s assets, or contested election, or any combination of the foregoing
transactions (a “Transaction”), the persons who were directors of the Company
immediately before the Transaction shall cease to constitute a majority of
the
Board of Directors of (a) of the Company or (b) any successor to the Company
or
(c) if the Company becomes a subsidiary of or is merged into or consolidated
with another corporation, of such corporation (the Company shall be deemed
a
subsidiary of such other corporation if such other corporation owns or controls,
directly or indirectly, a majority of the combined voting power of the
outstanding shares of the capital stock of the Company entitled to vote
generally in the election of directors (“Voting Stock”)).
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ii.
if,
as a result of a Transaction, the Company does not survive as an entity,
or its
shares are changed into the shares of another corporation unless the
stockholders of the Company immediately prior to the Transaction own a majority
of the outstanding shares of such other corporation immediately following
the
Transaction;
iii.
if
any “person” (within the meaning ascribed to such term in Section 3(a)(9)
of the Securities Exchange Act of 1934, as amended, and used in
Sections 13(d) and 14(d) thereof and the rules promulgated thereunder),
becomes, after the Effective Date, a beneficial owner directly or indirectly
of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company’s Voting Stock;
iv. the
dissolution or liquidation of the Company is approved by its stockholders;
or
v.
if the
members of the Board as of the Effective Date (the “Incumbent Board”) cease to
represent a majority of the Board; provided, that any person becoming a director
subsequent to the date hereof whose election, or nomination for election
by the
Company’s stockholders, was approved by at least two-thirds of the members
comprising the Incumbent Board (either by a specific vote or by approval
of the
proxy statement in which such person is named as a nominee for director without
objection to such nomination) shall be, for purposes of this paragraph v,
treated as though such person were a member of the Incumbent Board.
b. Termination
of Employment.
In the
event Executive’s employment is terminated by the Company or its successor
during the one year period following a completed Change in Control, Executive
shall be entitled to receive the following:
i.
One
(1) year of severance pay based on Executive’s Base Salary then in effect,
payable in a lump sum amount within thirty (30) days of the Executive’s
termination or, if later, the completion of the Change in Control, and subject
to usual and customary deductions and withholding; and
ii.
Continuation of all welfare benefits provided pursuant to Section 3.3 of
this
Agreement for a period of one (1) year.
iii.
If,
with respect to any alleged failure by the Company to comply with any of
the
terms of this Agreement upon a Change in Control, Executive hires legal counsel
with respect to this Agreement or institutes any negotiations or institutes
or
responds to legal action to assert or defend the validity of, enforce his
rights
under, or recover damages for breach of this Agreement and thereafter the
Company is found in a judgment no longer subject to review or appeal to have
breached this Agreement in any material respect, then the Company shall
indemnify Executive for his actual expenses for attorneys’ fees and
disbursements, together with such additional payments, if any, as may be
necessary so that the net after-tax payments to Executive equal such fees
and
disbursements.
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10
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iv.
Any
unvested options granted to Executive under the Company’s stock option plan
shall immediately vest and any vested options may be exercised on or before
the
earlier of: (i) the option’s expiration date or (ii) twelve months after the
Executive’s termination.
Any
amount payable under this Section 11(b)(i) or (ii) shall be reduced by the
value
of any termination benefit that is payable to Executive under Section
5.
c. Voluntary
Resignation by Executive for Good Reason.
In the
event Executive resigns his employment with Good Reason (as defined below)
within the one year period following a completed Change in Control, Executive
may elect to terminate this Agreement by providing written notice to the
Company
or its successor. In such case, Executive shall be entitled to receive all
of
the benefits provided in Section 11(b). For purposes of this subsection,
Good
Reason shall mean:
i.
The
assignment to Executive of any duties inconsistent with the position Executive
held immediately prior to the Change in Control, or a significant adverse
alteration in the nature or status of Executive’s responsibilities or the
conditions of his employment from those in effect immediately prior to such
Change in Control;
ii.
The
relocation of the Company’s offices at which Executive is employed immediately
prior to the date of the Change in Control to a location more than fifty
(50)
miles from Midland, Texas, or the Company’s requiring Executive to be based
anywhere other than the Company’s offices at such location except for required
travel on the Company’s business to an extent substantially consistent with
Executive’s business travel obligations at the time of the Change in
Control;
iii.
The
failure by the Company to continue in effect any material compensation or
benefit plan or arrangement in which Executive participates immediately prior
to
the Change in Control unless an equitable and substantially comparable
arrangement (embodied in a substitute or alternative plan) has been made
with
respect to such plan or arrangement, or the failure by the Company to continue
Executive’s participation therein (or in such substitute or alternative plan or
arrangement) on a basis not less favorable, both in terms of the amount of
benefits provided and the level of participation relative to other participants,
as existed at the time of the Change in Control; or
iv.
Any
breach of this Agreement by the Company.
d. Certain
Taxes.
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11
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i.
Anything in this Agreement to the contrary notwithstanding, in the event
it is
determined that any payment made to or benefit provided to Executive pursuant
to
this Agreement or any other plan, arrangement, or agreement of the Company
(a
“Payment") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code or any similar federal, state, or local tax that may
hereafter be imposed (such excise tax, together with any associated interest
and
penalties, are hereinafter collectively referred to as the “Excise Tax"), then
the Company or its successor shall pay to Executive an additional payment
(the
“Gross-Up Payment”) in an amount such that after payment by Executive of all
taxes (including federal, state, and local income taxes, employment taxes,
Excise Tax, and any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment, Executive retains
a
net amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. It is the intention of the parties that the Company provide Executive
with a full tax gross-up under the provisions of this Section 11(g) so that
on a
net after-tax basis, the result to Executive shall be the same as if the
Excise
Tax had not been imposed on a Payment.
ii. All
determinations required to be made under Section 11(g) (including whether
and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment
and the
assumptions to be utilized in arriving at such determination) shall be made
by a
nationally recognized independent accounting firm serving as the Company’s
independent accounting firm immediately prior to the Change in Control (the
"Accounting Firm"). The Accounting Firm shall provide detailed supporting
calculations to both the Company and Executive within ten (10) business days
of
the Company's receipt of notice from Executive that there has been a Payment
or
at such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity,
or group effecting the Change in Control, Executive may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to Section
11(g), shall be paid by the Company to Executive within five (5) business
days
of the receipt of the Accounting Firm's determination. Any determination
by the
Accounting Firm shall be binding upon the Company and Executive.
iii. As
a
result of the uncertainty in the application of Section 4999 of the Code
at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by the Company
should have been made (the "Underpayment") or that Gross-Up Payments will
have
been made that should not have been made ("Overpayments"), consistent with
the
calculations required to be made hereunder. In the event Executive thereafter
is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit
of
Executive. If the Accounting Firm shall determine that an Overpayment has
been
made, Executive shall promptly repay the amount of the Overpayment to the
Company.
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12. Additional
Provisions.
12.1 Amendments;
Waivers; Remedies.
This
Agreement may not be amended, and no provision of this Agreement may be waived,
except by a writing signed by Executive and by a duly authorized representative
of the Company. Failure to exercise any right under this Agreement shall
not
constitute a waiver of such right. Any waiver of any breach of this Agreement
shall not operate as a waiver of any subsequent breaches. All rights or remedies
specified for a party herein shall be cumulative and in addition to all other
rights and remedies of the party hereunder or under applicable law.
12.2 Notices.
Any
notice under this Agreement must be in writing and addressed to the Company
or
to Executive at the corresponding address below. Notices under this Agreement
shall be effective upon: (a) hand delivery, when personally delivered; (b)
written verification of receipt, when delivered by overnight courier or
certified or registered mail; or (c) acknowledgment of receipt of electronic
transmission, when delivered via electronic mail or facsimile. Executive
shall
be obligated to notify the Company, in writing, of any change in Executive’s
address. Notice of change of address shall be effective only when done in
accordance with this Section 11.2.
|
Company’s
Notice Address:
|
United
Fuel & Energy Corporation
|
|
|
000
X. Xxxxxxxxxx
|
||
|
Xxxxx
Xxxxx
|
||
|
Xxxxxxx,
Xxxxx 00000
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
Executive’s
Notice Address:
|
Xxxxx
XxXxxxxx
|
|
|
0000
Xxxxxxxxx Xxxx.
|
||
|
Xxxxxxx,
Xxxxx 00000
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
( )
|
||
12.3 Severability.
If any
provision of this Agreement shall be held by a court of competent jurisdiction
to be invalid, unenforceable, or void, such provision shall be enforced to
the
fullest extent permitted by law, and the remainder of this Agreement shall
remain in full force and effect. In the event that the time period or scope
of
any provision is declared by a court of competent jurisdiction to exceed
the
maximum time period or scope that such court deems enforceable, then such
court
shall reduce the time period or scope to the maximum time period or scope
permitted by law.
12.4 Taxes.
All
amounts paid under this Agreement (including, without limitation, Base Salary)
shall be reduced by all applicable state and federal tax withholdings and
any
other withholdings required by any applicable jurisdiction.
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13
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12.5 Governing
Law.
The
validity, interpretation, enforceability and performance of this Agreement
shall
be governed by and construed in accordance with the laws of the State of
Texas,
without regard to conflict of laws principles.
12.6 Venue.
Each of
the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of Texas located in Midland County and the Federal Courts
of
the United States of America located in the Midland-Odessa Division of the
Western District of Texas, for the purposes of any suit, action, or other
proceeding arising out of this Agreement or any transaction contemplated
hereby.
12.7 Interpretation.
This
Agreement shall be construed as a whole, according to its fair meaning, and
not
in favor of or against any party. Sections and section headings contained
in
this Agreement are for reference purposes only, and shall not affect, in
any
manner, the meaning or interpretation of this Agreement. Whenever the context
requires, references to the singular shall include the plural and the plural
the
singular.
12.8 Survival.
All of
those portions of this Agreement that require performance by Executive following
termination of Executive’s employment hereunder shall survive any termination of
this Agreement.
12.9 Counterparts.
This
Agreement may be executed in several counterparts (including by means of
telecopied signature pages), each of which shall be deemed an original but
all
of which shall constitute one and the same instrument.
12.10 Authority.
Each
party represents and warrants that such party has the right, power, and
authority to enter into and execute this Agreement and to perform and discharge
all of the obligations hereunder, and that this Agreement constitutes the
valid
and legally binding agreement and obligation of such party and is enforceable
in
accordance with its terms.
12.11 Additional
Assurances.
The
provisions of this Agreement shall be self-operative and shall not require
further agreement by the parties except as may be herein specifically provided
to the contrary; provided, however, that at the request of the Company,
Executive shall execute such additional instruments and take such additional
acts as the Company may deem necessary to effectuate this
Agreement.
12.12 Entire
Agreement.
This
Agreement (including the Exhibits attached hereto, which are incorporated
herein
by reference) is the final, complete, and exclusive agreement of the parties
with respect to the subject matter hereof and supersedes and merges all prior
or
contemporaneous representations, discussions, proposals, negotiations,
conditions, communications, and agreements, whether written or oral, between
the
parties relating to the subject matter hereof and all past courses of dealing
or
industry custom. No oral statements or prior written material not specifically
incorporated herein shall be of any force and effect, and no changes in or
additions to this Agreement shall be recognized unless incorporated herein
by
amendment, as provided herein (such amendment to become effective on the
date
stipulated therein).
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12.13 Executive
Acknowledgment.
Executive acknowledges that, before signing this Agreement, Executive was
advised of his right to consult with an attorney of his choice to review
this
Agreement and that Executive had sufficient opportunity to have an attorney
review the provisions of this Agreement and negotiate its terms. Executive
further acknowledges that Executive had a full and adequate opportunity to
review this Agreement before signing it; that Executive carefully read and
fully
understood all the provisions of this Agreement before signing it, including
the
rights and obligations of the parties; and that Executive has entered into
this
Agreement knowingly and voluntarily.
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IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first above
written.
|
COMPANY:
|
||
|
UNITED
FUEL & ENERGY CORPORATION
|
||
|
By
Its Duly Authorized Officer:
|
||
| /s/ Xxxxx X. Page | ||
| Signature | ||
| Name Printed: Xxxxx X. Page | ||
| EXECUTIVE: | ||
| /s/ Xxxxx XxXxxxxx | ||
| Signature | ||
|
Name
Printed:
Xxxxx XxXxxxxx
|
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SCHEDULE
3.6
BUSINESS
MANAGEMENT OBJECTIVES
Goals
and Objectives
Xxxxx
XxXxxxxx
|
·
|
Develop
and promote a clear mission statement and strategic plan that is
approved
by the board and is well communicated within the
organization.
|
|
·
|
Create
operational plan and budget that fulfills the objectives of the
mission
statement and strategic
plan.
|
|
·
|
Effectively
manage the human resources of the organization, to meet corporate
objectives and to ensure the companies policies and procedures
are being
followed.
|
|
·
|
Oversee
compliance of all company actions with regard to current laws and
public
company regulations.
|
|
·
|
Ensure
the company maintains positive community and public
relations.
|
|
·
|
Efficiently
integrate the companies’ acquisitions within the projected time frame the
integration team believes will be necessary.
|
|
·
|
Supports
operations and administration of Board by maintaining good levels
of
communication and interface between board and company management.
Report
quarterly to board any areas of significance such as employee turnover
ratios, key customers movement and other items as requested from
time to
time.
|
|
·
|
Publish
monthly executive summary, to board and key executive management
members,
which include quantitative results and qualitative issues, programs
and
actions.
|
|
·
|
Others
to be determined by the
Board
|
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17
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EXHIBIT
4.1
EMPLOYEE
CONFIDENTIAL INFORMATION AGREEMENT
For
good
and valuable consideration, including my employment and continued employment
by
United Fuel & Energy Corporation, or its successors and assigns, and any of
its present or future subsidiaries, or organizations controlled by, controlling,
or under common control with it (the "Company"), I agree as
follows:
1. That
the
Company operates in a competitive environment, and that its success is due
in
part to the competitive advantage afforded it by its unique and proprietary
trade secrets and other confidential information relating to: (1); and (3)
the
related marketing and business plan, as well as other business processes
and
product technologies, in which the Company has invested (and plans to continue
investing) great time, effort, skill, and expense. I understand that the
Company
is unwilling to employ and compensate me, or to continue to employ and
compensate me, but for the restrictions of this Agreement. I acknowledge
that my
employment by the Company may include inventing, discovering, initiating,
or
contributing to Confidential or Proprietary Information (as defined below)
as an
integral part thereof.
2. At
all
times before and after the termination of my service (for any reason, by
the
Company or by me) to keep all Confidential or Proprietary Information in
strict
confidence and secrecy, and not to disclose such Confidential or Proprietary
Information to anyone, and not to use the Confidential or Proprietary
Information in any way outside of my assigned responsibilities for the Company,
except as expressly pre-authorized by the Company in writing. "Confidential
or Proprietary Information"
means
any information or idea (whether or not a trade secret) relating to the business
of the Company that is not generally known outside the Company (including
information which may be available from sources outside the Company, but
not in
the form, arrangement, or compilation in which it exists within the Company);
that the Company considers confidential; or that may tend to give the Company,
or another party using it, any competitive advantage. "Confidential
or Proprietary Information"
includes, but is not limited to: (i) customer lists and records of current,
former, and prospective customers; (ii) special needs and characteristics
of
current, former, or prospective customers; (iii) present or future business
plans; (iv) trade secrets, proprietary, or confidential information of any
customer or other entity to which the Company owes an obligation not to disclose
such information; (v) marketing, financing, business development, or strategic
plans; (vi) sales methods, practices, and procedures; (vii) personnel
information; (viii) research and development data and projections; (ix)
information or data concerning the Company’s competitive position in its various
lines of business; (x) existing, new, or envisioned products, programs,
services, methods, techniques, processes, projects, or systems; and (xi)
sales,
pricing, billing, costs, and other financial data and projections. All documents
containing this information will be considered Confidential or Proprietary
Information whether or not marked with any proprietary or confidential notice
or
legend.
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18
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3. This
Agreement shall benefit and may be enforced by the Company, its successors
or
assigns, and shall bind me and any successors in interest, and may not be
changed in whole or in part except in a writing signed by an authorized officer
of the Company and me. This Agreement is governed by the law of the State
of
Texas. Any litigation commenced by a party and relating to this Agreement
or its
subject matter shall be within the exclusive jurisdiction of the courts of
the
State of Texas, Midland County, or if the jurisdiction prerequisites exist
at
the time, the Federal Courts of Texas with venue to be in the Midland-Odessa
Division of the Western District
of Texas, and the parties hereby waive any right in such litigation to object
to
personal jurisdiction and venue. The Company shall be entitled to preliminary,
temporary, and permanent injunctive relief to restrain any violation of this
Agreement by me, in addition to damages and other remedies. I agree to pay
the
Company's attorneys’ fees and other costs of enforcing this Agreement, should I
breach any provision of it. The Company may notify anyone subsequently employing
or retaining me or evidencing any intention to employ or retain me as to
the
existence and provisions of this Agreement. No waiver of any provision of
this
Agreement (or any similar agreement with any other person) shall constitute
or
imply any continuing, other, or further waiver, and the Company shall be
free to
reinstate the waived term at any time and to enforce all other provisions
of
this Agreement at its sole discretion. This is the entire agreement concerning
its subject matter. If I have a written employment agreement with the Company,
I
understand that my employment with the Company may be terminated by either
me or
the Company under the terms of that written agreement.
Having
read and understood this Employee Confidential Information Agreement, I have
willingly and voluntarily executed and unconditionally delivered this Agreement
to the Company, effective as of August ___, 2005.
| _________________________________________ | _________________________________________ | |
| Employee’s Name | Signature |
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19
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