SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS
SEPARATION
AGREEMENT AND RELEASE OF ALL CLAIMS
This
SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS (“Agreement”)
is
made and entered into between Xxxxxxx XxXxxxxx, his heirs and assigns
(hereinafter “XxXxxxxx”)
and
United Fuel & Energy Corporation (hereinafter “United”)
for
the consideration and mutual promises hereinafter stated, as
follows:
RECITALS
WHEREAS,
XxXxxxxx is presently employed by United pursuant to the terms of an Amended
and
Restated Executive Employment Agreement dated October 5, 2007 (the “Employment
Agreement”);
and
WHEREAS,
United
and XxXxxxxx have mutually agreed that it is in the Parties’ best interests to
terminate the employment relationship and the Employment Agreement pursuant
to
the terms identified herein, as opposed to those identified in the Employment
Agreement;
THEREFORE,
XxXxxxxx
and United hereby enter into this Agreement for the consideration and mutual
promises stated herein as follows:
1. Separation:
The
Parties acknowledge that XxXxxxxx has resigned his position as United’s
President and Chief Executive Officer and as a member of United’s Board of
Directors as of June 10, 2008. In addition, XxXxxxxx has resigned from all
of
his officer and director positions from each of United’s subsidiaries as of June
10, 2008. XxXxxxxx and United agree that the Employment Agreement shall
terminate, and XxXxxxxx’x employment with United shall also terminate, as of
August 31, 2008 (the “Effective
Date of Separation”).
XxXxxxxx agrees that all benefits of employment with United will terminate
as of
the Effective Date of Separation, unless specifically provided to the contrary
in this Agreement or by law. XxXxxxxx shall continue to be paid his current
base
salary of $325,000 per annum consistent
with United’s normal payroll practices through the Effective Date of
Separation.
2. Payment
Following Separation:
As
consideration in support of this Agreement, should XxXxxxxx execute this
Agreement and not revoke it as permitted in Paragraph 20, United shall pay
to
XxXxxxxx the amount of four hundred thirty three thousand three hundred thirty
three dollars ($433,333) (the “Separation
Payment”),
less
applicable payroll deductions and withholding, payable in thirty-two (32)
semi-monthly payments consistent with United’s normal payroll practices
beginning on United’s first regularly scheduled payroll date in September, 2008,
and ending on United’s last regularly scheduled payroll date in December, 2009.
By signing this Agreement, XxXxxxxx acknowledges the sufficiency of the
Separation Payment as consideration for this Agreement. Payment of the
Separation Payment shall constitute full satisfaction of any obligation to
XxXxxxxx by United arising out of or in any way related to his employment,
the
termination of his employment and/or the termination of the Employment
Agreement, and XxXxxxxx further acknowledges and agrees that he is not owed
any
additional amounts by United arising out of or related to his employment,
including, without limitation, bonuses, accrued but unused vacation or sick
leave or expense reimbursements.
3. Continuation
of Health and Life Insurance Benefits:
XxXxxxxx understands and agrees that, except as otherwise provided herein,
United shall cease making payments for his health and life insurance premiums
as
of the Effective Date of Separation. XxXxxxxx acknowledges that he will receive
notification that he may continue coverage under United’s health insurance
program as provided by the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”).
For
purposes of COBRA coverage, the Effective Date of Separation or other date
of
employment termination will constitute the date of the qualifying event.
XxXxxxxx acknowledges and agrees that he shall be responsible for taking all
steps necessary to elect continuation of health insurance as provided by COBRA
and that he shall be solely responsible for payment of any and all health
insurance premiums due as a result of his election to continue such coverage.
Notwithstanding the foregoing, should XxXxxxxx execute this Agreement and not
revoke it as permitted in Paragraph 20, and should XxXxxxxx further timely
elect
to continue health insurance through COBRA, United will pay XxXxxxxx’x COBRA
premium for individual and dependent coverage for the period of time from July,
2008, through December, 2009; thereafter, XxXxxxxx may continue his insurance
as
provided by COBRA by making any and all insurance premium payments that may
be
required. In addition to paying health insurance premiums as provided in this
Paragraph, United shall also pay life insurance premiums for the same period
of
time identified in this Paragraph for life insurance benefits in an amount
equal
to those currently provided by United to XxXxxxxx as of the Effective Date
of
Separation.
4. Stock
Options and Grants:
Upon
the Effective Date of Separation, all restrictions on any restricted stock
grants issued to XxXxxxxx by United shall lapse and all stock options and grants
granted to XxXxxxxx by United shall become fully vested and exercisable. The
expiration dates for all of XxXxxxxx’x outstanding stock options shall be
amended to provide that such options shall remain exercisable following the
Effective Date of Separation until January 3, 2011. All such stock options
shall
expire as of the 5:00 p.m. Central time on January 3, 2011. XxXxxxxx
acknowledges and agrees that his stock options that currently qualify as
incentive stock options shall no longer qualify for incentive stock option
treatment as a result of the foregoing extension of the expiration date and
that
United shall not be held responsible for any failure of such stock options
to
qualify for incentive stock option treatment.
5. Other
Employee Benefits:
XxXxxxxx understands and agrees that this Agreement does not modify the Parties’
rights and obligations under any employee benefit plans. XxXxxxxx further
understands and agrees that his right to receive benefits as provided in any
of
United’s employee benefit plans shall be determined solely as provided by, and
in accordance with, the terms and conditions of the applicable benefit plans
as
they may currently exist or as they may be modified in the future.
6. Release,
Assignment of All Claims and Covenant Not to Xxx -
XxXxxxxx:
It is
agreed and understood by XxXxxxxx that this Agreement shall resolve any and
all
obligations and disputes between XxXxxxxx and United, its
past,
present and future directors, officers, managers, members, shareholders,
representatives, subsidiaries, related companies, insurance carriers, agents,
servants, employees, successors, assigns, predecessors, assignors, heirs,
legatees, insurers and (collectively, the “United
Released Parties”).
XxXxxxxx, with full understanding of the contents and legal effects of this
Agreement, completely and voluntarily releases the United Released Parties
from
any and all claims, rights, demands, liabilities and causes of action, of any
character, known or unknown, asserted or unasserted, in law or in equity, of
any
nature, that he may have against them that arose or may have arisen in whole
or
in part before the date of this Agreement, including but not limited to any
and
all:
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a.
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Claims
related to XxXxxxxx’x employment with United and the termination of his
employment with United;
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b.
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Claims
arising under contract, tort or common law, including, but not limited
to,
breach of contract, promissory estoppel, detrimental reliance, fraud,
wrongful discharge, false imprisonment, assault, battery, intentional
infliction of emotional distress, defamation, slander, libel, fraud,
invasion of privacy, breach of the covenant of good faith and fair
dealing, breach of fiduciary duty, conversion and tortious interference
with any type of third-party relationship, as well as any and all
damages
that may arise out of any such claims, including, without limitation,
claims for economic loss, lost profits, loss of capital, lost wage
earning
capacity, emotional distress, mental anguish, personal injuries,
punitive
damages, or future damages;
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d.
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Claims
arising under state or federal constitution, state or federal statute,
city ordinance or public policy, including, but not limited to, the
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001
et
seq.
(“ERISA”)
and claims involving employment discrimination of any form and/or
harassment (including, but not limited to, claims under the Age
Discrimination in Employment Act, 29 U.S.C. § 621 et
seq.,
Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000e
et
seq.,
the Civil Rights Act of 1870, 42 U.S.C. § 1981, and/or the Texas
Commission on Human Rights Act, Tex. Lab. Code Xxx. § 21.001 et
seq.);
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e.
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Claims
of retaliation of any nature, including, but not limited to, the
anti-retaliatory provisions of the statutes identified in Subparagraph
(d)
of this Paragraph and claims under Tex.
Lab. Code Xxx.
§
451.001 et
seq.;
and
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f.
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NEGLIGENCE
OF ANY KIND, INCLUDING WITHOUT LIMITATION GROSS NEGLIGENCE, AGAINST
THE
UNITED RELEASED PARTIES BASED UPON THE ACTION OR INACTION OF THE
UNITED
RELEASED PARTIES.
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(collectively
the “Claims”).
It is
also understood and agreed by XxXxxxxx that this Agreement may be pleaded as,
and shall constitute an absolute and final bar to, any and all suits now
pending, or which may hereafter be filed or prosecuted by XxXxxxxx, or anyone
claiming by, through or under XxXxxxxx against the United Released Parties,
arising out of or connected with any of the Claims. Additionally, XxXxxxxx
covenants not to xxx and agrees that at no time subsequent to the execution
of
this Agreement will he permit the filing or maintenance, in any state, federal
or foreign court, or before any local, state, federal or foreign administrative
agency, or any other tribunal, of any charge, claim or action of any kind
arising out of or in any way related to the Claims, although the Parties agree
that the Claims do not include any cause of action or claim related to action
or
inaction following the date on which this Agreement was fully executed by the
Parties, including any claim relating to the breach of this Agreement. Finally,
it is understood and agreed by XxXxxxxx that this Agreement shall be construed
as broadly and all-encompassing as permitted by law and that it is the intent
of
the parties that this Agreement shall fully and finally resolve all existing
claims that XxXxxxxx has against United; if it is found in contravention of
the
Parties’ intent that a claim has not been so released, XxXxxxxx agrees that any
such claim is hereby assigned to United. Notwithstanding the foregoing, the
parties expressly agree that the provisions of this Agreement do not restrict
XxXxxxxx’x ability to challenge this Agreement’s compliance with the Older
Workers Benefit Protection Act.
7. Release,
Covenant Not to Xxx and Assignment of All Claims -
United:
It is
agreed and understood by United that this Agreement shall resolve any and all
obligations and disputes between it and XxXxxxxx arising out of or related
to
his employment or the termination of his employment with United. United, with
full understanding of the contents and legal effects of this Agreement,
completely and voluntarily releases XxXxxxxx from any and all claims, rights,
demands, liabilities and causes of action, of any character, known or unknown,
asserted or unasserted, in law or in equity, of any nature, that it may have
against him that arose or may have arisen in whole or in part before the date
of
this Agreement, including but not limited to any and all:
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a.
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Claims
arising under contract, tort or common law (including without limitation
claims for economic loss, lost profits, loss of capital, emotional
distress, mental anguish, personal injuries, punitive damages, or
future
damages), including, but not limited to claims for defamation, fraudulent
inducement, or breach of contract;
and
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b.
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NEGLIGENCE
(EXCLUDING GROSS NEGLIGENCE) AGAINST XXXXXXXX BASED UPON THE ACTION
OR
INACTION OF XXXXXXXX,
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(collectively
the “United
Claims”).
It is
also understood and agreed by United that this Agreement may be pled as, and
shall constitute, an absolute and final bar to any and all suits now pending,
or
that may hereafter be filed or prosecuted by United, or anyone claiming by,
through, or under United against XxXxxxxx, arising out of or in connection
with
any of the United Claims. Additionally, United agrees and covenants that at
no
time subsequent to the execution of this Agreement will it xxx XxXxxxxx or
permit the filing or maintenance, in any state, federal, or foreign court,
or
before any local, state, federal or foreign administrative agency, or any other
tribunal, of any charge, claim or action of any kind arising out of or in any
way related to the United Claims, although the Parties agree that the United
Claims do not include (i) any cause of action or claim related to action or
inaction following the date on which this Agreement was fully executed by the
Parties, including any claim relating to the breach of this Agreement, or (ii)
any claims for fraud or claims arising under a state or federal constitution,
state or federal statute or regulation, city ordinance or public policy.
Finally, it is understood and agreed by United that this Agreement shall be
construed as broadly and all-encompassing as permitted by law and that it is
the
intent of the parties that this Agreement shall fully and finally resolve all
existing claims that United has against XxXxxxxx; if it is found in
contravention of the Parties’ intent that a claim has not been so released,
United agrees that any such claim is hereby assigned to XxXxxxxx.
8. Return
of Property:
XxXxxxxx agrees that as soon as possible and in no event later than seven (7)
days following the date the Agreement is executed and delivered by both Parties,
he will return to United any and all property in his possession or custody
owned
by any of the United Released Parties, including, but not limited to, keys
associated with all vehicles and buildings owned by the United Released Parties,
credit cards, mobile phones, computers, access cards, PDAs and other items
and
documents. Notwithstanding the foregoing, United agrees that XxXxxxxx may keep
his laptop computer and PDA provided that XxXxxxxx first give United’s IT
department access to said laptop computer and PDA in order to remove all
software and proprietary information owned by United from the memory storage
thereof.
9. Continuation
of Contractual and Other Obligations:
The
Parties acknowledge and agree that XxXxxxxx has previously agreed to various
“Restrictive Covenants” pursuant to Paragraph 6 of the Employment Agreement. The
Parties also acknowledge and agree that XxXxxxxx’x obligations pursuant to
paragraph 6 of the Employment Agreement shall remain in full force and effect
as
provided therein, notwithstanding the Parties’ agreement to terminate such
Employment Agreement, and that this Agreement shall not modify XxXxxxxx’x
obligations, whether imposed by contract or common law, not to use or disclose
United’s confidential and proprietary information. The Parties further agree
that United has agreed to indemnify XxXxxxxx as provided in Paragraph 8.2 of
the
Employment Agreement and in an Indemnification Agreement dated October 5, 2007
(the “Indemnity
Agreement”)
and
that such obligations shall remain in full force and effect as provided in
both
the Employment Agreement, notwithstanding the Parties’ agreement to terminate
such Employment Agreement, and the Indemnity Agreement. Finally, XxXxxxxx
acknowledges and agrees that the provisions of Paragraph 6 of the Employment
Agreement are a reasonable and necessary protection of substantial interests
and
that any violation of such restrictions could cause substantial injury to the
United Released Parties; therefore, XxXxxxxx agrees that, in the event of a
breach or threatened breach by XxXxxxxx of such provisions, the United Released
Parties, individually or collectively, shall be entitled to seek a temporary
and/or permanent injunction through the appropriate forum restraining XxXxxxxx
from such breach or threatened breach, provided, however, that nothing contained
herein shall be construed to preclude the United Released Parties from pursuing
any other available remedy for such breach or threatened breach in addition
to,
or in lieu of, such injunctive relief.
10. Assignment
of Interest:
XxXxxxxx represents and warrants that he has not assigned to any person or
entity all or any part of the claims released herein, other than as may be
provided in this Agreement. XxXxxxxx acknowledges and agrees that he shall
satisfy all obligations to any party, including his attorney(s), if any, related
in any way to XxXxxxxx’x employment with United, the termination of his
employment with United
and/or
preparation of this Agreement.
11. Indemnity:
XxXxxxxx agrees to indemnify and hold free and harmless the United Released
Parties from and against any and all claims, demands, causes of action or
judgments made, brought or recovered by any parent, spouse (ceremonial or at
common law) or child (born, adopted or adoption by estoppel), whether by birth
or marriage, arising out of or in any manner related to claims released by
this
Agreement and all moneys paid to XxXxxxxx as a result of this Agreement. This
agreement to indemnify the United Released Parties from such claims includes
the
agreement to pay all attorneys' fees and other costs that any and all of the
United Released Parties may incur in the defense of such claims. XxXxxxxx
understands and agrees that the choice of counsel to represent the United
Released Parties in any such proceedings to which this agreement to indemnify
applies shall at all times rest within the sole discretion of that member of
the
United Released Parties seeking indemnification pursuant to this
Paragraph.
12. Taxation
of Settlement Payment and Indemnity:
XxXxxxxx acknowledges and agrees that the United Released Parties have made
no
representations to him regarding taxes that may be due as a result of the
consideration provided to him pursuant to this Agreement. XxXxxxxx understands
and agrees that the United Released Parties have no duty to defend him against
any claims brought by taxing authorities related in any way to any payments
made
to him pursuant to this Agreement. Finally, XxXxxxxx understands and agrees
that
he shall fully indemnify the United Released Parties for any claims brought
by
taxing authorities against the United Released Parties, whether individually
or
collectively, seeking payment of taxes, penalties and/or interest related in
any
way to the assessment, determination and/or reporting of taxes under federal,
state and/or local law. This agreement to indemnify the United Released Parties
includes the agreement to pay all attorneys' fees and other costs that any
and
all of the United Released Parties may incur in the defense of such claims;
additionally, the choice of counsel to represent the United Released Parties
in
any proceedings to which this agreement to indemnify applies shall at all times
rest within the sole discretion of that member of the United Released Parties
seeking indemnification pursuant to this Paragraph.
13. Entire
Agreement:
XxXxxxxx acknowledges that, except as expressly set forth herein, no
representations of any kind or character have been made by or on behalf of
the
United Released Parties to induce his execution of this Agreement and that
this
Agreement constitutes the complete understanding and agreement between him
and
the United Released Parties. XxXxxxxx also acknowledges that this Agreement
supersedes any and all prior agreements, promises or inducements concerning
this
subject matter, if any, unless otherwise provided herein. By signing this
Agreement, XxXxxxxx expressly disclaims any reliance on any representations,
promises, or other statements by the United Released Parties, their
representatives, agents or attorneys, except to the extent such representations,
promises or other statements are expressly contained in this
Agreement.
14. Miscellaneous:
XxXxxxxx acknowledges and agrees that the terms of this Agreement are
contractual and not mere recitals. XxXxxxxx also acknowledges and agrees that
this Agreement shall be construed and governed by the laws of the State of
Texas, including, but not limited to, the doctrine of severability, as that
doctrine may be considered to have been modified by state and/or federal
statutes and/or regulations. XxXxxxxx further acknowledges that this Agreement
may be executed in any number of counterparts, each of which shall be deemed
an
original and all of which shall constitute one and the same instrument. XxXxxxxx
also agrees that venue for this Agreement shall be proper and irrevocably set
in
Dallas County, Texas, regardless of his present or future domicile. Finally,
XxXxxxxx agrees that the existence of any claim or cause of action by XxXxxxxx
against the United Released Parties that arises following his execution of
this
Agreement, whether predicated on this Agreement or otherwise, will not
constitute a defense to the enforcement by any of the United Parties of any
provision of this Agreement or any other agreement that may exist as between
the
parties
15. Exercise
of Remedies:
No
delay or omission by the United Released Parties in exercising any right under
this Agreement shall operate as a waiver of any rights or remedies that they
may
have under this Agreement, either at law or in equity, and no single or partial
exercise of any such right shall preclude any other or further exercise thereof
or of the exercise of any other right or remedy.
16. Agreement
of Further Cooperation:
XxXxxxxx and United each agree to execute and deliver such further documents
and
to cooperate in such manner as may be necessary to implement and give effect
to
the agreements contained in this Agreement. In addition, XxXxxxxx agrees that
if
the other parties to that certain Stockholders Agreement dated October 5, 2007
by and among United, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, as Trustee under the
Greinke Business Living Trust dated April 20, 1999, Xxxxxx X. Xxxxx, Falcon
Seaboard Investment Company, L.P. and XxXxxxxx agree to amend or terminate
such
agreement so as to eliminate XxXxxxxx’x ability to influence or control the
voting of United shares held by Xxxxx X. Xxxxxxx or his affiliates, he will
execute and deliver such further documents and cooperate in such manner as
may
be necessary to so amend or terminate such agreement.
17. Confirmation
of No Additional Claims.
XxXxxxxx acknowledges and agrees that he has not initiated any administrative
proceedings or litigation with respect to the Claims. United acknowledges and
agrees that it has not initiated any administrative proceedings or litigation
with respect to the United Claims.
18. No
Admission of Wrongdoing:
XxXxxxxx acknowledges and agrees that this Agreement shall not be construed
as
an admission by the United Released Parties of any wrongdoing and that neither
this Agreement nor the furnishing of consideration for this Agreement shall
be
deemed or construed at any time for any purpose as an admission of the United
Released Parties’ liability or responsibility for any alleged wrongdoing of any
kind. XxXxxxxx agrees that he shall not be deemed to have prevailed in any
respect against the United Released Parties for the purpose of an attorneys’ fee
award or for any other purpose.
19. No
Presumption Against Interest:
This
Agreement has been jointly negotiated, drafted, and reviewed by the Parties.
Therefore, no provision arising directly or indirectly therefrom shall be
construed against XxXxxxxx or the United Released Parties as being drafted
by
that party.
20. Understanding
of Agreement:
By
signing this Agreement, XxXxxxxx acknowledges that:
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a.
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He
has read and considered the terms of this Agreement, including the
Release, Assignment of All Claims and Covenant Not to Xxx in Paragraph
6;
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b.
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This
Agreement, including the Release, Assignment of All Claims and Covenant
Not to Xxx, is written in a manner that he understands and that he
agrees
to the terms of this Agreement of his own free will and
accord;
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c.
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He
has been advised in writing to consult with an attorney of his choosing
prior to executing this Agreement, he has consulted with an attorney
of
his choosing and that such attorney has explained the terms and conditions
of this Agreement to him;
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d.
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The
Release, Assignment of All Claims and Covenant Not to Xxx specifically
refers to rights and/or claims that may arise under the Age Discrimination
in Employment Act, 29 U.S.C. § 621 et
seq.
and any similar state or local protective
statute;
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e.
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He
has twenty-one (21) calendar days from the date on which this Agreement
is
given to him (the “Consideration
Period”)
to consider the terms of this Agreement and whether he will execute it,
although he may execute the Agreement before the expiration of the
Consideration Period;
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f.
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If
the executed original of this Agreement is not received by United
within
twenty-two (22) days of its presentation to XxXxxxxx, the Agreement
shall
expire and be considered null and void;
and
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g.
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This
Agreement will only become effective or enforceable, and the consideration
identified in this Agreement will only be provided to XxXxxxxx, if
he (1)
signs this Agreement before the end of the Consideration Period and
(2)
does not revoke this Agreement during the seven (7) day period of
time
following the date on which he signs it (the “Revocation Period”), which
revocation must be in writing sent by certified mail, return-receipt
requested, to United Fuel & Energy Corporation, Attn: Xxxxx Xxxxxxx,
000 X. Xxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 and post-marked
within
the Revocation Period.
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[signature
page follows]
READ
CAREFULLY BEFORE SIGNING. BY SIGNING, YOU NOT ONLY AGREE TO ALL OF THE TERMS
OF
THIS AGREEMENT, BUT YOU ALSO ACKNOWLEDGE THAT YOU UNDERSTAND THE TERMS AND
EFFECT OF THIS AGREEMENT AND HAVE WILLINGLY AND VOLUNTARILY ENTERED INTO THIS
SEPARATION AGREEMENT.
SIGNED
at
Midland, Midland County, Texas, this 12th
day of
June, 2008.
/s/
Xxxxxxx XxXxxxxx
Xxxxxxx
XxXxxxxx
| THE STATE OF TEXAS | § |
| § | |
| COUNTY OF MIDLAND | § |
BEFORE
ME, the undersigned authority, on this day personally appeared Xxxxxxx XxXxxxxx,
known to me to be the person whose name is subscribed to the foregoing
Separation Agreement and Release of All Claims, and acknowledged to me that
he
executed the same for the purposes and consideration therein
expressed.
GIVEN
UNDER MY HAND AND SEAL OF OFFICE on this the 12th
day of
June, 2008.
/s/
X.
Xxxx
NOTARY
PUBLIC, State of Texas
SIGNED
at
Midland, Midland County, Texas, this 12th
day of
June, 2008.
UNITED
FUEL & ENERGY CORPORATION
/s/
Xxxxx X. Xxxxxxx
By: Xxxxx
X. Xxxxxxx
Its: President
and Chief Executive Officer
