INDEMNITY AGREEMENT
Exhibit 10.40
INDEMNITY AGREEMENT, dated as of _____, _____, by and among Arch Coal, Inc., a Delaware corporation
(the “Company” or the “Indemnitor”), and ________________ (the “Indemnitee”).
RECITALS
The Indemnitee is a director and/or officer of the Company and/or an Affiliate Indemnitee (as
hereinafter defined). Indemnitor and the Indemnitee recognize the increased risk of litigation and
other claims being asserted against directors and officers in today’s environment.
The Bylaws of the Company require the Company to indemnify its directors and officers as
currently provided therein, and the Indemnitee is willing to serve as a director and/or officer of
the Company in part in reliance on such provisions. The Bylaws of the Indemnitor permit Indemnitor
to purchase and maintain insurance or to furnish similar protection or make other arrangements (any
such insurance, protection or arrangement, an “Indemnification Agreement”) on behalf of the
Indemnitee against personal liability (including, but not limited to, providing for Advanced
Amounts as hereinafter defined) asserted against the Indemnitee or incurred by or on behalf of the
Indemnitee in such capacity as a director or officer of such Indemnitor or as an Affiliate
Indemnitee, or arising out of the Indemnitee’s status as such, whether or not Indemnitor would have
the power to indemnify the Indemnitee against such liability under the provisions of this Agreement
or under the Delaware General Corporation Law (the “DGCL”), as it may then be in effect.
In part to provide the Indemnitee with specific contractual assurance of substantial
protection against personal liability (regardless of, among other things, any amendment to or
revocation of the aforementioned provisions of any of the Indemnitor’s Bylaws or any change in the
composition of the Indemnitor’s Board of Director or control of such Indemnitor), the Indemnitor
desires to enter into this Agreement. DGCL Section 145(f) expressly recognizes that the
indemnification provisions of the DGCL are not exclusive of any other rights to which a person
seeking indemnification may be entitled under the Certificate of Incorporation or Bylaws of the
Indemnitor, or an agreement providing for indemnification, or a resolution of stockholders or
directors, or otherwise, and the Bylaws of the Indemnitor expressly recognize that the
indemnification provisions of such Bylaws shall not be deemed exclusive of, and shall not affect,
any other rights to which a person seeking indemnification may be entitled under any agreement, and
this Agreement is being entered into pursuant to the Bylaws of the Indemnitor, as permitted by the
DGCL.
In order to induce the Indemnitee to serve as a director and/or officer of the Company and in
consideration of the Indemnitee’s so serving, the Indemnitor desires to hold harmless and indemnify
the Indemnitee and to make arrangements pursuant to which the Indemnitee may be advanced or
reimbursed expenses incurred by the Indemnitee in certain proceedings, in every case to the fullest
extent authorized or permitted by the DGCL, or any other applicable law, or by any amendment
thereof or other statutory provisions authorizing or permitting such indemnification which are
adopted after the date hereof (but, in the case of any such amendment,
only to the extent that such amendment permits the Indemnitor to provide broader indemnification
rights than the DGCL, or other applicable law, permitted Indemnitor to provide prior to such
amendment).
NOW, THEREFORE, in consideration of the foregoing recitals and of the Indemnitee’s continuing
to serve the Company as a director and/or officer, the parties hereby agree as follows:
1. Indemnification. To the fullest extent allowed by law, the Indemnitor shall hold
harmless and indemnify the Indemnitee, the Indemnitee’s executors, administrators or assigns
against any and all expenses, liabilities and losses (including, without limitation, investigation
expenses, expert witnesses’ and attorneys’ fees and expenses, judgments, penalties, fines, amounts
paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon and
any federal, state, local or foreign taxes imposed as a result of actual or deemed receipt of any
payment hereunder) actually incurred by the Indemnitee (net of any related insurance proceeds or
other amounts received by the Indemnitee or paid by or on behalf of Indemnitor on the Indemnitee’s
behalf in compensation of such expenses, liabilities or losses) in connection with any actual or
threatened action, suit or proceeding, whether civil, criminal, administrative or investigative or
in arbitration, to which the Indemnitee is a party or participant or is threatened to be made a
party or participant (“Proceeding”), as a plaintiff, defendant, respondent, witness or otherwise,
based upon, arising from, relating to or by reason of the fact that the Indemnitee: (a) is, was,
shall be or shall have been a director and/or officer of the Company, or (b) is or was serving,
shall serve, or shall have served at the request of the Company as a director, officer, partner,
trustee, fiduciary, employee or agent (“Affiliate Indemnitee”) of another foreign or domestic
corporation or non-profit corporation, cooperative, partnership, joint venture, trust, employee
benefit plan, or other incorporated or unincorporated enterprise; or in any way arising from,
relating to or connected with any action or omission to act taken by the Indemnitee in any of the
foregoing capacities; provided, however, that, except as provided in Section 9(b) hereof,
Indemnitor shall indemnify the Indemnitee in connection with a Proceeding initiated by the
Indemnitee only if such Proceeding (or part thereof) was authorized by a two-thirds vote of the
Board of Directors of Indemnitor.
The Indemnitee shall be presumed to be entitled to such indemnification under this Agreement
upon submission of a written claim pursuant to Section 4 hereof. Thereafter, the Indemnitor shall
have the burden of proof to overcome the presumption that the Indemnitee is so entitled. Such
presumption shall only be overcome by a judgment or other final adjudication, after all appeals and
all time for appeals has expired (“Final Determination”), which is adverse to the Indemnitee and
which establishes (i) that the Indemnitee’s acts were committed in bad faith, or were the result of
active and deliberate dishonesty, and were material to the cause of action so adjudicated and (ii)
that the Indemnitee in fact personally gained a financial profit or other advantage to which he was
not legally entitled. With respect to any claim, issue or matter in a Final Determination for
which such presumption is not overcome, the Indemnitor agrees to indemnify the Indemnitee to the
maximum extent permitted by law against all losses and expenses incurred by the Indemnitee in
connection with such resolved claim, issue or matter. Neither the failure of the Indemnitor
(including its Board of Directors, legal counsel or stockholders) to have made a determination
prior to the commencement of such Proceeding that indemnification of the Indemnitee is proper in
the circumstances because such person has met the applicable standard of conduct set forth in the
DGCL, nor an actual determination by
Indemnitor (including its Board of Directors, its legal counsel or its stockholders) that the
Indemnitee has not met the applicable standard of conduct, shall be a defense to any action or
create a presumption that the Indemnitee has not met the applicable standard of conduct. The
purchase, establishment or maintenance of any Indemnification Arrangement shall not in any way
diminish, restrict, limit or adversely affect the rights and obligations of the Indemnitor or of
the Indemnitee under this Agreement, except as expressly provided herein, and the execution and
delivery of this Agreement, by the Indemnitor and the Indemnitee shall not in any way diminish,
restrict, limit or adversely affect the Indemnitee’s right to indemnification from the Indemnitor
or any other party or parties under any other Indemnification Arrangement, the Certificate of
Incorporation or Bylaws of the Indemnitor, or the DGCL.
2. Period of Limitations. No legal action shall be brought and no cause of action
shall be asserted by or on behalf of Indemnitor or any affiliate of Indemnitor against the
Indemnitee, Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of action, or such longer period as
may be required by applicable law under the circumstances. Any claims or cause of action of the
Indemnitor or its affiliate shall be extinguished and deemed released unless asserted by the timely
filing of a legal action within such period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action the shorter period shall govern.
3. Insurance. Subject only to the provisions of this Section 3, as long as the
Indemnitee shall continue to serve as a director and/or officer of Indemnitor (or shall continue at
the request of Indemnitor to serve as an Affiliate Indemnitee) and, thereafter, as long as the
Indemnitee shall be subject to any possible Proceeding by reason of the fact that the Indemnitee
was a director and/or officer of the Company (or served in any of said other capacities), the
Indemnitor shall, unless no such policies are available in any market, purchase and maintain in
effect for the benefit of the Indemnitee, one or more valid, binding and enforceable policies (the
“Insurance Policies”) of directors’ and officers’ liability insurance (“D&O Insurance”) providing
adequate liability coverage for the Indemnitee’s acts as a director and/or officer of the
Indemnitor or as an Affiliate Indemnitee. Indemnitor shall promptly notify the Indemnitee of any
lapse, amendment or failure to renew said policy or policies or any provision thereof relating to
the extent or nature of coverage provided thereunder. In the event the Indemnitor does not
purchase and maintain in effect said policy or policies of D&O Insurance pursuant to the provisions
of this Section 3, Indemnitor shall, in addition to and not in limitation of the other rights
granted the Indemnitee under this Agreement, hold harmless and indemnify the Indemnitee to the full
extent of coverage which would otherwise have been provided for the benefit of the Indemnitee
pursuant to the Insurance Policies.
4. Claims for Payment. The Indemnitee shall have the right to receive from the
Indemnitor on demand or, at the Indemnitee’s option, to have the Indemnitor pay promptly on the
Indemnitee’s behalf, in advance of a Final Determination of a Proceeding, all amounts payable by
the Indemnitor pursuant to the terms of this Agreement as corresponding amounts are expended or
incurred by the Indemnitee in connection with any Proceeding or otherwise (such amounts so expended
or incurred being referred to as “Advanced Amounts”). In making any claim for payment by the
Indemnitor of any amount, including any Advanced Amount, pursuant to this Agreement, the Indemnitee
shall submit to the Indemnitor a written request for payment (a “Claim”) which includes a schedule
setting forth in reasonable detail the dollar amount expended
(or incurred or expected to be expended or incurred). Each item on such schedule shall be
supported by the xxxx, agreement, or other documentation relating thereto, a copy of which shall be
appended to the schedule as an exhibit.
Where the Indemnitee is requesting Advanced Amounts, the Indemnitee must also provide an
undertaking to repay such Advanced Amounts if a Final Determination is made that the Indemnitee is
not entitled to indemnification hereunder.
5. Section 16(b) Liability. Indemnitor shall not be liable under this Agreement to
make any payment in connection with any claim made against the Indemnitee for an accounting of
profits made from the purchase or sale by the Indemnitee of securities of Indemnitor within the
meaning of Section 16(b) of the Securities Exchange Act of 1934, and amendments thereof, or similar
provisions of any state statutory law or common law.
6. Continuation of Indemnity. All agreements and obligations of the Indemnitor
contained herein shall continue during the period the Indemnitee is a director and/or officer of
Indemnitor (or is serving at the request of Indemnitor as an Affiliate Indemnitee) and shall
continue thereafter so long as the Indemnitee shall be subject to any possible Proceeding by reason
of the fact that the Indemnitee was a director or officer of Indemnitor or served as such an
Affiliate Indemnitee.
7. Successors; Binding Agreement. This Agreement shall be binding on, and shall inure
to the benefit of and be enforceable by, the Indemnitor’s successors and assigns and by the
Indemnitee’s personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Indemnitor shall require any successor or assignee (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of Indemnitor, by written agreement in form and substance reasonably
satisfactory to Indemnitor and to the Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that Idemnitor would be required to perform if
no such succession or assignment had taken place.
8. Notification and Defense of Claims. Promptly after receipt by the Indemnitee of
notice of the commencement of any Proceeding, the Indemnitee shall, if a claim in respect thereof
is to be made against Indemnitor under this Agreement, notify Indemnitor of the commencement
thereof, but the failure to so notify Indemnitor will not relieve the Indemnitor from any liability
that it may have to the Indemnitee. With respect to any such Proceeding:
(a) Indemnitor shall be entitled to participate therein at its own expense;
(b) Except with prior written consent of the Indemnitee, the Indemnitor shall not be entitled
to assume the defense of any Proceeding; and
(c) Indemnitor shall not settle any Proceeding in any manner that would impose any penalty or
limitation on, or in any way be adverse to, the Indemnitee without the Indemnitee’s prior written
consent.
The Indemnitee shall not settle any Proceeding with respect to which the Indemnitee has
received indemnified amounts or Advanced Amounts without the Indemnitor’s prior written consent,
nor will the Indemnitee unreasonably withhold consent to any proposed settlement.
9. Enforcement. (a) Indemnitor has entered into this Agreement and assumed the
obligations imposed on Indemnitor hereby in order to induce the Indemnitee to act as a director
and/or officer of the Company or as an Affiliate Indemnitee and acknowledges that the Indemnitee is
relying upon this Agreement in continuing in such capacity.
(b) All expenses incurred by the Indemnitee in connection with the preparation and submission
of the Indemnitee’s request for indemnification hereunder shall be borne by the Indemnitor. In the
event the Indemnitee has requested payment for any amount under this Agreement and has not received
payment thereof within thirty (30) days of such request, the Indemnitee may bring any action to
enforce rights or collect moneys due under this Agreement, and, if the Indemnitee is successful in
such action, the Indemnitor shall reimburse the Indemnitee for all of the Indemnitee’s fees and
expenses in bringing and pursuing such action. If it is determined that the Indemnitee is entitled
to indemnification for part (but not all) of the indemnification so requested, expenses incurred in
seeking enforcement of such partial indemnification shall be reasonably prorated among the claims,
issues or matters for which the Indemnitee is entitled to indemnification and the claims, issues or
matters for which the Indemnitee is not so entitled. The Indemnitee shall be entitled to the
advancement of such amounts to the full extent contemplated by Section 4 hereof in connection with
such Proceeding.
10. Separability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of this Agreement (including, without limitation, all
portions of any sections or subsections of this Agreement containing any such provision held to be
invalid, illegal or unenforceable, that are not by themselves invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the
provisions of any section or subsections of this Agreement containing any such provisions held to
be invalid, illegal or unenforceable shall be construed so as to give effect to the intent of the
parties that the Indemnitors (or any of them) provide protection to the Indemnitee to the fullest
extent enforceable.
11. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is agreed to in writing signed by the
Indemnitee and an officer of the Indemnitor designated by the Board of Directors of Indemnitor. No
waiver by either party at any time of any breach by the other party of, or of compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same time or at any prior or
subsequent time. The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof. The Indemnitee may bring an action seeking resolution of disputes or
controversies arising under, or in any way related to, this Agreement in the state or federal court
jurisdiction in which the Indemnitee resides or in which the Indemnitee’s place of business is
located and in any related appellate courts, and the Indemnitor hereby consents to the jurisdiction
of such courts and to such venue. This Agreement amends and restates, in its entirety, any prior
indemnity agreement entered into between the Company and Indemnitee.
12. Notices. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, as follows:
If to the Indemnitee:
|
At the address set below his signature hereto. | |
If to the Company:
|
Arch Coal, Inc. Xxxxx 000 Xxx XxxxXxxxx Xxxxx Xx. Xxxxx, Xxxxxxxx 00000 |
or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
13. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the day
and year first above written.
| ARCH COAL, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | Senior Vice President-Law, General Counsel and Secretary |
|||||
| INDEMNITEE | ||||||
| Address: | ||||||
