EXHIBIT 10.1
FORM OF
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "AGREEMENT") is made effective as
of this ____ day of _________, _____ by and between National Coal Corp, a
Florida corporation (the "COMPANY"), and ______________, an individual (the
"INDEMNITEE").
RECITALS
A. The Company and Indemnitee recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees
and agents to expensive litigation risk at the same time that the availability
and coverage of liability insurance has been severely limited.
B. Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other directors,
officers, employees and agents of the Company may not be willing to continue to
serve as directors, officers, employees and agents without additional
protection.
C. The Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve as directors,
officers, employees and agents of the Company and to indemnify its directors,
officers, employees and agents so as to provide them with the maximum protection
permitted by law.
AGREEMENT
The Company and Indemnitee hereby agree as follows:
1. INDEMNIFICATION.
1.1 THIRD PARTY PROCEEDINGS. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, whether formal or informal (a
"PROCEEDING") (other than an action by or in the right of the Company) by reason
in whole or in part of: (i) the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company,
(ii) any action or inaction on the part of Indemnitee while a director, officer,
employee or agent of the Company, or any subsidiary of the Company, or (iii) the
fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise (subsections (i), (ii)
and (iii) together, the Indemnitee's "CORPORATE STATUS"), against all expenses
(including, without limitation, attorneys' fees, disbursements and retainers,
accounting and witness fees, court costs, expenses of investigation, transcript
costs, fees of experts, travel and deposition costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, participating or
being or preparing to be a witness in a Proceeding (collectively, "EXPENSES")),
judgments, penalties, fines and amounts paid in settlement (if such settlement
is approved in advance by the Company which approval
shall not be unreasonably withheld) and other amounts actually and reasonably
incurred by Indemnitee, in connection with such Proceeding, to the fullest
extent permissible under Florida Law as currently in effect and as may be
expanded in the future if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company and, with respect to any criminal proceeding, had no reasonable
cause to believe the conduct was unlawful. The termination of any Proceeding by
judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or
its equivalent, shall not, of itself, create a presumption that indemnification
is unavailable under this Agreement.
1.2 PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any Proceeding by or in the right of the Company or any
subsidiary of the Company arising in whole or in part out of Indemnitee's
Corporate Status against Expenses and amounts paid in settlement not exceeding,
in the judgment of the board of directors, the estimated expense of litigating
the proceeding to conclusion, in each case to the extent actually and reasonably
incurred by Indemnitee in connection with such Proceeding, including any appeal
thereof, to the fullest extent permissible under Florida Law as currently in
effect and as may be expanded in the future if Indemnitee acted in good faith
and in a manner he or she reasonable belied to be in, or not opposed to the best
interests of the Company, except that, notwithstanding anything herein to the
contrary, no indemnification under this Section 1.2 shall be made in respect of
any claim, issue or matter, as to which such Indemnitee shall have been adjudged
to be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such Indemnitee is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
1.3 MANDATORY PAYMENT OF EXPENSES. Notwithstanding any limitations
or conditions upon the Company's indemnification obligations set forth in
SECTIONS 1.1 and 1.2 above, to the extent that Indemnitee has been successful on
the merits or otherwise in defense of any Proceeding referred to in SECTIONS 1.1
and 1.2 or in defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against Expenses actually and reasonably incurred by Indemnitee in
connection therewith.
1.4 INDEMNIFICATION FOR SERVING AS A WITNESS. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of Indemnitee's Corporate Status, a witness in any Proceeding, Indemnitee shall
be indemnified against Expenses actually and reasonably incurred by Indemnitee
in connection therewith.
2. EXPENSES; INDEMNIFICATION PROCEDURE.
2.1 ADVANCEMENT OF EXPENSES. The Company shall advance all
Expenses incurred by Indemnitee in connection with the investigation, defense,
settlement or appeal of any Proceeding referenced in SECTIONS 1.1 or 1.2 hereof.
The advances to be made hereunder shall be paid by the Company to Indemnitee
within 30 days following delivery of a written request therefor by Indemnitee to
the Company. Such written request shall reasonably evidence the Expenses
incurred by Indemnitee. Indemnitee hereby undertakes to repay such amounts
advanced only if, and to the extent that, it shall ultimately be determined that
Indemnitee is not
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entitled to be indemnified by the Company as authorized hereby. Indemnitee shall
have 30 days following such determination to reimburse the Company of any
advances Indemnitee is not entitled to be indemnified by the Company.
2.2 NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company prompt notice, in accordance with SECTION 13 hereof, of any claim
made against Indemnitee for which indemnification will or could be sought under
this Agreement; provided, however, that a delay by Indemnitee in sending such
notice shall not relieve the Company of its obligations hereunder except to the
extent that the Company is actually materially prejudiced by such delay. Notice
to the Company shall be directed to the Chief Financial Officer of the Company
at the principal executive offices of the Company. In addition, Indemnitee shall
give the Company, at the Company's expense, such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
2.3 PROCEDURE. Any indemnification and advances provided for in
SECTION 1 and this SECTION 2 shall be made no later than 30 days after receipt
of the written request of Indemnitee. If a claim under this Agreement is not
paid in full by the Company within 30 days after a written request for payment
therefor has first been received by the Company, Indemnitee may, but need not,
at any time thereafter bring an action against the Company to recover the unpaid
amount of the claim and, subject to SECTION 12 of this Agreement, Indemnitee
shall also be entitled to be paid for the Expenses for bringing such an action.
It shall be a defense to any such action (other than an action brought to
enforce a claim for Expenses incurred in connection with any Proceeding in
advance of its final disposition) that Indemnitee has not met the standards of
conduct which make it permissible under applicable law for the Company to
indemnify Indemnitee, but the burden of proving such defense shall be on the
Company and Indemnitee shall be entitled to receive interim payments of Expenses
pursuant to SECTION 2.1 unless and until such defense is finally adjudicated by
court order or judgment from which no further right of appeal exists. It is the
intention of the parties that if the Company contests Indemnitee's right to
indemnification under this Agreement or applicable law, the question of
Indemnitee's right to indemnification shall be for the court to decide, and
neither the failure of the Company (including its officers, its Board, any
committee or subgroup of its Board, independent legal counsel, or its
stockholders) to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct required by this Agreement or by applicable law, nor an actual
determination by the Company (including its officers, its Board, any committee
or subgroup of its Board, independent legal counsel, or its stockholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has not met the applicable standard of conduct.
2.4 NOTICE TO INSURERS. If, at the time of the receipt of a notice
of a claim pursuant to SECTION 2.2 hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of receipt
of a claim or the commencement of a Proceeding to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Proceeding
in accordance with the terms of such policies.
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2.5 SELECTION OF COUNSEL. In the event the Company shall be
obligated under SECTION 2.1 hereof to pay the Expenses of any Proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such Proceeding, with counsel approved by Indemnitee, upon the delivery to
Indemnitee of written notice of its election so to do, provided, however, that
(i) the Company shall have no right to assume the defense of any Proceeding
which seeks, in whole or in part, any remedy other than monetary damages (e.g.,
injunction, specific performance, criminal sanctions) or which could, if
Indemnitee were not to prevail therein, materially damage Indemnitee's personal
or business reputation, and (ii) the Company shall have no right to assume the
defense of any Proceeding unless the Company first agrees fully and
unconditionally, in writing, that the Company is obligated to indemnify
Indemnitee in full with respect thereto, and waives any and all defenses,
counterclaims or set-offs which might otherwise be asserted in limitation or
mitigation of such indemnification obligation. After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to Indemnitee under this Agreement for
any fees of counsel subsequently incurred by Indemnitee with respect to the same
Proceeding, provided that (i) Indemnitee shall have the right to employ separate
counsel in any such Proceeding at Indemnitee's expense; and (ii) if (A) the
employment of counsel by Indemnitee has been previously authorized by the
Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense, or (C) the Company shall not, in fact, have employed counsel to
assume the defense of such Proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.
2.6 SETTLEMENT, COMPROMISE OR JUDGMENT. The Company shall not,
without the written consent of Indemnitee, effect the settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action or claim in respect of which indemnification may be sought
hereunder (whether or not Indemnitee is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (a) includes an
unconditional release of Indemnitee from all liability arising out of such
action or claim and (b) does not include a statement as to or admission of
fault, culpability or failure to a act, by or on behalf of Indemnitee.
2.7 TAX GROSS-UP. If Indemnitee is required by law to pay any tax
on account of receipt of any amount under this Agreement, the Company shall
increase the amount payable to Indemnitee such that the amount receivable by
Indemnitee, after deduction of all applicable taxes, is equal to the amount
Indemnitee would have received under Agreement had such tax not been payable,
provided that Indemnitee takes all reasonable steps to minimize the amount of
such tax and provides the Company with evidence reasonably satisfactory to the
Company that such steps have been taken.
3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
3.1 SCOPE. Notwithstanding any other provision of this Agreement,
in the event of any change in any applicable law, statute or rule which narrows
the right of the Company to indemnify Indemnitee, such change, to the extent not
otherwise required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties' rights and obligations
hereunder. No amendment, alteration or repeal of this Agreement
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or of any provision hereof shall limit or restrict any right of Indemnitee under
this Agreement in respect of any action taken or omitted by such Indemnitee in
his Corporate Status prior to such amendment, alteration or repeal.
3.2 NONEXCLUSIVITY. The indemnification rights provided to
Indemnitee by this Agreement shall be in addition to, and not in lieu of, any
rights to which Indemnitee may be entitled under the Company's Certificate of
Incorporation, its Bylaws, any agreement, any vote of stockholders or
disinterested directors, applicable law or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee with respect to (i) any action taken or not taken
while serving in an indemnified capacity and (ii) any Proceeding arising out of
or relating to the period prior to the date upon which Indemnitee ceased to
serve in an indemnified capacity, even though he may have ceased to serve in
such capacity at the time of any covered Proceeding.
4. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines or penalties actually and reasonably incurred by him
in the investigation, defense, appeal or settlement of any Proceeding, but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses, judgments, fines or penalties to
which Indemnitee is entitled.
5. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge that
in certain instances, federal or state law or regulation may prohibit the
Company from indemnifying Indemnitee under this Agreement or otherwise. The
Company agrees to assert vigorously, in any such action pertaining to the
Company's right to indemnify Indemnitee, the position that the Company has the
full and unfettered right to so indemnify Indemnitee, and further agrees that
Indemnitee may, at any time and in Indemnitee's sole discretion, assume control
of the Company's defense of such right (including without limitation selection
of counsel and determination of strategy), with such defense nonetheless being
conducted at the Company's expense.
6. LIABILITY INSURANCE. The Company shall, from time to time, make the
good faith determination whether or not it is practicable for the Company to
obtain and maintain a policy or policies of insurance with reputable insurance
companies providing the directors, officers, employees and agents of the Company
with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all such policies
of liability insurance, Indemnitee shall be named as an insured in such a manner
as to provide Indemnitee the same rights and benefits as are accorded to the
most favorably insured of the Company's directors, if Indemnitee is a director;
or of the Company's officers, if Indemnitee is not a director of the Company but
is an officer; or of the Company's employees, if Indemnitee is not a director or
officer but is an employee; or of the Company's agents, if Indemnitee is not a
director, officer or employee but is an agent. Notwithstanding the foregoing,
the Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
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amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company.
7. SEVERABILITY. Nothing in this Agreement is intended to require or shall
be construed as requiring the Company to do or fail to do any act in violation
of applicable law. The Company's inability, pursuant to law, regulation or court
order, to perform its obligations under this Agreement shall not constitute a
breach of this Agreement. The provisions of this Agreement shall be severable as
provided in this SECTION 7. If this Agreement or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify Indemnitee to the full extent permitted by
any applicable portion of this entire Agreement that shall not have been
invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.
8. EXCEPTIONS. Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:
8.1 CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
Expenses to Indemnitee with respect to Proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to Proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or otherwise but such indemnification or
advancement of Expenses may be provided by the Company in specific cases if the
Board has approved the initiation or bringing of such suit;
8.2 FRIVOLOUS PROCEEDINGS. To indemnify Indemnitee for any
Expenses incurred by Indemnitee with respect to any Proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such Proceeding were frivolous;
8.3 INSURED CLAIMS. To make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise received
payment (under any insurance policy, the Certificate of Incorporation or Bylaws
of the Company, contract or otherwise) of the amounts otherwise indemnifiable
hereunder. If the Company makes any indemnification payment to Indemnitee in
connection with any particular Expense indemnified hereunder and Indemnitee has
already received or thereafter receives, and is entitled to retain, duplicate
payments in reimbursement of the same particular expense, then Indemnitee shall
reimburse the Company in an amount equal to the lesser of (i) the amount of such
duplicate payment and (ii) the full amount of such indemnification payment made
by the Company;
8.4 UNLAWFUL CLAIMS. To indemnify Indemnitee in any manner which a
court of competent jurisdiction has finally determined to be unlawful;
8.5 FAILURE TO SETTLE PROCEEDING. In the event that Indemnitee
Fails to Pursue a Recommended Settlement of a Qualifying Claim, to indemnify
Indemnitee (i) for amounts paid or payable in settlement of such Qualifying
Claim in excess of the amount of such Recommended Settlement thereof, or (ii)
for any cost and/or expenses directly related to such Qualifying Claim incurred
by Indemnitee following the date upon which Indemnitee Fails To
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Pursue such Recommended Settlement. For purposes of this clause, "QUALIFYING
CLAIM" shall mean any claim the defense of which has been properly assumed by
the Company under SECTION 2.5 above, "RECOMMENDED SETTLEMENT" shall mean a
reasonable written settlement proposal, in full and final executable form in all
material respects, and "FAILS TO PURSUE" shall mean Indemnitee's failure to
agree to any Recommended Settlement that has been accepted by all adverse
parties in the subject matter within 30 days after receipt thereof, provided the
Company has (A) irrevocably deposited all funds necessary to satisfy all of
Indemnitee's obligations under such Recommended Settlement in an account subject
to Indemnitee's or a third party's control and (B) irrevocably taken all actions
and given all instructions necessary or appropriate to permit such funds to be
applied in satisfaction of such obligations of Indemnitee.
9. CONSTRUCTION OF CERTAIN PHRASES.
9.1 For purposes of this Agreement, references to the "COMPANY"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees
and/or agents, so that if Indemnitee is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
9.2 For purposes of this Agreement, references to "OTHER
ENTERPRISES" shall include employee benefit plans; references to "FINES" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "SERVING AT THE REQUEST OF THE COMPANY" shall
include any service as a director, officer, employee or agent of the Company or
any subsidiary of the Company which imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an employee benefit
plan, its participants, or beneficiaries.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
12. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee with
respect to such action, unless as a part of such action, the court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
as a basis for such action were frivolous. In the event of an action instituted
by or in the name of the Company under this Agreement to enforce or interpret
any of the terms of this Agreement, Indemnitee shall be entitled to be paid all
Expenses incurred by Indemnitee in defense of such action (including with
respect to Indemnitee's counterclaims and cross-
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claims made in such action), unless as a part of such action the court
determines that each of Indemnitee's material defenses to such action were
frivolous.
13. NOTICE. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed duly given (i) if delivered by hand and
receipted for by the party addressee, on the date of such receipt, or (ii) if
mailed by domestic certified or registered mail with postage prepaid, on the
third business day after the date postmarked if addressed as provided for on the
signature page of this Agreement, unless sooner received, or as subsequently
modified by written notice.
14. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of California
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of California,
or in federal courts located in such State.
15. CHOICE OF LAW. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of [Florida], without regard
to conflicts of law principles of such state.
16. SUBROGATION. In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of contribution or recovery of Indemnitee against other persons, and Indemnitee
shall take, at the request of the Company, all reasonable action necessary to
secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
17. ENFORCEMENT.
17.1 The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as an officer or director of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving
as an officer or director of the Company.
17.2 This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof.
18. MODIFICATION AND WAIVER. No supplement, modification, termination or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
19. HEADINGS. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY:
NATIONAL COAL CORP.
By:
--------------------------------
Name:
Title:
Notice Address:
--------------------------------
--------------------------------
--------------------------------
Attn:
AGREED TO AND ACCEPTED:
INDEMNITEE:
-----------------------
(Signature)
[NAME]
Notice Address:
-----------------------
-----------------------
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