INDEMNIFICATION AGREEMENT
EXHIBIT
10.4
This
Indemnification Agreement (this “Agreement”)
dated
the 16th day of September 2008, by and between United Fuel & Energy
Corporation, a Nevada corporation (the “Company”),
and
Xxxxxxx X. Xxxxxxx, an individual (“Indemnitee”).
RECITALS
A. Competent
and experienced persons are reluctant to serve or to continue to serve as
officers of corporations or in other capacities unless they are provided with
adequate protection through insurance or indemnification (or both) against
claims against them arising out of their service and activities on behalf of
the
corporation.
B. The
current uncertainties relating to the availability of adequate insurance have
increased the difficulty for corporations of attracting and retaining competent
and experienced persons to serve in such capacity.
C. The
Board
of Directors of the Company (the “Board
of Directors”)
has
determined that the continuation of present trends in litigation will make
it
more difficult to attract and retain competent and experienced persons to serve
as officers of the Company, that this situation is detrimental to the best
interests of the Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of adequate
protection in the future.
D. As
a
supplement to and in the furtherance of the Company’s Articles of Incorporation,
as amended (the “Articles”),
and
Bylaws, as amended (the “Bylaws”),
it is
reasonable, prudent, desirable and necessary for the Company contractually
to
obligate itself to indemnify, and to pay in advance expenses on behalf of the
Company’s Executive Vice President and Chief Financial Officer to the fullest
extent permitted by law so that he will serve or continue to serve the Company
free from concern that he will not be so indemnified and that his expenses
will
not be so paid in advance;
E. This
Agreement is not a substitute for, nor does it diminish or abrogate any rights
of Indemnitee under, the Articles and the Bylaws or any resolutions adopted
pursuant thereto (including any contractual rights of Indemnitee that may
exist).
F. Indemnitee
is the Executive Vice President and Chief Financial Officer of the Company
and
his willingness to continue to serve in such capacity is predicated, in
substantial part, upon the Company’s willingness to indemnify him to the fullest
extent permitted by the laws of the State of Nevada and upon the other
undertakings set forth in this Agreement.
AGREEMENT
NOW,
THEREFORE,
in
consideration of the premises and covenants contained herein, the Company and
Indemnitee hereby agree as follows:
1
ARTICLE
1
CERTAIN
DEFINITIONS
Capitalized
terms used but not otherwise defined in this Agreement have the meanings set
forth below:
“Corporate
Status”
means
the status of a person who is or was a director, officer, employee, partner,
member, manager, trustee, fiduciary or agent of the Company or of any other
Enterprise which such person is or was serving at the request of the Company.
In
addition to any service at the actual request of the Company, Indemnitee will
be
deemed, for purposes of this Agreement, to be serving or to have served at
the
request of the Company as a director, officer, employee, partner, member,
manager, trustee, fiduciary or agent of another Enterprise if Indemnitee is
or
was serving as a director, officer, employee, partner, member, manager,
fiduciary, trustee or agent of such Enterprise and (i) such Enterprise is or
at
the time of such service was a Controlled Affiliate, (ii) such Enterprise is
or
at the time of such service was an employee benefit plan (or related trust)
sponsored on maintained by the Company or a Controlled Affiliate or (iii) the
Company or a Controlled Affiliate directly or indirectly caused Indemnitee
to be
nominated, elected, appointed, designated, employed, engaged or selected to
serve in such capacity.
“Controlled
Affiliate”
means
any corporation, limited liability company, partnership, joint venture, trust
or
other Enterprise, whether or not for profit, that is directly or indirectly
controlled by the Company. For purposes of this definition, the term “control”
means the possession, directly or indirectly, of the power to direct, or cause
the direction of, the management or policies of an Enterprise, whether through
the ownership of voting securities, through other voting rights, by contract
or
otherwise; provided,
however,
that
direct or indirect beneficial ownership of capital stock or other interests
in
an Enterprise entitling the holder to cast 30% or more of the total number
of
votes generally entitled to be cast in the election of directors (or persons
performing comparable functions) of such Enterprise will be deemed to constitute
“control” for purposes of this definition.
“Disinterested
Director”
means
a
director of the Company who is not and was not a party to the Proceeding in
respect of which indemnification is sought by Indemnitee.
“Enterprise”
means
the Company and any other corporation, partnership, limited liability company,
joint venture, employee benefit plan, trust or other entity or other enterprise
of which Indemnitee is or was serving at the request of the Company in a
Corporate Status.
“Expenses”
means
all attorney’s fees, disbursements and retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs, printing
and
binding costs, telephone charges, postage, fax transmission charges, secretarial
services, delivery service fees and all other disbursements or expenses paid
or
incurred in connection with prosecuting, defending, preparing to prosecute
or
defend, investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding, or in connection with seeking indemnification
under this Agreement. Expenses will also include Expenses paid or incurred
in
connection with any appeal resulting from any Proceeding, including the premium,
security for and other costs relating to any appeal bond or its equivalent.
Expenses, however, will not include amounts paid in settlement by Indemnitee
or
the amount of judgments or fines against Indemnitee.
2
“Independent
Counsel”
means
an attorney or firm of attorneys that is experienced in matters of corporation
law and neither currently is, nor in the past five (5) years has been, retained
to represent: (i) the Company or Indemnitee in any matter material to either
such party (other than with respect to matters concerning the Indemnitee under
this Agreement and/or the indemnification provisions of the Articles or Bylaws,
or of other indemnitees under similar indemnification agreements), or (ii)
any
other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does
not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee’s rights
under this Agreement.
“Losses”
means
any loss, liability, judgments, damages, amounts paid in settlement, fines
(including excise taxes and penalties assessed with respect to employee benefit
plans), penalties (whether civil, criminal or otherwise) and all interest,
assessments and other charges paid or payable in connection with or in respect
of any of the foregoing.
“Proceeding”
means
any threatened, pending or completed action, suit, claim, demand, arbitration,
alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, including
any
and all appeals, whether brought by or in the right of the Company or otherwise,
whether civil, criminal, administrative or investigative, whether formal or
informal, and in each case whether or not commenced prior to the date of this
Agreement, in which Indemnitee was, is or will be involved as a party or
otherwise, by reason of or relating to Indemnitee’s Corporate Status and by
reason of or relating to either (i) any action or alleged action taken by
Indemnitee (or failure or alleged failure to act) or of any action or alleged
action (or failure or alleged failure to act) on Indemnitee’s part, while acting
in his Corporate Status or (ii) the fact that Indemnitee is or was serving
at
the request of the Company as director, officer, employee, partner, member,
manager, trustee, fiduciary or agent of another Enterprise, in each case whether
or not serving in such capacity at the time any Loss or Expense is paid or
incurred for which indemnification or advancement of Expenses can be provided
under this Agreement, except one initiated by Indemnitee to enforce his rights
under this Agreement. For purposes of this definition, the term “threatened”
will be deemed to include Indemnitee’s good faith belief that a claim or other
assertion may lead to institution of a Proceeding.
References
to “serving
at the request of the Company”
include
any service as a director, officer, employee or agent of the Company which
imposes duties on, or involves services by, such director, officer, employee
or
agent with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan will be deemed to have acted in a
manner “not
opposed to the best interests of the Company”
as
referred to under applicable law or in this Agreement.
ARTICLE
2
SERVICES
TO THE COMPANY
2.1 Services
to the Company.
Indemnitee agrees to serve as the Executive Vice President and Chief Financial
Officer of the Company. Indemnitee may at any time and for any reason resign
from such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company will have
no
obligation under this Agreement to continue Indemnitee in such position. This
Agreement will not be construed as giving Indemnitee any right to be retained
in
the employ of the Company (or any other Enterprise).
3
ARTICLE
3
INDEMNIFICATION
3.1 Company
Indemnification.
Except
as otherwise provided in this Article 3,
if
Indemnitee was, is or becomes a party to, or was or is threatened to be made
a
party to, or was or is otherwise involved in, any Proceeding, the Company will
indemnify and hold harmless Indemnitee to the fullest extent permitted by the
Articles, Bylaws and applicable law, as the same exists or may hereafter be
amended, interpreted or replaced (but in the case of any such amendment,
interpretation or replacement, only to the extent that such amendment,
interpretation or replacement permits the Company to provide broader
indemnification rights than were permitted prior thereto), against any and
all
Expenses and Losses, and any federal, state, local or foreign taxes imposed
as a
result of the actual or deemed receipt of any payments under this Agreement,
that are actually and reasonably paid or incurred by Indemnitee in connection
with such Proceeding. For purposes of this Agreement, the meaning of the phrase
“to
the fullest extent permitted by law”
will
include to the fullest extent permitted by the Nevada Revised Statues, as
amended (the “NRS”),
with
respect to such matters.
3.2 Mandatory
Indemnification if Indemnitee is Wholly or Partly
Successful.
Notwithstanding any other provision of this Agreement (other than Section 6.9),
to the
extent that Indemnitee has been successful, on the merits or otherwise, in
defense of any Proceeding or any part thereof, the Company will indemnify
Indemnitee against all Expenses that are actually and reasonably paid or
incurred by Indemnitee in connection therewith. If Indemnitee is not wholly
successful in such Proceeding, but is successful, on the merits or otherwise,
as
to one or more but fewer than all claims, issues or matters in such Proceeding,
the Company will indemnify and hold harmless Indemnitee against all Expenses
paid or incurred by Indemnitee in connection with each successfully resolved
claim, issue or matter on which Indemnitee was successful. For purposes of
this
Section 3.2,
the
termination of any Proceeding, or any claim, issue or matter in such Proceeding,
by dismissal with or without prejudice will be deemed to be a successful result
as to such Proceeding, claim, issue or matter.
3.3 Indemnification
for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding
to
which Indemnitee is not a party, the Company will indemnify Indemnitee against
all Expenses actually and reasonably paid or incurred by Indemnitee on his
behalf in connection therewith.
3.4 Exclusions.
Notwithstanding any other provision of this Agreement, the Company will not
be
obligated under this Agreement to provide indemnification in connection with
the
following:
(a) Any
Proceeding (or part of any Proceeding) initiated or brought voluntarily by
Indemnitee against the Company or its directors, officers, employees or other
indemnities, unless the Board of Directors has authorized or consented to the
initiation of the Proceeding (or such part of any Proceeding); provided,
however,
that
nothing in this Section 3.4(a)
shall
limit the right of Indemnitee to be indemnified under Section 8.4.
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(b) For
an
accounting of profits made from the purchase and sale (or sale and purchase)
by
Indemnitee of securities of the Company within the meaning of Section 16(b)
of the Exchange Act or any similar successor statute.
ARTICLE
4
ADVANCEMENT
OF EXPENSES
4.1 Expense
Advances.
Except
as set forth in Section 4.2,
the
Company will, if requested by Indemnitee, advance, to the fullest extent
permitted by law, to Indemnitee (hereinafter an “Expense
Advance”)
any
and all Expenses actually and reasonably paid or incurred by Indemnitee in
connection with any Proceeding (whether prior to or after its final
disposition). Indemnitee’s right to each Expense Advance will not be subject to
the satisfaction of any standard of conduct and will be made without regard
to
Indemnitee’s ultimate entitlement to indemnification under the other provisions
of this Agreement, or under provisions of the Articles or Bylaws or otherwise.
Each Expense Advance will be unsecured and interest free and will be made by
the
Company without regard to Indemnitee’s ability to repay the Expense Advance;
provided,
however,
that,
if applicable law requires, an Expense Advance will be made only upon delivery
to the Company of an undertaking (hereinafter an “Undertaking”),
by or
on behalf of Indemnitee, to repay such Expense Advance if it is ultimately
determined, by final decision by a court or arbitrator, as applicable, from
which there is no further right to appeal, that Indemnitee is not entitled
to be
indemnified for such Expenses under the Articles, Bylaws, the NRS, this
Agreement or otherwise. An Expense eligible for an Expense Advance will include
any and all reasonable Expenses incurred pursuing an action to enforce the
right
of advancement provided for in this Article 4,
including Expenses incurred preparing and forwarding statements to the Company
to support the Expense Advances claimed.
4.2 Exclusions.
Indemnitee will not be entitled to any Expense Advance in connection with any
of
the matters for which indemnity is excluded pursuant to Section 3.4.
4.3 Timing.
An
Expense Advance pursuant to Section 4.1
will be
made within five business days after the receipt by the Company of a written
statement or statements from Indemnitee requesting such Expense Advance (which
statement or statements will include, if requested by the Company, reasonable
detail underlying the Expenses for which the Expense Advance is requested),
whether such request is made prior to or after final disposition of such
Proceeding. Such request must be accompanied by or preceded by the Undertaking,
if then required by the NRS or any other applicable law.
ARTICLE
5
CONTRIBUTION
IN THE EVENT OF JOINT LIABILITY
5.1 Contribution
by Company.
To the
fullest extent permitted by law, if the indemnification provided for in this
Agreement is unavailable to Indemnitee for any reason whatsoever, the Company,
in lieu of indemnifying Indemnitee, will contribute to the amount of Expenses
and Losses actually and reasonably incurred or paid by Indemnitee in connection
with any Proceeding in proportion to the relative benefits received by the
Company and all officers, directors and employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be if joined in
such
Proceeding), on the one hand, and Indemnitee, on the other hand, from the
transaction from which such Proceeding arose; provided,
however,
that
the proportion determined on the basis of relative benefit may, to the extent
necessary to conform to law, be further adjusted by reference to the relative
fault of the Company and all officers, directors and employees of the Company
other than Indemnitee who are jointly liable with Indemnitee (or would be if
joined in such Proceeding), on the one hand, and Indemnitee, on the other hand,
in connection with the events that resulted in such Expenses and Losses, as
well
as any other equitable considerations which applicable law may require to be
considered. The relative fault of the Company and all officers, directors and
employees of the Company other than Indemnitee who are jointly liable with
Indemnitee (or would be if joined in such Proceeding), on the one hand, and
Indemnitee, on the other hand, will be determined by reference to, among other
things, the degree to which their actions were motivated by intent to gain
personal profit or advantage, the degree to which their liability is primary
or
secondary, and the degree to which their conduct was active or passive.
5
5.2 Indemnification
for Contribution Claims by Others.
To the
fullest extent permitted by law, the Company will fully indemnify and hold
Indemnitee harmless from any claims of contribution which may be brought by
other officers, directors or employees of the Company who may be jointly liable
with Indemnitee for any Loss or Expense arising from a Proceeding.
ARTICLE
6
PROCEDURES
AND PRESUMPTIONS FOR THE
DETERMINATION
OF ENTITLEMENT TO INDEMNIFICATION
6.1 Notification
of Claims; Request for Indemnification.
Indemnitee agrees to notify promptly the Company in writing of any claim made
against Indemnitee for which indemnification will or could be sought under
this
Agreement; provided,
however,
that a
delay in giving such notice will not deprive Indemnitee of any right to be
indemnified under this Agreement unless, and then only to the extent that,
the
Company did not otherwise learn of the Proceeding and such delay is materially
prejudicial to the Company’s ability to defend such Proceeding; and,
provided,
further,
that
notice will be deemed to have been given without any action on the part of
Indemnitee in the event the Company is a party to the same Proceeding. The
omission to notify the Company will not relieve the Company from any liability
for indemnification which it may have to Indemnitee otherwise than under this
Agreement. Indemnitee may deliver to the Company a written request to have
the
Company indemnify and hold harmless Indemnitee in accordance with this
Agreement. Subject to Section 6.9,
such
request may be delivered from time to time and at such time(s) as Indemnitee
deems appropriate in his sole discretion. Following such a written request
for
indemnification, Indemnitee’s entitlement to indemnification shall be determined
according to Section 6.2.
The
Secretary of the Company will, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that Indemnitee has
requested indemnification. The Company will be entitled to participate in any
Proceeding at its own expense.
6.2 Determination
of Right to Indemnification.
Upon
written request by Indemnitee for indemnification pursuant to Section 6.1
hereof
with respect to any Proceeding, a determination, if, but only if, required
by
applicable law, with respect to Indemnitee’s entitlement thereto will be made by
one of the following, at the election of Indemnitee: (1) so long as there are
Disinterested Directors with respect to such Proceeding, a majority vote of
the
Disinterested Directors, even though less than a quorum of the Board of
Directors, (2) so long as there are Disinterested Directors with respect to
such
Proceeding, a committee of such Disinterested Directors designated by a majority
vote of such Disinterested Directors, even though less than a quorum of the
Board of Directors or (3) Independent Counsel in a written opinion delivered
to
the Board of Directors, a copy of which will also be delivered to Indemnitee.
The election by Indemnitee to use a particular person, persons or entity to
make
such determination is to be included in the written request for indemnification
submitted by Indemnitee (and if no election is made in the request it will
be
assumed that Indemnitee has elected the Independent Counsel to make such
determination). The person, persons or entity chosen to make a determination
under this Agreement of the Indemnitee’s entitlement to indemnification will act
reasonably and in good faith in making such determination.
6
6.3 Selection
of Independent Counsel.
If the
determination of entitlement to indemnification pursuant to Section 6.2
will be
made by an Independent Counsel, the Independent Counsel will be selected as
provided in this Section 6.3.
The
Independent Counsel will be selected by Indemnitee (unless Indemnitee requests
that such selection be made by the Board of Directors, in which event the
immediately following sentence will apply) and Indemnitee will give written
notice to the Company advising it of the identity of the Independent Counsel
so
selected. If the Independent Counsel is selected by the Board of Directors,
the
Company will give written notice to Indemnitee advising him of the identity
of
the Independent Counsel so selected. In either event, Indemnitee or the Company,
as the case may be, may, within ten days after such written notice of selection
is given, deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection; provided,
however,
that
such objection may be asserted only on the ground that the Independent Counsel
so selected does not meet the requirements of “Independent Counsel” as defined
in this Agreement, and the objection will set forth with particularity the
factual basis of such assertion. Absent a proper and timely objection, the
person so selected will act as Independent Counsel. If a written objection
is
made and substantiated, the Independent Counsel selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court
has
determined that such objection is without merit. If, within 30 days after
submission by Indemnitee of a written request for indemnification pursuant
to
Section 6.1,
no
Independent Counsel is selected, or an Independent Counsel for which an
objection thereto has been properly made remains unresolved, either the Company
or Indemnitee may petition the appropriate court of the State of Nevada or
other
court of competent jurisdiction for resolution of any objection which has been
made by the Company or Indemnitee to the other’s selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the court or by such other person as the court may designate, and the person
with respect to whom all objections are so resolved or the person so appointed
will act as Independent Counsel under Section 6.2.
The
Company will pay any and all fees and expenses incurred by such Independent
Counsel in connection with acting pursuant to Section 6.2
hereof,
and the Company will pay all fees and expenses incident to the procedures of
this Section 6.3,
regardless of the manner in which such Independent Counsel was selected or
appointed.
6.4 Burden
of Proof.
In
making a determination with respect to entitlement to indemnification hereunder,
the person, persons or entity making such determination will presume that
Indemnitee is entitled to indemnification under this Agreement. Anyone seeking
to overcome this presumption will have the burden of proof and the burden of
persuasion, by clear and convincing evidence. In making a determination with
respect to entitlement to indemnification hereunder which under this Agreement,
the Articles, Bylaws or applicable law requires a determination of Indemnitee’s
good faith and/or whether Indemnitee acted in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the
Company, the person, persons or entity making such determination will presume
that Indemnitee has at all times acted in good faith and in a manner he or
she
reasonably believed to be in or not opposed to the best interests of the
Company. Anyone seeking to overcome this presumption will have the burden of
proof and the burden of persuasion, by clear and convincing evidence. Indemnitee
will be deemed to have acted in good faith if Indemnitee’s action with respect
to a particular Enterprise is based on the records or books of account of such
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of such Enterprise in the course of their duties,
or
on the advice of legal counsel for such Enterprise or on information or records
given or reports made to such Enterprise by an independent certified public
accountant or by an appraiser or other expert selected by such Enterprise;
provided,
however
this
sentence will not be deemed to limit in any way the other circumstances in
which
Indemnitee may be deemed to have met such standard of conduct. In addition,
the
knowledge and/or actions, or failure to act, of any other director, officer,
agent or employee of such Enterprise will not be imputed to Indemnitee for
purposes of determining the right to indemnification under this
Agreement.
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6.5 No
Presumption in Absence of a Determination or As Result of an Adverse
Determination; Presumption Regarding Success.
Neither
the failure of any person, persons or entity chosen to make a determination
as
to whether Indemnitee has met any particular standard of conduct or had any
particular belief to make such determination, nor an actual determination by
such person, persons or entity that Indemnitee has not met such standard of
conduct or did not have such belief, prior to or after the commencement of
legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement under applicable law, will be a
defense to Indemnitee’s claim or create a presumption that Indemnitee has not
met any particular standard of conduct or did not have any particular belief.
In
addition, the termination of any Proceeding by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, will not create a presumption that Indemnitee
did
not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In the event that any Proceeding to which
Indemnitee is a party is resolved in any manner other than by final adverse
judgment (as to which all rights of appeal therefrom have been exhausted or
lapsed) against Indemnitee (including, without limitation, settlement of such
Proceeding with or without payment of money or other consideration) it will
be
presumed that Indemnitee has been successful on the merits or otherwise in
such
Proceeding. Anyone seeking to overcome this presumption will have the burden
of
proof and the burden of persuasion, by clear and convincing
evidence.
6.6 Timing
of Determination.
The
Company will use its reasonable best efforts to cause any determination required
to be made pursuant to Section 6.2
to be
made as promptly as practicable after Indemnitee has submitted a written request
for indemnification pursuant to Section 6.1.
If the
person, persons or entity chosen to make a determination does not make such
determination within 30 days after the later of the date (a) the Company
receives Indemnitee’s request for indemnification pursuant to Section 6.1
and (b)
on which an Independent Counsel is selected pursuant to Section 6.3,
if
applicable (and all objections to such person, if any, have been resolved),
the
requisite determination of entitlement to indemnification will be deemed to
have
been made and Indemnitee will be entitled to such indemnification, so long
as
(i) Indemnitee has fulfilled his obligations pursuant to Section 6.8
and (ii)
such indemnification is not prohibited under applicable law; provided,
however,
that
such 30 day period may be extended for a reasonable time, not to exceed an
additional 15 days, if the person, persons or entity making the determination
with respect to entitlement to indemnification in good faith requires such
additional time for the obtaining of or evaluating of documentation and/or
information relating thereto.
6.7 Timing
of Payments.
All
payments of Expenses, including any Expense Advance, and other amounts by the
Company to the Indemnitee pursuant to this Agreement will be made as soon as
practicable after a written request or demand therefor by Indemnitee is
presented to the Company, but in no event later than thirty (30) days after
(i)
such demand is presented or (ii) such later date as a determination of
entitlement to indemnification is made in accordance with Section 6.6,
if
applicable; provided,
however,
that an
Expense Advance will be made within the time provided in Section 4.3
hereof.
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6.8 Cooperation.
Indemnitee will cooperate with the person, persons or entity making a
determination with respect to Indemnitee’s entitlement to indemnification,
including providing to such person, persons or entity, upon reasonable advance
request, any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. Any Expenses incurred by Indemnitee
in so cooperating with the person, persons or entity making such determination
will be borne by the Company (irrespective of the determination as to
Indemnitee’s entitlement to indemnification) and the Company will indemnify
Indemnitee therefor and will hold Indemnitee harmless therefrom.
6.9 Time
for Submission of Request.
Indemnitee will be required to submit any request for Indemnification pursuant
to this Article 6
within a
reasonable time, not to exceed two years, after any judgment, order, settlement,
dismissal, arbitration award, conviction, acceptance of a plea of nolo
contendere (or its equivalent) or other full or partial final determination
or
disposition of the Proceeding (with the latest date of the occurrence of any
such event to be considered the commencement of the two year
period).
ARTICLE
7
LIABILITY
INSURANCE
7.1 Company
Insurance.
Subject
to Section 7.3,
the
Company will obtain and maintain a policy or policies of insurance with one
or
more reputable insurance companies providing Indemnitee with coverage in such
amount as will be determined by the Board of Directors for Losses and Expenses
paid or incurred by Indemnitee as a result of acts or omissions of Indemnitee
in
his Corporate Status, and to ensure the Company’s performance of its
indemnification obligations under this Agreement; provided,
however,
in all
policies of director and officer liability insurance obtained by the Company,
Indemnitee will be named as an insured party in such manner as to provide
Indemnitee with the same rights and benefits as are afforded to the most
favorably insured directors or officers, as applicable, of the Company under
such policies. Any reductions to the amount of director and officer liability
insurance coverage maintained by the Company as of the date hereof will be
subject to the approval of the Board of Directors.
7.2 Notice
to Insurers.
If, at
the time of receipt by the Company of a notice from any source of a Proceeding
as to which Indemnitee is a party or participant, the Company will give prompt
notice of such Proceeding to the insurers in accordance with the procedures
set
forth in the respective policies, and the Company will provide Indemnitee with
a
copy of such notice and copies of all subsequent correspondence between the
Company and such insurers related thereto. The Company will thereafter take
all
necessary or desirable actions to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such Proceeding in accordance
with the terms of such policies.
7.3 Insurance
Not Required.
Notwithstanding Section 7.1,
the
Company will have no obligation to obtain or maintain the insurance contemplated
by Section 7.1
if the
Board of Directors determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionately high compared to the amount of coverage provided, or if
the
coverage provided by such insurance is limited by exclusions so as to provide
an
insufficient benefit. The Company will promptly notify Indemnitee of any such
determination not to provide insurance coverage.
9
ARTICLE
8
REMEDIES
OF INDEMNITEE
8.1 Action
by Indemnitee.
In the
event that (i) a determination is made pursuant to Article 6
of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) an Expense Advance is not timely made pursuant to Section 4.3
of this
Agreement, (iii) no determination of entitlement to indemnification is made
within the applicable time periods specified in Section 6.6
or (iv)
payment of indemnified amounts is not made within the applicable time periods
specified in Section 6.7,
Indemnitee will be entitled to an adjudication in an appropriate court of the
State of Nevada, or in any other court of competent jurisdiction, of his
entitlement to such indemnification or payment of an Expense Advance.
Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. The provisions of
Nevada law (without regard to its conflict of laws rules) will apply to any
such
arbitration. The Company will not oppose Indemnitee’s right to seek any such
adjudication or award in arbitration.
8.2 De
Novo Review
if Prior Adverse Determination.
In the
event that a determination is made pursuant to Article 6
that
Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Article 8
will be
conducted in all respects as a de
novo
trial or
arbitration, as applicable, on the merits and Indemnitee will not be prejudiced
by reason of that adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Article 8,
Indemnitee will be presumed to be entitled to indemnification under this
Agreement, the Company will have the burden of proving Indemnitee is not
entitled to indemnification and the Company may not refer to or introduce
evidence of any determination pursuant to Article 6
adverse
to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding
or
arbitration pursuant to this Article 8,
Indemnitee will not be required to reimburse the Company for any Expense Advance
made pursuant to Article 4
until a
final determination is made with respect to Indemnitee’s entitlement to
indemnification (as to which all rights of appeal have been exhausted or
lapsed).
8.3 Company
Bound by Favorable Determination by Reviewing Party.
If a
determination is made that Indemnitee is entitled to indemnification pursuant
to
Article 6,
the
Company will be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Article 8,
absent
(i) a misstatement by Indemnitee of a material fact or an omission of a material
fact necessary to make Indemnitee’s statements in connection with the request
for indemnification not materially misleading or (ii) a prohibition of such
indemnification under law.
8.4 Company
Bears Expenses if Indemnitee Seeks Adjudication.
In the
event that Indemnitee, pursuant to this Article 8,
seeks a
judicial adjudication or arbitration of his rights under, or to recover damages
for breach of, this Agreement, any other agreement for indemnification, the
indemnification or advancement of expenses provisions in the Articles or Bylaws,
payment of Expenses in advance or contribution hereunder or to recover under
any
director and officer liability insurance policies maintained by the Company,
the
Company will, to the fullest extent permitted by law, indemnify and hold
harmless Indemnitee against any and all Expenses which are paid or incurred
by
Indemnitee in connection with such judicial adjudication or arbitration,
regardless of whether Indemnitee ultimately is determined to be entitled to
such
indemnification, payment of Expenses in advance or contribution or insurance
recovery. In addition, if requested by Indemnitee, the Company will (within
five
days after receipt by the Company of the written request therefor), pay as
an
Expense Advance such Expenses, to the fullest extent permitted by law.
10
8.5 Company
Bound by Provisions of this Agreement.
The
Company will be precluded from asserting in any judicial or arbitration
proceeding commenced pursuant to this Article 8
that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and will stipulate in any such judicial or arbitration proceeding
that the Company is bound by all the provisions of this Agreement.
ARTICLE
9
NON-EXCLUSIVITY,
SUBROGATION; NO DUPLICATIVE PAYMENTS;
MORE
FAVORABLE TERMS
9.1 Non-Exclusivity.
The
rights of indemnification and to receive Expense Advances as provided by this
Agreement will not be deemed exclusive of any other rights to which Indemnitee
may at any time be entitled under applicable law, the Articles, the Bylaws,
any
agreement, a vote of stockholders, a resolution of the directors or otherwise.
To the extent Indemnitee otherwise would have any greater right to
indemnification or payment of any advancement of Expenses under any other
provisions under applicable law, the Articles, Bylaws, any agreement, vote
of
stockholders, a resolution of directors or otherwise, Indemnitee will be
entitled under this Agreement to such greater right. No amendment, alteration
or
repeal of this Agreement or of any provision hereof limits or restricts any
right of Indemnitee under this Agreement in respect of any action taken or
omitted by such Indemnitee prior to such amendment, alteration or repeal. To
the
extent that a change in the NRS, whether by statute or judicial decision,
permits greater indemnification than would be afforded currently under the
Articles, Bylaws and this Agreement, it is the intent of the parties hereto
that
Indemnitee enjoy by this Agreement the greater benefits so afforded by such
change. No right or remedy herein conferred is intended to be exclusive of
any
other right or remedy, and every other right and remedy will be cumulative
and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, will not prevent the concurrent
assertion or employment of any other right or remedy.
9.2 Subrogation.
In the
event of any payment by the Company under this Agreement, the Company will
be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee with respect thereto and Indemnitee will execute all papers required
and take all 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 (it being understood that all of Indemnitee’s reasonable Expenses related
thereto will be borne by the Company).
9.3 No
Duplicative Payments.
The
Company will not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or any Expense for which advancement is provided)
hereunder if and to the extent that Indemnitee has otherwise actually received
such payment under any insurance policy, contract, agreement or otherwise.
The
Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee in
respect of Proceedings relating to Indemnitee’s service at the request of the
Company as a director, officer, employee, partner, member, manager, trustee,
fiduciary or agent of any other Enterprise will be reduced by any amount
Indemnitee has actually received as indemnification or advancement of Expenses
from such other Enterprise.
11
9.4 More
Favorable Terms.
In the
event the Company enters into an indemnification agreement with another officer
or director, as the case may be, containing terms more favorable to the
indemnitee thereof than the terms contained herein (and absent special
circumstances justifying such more favorable terms), Indemnitee will be afforded
the benefit of such more favorable terms and such more favorable terms will
be
deemed incorporated by reference herein as if set forth in full herein. As
promptly as practicable following the execution thereof, the Company will (a)
send a copy of the agreement containing more favorable terms to Indemnitee,
and
(b) prepare, execute and deliver to Indemnitee an amendment to this Agreement
containing such more favorable terms.
ARTICLE
10
DEFENSE
OF PROCEEDINGS
10.1 Company
Assuming the Defense.
Subject
to Section 10.3
below,
in the event the Company is obligated to pay in advance the Expenses of any
Proceeding pursuant to Article 4,
the
Company will be entitled, by written notice to Indemnitee, to assume the defense
of such Proceeding, with counsel approved by Indemnitee, which approval will
not
be unreasonably withheld. The Company will identify the counsel it proposes
to
employ in connection with such defense as part of the written notice sent to
Indemnitee notifying Indemnitee of the Company’s election to assume such
defense, and Indemnitee will be required, within ten days following Indemnitee’s
receipt of such notice, to inform the Company of its approval of such counsel
or, if it has objections, the reasons therefor. If such objections cannot be
resolved by the parties, the Company will identify alternative counsel, which
counsel will also be subject to approval by Indemnitee in accordance with the
procedure described in the prior sentence.
10.2 Right
of Indemnitee to Employ Counsel.
Following approval of counsel by Indemnitee pursuant to Section 10.1
and
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees and expenses of counsel
subsequently incurred by Indemnitee with respect to the same Proceeding;
provided,
however,
that
(a) Indemnitee has the right to employ counsel in any such Proceeding at
Indemnitee’s expense and (b) the Company will be required to pay the fees and
expenses of Indemnitee’s counsel if (i) the employment of counsel by Indemnitee
has been previously authorized by the Company, (ii) Indemnitee reasonably
concludes that there is an actual or potential conflict between the Company
(or
any other person or persons included in a joint defense) and Indemnitee in
the
conduct of such defense or representation by such counsel retained by the
Company or (iii) the Company does not continue to retain the counsel approved
by
Indemnitee.
10.3 Company
Not Entitled to Assume Defense.
Notwithstanding Section 10.1,
the
Company will not be entitled to assume the defense of any Proceeding brought
by
or on behalf of the Company or any Proceeding as to which Indemnitee has
reasonably made the conclusion provided for in Section 10.2(b)(ii).
ARTICLE
11
SETTLEMENT
11.1 Company
Bound by Provisions of this Agreement.
Notwithstanding anything in this Agreement to the contrary, the Company will
have no obligation to indemnify Indemnitee under this Agreement for any amounts
paid in settlement of any Proceeding effected without the Company’s prior
written consent.
12
11.2 When
Indemnitee’s Prior Consent Required.
The
Company will not, without the prior written consent of Indemnitee, consent
to
the entry of any judgment against Indemnitee or enter into any settlement or
compromise which (i) includes an admission of fault of Indemnitee, any
non-monetary remedy imposed on Indemnitee or a Loss for which Indemnitee is
not
wholly indemnified hereunder or (ii) with respect to any Proceeding with respect
to which Indemnitee may be or is made a party or a participant or may be or
is
otherwise entitled to seek indemnification hereunder, does not include, as
an
unconditional term thereof, the full release of Indemnitee from all liability
in
respect of such Proceeding, which release will be in form and substance
reasonably satisfactory to Indemnitee. Neither the Company nor Indemnitee will
unreasonably withhold its consent to any proposed settlement; provided,
however,
Indemnitee may withhold consent to any settlement that does not provide a full
and unconditional release of Indemnitee from all liability in respect of such
Proceeding.
ARTICLE
12
DURATION
OF AGREEMENT
12.1 Duration
of Agreement.
This
Agreement will continue until and terminate upon the latest of (a) the statute
of limitations applicable to any claim that could be asserted against an
Indemnitee with respect to which Indemnitee may be entitled to indemnification
and/or an Expense Advance under this Agreement, (b) ten years after the date
that Indemnitee has ceased to serve as an officer of the Company or as a
director, officer, employee, partner, member, manager, fiduciary or agent of
any
other Enterprise which Indemnitee served at the request of the Company, or
(c)
if, at the later of the dates referred to in (a) and (b) above, there is pending
a Proceeding in respect of which Indemnitee is granted rights of indemnification
or the right to an Expense Advance under this Agreement or a Proceeding
commenced by Indemnitee pursuant to Article 8
of this
Agreement, one year after the final termination of such Proceeding, including
any and all appeals.
ARTICLE
13
MISCELLANEOUS
13.1 Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding of the parties
in
respect of the subject matter hereof and supersedes all prior understandings,
agreements or representations by or among the parties, written or oral, to
the
extent they relate in any way to the subject matter hereof; provided,
however,
it is
agreed that the provisions contained in this Agreement are a supplement to,
and
not a substitute for, any provisions regarding the same subject matter contained
in the Articles, the Bylaws and any employment or similar agreement between
the
parties.
13.2 Assignment;
Binding Effect; Third Party Beneficiaries.
No
party may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other party
and
any such assignment by a party without prior written approval of the other
parties will be deemed invalid and not binding on such other parties;
provided,
however, that the Company may assign all (but not less than all) of its rights,
obligations and interests hereunder to any direct or indirect successor to
all
or substantially all of the business or assets of the Company by purchase,
merger, consolidation or otherwise and will cause such successor to be bound
by
and expressly assume the terms and provisions hereof. All of the terms,
agreements, covenants, representations, warranties and conditions of this
Agreement are binding upon, and inure to the benefit of and are enforceable
by,
the parties and their respective successors, permitted assigns, heirs, executors
and personal and legal representatives. There are no third party beneficiaries
having rights under or with respect to this Agreement.
13
13.3 Notices.
All
notices, requests and other communications provided for or permitted to be
given
under this Agreement must be in writing and be given by personal delivery,
by
certified or registered United States mail (postage prepaid, return receipt
requested), by a nationally recognized overnight delivery service for next
day
delivery, or by facsimile transmission, as follows (or to such other address
as
any party may give in a notice given in accordance with the provisions
hereof):
| If to the Company: | United Fuel & Energy Corporation | |
| 0000 Xxxxxxx Xxxxxx , Xxxxx _____ | ||
| Xxxxxxx, Xxxxxxxxxx, 00000 | ||
| Attn: Chief Executive Officer | ||
| Fax No: ( ) _________________ | ||
| If to Indemnitee: | Xxxxxxx X. Xxxxxxx | |
| 0000 Xxxxxxx Xxxxxx, Xxxxx _____ | ||
| Anaheim, California 92863______ | ||
| Fax No:_____________________ |
All
notices, requests or other communications will be effective and deemed given
only as follows: (i) if given by personal delivery, upon such personal delivery,
(ii) if sent by certified or registered mail, on the fifth business day after
being deposited in the United States mail, (iii) if sent for next day delivery
by overnight delivery service, on the date of delivery as confirmed by written
confirmation of delivery, (iv) if sent by facsimile, upon the transmitter’s
confirmation of receipt of such facsimile transmission, except that if such
confirmation is received after 5:00 p.m. (in the recipient’s time zone) on a
business day, or is received on a day that is not a business day, then such
notice, request or communication will not be deemed effective or given until
the
next succeeding business day. Notices, requests and other communications sent
in
any other manner, including by electronic mail, will not be
effective.
13.4 Specific
Performance; Remedies.
Each
party acknowledges and agrees that the other party would be damaged irreparably
if any provision of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and its provisions
in any action or proceeding instituted in any court of the United States or
any
state thereof having jurisdiction over the parties and the matter, in addition
to any other remedy to which they may be entitled, at law or in equity. Except
as expressly provided herein, the rights, obligations and remedies created
by
this Agreement are cumulative and in addition to any other rights, obligations
or remedies otherwise available at law or in equity. Except as expressly
provided herein, nothing herein will be considered an election of
remedies.
13.5 Headings.
The
article and section headings contained in this Agreement are inserted for
convenience only and will not affect in any way the meaning or interpretation
of
this Agreement.
13.6 Governing
Law.
This
Agreement will be governed by and construed in accordance with the laws of
the
State of Nevada, without giving effect to any choice of law
principles.
14
13.7 Amendment.
This
Agreement may not be amended or modified except by a writing signed by all
of
the parties.
13.8 Extensions;
Waivers.
Any
party may, for itself only, (i) extend the time for the performance of any
of
the obligations of any other party under this Agreement, (ii) waive any
inaccuracies in the representations and warranties of any other party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any such extension or waiver will be valid only if set forth in a
writing signed by the party to be bound thereby. No waiver by any party of
any
default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, may be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in
any
way any rights arising because of any prior or subsequent such occurrence.
Neither the failure nor any delay on the part of any party to exercise any
right
or remedy under this Agreement will operate as a waiver thereof, nor will any
single or partial exercise of any right or remedy preclude any other or further
exercise of the same or of any other right or remedy.
13.9 Severability.
The
provisions of this Agreement will be deemed severable and the invalidity or
unenforceability of any provision will not affect the validity or enforceability
of the other provisions hereof; provided that if any provision of this
Agreement, as applied to any party or to any circumstance, is judicially
determined not to be enforceable in accordance with its terms, the parties
agree
that the court judicially making such determination may modify the provision
in
a manner consistent with its objectives such that it is enforceable, and/or
to
delete specific words or phrases, and in its modified form, such provision
will
then be enforceable and will be enforced.
13.10 Counterparts;
Effectiveness.
This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original but all of which together will constitute one and the same
instrument. This Agreement will become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties,
which delivery may be made by exchange of copies of the signature page by
facsimile transmission or email of a .pdf or .tiff formatted
document.
13.11 Construction.
This
Agreement has been freely and fairly negotiated among the parties. If an
ambiguity or question of intent or interpretation arises, this Agreement will
be
construed as if drafted jointly by the parties and no presumption or burden
of
proof will arise favoring or disfavoring any party because of the authorship
of
any provision of this Agreement. Any reference to any law will be deemed also
to
refer to such law as amended and all rules and regulations promulgated
thereunder, unless the context requires otherwise. The words “include,”
“includes,” and “including” will be deemed to be followed by “without
limitation.” Pronouns in masculine, feminine, and neuter genders will be
construed to include any other gender, and words in the singular form will
be
construed to include the plural and vice versa, unless the context otherwise
requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,”
and words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The parties intend that
each
representation, warranty, and covenant contained herein will have independent
significance. If any party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached will not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant. Time is of the essence
in
the performance of this Agreement.
15
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
| UNITED FUEL & ENERGY CORPORATION | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxxx | |
|
Xxxxx X. Xxxxxxx |
||
| President and Chief Executive Officer | ||
| INDEMNITEE | ||
| /s/ Xxxxxxx X. Xxxxxxx | ||
|
XXXXXXX X. XXXXXXX |
||
16
