EMPLOYMENT AGREEMENT
EXHIBIT
10.1
THIS
EMPLOYMENT AGREEMENT (this “Agreement”)
is
made as of the 16th day of September, 2008 (the “Commencement
Date”),
by
and between United Fuel & Energy Corporation, a Nevada corporation on behalf
of itself and any and all subsidiaries (together, the “Company”),
and
Xxxxxxx X. Xxxxxxx (“Employee”).
In
consideration of the mutual covenants and agreements set forth below, it is
hereby covenanted and agreed by the Company and Employee as
follows:
1. Employment
Term.
This
Agreement will remain in effect from the Commencement Date and shall end on
the
date that is the first anniversary of the Commencement Date unless this
Agreement is earlier terminated in accordance with its express terms (the
“Initial
Term”);
provided,
however,
that
upon the expiration of the Initial Term, and on each anniversary of the
Commencement Date thereafter, the term of this Agreement shall automatically
extend for an additional one-year term (each a “Renewal
Term,”
and
together with the Initial Term, the “Employment
Term”)
unless
(a) either Party gives the other Party three (3) months’ written notice of its
desire not to extend this Agreement prior to the expiration of the Initial
Term
or Renewal Term, as applicable, or (b) this Agreement is earlier terminated
in
accordance with its express terms.
2. Position.
During
the Employment Term, Employee shall serve in the position of Executive Vice
President and Chief Financial Officer.
3. Duties.
During
the Employment Term, Employee shall devote all of his business time, attention
and energies to the performance of his duties hereunder. As Chief Financial
Officer, Employee will have such duties and responsibilities as determined
by
Company’s Board of Directors and
Chief
Executive Officer consistent with the Company’s Bylaws. If requested by Company,
Employee will serve as an officer or director of any subsidiary of Company
without additional compensation. Employee will devote his full business energies
and abilities and all of his business time to the performance of his duties
hereunder and will not, without the Company’s prior written consent, render to
others any service of any kind (whether or not for compensation) that, in the
Company’s sole but reasonable judgment, would interfere with the full
performance of his duties hereunder. Notwithstanding the foregoing, Employee
is
permitted to spend reasonable amounts of time to manage his personal financial
and legal affairs and, with the Company’s consent which will not be unreasonably
withheld, to serve on civic, charitable, not-for-profit, industry or corporate
boards or advisory committees, provided that such activities, individually
and
collectively, do not materially interfere with the performance of Employee’s
duties hereunder. In no event will Employee engage in any activities that could
reasonably create a conflict of interest or the appearance of a conflict of
interest. Employee shall be subject to the Company’s policies, procedures and
approval practices, as generally in effect from time to time.
4. Compensation
and Benefits.
During
the Employment Term, the Company shall pay and provide Employee with the
following:
(a) Base
Salary.
The
Company shall pay Employee an initial base salary at a monthly rate of Twenty
Thousand Eight Hundred Thirty Three Dollars and Thirty Three Cents ($20,833.33)
(the “Monthly
Salary”)
equaling an annual salary of Two Hundred Fifty Thousand Dollars and No Cents
($250,000.00) (the “Base
Salary),
payable in accordance with its normal payroll practices, as in effect from
time
to time. The Base Salary is first subject to review within the first three
(3)
months after the end of the fiscal year ending December 31, 2008 and,
thereafter, subject to periodic review not less frequently than annually within
the first three (3) months after the end of the next successive fiscal
year, and to increase (but not decrease) as approved by the Compensation
Committee of the Board (“Compensation
Committee”),
or,
if the Board desires to approve increases to the Base Salary, the Board, in
the
sole discretion of the Compensation Committee or the Board, as
applicable.
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(b) Incentive
Bonuses.
During
the term of Employee’s employment under this Agreement, Employee will be
eligible to participate in all bonus plans applicable to senior executives
of
the Company established by the Board or the Compensation Committee, if any,
subject to the terms and conditions of any such plans. The target amount of
incentive bonuses will be determined by the Board or the Compensation Committee,
and will be tied to the Company’s achievement of financial objectives
established by the Board or the Compensation Committee and individual
performance objectives to be established annually by the Compensation Committee.
For the avoidance of doubt, incentive bonuses will be payable only if financial
and performance objectives established by the Board and/or the Compensation
Committee are achieved. Employee must be employed by the Company as of the
eligibility date established by the Compensation Committee for a given fiscal
year to be eligible for consideration for an incentive bonus for that year.
Incentive bonuses will be paid out according to the terms of the applicable
bonus plan, if any, but in no event later than March 15 of the year that
immediately follows the fiscal year to which the bonus relates.
(c) Discretionary
Bonus.
Employee shall also be eligible to receive an annual discretionary bonus. The
bonus will be determined at the sole discretion of the Compensation Committee
or
the Board based on Employee’s performance during the twelve month period ending
September 30th
of each
year or other annual period determined by the Board or Compensation Committee.
(d) Equity
Incentive Grants.
(i) Stock
Options.
As will
be evidenced by a separate stock option agreement in substantially the form
attached hereto as Exhibit
A,
the
Company shall grant to Employee an incentive stock option on the Commencement
Date or as soon as administratively feasible thereafter, to purchase 150,000
shares of the Company’s common stock pursuant to the Company’s 2005 Equity
Incentive Plan (the “2005
Plan”)
. The
option will vest in twelve (12) equal quarterly installments with an exercise
price equal to the Fair Market Value of the Company’s common stock (as defined
in the 2005 Plan) on the Commencement Date or the actual date of grant if the
grant occurs after the Commencement Date.
(ii) Restricted
Stock.
As will
be evidenced by a separate restricted stock agreement in substantially the
form
attached hereto as Exhibit
B,
the
Company shall grant to Employee pursuant to the 2005 Plan 150,000 shares of
the
Company’s common stock on the Commencement Date or as soon as administratively
feasible thereafter. The restricted stock shall be subject to forfeiture, and
will vest in twelve (12) equal quarterly installments.
(iii) Additional
Equity Interests.
Employee
shall be eligible to receive such additional stock options and restricted stock
as the Board or Compensation Committee may determine in its reasonable
discretion based on Company and individual performance criteria to be mutually
agreed upon by Employee and the Company.
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(e) Benefits.Employee
shall be eligible to participate in the employee benefit plans and programs
generally provided to its employees, and in all benefit plans and programs
afforded to senior or executive management employees, in accordance with the
terms thereof, as in effect and as amended from time to time, including the
Company’s health benefit plan, vacation, sick leave and any other allowed
absences, paid or unpaid.
(f) Expenses.
Upon
submission of appropriate documentation, the Company shall reimburse Employee
for all previously approved, reasonable business expenses incurred in connection
with the performance of his duties hereunder in accordance with the Company’s
expense reimbursement policies, as in effect from time to time.
(g) Termination
of Employment.
This
Agreement may be terminated upon the following terms:
(i) Termination
Upon Death.
If
Employee should die during the Employment Term, this Agreement will terminate
on
the date of death.
(ii) Termination
Upon Disability.
This
Agreement shall automatically terminate upon the Employee’s Disability.
“Disability”
means
that the (i) Employee is unable to engage in any substantial gainful activity
by
reason of any medically determinable physical or mental impairment that can
be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months; (ii) Employee is, by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employee’s of Company;
(iii) Employee is determined to be totally disabled by the Social Security
Administration; or (iv) Employee is determined to be disabled in accordance
with
the disability insurance program under which the Company has provided disability
insurance to the Employee, provided that the definition of disability applied
under such disability insurance program complies with the requirements of
Treasury Regulation Section 1.409A-3(i)(4). Nothing in this Paragraph relieves
the Company of any of its obligations of reasonable accommodation under the
Americans with Disabilities Act.
(iii) Termination
by Company With Cause.
Company
will be entitled to terminate Employee’s employment at any time for Cause.
“Cause”
will
constitute any one of the following:
(1) Employee’s
demonstrated and material neglect of or failure or refusal to perform the
material duties of his position, or failure to follow the reasonable and lawful
instructions of the Board or the Chief Executive Officer (other than a failure
resulting from a Disability);
(2) Employee
engaging in willful, reckless, or grossly negligent misconduct that the Board
reasonably determines has caused, is causing or reasonably is likely to cause
harm that is materially injurious to the Company, monetarily or
otherwise;
(3) Employee’s
conviction of, or plea of guilty or nolo contender to, a felony or a crime
involving moral turpitude, other than a traffic offense that is not punishable
by a sentence of incarceration or a felony related to hunting live game, except
for felonies pertaining to acts of poaching, criminal trespass or violations
of
federal or state weapons or firearms laws;
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(4) Employee
commits an act of fraud, misappropriation, or personal dishonesty (in each
case,
that is not de
minimus)
that
the Board reasonably determines has caused, is causing, or reasonably is likely
to cause harm to the Company; and
(5) Employee
commits a material breach of this Agreement and fails to cure such breach within
thirty (30) days from the date that the Company gives notice thereof to Employee
identifying the provision of this Agreement that the Company has determined
has
been breached.
Termination
pursuant to Section
4(g)(iii)(1)
above
shall be effective only if such instances of neglect, failure or refusal
continue after Employee has been given written notice thereof by the Company,
and Employee is given fifteen (15) days after the receipt of such notice to
present his position to the Board or to cure the same.
(iv) Termination
by Company Without Cause.
Company
may at any time terminate Employee's employment without Cause.
(v) Resignation
for Good Reason.
Employee may terminate this Agreement for Good Reason (as defined below) by
giving written notice of such termination, which termination will become
effective on the thirtieth (30th) day following receipt by the Company. As
used
in this Agreement, “Good
Reason”
shall
mean any one of the following: (i) a material reduction in Employee’s Base
Salary and/or a material failure to provide the benefits required in
Section
4;
(ii)
any other action or inaction that constitutes a material breach by the Company
of this Agreement; (iii) a material diminution in Employee’s authority, duties
or responsibilities such that they are materially inconsistent with his position
as Chief Financial Officer of the Company; (iv) relocation of the Company’s
headquarters to a location more than thirty (30) miles from 0000 Xxxxxxx Xxxxxx
in Anaheim, California; and (v) in the event of a Change in Control (as defined
below), failure of the successor to the Company or to the Company’s business (A)
to offer Employee the position of Chief Financial Officer of the successor
company, reporting only to the board of directors and/or the chief executive
officer of the successor to the Company, with duties, responsibilities,
compensation and benefits materially similar to those enjoyed by Employee
immediately preceding the Change in Control, or (B) to assume the obligations
of
the Company under and to become a party to this Agreement, provided that no
termination for Good Reason shall be effective until Employee has given the
Company written notice (pursuant to Section
8(g)
below)
within sixty (60) days of the initial occurrence of any of the foregoing
specifying the event or condition constituting the Good Reason and the specific
reasonable cure requested by Employee, the Company has failed to cure the
occurrence within thirty (30) days of receiving written notice from Employee,
and Employee resigns within six (6) months following the initial occurrence.
In
the event of a termination for Good Reason, Employee will be entitled to the
Accrued Benefits and the Severance Benefits, on the same conditions as would
apply to Employee if he were terminated without cause on or after the 91st
day
of the Initial Term.
As
used
in this Agreement, a “Change
in Control”
shall
mean any of the following events:
(1) the
acquisition by any Group or Person (as such terms are defined in Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934
Act”)),
other than (A) a trustee or other fiduciary holding securities of the Company
under an employee benefit plan of the Company, (B) an entity in which the
Company directly or indirectly beneficially owns fifty percent (50%) or more
of
the voting securities of such entity (an “Affiliate”),
or (C)
Xxxxx Xxxxxxx or an affiliate of Xxxxx Xxxxxxx, of any securities of the
Company,
immediately after which such Group or Person has beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the 0000 Xxx) of more than fifty
percent (50%) of (X) the outstanding shares of Common Stock or (Y) the combined
voting power of the Company’s then outstanding securities entitled to vote
generally in the election of directors;
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(2) the
Company (and/or its subsidiaries) is a party to a merger or consolidation with
a
Person, or series or related transactions, with a Person other than an
Affiliate, which results in the holders of voting securities of the Company
outstanding immediately before such merger or consolidation failing to continue
to represent (either by remaining outstanding or being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of the then outstanding voting securities of the
corporation resulting from such merger or consolidation; or
(3) all
or
substantially all of the assets of the Company and its subsidiaries are, in
any
transaction or series of transactions, sold or otherwise disposed of (or
consummation of any transaction, or series of related transactions, having
similar effect , other than to an Affiliate;
provided,
however, that in no event shall a “Change in Control” be deemed to have occurred
for purposes of this Agreement solely because the Company engages in an internal
reorganization, which may include a transfer of assets to, or a merger or
consolidation with, one or more Affiliates.
(vi) Voluntary
Resignation without Good Reason.
In the
event that Employee resigns without Good Reason as defined above in Section
4(v),
Employee will be entitled only to the Accrued Benefits through the termination
date. The Company will have no further obligation to pay any compensation of
any
kind (including without limitation any bonus or portion of a bonus that
otherwise may have become due and payable to Employee with respect to the year
in which such termination date occurs), or severance payments of any
kind.
5. Payments
and Benefits upon any Expiration or Termination.
Upon
termination of employment, the Company shall provide Employee with the payments
and benefits set forth in this Section
5.
Upon
termination of employment for any reason, Employee shall also resign (and shall
be deemed to have resigned) any officerships, directorships or other positions
that he then holds with the Company or any of its affiliates.
(a) General.
Upon
the termination of Employee’s employment for any reason, the Company shall pay
and provide Employee (or, in the case of his death, his surviving spouse or,
if
none, his estate) with the following amounts and benefits: (i) all earned but
unpaid compensation, including accrued unpaid vacation) through the effective
date of termination, payable on or before the termination date; (ii) any
previously awarded but unpaid cash bonuses, payable on or before the termination
date; (iii) reimbursement for all un-reimbursed business expenses incurred
on or
prior to the date of termination to which Employee would be otherwise entitled;
and (iv) continued coverage under the Company’s insurance benefit plans through
the termination date and such other benefits to which he may be entitled
pursuant to the Company’s benefit plans (other than any severance
plan). The
payments and benefits set forth in this Section
5(a)
shall be
referred to as the “Accrued
Benefits.”
(b) Special
Benefits Upon Death or Disability.
Upon
the termination of Employee’s employment in the event of Employee’s death or
disability pursuant to Sections
4(g)(i)
or
(ii)
above,
the stock option described in Section
4(d)(i)
above
shall fully vest and become exercisable by Employee’s legal representative or
authorized assignee for a period of no more than six (6) months following
Employee’s date of death and the restrictions shall immediately lapse with
respect to the restricted stock grant described in Section
4(d)(ii)
above.
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(c) Special
Benefits Upon Termination Without Cause or for Good Reason.
Upon
the Company’s termination of Employee’s employment without Cause pursuant to
Section
4(g)(iv)
above or
upon Employee’s termination of Employee’s employment for Good Reason pursuant to
Section
4(g)(v)
above,
the stock option described in Section
4(d)(i)
above
shall remain exercisable by Employee for a period of no more than twelve (12)
months following the date of termination to the extent such option was vested
and exercisable as of the date of termination. In addition, upon the Company’s
termination of Employee’s employment without Cause pursuant to Section
4(g)(iv)
above on
or after the 91st
day of
the Initial Term or at any time during any Renewal Term or upon Employee’s
termination of Employee’s employment for Good Reason pursuant to Section
4(g)(v)
above on
or after the 91st
day of
the Initial Term or at any time during any Renewal Term, the Company will also
(i) continue to pay Employee the equivalent of the Base Salary he would have
earned over the next twelve (12) months following the termination date (less
necessary withholdings and authorized deductions) at his current Base Salary
(the “Severance
Payment”),
payable in equal monthly installments over the twelve (12) months following
the
termination date (the “Severance
Period”),
in
accordance with the Company’s regular payroll practices, as in effect from time
to time, subject to Section
7(b)
below;
(ii) reimburse Employee the amount of any insurance premiums actually paid
by
Employee to retain group health insurance coverage as of the termination date
for the Employee and his eligible dependents pursuant to Consolidated Omnibus
Budget Reconciliation Act of 1986 (COBRA) for a period of up to twelve (12)
months following the date of termination; and (iii) immediately vest the number
of outstanding unvested options and shares of restricted stock granted to
Employee pursuant
to Sections
4(d)(i)
and
4(d)(ii).
The
payments and benefits set forth in this Section
5(c)(i)-(iii)
shall be
referred to as the “Severance
Benefits.”
(d) No
Further Benefits.
Other
than as expressly provided in this Agreement, from and after the date of
termination, Employee shall not be entitled to any other payments or benefits
in
connection with his employment and/or the termination thereof, and shall have
no
further right to receive compensation or other consideration from the Company.
6. Confidential
Information.
Prior
to the execution of this Agreement, the Company has, and following the executing
this Agreement, the Company will provide Employee with some or all of the
Company’s various trade secrets and confidential or proprietary information.
“Confidential
Information”
means
information relating to the Company, it’s business or operations that the
Company takes reasonable efforts to keep confidential, including the following:
(i) information relating to the Company’s business, operations, assets,
liabilities or financial condition; (ii) information regarding the Company’s
pricing, sales, merchandising, marketing, capital expenditures, costs, joint
ventures, business alliances, purchasing or manufacturing; (iii) information
regarding the Company’s employees or representatives, including their
identities, responsibilities, competence and compensation; (iv) information
regarding the Company’s current or prospective customers; (v) information
regarding the Company’s current or prospective vendors, suppliers, competitors,
distributors or other business partners; (vi) trading positions, forecasts,
projections, budgets and business plans regarding the Company; (vii) information
regarding the Company’s planned or pending acquisitions, divestitures or other
business combinations; (viii) the Company’s trade secrets and proprietary
information, including strategies (including investment and trading strategies),
potential investments, trades and trading positions, and company, commodity
and
industry research information; (ix) technical information, patent disclosures
and applications, copyright applications, sketches, drawings, blueprints,
models, know-how, discoveries, inventions, improvements, techniques, processes,
business methods, equipment, algorithms, software programs, software source
documents and formulae, in each case regarding the Company’s current, future or
proposed products or services (including information concerning the Company’s
research, experimental work, development, design details and specifications,
and
engineering); (x) information regarding the Company’s web site designs, web site
content, proposed domain names, and data bases; (xi) confidential information
received by the Company belonging to third parties which the Company is required
to keep confidential; and, (xii) any of the foregoing which may be developed
by
Employee incident to his duties with the Company. Notwithstanding anything
herein to the contrary, the following information shall not be deemed to
constitute Confidential Information and Employee shall have no obligation with
respect to such information which:
6
(i) is
or
becomes publicly known or available through no fault or wrongful act of
Employee;
(ii) is
rightfully received from a third party without restriction and without breach
of
this Agreement;
(iii) is
approved for release by written authorization of the Company.
Employee
agrees that all Confidential Information, whether prepared by Employee or
otherwise, coming into his possession, shall remain the exclusive property
of
the Company. Employee further agrees that he shall not, without the prior
written consent of the Company, use or disclose to any third party any of the
Confidential Information described herein, directly or indirectly, either during
Employee’s employment with the Company or at any time following the termination
of Employee’s employment with the Company. Employee understands and acknowledges
that the disclosure or use of the Confidential Information described herein
in
violation of this Agreement may damage the Company or its affiliates and is
prohibited by the law.
Upon
termination of this Agreement, Employee agrees that all Confidential Information
and other files, documents, materials, records, notebooks, customer lists,
business proposals, contracts, agreements and other repositories containing
information concerning the Company or the businesses of the Company (including
all copies thereof) in Employee’s possession, custody or control, whether
prepared by Employee or others, shall remain with or be returned to the Company
promptly (within five (5) business days) after the termination of Employee’s
employment. Employee also agrees not to use any Confidential Information for
the
benefit of Employee or any third party. All Confidential Information that cannot
be returned upon the termination of Employee’s employment, e.g., information
residing on magnetic or electronic media belonging to Employee, shall be
destroyed and its destruction certified by Employee under penalty of perjury
and
to the reasonable satisfaction of the Company. It is not a breach of this
Agreement for Employee to disclose Confidential Information pursuant to an
order
of a court or other governmental or legal body. Nothing in this Agreement,
however, shall prohibit Employee from using or disclosing Confidential
Information (A) to the extent required by law, or (B) while employed by the
Company to the extent necessary in furtherance of Employee’s duties to the
Company. If Employee is required by applicable law to disclose any Confidential
Information, then, to the extent permitted by law, Employee shall (1) provide
the Company with prompt notice before such disclosure so that the Company may
attempt to obtain a protective order or other assurance that confidential
treatment will be accorded such information and (2) cooperate with the Company
in attempting to obtain such order or assurance.
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7. Taxes.
(a) Withholdings.
The
Company may withhold from any compensation and benefits payable under this
Agreement all federal, state, city and other taxes or amounts as shall be
determined by the Company to be required to be withheld pursuant to applicable
laws, or governmental regulations or rulings. Employee shall be solely
responsible for the satisfaction of any taxes (including employment taxes
imposed on employees and penalty taxes on nonqualified deferred compensation).
(b) Section
409A Compliance.
(i) Section
409A Six-Month Delay Rule.
If any
amounts that become due under this Agreement on account of Employee’s
termination of employment constitute “nonqualified deferred compensation” within
the meaning of Code section 409A (“Section
409A”),
payment of such amounts shall not commence until Employee experiences a
“separation from service” within the meaning of Treasury Regulation Section
1.409A-1(h). If, at the time of Employee’s separation from service, Employee’s
is a “specified employee” (under Section 409A), any such amounts will not be
paid until after the first business day of the seventh (7th) month after
Employee’s separation from service (the “409A
Suspension Period”).
Within fourteen (14) calendar days after the end of the 409A Suspension Period,
Employee shall be paid a lump sum payment in cash equal to any payments delayed
because of the preceding sentence, together with interest on them for the period
of delay at a rate equal to the average prime interest rate published in the
Wall Street Journal on any day chosen by the Company during that period.
Thereafter, Employee shall receive any remaining benefits as if there had not
been an earlier delay.
(ii) Interpretation.
This
Agreement is intended to comply with or be exempt from Section 409A, and the
Company shall have complete discretion to interpret and construe this Agreement
and any associated documents in any manner that establishes an exemption from
(or otherwise conforms them to) the requirements of Section 409A. To the extent
that any regulations or other guidance issued under Section 409A (after
application of the previous sentence) would result Employee being subject to
the
payment of interest or any additional tax under Section 409A, the parties agree,
to the extent reasonably possible, to amend this Agreement in order to avoid
the
imposition of any such interest or additional tax under Section 409A, which
such
amendment shall have the minimum economic effect necessary and be reasonably
determined in good faith by Employee and the Company, provided it does not
increase the overall expense to the Company in providing the
benefits.
8. General
(a) Governing
Law; Jurisdiction.
The
laws of the State of California shall govern the validity, performance,
enforcement, interpretation, and other aspects of this Agreement,
notwithstanding any state’s choice of law provisions to the contrary. Any
proceeding arising from or in connection with this Agreement shall be conducted
in Orange County, California.
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(i) Subject
to the rights of any party to seek a temporary restraining order or injunctive
relief from a court of competent jurisdiction, and without waiving the same,
the
parties agree that all disputes, controversies or claims that may arise among
them (including their agents and employees) whether sounding in contract,
statute, tort, fraud, misrepresentation, discrimination or any other legal
theory relating to or involving the construction, performance or breach of
this
Agreement or Employee’s employment with the Company, including, without
limitation, (i) any claims arising out of or relating to this Agreement or
the
breach, termination or invalidity thereof, (ii) any claim arising out of the
termination of Employee’s employment, or (iii) any claim for discrimination
(e.g.,
sex,
sexual harassment, race, national origin, age, color, religion or disability),
retaliation, whether statutory or otherwise, e.g.,
claims
under the Fair Labor Standards Act, the Family and Medical Leave Act, Title
VII
of the Civil Rights Act of 1964, the Age Discrimination in Employment Act,
the
Americans with Disabilities Act or any other similar federal, state or local
law, or alleged violations of public policy, shall be settled by arbitration
conducted by one arbitrator mutually agreeable to the parties to such
dispute. In the event that, within 60 days after submission of any dispute
to arbitration the parties cannot mutually agree on one arbitrator, then the
parties shall arrange for American Arbitration Association (“AAA”)
to
designate a single arbitrator in accordance with the rules of AAA. The
arbitrator shall determine how all expenses relating to the arbitration shall
be
paid, including the respective expenses of each party, the fees of the
arbitrator and the administrative fee of the AAA. The arbitrator shall set
a limited time period and establish procedures designed to reduce the cost
and
time for discovery while allowing the parties an opportunity, adequate in the
sole judgment of the arbitrator to discover from the opposing parties all
information reasonably calculated to lead to the discovery of admissible
evidence. The arbitrator shall rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions to the same extent
as
a competent court of law or equity, should the arbitrator determine that
discovery was sought without substantial justification or that discovery was
refused or objected to without substantial justification. The decision of
the arbitrator with respect to such dispute shall be final, binding and
conclusive upon the parties provided that such decision shall address all claims
and defenses asserted by the parties, shall not be contrary to law, shall be
written, shall be supported by written findings of fact as all material facts
whose existence or non-existence was proved to the satisfaction of or otherwise
relied upon by the arbitrator in making his or her decision, and shall set
forth
the award, judgment, decree or other award of the arbitrator. All payments
required by the arbitrator shall be made within 30 days after the decision
of
the arbitrator is rendered. Judgment upon any award rendered by the
arbitrator may be entered in any court having jurisdiction. The Company,
Employee and the arbitrator, shall maintain in strict confidence all matters
relating to any arbitration proceeding pursuant hereto (including, without
limitation, the fact that the arbitration is or was ongoing, the facts or
allegations in such arbitration proceeding and the decision of the arbitrator
and the written findings of fact and conclusions of such arbitrator); provided,
however, the Company and the Employee (and each employee, representative, or
other agent of such Partner) may disclose such information (i) to the extent,
and only the extent, required under applicable law or necessary to protect
or
pursue any legal right of such party (e.g., in an action to enforce an award
by
an arbitrator) or (ii) to its representatives who need to know in
connection with the provision of services to the Company or the Employee, as
the
case may be (e.g.,
attorneys, accountants in the preparation of filings before the Securities
and
Exchange Commission, tax returns, etc.), and agree to maintain such
confidentiality.
(ii) EACH
OF
THE PARTIES TO THIS AGREEMENT WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY DISPUTE
OF ANY NATURE WHATSOEVER THAT MAY ARISE BETWEEN THEM, INCLUDING, BUT NOT LIMITED
TO, THOSE DISPUTES RELATING TO OR INVOLVING, IN ANY WAY THE CONSTRUCTION,
PERFORMANCE OR BREACH OF THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN THE
PARTIES, THE PROVISIONS OF ANY FEDERAL, STATE OR LOCAL LAW, REGULATION OR
ORDINANCE NOTWITHSTANDING. By execution of this Agreement, each of the parties
hereto acknowledges and agrees that such party has had an opportunity to consult
with legal counsel and that such party knowingly and voluntarily waives any
right to a trial by jury of any dispute pertaining to or relating in any way
to
the transactions contemplated by this Agreement, the provisions of any federal,
state or local law, regulation or ordinance notwithstanding.
9
(b) Indemnification
and Insurance.
The
Company will indemnify Employee to the fullest extent permitted by the laws
of
the State of Nevada, as more fully described in the Indemnification Agreement
dated as of the Commencement Date, the form of which is attached hereto as
Exhibit
C.
While
employed by the Company, and thereafter to the extent provided to the Company’s
other senior executives, the Company shall, at its cost, provide insurance
coverage to Employee at least to the same extent as other senior executives
of
the Company with respect to (i) officers and directors liability, (ii) errors
and omissions and (iii) general liability. The foregoing rights conferred upon
Employee shall not be exclusive of any other right which Employee may have
or
hereafter may acquire under any statute, provision of the certificate of
incorporation or bylaws of the Company, agreement, vote of the stockholders
or
directors or otherwise.
(c) Assignment;
Binding Nature.
This
Agreement shall be binding upon, and shall inure to the benefit of, Employee
and
his estate, but Employee may not assign or pledge this Agreement or any rights
arising under it, except to the extent permitted under the terms of the benefit
plans in which he participates. No rights or obligations of the Company under
this Agreement may be assigned or transferred except that the Company shall
require any successor (whether direct or indirect, by purchase, merger,
reorganization, sale, transfer of stock, consideration or otherwise) to all
or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no succession had
taken place. As used in this Agreement, “Company”
means
the Company as hereinbefore defined and any successor to its business and/or
assets (by merger, purchase or otherwise as provided in this Section
8
which
executes and delivers the agreement provided for in this Section
8
or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. In the event that any successor refuses to assume the
obligations hereunder, the Company as hereinbefore defined shall remain fully
responsible for all obligations hereunder.
(d) Survival.
The
respective rights and obligations of the parties hereunder shall survive any
termination of Employee’s employment or other service and the termination of
this Agreement to the extent necessary for the intended preservation of such
rights and obligations.
(e) Amendment
or Waiver.
No
provision in this Agreement may be amended unless such amendment is agreed
to in
writing and signed by Employee and an authorized officer of the Company. Except
as set forth herein, no delay or omission to exercise any right, power or remedy
accruing to any party shall impair any such right, power or remedy or shall
be
construed to be a waiver of or an acquiescence to any breach hereof. No waiver
by either party of any breach by the other party of any condition or provision
contained in this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same or any
prior or subsequent time. Any waiver must be in writing and signed by Employee
or an authorized officer of the Company, as the case may be.
10
(f) Severability.
In the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.
(g) Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be given by hand delivery, facsimile, telecopy, overnight
courier service, or by United States certified or registered mail, return
receipt requested. Each such notice, request, demand or other communication
shall be effective (i) if delivered by hand or by overnight courier service,
when delivered at the address specified in this Section
8(g);
(ii) if
given by facsimile or telecopy, when such facsimile or telecopy is transmitted
to the facsimile or telecopy number specified in this Section
8(g)
and
confirmation is received if during normal business hours on a business day,
and
otherwise, on the next business day; and (iii) if given by certified or
registered mail, three (3) days after the mailing thereof. Notices shall be
addressed to the parties as follows (or at such other address or fax number
as
either party may from time to time specify in writing by giving notice as
provided herein):
| If to the Company: | United Fuel & Energy Corporation | |
| 0000 Xxxxxxx Xxxxxx , Xxxxx _____ | ||
| Xxxxxxx, Xxxxxxxxxx, 00000 | ||
| Attn: Chief Executive Officer | ||
| Fax No: ( ) _________________ | ||
| If to Employee: | Xxxxxxx X. Xxxxxxx | |
| 0000 Xxxxxxx Xxxxxx, Xxxxx _____ | ||
| Anaheim, California 92863______ | ||
| Fax No:_____________________ |
(h) Entire
Agreement.Except
for the Incentive Stock Option Agreement, the Restricted Stock Agreement and
the
Indemnification Agreement, this Agreement contains the entire understanding
and
agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations
and
undertakings, whether written or oral, between the parties with respect
thereto.
(i) Counterparts.
This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one
and
the same Agreement. Digitally transmitted signatures shall have the force and
effect of original signatures.
(j) No
Conflict of Interest.
Employee agrees that, during the Employment Term, he will not knowingly become
involved in a conflict between his personal interests and those of Company
or
any of its affiliates, and, upon discovery thereof, will not willfully allow
such conflict of interest to continue. Employee agrees to disclose in writing
to
the Company facts that could reasonably be expected to involve a material
conflict of interest upon Employee’s awareness that such a material conflict
exist. The Company and Employee recognizes that it is impossible to provide
an
exhaustive list of actions or activities that constitute or might constitute
a
conflict of interest, but recognizes that these actions or activities may
include the following:
(i) ownership
of more than a 1% interest in any supplier, contractor, customer, or other
person that does business with Company or any of its affiliates;
11
(ii) acting
in
any capacity, including as a director, officer, employee, partner, consultant,
or agent, for any supplier, contractor, customer, or other person that does
business with Company or any of its affiliates;
(iii) acceptance,
directly or indirectly, of payments, services, or loans (other
than entertainment, gifts, or other sales incentives that may be furnished
in
the ordinary course of business)
from a
supplier, contractor, customer, or other person that does business with Company
or any of its affiliates; and
(iv) appropriation
by Employee or diversion to any other person, directly or indirectly, of any
business opportunity in the business of marketing refined petroleum products
in
which it is known or could reasonably be anticipated that Company or its
affiliates would be interested.
(k) Expenses.
Except
as otherwise expressly provided in this Agreement, each Party will bear its
own
costs and expenses incurred in connection with the preparation, execution and
performance of this Agreement, including all fees and expenses of agents,
representatives, financial advisors, legal counsel and accountants.
(l) Representation.
Employee represents and warrants to the Company, and Employee acknowledges
that
the Company has relied on such representations and warranties in employing
Employee, that neither Employee’s duties as an employee of the Company nor his
performance of this Agreement will breach any other agreement to which Employee
is a party, including without limitation, any agreement limiting the use or
disclosure of any information acquired by Employee prior to his employment
by
the Company. In the course of performing Employee’s duties for the Company,
Employee will not disclose or make use of any information, documents or
materials that Employee is under any obligation to any other party to maintain
in confidence. In addition, Employee represents and warrants and acknowledges
that the Company has relied on such representations and warranties in employing
Employee, that (i) he has not entered into, and will not enter into, any
agreement, either oral or written, in conflict herewith.
(m) Construction.
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. 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 federal, state, local, or foreign law will be deemed also to refer to 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.
12
(n) Electronic
Signatures.
Delivery of a copy of this Agreement bearing an original signature by facsimile
transmission (whether directly from one facsimile device to another by means
of
a dial-up connection or whether mediated by the worldwide web), by electronic
mail in “portable document format” (“.pdf”) form, or by any other electronic
means intended to preserve the original graphic and pictorial appearance of
a
document, will have the same effect as physical delivery of the paper document
bearing the original signature. “Originally signed” or “original signature”
means or refers to a signature that has not been mechanically or electronically
reproduced.
[SIGNATURE
PAGE FOLLOWS]
13
IN
WITNESS WHEREOF, the undersigned 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 | ||
|
EMPLOYEE
|
||
| |
|
|
| /s/ Xxxxxxx X. Xxxxxxx | ||
|
XXXXXXX X. XXXXXXX |
||
14
