AMENDED AND RESTATED EXECUTIVE EMPLOYMENT
AGREEMENT
This
Amended and Restated Executive Employment Agreement (this
“
Agreement ”)
dated as of the 5th day of October, 2007 is by and between United
Fuel & Energy Corporation, a Nevada corporation (“
Employer ”),
and Charles McArthur (“
Employee ”
and, together with Employer, the “
Parties ”
and each individually, a “
Party ”).
This Agreement will become effective as of January 1, 2008 (the
“
Commencement Date ”).
RECITALS:
A.
Employer
and Employee are each a party to that certain Executive
Employment Agreement dated September 2, 2005 (the
“
Original Agreement ”).
B.
This
Agreement is intended to amend and restate the Original
Agreement as of the Commencement Date. Prior to the
Commencement Date, this Agreement shall have no force or
effect and the terms of the Original Agreement shall continue
to apply to the employment relationship between the Employer
and the Employee.
AGREEMENT:
NOW,
THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the
representations, warranties, and covenants contained herein,
each Party agrees as follows:
1.
Employment Term. This
Agreement will remain in effect from the Commencement Date and
shall end on the date that is the third 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 four (4)
months’ 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.
Responsibilities and Authority. Employer
hereby employs Employee to serve as its President and Chief
Executive Officer. In such capacity, Employee will have such duties
and responsibilities as determined by Employer’s Board of
Directors (the “
Board ”)
consistent with the Employer’s Bylaws. If requested by
Employer, Employee will serve as an officer or director of Employer
or any subsidiary of Employer without additional
compensation.
3.
Acceptance of Employment and Other Activities.
Employee
accepts employment, and Employer acknowledges Employee’s
other activities as follows:
3.1
Acceptance of Employment. Employee
accepts employment by Employer on the terms and conditions herein
provided and agrees, subject to the terms of this Agreement, to
devote all of Employee’s full business time to
Employer’s affairs. Employee shall not, during the term of
this Agreement: engage, directly or indirectly, in any other
business activity (whether or not pursued for pecuniary advantage)
which might interfere with Employee’s duties and
responsibilities hereunder. The foregoing limitations shall not be
construed to prohibit Employee from (i) owning less than 5% of the
equity interests of any person or company having a class of equity
interests actively traded on a national securities exchange or
over-the-counter market; (ii) making personal investments in such
form or manner as will neither require Employee’s services in
the operation or affairs of the companies or enterprises in which
such investments are made nor violate the terms of Section 7
hereof; or (iii) owning non-operating oil and gas interests
(including working interests) in properties where the operator of
such property may call upon Employer or its affiliates to provide
goods and services; provided, however, in such instances where the
operator of such a property calls upon Employer or its affiliates
to provide goods and services, Employee
will notify the members of the Employer’s audit committee of
the board of directors and will refrain from negotiating the price
or terms of such goods or services to be provided by Employer and
will delegate such responsibility, if any, to other senior
management .
Employer acknowledges that Employee will from time-to-time serve on
the boards of philanthropic organizations or of public or private
companies that do not compete against the Employer or its
affiliates; provided that such service does not interfere with
Employee’s duties and responsibilities hereunder.
Accordingly, the foregoing limitations shall not be construed to
prohibit Employee from serving on the boards of philanthropic
organizations or of public or private companies that do not compete
against the Employer or its affiliates, provided that such service
does not violate Section 7 hereof or otherwise interfere with
Employee’s duties and responsibilities hereunder, and
provided further that in instances where such philanthropic
organization or public or private companies call upon the Employer
or its affiliates to provide goods or services, Employee will
notify the members of the Employer’s audit committee of the
board of directors and will refrain from negotiating the price or
terms of such goods or services to be provided by Employer and will
delegate such responsibility, if any, to other senior management.
The determination of whether a particular activity of the Employee
violates this provision rests solely with the discretion of the
Board.
4.
Compensation and Benefits. As
compensation for Employee’s services hereunder, Employee will
be entitled to the following:
4.1
Base Salary. From
and after the Commencement Date, Employee will receive a base
salary at the rate of $325,000 per annum (“
Base Salary ”).
On each of January 1, 2008, 2009 and 2010, Employee shall be
eligible to receive up to a $25,000 raise at the discretion of the
compensation committee of the Board (the “
Compensation Committee
”). The Base Salary will be paid in substantially equal
installments in accordance with Employer’s regular payroll
practices, as in effect from time to time, and subject to all
appropriate withholdings.
4.2
Bonus. Employee
shall be eligible to receive a cash bonus on an annual basis equal
to up to 100% of Employee’s Base Salary in the event that
Employee meets certain performance criteria established in advance
in writing by the Compensation Committee for such year
(“
Performance Criteria ”).
Additional bonuses may be paid to Employee at such times and in
such amounts as may be determined in the sole discretion of the
Compensation Committee. If awarded, payment of all bonuses will be
subject to all appropriate withholdings.
4.4
Restricted Stock Grants. In
addition to stock options previously granted to Employee under
Employer’s stock option plan, Employee shall be eligible to
receive annual restricted stock grants for up to 150,000 shares of
common stock of Employer each (at the discretion of the
Compensation Committee). The restrictions on each grant shall lapse
in four equal installments on the 6, 12, 18 and 24-month
anniversaries of each such grant. Any such restricted stock grants
made will occur following the completion of the audit of
Employer’s financial statements for the year which is the
basis for the grant being issued.
4.5
Benefits. Employee
will be entitled to receive the benefits specified on
Exhibit A (“
Benefits ”).
4.6
Expense Reimbursement. Employer
will reimburse Employee for all expenses reasonably incurred or
paid by Employee in direct connection with the performance of
Employee’s services under this Agreement upon presentation of
expense statements or vouchers and such other supporting
information as Employer may from time to time reasonably require or
request (“
Reimbursable Expenses ”),
subject to approval by the audit committee of the Board at the
discretion of the audit committee of the Board.
5.
Termination; Payments upon Termination.
This Agreement may be terminated upon the following
terms:
5.1
Termination Upon Death. If
Employee should die during the Employment Term, this Agreement will
terminate on the date of death. All Base Salary through such date
and any amounts owed for Reimbursable Expenses that Employee incurs
through such date, as well as any previously awarded but unpaid
bonuses, will be paid to Employee’s designated beneficiary as
promptly as practicable following the date of death. All
restrictions on any restricted stock grants issued to Employee
hereunder shall lapse. Employer shall provide, at its expense,
health insurance coverage to Employee’s spouse and dependent
children until the first anniversary of Employee’s death. All
other Benefits will, unless otherwise expressly set forth on
Exhibit A ,
otherwise provided by Employer policy applicable to its employees
generally, or otherwise required by Law, terminate on the date of
death.
5.2
Termination Upon Disability. This
Agreement shall automatically terminate upon the Employee’s
Disability. The Base Salary will continue to be paid to Employee
through the date of Disability, and any amounts owed for
Reimbursable Expenses that Employee incurs through such date and
any previously awarded but unpaid bonuses will be paid as promptly
as practicable following such date. In such event of
Employee’s Disability, Employer will also continue to pay
Employee the Base Salary in effect at the time of such Disability
for a period of 6 months following the date of Disability. All
restrictions on any restricted stock grants issued to Employee
hereunder shall lapse. Employer shall provide, at its expense, life
and health insurance coverage to Employee for six months following
the date of Disability. All other Benefits will, unless otherwise
expressly set forth on
Exhibit A ,
otherwise provided by Employer policy applicable to its employees
generally, or otherwise required by Law, terminate on the date of
termination. “
Disability ”
means (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 Employer; (iii) Employee is
determined to be totally disabled by the Social Security
Administration; or (iv) Employee is determined to be disabled in
accordance with a disability insurance program, 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). If a disagreement arises between Employee
and Employer as to whether Employee is suffering from Disability,
such issue will be determined by a physician designated by
Employer. If Employee disagrees with the conclusion of such
physician, then such physician and Employee’s physician will
choose a mutually acceptable physician to make such
determination.
5.3
Termination by Employer For Cause. Employer
will be entitled to terminate Employee’s employment at any
time for Cause. The Base Salary will continue to be paid to
Employee through the date of termination, and any amounts owed for
Reimbursable Expenses that Employee incurs through such date and
any previously awarded but unpaid bonuses will be paid as promptly
as practicable to Employee following termination. All restricted
stock grants issued to Employee hereunder still subject to
restrictions shall be forfeited. All Benefits will, unless
otherwise required by Law, terminate on the date of termination.
“
Cause ”
will constitute any one of the following:
(a)
Employee’s
continued failure to substantially perform Employee’s
duties and responsibilities (other than a failure resulting
from a Disability);
(b)
Employee’s
engaging in willful, reckless, or grossly negligent misconduct
that is materially injurious to Employer, monetarily or
otherwise;
(c)
Employee’s
commission of a felony or a crime involving moral
turpitude;
(d)
Employee’s
breach of this Agreement and failure to cure such breach
within thirty (30) days from the date that Employer gives
notice thereof to Employee identifying the provision of this
Agreement that Employer determined has been breached;
or
(e)
Employee’s
commission of fraud, misappropriation, or personal
dishonesty.
5.4
Termination by Employer Without Cause. Employer
may at any time terminate Employee’s employment without
Cause. In such event, the Base Salary will continue to be paid
through such the date of termination, and any amounts owed for
Reimbursable Expenses that Employee incurs through such date and
any previously awarded but unpaid bonus will be paid to Employee
promptly following termination. In addition, Employer will also
continue to pay Employee, as severance, the Base Salary in effect
at the time of such termination for the remainder of the Employment
Term in monthly installments; provided, however, that if Employee
is determined on the date of termination to be a “specified
employee” for purposes of Section 409A of the Internal
Revenue Code, then such monthly payments of Base Salary for the
remainder of the Employment Term will not commence until the
earlier of: (i) the first day of the seventh month after the month
the Employee was terminated; or (ii) the Employee’s death;
and such monthly payments will then continue for an additional six
months following the end of the Employment Term. All restrictions
on any restricted stock grants issued to Employee hereunder shall
lapse. Employer shall provide, at its expense, life and health
insurance coverage to Employee for the remainder of the Employment
Term; provided, however, that if Employee is determined on the date
of termination to be a “specified employee” for
purposes of Section 409A of the Internal Revenue Code, then such
continuation of life and health insurance coverage will be limited
to the period during which the Employee would be entitled, but for
the terms of this Agreement, to continuation of coverage under the
federal law knows as COBRA. All other Benefits will, unless
otherwise expressly set forth on
Exhibit A ,
otherwise provided by Employer policy applicable to its employees
generally or otherwise required by Law, terminate on the date of
termination.
5.5
Termination by Employee For Good Reason.
Employee
will be entitled to terminate Employee’s employment at any
time for Good Reason. In such event, the Base Salary will continue
to be paid through the date of termination, and any amounts owed
for Reimbursable Expenses that Employee incurs through such date
and any previously awarded but unpaid bonus will be paid to
Employee promptly following termination. In addition, Employer will
also continue to pay Employee, as severance, the Base Salary in
effect at the time of such termination for the remainder of the
Employment Term in monthly installments; provided, however, that if
Employee is determined on the date of termination to be a
“specified employee” for purposes of Section 409A of
the Internal Revenue Code, then such monthly payments of Base
Salary for the remainder of the Employment Term will not commence
until the earlier of: (i) the first day of the seventh month after
the month the Employee was terminated; or (ii) the Employee’s
death; and such monthly payments will then continue for an
additional six months following the end of the Employment Term. All
restrictions on any restricted stock grants issued to Employee
hereunder shall lapse. Employer shall provide, at its expense, life
and health insurance coverage to Employee for the remainder of the
Employment Term; provided, however, that if Employee is determined
on the date of termination to be a “specified employee”
for purposes of Section 409A of the Internal Revenue Code, then
such continuation of life and health insurance coverage will be
limited to the period during which the Employee would be entitled,
but for the terms of this Agreement, to continuation of coverage
under the federal law knows as COBRA. All other Benefits will,
unless otherwise expressly set forth on
Exhibit A ,
otherwise provided by Employer policy applicable to its employees
generally or otherwise required by applicable law, terminate on the
date of termination. For purposes of this Agreement, “
Good Reason ”
shall exist upon the occurrence of any of the following events or
matters, in each case without Employer first be
