AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENTEmployment Agreement |
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EXHIBIT
10.2
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.
2
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.
3
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.
4
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 being in receipt of Employee’s written consent
thereto, and the period of time within which Employee shall be required to
exercise a Good Reason termination of service shall be 90 days, measured
from
the date upon which he is notified by Employer of such occurrence, or, with
respect to the matter identified in clause (b) below, from the date upon
which
Employee notifies Employer in writing of his belief that a material breach
has
occurred:
(a) a
material adverse change in, or a substantial elimination of the duties and
responsibilities of Employee;
5
(b) a
material breach by Employer of its obligations hereunder;
(c) the
relocation of the Employer’s principal executive offices or Employee’s own
office location to a location outside of Midland, Texas; or
(d) a
reduction in Employee’s Base Salary.
5.6 Termination
by Employee Without Good Reason.
Employee
may at any time terminate Employee’s employment without Good Reason. In such
event, 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
to
Employee following termination. All restricted stock grants issued to Employee
hereunder still subject to restrictions shall be forfeited. All 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.
5.7 Effect
of Termination.
Except
as expressly provided in this Section
5
and
except for the obligations set forth in Section
6
and
Section
7,
all
further obligations of the Parties under this Agreement will terminate upon
termination of Employee’s employment with Employer.
6.
