INDEMNIFICATION
AGREEMENT
This Indemnification Agreement, dated
as of July 24, 2008, is made by and between PATRIOT COAL
CORPORATION, a Delaware corporation (the “Corporation”)
and Michael P. Johnson (the “Indemnitee”).
RECITALS
A. The
Corporation recognizes that competent and experienced persons are
increasingly reluctant to serve or to continue to serve as
directors or officers of corporations unless they are protected by
comprehensive liability insurance or indemnification, or both, due
to increased exposure to litigation costs and risks resulting from
their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the
compensation of such directors and officers;
B. The
statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or
conflicting, and therefore fail to provide such directors and
officers with adequate, reliable knowledge of legal risks to which
they are exposed or information regarding the proper course of
action to take;
C. The
Corporation and Indemnitee recognize that plaintiffs often seek
damages in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense
and/or settlement of such litigation is often beyond the personal
resources of directors and officers;
D. The
Corporation believes that it is unfair for its directors and
officers to assume the risk of huge judgments and other expenses
which may occur in cases in which the director or officer received
no personal profit and in cases where the director or officer was
not culpable;
E. The
Corporation, after reasonable investigation, has determined that
the liability insurance coverage presently available to the
Corporation may be inadequate in certain circumstances to cover all
possible exposure for which Indemnitee should be
protected. The Corporation believes that the interests
of the Corporation and its stockholders would best be served by a
combination of such insurance and the indemnification by the
Corporation of the directors and officers of the
Corporation;
F. The
Corporation’s Amended and Restated Certificate of
Incorporation (the “Certificate of Incorporation”) and
Amended and Restated By-Laws require the Corporation to indemnify
its directors and officers to the fullest extent permitted by the
Delaware General Corporation Law (the “DGCL”). The
Certificate of Incorporation expressly provides that the
indemnification provisions set forth therein are not exclusive, and
contemplates that contracts may be entered into between the
Corporation and its directors and officers with respect to
indemnification;
G. Section
145 of the DGCL (“Section 145”), under which the
Corporation is organized, empowers the Corporation to indemnify its
officers, directors, employees and agents by agreement and to
indemnify persons who serve, at the request of the Corporation, as
the directors, officers, employees or agents of other corporations
or enterprises, and expressly provides that the indemnification
provided by Section 145 is not exclusive;
H. The
Board of Directors has determined that contractual indemnification
as set forth herein is not only reasonable and prudent but also
promotes the best interests of the Corporation and its
stockholders;
I. The
Corporation desires and has requested Indemnitee to serve or
continue to serve as a director or officer of the Corporation free
from undue concern for unwarranted claims for damages arising out
of or related to such services to the Corporation; and
J. Indemnitee
is willing to serve, continue to serve or to provide additional
service for or on behalf of the Corporation on the condition that
he is furnished the indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, in consideration of
the mutual covenants and agreements set forth below, and other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
Section 1. Generally
.
To the fullest extent permitted by
the laws of the State of Delaware:
(a) The Corporation shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Indemnitee is or was or
has agreed to serve at the request of the Corporation as a
director, officer, employee or agent of the Corporation, or while
serving as a director or officer of the Corporation, is or was
serving or has agreed to serve at the request of the Corporation as
a director, officer, employee or agent (which, for purposes hereof,
shall include a trustee, partner or manager or similar capacity) of
another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of any action
alleged to have been taken or omitted in such capacity.
(b) The indemnification provided by
this Section 1 shall be from and against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with such action, suit or
proceeding and any appeal therefrom, but shall only be provided if
Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action, suit
or proceeding, had no reasonable cause to believe
Indemnitee’s conduct was unlawful.
(c) Notwithstanding the foregoing
provisions of this Section 1, in the case of any threatened,
pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the
fact that Indemnitee is or was a director, officer, employee or
agent of the Corporation, or while serving as a director or officer
of the Corporation, is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, no indemnification shall
be made in respect of any claim, issue or matter as to which
Indemnitee shall have been adjudged to be liable to the Corporation
unless, and only to the extent that, the Delaware Court of Chancery
or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court
shall deem proper.
(d) The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause
to believe that Indemnitee’s conduct was unlawful.
Section 2. Successful Defense;
Partial Indemnification . To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1 hereof or in
defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against expenses (including attorneys' fees) actually
and reasonably incurred in connection therewith. For purposes
of this Agreement and without limiting the foregoing, if
any action, suit or proceeding is disposed of, on the merits or
otherwise (including a disposition without prejudice), without (i)
the disposition being adverse to Indemnitee, (ii) an adjudication
that Indemnitee was liable to the Corporation, (iii) a plea of
guilty or nolo contendere by Indemnitee, (iv) an adjudication that
Indemnitee did not act in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests
of the Corporation, and (v) with respect to any criminal
proceeding, an adjudication that Indemnitee had reasonable cause to
believe
Indemnitee’s conduct was
unlawful, Indemnitee shall be considered for the purposes hereof to
have been wholly successful with respect thereto.
If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Corporation
for some or a portion of the expenses (including attorneys' fees),
judgments, fines or amounts paid in settlement actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf
in connection with any action, suit, proceeding or investigation,
or in defense of any claim, issue or matter therein, and any appeal
therefrom but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify Indemnitee for the portion
of such expenses (including attorneys' fees), judgments, fines or
amounts paid in settlement to which Indemnitee is
entitled.
Section 3. Determination That
Indemnification Is Proper . Any indemnification hereunder shall
(unless otherwise ordered by a court) be made by the Corporation
unless a determination is made that indemnification of such person
is not proper in the circumstances because he or she has not met
the applicable standard of conduct set forth in Section 1(b)
hereof. Any such determination shall be made (i) by a majority vote
of the directors who are not parties to the action, suit or
proceeding in question (“disinterested directors”),
even if less than a quorum, (ii) by a majority vote of a committee
of disinterested directors designated by majority vote of
disinterested directors, even if less than a quorum, (iii) by a
majority vote of a quorum of the outstanding shares of stock of all
classes entitled to vote on the matter, voting as a single class,
which quorum shall consist of stockholders who are not at that time
parties to the action, suit or proceeding in question, (iv) by
independent legal counsel, or (v) by a court of competent
jurisdiction.
Section 4. Advance Payment of
Expenses; Notification and Defense of Claim .
(a) Expenses (including attorneys'
fees) incurred by Indemnitee in defending a threatened or pending
civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding within twenty (20)
days after receipt by the Corporation of (i) a statement or
statements from Indemnitee requesting such advance or advances from
time to time, and (ii) an undertaking by or on behalf of Indemnitee
to repay such amount or amounts, only if, and to the extent that,
it shall ultimately be determined that Indemnitee is not entitled
to be indemnified by the Corporation as authorized by this
Agreement or otherwise. Such undertaking shall be
accepted without reference to the financial ability of Indemnitee
to make such repayment. Advances shall be unsecured and
interest-free.
(b) Promptly after receipt by
Indemnitee of notice of the commencement of any action, suit or
proceeding, Indemnitee shall, if a claim thereof is to be made
against the Corporation hereunder, notify the Corporation of the
commencement thereof. The failure to promptly notify the
Corporation of the commencement of the action, suit or proceeding,
or Indemnitee’s request for indemnification, will not relieve
the Corporation from any liability that it may have to Indemnitee
hereunder, except to the extent the Corporation is prejudiced in
its defense of such action, suit or proceeding as a result of such
failure.
(c) In the event the
Corporation shall be obligated to pay the expenses of Indemnitee
with respect to an action, suit or proceeding, as provided in this
Agreement, the Corporation, if appropriate, shall be entitled to
assume the defense of such action, suit or proceeding, with counsel
reasonably acceptable to Indemnitee, upon the delivery to
Indemnitee of written notice of its election to do
so. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the
Corporation, the Corporation will not be liable to Indemnitee under
this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same action, suit or proceeding,
provided that (1) Indemnitee shall have the right to employ
Indemnitee’s own counsel in such action, suit or proceeding
at Indemnitee’s expense and (2) if (i) the employment of
counsel by Indemnitee has been previously authorized in writing by
the Corporation, (ii) counsel to the Corporation or Indemnitee
shall have reasonably concluded that there may be a conflict of
interest or position, or reasonably believes that a conflict is
likely to arise, on any significant issue between the Corporation
and Indemnitee in the conduct of any such defense or (iii) the
Corporation shall not, in fact, have employed counsel to assume the
defense of such action, suit or proceeding, then the fees and
expenses of Indemnitee’s counsel shall be at the expense of
the Corporation, except as otherwise expressly provided by this
Agreement. The Corporation shall not be entitled,
without the consent of Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which
counsel for the Corporation shall have reasonably made the
conclusion provided for in clause (ii) above.
(d) Notwithstanding any other
provision of this Agreement to the contrary, to the extent that
Indemnitee is, by reason of Indemnitee’s corporate status
with respect to the Corporation or any corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise
which Indemnitee is or was serving or has agreed to serve
at
