|
EXHIBIT 10.4 INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this
" Agreement ") dated the 12th day of
November 2008, by and between United Fuel & Energy
Corporation, a Nevada corporation (the " Company "),
and Joseph M. Juliano, an individual (" Indemnitee
"). RECITALS A. Competent
and experienced persons are reluctant to serve or to continue to
serve as officers of corporations or in other capacities unless
they are provided with adequate protection through insurance or
indemnification (or both) against claims against them arising out
of their service and activities on behalf of the corporation.
B. The current uncertainties
relating to the availability of adequate insurance have increased
the difficulty for corporations of attracting and retaining
competent and experienced persons to serve in such capacity.
C. The Board of Directors of the
Company (the " Board of Directors ") has determined
that the continuation of present trends in litigation will make it
more difficult to attract and retain competent and experienced
persons to serve as officers of the Company, that this situation is
detrimental to the best interests of the Company’s
stockholders and that the Company should act to assure such persons
that there will be increased certainty of adequate protection in
the future. D. As a supplement
to and in the furtherance of the Company’s Articles of
Incorporation, as amended (the " Articles "), and
Bylaws, as amended (the " Bylaws "), it is
reasonable, prudent, desirable and necessary for the Company
contractually to obligate itself to indemnify, and to pay in
advance expenses on behalf of the Company’s Executive Vice
President and Chief Operating Officer to the fullest extent
permitted by law so that he will serve or continue to serve the
Company free from concern that he will not be so indemnified and
that his expenses will not be so paid in advance;
E. This Agreement is not a
substitute for, nor does it diminish or abrogate any rights of
Indemnitee under, the Articles and the Bylaws or any resolutions
adopted pursuant thereto (including any contractual rights of
Indemnitee that may exist).
F. Indemnitee is the Executive
Vice President and Chief Operating Officer of the Company and his
willingness to continue to serve in such capacity is predicated, in
substantial part, upon the Company’s willingness to indemnify
him to the fullest extent permitted by the laws of the State of
Nevada and upon the other undertakings set forth in this Agreement.
AGREEMENT NOW,
THEREFORE , in consideration of the premises and covenants
contained herein, the Company and Indemnitee hereby agree as
follows:
1
ARTICLE 1
CERTAIN DEFINITIONS Capitalized
terms used but not otherwise defined in this Agreement have the
meanings set forth below: "
Corporate Status " means the status of a person who
is or was a director, officer, employee, partner, member, manager,
trustee, fiduciary or agent of the Company or of any other
Enterprise which such person is or was serving at the request of
the Company. In addition to any service at the actual request of
the Company, Indemnitee will be deemed, for purposes of this
Agreement, to be serving or to have served at the request of the
Company as a director, officer, employee, partner, member, manager,
trustee, fiduciary or agent of another Enterprise if Indemnitee is
or was serving as a director, officer, employee, partner, member,
manager, fiduciary, trustee or agent of such Enterprise and
(i) such Enterprise is or at the time of such service was a
Controlled Affiliate, (ii) such Enterprise is or at the time
of such service was an employee benefit plan (or related trust)
sponsored on maintained by the Company or a Controlled Affiliate or
(iii) the Company or a Controlled Affiliate directly or
indirectly caused Indemnitee to be nominated, elected, appointed,
designated, employed, engaged or selected to serve in such
capacity. " Controlled
Affiliate " means any corporation, limited liability
company, partnership, joint venture, trust or other Enterprise,
whether or not for profit, that is directly or indirectly
controlled by the Company. For purposes of this definition, the
term "control" means the possession, directly or indirectly, of the
power to direct, or cause the direction of, the management or
policies of an Enterprise, whether through the ownership of voting
securities, through other voting rights, by contract or otherwise;
provided , however , that direct or indirect
beneficial ownership of capital stock or other interests in an
Enterprise entitling the holder to cast 30% or more of the total
number of votes generally entitled to be cast in the election of
directors (or persons performing comparable functions) of such
Enterprise will be deemed to constitute "control" for purposes of
this definition. "
Disinterested Director " means a director of the
Company who is not and was not a party to the Proceeding in respect
of which indemnification is sought by Indemnitee.
" Enterprise " means
the Company and any other corporation, partnership, limited
liability company, joint venture, employee benefit plan, trust or
other entity or other enterprise of which Indemnitee is or was
serving at the request of the Company in a Corporate Status.
" Expenses " means all
attorney’s fees, disbursements and retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges,
postage, fax transmission charges, secretarial services, delivery
service fees and all other disbursements or expenses paid or
incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a
witness in, or otherwise participating in, a Proceeding, or in
connection with seeking indemnification under this Agreement.
Expenses will also include Expenses paid or incurred in connection
with any appeal resulting from any Proceeding, including the
premium, security for and other costs relating to any appeal bond
or its equivalent. Expenses, however, will not include amounts paid
in settlement by Indemnitee or the amount of judgments or fines
against Indemnitee.
2
" Independent
Counsel " means an attorney or firm of attorneys that is
experienced in matters of corporation law and neither currently is,
nor in the past five (5) years has been, retained to
represent: (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters
concerning the Indemnitee under this Agreement and/or the
indemnification provisions of the Articles or Bylaws, or of other
indemnitees under similar indemnification agreements), or
(ii) any other party to the Proceeding giving rise to a claim
for indemnification hereunder. Notwithstanding the foregoing, the
term "Independent Counsel" does not include any person who, under
the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s
rights under this Agreement. "
Losses " means any loss, liability, judgments,
damages, amounts paid in settlement, fines (including excise taxes
and penalties assessed with respect to employee benefit plans),
penalties (whether civil, criminal or otherwise) and all interest,
assessments and other charges paid or payable in connection with or
in respect of any of the foregoing. "
Proceeding " means any threatened, pending or
completed action, suit, claim, demand, arbitration, alternate
dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed
proceeding, including any and all appeals, whether brought by or in
the right of the Company or otherwise, whether civil, criminal,
administrative or investigative, whether formal or informal, and in
each case whether or not commenced prior to the date of this
Agreement, in which Indemnitee was, is or will be involved as a
party or otherwise, by reason of or relating to Indemnitee’s
Corporate Status and by reason of or relating to either (i) any
action or alleged action taken by Indemnitee (or failure or alleged
failure to act) or of any action or alleged action (or failure or
alleged failure to act) on Indemnitee’s part, while acting in
his Corporate Status or (ii) the fact that Indemnitee is or
was serving at the request of the Company as director, officer,
employee, partner, member, manager, trustee, fiduciary or agent of
another Enterprise, in each case whether or not serving in such
capacity at the time any Loss or Expense is paid or incurred for
which indemnification or advancement of Expenses can be provided
under this Agreement, except one initiated by Indemnitee to enforce
his rights under this Agreement. For purposes of this definition,
the term "threatened" will be deemed to include Indemnitee’s
good faith belief that a claim or other assertion may lead to
institution of a Proceeding.
References to " serving at the
request of the Company " include any service as a director,
officer, employee or agent of the Company which imposes duties on,
or involves services by, such director, officer, employee or agent
with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner
he or she reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan will be
deemed to have acted in a manner " not opposed to the best
interests of the Company " as referred to under applicable
law or in this Agreement. ARTICLE 2
SERVICES TO THE COMPANY 2.1
Services to the Company . Indemnitee agrees to serve as the
Executive Vice President and Chief Operating Officer of the
Company. Indemnitee may at any time and for any reason resign from
such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company
will have no obligation under this Agreement to continue Indemnitee
in such position. This Agreement will not be construed as
3
giving Indemnitee any right to be retained in the employ of the
Company (or any other Enterprise). ARTICLE 3
INDEMNIFICATION 3.1 Company
Indemnification . Except as otherwise provided in this
Article 3 , if Indemnitee was, is or becomes a party
to, or was or is threatened to be made a party to, or was or is
otherwise involved in, any Proceeding, the Company will indemnify
and hold harmless Indemnitee to the fullest extent permitted by the
Articles, Bylaws and applicable law, as the same exists or may
hereafter be amended, interpreted or replaced (but in the case of
any such amendment, interpretation or replacement, only to the
extent that such amendment, interpretation or replacement permits
the Company to provide broader indemnification rights than were
permitted prior thereto), against any and all Expenses and Losses,
and any federal, state, local or foreign taxes imposed as a result
of the actual or deemed receipt of any payments under this
Agreement, that are actually and reasonably paid or incurred by
Indemnitee in connection with such Proceeding. For purposes of this
Agreement, the meaning of the phrase " to the fullest extent
permitted by law " will include to the fullest extent
permitted by the Nevada Revised Statues, as amended (the "
NRS "), with respect to such matters.
3.2 Mandatory Indemnification if
Indemnitee is Wholly or Partly Successful . Notwithstanding any
other provision of this Agreement (other than
Section 6.9 ), to the extent that Indemnitee has been
successful, on the merits or otherwise, in defense of any
Proceeding or any part thereof, the Company will indemnify
Indemnitee against all Expenses that are actually and reasonably
paid or incurred by Indemnitee in connection therewith. If
Indemnitee is not wholly successful in such Proceeding, but is
successful, on the merits or otherwise, as to one or more but fewer
than all claims, issues or matters in such Proceeding, the Company
will indemnify and hold harmless Indemnitee against all Expenses
paid or incurred by Indemnitee in connection with each successfully
resolved claim, issue or matter on which Indemnitee was successful.
For purposes of this Section 3.2 , the termination of
any Proceeding, or any claim, issue or matter in such Proceeding,
by dismissal with or without prejudice will be deemed to be a
successful result as to such Proceeding, claim, issue or matter.
3.3 Indemnification for Expenses
of a Witness . Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, the Company will indemnify Indemnitee against all
Expenses actually and reasonably paid or incurred by Indemnitee on
his behalf in connection therewith.
3.4 Exclusions . Notwithstanding any other provision of this
Agreement, the Company will not be obligated under this Agreement
to provide indemnification in connection with the following:
(a) Any Proceeding (or part of any
Proceeding) initiated or brought voluntarily by Indemnitee against
the Company or its directors, officers, employees or other
indemnities, unless the Board of Directors has authorized or
consented to the initiation of the Proceeding (or such part of any
Proceeding); provided , however , that nothing in
this Section 3.4(a) shall limit the right of Indemnitee
to be indemnified under Section 8.4 .
4
(b) For an accounting of profits
made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of
Section 16(b) of the Exchange Act or any similar successor statute.
ARTICLE 4
ADVANCEMENT OF EXPENSES 4.1
Expense Advances . Except as set forth in
Section 4.2 , the Company will, if requested by
Indemnitee, advance, to the fullest extent permitted by law, to
Indemnitee (hereinafter an " Expense Advance ") any
and all Expenses actually and reasonably paid or incurred by
Indemnitee in connection with any Proceeding (whether prior to or
after its final disposition). Indemnitee’s right to each
Expense Advance will not be subject to the satisfaction of any
standard of conduct and will be made without regard to
Indemnitee’s ultimate entitlement to indemnification under
the other provisions of this Agreement, or under provisions of the
Articles or Bylaws or otherwise. Each Expense Advance will be
unsecured and interest free and will be made by the Company without
regard to Indemnitee’s ability to repay the Expense Advance;
provided , however , that, if applicable law
requires, an Expense Advance will be made only upon delivery to the
Company of an undertaking (hereinafter an "
Undertaking "), by or on behalf of Indemnitee, to
repay such Expense Advance if it is ultimately determined, by final
decision by a court or arbitrator, as applicable, from which there
is no further right to appeal, that Indemnitee is not entitled to
be indemnified for such Expenses under the Articles, Bylaws, the
NRS, this Agreement or otherwise. An Expense eligible for an
Expense Advance will include any and all reasonable Expenses
incurred pursuing an action to enforce the right of advancement
provided for in this Article 4 , including Expenses
incurred preparing and forwarding statements to the Company to
support the Expense Advances claimed.
4.2 Exclusions . Indemnitee
will not be entitled to any Expense Advance in connection with any
of the matters for which indemnity is excluded pursuant to
Section 3.4 . 4.3
Timing . An Expense Advance pursuant to Section 4.1
will be made within five business days after the receipt by the
Company of a written statement or statements from Indemnitee
requesting such Expense Advance (which statement or statements will
include, if requested by the Company, reasonable detail underlying
the Expenses for which the Expense Advance is requested), whether
such request is made prior to or after final disposition of such
Proceeding. Such request must be accompanied by or preceded by the
Undertaking, if then required by the NRS or any other applicable
law. ARTICLE 5
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY
5.1 Contribution by Company .
To the fullest extent permitted by law, if the indemnification
provided for in this Agreement is unavailable to Indemnitee for any
reason whatsoever, the Company, in lieu of indemnifying Indemnitee,
will contribute to the amount of Expenses and Losses actually and
reasonably incurred or paid by Indemnitee in connection with any
Proceeding in proportion to the relative benefits received by the
Company and all officers, directors and employees of the Company
other than Indemnitee who are jointly liable with Indemnitee (or
would be if joined in such Proceeding), on the one hand, and
Indemnitee, on the other hand, from the transaction from which such
Proceeding arose; provided , however , that the
proportion determined on the basis of relative benefit may, to the
extent necessary to conform to law, be further adjusted by
reference to the relative fault of the Company and all officers,
directors and employees of the Company other than Indemnitee who
are jointly liable
5
with Indemnitee (or would be if joined in such Proceeding), on
the one hand, and Indemnitee, on the other hand, in connection with
the events that resulted in such Expenses and Losses, as well as
any other equitable considerations which applicable law may require
to be considered. The relative fault of the Company and all
officers, directors and employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be if
joined in such Proceeding), on the one hand, and Indemnitee, on the
other hand, will be determined by reference to, among other things,
the degree to which their actions were motivated by intent to gain
personal profit or advantage, the degree to which their liability
is primary or secondary, and the degree to which their conduct was
active or passive. 5.2
Indemnification for Contribution Claims by Others . To the
fullest extent permitted by law, the Company will fully indemnify
and hold Indemnitee harmless from any claims of contribution which
may be brought by other officers, directors or employees of the
Company who may be jointly liable with Indemnitee for any Loss or
Expense arising from a Proceeding. ARTICLE 6
PROCEDURES AND PRESUMPTIONS FOR THE
DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION
6.1 Notification of Claims;
Request for Indemnification . Indemnitee agrees to notify
promptly the Company in writing of any claim made against
Indemnitee for which indemnification will or could be sought under
this Agreement; provided , however , that a delay in
giving such notice will not deprive Indemnitee of any right to be
indemnified under this Agreement unless, and then only to the
extent that, the Company did not otherwise learn of the Proceeding
and such delay is materially prejudicial to the Company’s
ability to defend such Proceeding; and, provided ,
further , that notice will be deemed to have been given
without any action on the part of Indemnitee in the event the
Company is a party to the same Proceeding. The omission to notify
the Company will not relieve the Company from any liability for
indemnification which it may have to Indemnitee otherwise than
under this Agreement. Indemnitee may deliver to the Company a
written request to have the Company indemnify and hold harmless
Indemnitee in accordance with this Agreement. Subject to Section
6.9 , such request may be delivered from time to time and at
such time(s) as Indemnitee deems appropriate in his sole
discretion. Following such a written request for indemnification,
Indemnitee’s entitlement to indemnification shall be
determined according to Section 6.2 . The Secretary of
the Company will, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that
Indemnitee has requested indemnification. The Company will be
entitled to participate in any Proceeding at its own expense.
6.2 Determination of Right to
Indemnification . Upon written request by Indemnitee for
indemnification pursuant to Section 6.1 hereof with
respect to any Proceeding, a determination, if, but only if,
required by applicable law, with respect to Indemnitee’s
entitlement thereto will be made by one of the following, at the
election of Indemnitee: (1) so long as there are Disinterested
Directors with respect to such Proceeding, a majority vote of the
Disinterested Directors, even though less than a quorum of the
Board of Directors, (2) so long as there are Disinterested
Directors with respect to such Proceeding, a committee of such
Disinterested Directors designated by a majority vote of such
Disinterested Directors, even though less than a quorum of the
Board of Directors or (3) Independent Counsel in a written
opinion delivered to the Board of Directors, a copy of which will
also be delivered to Indemnitee. The election by Indemnitee to use
a particular person, persons or entity to make such determination
is to be included in the written request for indemnification
submitted by Indemnitee (and if no election is
6
made in the request it will be assumed that Indemnitee has
elected the Independent Counsel to make such determination). The
person, persons or entity chosen to make a determination under this
Agreement of the Indemnitee’s entitlement to indemnification
will act reasonably and in good faith in making such determination.
6.3 Selection of Independent
Counsel . If the determination of entitlement to
indemnification pursuant to Section 6.2 will be made by
an Independent Counsel, the Independent Counsel will be selected as
provided in this Section 6.3 . The Independent Counsel
will be selected by Indemnitee (unless Indemnitee requests that
such selection be made by the Board of Directors, in which event
the immediately following sentence will apply) and Indemnitee will
give written notice to the Company advising it of the identity of
the Independent Counsel so selected. If the Independent Counsel is
selected by the Board of Directors, the Company will give written
notice to Indemnitee advising him of the identity of the
Independent Counsel so selected. In either event, Indemnitee or the
Company, as the case may be, may, within ten da
|
