INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (this “ Agreement
”) dated the 6th day of May 2009, by and between United
Fuel & Energy Corporation, a Nevada corporation (the “
Company ”), and Marilyn Lobel, an individual
(“ Indemnitee ”).
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 Vice President and Chief Financial Officer to
the fullest extent permitted by law so that she will serve or
continue to serve the Company free from concern that she will not
be so indemnified and that her 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 Vice President and Chief Financial Officer of the Company
and her willingness to continue to serve in such capacity is
predicated, in substantial part, upon the Company’s
willingness to indemnify her to the fullest extent permitted by the
laws of the State of Nevada and upon the other undertakings set
forth in this Agreement.
NOW,
THEREFORE , in consideration of the premises and covenants
contained herein, the Company and Indemnitee hereby agree as
follows:
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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.
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“
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
her 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
her 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 Vice
President and Chief Financial 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 giving Indemnitee
any right to be retained in the employ of the Company (or any other
Enterprise).
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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 her 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 her 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
.
(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.
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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 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
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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 her 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 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.
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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 her of the identity of the
Indep
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