INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement") is made and effective as
of this __th day of August __, 1999, by and between Grant Geophysical,
Inc., a Delaware corporation (the "Company"), and ______________
("Indemnitee").
W I T N E S S E T H:
WHEREAS, the Company seeks to attract and retain competent and
experienced persons to serve as directors and desires to protect such
individuals by providing comprehensive liability insurance and
indemnification due to exposure to litigation costs and risks resulting
from their service to the Company;
WHEREAS, the Board of Directors of the Company has concluded that to
retain and attract talented and experienced individuals to serve as
directors of the Company, and to encourage such individuals to take the
business risks necessary for the success of the Company, it is necessary
for the Company to contractually indemnify its directors and to assume for
itself maximum liability for expenses and damages in connection with claims
against its directors in connection with their service to the Company;
WHEREAS, the General Corporation Law of the State of Delaware (the
"DGCL"), under which the Company is organized, empowers the Company to
indemnify by agreement its directors and expressly provides that the
indemnification provided in the DGCL is not exclusive; and
WHEREAS, the Company desires and has requested the Indemnitee to
continue to serve as a director of the Company free from undue concern for
claims for damages arising out of or related to such service to the
Company.
NOW, THEREFORE, in consideration of the Indemnitee's agreement to
continue to serve as a director of the Company, the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto stipulate
and agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the indicated meanings:
(a) "agent" of the Company means any person who is or was a
director of the Company or a subsidiary of the Company; or is or was
serving at the request of, for the convenience of, or to represent the
interest of the Company or a subsidiary of the Company as a director or
officer of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise or an affiliate of the Company. The
term "enterprise" includes any employee benefit plan of the Company, its
subsidiaries or affiliates.
(b) "expenses" includes all direct and indirect costs of any
type or nature whatsoever (including, without limitation, all attorneys'
fees and related disbursements and other out-of-pocket costs) actually and
reasonably incurred by the Indemnitee in connection with the investigation,
defense or appeal of a proceeding or establishing or enforcing a right to
indemnification or advancement of expenses under this Agreement, the
Company's Certificate of Incorporation, Bylaws, the DGCL or otherwise.
(c) "proceeding" means any threatened, pending or completed
action, suit or other proceeding, whether civil, criminal, administrative,
arbitral, investigative or any other type whatsoever.
(d) "subsidiary" means any corporation or other business entity
of which more than 50% of the outstanding voting securities is owned,
directly or indirectly, by the Company, by the Company and one or more of
its subsidiaries or by one or more of the Company's subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to continue to serve
as a director and agent of the Company in the capacities Indemnitee
currently serves or as he may hereafter agree to serve so long as he is
duly appointed or elected and qualified in accordance with the applicable
provisions of the Certificate of Incorporation, Bylaws or otherwise of the
Company, or until such time as he tenders his resignation in writing.
3. Maintenance of Liability Insurance.
(a) The Company agrees that, as long as the Indemnitee shall
continue to serve as a director of the Company and/or as an agent in any
other capacity and thereafter for the period of five years following the
termination of service, the Company shall maintain in full force and effect
directors' and officers' liability insurance (the "D&O Insurance") in a
minimum aggregate amount of $____ million for each policy year from
established and reputable insurers on such terms as are approved from time
to time by the Board of Directors. The Indemnitee shall be named as an
insured in all D&O Insurance in such a manner as to provide the Indemnitee
with the maximum rights and benefits available under the D&O Insurance.
(b) Notwithstanding anything in this Section 3 to the contrary,
the Company shall have no obligation to maintain D&O Insurance if the Board
of Directors, by a two-thirds vote, determines in good faith that the
premium costs for such insurance are disproportionate to the amount of
coverage provided or the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit.
4. Indemnification. To the fullest extent allowed by law, the
Indemnitee shall be indemnified and held harmless by the Company against
all expense incurred by Indemnitee in connection with any proceeding to
which the Indemnitee is a party, participant or is threatened to be made a
party or participant, based upon, arising from, relating to or by reason of
the fact that the Indemnitee is, was, shall be or shall have been an agent.
5. Mandatory Advancement of Expenses. The Company shall advance all
expenses incurred by the Indemnitee in connection with the investigation,
defense, settlement or appeal of any proceeding to which the Indemnitee is
a party or is threatened to be made a party by reason of the fact that the
Indemnitee is or was an agent or by reason of anything done or not done by
him in any such capacity. The Indemnitee hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified by the
Company under the provisions of this Agreement, the Certificate of
Incorporation or Bylaws of the Company, the DGCL or otherwise. The
advances to be made hereunder shall be paid by the Company to the
Indemnitee within 20 days following the delivery of a written request
therefor by the Indemnitee to the Company.
6. Notice and other Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the
Indemnitee shall, if the Indemnitee believes that indemnification with
respect thereto may be sought from the Company under this Agreement, notify
the Company of the commencement or threat of commencement thereof.
(b) If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 6(a), the Company has D&O
Insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the D&O Insurance. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on
behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of the D&O Insurance.
(c) If the Company is obligated to advance the expenses for any
proceeding, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by the Indemnitee (which
approval shall not be unreasonably withheld), upon the delivery to the
Indemnitee of written notice of its election to do so. After delivery of
such notice, approval of such counsel by the Indemnitee and the retention
of such counsel by the Company, the Company will not be liable to the
Indemnitee under this Agreement for any fees of counsel subsequently
incurred by the Indemnitee with respect to the same proceeding, provided
that: (i) the Indemnitee shall have the right to employ his own counsel in
any such proceeding at the Indemnitee's expense; (ii) the Indemnitee shall
have the right to employ his own counsel in connection with any such
proceeding, at the expense of the Company, if such counsel serves in a
review, observer, advice and counseling capacity and does not otherwise
materially control or participate in the defense of such proceeding; and
(iii) if (A) the employment of counsel by the Indemnitee has been
previously authorized by the Company, (B) the Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of any such defense or (C) the
Company shall not, in fact, have employed counsel to assume the defense of
such proceeding, then the fees and expenses of the Indemnitee's counsel
shall be at the expense of the Company.
7. Determination of Right to Indemnification.
(a) To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding referred to in Section 4
or in the defense of any claim, issue or matter described therein, the
Indemnitee shall be entitled to indemnification from the Company and the
Company shall indemnify the Indemnitee against expenses actually and
reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding.
(b) In the event that Section 7(a) is inapplicable, the Company
shall also indemnify the Indemnitee unless, and only to the extent that,
the Company shall prove by clear and convincing evidence to a forum listed
in Subsection 7(c) that the Indemnitee's acts were committed in bad faith,
or were the result of active and deliberate dishonesty, and were material
to the cause of action so adjudicated and that the Indemnitee in fact
personally gained a financial profit or other advantage to which he was not
legally entitled. Neither the failure of the Company to have made a
determination prior to the commencement of a proceeding that
indemnification of the Indemnitee is proper under the circumstances because
the Indemnitee has met the applicable standard of conduct set forth in the
DGCL, nor an actual determination by the Company that the Indemnitee has
not met the applicable standard of conduct, shall be a defense to the
action or create a presumption that the Indemnitee has not met the
applicable standard of conduct.
(c) The Indemnitee shall be entitled to select the forum in
which the validity of the Company's claim under Section 7(b) hereof that
the Indemnitee is not entitled to indemnification will be heard from among
the following:
(i) A quorum of the Board of Directors consisting of
directors who are not parties to the proceeding for which indemnification
is being sought or by a committee of such directors designated by a
majority vote of such directors, even though less than a quorum;
(ii) The stockholders of the Company;
(iii) Legal counsel selected by the Indemnitee, and
reasonably approved by the Board of Directors, which counsel shall make
such determination in a written opinion; or
(iv) A panel of three arbitrators, one of whom is selected
by the Company, another of whom is selected by the Indemnitee and the last
of whom is selected by the first two arbitrators so selected.
(d) As soon as practicable, and in no event later than 30 days
after written notice of the Indemnitee's choice of forum pursuant to
Section 7(c), the Company shall, at its own expense, submit to the selected
forum in such manner as the Indemnitee or the Indemnitee's counsel may
reasonably request, its claim that the Indemnitee is not entitled to
indemnification; and the Company shall act in the utmost good faith to
assure the Indemnitee a complete opportunity to defend against such claim.
(e) After the final decision of the forum selected pursuant to
Section 7(c) is rendered, the Indemnitee and Company shall each have the
right to apply to the Chancery Court of New Castle County, the court in
which that proceeding is or was pending or any other court of competent
jurisdiction, for the purpose of appealing the decision of such forum;
provided that such right is exercised within 60 days after the final
decision of such forum is rendered.
(f) Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any proceeding under this
Section 7 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company and
the Indemnitee involving the interpretation or enforcement of the rights of
the Indemnitee under this Agreement unless a court of competent
jurisdiction finds that each of the claims and/or defenses of the
Indemnitee in any such proceeding was frivolous or made in bad faith.
8. Exceptions. Notwithstanding any other provision of this
Agreement, the Company shall not be obligated pursuant to the terms of this
Agreement:
(a) To indemnify or advance expenses to the Indemnitee with
respect to proceedings or claims initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to proceedings
specifically authorized by the Board of Directors or brought to establish
or enforce a right to indemnification and/or advancement of expenses
arising under this Agreement, the Certificate of Incorporation or Bylaws of
the Company or any subsidiary or any statute or law or otherwise, but such
indemnification or advancement of expenses may be provided by the Company
in specific cases if the Board of Directors finds it to be appropriate;
(b) To indemnify the Indemnitee hereunder for any amounts paid
in settlement of a proceeding unless the Company consents in advance in
writing to such settlement, which consent shall not be unreasonably
withheld; or
(c) To indemnify the Indemnitee on account of any suit in which
judgment is rendered against the Indemnitee for an accounting of profits
made from the purchase or sale by the Indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law.
9. Successors; Binding Agreement. This Agreement shall be binding
on, and shall inure to the benefit of and be enforceable by, each of the
Indemnitee's personal or legal representatives, executives, administrators,
successors, heirs, distributees, devisees and by each of the Company's
successors and assigns. The Company shall require any successor or
assignee (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by written agreement in form and substance reasonably
satisfactory to the Company and to the Board of Directors, expressly to
assume and agree to perform this Agreement in the same manner that the
Company would be required to perform if no such succession or assignment
had taken place.
10. Credit for Insurance; Other Indemnities. Notwithstanding any
other provision of this Agreement, the amount of indemnification payable by
the Company with respect to any proceeding shall be subject to a credit for
amounts actually paid to Indemnitee under or pursuant to (a) D&O Insurance
and (b) provisions providing indemnification in the Certificate of
Incorporation, Bylaws, resolutions, agreements or other instruments of the
Company or any subsidiary.
11. Deposit of Funds in Trust. If the Company voluntarily decides to
dissolve or to file a petition for relief under any applicable bankruptcy,
moratorium or similar laws, then not later than 10 days prior to such
dissolution or filing, the Company shall deposit in trust for the sole and
exclusive benefit of Indemnitee a cash amount equal to all amounts
previously authorized to be paid to Indemnitee hereunder, such amounts to
be used to discharge the Company's obligations to Indemnitee hereunder.
Any amounts in such trust not required for such purpose shall be returned
to the Company. This Section 11 shall not apply to the dissolution of the
Company in connection with a transaction as to which Section 9 applies.
12. Enforcement.
(a) The Company has entered into this Agreement and assumed the
obligations imposed on the Company or hereby in order to induce the
Indemnitee to continue to act as an agent of the Company and acknowledges
that the Indemnitee is relying upon this Agreement in continuing in such
capacity.
(b) All expenses incurred by the Indemnitee in connection with
the preparation and submission of the Indemnitee's request for
indemnification hereunder shall be borne by the Company. If the Indemnitee
has requested payment of any amount under this Agreement and has not
received payment thereof within 20 days of such request, the Indemnitee may
bring any action to enforce rights or collect moneys due under this
Agreement, and, if the Indemnitee is successful in such action, the Company
shall reimburse the Indemnitee for all of the Indemnitee's fees and
expenses in bringing and pursuing such action. If it is determined that
the Indemnitee is entitled to indemnification for part (but not all) of the
indemnification so requested, expenses incurred in seeking enforcement of
such partial indemnification shall be reasonably prorated among the claims,
issues or matters for which the Indemnitee is entitled to indemnification
for claims, issues or matter for which the Indemnitee is not so entitled.
The Indemnitee shall be entitled to the advancement of such amounts to the
full extent contemplated by Section 5 hereof in connection with such
proceeding.
(c) The Company shall be precluded from asserting in any
judicial proceeding commenced under this Agreement that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and
shall stipulate in any such court that the Company is bound by all the
provisions of this Agreement.
13. Savings Clause. If any provision of this Agreement is determined
by a court having jurisdiction over the matter to violate or conflict with
applicable law, the court shall be empowered to modify or reform such
provision so that, as modified or reformed, such provision provides the
maximum indemnification permitted by law and such provi-sion, as so
modified or reformed, and the balance of this Agreement, shall be applied
in accordance with their terms. Without limiting the generality of the
forego-ing, if any portion of this Agreement shall be invalidated on any
ground, the Company shall nevertheless indemnify Indemni-tee to the full
extent permitted by any applicable portion of this Agreement that shall not
have been invalidated and to the full extent permitted by law with respect
to that portion that has been invalidated.
14. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some
claims, issues or matters related to a proceeding, but not as to other
claims, issues or matters, or for some or a portion of the expenses in the
investigation, defense, appeal or settlement of any proceeding, but not for
the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such claims, issues or matters or expenses to
which Indemnitee is entitled.
15. Non-Exclusivity.
(a) The right to indemnification pro-vided by or granted
pursuant to this Agreement shall not be deemed exclusive of any other
rights to which Indemnitee is or may become en-titled under any statute,
provision of the Company's Certificate of Incorporation, Bylaws, agreement,
resolution or otherwise.
(b) It is the intent of the Company by this Agree-ment to
indemnify and hold harmless Indemnitee to the fullest ex-tent permitted by
law, so that if applicable law would permit the Company to provide broader
indemnification rights than are currently permitted, the Company shall
indemnify and hold harmless Indemnitee to the fullest extent permitted by
applicable law notwithstanding that the other terms of this Agreement would
provide for lesser indemnification.
16. Confidentiality. The Company and Indemnitee shall keep
confidential to the extent permitted by law and their fiduciary obligations
all information and determinations provided pursuant to or arising out of
the operations of this Agreement and the Company and Indemnitee shall
instruct their agents and employees to do likewise.
17. Counterparts. This Agreement may be executed in any number of
counter-parts, each of which shall constitute an origi-nal but all of which
taken together shall be deemed to constitute a single instrument.
18. Applicable Law. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of
Delaware.
19. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in writing
signed by the Company and Indemnitee. Notwithstand-ing any amendment,
modification, termination or cancella-tion of this Agreement or any portion
hereof, Indemnitee shall be entitled to indemnification in accordance with
the provisions hereof with respect to any acts or omissions of Indemnitee
which occur prior to such amendment, modification, termination or
can-cellation.
20. Gender. All pronouns and variations thereof used in this
Agreement shall be deemed to refer to the masculine, feminine or neuter
gender, singular or plural, as the identity of the person, persons, entity
or entities referred to may require.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and signed as of the date and year first above written.
GRANT GEOPHYSICAL, INC.
By:
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Name:
Title:
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Indemnitee
