INDEMNITY AGREEMENT
Exhibit 10.1
This Indemnification Agreement (“Agreement”) is made as of July 1, 2006 by and between Terra
Industries Inc., a Maryland corporation, and «Name» (“Indemnitee”).
RECITALS
WHEREAS, highly competent persons have become more reluctant to serve publicly-held
corporations as directors or in other capacities unless they are provided with adequate protection
through insurance or adequate indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on behalf of the corporation;
WHEREAS, the Articles of Restatement (the “Charter”) and Amended and Restated Bylaws (the
“Bylaws”) of the Company require indemnification of the officers and directors of the Company, and
Indemnitee may also be entitled to indemnification pursuant to the Maryland General Corporation Law
(“MGCL”);
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to
attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis,
at its sole expense, liability insurance to protect persons serving the Company and its
subsidiaries from certain liabilities;
WHEREAS, the uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons;
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining
such persons 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 such protection
in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of the Charter and Bylaws of the
Company and any resolutions adopted pursuant thereto and any liability insurance, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
WHEREAS, Indemnitee does not regard the protection available under the Company’s Charter,
Bylaws and insurance as adequate in the present circumstances, and may not be willing to serve as
an officer or director without adequate protection, and the Company desires Indemnitee to serve in
such capacity, Indemnitee is willing to serve, continue to serve and to take on additional service
for or on behalf of the Company on the condition that he be so indemnified;
NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:
1. Services to the Company. Indemnitee will serve or continue to serve, at the will of the
Company, as an officer, director or key employee of the Company for so long as Indemnitee is duly
elected or appointed or until Indemnitee tenders his resignation; however, this Agreement shall not
impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company
beyond any period otherwise required by law or by other agreements or commitments of the parties,
if any.
2. Definitions. As used in this Agreement
(a) A “Change in Control” shall be deemed to occur upon the earliest to occur after the
date of this Agreement of any of the following events:
| (i) | The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act of 1934) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of this definition; or | ||
| (ii) | Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or | ||
| (iii) | Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another |
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| entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or | |||
| (iv) | Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. |
(b) “Company” means Terra Industries Inc. and its successors, and shall include, in the
case of any merger or consolidation, in addition to the resulting corporation and surviving
corporation, any constituent corporation (including any constituent of a constituent)
absorbed in such consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers, employees,
trustees, fiduciaries or agents, so that if Indemnitee is or was a director, officer,
employee, trustee, fiduciary or agent of such constituent corporation, or is or was serving
at the request of such constituent corporation as a director, officer, employee, trustee,
fiduciary or agent of another corporation, partnership, joint venture, trust, employee
benefit program or other enterprise, Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its separate existence
had continued.
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(c) “Corporate Status” describes the status of a person who is or was a director,
officer, employee, agent, trustee or fiduciary of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise which such
person is or was serving at the request of the Company.
(d) “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.
(e) “Enterprise” means the Company and any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was
serving at the request of the Company as a director, officer, employee, agent, trustee or
fiduciary.
(f) “Expenses” means all retainers, court costs, transcript costs, fees of experts,
witness fees, private investigators, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, fax transmission charges, secretarial services,
delivery service fees, reasonable attorneys’ fees, and all other disbursements or expenses
of the types customarily 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 also shall include Expenses incurred in connection with any appeal
resulting from any Proceeding, including without limitation the premium, security for, and
other costs relating to any cost bond, supersedeas bond, or other appeal bond or its
equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee
or the amount of judgments or fines against Indemnitee.
(g) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of relevant corporation law and neither presently is, nor in the past
five 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, 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” shall 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.
(h) “Losses” means all loss, liability, judgments, damages, amounts paid in settlement,
fines, penalties, interest, assessments, other charges or, with respect to an employee
benefit plan, excise taxes or penalties assessed with respect thereto.
(i) References to “other enterprise” shall include employee benefit plans; references
to “fines” shall include any excise tax assessed with respect to any employee benefit plan;
references to “serving at the request of the Company” shall include any service as a
director, officer, employee, trustee, fiduciary or agent of the Company which imposes duties
on, or involves services by, such director, officer, employee, trustee,
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fiduciary or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he reasonably believed
to be in the best interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner not opposed to the best interests of the
Company and not in “bad faith” as referred to under applicable law.
(j) “Person” means an individual, entity, partnership, limited liability company,
corporation, association, joint stock company, trust, joint venture, unincorporated
organization, and a governmental entity or any department agency or political subdivision
thereof.
(k) The term “Proceeding” shall include any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed proceeding, including
any and all appeals, whether brought in the right of the Company or otherwise and whether of
a civil, criminal, administrative or investigative nature and whether formal or informal, in
which Indemnitee was, is or will be involved as a party or otherwise by reason of or
relating to the fact that Indemnitee is or was a director, officer, employee, agent, trustee
or fiduciary of the Company, by reason of or relating to any action taken by him or of any
action on his part while acting as director, officer, employee, agent, trustee or fiduciary
of the Company, or by reason of the fact that he is or was serving at the request of the
Company as a director, officer, employee, agent, trustee or fiduciary of another Enterprise,
in each case whether or not serving in such capacity at the time any Loss or Expense is
incurred for which indemnification, reimbursement, or advancement of Expenses can be
provided under this Agreement, including one initiated by an Indemnitee to enforce his
rights under this Agreement.
(l) For purposes of Sections 3 and 4, the meaning of the phrase “to the fullest extent
permitted by law” shall include, but not be limited to:
| A. | to the fullest extent permitted by Section 2-418 of the MGCL or any section that replaces or succeeds Section 2-418 with respect to such matters of the MGCL, and | ||
| B. | to the fullest extent authorized or permitted by any amendments to or replacements of the MGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers, directors, employees, agents, trustees, fiduciaries and other persons acting or serving at the Company’s request. |
3. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance
with the provisions of this Section 3 if Indemnitee was or is, or was or is threatened to be made,
a party to or a witness or participant in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee
shall be indemnified against all Expenses and Losses to the fullest extent permitted by law.
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4. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 4 if Indemnitee was or is, or was or
is threatened to be made, a party to or a participant in any Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be
indemnified against all Expenses and Losses actually and reasonably incurred or suffered by him or
on his behalf in connection with such Proceeding or any claim, issue or matter therein to the
fullest extent permitted by law. No indemnification for Expenses or Losses shall be made under
this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudged by a court to be liable to the Company, unless and only to the extent that a court
of appropriate jurisdiction shall determine upon application that, despite the adjudication of
liability but in view of all the relevant circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnification, but any such indemnification shall be limited to Expenses.
5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee was or is a
party to (or a participant in) and is successful, on the merits or otherwise, in defense of any
Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him 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 less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved claim, issue or
matter and any claim, issue or matter related to any claim, issue, or matter on which the
Indemnitee was successful. For purposes of this Section and without limitation, the termination of
any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.
6. 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, he shall be indemnified against all Expenses
actually and reasonably incurred by him or on his behalf in connection therewith.
7. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be
obligated under this Agreement to make any indemnity in connection with any claim made against
Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect to any excess beyond the
amount paid under any insurance policy or other indemnity provision; or
(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
Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or
common law; or
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(c) in connection with any Proceeding (or any part of any Proceeding) initiated or
brought voluntarily by Indemnitee prior to a Change of Control against the Company or its
directors, officers, employees or other indemnitees, unless (i) the Board of the Company
authorized the Proceeding (or any part of any Proceeding) prior to its initiation, or (ii)
the Company provides indemnification, in its sole discretion, pursuant to the powers vested
in the Company under applicable law.
8. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary, the
Company shall advance the Expenses reasonably incurred by Indemnitee in connection with any
Proceeding for which indemnification is or may be available pursuant to this Agreement within 20
days after the receipt by the Company of a statement or statements requesting such advances from
time to time, whether prior to or after final disposition of any Proceeding. Advances shall be
unsecured and interest free. Advances shall be made to the fullest extent permitted by applicable
law and without requiring a preliminary determination of Indemnitee’s ultimate entitlement to
indemnification under the other provisions of this Agreement. Advances shall include any and all
Expenses incurred pursuing an action to enforce this right of advancement, including Expenses
incurred preparing and forwarding statements to the Company to support the advances claimed. The
Indemnitee shall qualify for advances solely upon the execution and delivery to the Company of (a)
a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct
necessary for indemnification by the Company as authorized by law and by this Agreement has been
met and (b) a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if
it shall ultimately be determined that such standard of conduct has not been met.
9. Selection of Counsel. In the event the Company is obligated under Section 8 hereof to pay,
and pays the Expenses of any Proceeding against Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such Proceeding, with counsel approved by Indemnitee, which
approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of
its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to Indemnitee under
this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same
Proceeding, provided that (i) Indemnitee shall have the right to employ his counsel in any such
Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has
been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the conduct of any such
defense or (C) the Company shall not, in fact, have employed counsel approved by the Indemnitee to
assume the defense of such Proceeding, then the fees and expenses of Indemnitee’s counsel shall be
at the expense of the Company.
10. Procedure for Notification and Defense of Claim.
(a) Indemnitee shall, as a condition precedent to his right to be indemnified under
this Agreement, give the Company notice in writing as soon as practicable of any claim made
against Indemmitee for which indemnification will or could be sought under this Agreement;
provided, however, that a delay in giving such notice shall not deprive
Indemnitee of any right to be indemnified under this Agreement unless, and then only to the
extent that, such delay is materially prejudicial to the defense of such claim. The
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omission to notify the Company will not relieve the Company from any liability for
indemnification which it may have to Indemnitee otherwise under this Agreement. The
Secretary of the Company shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that Indemnitee has requested indemnification.
(b) The Company will be entitled to participate in any Proceeding at its own expense.
11. Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant to the first
sentence of Section 10(a), a determination, if required by applicable law, with respect to
Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in
Control shall have occurred, by Independent Counsel in a written opinion to the Board, a
copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not
have occurred, (A) by the Board by a majority vote of a quorum consisting of Disinterested
Directors, (B) if such a quorum cannot be obtained then by a majority vote of a committee of
the Board consisting solely of Disinterested Directors designated by a majority vote of the
Board in which directors who are parties to the Proceeding in respect of which
indemnification is sought may participate, (C) if a quorum of the Board consisting of
Disinterested Directors is not obtainable, and if a majority vote of a committee of the
Board consisting solely of Disinterested Directors is not obtainable, or, even if obtainable
such quorum of Disinterested Directors, or such committee, by a majority vote so directs, by
Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee or (D) if so directed by a majority of the members of the Board, by the
stockholders of the Company; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after such
determination. Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee’s entitlement to indemnification, including
providing to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from disclosure
and which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred
by Indemnitee in so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(b) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be
selected as provided in this Section 11(b). If a Change in Control shall not have occurred,
the Independent Counsel shall be selected by the Board or a committee of the Board
consisting solely of Disinterested Directors, by the vote required by applicable law for the
selection of Independent Counsel, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change in Control
shall have occurred, the Independent Counsel shall be selected by
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Indemnitee (unless Indemnitee shall request that such selection be made by the Board,
in which event the preceding sentence shall apply), subject to approval by the Board, or a
committee thereof consisting solely of Disinterested Directors, by the vote required by
applicable law for the selection of Independent Counsel, and Indemnitee shall give written
notice to the Company advising it of the identity of the Independent Counsel so selected.
Any such approval by the Board or a committee thereof consisting solely of Disinterested
Directors, will not be unreasonably withheld and by such approval the Board or committee
shall be deemed to have joined in such selection. In either event, Indemnitee or the
Company, as the case may be, may, within ten (10) days after such written notice of
selection shall have been given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so selected does
not meet the requirements of “Independent Counsel” as defined in Section 2 of this
Agreement, and the objection shall set forth with particularity the factual basis for such
assertion. Absent a proper and timely objection, the person so selected (and, if a Change
in Control shall have occurred, approved by the Board or a committee thereof consisting
solely of Disinterested Directors) shall act as Independent Counsel. If such written
objection is so made and substantiated, the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court has determined
that such objection is without merit. If, within twenty (20) days after submission by
Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof, no
Independent Counsel shall have been selected (and, if a Change in Control shall have
occurred, approved by the Board or a committee thereof consisting solely of Disinterested
Directors) and not objected to, either the Company or Indemnitee may petition a court of
competent jurisdiction for resolution of any failure by the Board or a committee thereof to
approve Indemnitee’s selection of Independent Counsel after a Change in Control shall have
occurred, or any objection which shall have been made by the Company or Indemnitee to the
other’s selection of Independent Counsel and/or for the appointment as Independent Counsel
of a person selected by the court or by such other person as the court shall designate, and
the person with respect to whom all failures to approve and objections are so resolved or
the person so appointed shall act as Independent Counsel under Section 11(a) hereof. Upon
the due commencement of any judicial proceeding or arbitration pursuant to Section 13(a) of
this Agreement, Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of professional conduct
then prevailing).
12. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder,
the person or persons or entity making such determination shall presume that Indemnitee is
entitled to indemnification under this Agreement and the Company shall have the burden of
proof to overcome that presumption in connection with the making by any person, persons or
entity of any determination contrary to that presumption. Neither the failure of the
Company (including by its directors or independent legal counsel) to have made a
determination prior to the commencement of any action pursuant to this Agreement that
indemnification is proper in the circumstances because Indemnitee has
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met the applicable standard of conduct, nor an actual determination by the Company
(including by its directors or independent legal counsel) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct.
(b) If the person, persons or entity empowered or selected under Section 11 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall not have made
a determination within sixty (60) days after receipt by the Company of the request therefor,
the requisite determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in connection with the request for
indemnification or (ii) a prohibition of such indemnification under applicable law;
provided, however, that such 60-day period may be extended for a reasonable
time, not to exceed an additional thirty (30) days, if the person, persons or entity making
the determination with respect to entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating of documentation and/or information relating
thereto; and provided, further, that the foregoing provisions of this
Section 12(b) shall not apply if the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 11(a) of this Agreement.
(c) Termination. The termination of any proceeding by judgment, order or
settlement does not create a presumption that Indemnitee did not meet the requisite standard
of conduct required under applicable law for indemnification.
(d) Actions of Others. The knowledge and/or actions, or failure to act, of any
director, officer, agent, trustee, fiduciary or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to indemnification under this
Agreement.
13. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 11 of this
Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no
determination of entitlement to indemnification shall have been made pursuant to Section
11(a) of this Agreement within sixty (60) days after receipt by the Company of the request
for indemnification, or (iv) payment of indemnification is not made pursuant to Section 3,
4, 5, 6 or the last sentence of Section 11(a) of this Agreement within ten (10) days after
receipt by the Company of a written request therefor, or, if a determination is required by
law, within ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication (or, in the case of clause
(i), to seek an adjudication) in an appropriate court of the State of Maryland or in any
other court of competent jurisdiction of his entitlement to such indemnification or
advancement of Expenses; provided, that nothing contained in this Section 13 shall
be deemed to limit Indemnitee’s rights under Section 12(b). Alternatively, Indemnitee, at
his option, may seek an award in binding arbitration to be
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conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the
American Arbitration Association. The Company shall not oppose Indemnitee’s right to seek
any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 11(a) of
this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding
or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a
de novo trial or arbitration on the merits, and Indemnitee shall not be
prejudiced by reason of that adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Section 13 the Company shall have the burden of
proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the
case may be.
(c) If a determination shall have been made pursuant to Section 11(a) of this Agreement
that Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to this Section
13, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee’s statement not materially misleading, in connection with
the request for indemnification or (ii) a prohibition of such indemnification under
applicable law.
(d) The Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 13 that the procedures and presumptions of
this Agreement are not valid, binding and enforceable and shall stipulate in any such court
or before any such arbitrator that the Company is bound by all the provisions of this
Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if
requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a
written request therefore) advance such expenses to Indemnitee, which are incurred by
Indemnitee in connection with any action brought by Indemnitee for indemnification or
advance of Expenses from the Company under this Agreement, under the Company’s Charter and
Bylaws as in effect from time to time or under any directors’ and officers’ liability
insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advancement of Expenses or insurance
recovery, as the case may be.
14. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of Expenses as provided by
this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at
any time be entitled under applicable law, the Charter, Bylaws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal
of this Agreement or of any provision hereto shall limit or restrict any right of Indemnitee
under this Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal. To the extent that a change
in Maryland law, whether by statute or judicial decision, permits greater indemnification or
advancement of Expenses than would be afforded currently under the Charter, Bylaws and this
Agreement, it is the intent of the
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parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other right or
remedy.
(b) The Company shall, from time to time, make the good faith determination whether or
not it is practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the directors, officers, employees,
trustees, fiduciaries and agents of the Company with coverage for losses from wrongful acts,
or to ensure the Company’s performance of its indemnification obligations under this
Agreement. Among other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. To the extent that the
Company maintains an insurance policy or policies providing liability insurance for
directors, officers, employees, trustees, fiduciaries and agents of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Company, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director, officer, employee, trustee,
fiduciary or agent under such policy or policies. If, at the time of the receipt of a
notice of a claim pursuant to the terms hereof, the Company has director and officer
liability 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
respective policies. 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 such policies.
(c) In the event of any payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of Indemnitee against other
persons or entities, and Indemnitee shall execute all papers required and take all action
necessary to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to
the extent that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
(e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee
who is or was serving at the request of the Company as a director, officer, employee,
trustee, fiduciary or agent of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has
actually received as indemnification or advancement of expenses from
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such other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise.
15. Settlement. (a) The Company shall have no obligation to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any Proceeding by the Indemnitee effected without
the Company’s prior written consent.
(b) The Company shall not, without the prior written consent of Indemnitee, consent to
the entry of any judgment against Indemnitee or enter into any settlement or compromise
which (i) includes an admission of fault of Indemnitee, any non-monetary remedy affecting or
obligation of Indemnitee, or monetary Loss for which Indemnitee is not indemnified hereunder
or (ii) with respect to any Proceeding with respect to which Indemnitee may be or is made a
party, witness or participant or may be or is otherwise entitled to seek indemnification
hereunder, does not include, as an unconditional term thereof, the full release of
Indemnitee from all liability in respect of such Proceeding, which release shall be in form
and substance reasonably satisfactory to Indemnitee.
(c) Neither the Company nor Indemnitee shall unreasonably withhold its consent to any
proposed settlement.
16. Duration of Agreement. This Agreement shall continue until and terminate upon the later
of (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director or
officer of the Company or as a director, officer, employee, trustee, fiduciary or agent of any
other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise
which Indemnitee served at the request of the Company or (b) one (1) year after the final
termination of any Proceeding, including any and all appeals, then pending in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any
proceeding commenced by Indemnitee pursuant to Section 13 of this Agreement relating thereto.
17. Successors and Assigns. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and
administrators.
18. Severability. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law;
(b) such provision or provisions shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the
fullest extent possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.
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19. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement
and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a
director or officer of the Company, and the Company acknowledges that Indemnitee is relying
upon this Agreement in serving as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and understandings,
oral, written and implied, between the parties hereto with respect to the subject matter
hereof.
20. Effectiveness of Agreement. This Agreement shall be effective as of the date set forth on
the first page and may apply to acts or omissions of Indemnitee which occurred prior to such date
if Indemnitee was an officer, director, employee, trustee, fiduciary or other agent of the Company,
or was serving at the request of the Company as a director, officer, employee, trustee, fiduciary
or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, at the time such act or omission occurred.
21. Modification and Waiver. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by the parties thereto. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this
Agreement nor shall any waiver constitute a continuing waiver.
22. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon
being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to the Indemnitee under this
Agreement or otherwise.
23. Notices. All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (a) if delivered by hand and
receipted for by the party to whom said notice or other communication shall have been directed, or
(b) mailed by certified or registered mail with postage prepaid, on the third business day after
the date on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement,
or such other address as Indemnitee shall provide to the Company.
(b) If to the Company to
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or to any other address as may have been furnished to Indemnitee by the Company.
24. Contribution. To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for Losses and/or for Expenses, in connection with any claim
relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the
relative benefits received by the Company and Indemnitee as a result of the event(s) and/or
transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and
its directors, officers, employees, trustees, fiduciaries and agents) and Indemnitee in connection
with such event(s) and/or transaction(s).
25. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among
the parties shall be governed by, and construed and enforced in accordance with, the laws of the
State of Maryland.
26. Identical Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall for all purposes be deemed to be an original but all of which together shall
constitute one and the same Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this Agreement.
27. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the
feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof. The term including shall mean including without limitation.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year
first above written.
| TERRA INDUSTRIES INC. | INDEMNITEE | ||||||
By:
|
By: | ||||||
| Name: Address: |
Name: «Name» Address: |
||||||
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