Exhibit 10.3
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated the ____ day of
_______, 2005, by and between GulfWest Energy Inc., a Texas corporation (the
"Company"), and ____________, an individual ("Indemnitee").
RECITALS
A. Competent and experienced persons are reluctant to serve or to
continue to serve as directors and 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 directors and officers of the Company, that this situation is detrimental to
the best interests of the Company's shareholders 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 (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,
officers and directors to the fullest extent permitted by law so that they will
serve or continue to serve the Company free from concern that they will not be
so indemnified and that their 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, applicable law, the Articles and/or the
Bylaws or any resolutions adopted pursuant thereto (including any contractual or
other rights of Indemnitee that may exist).
F. Indemnitee is a director and/or officer of the Company and his or her
willingness to continue to serve in such capacity is predicated, in substantial
part, upon the Company's willingness to indemnify him or her to the fullest
extent permitted by the laws of the State of Texas and upon the other
undertakings set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the Company and Indemnitee hereby agree as follows:
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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 or agent of the Company or a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary 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, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
Enterprise if Indemnitee is or was serving as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary 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 or 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 named defendant or respondent 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 attorneys' 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, or as a result of being, 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
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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.
"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 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 an
actual 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 of
Indemnitee to act) or any action or alleged action (or failure or alleged
failure to act) on Indemnitee's part, while acting in his or her Corporate
Status or (ii) the fact that Indemnitee is or was serving at the request of the
Company as director, officer, employee, partner, venturer, proprietor, trustee
or agent or similar functionary of another Enterprise, in each case whether or
not serving in such capacity at the time any Loss or Expense is paid or incurred
for which indemnification or advancement of Expenses can be provided under this
Agreement, except one initiated by Indemnitee to enforce his or 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" as a trustee,
employee, agent or similar functionary of an employee benefit plan include any
service as a director, officer, employee or agent of the Company which imposes
duties, liabilities, Losses or other obligations on, or involves services by,
such person with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted or failed to act in the performance of his
or her duties in good faith and for a purpose he or she reasonably believed to
be in the best interests of the participants and beneficiaries of an employee
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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 a ________ of
the Company. Indemnitee may at any time and for any or no 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).
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
reasonable Expenses and all 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 paid or incurred by Indemnitee in connection
with such Proceeding. In addition, and not withstanding anything herein to the
contrary, the Company will fully indemnify, defend and hold harmless Indemnitee
against any and all Expenses and all Losses that are paid or incurred by
Indemnitee in connection with any threatened, pending or completed legal 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 formal or
informal, and in each case whether or not commenced prior to the date of this
Agreement and whether or not based on facts, circumstances, or events that
occurred prior to the dates of this Agreement, which Indemnitee was, is or will
be involved as a party or otherwise, which is brought or asserted, directly or
indirectly, by, on behalf, or in the name of Xxxxx Xxxxx, Volant Energy LLC (or
any similar entity owned or controlled by Xxxxx Xxxxx), or any of their
respective affiliates or assigns arising out of or relating to (i) the
formation, operations, business proposals or any actual or alleged opportunity
of Volant Energy LLC (or any similar entity owned or controlled by Xxxxx Xxxxx)
directly or indirectly related to the Company, (ii) discussions, negotiations,
and actual or proposed transactions between or among Oaktree Capital Management
LLC or any of its affiliates, the Company, Xxxxx Xxxxx and/or Indemnitee,
including without limitation the transactions contemplated by that certain
Subscription Agreement dated the dated hereof between the Company and OCM GW
Holdings, LLC, or (iii) otherwise relating to or involving the Company. For
purposes of this Agreement, the meaning of the phrase "to the fullest extent
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permitted by law" will include to the fullest extent permitted by Article 2.02-1
of the Texas Business Corporation Act ("TBCA") or any section that replaces or
succeeds Article 2.02-1 of the TBCA with respect to such matters, but in the
case of any such replacement or succession, only to the extent that such
succession permits the Company to provide broader indemnification rights than
were permitted prior thereto.
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 wholly successful, on the
merits or otherwise, in defense of any Proceeding or any part thereof, the
Company will indemnify Indemnitee against all reasonable Expenses and all Losses
that are actually 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 reasonable Expenses and all Losses that are actually 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 or abandonment of any Proceeding, or any claim, issue or
matter in such Proceeding, by dismissal with or without prejudice will be deemed
to be a successful result as to such Proceeding, claim, issue or matter.
3.3 Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
or her Corporate Status, a witness in any Proceeding to which Indemnitee is not
at such time a named defendant or respondent, the Company will indemnify
Indemnitee against all Expenses actually paid or incurred by Indemnitee or on
his or 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.
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
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actually 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 affirmation of Indemnitee's good faith belief that Indemnitee
has met the standard of conduct necessary for such indemnification and an
undertaking (hereinafter, collectively, 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 TBCA, 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
5 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 TBCA 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
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considerations which applicable law may require to be considered. The relative
fault of the Company and all officers, directors and employees of the Company
other than Indemnitee who are jointly liable with Indemnitee (or would be if
joined in such Proceeding), on the one hand, and Indemnitee, on the other hand,
will be determined by reference to, among other things, the degree to which
their actions were motivated by intent to gain personal profit or advantage, the
degree to which their liability is primary or secondary, and the degree to which
their conduct was active or passive.
5.2 Indemnification for Contribution Claims by Others. To the fullest
extent permitted by law, the Company will fully indemnify and hold Indemnitee
harmless from any claims of contribution which may be brought by other officers,
directors or employees of the Company who may be jointly liable with Indemnitee
for any Loss or Expense arising from a Proceeding.
ARTICLE 6
PROCEDURES AND PRESUMPTIONS FOR THE
DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION
6.1 Notification of Claims; Request for Indemnification. Indemnitee agrees
to notify promptly the Company in writing of any claim made against Indemnitee
for which indemnification will or could be sought under this Agreement;
provided, however, that a delay in giving such notice will not deprive
Indemnitee of any right to be indemnified under this Agreement unless, and then
only to the extent that, the Company did not otherwise learn of the Proceeding
and such delay is materially prejudicial to the Company's ability to defend such
Proceeding; and, provided, further, that notice will be deemed to have been
given without any action on the part of Indemnitee in the event the Company is a
party to the same Proceeding. The omission to notify the Company will not
relieve the Company from any liability for indemnification which it may have to
Indemnitee otherwise than under this Agreement. Indemnitee may deliver to the
Company a written request to have the Company indemnify and hold harmless
Indemnitee in accordance with this Agreement. Subject to Section 6.9, such
request may be delivered from time to time and at such time(s) as Indemnitee
deems appropriate in his or 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 the Indemnitee: (1) so long as there are
Disinterested Directors with respect to such Proceeding, a majority vote of the
Disinterested Directors, regardless of whether the Disinterested Directors make
up a quorum of the Board of Directors, (2) a majority vote of a committee of one
or more Disinterested Directors designated by a majority vote of the
Disinterested Directors, (3) Independent Counsel in a written opinion delivered
to the Board of Directors, a copy of which will also be delivered to Indemnitee,
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or (4) by the shareholders in a vote excluding shares held by all directors
other than Disinterested Directors. In the event that there are no Disinterested
Directors, the determination shall be made in accordance with (4) of the
preceding sentence. 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 to the extent permitted by applicable law).
The person, persons or entity chosen to make a determination under this
Agreement of the Indemnitee's entitlement to indemnification will act reasonably
and in good faith in making such determination.
6.3 Selection of Independent Counsel. If the determination of entitlement
to indemnification pursuant to Section 6.2 will be made by an Independent
Counsel, the Independent Counsel will be selected in accordance with (1) or (2)
of Section 6.2. The Company will give written notice to Indemnitee advising him
or her of the identity of the Independent Counsel so selected. In any event,
Indemnitee may, within 10 days after such written notice of selection is given,
deliver to the Company 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 this Agreement, and the objection will set forth with reasonable
particularity the factual basis of such assertion. Absent a proper and timely
objection in accordance with this Agreement, the person so selected will act as
Independent Counsel. If a written objection is made and substantiated, the
Independent Counsel 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 thirty days after submission by Indemnitee of a
written request for indemnification pursuant to Section 6.1, no Independent
Counsel is selected, or an Independent Counsel for which an objection thereto
has been properly made remains unresolved, either the Company or Indemnitee may
petition an appropriate court of the State of Texas or any other court of
competent jurisdiction for resolution of any objection which has been made by
Indemnitee to the Company'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 may designate, and the person with respect to whom all
objections are so resolved or the person so appointed will act as Independent
Counsel under Section 6.2. The Company will pay any and all fees and expenses
incurred by such Independent Counsel in connection with acting pursuant to
Section 6.2 hereof, and the Company will pay all fees and expenses incident to
the procedures of this Section 6.3, regardless of the manner in which such
Independent Counsel was selected or appointed.
6.4 Burden of Proof. In making a determination with respect to entitlement
to indemnification hereunder, the person, persons or entity making such
determination will presume that Indemnitee is entitled to indemnification under
this Agreement. Anyone seeking to overcome this presumption will have the burden
of proof and the burden of persuasion, by clear and convincing evidence. In
making a determination with respect to entitlement to indemnification hereunder
which under this Agreement, the Articles, Bylaws or applicable law requires a
determination of Indemnitee's good faith and/or whether Indemnitee acted in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the Company, the person, persons or entity making such
determination will presume that Indemnitee has at all times acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
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best interests of the Company. Anyone seeking to overcome this presumption will
have the burden of proof and the burden of persuasion, by clear and convincing
evidence. Indemnitee also will be deemed to have acted in good faith if
Indemnitee's action with respect to a particular Enterprise is based on the
records or books of account of such Enterprise, including financial statements,
or on information supplied to Indemnitee by the officers or other agents of such
Enterprise in the course of their duties, or on the advice of legal counsel for
such Enterprise or on information or records given or reports made to such
Enterprise by an independent certified public accountant or by an appraiser or
other expert selected by such Enterprise; provided, however, that this sentence
will not be deemed to limit in any way the other circumstances in which
Indemnitee may be deemed to have met such standard of conduct. In addition, the
knowledge and/or actions, or failure to act, of any other director, officer,
agent or employee of such Enterprise will not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement.
6.5 No Presumption in Absence of a Determination or As Result of an
Adverse Determination; Presumption Regarding Success. Neither the failure of any
person, persons or entity chosen to make a determination as to whether
Indemnitee has met any particular standard of conduct or had any particular
belief to make such determination, nor an actual determination by such person,
persons or entity that Indemnitee has not met such standard of conduct or did
not have such belief, prior to or after the commencement of legal proceedings by
Indemnitee to secure a judicial determination that Indemnitee should be
indemnified under this Agreement under applicable law, will be a defense to
Indemnitee's claim or create a presumption that Indemnitee has not met any
particular standard of conduct or did not have any particular belief. In
addition, the termination of any Proceeding by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, will not create a presumption that Indemnitee did
not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In the event that any Proceeding to which
Indemnitee is a party is resolved in any manner other than by final adverse
judgment (as to which all rights of appeal therefrom have been exhausted or
lapsed) against Indemnitee (including, without limitation, settlement of such
Proceeding with or without payment of money or other consideration) it will be
presumed that Indemnitee has been successful on the merits or otherwise in such
Proceeding. Anyone seeking to overcome this presumption will have the burden of
proof and the burden of persuasion, by clear and convincing evidence.
6.6 Timing of Determination. The Company will use its reasonable best
efforts to cause any determination required to be made pursuant to Section 6.2
to be made as promptly as practicable after Indemnitee has submitted a written
request for indemnification pursuant to Section 6.1. If the person, persons or
entity chosen to make a determination does not make such determination within 30
days after the later of the date (a) the Company receives Indemnitee's request
for indemnification pursuant to Section 6.1 or (b) on which an Independent
Counsel is selected pursuant to Section 6.3, if applicable (and all objections
to such person, if any, have been resolved), the requisite determination of
entitlement to indemnification will be deemed to have been made and Indemnitee
will be entitled to such indemnification, so long as (i) Indemnitee has
fulfilled his or her obligations pursuant to Section 6.8 and (ii) such
indemnification is not prohibited under applicable law; provided, however, that
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such 30 day period may be extended for a reasonable time, not to exceed an
additional 15 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 of or evaluating of documentation and/or
information relating thereto.
6.7 Timing of Payments. All payments of Expenses, including any Expense
Advance, and other amounts by the Company to the Indemnitee pursuant to this
Agreement will be made as soon as practicable after a written request or demand
therefor by Indemnitee is presented to the Company, but in no event later than
20 business days after (i) such demand is presented or (ii) such later date as a
determination of entitlement to indemnification is made in accordance with
Section 6.6, if applicable; provided, however, that, notwithstanding anything
herein to the contrary, an Expense Advance will be made within the time provided
in Section 4.3 hereof.
6.8 Cooperation. Indemnitee will cooperate with the person, persons or
entity making a 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
Expenses incurred by Indemnitee in so cooperating with the person, persons or
entity making such determination will be borne by the Company (irrespective of
the determination as to Indemnitee's entitlement to indemnification) and the
Company will indemnify Indemnitee therefor and will hold Indemnitee harmless
therefrom.
6.9 Time for Submission of Request. Indemnitee will be required to submit
any request for Indemnification pursuant to this Article 6 within a reasonable
time, not to exceed 2 years, after any judgment, order, settlement, dismissal,
arbitration award, conviction, acceptance of a plea of nolo contendere (or its
equivalent) or other full or partial final determination or disposition of the
Proceeding (with the latest date of the occurrence of any such event to be
considered the commencement of the 2 year period).
6.10 Report to Shareholders. To the extent required by applicable law, any
indemnification or advance of expenses to Indemnitee in accordance with this
Agreement shall be reported in writing to the shareholders with or before the
notice or waiver of notice of the next shareholders meeting or with or before
the next submission to shareholders of a consent to action without a meeting
and, in any case, within the 12 month period immediately following the
indemnification or advance.
ARTICLE 7
LIABILITY INSURANCE
7.1 Company Insurance. Subject to Section 7.3, the Company will obtain and
maintain a policy or policies of insurance with one or more reputable insurance
companies providing Indemnitee with coverage in such amount as will be
determined by the Board of Directors for Losses and Expenses paid or incurred by
Indemnitee as a result of acts or omissions of Indemnitee in his or her
Corporate Status, and to ensure the Company's performance of its indemnification
10
obligations under this Agreement; provided, however, in all policies of director
and officer liability insurance obtained by the Company, Indemnitee will be
named as an insured party in such manner as to provide Indemnitee with the same
rights and benefits as are afforded to the most favorably insured directors or
officers, as applicable, of the Company under such policies. Any reductions to
the amount of director and officer liability insurance coverage maintained by
the Company as of the date hereof will be subject to the approval of the Board
of Directors.
7.2 Notice to Insurers. If, at the time of receipt by the Company of a
notice from any source of a Proceeding as to which Indemnitee is a party or
participant, the Company will give prompt notice of such Proceeding to the
insurers in accordance with the procedures set forth in the respective policies,
and the Company will provide Indemnitee with a copy of such notice and copies of
all subsequent correspondence between the Company and such insurers related
thereto. The Company will thereafter take all necessary or desirable actions to
cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a
result of such Proceeding in accordance with the terms of such policies.
7.3 Insurance Not Required. Notwithstanding Section 7.1, to the extent
permitted by any other agreements to which the Company is a party, the Company
will have no obligation to obtain or maintain the insurance contemplated by
Section 7.1 if the Board of Directors determines in good faith that such
insurance is not reasonably available, if the premium costs for such insurance
are disproportionately high compared to the amount of coverage provided, or if
the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit. The Company will promptly notify Indemnitee of
any such determination not to provide insurance coverage.
ARTICLE 8
REMEDIES OF INDEMNITEE
8.1 Action by Indemnitee. In the event that (i) a determination is made
pursuant to Article 6 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) an Expense Advance is not timely made
pursuant to Section 4.3 of this Agreement, (iii) no determination of entitlement
to indemnification is made within the applicable time periods specified in
Section 6.6 or (iv) payment of indemnified amounts is not made within the
applicable time periods specified in Section 6.7, Indemnitee will be entitled to
an adjudication in an appropriate court of the State of Texas, or in any other
court of competent jurisdiction, of his or her entitlement to such
indemnification or payment of an Expense Advance. Alternatively, Indemnitee, at
Indemnitee's option, may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. The provisions of Texas law (without regard to its
conflict of laws rules) will apply to any such arbitration. The Company will not
oppose Indemnitee's right to seek any such adjudication or award in arbitration.
8.2 De Novo Review if Prior Adverse Determination. In the event that a
determination is made pursuant to Article 6 that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Article 8 will be conducted in all respects as a de novo trial or
11
arbitration, as applicable, on the merits and Indemnitee will not be prejudiced
by reason of that adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Article 8, Indemnitee will be presumed to
be entitled to indemnification under this Agreement, the Company will have the
burden of proving Indemnitee is not entitled to indemnification and the Company
may not refer to or introduce evidence of any determination pursuant to Article
6 adverse to Indemnitee for any purpose. If Indemnitee commences a judicial
proceeding or arbitration pursuant to this Article 8, Indemnitee will not be
required to reimburse the Company for any Expense Advance made pursuant to
Article 4 until a final determination is made with respect to Indemnitee's
entitlement to indemnification (as to which all rights of appeal have been
exhausted or lapsed).
8.3 Company Bound by Favorable Determination by Reviewing Party. If a
determination is made that Indemnitee is entitled to indemnification pursuant to
Article 6, the Company will be bound by such determination in any judicial
proceeding or arbitration commenced pursuant to this Article 8, absent a
misstatement by Indemnitee of a material fact or an omission of a material fact
necessary to make Indemnitee's statements in connection with the request for
indemnification not materially misleading or a prohibition of such
indemnification under law.
8.4 Company Bears Expenses if Indemnitee Seeks Adjudication. In the event
that Indemnitee, pursuant to this Article 8, seeks a judicial adjudication or
arbitration of his or her rights under, or to recover damages for breach of,
this Agreement, any other agreement for indemnification, the indemnification or
advancement of expenses provisions in the Articles or Bylaws, payment of
Expenses in advance or contribution hereunder or to recover under any director
and officer liability insurance policies maintained by the Company, the Company
will, to the fullest extent permitted by law, indemnify and hold harmless
Indemnitee against any and all Expenses which are paid or incurred by Indemnitee
in connection with such judicial adjudication or arbitration, regardless of
whether Indemnitee ultimately is determined to be entitled to such
indemnification, payment of Expenses in advance or contribution or insurance
recovery. In addition, if requested by Indemnitee, the Company will (within 5
business days after receipt by the Company of the written request therefor), pay
as an Expense Advance such Expenses, to the fullest extent permitted by law.
8.5 Company Bound by Provisions of this Agreement. The Company will be
precluded from asserting in any judicial or arbitration proceeding commenced
pursuant to this Article 8 that the procedures and presumptions and other
provisions of this Agreement are not valid, binding and enforceable and will
stipulate in any such judicial or arbitration proceeding that the Company is
bound by all the provisions of this Agreement.
ARTICLE 9
NON-EXCLUSIVITY, SUBROGATION; NO DUPLICATIVE PAYMENTS;
MORE FAVORABLE TERMS
9.1 Non-Exclusivity. The rights of indemnification and to receive Expense
Advances as provided by this Agreement will not be deemed exclusive of any other
rights to which Indemnitee may at any time be entitled under applicable law, the
Articles, the Bylaws, any agreement, a vote of shareholders, a resolution of the
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directors or otherwise. To the extent Indemnitee otherwise would have any
greater right to indemnification or payment of any advancement of Expenses under
any other provisions under applicable law, the Articles, Bylaws, any agreement,
vote of shareholders, a resolution of directors or otherwise, Indemnitee will be
entitled under this Agreement to such greater right. No amendment, alteration or
repeal of this Agreement or of any provision hereof limits or restricts any
right of Indemnitee under this Agreement in respect of any action taken or
omitted by such Indemnitee prior to such amendment, alteration or repeal. To the
extent that a change in the TBCA, whether by statute (including the Texas
Business Organizations Code) or judicial decision, permits greater
indemnification than would be afforded currently under the Articles, Bylaws and
this Agreement, it is the intent of the parties hereto that Indemnitee 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 will 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, will not prevent the concurrent assertion or employment
of any other right or remedy.
9.2 Subrogation. In the event of any payment by the Company under this
Agreement, the Company will be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee with respect thereto and Indemnitee will
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 (it being understood that all of Indemnitee's
reasonable Expenses related thereto will be borne by the Company).
9.3 No Duplicative Payments. The Company will not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable (or any Expense
for which advancement is provided) hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise. The Company's obligation to indemnify
or advance Expenses hereunder to Indemnitee in respect of Proceedings relating
to Indemnitee's service at the request of the Company as a director, officer,
employee, partner, member, manager, trustee, fiduciary or agent of any other
Enterprise will be reduced by any amount Indemnitee has actually received as
indemnification or advancement of Expenses from such other Enterprise.
9.4 More Favorable Terms. In the event the Company enters into an
indemnification agreement with another officer or director, as the case may be,
containing terms more favorable to the indemnitee thereof than the terms
contained herein (and absent special circumstances justifying such more
favorable terms), Indemnitee will be afforded the benefit of such more favorable
terms and such more favorable terms will be deemed incorporated by reference
herein as if set forth in full herein. As promptly as practicable following the
execution thereof, the Company will (a) send a copy of the agreement containing
more favorable terms to Indemnitee, and (b) prepare, execute and deliver to
Indemnitee an amendment to this Agreement containing such more favorable terms.
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ARTICLE 10
DEFENSE OF PROCEEDINGS
10.1 Company Assuming the Defense. Subject to Section 10.3 below, in the
event the Company is obligated to pay in advance the Expenses of any Proceeding
pursuant to Article 4, the Company will be entitled, by written notice to
Indemnitee, to assume the defense of such Proceeding, with counsel approved by
Indemnitee, which approval will not be unreasonably withheld. The Company will
identify the counsel it proposes to employ in connection with such defense as
part of the written notice sent to Indemnitee notifying Indemnitee of the
Company's election to assume such defense, and Indemnitee will be required,
within 10 business days following Indemnitee's receipt of such notice, to inform
the Company of its approval of such counsel or, if it has objections, the
reasons therefor. If such objections cannot be resolved by the parties, the
Company will identify alternative counsel, which counsel will also be subject to
approval by Indemnitee in accordance with the procedure described in the prior
sentence.
10.2 Right of Indemnitee to Employ Counsel. Following approval of counsel
by Indemnitee pursuant to Section 10.1 and retention of such counsel by the
Company, the Company will not be liable to Indemnitee under this Agreement for
any fees and expenses of counsel subsequently incurred by Indemnitee with
respect to the same Proceeding; provided, however, that (a) Indemnitee has the
right to employ counsel in any such Proceeding at Indemnitee's expense and (b)
the Company will be required to pay the fees and expenses of Indemnitee's
counsel if (i) the employment of counsel by Indemnitee has been previously
authorized by the Company, (ii) Indemnitee reasonably concludes that there is an
actual or potential conflict between the Company (or any other person or persons
included in a joint defense) and Indemnitee in the conduct of such defense or
representation by such counsel retained by the Company or (iii) the Company does
not continue to retain the counsel approved by Indemnitee.
10.3 Company Not Entitled to Assume Defense. Notwithstanding Section 10.1,
the Company will not be entitled to assume the defense of any Proceeding brought
by or on behalf of the Company or any Proceeding as to which Indemnitee has
reasonably made the conclusion provided for in Section 10.2(b)(ii).
ARTICLE 11
SETTLEMENT
11.1 Company's Prior Consent Required. Notwithstanding anything in this
Agreement to the contrary, the Company will have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
Proceeding effected without the Company's prior written consent.
11.2 When Indemnitee's Prior Consent Required. The Company will 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 imposed on
Indemnitee or a Loss for which Indemnitee is not wholly indemnified hereunder or
(ii) with respect to any Proceeding with respect to which Indemnitee may be or
is made a party or a participant or may be or is otherwise entitled to seek
14
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 will be in form and substance reasonably satisfactory to
Indemnitee. Neither the Company nor Indemnitee will unreasonably withhold its
consent to any proposed settlement; provided, however, that Indemnitee may
withhold consent to any settlement that does not provide a full and
unconditional release of Indemnitee from all liability in respect of such
Proceeding.
ARTICLE 12
DURATION OF AGREEMENT
12.1 Duration of Agreement. This Agreement will continue until and, except
for Article 13, terminate upon the latest of (a) the statute of limitations
applicable to any claim that could be asserted against an Indemnitee with
respect to which Indemnitee may be entitled to indemnification and/or an Expense
Advance under this Agreement, (b) 10 years after the date that Indemnitee has
ceased to serve as a director or officer of the Company or as a director,
officer, employee, partner, member, manager, fiduciary or agent of any other
Enterprise which Indemnitee served at the request of the Company, or (c) if, at
the later of the dates referred to in (a) and (b) above, there is pending a
Proceeding in respect of which Indemnitee is granted rights of indemnification
or the right to an Expense Advance under this Agreement or a Proceeding
commenced by Indemnitee pursuant to Article 8 of this Agreement, one year after
the final termination of such Proceeding, including any and all appeals.
ARTICLE 13
MISCELLANEOUS
13.1 Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties in respect of the subject matter hereof and
supersedes all prior understandings, agreements or representations by or among
the parties, written or oral, to the extent they relate in any way to the
subject matter hereof; provided, however, it is agreed that the provisions
contained in this Agreement are a supplement to, and not a substitute for, any
provisions regarding the same subject matter contained in the Articles, the
Bylaws and any employment or similar agreement between the parties.
13.2 Assignment; Binding Effect; Third Party Beneficiaries. No party may
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the other party; provided,
however, that the Company may assign all (but not less than all) of its rights,
obligations and interests hereunder to any direct or indirect successor to all
or substantially all of the business or assets of the Company by purchase,
merger, consolidation or otherwise and will cause such successor to be bound by
and expressly assume the terms and provisions hereof; provided, further, that if
the Company changes it domicile from Texas to Delaware pursuant to a merger of
the Company into a wholly owned subsidiary or otherwise, the Company or its
successor, as the case may be, shall enter into an agreement with Indemnitee
substantially similar to this Agreement but with such changes as may be
necessary to conform to Delaware law. All of the terms, agreements, covenants,
representations, warranties and conditions of this Agreement are binding upon,
and inure to the benefit of and are enforceable by, the parties and their
respective successors, permitted assigns, heirs, executors and personal and
15
legal representatives. There are no third party beneficiaries having rights
under or with respect to this Agreement.
13.3 Notices. All notices, requests and other communications provided for
or permitted to be given under this Agreement must be in writing and be given by
personal delivery, by certified or registered United States mail (postage
prepaid, return receipt requested), by a nationally recognized overnight
delivery service for next day delivery, or by facsimile transmission, as follows
(or to such other address as any party may give in a notice given in accordance
with the provisions hereof):
If to Company:
GulfWest Energy Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: ____________
Facsimile: (000) 000-0000
If to Indemnitee:
-------------------------
-------------------------
Attention:
Facsimile:
All notices, requests or other communications will be effective and deemed given
only as follows: (i) if given by personal delivery, upon such personal delivery,
(ii) if sent by certified or registered mail, on the fifth business day after
being deposited in the United States mail, (iii) if sent for next day delivery
by overnight delivery service, on the date of delivery as confirmed by written
confirmation of delivery, (iv) if sent by facsimile, upon the transmitter's
confirmation of receipt of such facsimile transmission, except that if such
confirmation is received after 5:00 p.m. (in the recipient's time zone) on a
business day, or is received on a day that is not a business day, then such
notice, request or communication will not be deemed effective or given until the
next succeeding business day. Notices, requests and other communications sent in
any other manner, including by electronic mail, will not be effective.
13.4 Specific Performance; Remedies. Each party acknowledges and agrees
that the other party would be damaged irreparably if any provision of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. Accordingly, the parties will be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and its provisions in any action or
proceeding instituted in any state or federal court sitting in Xxxxxx County,
Texas having jurisdiction over the parties and the matter, in addition to any
other remedy to which they may be entitled, at law or in equity. Except as
expressly provided herein, the rights, obligations and remedies created by this
Agreement are cumulative and in addition to any other rights, obligations or
remedies otherwise available at law or in equity. Except as expressly provided
herein, nothing herein will be considered an election of remedies.
16
13.5 Submission to Jurisdiction. Any action, suit or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement may only be brought in a district court of the State of
Texas sitting in Xxxxxx County, which will be the exclusive and only proper
forum for adjudicating such action, suit or proceeding, and each party consents
to the exclusive jurisdiction and venue of such court (and of the appropriate
appellate courts therefrom) in any such action, suit or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such action, suit
or proceeding in any such court or that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such action, suit or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.
13.6 Headings. The article and section headings contained in this Agreement
are inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
13.7 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to any
choice of law principles.
13.8 Amendment. This Agreement may not be amended or modified except by a
writing signed by all of the parties.
13.9 Extensions; Waivers. Any party may, for itself only, (i) extend the
time for the performance of any of the obligations of any other party under this
Agreement, (ii) waive any inaccuracies in the representations and warranties of
any other party contained herein or in any document delivered pursuant hereto
and (iii) waive compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any such extension or waiver will be
valid only if set forth in a writing signed by the party to be bound thereby. No
waiver by any party of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, may be deemed to extend to any
prior or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising because of any prior or
subsequent such occurrence. Neither the failure nor any delay on the part of any
party to exercise any right or remedy under this Agreement will operate as a
waiver thereof, nor will any single or partial exercise of any right or remedy
preclude any other or further exercise of the same or of any other right or
remedy
13.10 Severability. The provisions of this Agreement will be deemed
severable and the invalidity or unenforceability of any provision will not
affect the validity or enforceability of the other provisions hereof; provided
that if any provision of this Agreement, as applied to any party or to any
circumstance, is judicially determined not to be enforceable in accordance with
its terms, the parties agree that the court judicially making such determination
may modify the provision in a manner consistent with its objectives such that it
is enforceable, and/or to delete specific words or phrases, and in its modified
form, such provision will then be enforceable and will be enforced.
17
13.11 Counterparts; Effectiveness. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument. This Agreement will become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, which delivery may be made by exchange of
copies of the signature page by facsimile transmission. For purposes of
determining whether a party has signed this Agreement or any document
contemplated hereby or any amendment or waiver hereof, only a handwritten
signature on a paper document or a facsimile transmission of a handwritten
original signature will constitute a signature, notwithstanding any law relating
to or enabling the creation, execution or delivery of any contract or signature
by electronic means.
13.12 Construction. This Agreement has been freely and fairly negotiated
among the parties. If an ambiguity or question of intent or interpretation
arises, this Agreement will be construed as if drafted jointly by the parties
and no presumption or burden of proof will arise favoring or disfavoring any
party because of the authorship of any provision of this Agreement. Any
reference to any law will be deemed also to refer to such law as amended and all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The words "include," "includes," and "including" will be deemed to be
followed by "without limitation." Pronouns in masculine, feminine, and neuter
genders will be construed to include any other gender, and words in the singular
form will be construed to include the plural and vice versa, unless the context
otherwise requires. The words "this Agreement," "herein," "hereof," "hereby,"
"hereunder," and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The parties
intend that each representation, warranty, and covenant contained herein will
have independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to the same subject
matter (regardless of the relative levels of specificity) which the party has
not breached will not detract from or mitigate the fact that the party is in
breach of the first representation, warranty, or covenant. Time is of the
essence in the performance of this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GULFWEST ENERGY INC.
By:
-----------------------------------------
Name:
Title:
INDEMNITEE
Signature
------------------------------
Print Name
Signature Page to Indemnification Agreement
