EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of June 1, 1997 is between Xxxxxxxxxxx
Enterra, Inc., a Delaware corporation (the "Company"), and Xxxxxx Xxxxx, Jr.
(the "Officer"), an officer of the Company;
WHEREAS, in recognition of Officer's need for substantial protection
against personal liability in order to enhance Officer's continued service
to the Company in an effective manner and of Officer's reliance on the
provisions of the Company's By-Laws requiring indemnification of the
Officer under certain circumstances, and in part to provide Officer with
specific contractual assurance that the protection promised by such
By-Laws will be available to Officer (regardless of, among other things,
any amendment to or revocation of such By-Laws, any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), the Company wishes to provide in
this Agreement for the indemnification of, and the advancing of expenses
to, Officer to the fullest extent (whether partial or complete) permitted
by law and as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Officer under the Company's
directors' and officers' liability insurance policies.
NOW THEREFORE, in consideration of the premises and of Officer
agreeing to serve or continuing to serve the Company directly or, at its
request, with another enterprise, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. BASIC INDEMNIFICATION ARRANGEMENT
(a) In the event Officer was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (as defined hereinafter) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined hereinafter), the Company shall indemnify Officer to the
fullest extent permitted by law as soon as practicable, but in any
event no later than 30 days after written demand is presented to the
Company, against any and all Expenses (as defined hereinafter),
judgments, fines, penalties and amounts paid in settlement of such
Claim. If so requested by Officer, the Company shall advance (within
ten business days after such written request) any and all Expenses
to Officer (an "Expense Advance"). Notwithstanding anything in this
Agreement to the contrary, and except as provided in Section 3
hereof, prior to a Change in Control (as defined hereinafter),
Officer shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Officer against
the Company or any director or officer of the Company, unless the
Company has joined in or consented to the initiation of such Claim.
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(b) Notwithstanding the foregoing, (I) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined hereinafter) shall not have determined
(in a written opinion, in any case in which the special independent
counsel referred to in Section 2 hereof is involved) that Officer
would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance
pursuant to Section 1(a) shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that
Officer would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by Officer (who
hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Officer has commenced
legal proceedings in a court of competent jurisdiction to secure a
determination that Officer should be indemnified under applicable
law, any determination made by the Reviewing Party that Officer
would not be permitted to be indemnified under applicable law shall
not be binding and Officer shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination
is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). If there has not been a
Change in Control, the Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in Control,
the Reviewing Party shall be the special independent counsel
referred to in Section 2 hereof. If there has been no determination
by the Reviewing Party or if the Reviewing Party determines that
Officer substantively would not be permitted to be indemnified in
whole or in part under applicable law, Officer shall have the right
to commence litigation in any court in the states of Texas or
Delaware having subject matter jurisdiction thereof and in which
venue is proper, seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of
process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the
Company and Officer.
2. CHANGE IN CONTROL. The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control), then
with respect to all matters thereafter arising concerning the rights
of Officer to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company By-Law now or hereafter
in effect relating to Claims for Indemnifiable Events, the Company
shall seek legal advice only from special independent counsel
selected by Officer and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company or Officer within the last five
years (other than in connection with such matters). Such counsel,
among other things, shall render its written opinion to the Company
and Officer as to whether and to what extent Officer would be
permitted to be indemnified under applicable law. The
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Company agrees to pay the reasonable fees of the special,
independent counsel referred to above and to fully indemnify such
counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall indemnify
Officer against any and all expenses (including attorneys' fees)
and, if requested by Officer, shall (within ten business days after
such written request) advance such expenses to Officer, which are
incurred by Officer in connection with any claim asserted against or
action brought by Officer for (I) indemnification or advance payment
of Expenses by the Company under this Agreement or any other
agreement or Company By-Law now or hereafter in effect relating to
Claims for Indemnifiable Events and/or (ii) recovery under any
directors' and officers' liability insurance policies maintained by
the Company, regardless of whether Officer ultimately is determined
to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
4. PARTIAL INDEMNITY, ETC. If Officer is entitled under any provision
of this Agreement to indemnification by the Company of some or a
portion of the Expenses, judgments, fines, penalties and amounts
paid in settlement of a Claim but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Officer for
the portion thereof to which Officer is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Officer has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Officer shall be indemnified
against all Expenses incurred in connection therewith. In connection
with any determination by the Reviewing Party or otherwise as to
whether Officer is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that Officer is not so
entitled.
5. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement
(whether with or without court approval), conviction, or plea of
nolo contendere, or its equivalent, shall not create a presumption
that Officer 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 applicable law.
6. NON-EXCLUSIVITY, ETC. The rights of Officer hereunder shall be in
addition to any other rights Officer may have under the Company's
By-Laws or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) or the Company's By-Laws
permits greater indemnification by agreement than would be afforded
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currently under the Company's By-Laws and this Agreement, it is the
intent of the parties hereto that Officer shall enjoy by this
Agreement the greater benefits so afforded by such change.
7. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers'
liability insurance, Officer 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 Company officer.
8. CERTAIN DEFINITIONS.
(a) CHANGE IN CONTROL: shall be deemed to have occurred if (I) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee
or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
20% or more of the total voting power represented by the Company's
then outstanding Voting Securities (as defined hereinafter), or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of
the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or
by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or the stockholders
of the Company approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation whether conducted by the
Company or any other party, whether civil, criminal, administrative
or investigative.
(c) EXPENSES: include attorneys' fees and all other costs, expenses and
obligations paid or incurred in connection with investigating,
defending, being a witness in or
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participating in (including on appeal), or preparing to defend, be a
witness in or participate in any Claim relating to any Indemnifiable
Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that Officer is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or
fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of
anything done or not done by Officer in any such capacity.
(e) REVIEWING PARTY: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other
person or body appointed by the Board (including the special
independent counsel referred to in Section 2) who is not a party to
the particular Claim for which Officer is seeking indemnification.
(f) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Officer, who shall execute all papers
required and shall do everything that may be necessary to secure
such rights, including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any claim made
against Officer to the extent Officer has otherwise actually
received payment (under any insurance policy, By-Law or otherwise)
of the amounts otherwise indemnifiable hereunder.
12. BINDING EFFECT, ETC. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Officer
continues to serve as a director or officer (or in one of the
capacities enumerated in Section 8(d) hereof) of the Company or of
any other enterprise at the Company's request.
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13. SEVERABILITY. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
14. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state
without giving effect to the principles of conflicts of laws.
XXXXXXXXXXX ENTERRA, INC.
By:_____________________
_____________________
Xxxxxx Xxxxx, Jr.
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