EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made as of the
__________, 200__, between Gateway Energy Corporation, a Delaware corporation
(the "Company"), and __________________________ (the "Indemnitee").
WHEREAS, it is important to the Company to attract and retain as
directors and officers the most capable persons available; and
WHEREAS, the Bylaws of the Company (the "Bylaws") provide for the
indemnification of the directors, officers, employees and agents of the Company
as authorized by Delaware General Corporation Law Section 145 (the "State
Statute"); and
WHEREAS, such Bylaws and the State Statute specifically provide that
they are not exclusive, and thereby contemplate that contracts may be entered
into between the Company and its directors and officers with respect to
indemnification of such directors and officers; and
WHEREAS, in accordance with the authorization provided by the State
Statute and the Bylaws, the Company has purchased and presently maintains a
policy or policies of Directors and Officers Liability Insurance ("D&O
Insurance"), covering certain liabilities which may be incurred by its directors
and officers in the performance of their services for the Company; and
WHEREAS, recent developments with respect to the terms and
availability of D&O Insurance and with respect to the application, amendment and
enforcement of statutory and bylaw indemnification provisions generally have
raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers thereby; and
WHEREAS, in order to resolve such questions and thereby induce the
Indemnitee to agree to serve or continue to serve as a director and/or officer
of the Company, the Company has determined and agreed to enter into this
contract with the Indemnitee;
NOW, THEREFORE, in consideration of the premises and of Indemnitee's
agreeing to serve or continuing to serve as a director and/or officer of the
Company, the parties hereto agree as follows:
1. Indemnity. The Company hereby agrees to hold harmless and indemnify
the Indemnitee to the full extent permitted by law:
(a) Against any and all expenses (including attorneys' fees),
judgments, fines, penalties and amounts paid in settlement (including,
without limitation, all interest, assessments and other charges paid
or payable in connection therewith) actually and reasonably incurred
by the Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding, whether brought by or in the
right of the Company or otherwise and whether civil, criminal,
administrative or investigative, to which the Indemnitee is, was or at
any time becomes a party, or is threatened to be made a party, by
reason of the fact that the Indemnitee is, was or at any time becomes
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, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other
entity or enterprise, or by reason of anything done or not done by
Indemnitee in any such capacity, whether prior to or subsequent to the
date of this Agreement; and
(b) Against any and all expenses (including attorneys' fees)
actually and reasonably incurred by the Indemnitee in serving or
preparing to serve as a witness or other participant in any
threatened, pending or completed action, suit or proceeding, whether
brought by or in the right of the Company or otherwise and whether
civil, criminal, administrative or investigative, if Indemnitee is
such a witness or participant by reason of the fact that the
Indemnitee is, was or at any time becomes 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, agent or
fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other entity or enterprise.
2. Specific Limitations on Indemnity. Indemnitee shall not be entitled
to indemnification under this Agreement:
(a) In respect to remuneration paid to or advantage gained
by the Indemnitee if it shall be determined by a final judgment or
other final adjudication that the Indemnitee was not legally entitled
to such remuneration or advantage;
(b) On account of the Indemnitee's conduct which is
determined by a final judgment or other final adjudication to have
been knowingly fraudulent, deliberately dishonest or willful
misconduct;
(c) Prior to a Change in Control (as defined in Section
4(e)), in respect of any action, suit or proceeding initiated by the
Indemnitee against the Company or any director or officer of the
Company unless the Company has joined in or consented to the
initiation of such action, suit or proceeding, except (i) as set forth
in Section 12(b) hereof, (ii) in respect of any counterclaims made
against Indemnitee in any such action, suit or proceeding, and (iii)
to the extent Indemnitee seeks contribution or apportionment of an
award or settlement against Indemnitee and against the Company and/or
any other director or officer of the Company;
(d) On account of any matter determined by a final judgment
or other final adjudication to be a violation by the Indemnitee of the
provisions of Section 16 of the Securities Exchange Act of 1934, as
amended (the "Act"), or the rules and regulations promulgated
thereunder, as amended from time to time; or
(e) With respect to any matter if it shall be determined by
a final judgment or other final adjudication that such indemnification
is not lawful.
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3. Advance of Expenses and Payment of Indemnification. Upon the
written request of Indemnitee, expenses that are subject to indemnification
under this Agreement shall be advanced by the Company within five (5) business
days of receipt of such request. Subject to Section 4(a), indemnification shall
be made under this Agreement no later than sixty (60) days after receipt by the
Company of the written request of Indemnitee, which written request shall
identify the judgments, fines, penalties and amounts paid in settlement that are
subject to indemnification under this Agreement and for which indemnification is
requested. Written request shall be deemed received three days after the date
postmarked if sent by prepaid mail properly addressed to the Company at the
address set forth in Section 11(a) hereof.
4. Determination of Indemnification.
(a) Notwithstanding any other provision of this Agreement
(i) the obligations of the Company under Section 1 shall be subject to
the condition that the Reviewing Party shall have determined (in a
written opinion, in any case in which the Independent Legal Counsel
referred to in Section 4(c) is involved) that Indemnitee would be
permitted to be indemnified under this Agreement, (ii) the obligation
of the Company to make an expense advance pursuant to Section 3 shall
be subject to the condition that, if, when and to the extent that it
is finally determined that Indemnitee would not be permitted to be
indemnified for such expenses under this Agreement, the Company shall
be entitled to be reimbursed by Indemnitee (who hereby agrees and
undertakes to reimburse the Company) for all such amounts theretofore
paid, and (iii) the obligation of the Company to make an expense
advance pursuant to Section 3 shall be made without regard to the
Indemnitee's ability to repay the amount advanced and without regard
to the Indemnitee's ultimate entitlement to indemnification under this
Agreement or otherwise. Indemnitee's obligation to reimburse the
Company for expense advances shall be unsecured and no interest shall
be charged thereon.
(b) The Reviewing Party shall be selected by the Board of
Directors, provided, however, that if there has been a Change in
Control (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) the Reviewing Party shall
be the Independent Legal Counsel referred to in Section 4(c). If there
has been no determination by the Reviewing Party within the sixty (60)
day period referred to in Section 3, the Reviewing Party shall be
deemed to have made a determination that it is permissible to
indemnify Indemnitee under this Agreement.
(c) 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 Independent Legal
Counsel shall be selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld) and such
Independent Legal Counsel shall determine whether the director or
officer is entitled to indemnification for expenses, judgments, fines,
penalties and amounts paid in settlement (including, without
limitation, all interest, assessments and other charges paid or
payable in connection therewith) under this Agreement or any other
agreement or the Certificate of Incorporation or Bylaws of the Company
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now or hereafter in effect relating to indemnification. Such
Independent Legal Counsel shall render its written opinion to the
Company and Indemnitee as to whether and to what extent the Indemnitee
will be permitted to be indemnified for expenses, judgments, fines,
penalties and amounts paid in settlement (including, without
limitation, all interest, assessments and other charges paid or
payable in connection therewith). The Company agrees to pay the
reasonable fees of the Independent Legal Counsel and to indemnify
fully such Independent Legal Counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement or the engagement of Independent
Legal Counsel pursuant hereto.
(d) If a determination denying Indemnitee's claim is made by
a Reviewing Party (other than Independent Legal Counsel), notice of
such determination shall disclose with particularity the reasons for
such determination. If a determination denying Indemnitee's claim is
made by Independent Legal Counsel, the notice shall include a copy of
the related legal opinion of such counsel.
(e) "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 Act, 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 the Act), directly or indirectly, of securities of the
Company representing 15% or more of the total voting power represented
by the Company's then outstanding Voting Securities, 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 85% 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 (in one transaction or a series of
transactions) of all or substantially all of the assets of the
Company.
(f) "Reviewing Party" shall mean any appropriate person or
body consisting of a member or members of the Board of Directors of
the Company or any other person or body appointed by the Board who is
not a party to the particular action, suit or proceeding with respect
to which Indemnitee is seeking indemnification, or Independent Legal
Counsel.
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(g) "Independent Legal Counsel" shall mean an attorney,
selected in accordance with the provisions of Section 4(c), who shall
not have otherwise performed services for the Company or Indemnitee
within the last five years (other than in connection with seeking
indemnification under this Agreement). Independent Legal Counsel shall
not be 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, nor shall
Independent Legal Counsel be any person who has been sanctioned or
censured for ethical violations of applicable standards of
professional conduct.
(h) "Voting Securities" shall mean any securities of the
Company which vote generally in the election of directors.
5. Partial Indemnity. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines, penalties and amounts paid in
settlement (including, without limitation, all interest, assessments and other
charges paid or payable in connection therewith) incurred by the Indemnitee, but
not for the total amount thereof, the Company shall indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any or all actions, suits or
proceedings relating in whole or in part to an event subject to indemnification
hereunder or in defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against expenses incurred in
connection with such action, suit, proceeding, issue or matter, as the case may
be.
6. Non-exclusivity. The rights of the Indemnitee under this Agreement
shall be in addition to any other rights Indemnitee may have under the
Certificate of Incorporation, the Bylaws, any other agreement of the Company,
the Delaware General Corporation Law ("DGCL"), D&O Insurance or otherwise. To
the extent that any change in the DGCL (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Certificate of Incorporation and the Bylaws of the Company and this
Agreement, it is the intent of the parties hereto that Indemnitee shall by this
Agreement be entitled to the greater benefits so afforded by such change.
7. Liability Insurance. To the extent the Company maintains D&O
Insurance, the Company shall maintain coverage for Indemnitee under such policy
or policies, in accordance with its or their terms, to the maximum extent of the
coverage provided under such policy or policies in effect for any other director
or officer of the Company.
8. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any claim against the
Indemnitee to the extent the Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder or to the extent that Indemnitee is entitled to be
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indemnified directly by any insurance company under the individual directors'
and officers' liability provisions of any D&O Insurance maintained by the
Company.
9. No Presumption. For purposes of this Agreement, the termination of
any claim, actions, suit or proceeding by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not of itself 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 applicable law.
10. Continuation of Indemnity. All agreements and obligations of the
Company contained herein shall continue during the period the Indemnitee is a
director, officer, employee, agent or fiduciary of the Company, or is serving at
the request of the Company as a director, officer, employee, agent or fiduciary
of another corporation, partnership, joint venture, trust or other entity or
enterprise, and shall continue thereafter so long as the Indemnitee shall be
subject to any possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal or investigative, by reason of the fact
that the Indemnitee was a director or officer of the Company or serving in any
other capacity referred to herein.
11. Notification of Proceedings; Consent to Settlements; Defense.
(a) Promptly after receipt by the Indemnitee of notice of
the commencement of any action, suit or proceeding, the Indemnitee
shall, if a claim in respect thereof is to be made against the Company
under this Agreement, notify the Company of the commencement thereof.
Notice shall be in writing and shall be addressed as follows:
Gateway Energy Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Secretary
Such notice shall be deemed received if sent by
prepaid mail properly addressed. Indemnitee and the Company shall
cooperate fully with each other in the defense of any such action, suit
or proceeding and each shall provide the other with such information as
the other may reasonably require. The Company shall not be liable to
indemnify the Indemnitee under this Agreement for any amounts paid in
settlement of any action, suit or proceeding effected without its prior
written consent (which consent shall not be unreasonably withheld).
(b) The Company shall be entitled to participate in the
Proceeding at its own expense.
(c) Except as otherwise provided below, the Company may, at
its option, assume the defense of such action, suit or proceeding with
legal counsel reasonably satisfactory to the Indemnitee. After notice
from the Company to the Indemnitee of its election to assume the
defense of an action, suit or proceeding, the Company will not be
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liable to the Indemnitee for expenses incurred by the Indemnitee in
connection with such action, suit or proceeding under this Agreement,
including Section 3 hereof, other than Indemnitee's reasonable costs
of investigation or participation in such action, suit or proceeding
(including, without limitation, travel expenses) and except as
provided below. The Indemnitee shall have the right to employ
Indemnitee's own counsel in any such action, suit or proceeding, but
the fees and expenses of such counsel incurred after notice from the
Company of its assumption of the defense of such action, suit or
proceeding shall be at the expense of the Indemnitee, unless (i) the
employment of counsel by the Indemnitee has been authorized by the
Company, (ii) the Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and the
Indemnitee in the conduct of the defense of such action, suit or
proceeding, or (iii) the Company shall not in fact have employed
counsel to assume the defense of such action, suit or proceeding, in
each of which cases the fees and expenses of the Indemnitee's counsel
shall be advanced by the Company as provided in Section 3 hereof. The
Company shall not be entitled to assume the defense of any such
action, suit or proceeding brought by or on behalf of the Company.
(d) If two or more persons, including the Indemnitee, may be
entitled to indemnification from the Company as parties to any action,
suit or proceeding, the Company may require the Indemnitee to use the
same legal counsel as the other parties. The Indemnitee shall have the
right to use separate legal counsel in such action, suit or
proceeding, but the Company shall not be liable to the Indemnitee
under this Agreement, including Section 3 hereof, for the fees and
expenses of separate legal counsel incurred after notice from the
Company of the requirement to use the same legal counsel as the other
parties, unless the Indemnitee reasonably concludes that there may be
a conflict of interest between the Indemnitee and any of the other
parties required by the Company to be represented by the same legal
counsel.
(e) The Indemnitee shall permit the Company to settle any
action, suit or proceeding that the Company assumes the defense of,
except that the Company shall not, without the Indemnitee's written
consent, settle any action, suit or proceeding unless such settlement
includes a provision whereby the parties to the settlement
unconditionally release Indemnitee from all liabilities, damages,
fines, penalties, costs and expenses in respect of claims by reason of
the settlement or release of the parties in such action, suit or
proceeding.
12. 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 the Indemnitee to agree to serve or to
continue to serve as a director and/or officer of the Company and
acknowledges that the Indemnitee is relying upon this Agreement in
agreeing to serve or continuing to serve in such capacity.
(b) The right to indemnification provided by this Agreement
shall be enforceable by Indemnitee in any court in the State of
Delaware having subject matter jurisdiction thereof and in which venue
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is proper. The Indemnitee shall have the right to commence litigation
in any such court challenging any determination by the Reviewing Party
or any aspect thereof, or the legal or factual bases therefor. The
Company shall reimburse Indemnitee for any and all reasonable expenses
(including attorneys' fees) incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee to enforce rights
or to collect moneys due under this Agreement, the Certificate of
Incorporation or the Bylaws of the Company or any other agreement with
the Company nor or hereafter in effect relating to indemnification, or
any D&O Insurance purchased and maintained by the Company, regardless
of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance coverage, as the
case may be, unless the court determines that the claim or action is
frivolous or that assertions made therein were made with no reasonable
basis.
(c) In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the Company to
establish that Indemnitee is not so entitled.
13. Separability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
14. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of laws thereof.
(b) This Agreement shall be binding upon the Indemnitee and
upon the Company, its successors and assigns (including any transferee
of all or substantially all of the assets of the Company and any
successor by merger or operation of law), and shall inure to the
benefit of the Indemnitee, his or her heirs, personal representatives
and assigns and to the benefit of the Company, its successors and
assigns. The Company shall require and cause any successor to all or
substantially all of its assets, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no succession had taken
place.
(c) No amendment, modification, termination or cancellation
of this Agreement shall be effective unless in writing signed by both
parties hereto. No waiver of any provision of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof, and
no such waiver shall constitute a continuing waiver.
15. 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 such Indemnitee, 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.
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16. Change in Other Rights. The Company will not adopt any amendment
to the Certificate of Incorporation or Bylaws of the Company the effect of which
would be to deny, diminish or encumber the Indemnitee's rights to
indemnification, advancement of expenses, exculpation or maintenance of the D &
O Insurance hereunder, under such other documents or under applicable law, as
applied to any act or failure to act occurring in whole or in part prior to the
date upon which any such amendment was approved by the Board of Directors or the
stockholders, as the case may be. Notwithstanding the foregoing, if the Company
adopts any amendment to the Certificate of Incorporation or Bylaws the effect of
which is to so deny, diminish or encumber such rights, such amendment will apply
only to acts or failures to act occurring entirely after the effective date
thereof.
17. Savings Clause. If this Agreement or any provision hereof is
invalidated on any ground by any court of competent jurisdiction, the Company
shall nevertheless indemnify the Indemnitee as to any expenses, judgments,
fines, penalties and amounts paid in settlement actually and reasonably incurred
by the Indemnitee in connection with any action, suit or proceeding to the
fullest extent permitted by any applicable provision of this Agreement that has
not been invalidated and to the fullest extent permitted by Delaware law.
18. Deposit of Funds in Trust. In the event that the Company decides
to voluntarily dissolve or to file a voluntary petition for relief under
applicable bankruptcy, moratorium or similar laws, then not later than ten (10)
days prior to such dissolution or filing, the Company shall deposit in trust for
the exclusive benefit of Indemnitee a cash amount equal to all amounts
previously authorized to be paid to Indemnitee hereunder, such amounts to be
used to discharge the Company's obligations to Indemnitee hereunder. Any amount
in such trust not required for such purpose shall be returned to the Company.
19. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GATEWAY ENERGY CORPORATION
By: /s/
--------------------------------
Xxxxxx Xxxxxx,
President and
Chief Executive Officer
Indemnitee:
-----------------------------------
Name:
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