EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
This AGREEMENT, effective as of January 5, 1998 is between Xxxxxxxxxxx
Enterra, Inc., a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxx
(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.
(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
Company agrees to
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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 currently under
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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.
Executed as of January 5, 1998.
XXXXXXXXXXX ENTERRA, INC.
By:/s/
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Name: Xxxxxx X. Xxxxx, Xx.
Title:President and Chief Executive Officer
/s/
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Xxxxxxx X. Xxxxxxx
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