EXHIBIT 10.XX
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made and delivered
this 17th day of December, 2004, by El Paso Corporation (the "Company"), to and
for the benefit of Xxxxxxx X. Xxxxxx ("Xxxxxx").
RECITALS
WHEREAS, the Company executed an Indemnification Agreement dated
September 2, 2003, for the benefit of Xxxxxx upon Xxxxxx'x election to the
Company's Board of Directors ("Board") and it is the Company's intent that this
Indemnification Agreement shall replace the Indemnification Agreement dated
September 2, 2003. Notwithstanding the foregoing, to the extent any claims for
indemnification or advancement of expenses existed under his prior agreement,
such claims shall be governed by the terms of that agreement.
WHEREAS, in order to induce Xxxxxx to continue as a member of the
Company's Board and as an officer of the Company ("Officer"), the Company is
executing and delivering to Xxxxxx this Indemnification Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby agrees as
follows:
SECTION 1. RIGHT TO INDEMNIFICATION
If Xxxxxx is made a party or is threatened to be made a party to or is
involved (including, without limitation, as a witness) in any actual or
threatened action, suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter a "proceeding"), by reason of the fact that he is
or was a Director or Officer of the Company (or of any subsidiary of the
Company) or is or was serving at the request of the Company or the Board of
Directors, including service with respect to any employee benefit plan or any
subsidiary of the Company, whether the basis of such proceeding is alleged
action in an official capacity as a Director or Officer or in any other capacity
while serving as a Director or Officer, he shall be indemnified and held
harmless by the Company to the full extent permitted by the General Corporation
Law of the State of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than said law
permitted the Company to provide prior to such amendment), or by other
applicable law as then in effect, against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts to be paid in settlement) actually and reasonably incurred or
suffered by him in connection therewith and such indemnification shall continue
after Xxxxxx has ceased to be a Director or Officer and shall inure to the
benefit of Xxxxxx'x heirs, executors and administrators; provided, however, that
except as provided in Section 2 of this Agreement with respect to proceedings
seeking to enforce rights to indemnification or to advancement of expenses, the
Company shall be required to indemnify Xxxxxx in connection with a proceeding
(or part thereof) initiated by Xxxxxx only if such proceeding (or part thereof)
was authorized by the Board. The right to indemnification conferred in this
Agreement shall include the right to be paid by the corporation the reasonable
expenses (including attorneys' fees) incurred in defending any such proceeding
in advance of its final disposition (hereinafter an "advancement of expenses");
further provided, however, that, if the General Corporation Law of the State of
Delaware requires, an advancement of expenses incurred by Xxxxxx in his capacity
as a Director or Officer (and not in any other capacity in which service was or
is rendered by Xxxxxx while a Director or Officer, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Company of an undertaking, if permitted by Federal Law, by or on
behalf of Xxxxxx, to repay all amounts so advanced if it shall ultimately be
determined that he is not entitled to be indemnified under this Agreement, or
otherwise, and provided further that except as provided in Section 2 of this
Agreement with respect to proceedings seeking to enforce rights to
indemnification or an advancement of expenses, the Company shall be required to
advance expenses to Xxxxxx in connection with a proceeding initiated by him only
if such proceeding was authorized by the Board.
SECTION 2. RIGHT TO BRING SUIT
If a claim under Section 1 of this Agreement is not paid in full by the
Company (following the final disposition of the proceeding) within sixty (60)
days after a written claim has been received by the Company, except in the case
of a claim for an advancement of expenses, in which case final disposition of
the proceeding is not required and the applicable period shall be twenty (20)
days, Xxxxxx may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim and, to the extent successful in whole or
in material part, Xxxxxx shall be entitled to be paid the expense of prosecuting
such suit. Xxxxxx shall be presumed to be entitled to indemnification under this
Agreement upon submission of a written claim (and, in an action brought to
enforce a claim for an advancement of expenses, where the required undertaking,
if any is required, has been tendered to the Company), and thereafter the
Company shall have the burden of proof to overcome the presumption that Xxxxxx
is not so entitled. Neither the failure of the Company (including its Board,
independent legal counsel, or its stockholders), to have made a determination
prior to the commencement of such suit that indemnification of Xxxxxx is proper
in the circumstances, nor an actual determination by the Company (including its
Board, independent legal counsel or its stockholders) that Xxxxxx is not
entitled to indemnification, shall be a defense to the suit or create a
presumption that Xxxxxx is not so entitled.
SECTION 3. NONEXCLUSIVITY OF RIGHTS
The rights to indemnification and to the advancement of expenses
conferred in this Agreement are in addition to and shall not be exclusive of any
other right Xxxxxx may have or hereafter acquire under any statute, provision of
the Restated Certificate of Incorporation of the Company or its By-laws, or
under any other plan, program, arrangement, agreement, vote of stockholders or
disinterested Directors or otherwise.
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SECTION 4. INSURANCE, CONTRACTS AND FUNDING
The Company may maintain insurance, at its expense, to protect itself
and Xxxxxx against any expense, liability or loss, whether or not the Company
would have the power to indemnify Xxxxxx against such expense, liability or loss
under the General Corporation Law of the State of Delaware. The Company may
enter into contracts with Xxxxxx in furtherance of the provisions of this
Agreement and may create a trust fund, grant a security interest or use other
means (including, without limitation, a letter of credit) to ensure the payment
of such amounts as may be necessary to effect indemnification as provided in
this Agreement. To the extent the Company maintains an insurance policy or
policies providing directors' and officers' liability insurance, Xxxxxx 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 director or
officer.
SECTION 5. CHANGE OF CONTROL
(a) A "Change in Control" shall mean the occurrence of any of the
following:
(I) An acquisition (other than directly from the Company) of any voting
securities of the Company (the "Voting Securities") by any "Person" (as
the term "person" is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
immediately after which such Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than twenty percent (20%) of (1) the then-outstanding shares of common
stock of the Company (or any other securities into which such shares of
common stock are changed or for which such shares of common stock are
exchanged) (the "Shares") or (2) the combined voting power of the
Company's then-outstanding Voting Securities; provided, however, that
in determining whether a Change in Control has occurred pursuant to
this paragraph (I), the acquisition of Shares or Voting Securities in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute
a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a trust forming a part
thereof) maintained by (A) the Company or (B) any corporation or other
Person the majority of the voting power, voting equity securities or
equity interest of which is owned, directly or indirectly, by the
Company (for purposes of this definition, a "Related Entity"), (ii) the
Company or any Related Entity, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined);
(II) The individuals who, as of the Effective Date, are members of the
board of directors of the Company (the "Incumbent Board"), cease for
any reason to constitute at least a majority of the members of the
board of directors of the Company or, following a Merger (as
hereinafter defined), the board of directors of (x) the corporation
resulting from such Merger (the "Surviving Corporation"), if fifty
percent (50%) or more of the combined voting power of the
then-outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly, by another Person (a
"Parent Corporation") or (y) if there is one or more than one Parent
Corporation, the ultimate Parent Corporation; provided, however, that,
if the election, or nomination for election by the Company's common
stockholders, of any new director was approved by a
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vote of at least two-thirds of the Incumbent Board, such new director
shall, for purposes of the Plan, be considered a member of the
Incumbent Board; and provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such individual
initially assumed office as a result of an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the board of directors of the Company (a "Proxy Contest"),
including by reason of any agreement intended to avoid or settle any
Proxy Contest; or
(III) The consummation of:
(i) A merger, consolidation or reorganization (1)
with or into the Company or (2) in which securities of the Company are
issued (a "Merger"), unless such Merger is a "Non-Control Transaction."
A "Non-Control Transaction" shall mean a Merger in which:
(A) the stockholders of the Company immediately
before such Merger own directly or indirectly immediately
following such Merger at least fifty percent (50%) of the
combined voting power of the outstanding voting securities of
(x) the Surviving Corporation, if there is no Parent
Corporation or (y) if there is one or more than one Parent
Corporation, the ultimate Parent Corporation;
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such Merger constitute at least a majority of
the members of the board of directors of (x) the Surviving
Corporation, if there is no Parent Corporation, or (y) if
there is one or more than one Parent Corporation, the ultimate
Parent Corporation; and
(C) no Person other than (1) the Company, (2) any
Related Entity, or (3) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to the Merger,
was maintained by the Company or any Related Entity, or (4)
any Person who, immediately prior to the Merger had Beneficial
Ownership of twenty percent (20%) or more of the then
outstanding Shares or Voting Securities, has Beneficial
Ownership, directly or indirectly, of twenty percent (20%) or
more of the combined voting power of the outstanding voting
securities or common stock of (x) the Surviving Corporation,
if fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of the Surviving
Corporation is not Beneficially Owned, directly or indirectly
by a Parent Corporation, or (y) if there is one or more than
one Parent Corporation, the ultimate Parent Corporation;
(ii) A complete liquidation or dissolution of the
Company; or
(iii) The sale or other disposition of all or
substantially all of the assets of the Company and its subsidiaries
taken as a whole to any Person (other than (x) a transfer to a Related
Entity, (y) a transfer under conditions that would constitute a
Non-Control Transaction, with the disposition of assets being regarded
as a Merger for this
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purpose or (z) the distribution to the Company's stockholders of the
stock of a Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then
outstanding Shares or Voting Securities as a result of the acquisition
of Shares or Voting Securities by the Company which, by reducing the
number of Shares or Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the Subject
Persons; provided, that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company and, after such share acquisition by
the Company, the Subject Person becomes the Beneficial Owner of any
additional Shares or Voting Securities and such Beneficial Ownership
increases the percentage of the then outstanding Shares or Voting
Securities Beneficially Owned by the Subject Person, then a Change in
Control shall occur.
(b) Change in Control of the Company. The Company agrees that if there
is a Change in Control of the Company, then with respect to all matters
thereafter arising concerning the rights of Xxxxxx to indemnity payments and
expense advances under this Agreement, any other agreements, the Restated
Certificate of Incorporation or the By-laws now or hereafter in effect relating
to a proceeding, the Company shall seek legal advice only from special
independent counsel selected by Xxxxxx and approved by the Company (which
approval shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (other than in connection with such matters)
or Xxxxxx. In the event that Xxxxxx and the Company are unable to agree on the
selection of the special independent counsel, such special independent counsel
shall be selected by lot from among at least five law firms in New York City,
New York or Houston, Texas selected by Foshee, each having no less than 50
partners. Such selection shall be made in the presence of Xxxxxx (and his legal
counsel or either of them, as Xxxxxx may elect). Such special independent
counsel, among other things, shall determine whether and to what extent Xxxxxx
would be permitted to be indemnified under applicable law and shall render its
written opinion to the Company and Xxxxxx to such effect.
The 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.
SECTION 6. NO MODIFICATION
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. Any waiver to this agreement shall be in
writing.
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SECTION 7. 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
Xxxxxx, 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.
SECTION 8. NO DUPLICATION OF PAYMENTS
The Company shall not be liable under this Agreement to make any
payment in connection with any proceeding against Xxxxxx to the extent Xxxxxx
has otherwise actually received payment (under any insurance policy or
otherwise) of the amounts otherwise indemnifiable hereunder.
SECTION 9. NOTIFICATION AND DEFENSE OF PROCEEDINGS
Xxxxxx agrees that he will use all reasonable efforts to notify the
Company promptly after receipt by Xxxxxx of notice of the commencement of any
proceeding if he anticipates that a request for indemnification in respect
thereof is to be made against the Company under this Agreement; but failure to
so notify the Company will not relieve the Company from any indemnification or
other obligation or liability which it may have to Xxxxxx. With respect to any
such proceeding as to which Xxxxxx notifies the Company of the commencement
thereof:
(a) the Company will be entitled to participate therein at its own
expense; and
(b) except as otherwise provided below, to the extent that it may wish,
the Company jointly with any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel satisfactory to Xxxxxx.
After notice from the Company to Xxxxxx of its election to assume the defense
thereof, the Company will not be liable to Xxxxxx under this Agreement for any
legal or other expenses subsequently incurred by Xxxxxx in connection with the
defense thereof other than reasonable costs of investigation or as otherwise
provided below. Xxxxxx shall have the right to employ its counsel in such
proceeding, but the fees and expenses of such counsel incurred after notice from
the Company of its assumption of the defense thereof shall be at the expense of
Xxxxxx unless (i) the employment of counsel by Xxxxxx has been authorized by the
Company, (ii) Xxxxxx shall have reasonably concluded that there may be a
conflict of interest between the Company and Xxxxxx in the conduct of the
defense of such proceeding or (iii) the Company shall not in fact have employed
counsel to assume the defense of such proceeding, in each of which cases the
fees and expenses of counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any proceeding brought by or on
behalf of the Company or as to which Xxxxxx shall have made the conclusion
provided for in clause (ii) of this subsection 9(b).
(c) The Company shall not be liable to indemnify Xxxxxx under this
Agreement for any amounts paid in settlement of any proceeding effected by
Xxxxxx without the Company's prior written consent. The Company shall not settle
any proceeding in any manner which would
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impose any penalty or limitation on Xxxxxx without Xxxxxx'x prior written
consent. Neither the Company nor Xxxxxx will unreasonably withhold their consent
to any proposed settlement.
SECTION 10. NO PRESUMPTIONS
For purposes of this Agreement, the termination of any proceeding
against Xxxxxx by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that Xxxxxx 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. In addition, neither the
failure of the Company to have made a determination as to whether Xxxxxx has met
any particular standard of conduct or had any particular belief, nor an actual
determination by the Company that Xxxxxx has not met such standard of conduct or
did not have such belief, prior to the commencement of legal proceedings by
Xxxxxx to secure a judicial determination that Xxxxxx should be indemnified
under applicable law shall be a defense to Xxxxxx'x claim for indemnification or
create a presumption that Xxxxxx has not met any particular standard of conduct
or did not have any particular belief.
SECTION 11. ACKNOWLEDGMENT OF RELIANCE
The Company acknowledges that Xxxxxx is relying on this Agreement and
the promises and agreements of the Company herein in continuing his service as a
Director and an Officer and in agreeing to undertake and in undertaking his
responsibilities, duties and services to and for the Company in connection
therewith.
SECTION 12. MISCELLANEOUS
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware. Each provision hereof is intended to be
severable and the invalidity or illegality of any portion of this Agreement
shall not affect the validity or legality of the remainder.
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Executed as an instrument under seal as of the day and year first above
written.
EL PASO CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxx
Title: Senior Vice President
Human Resources
Hereunto duly authorized
By: /s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman of the Board
Hereunto duly authorized
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