1
EXHIBIT 10.1
DIRECTOR
INDEMNIFICATION AGREEMENT
The Company has entered into an Indemnification Agreement in the form
attached hereto, effective October 28, 1998, with each of its directors. It is
anticipated that any new directors elected or appointed to the Company's Board
of Directors will enter into the same agreement, effective as of the date of
such election or appointment.
2
INDEMNIFICATION AGREEMENT
This AGREEMENT is made and entered into as of the 28th day of
October, 1998, by and between Pool Energy Services Co., a Texas corporation (the
"Company"), and [name of director] "Indemnitee").
WHEREAS, it is essential to the Company and its mission to
retain and attract as directors the most capable persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the
omnipresent risk of litigation and other claims that are routinely asserted
against directors of companies operating in the public arena in today's
environment, and the attendant costs of defending even wholly frivolous claims;
WHEREAS, it has become increasingly difficult to obtain
insurance against the risk of personal liability of directors on terms providing
reasonable protection to the individual at reasonable cost to the companies;
WHEREAS, the Bylaws of the Company provide certain
indemnification rights to the directors of the Company, and its directors have
relied on this assurance of indemnification, as provided by Texas law;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's continued
service to the Company in an effective manner, the increasing difficulty in
obtaining and maintaining satisfactory insurance coverage, and Indemnitee's
reliance on assurance of indemnification, the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the fullest extent permitted by law (whether partial or complete) and as set
forth in this Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors' and officers'
liability insurance policies;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and Indemnitee's continuing to serve
as a director of the Company, the parties hereto agree as follows:
1. 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 such Act),
directly or indirectly, of securities of the Company representing 20%
or more of the
3
total voting power represented by the Company's then outstanding Voting
Securities (other than any such person or any affiliate thereof that is
such a 20% beneficial owner as of the date hereof), 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 (in one
transaction or a series of transactions) all or substantially all the
Company's assets.
(b) Claim: any threatened, pending or completed
action, suit or proceeding, whether instituted by the Company or any
other party, or any inquiry or investigation that Indemnitee in good
faith believes might lead to the institution of any such action, suit
or proceeding, whether civil (including intentional and unintentional
tort claims), criminal, administrative, investigative or other.
(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 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 Indemnitee 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 Indemnitee in any such capacity.
(e) Independent Legal Counsel: an attorney or firm of
attorneys, selected in accordance with the provisions of Section 3, who
shall not have otherwise performed services for the Company or
Indemnitee within the last five years (other than with respect to
matters concerning the rights of Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements).
(f) 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 Company's Board of
Directors who is not a party to the particular Claim for which
Indemnitee is seeking indemnification, or Independent Legal Counsel.
-2-
4
(g) Voting Securities: any securities of the Company
which vote generally in the election of directors.
2. Basic Indemnification Arrangement.
(a) In the event Indemnitee 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 by reason
of (or arising in part out of) an Indemnifiable Event, the Company
shall indemnify Indemnitee to the fullest extent permitted by law as
soon as practicable but in any event no later than thirty days after
written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim. If so requested
by Indemnitee, the Company shall advance (within two business days of
such request) any and all Expenses to Indemnitee (an "Expense
Advance").
(b) Notwithstanding the foregoing, (i) the
obligations of the Company under Section 2(a) shall be subject to the
condition that the Reviewing Party shall not have determined (in a
written opinion, in any case in which the Independent Legal Counsel
referred to in Section 3 hereof is involved) that Indemnitee 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 2(a) shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Indemnitee (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid; provided,
however, that if Indemnitee has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable
law, any determination made by the Reviewing Party that Indemnitee
would not be permitted to be indemnified under applicable law shall not
be binding and Indemnitee 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 (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 3 hereof. If there has been no
determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall
have the right to commence litigation in any court in Texas 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, including
the legal or factual bases therefor, and the Company hereby consents to
service of process and agrees to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and Indemnitee.
-3-
5
3. 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 Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or Company Bylaw
now or hereafter in effect relating to Claims for Indemnifiable Events, the
Company shall seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law. The Company agrees to pay the
reasonable fees of the Independent Legal 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.
4. Indemnification for Additional Expenses. The Company shall
indemnify Indemnitee against any and all expenses (including attorneys' fees)
and, if requested by Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any action brought by Indemnitee (whether pursuant to Section
17 of this Agreement or otherwise) for (i) indemnification or advance payment of
Expenses by the Company under this Agreement or any other agreement or Company
Bylaw now or hereafter in effect relating to Claims for Indemnifiable Events or
(ii) recovery under any directors' and officers' liability insurance policies
maintained by the Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
5. Partial Indemnity. If 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 of a Claim but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, 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 Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. Burden of Proof. 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.
7. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, 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 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. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
-4-
6
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law shall 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.
8. Nonexclusivity; Subsequent Change in Law. The rights of the
Indemnitee hereunder shall be in addition to any other rights Indemnitee may
have under the Company's Bylaws or under Texas law, or otherwise. To the extent
that a change in Texas law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently under the
Company's Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change.
9. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee 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.
10. Amendments; 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.
11. 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 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.
12. No Duplication of Payments. The Company shall not be
liable under this Agreement to make any payment in connection with any Claim
made against Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.
13. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company), assigns, spouses, heirs, executors and personal and
legal representatives. This Agreement shall continue in effect regardless of
whether Indemnitee continues to serve as a director of the Company or of any
other enterprise at the Company's request.
14. 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) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable in any
respect, and the validity and enforceability of any such provision in every
other respect and of
-5-
7
the remaining provisions hereof shall not be in any way impaired and shall
remain enforceable to the fullest extent permitted by law.
15. Effective Date. This Agreement shall be effective as of
the date hereof and shall apply to any claim for indemnification by the
Indemnitee on or after such date.
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.
17. Injunctive Relief. The parties hereto agree that
Indemnitee may enforce this Agreement by seeking specific performance hereof,
without any necessity of showing irreparable harm or posting a bond, which
requirements are hereby waived, and that by seeking specific performance,
Indemnitee shall not be precluded from seeking or obtaining any other relief to
which he may be entitled.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
POOL ENERGY SERVICES CO.
By:
---------------------------------------
Title:
------------------------------------------
[Name of Director]
-6-
