INDEMNIFICATION AGREEMENT
Exhibit 10.2
This AGREEMENT, dated as of , 2010, is made by and between PostRock Energy Corporation, a
Delaware corporation (the “Company”), and (the “Indemnitee”).
WHEREAS, it is essential to the Company and its mission to retain and attract as officers and
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 officers and 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 officers and 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 officers and
directors of the Company, as provided by Delaware 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 service 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) there shall
have occurred an event that is or would be required to be reported with respect to the
Company in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), if the Company is or were subject to such
reporting requirement; (ii) any “person” (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) shall have become the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the Company’s then
outstanding voting securities without prior approval of at least two-thirds of the members
of the Board of Directors in office immediately prior to such person’s attaining such
percentage interest; (iii) the Company is a party to a merger, consolidation, sale of assets
or other reorganization, or a proxy contest, as a consequence of which members of the Board
of Directors in office immediately prior to such transaction or event constitute less than a
majority of the Board of Directors thereafter; or (iv) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of Directors
(including, for this purpose, any new director whose election or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such period) cease for any
reason to constitute at least a majority of the Board of Directors.
(b) Claim: any threatened, pending or completed action, suit or proceeding
(including any mediation, arbitration or other alternative dispute resolution proceeding),
whether instituted by or in the right of the Company or by 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, fiduciary or other legal representative 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. Basic Indemnification Arrangement.
(a) In the event Indemnitee was, is or becomes a party to or witness or
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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 30 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 30 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 the
State of 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, 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. 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
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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 and expenses 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 30 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
determination by the Reviewing Party that Indemnitee has not met such standard of
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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
Delaware law, or otherwise. To the extent that a change in Delaware 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 as a legal representative 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
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otherwise unenforceable in any respect, and the validity and enforceability of any such
provision in every other respect and of 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 Delaware applicable to contracts made and to be performed
in such state without giving effect to the principles of conflicts of laws that would require the
application of the laws of another jurisdiction.
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.
[signatures follow on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth
above.
| POSTROCK ENERGY CORPORATION |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| INDEMNITEE |
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| By: | ||||
| Name: | ||||
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