INDEMNITY AGREEMENT
Exhibit 10.1
INDEMNITY AGREEMENT
This Agreement made and entered into as of this ___ day
of , 2007, by and
between Approach Resources Inc., a Delaware corporation (the “Company”), and
(“Indemnitee”),
who is currently serving the Company in the capacity of a director and/or officer
thereof;
WITNESSETH:
WHEREAS, the Company and Indemnitee recognize that the interpretation of ambiguous statutes,
regulations and court opinions and of the Restated Certificate of Incorporation and Restated Bylaws
of the Company, and the vagaries of public policy, are too uncertain to provide the directors and
officers of the Company with adequate or reliable advance knowledge or guidance with respect to the
legal risks and potential liabilities to which they become personally exposed as a result of
performing their duties in good faith for the Company; and
WHEREAS, the Company and the Indemnitee are aware that highly experienced and capable persons
are often reluctant to serve as directors or officers of a corporation unless they are protected to
the fullest extent permitted by law by comprehensive insurance and indemnification, especially
since the legal risks and potential liabilities, and the very threat thereof, associated with
lawsuits filed against the officers and directors of a corporation, and the resultant substantial
time, expense, harassment, ridicule, abuse and anxiety spent and endured in defending against such
lawsuits, whether or not meritorious, bear no reasonable or logical relationship to the amount of
compensation received by the directors or officers from the corporation; and
WHEREAS, Section 145 of the General Corporation Law of the State of Delaware and the Restated
Certificate of Incorporation of the Company, which set forth certain provisions relating to the
mandatory and permissive indemnification of, and advancement of expenses to, officers and directors
(among others) of a Delaware corporation by such corporation, are specifically not exclusive of
other rights to which those indemnified thereunder may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise; and
WHEREAS, after due consideration and investigation of the terms and provisions of this
Agreement and the various other options available to the Company and the Indemnitee in lieu
thereof, the Board of Directors of the Company has determined that the following Agreement is not
only reasonable and prudent but necessary to promote and ensure the best interests of the Company
and its stockholders; and
WHEREAS, the Company desires to have Indemnitee serve or continue to serve as an officer
and/or director of the Company, free from undue concern for unpredictable, inappropriate or
unreasonable legal risks and personal liabilities by reason of his acting in good faith in the
performance of his duty to the Company; and Indemnitee desires to serve, or to continue to serve
(provided that he is furnished the indemnity provided for hereinafter), in either or both of such
capacities;
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Indemnitee, intending to be legally bound, do hereby agree as
follows:
1. Agreement to Serve. Indemnitee agrees to serve or continue to serve as director and/or officer of the Company and
as Indemnitee and the Company may agree, as a director, officer, trustee, general partner, managing
member, fiduciary, employee or agent of another Enterprise, for so long as he is duly elected or
appointed and qualified in accordance with the provisions of the General Corporation Law of the
State of Delaware and the Restated Certificate of Incorporation and Restated Bylaws of the Company
or until such time as he tenders his resignation. The Company acknowledges that the Indemnitee is
relying on this Agreement in so serving.
2. Definitions. As used in this Agreement:
(a) “Change in Control” means a change in control of the Company of a nature that would
be required to be reported 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 (the “Act”), whether or not the Company is then subject to
such reporting requirement; provided, however, that, without limitation, such 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 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 combined voting power of the Company’s then outstanding securities without
the prior approval of at least two-thirds of the members of the Board of Directors of the
Company in office immediately prior to such person attaining such percentage interest; (ii)
there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of
assets, plan of liquidation or other reorganization not approved by at least two-thirds of
the members of the Board of Directors of the Company then in office, 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 (iii) during
any period of two consecutive years, other than as a result of an event described in clause
(ii) of this subsection (a), individuals who at the beginning of such period constituted the
Board of Directors of the Company (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) “Disinterested Director” means a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by Indemnitee.
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(c) “Enterprise” shall mean any other corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan, organization or other enterprise
of which Indemnitee is or was serving at the request of the Company as a director, officer,
trustee, general partner, managing member, fiduciary, employee or agent.
(d) The term “Expenses” includes, without limitation, all reasonable attorneys’ fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage, delivery service
fees and all other disbursements or expenses of the types customarily incurred in connection
with prosecuting, defending, preparing to prosecute or defend, investigating, or being or
preparing to be a witness in, or otherwise involved in, a Proceeding. Should any payments
by the Company under this Agreement be determined to be subject to any federal, state or
local income or excise tax, Expenses will also include such amounts as are necessary to
place Indemnitee in the same after-tax position, after giving effect to all applicable
taxes, Indemnitee would have been in had such tax not have been determined to apply to those
payments. Expenses also shall include (i) Expenses incurred in connection with any appeal
resulting from any Proceeding, including, without limitation, the premium, security for, and
other costs relating to any cost bond, supersedeas bond, or other appeal bond or its
equivalent and (ii) Expenses incurred by Indemnitee in connection with the interpretation,
enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or
otherwise.
(e) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past five
years has been, retained to represent: (i) the Company or Indemnitee in any matter material
to either such party (other than with respect to matters concerning the Indemnitee under
this Agreement, or of other indemnitees under similar indemnification agreements), or (ii)
any other party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include 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. The Company agrees to pay the
reasonable fees and expenses of the Independent Counsel referred to above and to fully
indemnify such counsel against any and all Expenses, claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.
(f) “Proceeding” shall mean any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative, arbitrative or investigative, any
appeal in such an action, suit, or proceeding, and any inquiry or investigation that could
lead to such an action, suit or proceeding irrespective of the initiator thereof. The final
disposition of a Proceeding shall be as determined by a settlement or the judgment of a court or other investigative or administrative body. The Board of Directors shall
not make a determination as to the final disposition of a Proceeding.
(g) References to “fines” shall include any (i) excise taxes assessed with respect to
any employee benefit plan and (ii) penalties; references to “serving at the
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request of the Company” shall include any service as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent which imposes duties on, or involves services
by, such director, officer, trustee, general partner, managing member, fiduciary, employee
or agent with respect to an Enterprise; and a person who acts in good faith and in a manner
he reasonably believed to be in the interest of the Enterprise shall be deemed to have acted
in a manner “not opposed to the best interests of the Company” as referred to in this
Agreement.
3. Indemnity in Third Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if
Indemnitee is a party to or is threatened to be made a party to or is otherwise involved in any
Proceeding (other than a Proceeding by or in the right of the Company to procure a judgment in its
favor) by reason of the fact that Indemnitee is or was a director and/or officer of the Company, or
was serving at the request of the Company as a director, officer, trustee, general partner,
managing member, fiduciary, employee or agent of an Enterprise, against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by Indemnitee (or on his
behalf) in connection with such Proceeding or any claim, issue or matter therein, provided it is
determined pursuant to Section 8 of this Agreement or by the court having jurisdiction in the
matter, that Indemnitee acted in good faith and in a manner that he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding or of
any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good faith and in a
manner that he reasonably believed to be in or not opposed to the best interests of the Company,
or, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was
unlawful. Indemnitee shall have the right to employ Indemnitee’s own legal counsel in any
Proceeding for which indemnification is available under this Section 3.
4. Indemnity in Proceedings By or In the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if
Indemnitee is a party to or is threatened to be made a party to or otherwise involved in any
Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the
fact that Indemnitee is or was a director and/or officer of the Company, or is or was serving at
the request of the Company as a director, officer, trustee, general partner, managing member,
fiduciary, employee or agent of an Enterprise, against all Expenses actually and reasonably
incurred by Indemnitee (or on his behalf) in connection with such Proceeding provided it is
determined pursuant to Section 8 of this Agreement or by the court having jurisdiction in the
matter, that Indemnitee acted in good faith and in a manner that he reasonably believed to be in
or not opposed to the best interests of the Company, except that no indemnification shall be made
under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have
been adjudged to be liable to the Company unless and only to the extent that the Delaware Court of
Chancery or the court in which such Proceeding was brought or is pending, shall determine upon
application that, despite the adjudication of liability but in view of all the circumstances of the
case, Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as the Delaware
Court of Chancery or such other court shall deem proper. Indemnitee shall have the right to employ
Indemnitee’s own legal counsel in any Proceeding for which indemnification is available under this
Section 4.
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5. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by
reason of the fact that Indemnitee is or was a director and/or officer of the Company, or is or was
serving at the request of the Company as a director, officer, trustee, general partner, managing
member, fiduciary, employee or agent of an Enterprise, a witness in any Proceeding to which
Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably
incurred by Indemnitee (or on his behalf) in connection therewith.
6. Indemnification for Expenses of Successful Party. Notwithstanding any other provision of this Agreement to the contrary, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to
in Sections 3 and/or 4 of this Agreement, or in defense of any claim, issue or matter therein,
including dismissal with or without prejudice, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by Indemnitee (or on his behalf) in connection therewith. If
Indemnitee is not wholly successful in any Proceeding referred to in Sections 3 and/or 4 of this
Agreement, but is successful on the merits or otherwise (including dismissal with or without
prejudice) as to one or more, but less than all claims, issues or matters therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by Indemnitee (or on his behalf) in connection with each successfully resolved
claim, issue or matter. For purposes of this Section 6, and without limitation, the termination of
any claim, issue or matter in any Proceeding referred to in Sections 3 and/or 4 of this Agreement
by dismissal, with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
7. Advances of Expenses. To the fullest extent permitted by applicable law, the Expenses incurred by Indemnitee
pursuant to Sections 3 and/or 4 of this Agreement in connection with any Proceeding or any claim,
issue or matter therein shall be paid by the Company currently and in advance of the final
disposition of such Proceeding or any claim, issue or matter therein no later than 10 days after
receipt by the Company of a request for an Expense advancement with appropriate documentation. The
undersigned Indemnitee hereby undertakes to repay the advanced Expenses to the Company to the
extent that it is ultimately determined pursuant to Section 8, or, in the event the Indemnitee
elects to pursue other remedies pursuant to Section 10, that the undersigned Indemnitee is not
entitled to be indemnified therefor by the Company. This agreement of Indemnitee to repay is
unsecured and interest free.
8. Procedure for Determination of Entitlement to Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the
Company a written request.
(b) Upon written request by Indemnitee for indemnification pursuant to Section 8(a)
hereof, a determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall be made in the specific case: (i) if a Change in Control shall
have occurred, the Disinterested Directors shall direct Independent Counsel to make such
determination in a written opinion to the Board of Directors of the Company, a copy of which
shall be delivered to Indemnitee; or (ii) if a Change in Control
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shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the
Board of Directors of the Company, or (B) by a committee of the Disinterested Directors
designated by a majority vote of Disinterested Directors, even though less than a quorum, or
(C) if there are no Disinterested Directors or, if the Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board of Directors of the Company, a copy of
which shall be delivered to Indemnitee; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within 10 days after such
determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred
by Indemnitee in cooperating with the person, persons or entity making the determination
discussed in this Section 8(b) with respect to Indemnitee’s entitlement to indemnification,
shall be borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 8(b) hereof, the Independent Counsel shall be
selected as provided in this Section 8(c). If a Change in Control shall not have occurred,
the Independent Counsel shall be selected by the Board of Directors of the Company, and the
Company shall give written notice to Indemnitee advising him of the identity of the
Independent Counsel so selected. If a Change in Control shall have occurred, the
Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board of Directors of the Company, in which event the
preceding sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either event,
Indemnitee or the Company, as the case may be, may, within 10 days after such written notice
of selection shall have been given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection; provided, however, that such objection may be
asserted only on the ground that the Independent Counsel so selected does not meet the
requirements of “Independent Counsel” as defined in this Agreement, and the objection shall
set forth with particularity the factual basis of such assertion. Absent a proper and
timely objection, the person so selected shall act as Independent Counsel. If such written
objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until
such objection is withdrawn or a court has determined that such objection is without merit.
If, within 20 days after submission by Indemnitee of a written request for indemnification
pursuant to Section 8(b) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Delaware Court of Chancery or
other court of competent jurisdiction for resolution of any objection which shall have been
made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person selected by the Court or by such other
person as the Court shall designate, and the person with respect to whom all objections are
so resolved or the person so appointed shall act as Independent Counsel under Section 8(a)
hereof.
(d) Indemnitee will be deemed a party to a Proceeding for all purposes hereof if
Indemnitee is named as a defendant or respondent in a complaint or petition for relief
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in that Proceeding, regardless of whether Indemnitee is ever served with process or makes an
appearance in that Proceeding.
9. Presumptions and Effect of Certain Provisions.
(a) In making a determination with respect to entitlement to indemnification
hereunder, the person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a
request for indemnification in accordance with Section 8(a) of this Agreement, and the
Company shall have the burden of proof in overcoming such presumption by clear and
convincing evidence. Neither the failure of the Company (including its Board of Directors
or independent legal counsel) to have made a determination prior to the commencement of such
action pursuant to this Agreement that indemnification is proper in the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual determination
by the Company (including its Board of Directors or independent legal counsel) that
Indemnitee has not met such applicable standard of conduct, shall be a defense to the action
or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) If the person, persons or entity empowered or selected under Section 8 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall not have made
a determination within 30 days after receipt by the Company therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable law;
provided, however, that such 30-day period may be extended for a reasonable time, not to
exceed an additional 15 days, if the person, persons or entity making the determination with
respect to entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information relating thereto.
(c) For purposes of any determination of whether Indemnitee acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of the Company,
and, with respect to any criminal Proceeding, Indemnitee had no reasonable cause to believe
his conduct was unlawful (collectively, “Good Faith”), Indemnitee shall be deemed to have
acted in Good Faith if Indemnitee’s action is based on the records or books of account of
the Company and any other Enterprise of which Indemnitee is or was serving at the request of
the Company as a director, officer, trustee, general partner, managing member, fiduciary,
employee or agent or information, opinions, reports or statements, including financial
statements and other financial information, concerning the Company and any other Enterprise
of which Indemnitee is or was serving at the request of the Company as a director, officer,
trustee, general partner, managing member, fiduciary, employee or agent or any other person
which were prepared or supplied to Indemnitee by: (i) one or more officers or employees of
the Company and any Enterprise of which Indemnitee is or was serving at the request of the
Company as a director, officer, trustee, general partner, managing member, fiduciary,
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employee or agent; (ii) appraisers, engineers, investment bankers, legal counsel or other
persons as to matters Indemnitee reasonably believed were within the professional or expert
competence of those persons; and (iii) any committee of the Board of Directors or equivalent
managing body of the Company and any other Enterprise of which Indemnitee is or was serving
at the request of the Company as a director, officer, trustee, general partner, managing
member, fiduciary, employee or agent of which Indemnitee is or was, at the relevant time,
not a member. The provisions of this Section 9(c) shall not be deemed to be exclusive or to
limit in any way the other circumstances in which the Indemnitee may be deemed to have met
the applicable standard of conduct set forth in this Agreement.
(d) The knowledge and/or actions, or failure to act, of any director, officer, agent or
employee of the Company and any other Enterprise of which Indemnitee is or was serving at
the request of the Company as a director, officer, trustee, general partner, managing
member, fiduciary, employee or agent shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement.
10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 8(b) of this
Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 7 of this Agreement, (iii) no
determination of entitlement to indemnification shall have been made pursuant to Section
8(b) of this Agreement within the time period provided in Section 9(b) after receipt by the
Company of the request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 5, Section 6, the last sentence of Section 8(b), or the last sentence of
Section 2(d) of this Agreement within 10 days after receipt by the Company of a written
request therefor, or (v) payment of indemnification pursuant to Section 3 or Section 4 of
this Agreement is not made within 10 days after a determination has been made that
Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication
by the Delaware Court of Chancery of his entitlement to such indemnification or advancement
of Expenses and appeals therefrom, concluding in a final and unappealable judgment by the Delaware Supreme Court. The Board of Directors shall
not make a determination as to the final disposition of such adjudication. The Company
shall not oppose Indemnitee’s right to seek any such adjudication.
(b) In the event that a determination shall have been made pursuant to Section 8(b) of
this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding
commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial
on the merits and Indemnitee shall not be prejudiced by reason of that adverse
determination.
(c) If a determination shall have been made pursuant to Section 8(b) of this Agreement
that Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding commenced pursuant to this Section 10, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact necessary
to make Indemnitee’s statement not materially misleading, in connection
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with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this Section 10, seeks a judicial
adjudication of his rights under, or to recover damages for breach of, this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the types described in the definition of Expenses
in Section 2(d) of this Agreement) actually and reasonably incurred by him in such judicial
adjudication regardless of whether Indemnitee ultimately is determined to be entitled to
such indemnification.
(e) The Company shall be precluded from asserting in any judicial proceeding commenced
pursuant to this Section 10 that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such court that the Company is
bound by all the provisions of this Agreement.
11. Indemnification and Advancement of Expenses Under this Agreement Not Exclusive; Survival
of Rights. The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled
under the Certificate of Incorporation or Bylaws of the Company, any other agreement, any vote of
stockholders or disinterested directors, the General Corporation Law of the State of Delaware, or
otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall
limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or
omitted by such Indemnitee prior to such amendment, alteration or repeal. To the extent that a
change in the General Corporation Law of the State of Delaware, whether by statute or judicial
decision, permits greater indemnification or advancement of Expenses than would be afforded
currently under the Certificate of Incorporation of the Company 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. No right or remedy herein conferred is intended to be exclusive of any
other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
12. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification or to
receive advancement by the Company for a portion of the Expenses, judgments, fines, penalties or
amounts paid in settlement actually and reasonably incurred by Indemnitee (or on his behalf) in
connection with such Proceeding, or any claim, issue or matter therein, but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof
to which Indemnitee is entitled.
13. Rights Continued. The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall continue as to Indemnitee even though Indemnitee may have ceased to be a director
or officer of the Company and shall inure to the benefit of Indemnitee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
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14. No Construction as an Employment Agreement or Any Other Commitment. Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be
retained in the employ or as an officer of the Company or any of its subsidiaries, if Indemnitee
currently serves as an officer of the Company, or to be renominated or reelected as a director of
the Company, if Indemnitee currently serves as a director of the Company.
15. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing liability
insurance for directors, officers, trustees, general partners, managing members, fiduciaries,
employees or agents of the Company or any other Enterprise which such person serves at the request
of the Company, 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 director, officer, trustee,
general partner, managing member, fiduciary, employee or agent under such policy or policies.
16. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise
indemnifiable under this Agreement if, and to the extent that, Indemnitee has otherwise actually
received such payment under any contract, agreement or insurance policy, the Certificate of
Incorporation or Bylaws of the Company, or otherwise.
17. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of
such payment to all 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 without limitation the
execution of such documents as may be necessary to enable the Company effectively to bring suit to
enforce such rights.
18. Exceptions. Notwithstanding any other provision in this Agreement, the Company shall not be obligated
pursuant to the terms of this Agreement, to (i) indemnify or advance Expenses to Indemnitee with
respect to any claim, issue or matter therein, brought or made by Indemnitee by way of cross-claim,
counter claim or the like, or (ii) indemnify Indemnitee with respect to any Proceeding in which
final judgment is rendered against Indemnitee for an accounting of profits made from the purchase
and sale or the sale and purchase by Indemnitee of securities of the Company pursuant to the
provisions of Section 16(b) of the Act.
19. Notices. Any notice or other communication required or permitted to be given or made to the Company or
Indemnitee pursuant to this Agreement shall be given if made in writing and deposited in the United
States mail, with postage thereon prepaid, addressed to the person to whom such notice or
communication is directed at the address of such person on the records of the Company, and such
notice or communication shall be deemed given or made at the time when the same shall be so
deposited in the United States mail. Any such notice or communication to the Company shall be
addressed to the Secretary of the Company.
20. Contractual Rights. The right to be indemnified or to receive advancement of Expenses under this Agreement (i) is
a contract right based upon good and valuable
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consideration, pursuant to which Indemnitee may xxx, (ii) is and is intended to be retroactive and shall be available as to events occurring prior to
the date of this Agreement and (iii) shall continue after any rescission or restrictive
modification of this Agreement as to events occurring prior thereto.
21. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; to the fullest extent possible,
the provisions of this Agreement shall be construed so as to give effect to the intent manifested
by the provisions held invalid, illegal or unenforceable; and those provision or provisions held to
be invalid, illegal or unenforceable for any reason whatsoever shall be deemed reformed to the
extent necessary to conform to applicable law and to give the maximum effect to the intent of the
parties hereto.
22. Successors; Binding Agreement. The Company shall require and cause any successor (whether direct or indirect) by purchase,
merger, consolidation or otherwise) to all or substantially all of the business or assets of the
Company, by written agreement in form and substance reasonably satisfactory to Indemnitee, to
expressly 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 such succession had taken place. As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid that executes and delivers the agreement provided for in this
Section 22 or that otherwise becomes bound by the terms and provisions of this Agreement by
operation of law. This Agreement shall be binding upon the Company and its successors and assigns
(including, without limitation, any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or assets of the Company) and will inure
to the benefit of Indemnitee (and Indemnitee’s spouse, if Indemnitee resides in Texas or another
community property state), heirs, executors and administrators.
23. Counterparts, Modification, Headings, Gender.
(a) This Agreement may be executed in counterparts, each of which shall constitute one
and the same instrument, and either party hereto may execute this Agreement by signing any
such counterpart.
(b) No provisions of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by Indemnitee and an
appropriate officer of the Company. No waiver by any party at any time of any breach by any
other party of, or compliance with, any condition or provision of this Agreement to be
performed by any other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time.
(c) Section headings are not to be considered part of this Agreement, are solely for
convenience of reference, and shall not affect the meaning or interpretation of this
Agreement or any provision set forth herein.
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(d) Pronouns in masculine, feminine and neuter genders shall be construed to include
any other gender, and words in the singular form shall be construed to include the plural
and vice versa, unless the context otherwise requires.
24. Exclusive Jurisdiction; Governing Law. The Company and Indemnitee agree that all disputes in any way relating to or arising under
this Agreement, including, without limitation, any action for advancement of Expenses or
indemnification, shall be litigated, if at all, exclusively in the Delaware Court of Chancery, and
if necessary, the corresponding appellate courts. 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. The Company and Indemnitee (i) expressly submit themselves to the personal jurisdiction of
the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in
connection with this Agreement, (ii) irrevocably appoint, to the extent such party is
not a resident of the State of Delaware, The Corporation Trust Company, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 as its agent in the State of Delaware as such party’s agent for
acceptance of legal process in connection with any such action or proceeding against such party
with the same legal force and validity as if served upon such party personally within the State of
Delaware, (iii) waive any objection to the laying of venue of any such action or proceeding in the
Delaware Court of Chancery, and (iv) waive, and agree not to plead or to make, any claim that any
such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper
or otherwise inconvenient forum.
25. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) 10 years after the
date that Indemnitee shall have ceased to serve as a director and/or officer of the Company or
director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any
other Enterprise which Indemnitee served at the request of the Company; or (b) one year after the
final, nonappealable termination of any Proceeding then pending in respect of which Indemnitee is
granted rights of indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 10 of this Agreement relating thereto.
26. Contribution. If it is established, under Section 8 or otherwise, that Indemnitee has the right to be
indemnified under this Agreement in respect of any claim, but that right is unenforceable by reason
of applicable law or public policy, then, to the fullest extent applicable law permits, the
Company, in lieu of indemnifying or causing the indemnification of Indemnitee under this Agreement,
will contribute to the amount Indemnitee has incurred, whether for judgments, fines, penalties,
excise taxes, amounts paid or to be paid in settlement or for Expenses reasonably incurred, in
connection with that Proceeding, in such proportion as is deemed fair and reasonable in light of
all the circumstances of that Proceeding in order to reflect:
(a) the relative benefits Indemnitee and the Company have received as a result of the
event(s) or transactions(s) giving rise to that Proceeding; or
(b) the relative fault of Indemnitee and of the Company and its other functionaries in
connection with those event(s) or transaction(s).
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IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement as of the date and
year first above written.
APPROACH RESOURCES INC. |
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By: | ||||
Name: | ||||
Title: | ||||
INDEMNITEE: |
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