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EXHIBIT 10.18
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement"), dated as of the 5th day
of December, 1995, is made and entered into by and among Western Resources,
Inc., a Kansas corporation ("Western") and Hanover Compressor Company, a
Delaware corporation ("Parent") and Hanover Acquisition Corp. ("Sub").
WHEREAS, Astra Resources, Inc., and Astra Resources Compression, Inc.
(the "Company"), Parent and Sub have entered into an Agreement and Plan of
Merger dated as of October 13, 1995 (the "Merger Agreement"), providing for the
merger of Sub into the Company.
WHEREAS, Astra, is a wholly-owned subsidiary of Western.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
All capitalized terms not specifically defined herein shall have the
meanings set forth in the Merger Agreement.
ARTICLE II
INDEMNIFICATION
SECTION 2.1 Tax Liability Indemnification Western hereby agrees
to assume all consolidated return liabilities, and Western hereby further
agrees to indemnify Parent, Sub and the Surviving Corporation and their
respective officers, directors, shareholders and representatives against any
liability for Taxes which may be imposed as a result of the Company or any
Company Subsidiary being a member of a consolidated group, as defined in
Regulation Section 1.1502-1(b) and 1.1502-1(h) respectively for any period
prior to the Effective Time under Regulation Section 1.1502-6. Such
indemnification obligation shall survive until expiration of the applicable
statute of limitations.
SECTION 2.2 ERISA and COBRA Liability Indemnification.
Western hereby agrees to indemnify Parent, Sub and the Surviving Corporation
and their respective officers, directors, shareholders and representatives
against any liability which may be imposed (i) under ERISA and/or the Code as a
result of the Company or any
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Company Subsidiary being treated prior to the Effective Time as a single
employer under Sections 414(b), (c), (m) or (o) of the Code with any other
Person, and (ii) under Section 4980B of the Code and/or ERISA for failure to
provide COBRA to any COBRA Beneficiary as set forth in Section 6.01(c) of the
Merger Agreement. Such indemnification obligation shall survive until
expiration of the applicable statute of limitations.
SECTION 2.3 Procedure for Claims.
(a) Notice of Claim. Promptly, but in any event within 30 days
after obtaining knowledge of any claim or demand which may give rise to, or
could reasonably give rise to, a claim for indemnification hereunder (any such
claim an "Indemnification Claim"), the party or parties entitled to
indemnification hereunder (the "Indemnified Party") shall give written notice
to the party or parties subject to indemnification obligations therefor (the
"Indemnifying Party") of such Indemnification Claim (a "Notice of Claim"). A
Notice of Claim shall be given with respect to all Indemnification Claims;
provided, however, that the failure to timely give a Notice of Claim to the
Indemnifying Party shall not relieve the Indemnified Party hereunder to the
extent that the Indemnifying Party is not prejudiced by such failure. The
Notice of Claim shall set forth, to the extent known to the particular
Indemnified Party, the amount (or a reasonable estimate) of the loss, damage or
expense suffered, or which may be suffered, by the Indemnified Party as a
result of such Indemnification Claim and a brief description of the facts
giving rise to such Indemnification Claim. The Indemnified Party shall furnish
to the Indemnifying party such information (in reasonable detail) as the
Indemnified party may have with respect to such Indemnification Claim
(including copies of any summons, complaint or other pleading which may have
been served on it and any written claim demand, invoice, billing or other
document evidencing or asserting the same).
(b) Third-Party Claims.
(i) If the claim or demand set forth in the Notice of
Claim is a claim or demand asserted by a third party (a "Third-Party
Claim"),the Indemnifying Party shall have 15 days (or such shorter period if an
answer or other response or filing with respect to the pleadings served by the
third party is required prior to the 15th day) after the date of receipt by the
Indemnifying Party of the Notice of Claim (the "Notice Date") to notify the
Indemnified Party in writing of the election by the Indemnifying Party to
defend the Third Party Claim on behalf of the Indemnified Party.
(ii) If the Indemnifying Party elects to defend a Third
Party Claim on behalf of the Indemnified Party, the Indemnified Party shall
make available to the Indemnifying Party and its agents and representatives all
records and other materials in its
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possession which are reasonably required in the defense of the Third Party
Claim and the Indemnifying Party shall pay any expenses payable in connection
with the defense of the Third Party Claim as they are incurred (whether
incurred by the Indemnified Party or Indemnifying Party).
(iii) In no event may the Indemnifying Party settle or
compromise any Third Party Claim without the Indemnified Party's consent, which
shall not be unreasonably withheld.
(iv) If the Indemnifying Party elects to defend a Third
Party Claim, the Indemnified Party shall have the right to participate in the
defense of the Third Party Claim, at the Indemnified Party's expense (and
without the right to indemnification for such expense under this Agreement);
provided, however, that the reasonable fees and expenses of counsel retained by
the Indemnified Party shall be at the expense of the Indemnifying Party if (A)
the use of the counsel chosen by the Indemnifying Party to represent the
Indemnified Party would present such counsel with a conflict of interest; (B)
the parties to such proceeding include both the Indemnified Party and the
Indemnifying Party and there may be legal defenses available to the Indemnified
Party which are different from or additional to those available to the
Indemnifying Party; (C) within 10 days after being advised by the Indemnifying
Party of the identity of counsel to be retained to represent the Indemnified
Party, the Indemnified Party shall have objected to the retention of such
counsel for valid reasons (which shall be stated in a written notice to
Indemnifying Party), and the Indemnifying Party shall not have retained
different counsel reasonably satisfactory to the Indemnified Party; or (D) the
Indemnifying Party shall authorize the Indemnified Party to retain separate
counsel at the expense of the Indemnifying Party.
(v) If the Indemnifying Party does not elect to defend a
Third Party Claim, or does not continue to defend a Third Party Claim, the
Indemnified Party shall have the right, in addition to any other right or
remedy it may have hereunder, at the sole and exclusive expense of the
Indemnifying Party, to defend such Third Party Claim; provided, however, that
such expenses shall be payable by the Indemnifying Party only if and when such
Third Party Claim becomes payable.
(vi) To the extent that an Indemnified Party recovers on a
Third Party Claim, the amount of such recovery (after deduction of all costs
and expenses incurred in connection with such Third Party Claim) shall reduce,
dollar-for-dollar, the indemnification obligation otherwise owing by the
Indemnifying Party.
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(c) Cooperation in Defense. The Indemnified Party shall
cooperate with the Indemnifying Party in the defense of a Third Party Claim.
Subject to the foregoing, (i) the Indemnified Party shall not have any
obligation to participate in the defense of or to defend any Third Party Claim,
and (ii) the Indemnified Party's defense of or its participation in the defense
of any Third Party Claim shall not in any way diminish or lessen its right to
indemnification as provided in this Agreement.
ARTICLE III
GENERAL PROVISIONS
SECTION 3.1 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
3.1):
(a) if to Parent:
Hanover Compressor Company
00000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx XxXxxx, President
with a copy to:
Xxxx Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(b) if to Sub:
Hanover Acquisition Corp.
00000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx XxXxxx, President
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with a copy to:
Xxxx Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(c) if to Western:
Western Resources, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxx, Vice President
with a copy to:
Xxxx X. Xxxxxxxxx, General Counsel
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
SECTION 3.3 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 3.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 3.5 Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof and thereof and supersedes all prior agreements and undertakings, both
written and oral, between Western on the one hand, and Parent and/or Sub, on
the other hand, with respect to the subject matter hereof.
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SECTION 3.6 Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by, or on behalf of Western
and Parent.
SECTION 3.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Texas, applicable to
contracts executed in and to be performed entirely within that state. All
action and proceedings arising out of or relating to this Agreement shall be
heard and determined in any Texas state or federal court sitting in the city of
Houston, Texas.
SECTION 3.8 Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
WESTERN RESOURCES, INC.
Attest: By:
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Name: Name:
Title: Title:
HANOVER COMPRESSOR COMPANY
Attest: By:
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Name: Name:
Title: Title:
HANOVER ACQUISITION CORP.
Attest: By:
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Name: Name:
Title: Title:
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