INDEMNIFICATION AGREEMENT
Exhibit 10.8
This Indemnification Agreement (“Agreement”) is made as of
(the
“Effective Date”) by and between The Houston Exploration Company, a Delaware corporation
(the “Company”), and
(“Indemnitee”).
RECITALS
WHEREAS, highly competent persons have become more reluctant to serve publicly-held
corporations as directors and officers unless they are provided with adequate protection through
insurance and/or indemnification against the risks of claims being asserted against them arising
out of their service to and activities on behalf of such corporations; and
WHEREAS, uncertainties relating to indemnification have increased the difficulty of attracting
and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that the
increased difficulty in attracting and retaining such persons is detrimental to the best interests
of the Company’s stockholders and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future; and
WHEREAS, the Board has determined that, in order to help attract and retain qualified
individuals as directors and officers, the best interests of the Company and its stockholders will
be served by attempting to maintain, on an ongoing basis, at the Company’s sole expense, insurance
to protect persons serving the Company and its subsidiaries as directors and officers in other
capacities from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and other business
enterprises for many years, the Company believes that, given current market conditions and trends,
such insurance may be available to it in the future only at higher premiums and with more
exclusions. At the same time, directors, officers, and other persons in service to corporations or
business enterprises are being increasingly subjected to expensive and time-consuming litigation;
and
WHEREAS, the Board has determined that, in order to help attract and retain qualified
individuals as directors and in other capacities, the best interests of the Company and its
stockholders will be served by assuring such individuals that the Company will indemnify them to
the maximum extent permitted by law; and
WHEREAS, the Amended and Restated Certificate of Incorporation (the “Certificate of
Incorporation”) and the By-Laws (the “By-Laws”) of the Company require indemnification
of the officers and directors of the Company, and Indemnitee may also be entitled to
indemnification pursuant to the Delaware General Corporation Law (“DGCL”); and
WHEREAS, the Certificate of Incorporation, the By-Laws and the DGCL expressly provide that the
indemnification provisions set forth therein are not exclusive, and thereby contemplate that
contracts may be entered into between the Company and members of the Board,
officers and other persons with respect to indemnification and the advancement of defense
costs; and
WHEREAS, it therefore is reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify, and to advance defense costs on behalf of, such persons to the
fullest extent permitted by applicable law so that they will serve or continue to serve the Company
free from undue concern that they will not be so indemnified; and
WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of
Incorporation, By-Laws and any resolutions adopted pursuant thereto, and shall not be deemed a
substitute therefor, nor shall it be deemed to diminish or abrogate any rights of Indemnitee
thereunder; and
WHEREAS, the Board recognizes that the Indemnitee does not regard the protection available
under the Company’s Certificate of Incorporation, the By-Laws and insurance program as adequate in
the present circumstances, and may not be willing to serve or continue to serve as a director
and/or in such other capacity as the Company may request without adequate protection, and the
Company desires Indemnitee to serve in such capacity; and
WHEREAS, Indemnitee is willing to serve, and continue to serve, and take on additional service
as a member of the Board on the condition that he or she be indemnified as provided for herein.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:
1. Services to the Company. Indemnitee will serve or continue to serve, at the will
of the Company, as an officer, director or key employee of the Company for so long as Indemnitee is
duly elected or appointed or until Indemnitee tenders his or her resignation.
2. Definitions. As used in this Agreement:
(a) “Change of Control” means:
(i) the acquisition after the Effective Date, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial
ownership of 20% or more of either (i) the then outstanding shares of common stock of the Company
(the “Outstanding Common Stock”) or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”), provided that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from
the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation controlled by the
Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) hereof; or
(ii) individuals, who, as of the Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board provided
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that any individual becoming a director subsequent to the Effective Date whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii) consummation after the Effective Date, of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the Company (a
“Corporate Transaction”) unless, in each case, following such Corporate Transaction, (A)
(1) all or substantially all of the persons who were the beneficial owners of the Outstanding
Common Stock immediately prior to such Corporate Transaction beneficially own, directly or
indirectly, more than 60% of the then outstanding shares of common stock of the corporation
resulting from such Corporate Transaction, and (2) all or substantially all of the persons who were
the beneficial owners of the Outstanding Voting Securities immediately prior to such Corporate
Transaction beneficially own directly or indirectly, more than 60% of the combined voting power of
the then outstanding voting securities entitled to vote generally in the election of directors of
the corporation resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership of the Outstanding Common Stock and the Outstanding Voting
Securities immediately prior to such Corporate Transaction, as the case may be, (B) no Person
(excluding (1) any corporation resulting from such Corporate Transaction or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such Corporate
Transaction and (2) any Person approved by the Incumbent Board) beneficially owns, directly or
indirectly, 20% or more of the then outstanding shares of common stock of the corporation resulting
from such Corporate Transaction or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed prior to such
Corporate Transaction and (C) at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action of the Board providing for such
Corporate Transaction.
(b) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(c) “Corporate Status” shall describe the status of a person who is or was a director,
officer, trustee, partner, member, fiduciary, employee or agent of the Company or of any other
Enterprise (as defined below), which such person is or was serving at the request of the Company.
(d) “Disinterested Director” shall mean a director of the Company who is not and was
not a party to the Proceeding (as defined below) in respect of which indemnification is sought by
Indemnitee.
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(e) “Enterprise” shall mean any corporation, limited liability company, partnership,
joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was
serving at the request of the Company as a director, officer, trustee, partner, member, fiduciary,
employee or agent.
(f) “Expenses” shall include 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 and amounts customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding (as defined below). Expenses also shall include costs
incurred in connection with any appeal resulting from any Proceeding (as defined below), including,
without limitation, the premium, security for, and other costs relating to any bond, supersedeas
bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in
settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(g) References to “fines” shall include any excise tax assessed on a person with
respect to any employee benefit plan pursuant to applicable law.
(h) References to “serving at the request of the Company” shall include any service
provided at the request of the Company as a director, officer, trustee, partner, member, fiduciary,
employee or agent of the Company which imposes duties on, or involves services by, such director,
officer, trustee, partner, member, fiduciary, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries.
(i) Any action taken or omitted to be taken by a person for a purpose which he or she
reasonably believed to be in the interests of the participants and beneficiaries of an employee
benefit plan shall be deemed to have been taken in “good faith” and for a purpose which is
“not opposed to the best interests of the Company”, as such terms are referred to in this
Agreement and used in the DGCL.
(j) The term “Proceeding” shall include any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether brought in the right of
the Company or otherwise and whether of a civil, criminal, administrative or investigative nature,
including any related appeal, in which Indemnitee was, is or will be involved as a party or witness
or otherwise by reason of the fact that Indemnitee is or was a director, officer, trustee, partner,
member, fiduciary, employee or agent of the Company, by reason of any action taken or not taken by
him or her while acting as director, officer, trustee, partner, member, fiduciary, employee or
agent of the Company, or by reason of the fact that he or she is or was serving at the request of
the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent of any
other Enterprise, in each case whether or not serving in such capacity at the time any liability or
expense is incurred for which indemnification, reimbursement, or advancement of expenses can be
provided under this Agreement.
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(k) “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 (5) 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
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.
3. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 3 if Indemnitee is made, or is threatened to be
made, a party to or a participant in (as a witness or otherwise) any Proceeding, other than a
Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this
Section 3, Indemnitee shall be indemnified against all judgments, fines, penalties, amounts paid in
settlement (if such settlement is approved in writing in advance by the Company, which approval
shall not be unreasonably withheld) (including, without limitation, all interest, assessments and
other charges paid or payable in connection with or in respect of any of the foregoing)
(collectively, “Losses”) and Expenses actually and reasonably incurred by Indemnitee or on his or
her behalf in connection with such Proceeding or any action, discovery event, claim, issue or
matter therein or related thereto, if Indemnitee acted in good faith, for a purpose which he or she
reasonably believed to be in or not opposed to the best interests of the Company and, in the case
of a criminal Proceeding, in addition, had no reasonable cause to believe that his or her conduct
was unlawful.
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 made, or
is threatened to be made, a party to or a participant in (as a witness or otherwise) any Proceeding
by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4,
Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or her
or on his or her behalf in connection with the defense or settlement of such Proceeding or any
action, discovery event, claim, issue or matter therein or related thereto, if Indemnitee acted in
good faith, for a purpose which he or she reasonably believed to be in or not opposed to the best
interests of the Company. No indemnification, however, 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 court in which the Proceeding was brought
or, if no Proceeding was brought in a court, any court of competent jurisdiction, determines upon
application that, in view of all the circumstances of the case, Indemnitee fairly and reasonably is
entitled to indemnification for such portion of the Expenses as the court deems proper.
5. Indemnification for Expenses Where Indemnitee is Wholly or Partly Successful.
Notwithstanding and in addition to any other provisions of this Agreement, to the extent that
Indemnitee is a party to a Proceeding and is successful, on the merits or otherwise, in the defense
of any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him or her or on his or her behalf in connection with such
successful defense. For the avoidance of doubt, if Indemnitee is not wholly successful
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in such Proceeding but is successful, on the merits or otherwise, as to one or more but less
than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him or her or on his or her behalf in
connection with each successfully resolved claim, issue or matter. For purposes of this Section 5
and, without limitation, the termination of any claim, issue or matter in such a Proceeding by
withdrawal or dismissal, with or without prejudice, shall be deemed to be a successful result as to
such claim, issue or matter.
6. Indemnification for Expenses of a Witness. Notwithstanding and in addition to any
other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her
Corporate Status, a witness in or otherwise incurs Expenses in connection with any Proceeding to
which Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and
reasonably incurred by him or her or on his or her behalf in connection therewith.
7. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4, or 5 hereof or in Section 145 of the
DGCL, the Company shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee
is made, or is threatened to be made, a party to any Proceeding (including a Proceeding by or in
the right of the Company to procure a judgment in its favor) against all Losses and Expenses
actually and reasonably incurred by Indemnitee in connection with the Proceeding. No
indemnification shall be made under this Section 7(a) on account of Indemnitee’s conduct which
constitutes a breach of Indemnitee’s duty of loyalty to the Company or its stockholders or is an
act or omission not in good faith or which involves intentional misconduct or a knowing violation
of the law.
(b) For purposes of Sections 7(a), the meaning of the phrase “to the fullest extent
permitted by law” shall include, but not be limited to:
(i) to the fullest extent authorized or permitted by the then-applicable provisions of the
DGCL that authorize or contemplate indemnification by agreement, or the corresponding provision of
any amendment to or replacement of the DGCL, and
(ii) to the fullest extent authorized or permitted by any amendments to or replacements of the
DGCL adopted after the date of this Agreement that increase the extent to which a corporation may
indemnify its officers and directors.
(c) Indemnitee shall be entitled to the prompt payment of all Expenses reasonably incurred in
enforcing successfully (fully or partially) this Agreement.
8. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not
be obligated under this Agreement to make any indemnity in connection with any claim made against
Indemnitee:
(a) for which payment actually has been received by or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect to any excess beyond the amount
actually received under such insurance policy or other indemnity provision; or
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(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act, as
amended, or similar provisions of state blue sky law, state statutory law or common law; or
(c) prior to a Change of Control, in connection with any Proceeding (or any part of any
Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding)
initiated by Indemnitee against the Company (other than any Proceeding referred to in Sections
13(d) or (e) below or any other Proceeding commenced to recover any Expenses referred to in Section
7(c) above) or its directors, officers, employees or other indemnitees, unless (i) the Board
authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the
Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law; or
(d) if the funds at issue were paid pursuant to a settlement approved by a court and
indemnification would be inconsistent with any condition with respect to indemnification expressly
imposed by the court in approving the settlement.
9. Advances
of Expenses; Defense of Claim (a) Notwithstanding any provision of this
Agreement to the contrary, the Indemnitee shall be entitled to advances of Expenses incurred by him
or her or on his or her behalf in connection with a Proceeding that Indemnitee claims is covered by
Sections 3 and 4 hereof, prior to a final determination of eligibility for indemnification and
prior to the final disposition of the Proceeding, upon the execution and delivery to the Company of
an undertaking by or on behalf of the Indemnitee providing that the Indemnitee will repay such
advances to the extent that it ultimately is determined that Indemnitee is not entitled to be
indemnified by the Company. This Section 9(a) shall not apply to any claim made by Indemnitee for
which indemnity is excluded pursuant to Section 8.
(b) The Company shall advance pursuant to Section 9(a) the Expenses incurred by Indemnitee in
connection with any Proceeding within thirty (30) days after the receipt by the Company of a
written statement or statements requesting such advances from time to time, whether prior to or
after final disposition of any Proceeding. Advances shall be unsecured and interest free.
Advances shall be made without regard to Indemnitee’s ability to repay such advances. Advances
shall include any and all reasonable Expenses incurred pursuing an action to enforce such right to
receive advances.
(c) The Company will be entitled to participate in the Proceeding at its own expense.
(d) The Company shall not settle any action, claim or Proceeding (in whole or in part) which
would impose any Expense, judgment, fine, penalty or limitation on the Indemnitee without the
Indemnitee’s prior written consent, which consent shall not be unreasonably withheld.
10. Procedure
for Notification and Application for Indemnification (a) Within sixty
(60) days after the actual receipt by Indemnitee of notice that he or she is a party to or is
requested to be a participant in (as a witness or otherwise) any Proceeding, Indemnitee shall
submit to the
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Company a written notice identifying the Proceeding. The failure by the Indemnitee
to notify the Company within such 60-day period will not relieve the Company from any liability
which it may have to Indemnitee (i) otherwise than under this Agreement, and (ii) under this
Agreement, provided that if the Company can establish that such failure to notify the Company in a
timely manner resulted in actual prejudice to the Company, then the Company will be relieved from
liability only to the extent of such actual prejudice.
(b) Indemnitee shall at the time of giving such notice pursuant to Section 10(a) or thereafter
deliver to the Company a written application for indemnification. Such application may be
delivered at such time as Indemnitee deems appropriate in his or her sole discretion. Following
delivery of such a written application for indemnification by Indemnitee, the Indemnitee’s
entitlement to indemnification shall be determined promptly according to Section 11(a) of this
Agreement and the outcome of such determination shall be reported to Indemnitee in writing within
forty-five (45) days of the submission of such application.
11. Procedure Upon Application for Indemnification.
(a) Upon written application by Indemnitee for indemnification pursuant to Section 10(b) or
written statement by Indemnitee for advances of Expenses pursuant to Section 9(b), a determination
with respect to Indemnitee’s entitlement thereto pursuant to the mandatory terms of this Agreement,
pursuant to statute, or pursuant to other sources of right to indemnity, and pursuant to Section 12
of this Agreement shall be made in the specific case: (i) by a majority vote of the Disinterested
Directors, whether or not such directors otherwise would constitute a quorum of the Board; (ii) by
a committee of Disinterested Directors designated by a majority vote of such directors, whether or
not such directors would otherwise constitute a quorum of the Board, (iii) if there are no
Disinterested Directors or if so requested by (x) the Indemnitee in his or her sole discretion or
(y) the Disinterested Directors, by Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee or (iv) by the stockholders of the Company. Indemnitee
shall reasonably cooperate with the person, persons or entity making the determination with respect
to Indemnitee’s entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or expenses (including attorneys’ fees and
disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making
such determination 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 from any such costs and expenses.
(b) If it is determined that Indemnitee is entitled to indemnification requested by the
Indemnitee in a written application submitted to the Company pursuant to Section 10(b), payment to
Indemnitee shall be made within ten (10) days after such determination. All
advances of Expenses requested in a written statement by Indemnitee pursuant to Section 9(b)
prior to a final determination of eligibility for indemnification shall be paid in accordance with
Section 9.
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(c) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as
provided in this Section 11(c). If a Change of Control shall not have occurred, the Independent
Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee
advising him or her of the identity of the Independent Counsel so selected. If a Change of Control
shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee
shall request that such selection be made by the Board, 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 ten (10) days after such written notice of selection shall have been received, 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
Section 2 of 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 a written objection is made and substantiated, the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection is withdrawn or a
court of competent jurisdiction has determined that such objection is without merit.
(d) If, within twenty (20) days after submission by Indemnitee of a written request for
indemnification pursuant to Section 9(b) or 10(b) hereof, no Independent Counsel shall have been
selected and not objected to, either the Company or Indemnitee may petition a 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 11(a) hereof.
(e) The Company agrees to pay the reasonable fees and expenses of the Independent Counsel and
to fully indemnify such Independent Counsel against any and all Expenses, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(f) Upon the due commencement of any judicial proceeding or arbitration pursuant to Section
13(a) of this Agreement, any Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of professional conduct then
prevailing).
12. Presumptions and Effect of Certain Proceedings.
(a) Presumption in Favor of Indemnitee. 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 an application for indemnification in accordance with Section
10(a) of this Agreement, and the Company shall have the burden of proof to overcome that
presumption.
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(b) No Presumption Against Indemnitee. Neither the failure of the Company (including
by its directors or Independent Counsel) to have made a determination prior to the commencement of
any action pursuant to this Agreement nor an actual determination by the Company (including by its
directors or Independent Counsel) that Indemnitee has not met the applicable standard of conduct
for indemnification shall be a defense to the action or create a presumption that Indemnitee has
not met the applicable standard of conduct.
(c) Sixty Day Period for Determination. If the person, persons or entity empowered or
selected under Section 11 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within sixty (60) days after receipt by the
Company of an application therefor, a 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 application for
indemnification, or (ii) a prohibition of such indemnification under applicable law; provided,
however, that such 60-day period may be extended for a reasonable time, not to exceed an additional
thirty (30) 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.
(d) No Presumption from Termination of a Proceeding. 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 for a purpose which he or she reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his or her conduct was unlawful.
(e) Reliance as Safe Harbor. For purposes of any determination of good faith,
Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action or failure to act is
based on the records or books of account of the Company or any Enterprise other than the Company,
including financial statements, or on information supplied to Indemnitee by the officers of the
Company or any Enterprise other than the Company in the course of their duties, or on the advice of
legal counsel for the Company or any Enterprise other than the Company or on information or records
given or reports made to the Company or any Enterprise other than the Company by an independent
certified public accountant or by an appraiser or other expert selected by the Company or any
Enterprise other than the Company, except if the Indemnitee knew or had reason to know that such
records or books of account of the Company, information supplied by the officers of the Company,
advice of legal counsel or information or records given or reports made by an independent certified
public accountant or by an appraiser or other expert were materially false or inaccurate. The
provisions of this Section 12(e) shall not be deemed to
be exclusive or to limit in any way the other circumstances in which the Indemnitee may be
deemed or found to have met any applicable standard of conduct.
(f) Actions of Others. The knowledge and/or actions, or failure to act, of any other
director, officer, trustee, partner, member, fiduciary, employee or agent of the Company or
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any
Enterprise other than the Company shall not be imputed to Indemnitee for purposes of determining
the right to indemnification under this Agreement.
13. Remedies of Indemnitee.
(a) Adjudication/Arbitration. In the event that (i) a determination is made pursuant
to Section 11 of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 of this Agreement,
(iii) subject to Section 12(c), no determination of entitlement to indemnification shall have been
made pursuant to Section 11(a) of this Agreement within 60 days after receipt by the Company of the
application for indemnification, or (iv) payment of indemnification is not made pursuant to
Sections 3, 4, 5, 6, 7 and 11(b) of this Agreement within ten (10) days after a determination has
been made that Indemnitee is entitled to indemnification, or after receipt by the Company of a
written request for any additional monies owed with respect to a Proceeding as to which it already
has been determined that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to
an adjudication by a court of his or her entitlement to such indemnification or advancement of
Expenses. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. The Company shall not oppose Indemnitee’s right to seek any such
adjudication or award in arbitration.
(b) Indemnitee Not Prejudiced by Prior Adverse Determination. In the event that a
determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is
not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this
Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits,
and Indemnitee shall not be prejudiced by reason of the prior adverse determination. In any
judicial proceeding or arbitration commenced pursuant to this Section 13, the Company shall have
the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as
the case may be.
(c) Company Bound by Prior Determination. If a determination shall have been made
pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 13, 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 application for indemnification, or (ii) a prohibition of such indemnification
under applicable law.
(d) Expenses. In the event that Indemnitee, pursuant to this Section 13, seeks a
judicial adjudication of or an award in arbitration to enforce his or her 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 actually and
reasonably incurred by him or her in such judicial adjudication or arbitration if it shall be
determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive all
or part of the indemnification or advancement of Expenses sought which the Company had disputed
prior to the commencement of the judicial proceeding or arbitration.
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(e) Advances of Expenses. If requested by Indemnitee, the Company shall (within ten
(10) days after receipt by the Company of a written request therefore) advance to Indemnitee the
Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration
brought by Indemnitee for indemnification or advance of Expenses from the Company under this
Agreement or under any directors’ and officers’ liability insurance policies maintained by the
Company, if the Indemnitee has submitted an undertaking to repay such Expenses if Indemnitee
ultimately is determined to not be entitled to such indemnification, advancement of Expenses or
insurance recovery, as the case may be. The Indemnitee’s financial ability to repay any such
advances shall not be a basis for the Company to decline to make such advances.
(f) Precluded Assertions by the Company. The Company shall be precluded from
asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the
procedures and presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement.
14. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) Rights of Indemnitee Not Exclusive. 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 at any time be entitled under applicable law, the Certificate of
Incorporation, the By Laws, any agreement, vote of stockholders or a resolution of directors, or
otherwise. No right or remedy herein conferred by this Agreement 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 or subsequent assertion or employment of any other right or remedy.
(b) Survival of Rights. 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 in his or her Corporate Status prior to
such amendment, alteration or repeal.
(c) Change of Law. To the extent that a change in Delaware law, whether by statute or
judicial decision, permits greater indemnification or advancement of Expenses than would be
afforded currently under the Certificate of Incorporation, the By-Laws 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.
(d) Insurance. To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, trustees, partners, members,
fiduciaries, employees, or agents of the Company or of 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 such
director, trustee, partner, member, fiduciary, officer, employee or agent under such policy or
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policies. If, at the time the Company receives notice from any source of a Proceeding as to which
Indemnitee is a party or a participant (as a witness or otherwise) the Company has director and
officer liability insurance in effect that covers Indemnitee, the Company shall give prompt notice
of such Proceeding to the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in
accordance with the terms of such policies.
(e) Subrogation. In the event of any 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 take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce such
rights.
(f) Other Payments. The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) if and
to the extent that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
(g) Other Indemnification. The Company’s obligation to indemnify or advance Expenses
hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer,
trustee, partner, member, fiduciary, employee or agent of any other Enterprise shall be reduced by
any amount Indemnitee has actually received as indemnification or advancement of expenses from such
Enterprise.
15. Duration of Agreement. This Agreement shall continue until and terminate upon the
later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as any of
the following: a director, officer, agent or employee of the Company or as a director, officer,
trustee, partner, member, fiduciary, employee or agent of any other corporation, partnership, joint
venture, trust, employee benefit plan or other Enterprise which Indemnitee served at the request of
the Company; or (b) one (1) year after the final termination of any Proceeding (including after the
expiration of any rights of appeal) 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 13 of this Agreement (including any rights of appeal of any
Proceeding commenced pursuant to Section 13). This Agreement shall be binding upon the Company and
its successors and assigns and shall inure to the benefit of Indemnitee and his or her heirs,
executors and administrators.
16. Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any
way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by
law; (b) such provision or provisions 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; and (c) to
the fullest extent possible, the provisions of this Agreement (including, without limitation, each
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portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.
17. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and
assumed the obligations imposed on it hereby in order to induce Indemnitee to serve, or to continue
to serve, as a director, officer, employee and/or agent of the Company, and the Company
acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a
director, officer, employee and/or agent of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings, oral, written and
implied, between the parties hereto with respect to the subject matter hereof.
18. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by each 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 of this Agreement nor shall any waiver constitute a continuing waiver.
19. Successors and Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) and any acquiror of all or substantially all of the
business or assets of the Company, by agreement in form and substance reasonably satisfactory to
Indemnitee and/or his or her counsel, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to perform it if no such
succession had taken place.
(b) This Agreement will be binding upon and inure to the benefit of the Company and any
successor to the Company, including, without limitation, any person acquiring directly or
indirectly all or substantially all of the business or assets of the Company whether by purchase,
merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed
the “Company” for purposes of this Agreement), but will not otherwise be assignable or
delegatable by the Company.
(c) This Agreement will inure to the benefit of and be enforceable by the Indemnitee’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
legatees and other successors.
(d) This Agreement is personal in nature and neither of the parties hereto will, without the
consent of the other, assign or delegate this Agreement or any rights or obligations hereunder
except as expressly provided in Sections 19(a), (b) and (c). Without limiting the generality or
effect of the foregoing, Indemnitee’s right to receive payments hereunder will not be assignable,
whether by pledge, creation of a security interest or otherwise, other than by a transfer by the
Indemnitee’s will or by the laws of descent and distribution, and, in the event of
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any attempted
assignment or transfer contrary to this Section 19(d), the Company will have no liability to pay
any amount so attempted to be assigned or transferred.
20. Notices. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if: (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall have been directed,
on the date of such receipt, or (ii) mailed by certified or registered mail with postage prepaid,
on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or
such other address as Indemnitee subsequently shall provide in writing to the Company.
(b) If to the Company to:
The Houston Exploration Company
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
or to any other address as may have been furnished to Indemnitee in writing by the Company.
21. Contribution. To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to
be paid in settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in
light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits
received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving
cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).
22. Applicable Law and Consent to Jurisdiction. This Agreement and the legal
relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws, principles or rules.
Except with respect to any arbitration commenced by Indemnitee pursuant to Section 13 of this
Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any
action or proceeding arising out of or in connection with this Agreement shall be brought only in
the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or
federal court in the United States of America or any court in any other country,
(ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any
action or proceeding arising out of or in connection with this Agreement, (iii) irrevocably
appoint, to the extent such party is not a resident of the State of Delaware, [Corporation Service
Company; 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000; Wilmington; New Castle County; Delaware 19808] 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
15
and validity as if
served upon such party personally within the State of Delaware, (iv) waive any objection to the
laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree
not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court
has been brought in an improper or inconvenient forum.
23. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the existence of this
Agreement.
24. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of
the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this Agreement or to
affect the construction thereof.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year
first above written.
| THE HOUSTON EXPLORATION COMPANY | INDEMNITEE | |||||||||
Name:
|
Name | |||||||||
Title:
|
Address: | |||||||||
Address for Notices:
Attention: Corporate Secretary
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