Exhibit 10.5
Form of
INDEMNIFICATION AGREEMENT
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Carbon Energy Corporation
1. EFFECTIVE DATE: October 14, 1999
2. PARTIES: Carbon Energy Corporation
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
a Colorado corporation ("Corporation")
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("*****")
3. RECITALS/AGREEMENT:
(a) At the request of the Corporation, ***** currently serves as a
director and/or officer (as defined below) of the Corporation.
(b) ***** has indicated that it was and is a condition of *****'s
acceptance and continuing in such service that, among other things, the
Corporation agree to (i) indemnify ***** against liabilities, expenses and costs
incurred in connection with any claims, suits or proceedings related to *****'s
service to or for the Corporation and (ii) advance to him such expenses and
costs incurred in connection with such claims, suits or proceedings, all in
accordance with, and to the fullest extent permitted by, the Colorado Business
Corporation Act.
(c) The Corporation's Articles of Incorporation and the Colorado Business
Corporation Act contemplate that contracts may be made between the Corporation
and members of its Board of Directors and officers with respect to
indemnification and advancement of expenses and costs.
(d) In consideration of *****'s acceptance and continuation of service as
a director of the Corporation after the date of this Agreement, and in
consideration of the mutual covenants stated herein, the parties agree as
follows.
4. DEFINITIONS: As used in this Agreement, the following terms have the
following meanings:
(a) Act. The term "Act" means the Colorado Business Corporation Act as it
exists on the date of this Agreement and as it may be hereafter amended from
time to time. In the case of any amendment of the Colorado Business Corporation
Act after the
date of this Agreement, when used in reference to an act or omission occurring
prior to effectiveness of such amendment, the term "Act" shall include such
amendment only to the extent that the amendment can apply to a prior act or
omission and the amendment permits the Corporation to provide broader
indemnification rights than the Colorado Business Corporation Act permitted the
Corporation to provide at the date of this Agreement and prior to the amendment.
(b) Director. The term "director and/or officer" means an individual who
is or was a director or an officer, or both, of a corporation or an individual
who, while a director and/or officer of a corporation, is or was serving at the
corporation's request as a director, an officer, an agent, an associate, an
employee, a fiduciary, a manager, a member, a partner, a promoter, or a trustee
of, or to hold any similar position with, another corporation or other person or
of an employee benefit plan. A director or officer is considered to be serving
an employee benefit plan at the corporations' request if the director's or
officer's duties to the corporation also impose duties on, or otherwise involve
services by, the director or officer to the plan or to participants in or
beneficiaries of the plan. The term "director and/or officer" includes (i)
unless the context requires otherwise, the estate or personal representative of
a director or officer and (ii) any broader definition as may be provided in the
Act from time to time.
(c) Expenses. The term "expenses" includes counsel fees.
(d) Liability. The term "liability" means the obligation incurred with
respect to a proceeding to pay a judgment, settlement, penalty, fine, including
an excise tax assessed with respect to an employee benefit plan, or reasonable
expenses.
(e) Party. The term "party" includes a person who was, is, or is
threatened to be made a defendant or respondent in a proceeding.
(f) Proceeding. The term "proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether formal or informal.
5. AGREEMENT TO INDEMNIFY: The Corporation shall indemnify and hold harmless
***** in accordance with, and to the fullest extent permitted and/or required
by, the express provisions of the Act from and against any liability, judgment,
penalty, fine (including but not limited to excise taxes with respect to an
employee benefit plan), amounts paid in settlement and reasonable expenses
(including but not limited to expenses of investigation and preparation and fees
and disbursements of *****'s counsel, accountants or other experts) actually
incurred by ***** in connection with any proceeding in which ***** was or is
made a party or was or is involved (for example, as a witness) because ***** is
or was a director or an officer of the Corporation.
6. INSURANCE: So long as ***** may be subject to any possible proceeding by
reason of the fact that ***** is or was a director or officer of the
Corporation, to the extent the Corporation maintains an insurance policy or
policies providing directors' and
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officers' liability insurance, ***** shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage applicable to any then current director or officer of the Corporation.
7. ADVANCES: In the event of any proceeding in which ***** is a party or is
involved and which may give rise to a right of indemnification from the
Corporation pursuant to this Agreement, following written request to the
Corporation by *****, the Corporation shall pay to *****, in accordance with and
to the fullest extent permitted and/or required by express provisions of the
Act, amounts to cover reasonable expenses incurred by ***** in such proceeding
in advance of its final disposition upon (a) receipt by the Corporation of (i) a
written affirmation by ***** of *****'s good faith belief that ***** has met any
applicable standard of conduct described in the Act and (ii) a written
undertaking executed by or on behalf of ***** to repay the advance if it shall
ultimately be determined that ***** did not meet such standard of conduct and
(b) the making of a determination on behalf of the Corporation (in the manner
prescribed in the Act) that, based on the facts then known to the persons making
the determination would not preclude indemnification under the Act. If a
requested is made by ***** to the Corporation for advancement of any expenses
incurred in connection with any claim, suit or proceeding for which ***** has
claimed indemnification under this Agreement, ***** shall furnish to the
Corporation satisfactory evidence as to the amount of such expenses. The
undertaking required by clause (a) must be an unlimited general obligation of
*****, but it need not be secured, and it shall be accepted without reference to
the financial ability of ***** to make repayment.
8. BURDEN OF PROOF: If under applicable law, the entitlement of ***** to be
indemnified by the Corporation or to receive the advancement of expenses
hereunder depends upon whether a standard of conduct has been met, the
Corporation shall have the burden of proof of establishing that ***** did not
act in accordance with such standard. ***** shall be presumed to have acted in
accordance with such standard and to be entitled to indemnification or the
advancement of expenses (as the case may be) unless, based upon a preponderance
of the evidence, it shall be determined that ***** has not met such standard.
Such determination and any evaluation as to the reasonableness of amounts
claimed by ***** shall be made by the Board of Directors of the Corporation, or
such other body or persons as may be permitted by the Act, acting in good faith.
For purposes of this Agreement, unless otherwise expressly stated, the
termination of any proceeding by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption, and is not determinative, that *****
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law.
9. NOTICE TO THE CORPORATION: ***** shall notify the Secretary of the
Corporation in writing of any matter for which ***** intends to seek
indemnification hereunder as soon as reasonably practicable following the
receipt by ***** of written notice thereof; provided, however, that delay in so
notifying the Corporation shall not constitute a waiver or release by ***** or
rights hereunder.
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10. COUNSEL FOR PROCEEDING: In the event of any proceeding in which ***** is a
party or is involved and which may give rise to a right of indemnification
hereunder, the Corporation shall have the right to retain counsel reasonably
satisfactory to ***** to represent ***** and any others the Corporation may
designate in such proceeding. In any such proceeding, ***** shall have the right
to retain *****'s own counsel, but the fees and expenses of such counsel shall
be at the expense of ***** unless (a) the retention of such counsel has been
specifically authorized by the Corporation; (b) representation of ***** and
another party by the same counsel as proposed by the Corporation would be
inappropriate, in the reasonable judgment of *****, due to actual or potential
differing interests between (as might be the case for representation of both the
Corporation and ***** in a proceeding by or in the right of the Corporation);
(c) the counsel retained by the Corporation and satisfactory to ***** has
advised *****, in writing, that such counsel's representation of ***** would be
likely inappropriate due to actual or potential different interests, whether it
be a conflicting, inconsistent, diverse or other interest; or (d) the
Corporation shall fail to retain counsel for ***** in such proceeding.
Notwithstanding the foregoing, if an insurance carrier has supplied directors'
and officers' liability insurance covering the liability which is the subject of
a proceeding and is entitled to retain counsel for the defense of such
proceeding, then the insurance carrier shall retain counsel to conduct the
defense of such proceeding unless ***** and the Corporation concur in writing
that the insurance carrier's doing so is undesirable. The Corporation shall not
be liable under this Agreement for any settlement of any proceeding effected
without its written consent. The Corporation shall not settle any proceeding in
any manner which would impose any penalty or limitation on ***** without *****'s
prior written consent. Consent to a proposed settlement of any proceeding shall
not be unreasonably withheld or delayed by either the Corporation or *****.
11. ENFORCEMENT: The Corporation acknowledges that ***** is relying upon this
Agreement in serving as a director and/or officer of the Corporation, as well as
any serving in the future in any capacity as a director and/or officer of the
Corporation. If a claim for indemnification or advancement of expenses is not
paid in full by the Corporation within 30 days after a written claim has been
received from ***** by the Corporation, ***** may at any time bring suit against
the Corporation to recover the unpaid amount of the claim. If successful in
whole or in part in such suit, ***** shall also be entitled to be paid all
reasonable fees and expenses (including without limitation fees of counsel) in
bringing and prosecuting such claim. Whether or not ***** has met any applicable
standard of conduct, the Court in such suit may order indemnification or the
advancement of expenses as the Court deems proper (subject to any express
limitation of the Act). Further, the Corporation shall indemnify ***** from and
against any and all expenses (including attorneys' fees) and, if requested by
*****, shall (within 10 business days of such request) advance such expenses to
*****, which are incurred by ***** in connection with any claim asserted against
or suit brought by ***** for recovery under any directors' and officers'
liability insurance policies maintained by the Corporation, regardless of
whether ***** is unsuccessful in whole or in part in such claim or suit.
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12. PROCEEDINGS BY *****: The Corporation shall indemnify ***** and advance
expenses to ***** in connection with any proceeding (or part thereof) initiated
by ***** only if such proceeding (or part thereof) was authorized by the Board
of Directors of the Corporation.
13. NONEXCLUSIVITY: The rights of ***** for indemnification and advancement of
expenses under this Agreement shall not be deemed exclusive of, or in limitation
of, any rights to which ***** may be entitled under any applicable law, the
Corporation's Articles of Incorporation or Bylaws, vote of stockholders or
otherwise.
14. MISCELLANEOUS:
(a) Effectiveness. This Agreement is effective for, and shall apply to,
(i) any claim which is asserted or threatened before, on or after the date of
this Agreement but for which no action, suit or proceeding has actually been
brought prior to the date of this Agreement and (ii) any proceeding which is
threatened before, on or after the date of this agreement but which is not
pending prior to the date of this Agreement. Thus, this Agreement shall not
apply to any action, suit or proceeding which has actually been brought before
the date of this Agreement. So long as the foregoing standard of effectiveness
has been satisfied, this Agreement shall be effective for and shall be applied
to acts or omissions prior to, on or after the date of this Agreement.
(b) Survival; Continuation. The rights of ***** hereunder shall inure to
the benefit of ***** (even after ***** ceases to be a director or officer),
*****'s personal representative, heirs, executors, administrators and
beneficiaries; and this Agreement shall be binding upon the Corporation, its
successors and assigns. The rights of ***** under this Agreement shall continue
so long as ***** may be subject to any possible proceeding because of the fact
that ***** was a director or officer of the Corporation. If the Corporation
sells, leases, exchanges or otherwise disposes of, in a single transaction or
series of related transactions, all or substantially all of its property and
assets, the Corporation shall, as a condition precedent to such transaction,
cause effective provision to be made so that the person or entity acquiring such
property and assets shall become bound by and replace the Corporation under this
Agreement.
(c) Governing Law. This Agreement shall be governed by the laws of the
State of Colorado.
(d) Severability. If any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be deemed
amended to accomplished the objectives of the provision as originally written
and to the fullest extent permitted by law and all other provisions shall remain
in full force and effect.
(e) Amendment. No amendment, termination or cancellation of this
Agreement shall be effective unless in writing signed by the Corporation and
*****.
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(f) Subrogation. In the event of payment under this Agreement the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of *****, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Corporation effectively to bring suit
to enforce such rights.
(g) Headings. The headings in this Agreement are for convenience only and
are not to be considered in construing this Agreement.
(h) Counterparts. This Agreement may be executed in counterparts, both of
which shall be deemed an original, and together shall constitute one document.
The parties have executed this Agreement as of the effective date first
above stated.
CARBON ENERGY CORPORATION [*****]
By:
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Xxxxxxx X. XxXxxxxx
President
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SCHEDULE 10.5
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As of October 14, 1999, the following persons have entered into
Indemnification Agreements with Carbon Energy Corporation, the form of which is
attached as Exhibit 10.5, issued in the 1999 Exchange Offer:
Xxxxxxx X. XxXxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxx, Xx.
