INDEMNIFICATION AGREEMENT
EXHIBIT 10.R
This Indemnification Agreement (this “Agreement”) is made and delivered this 15th day of
December, 2004, by El Paso Corporation (the “Company”), to and for the benefit of Xxxxxxx X. Xxxxxx
(“Xxxxxx”).
RECITALS
WHEREAS, the Company executed an Indemnification Agreement dated September 2, 2003, for the
benefit of Xxxxxx upon Xxxxxx’x election to the Company’s Board of Directors (“Board”) and it is
the Company’s intent that this Indemnification Agreement shall replace the Indemnification
Agreement dated September 2, 2003. Notwithstanding the foregoing, to the extent any claims for
indemnification or advancement of expenses existed under his prior agreement, such claims shall be
governed by the terms of that agreement.
WHEREAS, in order to induce Xxxxxx to continue as a member of the Company’s Board and as an
officer of the Company (“Officer”), the Company is executing and delivering to Xxxxxx this
Indemnification Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby agrees as follows:
SECTION 1. Right To Indemnification
If Xxxxxx is made a party or is threatened to be made a party to or is involved (including,
without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the
fact that he is or was a Director or Officer of the Company (or of any subsidiary of the Company)
or is or was serving at the request of the Company or the Board of Directors, including service
with respect to any employee benefit plan or any subsidiary of the Company, whether the basis of
such proceeding is alleged action in an official capacity as a Director or Officer or in any other
capacity while serving as a Director or Officer, he shall be indemnified and held harmless by the
Company to the fullest extent permitted by the General Corporation Law of the State of Delaware, as
the same exists or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader indemnification rights than said
law permitted the Company to provide prior to such amendment), or by other applicable law as then
in effect, against all expense, liability and loss (including attorneys’ fees, judgments, fines,
ERISA excise taxes or penalties and amounts to be paid in settlement) actually and reasonably
incurred or suffered by him in connection therewith and such indemnification shall continue after
Xxxxxx has ceased to be a Director or Officer and shall inure to the benefit of Xxxxxx’x heirs,
executors and administrators; provided, however, that except as provided in Section 2 of this
Agreement with respect to proceedings seeking to enforce
rights to indemnification or to advancement of expenses, the Company shall be required to
indemnify Xxxxxx in connection with a proceeding (or part thereof) initiated by Xxxxxx only if such
proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred
in this Agreement shall include the right to be paid by the corporation the reasonable expenses
(including attorneys’ fees) incurred in defending any such proceeding in advance of its final
disposition (hereinafter an “advancement of expenses”); further provided, however, that, if the
General Corporation Law of the State of Delaware requires, an advancement of expenses incurred by
Xxxxxx in his capacity as a Director or Officer (and not in any other capacity in which service was
or is rendered by Xxxxxx while a Director or Officer, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Company of an undertaking, if
permitted by Federal Law, by or on behalf of Xxxxxx, to repay all amounts so advanced if it shall
ultimately be determined that he is not entitled to be indemnified under this Agreement, or
otherwise, and provided further that except as provided in Section 2 of this Agreement with respect
to proceedings seeking to enforce rights to indemnification or an advancement of expenses, the
Company shall be required to advance expenses to Xxxxxx in connection with a proceeding initiated
by him only if such proceeding was authorized by the Board.
SECTION 2. Right To Bring Suit
If a claim under Section 1 of this Agreement is not paid in full by the Company (following the
final disposition of the proceeding) within sixty (60) days after a written claim has been received
by the Company, except in the case of a claim for an advancement of expenses, in which case final
disposition of the proceeding is not required and the applicable period shall be twenty (20) days,
Xxxxxx may at any time thereafter bring suit against the Company to recover the unpaid amount of
the claim and, to the extent successful in whole or in material part, Xxxxxx shall be entitled to
be paid the expense of prosecuting such suit. Xxxxxx shall be presumed to be entitled to
indemnification under this Agreement upon submission of a written claim (and, in an action brought
to enforce a claim for an advancement of expenses, where the required undertaking, if any is
required, has been tendered to the Company), and thereafter the Company shall have the burden of
proof to overcome the presumption that Xxxxxx is not so entitled. Neither the failure of the
Company (including its Board, independent legal counsel, or its stockholders), to have made a
determination prior to the commencement of such suit that indemnification of Xxxxxx is proper in
the circumstances, nor an actual determination by the Company (including its Board, independent
legal counsel or its stockholders) that Xxxxxx is not entitled to indemnification, shall be a
defense to the suit or create a presumption that Xxxxxx is not so entitled.
SECTION 3. Nonexclusivity of Rights
The rights to indemnification and to the advancement of expenses conferred in this Agreement
are in addition to and shall not be exclusive of any other right Xxxxxx may have or hereafter
acquire under any statute, provision of the Restated Certificate of Incorporation of the Company or
its By-laws, or under any other plan, program, arrangement, agreement, vote of stockholders or
disinterested Directors or otherwise.
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SECTION 4. Insurance, Contracts and Funding
The Company may maintain insurance, at its expense, to protect itself and Xxxxxx against any
expense, liability or loss, whether or not the Company would have the power to indemnify Xxxxxx
against such expense, liability or loss under the General Corporation Law of the State of Delaware.
The Company may enter into contracts with Xxxxxx in furtherance of the provisions of this
Agreement and may create a trust fund, grant a security interest or use other means (including,
without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary
to effect indemnification as provided in this Agreement. To the extent the Company maintains an
insurance policy or policies providing directors’ and officers’ liability insurance, Xxxxxx shall
be covered by such policy or policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any Company director or officer.
SECTION 5. Change of Control
(a) A “Change in Control” shall mean the occurrence of any of the following:
(I) An acquisition (other than directly from the Company) of any voting securities of the
Company (the “Voting Securities”) by any “Person” (as the term “person” is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), immediately after which such Person has “Beneficial Ownership” (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of more than twenty percent (20%) of (1)
the then-outstanding shares of common stock of the Company (or any other securities into
which such shares of common stock are changed or for which such shares of common stock are
exchanged) (the “Shares”) or (2) the combined voting power of the Company’s then-outstanding
Voting Securities; provided, however, that in determining whether a Change
in Control has occurred pursuant to this paragraph (I), the acquisition of Shares or Voting
Securities in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute a
Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (i) an employee
benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person the majority of the voting power, voting equity securities or
equity interest of which is owned, directly or indirectly, by the Company (for purposes of
this definition, a “Related Entity”), (ii) the Company or any Related Entity, or (iii) any
Person in connection with a “Non-Control Transaction” (as hereinafter defined);
(II) The individuals who, as of the Effective Date, are members of the board of directors of
the Company (the “Incumbent Board”), cease for any reason to constitute at least a majority
of the members of the board of directors of the Company or, following a Merger (as
hereinafter defined), the board of directors of (x) the corporation resulting from such
Merger (the “Surviving Corporation”), if fifty percent (50%) or more of the combined voting
power of the then-outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly, by another Person (a “Parent Corporation”) or
(y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation;
provided, however, that, if the election, or nomination for election by the
Company’s common stockholders, of any new director was approved by a
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vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of
the Plan, be considered a member of the Incumbent Board; and provided,
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of an actual or
threatened solicitation of proxies or consents by or on behalf of a Person other than the
board of directors of the Company (a “Proxy Contest”), including by reason of any agreement
intended to avoid or settle any Proxy Contest; or
(III) The consummation of:
(i) A merger, consolidation or reorganization (1) with or into the Company or (2) in
which securities of the Company are issued (a “Merger”), unless such Merger is a
“Non-Control Transaction.” A “Non-Control Transaction” shall mean a Merger in which:
(A) the stockholders of the Company immediately before such Merger own directly
or indirectly immediately following such Merger at least fifty percent (50%) of the
combined voting power of the outstanding voting securities of (x) the Surviving
Corporation, if there is no Parent Corporation or (y) if there is one or more than
one Parent Corporation, the ultimate Parent Corporation;
(B) the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for such Merger constitute at least a
majority of the members of the board of directors of (x) the Surviving Corporation,
if there is no Parent Corporation, or (y) if there is one or more than one Parent
Corporation, the ultimate Parent Corporation; and
(C) no Person other than (1) the Company, (2) any Related Entity, or (3) any
employee benefit plan (or any trust forming a part thereof) that, immediately prior
to the Merger, was maintained by the Company or any Related Entity, or (4) any
Person who, immediately prior to the Merger had Beneficial Ownership of twenty
percent (20%) or more of the then outstanding Shares or Voting Securities, has
Beneficial Ownership, directly or indirectly, of twenty percent (20%) or more of the
combined voting power of the outstanding voting securities or common stock of (x)
the Surviving Corporation, if fifty percent (50%) or more of the combined voting
power of the then outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly by a Parent Corporation, or (y) if there
is one or more than one Parent Corporation, the ultimate Parent Corporation;
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of the assets of the
Company and its subsidiaries taken as a whole to any Person (other than (x) a transfer to a
Related Entity, (y) a transfer under conditions that would constitute a Non-Control
Transaction, with the disposition of assets being regarded as a Merger for this
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purpose or (z) the distribution to the Company’s stockholders of the stock of a Related
Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely
because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the
permitted amount of the then outstanding Shares or Voting Securities as a result of the
acquisition of Shares or Voting Securities by the Company which, by reducing the number of
Shares or Voting Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons; provided, that if a Change in Control
would occur (but for the operation of this sentence) as a result of the acquisition of
Shares or Voting Securities by the Company and, after such share acquisition by the Company,
the Subject Person becomes the Beneficial Owner of any additional Shares or Voting
Securities and such Beneficial Ownership increases the percentage of the then outstanding
Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in
Control shall occur.
(b) Change in Control of the Company. The Company agrees that if there is a Change in
Control of the Company, then with respect to all matters thereafter arising concerning the rights
of Xxxxxx to indemnity payments and expense advances under this Agreement, any other agreements,
the Restated Certificate of Incorporation or the By-laws now or hereafter in effect relating to a
proceeding, the Company shall seek legal advice only from special independent counsel selected by
Xxxxxx and approved by the Company (which approval shall not be unreasonably withheld), and who has
not otherwise performed services for the Company (other than in connection with such matters) or
Xxxxxx. In the event that Xxxxxx and the Company are unable to agree on the selection of the
special independent counsel, such special independent counsel shall be selected by lot from among
at least five law firms in New York City, New York or Houston, Texas selected by Foshee, each
having no less than 50 partners. Such selection shall be made in the presence of Xxxxxx (and his
legal counsel or either of them, as Xxxxxx may elect). Such special independent counsel, among
other things, shall determine whether and to what extent Xxxxxx would be permitted to be
indemnified under applicable law and shall render its written opinion to the Company and Xxxxxx to
such effect.
The Company agrees to pay the reasonable fees of the special independent counsel referred to
above and to fully indemnify such counsel against any and all expenses (including attorneys’ fees),
claims, liabilities and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
SECTION 6. No Modification
No supplement, modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver. Any waiver to this agreement shall be in
writing.
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SECTION 7. Subrogation
In the event of payment under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of Xxxxxx, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce such rights.
SECTION 8. No Duplication of Payments
The Company shall not be liable under this Agreement to make any payment in connection with
any proceeding against Xxxxxx to the extent Xxxxxx has otherwise actually received payment (under
any insurance policy or otherwise) of the amounts otherwise indemnifiable hereunder.
SECTION 9. Notification and Defense of Proceedings
Xxxxxx agrees that he will use all reasonable efforts to notify the Company promptly after
receipt by Xxxxxx of notice of the commencement of any proceeding if he anticipates that a request
for indemnification in respect thereof is to be made against the Company under this Agreement; but
failure to so notify the Company will not relieve the Company from any indemnification or other
obligation or liability which it may have to Xxxxxx. With respect to any such proceeding as to
which Xxxxxx notifies the Company of the commencement thereof:
(a) the Company will be entitled to participate therein at its own expense; and
(b) except as otherwise provided below, to the extent that it may wish, the Company jointly
with any other indemnifying party similarly notified will be entitled to assume the defense
thereof, with counsel satisfactory to Xxxxxx. After notice from the Company to Xxxxxx of its
election to assume the defense thereof, the Company will not be liable to Xxxxxx under this
Agreement for any legal or other expenses subsequently incurred by Xxxxxx in connection with the
defense thereof other than reasonable costs of investigation or as otherwise provided below.
Xxxxxx shall have the right to employ its counsel in such proceeding, but the fees and expenses of
such counsel incurred after notice from the Company of its assumption of the defense thereof shall
be at the expense of Xxxxxx unless (i) the employment of counsel by Xxxxxx has been authorized by
the Company, (ii) Xxxxxx shall have reasonably concluded that there may be a conflict of interest
between the Company and Xxxxxx in the conduct of the defense of such proceeding or (iii) the
Company shall not in fact have employed counsel to assume the defense of such proceeding, in each
of which cases the fees and expenses of counsel shall be at the expense of the Company. The
Company shall not be entitled to assume the defense of any proceeding brought by or on behalf of
the Company or as to which Xxxxxx shall have made the conclusion provided for in clause (ii) of
this subsection 9(b).
(c) The Company shall not be liable to indemnify Xxxxxx under this Agreement for any amounts
paid in settlement of any proceeding effected by Xxxxxx without the Company’s prior written
consent. The Company shall not settle any proceeding in any manner which would
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impose any penalty or limitation on Xxxxxx without Xxxxxx’x prior written consent. Neither the
Company nor Xxxxxx will unreasonably withhold their consent to any proposed settlement.
SECTION 10. No Presumptions
For purposes of this Agreement, the termination of any proceeding against Xxxxxx by judgment,
order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Xxxxxx did not meet any
particular standard of conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition, neither the failure of the
Company to have made a determination as to whether Xxxxxx has met any particular standard of
conduct or had any particular belief, nor an actual determination by the Company that Xxxxxx has
not met such standard of conduct or did not have such belief, prior to the commencement of legal
proceedings by Xxxxxx to secure a judicial determination that Xxxxxx should be indemnified under
applicable law shall be a defense to Xxxxxx’x claim for indemnification or create a presumption
that Xxxxxx has not met any particular standard of conduct or did not have any particular belief.
SECTION 11. Acknowledgment of Reliance
The Company acknowledges that Xxxxxx is relying on this Agreement and the promises and
agreements of the Company herein in continuing his service as a Director and an Officer and in
agreeing to undertake and in undertaking his responsibilities, duties and services to and for the
Company in connection therewith.
SECTION 12. Miscellaneous
This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware. Each provision hereof is intended to be severable and the invalidity or illegality of
any portion of this Agreement shall not affect the validity or legality of the remainder.
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Executed as an instrument under seal as of the day and year first above written.
| EL PASO CORPORATION |
||||
| By: | /s/ Xxxxx X. Xxxxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxxxx | |||
| Title: | Senior Vice President Human Resources |
|||
| Hereunto duly authorized |
||||
| By: | /s/ Xxxxxx X. Xxxxx, Xx. | |||
| Name: | Xxxxxx X. Xxxxx, Xx. | |||
| Title: | Chairman of the Board | |||
| Hereunto duly authorized | ||||
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