EXHIBIT 10.19
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of February 1, 2005, by and between Harvest
Natural Resources, Inc., a Delaware corporation (the "Company"), and
_________________ ("Indemnitee"), an officer or director of the Company.
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board") seeks to
attract and retain highly qualified individuals to serve as officers and
directors of the Company;
WHEREAS, directors, officers, and other persons in service to
corporations or business enterprises are being increasingly subjected to
expensive and time-consuming litigation relating to, among other things, matters
that traditionally would have been brought only against the Company or business
enterprise itself, and highly qualified individuals may be more reluctant to
serve publicly-held corporations as directors, officers or in other capacities
unless they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the Company;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the Company will attempt to maintain on an ongoing basis, at its
sole expense, liability insurance to protect persons serving the Company and its
subsidiaries 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, the Company believes that such
insurance may be available to it in the future with more exclusions;
WHEREAS, 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");
WHEREAS, 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 of directors and officers with respect to indemnification of
directors and officers;
WHEREAS, the Board has determined that it is in the best interests of
the Company's stockholders that the Company facilitate its ability to attract
and retain highly qualified individuals to serve as directors and officers by
contractually obligating itself to indemnify, and to advance expenses on behalf
of, such persons to the fullest extent possible so that they will serve or
continue to serve the Company free from undue concern that they will not be
indemnified;
1
WHEREAS, this Agreement is a supplement to and in furtherance of the
Bylaws of the Company and any resolutions adopted pursuant thereto, and shall
not be deemed a substitute therefor, nor to diminish or abrogate any rights of
Indemnitee thereunder; and
WHEREAS, Indemnitee does not regard the protection available under the
Company's Bylaws and insurance adequate in the present circumstances, and may
not be willing to serve as an officer or director without adequate protection,
and the Company desires Indemnitee to serve in such capacity. Indemnitee is
willing to serve, continue to serve and to take on additional service for or on
behalf of the Company on the condition that he be so indemnified;
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 or director of the Company for
so long as Indemnitee is duly elected or appointed or until Indemnitee tenders
his or her resignation in writing.
2. DEFINITIONS. As used in this Agreement:
(a) "Change in Control" shall be deemed to occur upon the
earliest to occur after the date of this Agreement of any of the following
events:
(i) Acquisition of Stock by Third Party. Any Person
(as defined below) is or becomes the Beneficial Owner (as defined below),
directly or indirectly, of securities of the Company representing fifteen
percent (15%) or more of the combined voting power of the Company's then
outstanding securities;
(ii) Change in Board of Directors. During any period
of two (2) consecutive years (not including any period prior to the execution of
this Agreement), individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction described
in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose election by the Board or
nomination for election by the Company's shareholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority of the members of the Board;
(iii) Corporate Transactions. The effective date of a
merger or consolidation of the Company with any other entity, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 51% of the combined voting power
of the voting securities of the surviving entity outstanding immediately after
such merger or consolidation and with the power to elect at least a majority of
the board of directors or other governing body of such surviving entity;
2
(iv) Liquidation. The approval by the shareholders of
the Company of a complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the Company's
assets;
(v) Other Events. There occurs any other event of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or a response to any similar item on any similar
schedule or form) promulgated under the Exchange Act (as defined below), whether
or not the Company is then subject to such reporting requirement; and
(vi) Certain Definitions. For purposes of this
Section 2(a), the following terms shall have the following meanings:
(A) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(B) "Person" shall have the meaning as set
forth in Sections 13(d) and 14(d) of the Exchange
Act; provided, however, that Person shall exclude (i)
the Company, (ii) any trustee or other fiduciary
holding securities under an employee benefit plan of
the Company, and (iii) any corporation owned,
directly or indirectly, by the shareholders of the
Company in substantially the same proportions as
their ownership of stock of the Company.
(C) "Beneficial Owner" shall have the
meaning given to such term in Rule 13d-3 under the
Exchange Act; provided, however, that Beneficial
Owner shall exclude any Person otherwise becoming a
Beneficial Owner by reason of the shareholders of the
Company approving a merger of the Company with
another entity.
(b) "Corporate Status" describes the status of a person
who is or was a director, officer, employee or agent of the Company or of any
other corporation, partnership or joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the request of the
Company.
(c) "Disinterested Director" means a director of the
Company who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d) "Enterprise" shall mean the Company and any other
corporation, 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, employee, agent or fiduciary.
(e) "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
3
or expenses of the types 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. Expenses,
however, shall not include amounts paid in settlement by Indemnitee or the
amount of judgments or fines against Indemnitee.
(f) As to the Indemnitee, "good faith" shall mean
Indemnitee having acted in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal Proceeding, having had no reasonable cause to believe
Indemnitee's conduct was unlawful.
(g) Reference to "other enterprise" shall include
employee benefit plans; references to "fines" shall include any excise tax
assessed with respect to any employee benefit plan; references to "serving at
the request of the Company" shall include any service as a director, officer,
employee or agent of the Company which imposes duties on, or involves services
by, such director, officer, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Company" as
referred to in this Agreement.
(h) 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, in which Indemnitee was, is or will be involved as a party or otherwise
by reason of the fact that Indemnitee is or was a director or officer of the
Company, by reason of any action taken by him or of any action on his part while
acting as director or officer of the Company, or by reason of the fact that he
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or 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.
(i) "Independent Counsel" means a law firm, or a member
of a law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company or Indemnitee in any matter material to either such party (other
than with respect to matters concerning the Indemnitee under this Agreement, or
of other indemnitees under similar indemnification agreements), or (ii) any
other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall
not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee's rights
under this Agreement. The Company agrees to pay the reasonable fees and expenses
of the Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
4
3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. The Company shall
indemnify Indemnitee in accordance with the provisions of this Section 3 if
Indemnitee is, or is threatened to be made, a party to or a participant in 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 Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee or on his behalf in
connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company and, in the case of a
criminal proceeding had no reasonable cause to believe that his 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, or is threatened to be made, a party to or a
participant in 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 on
his behalf in connection with the defense or settlement of such Proceeding or
any claim, issue or matter therein, if Indemnitee acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company. No indemnification for Expenses shall be made under this Section 4
in respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudged by a court to be liable to the Company, unless and only to the
extent that any court in which the Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification.
5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR
PARTLY SUCCESSFUL. Notwithstanding any other provisions of this Agreement, to
the extent that Indemnitee is a party to (or a participant in) and is
successful, on the merits or otherwise, in any Proceeding or in defense of any
claim, issue or matter therein, in whole or in part, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him in
connection therewith. If Indemnitee is not wholly successful 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 on
his behalf in connection with each successfully resolved claim, issue or matter.
If the Indemnitee is not wholly successful in such Proceeding, the Company also
shall indemnify Indemnitee against all Expenses reasonably incurred in
connection with a claim, issue or matter related to any claim, issue, or matter
on which the Indemnitee was successful. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by 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
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.
5
7. ADDITIONAL INDEMNIFICATION.
(a) Notwithstanding any limitation in Sections 3, 4, or
5, the Company shall indemnify Indemnitee to the fullest extent permitted by law
if Indemnitee is a party to or 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 Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with the
Proceeding. No indemnity 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 shareholders or is an act or omission not in good faith or
which involves intentional misconduct or a knowing violation of the law.
(b) Notwithstanding any limitation in Sections 3, 4, 5
or 7(a), the Company shall indemnify Indemnitee to the fullest extent permitted
by law if Indemnitee is a party to or threatened to be made a party to any
Proceeding (including a Proceeding by or in the right of the Company to procure
a judgement in its favor) against all Expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by Indemnitee in connection
with the Proceeding.
(c) For purposes of Sections 7(a) and 7(b), the meaning
of the phrase "to the fullest extent permitted by law" shall include, but not be
limited to:
(i) to the fullest extent permitted by the
provision of the DGCL that authorizes or contemplates additional 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.
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 has actually been made to or on
behalf of Indemnitee under any insurance policy or other indemnity provision,
except with respect to any excess beyond the amount paid under any insurance
policy or other indemnity provision;
(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 Securities Exchange Act of 1934, as
amended, or similar provisions of state statutory law or common law; or
(c) in connection with any Proceeding (or part of any
Proceeding) initiated by Indemnitee prior to a Change in Control, or any
Proceeding initiated by Indemnitee against the
6
Company or its directors, officers, employees or other indemnitees prior to a
Change in Control, unless (i) the Company is expressly required by law to make
the indemnification, (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law,
(iii) Indemnitee initiated the Proceeding pursuant to Section 13 of this
Agreement and Indemnitee is successful in whole or in part in the Proceeding, or
(iv) the Proceeding was authorized by the Board of Directors of the Company.
9. ADVANCES OF EXPENSES. Notwithstanding any provision of this
Agreement to the contrary, the Company shall advance the expenses incurred by
Indemnitee in connection with any Proceeding within 30 days after the receipt by
the Company of a 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 the expenses and without regard to Indemnitee's
ultimate entitlement to indemnification under the other provisions of this
Agreement. Advances shall include any and all reasonable Expenses incurred
pursuing an action to enforce this right of advancement, including Expenses
incurred preparing and forwarding statements to the Company to support the
advances claimed. The Indemnitee shall qualify for advances solely upon the
execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is ultimately
determined that Indemnitee is not entitled to be indemnified by the Company.
10. PROCEDURE FOR NOTIFICATION AND DEFENSE OF CLAIM.
(a) To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request, including therein or
therewith such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification, not later than thirty (30) days after
receipt by Indemnitee of notice of the commencement of any Proceeding. The
omission to notify the Company will not relieve the Company from any liability
which it may have to Indemnitee otherwise than under this Agreement (unless the
omission xxxxx or prejudices the defense). The Secretary of the Company shall,
promptly upon receipt of such a request for indemnification, advise the Board in
writing that Indemnitee has requested indemnification.
(b) The Company will be entitled to participate in the
Proceeding at its own expense.
11. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
(a) Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 10(a), a determination
with respect to Indemnitee's entitlement thereto shall be made in the specific
case: (i) if a Change in Control shall have occurred, by Independent Counsel in
a written opinion to the Board of Directors, a copy of which shall be delivered
to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a
majority vote of the Disinterested Directors, even though less than a quorum of
the Board, or (B) if there are no such Disinterested Directors or, if such
Disinterested Directors so direct, by Independent Counsel in a
7
written opinion to the Board, a copy of which shall be delivered to Indemnitee
or (C) if so directed by the Board, by the stockholders of the Company; and, if
it is so determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within ten (10) days after such determination.
Indemnitee shall cooperate with the person, persons or entity making such
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 therefrom.
(b) 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(b). If a Change in Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change in Control shall have occurred, the Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within 10 days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the case may be, a written objection to such selection;
provided, however, that such objection may be asserted only on the ground that
the Independent Counsel so selected does not meet the requirements of
"Independent Counsel" as defined in 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 such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has determined
that such objection is without merit. If, within 20 days after submission by
Indemnitee of a written request for indemnification pursuant to Section 10(a)
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. Upon the due commencement of any
judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
8
12. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) In making a determination with respect to entitlement
to indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 10(a) of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with the making by
any person, persons or entity of any determination contrary to that presumption.
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 that indemnification is proper in the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or Independent Counsel)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct.
(b) If the person, persons or entity empowered or
selected under Section 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 the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law, excluding the application of Section 145
of the DGCL; 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; and provided,
further, that the foregoing provisions of this Section 12(b) shall not apply (i)
if the determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 11(a) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board of Directors has resolved to submit such determination
to the stockholders for their consideration at an annual meeting thereof to be
held within seventy five (75) days after such receipt and such determination is
made thereat, or (B) a special meeting of stockholders is called within fifteen
(15) days after such receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after having been so
called and such determination is made thereat, or (ii) if the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 11(a) of this Agreement.
(c) 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 (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best
9
interests of the Company or, with respect to any criminal Proceeding, that
Indemnitee had reasonable cause to believe that his conduct was unlawful.
(d) For purposes of any determination of good faith,
Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is
based on the records or books of account of the Enterprise, including financial
statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for
the Enterprise or on information or records given or reports made to the
Enterprise by an independent certified public accountant or by an appraiser or
other expert selected with the reasonable care by the Enterprise. The provisions
of this Section 12(d) shall not be deemed to be exclusive or to limit in any way
the other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
(e) The knowledge and/or actions, or failure to act, of
any director, officer, agent or employee of the Enterprise shall not be imputed
to Indemnitee for purposes of determining the right to indemnification under
this Agreement.
13. REMEDIES OF INDEMNITEE.
(a) 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) no determination of
entitlement to indemnification shall have been made pursuant to Section 11(a) of
this Agreement within 90 days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section
5, 6, 7 or the last sentence of Section 11(a) of this Agreement within ten (10)
days after receipt by the Company of a written request therefor, or (v) payment
of indemnification pursuant to Section 3 or 4 of this Agreement is not made
within ten (10) days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication by
a court of his entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his 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) 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
that 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) 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,
10
absent (i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this
Section 13, seeks a judicial adjudication of or an award in arbitration to
enforce his rights under, or to recover damages for breach of, this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company against, any and all Expenses actually and reasonably
incurred by him in such judicial adjudication or arbitration. If it shall be
determined in said judicial adjudication or arbitration that Indemnitee is
entitled to receive part but not all of the indemnification or advancement of
Expenses sought, the Indemnitee shall be entitled to recover from the Company,
and shall be indemnified by the Company against, any and all Expenses reasonably
incurred by Indemnitee in connection with such judicial adjudication or
arbitration.
(e) 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. The Company
shall indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within ten (10) days after receipt by the Company of a
written request therefore) advance such expenses to Indemnitee, which are
incurred by Indemnitee in connection with any action 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, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advancement of Expenses or insurance recovery,
as the case may be.
14. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) 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 Company's Certificate of Incorporation, the Company's
Bylaws, any agreement, a vote of stockholders or a resolution of directors, or
otherwise. No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal. 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 Company's Bylaws and this Agreement, it is the intent of the
parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change. No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other right and
remedy shall be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other right or remedy.
11
(b) To the extent that the Company maintains an insurance
policy or policies providing liability insurance for directors, officers,
employees, or agents of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or 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, officer, employee or agent
under such policy or policies. Notwithstanding any other provisions of this
Agreement, if a Change in Control shall have occurred, the Company shall furnish
Indemnitee with directors' and officers' liability insurance insuring Indemnitee
against insurable events which occur or have occurred while Indemnitee was a
director or officer of the Company, such insurance to have policy limits
aggregating not less than the amount in effect immediately prior to the Change
in Control and otherwise to be in substantially the same form and to contain
substantially the same terms, conditions and exceptions as the liability
insurance policies provided for officers and directors of the Company in force
from time to time, provided, however, that (i) such terms, conditions and
exceptions shall not be, in the aggregate, materially less favorable to
Indemnitee than those in effect on the date hereof and (ii) if the aggregate
annual premiums for such insurance at any time during such period exceed two
hundred percent (200%) of the per annum rate of premium currently paid by the
Company for such insurance, then the Company shall provide the maximum coverage
that will then be available at an annual premium equal to two hundred percent
(200%) of such rate;
(c) 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.
(d) The Company shall not be liable under this Agreement
to make any payment of amounts otherwise indemnifiable (or for which advancement
is provided hereunder) hereunder if and to the extent that Indemnitee has
otherwise actually received such payment under any insurance policy, contract,
agreement or otherwise.
(e) 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, employee or agent of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
shall be reduced by any amount Indemnitee has actually received as
indemnification or advancement of expenses from such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise.
15. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) 10 years after the date that Indemnitee shall
have ceased to serve as a director or officer of the Company or as a director,
officer, 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) 1 year after the final termination of any
Proceeding then pending in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 13 of this Agreement relating
thereto. This Agreement shall be binding upon the
12
Company and its successors and assigns and shall inure to the benefit of
Indemnitee and his 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 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 as a director or officer of the Company, and
the Company acknowledges that Indemnitee is relying upon this Agreement in
serving as a director or officer 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 the
parties thereto. 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. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall not
relieve the Company of any obligation which it may have to the Indemnitee under
this Agreement or otherwise.
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 (a) if delivered by hand and receipted for by the party to
whom said notice or other communication shall have been directed, or (b) mailed
by certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
13
(a) If to Indemnitee, at the address indicated on the
signature page of this Agreement, or such other address as Indemnitee shall
provide to the Company.
(b) If to the Company to:
Harvest Natural Resources, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: General Counsel
or to any other address as may have been furnished to Indemnitee 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. 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 rules.
Except with respect to any arbitration commenced by Indemnitee pursuant to
Section 10(a) 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) appoint, to the extent such party is not a resident of the
State of Delaware, irrevocably RL&F Service Corp., One Xxxxxx Square, 10th
Floor, 10th and King Streets, Wilmington, Delaware 19801 as its agent in the
State of Delaware as such party's agent for acceptance of legal process in
connection with any such action or proceeding against such party with the same
legal force and validity as if served upon such party personally within the
State of Delaware, (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
14
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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
as of the day and year first above written.
HARVEST NATURAL RESOURCES, INC. INDEMNITEE
By: By:
----------------------------------- ------------------------------
Name: Name:
------------------------------- --------------------------
Title: President & CEO
15
