EXHIBIT 10.5
GMX RESOURCES INC.
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT is dated effective as of
[_______][___], [____], by and between GMX RESOURCES INC., an Oklahoma
corporation (the "Company"), and the director of the Company whose name appears
on the signature page of this Agreement ("Indemnitee") with reference to the
following circumstances.
A. Highly competent persons are becoming more reluctant to
serve publicly-held corporations as directors or in other capacities unless they
are provided with reasonable protection through insurance or indemnification
against risks of claims and actions against them arising out of their service to
and activities on behalf of the corporation.
B. It is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify 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.
C. Indemnitee is willing to serve, to continue to serve and to
take on additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.
In consideration of the promises and the covenants
contained herein, the Company and Indemnitee hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" shall mean any corporation, partnership, joint
venture, trust or other enterprise in respect of which the Indemnitee is or was
or will be serving as a director, advisory director or board committee member,
officer, trustee or employee at the request of the Company and including, but
not limited to, any employee benefit plan of the Company or any of the
foregoing.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Disinterested Director" shall mean a director of the
Company who is not and was not a party to the Proceeding in respect of which
indemnification is being sought by Indemnitee.
(d) "Expenses" shall include all attorneys' fees and costs,
retainers, court costs, transcripts, 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 incurred
in connection with asserting or defending claims.
(e) "Independent Counsel" shall mean a law firm or lawyer that
at the time of the determination neither is presently nor in the past year has
been retained to represent: (i) the Company or Indemnitee in any matter material
to any such party or (ii) any other party to the Proceeding giving rise to a
claim for indemnification hereunder in any matter material to such other party.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any firm or person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing the Company
or Indemnitee in an action to determine Indemnitee's right to indemnification
under this Agreement.
(f) "Losses" shall mean all losses, claims, liabilities,
judgments, fines and amounts paid in settlement in connection with any
Proceeding.
(g) "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or
any other proceeding whether civil, criminal, administrative or investigative;
PROVIDED, HOWEVER, that the term "Proceeding" shall include any action
instituted by an Indemnitee (other than an action to enforce indemnification
rights under this Agreement) only if such action is authorized by the Board.
2. SERVICE BY INDEMNITEE. Indemnitee shall begin or continue
to serve the Company and any Affiliates as a director, and/or officer and/or
trustee. Notwithstanding anything contained herein, this Agreement shall not
create a contract of employment between the Company and Indemnitee, and the
termination of Indemnitee's relationship with the Company or an Affiliate by
either party hereto shall not be restricted by this Agreement.
3. INDEMNIFICATION. The Company shall indemnify Indemnitee
for, and hold Indemnitee harmless from and against, any Losses or Expenses at
any time incurred by or assessed against Indemnitee arising out of or in
connection with the service of Indemnitee as a director, advisory director,
Board Committee member, officer or trustee of the Company or of an Affiliate
(collectively referred to as a "Company Official") to the fullest extent
permitted by the laws of the State of Oklahoma in effect on the date hereof or
as such laws may from time to time hereafter be amended to increase the scope of
such permitted indemnification. Without diminishing the scope of the
indemnification provided by this Section 3, the rights of indemnification of
Indemnitee provided hereunder shall include but shall not be limited to those
rights set forth hereinafter.
4. ACTION OR PROCEEDING OTHER THAN AN ACTION BY OR IN THE
RIGHT OF THE COMPANY. Indemnitee shall be entitled to the indemnification rights
provided herein if Indemnitee is a person who was or is made a party or is
threatened to be made a party to any contemplated, pending or completed
Proceeding, other than an action by or in the right of the Company, as the case
may be, by reason of (a) the fact that Indemnitee is or was a Company Official,
or (b) anything done or not done by Indemnitee in any such capacity. Pursuant to
this Section, Indemnitee shall be indemnified against Losses or Expenses
incurred by Indemnitee or on Indemnitee's behalf in connection with any
Proceeding, if Indemnitee acted in good faith and in a manner Indemnitee
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reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal Proceeding, had no reasonable
cause to believe his conduct was unlawful.
5. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall
be entitled to the indemnification rights provided herein if Indemnitee is a
person who was or is made a party or is threatened to be made a party to any
pending, completed or threatened Proceeding brought by or in the right of the
Company to procure a judgment in its favor by reason of (a) the fact that
Indemnitee is or was a Company Official, or (b) anything done or not done by
Indemnitee in any such capacity. Pursuant to this Section, Indemnitee shall be
indemnified against Losses or Expenses incurred by Indemnitee or on Indemnitee's
behalf in connection with any Proceeding if Indemnitee acted in good faith and
in a manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company. Notwithstanding the foregoing provisions of this
Section, no such indemnification shall be made in respect of any claim, issue or
matter as to which Oklahoma law expressly prohibits such indemnification by
reason of an adjudication of liability of Indemnitee to the Company; PROVIDED,
HOWEVER, that in such event such indemnification shall nevertheless be made by
the Company to the extent that the court in which such action or suit was
brought shall determine that, despite the adjudication of liability but in view
of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnification.
6. INDEMNIFICATION FOR LOSSES AND EXPENSES OF PARTY WHO IS
WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any provision of this Agreement, to
the extent that Indemnitee has been wholly successful on the merits or otherwise
in any Proceeding on any claim, issue or matter, Indemnitee shall be indemnified
against all Losses or Expenses incurred by Indemnitee or on Indemnitee's behalf
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 to the maximum extent permitted by law, against all Losses
and Expenses incurred by Indemnitee in connection with each successfully
resolved claim, issue or matter. In any review or Proceeding to determine the
extent of indemnification, the Company shall bear the burden of proving any lack
of success and which amounts sought in indemnity are allocable to claims, issues
or matters that were not successfully resolved. For purposes of this Section and
without limitation, the termination of any such claim, issue or matter by
dismissal with or without prejudice shall be deemed to be a successful
resolution as to such claim, issue or matter.
7. PAYMENT FOR EXPENSES OF A WITNESS. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of the fact that Indemnitee is or was a Company Official, a witness in any
Proceeding, the Company shall pay to Indemnitee all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee's behalf in connection
therewith.
8. ADVANCEMENT OF EXPENSES AND COSTS. All Expenses incurred by
or on behalf of Indemnitee (or reasonably expected by Indemnitee to be incurred
by Indemnitee within three months) in connection with any Proceeding shall be
paid by the Company in advance of the final disposition of such Proceeding
within twenty days after the receipt by the Company of a statement
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or statements from Indemnitee requesting from time to time such advance or
advances whether or not a determination to indemnify has been made under
Section 9. Indemnitee's entitlement to such advancement of Expenses shall
include those incurred in connection with any Proceeding by Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement.
Such statement or statements shall evidence such Expenses incurred (or
reasonably expected to be incurred) by Indemnitee in connection therewith and
shall include or be accompanied by a written undertaking in form and
substance satisfactory to the Company and the Indemnitee by or on behalf of
Indemnitee to repay such amount if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified therefor pursuant to the terms
of this Agreement.
9. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION. (a) When seeking indemnification under this Agreement (which
shall not include in any case the right of Indemnitee to receive payments
pursuant to Section 7 and Section 8 hereof, which shall not be subject to this
Section 9), Indemnitee shall submit a written request for indemnification to the
Company. Such request shall include documentation or information that is
reasonably necessary for the Company to make a determination of Indemnitee's
entitlement to indemnification hereunder and that is reasonably available to
Indemnitee. Determination of Indemnitee's entitlement to indemnification shall
be made promptly, but in no event later than 90 days after receipt by the
Company of Indemnitee's written request for indemnification. The Company shall,
promptly upon receipt of Indemnitee's request for indemnification, advise the
Board that Indemnitee has made such request for indemnification.
(b) The entitlement of Indemnitee to indemnification under
this Agreement shall be determined in the specific case by a majority vote of a
quorum of the Board consisting of Disinterested Directors. If such a quorum is
not obtainable or the Board, by the majority vote of Disinterested Directors,
directs, the determination shall be made by Independent Counsel in a written
opinion.
(c) In the event the determination of entitlement is to be
made by Independent Counsel, such Independent Counsel shall be selected by the
Board and approved by Indemnitee. Upon failure of the Board to so select such
Independent Counsel or upon failure of Indemnitee to so approve, such
Independent Counsel shall be selected by the American Arbitration Association or
such other person as such Association shall designate to make such selection.
All Expenses of the Independent Counsel incurred in connection with acting
pursuant to this Agreement shall be borne by the Company.
(d) If the person or persons empowered pursuant to Section
9(b) hereof to make a determination with respect to entitlement to
indemnification shall have failed to make the requested determination within 90
days after receipt by the Company of such request, the requisite determination
of entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be absolutely entitled to such indemnification, absent (i)
misrepresentation by Indemnitee of a material fact in the request for
indemnification or (ii) a final judicial determination that all or any part of
such indemnification is expressly prohibited by law.
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(e) The termination of any Proceeding by judgment, order,
settlement or conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, adversely affect the rights of Indemnitee to
indemnification hereunder except as may be specifically provided herein, or
create a presumption that Indemnitee did not act in good faith and in a manner
that Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company or create a presumption that (with respect to any
criminal action or proceeding) Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.
(f) For purposes of any determination of good faith hereunder,
Indemnitee shall be deemed to have acted in good faith if in taking such action
Indemnitee relied on the records or books of account of the Company or an
Affiliate, including financial statements, or on information supplied to
Indemnitee by the officers of the Company or an Affiliate in the course of their
duties, or on the advice of legal counsel for the Company or an Affiliate or on
information or records given or reports made to the Company or an Affiliate by
an independent certified public accountant or by an appraiser, petroleum
engineer or other expert selected with reasonable care by the Company or an
Affiliate. The Company shall have the burden of establishing the absence of good
faith. The provisions of this Section 9(f) 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.
(g) The knowledge and/or actions, for failure to act, of any
director, officer, agent or employee of the Company or an Affiliate shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.
10. REMEDIES IN CASES OF DETERMINATION NOT TO INDEMNIFY OR TO
ADVANCE EXPENSES. (a) In the event that (i) a determination is made that
Indemnitee is not entitled to indemnification hereunder, (ii) advances are not
made pursuant to Section 8 hereof or (iii) payment has not been timely made
following a determination of entitlement to indemnification pursuant to Section
9 hereof, Indemnitee shall be entitled to seek a final adjudication either
through an arbitration proceeding or in an appropriate court of the State of
Oklahoma or any other court of competent jurisdiction of Indemnitee's
entitlement to such indemnification or advance.
(b) In the event a determination has been made in accordance
with the procedures set forth in Section 9 hereof, in whole or in part, that the
Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration referred to in paragraph (a) of this Section 10 shall be DE NOVO and
Indemnitee shall not be prejudiced by reason of any such prior determination
that Indemnitee is not entitled to indemnification, and the Company shall bear
the burdens of proof specified in paragraphs 6 and 9 hereof in such proceeding.
(c) If a determination is made or deemed to have been made
pursuant to the terms of Section 9 or 10 hereof that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration in the absence of (i) a
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misrepresentation of a material fact by Indemnitee or (ii) a final judicial
determination that all or any part of such indemnification is expressly
prohibited by law.
(d) The Company and Indemnitee shall be precluded from
asserting that the procedures and presumptions of this Agreement are not valid,
binding and enforceable. The Company and Indemnitee shall stipulate in any such
court that the Company and Indemnitee are bound by all of the provisions of this
Agreement and are precluded from making any assertion to the contrary.
(e) To the extent deemed appropriate by the court, interest
shall be paid by the Company to Indemnitee at a reasonable interest rate for
amounts that the Company indemnifies or is obliged to indemnify the Indemnitee
for the period commencing with the date on which Indemnitee requested
indemnification (or reimbursement or advance of an Expense) and ending with the
date that such payment is made to Indemnitee by the Company.
11. EXPENSES INCURRED BY INDEMNITEE TO ENFORCE THIS AGREEMENT.
All Expenses incurred by Indemnitee in connection with the preparation and
submission of Indemnitee's request for indemnification hereunder shall be borne
by the Company. In the event that Indemnitee is a party to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication to enforce Indemnitee's rights under, or to recover
damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in
whole in such action, shall be entitled to recover from the Company, and shall
be indemnified by the Company against any Expenses incurred by Indemnitee. If it
is determined that Indemnitee is entitled to indemnification for part (but not
all) of the indemnification so requested, Expenses incurred in seeking
enforcement of such partial indemnification shall be reasonably prorated among
the claims, issues or matters for which the Indemnitee is entitled to
indemnification and for claims, issues or matters for which the Indemnitee is
not so entitled.
12. NON-EXCLUSIVITY. The rights of indemnification and to
receive advances 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, a certificate of incorporation, by-laws, any agreement, a vote
of stockholders or a resolution of directors or otherwise. To the extent
Indemnitee would be prejudiced thereby, no amendment, alteration, rescission or
replacement of this Agreement or any provision hereof shall be effective as to
Indemnitee with respect to any action taken or omitted by such Indemnitee in
Indemnitee's position with the Company or an Affiliate prior to such amendment,
alteration, rescission or replacement.
13. DURATION OF AGREEMENT. This Agreement shall apply to
any claim asserted and any Losses and Expenses incurred in connection with
any claim asserted on or after the effective date of this Agreement and shall
continue until and terminate upon the later of: (a) ten (10) years after
Indemnitee has ceased to serve as a Company Official; or (b) one (1) year
after the final termination of all pending or threatened Proceedings of the
kind described herein with respect to Indemnitee. This Agreement shall be
binding upon the Company and its successors and assigns and
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shall inure to the benefit of Indemnitee and Indemnitee's spouse, assigns,
heirs, devisee, executors, administrators or other legal representatives.
14. MAINTENANCE OF D&O INSURANCE. (a) So long as Indemnitee
shall continue to serve as a Company Official and thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed Proceeding, whether civil, criminal or investigative, by reason of the
fact that Indemnitee was a Company Official, the Company shall use commercially
reasonable efforts to maintain in full force and effect directors' and officers'
liability insurance issued by reputable insurers and having policy amounts and
deductibles and other provisions as the Company deems to be commercially
reasonable under the circumstances. The Company will keep the Indemnitee advised
of the amount and terms of any D&O Insurance and will promptly notify Indemnitee
of any proposed non-renewal, cancellation or termination of D&O Insurance as
soon as practicable after receiving notice thereof.
15. SEVERABILITY. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby, and the illegal or unenforceable portions of the Agreement
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions of this Agreement intact.
16. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
17. HEADINGS. Section headings are for convenience only and do
not control or affect meaning or interpretation of any terms or provisions of
this Agreement.
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.
19. NO DUPLICATIVE PAYMENT. The Company shall not be liable
under this Agreement to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that Indemnitee has otherwise actually received
such payment (net of Expenses incurred in collecting such payment) under this
Agreement, any insurance policy, contract, agreement or otherwise.
20. NOTICES. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing (including
telecopier or similar writing) and shall be deemed to have been given at the
time when mailed in a registered or certified postpaid envelope in any general
or branch office of the United States Postal Service, or sent by Federal Express
or other similar overnight courier service, addressed to the address of the
parties stated below or to such changed address as such party may have fixed by
notice or, if given by telecopier, when such telecopy is transmitted and the
appropriate answerback is received.
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(a) If to Indemnitee, to the address on the signature page
hereof.
(b) If to the Company to:
GMX RESOURCES INC.
0000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
21. GOVERNING LAW. The parties agree that this agreement shall
be governed by, and construed and enforced in accordance with, the internal laws
of the State of Oklahoma without giving effect to the conflicts of laws
principles thereof.
22. ENTIRE AGREEMENT. Subject to the provisions of Section 12
hereof, this Agreement constitutes the entire understanding between the parties
and supersedes all proposals, commitments, writings, negotiations and
understandings, oral and written, and all other communications between the
parties relating to the subject matter of this Agreement. This Agreement may not
be amended or otherwise modified except in writing duly executed by all of the
parties. A waiver by any party of any breach or violation of this Agreement
shall not be deemed or construed as a waiver of any subsequent breach or
violation thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
GMX RESOURCES INC.
By:
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Title:
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INDEMNITEE:
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Address:
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