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SUPPLEMENTAL INDEMNIFICATION AGREEMENT

Addendum or Modifications

SUPPLEMENTAL INDEMNIFICATION AGREEMENT | Document Parties: EAGLE ROCK ENERGY PARTNERS L P | Eagle Rock Energy GP, LLC You are currently viewing:
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EAGLE ROCK ENERGY PARTNERS L P | Eagle Rock Energy GP, LLC

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Title: SUPPLEMENTAL INDEMNIFICATION AGREEMENT
Governing Law: Delaware     Date: 12/30/2009
Industry: Oil and Gas Operations     Sector: Energy

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Exhibit 10.1

SUPPLEMENTAL INDEMNIFICATION AGREEMENT

     SUPPLEMENTAL INDEMNIFICATION AGREEMENT (this “Agreement”), made and executed as of                      , 2009, by and between Eagle Rock Energy G&P, LLC, a Delaware limited liability company (“G&P”), Eagle Rock Energy GP, L.P., a Delaware limited partnership (“GP”), Eagle Rock Energy Partners, L.P., a Delaware limited partnership (the “Partnership,” and collectively with G&P and GP, the “Company”), and                      , an individual resident of the State of                      (the “Indemnitee”).

WITNESSETH :

     WHEREAS, the Company is aware that, to induce and to retain highly competent persons to serve G&P as directors or officers or in other capacities, the Company must provide such persons with adequate protection through insurance and indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of G&P as to itself, on behalf of and as general partner of GP, or on behalf of and as general partner of the Partnership;

     WHEREAS, the Company recognizes that the increasing difficulty in obtaining directors’ and officers’ liability insurance, the increasing cost of such insurance and the general reductions in coverage of such insurance have made attracting and retaining such persons more difficult;

     WHEREAS, the Company recognizes the substantial increase in corporate litigation in general, subjecting directors and officers to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited;

     WHERAS, the Second Amended and Restated Limited Liability Company Agreement of G&P (the “LLC Agreement”) and the First Amended and Restated Agreement of Limited Partnership of the Partnership (the “LP Agreement) contain indemnification provisions for the benefit of Indemnitees, as defined therein, which include members of the Board of Directors and officers of G&P;

     WHEREAS, the Company recognizes that although the indemnification provisions in the LLC Agreement and in the LP Agreement provide appropriate levels of indemnification, this Agreement is intended to supplement the indemnification provisions provided in the LLC Agreement and the LP Agreement;

     WHEREAS, the Board of Directors of G&P has determined that it is in the best interests of G&P’s member that the Company act to assure such persons that there will be increased certainty of such protection and the process and procedures by which an Indemnitee seeks indemnification for acts involving the Company; and

     WHEREAS, it is reasonable, prudent and necessary for the Company to obligate itself contractually to indemnify such persons to the fullest extent permitted by applicable law and to provide an express process and procedure for seeking indemnification so that they will continue to serve G&P as to itself, as general partner of GP and, ultimately, as general partner of the Partnership free from undue concern.

 


 

AGREEMENT :

     NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Indemnitee do hereby agree as follows:

     1. DEFINITIONS. For purposes of this Agreement and if not otherwise defined herein, the following terms shall have the meanings set forth below:

     (a) “Disinterested Director” shall mean a director of G&P who is not or was not a party to the Proceeding in respect of which indemnification is being sought by the Indemnitee.

     (b) “Expenses” shall include all reasonable attorneys’ fees, accountants’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating or being or preparing to be a witness in any Proceeding or establishing the Indemnitee’s right of entitlement to indemnification for any of the foregoing.

     (c) “Independent Counsel” shall mean a law firm of at least 100 attorneys or a member of a law firm of at least 100 attorneys that neither is presently nor in the past five years has been retained to represent (i) the Company or the Indemnitee or any affiliate thereof in any matter material to either such party 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 the Indemnitee in an action to determine the Indemnitee’s right to indemnification under this Agreement.

     (d) “Proceeding” shall mean any threatened, pending or completed action, suit, arbitration, investigation, inquiry, alternate dispute resolution mechanism, administrative or legislative hearing, or any other proceeding (including, without limitation, any securities laws action, suit, arbitration, alternative dispute resolution mechanism, hearing or procedure) whether civil, criminal, administrative, arbitrative or investigative and whether or not based upon events occurring, or actions taken, before the date hereof, and any appeal in or related to any such action, suit, arbitration, investigation, hearing or proceeding and any inquiry or investigation (including discovery), whether conducted by or in the right of the Company or any other person, that the Indemnitee in good faith believes could lead to any such action, suit, arbitration, alternative dispute resolution mechanism, hearing or other proceeding or appeal thereof.

     2. SERVICE BY THE INDEMNITEE. The Indemnitee agrees to serve or to continue to serve as a director or officer of G&P, on behalf of itself and as general partner of GP and, ultimately, as general partner of the Partnership, and will discharge his/her duties and responsibilities to the best of his/her ability so long as the Indemnitee is duly elected and

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appointed in accordance with the provisions of G&P’s Certificate of Formation (the “Certificate”), the LLC Agreement, and the Delaware Limited Liability Company Act, as amended (the “DLLCA”), or until his/her earlier death, retirement, resignation or removal. The Indemnitee may at any time and for any reason resign from such position (subject to any other obligation, whether contractual or imposed by operation of law), in which event this Agreement shall continue in full force and effect after such resignation. Additionally, this Agreement shall remain in full force and effect after the death, retirement or removal of the Indemnitee. Nothing in this Agreement shall confer upon the Indemnitee the right to continue in the employ of G&P or as a director of G&P, or affect the right of G&P to terminate, in G&P’s sole discretion (with or without cause) and at any time, the Indemnitee’s employment or position as a director, in each case, subject to any contractual rights of the Indemnitee existing otherwise than under this Agreement.

     3. INDEMNIFICATION. The Company shall indemnify the Indemnitee and advance Expenses to the Indemnitee as provided in this Agreement to the fullest extent permitted by the Certificate, the LLC Agreement in effect as of the date hereof and the DLLCA or other applicable law in effect on the date hereof and to any greater extent that the LP Agreement, the DLLCA, the Delaware Revised Uniform Limited Partnership Act, as amended (the “DRULPA”), or applicable law may in the future from time to time permit. Without diminishing the scope of the indemnification provided by this Section 3, the rights of indemnification of the Indemnitee provided hereunder shall include, but shall not be limited to, those rights hereinafter set forth, except that no indemnification shall be paid hereunder to the Indemnitee:

     (a) on account of conduct of the Indemnitee which is adjudged in a final adjudication by a court of competent jurisdiction from which there is no further right of appeal or in a final adjudication of an arbitration pursuant to Section 12, if Indemnitee elects to seek such arbitration, to have been knowingly fraudulent or to constitute conduct not in good faith or willful misconduct, or in the case of a criminal matter, to have been knowingly unlawful;

     (b) in any circumstance where such indemnification is expressly prohibited by applicable law in effect as of the date of this Agreement or subsequently determined to be prohibited by applicable law;

     (c) with respect to liability for which payment is actually made to the Indemnitee under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, LLC Agreement provision or other agreement (other than this Agreement), except in respect of any liability in excess of payment under such insurance, clause, LLC Agreement provision or other agreement; or

     (d) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful.

     4. ACTIONS OR PROCEEDINGS OTHER THAN AN ACTION BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall be entitled to the indemnification rights provided in this Agreement if the Indemnitee was or is a party or is threatened to be a party to any Proceeding other than a Proceeding by or in the right of the Company, by reason of the fact

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that the Indemnitee is or was a director, officer, employee, agent or fiduciary of G&P, specifically, or the Company, in general, or any of the Partnership’s direct or indirect wholly-owned subsidiaries, or is or was serving at the request of G&P, or any of the Partnership’s direct or indirect wholly-owned subsidiaries, as a director, officer, employee, agent or fiduciary of any other entity, including, but not limited to, another corporation, partnership, limited liability company, employee benefit plan, joint venture, trust or other enterprise, or by reason of any act or omission by him/her in such capacity. Pursuant to this Section 4, the Indemnitee shall be indemnified against all judgments, penalties (including, but not limited to, excise and similar taxes) and fines against the Indemnitee, and all Expenses, liabilities and amounts paid in settlement which were actually and reasonably incurred by, or in the case of retainers to be incurred by, the Indemnitee or on Indemnitee’s behalf in connection with such Proceeding (including, but not limited to, the investigation, defense or appeal thereof).

     5. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall be entitled to the indemnification rights provided in this Agreement if the Indemnitee was or is a party or is threatened to be made a party to any Proceeding brought by or in the right of G&P, GP, or the Partnership to procure a judgment in its favor by reason of the fact that the Indemnitee is or was a director, officer, employee, agent or fiduciary of G&P, specifically, or the Company, in general, or any of the Partnership’s direct or indirect wholly-owned subsidiaries, or is or was serving at the request of G&P, or any of the Partnership’s direct or indirect wholly-owned subsidiaries, as a director, officer, employee, agent or fiduciary of another entity, including, but not limited to, another corporation, partnership, limited liability company, employee benefit plan, joint venture, trust or other enterprise, or by reason of any act or omission by him/her in any such capacity. Pursuant to this Section 5, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by, or in the case of retainers to be incurred by, him/her in connection with such Proceeding (including, but not limited to the investigation, defense or appeal thereof); provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to G&P, GP or the Partnership in a final adjudication by a court of competent jurisdiction from which there is no further right of appeal or in a final adjudication of an arbitration pursuant to Section 12, if Indemnitee elects to seek such arbitration, unless and only to the extent such court or tribunal shall determine that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such Expenses which such court or tribunal shall deem proper.

     6. GOOD FAITH DEFINITION. For purposes of this Agreement, the Indemnitee shall be deemed to have acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal Proceeding, to have had no reasonable cause to believe the Indemnitee’s conduct was unlawful, if such action was based on any of the following: (a) the records or books of the account of the Company or other enterprise, including financial statements; (b) information supplied to the Indemnitee by the officers of the Company or other enterprise in the course of his/her duties; (c) the advice of legal counsel for the Company or other enterprise; or (d) information or records given in reports made to the Company or other enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or other enterprise. The provisions of this Section 6 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the

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Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

     7. INDEMNIFICATION FOR EXPENSES OF WITNESS. Notwithstanding the other provisions of this Agreement, to the extent that the Indemnitee has served on behalf of G&P, specifically, or the Company, in general, or any of the Partnership’s direct or indirect wholly-owned subsidiaries, or is or was serving at the request of G&P, or any of the Partnership’s direct or indirect wholly-owned subsidiaries, as a witness or other similar participant in any Proceeding, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by, or in the case of retainers to be incurred by, the Indemnitee in connection therewith to be paid by G&P, within 15 days of receipt by G&P of a statement from Indemnitee requesting such payment and detailing such expenses.

     8. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the judgments, penalties and fines and Expenses and amounts paid in settlement actually and reasonably incurred by, or in the case of retainers to be incurred by, the Indemnitee in connection with the investigation, defense, appeal or settlement of such Proceeding described in Sections 4 and 5 hereof, but is not entitled to indemnification for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion of such judgments, penalties and fines and Expenses and amounts paid in settlement actually and reasonably incurred by, or in the case of retainers to be incurred by, the Indemnitee to which the Indemnitee is entitled. For purposes of this Section 8 and without limitation, the termination of any claim, issue, or matter in such a Proceeding described herein (a) by dismissal, summary judgment, judgment on the pleading, or final judgment, with or without prejudice, or (b) by agreement without payment or assumption or admission of liability by Indemnitee, shall be deemed to be a successful determination or result as to such claim, issue or matter.

     9. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.

     (a) To obtain indemnification under this Agreement, the Indemnitee shall submit to G&P a written request, including documentation and information which is reasonably available to the Indemnitee and is reasonably necessary to determine whether the Indemnitee is entitled to indemnification. The Secretary of G&P shall, promptly upon receipt of a request for indemnification, advise the Board of Directors that the Indemnitee has requested indemnification. Any Expenses incurred by, or in the case of retainers to be incurred by, the Indemnitee in connection with the Indemnitee’s request for indemnification hereunder shall be borne by the Company.

     (b) Upon written request by the Indemnitee for indemnification pursuant to Sections 4 and 5 hereof, the entitlement of the Indemnitee to indemnification pursuant to the terms of this Agreement shall be determined by the following person or persons, who shall be empowered to make such determination: (i) if requested by Indemnitee, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee; or (ii) if not so requested, (A) by the Board of Directors of G&P, by a majority vote of a quorum consisting of Disinterested Directors, or (B) if a quorum consisting of Disinterested Directors is not obtainable or if a majority vote of a

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quorum consisting of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee. The Independent Counsel shall be selected by the Board of Directors of G&P. Such determination of entitlement to indemnification shall be made not later than 45 days after receipt by G&P of a written request for indemnification. If it is so determined that the Indemnitee is entitled to indemnification, payment to the Indemnitee shall be made within 15 days after such determination.

     (c) The Indemnitee shall be entitled to indemnification hereunder without a separate determination by or on behalf of the Company pursuant to Section 9(b) hereof, with respect to any Proceeding and/or any claim, issue, or matter with respect thereto: (i) which is resolved by agreement without any payment or assumption or admission of liability by the Indemnitee; or (ii) as to which a final decision on the merits has been made by the court or other body with jurisdiction over that Proceeding, in which the Indemnitee was not determined to be liable with respect to such claim, issue, or matter asserted against the Indemnitee in the Proceeding, or (iii) as to which a court or arbitrator determines upon application that, despite such a determination of liability on the part of the Indemnitee, but in view of all the circumstances of the Proceeding and of the Indemnitee’s conduct with respect thereto, the Indemnitee is fairly and reasonably entitled to indemnification for such judgments, penalties, fines, amounts paid in settlement, and Expenses as such court or arbitrator shall deem proper; provided, however, such decision shall have been rendered in or with respect to the Proceeding for which the Indemnitee seeks indemnification under this Agreement.

     10. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.

     (a) In making a determination with respect to entitlement to indemnification, the Indemnitee shall be presumed to be entitled to full indemnification hereunder and the Company shall have the burden of proof in the making of any determination contrary to such presumption. Neither the failure of the


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