EXHIBIT 10.1 INDEMNIFICATION AGREEMENT

 

                                                                    EXHIBIT 10.1

 

                            INDEMNIFICATION AGREEMENT

 

     THIS     INDEMNIFICATION     AGREEMENT    (this     "Agreement")    is    between

______________, a Texas corporation (the "Corporation"), and ______________ (the

"Indemnitee"),   and is effective as of the date the Indemnitee becomes or became

a director or executive officer of the Corporation.

 

     WHEREAS,   highly   competent   persons   have become more   reluctant   to serve

corporations as directors, executive 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 corporation;

 

     WHEREAS, the Board of Directors of the Company (the "Board") has determined

that,   in order to attract and retain   qualified   individuals,   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,   given current market

conditions and trends,   such insurance may be available to it in the future only

at   higher   premiums   and with more   exclusions.   At the same   time,   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 corporation or business enterprise itself;

 

     WHEREAS,    the    uncertainties    relating    to    such    insurance    and   to

indemnification   have   increased the difficulty of attracting and retaining such

persons;

 

     WHEREAS,   the   Board   has   determined   that   the   increased   difficulty   in

attracting   and retaining   such persons is   detrimental to the best interests of

the   Company's   stockholders   and that the   Company   should   act to assure   such

persons that there will be increased certainty of such protection in the future;

 

     WHEREAS,   Indemnitee   is willing to serve,   continue to serve,   and take on

additional   service   for or on behalf of the   Corporation,   subject   to   certain

conditions,   including without limitation, the execution and performance of this

Agreement by the Corporation.

 

     WHEREAS,   it is   intended   that   Indemnitee   shall be paid   promptly by the

Corporation all amounts   necessary to effectuate in full the indemnity   provided

herein.

 

     NOW,   THEREFORE,   In   consideration   of the premises   and mutual   covenants

herein   contained,   the   Corporation   and the Indemnitee do hereby   covenant and

agree as follows:

 

 

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                                    ARTICLE I

                                CERTAIN DEFINITIONS

 

     As used   herein,   the   following   words and terms shall have the   following

respective meanings (whether singular or plural):

 

     "Change in Control" means a change in control of the Corporation   occurring

after   the date of this   Agreement   of a nature   that   would be   required   to be

reported   in   response to Item 6(e) of   Schedule   14A of   Regulation   14A (or in

response to any similar item on any similar schedule or form)   promulgated under

the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or

not the   Corporation   is then subject to such reporting   requirement;   provided,

however,   that, without limitation,   such a Change in Control shall be deemed to

have   occurred if at any time after the date of this   Agreement (i) any "person"

(as such term is used in Sections   13(d) and 14(d) of the Exchange   Act),   other

than a trustee or other fiduciary   holding   securities under an employee benefit

plan of the   Corporation   or a   corporation   or other entity   owned   directly or

indirectly by the   shareholders   of the   Corporation in   substantially   the same

proportion   as their   ownership of stock in the   Corporation,   is or becomes the

"beneficial   owner" (as defined in Rule 13d-3 under the Exchange Act),   directly

or indirectly,   of securities of the Corporation representing 20% or more of the

combined voting power of the Corporation's   then outstanding   securities without

the   prior   approval   of at least   two-thirds   of the   members   of the   Board of

Directors in office   immediately   prior to such person attaining such percentage

interest;   (ii) the   Corporation   is a party to a merger,   consolidation,   share

exchange,   sale of   assets or other   reorganization,   or a proxy   contest,   as a

consequence   of which   members of the Board of Directors   in office   immediately

prior to such   transaction or event constitute less than a majority of the Board

of Directors thereafter or (iii) during any 15-month period,   individuals who at

the beginning of such period   constituted the Board of Directors   (including for

this purpose any new director   whose   election or nomination for election by the

Corporation's   shareholders was approved by a vote of at least two-thirds of the

directors   then   still in office who were   directors   at the   beginning   of such

period)   cease for any reason to   constitute at least a majority of the Board of

Directors.

 

     "Claim" means an actual or threatened claim or request for relief.

 

     "Corporate   Status"   means the status of a Person who is or was a director,

officer,   partner,   employee,   agent or fiduciary of the   Corporation   or of any

other corporation,   partnership,   joint venture, trust, employee benefit plan or

other   enterprise   which such   person is or was   serving   at the   request of the

Corporation. For the purposes of this Agreement,   "serving at the request of the

Corporation"   includes any service by   Indemnitee,   which imposes   duties on, or

involves   services by,   Indemnitee with respect to any employee   benefit plan or

its participants or beneficiaries.

 

     "Expenses" shall include all direct and indirect costs (including,   without

limitation,   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 or   out-of-pocket   expenses)   actually and reasonably   incurred in

connection   with   prosecuting,   defending,   preparing   to   prosecute   or defend,

investigating,   appealing or being or preparing to be a witness in a Proceeding.

Should any   payments by the Company   under this   Agreement be   determined   to be

subject to any   federal,   state or local income or excise tax,   "Expenses"   also

shall   include such amounts as are   necessary   to place   Indemnitee   in the same

after-tax   position (after giving effect to all applicable   taxes) he would have

been in had no such tax been determined to apply to such payments.

 

 

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     "Independent   Counsel" means a law firm, or a member of a law firm, that is

experienced in matters of corporation law and neither   contemporaneously is, nor

in the past five (5) years theretofore has been, retained to represent:   (a) the

Corporation,   its Affiliates or Indemnitee in any matter material to either such

party,   (b) any   other   party   to the   Proceeding   giving   rise   to a claim   for

indemnification   hereunder, or (c) the beneficial owner, directly or indirectly,

of securities of the Corporation representing 10% or more of the combined voting

power of the Corporation's then outstanding   voting securities.   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 Corporation or Indemnitee

in an action to determine Indemnitee's rights under this Agreement.

 

     "Other   enterprise"   shall include,   but shall not be limited to, an "other

entity" as defined in Section 1.01 of the TBCA (including any amendment that may

from time to time be made to such Section.

 

     "Person"   means   any   natural   person,   sole   proprietorship,   corporation,

partnership   of any kind   having a   separate   legal   status,   limited   liability

company,   business trust,   unincorporated   organization   or association,   mutual

company,   joint stock company,   joint venture,   estate, trust, union or employee

organization or governmental authority.

 

     "Potential   Change in Control"   shall be deemed to have occurred if (a) the

Corporation enters into an agreement,   the consummation of which would result in

the   occurrence   of   a   Change   in   Control;    (b)   any   person   (including   the

Corporation)   publicly   announces   an   intention   to take or to consider   taking

actions   which if   consummated   would   constitute   a Change in Control;   (c) any

person,   other than a trustee or other   fiduciary   holding   securities   under an

employee   benefit plan of the Corporation or a corporation or other entity owned

directly or indirectly by the   shareholders of the Corporation in   substantially

the same   proportion as their ownership of stock in the   Corporation,   who is or

becomes the   beneficial   owner,   directly or   indirectly,   of   securities of the

Corporation   representing   9.5% or   more of the   combined   voting   power   of the

Corporation's then outstanding securities, increases his beneficial ownership of

such   securities by five   percentage   points (5%) or more over the percentage so

owned by such person;   or (d) the Board of Directors   adopts a resolution to the

effect that, for purposes of this Agreement,   a Potential   Change in Control has

occurred.

 

     "Proceeding"   means any   threatened,   pending or   completed   action,   suit,

alternative   dispute   resolution   mechanism,   hearing   or any other   proceeding,

whether    civil,    criminal,    administrative,     arbitrative,    meditative    or

investigative (except one initiated by Indemnitee pursuant to Article VI of this

Agreement   to enforce   his rights   under this   Agreement),   and any appeal in or

related   to any   such   action,   suit,   arbitration,   investigation,   hearing   or

proceeding and any inquiry or   investigation   that could lead to such an action,

suit, proceeding or arbitration.

 

 

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     "TBCA" means the Texas Business   Corporation Act and any successor   statute

thereto as either of them may from time to time be amended.

 

 

                                   ARTICLE II

                             SERVICES BY INDEMNITEE

 

     Section 2.1 General.   Indemnitee agrees to serve as a director or executive

officer of the   Corporation   and, as mutually   agreed on by   Indemnitee   and the

Corporation,   as a director,   officer,   employee,   agent or   fiduciary   of other

corporations,    partnerships,    joint   ventures,   trusts   or   other   enterprises

(including,   without limitation,   employee benefit plans). Indemnitee may at any

time and for any reason resign or be removed from such position   (subject to any

other contractual obligation or any obligation imposed by operation of law). The

Corporation   shall   have   no   obligation   to   continue   Indemnitee   in any   such

position.   This Agreement shall not be deemed an employment contract between the

Corporation (or any of its subsidiaries)   and the Indemnitee.   The provisions of

this Agreement are subject to any other   obligation   imposed by operation of law

and   subject   to   any    applicable    provisions    of   the   Charter   or   By-Laws.

Notwithstanding, the foregoing, this Agreement shall continue in force after the

Indemnitee has ceased to serve as an officer or director of the   Corporation and

no longer   serves at the   request of the   Corporation   as a   director,   officer,

employee or agent of the Company or any subsidiary of the Corporation.

 

                                  ARTICLE III

                                 INDEMNIFICATION

 

     Section 3.1 General. The Corporation shall indemnify,   and advance Expenses

to, Indemnitee (subject to Section 7.3) to the fullest extent permitted by Texas

law in effect on the date hereof and to such greater   extent as   applicable   law

may thereafter from time to time permit. The rights of Indemnitee provided under

the preceding sentence shall include,   but shall not be limited to, the right to

be indemnified   and to have Expenses   advanced in all Proceedings to the fullest

extent permitted by Article 2.02-1 of the TBCA. The provisions set forth in this

Agreement   are   provided   in   addition   to and as a   means   of   furtherance   and

implementation   of, and not in limitation of, the obligations   expressed in this

Article III. In the event of any change after the date of this   Agreement in any

applicable law,   statute or rule which expands the right of a Texas   corporation

to   indemnify a member of its Board of   Directors   or an officer,   such   changes

shall be deemed to be within   the   purview   of the   Indemnitee's   rights and the

Company's   obligations   under this Agreement.   In the event of any change in any

applicable law,   statute or rule which narrows the right of a Texas   corporation

to indemnify a member of its Board of Directors or an officer,   such changes, to

the extent not otherwise   required by law, statute or rule to be applied to this

Agreement   shall have no effect on this   Agreement   or the   parties'   rights and

obligations hereunder.

 

 

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     Section 3.2 Additional   Indemnity of the   Corporation.   Indemnitee shall be

entitled   to   indemnification   provided   in   Section   3.1 if,   by   reason of his

Corporate   Status, he is, or is threatened to be made, a party to any Proceeding

(except to the extent   limited by Section   3.3).   Pursuant to this   Section 3.2,

Indemnitee   shall   be   indemnified    against   Expenses,    judgments,    penalties

(including   excise or   similar   taxes),   fines and   amounts   paid in   settlement

(subject   to Section   7.3)   actually   and   reasonably   incurred by him or on his

behalf in   connection   with such   Proceeding   or any   Claim   therein,   if (1) he

conducted himself in good faith; (2) he reasonably believed:   (a) in the case of

conduct in his official capacity, that his conduct was in the Corporation's best

interest;   and (b) in all other cases, that his conduct was at least not opposed

to the   Corporation's   best   interests;   and,   (3) in the   case of any   criminal

Proceeding, had no reasonable cause to believe his conduct was unlawful. Nothing

in this Section 3.2 shall limit the benefits of Section 3.1 or any other Section

hereunder.

 

     Section   3.3   Limitation   on   Indemnity.    The   Indemnification    otherwise

available to an Indemnitee   under Section 3.2 shall be limited to the extent set

forth in this   Section 3.3. In the event that an   Indemnitee   is found liable to

the   Corporation   or is found   liable on the basis   that   personal   benefit   was

improperly   received by the Indemnitee   whether or not the benefit resulted from

an action taken in   Indemnitee's   official   capacity,   the   Indemnitee   shall be

indemnified   only   against   reasonable   Expenses   actually   incurred   by   him in

connection    with    the    Proceeding.     Notwithstanding    the    foregoing,    no

indemnification   for such Expenses shall be made in respect of any Proceeding in

which   the   Indemnitee   shall   have   been   found to be   liable   for   willful   or

intentional   misconduct   in the   performance   of his   duty   to the   Corporation;

provided, however, that, if applicable law so permits,   indemnification for such

Expenses shall nevertheless be made by the Corporation in such event if and only

to the extent that the court in which such Proceeding shall have been brought or

is pending, shall determine.

 

                                   ARTICLE IV

                                     EXPENSES

 

     Section   4.1   Expenses   of a Party   Who Is   Wholly   or   Partly   Successful.

Notwithstanding   any other   provision   of this   Agreement,   Indemnitee   shall be

indemnified   against all   Expenses   actually and   reasonably   incurred by him in

connection with any Proceeding to which Indemnitee is a party to (or participant

in) by reason of his Corporate Status and in which Indemnitee is successful,   on

the merits or otherwise.   In the event that Indemnitee is not wholly successful,

on the merits or otherwise, in a Proceeding but is successful,   on the merits or

otherwise,   as to any Claim in such   Proceeding,   the   Company   shall   indemnify

Indemnitee   against all Expenses   actually and reasonably   incurred by him or on

his behalf relating to each successfully   resolved claim,   issue or matter.   For

purposes of this   Section 4.1 and without   limitation,   the   termination   of any

claim, issue or matter in a Proceeding by dismissal,   with or without prejudice,

shall be deemed to be a successful result as to such claim, issue or matter.

 

 

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     Section 4.2 Indemnification for Expenses as a Witness.   Notwithstanding any

other provision of this   Agreement,   to the extent that Indemnitee is, by reason

of his Corporate   Status, a witness or otherwise   participates in any Proceeding

at a time when he is not named a defendant or respondent in the   Proceeding,   he

shall be indemnified   against all Expenses   actually and reasonably   incurred by

him or on his behalf in connection therewith.

 

     Section   4.3   Advancement   of   Expenses.   The   Corporation   shall   pay   all

reasonable   Expenses   incurred by or on behalf of Indemnitee in connection   with

any Proceeding or Claim,   whether   brought by the   Corporation or otherwise,   in

advance of any determination   respecting entitlement to indemnification pursuant

to Article V hereof within ten (10) days after the receipt by the Corporation of

a written statement from Indemnitee (a) requesting such payment or payments from

time to time,   whether prior to or after final disposition of such Proceeding or

Claim and (b)   affirming   Indemnitee's   good   faith   belief   that he has met the

standard of conduct   necessary for   indemnification   under Article 2.02-1 of the

TBCA.   Such   statement   or   statements   shall   reasonably   evidence the Expenses

incurred by   Indemnitee.   Indemnitee   hereby   undertakes and agrees that he will

reimburse and repay the   Corporation   for any Expenses so advanced to the extent

that it shall ultimately be determined by a court in a final   adjudication   from

which there is no further right of app