Exhibit 10.1
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this
“Agreement”) is effective as of August 24, 2005 by
and between Copano Energy, L.L.C., a Delaware limited liability
company (the “Company”),
and (“Indemnitee”).
PRELIMINARY
STATEMENT
Highly competent persons have become
more reluctant to serve corporations or other business enterprises
as officers, directors 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 such enterprises.
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 that insurance has been a customary and widespread
practice among United States-based corporations and other business
enterprises, the Board believes that, given current market
conditions and trends, 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 increasingly are being
subjected to expensive and time-consuming litigation, relating to,
among other matters, matters that traditionally would have been
brought only against the corporation or business enterprise
itself. The uncertainties relating to liability insurance and
to indemnification have increased the difficulty of attracting and
retaining those persons, and the Board has determined that
(i) this increased difficulty is detrimental to the best
interests of the Company’s unitholders and that the Company
should act to assure those persons that there will be increased
certainty of such protection in the future and (ii) it is
reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify those persons to the fullest extent
applicable law permits so that they will serve or continue to serve
the Company free from undue concern that they will not be so
indemnified.
As permitted by the Delaware Limited
Liability Company Act (the “Delaware Act”), the Second
Amended and Restated Limited Liability Company Agreement of the
Company (the “LLC Agreement”) requires indemnification
of the officers and directors of the Company in certain
circumstances. The LLC Agreement expressly provides 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, officers and other
persons with respect to indemnification.
This Agreement is a supplement to
and in furtherance of the LLC Agreement 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.
The Indemnitee does not regard the
protection available under the LLC Agreement and insurance as
adequate in the present circumstances, and may not be willing to
continue 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 herein, the parties to this
Agreement agree as follows:
Section 1.
Services by Indemnitee. Indemnitee agrees to serve as
an officer or director of the Company or its subsidiaries and, as
mutually agreed by Indemnitee and the Company, as a director,
officer, tax matters partner, employee, partner, manager,
fiduciary, trustee or agent of other corporations, limited
liability companies, partnerships, joint ventures, trusts or other
enterprises (including, without limitation, employee benefit plans)
(each, an “Enterprise”). Indemnitee may at any
time and for any reason resign from any such position (subject to
any other contractual obligation or any obligation applicable law
imposes), in which event the Company will have no obligation under
this Agreement to continue Indemnitee in that position. This
Agreement is not and is not to be construed as an employment
contract between the Company (or any of its subsidiaries) and
Indemnitee. Indemnitee specifically acknowledges that
Indemnitee’s employment with the Company (or any of its
subsidiaries), if any, is at will, and the Indemnitee may be
discharged at any time for any reason, with or without cause,
except as may be otherwise provided in any written employment
contract between Indemnitee and the Company (or any of its
subsidiaries), other applicable formal severance policies duly
adopted by the Board or, with respect to service as a director of
the Company, by the Company’s Certificate of Formation, LLC
Agreement and the Delaware Act. The foregoing
notwithstanding, subject to Section 12, this Agreement will
continue in force after Indemnitee has ceased to serve as an
officer or director of the Company or its subsidiaries and no
longer serves at the request of the Company as a director, officer,
tax matters partner, employee, partner, manager, fiduciary, trustee
or agent of any other Enterprise.
Section 2.
Indemnification—General . The Company will
indemnify and advance Expenses (as hereinafter defined) to
Indemnitee (i) as this Agreement permits and
(ii) (subject to the provisions hereof) to the fullest extent
applicable law in effect on the date hereof and as amended from
time to time permits. The rights the preceding sentence
provides to Indemnitee will include, but will not be limited to,
the rights the other Sections hereof set forth.
Section 3.
Proceedings Other Than by or in the Right of the Company
. Indemnitee will be entitled to the rights of
indemnification this Section 3 provides if, by reason of his
Corporate Status, he was, is, or is threatened to be made, a party
to or a participant in any threatened, pending or completed
Proceeding (as hereinafter defined), other than a Proceeding by or
in the right of the Company. Pursuant to this Section 3,
the Company will indemnify Indemnitee against, and will hold
Indemnitee harmless from and in respect of, all Expenses,
judgments, penalties, fines (including excise taxes) and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of those
Expenses) judgments, fines, penalties or amounts paid in
settlement) actually and reasonably incurred by him or on his
behalf in connection with that Proceeding or any claim, issue or
matter therein, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed
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to the best interests of the Company and, with
respect to any criminal Proceeding, had no reasonable cause to
believe his conduct was unlawful.
Section 4.
Proceedings by or in the Right of the Company .
Indemnitee will be entitled to the rights of indemnification this
Section 4 provides if, by reason of his Corporate Status, he
was, is, or is threatened to be made, a party to or a participant
(as a witness or otherwise) in any threatened, pending or completed
Proceeding brought by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 4, the
Company will indemnify Indemnitee against, and will hold Indemnitee
harmless from and in respect of, all Expenses actually and
reasonably incurred by him or on his behalf in connection with that
Proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company; provided, however, that no indemnification against those
Expenses will be made in respect of any claim, issue or matter in
that Proceeding as to which Indemnitee has been adjudged to be
liable to the Company unless and to the extent that the Court of
Chancery, or the court in which that Proceeding has been brought or
is pending determines that despite the adjudication of liability
but in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnification.
Section 5.
Indemnification for Expenses of a Party Who Is Wholly or Partly
Successful . Notwithstanding any other provision hereof,
to the extent that Indemnitee is, by reason of his Corporate
Status, a party to (or a participant in) and is successful, on the
merits or otherwise, in defense of any Proceeding, the Company will
indemnify him against all Expenses actually and reasonably incurred
by him or on his behalf in connection therewith. If
Indemnitee is not wholly successful in defense of any Proceeding
but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in that Proceeding, the
Company will 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. For purposes of
this Section 5 and without limitation, the termination of any
claim, issue or matter in any Proceeding by dismissal, with or
without prejudice, will be deemed to be a successful result as to
that claim, issue or matter.
Section 6.
Indemnification for Expenses as a Witness .
Notwithstanding any other provision hereof, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any
Proceeding to which Indemnitee is not a party, the Company will
indemnify him against all Expenses actually and reasonably incurred
by him or on his behalf in connection therewith.
Section 7.
Advancement of Expenses . The Company will advance all
reasonable Expenses incurred by or on behalf of Indemnitee in
connection with any Proceeding within 10 days after the Company
receives a statement or statements from Indemnitee requesting such
advance or advances from time to time, whether prior to or after
final disposition of that Proceeding. Each such statement
must reasonably evidence the Expenses incurred by or on behalf of
Indemnitee and include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses
advanced if it ultimately is determined by final judicial decision
from which there is no further right to appeal that Indemnitee is
not entitled to be indemnified by the Company against those
Expenses. The Company will accept any such undertaking
without reference to the financial ability of Indemnitee to make
repayment, and without regard to Indemnitee’s ultimate
entitlement to indemnification under other provisions of this
Agreement.
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Section 8.
Procedure for Determination of Entitlement to
Indemnification . (a) Within sixty (60) days after
the actual receipt by Indemnitee of notice that he or she is a
party to or a participant (as a witness or otherwise) in any
Proceeding, Indemnitee shall submit to the Company a written notice
identifying the Proceeding. The omission by the Indemnitee to
notify the Company will not relieve the Company from any liability
which it may have to Indemnitee (i) otherwise than under this
Agreement, and (ii) under this Agreement only to the extent
the Company can establish that such omission to notify resulted in
actual prejudice to the Company.
(b)
Indemnitee shall thereafter deliver to the Company a written
application to indemnify Indemnitee in accordance with this
Agreement. Such application(s) may be delivered from time to
time and at such time(s) as Indemnitee deems appropriate in his or
her sole discretion. Following such a written application for
indemnification by Indemnitee, the Indemnitee’s entitlement
to indemnification shall be determined according to
Section 8(c) of this Agreement.
(c)
On written request by Indemnitee for indemnification pursuant to
Section 8(b), a determination, if applicable law requires,
with respect to Indemnitee’s entitlement thereto will be made
in the specific case: (i) by a majority vote of the
Disinterested Directors, even though less than a quorum of the
Board, or (ii) if so requested by the Indemnitee in his or her
sole discretion by an Independent Counsel in a written opinion to
the Board, a copy of which will be delivered to Indemnitee.
If it is so determined that Indemnitee is entitled to
indemnification hereunder, the Company will: (i) within 10
days after that determination, pay to Indemnitee all amounts
theretofore incurred by or on behalf of Indemnitee in respect of
which Indemnitee is entitled to that indemnification by reason of
that determination; and (ii) thereafter on written request by
Indemnitee, pay to Indemnitee within 10 days after that request
such additional amounts theretofore incurred by or on behalf of
Indemnitee in respect of which Indemnitee is entitled to that
indemnification by reason of that determination. Indemnitee
will cooperate with the person, persons or entity making the
determination with respect to Indemnitee’s entitlement to
indemnification under this Agreement, including providing to such
person, persons or entity on reasonable advance request any
documentation or information which is (i) not privileged or
otherwise protected from disclosure, (ii) reasonably available
to Indemnitee and (iii) reasonably necessary to that
determination. The Company will bear all costs and expenses
(including attorneys’ fees and disbursements) Indemnitee
incurs in so cooperating (irrespective of the determination as to
Indemnitee’s entitlement to indemnification) and hereby
indemnifies and agrees to bold Indemnitee harmless
therefrom.
(d)
If an Independent Counsel is to make the determination of
entitlement to indemnification pursuant to Section 8(c), the
Independent Counsel will be selected as this
Section 8(d) provides. If a Change of Control has
not occurred within two years prior to the date of
Indemnitee’s written request for indemnification pursuant to
Section 8(a), the Board will select the Independent Counsel,
and the Company will give written notice to Indemnitee advising him
of the identity of the Independent Counsel so selected. If a
Change of Control has occurred within two years prior to the date
of that written request, Indemnitee will select the Independent
Counsel (unless Indemnitee requests that the Board make the
selection, in which event the preceding sentence will apply), and
Indemnitee will 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 the written notice of selection has been given
deliver to the Company or to Indemnitee, as the case may be, a
written objection to the
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selection, provided, however, that any such
objection may be asserted only on the ground that the Independent
Counsel so selected is not an “Independent Counsel” as
Section 18 defines that term, and the objection must set forth
with particularity the factual basis for that assertion. Absent a
proper and timely objection, the person so selected shall act as
Independent Counsel. If any such written objection is so made
and substantiated, the Independent Counsel so selected may not
serve as Independent Counsel unless and until that objection is
withdrawn or a court of competent jurisdiction has determined that
objection is without merit. If (i) an Independent
Counsel is to make the determination of entitlement to
indemnification pursuant to Section 8(c) and
(ii) within 20 days after submission by Indemnitee of a
written request for indemnification pursuant to Section 8(a),
no Independent Counsel has been selected and not objected to,
either the Company or Indemnitee may petition the Court of Chancery
or another court of competent jurisdiction for resolution of any
objection that has 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
petitioned court or by such other person as the petitioned court
designates, and the person with respect to whom all objections are
so resolved or the person so appointed will act as the Independent
Counsel under Section 8(c). The Company will pay any and
all reasonable fees and expenses the Independent Counsel incurs in
connection with acting pursuant to Section 8(c), and the
Company will pay all reasonable fees and expenses incident to the
procedures this Section 8(d) sets forth, regardless of
the manner in which the Independent Counsel is selected or
appointed. If (i) the Independent Counsel selected or
appointed pursuant to this Section 8(d) does not make any
determination respecting Indemnitee’s entitlement to
indemnification hereunder within 45 days after the Company receives
a written request therefor and (ii) any judicial proceeding or
arbitration pursuant to Section 10(a) is then commenced,
that Independent Counsel will be discharged and relieved of any
further responsibility in such capacity (subject to the applicable
standards of professional conduct then prevailing).
Section 9.
Presumptions and Effect of Certain Proceedings .
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person, persons or entity making
that determination must presume that Indemnitee is entitled to
indemnification hereunder if Indemnitee has submitted a request for
indemnification in accordance with Section 8(a), and the
Company will 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
legal 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 legal 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)
The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or on a plea
of nolo contendere or its equivalent, will not (except as this
Agreement otherwise expressly provides) of itself adversely affect
the right of Indemnitee to indemnification hereunder or create a
presumption that Indemnitee did not act in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal
proceeding, that Indemnitee had reasonable cause to believe that
his conduct was unlawful.
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(c)
Any action Indemnitee takes or omits to take in connection with any
employee benefit plan will if taken or omitted in good faith by
Indemnitee and in a manner Indemnitee reasonably believed to be in
the interest of the participants in or beneficiaries of that plan,
be deemed to have been taken or omitted in a manner that is
“in, or not opposed to, the best interests of the
Company” for all purposes hereof.
(d)
Reliance as Safe Harbor . 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 by the Enterprise. The provisions of this
Section 9(d) shall not be deemed to be exclusive or to
limit in any way the other circumstances in which the Indemnitee
may be deemed or found to have met the applicable standard of
conduct set forth in this Agreement.
(e)
Actions of Others . The knowledge and/or actions, or
failure to act, of any other director, officer, tax matters
partner, employee, partner, manager, fiduciary, trustee or agent of
the Enterprise shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this
Agreement.
Section 10.
Remedies of Indemnitee . (a) In the event that
(i) a determination is made pursuant to Section 8 that
Indemnitee is not entitled to indemnification hereunder,
(ii) advancement of Expenses is not timely made pursuant to
Section 7, (iii) no determination as to
Indemnitee’s entitlement to indemnification shall have been
made pursuant to Section 8(c) of this Agreement
hereunde
