1
EXHIBIT 10.1
INDEMNITY AGREEMENT
This Agreement is made as of ________________, 1997, by and between
UNIFAB International, Inc., a Louisiana corporation (the "Corporation"), and
_______________ ("Indemnitee").
In consideration of Indemnitee's continued service after the date
hereof, the Corporation and Indemnitee do hereby agree as follows:
1. AGREEMENT TO SERVE. Indemnitee agrees to serve as a
[DIRECTOR/OFFICER] of the Corporation for so long as he is elected or appointed
or until such earlier time as he tenders his resignation in writing.
2. DEFINITIONS. As used in this Agreement:
(a) The term "Expenses" shall mean any expenses or costs
(including, without limitation, attorney's fees, judgments, punitive or
exemplary damages, fines and amounts paid in settlement). If any of the
foregoing amounts paid on behalf of Indemnitee are not deductible by Indemnitee
for federal or state income tax purposes, the Corporation will reimburse
Indemnitee for tax liability with respect thereto by paying to Indemnitee an
amount which, after taking into account taxes on such amount, equals
Indemnitee's incremental tax liability.
(b) The term "Claim" shall mean any threatened, pending
or completed claim, action, suit, or proceeding, whether civil, criminal,
administrative or investigative and whether made judicially or
extra-judicially, or any separate issue or matter therein, as the context
requires.
(c) The term "Determining Body" shall mean (i) those
members of the Board of Directors who are not named as parties to the Claim for
which indemnification is being sought ("Impartial Directors"), if there are at
least three Impartial Directors, or (ii) a committee of at least three
directors appointed by the Board of Directors (regardless whether the members
of the Board of Directors voting on such appointment are Impartial Directors)
and composed of Impartial Directors or (iii) if there are fewer than three
Impartial Directors or if the Board of Directors or a committee appointed
thereby so directs (regardless whether the members thereof are Impartial
Directors), independent legal counsel, which may be the regular outside counsel
of the Corporation.
3. LIMITATION OF LIABILITY.
To the fullest extent permitted by Article VIII of the
Articles of Incorporation of the Corporation in effect on the date hereof and,
if and to the extent such Article VIII is amended to permit further
limitations, in effect at any time prior to the determination of liability that
would exist but for the provisions of this Agreement, Indemnitee shall not be
liable for breach of his fiduciary duty as a director or officer.
-1-
2
4. MAINTENANCE OF INSURANCE AND SELF-INSURANCE.
(a) The Corporation represents that it presently
maintains in force and effect the following directors and officers liability
insurance ("D&O Insurance") policies (the "Insurance Policies"):
Insurer Policy No. Coverage
------- ---------- --------
Subject only to the provisions of Section 4(b) hereof, the Corporation hereby
agrees that, so long as Indemnitee shall continue to serve as a [DIRECTOR OR
OFFICER] (or shall continue at the request of the Corporation to serve in any
capacity referred to in Section 5(a) hereof) and thereafter so long as
Indemnitee shall be subject to any possible Claim, the Corporation shall use
its best efforts to purchase and maintain in effect for the benefit of
Indemnitee one or more valid and enforceable policy or policies of D&O
Insurance providing, in all respects, coverage at least comparable to that
currently provided pursuant to the Insurance Policies, provided that the
Corporation shall have no obligation to provide primary coverage in excess of
$_____ million or excess coverage in excess of $_____ million.
(b) The Corporation shall not be required to purchase and
maintain the Insurance Policies in effect if D&O Insurance is not reasonably
available or if, in the reasonable business judgment of the then directors of
the Corporation, either (i) the premium cost for such insurance is excessive in
light of the amount of coverage or (ii) the coverage provided by such insurance
is so limited by exclusions, retentions, deductibles or otherwise that there is
insufficient benefit from such insurance.
(c) If the Corporation does not purchase and maintain in
effect the Insurance Policies pursuant to the provisions of Section 4(b)
hereof, the Corporation agrees to hold harmless and indemnify Indemnitee to the
full extent of the coverage that would otherwise have been provided for the
benefit of Indemnitee pursuant to the Insurance Policies.
5. ADDITIONAL INDEMNITY.
(a) To the extent any Expenses incurred by Indemnitee are
in excess of the amounts reimbursed or indemnified pursuant to the provisions
of Section 4 hereof, the Corporation shall indemnify and hold harmless
Indemnitee against any such Expenses actually and reasonably incurred, as they
are incurred, in connection with any Claim against Indemnitee (whether as a
subject of or party to, or a proposed or threatened subject of or party to, the
Claim) or in which Indemnitee is involved solely as a witness or person
required to give evidence, by reason of his position
(i) as a director or officer of the Corporation
-2-
3
(ii) as a director or officer of any subsidiary of
the Corporation or as a fiduciary with respect to any employee benefit plan of
the Corporation or
(iii) as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other for profit or
not for profit entity or enterprise, if such position is or was held at the
request of the Corporation, whether relating to service in such position before
or after the effective date of this Agreement, if (i) the Indemnitee is
successful in his defense of the Claim on the merits or otherwise or (ii) the
Indemnitee has been found by the Determining Body (acting in good faith) to
have met the Standard of Conduct; provided that (a) the amount of Expenses for
which the Corporation shall indemnify Indemnitee may be reduced by the
Determining Body to such amount as it deems proper if it determines in good
faith that the Claim involved the receipt of a personal benefit by Indemnitee
and (b) no indemnification shall be made in respect of any Claim as to which
Indemnitee shall have been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for willful or intentional
misconduct in the performance of his duty to the Corporation or to have
obtained an improper personal benefit, unless, and only to the extent that, a
court 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 indemnity for such Expenses as the court
shall deem proper; and provided further that, if the Claim involves Indemnitee
by reason of his position with an entity or enterprise described in clause (ii)
or (iii) of this Section 5(a) and if Indemnitee may be entitled to
indemnification with respect to such Claim from such entity or enterprise,
Indemnitee shall be entitled to indemnification hereunder only (x) if he has
applied to such entity or enterprise for indemnification with respect to the
Claim and (y) to the extent that indemnification to which he would be entitled
hereunder but for this proviso exceeds the indemnification paid by such other
entity or enterprise.
(b) For purposes of this Agreement, the Standard of
Conduct is met when conduct by an Indemnitee with respect to which a Claim is
asserted was conduct that he reasonably believed to be in, or not opposed to,
the best interest of the Corporation, and, in the case of a Claim which is a
criminal action or proceeding, conduct that the Indemnitee had no reasonable
cause to believe was unlawful. The termination of any Claim by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Indemnitee did not
meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any
Claim, Indemnitee shall notify the Chief Executive Officer of the existence of
the Claim, who shall promptly advise the members of the Board of Directors and
that establishing the Determining Body will be a matter presented at the next
regularly scheduled meeting of the Board of Directors. After the Determining
Body has been established the Chief Executive Officer shall inform Indemnitee
thereof and Indemnitee shall immediately notify the Determining Body of all
facts relevant to the Claim known to such Indemnitee. Within 60 days of the
receipt of such notice and information, together with such additional
information as the Determining Body may request of Indemnitee, the Determining
Body shall report to Indemnitee of its determination whether Indemnitee has met
the Standard of Conduct. The Determining Body may extend the period of time
for determining
-3-
4
whether the Standard of Conduct has been met, but in no event shall such period
of time be extended beyond an additional sixty days.
(d) If, after determining that the Standard of Conduct
has been met, the Determining Body obtains facts of which it was not aware at
the time it made such determination, the Determining Body on its own motion,
after notifying Indemnitee and providing him an opportunity to be heard, may,
on the basis of such facts, revoke such determination, provided that, in the
absence of actual fraud by Indemnitee, no such revocation may be made later
than thirty days after final disposition of the Claim.
(e) Indemnitee shall promptly inform the Determining Body
upon his becoming aware of any relevant facts not theretofore provided by him
to the Determining Body, unless the Determining Body has obtained such facts by
other means.
(f) In the case of any Claim not involving a proposed,
threatened or pending criminal proceeding,
(i) if Indemnitee has, in the good faith judgment
of the Determining Body, met the Standard of Conduct, the Corporation may, in
its sole discretion, assume all responsibility for the defense of the Claim,
and, in any event, the Corporation and Indemnitee each shall keep the other
informed as to the progress of the defense of the Claim, including prompt
disclosure of any proposals for settlement; provided that if the Corporation is
a party to the Claim and Indemnitee reasonably determines that there is a
conflict between the positions of the Corporation and Indemnitee with respect
to the Claim, then Indemnitee shall be entitled to conduct his defense with
counsel of his choice; and provided further that Indemnitee shall in any event
be entitled at his expense to employ counsel chosen by him to participate in
the defense of the Claim; and
(ii) the Corporation shall fairly consider any
proposals by Indemnitee for settlement of the Claim. If the Corporation
proposes a settlement of the Claim and such settlement is acceptable to the
person asserting the Claim or the Corporation believes a settlement proposed by
the person asserting the Claim should be accepted, it shall inform Indemnitee
of the terms of such proposed settlement and shall fix a reasonable date by
which Indemnitee shall respond. If Indemnitee agrees to such terms, he shall
execute such documents as shall be necessary to make final the settlement. If
Indemnitee does not agree with such terms, Indemnitee may proceed with the
defense of the Claim in any manner he chooses, provided that if Indemnitee is
not successful on the merits or otherwise, the Corporation's obligation to
indemnify such Indemnitee as to any Expenses incurred following his
disagreement shall be limited to the lesser of (A) the total Expenses incurred
by Indemnitee following his decision not to agree to such proposed settlement
or (B) the amount that the Corporation would have paid pursuant to the terms of
the proposed settlement. If, however, the proposed settlement would impose
upon Indemnitee any requirement to act or refrain from acting that would
materially interfere with the conduct of Indemnitee's affairs, Indemnitee shall
be permitted to refuse such settlement and proceed with the defense of the
Claim, if he so desires, at the Corporation's expense in accordance with the
terms and conditions of this Agreement without regard to the limitations
imposed by the
-4-
5
immediately preceding sentence. In any event, the Corporation shall not be
obligated to indemnify Indemnitee for an amount paid in a settlement that the
Corporation has not approved.
(g) In the case of a Claim involving a proposed,
threatened or pending criminal proceeding, Indemnitee shall be entitled to
conduct the defense of the Claim and to make all decisions with respect
thereto, with counsel of his choice; provided that the Corporation shall not be
obligated to indemnify Indemnitee for an amount paid in settlement that the
Corporation has not approved.
(h) After notification to the Corporation of the
existence of a Claim, Indemnitee may from time to time request of the Chief
Executive Officer or, if the Chief Executive Officer is a party to the Claim as
to which indemnification is being sought, any officer who is not a party to the
Claim and who is designated by the Chief Executive Officer (the "Disbursing
Officer"), which designation shall be made promptly after receipt of the
initial request, that the Corporation advance to Indemnitee the Expenses (other
than fines, penalties, judgments or amounts paid in settlement) that he incurs
in pursuing a defense of the Claim prior to the time that the Determining Body
determines whether the Standard of Conduct has been met. The Disbursing
Officer shall pay to Indemnitee the amount requested (regardless of
Indemnitee's apparent ability to repay the funds) upon receipt of an
undertaking by or on behalf of Indemnitee to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation under the circumstances, provided that if the Disbursing Officer
does not believe such amount to be reasonable, he shall advance the amount
deemed by him to be reasonable and Indemnitee may apply directly to the
Determining Body for the remainder of the amount requested.
(i) After a determination that the Standard of Conduct
has been met, for so long as and to the extent that the Corporation is required
to indemnify Indemnitee under this Agreement, the provisions of Paragraph (h)
shall continue to apply with respect to Expenses incurred after such time
except that (i) no undertaking shall be required of Indemnitee and (ii) the
Disbursing Officer shall pay to Indemnitee the amount of any fines, penalties
or judgments against him which have become final for which the Corporation is
obligated to indemnify him or any amount of indemnification ordered to be paid
to him by a court.
(j) Any determination by the Corporation with respect to
settlement of a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep
confidential to the extent permitted by law and their fiduciary obligations all
facts and determinations provided pursuant to or arising out of the operation
of this Agreement and the Corporation and Indemnitee shall instruct its or his
agents and employees to do likewise.
6. ENFORCEMENT.
(a) The rights provided by this Agreement shall be
enforceable by Indemnitee in any court of competent jurisdiction.
-5-
6
(b) If Indemnitee seeks a judicial adjudication of his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Corporation, and shall be indemnified by
the Corporation against, any and all Expenses actually and reasonably incurred
by him in connection with such proceeding, but only if he prevails therein. If
it shall be determined that Indemnitee is entitled to receive part but not all
of the relief sought, then Indemnitee shall be entitled to be reimbursed for
all Expenses incurred by him in connection with such proceeding if the
indemnification amount to which he is determined to be entitled exceeds 50% of
the amount of his claim. Otherwise, the Expenses incurred by Indemnitee in
connection with such judicial adjudication shall be appropriately prorated.
(c) In any judicial proceeding described in this Section
6, the Corporation shall bear the burden of proving that Indemnitee is not
entitled to Expenses sought with respect to any Claim.
7. SAVING CLAUSE. If any provision of this Agreement is
determined by a court having jurisdiction over the matter to require the
Corporation to do or refrain from doing any act that is in violation of
applicable law, the court shall be empowered to modify or reform such provision
so that, as modified or reformed, such provision provides the maximum
indemnification permitted by law and such provision, as so modified or
reformed, and the balance of this Agreement, shall be applied in accordance
with their terms. Without limiting the generality of the foregoing, if any
portion of this Agreement shall be invalidated on any ground, the Corporation
shall nevertheless indemnify Indemnitee to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated and
to the full extent permitted by law with respect to that portion that has been
invalidated.
8. NON-EXCLUSIVITY.
(a) The indemnification and payment of Expenses provided
by or granted pursuant to this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee is or may become entitled under any statute,
article of incorporation, by-law, authorization of shareholders or directors,
agreement or otherwise.
(b) It is the intent of the Corporation by this Agreement
to indemnify and hold harmless Indemnitee to the fullest extent permitted by
law, so that if applicable law would permit the Corporation to provide broader
indemnification rights than are currently permitted, the Corporation shall
indemnify and hold harmless Indemnitee to the fullest extent permitted by
applicable law notwithstanding that the other terms of this Agreement would
provide for lesser indemnification.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute the original.
10. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Louisiana.
-6-
7
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
Indemnitee and upon the Corporation, its successors and assigns, and shall
inure to the benefit of Indemnitee's heirs, personal representatives, and
assigns and to the benefit of the Corporation, its successors and assigns.
12. AMENDMENT. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in writing signed
by the Corporation and Indemnitee. Notwithstanding any amendment or
modification to or termination or cancellation of this Agreement or any portion
hereof, Indemnitee shall be entitled to indemnification in accordance with the
provisions hereof with respect to any acts or omissions of Indemnitee which
occur prior to such amendment, modification, termination or cancellation.
13. GENDER. All pronouns and variations thereof used in this
Agreement shall be deemed to refer to the masculine, feminine or neuter gender,
singular or plural, as the identity of the person, persons, entity or entities
refer to may require.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and signed as of the date and year first above written.
UNIFAB INTERNATIONAL, INC.
By:
--------------------------------------
Name:
Office:
-----------------------------------------
Name:
-7-