EXHIBIT 10.3
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made on the 27th day of October, 2006
BETWEEN:
Weatherford International Ltd., a company incorporated under the laws of Bermuda
with its registered office located at Clarendon House, 2 Church Street,
Hamilton, Bermuda (the “Company”); and
Jessica Abarca (the “Indemnitee”).
WHEREAS the Indemnitee is an officer of the Company;
WHEREAS highly skilled and competent persons are becoming more reluctant to
serve public companies as directors or officers unless they are provided 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 such companies;
WHEREAS uncertainties relating to indemnification increase the difficulty of
attracting and retaining such persons;
WHEREAS the Board has determined that an inability to attract and retain such
persons is detrimental to the best interests of the Company and that the Company
should act to assure such persons that there will be increased certainty of such
protection in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company contractually
to obligate itself to indemnify Indemnitee to the fullest extent permitted by
Bermuda law so that Indemnitee will serve or continue to serve the Company free
from undue concern that Indemnitee will not be so indemnified;
WHEREAS, 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
Indemnitee be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants contained
herein, the Company and Indemnitee do hereby covenant and agree as follows:
1. INTERPRETATION

1.1   In this Agreement unless the context otherwise requires, the following
words and expressions shall have the following meanings:

         
 
  this “Agreement”   means this Indemnification Agreement;

 
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  the “Board”   means the board of directors of the Company;
 
       
 
  “Business Day”   means any day on which banks in Bermuda are open for
business;
 
       
 
  the “Companies Act”   means the Companies Act 1981;
 
       
 
  “Corporate Status”   means the status of a person who is or was a director,
officer, employee, agent, or fiduciary of the Company or any other Group
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of any other company, corporation,
partnership, limited liability company, joint venture, trust, employee benefit
plan or other entity or enterprise;
 
       
 
  “the Court”   means the Supreme Court of Bermuda;
 
       
 
  “Disinterested Director”   means a director of the Company who is not or was
not a party to a Proceeding in respect of which indemnification is sought by
Indemnitee;
 
       
 
  “Group Companies”   means the Company and each subsidiary of the Company
(wherever incorporated or organized);
 
       
 
  “Independent Counsel”   means a law firm or a member of a law firm that
neither is presently nor in the past five years has been retained to represent:
(i) the Company or Indemnitee 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 Indemnitee in an action to determine
Indemnitee’s right to indemnification under this Agreement;
 
       
 
  the “Parties”   means the parties to this Agreement collectively, and “Party”
means any one of them; and
 
       
 
  “Proceeding”   means any action, suit, arbitration, alternate dispute
resolution
mechanism, investigation, administrative hearing or any other proceeding whether
civil,

 
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      criminal, administrative or investigative and whether formal or informal;

1.2   In this Agreement unless the context otherwise requires:

  1.2.1   references to statutory provisions shall be construed as references to
those provisions as amended or re-enacted or as their application is modified by
other provisions from time to time and shall include references to any
provisions of which they are re-enactments (whether with or without
modification);     1.2.2   references to clauses and schedules are references to
clauses hereof and schedules hereto; references to sub-clauses or paragraphs
are, unless otherwise stated, references to sub-clauses of the clause or
paragraphs of the schedule in which the reference appears;     1.2.3  
references to the singular shall include the plural and vice versa and
references to the masculine shall include the feminine and/or neuter and vice
versa; and     1.2.4   references to persons shall include companies,
partnerships, associations and bodies of persons, whether incorporated or
unincorporated.

2. AGREEMENT TO SERVE
Indemnitee agrees to continue to serve as an officer of the Company. This
Agreement does not create or otherwise establish any right on the part of
Indemnitee to be and continue to beK elected or appointed an officer of the
Company or any other Group Company and does not create an employment contract
between the Company and Indemnitee.
3. INDEMNITY OF DIRECTOR/OFFICER

3.1   Subject to clause 10, the Company shall indemnify Indemnitee if Indemnitee
is a party or is threatened to be made a party to any threatened, pending or
completed Proceeding, including a Proceeding brought by or in the right of the
Company, by reason of the fact that Indemnitee is or was a director, officer,
employee, agent, or fiduciary of the Company or is or was serving at the request
of the Company as a director, officer, employee, agent, or fiduciary of any
other company, corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other entity or enterprise or by reason
of anything done or not done by Indemnitee in any such capacity. Subject to
clause 10, pursuant to this sub-clause 3.1 Indemnitee shall be indemnified
against expenses (including attorneys’ fees and disbursements), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by Indemnitee in connection with such Proceeding (including, but not limited to,
the investigation, defense, settlement or appeal thereof).

 
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3.2   Notwithstanding any other provision of this Agreement other than clause
10, Indemnitee shall be indemnified against all expenses (including attorneys’
fees and disbursements) actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in defending any Proceedings referred to in clause 3.1 in
which judgement is given in her favour, in which she is acquitted, or in respect
of which relief is granted to her by the Court under section 281 of the
Companies Act.   3.3   Subject to clause 10, the Company shall indemnify
Indemnitee for such portion of the expenses (including attorneys’ fees), witness
fees, damages, judgments, fines and amounts paid in settlement and any other
amounts that Indemnitee becomes legally obligated to pay in connection with any
Proceeding referred to in clause 3.1 in respect of which Indemnitee is entitled
to indemnification hereunder, even if Indemnitee is not entitled to
indemnification hereunder for the total amount thereof.   3.4   Without limiting
the scope of the indemnity provided under any other provision of this Agreement,
if the Indemnitee has reason to apprehend that any claim will or might be made
against her in respect of any negligence, default, breach of duty or breach of
trust, she may apply to the Court for relief pursuant to section 281 of the
Companies Act and, to the extent that the Court relieves her, either wholly or
partly, from her liability in accordance with section 281 of the Companies Act,
the Indemnitee shall be indemnified against any liability incurred by her in
defending any Proceedings in accordance with paragraph 98(2)(b) of the Companies
Act.

4. INDEMNIFICATION FOR EXPENSES OF A WITNESS
Subject to clause 10, to the extent that Indemnitee is, by reason of
Indemnitee’s Corporate Status, a witness in any proceeding, Indemnitee shall be
indemnified by the Company against all expenses actually and reasonably incurred
by Indemnitee or on Indemnitee’s behalf in connection therewith.
5. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION

5.1   The Indemnitee shall request indemnification pursuant to this Agreement by
notice in writing to the secretary of the Company. The secretary shall, promptly
upon receipt of Indemnitee’s request for indemnification, advise in writing the
Board or such other person or persons empowered to make the determination as
provided in sub-clause 5.2 that Indemnitee has made such request for
indemnification. Subject to clause 10, upon making such request for
indemnification, Indemnitee shall be presumed to be entitled to indemnification
hereunder and the Company shall have the burden of proof in the making of any
determination contrary to such presumption.

 
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5.2   Upon written request by Indemnitee for indemnification pursuant to
sub-clause 3.1, 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:

  5.2.1   the Board, by a majority vote of the Disinterested Directors; or    
5.2.2   if such vote is not obtainable or, even if obtainable, if such
Disinterested Directors so direct by majority vote, by Independent Counsel in a
written opinion to the Board, a copy of which shall be delivered to Indemnitee;
or     5.2.3   by a majority vote of the shareholders.

5.3   For purposes of sub-clause 5.2, 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 a single arbitrator pursuant to the
rules of the American Arbitration Association. Such determination of entitlement
to indemnification shall be made not later than 60 days after receipt by the
Company of a written request for indemnification. Such request shall include
documentation or information which is necessary for such determination and which
is reasonably available to Indemnitee. Subject to clause 10, any expenses
(including attorneys’ fees) incurred by Indemnitee in connection with
Indemnitee’s request for indemnification hereunder shall be borne by the Company
irrespective of the outcome of the determination of Indemnitee’s entitlement to
indemnification. If the person or persons making such determination shall
determine that Indemnitee is entitled to indemnification as to part (but not
all) of the application for indemnification, such persons may reasonably prorate
such partial indemnification among such claims, issues or matters in respect of
which indemnification is requested.

6. ADVANCEMENT OF EXPENSES
All reasonable expenses incurred by Indemnitee (including attorneys’ fees,
retainers and advances of disbursements required of Indemnitee) shall be paid by
the Company in advance of the final disposition of any Proceeding at the request
of Indemnitee as promptly as possible, and in any event within twenty days after
the receipt by the Company of a statement or statements from Indemnitee
requesting such advance or advances from time to time. Indemnitee’s entitlement
to such 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 reasonably evidence the expenses
incurred by Indemnitee in connection therewith and shall include or be
accompanied by an undertaking by or on behalf of Indemnitee to repay such amount
if it is ultimately determined that Indemnitee is not entitled to be indemnified
against such expenses by the Company as provided by this Agreement or
 
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otherwise. Subject to clause 10, the Company shall have the burden of proof in
any determination under this clause 6. No amounts advanced hereunder shall be
deemed an extension of credit by the Company to Indemnitee.
7. REMEDIES OF INDEMNITEE IN CASES OF DETERMINATION NOT TO INDEMNIFY OR TO
ADVANCE EXPENSES

7.1   In the event that: (a) a determination is made that Indemnitee is not
entitled to indemnification hereunder; (b) payment has not been timely made
following a determination of entitlement to indemnification pursuant to clause
5; or (c) expenses are not advanced pursuant to clause 6, Indemnitee shall be
entitled to apply to the Court or any other court of competent jurisdiction for
a determination of Indemnitee’s entitlement to such indemnification or advance.

7.2   Alternatively to sub-clause 7.1, Indemnitee, at Indemnitee’s option, may
seek an award in arbitration to be conducted by a single arbitrator pursuant to
the rules of the American Arbitration Association, such award to be made within
sixty days following the filing of the demand for arbitration. The Company shall
not oppose Indemnitee’s right to seek any such adjudication or award in
arbitration or any other claim.

7.3   A judicial proceeding or arbitration pursuant to this clause 7 shall be
made de novo and Indemnitee shall not be prejudiced by reason of a determination
otherwise made hereunder (if so made) that Indemnitee is not entitled to
indemnification. Subject to clause 10, if a determination is made pursuant to
the terms of clause 5 that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination and is precluded from asserting
that such determination has not been made or that the procedure by which such
determination was made is not valid, binding and enforceable. If the court or
arbitrator shall determine that Indemnitee is entitled to any indemnification
hereunder, the Company shall pay all reasonable expenses (including attorneys’
fees and disbursements) actually incurred by Indemnitee in connection with such
adjudication or award in arbitration (including, but not limited to, any
appellate proceedings).

8. OTHER RIGHTS TO INDEMNIFICATION
The indemnification and advancement of expenses (including attorneys’ fees)
provided by this Agreement shall not be deemed exclusive of any other right to
which Indemnitee may now or in the future be entitled under any provision of the
Company’s bye-laws, any agreement, vote of shareholders, the Board or
Disinterested Directors, provision of law, or otherwise; provided, however,
that: (a) this Agreement supersedes any other agreement that has been entered
into by the Company with the Indemnitee which has as its principal purpose the
indemnification of Indemnitee (except that this Agreement shall not supersede
that certain Indemnification Agreement entered into on or about the date hereof
between Indemnitee and Weatherford International, Inc., a subsidiary of the
Company, it being the intention of the Parties that Indemnitee shall be entitled
to the
 
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indemnification provided under either or both agreements to the fullest extent
permitted by law); and (b) where the Company may indemnify the Indemnitee
pursuant to either this Agreement or the bye-laws of the Company, the Company
may indemnify the Indemnitee under either this Agreement or the bye-laws but the
Indemnitee shall, in no case, be indemnified by the Company in respect of any
expense, liability or cost of any type for which payment is or has been actually
made to Indemnitee under any insurance policy, indemnity clause, bye-law or
agreement, except in respect of any excess beyond such payment.
9. ATTORNEYS’ FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT
In the event that Indemnitee is subject to or intervenes in any Proceeding in
which the validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce Indemnitee’s rights under, or to
recover damages for breach of, this Agreement, Indemnitee, if Indemnitee
prevails in whole or in part in such action, shall be entitled to recover from
the Company and shall be indemnified by the Company against, any actual expenses
for attorneys’ fees and disbursements reasonably incurred by Indemnitee,
provided that in bringing such action, Indemnitee acted in good faith.
10. LIMITATION OF INDEMNIFICATION
Notwithstanding any other terms of this Agreement, nothing herein shall
indemnify the Indemnitee against, or exempt the Indemnitee from, any liability
in respect of the Indemnitee’s fraud or dishonesty.
11. LIABILITY INSURANCE
To the extent the Company maintains an insurance policy or policies providing
directors’ and officers’ liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company director or officer.
12. DURATION OF AGREEMENT
This Agreement shall apply with respect to Indemnitee’s occupation of any of the
position(s) described in sub-clause 3.1 of this Agreement prior to the date of
this Agreement and with respect to all periods of such service after the date of
this Agreement, even though the Indemnitee may have ceased to occupy such
positions(s).
13. NOTICE OF PROCEEDINGS BY INDEMNITEE

13.1   Indemnitee agrees promptly to notify the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding which may be subject to
indemnification hereunder, provided,

 
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however, that the failure to so notify the Company will not relieve the Company
from any liability it may have to Indemnitee except to the extent that such
failure materially prejudices the Company’s ability to defend such claim. With
respect to any such Proceeding as to which Indemnitee notifies the Company of
the commencement thereof:

  13.1.1   the Company will be entitled to participate therein at its own
expense; and     13.1.2   except as otherwise provided below, to the extent that
it may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee. After notice from the Company to Indemnitee of its
election so to assume the defense thereof, the Company will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ Indemnitee’s own counsel in such Proceeding, but
the fees and expenses of such counsel incurred after notice from the Company of
its assumption of the defense thereof shall be at the expense of Indemnitee and
not subject to indemnification hereunder unless (a) the employment of counsel by
Indemnitee has been authorized by the Company; (b) in the reasonable opinion of
counsel to Indemnitee there is or may be a conflict of interest between the
Company and Indemnitee in the conduct of the defense of such Proceeding; or
(c) the Company shall not in fact have employed counsel to assume the defense of
such action, in each of which cases, subject to clause 10, the fees and expenses
of counsel shall be at the expense of the Company.

13.2   Neither the Company nor the Indemnitee shall settle any claim without the
prior written consent of the other (which shall not be unreasonably withheld).

14. NOTICES
Any notice required to be given hereunder shall be in writing in the English
language and shall be served by sending the same by prepaid recorded post,
facsimile or by delivering the same by hand to the address of the Party or
Parties in question as set out below (or such other address as such Party or
Parties shall notify the other Parties of in accordance with this clause). Any
notice sent by post as provided in this clause shall be deemed to have been
served five Business Days after despatch and any notice sent by facsimile as
provided in this clause shall be deemed to have been served at the time of
despatch and in proving the service of the same it will be sufficient to prove
in the case of a letter that such letter was properly stamped, addressed and
placed in the post; and in the case of a facsimile that such facsimile was duly
despatched to a current facsimile number of the addressee.
 
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Company -
Weatherford International Ltd.
515 Post Oak Park, Suite 600
Houston, Texas 77027-3415
Attn: Secretary
 
Fax: 713-693-4484
 
Indemnitee -
Name: Jessica Abarca
Address: 515 Post Oak Boulevard, Suite 600
Houston, Texas 77027
 
Fax: (713) 693-____
15. MISCELLANEOUS

15.1   Notwithstanding the expiration or termination of this Agreement howsoever
arising, such expiration or termination shall not operate to affect such of the
provisions hereof as are expressed or intended to remain in full force and
effect.

15.2   If any of the clauses, conditions, covenants or restrictions of this
Agreement or any deed or document emanating from it shall be found to be void
but would be valid if some part thereof were deleted or modified, then such
clause, condition, covenant or restriction shall apply with such deletion or
modification as may be necessary to make it valid and effective so as to give
effect as nearly as possible to the intent manifested by such clause, condition,
covenant or restriction.

15.3   This Agreement shall be binding upon the Company and its successors and
assigns (including any transferee of all or substantially all of its assets and
any successor or resulting company by merger, amalgamation or operation of law)
and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns,
heirs, estate, devises, executors, administrators or other legal
representatives.

15.4.   This Agreement (together with any documents referred to herein)
constitutes the whole agreement between the Parties relating to its subject
matter and supersedes any prior indemnification arrangement between the Company
(or its predecessor) and Indemnitee (except as specifically set forth in clause
8).

15.5   No provision in this Agreement may be amended unless such amendment is
agreed to in writing, signed by the Indemnitee and by a duly authorised officer
of the Company. No

 
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            waiver by either Party of any breach by the other Party of any
condition or provision of this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Indemnitee or a duly authorised officer of the Company, as the
case may be.

15.6   The headings in this Agreement are inserted for convenience only and
shall not affect the construction of this Agreement.

15.7   This Agreement may be executed in counterparts each of which when
executed and delivered shall constitute an original but all such counterparts
together shall constitute one and the same instrument.

15.8   The terms and conditions of this Agreement and the rights of the parties
hereunder shall be governed by and construed in all respects in accordance with
the laws of the Islands of Bermuda. The parties to this Agreement hereby
irrevocably agree that the courts of Bermuda shall have non-exclusive
jurisdiction in respect of any dispute, suit, action, arbitration or proceedings
(“Agreement Proceedings”) which may arise out of or in connection with this
Agreement and waive any objection to Agreement Proceedings in the courts of
Bermuda on the grounds of venue or on the basis that the Agreement Proceedings
have been brought in an inconvenient forum.

15.9   All payments made by the Company to Indemnitee hereunder shall be deemed
to have been made in the ordinary course of business of the Company, and shall
not be deemed to be extraordinary payments.

 
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IN WITNESS WHEREOF, the undersigned, intending to be bound hereby, have duly
executed this Agreement as of the date first written above.

         
SIGNED by and on behalf of
THE COMPANY
in the presence of:

  )
)
)   /s/ BURT M. MARTIN
Name: Burt M. Martin
Title:  Senior Vice President
 
       
Witness: /s/ KATHLEEN MARINO
       
 
       
Name: Kathleen Marino
       
 
       
SIGNED by
THE INDEMNITEE
in the presence of:

  )
)
)   /s/ JESSICA ABARCA
Name: Jessica Abarca
 
       
Witness: /s/ JOSEPH C HENRY
       
 
       
Name: Joseph C. Henry
       

 
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