EXHIBIT 10.R
INDEMNIFICATION AGREEMENT
     This Indemnification Agreement (this “Agreement”) is made and delivered
this 15th day of December, 2004, by El Paso Corporation (the “Company”), to and
for the benefit of Douglas L. Foshee (“Foshee”).
RECITALS
     WHEREAS, the Company executed an Indemnification Agreement dated
September 2, 2003, for the benefit of Foshee upon Foshee’s election to the
Company’s Board of Directors (“Board”) and it is the Company’s intent that this
Indemnification Agreement shall replace the Indemnification Agreement dated
September 2, 2003. Notwithstanding the foregoing, to the extent any claims for
indemnification or advancement of expenses existed under his prior agreement,
such claims shall be governed by the terms of that agreement.
     WHEREAS, in order to induce Foshee to continue as a member of the Company’s
Board and as an officer of the Company (“Officer”), the Company is executing and
delivering to Foshee this Indemnification Agreement.
     NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby agrees as
follows:
SECTION 1. Right To Indemnification
     If Foshee is made a party or is threatened to be made a party to or is
involved (including, without limitation, as a witness) in any actual or
threatened action, suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter a “proceeding”), by reason of the fact that he is
or was a Director or Officer of the Company (or of any subsidiary of the
Company) or is or was serving at the request of the Company or the Board of
Directors, including service with respect to any employee benefit plan or any
subsidiary of the Company, whether the basis of such proceeding is alleged
action in an official capacity as a Director or Officer or in any other capacity
while serving as a Director or Officer, he shall be indemnified and held
harmless by the Company to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
said law permitted the Company to provide prior to such amendment), or by other
applicable law as then in effect, against all expense, liability and loss
(including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties
and amounts to be paid in settlement) actually and reasonably incurred or
suffered by him in connection therewith and such indemnification shall continue
after Foshee has ceased to be a Director or Officer and shall inure to the
benefit of Foshee’s heirs, executors and administrators; provided, however, that
except as provided in Section 2 of this Agreement with respect to proceedings
seeking to enforce

--------------------------------------------------------------------------------

 

rights to indemnification or to advancement of expenses, the Company shall be
required to indemnify Foshee in connection with a proceeding (or part thereof)
initiated by Foshee only if such proceeding (or part thereof) was authorized by
the Board. The right to indemnification conferred in this Agreement shall
include the right to be paid by the corporation the reasonable expenses
(including attorneys’ fees) incurred in defending any such proceeding in advance
of its final disposition (hereinafter an “advancement of expenses”); further
provided, however, that, if the General Corporation Law of the State of Delaware
requires, an advancement of expenses incurred by Foshee in his capacity as a
Director or Officer (and not in any other capacity in which service was or is
rendered by Foshee while a Director or Officer, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
Company of an undertaking, if permitted by Federal Law, by or on behalf of
Foshee, to repay all amounts so advanced if it shall ultimately be determined
that he is not entitled to be indemnified under this Agreement, or otherwise,
and provided further that except as provided in Section 2 of this Agreement with
respect to proceedings seeking to enforce rights to indemnification or an
advancement of expenses, the Company shall be required to advance expenses to
Foshee in connection with a proceeding initiated by him only if such proceeding
was authorized by the Board.
SECTION 2. Right To Bring Suit
     If a claim under Section 1 of this Agreement is not paid in full by the
Company (following the final disposition of the proceeding) within sixty
(60) days after a written claim has been received by the Company, except in the
case of a claim for an advancement of expenses, in which case final disposition
of the proceeding is not required and the applicable period shall be twenty
(20) days, Foshee may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim and, to the extent successful in whole or
in material part, Foshee shall be entitled to be paid the expense of prosecuting
such suit. Foshee shall be presumed to be entitled to indemnification under this
Agreement upon submission of a written claim (and, in an action brought to
enforce a claim for an advancement of expenses, where the required undertaking,
if any is required, has been tendered to the Company), and thereafter the
Company shall have the burden of proof to overcome the presumption that Foshee
is not so entitled. Neither the failure of the Company (including its Board,
independent legal counsel, or its stockholders), to have made a determination
prior to the commencement of such suit that indemnification of Foshee is proper
in the circumstances, nor an actual determination by the Company (including its
Board, independent legal counsel or its stockholders) that Foshee is not
entitled to indemnification, shall be a defense to the suit or create a
presumption that Foshee is not so entitled.
SECTION 3. Nonexclusivity of Rights
     The rights to indemnification and to the advancement of expenses conferred
in this Agreement are in addition to and shall not be exclusive of any other
right Foshee may have or hereafter acquire under any statute, provision of the
Restated Certificate of Incorporation of the Company or its By-laws, or under
any other plan, program, arrangement, agreement, vote of stockholders or
disinterested Directors or otherwise.

- 2 -

--------------------------------------------------------------------------------

 

SECTION 4. Insurance, Contracts and Funding
     The Company may maintain insurance, at its expense, to protect itself and
Foshee against any expense, liability or loss, whether or not the Company would
have the power to indemnify Foshee against such expense, liability or loss under
the General Corporation Law of the State of Delaware. The Company may enter into
contracts with Foshee in furtherance of the provisions of this Agreement and may
create a trust fund, grant a security interest or use other means (including,
without limitation, a letter of credit) to ensure the payment of such amounts as
may be necessary to effect indemnification as provided in this Agreement. To the
extent the Company maintains an insurance policy or policies providing
directors’ and officers’ liability insurance, Foshee 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.
SECTION 5. Change of Control
     (a) A “Change in Control” shall mean the occurrence of any of the
following:
(I) An acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by any “Person” (as the term
“person” is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), immediately after which
such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than twenty percent (20%) of (1) the
then-outstanding shares of common stock of the Company (or any other securities
into which such shares of common stock are changed or for which such shares of
common stock are exchanged) (the “Shares”) or (2) the combined voting power of
the Company’s then-outstanding Voting Securities; provided, however, that in
determining whether a Change in Control has occurred pursuant to this paragraph
(I), the acquisition of Shares or Voting Securities in a “Non-Control
Acquisition” (as hereinafter defined) shall not constitute a Change in Control.
A “Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) the Company or
(B) any corporation or other Person the majority of the voting power, voting
equity securities or equity interest of which is owned, directly or indirectly,
by the Company (for purposes of this definition, a “Related Entity”), (ii) the
Company or any Related Entity, or (iii) any Person in connection with a
“Non-Control Transaction” (as hereinafter defined);
(II) The individuals who, as of the Effective Date, are members of the board of
directors of the Company (the “Incumbent Board”), cease for any reason to
constitute at least a majority of the members of the board of directors of the
Company or, following a Merger (as hereinafter defined), the board of directors
of (x) the corporation resulting from such Merger (the “Surviving Corporation”),
if fifty percent (50%) or more of the combined voting power of the
then-outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly, by another Person (a “Parent
Corporation”) or (y) if there is one or more than one Parent Corporation, the
ultimate Parent Corporation; provided, however, that, if the election, or
nomination for election by the Company’s common stockholders, of any new
director was approved by a

- 3 -

--------------------------------------------------------------------------------

 

vote of at least two-thirds of the Incumbent Board, such new director shall, for
purposes of the Plan, be considered a member of the Incumbent Board; and
provided, further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
an actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the board of directors of the Company (a “Proxy Contest”),
including by reason of any agreement intended to avoid or settle any Proxy
Contest; or
(III) The consummation of:
          (i) A merger, consolidation or reorganization (1) with or into the
Company or (2) in which securities of the Company are issued (a “Merger”),
unless such Merger is a “Non-Control Transaction.” A “Non-Control Transaction”
shall mean a Merger in which:
     (A) the stockholders of the Company immediately before such Merger own
directly or indirectly immediately following such Merger at least fifty percent
(50%) of the combined voting power of the outstanding voting securities of
(x) the Surviving Corporation, if there is no Parent Corporation or (y) if there
is one or more than one Parent Corporation, the ultimate Parent Corporation;
     (B) the individuals who were members of the Incumbent Board immediately
prior to the execution of the agreement providing for such Merger constitute at
least a majority of the members of the board of directors of (x) the Surviving
Corporation, if there is no Parent Corporation, or (y) if there is one or more
than one Parent Corporation, the ultimate Parent Corporation; and
     (C) no Person other than (1) the Company, (2) any Related Entity, or
(3) any employee benefit plan (or any trust forming a part thereof) that,
immediately prior to the Merger, was maintained by the Company or any Related
Entity, or (4) any Person who, immediately prior to the Merger had Beneficial
Ownership of twenty percent (20%) or more of the then outstanding Shares or
Voting Securities, has Beneficial Ownership, directly or indirectly, of twenty
percent (20%) or more of the combined voting power of the outstanding voting
securities or common stock of (x) the Surviving Corporation, if fifty percent
(50%) or more of the combined voting power of the then outstanding voting
securities of the Surviving Corporation is not Beneficially Owned, directly or
indirectly by a Parent Corporation, or (y) if there is one or more than one
Parent Corporation, the ultimate Parent Corporation;
          (ii) A complete liquidation or dissolution of the Company; or
          (iii) The sale or other disposition of all or substantially all of the
assets of the Company and its subsidiaries taken as a whole to any Person (other
than (x) a transfer to a Related Entity, (y) a transfer under conditions that
would constitute a Non-Control Transaction, with the disposition of assets being
regarded as a Merger for this

- 4 -

--------------------------------------------------------------------------------

 

purpose or (z) the distribution to the Company’s stockholders of the stock of a
Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Shares or Voting
Securities as a result of the acquisition of Shares or Voting Securities by the
Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons; provided, that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company and, after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities and such Beneficial Ownership increases the
percentage of the then outstanding Shares or Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall occur.
     (b) Change in Control of the Company. The Company agrees that if there is a
Change in Control of the Company, then with respect to all matters thereafter
arising concerning the rights of Foshee to indemnity payments and expense
advances under this Agreement, any other agreements, the Restated Certificate of
Incorporation or the By-laws now or hereafter in effect relating to a
proceeding, the Company shall seek legal advice only from special independent
counsel selected by Foshee and approved by the Company (which approval shall not
be unreasonably withheld), and who has not otherwise performed services for the
Company (other than in connection with such matters) or Foshee. In the event
that Foshee and the Company are unable to agree on the selection of the special
independent counsel, such special independent counsel shall be selected by lot
from among at least five law firms in New York City, New York or Houston, Texas
selected by Foshee, each having no less than 50 partners. Such selection shall
be made in the presence of Foshee (and his legal counsel or either of them, as
Foshee may elect). Such special independent counsel, among other things, shall
determine whether and to what extent Foshee would be permitted to be indemnified
under applicable law and shall render its written opinion to the Company and
Foshee to such effect.
     The Company agrees to pay the reasonable fees of the special independent
counsel referred to above and to fully indemnify such counsel against any and
all expenses (including attorneys’ fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.
SECTION 6. No Modification
     No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver. Any waiver to this agreement shall be in
writing.

- 5 -

--------------------------------------------------------------------------------

 

SECTION 7. Subrogation
     In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Foshee, who shall execute all papers required and shall do everything that may
be necessary to secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce such
rights.
SECTION 8. No Duplication of Payments
     The Company shall not be liable under this Agreement to make any payment in
connection with any proceeding against Foshee to the extent Foshee has otherwise
actually received payment (under any insurance policy or otherwise) of the
amounts otherwise indemnifiable hereunder.
SECTION 9. Notification and Defense of Proceedings
     Foshee agrees that he will use all reasonable efforts to notify the Company
promptly after receipt by Foshee of notice of the commencement of any proceeding
if he anticipates that a request for indemnification in respect thereof is to be
made against the Company under this Agreement; but failure to so notify the
Company will not relieve the Company from any indemnification or other
obligation or liability which it may have to Foshee. With respect to any such
proceeding as to which Foshee notifies the Company of the commencement thereof:
     (a) the Company will be entitled to participate therein at its own expense;
and
     (b) 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 satisfactory to Foshee.
After notice from the Company to Foshee of its election to assume the defense
thereof, the Company will not be liable to Foshee under this Agreement for any
legal or other expenses subsequently incurred by Foshee in connection with the
defense thereof other than reasonable costs of investigation or as otherwise
provided below. Foshee shall have the right to employ its 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
Foshee unless (i) the employment of counsel by Foshee has been authorized by the
Company, (ii) Foshee shall have reasonably concluded that there may be a
conflict of interest between the Company and Foshee in the conduct of the
defense of such proceeding or (iii) the Company shall not in fact have employed
counsel to assume the defense of such proceeding, in each of which cases the
fees and expenses of counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any proceeding brought by or on
behalf of the Company or as to which Foshee shall have made the conclusion
provided for in clause (ii) of this subsection 9(b).
     (c) The Company shall not be liable to indemnify Foshee under this
Agreement for any amounts paid in settlement of any proceeding effected by
Foshee without the Company’s prior written consent. The Company shall not settle
any proceeding in any manner which would

- 6 -

--------------------------------------------------------------------------------

 

impose any penalty or limitation on Foshee without Foshee’s prior written
consent. Neither the Company nor Foshee will unreasonably withhold their consent
to any proposed settlement.
SECTION 10. No Presumptions
     For purposes of this Agreement, the termination of any proceeding against
Foshee by judgment, order, settlement (whether with or without court approval)
or conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that Foshee did not meet any particular standard of conduct
or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition, neither the
failure of the Company to have made a determination as to whether Foshee has met
any particular standard of conduct or had any particular belief, nor an actual
determination by the Company that Foshee has not met such standard of conduct or
did not have such belief, prior to the commencement of legal proceedings by
Foshee to secure a judicial determination that Foshee should be indemnified
under applicable law shall be a defense to Foshee’s claim for indemnification or
create a presumption that Foshee has not met any particular standard of conduct
or did not have any particular belief.
SECTION 11. Acknowledgment of Reliance
     The Company acknowledges that Foshee is relying on this Agreement and the
promises and agreements of the Company herein in continuing his service as a
Director and an Officer and in agreeing to undertake and in undertaking his
responsibilities, duties and services to and for the Company in connection
therewith.
SECTION 12. Miscellaneous
     This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware. Each provision hereof is intended to be severable
and the invalidity or illegality of any portion of this Agreement shall not
affect the validity or legality of the remainder.

- 7 -

--------------------------------------------------------------------------------

 

     Executed as an instrument under seal as of the day and year first above
written.

            EL PASO CORPORATION
      By:   /s/ Susan B. Ortenstone       Name:  Susan B. Ortenstone     
Title:  Senior Vice President
Human Resources      Hereunto duly authorized
      By:   /s/ Ronald L. Kuehn, Jr.       Name:  Ronald L. Kuehn, Jr.     
Title:  Chairman of the Board     Hereunto duly authorized   

- 8 -