EXHIBIT 2
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of May 2, 1997 between XXXXXX OIL
CORPORATION, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxx
("Indemnitee").
Preliminary Statements
Competent and experienced persons are becoming more reluctant to serve
as directors or officers of corporations unless they are provided with adequate
protection against claims and actions against them for their activities on
behalf or at the request of such corporations, generally through insurance and
indemnification.
Uncertainties in the interpretations of the statutes and regulations,
laws and public policies relating to indemnification of corporate directors and
officers are such as to make adequate, reliable assessment of the risks to which
directors and officers of such corporations may be exposed difficult,
particularly in light of the proliferation of lawsuits against directors and
officers generally.
The Board of Directors of the Company, based upon its business
experience, has concluded that the continuation of present trends in litigation
against corporate directors and officers will inevitably make it more difficult
for the Company to attract and retain directors and officers of the highest
degree of competence committed to the active and effective direction and
supervision of the business and affairs of the Company and its subsidiaries and
affiliates and the operation of its and their facilities, and the Board deems
such consequences to be so detrimental to the best interests of the Company that
it has concluded that the Company should act to provide its directors and
officers with enhanced protection against inordinate risks attendant on their
positions in order to assure that the most capable persons otherwise available
will be attracted to, or will remain in, such positions and, in such connection,
such directors have further concluded that it is not only reasonable and prudent
but necessary for the Company to obligate itself contractually to indemnify to
the fullest extent permitted by applicable law its directors and certain of its
officers and certain persons serving other entities on behalf or at the request
of the Company and to assume, to the maximum extent permitted by applicable law,
financial responsibility for expenses and liabilities which might be incurred by
such individuals in connection with claims lodged against them for their
decisions and actions in such capacities.
Section 145 of the General Corporation Law of the State of Delaware,
under which law the Company is organized, empowers a corporation organized in
Delaware to indemnify persons who serve as directors, officers, employees or
agents of the corporation or persons who serve at the request of the corporation
as directors, officers, employees or agents of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise, and further
specifies that the indemnification provided by such section "shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise," and further empowers a corporation to "purchase and
maintain insurance" on behalf of such persons "against any liability asserted
against him or incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under the provisions of" said laws.
The Certificate of Incorporation, as amended, and By-laws of the
Company permit indemnification in accordance with the fullest extent permitted
by applicable law.
The Company has (i) reviewed the type of insurance available to insure
the directors and officers of the Company and of its affiliates against costs,
expenses (including attorneys' fees and disbursements), judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by them in
connection with any action, suit or proceeding to which they are, or are
threatened to be made, a party by reason of their status or decisions or actions
in such positions, (ii) studied the nature and extent of the coverage provided
by such insurance and the cost thereof to the Company, (iii) concluded at the
present time not to obtain such insurance in view of the costs and benefits
thereof and (iv) concluded, in part based upon Company's decision not to obtain
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such insurance, that it would be in the best interests of the Company and its
stockholders for the Company to enter into agreements to indemnify certain of
such persons in the form of this Agreement. The Company has, moreover, concluded
that it would continue to be in the best interests of the Company to enter into
such agreements with such persons even if the Company should, in the future,
obtain any such insurance inasmuch as such insurance is, and is likely to
continue to be, subject to certain significant exclusions and limitations or
could cease to be reasonably available on any basis.
The Company desires to have Indemnitee serve or continue to serve as a
director or officer of the Company, or as a director, officer, employee,
partner, trustee, agent or fiduciary of such other corporations, partnerships,
joint ventures, employee benefit plans, trusts or other enterprises (each a
"Company Affiliate") of which he has been or is serving, or will serve on behalf
or at the request of or for the convenience of or to represent the interests of
the Company, free from undue concern for unpredictable, inappropriate or
unreasonable claims for damages by reason of his being, or having been, a
director or officer of the Company or a director, officer, employee, partner,
trustee, agent or fiduciary of a Company Affiliate or by reason of his decisions
or actions on their behalf.
Indemnitee is willing to serve, or to continue to serve, or to take on
additional service for, the Company or the Company's Affiliates in such
aforesaid capacities on the condition that he be indemnified as provided for
herein.
Accordingly, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Services to the Company. Indemnitee will serve or continue to serve
as a director or officer of the Company (in the case of a Company officer, at
the will of the Company or under separate contract, if any such contract exists
or shall hereafter exist) or as a director, officer, employee, partner, trustee,
agent or fiduciary of a Company Affiliate faithfully and to the best of his
ability so long as he is duly elected and qualified in accordance with the
provisions of the By-laws or other applicable constitutive documents thereof;
provided, however, that (i) Indemnitee may at any time and for any reason resign
from such position (subject to any contractual obligations which Indemnitee
shall have assumed apart from this Agreement) and (ii) neither the Company nor
any Company Affiliate shall have any obligation under this Agreement to continue
the Indemnitee in any such position.
2. Right to Indemnification. The Company shall, to the fullest extent
permitted by applicable law as then in effect, indemnify any Indemnitee who is
or was involved in any manner (including, without limitation, as a party or a
witness) or is threatened to be made so involved in any threatened, pending or
completed investigation, claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, without limitation, any
action, suit or proceeding by or in the right of the Company to procure a
judgment in its favor) (a "Proceeding") by reason of the fact that such person
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of any Company Affiliate against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such Proceeding; provided, however, that,
except as provided in Section 3(d), the foregoing shall not apply to a director
or officer of the Company with respect to a Proceeding that was commenced by
such director or officer. Such indemnification shall include the right to
receive payment in advance of any expenses incurred by Indemnitee in connection
with such Proceeding, consistent with the provisions of applicable law as then
in effect.
3. Advancement of Expenses; Procedures; Presumptions and Effect of
Certain Proceedings; Remedies. In furtherance, but not in limitation, of the
foregoing provisions, the following procedures, presumptions and remedies shall
apply with respect to advancement of expenses and the right to indemnification
hereunder:
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(a) Advancement of Expenses. All reasonable expenses incurred
by or on behalf of the Indemnitee in connection with any Proceeding
shall be advanced to the Indemnitee by the Company within 20 calendar
days after the receipt by the Company of a statement or statements from
the Indemnitee requesting such advance or advances from time to time,
whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the expenses incurred
by the Indemnitee and, if required by law at the time of such advance,
shall include or be accompanied by an undertaking by or on behalf of
the Indemnitee to repay the amounts advanced if it should ultimately be
determined that the Indemnitee is not entitled to be indemnified
against such expenses pursuant to this Article.
(b) Procedure for Determination of Entitlement to
Indemnification. (i) To obtain indemnification under this Article, an
Indemnitee shall submit to the Secretary of the Company a written
request, including such documentation and information as is reasonably
available to the Indemnitee and reasonably necessary to determine
whether and to what extent the Indemnitee is entitled to
indemnification (the "Supporting Documentation"). The determination of
the Indemnitee's entitlement to indemnification shall be made not later
than 60 calendar days after receipt by the Company of the written
request for indemnification together with the Supporting Documentation.
The Secretary of the Company shall, promptly upon receipt of such a
request for indemnification, advise the Board in writing that the
Indemnitee has requested indemnification.
(ii) The Indemnitee's entitlement to indemnification hereunder
shall be determined in one of the following ways (each of which shall
give effect to the presumptions set forth in Section 3(c)): (A) by a
majority vote of the Disinterested Directors (as hereinafter defined),
if they constitute a quorum of the Board; (B) by a written opinion of
Independent Counsel (as hereinafter defined) if a quorum of the Board
consisting of Disinterested Directors is not obtainable or, even if
obtainable, a majority of such Disinterested Directors so directs; (C)
by the stockholders of the Company (but only if a majority of the
Disinterested Directors, if they constitute a quorum of the Board,
presents the issue of entitlement to indemnification to the
stockholders for their determination) or (D) as provided in Section
3(c).
(iii) If the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 3(b)(ii), a majority
of the Disinterested Directors, if any, shall select the Independent
Counsel, but only an Independent Counsel to which the Indemnitee does
not reasonably object. If there shall be no Disinterested Directors,
such Independent Counsel shall be selected by a majority of the
Directors, but only an Independent Counsel to which the Indemnitee does
not reasonably object.
(c) Presumptions and Effect of Certain Proceedings. Except as
otherwise expressly provided herein, the Indemnitee shall be presumed
to be entitled to indemnification hereunder upon submission of a
request for indemnification together with the Supporting Documentation
in accordance with Section 3(b)(i), and thereafter the Company shall
have the burden of proof to overcome that presumption in reaching a
contrary determination. In any event, if the person or persons
empowered under Section 3(b) to determine entitlement to
indemnification shall not have been appointed or shall not have made a
determination within 60 calendar days after receipt by the Corporation
of the request therefor together with the Supporting Documentation, the
Indemnitee shall be deemed to be entitled to indemnification and the
Indemnitee shall be entitled to such indemnification unless the Company
establishes as provided in the final sentence of Section 3(d)(ii) or by
written opinion of Independent Counsel that (A) the Indemnitee
misrepresented or failed to disclose a material fact in making the
request for indemnification or in the Supporting Documentation or (B)
such indemnification is prohibited by law. The termination of any
Proceeding described in Section 2, or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, adversely
affect the right of the Indemnitee to indemnification or create a
presumption that the Indemnitee did not act in good faith and in a
manner which the Indemnitee reasonably believed to be in
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or not opposed to the best interests of the Company or, with respect to
any criminal Proceeding, that the Indemnitee had reasonable cause to
believe that his conduct was unlawful.
(d) Remedies of Indemnitee. (i) In the event that a
determination is made pursuant to Section 3(b) that the Indemnitee is
not entitled to indemnification hereunder, (A) the Indemnitee shall be
entitled to seek an adjudication of his entitlement to such
indemnification either, at the Indemnitee's sole option, in (x) an
appropriate court of the State of Delaware or any other court of
competent jurisdiction or (y) an arbitration to be conducted by a
single arbitrator, selected by mutual agreement of the Company and
Indemnitee (or, failing such agreement, by the then sitting Chief Judge
of the United States District Court for the Northern District of
Texas), pursuant to the rules of the American Arbitration Association;
(B) any such judicial proceeding or arbitration shall be de novo and
the Indemnitee shall not be prejudiced by reason of such adverse
determination and (C) in any such judicial proceeding or arbitration
the Company shall have the burden of proving that the Indemnitee is not
entitled to indemnification under this Article. If any such
determination is made, the Indemnitee shall be entitled, on five days
written notice to the Secretary of the Company, to receive the written
report of the persons making such determination, which report shall
include the reasons and factual findings, if any, upon which such
determination was based.
(ii) If a determination shall have been made or deemed to have been
made, pursuant to Section 3(b) or (c), that the Indemnitee is entitled
to indemnification, the Company shall be obligated to pay the amounts
constituting such indemnification within five days after such
determination has been made or deemed to have been made and shall be
conclusively bound by such determination unless the Company establishes
as provided in the final sentence of this paragraph that (A) the
Indemnitee misrepresented or failed to disclose a material fact in
making the request for indemnification or in the Supporting
Documentation or (B) such indemnification is prohibited by law. If (x)
advancement of expenses is not timely made pursuant to Section 3(a) or
(y) payment of indemnification is not made within five calendar days
after a determination of entitlement to indemnification has been made
or deemed to have been made pursuant to Section 3(b) or (c), the
Indemnitee shall be entitled to seek judicial enforcement of the
Company's obligation to pay to the Indemnitee such advancement of
expenses or indemnification. Notwithstanding the foregoing, the Company
may bring an action, in an appropriate court in the State of Delaware
or any other court of competent jurisdiction, contesting the right of
the Indemnitee to receive indemnification hereunder due to the
occurrence of an event described in subclause (A) or (B) of this clause
(ii) (a "Disqualifying Event"); provided, however, that in any such
action the Company shall have the burden of proving the occurrence of
such Disqualifying Event.
(iii) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 3(d) that
the procedures and presumptions of this Section 3 are not valid,
binding and enforceable and shall stipulate in any such court or before
any such arbitrator that the Company is bound by all the provisions of
this Agreement.
(iv) If the Indemnitee, pursuant to this Section 3(d), seeks a
judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, the
Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company against, any expenses actually and
reasonably incurred by the Indemnitee if the Indemnitee prevails in
such judicial adjudication or arbitration. If it shall be determined in
such judicial adjudication or arbitration that the Indemnitee is
entitled to receive part but not all of the indemnification or
advancement of expenses sought, the expenses incurred by the Indemnitee
in connection with such judicial adjudication or arbitration shall be
prorated accordingly.
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(e) Definitions. For purposes of this Section 3:
"Disinterested Director" means a director of the
Company who is not or was not a party to the Proceeding in
respect of which indemnification is sought by the Indemnitee.
"Independent Counsel" means a law firm or a member of
a law firm that neither presently is, nor in the past five
years has been, retained to represent (a) the Company or the
Indemnitee in any matter material to either such party or (b)
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 under the law of the State of Delaware, would have
a conflict of interest in representing either the Company or
the Indemnitee in an action to determine the Indemnitee's
rights hereunder.
4. Other Rights to Indemnification. The indemnification and advancement
of costs and expenses (including attorneys' fees and disbursements) provided by
this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may now or in the future be entitled under any provision of
applicable law, the Certificate of Incorporation or any By-law of the Company or
any other agreement or any vote of directors or stockholders or otherwise,
whether as to action in his official capacity or in another capacity while
occupying any of the positions or having any of the relationships referred to in
Section 1 of this Agreement.
5. Duration of Agreement. (a) This Agreement shall be effective from
and after the effective date of the Agreement, and shall continue until and
terminate upon the later of (i) the tenth anniversary after Indemnitee has
ceased to occupy any of the positions or have any of the relationships described
in Section 1 of this Agreement or (ii) (A) the final termination or resolution
of all Proceedings with respect to Indemnitee commenced during such 10-year
period and (B) either (x) receipt by Indemnitee of the indemnification to which
he is entitled hereunder with respect thereto or (y) a final adjudication or
binding arbitration that Indemnitee is not entitled to any further
indemnification with respect thereto, as the case may be.
(b) This Agreement shall be binding upon the Company and its successors
and assigns and shall inure to the benefit of Indemnitee and his heirs,
devisees, executors, administrators or other legal representatives.
6. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable under any particular
circumstances or for any reason whatsoever (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including, without
limitation, all other portions of any Section, paragraph or clause of this
Agreement that contains any provision that has been found to be invalid, illegal
or unenforceable, that are not themselves invalid, illegal or unenforceable), or
the validity, legality or enforceability under any other circumstances shall not
in any way be affected or impaired thereby and (b) to the fullest extent
possible consistent with applicable law, the provisions of this Agreement
(including, without limitation, all other portions of any Section, paragraph or
clause of this Agreement that contains any such provision that has been found to
be invalid, illegal or unenforceable, that are not themselves invalid, illegal
or unenforceable) shall be deemed revised, and shall be construed so as to give
effect to the intent manifested by this Agreement (including the provision held
invalid, illegal or unenforceable).
7. Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
8. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
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9. Modification and Waiver. 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.
10. Notification and Defense of Claim. Indemnitee agrees to notify the
Company promptly in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
matter which may be subject to indemnification hereunder, whether civil,
criminal or investigative; provided, however, that the failure of Indemnitee to
give such notice to the Company shall not adversely affect Indemnitee's rights
under this Agreement except to the extent the Company shall have been materially
prejudiced as a direct result of such failure. Nothing in this Agreement shall
constitute a waiver of the Company's right to seek participation at its own
expense in any Proceeding which may give rise to indemnification hereunder.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed or (ii) mailed by certified or registered
mail with postage prepaid, on the third business day after the date on which it
is so mailed, in either case:
(a) if to Indemnitee, at the address indicated on the
signature page hereof,
(b) if to the Company:
Xxxxxx Oil Corporation
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Secretary
or to such other address as may have been furnished to either party by the other
party.
12. Governing Law. The parties hereto agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement On
April 15, 1997 as of the day and year first above written.
XXXXXX OIL CORPORATION
By: /s/Xxxx X. Xxxxxx
--------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Address: 0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxx 00000
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