CRUSADER ENERGY GROUP INC. INDEMNIFICATION AGREEMENT
EXHIBIT 10.12
This Agreement (“Agreement”) is made and entered into as of the 26th day of June,
2008, by and between Crusader Energy Group Inc., a Nevada corporation (the “Company”), and
Xxxxxx X. Xxxxxxx (“Indemnitee”).
RECITALS
A. Highly competent and experienced persons are reluctant to serve corporations as directors,
executive officers or in other capacities unless they are provided with adequate protection through
insurance and indemnification against claims and actions against them arising out of their service
to and activities on behalf of the Company.
B. The Board of Directors of the Company (the “Board”) has determined that the
inability to attract and retain such persons would be detrimental to the best interests of the
Company and its stockholders and that the Company should act to assure such persons that there will
be increased certainty of such protection in the future.
C. The Board has also determined that it is reasonable, prudent and necessary for the Company,
in addition to purchasing and maintaining directors’ and officers’ liability insurance (or
otherwise providing for adequate arrangements of self-insurance), contractually to obligate itself
to indemnify such persons to the fullest extent permitted by applicable law so that they will serve
or continue to serve the Company free from undue concern that they will not be adequately
protected.
D. 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 to the fullest extent
permitted by law.
E. Section 78.751 of the NRS (as hereinafter defined) empowers the Company to indemnify its
officers and directors by agreement and expressly provides that the indemnification provided by NRS
78.751 is not exclusive of other rights of indemnification.
In consideration of the foregoing and the mutual covenants herein contained, and other good
and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
Certain Definitions
As used herein, the following words and terms shall have the following respective meanings
(whether singular or plural):
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“Acquiring Person” means any Person other than (i) the Company, (ii) any of the
Company’s Subsidiaries, (iii) any employee benefit plan of the Company or of a Subsidiary of the
Company or of a Company owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company, or (iv) any trustee
or other fiduciary holding securities under an employee benefit plan of the Company or of a
Subsidiary of the Company or of a Company owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the Company.
“Beneficial Owner” or “Beneficial Ownership” or “Beneficially Owns”
shall have the meaning ascribed to such terms in, or be interpreted in a manner consistent with,
Rule 13d-3 under the Exchange Act and any successor to such rule.
“Change in Control” means the occurrence of any of the following events:
(i) Subject to the last paragraph of this definition, the acquisition by any Person or Group
of Beneficial Ownership of forty percent (40%) or more of either (x) the then outstanding shares of
Common Stock (the “Outstanding Company Stock”) or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of
directors or similar governing body (the “Outstanding Company Voting Securities” and,
together with the Outstanding Company Stock, the “Company Securities”); or
(ii) Members of the Incumbent Board cease to constitute at least a majority of the members of
the Board; or
(iii) Consummation of a reorganization, merger, consolidation, sale or other disposition of
all or substantially all of the assets of the Company or an acquisition of assets of another
company (a “Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the Persons who were the Beneficial Owners of Company
Securities immediately prior to such Business Combination Beneficially Own, directly or indirectly,
more than fifty percent (50%) of, respectively, the then outstanding shares of common stock or
common equity interests and the combined voting power of the then outstanding Voting Securities, as
the case may be, of the entity resulting from such Business Combination (including without
limitation an entity which as a result of such transaction owns the Company or all or substantially
all of the Company’s assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business Combination, of the
Company Securities, (B) no Person or Group (excluding any employee benefit plan (or related trust)
of the Company or the entity resulting from such Business Combination) Beneficially Owns, directly
or indirectly, forty percent (40%) or more of, respectively, the then outstanding shares of common
stock or common equity interests of the entity resulting from such Business Combination or the
combined voting power of the then outstanding Voting Securities of such entity except to the extent
that such ownership results solely from ownership of the Company that existed prior to the Business
Combination, and (C) at least a majority of the members of the board of directors or similar
governing body of the entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
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(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
Notwithstanding the foregoing clause (i) of this definition: (x) the following acquisitions
(whether the acquiring Person or Group acquires Beneficial Ownership of forty percent (40%) or more
of the Outstanding Company Stock or Outstanding Company Voting Securities or any such acquisition
results in any other Person or Group (other than the acquiring Person or Group) Beneficially Owning
forty percent (40%) or more of the Outstanding Company Stock or Outstanding Company Voting
Securities) shall not constitute a Change in Control unless, following such acquisition, any Person
or Group (other than the acquiring Person or Group effecting the acquisition pursuant to the
following clauses (A) through (D)) who becomes the Beneficial Owner of forty percent (40%) or more
of the Outstanding Company Stock or Outstanding Company Voting Securities as a result of one or
more of such acquisitions shall thereafter acquire any additional shares of Company Securities and,
following such acquisition, Beneficially Owns forty percent (40%) or more of either the Outstanding
Company Stock or Outstanding Company Voting Securities, in which case such acquisition shall
constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition
by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any entity controlled by the Company, or (D) any acquisition by any
entity pursuant to a transaction which complies with clauses (A), (B) and (C) of the foregoing
clause (iii) of this definition; and (y) the acquisition of Beneficial Ownership of shares of
Common Stock by the Crusader Parent Entities pursuant to the Contribution Agreement, the
corresponding acquisition of Beneficial Ownership of shares of Common Stock by any other Person or
Group deemed to Beneficially Own the Common Stock so acquired by the Crusader Parent Entities (any
such Person and/or Group, collectively with the Crusader Parent Entities and the Crusader
Distributees, the “Crusader Group”) and the acquisition of Beneficial Ownership of shares
of Common Stock as a result of the distribution by a Crusader Parent Entity to Crusader
Distributees of shares of Common Stock acquired pursuant to the Contribution Agreement or directly
from the Company prior to the date of the Contribution Agreement shall not constitute a Change of
Control, provided that if, (1) for so long as the shares of Common Stock Beneficially Owned by any
member of the Crusader Group equals or exceeds forty percent (40%) of the Outstanding Company Stock
or the Outstanding Company Voting Securities, such member of the Crusader Group shall obtain
Beneficial Ownership of shares of Common Stock (other than as a result of any acquisition described
in the foregoing clauses (A) through (D) of this paragraph or pursuant to an award issued under any
equity based compensation plan of the Company, including without limitation the LTIP) representing
one percent (1%) or more of the Outstanding Company Stock or Outstanding Company Voting Securities
or (2) at any time after such member of the Crusader Group shall cease to Beneficially Own forty
percent (40%) or more of the Outstanding Company Stock and Outstanding Company Voting Securities,
such member of the Crusader Group shall obtain Beneficial Ownership of shares of Common Stock
(other than as a result of any acquisition described in the foregoing clauses (A) through (D) of
this paragraph or pursuant to an award issued under any equity based compensation plan of the
Company, including without limitation the LTIP) representing forty percent (40%) or more of either
the Outstanding Company Stock or Outstanding Company Voting Securities, then in the case of either
(1) or (2) a Change of Control shall be deemed to occur.
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“Claim” means an actual or threatened claim or request for relief which was, is or may
be made by reason of anything done or not done by Indemnitee in, or by reason of any event or
occurrence related to, Indemnitee’s Corporate Status.
“Common Stock” means the Company’s common stock, par value $.01 per share, and such
other securities as may be substituted (or resubstituted) for such Common Stock.
“Contribution Agreement” means the Contribution Agreement among Westside Energy
Corporation (now known as Crusader Energy Group Inc.), Crusader Management Corporation, Xxxxx X. Xx
Xxxxxx, Knight Energy Management Holding Company, LLC, Knight Energy Group II Holding Company, LLC,
Knight Energy Group I Holding Co., LLC, Crusader Energy Group Holding Co., LLC, Hawk Energy Fund I
Holding Company, LLC, RCH Energy Opportunity Fund I, L.P., Knight Energy Group, LLC, Knight Energy
Group II, LLC, Knight Energy Management, LLC, Hawk Energy Fund I, LLC, RCH Upland Acquisition, LLC
and Crusader Energy Group, LLC dated as of December 31, 2007, as amended.
“Corporate Status” means the status of a person who is, becomes or was a director,
officer, employee or agent of the Company or is, becomes or was serving at the request of the
Company as a director, officer, partner, member, manager, venturer, proprietor, trustee, employee,
agent, fiduciary or similar functionary of another foreign or domestic corporation, partnership,
limited liability company, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise. For purposes of this Agreement, the Company agrees that Indemnitee’s service on
behalf of or with respect to any Subsidiary of the Company shall be deemed to be at the request of
the Company.
“Crusader Distributees” means holders of equity interests in any Crusader Parent
Entity who receives a distribution from such Crusader Parent Entity of shares of Common Stock
acquired pursuant to the Contribution Agreement or directly from the Company prior to the date of
the Contribution Agreement.
“Crusader Parent Entities” means Knight Energy Group I Holding Co., LLC, Knight Energy
Group II Holding Company, LLC, Knight Energy Management Holding Company, LLC, Hawk Energy Fund I
Holding Company, LLC, RCH Energy Opportunity Fund I, L.P., Xxxxx X. Xx Xxxxxx and Crusader Energy
Group Holding Co., LLC.
“Disinterested Director” with respect to any request by Indemnitee for indemnification
hereunder, means a director of the Company who at the time of the vote is not a named defendant or
respondent in the Proceeding in respect of which indemnification is sought by Indemnitee.
“Exchange Act” means the Securities Exchange Act of 1934.
“Expenses” means all attorneys’ fees and disbursements, retainers, accountant’s fees
and disbursements, private investigator fees and disbursements, court costs, transcript costs, fees
and expenses of experts, witness fees and expenses, travel expenses, duplicating costs, printing
and binding costs, telephone charges, postage, delivery service fees and all other disbursements,
costs or expenses of the types customarily incurred in connection with prosecuting, defending
(including affirmative defenses and counterclaims), preparing to prosecute or defend,
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investigating, being or preparing to be a witness in, or participating in or preparing to
participate in (including on appeal) a Proceeding and all interest or finance charges attributable
to any thereof. Should any payments by the Company under this Agreement be determined to be
subject to any federal, state or local income or excise tax, “Expenses” shall also include such
amounts as are necessary to place Indemnitee in the same after-tax position (after giving effect to
all applicable taxes) as Indemnitee would have been in had no such tax been determined to apply to
such payments.
“Group” shall have the meaning ascribed to such term in Section 13(d)(3) or 14(d)(2)
of the Exchange Act.
“Incumbent Board” means the individuals who, as of the date of this Agreement,
constitute the Board and any other individual who becomes a director of the Company after that date
and whose election or appointment by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board.
“Independent Counsel” means a law firm, or a member of a law firm, that is experienced
in matters of corporation law and neither contemporaneously is, nor in the five years theretofore
has been, retained to represent: (a) the Company or Indemnitee in any matter material to either
such party (other than as Independent Counsel under this Agreement or similar agreements), (b) any
other party to the Proceeding giving rise to a claim for indemnification hereunder or (c) the
beneficial owner, directly or indirectly, of securities of the Company representing 5% or more of
the combined voting power of the Company’s then outstanding voting securities (other than, in each
such case, with respect to matters concerning the rights of Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements). 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 rights under this Agreement.
“Independent Directors” means the directors on the Board that are independent
directors as defined in Section 803A of the American Stock Exchange Company Guide or successor
provision, or, if the Company’s common stock is not then quoted on the AMEX, that qualify as
independent, disinterested, or a similar term as defined in the rules of the principal securities
exchange or inter-dealer quotation system on which the Company’s common stock is then listed or
quoted.
“LTIP” means the 2008 Long-Term Incentive Plan of the Company.
“NRS” means the Nevada Revised Statues and any successor statute thereto, as either of
them may from time to time be amended.
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“Person” means any individual, entity or group (within the meaning of Sections
13(d)(3) and 14(d)(2) of the Exchange Act).
“Potential Change in Control” shall be deemed to have occurred if (i) any Person shall
have announced publicly an intention to effect a Change in Control, or commenced any action (such
as the commencement of a tender offer for the Company’s Common Stock or the solicitation of proxies
for the election of any of the Company’s directors) that, if successful, could reasonably be
expected to result in the occurrence of a Change in Control; (ii) the Company enters into an
agreement, the consummation of which would constitute a Change in Control; or (iii) any other event
occurs which the Board declares to be a Potential Change of Control.
“Proceeding” means any threatened, pending or completed action, suit, arbitration,
investigation, inquiry, alternate dispute resolution mechanism, administrative or legislative
hearing, or any other proceeding (including, without limitation, any securities laws action, suit,
arbitration, alternative dispute resolution mechanism, hearing or procedure) whether civil,
criminal, administrative, arbitrative or investigative and whether or not based upon events
occurring, or actions taken, before the date hereof, and any appeal in or related to any such
action, suit, arbitration, investigation, hearing or proceeding and any inquiry or investigation
(including discovery), whether conducted by or in the right of the Company or any other Person,
that Indemnitee in good faith believes could lead to any such action, suit, arbitration,
alternative dispute resolution mechanism, hearing or other proceeding or appeal thereof.
“Subsidiary” means, with respect to any Person, any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by that Person.
“Voting Securities” means any securities that vote generally in the election of
directors, in the admission of general partners, or in the selection of any other similar governing
body.
ARTICLE II
Services by Indemnitee
Indemnitee is serving as a director of the Company. Indemnitee may from time to time also
agree to serve, as the Company may request from time to time, in another capacity for the Company
(including another officer or director position) or as a director, officer, partner, member,
venturer, proprietor, trustee, employee, agent, fiduciary or similar functionary of another foreign
or domestic corporation, partnership, joint venture, limited liability company, sole
proprietorship, trust, employee benefit plan or other enterprise. Indemnitee and the Company each
acknowledge that they have entered into this Agreement as a means of inducing Indemnitee to serve,
or continue to serve, the Company in such capacities. Indemnitee may at any time and for any
reason resign from such position or positions (subject to any other contractual obligation or any
obligation imposed by operation of law). The Company shall have no obligation under this Agreement
to continue Indemnitee in any such position or positions.
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ARTICLE III
Indemnification
Section 3.1 General. Subject to the provisions set forth in Article IV, the Company
shall indemnify, and advance Expenses to, Indemnitee to the fullest extent permitted by applicable
Nevada law in effect on the date hereof and to such greater extent as applicable Nevada law may
hereafter from time to time permit. The other provisions set forth in this Agreement are provided
in addition to and as a means of furtherance and implementation of, and not in limitation of, the
obligations expressed in this Article III. No requirement, condition to or limitation of any right
to indemnification or to advancement of Expenses under this Article III shall in any way limit the
rights of Indemnitee under Article VII.
Section 3.2 Additional Indemnity of the Company. Indemnitee shall be entitled to
indemnification pursuant to this Section 3.2 if, by reason of anything done or not done by
Indemnitee in, or by reason of any event or occurrence related to, Indemnitee’s Corporate Status,
Indemnitee is, was or becomes, or is threatened to be made, a party to, or witness or other
participant in any Proceeding. Pursuant to this Section 3.2, Indemnitee shall be indemnified
against any and all Expenses, judgments, penalties (including excise or similar taxes), fines and
amounts paid in settlement (including all interest, assessments and other charges paid or payable
in connection with or in respect of any such Expenses, judgments, penalties, fines and amounts paid
in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection with such Proceeding or any Claim, issue or matter therein. Notwithstanding the
foregoing, the obligations of the Company under this Section 3.2 shall be subject to the condition
that no determination (which, in any case in which Independent Counsel is involved, shall be in a
form of a written opinion) shall have been made pursuant to Article IV that Indemnitee would not be
permitted to be indemnified under applicable Nevada law. Nothing in this Section 3.2 shall limit
the benefits of Section 3.1, Section 3.3 or any other Section hereunder.
Section 3.3 Advancement of Expenses. The Company shall pay all Expenses reasonably
incurred by, or in the case of retainers to be incurred by, or on behalf of Indemnitee (or, if
applicable, reimburse Indemnitee for any and all Expenses reasonably incurred by Indemnitee and
previously paid by Indemnitee) in connection with any Claim or Proceeding, whether brought by the
Company or otherwise, in advance of any determination respecting entitlement to indemnification
pursuant to Article IV hereof (and shall continue to pay such Expenses after such determination and
until it shall ultimately be determined (in a final adjudication by a court from which there is no
further right of appeal or in a final adjudication of an arbitration pursuant to Section 5.1 if
Indemnitee elects to seek such arbitration) that Indemnitee is not entitled to be indemnified by
the Company against such Expenses) within 10 days after the receipt by the Company of (a) a
written request from Indemnitee requesting such payment or payments from time to time, whether
prior to or after final disposition of such Proceeding, and (b) a written affirmation from
Indemnitee of Indemnitee’s good faith belief that Indemnitee has met the standard of conduct
necessary for Indemnitee to be permitted to be indemnified under applicable law. Any such payment
by the Company is referred to in this Agreement as an “Expense Advance.” In connection with any
request for an Expense Advance, if requested by the Company, Indemnitee or Indemnitee’s counsel
shall also submit an affidavit stating that the Expenses incurred were, or in the case of retainers
to be incurred are, reasonably
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incurred. Any dispute as to the reasonableness of the incurrence of any Expense shall not
delay an Expense Advance by the Company, and the Company agrees that any such dispute shall be
resolved only upon the disposition or conclusion of the underlying Claim against Indemnitee.
Indemnitee hereby undertakes and agrees that Indemnitee will reimburse and repay the Company
without interest for any Expense Advances to the extent that it shall ultimately be determined (in
a final adjudication by a court from which there is no further right of appeal or in a final
adjudication of an arbitration pursuant to Section 5.1 if Indemnitee elects to seek such
arbitration) that Indemnitee is not entitled to be indemnified by the Company against such
Expenses. Indemnitee shall not be required to provide collateral or otherwise secure the
undertaking and agreement described in the prior sentence.
Section 3.4 Indemnification for Additional Expenses. The Company shall indemnify
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within two business
days of that request) advance those Expenses to Indemnitee, that are incurred by Indemnitee in
connection with any claim asserted against, or action brought by, Indemnitee for (i)
indemnification or an Expense Advance by the Company under this Agreement or any other agreement or
provision of the Amended and Restated Articles of Incorporation of the Company (the “Articles
of Incorporation”) or the Second Amended and Restated Bylaws of the Company, as amended by the
First Amendment to Second Amended and Restated Bylaws (collectively, the “Bylaws”) now or
hereafter in effect relating to any Claim or Proceeding, (ii) recovery under any directors’ and
officers’ liability insurance policies maintained by the Company, or (iii) enforcement of, or
claims for breaches of, any provision of this Agreement, in each of the foregoing situations
regardless of whether Indemnitee ultimately is determined to be entitled to that indemnification,
advance expense payment, insurance recovery, enforcement, or damage claim, as the case may be and
regardless of whether the nature of the proceeding with respect to such matters is judicial, by
arbitration, or otherwise.
Section 3.5 Partial Indemnity. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the Expenses, judgments,
fines, penalties, and amounts paid in settlement of a Claim or Proceeding but not, however, for all
of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense
of any or all Claims or Proceedings, or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in
connection therewith.
ARTICLE IV
Procedure for Determination of Entitlement
to Indemnification
to Indemnification
Section 4.1 Request by Indemnitee. To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is reasonably necessary
to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary
or an Assistant Secretary of the Company shall, promptly upon receipt of such a
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request for indemnification, advise the Board in writing that Indemnitee has requested
indemnification.
Section 4.2 Determination of Request. Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 4.1 hereof, a determination, if required
by applicable law, with respect to whether Indemnitee is permitted under applicable law to be
indemnified shall be made in accordance with the terms of Section 4.5, in the specific case as
follows:
(a) If a Potential Change in Control or a Change in Control shall have occurred, by
Independent Counsel (selected in accordance with Section 4.3) in a written opinion to the
Board and Indemnitee, unless Indemnitee shall request that such determination be made by the
Board, or a committee of the Board, in which case by the person or persons or in the manner
provided for in clause (i) or (ii) of paragraph (b) below; or
(b) If a Potential Change in Control or a Change in Control shall not have occurred,
(i) by the Board by a majority vote of the Disinterested Directors even though less than a
quorum of the Board, or (ii) by a majority vote of a committee solely of two or more
Disinterested Directors designated to act in the matter by a majority vote of all
Disinterested Directors even though less than a quorum of the Board, or (iii) by Independent
Counsel selected by the Board or a committee of the Board by a vote as set forth in clauses
(i) or (ii) of this paragraph (b), or if such vote is not obtainable or such a committee
cannot be established, by a majority vote of all directors, or (iv) if Indemnitee and the
Company agree, by the stockholders of the Company in a vote that excludes the shares held by
directors who are not Disinterested Directors.
If it is so determined that Indemnitee is permitted to be indemnified under applicable law, payment
to Indemnitee shall be made within 10 days after such determination. Nothing contained in this
Agreement shall require that any determination be made under this Section 4.2 prior to the
disposition or conclusion of a Claim or Proceeding against Indemnitee; provided, however, that
Expense Advances shall continue to be made by the Company pursuant to, and to the extent required
by, the provisions of Article III. Indemnitee shall cooperate with the person or persons making
such determination with respect to Indemnitee’s entitlement to indemnification, including providing
to such person upon reasonable advance request any documentation or information that is not
privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee
and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees
and disbursements) incurred by Indemnitee in so cooperating with the person or persons making such
determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification), and the Company shall indemnify and hold harmless Indemnitee
therefrom.
Section 4.3 Independent Counsel. If a Potential Change in Control or a Change in
Control shall not have occurred and the determination of entitlement to indemnification is to be
made by Independent Counsel, the Independent Counsel shall be selected by (a) a majority vote of
the Disinterested Directors, even though less than a quorum of the Board or (b) if there are no
Disinterested Directors, by a majority vote of the Board, and the Company shall give written
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notice to Indemnitee, within 10 days after receipt by the Company of Indemnitee’s request for
indemnification, specifying the identity and address of the Independent Counsel so selected. If a
Potential Change in Control or a Change in Control shall have occurred and the determination of
entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall
be selected by Indemnitee, and Indemnitee shall give written notice to the Company, within 10 days
after submission of Indemnitee’s request for indemnification, specifying the identity and address
of the Independent Counsel so selected (unless Indemnitee shall request that such selection be made
by the Disinterested Directors or a committee of the Board, in which event the Company shall give
written notice to Indemnitee within 10 days after receipt of Indemnitee’s request for the Board or
a committee of the Disinterested Directors to make such selection, specifying the identity and
address of the Independent Counsel so selected). In either event, (i) such notice to Indemnitee or
the Company, as the case may be, shall be accompanied by a written affirmation of the Independent
Counsel so selected that it satisfies the requirements of the definition of “Independent Counsel”
in Article I and that it agrees to serve in such capacity and (ii) Indemnitee or the Company, as
the case may be, may, within seven days after such written notice of selection shall have been
given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such
selection. Any objection to the selection of Independent Counsel pursuant to this Section 4.3 may
be asserted only on the ground that the Independent Counsel so selected does not meet the
requirements of the definition of “Independent Counsel” in Article I, and the objection shall set
forth with particularity the factual basis of such assertion. If such written objection is timely
made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a
court of competent jurisdiction (the “Court”) has determined that such objection is without
merit. In the event of a timely written objection to a choice of Independent Counsel, the party
originally selecting the Independent Counsel shall have seven days to make an alternate selection
of Independent Counsel and to give written notice of such selection to the other party, after which
time such other party shall have five days to make a written objection to such alternate selection.
If, within 30 days after submission of Indemnitee’s request for indemnification pursuant to
Section 4.1, no Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition the Court for resolution of any objection that shall have 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 Court or by such other person as the
Court shall designate, and the person with respect to whom an objection is so resolved or the
person so appointed shall act as Independent Counsel under Section 4.2. The Company shall pay any
and all fees and expenses reasonably incurred by such Independent Counsel in connection with acting
pursuant to Section 4.2, and the Company shall pay all fees and expenses reasonably incurred
incident to the procedures of this Section 4.3, regardless of the manner in which such Independent
Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 5.1, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of professional
conduct then prevailing).
Section 4.4 Establishment of a Trust. In the event of a Potential Change in Control
or a Change in Control, the Company shall, upon written request by Indemnitee, create a trust for
the benefit of Indemnitee (the “Trust”) and from time to time upon written request of
Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably
anticipated at the time of each such request to be incurred in connection with investigating,
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preparing for, and defending any Claim, and any and all judgments, fines, penalties, and
settlement amounts of any and all Claims from time to time actually paid or claimed, reasonably
anticipated, or proposed to be paid. The amount to be deposited in the Trust pursuant to the
foregoing funding obligation shall be determined by the Independent Counsel (or other person(s)
making the determination of whether Indemnitee is permitted to be indemnified by applicable law).
The terms of the Trust shall provide that, upon a Change in Control, (i) the Trust shall not be
revoked or the principal thereof invaded, without the written consent of Indemnitee; (ii) the
trustee of the Trust shall advance, within ten business days of a request by Indemnitee, any and
all Expenses reasonably incurred to Indemnitee, any required determination concerning the
reasonableness of the Expenses to be made by the Independent Counsel (and Indemnitee hereby agrees
to reimburse the Trust under the circumstances in which Indemnitee would be required to reimburse
the Company for Expenses Advances under Section 3.3 of this Agreement); (iii) the Trust shall
continue to be funded by the Company in accordance with the funding obligation set forth above;
(iv) the trustee of the Trust shall promptly pay to Indemnitee all amounts for which Indemnitee
shall be entitled to indemnification pursuant to this Agreement; and (v) all unexpended funds in
the Trust shall revert to the Company upon a final determination by the Independent Counsel or a
court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified
under the terms of this Agreement. The trustee of the Trust shall be chosen by Indemnitee and
shall be an institution that is not affiliated with Indemnitee. Nothing in this Section 4.4 shall
relieve the Company of any of its obligations under this Agreement.
Section 4.5 Presumptions and Effect of Certain Proceedings.
(a) Indemnitee shall be presumed to be entitled to indemnification under this Agreement
upon submission of a request for indemnification under Section 4.1, and the Company shall
have the burden of proof in overcoming that presumption in reaching a determination contrary
to that presumption. Such presumption shall be used by Independent Counsel (or other person
or persons determining entitlement to indemnification) as a basis for a determination of
entitlement to indemnification unless the Company provides information sufficient to
overcome such presumption by clear and convincing evidence or unless the investigation,
review and analysis of Independent Counsel (or such other person or persons) convinces
Independent Counsel by clear and convincing evidence that the presumption should not apply.
(b) If the person or persons empowered or selected under Article IV of this Agreement
to determine whether Indemnitee is entitled to indemnification shall not have made a
determination within 60 days after receipt by the Company of the request by Indemnitee
therefor, the determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification; provided, however, that such
60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if
the person making the determination with respect to entitlement to indemnification in good
faith requires such additional time for the obtaining or evaluating of documentation and/or
information relating to such determination; and provided, further, that the 60-day
limitation set forth in this Section 4.5(b) shall not apply and such period shall be
extended as necessary (i) if within 30 days after receipt by the Company of the request for
indemnification under Section 4.1 Indemnitee and the Company have agreed, and the Board has
resolved to submit such determination to the
11
stockholders of the Company pursuant to Section 4.2(b) for their consideration at an
annual meeting of stockholders to be held within 90 days after such agreement and such
determination is made thereat, or a special meeting of stockholders is called within 30 days
after such receipt for the purpose of making such determination, such meeting is held for
such purpose within 60 days after having been so called and such determination is made
thereat, or (ii) if the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 4.2(a) of this Agreement, in which case the
applicable period shall be as set forth in Section 5.1(c).
(c) The termination of any Proceeding or of any Claim, issue or matter by judgment,
order, settlement (whether with or without court approval) or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) by itself adversely affect the rights of Indemnitee to indemnification or create
a presumption that Indemnitee failed to meet any particular standard of conduct, that
Indemnitee had any particular belief, or that a court has determined that indemnification is
not permitted by applicable law. Indemnitee shall be deemed to have been found liable in
respect of any Claim, issue or matter only after Indemnitee shall have been so adjudged by
the Court after exhaustion of all appeals therefrom.
ARTICLE V
Certain Remedies of Indemnitee
Section 5.1 Indemnitee Entitled to Adjudication in an Appropriate Court. If (a) a
determination is made pursuant to Article IV that Indemnitee is not entitled to indemnification
under this Agreement; (b) there has been any failure by the Company to make timely payment or
advancement of any amounts due hereunder (including, without limitation, any Expense Advances); or
(c) the determination of entitlement to indemnification is to be made by Independent Counsel
pursuant to Section 4.2 and such determination shall not have been made and delivered in a written
opinion within 90 days after the latest of (i) such Independent Counsel’s being appointed, (ii) the
overruling by the Court of objections to such counsel’s selection, or (iii) expiration of all
periods for the Company or Indemnitee to object to such counsel’s selection, Indemnitee shall be
entitled to commence an action seeking an adjudication in the Court of Indemnitee’s entitlement to
such indemnification or advancements due hereunder, including, without limitation, Expense
Advances. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to
be conducted by a single arbitrator pursuant to the commercial arbitration rules of the American
Arbitration Association. Indemnitee shall commence such action seeking an adjudication or an award
in arbitration within 180 days following the date on which Indemnitee first has the right to
commence such action pursuant to this Section 5.1, or such right shall expire. The Company agrees
not to oppose Indemnitee’s right to seek any such adjudication or award in arbitration and it shall
continue to pay Expense Advances pursuant to Section 3.3 until it shall ultimately be determined
(in a final adjudication by a court from which there is no further right of appeal or in a final
adjudication of an arbitration pursuant to this Section 5.1 if Indemnitee elects to seek such
arbitration) that Indemnitee is not entitled to be indemnified by the Company against such
Expenses.
12
Section 5.2 Adverse Determination Not to Affect any Judicial Proceeding. If a
determination shall have been made pursuant to Article IV that Indemnitee is not entitled to
indemnification under this Agreement, any judicial proceeding or arbitration commenced pursuant to
this Agreement shall be conducted in all respects as a de novo trial or arbitration on the merits,
and Indemnitee shall not be prejudiced by reason of such initial adverse determination. In any
judicial proceeding or arbitration commenced pursuant to this Agreement, Indemnitee shall be
presumed to be entitled to indemnification or advancement of Expenses, as the case may be, under
this Agreement and the Company shall have the burden of proof in overcoming such presumption and to
show by clear and convincing evidence that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
Section 5.3 Company Bound by Determination Favorable to Indemnitee in any Judicial
Proceeding or Arbitration. If a determination shall have been made or deemed to have been made
pursuant to Article IV that Indemnitee is entitled to indemnification, the Company shall be
irrevocably bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Article V, and shall be 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.
Section 5.4 Company Bound by the Agreement. The Company shall be precluded from
asserting in any judicial proceeding or arbitration commenced pursuant to this Article V that the
procedures and presumptions of this Agreement 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.
ARTICLE VI
Contribution
Section 6.1 Contribution Payment. To the extent the indemnification provided for
under any provision of this Agreement is determined (in the manner hereinabove provided) not to be
permitted under applicable law, then in the event Indemnitee was, is, or becomes a party to or
witness or other participant in, or is threatened to be made a party to or witness or other
participant in, a Proceeding by reason of (or arising in part out of) Indemnitee’s Corporate
Status, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount of any and
all Expenses, judgments, fines, or penalties assessed against or incurred or paid by Indemnitee on
account of such Proceeding and any and all amounts paid in settlement of that Proceeding (including
all interest, assessments, and other charges paid or payable in connection with or in respect of
such Expenses, judgments, fines, penalties, or amounts paid in settlement) for which such
indemnification is not permitted (“Contribution Amounts”), in such proportion as is
appropriate to reflect the relative fault with respect to the subject matter of the Proceeding
giving rise to the Contribution Amounts of Indemnitee, on the one hand, and of the Company and any
and all other parties (including officers and directors of the Company other than Indemnitee) who
may be at fault with respect to such matter (collectively, including the Company, the “Third
Parties”) on the other hand.
13
Section 6.2 Relative Fault. The relative fault of the Third Parties and Indemnitee
shall be determined (i) by reference to the relative fault of Indemnitee as determined by the court
or other governmental agency assessing the Contribution Amounts or (ii) to the extent such court or
other governmental agency does not apportion relative fault, by the Independent Counsel (or such
other party which makes a determination under Article IV) after giving effect to, among other
things, the relative intent, knowledge, access to information, and opportunity to prevent or
correct the subject matter of the Proceedings and other relevant equitable considerations of each
party. The Company and Indemnitee agree that it would not be just and equitable if contribution
pursuant to this Section 6.2 were determined by pro rata allocation or by any other method of
allocation which does take account of the equitable considerations referred to in this Section 6.2.
ARTICLE VII
Miscellaneous
Section 7.1 Non-Exclusivity. The rights of Indemnitee to receive indemnification and
advancement of Expenses under this Agreement shall be in addition to, and shall not be deemed
exclusive of, any other rights Indemnitee shall under the NRS or other applicable law, the articles
of incorporation or bylaws of the Company, any other agreement, vote of stockholders or a
resolution of directors, or otherwise. No amendment or alteration of the articles of incorporation
or bylaws of the Company or any provision thereof shall adversely affect Indemnitee’s rights
hereunder and such rights shall be in addition to any rights Indemnitee may have under the articles
of incorporation, bylaws and the NRS or other applicable law. To the extent that there is a change
in the NRS or other applicable law (whether by statute or judicial decision) that allows greater
indemnification by agreement than would be afforded currently under the Company’s articles of
incorporation or bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee
shall enjoy by virtue of this Agreement the greater benefit so afforded by such change. Any
amendment, alteration or repeal of the NRS that adversely affects any right of Indemnitee shall be
prospective only and shall not limit or eliminate any such right with respect to any Proceeding
involving any occurrence or alleged occurrence of any action or omission to act that took place
before such amendment or repeal.
Section 7.2 Insurance and Subrogation.
(a) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees or agents of the Company or for
individuals serving at the request of the Company as directors, officers, partners, members,
venturers, proprietors, trustees, employees, agents, fiduciaries or similar functionaries of
another foreign or domestic corporation, partnership, limited liability company, joint
venture, sole proprietorship, trust, employee benefit plan or other enterprise, 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 such director, officer, employee, agent or
fiduciary under such policy or policies.
(b) In the event of any payment by the Company under this Agreement for which
reimbursement is available under any insurance policy or policies obtained by the Company,
the Company shall be subrogated to the extent of such payment to all of the
14
rights of recovery of Indemnitee under such insurance policy or policies, who shall
execute all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce
such rights, provided that all Expenses relating to such action shall be borne by the
Company.
(c) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise
actually received such payment under the Company’s articles of incorporation or bylaws or
any insurance policy, contract, agreement or otherwise.
(d) If Indemnitee is a director of the Company, the Company will advise the Board of
any proposed material reduction in the coverage for Indemnitee to be provided by the
Company’s directors’ and officers’ liability insurance policy and will not effect such a
reduction with respect to Indemnitee without the prior approval of at least 80% of the
Independent Directors of the Company.
(e) If Indemnitee is a director of the Company during the term of this Agreement and if
Indemnitee ceases to be a director of the Company for any reason, the Company shall procure
a run-off directors’ and officers’ liability insurance policy with respect to claims arising
from facts or events that occurred before the time Indemnitee ceased to be a director of the
Company and covering Indemnitee, which policy, without any lapse in coverage, will provide
coverage for a period of six years after the time Indemnitee ceased to be a director of the
Company and will provide coverage (including amount and type of coverage and size of
deductibles) that are substantially comparable to the Company’s directors’ and officers’
liability insurance policy that was most protective of Indemnitee in the 12 months preceding
the time Indemnitee ceased to be a director of the Company; provided, however, that:
(i) this obligation shall be suspended during the period immediately following
the time Indemnitee ceases to be a director of the Company if and only so long as
the Company has a directors’ and officers’ liability insurance policy in effect
covering Indemnitee for such claims that, if it were a run-off policy, would meet or
exceed the foregoing standards, but in any event this suspension period shall end
when a Change in Control occurs; and
(ii) no later than the end of the suspension period provided in the preceding
clause (i) (whether because of failure to have a policy meeting the foregoing
standards or because a Change in Control occurs), the Company shall procure a
run-off directors’ and officers’ liability insurance policy meeting the foregoing
standards and lasting for the remainder of the six-year period.
(f) Notwithstanding the preceding clause (e) including the suspension provisions
therein, if Indemnitee ceases to be an officer or a director of the Company in connection
with a Change in Control or at or during the one-year period following the occurrence of a
Change in Control, the Company shall procure a run-off directors’ and officers’ liability
insurance policy covering Indemnitee and meeting the foregoing
15
standards in clause (e) and lasting for a six-year period upon the Indemnitee’s ceasing
to be an officer or a director of the Company in such circumstances.
Section 7.3 Self Insurance of the Company; Other Arrangements. The parties hereto
recognize that the Company may, but except as provided in Section 7.2(d), Section 7.2(e), and
Section 7.2(f) is not required to, procure or maintain insurance or other similar arrangements, at
its expense, to protect itself and any person, including Indemnitee, who is or was a director,
officer, employee, agent or fiduciary of the Company or who is or was serving at the request of the
Company as a director, officer, partner, member, venturer, proprietor, trustee, employee, agent,
fiduciary or similar functionary of another foreign or domestic corporation, partnership, limited
liability company, joint venture, sole proprietorship, trust, employee benefit plan or other
enterprise against any expense, liability or loss asserted against or incurred by such person, in
such a capacity or arising out of the person’s status as such a person, whether or not the Company
would have the power to indemnify such person against such expense or liability or loss.
Except as provided in Section 7.2(d), Section 7.2(e) and Section 7.2(f), in considering the
cost and availability of such insurance, the Company (through the exercise of the business judgment
of its directors and officers) may, from time to time, purchase insurance which provides for
certain (i) deductibles, (ii) limits on payments required to be made by the insurer, or (iii)
coverage which may not be as comprehensive as that previously included in insurance purchased by
the Company or its predecessors. The purchase of insurance with deductibles, limits on payments
and coverage exclusions, even if in the best interest of the Company, may not be in the best
interest of Indemnitee. As to the Company, purchasing insurance with deductibles, limits on
payments and coverage exclusions is similar to the Company’s practice of self-insurance in other
areas. In order to protect Indemnitee who would otherwise be more fully or entirely covered under
such policies, the Company shall, to the maximum extent permitted by applicable law, indemnify and
hold Indemnitee harmless to the extent (i) of such deductibles, (ii) of amounts exceeding payments
required to be made by an insurer, or (iii) of amounts that prior policies of directors’ and
officers’ liability insurance held by the Company or its predecessors have provided for payment to
Indemnitee, if by reason of Indemnitee’s Corporate Status Indemnitee is or is threatened to be made
a party to any Proceeding. The obligation of the Company in the preceding sentence shall be
without regard to whether the Company would otherwise be required to indemnify such officer or
director under the other provisions of this Agreement, or under any law, agreement, vote of
stockholders or directors or other arrangement. Without limiting the generality of any provision
of this Agreement, the procedures in Article IV hereof shall, to the extent applicable, be used for
determining entitlement to indemnification under this Section 7.3.
Section 7.4 Certain Settlement Provisions. The Company shall have no obligation to
indemnify Indemnitee under this Agreement for amounts paid in settlement of a Proceeding or Claim
without the Company’s prior written consent. The Company shall not settle any Proceeding or Claim
in any manner that would impose any fine or other obligation on Indemnitee without Indemnitee’s
prior written consent. Neither the Company nor Indemnitee shall unreasonably withhold their
consent to any proposed settlement.
16
Section 7.5 Duration of Agreement. This Agreement shall continue for so long as
Indemnitee serves as a director, officer, employee or agent of the Company or, at the request of
the Company, as a director, officer, partner, member, venturer, proprietor, trustee, employee,
agent, fiduciary or similar functionary of another foreign or domestic corporation, partnership,
limited liability company, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise, and thereafter shall survive until and terminate upon the later to occur of: (a)
the expiration of 20 years after the latest date that Indemnitee shall have ceased to serve in any
such capacity; (b) the final termination of all pending Proceedings in respect of which Indemnitee
is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Article IV relating thereto; or (c) the expiration of all
statutes of limitation applicable to possible Claims arising out of Indemnitee’s Corporate Status.
Section 7.6 Notice by Each Party. Indemnitee shall promptly notify the Company in
writing upon being served with any summons, citation, subpoena, complaint, indictment, information
or other document or communication relating to any Proceeding or Claim for which Indemnitee may be
entitled to indemnification or advancement of Expenses hereunder; provided, however, that any
failure of Indemnitee to so notify 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. The Company shall promptly notify Indemnitee in writing as to the pendency
of any Proceeding or Claim that may involve a claim against Indemnitee for which Indemnitee may be
entitled to indemnification or advancement of Expenses hereunder.
Section 7.7 Amendment. This Agreement may not be modified or amended except by a
written instrument executed by or on behalf of each of the parties hereto.
Section 7.8 Waivers. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or prospectively) by the
party entitled to enforce such term only by a writing signed by the party against which such waiver
is to be asserted. Unless otherwise expressly provided herein, no delay on the part of any party
hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder.
Section 7.9 Entire Agreement. This Agreement and the documents expressly referred to
herein constitute the entire agreement between the parties hereto with respect to the matters
covered hereby, and any other prior or contemporaneous oral or written understandings or agreements
with respect to the matters covered hereby, including without limitation any prior indemnification
agreements, are expressly superseded by this Agreement.
Section 7.10 Severability. If any provision of this Agreement (including any
provision within a single section, paragraph or sentence) or the application of such provision to
any Person or circumstance, shall be judicially declared to be invalid, unenforceable or void, such
decision will not have the effect of invalidating or voiding the remainder of this Agreement or
affect the application of such provision to other Persons or circumstances, it being the intent and
agreement
17
of the parties that this Agreement shall be deemed amended by modifying such provision to the
extent necessary to render it valid, legal and enforceable while preserving its intent, or if such
modification is not possible, by substituting therefor another provision that is valid, legal and
unenforceable and that achieves the same objective. Any such finding of invalidity or
unenforceability shall not prevent the enforcement of such provision in any other jurisdiction to
the maximum extent permitted by applicable law.
Section 7.11 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter’s confirmation of a receipt of a facsimile
transmission if during normal business hours of the recipient, otherwise on the next business day,
(b) confirmed delivery of a standard overnight courier or when delivered by hand or (c) the
expiration of five business days after the date mailed by certified or registered mail (return
receipt requested), postage prepaid, to the parties at the following addresses (or at such other
addresses for a party as shall be specified by like notice):
If to the Company, to it at:
Crusader Energy Group Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: General Counsel
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: General Counsel
If to Indemnitee, to Indemnitee at:
Xxxxxx X. Xxxxxxx
RR Advisors, LLC
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
RR Advisors, LLC
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
or to such other address or to such other individuals as any party shall have last designated by
notice to the other parties. All notices and other communications given to any party in accordance
with the provisions of this Agreement shall be deemed to have been given when delivered or sent to
the intended recipient thereof in accordance with and as provided in the provisions of this Section
7.11.
Section 7.12 Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Nevada without regard to the principles of conflict of laws.
Section 7.13 Certain Construction Rules.
(a) The article and section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. As used in this Agreement, unless otherwise provided to the contrary, (1) all
references to days shall be deemed references to calendar days and (2) any reference to a
“Section” or “Article” shall be deemed to refer to a section or article of this Agreement.
The words “hereof,” “herein” and “hereunder” and words of similar import
18
referring to this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by the words
“without limitation.” Unless otherwise specifically provided for herein, the term “or”
shall not be deemed to be exclusive. Whenever the context may require, any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice versa.
(b) For purposes of this Agreement, references to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise taxes assessed on a
person with respect to any employee benefit plan; references to “serving at the request of
the Company” shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such director, nominee, officer,
employee or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner the person reasonably
believed to be in the interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner “not opposed to the best interest of the
Company” for purposes of this Agreement and the NRS.
Section 7.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument, notwithstanding that both parties are not signatories to
the original or same counterpart.
Section 7.15 Certain Persons Not Entitled to Indemnification. The Company shall not
be obligated pursuant to the terms of this Agreement:
(a) To indemnify Indemnitee if (and to the extent that) a final decision by a court or
arbitration body having jurisdiction in the matter shall determine that such indemnification
is not lawful; or
(b) To indemnify Indemnitee for the payment to the Company of profits pursuant to
Section 16(b) of the Exchange Act, or Expenses incurred by Indemnitee for Proceedings in
connection with such payment under Section 16(b) of the Exchange Act.
Section 7.16 Indemnification for Negligence, Gross Negligence, etc. Without limiting
the generality of any other provision hereunder, it is the express intent of this Agreement that
Indemnitee be indemnified and Expenses be advanced regardless of Indemnitee’s acts of negligence,
gross negligence, intentional or willful misconduct to the extent that indemnification and
advancement of Expenses is allowed pursuant to the terms of this Agreement and under applicable
Nevada law.
Section 7.17 Mutual Acknowledgments. Both the Company and Indemnitee acknowledge that
in certain instances, applicable law (including applicable federal law that may preempt or override
applicable state law) or public policy may prohibit the Company from indemnifying the directors,
officers, employees or agents of the Company under this Agreement or otherwise. For example, the
Company and Indemnitee acknowledge that the U.S. Securities
19
and Exchange Commission has taken the position that indemnification of directors, officers and
controlling Persons of the Company for liabilities arising under federal securities laws is against
public policy and, therefore, unenforceable. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in certain circumstances
for a determination of the Company’s right under public policy to indemnify Indemnitee. In
addition, the Company and Indemnitee acknowledge that federal law prohibits indemnifications for
certain violations of the Employee Retirement Income Security Act of 1974, as amended.
Section 7.18 Enforcement. The Company agrees that its execution of this Agreement
shall constitute a stipulation by which it shall be irrevocably bound in any court or arbitration
in which a proceeding by Indemnitee for enforcement of Indemnitee’s rights hereunder shall have
been commenced, continued or appealed, that its obligations set forth in this Agreement are unique
and special, and that failure of the Company to comply with the provisions of this Agreement will
cause irreparable and irremediable injury to Indemnitee, for which a remedy at law will be
inadequate. As a result, in addition to any other right or remedy Indemnitee may have at law or in
equity with respect to breach of this Agreement, Indemnitee shall be entitled to injunctive or
mandatory relief directing specific performance by the Company of its obligations under this
Agreement. The Company agrees not to seek, and agrees to waive any requirement for the securing or
posting of, a bond in connection with Indemnitee’s seeking or obtaining such relief.
Section 7.19 Successors and Assigns. All of the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto
and their respective successors, assigns, heirs, executors, administrators, legal representatives.
Section 7.20 Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or on behalf of the Company or any affiliate of the Company against
Indemnitee or Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the
expiration of one year from the date of accrual of that cause of action, and any claim or cause of
action of the Company or its affiliate shall be extinguished and deemed released unless asserted by
the timely filing of a legal action within that one-year period; provided, however, that for any
claim based on Indemnitee’s breach of fiduciary duties to the Company or its stockholders, the
period set forth in the preceding sentence shall be three years instead of one year; and provided,
further, that, if any shorter period of limitations is otherwise applicable to any such cause of
action, the shorter period shall govern.
[SIGNATURES ON FOLLOWING PAGE]
20
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to be effective as of
the date first above written.
| COMPANY: | ||||
| CRUSADER ENERGY GROUP INC., a Nevada corporation |
||||
| By: | /s/ XXXXX X. XX XXXXXX | |||
| Xxxxx X. Xx Xxxxxx | ||||
| President and Chief Executive Officer | ||||
| INDEMNITEE: |
||||
| /s/ XXXXXX X. XXXXXXX | ||||
| Xxxxxx X. Xxxxxxx | ||||
21
Schedule I
Xxxxx X. Xx Xxxxxx
Xxxx X. Xxxxxx
Xxxx X. Xxxx
Xxxxxxx X. Xxxxxxx, Xx.
Xxx X. Xxxxxxxx
Xxx Xxxxxxxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxx X. Xxxxxx
Xxxx X. Xxxx
Xxxxxxx X. Xxxxxxx, Xx.
Xxx X. Xxxxxxxx
Xxx Xxxxxxxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx
22
