INDEMNITY AGREEMENT
EXHIBIT
10.32
INDEMNITY
AGREEMENT
This
Indemnity Agreement (this “Agreement”), dated as of August 7, 2008, is made by
and between Vanguard Natural Resources, LLC, a Delaware limited liability
company (the “Company”), and ______________________________ (the “Indemnitee”),
an “Agent” (as hereinafter defined) of the Company.
RECITALS
A. The
Company recognizes that competent and experienced persons are increasingly
reluctant to serve as Directors, officers or employees of companies unless
they
are protected by comprehensive liability insurance or indemnification, or both,
due to increased exposure to litigation costs and risks resulting from their
service to such companies, and due to the fact that the exposure frequently
bears no reasonable relationship to their compensation;
B. The
statutes and judicial decisions regarding the duties of Directors and officers
are often difficult to apply, ambiguous, or conflicting, and therefore fail
to
provide such Directors and officers with adequate, reliable knowledge of legal
risks to which they are exposed or information regarding the proper course
of
action to take;
C. The
Company and the Indemnitee recognize that plaintiffs often seek damages in
such
large amounts and the costs of litigation may be so expensive (whether or not
the case is meritorious), that the defense and/or settlement of such litigation
is often beyond the personal resources of Directors, officers and
employees;
D. The
Company believes that it is often unfair for its Directors, officers and
employees to assume the risk of judgments and other expenses which may occur
in
cases in which the Director, officer or employee has acted in good faith and
in
a manner the Director, officer or employee reasonably believes to be in or
not
opposed to the best interests of the Company;
E. The
Company desires the Indemnitee to serve or continue to serve as an Agent of
the
Company and recognizes that the Indemnitee may not be willing to serve or
continue to serve the Company without additional indemnification and insurance
to protect against claims for damages arising out of or related to such services
to the Company;
F. The
Company believes that the interests of the Company and its shareholders would
best be served by a combination of Directors’ and officers’ liability insurance
and the indemnification by the Company of the Directors, officers and employees
of the Company; and
G. The
Board
of Directors has determined that contractual indemnification as set forth in
this Agreement is reasonable and prudent, and is necessary to promote the best
interests of the Company and its shareholders.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
below, the parties to this Agreement, intending to be legally bound, hereby
agree as follows:
1. Definitions
(a) Agent.
For
purposes of this Agreement, “Agent” of the Company means any person who is or
was a Director, officer, employee or other agent of the Company or a Subsidiary
of the Company; or is or was serving at the request of, for the convenience
of,
or to represent the interests of the Company or a Subsidiary of the Company
as a
Director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or Other Enterprise.
(b) Expenses.
For
purposes of
this
Agreement, “Expenses” includes all direct and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys’ fees and
related disbursements, other out-of-pocket costs and reasonable compensation
for
time spent by the Indemnitee for which he is not otherwise compensated by the
Company or any third party, provided that the rate of compensation, if any,
and
estimated time involved is approved in advance by a majority vote of the Board
of Directors), actually and reasonably incurred by the Indemnitee in connection
with either the investigation, defense or appeal of a Proceeding or establishing
or enforcing a right to indemnification under this Agreement or otherwise,
and
amounts paid in settlement (if such settlement is approved in advance by the
Company) by or on behalf of the Indemnitee, but shall not include any judgments,
fines or penalties actually levied against the Indemnitee.
(c) Proceeding.
For the
purposes of this Agreement, “Proceeding” means any threatened, pending or
completed action, suit or other proceeding, whether civil, criminal,
administrative, investigative or any other type whatsoever.
(d) Subsidiary.
For
purposes of this Agreement, “Subsidiary” means any corporation of which 50% or
more of the outstanding voting securities are owned directly or indirectly
by
the Company, by the Company and one or more other subsidiaries, or by one or
more other subsidiaries.
(e) Other
Enterprise.
For
purposes of this Agreement, “Other Enterprise” means any other enterprise and
shall include employee benefit plans; references to “fines” shall include any
excise tax assessed with respect to any employee benefit plans; references
to
“serving at the request of the Company” shall include any service as an Agent of
the Company which imposes duties on, or involves services by, such Director,
officer, employee or Agent of the Company with respect to an employee benefit
plan, its participants, or beneficiaries; any person who acts in good faith
and
in a manner he reasonably believes to be in the best interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to
have acted in a manner “not opposed to the best interests of the Company” as
referred to in this Agreement.
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2. Agreement
to Serve.
The
Indemnitee agrees to serve and/or continue to serve as an Agent of the Company,
at its will (or under separate agreement, if such agreement exists), in the
capacity the Indemnitee currently serves as an Agent of the Company, so long
as
he is duly appointed or elected and qualified in accordance with the applicable
provisions of the Articles of Association or comparable corporate governance
document (“Articles”) of the Company or the Articles of any Subsidiary of the
Company or until such time as he tenders his resignation in writing, provided,
however, that nothing contained in this Agreement is intended to create any
right in favor of the Indemnitee to continued employment in any
capacity.
3. Indemnity
in Third Party Proceedings.
The
Company shall indemnify the Indemnitee if the Indemnitee is a party to or
threatened to be made a party to or otherwise involved in any Proceeding (other
than a Proceeding by or in the name of the Company to procure a judgment in
its
favor) by reason of the fact that the Indemnitee is or was an Agent of the
Company, or by reason of any act or inaction by him in any such capacity,
against any and all Expenses and liabilities of any type whatsoever (including,
but not limited to, judgments, fines and penalties), actually and reasonably
incurred by him in connection with the investigation, defense, settlement or
appeal of such Proceeding, but only in the absence of fraud, willful default
or
dishonesty on the part of the Indemnitee and if the Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best
interests of the Company, and, with respect to any criminal action or
Proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any Proceeding by judgment, order of court, settlement,
conviction or on plea of nolo
contendere,
or its
equivalent, shall not, of itself, create a presumption that the Indemnitee
did
not act in good faith in a manner which he reasonably believed to be in the
best
interests of the Company or, with respect to any criminal Proceedings, that
such
person had reasonable cause to believe that his conduct was
unlawful.
4. Indemnity
in Derivative Actions.
The
Company shall indemnify the Indemnitee if the Indemnitee is a party to or
threatened to be made a party to or otherwise involved in any Proceeding by
or
in the name of the Company to procure a judgment in its favor by reason of
the
fact that the Indemnitee is or was an Agent of the Company, or by reason of
any
act or inaction by him in any such capacity, against all Expenses actually
and
reasonably incurred by the Indemnitee in connection with the investigation,
defense, settlement, or appeal of such Proceeding, but only in the absence
of
fraud, willful default or dishonesty on the part of the Indemnitee and if the
Indemnitee acted in good faith and in a manner he reasonably believed to be
in
or not opposed to the best interests of the Company, except that no
indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which the Indemnitee shall have been finally adjudged
to
be liable to the Company by a court of competent jurisdiction in the performance
of his duty to the Company, unless and only to the extent that any court in
which such Proceeding was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such Expenses
as
such court shall deem proper.
5. Indemnification
of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to the extent that
the
Indemnitee has been successful on the merits or otherwise in defense of any
Proceeding or in defense of any claim, issue or matter therein, including the
dismissal of an action without prejudice, the Company shall indemnify the
Indemnitee against all Expenses actually and reasonably incurred in connection
with the investigation, defense or appeal of such Proceeding.
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6. Partial
Indemnification.
If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of any Expenses or liabilities of any
type
whatsoever (including, but not limited to, judgments, fines or penalties),
actually and reasonably incurred by him in the investigation, defense,
settlement or appeal of a Proceeding but is not entitled, however, to
indemnification for the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion thereof to which the Indemnitee is
entitled.
7. Advancement
of Expenses.
Subject
to Section 10(a) below, the Company shall advance all Expenses incurred by
the
Indemnitee in connection with the investigation, defense, settlement or appeal
of any Proceeding to which the Indemnitee is a party or is threatened to be
made
a party by reason of the fact that the Indemnitee is or was an Agent of the
Company. The Indemnitee hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Company as authorized by
this Agreement. The advances to be made under this Agreement shall be paid
by
the Company to or on behalf of the Indemnitee within 30 days following delivery
of a written request therefor by the Indemnitee to the Company. By execution
of
this Agreement, the Indemnitee agrees to repayment of the Company of such
Expenses under Section 7 if it is determined by a majority vote of the Board
that the Indemnitee is not entitled to the indemnification payment; provided,
however, that in no circumstance shall the Indemnitee be required to repay
the
Company for Expenses as to which the Indemnitee is entitled to indemnification
under this Agreement.
8. Notice
and Other Indemnification Procedures.
(a) Promptly
after receipt by the Indemnitee of notice of the commencement of or the threat
of commencement of any Proceeding, the Indemnitee shall, if the Indemnitee
believes that indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement or threat
of commencement thereof.
(b) Any
indemnification requested by the Indemnitee under Section 3 and/or 4 of this
Agreement shall be made no later than 60 days after receipt of the written
request of the Indemnitee, unless a determination is made within said 60 day
period (i) by the Board of Directors of the Company by a majority vote of a
quorum thereof consisting of Directors who are not parties to such Proceedings,
or (ii) in the event such a quorum is not obtainable, at the election of the
Company, either by independent legal counsel in a written opinion or by a panel
of arbitrators from the American Arbitration Association (“AAA”), one of whom is
selected by the Company, another of whom is selected by the Indemnitee and
the
last of whom is selected by the first two arbitrators so selected, that the
Indemnitee has not met the relevant standards for indemnification set forth
in
Section 3 and 4 of this Agreement. In the event the Indemnitee is determined
not
to be entitled to indemnification, the Company shall give, or cause to be given
to, the Indemnitee written notice thereof specifying the reason therefor,
including any determination of fact or conclusion of law relied upon in reaching
such determination.
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(c) Notwithstanding
a determination under Section 8(b) above that the Indemnitee is not entitled
to
indemnification with respect to any specific Proceeding, the Indemnitee shall
have the right to apply to any court of competent jurisdiction for the purpose
of enforcing the Indemnitee’s right to indemnification pursuant to this
Agreement. Neither the failure of the Company (including its Board of Directors
or independent legal counsel or the panel of arbitrators) to have made a
determination prior to the commencement of such action that indemnification
or
advances are proper in the circumstances because the Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Company
(including its Board of Directors or independent legal counsel or the panel
of
arbitrators) that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create any presumption that the
Indemnitee has not met the applicable standard of conduct. In any such
proceeding, the Company will bear the burden of proof in showing that the
Indemnitee’s conduct did not meet the applicable standard of conduct provided
for by this agreement, and accordingly the Indemnitee shall be deemed to have
a
prima
facie
right to
indemnification under this agreement unless the Company can prove to the court’s
satisfaction that the Indemnitee’s conduct did not meet the applicable standard
of conduct provided for by this agreement or applicable law for
indemnification.
(d) In
the
absence of fraud, willful default or dishonesty on the part of the Indemnitee,
the Company shall indemnify the Indemnitee against all Expenses incurred in
connection with any hearing or Proceeding under this Section 8 unless a court
of
competent jurisdiction finds that each of the claims and/or defenses of the
Indemnitee in any such Proceeding was frivolous or in bad faith.
9. Insurance.
The
Company will obtain Directors’ and officers’ liability insurance (“D&O
Insurance”) in reasonable amounts from established and reputable insurers with
respect to which the Indemnitee is named as an insured. Notwithstanding any
other provision of the Agreement, the Company shall not be obligated to
indemnify the Indemnitee for Expenses, judgments, fines or penalties, which
have
been paid directly to or on behalf of the Indemnitee out of the Company’s
D&O Insurance. If the Company has D&O Insurance in effect at the time
the Company receives from the Indemnitee any notice of the commencement of
a
Proceeding, the Company shall give prompt notice of the commencement of such
Proceeding to the insurers in accordance with the procedures set forth in the
policy. The Company shall thereafter take all necessary or desirable action
to
cause such insurers to pay, on behalf of the Indemnitee, all amounts payable
as
a result of such Proceeding in accordance with the terms of such
policy.
10. Exceptions.
Any
other provision in this Agreement to the contrary notwithstanding, the Company
shall not be obligated pursuant to the terms of this Agreement:
(a) Claims
Initiated by the Indemnitee.
To
indemnify or advance Expenses to the Indemnitee with respect to Proceedings
or
claims initiated or brought voluntarily by the Indemnitee and not by way of
defense, except with respect to Proceedings brought to establish or enforce
a
right to indemnification under this Agreement or any other statute or law,
but
such indemnification or advancement of Expenses may be provided by the Company
in specific cases if a majority of the Board of Directors finds it to be
appropriate; or
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(b) Action
for Indemnification.
To
indemnify the Indemnitee for any Expenses incurred by the Indemnitee with
respect to any Proceeding instituted by the Indemnitee to enforce or interpret
this Agreement, if a court of competent jurisdiction or a panel of arbitrators
determines that any of the material assertions made by the Indemnitee in such
Proceeding was not made in good faith or was frivolous; or
(c) Unauthorized
Settlements.
To
indemnify the Indemnitee under this Agreement for any amounts paid in settlement
of a Proceeding effected without the Company’s written consent. The Company
shall not settle any Proceeding without the Indemnitee’s written consent.
Neither the Company nor the Indemnitee will unreasonably withhold consent to
any
proposed settlement; or
(d) Certain
Matters.
To
indemnify the Indemnitee on account of any Proceeding with respect to (i)
remuneration paid to the Indemnitee if it is determined by judgment or other
adjudication that such remuneration was in violation of law, (ii) which judgment
is rendered against the Indemnitee for an accounting of profits made from the
purchase or sale by the Indemnitee of securities of the Company pursuant to
the
provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended,
or similar provisions of any federal, state or local statute, or (iii) which
it
is determined by judgment or other adjudication that the Indemnitee’s conduct
was knowingly fraudulent or dishonest.
11. Nonexclusivity.
The
provisions for indemnification and advancement of Expenses set forth in this
Agreement shall not be deemed exclusive of any other rights which the Indemnitee
may have under any provision of law, the Company’s Memorandum or Articles of
Association, in any court in which a Proceeding is brought, the vote of the
Company’s shareholders or disinterested Directors, other agreements or
otherwise, both as to action in his official capacity and to action in another
capacity while occupying his position as an Agent of the Company, and the
Indemnitee’s rights under this Agreement shall continue after the Indemnitee has
ceased acting as an Agent of the Company and shall inure to the benefit of
the
heirs, executors and administrators of the Indemnitee.
12. Subrogation.
In the
event of payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of the Indemnitee,
who
shall execute all papers required and shall do everything that may be necessary
to secure such rights, including the execution of such documents necessary
to
enable the Company effectively to bring suit to enforce such
rights.
13. Interpretation
of Agreement.
It is
understood that the parties to this Agreement intend this Agreement to be
interpreted and enforced so as to provide indemnification to the Indemnitee
to
the fullest extent now or hereafter permitted by law.
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14. Severability.
If any
provision or provisions of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of the Agreement (including without
limitation, all portions of any paragraphs of this Agreement containing any
such
provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby, and (ii) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions of any paragraph of
this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
be construed so as to give effect to the intent manifested by the provision
held
invalid, illegal or unenforceable and to give effect to Section 13 of this
Agreement.
15. Modification
and Waiver.
No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties to this Agreement. No waiver of
any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision of this Agreement (whether or not similar) nor shall
such
waiver constitute a continuing waiver.
16. Successors
and Assigns; Duration of Agreement.
The
terms of this Agreement shall bind, and shall inure to the benefit of, the
successors and assigns of the parties to this Agreement. This Agreement shall
continue in effect so long as the Indemnitee shall be subject to any Proceeding
by reason of the fact that the Indemnitee is or was an Agent of the Company,
regardless of whether the Indemnitee continues to serve as an Agent of the
Company.
17. Notice.
All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed duly given (i) if delivered by hand and
receipted for by the party addressee, on the date of delivery, or (ii) if mailed
by certified or registered mail with postage prepaid, on the third business
day
after the mailing date. Addresses for notice to either party are as shown on
the
signature page of this Agreement, or as subsequently modified by written
notice.
18. Governing
Law.
This
Agreement shall be governed exclusively by and construed according to the laws
of Delaware. If a court of competent jurisdiction shall make a final
determination that the provisions of the law of any jurisdiction other than
Delaware, govern indemnification by the Company of its Directors and officers,
then the indemnification provided under this Agreement shall in all instances
be
enforceable only to the extent permitted under such law, notwithstanding any
provision of this Agreement to the contrary.
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COMPANY:
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Name: Xxxxx X. Xxxxx |
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Address:
0000 Xxx Xxxxxx,
Xxx.
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Xxxxxxx,
Xxxxx 00000
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INDEMNITEE:
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Name:
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Address:
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