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EXHIBIT 12
INDEMNIFICATION AGREEMENT
This AGREEMENT is made and entered into this 1st day of July,
1997, by and between Pennzoil Company, a Delaware corporation (the "Company"),
and [Name of Director] [Name of Executive Officer] (the "Indemnitee").
WHEREAS, Indemnitee is [a director] [an executive officer] of the
Company;
WHEREAS, the Bylaws of the Company provide certain
indemnification rights to the [directors] [executive officers] of the Company,
and its [directors] [executive officers] have been otherwise assured
indemnification, as provided by Delaware law;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner and Indemnitee's
reliance on past assurances of indemnification, the Company wishes to provide
in this Agreement for the indemnification of and the advancing of expenses
(whether partial or complete) to Indemnitee to the fullest extent permitted by
law and as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Indemnitee under the Company's
directors' and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and Indemnitee's continuing to serve
as [a director] [an executive officer] of the Company, the parties hereto agree
as follows:
1. Requirement of Indemnity and Advancement of Expenses. The
Company shall indemnify, and advance Expenses (as this and all other
capitalized words are defined in Section 12) to, Indemnitee to the fullest
extent permitted by applicable law in effect on the date hereof, and to such
greater extent as applicable law may thereafter permit. The rights of
Indemnitee provided under the preceding sentence shall include, but not be
limited to, the right to be indemnified to the fullest extent permitted by
Section 145(b) of the D.G.C.L. in Proceedings by or in the right of the
Company and to the fullest extent permitted by Section 145(a) of the D.G.C.L.
in all other Proceedings.
2. Expenses as a Witness or Party. If Indemnitee is, by reason of
his Corporate Status, a witness in or a party to and is successful, on the
merits or otherwise, in any Proceeding, he shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to any Matter in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf relating to each Matter. The
termination of any Matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such Matter.
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3. Advancement of Expenses. Indemnitee shall be advanced Expenses
within 10 days after requesting them to the fullest extent permitted by Section
145(e) of the D.G.C.L.
4. Written Request. To obtain indemnification, Indemnitee shall
submit to the Company a written request with such information as is reasonably
available to Indemnitee. The Secretary of the Company shall promptly advise
the Board of Directors of such request.
5. Determination of Entitlement Prior to a Change in Control. If
there has been no Change of Control at the time the request for indemnification
is sent, Indemnitee's entitlement to indemnification shall be determined in
accordance with Section 145(d) of the D.G.C.L. If entitlement to
indemnification is to be determined by Independent Counsel, the Company shall
furnish notice to Indemnitee within 10 days after receipt of the request for
indemnification, specifying the identity and address of Independent Counsel.
The Indemnitee may, within 14 days after receipt of such written notice of
selection, deliver to the Company a written objection to such selection. Such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of Independent Counsel and the
objection shall set forth with particularity the factual basis of such
assertion. If there is an objection to the selection of Independent Counsel,
either the Company or Indemnitee may petition the Court of Chancery of the
State of Delaware or any other court of competent jurisdiction for a
determination that the objection is without a reasonable basis and/or for the
appointment of Independent Counsel selected by the Court.
6. Determination of Entitlement After a Change in Control. If there
has been a Change of Control at the time the request for indemnification is
sent, Indemnitee's entitlement to indemnification shall be determined in a
written opinion by Independent Counsel selected by Indemnitee. Indemnitee
shall give the Company written notice advising of the identity and address of
the Independent Counsel so selected. The Company may, within 7 days after
receipt of such written notice of selection, deliver to the Indemnitee a
written objection to such selection. Indemnitee may, within 5 days after the
receipt of such objection from the Company, submit the name of another
Independent Counsel and the Company may, within 7 days after receipt of such
written notice of selection, deliver to the Indemnitee a written objection to
such selection. Any objection is subject to the limitations in Section 5.
Indemnitee may petition the Court of Chancery of the State of Delaware or any
other Court of competent jurisdiction for a determination that the Company's
objection to the first and/or second selection of Independent Counsel is
without a reasonable basis and/or for the appointment as Independent Counsel of
a person selected by the Court.
7. Presumption and Deemed Determination. If a Change of Control
shall have occurred before the request for indemnification is sent by
Indemnitee, Indemnitee shall be presumed (except as otherwise expressly
provided in this Agreement) to be entitled to indemnification upon submission
of a request for indemnification in accordance with Section 4 of this
Agreement, and thereafter the Company shall have the burden of proof to
overcome the presumption in reaching a determination contrary to the
presumption. The presumption shall be used by Independent Counsel as a basis
for a determination of entitlement to indemnification unless the Company
provides
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information sufficient to overcome such presumption by clear and convincing
evidence or the investigation, review and analysis of Independent Counsel
convinces him by clear and convincing evidence that the presumption should not
apply.
Except in the event that the determination of entitlement to
indemnification is to be made by Independent Counsel, if the person or persons
empowered under Section 5 or 6 of this Agreement to determine entitlement to
indemnification shall not have made and furnished to Indemnitee in writing a
determination within 60 days after receipt by the Company of the request
therefor, the requisite determination of entitlement to indemnification shall
be deemed to have been made and Indemnitee shall be entitled to such
indemnification unless Indemnitee knowingly misrepresented a material fact in
connection with the request for indemnification or such indemnification is
prohibited by law. The termination of any Proceeding or of any Matter therein,
by judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company, or with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
8. Fees and Expenses of Counsel. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred acting pursuant to
this Agreement and in any proceeding to which it is a party or witness in
respect of its investigation and written report and shall pay all reasonable
fees and expenses incident to the procedures in which such Independent Counsel
was selected or appointed. No Independent Counsel may serve if a timely
objection has been made to his selection until a Court has determined that such
objection is without a reasonable basis.
9. Judicial Determination. In the event that (i) a determination is
made pursuant to Section 5 or 6 that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not
timely made pursuant to Section 3 of this Agreement, (iii) Independent Counsel
has not made and delivered a written opinion determining the request for
indemnification (a) within 90 days after being appointed by the Court, or (b)
within 90 days after objections to his selection have been overruled by the
Court, or (c) within 90 days after the time for the Company or Indemnitee to
object to his selection, or (iv) payment of indemnification is not made within
5 days after a determination of entitlement to indemnification has been made or
deemed to have been made pursuant to Section 5, 6 or 7 of this Agreement,
Indemnitee shall be entitled to an adjudication in an appropriate court of the
State of Delaware, or in any other court of competent jurisdiction, of his
entitlement to such indemnification or advancement of Expenses. In the event
that a determination shall have been made that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section shall be conducted in all respects as a de novo trial on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding commenced pursuant to this Section, the Company shall have the
burden of proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be. If a
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determination shall have been made or deemed to have been made that Indemnitee
is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding commenced pursuant to this Section 9,
or otherwise, unless Indemnitee knowingly misrepresented a material fact in
connection with the request for indemnification, or such indemnification is
prohibited by law.
The Company shall be precluded from asserting in any judicial proceeding
commenced pursuant to this Section 9 that the procedures and presumptions of
this Agreement are not valid, binding and enforceable and shall stipulate in
any such court that the Company is bound by all provisions of this Agreement.
In the event that Indemnitee, pursuant to this Section 9, seeks a judicial
adjudication to enforce his rights under, or to recover damages for breach of,
this Agreement, Indemnitee shall be entitled to recover from the Company, and
shall be indemnified by the Company against, any and all Expenses actually and
reasonably incurred by him in such judicial adjudication, but only if he
prevails therein. If it shall be determined in such judicial adjudication that
Indemnitee is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be
appropriately prorated.
10. Non-Exclusivity. The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Certificate of Incorporation, the By-laws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise.
No amendment, alteration or repeal of this Agreement or any provision hereof
shall be effective as to any Indemnitee for acts, events and circumstances that
occurred, in whole or in part, before such amendment, alteration or repeal.
The provisions of this Agreement shall continue as to an Indemnitee whose
Corporate Status has ceased.
11. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Agreement shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
12. Definitions. For purposes of this Agreement:
"Change of Control" means a change in control of the Company
after the date hereof in any one of the following circumstances (1) there shall
have occurred an event required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act of 1934
(the "Act"), whether or not the Company is then subject to such reporting
requirement; (2) any "person" (as such term is used in Section 13(d) and 14(d)
of the Act) shall have become the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the Company's then
outstanding voting
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securities without prior approval of at least two-thirds of the members of the
Board of Directors in office immediately prior to such person attaining such
percentage interest; (3) the Company is a party to a merger, consolidation,
sale of assets or other reorganization, or a proxy contest, as a consequence of
which members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; (4) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (including for
this purpose any new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Directors.
"Corporate Status" describes the status of a person who (a) is or
was a director, officer or employee of the Company, or is or was serving at the
request of the Company as a director, officer or employee of another Company,
partnership, joint venture, trust or other enterprise, in each case which is
controlled by the Company, or (b) is or was serving, at the written request of
the Company or pursuant to an agreement in writing with the Company which
request or agreement provides for indemnification under these By-laws, as a
director, officer or employee of another Company, partnership, joint venture,
trust or other enterprise not controlled by the Company, provided that if such
written request or agreement referred to in this clause (b) provides for a
lesser degree of indemnification by the Company than that provided pursuant to
this Agreement, the provisions contained in or made pursuant to such written
request or agreement shall govern. References above to "other enterprises"
shall include employee benefit plans and references to "serving at the request
of the Company" shall include any service as a director, officer or employee
which imposes duties on, or involves services by, such director, officer or
employee with respect to an employee benefit plan or its participants or
beneficiaries.
"D.G.C.L." means the Delaware General Company Law.
"Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification
is sought by indemnitee.
"Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.
"Indemnitee" includes any person who is, or is threatened to be
made, a witness in or a party to any Proceeding as described in Section 1 or 2
of this Agreement by reason of his Corporate Status.
"Independent Counsel" means a law firm, or member of a law firm,
that is experienced in matters of Company law and neither presently is, nor in
the five years previous to his
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selection or appointment has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party, or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
"Matter" is a claim, a material issue, or a substantial request
for relief.
"Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any
other proceeding whether civil, criminal, administrative or investigative,
except one initiated by an Indemnitee pursuant to Section 9 of this Agreement
to enforce his rights under this Agreement.
13. Notices. Any communication required or permitted to the Company
under this Agreement shall be addressed to the Secretary of the Company and any
such communication to Indemnitee shall be addressed to his home address unless
he specifies otherwise and shall be personally delivered or delivered by
overnight mail delivery.
14. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
15. Waiver. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
16. 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 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; provided however, that the Company shall not enforce any
of such rights in any manner or at any time as would prevent or delay payment
to Indemnitee of all amounts owing to him.
17. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors (including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business or
assets of the Company), assigns, spouses, heirs, executors, administrators and
personal and legal representatives.
18. Effective Date. This Agreement shall be effective as of the date
hereof and shall apply to any claim for indemnification by the Indemnitee on or
after such date.
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19. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws thereof.
20. Captions; Headings. The captions and headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
PENNZOIL COMPANY
By:
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Name:
Title:
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Name:
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