Exhibit 10.38
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made as of the 17th day of September,
1998 by and between Burlington Northern Santa Fe Corporation, a Delaware
corporation (the "Company"), and the undersigned (the "Indemnitee" and, together
with other persons who may execute similar agreements, the "Indemnitees").
The Indemnitee currently is and in the future may be serving in one or
more capacities as a director or officer of the Company or, at the request of
the Company, as a director, officer, employee, agent, fiduciary, or trustee of,
or in a similar capacity for, another corporation, partnership, joint venture,
trust, employee benefit plan, or other entity, and in so doing is and will be
performing a valuable service to or on behalf of the Company. The Board of
Directors of the Company has determined that, in order to attract and retain
qualified individuals, the Company will supplement the Company's liability
insurance for officers and directors and the protection provided by the
Company's By-Laws by providing the contractual assurances herein contained. The
Indemnitee is willing to continue to serve and to undertake such additional
duties and responsibilities for and on behalf of the Company as may be agreed to
on the condition that [he] [she] be indemnified contractually by the Company. As
an inducement to the Indemnitee to continue to serve the Company, and in
consideration for such continued service, the Company has therefore agreed to
indemnify the Indemnitee and to advance certain expenses upon the terms set
forth herein.
In consideration of the promises and mutual covenants contained herein,
and intending to be legally bound hereby, the Company and the Indemnitee agree
as follows:
1. Indemnification
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(a) Except as provided in Sections 3 and 5 hereof, the Company shall
indemnify the Indemnitee to the full extent permitted by law against any
Liability incurred by or assessed against the Indemnitee in connection with any
Proceeding in which the Indemnitee may be involved, as a party, a witness or
otherwise, by reason of the fact that the Indemnitee is or was serving in any
Official Capacity held now or in the future, including, without limitation, any
Liability resulting from actual or alleged breach or neglect of duty, error,
misstatement, misleading statement, omission, negligence, act giving rise to
strict or product liability, act giving rise to liability for environmental
contamination, or other act or omission, whether occurring prior to or after the
date of this Agreement. As used in this Agreement:
(1) "Liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damage, or expense of any nature (including
attorney's fees and expenses);
(2) "Proceeding" means any threatened, pending, or completed action,
suit, appeal, arbitration, or other proceeding of any nature, whether civil,
criminal, administrative, or investigative, whether formal or informal, and
whether brought by or in the right of the Company, a class of its security
holders, or any other party; and
(3) "Official Capacity" means service to the Company as director or
officer or, at the request of the Company, as a director, officer, employee,
agent, fiduciary, or trustee of, or in a similar capacity for, another
corporation, partnership, joint venture, trust, employee benefit plan (including
a plan qualified under the Employee Retirement Income Security Act of 1974), or
other entity.
(b) Notwithstanding Section 1(a) hereof, except for a Proceeding brought
pursuant to Section 5(e) of this Agreement, the Company shall not indemnify the
Indemnitee under this Agreement for any Liability incurred in a Proceeding
initiated by the Indemnitee unless the Proceeding is authorized, either before
or after commencement of the Proceeding, by the majority vote of a quorum of the
Board of Directors of the Company. An affirmative defense or counterclaim of an
Indemnitee shall not be deemed to constitute a Proceeding initiated by the
Indemnitee.
2. Agreement to Serve and to Cooperate with the Company in any Proceeding.
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The Indemnitee agrees to serve or continue to serve for or on behalf of the
Company in each Official Capacity held now or in the future for so long as the
Indemnitee is duly elected or appointed or until such time as the Indemnitee
tenders a resignation in writing [for outside Directors - or such service is
otherwise terminated pursuant to the Company's Certificate of Incorporation,
By-Laws or the Delaware General Corporation Law]. [For officers - This Agreement
shall not be deemed an employment contract between the Company or any of its
subsidiaries and any Indemnitee who is an employee of the Company or any of its
subsidiaries. The Indemnitee specifically acknowledges that the Indemnitee's
employment with the Company or any of its subsidiaries, if any, is at will, and
that the Indemnitee may be discharged at any time for any reason, with or
without cause, except as may be otherwise provided in any written employment
contract between the Indemnitee and the Company or any of its subsidiaries, or
other applicable formal severance policies duly adopted by the board of
directors of the Indemnitee's employer.] The Indemnitee also agrees to cooperate
with the Company in connection with the investigation, prosecution or defense of
any proceeding for which indemnification or the advancement of expenses may be
claimed hereunder. The foregoing notwithstanding, this Agreement shall continue
in force after the Indemnitee has ceased to serve in any Official Capacity for
or on behalf of the Company or any of its subsidiaries with respect to claims
based on matters occurring before the Indemnitee ceased to serve in any Official
Capacity.
3. Exclusions.
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(a) The Company shall not be liable under this Agreement to make any
payment in connection with any Liability incurred by the Indemnitee:
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(1) to the extent payment for such Liability is made to or on behalf
of the Indemnitee under an insurance policy obtained by the Company;
(2) to the extent payment is made to or on behalf of the Indemnitee
for such Liability by the Company under its Certificate of Incorporation,
By-Laws, the Delaware General Corporation Law, or otherwise than pursuant to
this Agreement;
(3) to the extent such Liability is determined in a final judgment
pursuant to Section 5(e) hereof to be based upon or attributable to the
Indemnitee gaining any personal profit or advantage to which such Indemnitee was
not legally entitled;
(4) for any claim by or on behalf of the Company for recovery of
profits resulting from the purchase and sale or sale and purchase by such
Indemnitee of equity securities of the Company pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended;
(5) for which the conduct of the Indemnitee has been determined in a
final judgment pursuant to Section 5(e) hereof to constitute bad faith or active
and deliberate dishonesty, in either such case material to the cause of action
or claim at issue in the Proceeding; or
(6) to the extent such indemnification has been determined in a
final judgment pursuant to Section 5(e) hereof to be unlawful.
(b) No act, omission, liability, knowledge, or other fact of or relating
to any other person, including any other person who is also an Indemnitee, shall
be imputed to the Indemnitee for the purposes of determining the applicability
of any exclusion set forth herein.
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not, of
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itself, create a presumption that the Indemnitee is not entitled to
indemnification under this Agreement.
4. Advancement of Expenses. The Company shall pay any Liability in the
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nature of an expense (including attorneys' fees and expenses) incurred in good
faith by the Indemnitee in advance of the final disposition of a Proceeding
within twenty days of receipt of a demand for payment by the Indemnitee, and the
Indemnitee undertakes to repay any such amount if it shall ultimately be
determined pursuant to Section 5(e) hereof that the Indemnitee is not entitled
to be indemnified by the Company pursuant to this Agreement. The financial
ability of the Indemnitee to repay an advance shall not be a prerequisite to the
making of such advance.
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5. Indemnification Procedure.
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(a) The Indemnitee shall notify promptly the Secretary of the Company of
the commencement of any Proceeding or the occurrence of any event which might
give rise to a Liability under this Agreement, but the failure to so notify the
Company shall not relieve the Company of any obligation which it may have to the
Indemnitee under this Agreement or otherwise.
(b) The Company shall be entitled, upon notice to the Indemnitee, to
assume the defense of any Proceeding with counsel reasonably satisfactory to the
Indemnitee involved in such Proceeding or, if there be more than one Indemnitee
involved in such Proceeding, to a majority of the Indemnitees involved in such
Proceeding. The foregoing notwithstanding, the Indemnitee may elect to retain
separate counsel to participate in the defense of such Proceeding and the fees
and expenses of such separate counsel shall be borne by Indemnitee unless; (i)
the engagement of separate counsel shall have been authorized by the Company, or
(ii) the Company shall not in fact have employed counsel reasonably satisfactory
to such Indemnitee or to the majority of Indemnitees if more than one is
involved, to assume the defense of such Proceeding.
(c) The Company shall not be required to obtain the consent of the
Indemnitee to the settlement of any Proceeding which the Company has undertaken
to defend if the Company assumes full and sole responsibility for such
settlement and the settlement grants the Indemnitee a complete and unqualified
release in respect of the potential Liability. The Company shall not be liable
for any amount paid by an Indemnitee in settlement of any Proceeding unless the
Company has consented to such settlement, which consent shall not be
unreasonably withheld.
(d) In the event that a claim for indemnification against liabilities
arising under the Securities Act of 1933 (the "Act") (other than the payment by
the Company of expenses incurred or paid by a director, officer, or controlling
person of the Company in the successful defense of any action, suit, or
proceeding) is asserted by a director, officer, or controlling person in
connection with securities being registered under the Act, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of competent jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(e) If a claim under Section 1 of this Agreement is not paid in full by
the Company within sixty days after a written claim has been received by the
Company, except in the case of a claim for an advancement of expenses, in which
case the applicable period shall be twenty days, the Indemnitee may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim and, to the extent successful in whole or in part, the Indemnitee shall
also be entitled to be paid the expense of prosecuting such suit. Any suit by
the Indemnitee under this Agreement must be brought in the Delaware Court of
Chancery. The Indemnitee shall be presumed to be entitled to indemnification
under this Agreement upon submission of a written
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claim, and thereafter the Company shall have the burden of proof to overcome the
presumption that the Indemnitee is not so entitled. Neither the failure of the
Company (including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances nor
any actual determination by the Company (including its Board of Directors,
independent legal counsel or its stockholders) that the Indemnitee is not
entitled to indemnification shall be a defense to the suit or create a
presumption that the Indemnitee is not so entitled except to the extent required
by law.
(f) Upon a payment under this Agreement to the Indemnitee with respect
to any Liability, the Company shall be subrogated to the extent of such payment
to all of the rights of the Indemnitee to recover against any person with
respect to such Liability, and the Indemnitee shall execute all document and
instruments required and shall take such other actions as may be necessary to
secure such rights, including the execution of such documents as may be
necessary for the Company to bring suit to enforce such rights.
6. Non-Exclusivity. The rights granted to the Indemnitee pursuant to this
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Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may be entitled under statute, the provisions of any certificate of
incorporation, by-laws, or agreement, a vote of stockholders or directors, or
otherwise, both as to action in an Official Capacity and in any other capacity.
7. Reliance on Provisions. The Indemnitee shall be deemed to be acting in
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any Official Capacity in reliance upon the rights of indemnification provided by
this Agreement Without limiting the generality of the foregoing, the Company and
the Indemnitee acknowledge the existence of Article X of the Company's By-Laws,
and confirm that the Indemnitee is also acting in reliance thereon.
8. Severability and Reformation. Any provision of this Agreement which is
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determined to be invalid or unenforceable in any jurisdiction or under any
circumstances shall be ineffective only to the extent of such invalidity or
unenforceability and shall be deemed reformed to the extent necessary to conform
to the applicable law of such jurisdiction and still give maximum effect to the
intent of the parties hereto. Any such determination shall not invalidate or
render unenforceable the remaining provisions hereof and shall not invalidate or
render unenforceable such provision in any other jurisdiction or under any other
circumstances.
9. Notices. Any notice, claim, request, or demand required or permitted
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hereunder shall be in writing and shall be deemed given if delivered personally
or sent by facsimile or by registered or certified mail, first class, postage
prepaid: (i) if to the Company, to Burlington Northern Santa Fe Corporation,
_________________, Attention: Secretary, or (ii) if to any Indemnitee, to the
address of such Indemnitee listed on the signature page hereto, or to such other
address as any party hereto shall have specified in a notice duly given in
accordance with this Section 10.
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10. Amendments; Binding Effect. No amendment, modification, termination, or
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cancellation of this Agreement shall be effective unless signed in writing by
the Company and the Indemnitee. This Agreement shall be binding upon the Company
and its successors and assigns and shall inure to the benefit of the
Indemnitee's heirs, executors, administrators, and personal representatives.
11. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first set forth above.
BURLINGTON NORTHERN SANTA FE
CORPORATION
By: _______________________
Name: Xxxxxx X. Xxxxx
Chairman, President & CEO
Attest:
_____________________
[Assistant] Secretary
Indemnitee
____________________________
Name:
Address:
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