EXHIBIT 10.42
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INDEMNIFICATION AGREEMENT
Dated as of January 5, 2004 between Nexen Inc. ("NEXEN") and Xxxx X.
Xxxxxx (together with his or her estate, heirs, executors and legal
representatives the "INDEMNIFIED PARTY")
BACKGROUND
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(a) The Indemnified Party:
(i) is or has been a director or officer of Nexen;
(ii) is or has been, at the request of Nexen, a director
or officer of a body corporate ("BODY CORPORATE"); or
(iii) is or has been, at the request of Nexen, a director
or officer of or is acting or has acted in a similar
capacity (and the Indemnified Party shall for
purposes hereof be referred to as a director or
officer in so acting or having acted) for a body
corporate, partnership, unincorporated association,
unincorporated syndicate, unincorporated
organization, joint venture or trust ("ENTITY");
(Nexen, any Body Corporate and any Entity being collectively
the "CORPORATIONS" and any one of them being a "CORPORATION");
(b) Nexen acknowledges that the Indemnified Party, acting in the
capacity of director or officer, is required to make decisions
and take actions in furtherance of the business and affairs of
any Corporation which might have the result of attracting
personal liability; and
(c) It is in the best interests of Nexen to agree to indemnify the
Indemnified Party from any and all liabilities, losses, costs,
charges, expenses or damages sustained or incurred by the
Indemnified Party acting in the capacity of director or
officer of any Corporation;
AGREEMENT
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In consideration of the Indemnified Party having acted and continuing to act as
a director or officer, the parties agree as follows:
1. DUTY OF CARE
(a) In accordance with the provisions of the CANADA BUSINESS
CORPORATIONS ACT (the "ACT"), the Indemnified Party, in
exercising his or her powers and discharging his or her duties
as a director or officer of any Corporation, shall:
(i) act honestly and in good faith with a view to the
best interests of the Corporation; and
(ii) exercise the care, diligence and skill that a
reasonably prudent person would exercise in
comparable circumstances.
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(b) Each Corporation acknowledges that the Indemnified Party has
complied with his or her duties under subsection 1(a) hereof
if the Indemnified Party relied in good faith on:
(i) financial statements of the Corporation represented
to the Indemnified Party by an officer of the
Corporation or in a written report of the auditor of
the Corporation fairly to reflect the financial
condition of the Corporation; or
(ii) a report of a person whose profession lends
credibility to a statement made by the professional
person.
2. DUTY TO COMPLY
(a) The Indemnified Party shall comply with the Act, the
regulations made in the Act, the articles of the Corporation,
the by-laws of the Corporation and any unanimous shareholder
agreement or partnership agreement respecting the Corporation.
(b) Each Corporation acknowledges that the Indemnified Party has
complied with his or her duties under subsection 2(a) hereof,
if the Indemnified Party exercised the care, diligence and
skill that a reasonably prudent person would have exercised in
comparable circumstances, including reliance in good faith on:
(i) financial statements of the Corporation represented
to the Indemnified Party by an officer of the
Corporation or in a written report of the auditor of
the Corporation fairly to reflect the financial
condition of the Corporation; or
(ii) a report of a person whose profession lends
credibility to a statement made by the professional
person.
3. DISCLAIMER OF LIABILITY
The Indemnified Party shall not be liable for the acts, receipts,
neglects, omissions or defaults of any other director or officer or any
employee or agent of any Corporation or for any liabilities, damages,
costs, charges or expenses sustained or incurred by any Corporation in
the execution of the duties of his or her office, provided that nothing
herein contained shall relieve the Indemnified Party of any liability
for liabilities, damages, costs, charges or expenses suffered or
incurred as a direct result of any acts, receipts, neglects, omissions
or defaults of the Indemnified Party which are in contravention of the
Act or any other applicable law.
4. INDEMNITY
(a) Except in respect of an action by or on behalf of a
Corporation to procure a judgment in its favour, Nexen shall
indemnify and save harmless the Indemnified Party from and
against all liabilities, damages, costs, charges and expenses
(including, without limitation, court fees, legal expenses and
witness fees), including an amount paid to settle an action or
satisfy a judgment or any fine or penalty levied, reasonably
incurred by him or her in respect of any civil, criminal,
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administrative, investigative or other action, proceeding or
inquiry of any nature, to which he or she is, directly or
indirectly, a party by reason of being or having been a
director or officer of any Corporation if:
(i) the Indemnified Party acted honestly and in good
faith with a view to the best interests of the
Corporation; and
(ii) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty,
the Indemnified Party had reasonable grounds for
believing that his or her conduct was lawful.
(b) For all purposes of this Agreement, a director or officer
shall be conclusively deemed to have acted honestly and in
good faith with a view to the best interests of the
Corporation and to have had reasonable grounds for believing
that his or her conduct was lawful, unless and until the
applicable court hearing the action in which indemnity is
sought determines in a final judgment that is non-appealable
that the director or officer in question did not act honestly
and in good faith with a view to the best interests of the
Corporation or did not have reasonable grounds for believing
that his or her conduct was lawful, as applicable.
(c) In respect of an action by or on behalf of a Corporation to
procure a judgment in its favour, to which the Indemnified
Party is, directly or indirectly, a party by reason of being
or having been a director or an officer of the Corporation,
Nexen shall make an application at its expense for, and use
its best efforts to obtain, approval of the Court of Queen's
Bench of Alberta to indemnify and save harmless the
Indemnified Party from and against all liabilities, damages,
costs, charges and expenses (including, without limitation,
court fees, legal expenses and witness fees) reasonably
incurred by him or her in connection with such action, if the
Indemnified Party fulfills the conditions set out in clauses
4(a)(i) and 4(a)(ii).
(d) Notwithstanding the foregoing, Nexen shall indemnify and save
harmless the Indemnified Party from and against any and all
liabilities, damages, costs, charges and expenses (including,
without limitation, court fees, legal expenses and witness
fees) reasonably incurred by him or her in connection with any
action or proceeding to which the Indemnified Party is,
directly or indirectly, a party by reason of being or having
been a director or officer of a Corporation (including,
without limitation, an action or proceeding to enforce or
interpret this Agreement), if the Indemnified Party was not
judged by the court or other competent authority to have
committed any fault or omitted to do anything that the
Indemnified Party ought to have done and the Indemnified Party
fulfills the conditions set out in clauses 4(a)(i) and
4(a)(ii).
(e) For the purposes of this Agreement, the termination of any
civil, criminal or administrative action or proceeding by
judgment, order, settlement or conviction shall not, of
itself, create a presumption either that the Indemnified Party
did not act honestly and in good faith with a view to the best
interests of the Corporation or that, in the case of a
criminal or administrative action or proceeding that is
enforced by a monetary penalty, the Indemnified Party did not
have reasonable grounds for believing that his or her conduct
was lawful.
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(f) Upon the Indemnified Party becoming, directly or indirectly, a
party to any action, proceeding or inquiry of any nature
referred to in paragraph 4(a), Nexen shall forthwith assume
and pay, or reimburse the Indemnified Party for and indemnify
and save harmless the Indemnified Party from and against, any
and all costs, charges and expenses (including, without
limitation, court fees, legal expenses and witness fees)
referred to in paragraph 4(a). Such assumption, payment or
reimbursement shall be made continuously and promptly after
the Indemnified Party has advised Nexen of such costs, charges
and expenses. If the outcome of such action, proceeding or
inquiry establishes that the Indemnified Party were not
entitled to indemnification of such costs, charges and
expenses, then the Indemnified Party shall repay to Nexen all
amounts paid by it to or for the benefit of such Indemnified
Party under this paragraph 4(f) for which there was no
entitlement to indemnification.
5. INSURANCE
(a) Unless otherwise agreed between the Parties hereto, Nexen
shall purchase and maintain, or cause to be purchased and
maintained, while the Indemnified Party remains a director or
officer of a Corporation and for a period of six years
thereafter, directors' and officers' errors and omissions
insurance for the benefit of the Indemnified Party on terms no
less favourable in terms of coverage and amounts, to the
extent permitted by law and available on reasonable commercial
terms, than such insurance maintained in effect by Nexen on
the date hereof, provided that such insurance shall not apply
to any liability incurred by the Indemnified Party relating to
any failure by the Indemnified Party to act honestly and in
good faith with a view to the best interests of the
Corporation. Nexen shall provide the Indemnified Party with a
copy of the insurance policies, if requested, and shall
provide the Indemnified Party with prompt written notice if
such insurance is not maintained for any reason.
(b) The indemnification provided pursuant to this Agreement is
intended to be available in all circumstances permitted under
the Act and, without limitation, is intended to be available
in circumstances where any insurance coverage maintained by
Nexen is not available, either because the insurer is denying
coverage, the actions are not covered due to an exemption or
exclusion from the terms of the insurance policy or otherwise,
or where Nexen determined for whatever reason not to obtain or
maintain insurance coverage.
6. INCOME TAX
Should any payment made pursuant to this Agreement be deemed by any
taxing authority to constitute a taxable benefit or otherwise be or
become subject to any tax or levy, then Nexen shall pay such greater
amount as may be necessary to ensure that the amount received by or on
behalf of the Indemnified Party after the payment of or withholding for
such tax, is equal to the amount of the costs, charges, expenses or
liability actually incurred by or on behalf of the Indemnified Party
such that the Indemnified Party shall be indemnified for any and all
such taxes.
7. ASSIGNMENT
The duties and obligations of Nexen under this Agreement shall be
binding upon, and
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enforceable by the Indemnified Party, against Nexen and its successors
and assigns, including any corporation with which Nexen is merged or
amalgamated. Nexen covenants and agrees that it shall not, without the
consent of the Indemnified Party, transfer of dispose of all or
substantially all of its assets or business to any entity that does not
agree to assume all of the obligations of Nexen under this Agreement.
8. EFFECTIVE DATE
Notwithstanding the date of execution of this Agreement, the terms and
provisions hereof shall be effective, binding upon, and enforceable by
the parties as of and from the date on which the Indemnified Party was
first appointed or elected a director or officer of a Corporation.
9. INDEMNIFICATION NOT EXCLUSIVE
The indemnification provided by this Agreement is in addition to the
indemnification provided by by-laws of any Corporation or those
provided under the legislation governing any Corporation. In addition,
the indemnification provided by this Agreement shall be in addition to
any right of indemnification, contribution or reimbursement that a
director or officer has under applicable law, the constating documents
of any Corporation or any other agreement between the director or
officer and any Corporation and shall continue for the benefit of the
Indemnified Party notwithstanding that he or she may have ceased to be
a director or officer of one or more Corporations.
10. DEFENCE OF CLAIMS
The Indemnified Party covenants and agrees that, upon becoming aware of
any facts or circumstances which may give rise to the Indemnified Party
becoming a party, directly or indirectly, to any action, proceeding or
inquiry referred to in paragraph 4(a) (a "CLAIM"), the Indemnified
Party shall provide written notice to Nexen setting out in reasonable
detail the nature of the facts relating to such Claim. Upon receipt of
the notice of the Claim, Nexen shall, at its expense and in a timely
manner, contest and defend against the Claim or cause the relevant
Corporation to contest and defend against the Claim and take all such
steps as may be necessary or proper to prevent the resolution thereof
in a manner adverse to the Indemnified Party. The Indemnified Party
shall fully cooperate with Nexen in taking all such steps. If Nexen
does not in a timely manner undertake or cause the contestation or
defence of the Claims, the Indemnified Party may do so and such
contestation or defence shall be at the expense and risk of Nexen
provided that if the outcome of such action, proceeding or inquiry
establishes that the Indemnified Party was not entitled to contest or
defend the Claim at the risk and expense of Nexen, then the Indemnified
Party shall repay to Nexen all amounts paid by Nexen in connection with
such contestation or defence pursuant to this section 10 and paragraph
4(f) for which there was no entitlement to indemnification.
11. OBLIGATIONS OF NEXEN ABSOLUTE
The obligations of Nexen under this Agreement are absolute and
unconditional and shall not be released, discharged or reduced, and the
rights of the Indemnified Party hereunder shall not be prejudiced or
impaired, by any neglect, delay or forbearance in demanding, requiring
or enforcing payment or performance by Nexen of any of its obligations
hereunder or by granting any extensions of time for such performance or
by
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waiving any performance (except as to any particular performance which
has been waived), or by permitting or consenting to any assignment in
bankruptcy, receivership, insolvency or any other creditor's
proceedings of or against Nexen or by the winding-up or dissolution of
Nexen or any other event or occurrence which would or might otherwise
have the effect at law of terminating the obligations of Nexen under
this Agreement.
12. INTERPRETATION
This Agreement is not intended to, and shall not be interpreted to,
authorize a payment of an indemnity contrary to section 124 of the Act.
13. SEVERABILITY
If any part of this Agreement or the application of such part to any
person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of
such part to any other person or circumstance, shall not be affected
thereby and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
14. CHOICE OF LAW
This Agreement shall be governed and construed in accordance with the
laws of Alberta and the laws of Canada applicable therein.
IN WITNESS WHEREOF the parties have executed this agreement on the date first
above mentioned.
SIGNED by the Indemnified Party in the presence of:
/s/ Xxxxxx Xxxxxx /s/ Xxxx X. Xxxxxx
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Witness Signature Xxxx X. Xxxxxx
XXXXXX XXXXXX
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Witness Name
11607-134 STREET
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Witness Address
XXXXXXXX, XX X0X 0X0
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Witness Address
SENIOR PUBLIC AFFAIRS OFFICER
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Witness Occupation
NEXEN INC.
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
