Exhibit 1
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SETTLEMENT AGREEMENT
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This Settlement Agreement (the "Agreement") dated as of July 21, 2006 is
entered into by and among Xxxxxx Energy Corporation ("Xxxxxx" or the "Company"),
its directors, officers and employees and Third Point LLC, Third Point Offshore
Fund Ltd., Third Point Partners LP, Third Point Ultra Ltd., Lyxor/Third Point
Fund Ltd., Third Point Partners Qualified LP, Third Point Resources LP and Third
Point Resources Ltd. (collectively "Third Point") and their managers, officers
and employees (collectively the "Parties").
WHEREAS, the Company nominated three candidates for election at the May 16,
2006 annual meeting (the "Annual Meeting"): Xxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxx
and E. Xxxxxx Xxx.
WHEREAS, Third Point nominated two candidates for election at the Annual
Meeting: Xxxxxx X. Xxxx and Xxxx X. Xxxxxxx.
WHEREAS, following the certification of the results of the May 16, 2006
election, on June 28, 2006, an action was filed in the Delaware Court of
Chancery pursuant to section 225 of the Delaware General Corporation Law and
captioned Xxxxxxx x. Xxxxxxx, C.A. No. 2250-N, challenging the election of Xxxx
X. Xxxxxxx to the Company's Board of the Directors ("the Board").
WHEREAS, subsequent to the Annual Meeting, the Board voted to increase the
number of directors by one and elected Xxxxx X. Xxxxxxxx to the vacancy thereby
created.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
agreements, representations and warranties set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound by the terms herein, the Parties
hereby agree as follows:
1. Third Point, on behalf of its managers, officers and employees hereby
agrees not to bring any causes of action challenging the expansion of the Board
to create a seat for Xxxxx X. Xxxxxxxx or the appointment of Xxxxx X. Xxxxxxxx
to the Board.
2. The Company hereby agrees that it will not add Xxxx X. Xxxxxxx to the
Board by expanding the size of the board; however, Xxxx X. Xxxxxxx will remain
an eligible director candidate to fill any vacancy that may occur on the Board
in the future.
3. The Company, on behalf of its directors, officers and employees, and
Xxxx X. Xxxxxxx, hereby agree to settle and dismiss with prejudice the action
filed in the Delaware Court of Chancery, captioned Xxxxxxx x. Xxxxxxx, C.A. No.
2250-N, through a stipulation of dismissal substantially in the form attached
hereto as Exhibit A, which plaintiff shall file on or before the next business
day following the date on which this Agreement is executed by all parties.
4. The Company, on behalf of its directors, officers and employees, hereby
agrees to reimburse Third Point for its legal fees incurred in connection with
(i) the proxy contest waged by Third Point in respect of the Annual Meeting and
(ii) the action in the Delaware Court of Chancery, Xxxxxxx x. Xxxxxxx, C.A. No.
2250-N. The Parties agree that the amount of such fees to be reimbursed is
$750,000, and such amount shall be paid by the Company to Third Point no later
than two business days following the date of the Agreement.
5. The Parties hereby agree that the current composition of the Board is: :
Xxx X. Xxxxxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxxxx, E. Xxxxxx Xxx,
Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxxx X. Xxxx, Xxx X. Xxxxx, Xxxxxx X. Xxxxx
and Xxxx X. Xxxxxxx.
6. Governing Law. The Agreement and the rights of the Parties hereunder,
shall be governed by, given effect, and construed in accordance with, the laws
of the State of
Delaware, without regard to conflict of laws principles. Any legal action, suit
or proceeding concerning any matter arising under, out of or in connection with
this Agreement or for recognition or enforcement of any judgment rendered in any
such action, suit or proceeding shall be resolved only in the Court of Chancery
of the State of Delaware in and for New Castle County.
7. No Waiver. The failure of any Party to insist on strict adherence to any
term of the Agreement shall not be considered a waiver of, or deprive that Party
of the right thereafter to insist upon strict adherence to that term or any
other term of the Agreement. Any waiver (express or implied) of any default or
breach of the Agreement shall not constitute a waiver of any other or subsequent
default or breach.
8. Counterparts. The Agreement may be signed in counterparts and delivered
by telecopy and so executed, shall constitute one agreement. The Agreement shall
be considered executed and binding on all Parties when all signatories
designated herein have executed the Agreement.
9. Authority. Each of the individuals executing the Agreement and any
ancillary documents on behalf of one or more of the Parties warrants and
represents that he has been duly authorized and empowered to execute this
Agreement on behalf of such party, and that it shall be binding on such party in
accordance with its terms.
10. Interpretation. This Agreement will be deemed to have been mutually
prepared by the Parties and will not be construed against any of them by reason
of authorship. The Parties acknowledge that they have made their own independent
analysis of this document and have engaged separate counsel and advisors.
11. Headings. The headings contained in the Agreement are for convenience
of reference purposes only and do not form a part of the Agreement and in no way
modify, interpret or construe the agreements and understandings of the Parties
contained in the Agreement.
12. Entire Agreement. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof, and may be modified or
amended only by a writing signed by the signatories hereto.
IN WITNESS WHEREOF, the parties have executed this Stipulation effective as
of the date noted above.
XXXXXX ENERGY COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxx, Xx.
Executive Vice President and Chief
Administrative Officer
THIRD POINT, LLC
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Chief Executive Officer
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
