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EXHIBIT 11
INDEMNIFICATION AGREEMENT
This AGREEMENT is made and entered into this ____ day of
______, 1997, by and between XxXxxxxxx Energy, Inc., a Delaware corporation
(the "Company"), and ___________________________ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract
as directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims routinely being asserted against
directors and officers of public companies in today's environment, and the
attendant costs of defending even wholly frivolous claims;
WHEREAS, it has become increasingly difficult to obtain
insurance against the risk of personal liability of directors and officers on
terms providing reasonable protection at reasonable cost;
WHEREAS, the Bylaws of the Company provide certain
indemnification rights to the directors and officers of the Company, and its
directors and 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, the increasing
difficulty in obtaining and maintaining satisfactory insurance coverage, 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 to Indemnitee to the fullest extent permitted by law (whether partial
or complete) 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 of the Company, the parties hereto agree as follows:
1. Certain Definitions:
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(a) Change in Control: shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended), other
than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under such
Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented by the
Company's then outstanding Voting Securities, or (ii) during any
period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company and any
new director whose election by the Board of Directors or nomination
for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of
the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of (in one
transaction or a series of transactions) all or substantially all the
Company's assets.
(b) Claim: any threatened, pending or completed
action, suit or proceeding, whether instituted by or on behalf of the
Company or any other party, or any inquiry or investigation that
Indemnitee in good faith believes might lead to the institution of any
such action, suit or proceeding, whether civil (including intentional
and unintentional tort claims), criminal, administrative,
investigative or other.
(c) Expenses: include attorneys' fees and all
other costs, expenses and obligations paid or incurred in connection
with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence
related to the fact that Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of
anything done or not done by Indemnitee in any such capacity.
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(e) Independent Legal Counsel: an attorney or
firm of attorneys, selected in accordance with the provisions of
Section 3, who shall not have otherwise performed services for the
Company or Indemnitee within the last five years (other than with
respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnification
agreements).
(f) Reviewing Party: any appropriate person or
body consisting of a member or members of the Company's Board of
Directors or any other person or body appointed by the Company's Board
of Directors who is not a party to the particular Claim for which
Indemnitee is seeking indemnification, or Independent Legal Counsel.
(g) Voting Securities: any securities of the
Company which vote generally in the election of directors.
2. Basic Indemnification Arrangement.
(a) In the event Indemnitee was, is or becomes a
party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Claim by reason
of (or arising in part out of) an Indemnifiable Event, the Company
shall indemnify Indemnitee to the fullest extent permitted by law as
soon as practicable but in any event no later than 30 days after
written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim. If so
requested by Indemnitee, the Company shall advance (within two
business days of such request) any and all Expenses to Indemnitee (an
"Expense Advance").
(b) Notwithstanding the foregoing, (i) the
obligations of the Company under Section 2(a) shall be subject to the
condition that the Reviewing Party shall not have determined (which
determination shall, in all cases, be made in writing, specifying in
reasonable detail the reasons therefor) that Indemnitee would not be
permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an Expense Advance pursuant to
Section 2(a) shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the Reviewing
Party shall be selected by the Board of Directors, and if there has
been such a Change in Control, the Reviewing Party shall be the
Independent
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Legal Counsel referred to in Section 3 hereof. If there has been no
determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall
have the right to commence litigation in any court in the State of
Delaware or the State of California having subject matter jurisdiction
thereof and in which venue is proper seeking an initial determination
by the court or challenging any such determination by the Reviewing
Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and
agrees to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Indemnitee.
3. Change in Control. The Company agrees that if there
is a Change in Control of the Company, then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement or Company
Bylaw now or hereafter in effect relating to Claims for Indemnifiable Events,
the Company shall seek legal advice only from Independent Legal Counsel
selected by the Company and approved by Indemnitee (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the Independent Legal Counsel
referred to above.
4. Indemnification for Additional Expenses. The Company
shall indemnify Indemnitee against any and all expenses (including attorneys'
fees) and, if requested by Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any action brought by Indemnitee (whether pursuant to
Section 17 of this Agreement or otherwise) for (i) indemnification or advance
payment of Expenses by the Company under this Agreement or any other agreement
or Company Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be.
5. Partial Indemnity. If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits
or otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. Burden of Proof. In connection with any
determination by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
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7. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law shall be a defense to Indemnitee's
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
8. Nonexclusivity; Subsequent Change in Law. The rights
of the Indemnitee hereunder shall be in addition to any other rights Indemnitee
may have under the Company's Bylaws or the General Corporation Law of the State
of Delaware or otherwise. To the extent that a change in the General
Corporation Law of the State of Delaware (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Company's Bylaws and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
9. 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.
10. Amendments; Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. 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.
11. 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.
12. No Duplication of Payments. The Company shall not be
liable under this Agreement to make any payment in connection with any Claim
made against Indemnitee to the extent Indemnitee has otherwise actually
received payment (under any insurance policy, Bylaw or otherwise) of the
amounts otherwise indemnifiable hereunder.
13. 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
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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 and personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director of the Company or of any other enterprise at the Company's request.
14. Severability. The provisions of this Agreement shall
be severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable in any
respect, and the validity and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent permitted by law.
15. 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.
16. 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.
17. Injunctive Relief. The parties hereto agree that
Indemnitee may enforce this Agreement by seeking specific performance hereof,
without any necessity of showing irreparable harm or posting a bond, which
requirements are hereby waived, and that by seeking specific performance,
Indemnitee shall not be precluded from seeking or obtaining any other relief to
which he may be entitled.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
XXXXXXXXX ENERGY, INC.
By:
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Name:
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Title:
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