Exhibit 10.1
PIONEER NATURAL RESOURCES COMPANY
INDEMNIFICATION AGREEMENT
This Agreement
(“Agreement”) is made and entered into as of the 16th
day of May, 2008, by and between Pioneer Natural Resources Company,
a Delaware corporation (the “Company”), and Scott D.
Sheffield (“Indemnitee”).
RECITALS
A. Highly competent and
experienced persons are reluctant to serve corporations as
directors, executive officers or in other capacities unless they
are provided with adequate protection through insurance and
indemnification against claims and actions against them arising out
of their service to and activities on behalf of the Company.
B. The Board of Directors of the
Company (the “Board”) has determined that the inability
to attract and retain such persons would be detrimental to the best
interests of the Company and its stockholders and that the Company
should act to assure such persons that there will be increased
certainty of such protection in the future.
C. The Board has also determined
that it is reasonable, prudent and necessary for the Company, in
addition to purchasing and maintaining directors’ and
officers’ liability insurance (or otherwise providing for
adequate arrangements of self-insurance), contractually to obligate
itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be adequately
protected.
D. Indemnitee is willing to
serve, continue to serve and to take on additional service for or
on behalf of the Company on the condition that Indemnitee be so
indemnified to the fullest extent permitted by law.
E. Article Twelfth of the
Amended and Restated Certificate of Incorporation of the Company
provides for indemnification of directors and officers to the
fullest extent permitted by law.
In consideration of the foregoing and
the mutual covenants herein contained, and other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
Certain Definitions
As used herein, the following words
and terms shall have the following respective meanings (whether
singular or plural):
“Acquiring Person” means
any Person other than (i) the Company, (ii) any of the
Company’s Subsidiaries, (iii) any employee benefit plan
of the Company or of a Subsidiary of the Company or of a Company
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of
the Company, or (iv) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of a
Subsidiary of the Company or of a Company owned directly or
indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.
“Change in Control” means
the occurrence of any of the following events:
(i) The acquisition by any
Person of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 40% or more
of either (x) the then outstanding shares of Common Stock of
the Company (the “Outstanding Company Common Stock”) or
(y) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
Subparagraph (i), the following acquisitions shall not constitute a
Change of Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (D) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(A), (B) and (C) of paragraph (iii) below; or
(ii) Members of the Incumbent
Board cease for any reason to constitute at least a majority of the
Board; or
(iii) Consummation of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or an acquisition of assets of another entity (a
“Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common
equity and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors
or other similar governing body, as the case may be, of the entity
resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns
the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or the entity resulting from such
Business Combination) beneficially owns, directly or indirectly,
40% or more of, respectively, the then outstanding shares of common
equity of the entity resulting from such Business Combination or
the combined voting power of the then outstanding voting securities
of
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such
entity except to the extent that such ownership results solely from
ownership of the Company that existed prior to the Business
Combination and (C) at least a majority of the members of the
board of directors or other similar governing body of the entity
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) Approval by the
stockholders of the Company of a complete liquidation or
dissolution of the Company.
“Claim” means an actual
or threatened claim or request for relief which was, is or may be
made by reason of anything done or not done by Indemnitee in, or by
reason of any event or occurrence related to, Indemnitee’s
Corporate Status.
“Corporate Status” means
the status of a person who is, becomes or was a director, officer,
employee, agent or fiduciary of the Company or is, becomes or was
serving at the request of the Company as a director, officer,
partner, member, venturer, proprietor, trustee, employee, agent,
fiduciary or similar functionary of another foreign or domestic
corporation, partnership, limited liability company, joint venture,
sole proprietorship, trust, employee benefit plan or other
enterprise. For purposes of this Agreement, the Company agrees that
Indemnitee’s service on behalf of or with respect to any
Subsidiary of the Company shall be deemed to be at the request of
the Company.
“DGCL” means the Delaware
General Corporation Law and any successor statute thereto, as
either of them may from time to time be amended.
“Disinterested Director”
with respect to any request by Indemnitee for indemnification
hereunder, means a director of the Company who at the time of the
vote is not a named defendant or respondent in the Proceeding in
respect of which indemnification is sought by Indemnitee.
“Exchange Act” means the
Securities Exchange Act of 1934.
“Expenses” means all
attorneys’ fees and disbursements, retainers,
accountant’s fees and disbursements, private investigator
fees and disbursements, court costs, transcript costs, fees and
expenses of experts, witness fees and expenses, travel expenses,
duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees and all other disbursements, costs
or expenses of the types customarily incurred in connection with
prosecuting, defending (including affirmative defenses and
counterclaims), preparing to prosecute or defend, investigating,
being or preparing to be a witness in, or participating in or
preparing to participate in (including on appeal) a Proceeding and
all interest or finance charges attributable to any thereof. Should
any payments by the Company under this Agreement be determined to
be subject to any federal, state or local income or excise tax,
“Expenses” shall also include such amounts as are
necessary to place Indemnitee in the same after-tax position (after
giving effect to all applicable taxes) as Indemnitee would have
been in had no such tax been determined to apply to such
payments.
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“Incumbent Board” means
the individuals who, as of the date of this Agreement, constitute
the Board and any other individual who becomes a director of the
Company after that date and whose election or appointment by the
Board or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Incumbent Board.
“Independent Counsel”
means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither contemporaneously is, nor in
the five years theretofore has been, retained to represent:
(a) the Company or Indemnitee in any matter material to either
such party (other than as Independent Counsel under this Agreement
or similar agreements), (b) any other party to the Proceeding
giving rise to a claim for indemnification hereunder or
(c) the beneficial owner, directly or indirectly, of
securities of the Company representing 5% or more of the combined
voting power of the Company’s then outstanding voting
securities (other than, in each such case, with respect to matters
concerning the rights of Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements).
Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee’s rights
under this Agreement.
“Independent Directors”
means the directors on the Board that are independent directors as
defined in Section 303A of the New York Stock Exchange Listed
Company Manual or successor provision, or, if the Company’s
common stock is not then quoted on the NYSE, that qualify as
independent, disinterested, or a similar term as defined in the
rules of the principal securities exchange or inter-dealer
quotation system on which the Company’s common stock is then
listed or quoted.
“Person” means any
individual, entity or group (within the meaning of
Sections 13(d)(3) and 14(d)(2) of the Exchange Act).
“Potential Change in
Control” shall be deemed to have occurred if (i) any
Person shall have announced publicly an intention to effect a
Change in Control, or commenced any action (such as the
commencement of a tender offer for the Company’s Common Stock
or the solicitation of proxies for the election of any of the
Company’s directors) that, if successful, could reasonably be
expected to result in the occurrence of a Change in Control;
(ii) the Company enters into an agreement, the consummation of
which would constitute a Change in Control; or (iii) any other
event occurs which the Board declares to be a Potential Change of
Control.
“Proceeding” means any
threatened, pending or completed action, suit, arbitration,
investigation, inquiry, alternate dispute resolution mechanism,
administrative or legislative hearing, or any other proceeding
(including, without limitation, any securities laws action, suit,
arbitration, alternative dispute resolution mechanism, hearing or
procedure) whether civil, criminal, administrative, arbitrative or
investigative and whether or not based upon events
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occurring, or actions taken, before the date hereof, and any appeal
in or related to any such action, suit, arbitration, investigation,
hearing or proceeding and any inquiry or investigation (including
discovery), whether conducted by or in the right of the Company or
any other Person, that Indemnitee in good faith believes could lead
to any such action, suit, arbitration, alternative dispute
resolution mechanism, hearing or other proceeding or appeal
thereof.
“Subsidiary” means, with
respect to any Person, any corporation or other entity of which a
majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by that
Person.
“Voting Securities” means
any securities that vote generally in the election of directors, in
the admission of general partners, or in the selection of any other
similar governing body.
ARTICLE II
Services by Indemnitee
Indemnitee is serving as an officer
of the Company. Indemnitee may from time to time also agree to
serve, as the Company may request from time to time, in another
capacity for the Company (including another officer or director
position) or as a director, officer, partner, member, venturer,
proprietor, trustee, employee, agent, fiduciary or similar
functionary of another foreign or domestic corporation,
partnership, joint venture, limited liability company, sole
proprietorship, trust, employee benefit plan or other enterprise.
Indemnitee and the Company each acknowledge that they have entered
into this Agreement as a means of inducing Indemnitee to serve, or
continue to serve, the Company in such capacities. Indemnitee may
at any time and for any reason resign from such position or
positions (subject to any other contractual obligation or any
obligation imposed by operation of law). The Company shall have no
obligation under this Agreement to continue Indemnitee in any such
position or positions.
ARTICLE III
Indemnification
Section 3.1 General .
Subject to the provisions set forth in Article IV, the Company
shall indemnify, and advance Expenses 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 hereafter from time to
time permit. The other provisions set forth in this Agreement are
provided in addition to and as a means of furtherance and
implementation of, and not in limitation of, the obligations
expressed in this Article III. No requirement, condition to or
limitation of any right to indemnification or to advancement of
Expenses under this Article III shall in any way limit the
rights of Indemnitee under Article VII.
Section 3.2 Additional
Indemnity of the Company . Indemnitee shall be entitled to
indemnification pursuant to this Section 3.2 if, by reason of
anything done or not done by Indemnitee in, or by reason of any
event or occurrence related to, Indemnitee’s Corporate
Status, Indemnitee is, was or becomes, or is threatened to be made,
a party to, or witness or other participant in any Proceeding.
Pursuant to this Section 3.2, Indemnitee shall be
indemnified
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against
any and all Expenses, judgments, penalties (including excise or
similar taxes), fines and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in
connection with or in respect of any such Expenses, judgments,
penalties, fines and amounts paid in settlement) actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf
in connection with such Proceeding or any Claim, issue or matter
therein. Notwithstanding the foregoing, the obligations of the
Company under this Section 3.2 shall be subject to the
condition that no determination (which, in any case in which
Independent Counsel is involved, shall be in a form of a written
opinion) shall have been made pursuant to Article IV that
Indemnitee would not be permitted to be indemnified under
applicable law. Nothing in this Section 3.2 shall limit the
benefits of Section 3.1, Section 3.3 or any other Section
hereunder.
Section 3.3 Advancement of
Expenses . The Company shall pay all Expenses reasonably
incurred by, or in the case of retainers to be incurred by, or on
behalf of Indemnitee (or, if applicable, reimburse Indemnitee for
any and all Expenses reasonably incurred by Indemnitee and
previously paid by Indemnitee) in connection with any Claim or
Proceeding, whether brought by the Company or otherwise, in advance
of any determination respecting entitlement to indemnification
pursuant to Article IV hereof (and shall continue to pay such
Expenses after such determination and until it shall ultimately be
determined (in a final adjudication by a court from which there is
no further right of appeal or in a final adjudication of an
arbitration pursuant to Section 5.1 if Indemnitee elects to
seek such arbitration) that Indemnitee is not entitled to be
indemnified by the Company against such Expenses) within
10 days after the receipt by the Company of (a) a written
request from Indemnitee requesting such payment or payments from
time to time, whether prior to or after final disposition of such
Proceeding, and (b) a written affirmation from Indemnitee of
Indemnitee’s good faith belief that Indemnitee has met the
standard of conduct necessary for Indemnitee to be permitted to be
indemnified under applicable law. Any such payment by the Company
is referred to in this Agreement as an “Expense
Advance.” In connection with any request for an Expense
Advance, if requested by the Company, Indemnitee or
Indemnitee’s counsel shall also submit an affidavit stating
that the Expenses incurred were, or in the case of retainers to be
incurred are, reasonably incurred. Any dispute as to the
reasonableness of the incurrence of any Expense shall not delay an
Expense Advance by the Company, and the Company agrees that any
such dispute shall be resolved only upon the disposition or
conclusion of the underlying Claim against Indemnitee. Indemnitee
hereby undertakes and agrees that Indemnitee will reimburse and
repay the Company without interest for any Expense Advances to the
extent that it shall ultimately be determined (in a final
adjudication by a court from which there is no further right of
appeal or in a final adjudication of an arbitration pursuant to
Section 5.1 if Indemnitee elects to seek such arbitration)
that Indemnitee is not entitled to be indemnified by the Company
against such Expenses. Indemnitee shall not be required to provide
collateral or otherwise secure the undertaking and agreement
described in the prior sentence.
Section 3.4 Indemnification
for Additional Expenses . The Company shall indemnify
Indemnitee against any and all costs and expenses (of the types
described in the definition of Expenses in Article I) and, if
requested by Indemnitee, shall (within two business days of that
request) advance those costs and expenses to Indemnitee, that are
incurred by Indemnitee in connection with any claim asserted
against, or action brought by, Indemnitee for (i) indemnification
or an Expense Advance by the Company under this Agreement or any
other agreement or provision of the Company’s Certificate of
Incorporation or Bylaws now or
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hereafter in effect relating to any Claim or Proceeding,
(ii) recovery under any directors’ and officers’
liability insurance policies maintained by the Company, or
(iii) enforcement of, or claims for breaches of, any provision
of this Agreement, in each of the foregoing situations regardless
of whether Indemnitee ultimately is determined to be entitled to
that indemnification, advance expense payment, insurance recovery,
enforcement, or damage claim, as the case may be and regardless of
whether the nature of the proceeding with respect to such matters
is judicial, by arbitration, or otherwise.
Section 3.5 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 or Proceeding 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 or Proceedings,
or in defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
ARTICLE IV
Procedure for Determination of Entitlement
to Indemnification
Section 4.1 Request by
Indemnitee . To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request, including
therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to
determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary or an Assistant Secretary of the
Company shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has
requested indemnification.
Section 4.2 Determination of
Request . Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 4.1
hereof, a determination, if required by applicable law, with
respect to whether Indemnitee is permitted under applicable law to
be indemnified shall be made in accordance with the terms of
Section 4.5, in the specific case as follows:
(a) If a Potential Change in Control
or a Change in Control shall have occurred, by Independent Counsel
(selected in accordance with Section 4.3) in a written opinion
to the Board and Indemnitee, unless Indemnitee shall request that
such determination be made by the Board, or a committee of the
Board, in which case by the person or persons or in the manner
provided for in clause (i) or (ii) of paragraph
(b) below; or
(b) If a Potential Change in Control
or a Change in Control shall not have occurred, (i) by the
Board by a majority vote of the Disinterested Directors even though
less than a quorum of the Board, or (ii) by a majority vote of
a committee solely of two or
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more
Disinterested Directors designated to act in the matter by a
majority vote of all Disinterested Directors even though less than
a quorum of the Board, or (iii) by Independent Counsel
selected by the Board or a committee of the Board by a vote as set
forth in clauses (i) or (ii) of this paragraph (b), or if
such vote is not obtainable or such a committee cannot be
established, by a majority vote of all directors, or (iv) if
Indemnitee and the Company agree, by the stockholders of the
Company in a vote that excludes the shares held by directors who
are not Disinterested Directors.
If it is
so determined that Indemnitee is permitted to be indemnified under
applicable law, payment to Indemnitee shall be made within
10 days after such determination. Nothing contained in this
Agreement shall require that any determination be made under this
Section 4.2 prior to the disposition or conclusion of a Claim
or Proceeding against Indemnitee; provided, however, that Expense
Advances shall continue to be made by the Company pursuant to, and
to the extent required by, the provisions of Article III.
Indemnitee shall cooperate with the person or persons making such
determination with respect to Indemnitee’s entitlement to
indemnification, including providing to such person upon reasonable
advance request any documentation or information that is not
privileged or otherwise protected from disclosure and that is
reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’
fees and disbursements) incurred by Indemnitee in so cooperating
with the person or persons making such determination shall be borne
by the Company (irrespective of the determination as to
Indemnitee’s entitlement to indemnification), and the Company
shall indemnify and hold harmless Indemnitee therefrom.
Section 4.3 Independent
Counsel . If a Potential Change in Control or a Change in
Control shall not have occurred and the determination of
entitlement to indemnification is to be made by Independent
Counsel, the Independent Counsel shall be selected by (a) a
majority vote of the Disinterested Directors, even though less than
a quorum of the Board or (b) if there are no Disinterested
Directors, by a majority vote of the Board, and the Company shall
give written notice to Indemnitee, within 10 days after
receipt by the Company of Indemnitee’s request for
indemnification, specifying the identity and address of the
Independent Counsel so selected. If a Potential Change in Control
or a Change in Control shall have occurred and the determination of
entitlement to indemnification is to be made by Independent
Counsel, the Independent Counsel shall be selected by Indemnitee,
and Indemnitee shall give written notice to the Company, within
10 days after submission of Indemnitee’s request for
indemnification, specifying the identity and address of the
Independent Counsel so selected (unless Indemnitee shall request
that such selection be made by the Disinterested Directors or a
committee of the Board, in which event the Company shall give
written notice to Indemnitee within 10 days after receipt
of
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