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Exhibit
10.3
INDEMNITY
AGREEMENT
This Agreement is made and
entered into by and between Chesapeake Energy Corporation, an
Oklahoma corporation (hereinafter the “Company”) and
[Officer] of the Company (hereinafter, together with her heirs,
personal representatives, and estate, the “Indemnitee”
or “claimant”).
WITNESSETH: THAT
WHEREAS, Section 1031
(“Section 1031”) of the General Corporation Act of the
State of Oklahoma (“Oklahoma Law”) empowers
corporations to indemnify a person serving as a director, officer,
employee, or agent of the corporation or a person who serves at the
request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust or
other enterprise, and further specifies that the indemnification
set forth in Section 1031 “shall not be deemed exclusive
of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or
disinterested directors or otherwise”; and Section 1031
further empowers a corporation to “purchase and maintain
insurance” on behalf of any of such persons “against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under” Section 1031; and
WHEREAS, the Board of
Directors has concluded that the Company’s directors and
officers should be provided with maximum protection in order to
insure that the most capable persons otherwise available will
remain in, and in the future be attracted to, such directorships
and, furthermore, that it is fair, reasonable, prudent and
necessary for the Company to contractually obligate itself to
indemnify present and future directors and officers of the Company
and their respective estates in a reasonable and adequate manner
and that the Company assume for itself the responsibility and
liability for expenses and damages in connection with claims
brought whether on account of any prior, present or future alleged
act, omission, injury, damage, or event; and
WHEREAS, the Company desires
to have the Indemnitee serve or continue to serve as a director
and/or officer of the Company or its Affiliates free from undue
concern for damages by reason of her being a director of the
Company or its Affiliates or by reason of her decisions or actions
on its behalf; and the Indemnitee desires to serve, or to continue
to serve, provided that she is furnished the indemnity provided for
hereinafter, as a director and/or officer of the Company or its
Affiliates.
NOW, THEREFORE, in
consideration of the mutually dependent covenants and agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby agree as follows:
1. Agreement to Serve:
Definitions .
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1.1 |
Agreement to Serve . The Indemnitee will serve, and/or
continue to serve, the Company as a director and/or officer so long
as she is duly elected and qualified in accordance with the
provisions of the By-laws thereof or until such time as she resigns
or is removed. |
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1.2 |
Definitions . Unless the context otherwise clearly
indicates to the contrary, the following terms as used herein shall
have the respective meanings set forth below: |
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(a) |
“Affiliates” shall mean any corporation,
partnership, or other enterprise which controls, is controlled by,
or is under common control with the Company; provided, that any
corporation, partnership, or other enterprise which is at least 30%
beneficially owned by the Company or by any corporation at least
51% of which is owned by the Company shall be deemed an
“Affiliate” of the Company. |
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(b) |
“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 l3d-3 under said 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
(in one transaction or a series of transactions) of all or
substantially all the Company’s assets. |
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(c) |
“Expenses” shall include attorneys’ fees and
all other costs, travel expenses, fees of experts, transcript
costs, filing fees, witness fees, telephone and telefacsimile
charges, postage, delivery service fees, expenses and obligations
of any nature whatsoever 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. |
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(d) |
“Indemnifiable Event” shall mean any event or
occurrence that takes place either prior to or after the execution
of this Agreement related to the fact that the 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 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 the Indemnitee in any such capacity. |
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(e) |
“Independent Directors” shall mean the
Company’s directors exclusive of any director who is the
Indemnitee. |
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(f) |
“Independent Legal Counsel” shall mean an attorney,
who shall not have otherwise performed services for the Company or
the Indemnitee within the last five years (other than in connection
with seeking indemnification under this Agreement). Independent
Legal Counsel shall not be any person who, under the applicable
standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or the
Indemnitee in an action to determine the Indemnitee’s rights
under this Agreement, nor shall independent Legal Counsel be any
person who has been sanctioned or censured for ethical violations
of applicable standards of professional conduct. |
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(g) |
“Non-governmental” shall refer to any Person which
is not (i) the government of the United States of America or
of any state, district, territory, or possession thereof or of any
county, parish, city, town, township, or municipality within any
such state, district, territory or possession, or (ii) any
agency, tribunal, council, instrumentality or public body
established by any Person described in (i). |
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(h) |
“Person” means any one (or more) individual or
natural person or any one (or more) corporation, firm, joint
venture, partnership, proprietorship, business venture, government,
governmental body, agency or instrumentality, estate, trust,
association, or other legal entity whatsoever or a group of
same. |
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(i) |
“Policy” shall refer to any insurance policy or
coverage obtained with respect of potential liabilities of
directors and officers of the Company. |
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(j) |
“Potential Change in Control” shall be deemed to
have occurred if (i) the Company enters into an agreement or
arrangement, the consummation of which would result in the
occurrence of a Change in Control; (ii) any person (including
the Company) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a Change in
Control; (iii) any person, other than a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company acting in such capacity 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, who is
or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined
voting power of the Company’s then outstanding Voting
Securities, increases his beneficial ownership of such securities
by 5% or more over the percentage so owned by such person on the
date hereof; or (iv) the Board adopt a resolution to the
effect that, for purposes of this Agreement, a Potential Change in
Control has occurred. |
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(k) |
“Voting Securities” shall mean any securities of
the Company which vote generally in the election of
directors. |
2. Indemnification . Subject to
the provisions of Sections 7 and 9, the Company shall indemnify the
Indemnitee as follows:
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2.1 |
Obligation to Indemnify . The Company will pay on behalf
of the Indemnitee, and her executors, administrators and heirs, any
amount which she is or becomes legally obligated to pay because of
(i) any claim or claims from time to time threatened or made
against her by any Person because of any act or omission or neglect
or breach of duty, including any actual or alleged error or
misstatement or misleading statement, which she commits or suffers
while acting in his capacity as a director and/or officer of the
Company or an Affiliate or (ii) being a party, or being
threatened to be made a party, to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that she is
or was an officer, director, employee, or agent of the Company or
an Affiliate or is or was serving at the request of the Company as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. The payments
which the Company will be obligated to make hereunder shall
include, inter alia damages, charges, judgments,
fines, penalties, settlements and costs, cost of investigation and
costs of defense of legal or equitable or criminal actions, claims
or proceedings and appeals therefrom, and costs of attachment,
supersedeas, bail, surety or other bonds. |
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2.2 |
Failure to Timely Pay . If a claim under this Agreement
is not paid by the Company, or on its behalf, within sixty
(60) days after a written claim has been received by the
Company, the Indemnitee may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim and,
if successful in whole or in part, the Indemnitee shall be entitled
to be paid also the expense (including reasonable attorney’s
fees) of prosecuting such claim. |
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2.3 |
Notice of Claim . The Indemnitee shall give to the
Company notice in writing as soon as practicable of any claim made
against her for which indemnity will or could be sought under this
Agreement. The Indemnitee will further notify and cooperate with
the Company in the selection of counsel and in the incurrence of
costs and expenses in defending or investigating any claim for
which indemnity may be sought hereunder. The Indemnitee shall give
the Company such information and cooperation as it may reasonably
require and as shall be within the Indemnitee’s
power. |
3. Assumption of Liability by
Company . If the Indemnitee is deceased and is entitled to
indemnification under any provision of this Agreement, the Company
shall indemnify the Indemnitee’s estate and her spouse,
heirs, administrators and executors against, and the Company shall
assume any and all costs, charges, and expenses (including
attorneys’ fees), penalties and fines actually and reasonably
incurred by or for the Indemnitee or her estate, in connection with
the investigation, defense, settlement or appeal of any such
action, suit or proceeding. Further, when requested in writing by
the spouse of the Indemnitee, and/or the heirs, executors or
administrators of the Indemnitee’s estate, the Company shall
provide appropriate evidence of the Company’s agreement set
out herein to indemnify the Indemnitee against and to assume itself
such costs, charges, liabilities and expenses.
4. Partial Indemnification . If
the Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the cost,
charges and expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in the investigation, defense, appeal or settlement
of such suit, action or proceeding but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify the
Indemnitee as to the portion thereof to which the Indemnitee is
entitled.
4. Determination of Right to
Indemnification . Anything contained elsewhere herein to the
contrary notwithstanding, any indemnification under the terms of
this Agreement shall (unless ordered by a court) be paid by the
Company promptly or in any event within 60 days of written request
therefor, unless a determination is made, as hereinafter provided,
that indemnification is not proper in the circumstances because of
the provisions of Sections 7 or 9.
The determination as to
whether or not the Indemnitee has met the standard of conduct
required to qualify and entitle her, partially or fully, to
indemnification under the provisions of any provision of
Section 2 hereof may be made (i) either by the Board of
Directors by a majority vote of a quorum consisting of directors
who were not parties of such action, suit or proceeding; or
(ii) by legal counsel (who may be the outside counsel
regularly employed by the Company); provided that the manner in
which (and
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