Exhibit 10.1
PIONEER NATURAL RESOURCES COMPANY
INDEMNIFICATION AGREEMENT
This
Agreement ("Agreement") is made and entered into as of the 15th day
of
November, 2006, 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:
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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 corporation (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 stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case
may be, of the corporation resulting from such Business Combination
(including,
without limitation, a corporation 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
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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 corporation resulting from such Business Combination)
beneficially owns,
directly or indirectly, 40% or more of, respectively, the
then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting
securities of such corporation 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
of the corporation
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,
venturer, proprietor, trustee, employee, agent, fiduciary or
similar functionary
of another foreign or domestic corporation, partnership, 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
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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.
"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
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(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 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 a 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, venturer, proprietor, trustee,
employee, agent, fiduciary or similar functionary of another
foreign or domestic
corporation,
partnership, joint
venture, 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
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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 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 or any other Section
hereunder.
Section 3.3
Advancement of Expenses. The Company shall pay all
reasonable
Expenses 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 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,
reasonable. Any
dispute as to the
reasonableness 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.
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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
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:
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(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 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
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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
Indemnitee's request for the Board or a committee of the
Disinterested Directors
to make such
selection, specifying
the identity and address of the Independent
Counsel s
