EXHIBIT 10.1
PIONEER SOUTHWEST ENERGY PARTNERS
L.P.
INDEMNIFICATION
AGREEMENT
This Agreement
(“Agreement”) is made and entered into as of the 13th
day of August, 2009, by and between Pioneer Southwest Energy
Partners L.P., a Delaware limited partnership (the
“Partnership”), and Phillip A. Gobe
(“Indemnitee”).
RECITALS
A. Highly
competent and experienced persons are reluctant to serve companies
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 (the “Board”) of Pioneer Natural
Resources GP LLC, a Delaware limited liability company and the
general partner of the Partnership (the “General
Partner”), has determined that the inability to attract and
retain such persons would be detrimental to the best interests of
the Partnership and its unitholders and that the Partnership 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 Partnership, 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 the Partnership
Agreement (as hereinafter defined) so that they will serve or
continue to serve the General Partner and the Partnership 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 General Partner and the Partnership
on the condition that Indemnitee be so indemnified to the fullest
extent permitted by the Partnership Agreement.
E. Section
7.7 of the First Amended and Restated Agreement of Limited
Partnership of the Partnership (the “Partnership
Agreement”) provides for indemnification of directors and
officers.
F. Indemnitee
is an “Indemnitee” as such term is defined in the
Partnership Agreement.
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):
“Affiliate” means, with
respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is
under common control with the Person in question. As used herein,
the term “control” means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
Voting Securities, by contract or otherwise.
“Change in Control”
means, and shall be deemed to have occurred upon, one or more of
the following events: (i) any transaction resulting in the
Partnership (or its successor or survivor by way of merger,
consolidation, or some other transaction, or a parent or subsidiary
thereof) ceasing to be an Affiliate of Pioneer (or its successor or
survivor by way of merger, consolidation, or some other
transaction, or a parent or subsidiary thereof); (ii) the limited
partners of the Partnership approve, in one transaction or a series
of transactions, a plan of complete liquidation of the Partnership;
(iii) the sale or other disposition by either the General Partner
or the Partnership of all or substantially all of its assets in one
or more transactions to any Person other than the General Partner
or an Affiliate of the General Partner; or (iv) a transaction
resulting in a Person other than Pioneer (or its successor or
survivor by way of merger, consolidation, or some other
transaction, or a parent or subsidiary thereof) or an Affiliate
thereof being the general partner of the Partnership (or its
successor or survivor by way of merger, consolidation, or some
other transaction, or a parent or subsidiary thereof).
“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
Status.
“DLLCA” means the
Delaware Limited Liability Company Act.
“DRULPA” means the
Delaware Revised Uniform Limited Partnership Act.
“Disinterested
Director,” with respect to any request by Indemnitee for
indemnification hereunder, means a director of the General Partner
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
Partnership 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.
“Independent Counsel”
means a law firm, or a member of a law firm, that is experienced in
matters of partnership and limited liability company law and
neither contemporaneously is, nor in the five years theretofore has
been, retained to represent: (a) the General Partner, the
Partnership or Indemnitee in any matter material to any 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 General Partner or the
Partnership representing 5% or more of the combined voting power of
the General Partner’s or the Partnership’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 Partnership or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.
“Independent Directors”
means the directors on the Board who are eligible to serve on the
Conflicts Committee (as defined in the Partnership
Agreement).
“Person” means any
individual, entity or group (within the meaning of Sections
13(d)(3) and 14(d)(2) of the Exchange Act).
“Pioneer” means Pioneer
Natural Resources Company, a Delaware corporation.
“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 that, if successful, could
reasonably be expected to result in the occurrence of a Change in
Control; (ii) the General Partner or the Partnership 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 in 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 Partnership 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.
“Status” means the
status of a person who is, becomes or was a director, officer,
employee, agent or fiduciary of the General Partner or is, becomes
or was serving at the request of the General Partner 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 Partnership agrees
that Indemnitee’s service on behalf of or with respect to the
Partnership or any Subsidiary of the Partnership shall be deemed to
be at the request of the General Partner.
“Subsidiary” has the
meaning set forth in the Partnership Agreement.
“Voting Securities”
means securities of any class of a Person entitling the holders
thereof to vote in the election of, or to appoint, members of the
board of directors or other similar governing body of the Person
and, with respect to the Partnership, means the Common Units (as
defined in the Partnership Agreement).
ARTICLE II
Services by
Indemnitee
Indemnitee is serving as a director
of the General Partner. Indemnitee may from time to time also agree
to serve, as the General Partner may request from time to time, in
another capacity for the General Partner 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 Partnership each acknowledge that
they have entered into this Agreement as a means of inducing
Indemnitee to serve, or continue to serve, the General Partner 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). Neither the General Partner nor the Partnership shall have
any 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 Partnership shall
indemnify, and advance Expenses to, Indemnitee to the fullest
extent permitted by the Partnership Agreement on the date hereof
and to such greater extent as the Partnership Agreement 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 and limitations 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 Partnership . 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 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
Partnership 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 or Article V
that Indemnitee would not be permitted to be indemnified under the
Partnership Agreement. 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 Partnership 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 Partnership 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 Partnership against such
Expenses) within 10 days after the receipt by the Partnership of a
written request from Indemnitee requesting such payment or payments
from time to time, whether prior to or after final disposition of
such Proceeding. Any such payment by the Partnership is referred to
in this Agreement as an “Expense Advance.” In
connection with any request for an Expense Advance, if requested by
the Partnership, 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 Partnership,
and the Partnership 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 Partnership 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 Partnership against such
Expenses. Indemnitee shall not be required to provide collateral or
otherwise secure the undertaking and agreement described in the
prior sentence. The Partnership shall make all advances pursuant to
this Section 3.3 without regard to the financial ability of the
Indemnitee to make repayment and
without regard to the prospect of
whether the Indemnitee may ultimately be found to be entitled to
indemnification under the provisions of this Agreement.
Section
3.4 Indemnification for
Additional Expenses . The Partnership shall, to the maximum
extent permitted by law, 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
Partnership under this Agreement or any other agreement or
provision of the Partnership Agreement now or hereafter in effect
relating to any Claim or Proceeding, (ii) recovery under any
directors’ and officers’ liability insurance policies
maintained by the Partnership, 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 Partnership 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 Partnership 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 Partnership 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 of the General Partner
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 Article III 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 consisting 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 Partnership
agree, by the unitholders of the Partnership in a vote that
excludes the units held by directors who are not Disinterested
Directors.
If it is so determined that
Indemnitee is permitted to be indemnified under Article III,
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 Partnership 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 Partnership (irrespective of the determination as to
Indemnitee’s entitlement to indemnification), and the
Partnership 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 Partnership shall give written notice to
Indemnitee, within 10 days after receipt by the Partnership 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 Partnership, 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 Partnership 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 so selected). In either event, (i) such notice to
Indemnitee or the Partnership, as the case may be, shall be
accompanied by a written affirmation of the Independent Counsel so
selected that it satisfies the requirements of the definition of
“Independent Counsel” in Article I and that it agrees
to serve in such capacity and (ii) Indemnitee or the Partnership,
as the case may be, may, within seven days after such written
notice of selection shall have been given, deliver to the
Partnership or to Indemnitee, as the case may be, a written
objection to such selection. Any objection to the selection of
Independent Counsel pursuant to this Section 4.3 may be asserted
only on the ground that the Independent Counsel so selected does
not meet the requirements of the definition of “Independent
Counsel” in Article I, and the objection shall set forth with
particularity the factual basis of such assertion. If such written
objection is timely made, the Independent Counsel so selected may
not serve as Independent Counsel unless and until a court of
competent jurisdiction (the “Court”) has determined
that such objection is without merit. In the event of a timely
written objection to a choice of Independent Counsel, the party
originally selecting the Independent Counsel shall have seven days
to make an alternat
