Pogo Producing Company Indemnification Agreement

Exhibit 10.6

 

POGO PRODUCING COMPANY

 

INDEMNIFICATION AGREEMENT

 

This IndemnificationAgreement (this “Agreement”), made and entered into as of the 25th dayof April, 2006, by and between Pogo Producing Company, a Delaware corporation(the “Company”), and Charles G. Groat (“Indemnitee”).

 

W I T N ES S E T H:

 

WHEREAS, Indemnitee iscurrently serving or is about to begin serving as a director and/or officer ofthe Company and/or in another Corporate Status, and Indemnitee is willing,subject to, among other things, the Company’s execution and performance of thisAgreement, to continue in or assume such capacity or capacities; and

 

WHEREAS, the By-Laws ofthe Company provide that the Company shall indemnify and advance expenses toall directors and officers of the Company in the manner set forth therein andto the fullest extent permitted by applicable law, and the Company’s Restated Certificateof Incorporation provides for limitation of liability for directors; and

 

WHEREAS, in order toinduce Indemnitee to provide services as contemplated hereby, the Company hasdeemed it to be in its best interests and the best interests of itsstockholders to enter into this Agreement with Indemnitee;

 

NOW, THEREFORE, in consideration of Indemnitee’sagreement to provide services to the Company and/or certain of its affiliatesas contemplated hereby, the mutual agreements contained herein and other goodand valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto stipulate and agree as follows:

 

ARTICLE I

 

Certain Definitions

 

As used herein, thefollowing words and terms shall have the following respective meanings (whethersingular or plural):

 

“Change of Control” meansa change in control of the Company after the date Indemnitee acquired hisCorporate Status, which shall be deemed to have occurred upon the occurrence ofany of the following events:

 

(a)                                  Theacquisition by any Person of beneficial ownership of Outstanding Company VotingSecurities (including any such acquisition of beneficial ownership deemed tohave occurred pursuant to Rule 13d-5 under the Exchange Act) if,immediately thereafter, such Person is the beneficial owner of 20% or more ofeither (i) the then Outstanding Company Common Stock or (ii) the thenOutstanding Company Voting Securities, unless such acquisition

 



 

is made (A) directly from the Company in atransaction approved by a majority of the members of the Incumbent Board, (B) byany employee benefit plan (or related trust) sponsored or maintained by theCompany or any corporation controlled by the Company, or (C) by a parentcorporation resulting from a Business Combination if, following such BusinessCombination, the conditions specified in clauses (i), (ii) and (iii) ofsubsection (c) of this definition are satisfied; or

 

(b)                                 Individualswho, as of the date of this Agreement, constituted the Board (the “IncumbentBoard”) cease for any reason to constitute at least a majority of the Board;provided, however, that any individual becoming a director subsequent to thedate of this Agreement whose election, or nomination for election by theCompany’s shareholders, was approved by a vote of at least a majority of thedirectors then comprising the Incumbent Board shall be considered as thoughsuch individual were a member of the Incumbent Board, except that any suchindividual shall not be considered a member of the Incumbent Board if his orher initial assumption of office occurs as a result of an actual or threatenedelection contest or other actual or threatened solicitation of proxies orconsents by or on behalf of a Person other than the Board; or

 

(c)                                  Approvalby the shareholders of the Company of a Business Combination (or if there is nosuch approval by shareholders, consummation of such Business Combination)unless, immediately following such Business Combination, (i) more than 60%of, respectively, the then outstanding shares of common stock of the parentcorporation resulting from such Business Combination and the combined votingpower of the then outstanding voting securities of such parent corporationentitled to vote generally in the election of directors will be (or is) thenbeneficially owned, directly or indirectly, by all or substantially all of theindividuals and entities who were the beneficial owners, respectively, of theOutstanding Company Common Stock and Outstanding Company Voting Securitiesimmediately prior to such Business Combination in substantially the sameproportions as their ownership immediately prior to such Business Combinationof the Outstanding Company Common Stock and Outstanding Company VotingSecurities, as the case may be, (ii) no Person (other than anyemployee benefit plan (or related trust) of the Company or any parentcorporation resulting from such Business Combination) beneficially owns,directly or indirectly, 20% or more, respectively, of the then outstandingshares of common stock of the parent corporation resulting from such BusinessCombination or the combined voting power of the then outstanding voting securitiesof such corporation entitled to vote generally in the election of directors and(iii) at least a majority of the members of the board of directors of theparent corporation resulting from such Business Combination were members of theIncumbent Board immediately prior to the consummation of such BusinessCombination; or

 

(d)                                 Approvalby the shareholders of the Company of (i) a complete liquidation ordissolution of the Company or (ii) a Major Asset Disposition (or if thereis no such approval by shareholders, consummation of such Major AssetDisposition) unless, immediately following such Major Asset Disposition, (A) individualsand entities that were beneficial owners of the Outstanding Company CommonStock and the Outstanding Company Voting Securities immediately prior to suchMajor Asset Disposition beneficially own, directly or indirectly, more than 60%of, respectively, the then outstanding shares of common stock and the combinedvoting power of the then outstanding shares of voting stock of the Company (ifit continues to exist) and of the Acquiring Entity; (B) no Person, otherthan any employee benefit plan (or related trust) of

 

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the Company or such entity beneficially owns, directlyor indirectly, 20% or more of, respectively, the then outstanding shares ofcommon stock and the combined voting power of the then outstanding votingsecurities of the Company (if it continues to exist) and of the AcquiringEntity and (C) at least a majority of the members of the board ofdirectors of the Company (if it continues to exist) and of the Acquiring Entitywere members of the Incumbent Board at the time of the execution of the initialagreement or action of the Board providing for such Major Asset Disposition.

 

For purposes of thisdefinition of Change of Control,

 

a                  theterm “Person” means an individual, entity or group;
 
b                 theterm “group” is used as it is defined for purposes of Section 13(d)(3) ofthe Securities Exchange Act of 1934 (the “Exchange Act”);
 
c                  theterms “beneficial owner”, “beneficially ownership” and “beneficially own” areused as defined for purposes of Rule 13d-3 under the Exchange Act;
 
d                 theterm “Business Combination” means (x) a merger or consolidation involving theCompany or its stock or (y) an acquisition by the Company, directly or throughone or more subsidiaries, of another entity or its stock or assets;
 
e                  theterm “Outstanding Company Common Stock” shall mean the outstanding shares ofCommon Stock, par value $1 per share, of the Company;
 
f                    theterm “Outstanding Company Voting Securities” means outstanding votingsecurities of the Company entitled to vote generally in the election ofdirectors; and any specified percentage or portion of the Outstanding CompanyVoting Securities (or of other voting stock or voting securities) shall bedetermined based on the relative combined voting power of such securities;
 
g                 theterm “parent corporation resulting from a Business Combination” means theCompany if its stock is not acquired or converted in the Business Combinationand otherwise means the entity which as a result of such Business Combinationowns the Company or all or substantially all of the Company’s assets eitherdirectly or through one or more subsidiaries;
 
h                 theterm “Major Asset Disposition” means the sale or other disposition in onetransaction or a series of related transactions of 60% or more of theassets of the Company and its subsidiaries on a consolidated basis; and anyspecified percentage or portion of the assets of the Company shall be based onfair market value, as determined by a majority of the members of the IncumbentBoard; and
 
i                     “AcquiringEntity” means the entity that acquires the largest portion of the assets soldor otherwise disposed of in a Major Asset Disposition (or the entity, if any,that owns a majority of the outstanding voting stock of such

 

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acquiring entity entitled to vote generally in the election ofdirectors or members of a comparable governing body).
 

“Corporate Status”describes the status of Indemnitee as a director, officer,  employee, agent or fiduciary of the Companyor of any other company, partnership, limited liability company, association,joint venture, trust, employee benefit plan or other enterprise that Indemniteeis or was serving at the request of the Company.

 

“Court” means the Courtof Chancery of the State of Delaware or any other court of competentjurisdiction.

 

“DGCL” means the DelawareGeneral Corporation Law.

 

“Expenses” shall includeall attorneys’ fees, retainers, court costs, transcript costs, fees of experts,witness fees, travel expenses, duplicating costs, printing and binding costs,telephone charges, postage, delivery service fees, and all other disbursementsor expenses of the types customarily incurred in connection with prosecuting,defending, preparing to prosecute or defend, investigating, or being orpreparing to be a witness in a Proceeding.

 

“Independent Counsel”means a law firm, or a member of a law firm, that is experienced in matters ofcorporate law and neither currently is, nor in the five years previous to itsselection or appointment has been, retained to represent (i) the Companyor Indemnitee in any matter material to either such party (other than withrespect to matters concerning the rights of Indemnitee under this Agreement orof other indemnitees under similar indemnification agreements) or (ii) anyother party to the Proceeding giving rise to a claim for indemnificationhereunder.

 

“Matter” is a claim, amaterial issue or a substantial request for relief.

 

“Proceeding” includes anythreatened, pending or completed action, suit, arbitration, alternate disputeresolution mechanism, investigation, administrative hearing or any otherproceeding, whether civil (including intentional and unintentional tortclaims), criminal, administrative or investigative and whether instituted by oron behalf of the Company or any other party, or any inquiry or investigationthat Indemnitee in good faith believes might lead to the institution of anysuch action, suit or other proceedings hereinabove listed, except such as isinitiated by Indemnitee pursuant to Section 6.1 of this Agreement toenforce his rights under this Agreement.

 

ARTICLE II

 

Services by Indemnitee

 

Section 2.1. Services byIndemnitee. Indemnitee agrees to serve or continue to servein his current capacity or capacities as a director, officer, employee, agentor fiduciary of the Company. Indemnitee may also agree to serve (theagreement so to serve being in the sole discretion of Indemnitee), as theCompany may request from time to time, as a director, officer, employee,agent or fiduciary of any other company, partnership, limited liabilitycompany, association, joint venture, trust or other enterprise in which theCompany has an interest.

 

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Indemnitee and the Company each acknowledge that theyhave entered into this Agreement as a means of inducing Indemnitee to serve theCompany in such capacities. Indemnitee may at any time and for any reasonresign from such position or positions (subject to any other contractualobligation or any obligation imposed by operation of law). The Company shallhave no obligation under this Agreement to continue Indemnitee in any suchposition for any period of time and shall not be precluded by the provisions ofthis Agreement from removing Indemnitee from any such position at any time.

 

ARTICLE III

 

Indemnification

 

Section 3.1. General. IfIndemnitee was or is a party or is threatened to be made a party to anyProceeding, the Company shall, to the fullest extent permitted by applicablelaw in effect on the date hereof, and to such greater extent as applicable law may thereafterpermit, within 30 days after written demand is presented to the Company,indemnify and hold Indemnitee harmless from and against any and all losses,liabilities, claims, damages, judgments, fines, penalties, amounts paid insettlement (subject to Section 7.2) and Expenses (including all interest,assessments and other charges paid or payable in connection with or in respectof such listed items), whatsoever (i) arising out of any event oroccurrence related to the fact that Indemnitee is or was a director or officerof the Company, is or was serving in another Corporate Status, consented to benamed as a person to be elected as a director of the Company, or by reason ofanything done or not done by Indemnitee in any such capacity and (ii) incurredin connection with such Proceeding.

 

Section 3.2. SuccessfulProceeding. Notwithstanding anything to the contrary setforth herein (other than Section 3.3), if Indemnitee is, by reason of hisCorporate Status, a party to and is successful, on the merits or otherwise, inany Proceeding, he shall be indemnified against all losses, liabilities,claims, damages, judgments, fines, penalties, amounts paid in settlement(subject to Section 7.2) and Expenses (including all interest, assessmentsand other charges paid or payable in connection with or in respect of such listeditems), actually and reasonably incurred by him or on his behalf in connectiontherewith. Notwithstanding anything to the contrary set forth herein (otherthan Section 3.3), if Indemnitee is not wholly successful in suchProceeding but is successful, on the merits or otherwise, as to any Matter insuch Proceeding, the Company shall indemnify Indemnitee against all losses,liabilities, claims, damages, judgments, fines, penalties, amounts paid insettlement (subject to Section 7.2) and Expenses (including all interest,assessments and other charges paid or payable in connection with or in respectof such listed items), actually and reasonably incurred by him or on his behalfrelating to such Matter. The termination of any Matter in such a Proceeding by dismissal,with or without prejudice, shall be deemed to be a successful result as to suchMatter. To the extent that the Indemnitee is, by reason of his CorporateStatus, a witness in any Proceeding in which the Indemnitee is not a party orthreatened to be made a party, he shall be indemnified against all Expensesactually and reasonably incurred by him or on his behalf in connectiontherewith.

 

Section 3.3. ClaimsInitiated by Indemnitee. Notwithstanding anything to thecontrary set forth herein, prior to a Change of Control, Indemnitee shall notbe entitled to indemnification (including any advancement of Expenses) pursuantto this Agreement in

 

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connection with any Proceeding initiated or claim madeby Indemnitee, unless either (i) the Board of Directors has authorized orconsented to the initiation of such Proceeding or the making of such claim or (ii) suchProceeding or claim seeks to enforce Indemnitee’s rights under this Agreement.

 

ARTICLE IV

 

Advancement of Expenses

 

Section 4.1. Advances. Inthe event of any threatened or pending Proceeding in which Indemnitee is aparty or is involved and that may give rise to a right of indemnificationunder this Agreement, following written request to the Company by Indemnitee,the Company shall pay to Indemnitee, within 10 days of such request, amounts tocover Expenses incurred by Indemnitee in such Proceeding in advance of itsfinal disposition upon the receipt by the Company of (i) a writtenundertaking executed by or on behalf of Indemnitee providing that Indemniteewill repay the advance if it shall ultimately be determined that Indemnitee isnot entitled to be indemnified by the Company as provided in this Agreement and(ii) evidence as to the amount of such Expenses.

 

Section 4.2. Repayment ofAdvances or Other Expenses. Indemnitee agrees that Indemniteeshall reimburse the Company for all Expenses advanced by the Company pursuantto Section 4.1 in the event and only to the extent that it shall bedetermined pursuant to the provisions of this Agreement or by final judgment orother final adjudication under the provisions of any applicable law (as towhich all rights of appeal therefrom have been exhausted or lapsed) thatIndemnitee is not entitled to be indemnified by the Company for such Expenses.

 

ARTICLE V

 

Procedure forDetermination of Entitlement

to Indemnification

 

Section 5.1. Request forIndemnification. To obtain indemnification, Indemnitee shallsubmit to the Secretary of the Company a written claim or request. Such writtenclaim or request shall contain sufficient information reasonably to inform theCompany about the nature and extent of the indemnification or advance sought byIndemnitee. The Secretary of the Company shall promptly advise the Board ofDirectors of such request.

 

Section 5.2. Determinationof Entitlement; No Change of Control. If there has been noChange of Control at the time the request for indemnification is submitted,Indemnitee’s entitlement to indemnification shall be determined in accordancewith Section 145(d) of the DGCL. If entitlement to indemnification isto be determined by Independent Counsel pursuant to Section 145(d) ofthe DGCL, the Company shall furnish written notice to Indemnitee within10 days after receipt of the request for indemnification, specifying theidentity and address of Independent Counsel. The Indemnitee may, within 10 daysafter such written notice of selection shall have been given, deliver to theCompany a written objection to such selection; provided, however, that suchobjection may be asserted only on the ground that the Independent Counselso selected does not meet the requirements of “Independent Counsel” as definedin Article I, and

 

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the objection shall set forth with particularity thefactual basis of such assertion. If such written objection is so made andsubstantiated, the Independent Counsel so selected may not serve asIndependent Counsel unless and until such objection is withdrawn or a court hasdetermined that such objection is without merit. If (i) the determinationof entitlement to indemnification is to be made by Independent Counsel pursuantto this Section  and (ii) within 20 days after submission byIndemnitee of a written request for indemnification pursuant to Section 5.1,no Independent Counsel shall have been selected and not objected to, theCompany or Indemnitee may petition the Court of Chancery or other court ofcompetent jurisdiction for resolution of any objection which shall have beenmade by Indemnitee to the Company’s selection of Independent Counsel and/or forthe appointment as Independent Counsel of a person selected by the petitionedcourt or by such other person as the petitioned court shall designate, and theperson with respect to whom all objections are so resolved or the person soappointed shall act as Independent Counsel under this Section. If (i) IndependentCounsel does not make any determination respecting Indemnitee’s entitlement toindemnification hereunder within 90 days after receipt by the Company of awritten request therefor and (ii) any judicial proceeding pursuant to Section 6.1is then commenced, Independent Counsel shall be discharged and relieved of anyfurther responsibility in such capacity (subject to the applicable standards ofprofessional conduct then prevailing).

 

Section 5.3. Determinationof Entitlement; Change of Control. If there has been a Changeof Control at the time the request for indemnification is submitted, Indemnitee’sentitlement to indemnification shall be determined in a written opinion byIndependent Counsel selected by Indemnitee. Indemnitee shall give the Companywritten notice advising of the identity and address of the Independent Counselso selected. The Company may, within 10 days after such written notice ofselection shall have been given, deliver to the Indemnitee a written objectionto such selection; provided, however, that such objection may be assertedonly on the ground that the Independent Counsel so selected does not meet therequirements of “Independent Counsel” as defined in Article I, and theobjection shall set forth with particularity the factual basis of suchassertion. If such written objection is so made and substantiated, theIndependent Counsel so selected may not serve as Independent Counselunless and until such objection is withdrawn or a court has determined thatsuch objection is without merit. If (i) the determination of entitlementto indemnification is to be made by Independent Counsel pursuant to this Section and(ii) within 20 days after submission by Indemnitee of a written requestfor indemnification pursuant to Section 5.1, no Independent Counsel shallhave been selected and not objected to, the Company or the Indemnitee may petitionthe Court of Chancery or other court of competent jurisdiction for resolutionof any objection which shall have been made by the Company to Indemnitee’sselection of Independent Counsel and/or for the appointment as IndependentCounsel of a person selected by the petitioned court or by such other person asthe petitioned court shall designate, and the person with respect to whom allobjections are so resolved or the person so appointed shall act as IndependentCounsel under this Section. If (i) Independent Counsel does not make anydetermination respecting Indemnitee’s entitlement to indemnification hereunderwithin 90 days after receipt by the Company of a written request therefor and (ii) anyjudicial proceeding or arbitration pursuant to Section 6.1 is then commenced,Independent Counsel shall be discharged and relieved of any furtherresponsibility in such capacity (subject to the applicable standards ofprofessional conduct then prevailing).

 

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Section 5.4. Presumptionsand Burden of Proof; Procedures of Independent Counsel. Inmaking a determination with respect to entitlement to indemnificationhereunder, the person, persons or entity making such determination shallpresume that Indemnitee is entitled to indemnification under this Agreement,and the Company shall have the burden of proof to overcome that presumption inconnection with the making by any person, persons or entity of anydetermination contrary to that presumption.

 

Except in the event thatthe determination of entitlement to indemnification is to be made byIndependent Counsel, if the person or persons empowered under Section 5.2to determine entitlement to indemnification shall not have made and furnishedto Indemnitee in writing a determination within 60 days after receipt bythe Company of the request therefor, the requisite determination of entitlementto indemnification shall be deemed to have been made and Indemnitee shall beentitled to such indemnification. The termination of any Proceeding or of anyMatter therein, by judgment, order, settlement or conviction, or upon a plea ofnolo contendere or its equivalent, shallnot of itself adversely affect the right of Indemnitee to indemnification orcreate a presumption that Indemnitee did not act in good faith and in a mannerthat he reasonably believed to be in or not opposed to the best interests ofthe Company, or with respect to any criminal Proceeding, that Indemnitee hadreasonable cause to believe that his conduct was unlawful. A person who actedin good faith and in a manner he reasonably believed to be in the interest ofthe participants and beneficiaries of an employee benefit plan of the Companyshall be deemed to have acted in a manner not opposed to the best interests ofthe Company.

 

For purposes of anydetermination hereunder, a person shall be deemed to have acted in good faithand in a manner he reasonably believed to be in or not opposed to the bestinterests of the Company, or, with respect to any criminal action orProceeding, to have had no reasonable cause to believe his conduct wasunlawful, if his action is based on good faith reliance on the records or booksof account of the Company or another enterprise or on information supplied tohim by the officers of the Company or another enterprise in the course of theirduties or on the advice of legal counsel for the Company or another enterpriseor on information or records given or reports made to the Company or anotherenterprise by an independent accountant or by an appraiser or other expertselected with reasonable care by the Company or another enterprise. The term “anotherenterprise” as used in this Section shall mean any other corporation orany partnership, limited liability company, association, joint venture, trust,employee benefit plan or other enterprise of which such person is or wasserving at the request of the Company as a director, officer, employee or agent.The provisions of this paragraph shall not be deemed to be exclusive or tolimit in any way the circumstances in which an Indemnitee may be deemed tohave met the applicable standards of conduct for determining entitlement torights under this Agreement.

 

Section 5.5. IndependentCounsel Expenses. The Company shall pay any and allreasonable fees and expenses of Independent Counsel incurred acting pursuant tothis Article and in any proceeding to which it is a party or witness inrespect of its investigation and written report and shall pay all reasonablefees and expenses incident to the procedures in which such Independent Counselwas selected or appointed. No Independent Counsel may serve if a timelyobjection has been made to his selection until a court has determined that suchobjection is without a reasonable basis.

 

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ARTICLE VI

 

Certain Remedies ofIndemnitee

 

Section 6.1. Adjudication. Inthe event that (i) a determination is made pursuant to Section 5.2 or5.3 that Indemnitee is not entitled to indemnification under this Agreement; (ii) advancementof Expenses is not timely made pursuant to Section 4.1; (iii) IndependentCounsel is to determine Indemnitee’s entitlement to indemnification hereunder,but does not make that determination within 90 days after receipt by theCompany of the request for that indemnification; or (iv) payment ofindemnification is not made within 10 days after a determination of entitlementto indemnification has been made or deemed to have been made pursuant to Section 5.2,5.3 or 5.4, Indemnitee shall be entitled to an adjudication in an appropriatecourt of the State of Delaware, or in any other court of competentjurisdiction, of his entitlement to such indemnification or advancement ofExpenses. In the event that a determination shall have been made thatIndemnitee is not entitled to indemnification, any judicial proceedingcommenced pursuant to this Section 6.1 shall be conducted in all respectsas a de novo trial on the merits andIndemnitee shall not be prejudiced by reason of that adverse determination. Inany judicial proceeding commenced pursuant to this Section 6.1, theCompany shall have the burden of proving that Indemnitee is not entitled toindemnification or advancement of Expenses, as the case may be. If adetermination shall have been made or deemed to have been made that Indemniteeis entitled to indemnification, the Company shall be bound by suchdetermination in any judicial proceeding commenced pursuant to this Section 6.1,or otherwise.

 

The Company shall beprecluded from asserting in any judicial proceeding commenced pursuant to this Section 6.1that the procedures and presumptions of this Agreement are not valid, bindingand enforceable, and shall stipulate in any such proceeding that the Company isbound by all provisions of this Agreement. In the event that Indemnitee,pursuant to this Section 6.1, seeks a judicial adjudication to enforce hisrights under, or to recover damages for breach of, this Agreement, (i) Indemniteeshall be entitled to recover from the Company, and shall be indemnified by theCompany against, any and all Expenses actually and reasonably incurred by himin such judicial adjudication, regardless of whether he prevails therein, and (ii) anydetermination made pursuant to Section 5.2 or 5.3 that Indemnitee is notentitled to indemnification under this Agreement shall not be binding andIndemnitee shall not be required to reimburse the Company for any Expensesadvanced pursuant to Section 4.1 until it shall be determined by finaljudgment or other final adjudication under the provisions of any applicable law(as to which all rights of appeal therefrom have been exhausted or lapsed) thatIndemnitee is not entitled to be indemnified by the Company for such Expenses.

 

ARTICLE VII

 

Participation by theCompany

 

Section 7.1. Participationby the Company. With respect to any such Proceeding as towhich Indemnitee notifies the Company of the commencement thereof, the Companywill be entitled to participate therein at its own expense and, except asotherwise provided below, to the extent that it may wish, the Company(jointly with any other indemnifying party similarly

 

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notified) will be entitled to assume the defensethereof, with counsel reasonably satisfactory to Indemnitee. After receipt ofnotice from the Company to Indemnitee of the Company’s election so to assumethe defense thereof, the Company will not be liable to Indemnitee under thisAgreement for any legal or other Expenses subsequently incurred by Indemniteein connection with the defense thereof other than reasonable costs ofinvestigation, Expenses incurred in being or preparing to be a witness or inassisting, at the request of the Company, with the defense, and as otherwiseprovided below. At the request of the Company, Indemnitee agrees to use hisreasonable efforts to assist in such defense. Indemnitee shall have the rightto employ his own counsel in such Proceeding but the fees and expenses of suchcounsel incurred after notice from the Company of its assumption of the defensethereof shall be at the expense of Indemnitee unless (i) the employment ofcounsel by Indemnitee has been authorized by the Company, (ii) Indemniteeshall have reasonably concluded that there is a conflict of interest betweenthe Company and Indemnitee in the conduct of the defense of such action or (iii) theCompany shall not in fact have employed counsel to assume the defense of suchaction, in each of which cases the fees and expenses of counsel employed byIndemnitee shall be subject to indemnification pursuant to the terms of thisAgreement. The Company shall not be entitled to assume the defense of anyProceeding brought in the name of or on behalf of the Company or as to whichIndemnitee shall have made the conclusion provided for in (ii) above.

 

Section 7.2. Settlements.The Company shall not be liable to indemnify Indemnitee under this Agreementfor any amounts paid in settlement of any action or claim effected without itswritten consent, which consent shall not be unreasonably withheld. The Companyshall not settle any action or claim in any manner that would impose anylimitation or unindemnified penalty on Indemnitee without Indemnitee’s writtenconsent, which consent shall not be unreasonably withheld.

 

ARTICLE VIII

 

Miscellaneous

 

Section 8.1. Nonexclusivityof Rights. The rights of indemnification and advancement ofExpenses as provided by this Agreement shall not be deemed exclusive of anyother rights to which Indemnitee may at any time be entitled to underapplicable law, the Company’s Certificate of Incorporation, the Company’sBylaws, any agreement, a vote of stockholders or a resolution of directors, orotherwise. No amendment, alteration or repeal of this Agreement or anyprovision hereof shall be effective as to any Indemnitee for acts, events and circumstancesthat occurred, in whole or in part, before such amendment, alteration or repeal.The provisions of this Agreement shall continue in effect as to an Indemniteewhose Corporate Status has ceased for any reason.

 

Section 8.2. Insurance andSubrogation. The Company shall not be liable under thisAgreement to make any payment of amounts otherwise indemnifiable hereunder if,but only to the extent that, Indemnitee has otherwise actually received suchpayment under any insurance policy, contract, agreement or otherwise.

 

In the event of anypayment hereunder, the Company shall be subrogated to the extent of suchpayment to all the rights of recovery of Indemnitee, who shall execute allpapers

 

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required and takeall action reasonably requested by the Company to secure such rights, includingexecution of such documents as are necessary to enable the Company to bringsuit to enforce such rights.

 

Section 8.3. Acknowledgmentof Certain Matters. Both the Company and Indemniteeacknowledge that in certain instances, applicable law or public policy may prohibitindemnification of Indemnitee by the Company under this Agreement or otherwise.Indemnitee understands and acknowledges that the Company has undertaken or may berequired in the future to undertake, by the Securities and Exchange Commission,to submit the question of indemnification to a court in certain circumstancesfor a determination of the Company’s right under public policy to indemnifyIndemnitee.

 

Section 8.4. Amendment. ThisAgreement may not be modified or amended except by a written instrumentexecuted by or on behalf of each of the parties hereto.

 

Section 8.5. Waivers. Theobservance of any term of this Agreement may be waived (either generallyor in a particular instance and either retroactively or prospectively) by theparty entitled to enforce such term only by a writing signed by the partyagainst which such waiver is to be asserted. Unless otherwise expresslyprovided herein, no delay on the part of any party hereto in exercisingany right, power or privilege hereunder shall operate as a waiver thereof, norshall any waiver on the part of any party hereto of any right, power orprivilege hereunder operate as a waiver of any other right, power or privilegehereunder nor shall any single or partial exercise of any right, power orprivilege hereunder preclude any other or further exercise thereof or theexercise of any other right, power or privilege hereunder.

 

Section 8.6. EntireAgreement. This Agreement and the documents referred toherein constitute the entire agreement between the parties hereto with respectto the matters covered hereby, and any other prior or contemporaneous oral orwritten understandings or agreements with respect to the matters covered herebyare superseded by this Agreement.

 

Section 8.7. Severability. Ifany provision or provisions of this Agreement shall be held to be invalid,illegal or unenforceable for any reason whatsoever, the validity, legality andenforceability of the remaining provisions shall not in any way be affected orimpaired thereby; and, to the fullest extent possible, the provisions of thisAgreement shall be construed so as to give effect to the intent manifested bythe provision held invalid, illegal or unenforceable.

 

Section 8.8. Notices. Promptlyafter receipt by Indemnitee of notice of the commencement of any action, suitor proceeding, Indemnitee shall, if he anticipates or contemplates making aclaim for expenses or an advance pursuant to the terms of this Agreement,notify the Company of the commencement of such action, suit or proceeding;provided, however, that any delay in so notifying the Company shall notconstitute a waiver or release by Indemnitee of rights hereunder and that anyomission by Indemnitee so to notify the Company shall not relieve the Companyfrom any liability that it may have to Indemnitee otherwise than underthis Agreement. Any communication required or permitted to the Company shall beaddressed to the Secretary of the Company and any such communication toIndemnitee shall be addressed to Indemnitee’s address as shown on the Company’srecords unless

 

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Indemnitee specifies otherwise and shall be personallydelivered or delivered by overnight mail delivery. Any such notice shall beeffective upon receipt.

 

Section 8.9. Binding Effect.The provisions of this Agreement shall be binding upon andinure to the benefit of the parties hereto and their respective heirs, legal representatives,successors and assigns.

 

Section 8.10. Governing Law.This Agreement shall be construed in accordance with andgoverned by the laws of the State of Delaware without regard to any principlesof conflict of laws that, if applied, might permit or require the applicationof the laws of a different jurisdiction.

 

Section 8.11. Headings. TheArticle and Section headings in this Agreement are for convenience ofreference only, and shall not be deemed to alter or affect the meaning orinterpretation of any provisions hereof.

 

Section 8.12. Counterparts. ThisAgreement may be executed in counterparts, each of which shall be deemedto be an original and all of which together shall be deemed to be one and thesame instrument.

 

Section 8.13. Use of CertainTerms. As used in this Agreement, the words “herein,” “hereof,”and “hereunder” and other words of similar import refer to this Agreement as awhole and not to any particular paragraph, subparagraph, section, subsection,or other subdivision. Whenever the context may require, any pronoun usedin this Agreement shall include the corresponding masculine, feminine or neuterforms, and the singular form of nouns, pronouns and verbs shall includethe plural and vice versa.

 

IN WITNESS WHEREOF, this Agreement has been dulyexecuted and delivered to be effective as of the date first above written.

 

 

POGO PRODUCING COMPANY

 

 

 

 

 

By:

/s/ Michael J. Killelea

 

 

 

Name: Michael J. Killelea

 

 

Title: Senior Vice President, General Counsel

 

 

and Corporate Secretary

 

 

 

 

 

INDEMNITEE

 

 

 

 

 

By:

/s/ Charles G. Groat

 

 

 

Charles G. Groat

 

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