Document:

Exhibit 10.41

 

EP ENERGY CORPORATION

 

FORM OF DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT

 

This Director and Officer Indemnification Agreement (this “Agreement”) is made as of this          day of                       , 2014, by and between EP Energy Corporation, a Delaware corporation (the “Company”), and                        (the “Indemnitee”).

 

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals to act as directors and officers;

 

WHEREAS, increased corporate litigation and investigations have subjected directors and officers to litigation risks and expenses, and the limitations on the availability and terms of director and officer liability insurance have made it increasingly difficult for the Company to attract and retain such persons;

 

WHEREAS, the Company’s certificate of incorporation contains provisions with respect to indemnification of the Company’s directors and officers as authorized by the Delaware General Corporation Law, as amended (“DGCL”), under which the Company is incorporated, and such certificate of incorporation expressly provides that the indemnification provided therein is not exclusive;

 

WHEREAS, in light of the fact that the certificate of incorporation and bylaws of the Company are subject to change and do not contain all the provisions and protections set forth in this Agreement, the Company has determined that the Indemnitee and other directors and officers of the Company may not be willing to commence serving or continue to serve in such capacities without additional protection;

 

WHEREAS, the Company desires and has requested the Indemnitee to commence serving or continue to serve as a director or officer of the Company, as the case may be, and has proffered this Agreement to the Indemnitee as an additional inducement to serve in such capacity; and

 

WHEREAS, the Indemnitee is willing to commence serving, or to continue to serve, as a director or officer of the Company, as the case may be, if the Indemnitee is furnished the indemnity provided for herein by the Company.

 

NOW, THEREFORE, in consideration of the promises and the covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Indemnitee do hereby covenant and agree as follows:

 

1.                                              Definitions.

 

(a)                                         “Change in Control” shall have the meaning set forth, as of the date hereof, in the Company’s 2014 Omnibus Incentive Plan.

 

(b)                                         “Corporate Status” describes the status of a person who is serving or has served as a (i) director or officer of the Company, (ii) Company employee in a fiduciary capacity with respect to an employee benefit plan of the Company or (iii) director or officer of any other Entity at the request of the Company. For purposes of subsection (iii) of this Section 1(b), without limitation, a director

 

 

or officer of the Company who is serving or has served as a director or officer of a Subsidiary shall be deemed to be serving at the request of the Company.

 

(c)                                          “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee and is determined to be “disinterested” under applicable Delaware state law.

 

(d)                                         “Entity” shall mean any corporation, partnership (general or limited), limited liability company, joint venture, trust, employee benefit plan, company, foundation, association, organization or other legal entity, other than the Company.

 

(e)                                          “Expenses” shall be construed broadly to mean all direct and indirect fees of any type or nature whatsoever, costs and expenses incurred in connection with any Proceeding, including, without limitation, all attorneys’ fees and costs, disbursements and retainers (including, without limitation, any fees, disbursements and retainers incurred by the Indemnitee pursuant to Section 10 of this Agreement), fees and disbursements of experts, witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), court costs, filing fees, transcript costs, fees of experts, travel expenses, duplicating, imaging, printing and binding costs, telephone and fax transmission charges, computer legal research costs, postage, delivery service fees, secretarial services, fees and expenses of third party vendors; the premium, security for, and other costs associated with any bond (including supersedeas or appeal bonds, injunction bonds, cost bonds, appraisal bonds or their equivalents), in each case incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding (including, without limitation, any judicial or arbitration Proceeding brought to enforce the Indemnitee’s rights under, or to recover damages for breach of, this Agreement), as well as all other “expenses” within the meaning of that term as used in Section 145 of the DGCL, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of types customarily and reasonably incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, actions, suits, or proceedings similar to or of the same type as the Proceeding with respect to which such disbursements or expenses were incurred. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding.

 

(f)                                           “Indemnifiable Expenses,”    “Indemnifiable Liabilities” and “Indemnifiable Amounts” shall have the meanings ascribed to those terms in Section 2(a) below.

 

(g)                                          “Independent Counsel” means a law firm, or a person admitted to practice law in any State of the United States or the District of Columbia, that is experienced in matters of corporation law and shall not include any law firm or 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.

 

(h)                                         “Liabilities” shall be broadly construed to mean, without limitation, all judgments, damages, liabilities, losses, penalties, taxes, fines and amounts paid in settlement, in each case, of any type whatsoever, in connection with a Proceeding. References herein to “fines” shall

 

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include any excise tax assessed with respect to any employee benefit plan.

 

(i)                                             “Proceeding” shall be construed broadly to mean, without limitation, any threatened, pending, completed or reasonably likely claim, government, regulatory and self- regulatory action, suit, arbitration, mediation, alternate dispute resolution process, investigation (including any internal investigation), inquiry, administrative hearing, appeal, or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, arbitrative or investigative nature, whether formal or informal, including a proceeding initiated by the Indemnitee pursuant to Section 10 of this Agreement to enforce the Indemnitee’s rights hereunder.

 

(j)                                            “Sponsor Stockholders” shall mean, collectively, the Apollo Stockholder, the Riverstone Stockholder, the KNOC Stockholder and the Access Stockholder (each as defined the Company’s certificate of incorporation).

 

(k)                                         “Subsidiary” shall mean any Entity of which the Company owns (either directly or indirectly) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such Entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such Entity.

 

(l)                                             References herein to a director of any other Entity shall include, in the case of any Entity that is not managed by a board of directors, such other position, such as manager or trustee or member of the governing body of such Entity, that entails responsibility for the management and direction of such Entity’s affairs, including, without limitation, the general partner of any partnership (general or limited) and the manager or managing member of any limited liability company.

 

2.                                              Agreement to Indemnify.

 

The Company agrees to indemnify the Indemnitee to the fullest extent permitted, and in the manner permitted, by applicable law as in effect as of the date hereof or as such laws may, from time to time, be amended (but only if amended in a way that broadens the right to indemnification and advancement of expenses). The rights to indemnification and advancement of expenses pursuant to this Agreement shall include, without limitation:

 

(a)                                         Indemnification for Third Party Proceedings. Subject to the exceptions contained in Section 3(a) and Section 5 below, if the Indemnitee was or is a party or was or is otherwise involved in or was or is threatened to be made a party or is otherwise involved in any capacity to any Proceeding (other than an action by or in the right of the Company) by reason of the Indemnitee’s Corporate Status, the Indemnitee shall be indemnified by the Company to the fullest extent permitted by the DGCL, as the same may be amended from time to time, against all Expenses and Liabilities actually and reasonably incurred or paid by the Indemnitee or on the Indemnitee’s behalf in connection with such a Proceeding (referred to herein as “Indemnifiable Expenses” and “Indemnifiable Liabilities,” respectively, and collectively as “Indemnifiable Amounts”). In addition, the Indemnitee’s Corporate Status may allow for indemnification under certain agreements containing indemnity provisions with another Entity or protections under the organization documents of such other Entity. In those instances, the Company shall remain wholly liable for making any indemnification payments for all Indemnifiable Amounts

 

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notwithstanding the payment obligation of such amounts by a third party to the Indemnitee; provided, however, that if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement, or otherwise, the Company shall not be liable under this Agreement to make any payment to the Indemnitee with respect to such Indemnifiable Amounts that have been satisfied. Nothing hereunder is intended to affect any right of contribution of or against the Company in the event the Company and any other person or persons have co-equal obligations to indemnify (or advance expenses to) the Indemnitee.

 

(b)                                         Indemnification in Derivative Actions and Direct Actions by the Company. Subject to the exceptions contained in Section 3(b) and Section 5 below, if the Indemnitee was or is a party or was or is otherwise involved in or was or is threatened to be made a party to or was or is otherwise involved in any capacity in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the Indemnitee’s Corporate Status, the Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses. In addition, the Indemnitee’s Corporate Status may allow for indemnification under certain agreements containing indemnity provisions with another Entity or protections under the organization documents of such other Entity. In those instances, the Company shall remain wholly liable for making any indemnification payments for all Indemnifiable Expenses notwithstanding the payment obligation of such amounts by a third party to the Indemnitee; provided, however, that if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement, or otherwise, the Company shall not be liable under this Agreement to make any payment to the Indemnitee with respect to such Indemnifiable Expenses that have been satisfied. Nothing hereunder is intended to affect any right of contribution of or against the Company in the event the Company and any other person or persons have co-equal obligations to indemnify (or advance expenses to) the Indemnitee.

 

(c)                                          In the event that the Sponsor Stockholders or any of their affiliates (other than the Company) pays, forwards or otherwise satisfies any Indemnifiable Amounts to the Indemnitee, such amounts shall be promptly reimbursed by the Company to such payor to the extent that such Indemnifiable Amounts were required to be paid by the Company to the Indemnitee pursuant to the terms of this Agreement.  For the avoidance of doubt, this Agreement creates no obligation on the part of the Sponsor Stockholders or any of their affiliates (other than the Company) to pay any Indemnifiable Amount.

 

3.                                              Exceptions to Indemnification.

 

The Indemnitee shall be entitled to indemnification under Section 2(a) and Section 2(b) above in all circumstances other than the following:

 

(a)                                         Exceptions to Indemnification for Third Party Proceedings. If indemnification is requested under Section 2(a) and there has been a final non-appealable judgment by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, the Indemnitee failed to meet the standard of conduct which makes it permissible under applicable law for the Company to indemnify the Indemnitee for Indemnifiable Amounts hereunder, (i) the Indemnitee shall not be entitled to payment of Indemnifiable Liabilities hereunder and (ii) no Indemnifiable Expenses shall be paid with respect to such claim, issue or matter unless the court of competent jurisdiction in which such Proceeding was brought shall determine upon application that, despite any adjudication of liability, the Indemnitee is entitled to indemnity for such Indemnifiable Expenses which such

 

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court shall deem proper.

 

(b)                                        Exceptions to Indemnification in Derivative Actions and Direct Actions by the Company. If indemnification is requested under Section 2(b) and there has been a final non- appealable judgment by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, the Indemnitee failed to meet the standard of conduct which makes it permissible under applicable law for the Company to indemnify the Indemnitee for Indemnifiable Amounts hereunder, (i) the Indemnitee shall not be entitled to payment of Indemnifiable Liabilities hereunder and (ii) no Indemnifiable Expenses shall be paid with respect to such claim, issue or matter unless the court of competent jurisdiction in which such Proceeding was brought shall determine upon application that, despite any adjudication of liability, the Indemnitee is entitled to indemnity for such Indemnifiable Expenses which such court shall deem proper.

 

4.                                             Procedure for Payment of Indemnifiable Amounts.

 

(a)                                        Subject to Section 8, the Indemnitee shall submit to the Company a written request specifying in reasonable detail the Indemnifiable Amounts for which the Indemnitee seeks payment under Section 2, Section 5 or Section 6 of this Agreement and a short description of the basis for the claim. The Company shall pay such Indemnifiable Amounts to the Indemnitee within thirty (30) calendar days of receipt of the request. At the request of the Company, the Indemnitee shall furnish such documentation and information as are reasonably available to the Indemnitee and necessary to establish that the Indemnitee is entitled to indemnification hereunder.

 

(b)                                        Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 4(a) hereof, if required by applicable law and to the extent not otherwise provided pursuant to the terms of this Agreement, a determination with respect to the Indemnitee’s entitlement to indemnification under applicable law shall be made in the specific case as follows if there is a dispute between the Company and the Indemnitee with respect to the Indemnitee’s rights to indemnification hereunder: (i) if a Change in Control shall have occurred and if so requested in writing by the Indemnitee, by Independent Counsel in a written opinion to the Board of Directors; or (ii) if a Change in Control shall not have occurred (or if a Change in Control shall have occurred but the Indemnitee shall not have requested that indemnification be determined by Independent Counsel as provided in subpart (i) of this Section 4(b)), (A) by a majority vote of a quorum of the Board of Directors consisting of Disinterested Directors or (B) if there is no such quorum of the Board of Directors consisting of Disinterested Directors or, if such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, or (C) if a quorum of Disinterested Directors so directs, by a majority of the stockholders of the Corporation. Notice in writing of any determination as to the Indemnitee’s entitlement to indemnification shall be delivered to the Indemnitee promptly after such determination is made, and if such determination of entitlement to indemnification has been made by Independent Counsel in a written opinion to the Board of Directors, then such notice shall be accompanied by a copy of such written opinion. If it is determined that the Indemnitee is entitled to indemnification, then payment to the Indemnitee of all amounts to which the Indemnitee is determined to be entitled (other than sums that were already advanced) shall be made within thirty (30) calendar days after such determination. If it is determined that the Indemnitee is not entitled to indemnification, then the written notice to the Indemnitee (or, if such determination has been made by Independent Counsel in a written opinion, the copy of such

 

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written opinion delivered to the Indemnitee) shall disclose the basis upon which such determination is based. The Indemnitee shall cooperate with the person, persons, or entity making the determination with respect to the Indemnitee’s entitlement to indemnification, including providing to such person, persons, or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification.

 

(c)                                          If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 4(b) hereof, the Independent Counsel shall be selected as provided in this Section 4(c). If a Change in Control shall not have occurred (or if a Change in Control shall have occurred but the Indemnitee shall not have requested that indemnification be determined by Independent Counsel as provided in subpart (i) of Section 4(b)), then the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred and the Indemnitee shall have requested that indemnification be determined by Independent Counsel, then the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and the Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, the Indemnitee or the Company, as the case may be, may, within thirty (30) calendar days after such written notice of selection has been given, deliver to the Company or to the Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the law firm or person so selected does not meet the requirements of “Independent Counsel” as defined in Section 1 of this Agreement, and the objection shall set forth the basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the law firm or person so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Court of Chancery of the State of Delaware or another court of competent jurisdiction in the State of Delaware has determined that such objection is without merit. If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 4(b) hereof and, following the expiration of thirty (30) calendar days after submission by the Indemnitee of a written request for indemnification pursuant to Section 4(a) hereof, Independent Counsel shall not have been selected, or an objection thereto has been made and not withdrawn, then either the Company or the Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction in the State of Delaware for resolution of any objection that shall have been made by the Company or the Indemnitee to the other’s selection of Independent Counsel and/or for appointment as Independent Counsel of a law firm or person selected by such court (or selected by such person as the court shall designate), and the law firm or person with respect to whom all objections are so resolved or the law firm or person so appointed shall act as Independent Counsel under Section4(b) hereof.  Upon the due commencement of any Proceeding pursuant to Section 10(e) hereof, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 4(b) hereof, then the Company agrees to pay the reasonable fees and expenses of such Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all expenses, claims,

 

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liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

5.                                              Indemnification for Expenses if the Indemnitee is Wholly or Partly Successful.

 

Notwithstanding anything contained in this Agreement to the contrary, to the extent that the Indemnitee is or was, or is or was threatened to be made, by reason of the Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in defending any Proceeding, the Indemnitee shall be indemnified against all Indemnifiable Expenses incurred by the Indemnitee or on the Indemnitee’s behalf in connection with the defense of such Proceeding. If the Indemnitee is not wholly successful in such Proceeding but is successful on the merits or otherwise as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled. If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify, hold harmless and exonerate the Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For purposes of this Agreement, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. Notwithstanding any of the foregoing, nothing herein shall be construed to limit the Indemnitee’s right to indemnification which he or she would otherwise be entitled to pursuant to Section 2 and Section 3 hereof, regardless of the Indemnitee’s success in a Proceeding.

 

6.                                              Indemnification for Expenses as a Witness.

 

Anything in this Agreement to the contrary notwithstanding, to the fullest extent permitted by applicable law, to the extent that the Indemnitee, by reason of the Indemnitee’s Corporate Status, is or was, or is or was threatened to be made, a witness in any Proceeding to which the Indemnitee is not a party, the Indemnitee shall be indemnified against all Indemnifiable Expenses incurred by the Indemnitee or on the Indemnitee’s behalf in connection therewith (including, for the avoidance of doubt, discovery expenses relating to locating and producing data or information that may be in the possession of the Indemnitee). To the extent permitted by applicable law, the Indemnitee shall be entitled to indemnification for Expenses incurred in connection with being or threatened to be made a witness, as provided in this Section 6, regardless of whether the Indemnitee failed to meet the standard of conduct which makes it permissible under applicable law for the Company to indemnify the Indemnitee for Indemnifiable Amounts hereunder.

 

7.                                              Agreement to Advance Expenses; Conditions.

 

The Company shall pay to the Indemnitee all Indemnifiable Expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding to which the Indemnitee was or is a party or was or is otherwise involved or was or is threatened to be made a party to or was or is otherwise involved in any capacity in any Proceeding by reason of the Indemnitee’s Corporate Status, including a Proceeding by or in the right of the Company, in advance of the final disposition of such Proceeding. The Indemnitee hereby undertakes to repay the amount of Indemnifiable Expenses paid to the Indemnitee if it shall ultimately be determined by final judicial decision of a court of competent jurisdiction, from which decision there is no further right to appeal, that the Indemnitee is not entitled under this Agreement to, or is prohibited by

 

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applicable law from, indemnification with respect to such Indemnifiable Expenses. Any advances and undertakings to repay pursuant to this Section 7 shall be unsecured and interest free. The Indemnitee shall be entitled to advancement of Indemnifiable Expenses as provided in this Section 7 regardless of any determination by or on behalf of the Company that the Indemnitee failed to meet the standard of conduct which makes it permissible under applicable law for the Company to indemnify the Indemnitee for Indemnifiable Amounts hereunder.

 

8.                                              Procedure for Advance Payment of Expenses.

 

The Indemnitee shall submit to the Company a written request specifying in reasonable detail the Indemnifiable Expenses for which the Indemnitee seeks an advancement under Section 7 of this Agreement, together with documentation reasonably evidencing that the Indemnitee has incurred such Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 7 shall be made no later than ten (10) calendar days after the Company’s receipt of such request.

 

9.                                              Burden of Proof; Defenses; and Presumptions.

 

(a)                                         In any Proceeding pursuant to Section 10 hereof brought by the Indemnitee to enforce rights to indemnification or to an advancement of Indemnifiable Expenses hereunder, or in any Proceeding brought by the Company to recover an advancement of Indemnifiable Expenses (whether pursuant to the terms of an undertaking or otherwise), the burden shall be on the Company to prove that the Indemnitee is not entitled to be indemnified, or to such an advancement of Indemnifiable Expenses, as the case may be.

 

(b)                                         It shall be a defense in any Proceeding pursuant to Section 10 hereof to enforce rights to indemnification under Section 2(a) or Section 2(b) hereof (but not in any Proceeding pursuant to Section 10 hereof to enforce a right to an advancement of Indemnifiable Expenses under Section 7 and Section 8 hereof) that the Indemnitee has not met the standard of conduct which makes it permissible under applicable law for the Company to indemnify the Indemnitee for Indemnifiable Amounts hereunder, as the case may be, but the burden of proving such defense shall be on the Company. With respect to any Proceeding pursuant to Section 10 hereof brought by the Indemnitee to enforce a right to indemnification hereunder, or any Proceeding brought by the Company to recover an advancement of Indemnifiable Expenses (whether pursuant to the terms of an undertaking or otherwise), neither (i) the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of such Proceeding that indemnification is proper in the circumstances because the Indemnitee has met the applicable standards of conduct, nor (ii) an actual determination by the Company (including by its directors or independent legal counsel) that the Indemnitee has not met such applicable standards of conduct, shall create a presumption that the Indemnitee has not met the applicable standards of conduct or, in the case of a Proceeding pursuant to Section 10 hereof brought by the Indemnitee seeking to enforce a right to indemnification, be a defense to such Proceeding.

 

(c)                                          The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, in and of itself, adversely affect the right of the Indemnitee to indemnification hereunder or create a presumption that the Indemnitee did not act in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, shall not create a presumption that the Indemnitee had reasonable cause to believe that his or her

 

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conduct was unlawful.

 

(d)                                         For purposes of any determination of good faith, the Indemnitee shall be deemed to have acted in good faith if the Indemnitee’s action is reasonably based on the records or books of account of the Company or other Entity, including financial statements, or on information supplied to the Indemnitee by the officers of the Company or other Entity in the course of their duties, or on the advice of legal counsel for the Company or other Entity or on information or records given or reports made to the Company or other Entity by an independent certified public accountant or by an appraiser or other expert selected by the Company or other Entity. The provisions of this Section 9(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

 

(e)                                          The knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of the Company or of another Entity shall not be imputed to the Indemnitee for purposes of determining the Indemnitee’s right to indemnification or advancement of Indemnifiable Expenses under this Agreement.

 

10.                                       Remedies of the Indemnitees.

 

(a)                                         Right to Petition Court.  In the event that the Indemnitee makes a request for payment of Indemnifiable Amounts under Section 2 or Section 4 herein or a request for an advancement of Indemnifiable Expenses under Section 7 or Section 8 herein and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, the Indemnitee may petition a court to enforce the Company’s obligations under this Agreement.

 

(b)                                         Expenses.  The Company agrees to reimburse the Indemnitee in full for any Expenses actually and reasonably incurred by the Indemnitee in connection with investigating, preparing for, litigating, defending or settling any action brought by the Indemnitee under Section 10(a) above within thirty (30) calendar days of receipt of a written request specifying in reasonable detail the amount and nature of such Expenses; provided, however, that to the extent the Indemnitee is unsuccessful on the merits in such action then the Company shall have no obligation to reimburse the Indemnitee under this Section 10(b).

 

(c)                                         Validity of Agreement. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 10(a) above, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement.

 

(d)                                        Failure to Act or Adverse Determination Not a Defense.  The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement or any adverse determination by the Company (including its Board of Directors or any committee thereof, independent legal counsel or stockholders) concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 10(a) above, and shall not create a

 

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presumption that such payment or advancement is not permissible.

 

(e)                                         Entitlement to Indemnification; Independent Counsel.  In the event that (i) a determination is made pursuant to Section 4 of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement, (ii) if the determination of entitlement to indemnification is not to be made by Independent Counsel pursuant to Section 4(b) hereof, no determination of entitlement to indemnification shall have been made pursuant to Section 4(b) of this Agreement within thirty (30) calendar days after receipt by the Company of the Indemnitee’s written request for indemnification, (iii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 4(b) hereof, no determination of entitlement to indemnification shall have been made pursuant to Section 4(b) hereof within thirty (30) calendar days after receipt by the Company of the Indemnitee’s written request for indemnification, unless an objection to the selection of such Independent Counsel has been made and substantiated and not withdrawn, in which case the applicable time period shall be thirty (30) calendar days after the Court of Chancery of the State of Delaware or another court of competent jurisdiction in the State of Delaware (or such person appointed by such court to make such determination) has determined or appointed the person to act as Independent Counsel pursuant to Section 4(b) hereof, (iv) payment of indemnification is not made pursuant to Section 5 or Section 6 of this Agreement within thirty (30) calendar days after receipt by the Company of a written request therefor or (v) payment of indemnification pursuant to Section 5 or Section 6 of this Agreement is not made within thirty (30) calendar days after a determination has been made pursuant to Section 4(b) that the Indemnitee is entitled to indemnification, then the Indemnitee shall be entitled to seek an adjudication by the Court of Chancery of the State of Delaware of the Indemnitee’s entitlement to such indemnification or advancement of Indemnifiable Expenses.

 

(f)                                          Not Prejudiced by Adverse Determination. In the event that a determination shall have been made pursuant to Section 4(b) of this Agreement that the Indemnitee is not entitled to indemnification, any Proceeding commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination.

 

11.                                       Settlement of Proceedings.

 

(a)                                         The Indemnitee agrees that it will not settle, compromise or consent to the entry of any judgment as to the Indemnitee in any pending or threatened Proceeding (whether or not the Indemnitee is an actual or potential party to such Proceeding) in which Indemnitee has sought indemnification hereunder without the Company’s prior written consent, which consent will not be unreasonably withheld, unless such settlement, compromise or consent respecting such Proceeding includes an unconditional release of the Indemnitee and does not (i) require or impose any injunctive or other non-monetary remedy on the Company or its affiliates, (ii) require or impose an admission or consent as to any wrongdoing by the Company or its affiliates or (iii) otherwise result in a direct or indirect payment by or monetary cost to the Company or its affiliates.

 

(b)                                         The Company agrees that it will not settle, compromise or consent to the entry of any judgment as to the Indemnitee in any pending or threatened Proceeding (whether or not the Indemnitee is an actual or potential party to such Proceeding) in which the Indemnitee has sought indemnification hereunder without the Indemnitee’s prior written consent, which consent shall not be unreasonably withheld, unless such settlement, compromise or consent includes an unconditional release of the Indemnitee and does not (i) require or impose any injunctive or other

 

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non-monetary remedy on the Indemnitee, (ii) require or impose an admission or consent as to any wrongdoing by the Indemnitee or (iii) otherwise result in a direct or indirect payment by or monetary cost to the Indemnitee personally (as opposed to a payment to be made or cost to be paid by the Company on the Indemnitee’s behalf).

 

12.                                       Notice by the Indemnitee.

 

The Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding which could reasonably be expected to result in the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify the Indemnitee from the right to receive payments of Indemnifiable Amounts or advancements of Indemnifiable Expenses.

 

13.                                       Representations and Warranties of the Company.

 

The Company hereby represents and warrants to the Indemnitee as follows:

 

(a)                                         Authority. The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company.

 

(b)                                         Enforceability. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by equitable principles and applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights generally.

 

(c)                                          No Conflicts. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, does not, and the Company’s performance of its obligations under this Agreement will not, violate the Company’s certificate of incorporation, bylaws, other agreements to which the Company is a party to or applicable law.

 

(d)                                         Insurance.   The Company shall use its reasonable best efforts to purchase and maintain a policy or policies of insurance (“D&O Insurance”) with reputable insurance companies with A.M. Best ratings of “A” or better, providing Indemnitee with coverage for any liability asserted against, or incurred by, Indemnitee or on Indemnitee’s behalf by reason of the fact that Indemnitee is or was or has agreed to serve as a director, officer, employee or agent of the Company, or while serving as a director or officer of the Company, is or was serving or has agreed to serve on behalf of or at the request of the Company as a director, officer, employee or agent (which, for purposes hereof, shall include a trustee, fiduciary, partner or manager or similar capacity) of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise, or arising out of Indemnitee’s status as such, whether or not the Company would have the power to indemnify Indemnitee against such liability under the provisions of this Agreement. Such D&O Insurance shall have coverage terms and policy limits at least as favorable to Indemnitee as the insurance coverage provided to any other director or officer of the Company. If the Company has such insurance in effect at the time the Company receives from Indemnitee any notice of the commencement of an action, suit or proceeding, the Company shall give prompt notice of the commencement of such action, suit or proceeding to

 

11

 

the insurers in accordance with the procedures set forth in the D&O Insurance. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such D&O Insurance.

 

14.                                       Contract Rights Not Exclusive; Subrogation.

 

The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights that the Indemnitee may have at any time under applicable law, the Company’s bylaws or certificate of incorporation, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in the Indemnitee’s official capacity and as to action in any other capacity as a result of the Indemnitee’s serving in a Corporate Status. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy, given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy. In the event of any payment to or on behalf of the Indemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

15.                                       Successors.

 

This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of the Indemnitee. This Agreement shall continue for the benefit of the Indemnitee and such heirs, personal representatives, executors and administrators after the Indemnitee has ceased to have Corporate Status. The Company shall require and cause any successor(s) (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law), by written agreement in form and substance reasonably satisfactory to the Indemnitee and his or her counsel, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place; provided that no such assumption shall relieve the Company from its obligations hereunder and any obligations shall thereafter be joint and several.

 

16.                                       Change in Law.

 

To the extent that a change in Delaware law (whether by statute or judicial decision) shall permit broader indemnification or advancement of expenses than is provided under the terms of the bylaws of the Company and this Agreement, the Indemnitee shall be entitled to such broader indemnification and advancements, and this Agreement shall be deemed to be amended to such extent, but only to the extent such amendment permits the Indemnitee to broader indemnification and advancement rights other than Delaware law permitted prior to the adoption of such

 

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amendment.

 

17.                                       Severability.

 

Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.

 

18.                                       Modifications and Waiver.

 

Except as provided in Section 16 above with respect to changes in Delaware law which broaden the right of the Indemnitee to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver. In the event the Company or any of its subsidiaries enters into an indemnification agreement with another director or officer of the Company or any of its subsidiaries with respect to the subject matter hereof containing a term or terms more favorable to the indemnitee thereunder than the terms contained herein, the Indemnitee shall be afforded the benefit of such more favorable term or terms and such more favorable term or terms shall be deemed incorporated by reference herein as if set forth in full herein. As promptly as practicable following the execution by the Company or the relevant subsidiary of any such indemnification agreement with any such other director or officer (i) the Company shall send a copy of the indemnification agreement to the Indemnitee, and (ii) if requested by the Indemnitee, the Company shall prepare, execute and deliver to the Indemnitee an amendment to this Agreement containing such more favorable term or terms.

 

19.                                       General Notices.

 

All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed

 

(a)                                 If to the Indemnitee, to:

 

(b)                                 If to the Company, to:

EP Energy Corporation

1001 Louisiana Street

Houston, Texas 77002

Facsimile: (713) 997-4099

 

or to such other address as may have been furnished in the same manner by any party to the

 

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others.

 

20.                               Contribution.

 

To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

21.                               Specific Performance.

 

The parties recognize that if any provision of this Agreement is violated by the parties hereto, the Indemnitee may be without an adequate remedy at law.  Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if the Indemnitee so elects, to institute proceedings, to enforce specific performance, to enjoin such violation, or to obtain any relief as the Indemnitee may elect to pursue.

 

22.                               Third Party Beneficiaries.

 

Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity, other than the parties hereto and their permitted successors and assigns, any rights or remedies under or by reason of this Agreement, except that the Sponsor Stockholders and any of their affiliates (other than the Company) shall be third-party beneficiaries hereunder with respect to the obligations of the Company set forth in Section 2(c).

 

23.                               Governing Law.

 

This Agreement shall be exclusively governed by and construed and enforced under the laws of the State of Delaware without giving effect to the provisions thereof relating to conflicts of law of such state.

 

24.                               Consent to Jurisdiction.

 

(a)                                 Each of the Company and the Indemnitee hereby irrevocably and unconditionally (i) agrees and consents to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action, suit or proceeding that arises out of or relates to this Agreement and agrees that any such action instituted under this Agreement shall be brought only in the Court of Chancery of the State of Delaware (or in any other state court of the State of Delaware if the Court of Chancery does not have subject matter jurisdiction over such action), and not in any other state or federal court in the United States of America or any court or tribunal in any other country; (ii) consents to submit to the exclusive jurisdiction of the courts of the State of Delaware for purposes of any action or proceeding arising out of or in connection with this Agreement; (iii) waives any objection to the laying of venue of any such action or proceeding in the courts of the State of

 

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Delaware; and (iv) waives, and agrees not to plead or to make, any claim that any such action or proceeding brought in the courts of the State of Delaware has been brought in an improper or otherwise inconvenient forum.

 

(b)                                 Each of the Company and the Indemnitee hereby consents to service of any summons and complaint and any other process that may be served in any action, suit or proceeding arising out of or relating to this Agreement in any court of the State of Delaware by mailing by certified or registered mail, with postage prepaid, copies of such process to such party at its address for receiving notice pursuant to Section 19 hereof. Nothing herein shall preclude service of process by any other means permitted by applicable law.

 

25.                               Counterparts.

 

This Agreement may be executed in one or more counterparts (including by PDF or facsimile), each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence of this Agreement.

 

26.                               Headings.

 

The headings of the Sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

 

27.                               Entire Agreement; Conflicts.

 

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings and negotiations, written and oral, between the parties with respect to the subject matter of this Agreement; provided, however, that this Agreement is supplement to and in furtherance of the Company’s certificate of incorporation, bylaws, the DGCL and any other applicable law, in each case, as amended, restated, supplemented or modified from time to time, and shall not be deemed a substitute therefor, and does not diminish or abrogate any rights of the Indemnitee thereunder.  Notwithstanding anything to the contrary set forth in this Agreement, in the event of any conflict between the provisions of this Agreement and the provisions of the Company’s certificate of incorporation or bylaws (in each case, as amended, restated, supplemented or modified from time to time), the provisions of the Company’s certificate of incorporation or bylaws (in each case, as amended, restated, supplemented or modified from time to time) shall govern.

 

[remainder of this page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
EP   ENERGY CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INDEMNITEE:
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    

 

[Signature Page to Indemnification Agreement]exhibit101.htm

MACATAWA BANK CORPORATION

VOTING AND

EXCHANGE AGREEMENT

This Voting and Exchange Agreement (this "Agreement") is entered into between the undersigned (the "Holder") and Macatawa Bank Corporation, a Michigan corporation (the "Company").

The Holder is the record holder of shares (the "Series A Preferred Shares") of the Company's outstanding Series A Noncumulative Convertible Perpetual Preferred Stock, Liquidation Preference Amount $1,000 per share (the "Series A Preferred Stock").  The Holder and the Company desire to enter into this Voting and Exchange Agreement.

A. PART ONE

1. Special Shareholders Meeting.  As permitted by the Michigan Business Corporation Act, as promptly as reasonably practicable following the execution and delivery of a Voting and Exchange Agreement (in a form which is the same or substantially similar to this Agreement) by holders of at least a majority of the Series A Preferred Shares and 5:00 p.m. eastern time on December 29, 2013, whichever is later, the Company shall call and hold a special meeting of shareholders (the "Special Shareholders Meeting") to vote on a proposal (the "Proposal") to amend the Company's Articles of Incorporation to effect, on a mandatory basis, the cancellation and exchange of the Series A Preferred Shares upon terms substantially consistent with the terms of the Exchange (defined below) as set forth in the Summary attached as Exhibit A and this Agreement.  In connection with the Special Shareholders Meeting, the Company agrees to use commercially reasonable efforts to solicit proxies representing at least a majority of the Series A Preferred Shares and representing at least a majority of the outstanding shares of Company common stock, in each case appointing the named proxies to vote all such shares "for" the Proposal.

 

2. Terms of Exchange.  If the Proposal is approved at the Special Shareholders Meeting (or if the Company exercises its Early Closing Option pursuant to Section B.5 of this Agreement) , the Company shall cancel and exchange (the "Exchange") each Series A Preferred Share and issue to the Holder the following consideration (the "Exchange Consideration") in exchange therefore:

 

(a) a number of shares of the Company's common stock equal to $1,000 divided by the Exchange Price; plus

 

(b) at the election of the Holder (as indicated by the Holder below in the Election Box on the Election and Signature Page): (i) an amount of cash equal to $142.00 (the "Investment Return Amount"); or (ii) a number of shares of Company common stock equal to the Investment Return Amount divided by the Exchange Price.

 

For purposes of this Agreement, "Exchange Price" means the greater of (A) $5.25 per share, (B) the average closing price per share for Company common stock as reported on NASDAQ for the 20 trading days immediately prior to the Closing Date, or (C) the consolidated closing bid price per share of Company common stock as determined by NASDAQ on the trading day immediately before the Closing Date.

 

3. Effective Time.  If the Proposal is approved, the Company shall file a certificate of amendment (the "Certificate") to its Articles of Incorporation to effect the Exchange and, in such case, the effective time ("Effective Time") of the Exchange shall be as of the time and date when the Certificate becomes effective.  Upon the Effective Time, the Series A Preferred Shares and all obligations thereunder and pursuant thereto shall be cancelled and extinguished and converted into the right to receive the Exchange Consideration.  Following the Effective Time, the Company shall issue to the Holder the Exchange Consideration, together with cash in lieu of any fractional share interest pursuant to Section C.15 of this Agreement, The Company shall issue or cause to be issued all shares of Company common stock owing to the Holder in book-entry form through the Direct Registration System and issue or cause to be issued statements reflecting ownership by the Holder of such shares in the Direct Registration System.  The Company shall mail or cause to be mailed to the Holder a check in payment of any cash payment owing to the Holder.

 

4. Irrevocable Proxy.  The Holder hereby irrevocably appoints Ronald L. Haan and Jon W. Swets, or either of them, of the Company, with full power of substitution, to act as attorneys and proxies for the Holder to vote all Series A Preferred Shares that the Holder is entitled to vote at the Special Shareholders Meeting, to be held on a date and at a location to be determined, and any and all adjournments and postponements thereof of such meeting, "for" the Proposal.

 

B. PART TWO

 

5. Early Closing Option.  If all of the holders of the Series A Preferred Shares execute and deliver a Voting and Exchange Agreement (in a form which is the same or substantially similar to this Agreement), the Company may, in its sole discretion, elect (the "Early Closing Option") to complete the Exchange without calling and holding the Special Shareholders Meeting and voting on the Proposal.  If the Company exercises the Early Closing Option, Company and Holder shall complete the Exchange on a date chosen by the Company, which shall be reasonably promptly after the Company exercises the Early Closing Option.

 

6. Closing Pursuant to Early Closing Option.

 

(a) Subject to the terms and conditions of this Agreement, the closing of the Exchange pursuant to the Early Closing Option (the "Closing") will occur on a date (the "Closing Date") chosen by the Company in its sole discretion.  The Company will provide notice to the Holder of the Closing Date chosen by the Company.  Upon completion of the Closing, the Series A Preferred Shares and all

 

(b) obligations thereunder and pursuant thereto shall be cancelled and extinguished and converted into the right to receive the Exchange Consideration.

 

(c) At the Closing, the Holder shall deliver or cause to be delivered to the Company (i) all right, title and interest in and to the Series A Preferred Shares free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto (collectively, "Liens"), and any documents of conveyance or transfer that the Company may deem necessary or desirable to transfer to and confirm in the Company all right, title and interest in and to the Series A Preferred Shares free and clear of any Liens; and (ii) the Company shall issue to the Holder the Exchange Consideration, together with cash in lieu of any fractional share interest pursuant to Section C.15 of this Agreement.  The Company shall issue or cause to be issued all shares of Company common stock owing to the Holder in book-entry form through the Direct Registration System and issue or cause to be issued statements reflecting ownership by the Holder of such shares in the Direct Registration System.  The Company shall mail or cause to be mailed to the Holder a check in payment of any cash payment owing to the Holder.

 

7. Power.  The Holder hereby irrevocably appoints Ronald L. Haan and Jon W. Swets, or either of them, with full power of substitution, as true and lawful attorneys to transfer all of the Holder's Series A Preferred Shares on the books and records of the Company.

 

C. PART THREE

 

8. Delivery of Stock Certificates; Transfer of Ownership.  Simultaneously with the execution and delivery of this Agreement, or within seven days thereafter if permitted by the Company, the Holder shall deliver into escrow stock certificates representing all of the Holder's Series A Preferred Shares.  Transfer of ownership of the Holder's Series A Preferred Shares will only occur upon the Effective Time or the Closing.  Prior to the Effective Time or the Closing, stock certificates representing the Holder's Series A Preferred Shares delivered to the Company shall be held in escrow by the Company.  The Holder's stock certificates will be returned to the Holder on or before June 30, 2014 if the Effective Time has not occurred and the Closing has not been completed before that date.

 

9. Representations, Warranties, and Agreements by Holder.

 

The Holder represents, warrants, and agrees as follows:

 

(a) This Agreement is the legal, valid and binding agreement of the Holder enforceable against the Holder in accordance with its terms.  The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the performance of the Holder's obligations hereunder are duly authorized and will not conflict with, or result in any violation of or default under, any provision of any agreement or other instrument to which the Holder is a party or by which the Holder is bound.

 

(b) If the Holder is an entity, the Holder is duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization.  If the Holder is an individual, the Holder has legal capacity to enter into and be bound by this Agreement.

 

(c) The Holder is the sole legal and beneficial owner of the Series A Preferred Shares, and the Holder has good, valid and marketable title to such shares free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto (collectively, "Liens") except as identified in Schedule 4(c) to this Agreement.  Upon the Holder's delivery of the Series A Preferred Shares to the Company pursuant to the Exchange, such shares shall be free and clear of all Liens.

 

(d) The shares of Company common stock to be issued pursuant to the Exchange are being issued to the Holder and not to any other person or entity and for the account of the Holder, not as a nominee or agent and not for the account of any other person or entity.  The Holder is accepting delivery of such shares for investment for an indefinite period and not with a view to the sale or distribution of any part or all of such shares by public or private sale or other disposition.

 

(e) The Holder has been advised that the shares of Company common stock have not been registered under the Securities Act of 1933, as amended (the "Act"), or registered or qualified under any state securities law, on the ground that exemptions from or preemption of such registration and qualification requirements are available.

 

(f) The Holder understands: (i) the risks involved in an investment in the shares of Company common stock to be issued pursuant to the Exchange, including the speculative nature of the investment; (ii) the financial risks involved in an investment in the such shares, including the risk of losing the entire investment made by the Holder; and (iii) the lack of liquidity and restrictions on transfers of such shares.

 

(g) The Holder has had an opportunity to consult with legal, accounting, tax, investment, and other advisers to the Holder with respect to the tax consequences of the Exchange and the tax treatment of an investment by the Holder in the shares of Company common stock to be issued pursuant to the Exchange and the merits and risks of an investment in such shares to the extent that such advice is deemed appropriate by the Holder.

 

(h) The Holder acknowledges that all documents, records, and books requested by the Holder pertaining to an investment in the shares of Company common stock have been made available for inspection by the Holder and the Holder's attorney, certified public accountant, or other representatives.  The Holder and the Holder's advisers have had a reasonable opportunity to ask questions of and receive answers from the Company, or a person or persons acting on its behalf, concerning an investment in the shares of Company common stock, and all such questions have been answered to the full satisfaction of the Holder.

 

(i) The Holder acknowledges receipt of the Company's Annual Report on Form 10-K for the year ended December 31, 2012 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, copies of which were provided to the Holder with this Agreement.

 

(j) The Holder:  (i) can bear the economic risk of losing the entire investment of the Holder in the Company, and (ii) together with the Holder's representatives (if any), has such knowledge and experience in financial, tax and business matters to enable the Holder to utilize the information made available in connection with the investment in the shares of Company common stock, to evaluate the merits and risks of the prospective investment, and to make an informed investment decision.

 

10.  Representations, Warranties, and Agreements by the Company

 

The Company represents, warrants, and agrees as follows:

 

(a) This Agreement is the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms.  The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the performance of the Company's obligations hereunder are duly authorized and will not conflict with, or result in any violation of or default under, any provision of any agreement or other instrument to which the Company is a party or by which the Company or any of the Company's properties are bound.

 

(b) The Company is duly incorporated, validly existing and in good standing under the laws of the State of Michigan.

 

(c) The shares of Company common stock to be issued pursuant to the Exchange, when issued in accordance with the terms of this Agreement, are duly authorized, validly issued, fully paid and non-assessable and not issued in violation of or subject to any preemptive rights, purchase option, call or right of first refusal rights.

 

11. Agreement to Refrain from Resales.  The Holder shall in no event pledge, sell, transfer, assign, or otherwise dispose of any shares of Company common stock to be issued pursuant to the Exchange, nor shall the Holder receive any consideration for such shares from any person, unless, before any proposed pledge, sale, transfer, assignment, or other disposition:

 

(a) A registration statement under the Act registering resale of such shares, including those owned by the Holder, shall be then effective and such disposition shall have been appropriately qualified in accordance with the Act; or

 

(b) The Holder reasonably concludes that any such proposed pledge, sale, transfer, assignment, or other disposition of such shares is exempt from registration of such shares under the Act or registration or qualification of such shares under any other federal or state securities law, and has provided to the Company, at the request of the Company, evidence of such exemption, to the reasonable satisfaction of the Company, including, without limitation, a legal opinion that such proposed pledge, sale, transfer, assignment, or other disposition will not require registration of such shares under the Act or registration or qualification of such shares under any other federal or state securities law.

 

12. Shares will be Restricted Securities.  The Holder understands that the shares of Company common stock to be issued pursuant to the Exchange will be "restricted securities" within the meaning of the Act and are subject to resale restrictions.  The Holder understands that such shares may not be sold or transferred unless registered under the Act, or sold or transferred pursuant to an applicable exemption from registration under the Act.

 

13. Registration Rights.

 

(a) At any time after the Closing, holders of a majority of the Registrable Securities then outstanding may request registration under the Act of resale of all or any portion of their Registrable Securities (each a "Demand Registration"). Each request for a Demand Registration shall specify the approximate number of Registrable Securities required to be registered. Upon receipt of such request, the Company shall promptly (but in no event later than 10 days following receipt thereof) deliver notice of such request to all other holders of Registrable Securities who shall then have 10 days from the date such notice is given to notify the Company in writing of their desire to be included in such Demand Registration. The Company shall cause a registration statement to be filed as soon as reasonably practicable after the date on which the initial request for such Demand Registration is given and shall use its commercially reasonable efforts to cause such registration statement to be declared effective by the Securities and Exchange Commission as soon as reasonably practicable thereafter. The Company shall not be required to effect a Demand Registration more than three times for the holders of Registrable Securities as a group.  The Company shall bear the expenses incurred by it and associated with each Demand Registration.  If then eligible to use Form S-3, the Company shall file each Demand Registration on Form S-3 or any successor form.

 

(b) The Company shall not be obligated to effect any Demand Registration within 90 days after the effective date of a previous Demand Registration.  The Company may postpone for up to 60 days the filing or effectiveness of a registration statement for a Demand Registration if the Company determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, securities offering, corporate reorganization or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Act or the Securities Exchange Act of 1934; provided, that in such event the holders of a majority of the Registrable Securities initiating such Demand Registration shall be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder.

 

(c) The Company and holders of a majority of the Registrable Securities then outstanding may enter into a registration rights agreement containing such other customary and mutually acceptable terms and conditions related to a Demand Registration subsequent to the date of this Agreement.

 

(d) Notwithstanding this Section C.13, the Company shall not be required to register any shares which are not held by an affiliate of the Company and which the Company reasonably concludes, after consulting with legal counsel, may be lawfully sold or transferred by the Holder without registration under the Act or any applicable state securities laws due to the availability of Securities and Exchange Commission Rule 144 or any other reason.  Any shares as to which the Company reaches such a conclusion will then no longer be "restricted securities" or subject to resale restrictions and the Company shall instruct the transfer agent that these shares may be transferred without legend or restriction.

 

(e) "Registrable Securities" means all shares of Company common stock issued to holders of Series A Preferred Stock pursuant to the Exchange.

 

14. Agreement to Refrain from Transfer and Assignment.  The Holder agrees not to transfer or assign the Holder's Series A Preferred Shares or this Agreement or any of the Holder's interest in the Holder's Series A Preferred Shares or this Agreement.

 

15. No Fractional Shares.  The Holder acknowledges and agrees that no fractional shares of Company common stock will be issued pursuant to the Exchange and that, instead, the Holder will be entitled to receive cash in lieu of any fractional share of Company common stock to which the Holder would otherwise have been entitled in an amount equal to such fractional share interest multiplied by the Exchange Price.

 

16. Successors.  This Agreement, including the representations, warranties, and agreements contained in this Agreement, shall be binding on the Holder and the Company and the successors and legal representatives of the Holder and the Company and shall inure to the benefit of the respective successors and assigns of the Holder and the Company.

 

17. Entire Agreement; Amendments.  This Agreement constitutes the entire agreement and understanding among the parties with respect to the subject matter hereof and supersedes all prior agreements, negotiations, arrangements, and understandings relating to the subject matter of this Agreement.  This Agreement may be amended, modified, superseded, or canceled, and any of the terms, covenants, representations, warranties, or conditions in this Agreement may be waived, only by a written instrument signed by each party to this Agreement or, in the case of a waiver, by or on behalf of the party waiving compliance.  The failure of any party at any time to require performance of any provision in this Agreement shall not affect the right at a later time to enforce that or any other provision.  No waiver by any party of any condition, or of any breach of any term, covenant, representation, or warranty contained in this Agreement, in any one or more instances, shall be deemed to be a further or continuing waiver of that or any other condition or breach.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute a single instrument.

 

18. Governing Law.  This Agreement and the rights and obligation of the parties under this Agreement shall be governed by, and interpreted and enforced in accordance with, the laws of the State of Michigan, without regard to conflicts of law principles.

 

19. Non-Waiver of Securities Laws.  Notwithstanding any of the representations, warranties, acknowledgments or agree­ments made in this Agreement by the Holder, the Holder does not waive any rights granted to the Holder under federal or state securities laws.

 

20. Counterparts.  This Agreement may be executed in one or more counterparts, each of which together shall constitute one and the same instrument.

 

21. Transfer Agent.  The transfer agent for the Series A Preferred Shares may accept a copy of this Agreement as an original signed power under Section B.7 of this Agreement.

 

[Election and Signature page follows]

 

  

  

  

 ELECTION AND SIGNATURE PAGE

 

	
Note to Holder: You must complete this Election Box by marking your election with an "X" where appropriate.

_____           The Holder elects to receive the Investment Return Amount in cash.

_____The Holder elects to receive the Investment Return Amount in shares of Company common stock.

HOLDER:

[Insert Holder's name and address exactly as it appears on the stock register]

This Agreement must be signed by the Holder exactly as the name appears above.

	
Date: _____________________

	  
	  	  
	
If Holder is an entity complete this signature block:

	
Name of Holder:

 

 

___________________________________

By:

Its:

	  	  
	
If Holder is an individual, complete this signature block:

	
 

 

 

___________________________________

Name:

 

Accepted and Agreed to by:

Macatawa Bank Corporation

By:                                                                      

By:

Its:

9624747

Exhibit A

MACATAWA BANK CORPORATION

Summary

Solicitation of Voting and Exchange Agreement

Relating to a Proposal to

Exchange Series A Noncumulative Convertible Perpetual Preferred Stock

This is a summary of the principal terms of a solicitation (the "Solicitation") by Macatawa Bank Corporation (the "Company") of a proxy relating to a proposal to cancel and exchange (the "Exchange") all of the issued and outstanding shares (the "Series A Preferred Shares") of the Company's Series A Noncumulative Convertible Perpetual Preferred Stock, Liquidation Preference Amount $1,000 per share.  The Solicitation is being made to you exclusively pursuant to this Summary and the enclosed Voting and Exchange Agreement. This Summary is qualified in its entirety by the terms of the enclosed Voting and Exchange Agreement.  To the extent this Summary conflicts with the enclosed Voting and Exchange Agreement, the terms of the enclosed Voting and Exchange Agreement control.

 

	
Who is making the Solicitation?

	
Macatawa Bank Corporation.

	  	  
	
Who is subject of the Solicitation?

	
Record holders of Series A Preferred Shares.

	  	  
	
What securities are subject of the Solicitation?

	
The Series A Preferred Shares.

	  	  
	
What is the Solicitation?

	
As permitted by the Michigan Business Corporation Act, as promptly as reasonably practicable following the execution and delivery of a Voting and Exchange Agreement by holders of at least a majority of the Series A Preferred Shares and 5:00 p.m. eastern time on December 29, 2013, whichever is later, the Company will call and hold a special meeting of shareholders (the "Special Shareholders Meeting") to vote on a proposal (the "Proposal") to amend the Company's Articles of Incorporation to effect, on a mandatory basis, the cancellation and exchange of the Series A Preferred Shares upon terms substantially consistent with the terms of the Exchange as set forth in this Summary and the enclosed Voting and Exchange Agreement.

 

By executing and delivering the Voting and Exchange Agreement, you are appointing the persons named as your proxy to vote all of your Series A Preferred Shares "for" the Proposal.

 

The Proposal will pass and become effective upon the affirmative vote of holders of at least a majority of the Series A Preferred Shares and the affirmative vote of a majority of the outstanding shares of Company common stock.

	  	  
	
What are the terms of the Exchange?

	
The Company will cancel and exchange each Series A Preferred Share for:

 

· shares of Company common stock, no par value, in an amount equal to $1,000 divided by the Exchange Price; plus

· at the election of the holder:

o an amount of cash equal to $142.00 (the "Investment Return Amount"); or

o a number of shares of Company common stock equal to the Investment Return Amount divided by the Exchange Price.

 

The "Exchange Price" is the greater of:

· $5.25 per share;

· the average closing price per share for Company common stock as reported on NASDAQ for the 20 trading days immediately prior to the Closing Date; or

· the consolidated closing bid price per share of Company common stock as determined by NASDAQ on the trading day immediately before the Closing Date.

	  	  
	
Early Closing Option

	
If all of the holders of the Series A Preferred Shares execute and deliver a Voting and Exchange Agreement, the Company may, in its sole discretion, elect (the "Early Closing Option") to complete the Exchange without calling and holding the Special Shareholders Meeting and voting on the Proposal.  If the Company exercises the Early Closing Option, Company and Holder will complete the Exchange on a date chosen by the Company in its sole discretion.

 

 

	  	  
	
What is the procedure to grant my proxy and agree to the Early Closing Option?

	
Before the Solicitation Period Deadline, you must properly complete, execute and deliver to the Company the enclosed Voting and Exchange Agreement, and deliver into escrow stock certificates representing all of your Series A Preferred Shares, as follows:

 

Macatawa Bank Corporation

Attention: Jon W. Swets

10753 Macatawa Drive

Holland, MI  49424

 

Transfer of ownership of your Series A Preferred Shares will only occur upon completion of the Exchange.  Prior to completion of the Exchange, stock certificates representing your Series A Preferred Shares delivered to the Company will be held in escrow by the Company.  Your stock certificates will be returned to you on or before June 30, 2014 if the Closing does not occur before that date.

	  	  
	
In what form will shares of Company common stock issued pursuant to the Exchange be issued?

	
All shares of Company common stock issued pursuant to the Exchange will be issued in book-entry form through the Direct Registration System, which means that, instead of receiving a paper stock certificate representing these shares, you will receive a statement showing the number of shares of Company common stock held by you electronically in book-entry form.

	  	  
	
Will fractional shares of Company common stock be issued pursuant to the Exchange?

	
No.  Fractional shares of Company common stock will not be issued pursuant to the Exchange.  Instead, you will be entitled to receive cash in lieu of any fractional share of Company common stock to which you would otherwise have been entitled in an amount equal to such fractional share interest multiplied by the Exchange Price.

	  	  
	
What is the Company's policy on dividends on Company common stock?

	
After payment of the second quarter cash dividend in 2008, in order to preserve its capital, the Company suspended payment of its cash dividend to common shareholders until further action by the Board of Directors. Funds for the payment of future cash dividends are primarily dependent upon cash currently held at the Company and from dividends received from its subsidiary, Macatawa Bank, out of its earnings. The Company expects to evaluate its ability to resume the payment of dividends on its common stock if and when the Exchange is completed.  There can, however, be no assurance that the Company will resume payment of dividends in the future.

	  	  
	
When will the Exchange be completed?

	
If the Proposal is approved, it is expected that the Exchange will be completed on or before March 31, 2014, but that timing is not assured.

 

If the Company elects to exercise the Early Closing Option, the Exchange will be completed on an earlier date chosen by the Company.

	  	  
	
Will there be restrictions on transfer of the shares of Company common stock issued pursuant to the Exchange?

	
Yes.  The shares of Company common stock issued pursuant to the Exchange will be restricted securities within the meaning of the Securities Act of 1933.  This means that you may not sell your shares of Company common stock unless the shares are registered under the Securities Act of 1933 or there is an available exemption from registration, such as Rule 144.

 

Generally, Rule 144 will permit non-affiliates of the Company to sell their shares without restriction after they have been held for six months and will permit affiliates of the Company to sell their shares after the six-month holding period and subject to the applicable limitations and requirements of Rule 144 (current public information about the Company, volume limitations, manner of sale limitations and filing of Form 144).

	  	  
	
Will the Company register the shares of Company common stock issued pursuant to the Exchange?

	
As soon as reasonably practicable following the completion of the Exchange, the Company intends to use commercially reasonable efforts to file (and cause to become effective) with the Securities and Exchange Commission a registration statement registering the resale of shares of Company common stock issued pursuant to the Exchange.  If and when a registration statement becomes effective, you will be permitted to sell your shares of Company common stock issued pursuant to the Exchange under the registration.

 

	  	  
	
Will holders have registration rights for shares of Company common stock issued pursuant to the Exchange?

	
Yes.  Holders will have registration rights for the resale of shares of Company common stock issued pursuant to the Exchange.  Under these registration rights, the Company must file (and cause to become effective) with the Securities and Exchange Commission a registration statement registering the resale of shares of Company common stock issued pursuant to the Exchange.  These registration rights may be exercised only upon the demand of holders of at least a majority of the shares of Company common stock issued pursuant to the Exchange.

	  	  
	
What are the tax consequences of the Exchange?

	
You should consult your own tax advisor as to particular tax consequences of the Exchange, including the election to receive the Investment Return Amount in cash or stock, and as to purchasing, holding and disposing of shares of Company common stock, including the application and effect of any federal, state, local or foreign tax laws, and of any proposed changes in applicable tax laws.

	  	  
	
Are there risks involved in owning Company common stock?

	
Yes.  Investing in Company common stock involves risks.  Before making an investment decision, you should carefully read:

 

· this Summary and the enclosed Voting and Exchange Agreement;

· the enclosed Annual Report on Form 10-K for the year ended December 31, 2012, including the risk factors set forth under the "Risk Factors" section of such report, and the enclosed Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.

 

Additional information about the Company is available in the "Investor Relations" section of our website at www.macatawabank.com.

	  	  
	
Who should I contact if I have any questions?

	
Jon W. Swets

Senior Vice President and Chief Financial Officer

(616) 494-7645

jswets@macatawabank.com

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Exchange or an investment in shares of Company common stock or passed upon the adequacy or accuracy of this Summary and the enclosed Voting and Exchange Agreement. Any representation to the contrary is a criminal offense. Shares of Company common stock are not savings accounts, deposits or other obligations of a bank or savings institution and are not insured by the Federal Deposit Insurance Corporation or any other government agency.  This Summary and the enclosed Voting and Exchange Agreement do not constitute an offer to sell or a solicitation of an offer to buy any securities other than the shares of Company common stock to which it relates or an offer to sell or a solicitation of an offer to buy to any person in any jurisdiction where it is unlawful to make such offer or solicitation.

9615526

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