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Exhibit 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made this ____ day
of ________, 1999 by and among AMERICAN EAGLE OUTFITTERS, INC., a Delaware
corporation ("AEO"), NATCO INDUSTRIES, INC., a Delaware corporation ("Natco"),
NATCO LIMITED LIABILITY COMPANY, a Delaware limited liability company ("Natco
LLC"), and the undersigned members of Natco LLC (the "Members").
RECITALS
A. Natco, Thorn Hill Acquisition Corp., a Delaware corporation
("Acquisition"), Natco LLC and AEO entered into a Plan of Reorganization and
Merger Agreement, dated as of November 30, 1998, (the "Merger Agreement")
providing for the merger of Acquisition with and into AEO (the "Merger").
B. Natco LLC was formed by Natco prior to the Merger as a part of the
plan of reorganization of Natco, to hold all assets and liabilities of Natco
other than its stock in AEO, and to facilitate the merger of Acquisition with
and into AEO. All of the assets of Natco, other than its 6,991,174 shares of AEO
common stock, were contributed by Natco to Natco LLC and all of Natco's
liabilities were assumed by Natco LLC, effective on __________, 1999.
C. The execution of this Agreement is a condition to AEO's obligation
to consummate the Merger under Section 7.02(f) of the Merger Agreement.
D. Except as otherwise defined herein, the capitalized terms in this
Agreement shall have the meanings ascribed to them in the Merger Agreement.
NOW THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants set forth herein, the undersigned parties agree as follows:
AGREEMENT
1. Indemnification by Natco LLC. Natco LLC agrees to indemnify each of
Natco, AEO and their officers, directors, employees and agents, and agrees to
hold each of them harmless from and against, any and all losses, liabilities,
obligations, costs, claims, damages (including consequential and punitive
damages), penalties and expenses (including attorneys' fees) (collectively,
"Losses") incurred or suffered by any of them relating to or arising out of or
in connection with: (a) any obligations or liabilities of Natco existing prior
to the Merger or resulting from events or occurrences prior to the Merger, (b)
any breach of or any inaccuracy in any representation or warranty made by Natco,
Acquiring or Natco LLC in the Merger Agreement or any document delivered by
Natco, Acquisition or Natco LLC at the Closing; or (c) any breach of or failure
by Natco, Acquisition or Natco LLC to perform any covenant or obligation of
Natco, Acquisition or Natco LLC set out or contemplated in the Merger Agreement
or any document delivered at the Closing; provided, however, that the foregoing
indemnity does not include Losses resulting from the Merger, including any claim
relating to whether or not the Merger is a tax-free reorganization or the amount
and value to Natco or AEO of any Natco net operating loss carry-forward, and,
provided further, that the foregoing indemnity shall only apply to Losses, that
exceed the actual cash value of any benefit received after the Merger by Natco
or AEO relating to any tax credits or the net operating loss carryover of Natco
immediately prior to the Merger, and any other tax benefits, but only if and to
the extent such Losses do not result from a willful breach of a representation,
warranty or covenant in the Merger Agreement by Natco, Acquisition or Natco LLC.
2. Term of Indemnity. All agreements and obligations of Natco LLC
contained herein shall terminate on the earlier of the fourth anniversary date
of the Effective Time of the Merger or the applicable statute of limitations,
except for (a) claims relating to tax matters, which can be asserted by Natco or
AEO through the applicable federal income tax statute of limitations, or (b)
claims relating to any breach of the representation and
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warranty made in Section 5.02(m) of the Merger Agreement, which can be asserted
by Natco or AEO through the earlier of the tenth anniversary date of the
Effective Time of the Merger or the applicable statute of limitations.
3. Maintenance of Minimum Net Worth and Recontribution of Non-tax
Distributions to Natco LLC. Each of the Members hereby agrees, severally and not
jointly, that, during the term ending on the fourth anniversary date of the
Effective Time of the Merger, there will be no distributions taken by it from
Natco LLC that would cause the net worth of Natco LLC, computed in accordance
with generally accepted accounting principles, applied on a consistent basis and
measured at the time of the distribution, to fall below $10,000,000. In addition
to the foregoing, each of the Members, severally and not jointly, hereby agrees
that during the term of this indemnity the Member will contribute back to Natco
LLC in cash its pro rata share of the net value (after giving effect to the
income taxes payable thereon by such Member) of any distributions received by
such Member from Natco LLC, other than distributions to pay tax on income
generated by Natco LLC or taxes payable by the Members as a result of the
initial receipt of their membership interest in Natco LLC, in the event that
such contributions are needed to allow Natco LLC to meet its indemnity
obligations under this Agreement.
4. Claims. As soon as is reasonably practicable after becoming aware of
a claim for indemnification under this Agreement and provided the claim for
indemnification falls within the limitations set forth above, the indemnified
person ("Indemnified Person") shall promptly give notice to Natco LLC of such
claim and the amount the Indemnified Person will be entitled to receive
hereunder from Natco LLC; provided that the failure of the Indemnified Person to
promptly give notice shall not relieve Natco LLC of its obligations except to
the extent (if any) that Natco LLC shall have been prejudiced thereby.
5. Notice of Third-Party Claims; Assumption of Defense. The Indemnified
Person shall give notice as promptly as is reasonably practicable to Natco LLC
of the assertion of any claim, or the commencement of any suit, action or
proceeding, by any person not a party hereto in respect of which indemnity may
be sought under this Agreement; provided that the failure of the Indemnified
Person to promptly give notice shall not relieve Natco LLC of its obligations
except to the extent (if any) that Natco LLC shall have been prejudiced thereby.
Natco LLC may, at its own expense, (a) participate in the defense of any claim,
suit, action or proceeding, and (b) upon notice to the Indemnified Person and
Natco LLC delivering to the Indemnified Person a written agreement that the
Indemnified Person is entitled to indemnification for all losses arising out of
such claim, suit, action or proceeding and that Natco LLC shall be liable for
the entire amount of any loss, at any time during the course of any such claim,
suit, action or proceeding, assume the defense thereof; provided, however, that
(i) Natco LLC's counsel is reasonably satisfactory to the Indemnified Person,
and (ii) Natco LLC shall thereafter consult with the Indemnified Person upon the
Indemnified Person's reasonable request for such consultation from time to time
with respect to such claim, suit, action or proceeding. If Natco LLC assumes
such defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by Natco LLC. If, however, counsel for the
Indemnified Person reasonably determines in its judgment that representation by
Natco LLC's counsel of Natco LLC and the Indemnified Person would present such
counsel with a conflict of interest, then such Indemnified Person may employ
separate counsel to represent or defend it in any such claim, action, suit or
proceeding and Natco LLC shall pay the fees and disbursements of such separate
counsel. Whether or not Natco LLC chooses to defend or prosecute any such claim,
suit, action or proceeding, all of the parties hereto shall cooperate in the
defense or prosecution thereof.
6. Failure of Natco LLC to Act. In the event that Natco LLC does not
elect to assume the defense of any claim, suit, action or proceeding, then any
failure of the Indemnified Person to defend or to participate in the defense of
any such claim, suit, action or proceeding or to cause the same to be done,
shall not relieve Natco LLC of its obligations hereunder.
7. Satisfaction of Indemnification Obligation. Natco LLC shall satisfy
any obligation to indemnify Natco, AEO and their officers and directors against
Losses as required by this Agreement in cash.
8. Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
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9. Notice. All notices that are required or may be given pursuant to
the terms of this Agreement shall be in writing and delivered by hand or
national overnight courier service, transmitted by fax or mailed by registered
or certified mail, postage prepaid, and shall be deemed given upon receipt, as
follows:
If to NATCO LLC to:
NATCO LIMITED LIABILITY COMPANY
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxx, Esq., General Counsel
If to NATCO or AEO, to:
AMERICAN EAGLE OUTFITTERS, INC.
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxxx Xxxxxx, COO
with copies to:
Benesch, Friedlander, Xxxxxx & Aronoff Porter, Wright, Xxxxxx & Xxxxxx
2300 BP America Building 00 Xxxxx Xxxx Xxxxxx
000 Xxxxxx Xxxxxx Xxxxxxxx, Xxxx 00000
Xxxxxxxxx, XX 00000-0000 Phone: 000-000-0000
Phone: 000-000-0000 Fax: 000-000-0000
Fax: 000-000-0000 Attention: Xxxx Xxxxxx, Xx., Esq.
Attention: Xxxxxxx X.X. Xxxxx, Esq
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
10. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Ohio applicable to contracts made and to be wholly
performed in such state.
(b) This Agreement shall be binding upon Natco LLC, and its successors
and assigns, and shall inure to the benefit of the Indemnified Persons, their
successors and assigns, and their personal representatives and heirs.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless agreed upon in writing and signed by Natco
LLC and by action of the Audit Committee of the Board of Directors of Natco
confirmed by the Chairman of the Committee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
NATCO LIMITED LIABILITY COMPANY AMERICAN EAGLE OUTFITTERS, INC.
By: By:
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Xxx X. Xxxxxxxxxxxxx Xxxxxx Xxxxxx
Chief Executive Officer Chief Operating Officer
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NATCO INDUSTRIES, INC.:
By:
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Xxx X. Xxxxxxxxxxxxx
Chief Executive Officer
NATCO LIMITED LIABILITY COMPANY MEMBERS:
XXXXXX XXXXXXXXXXXXX FUND A XXXXX XXXXXXXXXXXXX 1983 SUB S TRUST
1983 REVOCABLE TRUST
By: By:
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Xxx Xxxxxxxxxxxxx, Trustee Xxxxx Xxxxxxx, Co-Trustee
XXXXX XXXXXXXXXXXXX 1983 SUB S TRUST
By:
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XXXX XXXXXXXXXXXXX, INDIVIDUALLY Xxx Xxxxx, Co-Trustee
XXX X. XXXXXXXXXXXXX SUB S TRUST #1 XXXXX XXXXXXX 1987 IRREVOCABLE TRUST
XXX X. XXXXXXXXXXXXX SUB S TRUST #2
XXX X. XXXXXXXXXXXXX SUB S TRUST #3
ELLIE XXXXXXX XXXXX 1983 SUB S TRUST By:
XXXXX XXXXX DESHE 1983 SUB S TRUST ---------------------------------
XXXX XXXXXX DESHE 1985 SUB S TRUST Xxx Xxxxx,Trustee
XXXX XXXXXXXXXXXXX 1984 SUB S TRUST
By:
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Xxxxxxxxx Xxxxxxxxxxxxx, Trustee for
each of the above Trusts
