EXHIBIT 16
FORM OF INDEMNITY AGREEMENT OF DIRECTOR
AGREEMENT, effective as of February ___, 1999, between ASA HOLDINGS, INC.,
a Georgia corporation (the "Company"), and ________________ (the "Indemnitee"),
whose principal residence address is __________________________________________.
WHEREAS, it is essential to the Company to retain and attract as directors
the most capable persons available; and
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other Claims being asserted against directors of public companies
in today's environment; and
WHEREAS, damages sought by class action plaintiffs in some cases amount to
tens of millions of dollars and, whether or not the case is meritorious, the
cost of defending them is enormous with few individual directors having the
resources to sustain such legal costs, not to mention the risk of a judgment
running into millions even in cases where the defendant was neither culpable nor
profited personally to the detriment of the corporation; and
WHEREAS, Section 14-2-851 of the Georgia Business Corporation Code, under
which the Company is organized, empowers corporations to indemnify persons
serving as a director of the corporation or a person who serves at the request
of the corporation as a director, trustee, officer, partner, employee or agent
of another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise; and
WHEREAS, the Bylaws of the Company require the Company to indemnify any
person who was or is a party or is threatened to made a party to a proceeding by
reason of the fact that he is or was a director or officer of the Company to the
maximum extent permitted by, and in the manner provided by, the Georgia Business
Corporation Code; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's service to the
Company in an effective manner, the increasing difficulty in obtaining
satisfactory directors' and officers' liability insurance coverage, and in part
to provide Indemnitee with specific contractual assurance that indemnification
protection provided under the Company's Bylaws will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of the
Articles of Incorporation ("Articles") or Bylaws ("Bylaws") of the Company or
any change in the composition of the Company's Board of Directors or acquisition
transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the full extent (whether partial or complete) authorized or permitted by law
and as set forth in this Agreement, and for the continued coverage of Indemnitee
under the Company's directors' and officers' liability insurance policies; and
WHEREAS, in order to induce Indemnitee to serve or continue to serve as a
director, the Company has agreed to provide Indemnitee with the benefits
contemplated by this Agreement; and
WHEREAS, the Board of Directors is making no determination by this
Agreement that indemnification of Indemnitee for any particular act or omission
giving rise to a proceeding is permissible because Indemnitee has met the
relevant standard of conduct set forth in Section 14-2-851 of the Georgia
Business Corporation Code;
NOW, THEREFORE, in consideration of the premises and of Indemnitee agreeing
to serve or to continue to serve the Company directly or, at its request,
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Basic Indemnification Arrangement.
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a) In the event Indemnitee was, is, or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the full extent authorized or permitted by law as soon
as practicable but in any event no later than thirty (30) days after
written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim; provided,
however, that, except for proceedings to enforce rights to
indemnification, the Company shall not be obligated to indemnify
Indemnitee in connection with a proceeding (or part thereof) initiated
by Indemnitee unless such proceeding (or part thereof) was authorized
in advance, or unanimously consented to, by the Board of Directors of
the Company. If so requested by Indemnitee, the Company shall advance
(within two (2) business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance").
b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party shall not have determined (in a written opinion, in
any case in which the Independent Legal Counsel referred to in Section
2 hereof is involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 1(a) shall be
subject to the condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to
be so indemnified under applicable law, the Company shall be entitled
to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable
law, any
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determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto
(as to which all rights of appeal therefrom have been exhausted or lapsed).
If there has not been a Change in Control, the Reviewing Party shall be
selected by the Company's Board of Directors, and if there has been such a
Change in Control, the Reviewing Party shall be the Independent Legal
Counsel referred to in Section 2 hereof. If there has been no determination
by the Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to commence
litigation in any court in the State of Georgia having subject matter
jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to
appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and Indemnitee.
c) No change in the Company's Articles or Bylaws or in the Georgia Business
Corporation Code subsequent to the date of this Agreement shall have the
effect of limiting or eliminating the indemnification available under this
Agreement as to any act, omission or capacity for which this Agreement
provides indemnification at the time of such act, omission or capacity.
d) Any change in the Company's Articles or Bylaws subsequent to the date of
this Agreement which expands the power of the Company to indemnify its
directors shall to the same extent expand the Indemnitee's rights and the
Company's obligations under this Agreement.
e) If the Articles of Incorporation or Bylaws of any corporation which is a
successor to the Company provide more extensive power to such corporation
to indemnify the directors of the Company, then the provisions of such
successor corporation's Articles of Incorporation or Bylaws shall expand
the Indemnitee's rights and the Company's obligations under this Agreement.
f) If any change after the date of this Agreement in any applicable law,
statute or rule expands the power of the Company to indemnify the
Indemnitee, such change shall to the same extent expand the Indemnitee's
rights and the Company's obligations under this Agreement.
g) If any change in any applicable law, statute or rule diminishes the power
of the Company to indemnify the Indemnitee, such change, except to the
extent otherwise
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required by law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
2. Change in Control. The Company agrees that if there is a Change in Control
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of the Company, then with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnity payments and Expense Advances under this
Agreement or any other agreement, or any Article or Bylaw provision now or
hereinafter in effect relating to Claims for Indemnifiable Events, the Company
shall seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent the Indemnitee would
be permitted to be indemnified under applicable law. The Company agrees to pay
the reasonable fees of the Independent Legal Counsel referred to above and to
fully indemnify such counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
3. Indemnification for Additional Expenses. The Company shall indemnify
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Indemnitee against any and all expenses (including attorneys' fees) and, if
requested by Indemnitee, shall (within two (2) business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement, or any Article or Bylaw provision now or hereafter in effect relating
to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company; provided,
however, that if there is a final judicial determination (as to which all rights
of appeal therefrom have been exhausted or lapsed) that Indemnitee is not
entitled to such indemnification, advance payment of expenses or insurance
recovery, Indemnitee shall reimburse the Company for all such expenses
theretofore paid under this Section 3.
4. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of
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this Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including dismissal without
prejudice, Indemnitee shall be indemnified against all Expenses incurred in
connection with such Claims as to which Indemnitee has been successful.
5. Burden of Proof. In connection with any determination by the Reviewing
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Party or otherwise as to whether Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
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6. No Presumptions. For purposes of this Agreement, the termination of any
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claim, action, suit or proceeding by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by a Reviewing Party that
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have any
particular belief.
7. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in
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addition to any other rights Indemnitee may have under the Articles, Bylaws or
the Georgia Business Corporation Code or otherwise. To the extent that a change
in the Georgia Business Corporation Code (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Articles, Bylaws and this Agreement, it is the intent of the
parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
8. Liability Insurance.
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a) The Company hereby represents and warrants that the Company has
purchased and maintains directors' and officers' liability insurance
consisting of a primary policy issued by Federal Insurance Company
through Chubb Group of Insurance Companies under existing policy
number 8152-98-71 EPP providing $15,000,000.00 in aggregate coverage
and an excess directors' and officers' liability insurance consisting
of a supplemental policy issued by American Casualty Company of
Reading, PA, through CNA Insurance Companies under existing policy
number 169550701 providing $15,000,000.00 in aggregate coverage (the
"D&O Insurance").
b) The Company hereby covenants and agrees that, so long as Indemnitee
shall continue to serve as a director of the Company and thereafter so
long as Indemnitee shall be subject to any possible Claim or
threatened, pending or completed action, suit or proceeding, whether
civil, criminal or investigative, by reason of the fact that
Indemnitee was a director of the Company, the Company shall maintain
in full force and effect the D&O Insurance, or substantially
equivalent insurance coverage.
c) In all policies of D&O Insurance, Indemnitee shall be named as an
insured in such manner as to provide Indemnitee the same rights and
benefits, subject to the same limitations, as are accorded to the
Company's directors or officers most favorably insured by such policy.
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9. Period of Limitations. No legal action shall be brought and no cause of
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action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's spouse, heirs, executors or personal or legal representatives after
the expiration of two (2) years from the date of accrual of such cause of
action, and any Claim or cause of action of the Company shall be extinguished
and deemed released unless asserted by the timely filing of a legal action
within such two (2) year period; provided, however, that if any shorter period
of limitations is otherwise applicable to any such cause of action such shorter
period shall govern.
10. Notices
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a) The Indemnitee shall give to the Company notice in writing as soon as
practicable of any Claim made against him for which indemnification
will or could be sought under this Agreement. Failure to give such
notice shall not be cause for the Company not to indemnify
Indemnitee or advance Expenses unless the Company can demonstrate that
it was prejudiced by such failure.
b) Notices shall be in writing and shall be either personally delivered
or sent by Federal Express or other reputable overnight courier for
next business day delivery, or sent by certified mail, return receipt
requested, addressed as follows:
If to be the Company: ASA Holdings, Inc.
000 Xxxxxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Chief Executive Officer
If to the Indemnitee: at Indemnitee's address stated above
or at such other address as from time to time designated by written notice
delivered in accordance herewith. Any notice personally served shall be deemed
delivered on the date of such service. Any notice sent by overnight courier as
provided above shall be deemed delivered on the first business day after the
date such notice was actually delivered by such overnight courier or refused.
Any notice sent by mail as provided above shall be deemed delivered on
the date of actual receipt or refusal thereof.
11. Amendments, Etc. No supplement, modification or amendment of this Agreement
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shall be binding unless executed in writing by both 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 hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement, the Company
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shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers
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required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under this
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Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Articles, Bylaws or otherwise) of the amounts
otherwise indemnifiable hereunder.
14. Binding Effect Etc. This Agreement shall be binding upon and inure to the
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benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as a director of the Company.
15. Severability. The provisions of this Agreement shall be severable in the
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event that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired and shall remain enforceable
to the full extent permitted by law.
16. Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the laws of the State of Georgia applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
17. Certain Definitions.
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a) Change in Control: shall mean the occurrence of any one or more of the
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following events: (i) acquisition of at least twenty-five percent
(25%) of the voting stock of the Company by any single entity or group
other than Delta Air Lines, Inc. or a subsidiary thereof, the Company,
a subsidiary or an employee benefit plan (or trust forming a part
hereof or a trustee thereof acting solely in its capacity as trustee)
maintained by the Company or a subsidiary, (ii) ownership of more than
fifty percent (50%) of the voting stock of the Company by Delta Air
Lines, Inc. or a subsidiary thereof, (iii) individuals who constitute
the Board on February 14, 1999 (the "Incumbent Board") cease for any
reason to constitute at least a majority thereof, provided that any
person becoming a director subsequent to February 14, 1999, whose
election or nomination for election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board (either
by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director,
without objection to such nomination) shall be, for purposes of this
clause, considered as though such person were a member of the
incumbent Board; provided, however, that no individual initially
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elected or nominated as a director of the Company as a result of an
actual or threatened election
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contest with respect to directors of any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other
than the board shall be deemed to be a member of the incumbent Board, (iv)
the sale or disposition of all or substantially all of the assets of the
Company, or (v) consummation of a reorganization, merger or consolidation
or similar form of corporate transaction involving the Company, unless,
immediately following such transaction more than 50% of the total voting
power of the publicly traded corporation resulting from such transaction
eligible to elect directors of such corporation would be represented by
shares that were Company voting stock immediately prior to such
transaction, and such voting power would be in substantially the same
proportion as the voting power of such Company voting stock immediately
prior to the transaction. Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 25% of the Company voting stock as a
result of the acquisition of the Company voting stock by the Company which
reduces the number of Company voting stock outstanding; provided, that if
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after such acquisition by the Company such person becomes the beneficial
owner of additional Company voting stock that increases the percentage of
outstanding Company voting stock beneficially owned by such person, a
Change in Control of the Company shall then occur.
b) Claim: any threatened, pending or completed action, suit or proceeding,
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or any inquiry or investigation, whether instituted by or in the right of
the Company or any other party, that Indemnitee in good faith believes
might lead to the institution of any such action, suit or proceeding,
whether civil, criminal, administrative, investigative or other.
c) Expenses: include attorneys' fees and all other costs, expenses and
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obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing
to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
d) Indemnifiable Event: any event or occurrence related to the fact that
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Indemnitee is or was a director of the Company, or is or was serving at the
request of the Company as a director, officer, or trustee of another
corporation, trust or other enterprise, or by reason of anything done or
not done by Indemnitee in any such capacity.
e) Independent Legal Counsel: an attorney or firm of attorneys, selected in
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accordance with the provisions of Section 2, who shall not have otherwise
performed services for the Company or Indemnitee within the last five (5)
years.
f) Reviewing Party: any appropriate person or body consisting of a member or
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members of the Company's Board of Directors or any other person or body
appointed by the Board who is not a party to the particular Claim for which
Indemnitee is seeking indemnification, or Independent Legal Counsel.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.
ASA HOLDINGS, INC.
By: ____________________________________
Name:
Title:
___________________________________
Indemnitee
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