INDEMNIFICATION AGREEMENT
THIS AGREEMENT (this "Agreement") is made this 8th day
of June, 1998, by and between XXXXXX INDUSTRIES, INC., a
Tennessee corporation (the "Corporation"), and _____________________
("Indemnified Party").
W I T N E S S E T H:
WHEREAS, Indemnified Party currently serves as a director or
officer, or both, of the Corporation, and in such capacity is
performing a valuable service; and
WHEREAS, the Corporation's Charter (the "Charter") permits
the Corporation to indemnify its directors and officers; and
WHEREAS, Section 00-00-000 of the Tennessee General
Corporation Act, as amended to date (the "State Statute"),
provides the statutory basis for an indemnification agreement
with directors and officers of a Tennessee corporation; and
WHEREAS, the Corporation's Bylaws (the "Bylaws") require the
Corporation to indemnify its directors and officers to the
fullest extent permitted by law; and
WHEREAS, the State Statute specifically provides that it is
not exclusive and that agreements may be entered into between the
Corporation and other persons with respect to the indemnification
of such persons; and
WHEREAS, in accordance with the authorization provided by
the State Statute, the Corporation may purchase a policy, or
policies, of directors and officers liability insurance ("D&O
Insurance"), covering certain liabilities which may be incurred
by its directors, officers and other persons in the performance
of their services for the Corporation; and
WHEREAS, in order to induce Indemnified Party to continue to
serve as a director or officer, or both, the Board of Directors
of the Corporation has determined that it is in the best
interests of the Corporation to indemnify its directors and
officers to the fullest extent possible and to provide specific
contractual assurance that the rights to indemnification
currently provided to them will remain available to them;
NOW, THEREFORE, in consideration of Indemnified Party's
continued service on behalf of the Corporation after the date
hereof, the parties hereto agree as follows:
1. AGREEMENT TO SERVE. The Indemnified Party agrees to
serve, at the will of the Corporation or its shareholders as a director
and/or officer, faithfully and to the best of his ability so long
as he is duly elected and qualified and/or appointed or until
such time as he resigns in accordance with the Corporation's
bylaws.
2. INDEMNITY. The Corporation hereby agrees to hold
harmless and indemnify Indemnified Party to the fullest extent
authorized or permitted by the provisions of the State Statute, or
by any amendment thereof or other statutory provision authorizing or
permitting such indemnification which is adopted after the date
hereof.
3. MAINTENANCE OF INSURANCE AND SELF INSURANCE.
Subject only to the provisions of Section 3(b) hereof, the
Corporation hereby agrees that, for so long as Indemnified Party
shall continue to serve on behalf of the Corporation (or shall
continue at the request of the Corporation to serve as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and
thereafter so long as Indemnified Party 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 Indemnified Party served on behalf of the
Corporation (or served in any of said other capacities), the
Corporation will purchase and maintain in effect for the benefit
of Indemnified Party one or more valid, binding and enforceable
policies of D&O Insurance. In all policies of D&O Insurance, the
Indemnified Party shall be named as an insured in such a manner
as to provide the Indemnified Party the same rights and benefits
as are accorded to the Corporation's directors and officers most
favorably insured by such policy.
The Corporation shall not be required to maintain any said
policy of D&O Insurance in effect if such insurance is not
reasonably available or if, in the reasonable business judgment
of the Board of Directors, either (i) the premium cost for such
insurance is substantially disproportionate to the amount of
coverage, or (ii) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit to
Indemnified Party from such insurance.
4. ADDITIONAL INDEMNITY. Subject only to the exclusions
set forth in Section 5 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Indemnified Party against any and
all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually incurred by Indemnified Party
in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the
Corporation) to which Indemnified Party is, was or at any time
becomes a party, or is threatened to be made a party, by reason
of the fact that Indemnified Party is, was or at any time becomes
a director, officer, employee or agent of the Corporation, or is
or was serving or at any time serves at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise.
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5. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity
pursuant to Section 2 or 4 hereof shall be paid by the Corporation:
(a) In respect of expenses, judgments, fines and
settlement amounts to the extent attributable to remuneration
paid or other financial benefit provided to Indemnified Party by
the Corporation if it shall be determined by a final judgment or
other final adjudication that such remuneration or financial
benefit was paid or provided in violation of Indemnified Party's
duties and obligations to the Corporation;
(b) On account of any suit in which judgment is
rendered against Indemnified Party for an accounting of profits,
made from the purchase or sale by Indemnified Party of securities
of the Corporation, pursuant to the provisions of Section 16(b)
of the Securities Exchange Act of 1934, as amended, or similar
provisions of any state statutory law, or on account of any
payment by Indemnified Party to the Corporation in respect of any
claim for such accounting;
(c) On account of Indemnified Party's conduct if it
shall be determined by a final judgment or other final
adjudication to have been knowingly fraudulent, deliberately
dishonest, or to have constituted willful misconduct;
(d) If a final decision by a court having jurisdiction
in the matter shall determine that such indemnification is not
lawful; or
(e) If the Indemnified Party has been indemnified by
the Corporation for any loss or expense pursuant to the
Corporation's bylaws or state statutes.
6. CONTRIBUTION.
If the indemnification provided in Sections 2 and 4 is
unavailable and may not be paid to Indemnified Party for any
reason other than those set forth in paragraphs (a), (b), (c) and
(e) of Section 5, then, in respect of any threatened, pending or
completed action, suit or proceeding in which the Corporation is
jointly liable with Indemnified Party (or would be if joined in
such action, suit or proceeding), the Corporation shall
contribute to the amount of expenses, judgments, fines and
settlements paid or payable by Indemnified Party in such
proportion as is appropriate to reflect (i) the relative benefits
received by the Corporation on the one hand and Indemnified Party
on the other hand from the transaction from which such action,
suit or proceeding arose, and (ii) the relative fault of the
Corporation on the one hand and of Indemnified Party on the other
in connection with the events which resulted in such expenses,
judgments, fines or settlement amounts, as well as any other
relevant equitable considerations. The relative fault of the
Corporation on the one hand and of Indemnified Party on the other
shall be determined by reference to, among other things, the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in
such expenses, judgments, fines or settlement amounts. The
Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro
rata allocation or any other method of allocation which does not
take account of the foregoing equitable considerations.
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The determination as to the amount of the contribution, if any,
shall be made by:
(i) a court of competent jurisdiction upon the
application of both Indemnified Party and the Corporation (if an
action or suit had been brought in, and final determination had
been rendered by, such court);
(ii) the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such
action, suit or proceeding; or
(iii) regular outside counsel of the Corporation,
if a quorum is not obtainable for purposes of clause (ii) above,
or, even if obtainable, a quorum of disinterested directors so
directs.
7. CONTINUATION OF OBLIGATIONS. All agreements and
obligations of the Corporation contained herein shall continue during
the period Indemnified Party is a director, officer, employee or
agent of the Corporation (or is serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise), and shall continue thereafter for so long as
Indemnified Party 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 Indemnified Party was serving in any such capacity on behalf
of the Corporation.
8. ADVANCEMENT OF EXPENSES. Expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually incurred by Indemnified Party with respect to any action,
suit or proceeding referred to in Sections 2 or 4 hereof shall be
advanced by the Corporation prior to the time of the disposition
of such action, suit or proceeding promptly upon the receipt of a
(a) written affirmation from Indemnified Party of his good faith
belief that he is entitled to be indemnified by the Corporation
for such expenses, judgments, fines or amounts paid in settlement
under the provisions of the State Statute, the Charter, the
Bylaws, this Agreement or otherwise, and (b) written undertaking
to promptly return any amounts advanced hereunder if it shall be
ultimately determined that Indemnified Party is not entitled to
be indemnified by the Corporation for such amounts under the
provisions of this Agreement.
9. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after
receipt by Indemnified Party of notice of the commencement or the
threat of commencement of any action, suit or proceeding,
Indemnified Party will, if a claim in respect thereof is to be
made against the Corporation under this Agreement, notify the
Corporation of the commencement thereof, but the omission so to
notify the Corporation will not relieve it from any liability
which it may have to Indemnified Party otherwise than under this
Agreement. With respect to any such action, suit or proceeding
as to which Indemnified Party so notifies the Corporation:
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(a) The Corporation shall give prompt notice of such
action, suit or proceeding to the insurers of its D&O Insurance
in accordance with the procedures set forth in the policy and
shall thereafter take all necessary or desirable actions to cause
such insurers to pay on behalf of the Indemnified Party all
expenses and losses in accordance with the terms of the policy;
(b) The Corporation will be entitled to participate in
the defense of any such action, suit or proceeding at its own
expense;
(c) Except as otherwise provided below, the
Corporation may assume the defense thereof, with counsel
satisfactory to Indemnified Party upon written notice of its
election to do so. After delivery of notice from the Corporation
to Indemnified Party of its election so to assume such defense,
the Corporation will not be liable to Indemnified Party under
this Agreement for any legal or other expenses subsequently
incurred by Indemnified Party in connection with the defenses
thereof, other than reasonable costs of investigation or as
otherwise provided below. Indemnified Party shall have the right
to employ its counsel in such action, suit or proceeding, but the
fees and expenses of such counsel incurred after delivery of
notice from the Corporation of its assumption of the defense
thereof shall be at the expense of Indemnified Party unless (i)
the employment of counsel by Indemnified Party has been
authorized by the Corporation, (ii) Indemnified Party shall have
reasonably concluded that there may be a conflict of interest
between the Corporation and Indemnified Party in the conduct of
the defense of such action, suit or proceeding, or (iii) the
Corporation shall not in fact have employed counsel to assume the
defense of such action, suit or proceeding in each of which cases
the fees and expenses of counsel shall be at the expense of the
Corporation; and
(d) The Corporation shall not be liable to indemnify
Indemnified Party under this Agreement for any amounts paid in
settlement of any action or claim effected without its written
consent. The Corporation shall not settle any action or claim in
any manner which would impose any penalty, obligation or
limitation on Indemnified Party without Indemnified Party's
written consent. Neither the Corporation nor Indemnified Party
will unreasonably withhold their consent to any proposed
settlement.
10. REPAYMENT OF EXPENSES. Indemnified Party agrees to
reimburse the Corporation for all reasonable expenses, judgments,
fines and amounts paid in settlement paid by the Corporation in
defending any civil or criminal action, suit or proceeding
against Indemnified Party or advanced by the Corporation to
Indemnified Party in the event, and only to the extent, that it
shall be ultimately determined that Indemnified Party is not
entitled to be indemnified by the Corporation for such expenses,
judgments, fines or amounts paid in settlement under the
provisions of this Agreement.
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11. ENFORCEMENT.
The Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed
on it hereby in order to induce Indemnified Party to continue to
serve on behalf of the Corporation, and acknowledges that
Indemnified Party is relying upon this Agreement in continuing to
serve in such capacity.
In the event Indemnified Party is required to bring any
action to enforce rights or to collect moneys due under this
Agreement and is successful in such action, the Corporation shall
reimburse Indemnified Party for all of Indemnified Party's fees
and expenses in bringing and pursuing such action.
12. 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 in whole or in part for any reason, such
invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
13. RIGHTS NOT EXCLUSIVE. The rights provided hereunder
shall not be deemed to be exclusive of any other rights to which
the Indemnified Party may be entitled under the Corporation's
charter, bylaws, the state statute or otherwise.
14. GOVERNING LAW; SUCCESSORS; AMENDMENT AND TERMINATION.
This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Tennessee.
This Agreement shall be binding upon Indemnified Party and
the Corporation, its successors and assigns, and shall inure to
the benefit of Indemnified Party, his heirs, personal
representatives and assigns and to the benefit of the
Corporation, its successors and assigns.
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No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by
both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
CORPORATION:
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxx Xxxxxxx
Vice President
INDEMNIFIED PARTY:
___________________________
