INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT, dated as of November 1, 1998 (this
"Agreement"), is by and between Xxxxxxxxx Xxxxx Corporation, an Illinois
corporation (the "Company"), and Xxxxx Xxxxxx ("Indemnitee").
WITNESSETH
WHEREAS, highly competent persons are becoming more reluctant to serve
as directors, executive officers or in other capacities of corporations that
have publicly-held equity or debt unless they are provided with adequate
protection through insurance and indemnification against inordinate risks of
claims and actions against them arising out of their service to and activities
on behalf of the corporation; and
WHEREAS, the current difficulties or virtual impossibility of
obtaining adequate insurance and uncertainties relating to indemnification have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company has determined that the
inability to attract and retain such persons is detrimental to the best
interests of the Company's shareholders and that the Company should act to
assure such persons that there will be increased certainty of such protection in
the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, the shareholders of the Company have adopted the Amended and
Restated By-laws of the Company (as amended, the "By-laws") providing for the
indemnification of the directors, officers, agents and employees of the Company
to the fullest extent permitted by the Illinois Business Corporation Act (as
amended, the "Act"). The By-laws and the Act specifically provide that they are
not exclusive, and thereby contemplate that contracts may be entered into
between the Company and the members of its Board of Directors and its executive
officers with respect to indemnification of such directors and executive
officers; and
WHEREAS, this Agreement is being entered into as part of Indemnitee's
total compensation for serving as a director and/or an executive officer of the
Company, as the case may be; and
NOW THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
SECTION 1. Service by Indemnitee.
Indemnitee agrees to serve as director of the Company and/or executive
officer of the Company if so designated by the Company and appointed by the
Board of Directors, and agrees to the indemnification provisions provided for
herein. Indemnitee may at any time and for any reason resign from such position
(subject to any other contractual obligation or other obligation imposed by
operation of law), in which event the Company shall have no obligation under
this Agreement to continue Indemnitee in any such position.
SECTION 2. Indemnification.
The Company shall indemnify Indemnitee to the fullest extent permitted
by applicable law in effect on the date hereof, notwithstanding that such
indemnification is not specifically authorized by this Agreement, the Amended
and Restated Articles of Incorporation of the Company (as amended, the
"Charter"), the Bylaws, the Act or otherwise. In the event of any change, after
the date of this Agreement, in any applicable law, statute or rule regarding the
right of an Illinois corporation to indemnify a member of its board of directors
or an officer, such changes, to the extent that they would expand Indemnitee's
rights hereunder, shall be within the scope of Indemnitee's rights and the
Company's obligations hereunder, and, to the extent that they would narrow
Indemnitee's rights hereunder, shall be excluded from this Agreement; provided,
however, that any change that is required by applicable laws, statutes or rules
to be applied to this Agreement shall be so applied regardless of whether the
effect of such change is to narrow Indemnitee's rights hereunder. Without
diminishing the scope of the indemnification provided by this Section 2, the
rights of indemnification of Indemnitee provided hereunder shall include
indemnification in respect of any public offering of securities by the Company
or Xxxxxx May Holdings, Inc., a Delaware corporation and sole stockholder of the
Company, and shall not be limited to those rights set forth hereinafter, except
to the extent expressly prohibited by applicable law.
SECTION 3. Action or Proceeding Other Than an Action by or in the
Right of the Company.
Indemnitee shall be entitled to the indemnification rights provided
in this Section 3 if he is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative in nature, other than an
action by or in the right of the Company, by reason of the fact that he is or
was a director, officer, employee, agent or fiduciary of the Company or is or
was serving at the request of the Company as a director, officer, employee,
agent, partner, trustee or fiduciary of any other entity (a "Related
Company") or by reason of anything done or not done by him in any such
capacity. Pursuant to this Section 3, Indemnitee shall be indemnified
against reasonable costs and expenses (including, but not limited to, counsel
fees, costs, judgments, penalties, fines, ERISA excise taxes, and amounts
paid in settlement) (collectively, "Damages") actually and reasonably
incurred by him in connection with such action, suit or proceeding
(including, but not limited to, the investigation, defense, settlement or
appeal thereof), if, in the case of conduct in his official capacity with the
corporation, he acted in good faith and in the Company's best interests, and
in all other cases, he acted in good faith and was at least not opposed to
the Company's best interests, and with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct was unlawful,
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except that no indemnification shall be made in respect of any claim, issue
or matter as to which Indemnitee shall have been finally adjudged to be
liable for (a) negligence or misconduct in the performance of his duty to the
Company unless and only to the extent that the court in which such action,
suit or proceeding was brought, or any other court of competent jurisdiction,
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such Damages as such court shall deem
proper or (b) a violation of Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any of the rules or regulations
promulgated thereunder. Notwithstanding the foregoing, the Company shall be
required to indemnify an officer or director in connection with an action,
suit or proceeding initiated by such person only if such action, suit or
proceeding was authorized or contemplated by the Board or a committee
thereof. No indemnity pursuant to this Agreement shall be provided by the
Company for Damages that have been paid directly to Indemnitee by an
insurance carrier under a policy of directors' and officers' liability
insurance maintained by the Company.
SECTION 4. Actions by or in the Right of the Company.
Indemnitee shall be entitled to the indemnification rights provided in
this Section 4 if he is or was made a party or is threatened to be made a party
to any threatened, pending or completed action, suit, or proceeding, whether
civil, criminal, administrative or investigative brought by or in the right of
the Company to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, agent or fiduciary of the Company or is or
was serving at the request of the Company as a director, officer, employee,
agent, partner, trustee or fiduciary of any Related Company by reason of
anything done or not done by him in any such capacity. Pursuant to this Section
4, Indemnitee shall be indemnified against Damages actually and reasonably
incurred by him in connection with such action or suit (including, but not
limited to, the investigation, defense, settlement or appeal thereof) if, in the
case of conduct in his official capacity with the corporation, he acted in good
faith and in the Company's best interests, and in all other cases, he acted in
good faith and was at least not opposed to the Company's best interests, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which Indemnitee shall have been finally adjudged to be liable for (a)
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the court in which such action, suit or proceeding
was brought, or any other court of competent jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for such Damages as such court shall deem proper or (b) a violation of
Section 16(b) of the Exchange Act or any of the rules or regulations promulgated
thereunder. Notwithstanding the foregoing, the Company shall be required to
indemnify an officer or director in connection with an action, suit or
proceeding initiated by such person only if such action, suit or proceeding was
authorized by the Board or a committee thereof. No indemnity pursuant to this
Agreement shall be provided by the Company for Damages that have been paid
directly to Indemnitee by an insurance carrier under a policy of directors' and
officers' liability insurance maintained by the Company.
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SECTION 5. Indemnification for Costs, Charges and Expenses of
Successful Party.
Notwithstanding the other provisions of this Agreement, to the extent
that Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Section 3 or 4, or in defense of any claim, issue or
matter therein, Indemnitee shall be indemnified against all reasonable costs,
charges, and expenses (including counsel fees) actually and reasonably incurred
by him or on his behalf in connection therewith.
SECTION 6. Partial Indemnification.
If Indemnitee is only partially successful in the defense,
investigation, settlement or appeal of any action, suit, investigation or
proceeding described in Section 3 or Section 4, and as a result is not entitled
under Section 5 to indemnification by the Company for the total amount of
reasonable Damages actually and reasonably incurred by him, the Company shall
nevertheless indemnify Indemnitee, as a matter of right pursuant to Section 5,
to the extent Indemnitee has been partially successful.
SECTION 7. Determination of Entitlement to Indemnification.
Upon written request by Indemnitee for indemnification pursuant to
Section 3 or Section 4 , the entitlement of Indemnitee to indemnification
pursuant to the terms of this Agreement shall be determined by the following
person or persons who shall be empowered to make such determination: (a) the
Board of Directors of the Company by a majority vote of a quorum consisting of
Disinterested Directors (as hereinafter defined); or (b) if such a quorum is not
obtainable or, even if obtainable, if the Board of Directors by the majority
vote of Disinterested Directors so directs, by Independent Counsel (as
hereinafter defined) in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; or (c) by the shareholders, but shares
owned by or voted under the control of directors, including the Indemnitee, who
are at the time parties to the proceeding may not be voted on the determination.
Such Independent Counsel shall be selected by the Board of Directors and
approved by Indemnitee. Upon failure of the Board of Directors to so select
such Independent Counsel or upon failure of Indemnitee to so approve, such
Independent Counsel shall be selected by an Illinois state court judge of the
Circuit Court of Xxxx County, Chancery Division, or such other person as such
judge shall designate to make such selection. Such determination of entitlement
to indemnification shall be made no later than sixty (60) days after receipt by
the Company of a written request for indemnification. Such request shall
include documentation or information which is necessary for such determination
and which is reasonably available to Indemnitee. Any Damages incurred by
Indemnitee in connection with his request for indemnification hereunder shall be
borne by the Company. The Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom irrespective of the outcome of the determination
of Indemnitee's entitlement to indemnification. If the person making such
determination shall determine that Indemnitee is entitled to indemnification as
to part (but not all) of the application for indemnification, such person shall
reasonably prorate such partial indemnification among such claims, issues or
matters.
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SECTION 8. Presumptions and Effect of Certain Proceedings.
The Secretary of the Company shall, promptly upon receipt of
Indemnitee's request for indemnification, advise in writing the Board of
Directors or such other person or persons empowered to make the determination as
provided in Section 7 that Indemnitee has made such request for indemnification.
Indemnitee shall be presumed to be entitled to indemnification hereunder and the
Company shall have the burden of proof in the making of any determination
contrary to such presumption. If the person or persons so empowered to make
such determination shall have failed to make the requested indemnification
within 60 days after receipt by the Company of such request, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be absolutely entitled to such indemnification, absent
actual and material fraud in the request for indemnification. The termination
of any action, suit, investigation or proceeding described in Section 3 or
Section 4 by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself (a) create a presumption that
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, that Indemnitee had reasonable
cause to believe that his conduct was unlawful or (b) otherwise adversely affect
the rights of Indemnitee to indemnification except as may be provided herein.
SECTION 9. Advancement of Expenses and Costs.
All reasonable expenses and costs incurred by Indemnitee who is
party to a proceeding or investigation (including counsel fees, retainers and
advances of disbursements required of Indemnitee) (collectively, the "Expense
Advance") shall be paid by the Company in advance of the final disposition of
such action, suit, proceeding or investigation at the request of Indemnitee
within twenty (20) days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to
time. Such statement or statements shall reasonably evidence the expenses
and costs incurred by him in connection therewith. The Company's obligation
to provide an Expense Advance is subject to the following conditions: (a) if
the proceeding arose in connection with Indemnitee's service as a director
and/or executive officer of, or in any other capacity on behalf of, the
Company or any Related Company, then the Indemnitee or his representative
shall have executed and delivered to the Company an undertaking, which need
not be secured and shall be accepted without reference to Indemnitee's
financial ability to make repayment, by or on behalf of Indemnitee to repay
all Expense Advance if and to the extent that it shall ultimately be
determined by a final, unappealable decision rendered by a court having
jurisdiction over the parties and the question that Indemnitee is not
entitled to be indemnified for such Expense Advance under this Agreement or
otherwise; (b) Indemnitee shall give the Company such information and
cooperation as it may reasonably request and as shall be within Indemnitee's
power; and (c) Indemnitee shall furnish, upon request by the Company and if
required under applicable law, a written affirmation of Indemnitee's good
faith belief that any applicable standards of conduct have been met by
Indemnitee. Indemnitee's entitlement to such Expense Advance shall include
those incurred in connection with any proceeding by Indemnitee seeking an
adjudication pursuant to this Agreement. In the event that a claim for an
Expense Advance is made hereunder and is not paid in full within twenty (20)
days after written notice of such claim is
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delivered to the Company, Indemnitee may, but need not, at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim.
SECTION 10. Remedies of Indemnitee in Cases of Determination not to
Indemnify or to Advance Expenses.
In the event that a determination is made that Indemnitee is not
entitled to indemnification hereunder or if payment has not been timely made
following a determination of entitlement to indemnification pursuant to Section
7 or 8, or if expenses are not advanced pursuant to Section 9, Indemnitee shall
be entitled to a final adjudication in an appropriate court of the State of
Illinois or any other court of competent jurisdiction of his entitlement to such
indemnification or advance. The Company shall not oppose Indemnitee's right to
seek any such adjudication or any other claim. Such judicial proceeding shall
be made de novo and Indemnitee shall not be prejudiced by reason of a
determination (if so made) that he is not entitled to indemnification. If a
determination is made or deemed to have been made pursuant to the terms of
Section 7 or 8 that Indemnitee is entitled to indemnification, the Company shall
be bound by such determination and is precluded from asserting that such
determination has not been made or that the procedure by which such
determination was made is not valid, binding and enforceable. The Company
further agrees to stipulate in any such court that the Company is bound by all
the provisions of this Agreement and is precluded from making any assertion to
the contrary. If the court shall determine that Indemnitee is entitled to any
indemnification hereunder, the Company shall pay all reasonable Damages actually
incurred by Indemnitee in connection with such adjudication (including, but not
limited to, any appellate proceedings).
SECTION 11. Other Rights to Indemnification.
The indemnification and advancement of expenses (including counsel
fees) and costs provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may now or in the future be entitled under any
provision of the By-laws or the Charter, any vote of shareholders or
Disinterested Directors, any provision of law or otherwise.
SECTION 12. Counsel Fees and Other Expenses to Enforce Agreement.
In the event that Indemnitee is subject to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication or award in arbitration to enforce his rights under, or
to recover damages for breach of, this Agreement, Indemnitee, if he prevails in
whole or in part in such action, shall be entitled to recover from the Company,
and shall be indemnified by the Company against, any reasonable expenses for
counsel fees and disbursements actually and reasonably incurred by him.
Indemnitee shall be entitled to select his own counsel; provided, however, that
the Company may elect to hire a counsel to represent Indemnitee together with
other similarly situated individuals, but only if such joint representation does
not, in the reasonable discretion of Indemnitee, create any conflict of
interest.
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SECTION 13. Duration of Agreement.
This Agreement shall continue until and terminate upon the later of
(a) 10 years after Indemnitee has ceased to occupy any of the positions or have
any of the relationships described in Sections 1, 3 or 4 or (b) the final
termination of all pending or threatened actions, suits, proceedings or
investigations with respect to Indemnitee. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and his spouse, assigns, heirs, devisees, executors, administrators
or other legal representatives.
SECTION 14. Severability.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
SECTION 15. Identical Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original, but all of which
together shall constitute one and the same Agreement. Only one such counterpart
signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this Agreement.
SECTION 16. Headings; Section References.
The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof. Unless otherwise specified herein, each
reference herein to a Section shall be deemed a reference to a Section of this
Agreement.
SECTION 17. Definitions.
For purposes of this Agreement:
(a) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by Indemnitee.
(b) "Independent Counsel" shall mean a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained to
represent (i) the Company or Indemnitee in any matter material to either such
party or (ii) any other party to the action, suit,
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investigation or proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel"
shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's right to indemnification under this Agreement.
SECTION 18. Modification and Waiver.
No supplement, modification or amendment of this Agreement 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.
SECTION 19. Mutual Acknowledgment.
The Company and Indemnitee acknowledge that, in certain instances,
federal law or public policy may override applicable state law and prohibit the
Company from indemnifying Indemnitee under this Agreement or otherwise. For
example, the Company and Indemnitee acknowledge that the Securities and Exchange
Commission ("SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws, and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the SEC to submit
the question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
SECTION 20. Notice by Indemnitee.
Indemnitee agrees promptly to notify the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any matter which may be subject to indemnification
covered hereunder, either civil, criminal or investigative.
SECTION 21. Notices.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (a) delivered
by hand and receipted for by the party to whom said notice or other
communication shall have been directed or (b) mailed by certified or registered
mail with postage prepaid on the third business day after the date on which it
is so mailed, to the following addresses:
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(a) to Indemnitee:
Xxxxx Xxxxxx
TCW Capital
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
(b) to the Company:
Xxxxxxxxx Xxxxx Corporation
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
SECTION 22. Other Agreements.
This Agreement restates and supersedes, but does not limit or negate,
any indemnification, rights or interests of Indemnitee under any prior
agreements between the Company and Indemnitee.
SECTION 23. Governing Law.
The parties agree that this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Illinois.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
XXXXXXXXX XXXXX CORPORATION
By: /s/ Xxx X. Xxxxxxxx
-----------------------------------------
Name: Xxx X. Xxxxxxxx
---------------------------------------
Title: President and Chief Operating Officer
--------------------------------------
INDEMNITEE:
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxx
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