THIS AGREEMENT is made the 5th day of August, 2003
BY AND AMONG:
XXXXXX INTERNATIONAL INC., a business trust organized
---------------------------
pursuant to the laws of the State of Washington, having
an address at 00000 Xxxxxxxxxx Xxx. Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxxx, XXX 00000
AND:
GREENLIGHT CAPITAL, L.L.C., a limited liability company
--------------------------
organized pursuant to the laws of the State of Delaware,
and GREENLIGHT CAPITAL, INC., a corporation organized
------------------------
pursuant to the laws of the State of Delaware, each
having an address at 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, Xxx Xxxx, XXX, 00000.
WHEREAS:
A. The Company has called the Meeting to, among other things, elect two
Trustees to the Board;
B. Greenlight, directly and/or indirectly through the Greenlight Funds, owns
and/or has voting power over approximately 14.9% of the currently issued shares
of the Company and pursuant to the Greenlight Proxy Materials proposed to
nominate two individuals for election as Trustees at the Meeting; and
C. The Company, Greenlight and the Unrelated Shareholders have mutually
agreed upon a consensual slate of two individuals to be nominated for election
as Trustees pursuant to the Company Proxy Materials at the Meeting upon the
terms and conditions hereinafter set forth.
NOW THEREFORE in consideration of the premises hereof and the mutual covenants
and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, the parties hereby covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
-----------
For the purposes of this Agreement, including the recitals hereto, the following
terms shall have the following meanings, respectively:
(a) "2003 OPTION PLAN" means a non-qualified stock option plan pursuant to
which the Board, or a duly authorized committee thereof, can issue
stock options to purchase an aggregate of up to 375,000 shares of
beneficial interest from the treasury of the Company, which plan shall
provide for the issuance of the G.A. Options, GWA Options and S.D.
Options;
(b) "AFFILIATE" has the meaning ascribed thereto in the Securities Act;
(c) "AGREEMENT" means this agreement made by and among the Company and
Greenlight and any and all schedules and amendments hereto;
(d) "BOARD" means the Board of Trustees of the Company;
(e) "BUSINESS DAY" means a day excluding Saturday and Sunday on which
banking institutions are open for business in Xxx Xxxx, Xxx Xxxx xxx
Xxxxxxxxx, Xxxxxx;
(f) "COMPANY" means Xxxxxx International Inc., a business trust organized
pursuant to the laws of the State of Washington;
(g) "COMPANY PRESS RELEASE" means the press release to be issued by the
Company attached hereto as Schedule A;
(h) "COMPANY PROXY MATERIALS" means the definitive proxy statements,
definitive additional materials and any other proxy statement or
materials filed by the Company with the SEC in respect of the Meeting
pursuant to Section 14(a) of the Exchange Act;
(i) "CONSENSUAL NOMINEES" means Xxx X. Xxxxx and the Unrelated Shareholder
Nominee;
(j) "DECLARATION OF TRUST" means the Restated Declaration of Trust of the
Company dated May 31, 1990, as amended and/or restated from time to
time;
(k) "EXCHANGE ACT" means the United States Securities Exchange Act of
1934, including the rules and regulations thereto, as amended from
time to time;
(l) "G.A. OPTIONS" means options granted by the Company to Xxx X. Xxxxx to
purchase shares of beneficial interest from the treasury of the
Company pursuant to the terms set forth in the Option Agreement
attached hereto as Schedule B. Notwithstanding the foregoing, the
number of shares of beneficial interest subject to the G.A. Options
shall be reduced by the number of shares acquired by Xx. Xxxxx, if
any, pursuant to the Greenlight Xxxxx Agreement;
2
(m) "GREENLIGHT" means, collectively, Greenlight Capital, L.L.C., a
limited liability company organized pursuant to the laws of Delaware,
and Greenlight Capital, Inc., a corporation organized pursuant to the
laws of Delaware;
(n) "GREENLIGHT 13D" means the Schedule 13D filed by Greenlight with the
SEC dated June 20, 2003, and any amendments thereto, in respect of its
shares of the Company;
(o) "GREENLIGHT XXXXX AGREEMENT" means the agreement made between
Greenlight and Xxx X. Xxxxx dated June 20, 2003 and included as
Exhibit 3 to the Greenlight 13D, together with the option agreements
related thereto;
(p) "GREENLIGHT FUNDS" means the investment funds managed by Greenlight
including Greenlight Capital L.P., Greenlight Capital Qualified L.P.
and Greenlight Capital Offshore, Ltd.;
(q) "GREENLIGHT INDEMNITY AGREEMENT" means the Greenlight Xxxxx Agreement,
as amended by that certain First Amendment to the Greenlight Xxxxx
Agreement in the form attached hereto as Schedule C (the "FIRST
AMENDMENT");
(r) "GREENLIGHT PRESS RELEASE" means the press release to be issued by
Greenlight attached hereto as Schedule D;
(s) "GREENLIGHT PROXY MATERIALS" means the preliminary proxy statements,
definitive proxy statements, definitive additional materials and any
other proxy statement or materials (including, without limitation,
those filed pursuant to Section 2.6(c) hereof) filed by Greenlight
with the SEC in respect of the Meeting pursuant to Section 14(a) of
the Exchange Act;
(t) "GWA" means GWA Investments LLC;
(u) "GWA OPTIONS" means options granted by the Company to GWA to purchase
shares of beneficial interest from the treasury of the Company
pursuant to the terms set forth in the Option Agreement attached
hereto as Schedule E. Notwithstanding the foregoing, the number of
shares of beneficial interest subject to the GWA Options shall be
reduced by the number of shares acquired by GWA, if any, pursuant to
the Greenlight Xxxxx Agreement;
(v) "MEETING" means the annual meeting of shareholders of the Company
scheduled to be held on August 22, 2003 and any adjournment,
postponement or rescheduling thereof;
(w) "XXXXXX STOCK VALUE" means the closing market price of the underlying
shares of beneficial interest of the Company on the day the Option is
exercised as reported on the Nasdaq National Market or if the shares
are not reported on the Nasdaq National Market, the principal
established stock exchange that lists such
3
shares, or if the shares are not quoted on the Nasdaq National Market
or an established stock exchange, the fair market value of such shares
as determined by the Board;
(x) "OPTION SPREAD" means the number of Options exercised multiplied by
the difference between the Xxxxxx Stock Value and $4.53, the exercise
price of the Options;
(y) "OPTIONS" shall have the meaning ascribed thereto in Section 2.8
hereof;
(z) "S.D. AGREEMENT" means the agreement made between Greenlight and Xxxx
Xxxxxxx dated June 20, 2003 and included as Exhibit 2 to the
Greenlight 13D, together with the option agreement related thereto;
(aa) "S.D. OPTIONS" means options granted by the Company to Xxxx Xxxxxxx to
purchase shares of beneficial interest from the treasury of the
Company pursuant to the terms set forth in the Option Agreement
attached hereto as Schedule F. Notwithstanding the foregoing, the
number of shares of beneficial interest subject to the S.D. Options
shall be reduced by the number of shares acquired by Mr. Diamond, if
any, pursuant to the S.D. Agreement;
(bb) "SEC" means the Securities and Exchange Commission;
(cc) "SECURITIES ACT" means the United States Securities Act of 1933,
including the rules and regulations thereto, as amended from time to
time;
(dd) "TRUSTEE" means a trustee of the Company;
(ee) "UNRELATED SHAREHOLDER NOMINEE" means a nominee for election as a
Trustee proposed by the Unrelated Shareholders; and
(ff) "UNRELATED SHAREHOLDERS" means Xxxxxxx Capital Management, LLC, Xxxxxx
Xxxxxxxxx XxXxxxx, LLC and Xxxxx X. Xxxxxxx;
1.2 HEADINGS
--------
All article and section headings are for convenience only and shall not limit,
alter or otherwise affect the meaning or construction of this Agreement.
1.3 INCLUDED WORDS
---------------
Wherever the singular or the masculine are used in this Agreement, the same
shall be deemed to include the plural or the feminine or vice versa and a body
politic or corporate where the context or the parties so require.
4
1.4 CROSS REFERENCES
-----------------
Unless otherwise stated, a reference in this Agreement to a numbered or lettered
paragraph, subparagraph or schedule refers to the paragraph, subparagraph or
schedule bearing that number or letter in the Agreement.
1.5 USE OF WORD "INCLUDING"
--------------------------
The word "including", when following any general term or statement, is not to be
construed as limiting the general term or statement to the specific terms or
matters set forth immediately following such word or to similar items or
matters, but such general term or statement shall rather be construed as
referring to all items or matters that could reasonably fall within the broadest
possible scope thereof.
ARTICLE 2
MEETING, NOMINEES, PROXY MATERIALS, VOTING, ETC.
2.1 NOTICE OF AND BUSINESS AT THE MEETING
-------------------------------------------
The Notice for the Meeting, which shall be included in the Company Proxy
Materials, shall provide that the purpose of the Meeting is solely to consider
the following matters: (i) the election of two Trustees to the Board to serve as
Class III Trustees; (ii) the ratification of Deloitte & Touche LLP as the
independent auditors for the Company; (iii) the approval of the 2003 Option
Plan; and (iv) such other business as may properly come before the Meeting or
any adjournment, postponement or rescheduling thereof. No other matters or
business will be proposed by the Company in the Notice for the Meeting or by the
Company Proxy Materials.
2.2 NO OTHER BUSINESS TO BE PROPOSED AT THE MEETING
-------------------------------------------------------
Neither the Company nor Greenlight shall, directly or indirectly, initiate,
raise or bring any business or matters before the Meeting or for a vote at the
Meeting other than the items set forth in (i) to (iii) of Section 2.1 hereof.
2.3 NO POSTPONEMENT, ADJOURNMENT OR RESCHEDULING OF THE MEETING
------------------------------------------------------------------
Neither the Company nor Greenlight shall seek to postpone, adjourn or reschedule
the Meeting from August 22, 2003, except as may be necessary to obtain a quorum
or pursuant to Section 4.6 hereof.
2.4 NOMINATION OF CONSENSUAL NOMINEES
------------------------------------
The Company shall file supplemental Company Proxy Materials to nominate the
Consensual Nominees (and no other persons) for election as Trustees at the
Meeting, shall solicit proxies for the due election of the Consensual Nominees
as Trustees, shall cause the Consensual Nominees to be nominated at the Meeting
and shall cause all such proxies received by the Company to be voted in the
manner specified by such proxies.
5
2.5 ADDITIONAL COMPANY PROXY MATERIALS
-------------------------------------
The Company shall: (i) ensure that any additional or supplemental Company Proxy
Materials filed or disseminated after the date hereof accurately reflect and
implement the terms of this Agreement and are consistent with the Company Press
Release and Greenlight Press Release; (ii) provide Greenlight with copies of any
additional or supplemental Company Proxy Materials at least one Business Day in
advance of filing such materials with the SEC or disseminating the same in order
to permit Greenlight a reasonable opportunity to review and comment on such
materials; and (iii) act reasonably in considering any comments that may be
provided by Greenlight in respect of any such additional or supplemental Company
Proxy Materials.
2.6 GREENLIGHT
----------
Greenlight shall:
(a) cause all the shares of the Company owned by it or over which it
exercises voting power, including those held by the Greenlight Funds,
totaling 2,517,500 shares of the Company (the "Greenlight Shares") to
be present and counted at the meeting of purposes of establishing a
quorum;
(b) duly vote and/or cause to be voted the Greenlight Shares in favor of
and to approve: (i) the election of the Consensual Nominees; (ii) the
ratification of Deloitte & Touche LLP as independent auditors of the
Company; and (iii) the 2003 Option Plan;
(c) within three Business Days of the date hereof, notify the SEC in
writing (and provide a true copy thereof to the Company) that
Greenlight will not use its definitive proxy statement, now on file
with the SEC, to solicit shareholder votes for the nominees therein
and will not nominate or propose any person(s) for election as a
Trustee (other than the Consensual Nominees) at or prior to the
completion of the Meeting unless this Agreement is terminated pursuant
to Section 4.6 hereof;
(d) forthwith cease and desist its current solicitation of proxies in
respect of the Meeting;
(e) not, directly or indirectly, either individually or in partnership or
in conjunction with any other person, make or in any way participate,
in any solicitation of proxies or directions to vote with respect to
shares of the Company at the Meeting other than as provided in this
Agreement; and
(f) not, directly or indirectly, seek to advise or influence any person or
entity with respect to the voting of any shares of the Company at the
Meeting (other than the voting or causing the Greenlight Funds to vote
their shares of the Company as set forth in this Agreement), or
otherwise act, alone or in concert with others, to seek
6
to control, influence or comment negatively on the management, Board,
business policy or affairs of the Company prior to the completion
of the Meeting.
2.7 GREENLIGHT PROXY MATERIALS
----------------------------
Greenlight shall: (i) ensure that any additional or supplemental Greenlight
Proxy Materials filed or disseminated after the date hereof accurately reflect
and implement the terms of this Agreement and are consistent with the Company
Press Release and Greenlight Press Release; (ii) provide the Company with copies
of any additional or supplemental Greenlight Proxy Materials at least one
Business Day in advance of filing such materials with the SEC or disseminating
the same in order to permit the Company a reasonable opportunity to review and
comment on such materials; and (iii) act reasonably in considering any comments
that may be provided by the Company in respect of any such additional or
supplemental Greenlight Proxy Materials.
2.8 OPTION PLAN
------------
If at the Meeting the 2003 Option Plan is duly approved and the Consensual
Nominees are elected as Trustees, the Company shall on the date of the Meeting
issue the G.A. Options to Xxx X. Xxxxx and the GWA Options to GWA and issue the
S.D. Options to Xxxx Xxxxxxx. Prior to the issuance, the Company shall take all
reasonable action necessary to exempt the acquisition of the G.A. Options by Xxx
X. Xxxxx and the GWA Options by GWA under Rule 16b-3 promulgated by the SEC
under the Exchange Act. If the shareholders do not approve the 2003 Option Plan
at the Meeting, the Company shall promptly issue to Greenlight upon exercise of
any of the options (the "Options") previously granted by Greenlight to Xxx X.
Xxxxx and GWA pursuant to the Greenlight Xxxxx Agreement and to Xxxx X. Xxxxxxx
pursuant to the S.D. Agreement, the number of shares of beneficial interest of
the Company equal to (1) the Option Spread divided by (2) the Xxxxxx Stock
Value. If the number of shares determined pursuant to this section results in
Greenlight receiving a fractional share, the number of shares that Greenlight
receives shall be rounded up to the next whole share (with a half share being
rounded down). Greenlight hereby acknowledges and agrees that it is acquiring
the shares set forth in this Section 2.8 (the "Spread Shares") for investment
purposes only, for Greenlight's own account, and not as nominee or agent for any
other person or entity, and not with a view to, or for resale in connection
with, any distribution thereof within the meaning of the Securities Act.
Greenlight represents and warrants that it has no agreements or other
arrangements with any person or entity to sell, transfer or pledge any part of
the Spread Shares and has no plans to enter into any such agreement or
arrangement. Greenlight acknowledges and agrees that the Spread Shares shall be
subject to restrictions on transfer and understands that any sale of the Spread
Shares may be made only in accordance with the Securities Act and applicable
state securities laws. Each Spread Share certificate may be imprinted with
legends reflecting federal and state securities laws, restrictions and
conditions, and the Company may comply therewith and issue "stock transfer"
instructions to its transfer agent and registrar in good faith without
liability.
7
2.9 GREENLIGHT XXXXX AGREEMENT
----------------------------
Greenlight and Xxx X. Xxxxx shall enter into the First Amendment, which
agreement shall be effective no later than the date of the Meeting and promptly
provide a true copy of the Greenlight Indemnity Agreement to the Company.
Except as provided in the Greenlight Indemnity Agreement, Greenlight shall not,
directly or indirectly, whether through the Greenlight Funds or otherwise,
during Xxx X. Xxxxx' tenure as a Trustee: (i) indemnify him for acting as or in
his capacity as a Trustee; (ii) subject to the issuance of the G.A. Options and
the GWA Options, pay, remunerate or otherwise compensate him for acting as or in
his capacity as a Trustee; or (iii) subject to the issuance of the G.A. Options
and the GWA Options, grant to him or any of his Affiliates options to acquire
any securities of the Company.
2.10 LEAD TRUSTEE
-------------
If the Consensual Nominees are elected as Trustees at the Meeting, the Company
will within 15 days of the Meeting convene a meeting of the Board at which the
agenda shall include, among other things, the sole nomination of the Unrelated
Shareholder Nominee to be elected as the "Lead Trustee" of the Board and the
establishment of the terms of reference for the Lead Trustee which shall include
chairing any Board meetings held in the absence of management Trustees and the
power to engage such counsel as he feels he may require from time to time with
respect to his duties as Lead Trustee on the Board, whose expense will be borne
solely by the Company.
2.11 RIGHTS OF CONSENSUAL NOMINEES
--------------------------------
If the shareholders elect the Consensual Nominees at the Meeting, the Company
agrees to provide the Consensual Nominees with all rights, including all rights
to indemnification, advancement of expenses and director and officer liability
insurance, provided by the Company to other Trustees (excluding, for greater
certainty, remuneration and benefits provided to Trustees in their capacity as
an employee, officer or executive of the Company and/or its subsidiaries).
Without limiting the foregoing, the Company agrees to enter into indemnification
agreements in the form attached hereto as Schedule G with each of the Consensual
Nominees to be effective no later than the date of the Meeting.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF GREENLIGHT
------------------------------------------------
Greenlight represents and warrants to the Company and acknowledges that the
Company is relying on such representations and warranties in connection with
entering into this Agreement:
(a) Organization of Greenlight Capital, L.L.C. Greenlight Capital, L.L.C.
is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
necessary power and authority to enter into this Agreement and perform
its obligations hereunder;
8
(b) Organization of Greenlight Capital, Inc. Greenlight Capital, Inc. is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary
corporate power and authority to enter into this Agreement and perform
its obligations hereunder;
(c) Authorization. The execution and delivery of this Agreement by
Greenlight has been duly authorized by all necessary action and no
other proceedings on the part of Greenlight are necessary to authorize
this Agreement. Greenlight concurrently herewith is delivering to the
Company true and complete copies of resolutions adopted by the
respective board of directors of Greenlight Capital, L.L.C and
Greenlight Capital, Inc. authorizing the execution of this Agreement
and consummation of the transactions contemplated hereby, which
resolutions have not been amended, modified, revoked or rescinded in
any respect since their adoption and remain in full force and effect
as of the date hereof;
(d) Execution, Delivery and Binding Effect. This Agreement has been duly
executed and delivered by Greenlight and constitutes a legal, valid
and binding obligation of Greenlight, enforceable against it in
accordance with its terms, subject to the availability of equitable
remedies and the enforcement of creditor's rights generally;
(e) No Violation. The execution and delivery of this Agreement by
Greenlight and the performance and consummation by Greenlight of the
transactions contemplated hereby will not (i) violate or breach any
law, statute, rule, regulation or order to which Greenlight is subject
or any provision of the organizational documents of Greenlight; (ii)
breach any agreement, contract, order or permit to which Greenlight is
a party or by which Greenlight is bound or to which any of
Greenlight's assets is subject; or (iii) result in any violation or
breach of, or default under, or give rise to any right of termination,
cancellation or acceleration under any of the terms, conditions or
provisions of any note, lease, license, agreement or obligation to
which Greenlight is a party or may be bound; and
(f) Greenlight Shares. Greenlight owns and/or has voting power over the
Greenlight Shares.
3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
--------------------------------------------------
The Company represents and warrants to Greenlight and acknowledges that
Greenlight is relying on such representations and warranties in connection with
entering into this Agreement:
(a) Organization. The Company is a business trust duly organized, validly
existing and in good standing under the laws of the State of
Washington and has all necessary power and authority to enter into
this Agreement and perform its obligations hereunder;
9
(b) Authorization. The execution and delivery of this Agreement by the
Company has been duly authorized by all necessary action and no other
proceedings on the part of the Company are necessary to authorize this
Agreement. The Company concurrently herewith is delivering to
Greenlight true and complete copies of resolutions adopted by the
Board authorizing the execution of this Agreement and consummation of
the transactions contemplated hereby, which resolutions have not been
amended, modified, revoked or rescinded in any respect since their
adoption and remain in full force and effect as of the date hereof;
(c) Execution, Delivery and Binding Effect. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to the availability of equitable
remedies and the enforcement of creditor's rights generally;
(d) Declaration of Trust and Regulations. The Company concurrently
herewith is delivering to Greenlight true and complete copies of each
of the Declaration of Trust and Regulations of the Company. Such
Declaration of Trust and Regulations have not been amended, modified,
revoked or rescinded in any respect and remain in full force and
effect as of the date hereof and the Board has not adopted any
resolutions to amend, modify, revoke or rescind any provision in the
Declaration of Trust or Regulations;
(e) Amendment of Rights Agreement. The Company concurrently herewith is
delivering to Greenlight a true and complete copy of the First
Amendment to the Rights Agreement dated as of August 20, 1993 by and
between the Company and Montreal Trust Company, which Amendment has
not been amended, modified, revoked or rescinded in any respect and
remains in full force and effect as of the date hereof; and
(f) No Violation. The execution and delivery of this Agreement by the
Company and the performance and consummation by the Company of the
transactions contemplated hereby will not (i) violate or breach any
law, statute, rule, regulation or order to which the Company is
subject or any provision of the organizational documents of the
Company; (ii) breach any agreement, contract, order or permit to which
the Company is a party or by which the Company is bound or to which
any of the Company's assets is subject; or (iii) result in any
violation or breach of, or default under, or give rise to any right of
termination, cancellation or acceleration under any of the terms,
conditions or provisions of any note, lease, license, agreement or
obligation to which the Company is a party or may be bound.
10
ARTICLE 4
GENERAL
4.1 EXPENSES
--------
The Company shall reimburse Greenlight for its reasonable third party costs and
expenses in respect of the Greenlight Proxy Materials, the Meeting and
negotiation and execution of this Agreement, including amounts paid or payable
by Greenlight to each of Xxx X. Xxxxx and Xxxx X. Xxxxxxx pursuant to the
Greenlight Xxxxx Agreement and S.D. Agreement, respectively, up to a maximum of
$250,000. Greenlight shall promptly provide to the Company reasonable evidence
and vouchers or receipts for such expenses. The Company shall reimburse
Greenlight for such costs and expenses within the later of 10 days of receipt of
such evidence and one Business Day after the Meeting; provided, however, that
Xxxxxx has no obligation to pay such expenses if this Agreement is terminated
pursuant to Section 4.6 hereof.
4.2 DECLARATION OF TRUST, REGULATIONS
------------------------------------
The Company agrees not to amend its Declaration of Trust or Regulations prior to
the Meeting without the prior consent of Greenlight. During the three year term
of the Consensual Trustees, the Company agrees not to amend or adopt any
provision to the Declaration of Trust or Regulations inconsistent with Section
2.1 of the Regulations, which provides that special meetings of the Board may be
called by two Trustees.
4.3 JOINT AND SEVERAL
-------------------
The obligations of Greenlight hereunder shall be joint and several.
4.4 ENTIRE AGREEMENT
-----------------
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter of this Agreement and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, among the
parties with respect to the subject matter of this Agreement except as
specifically set out herein.
4.5 AMENDMENTS
----------
This Agreement may not be amended except by written agreement among all the
parties to this Agreement.
4.6 EXTENSION/TERMINATION
---------------------
If the Unrelated Shareholders do not provide the Company with the name of the
Unrelated Nominee and the information regarding the Unrelated Nominee required
for purposes of the Company Proxy Materials by August 8, 2003, then: (i) the
Meeting will be postponed until September 22, 2003 or such earlier date that
Greenlight and the Company shall agree upon; (ii)
11
on or before August 22, 2003 Greenlight and the Company will select an
independent unrelated nominee for Trustee that is mutually acceptable to the
Company and Greenlight (the "Replacement Nominee"); and (iii) if the parties
cannot agree upon the Replacement Nominee by August 22, 2003, either party
can at its sole option terminate this Agreement upon written notice to the
other.
4.7 GOVERNING LAW AND VENUE
--------------------------
This Agreement shall be construed and interpreted in accordance with the laws of
the State of Washington, USA. Each of the parties hereto irrevocably attorns to
the non-exclusive jurisdiction of the courts of the State of Washington,
situated in Seattle, with respect to any matters arising out of this Agreement.
4.8 TIME OF ESSENCE
-----------------
Time is of the essence of this Agreement.
4.9 FURTHER ASSURANCES
-------------------
Each party will, at its own expense, execute and deliver all such further
agreements and documents and do such further acts and things as may be
reasonably required to give effect to this Agreement.
4.10 COSTS AND EXPENSES
--------------------
Except as otherwise expressly set forth in Section 4.1 hereof, all costs and
expenses of or incidental to the transactions contemplated in this Agreement are
to be assumed and paid by the party incurring such costs and expenses.
4.11 INUREMENT
---------
This Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns.
4.12 CONFIDENTIALITY AND PUBLIC DISCLOSURE.
----------------------------------------
Disclosure of this Agreement, its terms and conditions and the transactions
contemplated hereby shall be made only: (i) with the approval of each of the
parties hereto, which approval shall not be unreasonably withheld, may be oral,
and may be given on behalf of a party by its counsel; (ii) as required by any
applicable law, rule or regulation or the rules, regulations or policies of the
NASDAQ National Market; or (iii) as may be necessary to implement the
transactions contemplated by this Agreement.
The parties shall consult with each other as to the timing and wording of any
press release and other disclosure of or relating to the transactions
contemplated hereby provided that promptly upon execution of this Agreement, the
parties shall issue and disseminate the Company Press
12
Release and the Greenlight Press Release, respectively. Notwithstanding the
foregoing, the parties shall be entitled to describe this Agreement and provide
copies thereof to their respective boards of directors and to those employees
and professional advisors that need to know details about this Agreement in
order for the parties to perform their obligations hereunder.
4.13 NOTICE
------
All notices, requests, demands or directions to any party to this Agreement by
any other party must be in writing and delivered by hand or facsimile
transmission between the hours of 8:30 a.m. and 4:30 p.m., Pacific Standard
time, on a Business Day to the address specified below and addressed as follows:
(a) To the Company:
Xxxxxx International Inc.
Xxxxxxxxxxxxx 00
XX-0000 Xxxxxx
Xxxxxxxxxxx
Attention: Xxxxx X.X. Xxx
Facsimile: (000) 00-00-000-0000
With a copy to:
Sangra, Moller
0000 Xxxxxxxxx Xxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X., X0X 0X0
Attention: H.S. Sangra
Facsimile: (000) 000-0000
(b) To Greenlight:
Greenlight Capital, L.L.C. and
Greenlight Capital, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx, XXX, 00000
Attention: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
13
With a copy to:
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX, XXX 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Any party may, by notice to the other party, change its address for notices to
some other no less convenient address suitable for delivery of notices by, and
will so change its address whenever its current address ceases to be so
suitable. Any notice, request, demand or direction so given will be deemed to
have been received by the party to whom it is given when delivered in accordance
herewith.
4.14 COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts with the same
effect as if all parties had signed the same document. All counterparts will
constitute one and the same agreement. This Agreement may be executed and
transmitted by facsimile transmission and if so executed and transmitted this
Agreement will be for all purposes as effective as if the parties had delivered
an executed original Agreement.
4.15 NO THIRD PARTY BENEFICIARIES
-------------------------------
This Agreement shall not confer any rights or remedies upon any person other
than the parties hereto and their respective successors and permitted assigns.
4.16 SEVERABILITY
------------
Should any part of this Agreement be declared or held invalid for any reason,
that invalidity will not affect the validity of the remainder which will
continue in force and effect and be construed as if this Agreement had been
executed without the invalid portion and it is hereby declared the intention of
the parties hereto that this Agreement would have been executed without
reference to any portion which may, for any reason, be hereafter declared or
held invalid.
14
IN WITNESS WHEREOF, this Agreement has been signed by each of the parties hereto
with effect as of the day and year first above written.
XXXXXX INTERNATIONAL INC.
By: /s/ Xxxx XxXxxxxxx
Name: Xxxx XxXxxxxxx
Title: Trustee
GREENLIGHT CAPITAL, L.L.C. GREENLIGHT CAPITAL, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx Name: Xxxxx Xxxxxxx
Title: Managing Member Title: President
15
SCHEDULE A
COMPANY PRESS RELEASE
FOR: XXXXXX INTERNATIONAL INC.
APPROVED BY: Xxxxx X.X Xxx
Chairman, Chief Executive Officer &
President
(00) 00 000-0000
FOR IMMEDIATE RELEASE
-----------------------
Financial Dynamics
Investors: Xxxx Xxxxxxxx
Media: Xxxxxxx Xxxx
(000) 000-0000
XXXXXX AND SIGNIFICANT SHAREHOLDERS MUTUALLY AGREE
ON TWO NOMINEES TO THE BOARD
NEW YORK, New York, August 6, 2003 - Xxxxxx International Inc. ("Xxxxxx" or
the "Company") (Nasdaq: MERCS, TSX: MRI.U, Nasdaq-Europe: MERC GR) today
announced that the Company and four significant shareholders have mutually
agreed upon a consensual slate of two nominees to be elected as trustees at the
Company's upcoming shareholders' meeting on August 22, 2003. As a result,
Greenlight Capital Inc. ("Greenlight") has withdrawn its proposed nominations
for trustees and terminated its proxy solicitation.
Xxxxxx will nominate for election as a trustee Xxx X. Xxxxx, one of the
nominees originally proposed by Greenlight. Pursuant to the agreement, Xx.
Xxxxx will now be compensated in his role and capacity as a trustee by the
Company and not by Greenlight. The other nominee will be proposed by three
other significant shareholders and serve as a lead trustee on the Company's
board.
Xxxxxx'x management, trustees and significant shareholders are expected to
support the election of the two nominees. Xxxxxx will reimburse Greenlight for
certain reasonable third-party costs incurred in connection with its proxy
solicitation.
Xxxxx X.X. Xxx, the Chief Executive Officer and President of Xxxxxx,
stated: "We are pleased to resolve this matter on a consensual basis that is
supported by our management, trustees and significant shareholders. This will
permit the Company to refocus on creating value for shareholders through our
strategy of becoming a leading global market pulp producer."
He added: "To this end, we will focus on the completion and start up of
our new Stendal pulp mill and revive our plan to refinance two bridge loans
which had initially been put on hold as a result of the resignation of our prior
CFO."
The Company will file supplemental proxy materials to nominate the two new
candidates for election as trustees at the upcoming shareholders' meeting. The
proxy materials will be mailed to shareholders of record as of July 23, 2003.
ABOUT XXXXXX INTERNATIONAL INC.
Xxxxxx International Inc. is a European pulp and paper manufacturing
company.
The preceding includes forward looking statements which involve known and
unknown risks and uncertainties which may cause Xxxxxx'x actual results in
future periods to differ materially from forecasted results. For a list and
description of such risks and uncertainties, see Xxxxxx'x reports filed with the
Securities and Exchange Commission.
# # #
SCHEDULE B
G.A. OPTION AGREEMENT
OPTION AGREEMENT
This Option Agreement (the "AGREEMENT"), dated as of August __, 2003, is
made by and between Xxxxxx International Inc. ("XXXXXX" or the "COMPANY") and
Xxx X. Xxxxx ("OPTIONEE").
WHEREAS, Xxxxxx, Greenlight Capital, L.L.C. and Greenlight Capital, Inc.
(Greenlight Capital, L.L.C. and Greenlight Capital, Inc. collectively,
"GREENLIGHT") are parties to that certain Agreement dated as of August 5, 2003
(the "AGREEMENT"), pursuant to which, among other things, Xxxxxx agreed to issue
options to purchase shares of beneficial interest, $1.00 par value per share
(the "COMMON STOCK"), of Xxxxxx to Optionee pursuant to terms substantially
similar to the terms set forth in the Option Agreement dated as of June 20, 2003
by and among Optionee and Greenlight Capital, LP, Greenlight Capital Qualified,
LP and Greenlight Capital Offshore, Ltd; and
WHEREAS, Xxxxxx and Optionee are entering into this Option Agreement to set
forth the terms of the options granted by Xxxxxx to Optionee.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
STATEMENT OF AGREEMENT
1. Option to Purchase Stock. Until and including June 20, 2004 (the
---------------------------
"EXPIRATION DATE"), Optionee shall have the right, but not the obligation, to
purchase from Xxxxxx up to one hundred thousand (100,000) shares of Common Stock
(the "SHARES"). Notwithstanding the foregoing, should Xxxxxx'x xxxxxxx xxxxxxx
policy or Regulation BTR of the Xxxxxxxx-Xxxxx Act of 2002 prohibit the Optionee
from exercising the option granted under this Agreement for any reason on the
Expiration Date, Xxxxxx shall extend the Expiration Date to August 4, 2004.
2. Price. The exercise price for each Share shall be $4.53 (the
-----
"EXERCISE PRICE"). The Aggregate Exercise Price for the Shares shall equal the
number of Shares multiplied by the Exercise Price. If the option is exercised,
the Aggregate Exercise Price shall be paid by wire transfer of immediately
available funds to an account or accounts specified by Xxxxxx.
3. Notice of Exercise. At any time prior to the Expiration Date,
--------------------
Optionee may exercise the right to purchase the Shares (the "EXERCISE DATE").
Optionee shall deliver to Xxxxxx written notice which shall state Optionee's
exercise of the purchase rights hereunder and the number of Shares in respect of
which the rights are being exercised. Optionee may, subject to any applicable
laws, in his sole discretion during any period for which the Common Stock is
publicly traded (i.e., the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market, or if the Common Stock is quoted on the Nasdaq System (but not
on the Nasdaq National Market) or any similar system whereby the stock is
regularly quoted by a recognized securities dealer but closing sale prices are
not reported), decide to pay Xxxxxx the Exercise Price by reducing the number of
Shares he would receive upon the exercise of his option ("CASHLESS EXERCISE").
In order to effectuate such Cashless Exercise, the number of Shares that
Optionee would receive upon
exercise of the option (the "OPTION SHARES") shall be reduced by the quotient
of (i) the Aggregate Exercise Price of such Option Shares and (ii) the closing
price of the day of the receipt of the written notice of exercise (the "EXERCISE
SHARES"). The option shall be deemed exercised upon receipt by Xxxxxx of (a)
such written notice and (b) the aggregate purchase price as contemplated by
Section 2 above. In the event that the Cashless Exercise would result in
Optionee receiving a fractional share, the number of Shares that Optionee
receives shall be rounded up to the next whole Share.
4. Transaction Costs. Xxxxxx will not charge any transaction costs to
------------------
deliver the Shares to Optionee.
5. Investment Purposes. Optionee is acquiring the Shares for
--------------------
investment purposes only, for Optionee's own account, and not as nominee or
agent for any other person or entity, and not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the Securities
Act of 1933, as amended (the "SECURITIES ACT"). Optionee has no agreements or
other arrangements with any person or entity to sell, transfer or pledge any
part of the Shares, and has no plans to enter into any such agreement or
arrangement.
6. Restrictions Regarding Shares. Optionee acknowledges that the
-------------------------------
Shares acquired upon exercise of the purchase rights hereunder may be subject to
restrictions on transfer and understands that any sale of the Shares may be made
only in accordance with the Securities Act and applicable state securities laws.
7. Adjustments. In the event of any change in the outstanding shares
-----------
of Common Stock of the Company by reason of a stock dividend and stock split or
similar adjustment, the number and kind of shares subject to this option and the
option price of such shares shall be appropriately adjusted. In the event that
the above would result in Optionee receiving a fractional share, the number of
Shares that the Optionee receives shall be rounded up to the next whole Share.
8. Covenants of Xxxxxx. Xxxxxx covenants that until the Expiration
---------------------
Date Xxxxxx will at all times reserve and keep available such number of shares
of Common Stock as the Optionee has the right to receive upon the exercise of
the option provided for in this Agreement and that such Shares will be duly
authorized and validly issued and will be free and clear of any lien,
encumbrance, adverse claim, restriction on sale or transfer, preemptive right,
limitations on voting rights or option on such Exercise Date.
9. 2003 Option Plan. This Agreement is entered into and the rights to
-----------------
acquire shares hereunder are granted pursuant and subject to the terms of
Xxxxxx'x 2003 Non-Qualified Stock Option Plan dated August __, 2003 (the "OPTION
PLAN").
10. Miscellaneous.
-------------
10.1 Further Assurances. Each party agrees to perform any further
------------------
acts and to execute and deliver any further documents or instruments which may
be reasonably necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby.
10.2 Amendments. This Agreement may not be amended, supplemented
----------
or modified except by an instrument in writing signed by each of the parties
hereto.
10.3 Interpretation. The headings contained in this Agreement are
--------------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.4 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed to be an original and which taken
together shall constitute one and the same agreement.
10.5 Entire Agreement. This Agreement (i) constitutes the entire
-----------------
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and (ii)
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
10.6 Notice. All notices and other communications required or
------
permitted hereunder shall be in writing and delivered personally, by telecopy,
by a nationally-recognized overnight courier service or by registered or
certified mail, postage prepaid, if to Optionee at the address of Optionee set
forth on the signature page hereof and if to Xxxxxx, as follows:
Xxxxxx International Inc. with a copy to:
00000 Xxxxxxxxxx Xxxxxx Xxxxx Xxxxxx, Moller
Suite 282 1000 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxxxx, X.X. X0X 0X0
Attn: Chief Financial Officer Attn: H.S. Sangra
10.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS RULES THEREOF.
10.8 Severability. If any provision of this Agreement as applied
------------
to any part or to any circumstance shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement and the application of such provision to any other
part or to any other circumstance shall not be affected or impaired thereby.
10.9 Waiver. Any of the terms or conditions of this Agreement may
------
be waived in writing at any time by the party which is entitled to the benefits
thereof. No waiver of any provision of this Agreement shall be deemed or shall
constitute a waiver of such provision at any time in the future or a waiver of
any other provision hereof.
10.10 Regulatory Expenses. Xxxxxx shall, upon timely receipt of
--------------------
any information required from Optionee, use its reasonable best efforts to make
any required regulatory filings relating to the grant of or exercise of the
option granted under this Agreement on behalf of the Optionee.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
XXXXXX INTERNATIONAL INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
OPTIONEE:
----------------------------------------
Xxx X. Xxxxx
Address:
--------------------------------
----------------------------------------
SCHEDULE C
FIRST AMENDMENT TO
GREENLIGHT INDEMNITY AGREEMENT
FIRST AMENDMENT TO AGREEMENT
FIRST AMENDMENT TO AGREEMENT (the "AMENDMENT") dated as of August __, 2003
between Greenlight Capital, L.L.C. ("GREENLIGHT") and Xxx X. Xxxxx (the
"INDEMNITEE"). This Amendment amends the Agreement dated as of June 20, 2003
between Greenlight and Indemnitee (the "AGREEMENT"). Capitalized terms used but
not otherwise defined herein are defined in the Agreement.
WHEREAS, Greenlight and Indemnitee entered into an Agreement dated
June 20, 2003 (the "AGREEMENT"), which provided, among other things, that
Greenlight would provide indemnification to Indemnitee in certain situations
relating to Indemnitee's nomination and election to the Board of Trustees of
Xxxxxx International Inc. (the "COMPANY") at the 2003 annual meeting of
shareholders of the Company (the "ANNUAL MEETING"); and
WHEREAS, this Amendment amends the Agreement with respect to the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Indemnification in Capacity as Trustee. Notwithstanding anything to
--------------------------------------
the contrary in the Agreement, from and after the effective date of this
Amendment, Greenlight shall continue to be obligated to provide the
indemnification and advancement of expenses as and to the extent set forth in
the Agreement, except that with respect to any indemnification and advancement
of expenses related to actions or omissions taken in Indemnitee's capacity as a
trustee of the Company, such indemnification and advancement of expenses shall
be limited to the following:
a) Greenlight shall, subject to Section 7 hereof, indemnify Indemnitee
and advance expenses pursuant to Section 3 of the Agreement to the
extent Indemnitee as a result of actions or omissions taken in his
capacity as a trustee of the Company while serving as such at the
request of Greenlight was, is or becomes a party to or other
participant in, or is threatened to be made a party to or other
participant in, (A) any threatened, pending or completed action, suit
or proceeding (whether civil, administrative, formal or informal,
investigative or other), which is instituted by or on behalf of, or
directly or indirectly funded to the extent of 25% or more by, any one
or more of (i) the Company and/or any one or more of its affiliates,
(ii) MFC Bancorp Ltd. and/or any one or more of its affiliates and/or
(iii) any one or more third party(ies) who has an executive officer,
director or 10 percent shareholder who is an affiliate of the Company
and/or MFC Bancorp Ltd., or (B) any inquiry or investigation that the
Indemnitee in good faith believes might lead to the institution of any
such action or proceeding. For purposes of this Section 1(a), a
derivative action, suit or proceeding shall not be deemed instituted
by or on behalf of the Company unless the plaintiff shareholder
bringing such action, suit or proceeding, or any person providing 25%
or more of the funding for such lawsuit, is an affiliate of the
Company, MFC Bancorp
Ltd. or any of its affiliates or any third party who has an executive
officer, director or 10 percent shareholder who is an affiliate of the
Company or such action is otherwise managed or controlled by any such
one or more persons.
b) Greenlight shall advance Indemnitee all reasonable attorney's fees and
all other reasonable fees, costs, expenses and obligations paid or
incurred in connection with any claim for liability under Section
16(b) of the Securities Exchange Act of 1934 or under United States
federal or state securities laws for "xxxxxxx xxxxxxx" arising as a
result of actions or omissions taken while serving as a trustee of the
Company at the request of Greenlight, including without limitation,
investigating, defending or participating (as a party, witness or
otherwise) in (including on appeal) or preparing to defend or
participate in any such claim, as such expenses are incurred by the
Indemnitee; provided, however, that all amounts advanced in respect of
such expenses shall be repaid to Greenlight by Indemnitee if it shall
ultimately be determined in a final judgment without further right to
appeal by a court of appropriate jurisdiction that Indemnitee is
liable under Section 16(b) or such "xxxxxxx xxxxxxx" laws.
c) Greenlight shall provide the same indemnification and advancement of
expenses to Indemnitee with respect to any actions or omissions taken
by Indemnitee while serving as a trustee of the Company at the request
of Greenlight that the Company would be obligated to provide
Indemnitee, in his capacity as trustee, pursuant to the Indemnity
Agreement entered into between the Company and Indemnitee to the
extent the Company for any reason defaults on its obligations to
Indemnitee under such Indemnity Agreement.
2. Costs of Legal Counsel. Section 2(c)(iv) of the Agreement is hereby
----------------------
deleted in its entirety and is of no further force and effect.
3. Enforcement of Settlement Agreement. Greenlight hereby agrees to use
-----------------------------------
its reasonable best efforts to enforce on Indemnitee's behalf Section 2.11 of
the Agreement dated August 5, 2003 by and among the Company, Greenlight and
Greenlight Capital, Inc.
4. Effective Time. This Amendment shall become effective upon the
--------------
execution and effectiveness of the Indemnity Agreement (the "INDEMNITY
AGREEMENT") entered into between the Company and Indemnitee, which is attached
hereto as Exhibit A. Indemnitee hereby agrees to execute and enter into such
---------
Indemnity Agreement immediately upon his becoming a trustee of the Company and
the tendering of such Indemnity Agreement by the Company.
5. Remainder of Agreement Not Affected. Greenlight and Indemnitee
---------------------------------------
acknowledge and agree that, except as specifically supplemented and amended,
changed or modified hereby, the Agreement shall remain in full force and effect
in accordance with its terms. On or after the date of this Amendment, each
reference in the Agreement to "this Agreement," "hereunder," "hereof," "herein,"
or words of like import referring to the Agreement shall mean and be a reference
to the Agreement as amended, and this Amendment shall be deemed to be a part of
the Agreement.
2
6. Subrogation. In the event of any payment under the Agreement, as
-----------
amended, Greenlight shall be subrogated to the extent of such payment to all of
the rights of recovery of Indemnitee from the Company and/or under any policy or
policies of insurance that may be maintained from time to time by the Company
with respect to the action or omission to which such payment relates, and the
Indemnitee shall execute all papers reasonably required and shall take such
action that may be reasonably necessary to secure such rights, including the
execution of such documents reasonably necessary to enable Greenlight
effectively to bring suit to enforce such rights.
7. Indemnification by Company. Notwithstanding anything herein or in
-----------------------------
the Agreement to the contrary, Greenlight shall not be obligated to provide
indemnification or advance Expenses hereunder or pursuant to the Agreement to
the extent the Indemnitee is in fact indemnified or advanced Expenses as the
case may be, by the Company or under any such policy or policies of insurance or
any other source. In the event the Company is indemnifying and advancing
expenses in accordance with the Indemnity Agreement, Section 3(b) of the
Agreement shall not apply in such circumstances.
8. Governing Law; Venue. This Amendment shall be governed by and
---------------------
construed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws. Any action brought to enforce or
interpret this Amendment will be brought only in the state or federal court
sitting in the County of Los Angeles, State of California, and the parties
hereby waive any objection to and submit to the personal jurisdiction of
such courts. The parties also hereby waive any claim of forum non conveniens.
9. Counterparts. This Amendment may be executed in one or more
------------
counterparts for the convenience of the parties hereto, all of which together
shall constitute one and the same instrument.
[Signature Page Follows]
3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
GREENLIGHT CAPITAL, L.L.C.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
Name: Xxx X. Xxxxx
4
EXHIBIT A
INDEMNITY AGREEMENT
TRUSTEE'S INDEMNITY AGREEMENT
-----------------------------
THIS AGREEMENT dated for reference the * day of *, 2003.
BETWEEN:
*, Businessman
(the "Trustee")
AND:
XXXXXX INTERNATIONAL INC., a Massachusetts business trust
organized under the laws of the State of Washington with an
office at 00000 Xxxxxxxxxx Xxx. Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx, XXX 00000
(the "Company")
WITNESSES THAT WHEREAS:
A. It is essential to the Company to retain and attract as trustees and
officers the most capable persons available;
B. The Trustee is a trustee and/or officer of the Company;
C. Both the Company and the Trustee recognize the increased risk of
litigation and claims being asserted against directors, trustees and
officers of public companies in today's environment; and
D. In recognition of the Trustee's need for substantial protection against
personal liability and in order to enhance the Trustee's continued
service to the Company in an effective manner, the Company wishes
to provide in this Agreement for the indemnification of the Trustee to
the fullest extent permitted by law and as set forth in this
Agreement.
NOW THEREFORE in consideration of the premises, the respective covenants of the
parties herein and other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged), the parties hereto covenant and
agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS. For the purposes of this Agreement, the following terms
-----------
shall have the following meanings, respectively:
(a) "BOARD" means the board of trustees of the Company;
2
(b) "CLAIM" or "CLAIMS" has the meaning ascribed to such term in
Subsection 2.1(a) hereof;
(c) "CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of shares of beneficial
interest of the Company, becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 20% or more of the total
voting power represented by the Company's then outstanding Voting
Securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board and any new
trustee of the Company whose election by the Board or nomination
for election by the Company's shareholders was approved by a vote
of at least two-thirds of the trustees of the Company then still
in office who either were trustees of the Company at the
beginning of such period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger
or consolidation which would result in the Voting Securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 50.1%
of the total voting power represented by the Voting Securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the shareholders of the
Company approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of
(in one transaction or a series of transactions) all or
substantially all of the Company's assets;
(d) "COSTS" has the meaning ascribed thereto in Subsection 2.1(b) hereof;
(e) "EXPENSE ADVANCE" has the meaning ascribed to such term in Section 2.2
hereof;
(f) "INDEMNIFIABLE EVENT" has the meaning ascribed to such term in
Subsection 2.1(a) hereof;
(g) "INDEPENDENT LEGAL COUNSEL" means an attorney or firm of attorneys,
selected in accordance with the provisions of Section 6.1 hereof, who
shall not have otherwise performed services for the Company or the
Trustee within the last two
3
years (other than with respect to matters concerning the rights of the
Trustee under this Agreement, or of other trustees of the Company
under similar indemnity agreements);
(h) "POTENTIAL CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if
consummated would constitute a Change in Control;
(iii) any person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their
ownership of shares of beneficial interest of the Company, who is
or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding Voting
Securities, increases his beneficial ownership of such securities
by five percentage points (5%) or more over the percentage so
owned by such person; or
(iv) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred;
(i) "RELATED COMPANIES" has the meaning ascribed to such term in
Subsection 2.1(a) hereof;
(j) "REVIEWING PARTY" means any appropriate person or body consisting of a
member or members of the Board or any other person or body appointed
by the Board who is not a party to the particular Claim for which
the Trustee is seeking indemnification, or the Independent Legal
Counsel; and
(k) "VOTING SECURITIES" means any securities of the Company which vote
generally in the election of trustees of the Company.
1.2 EFFECTIVE DATE. Notwithstanding the date of its execution and delivery,
--------------
this Agreement shall be conclusively deemed to commence on,
and be effective as of, the day upon which the Trustee first became or
becomes a trustee or officer of the Company and shall survive and remain in
full force and effect after the Trustee ceases to be a trustee or officer
of the Company and after the termination of the Trustee's employment with
the Company.
2. INDEMNITY
2.1 INDEMNIFICATION. Subject to Section 3.1, the Company shall indemnify
---------------
and save harmless the Trustee to the fullest extent permitted by law against and
from:
4
(a) any and all charges and claims of every nature and kind whatsoever
which may be brought, made or advanced by any person, firm,
corporation or government, or by any governmental department, body,
commission, board, bureau, agency or instrumentality against the
Trustee, and any and all threatened, pending or completed actions,
suits or proceedings, or any inquires or investigations, whether
instituted by the Company or any other person, that the Trustee in
good faith believes might lead to the institution of any such action,
suit or proceeding, whether civil, criminal, administrative,
investigative or other, against the Trustee, including any and all
actions, suits, proceedings, inquires or investigations in which the
Trustee was, is, becomes or is threatened to be made a party to or
witness or other participant in (a "CLAIM", or, collectively,
"CLAIMS"), by reason of (or arising in part out of) the Trustee being
a director, officer, trustee, employee or agent of the Company, any of
the Company's subsidiaries, or any company, partnership, joint
venture, trust or other enterprise related to or affiliated with the
Company or which the Trustee was serving at the request of the Company
as a director, officer, trustee, employee or agent (the "RELATED
COMPANIES"), or that arise out of or are in any way connected with the
management, operation, activities, affairs or existence of the Company
or any of its Related Companies (an "INDEMNIFIABLE EVENT");
(b) any and all costs, damages, expenses (including legal fees and
disbursements on a full indemnity basis), judgements, fines,
liabilities, penalties (statutory and otherwise), losses and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such
costs, damages, expenses, judgements, fines, liabilities, penalties,
losses or amounts paid in settlement) (referred to herein as "COSTS")
which the Trustee may sustain, incur or be liable for by reason of (or
arising in part out of) an Indemnifiable Event whether sustained or
incurred by reason of his negligence, default, breach of duty, breach
of trust, failure to exercise due diligence or otherwise in relation
to the Company or its Related Companies or any of their affairs; and
(c) in particular, and without in any way limiting the generality of the
foregoing, any and all Costs which the Trustee may sustain, incur or
be liable for as a result of or in connection with the release of or
presence in the environment of hazardous substances, contaminants,
litter, waste, effluent, refuse, pollutants or deleterious materials
and that arise out of or are in any way connected with the management,
operation, activities, affairs or existence of the Company or any of
its Related Companies.
2.2 EXPENSE ADVANCES. Subject to Section 3.1, the Company shall advance to
-----------------
the Trustee the Costs reasonably estimated to be sustained, incurred or
suffered by him, in connection with the indemnification set forth in
Section 2.1 hereof within two business days of receipt by the Company of a
written request for such advance (an "EXPENSE ADVANCE"). The Trustee hereby
undertakes to repay such amounts advanced only if, and to the extent that,
it shall ultimately be determined by a court of competent jurisdiction,
which
5
determination is not subject to any subsequent appeals, that the Trustee is
not entitled to be indemnified by the Company as authorized by this
Agreement.
2.3 INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY. Notwithstanding any
--------------------------------------------------
other provision of this Agreement, to the extent that the Trustee has been
successful on the merits or otherwise in the defence of any Claim or in the
defence of any charge, issue or matter therein, including the dismissal of a
Claim, the Company shall indemnify the Trustee against any and all Costs
actually and reasonably sustained or incurred by him in connection with
the investigation, defence or appeal of such Claim.
2.4 INDEMNIFICATION FOR EXPENSE OF A WITNESS. Notwithstanding any other
--------------------------------------------
provision of this Agreement, the Company will indemnify the Trustee if and
whenever he is a witness or participant, or is threatened to be made a witness
or participant, to any action, suit, proceeding, hearing, inquiry or
investigation to which the Trustee is not a party, by reason of the fact that
he is or was a trustee, director, officer, employee or agent of the Company or
any of its Related Companies or by reason of anything done or not done by
him in such capacity, against any and all Costs actually and reasonably
sustained or incurred by the Trustee or on the Trustee's behalf in connection
therewith.
2.5 INDEMNIFICATION FOR EXPENSES IN OBTAINING INDEMNITY. The Company shall
----------------------------------------------------
indemnify the Trustee against any and all Costs, and, if requested by the
Trustee, shall subject to Section 3.1 hereof (within two business days of such
request) advance such Costs to the Trustee, which are sustained, incurred or
suffered by the Trustee in connection with any action, suit or proceeding
brought by the Trustee for: (i) indemnification, or an advance thereof, by
the Company under this Agreement, any other agreement or the Restated
Declaration of Trust of the Company, as amended; or (ii) recovery under any
trustees', directors' and officers' liability insurance policies maintained
by the Company, regardless of whether the Trustee ultimately is determined to
be entitled to such indemnification or insurance recovery, as the case may be.
2.6 PARTIAL INDEMNITY. If the Trustee is entitled under any provisions of
------------------
this Agreement to indemnification by the Company for some or a portion of the
Costs sustained, incurred or suffered by him but not, however, for all of the
total amounts thereof, the Company shall nevertheless indemnify the Trustee for
the portion thereof to which Trustee is entitled.
3. INDEMNITY EXCEPTIONS
3.1 EXCEPTIONS TO INDEMNIFICATION. Notwithstanding the provisions of
-------------------------------
Sections 2.1, 2.2 and 2.5 hereof, the Company shall not be obligated to
indemnify or save harmless the Trustee against and from any Claim or Costs
or make an Expense Advance:
(a) if, in respect thereof, a court of competent jurisdiction determines,
which determination is not subject to any subsequent appeals, that the
Trustee failed to act honestly and in good faith with a view to the
best interests of the Company;
(b) arising out of any criminal conviction of the Trustee if the Trustee
pleaded guilty or was found guilty by a court of competent
jurisdiction, which finding is not subject to any subsequent appeals
by the Trustee, other than in the case of a
6
criminal proceeding in respect of which the Trustee had no reasonable
cause to believe that his conduct was unlawful;
(c) arising out of a determination by a court of competent jurisdiction,
which determination is not subject to any subsequent appeals, that:
(i) the Trustee failed to disclose his interest or conflicts as
required under the Washington Business Corporation Act - Title 23B of
the Revised Code of Washington, as amended (the "RCW"); or (ii) the
Company is not permitted to indemnify the Trustee as provided in RCW
23B.08.510(4);
(d) in connection with any liability under Section 16(b) of the Securities
Exchange Act of 1934, as amended, or under United States federal or
state securities laws for "xxxxxxx xxxxxxx";
(e) if, in respect thereof, the Expense Advance, or any other advance
to the Trustee under this Agreement, is prohibited by the Xxxxxxxx
-Xxxxx Act of 2002, as amended; or
(f) in connection with any settlement of a Claim effected without the
Company's written consent.
4. BURDEN OF PROOF AND PRESUMPTIONS
4.1 BURDEN OF PROOF. In connection with any determination by the Company as
---------------
to whether the Trustee is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish that the Trustee is not so
entitled.
4.2 NO PRESUMPTIONS. For purposes of this Agreement, the termination of any
---------------
Claim, by judgement, 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 the Trustee did not meet any particular standard of
conduct or have any particular belief or that a court had determined that
indemnification is not permitted by applicable law.
5. CONTRIBUTION
5.1 If the indemnification provided in this Agreement is unavailable and may
not be paid to the Trustee for any reason other than statutory limitations
set forth in applicable law, then in respect of any Claim in which the
Company is jointly liable with the Trustee (or would be if joined in such
Claim), the Company shall contribute to the amount of Costs actually and
reasonably sustained or incurred and paid or payable by the Trustee in such
proportion as is appropriate to reflect (i) the relative benefits received
by the Company and all officers, trustees, directors or employees of the
Company and any of its Related Companies, other than the Trustee, who are
jointly liable with the Trustee (or would be if joined in such Claim) on
the one hand, and the Trustee, on the other hand, from the transaction from
which such Claim arose, and (ii) the relative fault of the Company and all
officers, trustees, directors or employees of the Company and any of its
Related Companies, other than the Trustee, who are jointly liable with the
Trustee (or would be if joined in such Claim), on the one hand, and of the
Trustee, on the other, in connection
7
with the events which resulted in such Costs, as well as any other relevant
equitable considerations. The relative fault referred to above 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 Costs. The Company agrees
that it would not be just and equitable if contribution pursuant to this
Section were determined by pro rata allocation or any other method of
allocation that does not take account of the foregoing equitable
considerations.
6. CHANGE IN CONTROL
6.1 CHANGE IN CONTROL. The Company agrees that if there is a Change in
-------------------
Control of the Company (other than a Change in Control which has been approved
By a majority of the trustees of the Company who were trustees of the Company
immediately prior to such Change in Control) then with respect to all matters
thereafter arising concerning the rights of the Trustee to indemnity
payments and Expense Advances under this Agreement, any other agreement or
the Restated Declaration of Trust of the Company, as amended, now or
hereafter in effect relating to Claims for Indemnifiable Events, the Company
shall seek legal advice only from Independent Legal Counsel selected by
the Trustee 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 the Trustee as to whether and to what extent
the Trustee 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 indemnify fully such counsel against any and all
Costs, claims and charge arising out of or relating to this Agreement or
its engagement pursuant hereto.
6.2 ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control,
-----------------------
the Company shall, upon written request by the Trustee, create a trust
for the benefit of the Trustee and from time to time upon written request of the
Trustee shall fund such trust in an amount sufficient to satisfy any and all
Costs reasonably anticipated at the time of such request to be sustained or
incurred in connection with investigating, preparing for and defending
any Claim, and the Costs sustained or incurred by the Trustee from time
to time, or reasonably anticipated to be sustained or incurred by the Trustee
in connection with any Claim, provided that in no event shall more than $25,000
be required to be deposited in any trust created hereunder in excess of amounts
deposited in respect of reasonably anticipated Costs. The amount or amounts
to be deposited in the trust pursuant to the foregoing funding obligation
shall be determined by the Reviewing Party in any case in which the
Independent Legal Counsel referred to above is involved. The terms of the
trust shall provide that upon a Change in Control (i) the trust shall not be
revoked or the principal thereof invaded, without the written consent of the
Trustee, (ii) the trustee of such trust shall advance to the Trustee,
within two business days of a request by the Trustee, the Costs sustained or
incurred, or reasonably anticipated to be sustained or incurred, by the
Trustee in connection with any Claim (and the Trustee hereby agrees to
reimburse the trust under the circumstances under which the Trustee would be
required to reimburse the Company under Section 2.2 hereof), (iii) such
trust shall continue to be funded by the Company in accordance with the
funding obligation set forth above, (iv) the trustee of such trust shall
promptly pay to the Trustee all amounts for which the
8
Trustee shall be entitled to indemnification pursuant to this Agreement
or otherwise, and (v) all unexpended funds in such trust shall revert
to the Company upon a final determination by the Reviewing Party or a court
of competent jurisdiction, as the case may be, that the Trustee has been
fully indemnified under the terms of this Agreement. The trustee of the
trust established hereunder shall be chosen by the Trustee. Nothing in
this Section 6.2 shall relieve the Company of any of its obligations under
this Agreement.
7. RESIGNATION
7.1 Nothing in this Agreement shall prevent the Trustee from resigning as a
trustee or officer of the Company or any of its Related Companies at any
time.
8. DEFENCE
8.1 NOTICE TO COMPANY. Upon the Trustee becoming aware of any pending or
-------------------
threatened Claim, written notice shall be given by or on behalf of the
Trustee to the Company as soon as is reasonably practicable.
8.2 INVESTIGATION BY COMPANY. The Company shall conduct such investigation
-------------------------
of each Claim as is reasonably necessary in the circumstances, and shall
pay all costs of such investigation.
8.3 DEFENCE BY COMPANY. Subject to this Section, the Company shall, upon
--------------------
the written request of the Trustee, defend, on behalf of the Trustee, any
Claim, even if the Claim is groundless, false or fraudulent.
8.4 APPOINTMENT OF DEFENCE COUNSEL. The Company shall consult with and
---------------------------------
accept the reasonable choice of the Trustee concerning the appointment of
any defence counsel to be engaged by the Company in fulfillment of its
obligations to defend a Claim pursuant to Section 8.3; thereafter the
Company shall appoint such counsel.
8.5 SETTLEMENT BY COMPANY. With respect to a Claim for which the Company is
---------------------
obliged to indemnify the Trustee hereunder, the Company may conduct
negotiations towards the settlement of a Claim and, with the written consent
of the Trustee (which the Trustee agrees not to unreasonably withhold) the
Company may make such settlement as it deems expedient, provided however that
the Trustee shall not be required, as part of any proposed settlement of a
Claim, to admit liability or agree to indemnify the Company in respect of,
or make contribution to, any compensation or other payment for which
provision is made under the settlement. The Company shall pay any
compensation or other payment for which provision is made by such
settlement.
9. GENERAL
9.1 LIMITATION OF ACTIONS. No legal action shall be brought and no cause of
---------------------
action shall be asserted by or in the right of the Company or any of its
Related Companies against the Trustee, the Trustee's spouse, heirs, executors
or personal or legal representatives after the expiration of two years from
the date of accrual of such cause of action, and any claim or cause
of action of the Company and any of its Related Companies shall be
extinguished
9
and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitation is otherwise applicable to such cause of action such
shorter period shall govern.
9.2 GENDER; PLURAL. In this Agreement wherever the singular or masculine is
--------------
used it will be construed as if the plural or feminine or neuter, as the
case may be, had been used where the context otherwise requires, and a
reference to a section by number is a reference to the section so numbered
in this Agreement.
9.3 NOTICES. All notices and other communications required to be given by a
-------
party hereunder shall be in writing and shall be deemed to have been duly
given: (a) upon delivery, if delivered by hand; (b) one (1) business day
after the business day of deposit with an overnight courier, if delivered
by overnight courier, freight prepaid; (c) five (5) days after
deposit with the applicable postal service, if delivered by first class
mail postage prepaid; or (d) one (1) day after the business day of delivery
by facsimile transmission, if delivered by facsimile transmission and a
facsimile transmission confirmation is obtained in respect thereof, with a
copy by first class mail postage prepaid, to the other party at the other
party's address specified above or to the last known facsimile number of
such party, as applicable, or at such other address or to such other
facsimile number as the other party may have last specified in writing to
the party intending to convey the notice or other communication.
9.4 TIME. Time shall be of the essence of this Agreement.
----
9.5 HEADINGS. The headings in this Agreement are inserted for ease of
--------
reference only and shall have no effect on the construction or
interpretation of this Agreement.
9.6 GOVERNING LAW. This Agreement shall be construed, interpreted, governed
-------------
by and enforced in accordance with the laws of the State of
Washington, U.S.A., applicable to contracts made and to be performed in the
State of Washington, U.S.A., without giving effect to the principles of
conflicts of laws. Each of the parties hereby irrevocably attorns to the
non-exclusive jurisdiction of the courts of Seattle, Washington, U.S.A.,
with respect to any matters arising out of this Agreement.
9.7 ENTIRE AGREEMENT. This Agreement contains the entire agreement between
-----------------
the parties relating to the subject matter hereof and
there are no agreements, representations or warranties, express or implied,
which are collateral hereto.
9.8 NONEXCLUSIVITY. The rights of the Trustee hereunder shall be in
--------------
addition to any rights the Trustee may have under the
Restated Declaration of Trust of the Company, including any amendments
thereto or restatements thereof, Chapter 23.90 of the RCW, as amended,
Title 23B of the RCW, as amended, or otherwise. To the extent that any
change(s) in Chapter 23.90 and/or Title 23B of the RCW (whether by statute
or judicial decision) permits greater indemnification by agreement than
would be afforded currently under the Company's Restated Declaration of
Trust, as amended, and this Agreement, it is the intent of the parties
hereto that the Trustee shall enjoy by this Agreement the benefits so
afforded by such change(s).
10
9.9 INSURANCE. To the extent the Company maintains an insurance policy or
---------
policies providing trustees', directors' and officers' liability
insurance, the Trustee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any trustee, director or officer of the Company.
9.10 AMENDMENTS. This Agreement may only be amended by a written agreement
----------
signed by both of the parties hereto.
9.11 WAIVERS. 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.
9.12 FURTHER ASSURANCES. Each of the parties agrees to promptly do all such
------------------
further acts, and promptly execute and deliver all such
further documents, as may be necessary or advisable for the purpose of
giving effect to or carrying out the intent of this Agreement.
9.13 SUCCESSORS AND ASSIGNS. This Agreement shall enure to the benefit of
------------------------
and be binding upon the parties hereto and their
respective successors, 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, assigns, spouses, heirs,
executors and personal and legal representatives. This Agreement shall
continue in effect regardless of whether the Trustee continues to serve as
a director, officer or trustee of the Company, any of its Related Companies
or of any other enterprise at the Company's request.
9.14 SEVERABILITY. The provisions of this Agreement shall be severable in
------------
the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are 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
fullest extent permitted by law.
11
9.15 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts with the same effect as if all parties had signed the same
document. All counterparts will constitute one and the same agreement. This
Agreement may be executed and transmitted by facsimile transmission and if
so executed and transmitted this Agreement will be for all purposes as
effective as if the parties had delivered an executed original Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in the case
of a corporate party by its duly authorized officer or officers, as of the date
first written above.
SIGNED, SEALED AND DELIVERED in the )
presence of: )
)
------------------------------------------ )
Signature )
)
--------------------------------------------)
Name )
)
--------------------------------------------) -----------------------------
Address ) *
)
------------------------------------------- )
------------------------------------------- )
Occupation )
XXXXXX INTERNATIONAL INC.
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SCHEDULE D
GREENLIGHT PRESS RELEASE
[GRAPHIC OMITED]
GREENLIGHT CAPITAL REACHES AGREEMENT WITH XXXXXX
INTERNATIONAL ON TWO BOARD NOMINEES
New York, NY; August 6, 2003: Greenlight Capital, Inc., ("Greenlight") today
announced that it has reached an agreement with Xxxxxx International, Inc.
(Nasdaq: MERCS) ("Mercer") under which Mercer will nominate for election as
Trustees at its upcoming annual shareholders' meeting Xxx X. Xxxxx, a candidate
proposed by Greenlight, and an independent candidate proposed by three of
Xxxxxx'x other largest shareholders. Accordingly, Greenlight has withdrawn its
proposed nominations for trustees and terminated its proxy solicitation.
"We are pleased that Xxxxxx'x management has listened to our concerns over
corporate governance," said Xxxxxx Xxxxxxx, Chief Operating Officer of
Greenlight. "We are also pleased that other significant shareholders in Mercer
have participated in achieving a resolution that is supported by all
stakeholders and is in the best interests of the Company."
"We believe there is substantial value in Mercer that can be delivered to all
shareholders, which is why we decided to push for change, rather than sell our
position. We hope that Xxx Xxxxx and the other new independent board member
will work cooperatively with Xxxxxx'x board and management to enhance corporate
governance, successfully implement the business plan, and represent all
shareholders."
Xxxxx Xxxxxxx, President of Greenlight added, "We believe this resolution will
enhance investor confidence in the marketplace and ensure that the value of
Xxxxxx'x assets are maximized for the benefit of Xxxxxx'x shareholders. I want
to thank Xxxxx Xxxxxxx, Xxxxxxx Capital Management and Xxxxxx Xxxxxxxxx XxXxxxx
for assisting Mercer and Greenlight in reaching an agreement."
Xxxxxx'x Board of Trustees currently has seven members, two of whom are
scheduled to be elected at the company's annual meeting of shareholders on
August 22, 2003. On July 2, 2003, Greenlight filed a definitive proxy
statement with the Securities and Exchange Commission nominating two independent
candidates in opposition to management's candidates. Greenlight, an investment
management firm with a focus on long-term value investing, has been an investor
in Mercer since August 1997. Greenlight owns 14.9% of Xxxxxx'x shares
outstanding, and has been the company's largest shareholder since 2000. Mercer
is a pulp and paper manufacturing company with operations in Europe.
CONTACT INFORMATION:
Xxxxx Xxxxxxx / Xx Xxxxxx
The Xxxxxxxxx XxxXxxxxx Group
(000) 000-0000
SCHEDULE E
GWA OPTION AGREEMENT
OPTION AGREEMENT
This Option Agreement (the "AGREEMENT"), dated as of August __, 2003, is
made by and between Xxxxxx International Inc. ("MERCER" or the "COMPANY") and
GWA Investments LLC ("OPTIONEE").
WHEREAS, Mercer, Greenlight Capital, L.L.C. and Greenlight Capital, Inc.
(Greenlight Capital, L.L.C. and Greenlight Capital, Inc. collectively,
"GREENLIGHT") are parties to that certain Agreement dated as of August 5, 2003
(the "AGREEMENT"), pursuant to which, among other things, Mercer agreed to issue
options to purchase shares of beneficial interest, $1.00 par value per share
(the "COMMON STOCK"), of Mercer to Optionee pursuant to terms substantially
similar to the terms set forth in the Option Agreement dated as of June 20, 2003
by and among Optionee and Greenlight Capital, LP, Greenlight Capital Qualified,
LP and Greenlight Capital Offshore, Ltd; and
WHEREAS, Mercer and Optionee are entering into this Option Agreement to set
forth the terms of the options granted by Mercer to Optionee.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
STATEMENT OF AGREEMENT
1. Option to Purchase Stock. For the period of time between the date
--------------------------
of the 2003 annual meeting of shareholders of Mercer (the "ANNUAL MEETING") and
30 days after the date of the Annual Meeting (the "EXPIRATION DATE"), Optionee
shall have the right, but not the obligation, to purchase from Greenlight up to
two hundred twenty five thousand (225,000) shares of Common Stock (the
"SHARES"); provided, however, if Xxx X. Xxxxx is not elected to Xxxxxx'x Board
of Trustees at the Annual Meeting, Optionee's rights under this Agreement shall
terminate. Notwithstanding the foregoing, if the Expiration Date has not
occurred prior to October 15, 2003, this Agreement shall terminate and be of no
further effect on October 15, 2003.
2. Price. The exercise price for each Share shall be $4.53 (the
-----
"EXERCISE PRICE"). The Aggregate Exercise Price for the Shares shall equal the
number of Shares multiplied by the Exercise Price. If the option is exercised,
the Aggregate Exercise Price shall be paid by wire transfer of immediately
available funds to an account or accounts specified by Mercer.
3. Notice of Exercise. At any time prior to the Expiration Date,
--------------------
Optionee may exercise the right to purchase the Shares (the "EXERCISE DATE").
Optionee shall deliver to Mercer written notice which shall state Optionee's
exercise of the purchase rights hereunder and the number of Shares in respect of
which the rights are being exercised. The option shall be deemed exercised upon
receipt by Mercer of (a) such written notice and (b) the Aggregate Exercise
Price as contemplated by Section 2 above.
4. Transaction Costs. Mercer will not charge any transaction costs to
------------------
deliver the Shares to Optionee.
5. Investment Purposes. Optionee is acquiring the Shares for
--------------------
investment purposes only, for Optionee's own account, and not as nominee or
agent for any other person or entity, and not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the Securities
Act of 1933, as amended (the "SECURITIES ACT"). Optionee has no agreements or
other arrangements with any person or entity to sell, transfer or pledge any
part of the Shares, and has no plans to enter into any such agreement or
arrangement.
6. Restrictions Regarding Shares. Optionee acknowledges that the
-------------------------------
Shares acquired upon exercise of the purchase rights hereunder may be subject to
restrictions on transfer and understands that any sale of the Shares may be made
only in accordance with the Securities Act and applicable state securities laws.
7. Adjustments. In the event of any change in the outstanding shares
-----------
of Common Stock of the Company by reason of a stock dividend and stock split or
similar adjustment, the number and kind of shares subject to this option and the
option price of such shares shall be appropriately adjusted. In the event that
the above would result in Optionee receiving a fractional share, the number of
Shares that the Optionee receives shall be rounded up to the next whole Share.
8. Covenants of Mercer. Mercer covenants that until the Expiration
---------------------
Date Mercer will at all times reserve and keep available such number of shares
of Common Stock as the Optionee has the right to receive upon the exercise of
the option provided for in this Agreement and that such Shares will be duly
authorized and validly issued and will be free and clear of any lien,
encumbrance, adverse claim, restriction on sale or transfer, preemptive right,
limitations on voting rights or option on such Exercise Date.
9. 2003 Option Plan. This Agreement is entered into and the rights to
-----------------
acquire shares hereunder are granted pursuant and subject to the terms of
Xxxxxx'x 2003 Non-Qualified Stock Option Plan dated August __, 2003 (the "OPTION
PLAN").
10. Miscellaneous.
-------------
10.1 Further Assurances. Each party agrees to perform any further
------------------
acts and to execute and deliver any further documents or instruments which may
be reasonably necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby.
10.2 Amendments. This Agreement may not be amended, supplemented
----------
or modified except by an instrument in writing signed by each of the parties
hereto.
10.3 Interpretation. The headings contained in this Agreement are
--------------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.4 Counterparts. This Agreement may be executed in multiple
------------
counterparts,
each of which shall be deemed to be an original and which taken together shall
constitute one and the same agreement.
10.5 Entire Agreement. This Agreement (i) constitutes the entire
-----------------
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and (ii)
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
10.6 Notice. All notices and other communications required or
------
permitted hereunder shall be in writing and delivered personally, by telecopy,
by a nationally-recognized overnight courier service or by registered or
certified mail, postage prepaid, if to Optionee at the address of Optionee set
forth on the signature page hereof and if to Mercer, as follows:
Xxxxxx International Inc. with a copy to:
00000 Xxxxxxxxxx Xxxxxx Xxxxx Xxxxxx, Moller
Suite 282 1000 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxxxx, X.X. X0X 0X0
Attn: Chief Financial Officer Attn: H.S. Sangra
10.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS RULES THEREOF.
10.8 Severability. If any provision of this Agreement as applied
------------
to any part or to any circumstance shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement and the application of such provision to any other
part or to any other circumstance shall not be affected or impaired thereby.
10.9 Waiver. Any of the terms or conditions of this Agreement may
------
be waived in writing at any time by the party which is entitled to the benefits
thereof. No waiver of any provision of this Agreement shall be deemed or shall
constitute a waiver of such provision at any time in the future or a waiver of
any other provision hereof.
10.10 Regulatory Expenses. Mercer shall, upon timely receipt of
--------------------
any information required from the Optionee, use its reasonable efforts to make
any required regulatory filings relating to the grant of or exercise of the
option granted under this Agreement on behalf of the Optionee.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
XXXXXX INTERNATIONAL INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
OPTIONEE:
GWA Investments LLC
By:
-------------------------------------
Name: Xxx X. Xxxxx
Title: Managing Member
Address:
--------------------------------
----------------------------------------
SCHEDULE F
S.D. OPTION AGREEMENT
OPTION AGREEMENT
This Option Agreement (the "OPTION AGREEMENT"), dated as of August __,
2003, is made by and between Xxxxxx International Inc. ("MERCER" or the
"COMPANY") and Xxxx X. Xxxxxxx ("OPTIONEE").
WHEREAS, Mercer, Greenlight Capital, L.L.C. and Greenlight Capital, Inc.
(Greenlight Capital, L.L.C. and Greenlight Capital, Inc. collectively,
"GREENLIGHT") are parties to that certain Agreement dated as of August 5, 2003
(the "AGREEMENT"), pursuant to which, among other things, Mercer agreed to issue
options to purchase shares of beneficial interest, $1.00 par value per share
(the "COMMON STOCK"), of Mercer to Optionee pursuant to terms substantially
similar to the terms set forth in the Option Agreement dated as of June 20, 2003
by and among Optionee and Greenlight Capital, LP, Greenlight Capital Qualified,
LP and Greenlight Capital Offshore, Ltd; and
WHEREAS, Mercer and Optionee are entering into this Option Agreement to set
forth the terms of the options granted by Mercer to Optionee.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
STATEMENT OF AGREEMENT
1. Option to Purchase Stock. Until and including June 20, 2004 (the
---------------------------
"EXPIRATION DATE"), Optionee shall have the right, but not the obligation, to
purchase from Mercer up to fifty thousand (50,000) shares of Common Stock (the
"SHARES"). Notwithstanding the foregoing, should Xxxxxx'x xxxxxxx xxxxxxx
policy or Regulation BTR of the Xxxxxxxx-Xxxxx Act of 2002 prohibit the Optionee
from exercising the option granted under this Agreement for any reason on the
Expiration Date, Mercer shall extend the Expiration Date to August 4, 2004.
2. Price. The exercise price for each Share shall be $4.53 (the
-----
"EXERCISE PRICE"). The Aggregate Exercise Price for the Shares shall equal the
number of Shares multiplied by the Exercise Price. If the option is exercised,
the Aggregate Exercise Price shall be paid by wire transfer of immediately
available funds to an account or accounts specified by Mercer.
3. Notice of Exercise. At any time prior to the Expiration Date,
--------------------
Optionee may exercise the right to purchase the Shares (the "EXERCISE DATE").
Optionee shall deliver to Mercer written notice which shall state Optionee's
exercise of the purchase rights hereunder and the number of Shares in respect of
which the rights are being exercised. Optionee may, in his sole discretion
during any period for which the Common Stock is publicly traded (i.e., the
Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market, or if the
Common Stock is quoted on the Nasdaq System (but not on the Nasdaq National
Market) or any similar system whereby the stock is regularly quoted by a
recognized securities dealer but closing sale prices are not reported), decide
to pay Mercer the Exercise Price by reducing the number of Shares he would
receive upon the exercise
of his option ("CASHLESS EXERCISE"). In order to effectuate such Cashless
Exercise, the number of Shares that Optionee would receive upon exercise of
the option (the "OPTION SHARES") shall be reduced by the quotient of (i) the
Aggregate Exercise Price of such Option Shares and (ii) the closing price of
the day of the receipt of the written notice of exercise (the "EXERCISE
SHARES"). The option shall be deemed exercised upon receipt by Mercer of (a)
such written notice and (b) the aggregate purchase price as contemplated by
Section 2 above. In the event that the Cashless Exercise would result in
Optionee receiving a fractional share, the number of Shares that Optionee
receives shall be rounded up to the next whole Share.
4. Transaction Costs. Mercer will not charge any transaction costs to
------------------
deliver the Shares to Optionee.
5. Investment Purposes. Optionee is acquiring the Shares for
--------------------
investment purposes only, for Optionee's own account, and not as nominee or
agent for any other person or entity, and not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the Securities
Act of 1933, as amended (the "SECURITIES ACT"). Optionee has no agreements or
other arrangements with any person or entity to sell, transfer or pledge any
part of the Shares, and has no plans to enter into any such agreement or
arrangement.
6. Restrictions Regarding Shares. Optionee acknowledges that the
-------------------------------
Shares acquired upon exercise of the purchase rights hereunder may be subject to
restrictions on transfer and understands that any sale of the Shares may be made
only in accordance with the Securities Act and applicable state securities laws.
7. Adjustments. In the event of any change in the outstanding shares
-----------
of Common Stock of the Company by reason of a stock dividend and stock split or
similar adjustment, the number and kind of shares subject to this option and the
option price of such shares shall be appropriately adjusted. In the event that
the above would result in Optionee receiving a fractional share, the number of
Shares that the Optionee receives shall be rounded up to the next whole Share.
8. Covenants of Mercer. Mercer covenants that until the Expiration
---------------------
Date Mercer will at all times reserve and keep available such number of shares
of Common Stock as the Optionee has the right to receive upon the exercise of
the option provided for in this Agreement and that such Shares will be duly
authorized and validly issued and will be free and clear of any lien,
encumbrance, adverse claim, restriction on sale or transfer, preemptive right,
limitations on voting rights or option on such Exercise Date.
9. 2003 Option Plan. This Agreement is entered into and the rights to
------------------
acquire shares hereunder are granted pursuant and subject to the terms of
Xxxxxx'x 2003 Non-Qualified Stock Option Plan dated August __, 2003 (the "OPTION
PLAN").
10. Miscellaneous.
-------------
10.1 Further Assurances. Each party agrees to perform any further
------------------
acts and to execute and deliver any further documents or instruments which may
be reasonably necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby.
10.2 Amendments. This Agreement may not be amended, supplemented
----------
or modified except by an instrument in writing signed by each of the parties
hereto.
10.3 Interpretation. The headings contained in this Agreement are
--------------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.4 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed to be an original and which taken
together shall constitute one and the same agreement.
10.5 Entire Agreement. This Agreement (i) constitutes the entire
-----------------
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and (ii)
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
10.6 Notice. All notices and other communications required or
------
permitted hereunder shall be in writing and delivered personally, by telecopy,
by a nationally-recognized overnight courier service or by registered or
certified mail, postage prepaid, if to Optionee at the address of Optionee set
forth on the signature page hereof and if to Mercer, as follows:
Xxxxxx International Inc. with a copy to:
00000 Xxxxxxxxxx Xxxxxx Xxxxx Xxxxxx, Moller
Suite 282 1000 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxxxx, X.X. X0X 0X0
Attn: Chief Financial Officer Attn: H.S. Sangra
10.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS RULES THEREOF.
10.8 Severability. If any provision of this Agreement as applied
------------
to any part or to any circumstance shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement and the application of such provision to any other
part or to any other circumstance shall not be affected or impaired thereby.
10.9 Waiver. Any of the terms or conditions of this Agreement may
------
be waived in writing at any time by the party which is entitled to the benefits
thereof. No waiver of any provision of this Agreement shall be deemed or shall
constitute a waiver of such provision at any time in the future or a waiver of
any other provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
XXXXXX INTERNATIONAL INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
OPTIONEE:
----------------------------------
Xxxx X. Xxxxxxx
Address:
--------------------------
----------------------------------
SCHEDULE G
INDEMNITY AGREEMENT
BETWEEN XXX X. XXXXX AND XXXXXX
TRUSTEE'S INDEMNITY AGREEMENT
-----------------------------
THIS AGREEMENT dated for reference the * day of *, 2003.
BETWEEN:
*, Businessman
(the "Trustee")
AND:
XXXXXX INTERNATIONAL INC., a Massachusetts business trust
organized under the laws of the State of Washington with an
office at 00000 Xxxxxxxxxx Xxx. Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx, XXX 00000
(the "Company")
WITNESSES THAT WHEREAS:
A. It is essential to the Company to retain and attract as trustees and
officers the most capable persons available;
B. The Trustee is a trustee and/or officer of the Company;
C. Both the Company and the Trustee recognize the increased risk of
litigation and claims being asserted against directors, trustees and
officers of public companies in today's environment; and
D. In recognition of the Trustee's need for substantial protection against
personal liability and in order to enhance the Trustee's continued
service to the Company in an effective manner, the Company wishes
to provide in this Agreement for the indemnification of the Trustee to
the fullest extent permitted by law and as set forth in this
Agreement.
NOW THEREFORE in consideration of the premises, the respective covenants of the
parties herein and other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged), the parties hereto covenant and
agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS. For the purposes of this Agreement, the following terms
-----------
shall have the following meanings, respectively:
(a) "BOARD" means the board of trustees of the Company;
2
(b) "CLAIM" or "CLAIMS" has the meaning ascribed to such term in
Subsection 2.1(a) hereof;
(c) "CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of shares of beneficial
interest of the Company, becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 20% or more of the total
voting power represented by the Company's then outstanding Voting
Securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board and any new
trustee of the Company whose election by the Board or nomination
for election by the Company's shareholders was approved by a vote
of at least two-thirds of the trustees of the Company then still
in office who either were trustees of the Company at the
beginning of such period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger
or consolidation which would result in the Voting Securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 50.1%
of the total voting power represented by the Voting Securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the shareholders of the
Company approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of
(in one transaction or a series of transactions) all or
substantially all of the Company's assets;
(d) "COSTS" has the meaning ascribed thereto in Subsection 2.1(b) hereof;
(e) "EXPENSE ADVANCE" has the meaning ascribed to such term in Section 2.2
hereof;
(f) "INDEMNIFIABLE EVENT" has the meaning ascribed to such term in
Subsection 2.1(a) hereof;
(g) "INDEPENDENT LEGAL COUNSEL" means an attorney or firm of attorneys,
selected in accordance with the provisions of Section 6.1 hereof, who
shall not have otherwise performed services for the Company or the
Trustee within the last two
3
years (other than with respect to matters concerning the rights of the
Trustee under this Agreement, or of other trustees of the Company
under similar indemnity agreements);
(h) "POTENTIAL CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if
consummated would constitute a Change in Control;
(iii) any person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their
ownership of shares of beneficial interest of the Company, who is
or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding Voting
Securities, increases his beneficial ownership of such securities
by five percentage points (5%) or more over the percentage so
owned by such person; or
(iv) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred;
(i) "RELATED COMPANIES" has the meaning ascribed to such term in
Subsection 2.1(a) hereof;
(j) "REVIEWING PARTY" means any appropriate person or body consisting of a
member or members of the Board or any other person or body appointed
by the Board who is not a party to the particular Claim for which
the Trustee is seeking indemnification, or the Independent Legal
Counsel; and
(k) "VOTING SECURITIES" means any securities of the Company which vote
generally in the election of trustees of the Company.
1.2 EFFECTIVE DATE. Notwithstanding the date of its execution and delivery,
--------------
this Agreement shall be conclusively deemed to commence on, and be effective
as of, the day upon which the Trustee first became or becomes a trustee or
officer of the Company and shall survive and remain in full force and
effect after the Trustee ceases to be a trustee or officer of the Company
and after the termination of the Trustee's employment with the Company.
2. INDEMNITY
2.1 INDEMNIFICATION. Subject to Section 3.1, the Company shall indemnify
---------------
and save harmless the Trustee to the fullest extent permitted by law against and
from:
4
(a) any and all charges and claims of every nature and kind whatsoever
which may be brought, made or advanced by any person, firm,
corporation or government, or by any governmental department, body,
commission, board, bureau, agency or instrumentality against the
Trustee, and any and all threatened, pending or completed actions,
suits or proceedings, or any inquires or investigations, whether
instituted by the Company or any other person, that the Trustee in
good faith believes might lead to the institution of any such action,
suit or proceeding, whether civil, criminal, administrative,
investigative or other, against the Trustee, including any and all
actions, suits, proceedings, inquires or investigations in which the
Trustee was, is, becomes or is threatened to be made a party to or
witness or other participant in (a "CLAIM", or, collectively,
"CLAIMS"), by reason of (or arising in part out of) the Trustee being
a director, officer, trustee, employee or agent of the Company, any of
the Company's subsidiaries, or any company, partnership, joint
venture, trust or other enterprise related to or affiliated with the
Company or which the Trustee was serving at the request of the Company
as a director, officer, trustee, employee or agent (the "RELATED
COMPANIES"), or that arise out of or are in any way connected with the
management, operation, activities, affairs or existence of the Company
or any of its Related Companies (an "INDEMNIFIABLE EVENT");
(b) any and all costs, damages, expenses (including legal fees and
disbursements on a full indemnity basis), judgements, fines,
liabilities, penalties (statutory and otherwise), losses and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such
costs, damages, expenses, judgements, fines, liabilities, penalties,
losses or amounts paid in settlement) (referred to herein as "COSTS")
which the Trustee may sustain, incur or be liable for by reason of (or
arising in part out of) an Indemnifiable Event whether sustained or
incurred by reason of his negligence, default, breach of duty, breach
of trust, failure to exercise due diligence or otherwise in relation
to the Company or its Related Companies or any of their affairs; and
(c) in particular, and without in any way limiting the generality of the
foregoing, any and all Costs which the Trustee may sustain, incur or
be liable for as a result of or in connection with the release of or
presence in the environment of hazardous substances, contaminants,
litter, waste, effluent, refuse, pollutants or deleterious materials
and that arise out of or are in any way connected with the management,
operation, activities, affairs or existence of the Company or any of
its Related Companies.
2.2 EXPENSE ADVANCES. Subject to Section 3.1, the Company shall advance to
-----------------
the Trustee the Costs reasonably estimated to be sustained, incurred
or suffered by him, in connection with the indemnification
set forth in Section 2.1 hereof within two business days of
receipt by the Company of a written request for such advance (an "EXPENSE
ADVANCE"). The Trustee hereby undertakes to repay such amounts advanced
only if, and to the extent that, it shall ultimately be determined by a
court of competent jurisdiction, which
5
determination is not subject to any subsequent appeals, that the Trustee is
not entitled to be indemnified by the Company as authorized by this
Agreement.
2.3 INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY. Notwithstanding any
--------------------------------------------------
other provision of this Agreement, to the extent that the Trustee
has been successful on the merits or otherwise in the defence of any Claim or
in the defence of any charge, issue or matter therein, including the
dismissal of a Claim, the Company shall indemnify the Trustee against any
and all Costs actually and reasonably sustained or incurred by him in
connection with the investigation, defence or appeal of such Claim.
2.4 INDEMNIFICATION FOR EXPENSE OF A WITNESS. Notwithstanding any other
--------------------------------------------
provision of this Agreement, the Company will indemnify the Trustee if and
whenever he is a witness or participant, or is threatened to be made a witness
or participant, to any action, suit, proceeding, hearing, inquiry or
investigation to which the Trustee is not a party, by reason of the fact that
he is or was a trustee, director, officer, employee or agent of the Company or
any of its Related Companies or by reason of anything done or not done
by him in such capacity, against any and all Costs actually and reasonably
sustained or incurred by the Trustee or on the Trustee's behalf in connection
therewith.
2.5 INDEMNIFICATION FOR EXPENSES IN OBTAINING INDEMNITY. The Company shall
----------------------------------------------------
indemnify the Trustee against any and all Costs, and, if requested by the
Trustee, shall subject to Section 3.1 hereof (within two business days of
such request) advance such Costs to the Trustee, which are sustained, incurred
or suffered by the Trustee in connection with any action, suit or proceeding
brought by the Trustee for: (i) indemnification, or an advance thereof, by
the Company under this Agreement, any other agreement or the Restated
Declaration of Trust of the Company, as amended; or (ii) recovery under any
trustees', directors' and officers' liability insurance policies maintained
by the Company, regardless of whether the Trustee ultimately is determined to
be entitled to such indemnification or insurance recovery, as the case may be.
2.6 PARTIAL INDEMNITY. If the Trustee is entitled under any provisions of
------------------
this Agreement to indemnification by the Company for some or a portion of
the Costs sustained, incurred or suffered by him but not, however, for all
of the total amounts thereof, the Company shall nevertheless indemnify the
Trustee for the portion thereof to which Trustee is entitled.
3. INDEMNITY EXCEPTIONS
3.1 EXCEPTIONS TO INDEMNIFICATION. Notwithstanding the provisions of
-------------------------------
Sections 2.1, 2.2 and 2.5 hereof, the Company shall not be obligated
to indemnify or save harmless the Trustee against and from any Claim or
Costs or make an Expense Advance:
(a) if, in respect thereof, a court of competent jurisdiction determines,
which determination is not subject to any subsequent appeals, that the
Trustee failed to act honestly and in good faith with a view to the
best interests of the Company;
(b) arising out of any criminal conviction of the Trustee if the Trustee
pleaded guilty or was found guilty by a court of competent
jurisdiction, which finding is not subject to any subsequent appeals
by the Trustee, other than in the case of a
6
criminal proceeding in respect of which the Trustee had no reasonable
cause to believe that his conduct was unlawful;
(c) arising out of a determination by a court of competent jurisdiction,
which determination is not subject to any subsequent appeals, that:
(i) the Trustee failed to disclose his interest or conflicts as
required under the Washington Business Corporation Act - Title 23B of
the Revised Code of Washington, as amended (the "RCW"); or (ii) the
Company is not permitted to indemnify the Trustee as provided in RCW
23B.08.510(4);
(d) in connection with any liability under Section 16(b) of the Securities
Exchange Act of 1934, as amended, or under United States federal or
state securities laws for "xxxxxxx xxxxxxx"; (e) if, in respect
thereof, the Expense Advance, or any other advance to the Trustee
under this Agreement, is prohibited by the Xxxxxxxx-Xxxxx Act of 2002,
as amended; or
(f) in connection with any settlement of a Claim effected without the
Company's written consent.
4. BURDEN OF PROOF AND PRESUMPTIONS
4.1 BURDEN OF PROOF. In connection with any determination by the Company as
---------------
to whether the Trustee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
the Trustee is not so entitled.
4.2 NO PRESUMPTIONS. For purposes of this Agreement, the termination of any
---------------
Claim, by judgement, 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 the Trustee did not
meet any particular standard of conduct or have any particular belief or
that a court had determined that indemnification is not permitted by
applicable law.
5. CONTRIBUTION
5.1 If the indemnification provided in this Agreement is unavailable and may
not be paid to the Trustee for any reason other than statutory limitations
set forth in applicable law, then in respect of any Claim in which the
Company is jointly liable with the Trustee (or would be if joined in such
Claim), the Company shall contribute to the amount of Costs actually and
reasonably sustained or incurred and paid or payable by the Trustee in such
proportion as is appropriate to reflect (i) the relative benefits received
by the Company and all officers, trustees, directors or employees of the
Company and any of its Related Companies, other than the Trustee, who are
jointly liable with the Trustee (or would be if joined in such Claim) on
the one hand, and the Trustee, on the other hand, from the transaction from
which such Claim arose, and (ii) the relative fault of the Company and all
officers, trustees, directors or employees of the Company and any of its
Related Companies, other than the Trustee, who are jointly liable with the
Trustee (or would be if joined in such Claim), on the one hand, and of the
Trustee, on the other, in connection
7
with the events which resulted in such Costs, as well as any other relevant
equitable considerations. The relative fault referred to above 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 Costs. The Company agrees
that it would not be just and equitable if contribution pursuant to this
Section were determined by pro rata allocation or any other method of
allocation that does not take account of the foregoing equitable
considerations.
6. CHANGE IN CONTROL
6.1 CHANGE IN CONTROL. The Company agrees that if there is a Change in
-------------------
Control of the Company (other than a Change in Control
which has been approved by a majority of the trustees of the Company who
were trustees of the Company immediately prior to such Change in Control)
then with respect to all matters thereafter arising concerning the rights
of the Trustee to indemnity payments and Expense Advances under this
Agreement, any other agreement or the Restated Declaration of Trust of the
Company, as amended, now or hereafter in effect relating to Claims for
Indemnifiable Events, the Company shall seek legal advice only from
Independent Legal Counsel selected by the Trustee 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 the
Trustee as to whether and to what extent the Trustee 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
indemnify fully such counsel against any and all Costs, claims and charges
arising out of or relating to this Agreement or its engagement pursuant
hereto.
6.2 ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control,
-----------------------
the Company shall, upon written request by the
Trustee, create a trust for the benefit of the Trustee and from time to
time upon written request of the Trustee shall fund such trust in an amount
sufficient to satisfy any and all Costs reasonably anticipated at the time
of such request to be sustained or incurred in connection with
investigating, preparing for and defending any Claim, and the Costs
sustained or incurred by the Trustee from time to time, or reasonably
anticipated to be sustained or incurred by the Trustee in connection with
any Claim, provided that in no event shall more than $25,000 be required to
be deposited in any trust created hereunder in excess of amounts deposited
in respect of reasonably anticipated Costs. The amount or amounts to be
deposited in the trust pursuant to the foregoing funding obligation shall
be determined by the Reviewing Party in any case in which the Independent
Legal Counsel referred to above is involved. The terms of the trust shall
provide that upon a Change in Control (i) the trust shall not be revoked or
the principal thereof invaded, without the written consent of the Trustee,
(ii) the trustee of such trust shall advance to the Trustee, within two
business days of a request by the Trustee, the Costs sustained or incurred,
or reasonably anticipated to be sustained or incurred, by the Trustee in
connection with any Claim (and the Trustee hereby agrees to reimburse the
trust under the circumstances under which the Trustee would be required to
reimburse the Company under Section 2.2 hereof), (iii) such trust shall
continue to be funded by the Company in accordance with the funding
obligation set forth above, (iv) the trustee of such trust shall promptly
pay to the Trustee all amounts for which the
8
Trustee shall be entitled to indemnification pursuant to this Agreement
or otherwise, and (v) all unexpended funds in such trust shall revert
to the Company upon a final determination by the Reviewing Party or a court
of competent jurisdiction, as the case may be, that the Trustee has been
fully indemnified under the terms of this Agreement. The trustee of the
trust established hereunder shall be chosen by the Trustee. Nothing in
this Section 6.2 shall relieve the Company of any of its obligations under
this Agreement.
7. RESIGNATION
7.1 Nothing in this Agreement shall prevent the Trustee from resigning as a
trustee or officer of the Company or any of its Related Companies at any
time.
8. DEFENCE
8.1 NOTICE TO COMPANY. Upon the Trustee becoming aware of any pending or
-------------------
threatened Claim, written notice shall be given by or
on behalf of the Trustee to the Company as soon as is reasonably
practicable.
8.2 INVESTIGATION BY COMPANY. The Company shall conduct such investigation
-------------------------
of each Claim as is reasonably necessary in the circumstances, and shall
pay all costs of such investigation.
8.3 DEFENCE BY COMPANY. Subject to this Section, the Company shall, upon
--------------------
the written request of the Trustee, defend, on behalf
of the Trustee, any Claim, even if the Claim is groundless, false or
fraudulent.
8.4 APPOINTMENT OF DEFENCE COUNSEL. The Company shall consult with and
---------------------------------
accept the reasonable choice of the Trustee concerning the appointment
of any defence counsel to be engaged by the Company in fulfillment
of its obligations to defend a Claim pursuant to Section 8.3; thereafter
the Company shall appoint such counsel.
8.5 SETTLEMENT BY COMPANY. With respect to a Claim for which the Company is
---------------------
obliged to indemnify the Trustee hereunder, the
Company may conduct negotiations towards the settlement of a Claim and,
with the written consent of the Trustee (which the Trustee agrees not to
unreasonably withhold) the Company may make such settlement as it deems
expedient, provided however that the Trustee shall not be required, as part
of any proposed settlement of a Claim, to admit liability or agree to
indemnify the Company in respect of, or make contribution to, any
compensation or other payment for which provision is made under the
settlement. The Company shall pay any compensation or other payment for
which provision is made by such settlement.
9. GENERAL
9.1 LIMITATION OF ACTIONS. No legal action shall be brought and no cause of
---------------------
action shall be asserted by or in the right of the
Company or any of its Related Companies against the Trustee, the Trustee's
spouse, heirs, executors or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of action,
and any claim or cause of action of the Company and any of its Related
Companies shall be extinguished
9
and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitation is otherwise applicable to such cause of action such
shorter period shall govern.
9.2 GENDER; PLURAL. In this Agreement wherever the singular or masculine is
--------------
used it will be construed as if the plural or feminine or
neuter, as the case may be, had been used where the context otherwise
requires, and a reference to a section by number is a reference to the
section so numbered in this Agreement.
9.3 NOTICES. All notices and other communications required to be given by a
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party hereunder shall be in writing and shall be deemed to have
been duly given: (a) upon delivery, if delivered by hand; (b) one (1)
business day after the business day of deposit with an overnight courier,
if delivered by overnight courier, freight prepaid; (c) five (5) days after
deposit with the applicable postal service, if delivered by first class
mail postage prepaid; or (d) one (1) day after the business day of delivery
by facsimile transmission, if delivered by facsimile transmission and a
facsimile transmission confirmation is obtained in respect thereof, with a
copy by first class mail postage prepaid, to the other party at the other
party's address specified above or to the last known facsimile number of
such party, as applicable, or at such other address or to such other
facsimile number as the other party may have last specified in writing to
the party intending to convey the notice or other communication.
9.4 TIME. Time shall be of the essence of this Agreement.
----
9.5 HEADINGS. The headings in this Agreement are inserted for ease of
--------
reference only and shall have no effect on the construction or
interpretation of this Agreement.
9.6 GOVERNING LAW. This Agreement shall be construed, interpreted, governed
-------------
by and enforced in accordance with the laws of the State of
Washington, U.S.A., applicable to contracts made and to be performed in the
State of Washington, U.S.A., without giving effect to the principles of
conflicts of laws. Each of the parties hereby irrevocably attorns to the
non-exclusive jurisdiction of the courts of Seattle, Washington, U.S.A.,
with respect to any matters arising out of this Agreement.
9.7 ENTIRE AGREEMENT. This Agreement contains the entire agreement between
-----------------
the parties relating to the subject matter hereof and
there are no agreements, representations or warranties, express or implied,
which are collateral hereto.
9.8 NONEXCLUSIVITY. The rights of the Trustee hereunder shall be in
--------------
addition to any rights the Trustee may have under the
Restated Declaration of Trust of the Company, including any amendments
thereto or restatements thereof, Chapter 23.90 of the RCW, as amended,
Title 23B of the RCW, as amended, or otherwise. To the extent that any
change(s) in Chapter 23.90 and/or Title 23B of the RCW (whether by statute
or judicial decision) permits greater indemnification by agreement than
would be afforded currently under the Company's Restated Declaration of
Trust, as amended, and this Agreement, it is the intent of the parties
hereto that the Trustee shall enjoy by this Agreement the benefits so
afforded by such change(s).
10
9.9 INSURANCE. To the extent the Company maintains an insurance policy or
---------
policies providing trustees', directors' and officers' liability
insurance, the Trustee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any trustee, director or officer of the Company.
9.10 AMENDMENTS. This Agreement may only be amended by a written agreement
----------
signed by both of the parties hereto.
9.11 WAIVERS. 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.
9.12 FURTHER ASSURANCES. Each of the parties agrees to promptly do all such
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further acts, and promptly execute and deliver all such
further documents, as may be necessary or advisable for the purpose of
giving effect to or carrying out the intent of this Agreement.
9.13 SUCCESSORS AND ASSIGNS. This Agreement shall enure to the benefit of
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and be binding upon the parties hereto and their
respective successors, 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, assigns, spouses, heirs,
executors and personal and legal representatives. This Agreement shall
continue in effect regardless of whether the Trustee continues to serve as
a director, officer or trustee of the Company, any of its Related Companies
or of any other enterprise at the Company's request.
9.14 SEVERABILITY. The provisions of this Agreement shall be severable in
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the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are 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
fullest extent permitted by law.
11
9.15 COUNTERPARTS. This Agreement may be executed in any number of
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counterparts with the same effect as if all parties had signed the same
document. All counterparts will constitute one and the same agreement. This
Agreement may be executed and transmitted by facsimile transmission and if
so executed and transmitted this Agreement will be for all purposes as
effective as if the parties had delivered an executed original Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement, in the case
of a corporate party by its duly authorized officer or officers, as of the date
first written above.
SIGNED, SEALED AND DELIVERED in the )
presence of: )
)
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Signature )
)
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Name )
)
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Address ) *
)
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Occupation )
XXXXXX INTERNATIONAL INC.
By:
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Name:
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Title:
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