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SEVERANCE AGREEMENT, RESIGNATION,
AND FULL GENERAL RELEASE
This Settlement Agreement, Resignation, and Release ("Agreement") is made
and entered into on January 21, 1998 by and between PAYLESS CASHWAYS, INC.
("PAYLESS") and Xxxxxxx X. Xxxxxxxxxx ("XXXXXXXXXX").
WHEREAS, LIGHTSTONE was employed by PAYLESS on November 1, 1983 and is
entitled to the benefits of an Employment Agreement dated as of February 8,
1993, as amended as of October 17, 1996, June 30, 1997 and August 20, 1997, (the
"Employment Agreement"); and
WHEREAS, PAYLESS and LIGHTSTONE mutually wish to terminate the employment
status of LIGHTSTONE, and LIGHTSTONE's employment with PAYLESS shall end on
January 30, 1998; and
WHEREAS, PAYLESS AND LIGHTSTONE have agreed that LIGHTSTONE shall resign as
Senior Vice President Finance, Chief Financial Officer, and Treasurer, but that
for purposes of his severance benefits LIGHTSTONE's termination shall be
regarded as a termination of his employment without cause by PAYLESS;
NOW THEREFORE, in consideration of the mutual promises, agreements and
releases contained in this Agreement, the parties agree as follows:
1. A. PAYLESS' AGREEMENTS
1. EFFECTIVE DATE
PAYLESS acknowledges that this Agreement will become effective on the 8th
day after LIGHTSTONE signs (the "Effective Date"), and that LIGHTSTONE will not
be required to perform services for PAYLESS after January 30, 1998.
2. SEVERANCE BENEFITS
PAYLESS agrees to provide LIGHTSTONE the severance benefits set forth
below.
1. Lump Sum Payment
(1) PAYLESS agrees to pay LIGHTSTONE on the Effective Date a lump
sum payment (less applicable payroll deductions) in the amount set forth on
Schedule I hereto. As set forth in Schedule 1, such lump sum payment consists of
(A) the amount that LIGHTSTONE would have received as base salary from the
Effective Date through March 1, 1999 (the "Severance Period") (based on his base
salary in effect on January 20, 1998), (B) the
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remaining amount due LIGHTSTONE under the PAYLESS Reorganization Retention Plan,
and (C) an amount for unused earned vacation days through the Effective Date. In
addition, PAYLESS shall pay LIGHTSTONE on the Effective Date or as promptly
thereafter as is practicable an amount equal to any previously unreimbursed
business expenses.
(2) PAYLESS also agrees to pay, in lieu of matching contributions
to the Payless Cashways, Inc. Employee Savings Plan which would otherwise have
been made on LIGHTSTONE's behalf during the Severance Period, and in
consideration for the Release of Liability contained herein in Paragraph B.2, an
additional lump sum payment (less applicable payroll deductions) of $10,000.00.
2. Continuation of Benefits PAYLESS agrees that during the Severance
Period it will provide LIGHTSTONE with health, life (including supplemental
death benefits), and dental benefits substantially equivalent to those received
by eligible active employees of PAYLESS. Such benefits are described in Schedule
II and shall be provided during the Severance Period (or, if longer, the period
during which such benefits would have been provided at PAYLESS' expense under
applicable plans of PAYLESS). Except as may be indicated in Schedule II, such
health, life and dental benefits shall be provided at the same coverage levels
provided to eligible active employees of PAYLESS, and such benefits shall be
provided at PAYLESS' expense, subject to the same cost sharing provisions, if
any. In addition, PAYLESS agrees that during the Severance Period it will
provide LIGHTSTONE with disability benefits similar to those that LIGHTSTONE was
receiving or was entitled to receive under the Employment Agreement, except that
during the Severance Period, such benefits will provide a maximum monthly
benefit of $5,000.00. Such benefits are also listed in Schedule II. After the
Severance Period, LIGHTSTONE shall be eligible for COBRA continuation coverage
of health and dental benefits for a period of 18 months or such period as may
then be provided by law. LIGHTSTONE shall not be entitled to receive such
benefits to the extent that he obtains other employment prior to the end of the
Severance Period that provides comparable benefits, provided, however, that
LIGHTSTONE is under no obligation to seek other employment during such period.
3. Retirement Benefits PAYLESS agrees that for purposes of determining
the benefits payable to LIGHTSTONE under the Payless Cashways, Inc. Amended
Retirement Plan (the "Pension Plan") and LIGHTSTONE's eligibility therefor,
LIGHTSTONE's date of separation from PAYLESS shall be deemed to be March 1,
1999, his age shall be deemed to be his age on such date and the amount
allocable to base pay included in the lump sum payment in Paragraph A.2.a (i)
shall be included in determining career average pay. If the terms of the Pension
Plan do not permit the foregoing, then on the Effective Date PAYLESS shall pay
LIGHTSTONE an amount equal to the present value of the additional retirement
benefits that would have accrued had he continued to perform services for
PAYLESS through the Severance Period at the same rate of compensation as was in
effect on January 21, 1998. The present value payable hereunder shall be
calculated using GATT rate currently in effect under the Pension Plan.
4. Automobile PAYLESS also agrees to a lump sum payment (less
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applicable payroll deductions) of $9,233.25 in lieu of LIGHTSTONE's car
allowance, to be paid on the Effective Date. LIGHTSTONE and PAYLESS agree that
the lease, and use, of his company car will be terminated.
3. DEATH OF LIGHTSTONE
The death of LIGHTSTONE prior to the expiration of this Agreement will not
void this Agreement, but the terms thereof will survive his death. In the event
that LIGHTSTONE dies prior to receipt of all sums set forth in section A.2.
above, then any and all such remaining sums not yet received by LIGHTSTONE
otherwise due under this Agreement shall become due and payable to the
beneficiaries hereinafter listed: Principal Beneficiary: Executor of the Estate
of Xxxxxxx X. Xxxxxxxxxx. .
4. STOCK INCENTIVE
The parties acknowledge that LIGHTSTONE has no vested stock incentives.
5. OUTPLACEMENT
PAYLESS will provide LIGHTSTONE at PAYLESS' expense with telephone
answering and e-mail services at Payless for a period of 60 days and
executive-level outplacement services at an outplacement service of PAYLESS'
choice in the Kansas City area, including an office and telephone transfer
services, until he obtains other employment, for a maximum of 18 months.
6. INDEMNIFICATION
Set forth as Schedules III through V hereto are provisions of PAYLESS
Certificate of Incorporation and Bylaws relating to indemnification of directors
and officers and an Indemnification Agreement dated December 2, 1997, between
PAYLESS and LIGHTSTONE (collectively "Indemnification Provisions"). Such
Indemnification Provisions are incorporated by this reference and made a part of
this Agreement in their entirety. PAYLESS acknowledges and agrees that
LIGHTSTONE and his estate are entitled to the benefit of such Indemnification
Provisions notwithstanding his termination of service and that such provisions
apply to his service as an officer of PAYLESS and any of its predecessors.
PAYLESS further acknowledges that the Indemnification Provisions obligate
PAYLESS, among other matters, to indemnify LIGHTSTONE against any and all
expenses(including costs and attorneys' fees) which he might incur as a witness
or party with respect to that certain matter pending in the United States
District Court for the Southern District of Iowa captioned PAYLESS Cashways,
Inc. Partners [et. al.] v. PAYLESS Cashways, Inc. [et. al.]. PAYLESS agrees to
honor such obligations with respect to such proceeding or any other proceeding
to which LIGHTSTONE may become a party or witness by reason of the fact that he
served as an officer of PAYLESS, except as may be provided in the
Indemnification Provisions. PAYLESS further agrees that as to LIGHTSTONE, any
amendments or changes to the Indemnification Provisions or the insurance
coverages described in paragraph A.7 below will not adversely affect LIGHTSTONE
without LIGHTSTONE's written consent, and
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that breach by LIGHTSTONE of any provision of this AGREEMENT will not constitute
grounds by PAYLESS to change such coverages or to terminate its obligations
under this Agreement or otherwise with respect to the Indemnification
Provisions. PAYLESS and LIGHTSTONE agree that said Indemnification Agreement is
hereby amended to delete section 9.6 thereof in its entirety.
7. LIABILITY INSURANCE
PAYLESS currently maintains $30 million in directors' and officers'
liability insurance that provides coverage for LIGHTSTONE and other directors
and officers of PAYLESS. The coverage period, including the run-off provisions
provided for thereunder, continue through December 2, 2003. PAYLESS agrees to
maintain such directors' and officers' liability insurance coverage or to
provide similar coverage to LIGHTSTONE so that LIGHTSTONE will remain insured
under similar coverage at current levels until December 2, 2003 with respect to
the period of time that LIGHTSTONE served as an officer of PAYLESS. PAYLESS has
given LIGHTSTONE a copy of such policy and will give him a copy of any amendment
or rider promptly after it becomes effective.
8. NON-COMPETE PROVISIONS
PAYLESS agrees that the provisions of Section 5 of the Employment Agreement
do not apply after the Effective Date.
9. RELEASE OF LIABILITY
PAYLESS releases LIGHTSTONE of all claims and demands of any kind, known or
unknown, which it may have against LIGHTSTONE as of the Effective Date or which
it may have had at any time before the Effective Date for any acts which
LIGHTSTONE committed or omitted during his employment with PAYLESS. PAYLESS
understands that it is releasing LIGHTSTONE, to the maximum extent permissible
by law, from any liability which LIGHTSTONE may have had to it, known or
unknown, at any time up to and including the Effective Date.
2. LIGHTSTONE'S AGREEMENTS
1. VOLUNTARY RESIGNATION
LIGHTSTONE and PAYLESS acknowledge that LIGHTSTONE does and he hereby does
voluntarily resign his employment as Senior Vice President, Finance and Chief
Financial Officer, effective as of the Effective Date. LIGHTSTONE and PAYLESS
acknowledge that the resignation which is the subject of this Agreement has been
effected by the mutual and amicable agreement of both parties. Notwithstanding
the foregoing LIGHTSTONE will, at PAYLESS' request, provide transitional
advisory services to PAYLESS' acting Chief Executive Officer for a period ending
April 30, 1998. Such service will be performed without compensation other than
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reimbursement of business expenses. The hours (if any) during which LIGHTSTONE
performs such transitional advisory services on any given day shall be
determined by him, although he will use reasonable efforts to respond timely to
accommodate the reasonable requests of PAYLESS' acting Chief Executive Officer
for his services.
2. RELEASE OF LIABILITY
LIGHTSTONE releases PAYLESS from the terms of the Employment Agreement and
acknowledges that further obligations of LIGHTSTONE and PAYLESS in that
Employment Agreement are extinguished upon execution of this Agreement, except
as specifically noted herein. LIGHTSTONE understands that he is releasing
PAYLESS to the maximum extent permissible by law, from any liability which
LIGHTSTONE believes PAYLESS may have had to him, at any time up to and including
the date he signs this Agreement. LIGHTSTONE waives any legal right or claims
LIGHTSTONE may have or may have had, including claims of race, color, national
origin, sex or gender, age or disability discrimination, arising under the Title
VII of the Civil Rights Acts of 1964, the Rehabilitation Act of 1973, the Civil
Rights Act of 1866 (Section 1981), the Americans with Disabilities Act of 1990,
the Employee Retirement Income Security Act of 1974, the Age Discrimination in
Employment Act, the Family and Medical Leave Act of 1993, the Missouri Human
Rights Act, the Missouri Workers Compensation Act and the Missouri Service
Letter Act and under any other federal, state, or local statute, regulation, or
common law of any state, including any and all claims in tort or contract;
provided, however, that nothing contained in this Release of Liability shall
modify or in any way detract from the Indemnification provisions of Paragraph
A.6 herein.
3. COOPERATION AGREEMENT
LIGHTSTONE also agrees to cooperate and assist PAYLESS in the investigation
and handling of any actual or threatened court action, arbitration or
administrative proceeding or dispute involving any matter that arose during
LIGHTSTONE's employment (including, but not limited to, testifying in deposition
and/or court and providing information to PAYLESS). PAYLESS acknowledges and
agrees that it is responsible for any and all expenses (including costs and
attorneys' fees) that LIGHTSTONE may incur in connection with any such
proceeding.
ADEQUACY OF CONSIDERATION
LIGHTSTONE acknowledges that the sum paid by PAYLESS under this Agreement
is adequate consideration for LIGHTSTONE's execution of this Agreement, and
further acknowledges that the sum is in excess of the amounts to which he would
be entitled under the existing Employment Agreement, as amended, and any
policies or practices of PAYLESS.
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4. CONFIDENTIALITY AND NON-SOLICITATION
LIGHTSTONE agrees that notwithstanding the provisions of this Agreement,
the provisions of Section 4 of his Employment Agreement will continue to apply
in accordance with their terms after the Effective Date.
3. OTHER AGREEMENTS
1. NON-DISPARAGEMENT
LIGHTSTONE and PAYLESS acknowledge and agree that disparaging or critical
statements made by LIGHTSTONE about PAYLESS or its board members, officers and
employees of PAYLESS or disparaging statements made by board members or senior
officers of PAYLESS about LIGHTSTONE would be uniquely detrimental to the
interests of both parties. Therefore, LIGHTSTONE agrees to refrain from making
such disparaging or critical statements about PAYLESS, or its board members,
officers, and employees of PAYLESS, and PAYLESS agrees that PAYLESS' board
members and senior officers (i.e. the Chairman, acting Chief Executive Officer,
President, and the senior vice presidents) will refrain from making such
disparaging or critical statements about LIGHTSTONE. All other provisions of
this Agreement notwithstanding, PAYLESS agrees that any statements made by
LIGHTSTONE during any testimony given by him as part of any deposition, court
hearing, trial, arbitration hearing or similar proceeding, shall not be
considered a disparaging or critical statement and LIGHTSTONE agrees that any
statements made by PAYLESS or its board members, officers, and employees of
PAYLESS during any testimony given by any of them as part of any deposition,
court hearing, trial, arbitration hearing, or similar proceeding, shall not be
considered a disparaging or critical statement.
2. NO ADMISSION OF LIABILITY
LIGHTSTONE acknowledges that this Agreement shall not in any way be
construed as an admission by PAYLESS of any liability on the part of PAYLESS,
and that all such liability is expressly denied by PAYLESS. Likewise, PAYLESS
acknowledges that this Agreement shall not in any way be construed as an
admission by LIGHTSTONE of any liability on the part of LIGHTSTONE and that all
such liability is expressly denied by LIGHTSTONE.
3. VOLUNTARY NATURE OF AGREEMENT AND ADVICE OF COUNSEL
LIGHTSTONE acknowledges that he has read this Agreement and any attached
exhibits, understands their terms, and signs the Agreement voluntarily of his
own free will, without coercion or duress, and with full understanding of the
significance and binding effect of the Agreement. LIGHTSTONE has consulted with
his attorney before signing this Agreement. LIGHTSTONE further acknowledges that
he has been represented by counsel with respect to his pending and potential
claims and has thoroughly discussed all aspects of this Agreement with his
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attorney.
4. CONSIDERATION PERIOD AND REVOCATION
LIGHTSTONE received this Agreement on January 21, 1998. LIGHTSTONE
acknowledges that he has had a reasonable time, and has had adequate opportunity
to consider the terms of the Agreement and whether or not to enter into the
Agreement. LIGHTSTONE has twenty-one (21) calendar days, after the date
LIGHTSTONE received the Agreement, within which to consider the Agreement,
although he may sign and deliver sooner if he desires. LIGHTSTONE may revoke the
Agreement by delivering a written notice of revocation to Xxxxxx Iennacaro, Vice
President of Human Resources, within seven (7) calendar days after LIGHTSTONE
signs the Agreement. The provisions of this Agreement will become effective and
enforceable on the eighth (8th) calendar day following the date LIGHTSTONE signs
the Agreement.
5. BINDING EFFECT
This Agreement will be binding upon LIGHTSTONE and his heirs,
administrators, representatives, executors, successors and assigns, and will
inure to the benefit of PAYLESS and its successors and assigns. Similarly, this
Agreement will be binding on PAYLESS, its officers, agents and successors in
interest and assigns and will inure to the benefit of LIGHTSTONE and his heirs,
administrators, representatives, executors, successors and assigns.
6. NEWS RELEASES
PAYLESS agrees that before it makes any public announcements concerning the
resignation of LIGHTSTONE in any newspaper, trade publication, radio,
television, or other form of public communication, it will submit such a
prepared announcement to LIGHTSTONE for his review and approval. No such
announcement will be made without the prior approval of LIGHTSTONE. LIGHTSTONE
agrees that his approval shall not be unreasonably refused.
7. GOVERNING LAW
This Agreement will be interpreted and enforced in accordance with the laws
of the State of Missouri.
8. SEVERABILITY
Should any provision of this Agreement be declared or determined by a court
of competent jurisdiction to be invalid or otherwise unenforceable, the
remaining parts, terms and provisions shall continue to be valid, legal and
enforceable, and will be performed and enforced to the fullest extent permitted
by law.
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9. COMPLETE AGREEMENT
Except for the Indemnification Provisions and rights and obligations under
directors' and officers' liability insurance policy referred to in paragraphs
A.6 and A.7, which this Agreement merely supplements but which otherwise remain
in full force and effect, and except for the confidentiality and
non-solicitation provision referred to in Paragraph B.5, this Agreement contains
the entire agreement between LIGHTSTONE and PAYLESS with respect to the subject
matter hereof and, except as otherwise noted herein supersedes all prior
agreements or understandings between them. No change or waiver of any part of
this Agreement will be valid unless in writing and signed by both LIGHTSTONE and
PAYLESS.
10. ARBITRATION
The parties hereby agree that any dispute arising hereunder or any claim
for breach or violation of any item hereof shall be submitted to arbitration
pursuant to the rules of the American Arbitration Association ("AAA") to a panel
of three arbitrators selected by mutual agreement of the parties or, if the
parties do not mutually agree on the arbitrators, in accordance with the rules
of the AAA. The award determination of the arbitrators shall be final and
binding upon the parties without right of appeal. Either party shall have the
right to bring an action in any court of competent jurisdiction to enforce this
Paragraph and to enforce any arbitrators' award rendered pursuant to this
Paragraph. The venue for all proceedings in arbitration hereunder and for any
judicial proceedings related thereto shall be in Kansas City, Missouri.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year set forth first above written.
PAYLESS CASHWAYS, INC. XXXXXXX X. XXXXXXXXXX
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------- ---------------------------
Name: Xxxxxx X. Xxxxxx Date: January 21, 1998
Title: Acting Chief Executive Officer
Date: January 22, 1998
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Schedule I to Lightstone Settlement Agreement
Lump sum payment computation
Severance Period Base Salary - $ 319,583.32
Through Xxxxx 0, 0000
Xxxxxx Retention Bonus 44,250.00
(50% of 30% of $295,000)
Unused Vacation Days (4 weeks)
Through Effective Date 22,692.31
-----------
Total $ 386,525.63
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Schedule II to Lightstone Settlement Agreement
Benefit Continuation
Group Medical/Vision
Group Dental
Long/Term Disability and Supplemental Disability (up to a maximum monthly
benefit of $5,000.00)
GroupLife Insurance and Supplemental Death Benefits during the Severance Period,
and a $295,000.00 life insurance policy thereafter
Annual Physical in early 1998
1997 Tax Preparation ($1,000 limit)
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Schedule III to Lightstone Settlement Agreement
CERTIFICATE OF INCORPORATION
INDEMNIFICATION PROVISION
ARTICLE VIII
INDEMNIFICATION; INSURANCE
The directors and officers of the corporation shall be indemnified to the
maximum extent permitted by law. Without limiting the foregoing, each person who
was or is made a party or is threatened to be made a party to any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the corporation, or is or was serving, at the request of the corporation, as
a director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation, to the fullest extent which it is empowered to
do so by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment), against all expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such proceeding, including attorneys' fees, and such indemnification shall inure
to the benefit of his or her heirs, executors and administrators; provided,
however, that, except as provided in the bylaws of the corporation, the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by the board of directors of the corporation. Expenses incurred
by a director or officer of the corporation in defending a civil or criminal
action, suit or proceeding shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it is ultimately determined that the director or officer is not entitled to be
indemnified by the corporation as authorized by the Delaware General Corporation
Law. The foregoing right of indemnification and advancement of expenses shall be
a contract right and shall in no way be exclusive of any other rights of
indemnification and advancement of expenses to which any such director or
officer may be entitled by law, agreement, vote of stockholders or of
disinterested directors or otherwise. All rights of indemnification and
advancement of expenses hereunder shall survive any repeal or modification of
this Article VIII as to any set of facts or proceeding then existing, shall
continue as to a person who has ceased to be an officer or director and shall
inure to the benefit of the heirs, executors and administrators of such a
director or officer. The procedures with respect to indemnification shall be set
forth in the bylaws of the corporation.
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The corporation may maintain insurance, at its expense, to protect itself
and any person who is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability or loss,
whether or not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General Corporation
Law.
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Schedule IV to Lightstone Settlement Agreement
BYLAWS
INDEMNIFICATION PROVISIONS
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the corporation or advance of
expenses under Article VIII of the certificate of incorporation shall be made
promptly, and in any event within thirty days, upon the written request of the
director or officer. If a determination by the corporation that the director or
officer is entitled to indemnification pursuant to this Article V is required,
and the corporation fails to respond within sixty days to a written request for
indemnity, the corporation shall be deemed to have approved the request. If the
corporation denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within thirty days, the right to indemnification or advances as granted
by this Article V shall be enforceable by the director or officer in any court
of competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his or her right to indemnification,
in whole or in part, in any such action shall also be indemnified by the
corporation. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any, has
been tendered to the corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the corporation
(including its board of directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 2. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision or the certificate of incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
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Section 3. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors. Expenses (including attorneys'
fees) incurred by employees and agents may be paid upon such terms and
conditions, if any, as the board of directors deems appropriate; provided, that
such expenses may only be paid by the corporation in advance of a proceeding's
final disposition upon receipt of an undertaking by or on behalf of such
employee or agent to repay such amount if it shall ultimately be determined that
he or she is not entitled to be indemnified by the corporation.
Section 4. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the Delaware General Corporation Law or other applicable
law are in effect, and any repeal or modification of this Article V or any such
law shall not affect any rights or obligations then existing with respect to any
state of facts or proceeding then existing.
Section 5. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is a
director, officer, employee or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect to the resulting or surviving corporation as he or she would have
with respect to such constituent corporation if its separate existence had
continued.
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Schedule V to Lightstone Settlement Agreement
INDEMNIFICATION AGREEMENT
