EXHIBIT 10.3
INDEMNIFICATION AGREEMENT
This Agreement made and entered into as of August 7, 2002 (the
"Agreement"), by and between Xxxxx Industries, Inc., a Delaware corporation (the
"Company," which term shall include, where appropriate, any Entity (as
hereinafter defined) controlled directly or indirectly by the Company) and
Xxxxxxx X. Xxxxx (the "Indemnitee"):
WHEREAS, the Company's Amended and Restated Certificate of Incorporation,
as amended, and Amended and Restated By-laws (the "Certificate of Incorporation"
and "By-laws," respectively) require it to indemnify its directors and officers
to the fullest extent permitted by law and permit it to make other
indemnification arrangements and agreements;
WHEREAS, the Company desires to provide Indemnitee with specific
contractual assurance of Indemnitee's rights to full indemnification against
litigation risks and expenses (regardless, among other things, of any amendment
to or revocation of the Certificate of Incorporation or By-laws or any change in
the ownership of the Company or the composition of its Board of Directors); and
WHEREAS, the Company intends that this Agreement provide Indemnitee with
greater protection than that which is provided by the Company's Certificate of
Incorporation and By-laws.
NOW, THEREFORE, in consideration of the promises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. DEFINITIONS.
(a) "Corporate Status" describes the status of a person (i) who is
serving or has served (A) as a director and/or officer of the Company,
(B) in any capacity with respect to any employee benefit plan of the
Company, or (C) as a director, partner, trustee, officer, employee, or
agent of any other Entity at the request of the Company or (ii) who
controls or may be deemed to control the Company. For purposes of
subsection (C) of Section l(a)(i), if Indemnitee is serving or has
served as a director, partner, trustee, officer, employee or agent of
a Subsidiary, Indemnitee shall be deemed to be serving at the request
of the Company.
(b) "Entity" shall mean any corporation, partnership, limited
liability company, joint venture, trust, foundation, association,
organization or other legal entity.
(c) "Expenses" shall mean all fees, costs and expenses incurred by
Indemnitee in connection with any Proceeding (as defined below),
including, without limitation, attorneys' fees, disbursements and
retainers (including, without limitation, any such fees, disbursements
and retainers incurred by Indemnitee
pursuant to Sections 10 and 11(c) of this Agreement), fees and
disbursements of expert witnesses, private investigators and
professional advisors (including, without limitation, accountants and
investment bankers), court costs, transcript costs, fees of experts,
travel expenses, duplicating, printing and binding costs, telephone
and fax transmission charges, postage, delivery services, secretarial
services, and other disbursements and expenses.
(d) "Indemnifiable Expenses," "Indemnifiable Liabilities" and
"Indemnifiable Amounts" shall have the meanings ascribed to those
terms in Section 3(a) below.
(e) "Liabilities" shall mean judgments, damages, liabilities, losses,
penalties, excise taxes, fines and amounts paid in settlement.
(f) "Proceeding" shall mean any threatened, pending or completed
claim, action, suit, arbitration, alternate dispute resolution
process, investigation, administrative hearing, appeal, or any other
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, whether formal or informal, including a proceeding
initiated by Indemnitee pursuant to Section 10 of this Agreement to
enforce Indemnitee's rights hereunder.
(g) "Subsidiary" shall mean any corporation, partnership, limited
liability company, joint venture, trust or other Entity of which the
Company owns (either directly or through or together with another
Subsidiary of the Company) either (i) a general partner, managing
member or other similar interest or (ii) (A) 50% or more of the voting
power of the voting capital equity interests of such corporation,
partnership, limited liability company, joint venture or other Entity,
or (B) 50% or more of the outstanding voting capital stock or other
voting equity interests of such corporation, partnership, limited
liability company, joint venture or other Entity.
2. SERVICES OF INDEMNITEE. In consideration of the Company's covenants
and commitments hereunder, Indemnitee agrees to continue to serve as a director
and/or officer of the Company. However, this Agreement shall not impose any
obligation on Indemnitee or the Company to continue Indemnitee's service to the
Company beyond any period otherwise required by law or by other agreements or
commitments of the parties, if any.
3. AGREEMENT TO INDEMNIFY. The Company agrees to indemnify Indemnitee as
follows:
(a) PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE COMPANY. Subject
to the exceptions contained in Section 4(a) below, if Indemnitee was
or is a party or
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is threatened to be made a party to any Proceeding (other than an
action by or in the right of the Company) by reason of Indemnitee's
Corporate Status, Indemnitee shall be indemnified by the Company
against all Expenses and Liabilities incurred or paid by Indemnitee in
connection with such Proceeding (referred to herein as "Indemnifiable
Expenses" and "Indemnifiable Liabilities," respectively, and
collectively as "Indemnifiable Amounts").
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Subject to the
exceptions contained in Section 4(b) below, if Indemnitee was or is a
party or is threatened to be made a party to any Proceeding by or in
the right of the Company by reason of Indemnitee's Corporate Status,
Indemnitee shall be indemnified by the Company against all
Indemnifiable Expenses.
(c) CONCLUSIVE PRESUMPTION REGARDING STANDARD OF CARE. In making any
determination required to be made under Delaware law with respect to
entitlement to indemnification hereunder, the person, persons or
entity making such determination shall presume that Indemnitee is
entitled to indemnification under this Agreement if Indemnitee
submitted a request therefor in accordance with Section 5 of this
Agreement, and the Company shall have the burden of proof to overcome
that presumption in connection with the making by any person, persons
or entity of any determination contrary to that presumption.
4. EXCEPTIONS TO INDEMNIFICATION. Indemnitee shall be entitled to
indemnification under Sections 3(a) and 3(b) above in all circumstances other
than with respect to any specific claim, issue or matter involved in the
Proceeding out of which Indemnitee's claim for indemnification has arisen, as
follows:
(a) PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE COMPANY. If
indemnification is requested under Section 3(a) and it has been
finally adjudicated by a court of competent jurisdiction that, in
connection with such specific claim, issue or matter, Indemnitee
failed to act (i) in good faith and (ii) in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of
the Company, or, with respect to any criminal action or proceeding,
Indemnitee had reasonable cause to believe that Indemnitee's conduct
was unlawful, Indemnitee shall not be entitled to payment of
Indemnifiable Amounts hereunder.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. If indemnification
is requested under Section 3(b) and
(i) it has been finally adjudicated by a court of competent
jurisdiction that, in connection with such specific claim,
issue or matter, Indemnitee failed to act (A) in good faith
and (B) in a manner Indemnitee reasonably believed to be in
or not opposed to
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the best interests of the Company, Indemnitee shall not be
entitled to payment of Indemnifiable Expenses hereunder; or
(ii) it has been finally adjudicated by a court of competent
jurisdiction that Indemnitee is liable to the Company with
respect to such specific claim, Indemnitee shall not be
entitled to payment of Indemnifiable Expenses hereunder with
respect to such claim, issue or matter unless the Court of
Chancery or another court in which such Proceeding was
brought shall determine upon application that, despite the
adjudication of liability, but in view of all the
circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnification for such
Indemnifiable Expenses which such court shall deem proper;
or
(iii) it has been finally adjudicated by a court of
competent jurisdiction that Indemnitee is liable to the
Company for an accounting of profits made from the purchase
or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, the rules and regulations
promulgated thereunder and amendments thereto or similar
provisions of any federal, state or local statutory law,
Indemnitee shall not be entitled to payment of Indemnifiable
Expenses hereunder.
(c) INSURANCE PROCEEDS. To the extent payment is actually made to the
Indemnitee under a valid and collectible insurance policy in respect
of Indemnifiable Expenses in connection with such specific claim,
issue or matter, Indemnitee shall not be entitled to payment of
Indemnifiable Expenses hereunder except in respect of any excess
beyond the amount of payment under such insurance.
5. PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. Indemnitee shall
submit to the Company a written request specifying the Indemnifiable Amounts for
which Indemnitee seeks payment under Section 3 of this Agreement and the basis
for the claim. The Company shall pay such Indemnifiable Amounts to Indemnitee
within sixty (60) calendar days of receipt of the request. At the request of the
Company, Indemnitee shall furnish such documentation and information as are
reasonably available to Indemnitee and necessary to establish that Indemnitee is
entitled to indemnification hereunder.
6. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without
limiting any such provision, to the extent that Indemnitee is, by reason of
Indemnitee's Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, Indemnitee shall be indemnified against all
Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the
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merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with each successfully resolved claim, issue or matter. For purposes
of this Agreement, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, by reason of settlement,
judgment, order or otherwise, shall be deemed to be a successful result as to
such claim, issue or matter.
7. EFFECT OF CERTAIN RESOLUTIONS. Neither the settlement or termination
of any Proceeding nor the failure of the Company to award indemnification or to
determine that indemnification is payable shall create a presumption that
Indemnitee is not entitled to indemnification hereunder. In addition, the
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent shall not create a presumption
that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal action or proceeding, had reasonable cause to
believe that Indemnitee's action was unlawful.
8. AGREEMENT TO ADVANCE EXPENSES; UNDERTAKING. The Company shall advance
all Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding, including a Proceeding by or in the right of the Company, in which
Indemnitee is involved by reason of such Indemnitee's Corporate Status within
ten (10) calendar days after the receipt by the Company of a written statement
from Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. To the extent required
by Delaware law, Indemnitee hereby undertakes to repay any and all of the amount
of Indemnifiable Expenses paid to Indemnitee if it is finally determined by a
court of competent jurisdiction that Indemnitee is not entitled under this
Agreement to indemnification with respect to such Expenses. This undertaking is
an unlimited general obligation of Indemnitee.
9. PROCEDURE FOR ADVANCE PAYMENT OF EXPENSES. Indemnitee shall submit to
the Company a written request specifying the Indemnifiable Expenses for which
Indemnitee seeks an advancement under Section 8 of this Agreement, together with
documentation evidencing that Indemnitee has incurred such Indemnifiable
Expenses. Payment of Indemnifiable Expenses under Section 8 shall be made no
later than ten (10) calendar days after the Company's receipt of such request.
10. REMEDIES OF INDEMNITEE.
(a) RIGHT TO PETITION COURT. In the event that Indemnitee makes a
request for payment of Indemnifiable Amounts under Sections 3 and 5
above or a request for an advancement of Indemnifiable Expenses under
Sections 8 and 9 above and the Company fails to make such payment or
advancement in a timely manner pursuant to the terms of this
Agreement, Indemnitee may petition the Court of Chancery to enforce
the Company's obligations under this Agreement.
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(b) BURDEN OF PROOF. In any judicial proceeding brought under Section
10(a) above, the Company shall have the burden of proving that
Indemnitee is not entitled to payment of Indemnifiable Amounts
hereunder.
(c) EXPENSES. The Company agrees to reimburse Indemnitee in full for
any Expenses incurred by Indemnitee in connection with investigating,
preparing for, litigating, defending or settling any action brought by
Indemnitee under Section 10(a) above, or in connection with any claim
or counterclaim brought by the Company in connection therewith,
whether or not Indemnitee is successful in whole or in part in
connection with any such action,
(d) FAILURE TO ACT NOT A DEFENSE. The failure of the Company
(including its Board of Directors or any committee thereof,
independent legal counsel, or stockholders) to make a determination
concerning the permissibility of the payment of Indemnifiable Amounts
or the advancement of Indemnifiable Expenses under this Agreement
shall not be a defense in any action brought under Section 10(a)
above, and shall not create a presumption that such payment or
advancement is not permissible.
11. DEFENSE OF THE UNDERLYING PROCEEDING.
(a) NOTICE BY INDEMNITEE. Indemnitee agrees to notify the Company
promptly upon being served with any summons, citation, subpoena,
complaint, indictment, information, or other document relating to any
Proceeding which may result in the payment of Indemnifiable Amounts or
the advancement of Indemnifiable Expenses hereunder; provided,
however, that the failure to give any such notice shall not disqualify
Indemnitee from the right, or otherwise affect in any manner any right
of Indemnitee, to receive payments of Indemnifiable Amounts or
advancements of Indemnifiable Expenses unless the Company's ability to
defend in such Proceeding is materially and adversely prejudiced
thereby.
(b) DEFENSE BY COMPANY. Subject to the provisions of the last
sentence of this Section 1l(b) and of Section 1l(c) below, the Company
shall have the right to defend Indemnitee in any Proceeding which may
give rise to the payment of Indemnifiable Amounts hereunder; provided,
however that the Company shall notify Indemnitee of any such decision
to defend within ten (10) calendar days of receipt of notice of any
such Proceeding under Section 11(a) above. The Company shall not,
without the prior written consent of Indemnitee, consent to the entry
of any judgment against Indemnitee or enter into any settlement or
compromise which (i) includes an admission of fault of Indemnitee or
(ii) does not include, as an unconditional term thereof, the full
release of Indemnitee from all liability in respect of such
Proceeding, which release shall be in form and substance reasonably
satisfactory to Indemnitee. This Section 1l(b) shall not
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apply to a Proceeding brought by Indemnitee under Section 10(a) above
or pursuant to Section 19 below.
(c) INDEMNITEE'S RIGHT TO COUNSEL. Notwithstanding the provisions of
Section 11(b) above, if in a Proceeding to which Indemnitee is a party
by reason of Indemnitee's Corporate Status, (i) Indemnitee reasonably
concludes that he may have separate defenses or counterclaims to
assert with respect to any issue which may not be consistent with the
position of other defendants in such Proceeding, (ii) a conflict of
interest or potential conflict of interest exists between Indemnitee
and the Company, or if the Company fails to assume the defense of such
proceeding in a timely manner, Indemnitee shall be entitled to be
represented by separate legal counsel of Indemnitee's choice at the
expense of the Company. In addition, if the Company fails to comply
with any of its obligations under this Agreement or in the event that
the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any action, suit or
proceeding to deny or to recover from Indemnitee the benefits intended
to be provided to Indemnitee hereunder, Indemnitee shall have the
right to retain counsel of Indemnitee's choice, at the expense of the
Company, to represent Indemnitee in connection with any such matter.
12. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Indemnitee as follows:
(a) AUTHORITY. The Company has all necessary power and authority to
enter into, and be bound by the terms of, this Agreement, and the
execution, delivery and performance of the undertakings contemplated
by this Agreement have been duly authorized by the Company.
(b) ENFORCEABILITY. This Agreement, when executed and delivered by
the Company in accordance with the provisions hereof, shall be a
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the enforcement
of creditors' rights generally.
13. INSURANCE. For a period of six (6) years following the date on which
Indemnitee no longer serves as a director, officer or employee of the Company or
any Subsidiary, and for such longer period, if any, for which Indemnitee may be
subject to a Proceeding by reason of Indemnitee's Corporate Status, the Company
(i) shall maintain a policy or policies of insurance with one or more reputable
insurance companies providing the Indemnitee with coverage (A) in an amount not
less than, and of a type and scope not materially less favorable to Indemnitee
than, the directors' and officers' liability insurance coverage presently
maintained by the Company, and (B) which coverage will ensure the Company's
performance of its indemnification obligations under this Agreement (except for
such obligations to Indemnitee if Indemnitee was or is a party or is threatened
to be made a party to any Proceeding solely by reason of Indemnitee's Corporate
Status as a person that controls or is deemed to control the Company and
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not by reason of Indemnitee's Corporate Status as a person serving as a director
and/or officer of the Company, in any capacity with respect to any employee
benefit plan of the Company, or as a director, partner, trustee, officer,
employee, or agent of any other Entity at the request of the Company), (ii)
shall pay on a timely basis all premiums on such insurance and (iii) shall
provide such notices and renewals in a complete and timely manner and take such
other actions as may be required in order to keep such insurance in full force
and effect. In all policies of director and officer liability insurance,
Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's officers and directors.
14. CONTRACT RIGHTS NOT EXCLUSIVE. The rights to payment of Indemnifiable
Amounts and advancement of Indemnifiable Expenses provided by this Agreement
shall be in addition to, but not exclusive of, any other rights which Indemnitee
may have at any time under applicable law, the Company's Certificate of
Incorporation or By-laws, or any other agreement, vote of stockholders or
directors (or a committee of directors), or otherwise, both as to action in
Indemnitee's official capacity and as to action in any other capacity as a
result of Indemnitee's serving as a director and/or officer of the Company.
15. SUCCESSORS. This Agreement shall be (a) binding upon all successors
and assigns of the Company (including any transferee of all or substantially all
of the business, stock and/or assets of the Company and any direct or indirect
successor by merger or consolidation or otherwise by operation of law) and (b)
binding on and shall inure to the benefit of the heirs, personal
representatives, executors and administrators of Indemnitee. In the event that
the Company or any of its successors or assigns (i) consolidates with or merges
into any other person or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person or
entity, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Company assume the obligations of the Company
under this Agreement. This Agreement shall continue for the benefit of
Indemnitee and his heirs, personal representatives, executors and administrators
after Indemnitee has ceased to have Corporate Status.
16. SUBROGATION. In the event of any payment of Indemnifiable Amounts
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of contribution or recovery of Indemnitee against
other persons, and Indemnitee shall take, at the request of the Company, all
reasonable action necessary to secure such rights, including the execution of
such documents as are necessary to enable the Company to bring suit to enforce
such rights.
17. CHANGE IN LAW. To the extent that a change in Delaware law (whether by
statute or judicial decision) shall permit broader indemnification or
advancement of expenses than is provided under the terms of the By-laws and this
Agreement, Indemnitee shall be entitled to such broader indemnification and
advancements, and this Agreement shall be deemed to be amended to such extent.
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18. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement, or any clause thereof,
shall be determined by a court of competent jurisdiction to be illegal, invalid
or unenforceable, in whole or in part, such provision or clause shall be limited
or modified in its application to the minimum extent necessary to make such
provision or clause valid, legal and enforceable, and the remaining provisions
and clauses of this Agreement shall remain fully enforceable and binding on the
parties.
19. INDEMNITEE AS PLAINTIFF. Except as provided in Section 10(c) of this
Agreement and in the next sentence, Indemnitee shall not be entitled to payment
of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect
to any Proceeding brought by Indemnitee against the Company, any Entity which it
controls, any director or officer thereof, or any third party, unless the Board
of Directors of the Company has consented to the initiation of such Proceeding.
This Section shall not apply to counterclaims or affirmative defenses asserted
by Indemnitee in an action brought against Indemnitee.
20. MODIFICATIONS AND WAIVER. Except as provided in Section 17 above with
respect to changes in Delaware law which broaden the right of Indemnitee to be
indemnified by the Company, no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by each of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions of this Agreement (whether or
not similar), nor shall such waiver constitute a continuing waiver.
21. GENERAL NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) when delivered by hand, (b) when transmitted by facsimile and
receipt is acknowledged, or (c) if mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed:
(i) If to Indemnitee, to:
Xxxxxxx X. Xxxxx
00 Xxxxxx Xxxx
Xxxxxxx, XX 00000
(ii) If to the Company, to:
Xxxxx Industries, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
or to such other address as may have been furnished in the same manner by any
party to the others.
22. GOVERNING LAW: CONSENT TO JURISDICTION; SERVICE OF PROCESS. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without
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regard to its rules of conflict of laws. Each of the Company and the Indemnitee
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the Court of Chancery of the State of Delaware and the courts of
the United States of America located in the State of Delaware (the "Delaware
Courts") for any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in the Delaware Courts and agrees not to plead or
claim in any Delaware Court that such litigation brought therein has been
brought in an inconvenient forum. Each of the parties hereto agrees, (a) to the
extent such party is not otherwise subject to service of process in the State of
Delaware, to appoint and maintain an agent in the State of Delaware as such
party's agent for acceptance of legal process, and (b) that service of process
may also be made on such party by prepaid certified mail with a proof of mailing
receipt validated by the United States Postal Service constituting evidence of
valid service. Service made pursuant to (a) or (b) above shall have the same
legal force and effect as if served upon such party personally within the State
of Delaware. For purposes of implementing the parties' agreement to appoint and
maintain an agent for service of process in the State of Delaware, each such
party does hereby appoint The Corporation Trust Company, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000, as such agent and each such party
hereby agrees to complete all actions necessary for such appointment.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
XXXXX INDUSTRIES, INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
--------------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: Chief Financial Officer
INDEMNITEE
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
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