EXHIBIT 10.1
DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
This Director and Officer Indemnification Agreement, dated as of
_______________ (this "AGREEMENT"), is made by and between PVC Container
Corporation, a Delaware corporation (the "COMPANY"), and ________________
("INDEMNITEE").
RECITALS:
A. Section 141 of the General Corporation Law of the State of Delaware
provides that the business and affairs of a corporation shall be managed by or
under the direction of its board of directors.
B. Pursuant to Sections 141 and 142 of the General Corporation Law of
the State of Delaware, significant authority with respect to the management of
the Company has been delegated to the officers of the Company.
C. By virtue of the managerial prerogatives vested in the directors and
officers of a Delaware corporation, directors and officers act as fiduciaries of
the corporation and its stockholders.
D. Thus, it is critically important to the Company and its stockholders
that the Company be able to attract and retain the most capable persons
reasonably available to serve as directors and officers of the Company.
E. In recognition of the need for corporations to be able to induce
capable and responsible persons to accept positions in corporate management,
Delaware law authorizes (and in some instances requires) corporations to
indemnify their directors and officers, and further authorizes corporations to
purchase and maintain insurance for the benefit of their directors and officers.
F. The Delaware courts have recognized that indemnification by a
corporation serves the dual policies of (1) allowing corporate officials to
resist unjustified lawsuits, secure in the knowledge that, if vindicated, the
corporation will bear the expense of litigation and (2) encouraging capable
women and men to serve as corporate directors and officers, secure in the
knowledge that the corporation will absorb the costs of defending their honesty
and integrity.
G. The number of lawsuits challenging the judgment and actions of
directors and officers of Delaware corporations, the costs of defending those
lawsuits, and the threat to directors' and officers' personal assets have all
materially increased over the past several years, chilling the willingness of
capable women and men to undertake the responsibilities imposed on corporate
directors and officers.
H. Recent federal legislation and rules adopted by the Securities and
Exchange Commission and the national securities exchanges have imposed
additional disclosure and corporate governance obligations on directors and
officers of public companies and have exposed such directors and officers to new
and substantially broadened civil liabilities.
I. These legislative and regulatory initiatives have also exposed
directors and officers of public companies to a significantly greater risk of
criminal proceedings, with attendant defense costs and potential criminal fines
and penalties.
J. Under Delaware law, a director's and officer's right to be
reimbursed for the costs of defense of criminal actions, whether such claims are
asserted under state or federal law, does not depend upon the merits of the
claims asserted against the director or officer and is separate and distinct
from any right to indemnification the director or officer may be able to
establish, and indemnification of the director or officer against criminal fines
and penalties is permitted if the director or officer satisfies the applicable
standard of conduct.
K. Indemnitee is a director [AND OFFICER] of the Company and his/her
willingness to serve in such capacity is predicated, in substantial part, upon
the Company's willingness to indemnify him/her in accordance with the principles
reflected above, to the fullest extent permitted by the laws of the state of
Delaware, and upon the other undertakings set forth in this Agreement.
L. Therefore, in recognition of the need to provide Indemnitee with
substantial protection against personal liability, in order to procure
Indemnitee's continued service as a director [AND OFFICER] of the Company and to
enhance Indemnitee's ability to serve the Company in an effective manner, and in
order to provide such protection pursuant to express contract rights (intended
to be enforceable irrespective of, among other things, any amendment to the
Company's certificate of incorporation or bylaws (collectively, the "CONSTITUENT
DOCUMENTS"), any change in the composition of the Company's Board of Directors
(the "BOARD") or any change-in-control or business combination transaction
relating to the Company), the Company wishes to provide in this Agreement for
the indemnification of and the advancement of Expenses (as defined in Section
1(e)) to Indemnitee as set forth in this Agreement and for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies.
M. In light of the considerations referred to in the preceding
recitals, it is the Company's intention and desire that the provisions of this
Agreement be construed liberally, subject to their express terms, to maximize
the protections to be provided to Indemnitee hereunder.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "CHANGE IN CONTROL" means the occurrence after the date of
this Agreement of any of the following events:
(i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "PERSON") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Company; provided, however, that:
2
(A) for purposes of this Section 1(a)(i), the following
acquisitions shall not constitute a Change in Control: (1) any acquisition of
Voting Stock of the Company directly from the Company that is approved by a
majority of the Incumbent Directors, (2) any acquisition of Voting Stock of the
Company by the Company or any Subsidiary, (3) any acquisition of Voting Stock of
the Company by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, and (4) any acquisition of Voting
Stock of the Company by any Person pursuant to a Business Combination that
complies with clauses (A), (B) and (C) of Section 1(a)(iii) below;
(B) if any Person acquires beneficial ownership of 20% or more of
combined voting power of the then-outstanding Voting Stock of the Company as a
result of a transaction described in clause (A)(1) of Section 1(a)(i) and such
Person thereafter becomes the beneficial owner of any additional shares of
Voting Stock of the Company representing 1% or more of the then-outstanding
Voting Stock of the Company, other than in an acquisition directly from the
Company that is approved by a majority of the Incumbent Directors or other than
as a result of a stock dividend, stock split or similar transaction effected by
the Company in which all holders of Voting Stock are treated equally, such
subsequent acquisition shall be deemed to constitute a Change in Control;
(C) a Change in Control will not be deemed to have occurred if a
Person acquires beneficial ownership of 20% or more of the Voting Stock of the
Company as a result of a reduction in the number of shares of Voting Stock of
the Company outstanding unless and until such Person thereafter becomes the
beneficial owner of any additional shares of Voting Stock of the Company
representing 1% or more of the then-outstanding Voting Stock of the Company,
other than in an acquisition directly from the Company that is approved by a
majority of the Incumbent Directors or other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Voting Stock are treated equally; and
(D) if at least a majority of the Incumbent Directors determine
in good faith that a Person has acquired beneficial ownership of 20% or more of
the Voting Stock of the Company inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares so that such Person
beneficially owns less than 20% of the Voting Stock of the Company, then no
Change in Control shall have occurred as a result of such Person's acquisition;
or
(ii) a majority of the directors of the Company are not
Incumbent Directors; or
(iii) the consummation of a reorganization, merger or
consolidation involving the Company, or sale or other disposition of all or
substantially all of the assets of the Company (each, a "BUSINESS COMBINATION"),
unless, in each case, immediately following such Business Combination (A) all or
substantially all of the individuals and entities who were the beneficial owners
of Voting Stock of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the combined voting
power of the then outstanding shares of Voting Stock of the entity resulting
from such Business Combination (including, without limitation, an entity which
as a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or
3
more subsidiaries), (B) no Person (other than the Company, such entity resulting
from such Business Combination, or any employee benefit plan (or related trust)
sponsored or maintained by the Company, any Subsidiary or such entity resulting
from such Business Combination) beneficially owns, directly or indirectly, 20%
or more of the combined voting power of the then outstanding shares of Voting
Stock of the entity resulting from such Business Combination, and (C) at least a
majority of the members of the Board of Directors of the entity resulting from
such Business Combination were Incumbent Directors at the time of the execution
of the initial agreement or of the action of the Board providing for such
Business Combination; or
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section 1(a)(iii).
(v) For purposes of this Section 1(a) and as used elsewhere in
this Agreement, the following terms shall have the following meanings:
(A) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(B) "INCUMBENT DIRECTORS" means the individuals who, as of the
date hereof, are Directors of the Company and any individual becoming a Director
subsequent to the date hereof whose election, nomination for election by the
Company's stockholders, or appointment, was approved by a vote of at least
two-thirds of the then Incumbent Directors (either by a specific vote or by
approval of the proxy or information statement of the Company in which such
person is named as a director or as a nominee for director, without objection to
such person or nomination); provided, however, that an individual shall not be
an Incumbent Director if such individual's election or appointment to the Board
occurs as a result of an actual or threatened election contest (as described in
Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of
Directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board.
(C) "SUBSIDIARY" means an entity in which the Company directly
or indirectly beneficially owns 50% or more of the outstanding Voting Stock.
(D) "VOTING STOCK" means securities entitled to vote generally
in the election of directors (or similar governing bodies).
(b) "CLAIM" means (i) any threatened, asserted, pending or completed
claim, demand, action, suit or proceeding, whether civil, criminal,
administrative, arbitrative, investigative or other, and whether made pursuant
to federal, state or other law; and (ii) any threatened, pending or completed
inquiry, hearing or investigation, whether made, instituted or conducted by the
Company or any other person, including without limitation any federal, state or
other governmental entity.
(c) "CONTROLLED AFFILIATE" means any corporation, limited liability
company, partnership, joint venture, trust or other entity or enterprise,
whether or not for profit, that is directly or indirectly controlled by the
Company. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of an entity or enterprise, whether through the ownership
of voting
4
securities, through other voting rights, by contract or otherwise; provided that
direct or indirect beneficial ownership of capital stock or other interests in
an entity or enterprise entitling the holder to cast 20% or more of the total
number of votes generally entitled to be cast in the election of directors (or
persons performing comparable functions) of such entity or enterprise shall be
deemed to constitute control for purposes of this definition.
(d) "DISINTERESTED DIRECTOR" means a director of the Company who is not
and was not a party to the Claim in respect of which indemnification is sought
by Indemnitee.
(e) "EXPENSES" means attorneys' and experts' fees and expenses and all
other costs and expenses paid or payable in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to investigate, defend, be a witness in or participate in (including
on appeal), any Claim.
(f) "INDEMNIFIABLE CLAIM" means any Claim based upon, arising out of or
resulting from (i) any actual, alleged or suspected act or failure to act by
Indemnitee in his or her capacity as a director, officer, employee or agent of
the Company or as a director, officer, employee, member, manager, trustee or
agent of any other corporation, limited liability company, partnership, joint
venture, trust or other entity or enterprise, whether or not for profit, as to
which Indemnitee is or was serving at the request of the Company as a director,
officer, employee, member, manager, trustee or agent, (ii) any actual, alleged
or suspected act or failure to act by Indemnitee in respect of any business,
transaction, communication, filing, disclosure or other activity of the Company
or any other entity or enterprise referred to in clause (i) of this sentence, or
(iii) Indemnitee's status as a current or former director, officer, employee or
agent of the Company or as a current or former director, officer, employee,
member, manager, trustee or agent of the Company or any other entity or
enterprise referred to in clause (i) of this sentence or any actual, alleged or
suspected act or failure to act by Indemnitee in connection with any obligation
or restriction imposed upon Indemnitee by reason of such status. In addition to
any service at the actual request of the Company, for purposes of this
Agreement, Indemnitee shall be deemed to be serving or to have served at the
request of the Company as a director, officer, employee, member, manager,
trustee or agent of another entity or enterprise if Indemnitee is or was serving
as a director, officer, employee, member, manager, trustee or agent of such
entity or enterprise and (i) such entity or enterprise is or at the time of such
service was a Controlled Affiliate, (ii) such entity or enterprise is or at the
time of such service was an employee benefit plan (or related trust) sponsored
or maintained by the Company or a Controlled Affiliate, or (iii) the Company or
a Controlled Affiliate directly or indirectly caused or authorized Indemnitee to
be nominated, elected, appointed, designated, employed, engaged or selected to
serve in such capacity.
(g) "INDEMNIFIABLE LOSSES" means any and all Losses relating to,
arising out of or resulting from any Indemnifiable Claim.
(h) "INDEPENDENT COUNSEL" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company (or any
Subsidiary), Indemnitee or any officer or director of the Company (other than
with respect to matters concerning the Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements), or (ii) any other
named (or, as to a threatened matter, reasonably likely to be named) party to
the Indemnifiable
5
Claim giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee's rights under this Agreement.
(i) "LOSSES" means any and all Expenses, damages, losses, liabilities,
judgments, fines, penalties (whether civil, criminal or other) and amounts paid
in settlement, including without limitation all interest, assessments and other
charges paid or payable in connection with or in respect of any of the
foregoing.
2. INDEMNIFICATION OBLIGATION. Subject to Section 7, the Company shall
indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted
or required by the laws of the State of Delaware in effect on the date hereof or
as such laws may from time to time hereafter be amended to increase the scope of
such permitted indemnification, against any and all Indemnifiable Claims and
Indemnifiable Losses; provided, however, that, except as provided in Sections 4
and 20, Indemnitee shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Indemnitee against the
Company or any director or officer of the Company unless the Company has joined
in or consented to the initiation of such Claim.
3. ADVANCEMENT OF EXPENSES. Indemnitee shall have the right to advancement
by the Company prior to the final disposition of any Indemnifiable Claim of any
and all Expenses relating to, arising out of or resulting from any Indemnifiable
Claim paid or incurred by Indemnitee or which Indemnitee determines are
reasonably likely to be paid or incurred by Indemnitee. Indemnitee's right to
such advancement is not subject to the satisfaction of any standard of conduct.
Without limiting the generality or effect of the foregoing, within five business
days after any request by Indemnitee, the Company shall, in accordance with such
request (but without duplication), (a) pay such Expenses on behalf of
Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such
Expenses, or (c) reimburse Indemnitee for such Expenses; provided that
Indemnitee shall repay, without interest, any amounts actually advanced to
Indemnitee that, at the final disposition of the Indemnifiable Claim to which
the advance related, were in excess of amounts paid or payable by Indemnitee in
respect of Expenses relating to, arising out of or resulting from such
Indemnifiable Claim. In connection with any such payment, advancement or
reimbursement, Indemnitee shall execute and deliver to the Company an
undertaking, which need not be secured and shall be accepted without reference
to Indemnitee's ability to repay the Expenses, by or on behalf of the
Indemnitee, to repay any amounts paid, advanced or reimbursed by the Company in
respect of Expenses relating to, arising out of or resulting from any
Indemnifiable Claim in respect of which it shall have been determined, following
the final disposition of such Indemnifiable Claim and in accordance with Section
7, that Indemnitee is not entitled to indemnification hereunder.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. Without limiting the generality
or effect of the foregoing, the Company shall indemnify and hold harmless
Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee
for, or advance to Indemnitee, within five business days of such request, any
and all Expenses paid or incurred by Indemnitee or which Indemnitee determines
are reasonably likely to be paid or incurred by Indemnitee in connection with
any Claim made, instituted or conducted by Indemnitee for (a) indemnification or
reimbursement or advance payment of Expenses by the Company under any provision
of this
6
Agreement, or under any other agreement or provision of the Constituent
Documents now or hereafter in effect relating to Indemnifiable Claims, and/or
(b) recovery under any directors' and officers' liability insurance policies
maintained by the Company, regardless in each case of whether Indemnitee
ultimately is determined to be entitled to such indemnification, reimbursement,
advance or insurance recovery, as the case may be; provided, however, that
Indemnitee shall return, without interest, any such advance of Expenses (or
portion thereof) which remains unspent at the final disposition of the Claim to
which the advance related.
5. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any
Indemnifiable Loss, but not for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
6. PROCEDURE FOR NOTIFICATION. To obtain indemnification under this
Agreement in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee
shall submit to the Company a written request therefor, including a brief
description (based upon information then available to Indemnitee) of such
Indemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt of
such request, the Company has directors' and officers' liability insurance in
effect under which coverage for such Indemnifiable Claim or Indemnifiable Loss
is potentially available, the Company shall give prompt written notice of such
Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in
accordance with the procedures set forth in the applicable policies. The Company
shall provide to Indemnitee a copy of such notice delivered to the applicable
insurers, and copies of all subsequent correspondence between the Company and
such insurers regarding the Indemnifiable Claim or Indemnifiable Loss, in each
case substantially concurrently with the delivery or receipt thereof by the
Company. The failure by Indemnitee to timely notify the Company of any
Indemnifiable Claim or Indemnifiable Loss shall not relieve the Company from any
liability hereunder unless, and only to the extent that, the Company did not
otherwise learn of such Indemnifiable Claim or Indemnifiable Loss and such
failure results in forfeiture by the Company of substantial defenses, rights or
insurance coverage.
7. DETERMINATION OF RIGHT TO INDEMNIFICATION.
(a) To the extent that Indemnitee shall have been successful on the
merits or otherwise in defense of any Indemnifiable Claim or any portion thereof
or in defense of any issue or matter therein, including without limitation
dismissal without prejudice, Indemnitee shall be indemnified against all
Indemnifiable Losses relating to, arising out of or resulting from such
Indemnifiable Claim in accordance with Section 2 and no Standard of Conduct
Determination (as defined in Section 7(b)) shall be required.
7
(b) To the extent that the provisions of Section 7(a) are inapplicable
to an Indemnifiable Claim that shall have been finally disposed of, within 10
business days of Indemnitee submitting a request for payment for indemnification
hereunder, the Company shall (i) notify the Indemnitee that the Board has
determined either that Indemnitee is not entitled to indemnification under this
Agreement or that the Board is legally required as a condition precedent to such
indemnification to determine whether Indemnitee has satisfied an applicable
standard of conduct or (ii) pay the Indemnitee the amount requested for payment.
Any determination of whether Indemnitee has satisfied any applicable standard of
conduct under Delaware law that is a legally required condition precedent to
indemnification of Indemnitee hereunder against Indemnifiable Losses relating
to, arising out of or resulting from such Indemnifiable Claim (a "STANDARD OF
CONDUCT DETERMINATION") shall be made as follows: (i) if a Change in Control
shall not have occurred, or if a Change in Control shall have occurred but
Indemnitee shall have requested that the Standard of Conduct Determination be
made pursuant to this clause (i), then, at Indemnitee's option, such
determination shall be made by (A) by a majority vote of the Disinterested
Directors, even if less than a quorum of the Board or (B) by a majority vote of
a committee of Disinterested Directors designated by a majority vote of all
Disinterested Directors, or (C) if there are no such Disinterested Directors, by
Independent Counsel in a written opinion addressed to the Board, a copy of which
shall be delivered to Indemnitee; and (ii) if a Change in Control shall have
occurred and Indemnitee shall not have requested that the Standard of Conduct
Determination be made pursuant to clause (i), by Independent Counsel in a
written opinion addressed to the Board, a copy of which shall be delivered to
Indemnitee. Indemnitee will cooperate with the person or persons making such
Standard of Conduct Determination, including providing to such person or
persons, upon reasonable advance request, any documentation or information which
is not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. The
Company shall indemnify and hold harmless Indemnitee against and, if requested
by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within
five business days of such request, any and all costs and expenses (including
attorneys' and experts' fees and expenses) incurred by Indemnitee in connection
with such determination and in so cooperating with the person or persons making
such Standard of Conduct Determination.
(c) The Company shall use its reasonable best efforts to cause any
Standard of Conduct Determination required under Section 7(b) to be made as
promptly as practicable. If (i) the person or persons empowered or selected
under Section 7 to make the Standard of Conduct Determination shall not have
made a determination within 30 days after the later of (A) receipt by the
Company of written notice from Indemnitee advising the Company of the final
disposition of the applicable Indemnifiable Claim (the date of such receipt
being the "NOTIFICATION DATE") and (B) the selection of an Independent Counsel,
if such determination is to be made by Independent Counsel, that is permitted
under the provisions of Section 7(e) to make such determination and (ii)
Indemnitee shall have fulfilled his/her obligations set forth in the second
sentence of Section 7(b), then Indemnitee shall be deemed to have satisfied the
applicable standard of conduct; provided that such 30-day period may be extended
for a reasonable time, not to exceed an additional 30 days, if the person or
persons making such determination in good faith requires such additional time
for the obtaining or evaluation or documentation and/or information relating
thereto.
8
(d) If (i) Indemnitee shall be entitled to indemnification hereunder
against any Indemnifiable Losses pursuant to Section 7(a), (ii) no determination
of whether Indemnitee has satisfied any applicable standard of conduct under
Delaware law is a legally required condition precedent to indemnification of
Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee has
been determined or deemed pursuant to Section 7(b) or (c) to have satisfied any
applicable standard of conduct under Delaware law which is a legally required
condition precedent to indemnification of Indemnitee hereunder against any
Indemnifiable Losses, then the Company shall pay to Indemnitee, within five
business days after the later of (x) the Notification Date in respect of the
Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are
related, out of which such Indemnifiable Losses arose or from which such
Indemnifiable Losses resulted and (y) the earliest date on which the applicable
criterion specified in clause (i), (ii) or (iii) above shall have been
satisfied, an amount equal to the amount of such Indemnifiable Losses.
(e) If a Standard of Conduct Determination is to be made by Independent
Counsel pursuant to Section 7(b)(i), the Independent Counsel shall be selected
by the Board of Directors within 10 business days of the Notification Date, and
the Company shall give written notice to Indemnitee advising him or her of the
identity of the Independent Counsel so selected. If a Standard of Conduct
Determination is to be made by Independent Counsel pursuant to Section 7(b)(ii),
the Independent Counsel shall be selected by Indemnitee, and Indemnitee shall
give written notice to the Company advising it of the identity of the
Independent Counsel so selected. In either case, Indemnitee or the Company, as
applicable, may, within five business days after receiving written notice of
selection from the other, deliver to the other a written objection to such
selection; provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not satisfy the criteria
set forth in the definition of "Independent Counsel" in Section 1(h), and the
objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person or firm so selected
shall act as Independent Counsel. If such written objection is properly and
timely made and substantiated, (i) the Independent Counsel so selected may not
serve as Independent Counsel unless and until such objection is withdrawn or a
court has determined that such objection is without merit and (ii) the
non-objecting party may, at its option, within five business days of receiving
such objection, select an alternative Independent Counsel and give written
notice to the other party advising such other party of the identity of the
alternative Independent Counsel so selected, in which case the provisions of the
two immediately preceding sentences and clause (i) of this sentence shall apply
to such subsequent selection and notice. If applicable, the provisions of clause
(ii) of the immediately preceding sentence shall apply to successive alternative
selections. If no Independent Counsel that is permitted under the foregoing
provisions of this Section 7(e) to make the Standard of Conduct Determination
shall have been selected within 30 days after the Company gives its initial
notice pursuant to the first sentence of this Section 7(e) or Indemnitee gives
its initial notice pursuant to the second sentence of this Section 7(e), as the
case may be, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware for resolution of any objection which shall have been
made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person or firm
selected by the Court or by such other person as the Court shall designate, and
the person or firm with respect to whom all objections are so resolved or the
person or firm so appointed will act as Independent Counsel. In all events, the
Company shall pay all of the reasonable fees and expenses of the Independent
9
Counsel incurred in connection with the Independent Counsel's determination
pursuant to Section 7(b).
(f) For purposes of any determination of good faith in connection with
the determination of whether in any particular circumstance the Indemnitee
satisfied any applicable standard of conduct, Indemnitee shall be deemed to have
acted in good faith if Indemnitee's action is based on the records or books of
account of the Company, including financial statements, or on information
supplied to Indemnitee by the officers of the Company in the course of their
duties, or on the advice of legal counsel for the Company or on information or
records given or reports made to the Company by an independent certified public
accountant or by an appraiser or other expert selected with the reasonable care
of the Company. The provisions of this Section 7(f) shall not be deemed to be
exclusive or limit in any way the other circumstances in which the Indemnitee
may be deemed to have met the applicable standard of conduct set forth in this
Agreement or under applicable law.
(g) The knowledge and/or actions, or failure to act, of any other
director, officer, agent or employee of the Company shall not be imputed to the
Indemnitee for purposes of determining the right to indemnification under this
Agreement.
8. PRESUMPTION OF ENTITLEMENT. In making any Standard of Conduct
Determination, the person or persons making such determination shall presume
that Indemnitee has satisfied the applicable standard of conduct, and the
Company may overcome such presumption only by its adducing clear and convincing
evidence to the contrary. Any Standard of Conduct Determination that is adverse
to Indemnitee may be challenged by the Indemnitee in the Court of Chancery of
the State of Delaware. No determination by the Company (including by its
directors or any Independent Counsel) that Indemnitee has not satisfied any
applicable standard of conduct shall be a defense to any Claim by Indemnitee for
indemnification or reimbursement or advance payment of Expenses by the Company
hereunder or create a presumption that Indemnitee has not met any applicable
standard of conduct.
9. NO OTHER PRESUMPTION. For purposes of this Agreement, the termination of
any Claim by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its equivalent,
will not create a presumption that Indemnitee did not meet any applicable
standard of conduct or that indemnification hereunder is otherwise not
permitted.
10. NON-EXCLUSIVITY. The rights of Indemnitee hereunder will be in addition
to any other rights Indemnitee may have under the Constituent Documents, or the
substantive laws of the Company's jurisdiction of incorporation, any other
contract or otherwise (collectively, "OTHER INDEMNITY PROVISIONS"); provided,
however, that (a) to the extent that Indemnitee otherwise would have any greater
right to indemnification under any Other Indemnity Provision, Indemnitee will be
deemed to have such greater right hereunder and (b) to the extent that any
change is made to any Other Indemnity Provision which permits any greater right
to indemnification than that provided under this Agreement as of the date
hereof, Indemnitee will be deemed to have such greater right hereunder. The
Company will not adopt any amendment to any of the Constituent Documents the
effect of which would be to deny, diminish or encumber Indemnitee's right to
indemnification under this Agreement or any Other Indemnity Provision.
10
11. LIABILITY INSURANCE AND FUNDING. For the duration of Indemnitee's
service as a director and/or officer of the Company, and thereafter for so long
as Indemnitee shall be subject to any pending or possible Indemnifiable Claim,
the Company shall use commercially reasonable efforts (taking into account the
scope and amount of coverage available relative to the cost thereof) to cause to
be maintained in effect policies of directors' and officers' liability insurance
providing coverage for directors and/or officers of the Company that is at least
substantially comparable in scope and amount to that provided by the Company's
current policies of directors' and officers' liability insurance. The Company
shall provide Indemnitee with a copy of all directors' and officers' liability
insurance applications, binders, policies, declarations, endorsements and other
related materials, and shall provide Indemnitee with a reasonable opportunity to
review and comment on the same. Without limiting the generality or effect of the
two immediately preceding sentences, the Company shall not discontinue or
significantly reduce the scope or amount of coverage from one policy period to
the next (i) without the prior approval thereof by a majority vote of the
Incumbent Directors, even if less than a quorum, or (ii) if at the time that any
such discontinuation or significant reduction in the scope or amount of coverage
is proposed there are no Incumbent Directors, without the prior written consent
of Indemnitee (which consent shall not be unreasonably withheld or delayed). In
all policies of directors' and officers' liability insurance obtained by the
Company, Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee the same rights and benefits, subject to the same limitations, as are
accorded to the Company's directors and officers most favorably insured by such
policy. The Company may, but shall not be required to, create a trust fund,
grant a security interest or use other means, including without limitation a
letter of credit, to ensure the payment of such amounts as may be necessary to
satisfy its obligations to indemnify and advance expenses pursuant to this
Agreement.
12. SUBROGATION. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the related rights
of recovery of Indemnitee against other persons or entities (other than
Indemnitee's successors), including any entity or enterprise referred to in
clause (i) of the definition of "Indemnifiable Claim" in Section 1(f).
Indemnitee shall execute all papers reasonably required to evidence such rights
(all of Indemnitee's reasonable Expenses, including attorneys' fees and charges,
related thereto to be reimbursed by or, at the option of Indemnitee, advanced by
the Company).
13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment to Indemnitee in respect of any Indemnifiable
Losses to the extent Indemnitee has otherwise actually received payment (net of
Expenses incurred in connection therewith) under any insurance policy, the
Constituent Documents and Other Indemnity Provisions or otherwise (including
from any entity or enterprise referred to in clause (i) of the definition of
"Indemnifiable Claim" in Section 1(f)) in respect of such Indemnifiable Losses
otherwise indemnifiable hereunder.
14. DEFENSE OF CLAIMS. The Company shall be entitled to participate in the
defense of any Indemnifiable Claim or to assume the defense thereof, with
counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee
believes, after consultation with counsel selected by Indemnitee, that (a) the
use of counsel chosen by the Company to represent Indemnitee would present such
counsel with an actual or potential conflict, (b) the named parties in any such
Indemnifiable Claim (including any impleaded parties) include both the Company
and Indemnitee and Indemnitee shall conclude that there may be one or more legal
defenses available
11
to him or her that are different from or in addition to those available to the
Company, or (c) any such representation by such counsel would be precluded under
the applicable standards of professional conduct then prevailing, then
Indemnitee shall be entitled to retain separate counsel (but not more than one
law firm plus, if applicable, local counsel in respect of any particular
Indemnifiable Claim) at the Company's expense. The Company shall not be liable
to Indemnitee under this Agreement for any amounts paid in settlement of any
threatened or pending Indemnifiable Claim effected without the Company's prior
written consent. The Company shall not, without the prior written consent of the
Indemnitee, effect any settlement of any threatened or pending Indemnifiable
Claim to which the Indemnitee is, or could have been, a party unless such
settlement solely involves the payment of money and includes a complete and
unconditional release of the Indemnitee from all liability on any claims that
are the subject matter of such Indemnifiable Claim. Neither the Company nor
Indemnitee shall unreasonably withhold its consent to any proposed settlement;
provided that Indemnitee may withhold consent to any settlement that does not
provide a complete and unconditional release of Indemnitee.
15. SUCCESSORS AND BINDING AGREEMENT. (a) The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to
Indemnitee and his or her counsel, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any person acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor will thereafter be deemed the "COMPANY" for purposes of this
Agreement), but shall not otherwise be assignable or delegatable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Indemnitee's personal or legal representatives, executors,
administrators, heirs, distributees, legatees and other successors.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in
Sections 15(a) and 15(b). Without limiting the generality or effect of the
foregoing, Indemnitee's right to receive payments hereunder shall not be
assignable, whether by pledge, creation of a security interest or otherwise,
other than by a transfer by the Indemnitee's will or by the laws of descent and
distribution, and, in the event of any attempted assignment or transfer contrary
to this Section 15(c), the Company shall have no liability to pay any amount so
attempted to be assigned or transferred.
16. NOTICES. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid or one business day after having been sent
for next-day delivery by a nationally recognized overnight courier service,
addressed to the Company (to the attention of the Secretary of the Company) and
to Indemnitee at the applicable address shown on
12
the signature page hereto, or to such other address as any party may have
furnished to the other in writing and in accordance herewith, except that
notices of changes of address will be effective only upon receipt.
17. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State. The Company and Indemnitee each
hereby irrevocably consent to the jurisdiction of the Chancery Court of the
State of Delaware for all purposes in connection with any action or proceeding
which arises out of or relates to this Agreement and agree that any action
instituted under this Agreement shall be brought only in the Chancery Court of
the State of Delaware.
18. VALIDITY. If any provision of this Agreement or the application of any
provision hereof to any person or circumstance is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such
provision to any other person or circumstance shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent, and only to the extent, necessary to make it
enforceable, valid or legal. In the event that any court or other adjudicative
body shall decline to reform any provision of this Agreement held to be invalid,
unenforceable or otherwise illegal as contemplated by the immediately preceding
sentence, the parties thereto shall take all such action as may be necessary or
appropriate to replace the provision so held to be invalid, unenforceable or
otherwise illegal with one or more alternative provisions that effectuate the
purpose and intent of the original provisions of this Agreement as fully as
possible without being invalid, unenforceable or otherwise illegal.
19. MISCELLANEOUS. No provision of this Agreement may be waived, modified
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by Indemnitee and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, expressed or implied with respect to the subject matter
hereof have been made by either party that are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
20. LEGAL FEES AND EXPENSES. It is the intent of the Company that
Indemnitee not be required to incur legal fees and or other Expenses associated
with the interpretation, enforcement or defense of Indemnitee's rights under
this Agreement by litigation or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to
Indemnitee hereunder. Accordingly, without limiting the generality or effect of
any other provision hereof, if it should appear to Indemnitee that the Company
has failed to comply with any of its obligations under this Agreement or in the
event that the Company or any other person takes or threatens to take any action
to declare this Agreement void or unenforceable, or institutes any litigation or
other action or proceeding designed to deny, or to recover from, Indemnitee the
benefits provided or intended to be provided to Indemnitee hereunder, the
Company irrevocably authorizes the Indemnitee from time to time to retain
counsel of Indemnitee's choice, at the expense of the Company as hereafter
provided, to advise and represent Indemnitee in connection with any such
interpretation, enforcement or defense,
13
including without limitation the initiation or defense of any litigation or
other legal action, whether by or against the Company or any director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to Indemnitee's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and Indemnitee agree that a confidential relationship
shall exist between Indemnitee and such counsel. The Company will pay and be
solely financially responsible for any and all attorneys' and related fees and
expenses incurred by Indemnitee in connection with any of the foregoing, unless
a court of competent jurisdiction determines that each of the material
assertions made by Indemnitee in such proceeding was frivolous or made in bad
faith.
21. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee or
Indemnitee's estate, 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 shall be
extinguished 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 limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
22. CERTAIN INTERPRETIVE MATTERS. Unless the context of this Agreement
otherwise requires, (a) "it" or "its" or words of any gender include each other
gender, (b) words using the singular or plural number also include the plural or
singular number, respectively, (c) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement, (d) the terms
"Article," "Section," "Annex" or "Exhibit" refer to the specified Article,
Section, Annex or Exhibit of or to this Agreement, (e) the terms "include,"
"includes" and "including" will be deemed to be followed by the words "without
limitation" (whether or not so expressed), and (f) the word "or" is disjunctive
but not exclusive. Whenever this Agreement refers to a number of days, such
number will refer to calendar days unless business days are specified and
whenever action must be taken (including the giving of notice or the delivery of
documents) under this Agreement during a certain period of time or by a
particular date that ends or occurs on a non-business day, then such period or
date will be extended until the immediately following business day. As used
herein, "business day" means any day other than Saturday, Sunday or a United
States federal holiday.
23. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together shall constitute one and the same agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
14
IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its
duly authorized representative to execute this Agreement as of the date first
above written.
PVC Container Corporation
0 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
By:
-----------------------------
Name:
Title:
[NAME OF INDEMNITEE]
[ADDRESS]
----------------------------------
[NAME OF INDEMNITEE]
15
