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EXHIBIT 10.7
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made and entered into as of the _____ day of
__________, 1999, by and between @xxxx.xxx, a Tennessee corporation (the
"Company"), and the undersigned (the "Indemnitee").
RECITALS
WHEREAS, it is essential to the Company that it attract and retain as
directors the most capable persons available; and
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors of public
companies in the current environment; and
WHEREAS, the Indemnitee currently is serving as a director of the
Company, and the Company desires that the Indemnitee continue to serve in such
capacity. The Indemnitee is willing to continue to serve in such capacity if the
Indemnitee is adequately protected against the risks associated with such
service; and
WHEREAS, the Company and the Indemnitee have concluded that the
indemnities available under the Company's Charter, Bylaws and any insurance now
or hereafter in effect need to be supplemented to more fully protect the
Indemnitee against the risks associated with the Indemnitee's service to the
Company; and
WHEREAS, in recognition of Indemnitee's need for additional protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner, and in order to induce Indemnitee to
continue to provide services to the Company as a director thereof, the Company
wishes to provide in this Agreement for the indemnification of Indemnitee to the
fullest extent permitted by law and as set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing, the covenants
contained herein and Indemnitee's continued service to the Company, the Company
and Indemnitee, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. The following terms, as used herein, shall have
the following respective meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or
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indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings relative
to the foregoing.
"Change in Control" shall be deemed to have taken place if: (i) any
person or entity, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, other than the Company or a wholly-owned
subsidiary thereof or any employee benefit plan of the Company or any of its
subsidiaries, becomes the beneficial owner of the Company securities having 50%
or more of the combined voting power of the then outstanding securities of the
Company that may be cast for the election of directors of the Company (other
than as a result of an issuance of securities initiated by Company in the
ordinary course of business); or (ii) as the result of, or in connection with,
any cash tender or exchange offer, merger or other business combination, sale of
substantially all of the assets or contested election, or any combination of the
foregoing transactions less than a majority of the combined voting power of the
then-outstanding securities of the Company or any successor corporation or
entity entitled to vote generally in the election of the directors of the
Company or such other corporation or entity after such transaction is held in
the aggregate by the holders of the Company securities entitled to vote
generally in the election of directors of the Company immediately prior to such
transaction; or (iii) during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Board of Directors of the
Company cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the Company's shareholders, of
each director of the Company first elected during such period was approved by a
vote of at least a majority of the directors of the Company then still in office
who were directors of the Company at the beginning of any such period.
"Claim" means (a) any threatened, pending or completed action, suit,
proceeding or arbitration or other alternative dispute resolution mechanism, or
(b) any inquiry, hearing or investigation, whether conducted by the Company or
any other Person, that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or arbitration or other
alternative dispute resolution mechanism, in each case whether civil, criminal,
administrative or other (whether or not the claims or allegations therein are
groundless, false or fraudulent) and includes, without limitation, those brought
by or in the name of the Company or any director or officer of the Company.
"Company Agent" means any director, officer, partner, employee, agent,
trustee or fiduciary of the Company, any Subsidiary or any Other Enterprise.
"Covered Event" means any event or occurrence, whether occurring prior
to or after the date of this Agreement, related to the fact that Indemnitee is
or was a Company Agent or related to anything done or not done by Indemnitee in
any such capacity, and includes, without limitation, any such event or
occurrence (a) arising from performance of the responsibilities, obligations or
duties imposed by ERISA or any similar applicable provisions of state or common
law, or (b) arising from any actual or proposed merger, consolidation or other
business combination involving the Company, any Subsidiary or any Other
Enterprise, including without limitation any sale or
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other transfer of all or substantially all of the business or assets of the
Company, any Subsidiary or any Other Enterprise.
"D&O Insurance" means the directors' and officers' liability insurance
described on Exhibit l to this Agreement and any replacement or substitute
policies issued by one or more reputable insurers providing in all respects
coverage at least comparable to and in the same amount as that provided under
the insurance described on Exhibit 1.
"Determination" means a determination made by (a) a majority vote of a
quorum of Disinterested Directors; (b) Independent Legal Counsel, in a written
opinion addressed to the Company and Indemnitee; (c) the shareholders of the
Company; or (d) a decision by a court of competent jurisdiction not subject to
further appeal.
"Disinterested Director" shall be a director of the Company who is not
or was not a party to the Claim giving rise to the subject matter of a
Determination.
"Expenses" includes attorneys' fees and all other costs, travel
expenses, fees of experts, transcript costs, filing fees, witness fees,
telephone charges, postage, copying costs, delivery service fees and other
expenses and obligations of any nature whatsoever paid or incurred in connection
with investigating, prosecuting or defending, being a witness in or
participating in (including on appeal), or preparing to prosecute or defend, be
a witness in or participate in any Claim, for which Indemnitee is or becomes
legally obligated to pay.
"Independent Legal Counsel" shall mean a law firm or a member of a law
firm that (a) neither is nor in the past five years has been retained to
represent in any material matter the Company, any Subsidiary, Indemnitee or any
other party to the Claim, (b) under applicable standards of professional conduct
then prevailing would not have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee's rights to
indemnification under this Agreement and (c) is reasonably acceptable to the
Company and Indemnitee.
"Loss" means any amount which Indemnitee is legally obligated to pay as
a result of any Claim, including, without limitation (a) all judgments,
penalties and fines, and amounts paid or to be paid in settlement, (b) all
interest, assessments and other charges paid or payable in connection therewith
and (c) any federal, state, local or foreign taxes imposed (net of the value to
Indemnitee of any tax benefits resulting from tax deductions or otherwise as a
result of the actual or deemed receipt of any payments under this Agreement,
including the creation of the Trust).
"Other Enterprise" means any corporation (other than the Company or any
Subsidiary), partnership, joint venture, association, employee benefit plan,
trust or other enterprise or organization to which Indemnitee renders service at
the request of the Company or any Subsidiary.
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"Parent" shall have the meaning set forth in the regulations of the
Securities and Exchange Commission under the Securities Act of 1933, as amended;
provided the term "Parent" shall not include the board of directors of a
corporation in its capacity as a board of directors, and provided further that
if the other party to any transaction referred to in Section 12.1.2 has no
Parent as so defined above, "Parent" shall mean such other party.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government (or any subdivision, department, commission or agency thereof), and
includes without limitation any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended.
"Potential Change in Control" shall be deemed to have occurred if (a)
the Company enters into an agreement or arrangement the consummation of which
would result in the occurrence of a Change in Control, (b) any Person (including
the Company) publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control or (c) the
Board of Directors of the Company adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
"Subsidiary" means any corporation of which more than 50% of the
outstanding stock having ordinary voting power to elect a majority of the board
of directors of such corporation is now or hereafter owned, directly or
indirectly, by the Company.
"Trust" has the meaning set forth in Section 9.2.
"Voting Securities" means any securities of the Company which vote
generally in the election of directors.
Section 2. Indemnification
2.1. General Indemnity Obligation.
2.1.1. Subject to the remaining provisions of this Agreement,
the Company hereby indemnifies and holds Indemnitee harmless for any Losses or
Expenses arising from any Claims relating to (or arising in whole or in part out
of) any Covered Event, including without limitation, any Claim the basis of
which is any actual or alleged breach of duty, neglect, error, misstatement,
misleading statement, omission or other act done or attempted by Indemnitee in
the capacity as a Company Agent at the time liability is incurred or at the time
the Claim is initiated.
2.1.2. The obligations of the Company under this Agreement shall
apply to the fullest extent authorized or permitted by the provisions of
applicable law, as presently in effect or as changed after the date of this
Agreement, whether by statute or judicial decision (but, in the case of any
subsequent change, only to the extent that such change permits the Company to
provide broader indemnification than permitted prior to giving effect thereto).
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2.1.3. 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; provided,
the provisions of this Section 2.1.3 shall not apply (i) following a Change in
Control to Claims seeking enforcement of this Agreement, the Charter or Bylaws
of the Company or any other agreement now or hereafter in effect relating to
indemnification for Covered Events or (ii) absent a Change in Control, to Claims
seeking enforcement of this Agreement, the Charter or Bylaws of the Company or
any other agreement now or hereafter in effect relating to indemnification for
Covered Events, but only if the Indemnitee is ultimately determined to be
entitled to indemnification.
2.1.4. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the Losses
or Expenses paid with respect to a Claim but not, however, for the total amount
thereof, the Company shall nevertheless indemnify and hold Indemnitee harmless
against the portion thereof to which Indemnitee is entitled.
2.1.5. Notwithstanding any other provision of this Agreement, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating to (or arising in whole or in part out of)
a Covered Event or in defense of any issue or matter therein, including
dismissal without prejudice, the Company shall indemnify and hold Indemnitee
harmless against all Expenses incurred in connection therewith.
2.2. Indemnification for Serving as Witness and Certain Other Claims.
Notwithstanding any other provision of this Agreement, the Company hereby
indemnifies and holds Indemnitee harmless for all Expenses in connection with
(a) the preparation to serve or service as a witness in any Claim in which
Indemnitee is not a party, if such actual or proposed service as a witness arose
by reason of Indemnitee having served as a Company Agent on or after the date of
this Agreement and (b) any Claim initiated by Indemnitee on or after the date of
this Agreement (i) for recovery under any directors' and officers' liability
insurance maintained by the Company or (ii) following a Change in Control, for
enforcement of the indemnification obligations of the Company under this
Agreement, the Charter or Bylaws of the Company or any other agreement now or
hereafter in effect relating to indemnification for Covered Events, regardless
of whether Indemnitee ultimately is determined to be entitled to such insurance
recovery or indemnification, as the case may be; or (iii) absent a Change in
Control for enforcement of this Agreement, the Charter or Bylaws of the Company
or any other agreement now or hereafter in effect relating to indemnification
for Covered Events, but only if the Indemnitee is ultimately determined to be
entitled to indemnification.
Section 3. Limitation on Indemnification.
3.1. Coverage Limitations. No indemnification is available pursuant to
the provisions of this Agreement:
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3.1.1. If such indemnification is not lawful;
3.1.2. If Indemnitee's conduct giving rise to the Claim with
respect to which indemnification is requested was not in good faith or involved
intentional misconduct or a knowing violation of law;
3.1.3. In respect of any Claim based upon any other proceeding
charging improper personal benefit to the Indemnitee in which the Indemnitee was
adjudged liable on the basis that personal benefit was improperly received by
the Indemnitee;
3.1.4. In respect of any Claim based upon or in connection with a
proceeding by or in the right of the Company in which the director was adjudged
liable to the Company;
3.1.5. In respect of any Claim for an accounting of profits made
from the purchase or sale by Indemnitee of securities of the Company within the
meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended; or
3.1.6. If Indemnitee's conduct giving rise to the Claim with
respect to which indemnification is requested constituted a breach of the duty
of loyalty to the corporation or its shareholders.
3.1.7. In respect of any Claim based upon any violation of Section
00-00-000 of the Tennessee Business Corporation Act, as amended.
3.2. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment otherwise due and payable to the extent
Indemnitee has otherwise actually received payment (whether under the Charter or
the Bylaws of the Company, the D&O Insurance or otherwise) of any amounts
otherwise due and payable under this Agreement.
Section 4. Payments and Determinations.
4.1. Advancement and Reimbursement of Expenses. If requested by
Indemnitee, the Company shall advance to Indemnitee, no later than 10 days
following any such request, any and all Expenses for which indemnification is
available under Section 2. In order to obtain such advancement or reimbursement,
the Indemnitee must also furnish to the Company a written affirmation of
Indemnitee's good faith belief that Indemnitee has acted in good faith and
reasonably believed that: (1) in the case of conduct in Indemnitee's official
capacity with the Company, that Indemnitee's conduct was in its best interest;
and (2) in all other cases, that Indemnitee's conduct was at least not opposed
to its best interests; and (3) in the case of any criminal proceeding,
Indemnitee had no reasonable cause to believe Indemnitee's conduct was unlawful.
In addition, Indemnitee must furnish to the Company a written undertaking,
executed personally or on Indemnitee's behalf, to repay the advance if it is
ultimately determined that Indemnitee is not entitled to indemnification. Upon
any Determination that Indemnitee is not
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permitted to be indemnified for any Expenses so advanced, Indemnitee hereby
agrees to reimburse the Company (or, as appropriate, any Trust established
pursuant to Section 9.2) for all such amounts previously paid. Such obligation
of reimbursement shall be unsecured and no interest shall be charged thereon.
4.2. Payment and Determination Procedures.
4.2.1. To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, together with such documentation
and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon receipt of
such a request for indemnification, advise the Board of Directors in writing
that Indemnitee has requested indemnification.
4.2.2. Upon written request by Indemnitee for indemnification
pursuant to Section 4.2.1, a Determination with respect to Indemnitee's
entitlement thereto shall be made in the specific case (a) if a Change in
Control shall have occurred, as provided in Section 9.1; and (b) if a Change in
Control shall not have occurred, by (i) the Board of Directors by a majority
vote of a quorum of Disinterested Directors, (ii) Independent Legal Counsel, if
either (A) a quorum of Disinterested Directors is not obtainable or (B) a
majority vote of a quorum of Disinterested Directors otherwise so directs or
(iii) the shareholders of the Company (if submitted by the Board of Directors)
but shares of stock owned by or voted under the control of any Indemnitee who is
at the time party to the proceeding may not be voted. If a Determination is made
that Indemnitee is entitled to indemnification, payment to Indemnitee shall be
made within 10 days after such Determination.
4.2.3. If no Determination is made within 60 days after receipt
by the Company of a request for indemnification by Indemnitee pursuant to
Section 4.2.1, a Determination shall be deemed to have been made that Indemnitee
is entitled to the requested indemnification (and the Company shall pay the
related Losses and Expenses no later than 10 days after the expiration of such
60-day period), except where such indemnification is not lawful; provided,
however, that (a) such 60-day period may be extended for a reasonable time, not
to exceed an additional 30 days, if the Person or Persons making the
Determination in good faith require such additional time for obtaining or
evaluating the documentation and information relating thereto; and (b) the
foregoing provisions of this Section 4.2.3 shall not apply (i) if the
Determination is to be made by the shareholders of the Company and if (A) within
15 days after receipt by the Company of the request by Indemnitee pursuant to
Section 4.2.1 the Board of Directors has resolved to submit such Determination
to the shareholders at an annual meeting of the shareholders to be held within
75 days after such receipt, and such Determination is made at such annual
meeting, or (B) a special meeting of shareholders is called within 15 days after
such receipt for the purpose of making such Determination, such meeting is held
for such purpose within 60 days after having been so called and such
Determination is made at such special meeting, or (ii) if the Determination is
to be made by Independent Legal Counsel.
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Section 5. D & 0 Insurance.
5.1. Current Policies. The Company hereby represents and warrants to
Indemnitee that Exhibit 1 contains a complete and accurate description of the
D&O Insurance and that such insurance is in full force and effect.
5.2. Continued Coverage. The Company shall maintain, to the extent
practicable, the D&O Insurance for so long as this Agreement remains in effect.
The Company shall cause the D&O Insurance to cover Indemnitee, in accordance
with its terms and at all times such insurance is in effect, to the maximum
extent of the coverage provided thereby for any director or officer of the
Company.
5.3. Indemnification. In the event of any reduction in, or cancellation
of, the D&O Insurance (whether voluntary or involuntary on behalf of the
Company), the Company shall, and hereby agrees to, indemnify and hold Indemnitee
harmless against any Losses or Expenses which Indemnitee is or becomes obligated
to pay as a result of the Company's failure to maintain the D&O Insurance in
effect in accordance with the provisions of Section 5.2, to the fullest extent
permitted by applicable law, notwithstanding any provision of the Charter or the
Bylaws of the Company, or any other agreement now or hereafter in effect
relating to indemnification for Covered Events. The indemnification available
under this Section 5.3 is in addition to all other obligations of
indemnification of the Company under this Agreement and shall be the only remedy
of Indemnitee for a breach by the Company of its obligations set forth in
Section 5.2.
Section 6. Subrogation. In the event of any payment under this
Agreement to or on behalf of Indemnitee, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee against
any Person other than the Company or Indemnitee in respect of the Claim giving
rise to such payment. Indemnitee shall execute all papers reasonably required
and shall do everything reasonably necessary to secure such rights, including
the execution of such documents reasonably necessary to enable the Company
effectively to bring suit to enforce such rights.
Section 7. Notification and Defense of Claims.
7.1. Notice by Indemnitee. Indemnitee shall give notice in writing to
the Company as soon as practicable after Indemnitee becomes aware of any Claim
with respect to which indemnification will or could be sought under this
Agreement; provided the failure of Indemnitee to give such notice, or any delay
in giving such notice, shall not relieve the Company of its obligations under
this Agreement except to the extent the Company is actually prejudiced to any
such failure or delay.
7.2. Insurance. The Company shall give prompt notice of the
commencement of any Claim relating to Covered Events to the insurers on the D&O
Insurance, if any, in accordance with the procedures set forth in the respective
policies in favor of Indemnitee. The Company shall
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thereafter take all necessary action to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such Claims in accordance with
the terms of such policies.
7.3. Defense.
7.3.1. In the event any Claim relating to Covered Events is by or
in the right of the Company, Indemnitee may, at the option of Indemnitee, either
control the defense thereof or accept the defense provided under the D&O
Insurance; provided, however, that Indemnitee may not control the defense if
such decision would jeopardize the coverage provided by the D&O Insurance, if
any, to the Company or the other directors and officers covered thereby.
7.3.2. In the event any Claim relating to Covered Events is other
than by or in the right of the Company, Indemnitee may, at the option of
Indemnitee, either control the defense thereof, require the Company to defend or
accept the defense provided under the D&O Insurance; provided, however, that
Indemnitee may not control the defense or require the Company to defend if such
decision would jeopardize the coverage provided by the D&O Insurance to the
Company or the other directors and officers covered thereby. In the event that
Indemnitee requires the Company to so defend, or in the event that Indemnitee
proceeds under the D&O Insurance but Indemnitee determines that such insurers
under the D&O Insurance are unable or unwilling to adequately defend Indemnitee
against any such Claim, the Company shall promptly undertake to defend any such
Claim, at the Company's sole cost and expense, utilizing counsel of Indemnitee's
choice who has been approved by the Company. If appropriate, the Company shall
have the right to participate in the defense of any such Claim.
7.3.3. In the event the Company shall fail, as required by any
election by Indemnitee pursuant to Section 7.3.2, timely to defend Indemnitee
against any such Claim, Indemnitee shall have the right to do so, including
without limitation, the right (notwithstanding Section 7.3.4) to make any
settlement thereof, and to recover from the Company, to the extent otherwise
permitted by this Agreement, all Expenses and Losses paid as a result thereof.
7.3.4. The Company shall have no obligation under this Agreement
with respect to any amounts paid or to be paid in settlement of any Claim
without the express prior written consent of the Company to any related
settlement. In no event shall the Company authorize any settlement imposing any
liability or other obligations on Indemnitee without the express prior written
consent of Indemnitee. Neither the Company nor Indemnitee shall unreasonably
withhold consent to any proposed settlement.
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Section 8. Determinations and Related Matters.
8.1. Presumptions.
8.1.1. If a Change in Control shall have occurred, Indemnitee
shall be entitled to a rebuttable presumption that Indemnitee is entitled to
indemnification under this Agreement and the Company shall have the burden of
proof in rebutting such presumption.
8.1.2. 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, shall not adversely affect either the right of
Indemnitee to indemnification under this Agreement or the presumptions to which
Indemnitee is otherwise entitled pursuant to the provisions of this Agreement
nor create a presumption that Indemnitee did not meet any particular standard of
conduct or that a court has determined that indemnification is not permitted by
applicable law.
8.2. Appeals; Enforcement.
8.2.1. In the event that (a) a Determination is made that
Indemnitee shall not be entitled to indemnification under this Agreement, (b)
any Determination to be made by Independent Legal Counsel is not made within 90
days of receipt by the Company of a request for indemnification pursuant to
Section 4.2.1 or (c) the Company fails to otherwise perform any of its
obligations under this Agreement (including, without limitation, its obligation
to make payments to Indemnitee following any Determination made or deemed to
have been made that such payments are appropriate), Indemnitee shall have the
right to commence a Claim in any court of competent jurisdiction, as
appropriate, to seek a Determination by the court, to challenge or appeal any
Determination which has been made, or to otherwise enforce this Agreement. If a
Change of Control shall have occurred, Indemnitee shall have the option to have
any such Claim conducted by a single arbitrator pursuant to the rules of the
American Arbitration Association. Any such judicial proceeding challenging or
appealing any Determination shall be deemed to be conducted de novo and without
prejudice by reason of any prior Determination to the effect that Indemnitee is
not entitled to indemnification under this Agreement. Any such Claim shall be at
the sole expense of Indemnitee except as provided in Section 9.3.
8.2.2. If a Determination shall have been made or deemed to have
been made pursuant to this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such Determination in any
judicial proceeding or arbitration commenced pursuant to this Section 8.2,
except if such indemnification is unlawful.
8.2.3. The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 8.2 that
the procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement. The
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Company hereby consents to service of process and to appear in any judicial or
arbitration proceedings and shall not oppose Indemnitee's right to commence any
such proceedings.
8.3. Procedures. Indemnitee shall cooperate with the Company and with
any Person making any Determination with respect to any Claim for which a claim
for indemnification under this Agreement has been made, as the Company may
reasonably require. Indemnitee shall provide to the Company or the Person making
any Determination, upon reasonable advance request, any documentation or
information reasonably available to Indemnitee and necessary to (a) the Company
with respect to any such Claim or (b) the Person making any Determination with
respect thereto.
Section 9. Change in Control Procedures.
9.1. Determinations. If there is a Change in Control, any Determination
to be made under Section 4 shall be made by Independent Legal Counsel selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). The Company shall pay the reasonable fees of the
Independent Legal Counsel and indemnify fully such Independent Legal Counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or the engagement of
Independent Legal Counsel pursuant hereto.
9.2. Establishment of Trust. Following the occurrence of any Potential
Change in Control, the Company, upon receipt of a written request from
Indemnitee, shall create a Trust (the "Trust") for the benefit of Indemnitee,
the trustee of which shall be a bank or similar financial institution with trust
powers chosen by Indemnitee. From time to time, upon the written request of
Indemnitee, the Company shall fund the Trust in amounts sufficient to satisfy
any and all Losses and Expenses reasonably anticipated at the time of each such
request to be incurred by Indemnitee for which indemnification may be available
under this Agreement. The amount or amounts to be deposited in the Trust
pursuant to the foregoing funding obligation shall be determined by mutual
agreement of Indemnitee and the Company or, if the Company and Indemnitee are
unable to reach such an agreement, or, in any event, if a Change in Control has
occurred, by Independent Legal Counsel. The terms of the Trust shall provide
that, except upon the prior written consent of Indemnitee and the Company, (a)
the Trust shall not be revoked or the principal thereof invaded, other than to
make payments to unsatisfied judgment creditors of the Company, (b) the Trust
shall continue to be funded by the Company in accordance with the funding
obligations set forth in this Section, (c) the Trustee shall promptly pay or
advance to Indemnitee any amounts to which Indemnitee shall be entitled pursuant
to this Agreement, and (d) all unexpended funds in the Trust shall revert to the
Company upon a Determination by Independent Legal Counsel (selected pursuant to
Section 9.1) or a court of competent jurisdiction that Indemnitee has been fully
indemnified under the terms of this Agreement. All income earned on the assets
held in the trust shall be reported as income by the Company for federal, state,
local and foreign tax purposes.
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9.3. Expenses. Following any Change in Control, the Company shall be
liable for, and shall pay the Expenses paid or incurred by Indemnitee in
connection with the making of any Determination (irrespective of the
determination as to Indemnitee's entitlement to indemnification) or the
prosecution of any Claim pursuant to Section 8.2, and the Company hereby agrees
to indemnify and hold Indemnitee harmless therefrom. If requested by counsel for
Indemnitee, the Company shall promptly give such counsel an appropriate written
agreement with respect to the payment of its fees and expenses and such other
matters as may be reasonably requested by such counsel.
Section 10. 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, any
Subsidiary, any Other Enterprise or any Affiliate of the Company against
Indemnitee or Indemnitee's spouse, heirs, executors, administrators 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, any Subsidiary, any Other Enterprise or any Affiliate 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, whether established by statute or judicial
decision, is otherwise applicable to any such cause of action such shorter
period shall govern.
Section 11. Contribution. If the indemnification provisions of this
Agreement should be unenforceable under applicable law in whole or in part or
insufficient to hold Indemnitee harmless in respect of any Losses and Expenses
incurred by Indemnitee, then for purposes of this Section 11, the Company shall
be treated as if it were, or was threatened to be made, a party defendant to the
subject Claim and the Company shall contribute to the amounts paid or payable by
Indemnitee as a result of such Losses and Expenses incurred by Indemnitee in
such proportion as is appropriate to reflect the relative benefits accruing to
the Company on the one hand and Indemnitee on the other and the relative fault
of the Company on the one hand and Indemnitee on the other in connection with
such Claim, as well as any other relevant equitable considerations. For purposes
of this Section 11 the relative benefit of the Company shall be deemed to be the
benefits accruing to it and to all of its directors, officers, employees and
agents (other than Indemnitee) on the one hand, as a group and treated as one
entity, and the relative benefit of Indemnitee shall be deemed to be an amount
not greater than the Indemnitee's compensation from the Company during the first
year in which the Covered Event forming the basis for the subject Claim was
alleged to have occurred. The relative fault shall be determined by reference
to, among other things, the fault of the Company and all of its directors,
officers, employees and agents (other than Indemnitee) on the one hand, as a
group and treated as one entity, and Indemnitee's and such group's relative
intent, knowledge, access to information and opportunity to have altered or
prevented the Covered Event forming the basis for the subject Claim.
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Section 12. Miscellaneous Provisions.
12.1. Successors and Assigns, Etc.
12.1.1. This Agreement shall be binding upon and inure to the
benefit of (a) the Company, its successors and assigns (including any direct or
indirect successor by merger, consolidation or operation of law or by transfer
of all or substantially all of its assets) and (b) Indemnitee and the heirs,
personal and legal representatives, executors, administrators or assigns of
Indemnitee.
12.1.2. The Company shall not consummate any consolidation,
merger or other business combination, nor will it transfer 50% or more of its
assets (in one or a series of related transactions), unless the ultimate Parent
of the successor to the business or assets of the Company shall have first
executed an agreement, in form and substance satisfactory to Indemnitee, to
expressly assume all obligations of the Company under this Agreement and agree
to perform this Agreement in accordance with its terms, in the same manner and
to the same extent that the Company would be required to perform this Agreement
if no such transaction had taken place; provided that, if the Parent is not the
Company, the legality of payment of indemnity by the Parent shall be determined
by reference to the fact that such indemnity is to be paid by the Parent rather
than the Company.
12.2. Severability. The provisions of this Agreement are severable. If
any provision of this Agreement shall be held by any court of competent
jurisdiction to be invalid, void or unenforceable, such provision shall be
deemed to be modified to the minimum extent necessary to avoid a violation of
law and, as so modified, such provision and the remaining provisions shall
remain valid and enforceable in accordance with their terms to the fullest
extent permitted by law.
12.3. Rights Not Exclusive; Continuation of Right of Indemnification.
Nothing in this Agreement shall be deemed to diminish or otherwise restrict
Indemnitee's right to indemnification pursuant to any provision of the Charter
or Bylaws of the Company, any agreement, vote of shareholders or Disinterested
Directors, applicable law or otherwise. This Agreement shall be effective as of
the date first above written and continue in effect until no Claims relating to
any Covered Event may be asserted against Indemnitee and until any Claims
commenced prior thereto are finally terminated and resolved, regardless of
whether Indemnitee continues to serve as a director of the Company, any
Subsidiary or any Other Enterprise.
12.4. No Employment Agreement. Nothing contained in this Agreement
shall be construed as giving Indemnitee any right to be retained in the employ
of the Company, any Subsidiary or any Other Enterprise.
12.5. Subsequent Amendment. No amendment, termination or repeal of any
provision of the Charter or Bylaws of the Company, or any respective successors
thereto, or of any relevant provision of any applicable law, shall affect or
diminish in any way the rights of Indemnitee to
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indemnification, or the obligations of the Company, arising under this
Agreement, whether the alleged actions or conduct of Indemnitee giving rise to
the necessity of such indemnification arose before or after any such amendment,
termination or repeal.
12.6. Notices. Notices required under this Agreement shall be given in
writing and shall be deemed given when delivered in person or sent by certified
or registered mail, return receipt requested, postage prepaid. Notices shall be
directed to the Company at Three Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxxx 00000, Attention: Chairman of the Board, and to Indemnitee at
____________________________________ (or such other address as either party may
designate in writing to the other).
12.7. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Tennessee applicable to
contracts made and performed in such state without giving effect to the
principles of conflict of laws.
12.8. Headings. The headings of the Sections of this Agreement are
inserted for convenience only and shall not be deemed to discriminate part of
this Agreement or to affect the construction thereof.
12.9. Counterparts. This Agreement may be executed in any number of
counterparts all of which taken together shall constitute one instrument.
12.10. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall constitute, or be deemed to constitute, a waiver of any other provisions
hereof (whether or not similar) nor shall any such waiver constitute a
continuing waiver.
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
@xxxx.xxx
By:
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Title:
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INDEMNITEE
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