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Exhibit 10.2
INDEMNIFICATION AGREEMENT
AGREEMENT between Xxxxxx Inc., a Delaware corporation (the "Company"),
and Xxxxx X. Xxxxxxx (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors, officers and representatives the most capable persons available; and
WHEREAS, Indemnitee is a director, officer or representative of the
Company; and
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors, officers and
representatives of public companies in today's environment; and
WHEREAS, the Articles of Incorporation of the Company and the Delaware
General Corporation Law each provide that the indemnification provided therein
shall not be exclusive; and
WHEREAS, in recognition of the Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's continued
service to the Company in an effective manner, the Company wishes to provide in
this Agreement for the indemnification of and the advancing of expenses to
Indemnitee to the full extent (whether partial or complete) permitted by law and
as set forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Indemnitee under the Company's directors' and
officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
(a) Change in Control shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities without the prior approval of the Board of Directors,
or (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the
Company and any new director whose election by the Board of
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Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or
(iii) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) at least 80% of the total voting
power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets.
(b) Claim shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether conducted
by the Company or any other party, that Indemnitee in good faith
believes might lead to the institution of any such action, suit or
proceeding, whether civil, criminal, administrative, investigative or
other.
(c) Expenses shall mean include all costs, expenses (including
attorneys' fees) and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal) or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event (including
all interest, assessments and other charges paid or payable in
connection with or in respect of any of the foregoing).
(d) Judgments shall mean judgments, fines, penalties and amounts
paid in settlement that are paid or payable in connection with any
Claim relating to any Indemnifiable Event (including all interest,
assessments and other charges paid or payable in connection with or in
respect of any of the foregoing).
(e) Indemnifiable Event shall mean any event or occurrence
related to the fact that Indemnitee is or was a director, director
nominee, officer or representative of the Company, or is or was serving
at the request of the Company as a director, trustee, officer,
employee, agent or representative of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by reason of anything done
or not done by Indemnitee in any such capacity.
(f) Reviewing Party shall mean any appropriate person or body
consisting of a member or members of the Company's Board of Directors
or any other person or body appointed by the Board (including the
special, independent counsel referred to in Section 3) who is
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not a party to the particular Claim for which Indemnitee is seeking
indemnification.
(g) Voting Securities shall mean any securities of the Company
that vote generally in the election of directors.
2. Scope of Indemnification.
(a) Indemnification for Judgments and Expenses. In the event
Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or
other participant in, a Claim by reason of (or arising in part out of)
an Indemnifiable Event, the Company shall indemnify Indemnitee to the
fullest extent permitted by law against any and all Expenses and
Judgments arising from or relating to such Claim. Except as otherwise
provided in Section 2(b), such indemnification shall be made as soon as
practicable, but in any event not later than thirty (30) days, after
written demand therefor is presented to the Company by or on behalf of
the Indemnitee.
(b) Indemnification and Advance Payment of Expenses. Any and all
Expenses and any and all expenses referred to in Section 2(c) shall be
paid by the Company promptly as they are incurred by Indemnitee (any
such payment of expenses by the Company is hereinafter referred to as
an "Expense Advance"). Indemnitee shall be obligated, and hereby
agrees, to repay the amount of Expenses so paid only to the extent that
it is proved by clear and convincing evidence in a court of competent
jurisdiction that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the
Company or violate the law or undertaken with reckless disregard for
the best interests of the Company. Indemnitee hereby further agrees to
cooperate reasonably with the Company concerning any Claim.
(c) Indemnification for Additional Expenses. The Company shall
indemnify Indemnitee against any and all expenses (including attorneys'
fees) that are incurred by Indemnitee in connection with any claim
asserted against or action brought by Indemnitee for (i)
indemnification of Expenses or Judgments or advance payment of Expenses
by the Company under this Agreement or under any other agreement, the
Company's articles, statute or rule of law now or hereafter in effect
relating to Claims for Indemnifiable Events and (ii) recovery under any
directors' and officers' liability insurance policy or policies
maintained by the Company, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advance expense
payment or insurance recovery, as the case may be.
(d) Partial Indemnity. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some
or a portion of the Judgments and Expenses arising from or relating to
a Claim but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof
to which
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Indemnitee is entitled.
(e) Indemnification of Successful Defense Expenses.
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 in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.
3. Reviewing Party Determinations.
(a) General Rules. Notwithstanding the provisions of Section 2,
the obligations of the Company under Section 2(a) shall be subject to
the condition that the Reviewing Party shall not have determined (in a
written opinion, in any case in which the special, independent counsel
referred to in Section 4 hereof is involved) that Indemnitee would not
be permitted to be indemnified under applicable law; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should
be indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding until a final
judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed) and any such
determination by the Reviewing Party shall be modified, to the extent
necessary, to conform to such final judicial determination.
(b) Selection of Reviewing Party. If there has not been a Change
in Control, the Reviewing Party shall be selected by the Board of
Directors. If there has been such a Change in Control, the Reviewing
Party shall be the special, independent counsel referred to in Section
4 hereof.
(c) Judicial Review. If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantially would not be permitted to be indemnified in whole or in
part under applicable law, Indemnitee shall have the right to commence
litigation in any court in the State of Delaware having subject matter
jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents
to service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and Indemnitee.
(d) Burden of Proof. In connection with any determination by the
Reviewing Party
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pursuant to Section 3(a), or by a court of competent jurisdiction
pursuant to Section 3(c) or otherwise, as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proof shall be on
the Company to establish by clear and convincing evidence that
Indemnitee is not so entitled.
4. Change in Control. The Company agrees that if there is a Change in
Control of the Company then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments under
this Agreement or under any other agreement, the Company's Certificate
of Incorporation, statute or rule of law now or hereafter in effect
relating to Claims for Indemnifiable Events, the Company shall seek
legal advice only from special, independent counsel selected by
Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services
for the Company or Indemnitee within the last five years (other than in
connection with such matters); provided, however, a majority of the
Company's Board of Directors, which majority were directors immediately
prior to such Change in Control, may waive this requirement. The
Company agrees to pay the reasonable fees of the special, independent
counsel referred to above and to indemnify fully such counsel against
any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
5. No Presumption. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea
of nolo contendere, or its equivalent, shall not create a presumption
that Indemnitee did not meet any particular standard of conduct or have
any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
6. Nonexclusivity. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may now or hereafter have to
indemnification by the Company. More specifically, the Parties intend
that Indemnitee shall be entitled to indemnification to the maximum
extent permitted by any or all of the following:
(a) The fullest benefits provided by the Company's Certificate of
Incorporation and By-Laws or their equivalent of the Company in effect
at the time the Indemnifiable Event occurs or at the time Expenses are
incurred by Indemnitee;
(b) The fullest benefits allowable under Delaware law in effect
at the date hereof or as the same may be amended to the extent that
such benefits are increased thereby;
(c) The fullest benefits allowable under the law of the
jurisdiction under which
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the Company exists at the time the Indemnifiable Event occurs or at the
time Expenses are incurred by the Indemnitee; and
(d) Such other benefits as are or may be otherwise available to
Indemnitee pursuant to this Agreement, any other agreement or
otherwise.
The parties intend that combination of two or more of the benefits
referred to in (a) through (d) shall be available to Indemnitee to the
extent that the document or law providing for such benefits does not
require that the benefits provided therein be exclusive of other
benefits. The Company hereby undertakes to use its best efforts to
assist Indemnitee, in all proper and legal ways, to obtain all such
benefits to which Indemnitee is entitled.
7. Liability Insurance. The rights of the Indemnitee hereunder shall also
be in addition to any other rights Indemnitee may now or hereafter have
under policies of insurance maintained by the Company or otherwise. To
the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its or
their terms, to the maximum extent of the coverage available for any
Company director, officer or representative.
The Company shall maintain such insurance coverage for so long as
Indemnitee's services are covered hereunder, provided and to the extent
that such insurance is available on a basis acceptable to the Company.
In the event that such insurance becomes unavailable in the amount of
the present policy limits or in the present scope of coverage at
premium costs and on other terms acceptable to the Company, then the
Company may forego maintenance of all or a portion of such insurance
coverage. However, in the event of any reduction in (or cancellation
of) such insurance coverage (whether voluntary or involuntary), the
Company shall, and hereby agrees to, stand as a self-insurer with
respect to the coverage, or portion thereof, not retained, and shall
indemnify the Indemnitee against any loss arising out of the reduction
in or cancellation of such insurance coverage.
8. Escrow Fund. As collateral security for its obligations hereunder
(including specifically its indemnity obligations [other than
Judgments] and other obligations pursuant to Sections 2,6 and 7) and
under similar agreements with other directors, officers and
representatives, in the event of a Change in Control, the Company shall
dedicate and maintain, for a period of five years following the Change
of Control, an escrow account in the aggregate of ten million dollars
($10,000,000) by depositing assets or bank letters of credit in escrow
or reserving lines of credit that may be drawn down by an escrow agent
in said amount (the "Escrow Reserve"). The Company shall promptly
following establishment of the Escrow Reserve provide Indemnitee with a
true and complete copy of the agreement relating to the establishment
and operation of the Escrow Reserve, together with such additional
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documentation or information with respect to the Escrow Reserve as
Indemnitee may from time to time reasonably request. The Company shall
promptly following establishment of the Escrow Reserve deliver an
executed copy of this Agreement to the escrow agent for the Escrow
Reserve to evidence to that agent that Indemnitee is a beneficiary of
that Escrow Reserve and shall deliver to Indemnitee the escrow agent's
signed receipt evidencing that delivery.
9. Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or on behalf of the Company or any
affiliate of the Company against Indemnitee, Indemnitee's spouse,
heirs, executors or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of
action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted by
the timely filing of 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.
10. Amendments. 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 be
deemed or shall constitute a waiver of any other provisions thereof
(whether or not similar) nor shall such waiver constitute a continuing
waiver.
11. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
12. No Duplication of Payments. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, article or otherwise) of the
amounts otherwise indemnifiable hereunder.
13. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, and personal and legal representatives. This Agreement
shall continue in effect regardless of whether Indemnitee continues to
serve as a director, officer or representative of the Company of or any
other enterprise at the Company's request.
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14. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable,
and the remaining provisions shall remain enforceable to the fullest
extent permitted by law.
15. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.
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Executed and effective as of this 16th day of August, 1997.
XXXXXX INC.
By
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Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President, Secretary
and General Counsel
Date:
INDEMNITEE:
By:
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Name: Xxxxx X. Xxxxxxx
Title: Vice President Human Resources
Date:
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