INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the, "Agreement") dated as of
_____________ 1997 is by and between a Travel Services International, Inc., a
Delaware corporation (the "Company"), and ______________ ("Indemnitee").
RECITALS
A. Indemnitee is a[n] [member of the Board of Directors or officer] of
the Company and in such capacity is performing a valuable service to the
Company.
B. The Company's Bylaws (the "Bylaws") provide for the indemnification
of the directors, officers, employees and agents of the Company to the extent
set forth in the Amended and Restated Certificate of Incorporation of the
Company (the "Certificate").
C. The Certificate provides that the Company shall indemnify the
directors, officers, employees and agents of the Company to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as amended to
date (the "Corporation Law").
D. The Corporation Law specifically provides that indemnification and
advancement of expenses provided in such statute shall not be exclusive of any
other rights under any agreement, and thereby contemplates that agreements may
be entered into between the Company and members of the Board of Directors or
officers of the Company with respect to the indemnification of such directors or
officers.
E. In accordance with the authorization provided in the Corporation
Law, the Company has purchased and presently maintains a policy or policies of
directors' and officers' liabilities insurance (the "Insurance") covering
certain liabilities which may be incurred by the Company's directors and
officers in the performance of their services to the Company.
F. The general availability of directors' and officers' liability
insurance covering certain liabilities which may be incurred by the Company's
directors and officers in the performance of their services to the Company and
the applicability, amendment and enforcement of statutory and by-law provisions
have raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers.
G. In order to induce Indemnitee to serve as a[n] [member of the Board
of Directors or officer] of the Company for the current term and for any
subsequent term to which he is elected or nominated, the Company has deemed it
to be in its best interest to enter into this Agreement with Indemnitee.
NOW, THEREFORE, in consideration of Indemnitee's agreement to serve as
a[n] [member of the Board of Directors or officer] of the Company after the date
hereof, the parties hereto agree as follows:
1. Definitions.
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As used in this Agreement, the following terms shall have the following
meanings:
(a) Change in Control. 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, is or becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Act), directly
or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the outstanding securities of the Company,
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 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 (x) a merger or consolidation of
the Company with any other entity (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 combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation), (y) a plan of complete
liquidation of the Company or (z) an agreement or agreements for the
sale or disposition, in a single transaction or series of related
transactions, by the Company of all or substantially all of the
property and assets of the Company. Notwithstanding the foregoing,
events otherwise constituting a Change in Control in accordance with
the foregoing shall not constitute a Change in Control if such events
are solicited by the Company and are approved, recommended or supported
by the Board of Directors of the Company in actions taken prior to, and
with respect to, such events.
(b) Reviewing Party. A "Reviewing Party" means (i) the Board
of Directors or a committee of directors of the Company, who are not
officers, appointed by the Board of Directors, provided that a majority
of such directors are not parties to the claim or (ii) special,
independent counsel selected and
appointed by the Board of Directors or by a committee of directors of
the Company who are not officers.
2. Indemnification of Indemnitee.
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The Company hereby agrees that it shall hold harmless and indemnify
Indemnitee to the fullest extent authorized and permitted by the provisions of
the Certificate and Bylaws and the provisions of the Corporation Law, or by any
amendment thereof, but in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than the Certificate, Bylaws or Corporation Law permitted the Company to
provide prior to such amendment, or other statutory provisions authorizing or
permitting such indemnification which is adopted after the date hereof.
3. Insurance.
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3.1 Insurance Policies. So long as Indemnitee may be subject to any
possible claim or threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that Indemnitee is or was a director or officer, to the extent that the Company
maintains one or more 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 applicable to any director or officer then serving the Company.
3.2 Maintenance of Insurance. The Company shall not be required to
maintain the Insurance or any policy or policies of comparable insurance, as the
case may be, if such insurance is not reasonably available or if, in the
reasonable business judgment of the Board of Directors of the Company which
shall be conclusively established by such determination by the Board of
Directors, or any appropriate committee thereof, either (i) the premium cost for
such insurance is substantially disproportionate to the amount of coverage
thereunder or (ii) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such insurance.
3.3 Self-Insurance. To the extent Indemnitee is not indemnified under
other Sections of this Agreement and is not fully, by reason of deductible or
otherwise, covered by directors' and officers' liability insurance, the Company
shall maintain self-insurance for, and thereby indemnify and hold harmless,
Indemnitee from and against any and all expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Indemnitee in connection with any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, in which Indemnitee was or is made party or was or is involved by
reason of the fact that Indemnitee is or was a director or officer of the
Company. Notwithstanding the foregoing,
payments of self-insurance under this Section to Indemnitee by the Company shall
not exceed the amount of $5,000,000 for any event and further shall be limited
in accordance with Section 5 hereof. An "event" as used in the preceding
sentence in reference to a limitation on self-insurance shall include the same
acts or omissions by Indemnitee and interrelated, repeated or continuous acts or
omissions.
4. Additional Indemnification.
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Subject only to the exclusions set forth in Section 5 hereof, the
Company hereby agrees that it shall hold harmless and indemnify Indemnitee.
(a) against any and all expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by or on behalf of
stockholders of the Company or by or in the right of the Company, to
which Indemnitee is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Indemnitee
is, was or at any time becomes a director, officer, employee or agent
of the Company, or is or was serving or at any time serves at the
request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise; and
(b) otherwise to the fullest extent as may be provided to
Indemnitee by the Company under the non-exclusivity provisions of the
Corporation Law.
5. Limitations on Additional Indemnification.
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No indemnification pursuant to this Agreement shall be paid by the
Company:
(a) in respect to any transaction if it shall be determined by
the Reviewing Party, or by final judgment or other final adjudication,
that Indemnitee derived an improper personal benefit;
(b) on account of Indemnitee's conduct which is determined by
the Reviewing Party, or by final judgment or other final adjudication,
to have involved acts or omissions not in good faith, intentional
misconduct or a knowing violation of law;
(c) if the Reviewing Party or a court having jurisdiction in
the matter shall determine that such indemnification is in violation of
the Certificate, the Bylaws or the law.
6. Advancement of Expenses.
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In the event of any threatened or pending action, suit or proceeding in
which Indemnitee is a party or is involved and which may give rise to a right of
indemnification under this Agreement, following written request to the Company
by Indemnitee the Company shall promptly pay to Indemnitee amounts to cover
expenses incurred by Indemnitee in such proceeding in advance of its final
disposition upon the receipt by the Company of (i) a written undertaking
executed by or on behalf of Indemnitee to repay the advance if it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by
the Company as provided in this Agreement and (ii) satisfactory evidence as to
the amount of such expenses.
7. Repayment of Expenses.
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Indemnitee agrees that Indemnitee shall reimburse the Company for all
reasonable expenses paid by the Company in defending any civil, criminal,
administrative or investigative action, suit or proceeding against Indemnitee in
the event and only to the extent that it shall be determined by final judgment
or other final adjudication that Indemnitee is not entitled to be indemnified by
the Company for such expenses under the provisions of the Corporation Law or any
applicable law.
8. Determination of Indemnification; Burden of Proof.
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With respect to all matters concerning the rights of Indemnitee to
indemnification and payment of expenses under this Agreement or under the
provisions of the Certificate and Bylaws now or hereafter in effect, the Company
shall appoint a Reviewing Party and any determination by the Reviewing Party
shall be conclusive and binding on the Company and Indemnitee. If under
applicable law, the entitlement of Indemnitee to be indemnified under this
Agreement depends on whether a standard of conduct has been met, the burden of
proof of establishing that Indemnitee did not act in accordance with such
standard of conduct shall rest with the Company. Indemnitee shall be presumed to
have acted in accordance with such standard and entitled to indemnification or
advancement of expenses hereunder, as the case may be, unless, based upon a
preponderance of the evidence, it shall be determined by the Reviewing Party
that Indemnitee did not meet such standard. For purposes of this Agreement,
unless otherwise expressly stated herein, the termination of any 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.
9. Effect of Chance in Control.
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If there has not been a Change in Control after the date of this
Agreement, the determination of (i) the rights of Indemnitee to indemnification
and payment of expenses under this Agreement or under the provisions of the
Certificate and the Bylaws, (ii) standard of conduct and (iii) evaluation of the
reasonableness of amounts claimed by Indemnitee shall be made by the Reviewing
Party or such other body or persons as may be permitted by the Corporation Law.
If there has been a Change in Control after the date of this Agreement, such
determination and evaluation shall be made by a special, independent counsel who
is selected by Indemnitee and approved by the Company, which approval shall not
be unreasonably withheld, and who has not otherwise performed services for
Indemnitee or the Company.
10. Continuation of Indemnification.
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All agreements and obligations of the Company contained herein shall
continue during the period that Indemnitee is a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, and shall continue thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Indemnitee was a director or officer
of the Company or serving in any other capacity referred to herein.
11. Notification and Defense of Claim.
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Promptly after receipt by Indemnitee of notice of the commencement of
any action, suit or proceeding, Indemnitee shall, if a claim in respect hereof
is to be made against the Company under this Agreement, notify the Company of
the commencement thereof; provided, however, that delay in so notifying the
Company shall not constitute a waiver or release by Indemnitee of rights
hereunder and that omission by Indemnitee to so notify the Company shall not
relieve the Company from any liability which it may have to Indemnitee otherwise
than under this Agreement. With respect to any such action, suit or proceeding
as to which Indemnitee notifies the Company of the commencement thereof:
(a) The Company shall be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided below, to the extent that it may wish,
the Company, jointly with any other indemnifying party similarly
notified, shall be entitled to assume the defense thereof and to employ
counsel reasonably satisfactory to Indemnitee. After notice from the
Company to Indemnitee of its election to so assume the defense thereof,
the Company shall not be liable to Indemnitee under this Agreement for
any
legal or other expenses subsequently incurred by Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the
right to employ counsel of his own choosing in such action, suit or
proceeding but the fees and expenses of such counsel incurred after
notice from the Company of assumption by the Company of the defense
thereof shall be at the expense of Indemnitee unless (i) the employment
of counsel by Indemnitee has been specifically authorized by the
Company, such authorization to be conclusively established by action by
disinterested members of the Board of Directors though less than a
quorum; (ii) representation by the same counsel of both Indemnitee and
the Company would, in the reasonable judgment of Indemnitee and the
Company, be inappropriate due to an actual or potential conflict of
interest between the Company and Indemnitee in the conduct of the
defense of such action, such conflict of interest to be conclusively
established by an opinion of counsel to the Company to such effect;
(iii) the counsel employed by the Company and reasonably satisfactory
to Indemnitee has advised Indemnitee in writing that such counsel's
representation of Indemnitee would likely involve such counsel in
representing differing interests which could adversely affect the
judgment or loyalty of such counsel to Indemnitee, whether it be a
conflicting, inconsistent, diverse or other interest; or (iv) the
Company shall not in fact have employed counsel to assume the defense
of such action, in each of which cases the fees and expenses of counsel
shall be paid by the Company. The Company shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on
behalf of the Company or as to which a conflict of interest has been
established as provided in (ii) hereof. Notwithstanding the foregoing,
if an insurance company has supplied directors' and officers' liability
insurance covering an action, suit or proceeding, then such insurance
company shall employ counsel to conduct the defense of such action,
suit or proceeding unless Indemnitee and the Company reasonably concur
in writing that such counsel is unacceptable.
(c) The Company shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any
action or claim in any manner which would impose any liability or
penalty on Indemnitee without Indemnitee's written consent. Neither the
Company nor Indemnitee shall unreasonably withhold consent to any
proposed settlement.
12. Enforcement.
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(a) The Company expressly confirms and agrees that it has entered into
this Agreement and assumed the obligations imposed on the Company hereby in
order to induce Indemnitee to serve as a
director or officer of the Company and acknowledges that Indemnitee is relying
upon this Agreement in continuing in such capacity.
(b) If a claim for indemnification or advancement of expenses is not
paid in full by the Company within thirty (30) days after a written claim by
Indemnitee has been received by the Company, Indemnitee may at any time assert
the claim and bring suit against the Company to recover the unpaid amount of the
claim. In the event Indemnitee is required to bring any action to enforce rights
or to collect moneys due under this Agreement and is successful in such action,
the Company shall reimburse Indemnitee for all of Indemnitee's reasonable
attorneys' fees and expenses in bringing and pursuing such action.
13. Proceedings by Indemnitee.
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The Company shall not be liable to make any payment under this
Agreement in connection with any action, suit or proceeding, or any part
thereof, initiated by Indemnitee unless such action, suit or proceeding, or part
thereof, (i) was authorized by the Company, such authorization to be
conclusively established by action by disinterested members of the Board of
Directors though less than a quorum or (ii) was brought by Indemnitee pursuant
to Section 12(b) hereof.
14. Effectiveness.
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This Agreement is effective for, and shall apply to, (i) any claim
which is asserted or threatened before, on or after the date of this Agreement
but for which no action, suit or proceeding has been brought prior to the date
hereof and (ii) any action, suit or proceeding which is threatened before, on or
after the date of this Agreement but which is not pending prior to the date
hereof. This Agreement shall not apply to any action, suit or proceeding which
was brought before the date of this Agreement. So long as the foregoing is
satisfied, this Agreement shall be effective for, and be applicable to, acts or
omissions occurring prior to, on or after the date hereof.
15. Non-exclusivity.
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The rights of Indemnitee under this Agreement shall not be deemed
exclusive, or in limitation of, any rights to which Indemnitee may be entitled
under any applicable common or statutory law, or pursuant to the Certificate,
the Bylaws, a vote of the stockholders or otherwise.
16. Other Payments.
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The Company shall not be liable to make any payment under this
Agreement in connection with any action, suit or proceeding against Indemnitee
to the extent Indemnitee has otherwise received payment of the amounts otherwise
payable by the Company hereunder.
17. Subrogation.
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In the event the Company makes any payment under this Agreement, the
Company shall be subrogated, to the extent of such payment, to all rights of
recovery of Indemnitee with respect thereto, and Indemnitee shall execute all
agreements, instruments, certificates or other documents and do or cause to be
done all things necessary or appropriate to secure such recovery rights to the
Company including, without limitation, executing such documents as shall enable
the Company to bring an action or suit to enforce such recovery rights.
18. Survival; Continuation.
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The rights of Indemnitee under this Agreement shall inure to the
benefit of Indemnitee, his heirs, executors, administrators, personal
representatives and assigns, and this Agreement shall be binding upon the
Company, its successors and assigns. The rights of Indemnitee under this
Agreement shall continue so long as Indemnitee may be subject to any action,
suit or proceeding because of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. If the Company, in a
single transaction or series of related transactions, sells, leases, exchanges,
or otherwise disposes of all or substantially all of its property and assets,
the Company shall, as a condition precedent to any such transaction, cause
effective provision to be made so that the persons or entities acquiring such
property and assets shall become bound by and replace the Company under this
Agreement.
19. Amendment and Termination.
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No amendment, modification, termination or cancellation of this
Agreement shall be effective unless made in writing signed by both parties
hereto.
20. Headings.
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Section headings of the sections and paragraphs of this Agreement have
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
21. Notices.
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All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally, mailed by
certified mail (return receipt requested) or sent by overnight delivery service,
cable, telegram, facsimile transmission or telex to the parties at the following
addresses or at such other addresses as shall be specified by the parties by
like notice:
(a) if to the Company:
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Attn: President
with a copy to:
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Attn:
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(b) if to the Indemnitee
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Notice so given shall, in the case of notice so given by mail, be deemed to be
given and received on the fourth calendar day after posting, in the case of
notice so given by overnight delivery service, on the date of actual delivery
and, in the case of notice so given by cable, telegram, facsimile transmission,
telex or personal delivery, on the date of actual transmission or, as the case
may be, personal delivery.
22. Severability.
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If any provision of this Agreement shall be held to be illegal, invalid
or unenforceable under any applicable law, then such contravention or invalidity
shall not invalidate the entire Agreement. Such provision shall be deemed to be
modified to the extent necessary to render it legal, valid and enforceable, and
if no such modification shall render it legal, valid and enforceable, then this
Agreement shall be construed as if not containing the provision held to be
invalid, and the rights and obligations of the parties shall be construed and
enforced accordingly.
23. Complete Agreement.
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This Agreement, those documents expressly referred to herein and other
documents of even date herewith embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
24. Counterparts.
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This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, with the same effect as if
all parties had signed the same document. All such counterparts shall be deemed
an original, shall be construed together and shall constitute one and the same
instrument.
25. CHOICE OF LAW. THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW,
AND NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
Travel Services International, Inc.
By:
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,
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, Indemnitee
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