AMENDED AND RESTATED INDEMNIFICATION AGREEMENT
Exhibit 10.1
AMENDED
AND RESTATED INDEMNIFICATION AGREEMENT
THIS
AMENDED AND RESTATED INDEMNIFICATION AGREEMENT (the “Agreement”) is made as of
the date set forth on the signature page to this Agreement, by and between 99¢
Only Stores, a California corporation (the “Company”), and the individual named
on the signature page to this Agreement (the “Indemnitee”), a director of the
Company.
RECITALS
A. The
Company and the Indemnitee are aware of the substantial increase in the number
of lawsuits filed against corporate directors.
B.
The Company
and the Indemnitee recognize that the cost of defending against such lawsuits,
whether or not meritorious, may impose substantial economic hardship on the
Company’s directors.
C.
The Company and the Indemnitee further recognize that the legal risks, potential
liabilities, and expenses of defense associated with lawsuits against directors
arising or alleged to arise from the conduct of the affairs of the Company
frequently bear no reasonable proportion to the amount of compensation received
by the Company’s directors, and thus may make it more difficult for the Company
to obtain experienced and capable directors.
D.
The Company has concluded that in order to attract and retain the services
of highly talented, qualified and experienced individuals, such as the
Indemnitee, to serve as the Company’s directors and to encourage such
individuals to take the business risks necessary for the success of the Company,
it is necessary for the Company to contractually indemnify its
directors.
AGREEMENT
NOW,
THEREFORE, in consideration of the recitals set forth above and the continued
services of the Indemnitee, and as an inducement to the Indemnitee to serve, or
to continue to serve, as a director of the Company, the Company and the
Indemnitee do hereby agree as follows:
1.
Definitions
1.1
“Expenses” means all costs, charges and expenses actually and reasonably
incurred in connection with a Proceeding, including, without limitation,
attorneys' fees, disbursements and retainers, accounting and witness fees,
travel and deposition costs, expenses of investigations, judicial or
administrative proceedings or appeals, and any expenses of establishing a right
to indemnification pursuant to this Agreement, including reasonable compensation
for time spent by the Indemnitee in connection with the investigation, defense
or appeal of a Proceeding or actions for indemnification pursuant to this
Agreement, for which the Indemnitee is not otherwise compensated by the Company
or any third party; provided, however, that the term “Expenses” does
not include Losses.
1.2 “Losses”
means any amount which the Indemnitee pays or is obligated to pay in connection
with a Proceeding, including, without limitation, (i) the amount of damages,
judgments, amounts paid in settlement, and fines, interest or penalties relating
to any Proceeding, (ii) excise taxes under the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), relating to any Proceeding, either
of which are actually levied against the Indemnitee or paid or payable by or on
behalf of the Indemnitee; provided, however, that the term “Losses” does not
include Expenses.
1.3 “Proceeding”
means any threatened, pending or completed action or proceeding, whether civil,
criminal, administrative or investigative, whether brought in the name of the
Company or otherwise, in which the Indemnitee may be or may have been involved
as a party or otherwise, by reason of the fact that the Indemnitee is or was a
director of the Company, by reason of any action taken by the Indemnitee or of
any inaction on the Indemnitee’s part while acting as such director or by reason
of the fact that the Indemnitee is or was serving at the request of the Company
as a director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, or was a
director of the foreign or domestic corporation which was a predecessor
corporation to the Company or of another enterprise at the request of such
predecessor corporation, whether or not the Indemnitee is serving in such
capacity at the time any liability, Expense or Loss is incurred for which
indemnification or reimbursement can be provided under this
Agreement.
2.
Agreement to Serve
In
reliance on this Agreement, the Indemnitee agrees to serve, or to continue to
serve, as a director of the Company for so long as the Indemnitee is duly
elected or appointed or until the Indemnitee resigns or fails to stand for
reelection. Nothing in this Agreement shall be construed to create any right of
the Indemnitee to continued employment with the Company or any subsidiary or
affiliate of the Company. Nothing in this Agreement shall affect or alter any of
the terms of any otherwise valid employment agreement or other agreement between
the Indemnitee and the Company relating to the Indemnitee's conditions and/or
terms of employment or service. In serving as a director of the
Company, the Indemnitee is relying on the right to indemnification provided by
this Agreement, and such right shall be enforceable as a contract
right.
3.
Indemnification in Third Party Actions
The
Company shall indemnify the Indemnitee to the fullest extent permitted by
applicable law against any and all Expenses and Losses actually and reasonably
incurred by the Indemnitee in connection with a Proceeding, other than a
Proceeding by or in the right of the Company, provided that any settlement of a
Proceeding be approved in writing by the Company and provided the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably believed to be in
the best interests of the Company and its shareholders, and with respect to any
criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct
was unlawful.
4.
Indemnification in Proceedings By or In the Right of the
Company
The
Company shall indemnify the Indemnitee to the fullest extent permitted by
applicable law against any and all Expenses and Losses actually and reasonably
incurred by the Indemnitee, in connection with a Proceeding by or in the right
of the Company to procure a judgment in its favor, if the Indemnitee acted in
good faith and in a manner the Indemnitee reasonably believed to be in the best
interests of the Company and its shareholders. Notwithstanding the foregoing, no
indemnification shall be made in respect of (i) any claim, issue or matter as to
which the Indemnitee shall have been adjudged in a final adjudication to be
liable to the Company in the performance of the Indemnitee’s duty to the Company
and its shareholders, unless and only to the extent that the court in which the
Proceeding is or was pending shall determine upon application that, in view of
all the circumstances of the case, the Indemnitee is fairly and reasonably
entitled to indemnity for Expenses and Losses and then only to the extent that
the court shall determine; (ii) any amounts paid by the Indemnitee in settling
or otherwise disposing of a pending action without court approval; and (iii)
Expenses incurred in defending a pending action which is settled or otherwise
disposed of without court approval.
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5.
Indemnification of Expenses of Successful Party
Notwithstanding
any other provision of this Agreement, to the extent that the Indemnitee has
been successful on the merits in defense of any Proceeding or in defense of any
claim, issue, or matter therein, the Indemnitee shall be indemnified against any
and all Expenses actually and reasonably incurred in connection
therewith.
6.
Partial indemnification
If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for a portion of the Expenses or Losses actually and reasonably
incurred by the Indemnitee in the investigation, defense, appeal or settlement
of any Proceeding but not, however, for the total amount thereof, the Company
shall nevertheless indemnify the Indemnitee for the portion of such Expenses and
Losses to which the Indemnitee is entitled.
7.
Advancement of Expenses
The
Expenses incurred by or on behalf of the Indemnitee in connection with any
Proceeding shall be paid by the Company in advance of the final disposition of
the Proceeding at the written request of the Indemnitee, which may be made from
time to time, and within twenty (20) business days of such request; provided
that the Indemnitee shall undertake in writing to repay such amount to the
extent that it is ultimately determined that the Indemnitee is not entitled to
indemnification. The Indemnitee’s obligation to repay the Company for any such
amounts shall be unsecured and no interest shall be charged
thereon. The Indemnitee’s entitlement to advancement of Expenses
shall include those incurred in connection with any Proceeding by the Indemnitee
seeking a determination pursuant to this Agreement.
8.
Indemnification Procedures
8.1 Notice. Promptly
after receipt by the Indemnitee of notice of the commencement of any Proceeding,
the Indemnitee shall, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company of the commencement thereof in
writing. No failure to provide or delay in giving such notice shall
constitute a waiver by the Indemnitee of his rights hereunder or be deemed to
reduce or limit the Company’s obligations under this Agreement, unless and only
to the extent, such failure or delay actually prejudices the Company’s rights.
In addition, the Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within the Indemnitee’s
reasonable control.
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8.2 Decision
on indemnification. Any indemnification under Sections 3 or 4 of this Agreement
shall be made no later than twenty (20) days after receipt of the Indemnitee’s
written request, unless a determination is made within that 20-day period by (a)
the Company’s board of directors by a majority vote of a quorum of the board
consisting of directors who are not and were not parties to the Proceeding, or
(b) independent legal counsel in a written opinion if such a quorum is not
obtainable, that the Indemnitee is not entitled to such indemnification
according to this Agreement.
8.3 Enforcement
of this Agreement
8.3.1 The
right to indemnification or advances as provided by this Agreement shall be
enforceable by the Indemnitee in any court of competent
jurisdiction. The Indemnitee shall be presumed to be entitled to
indemnification under this Agreement, and if the Company contests the
Indemnitee’s right to indemnification or advances, the Company shall bear the
burden of proving that indemnification or advances are not
appropriate. Neither the failure of the Company (including its board
of directors, any committee or subgroup of the board of directors or an
independent legal counsel) to have made a determination that indemnification of
the Indemnitee is proper, nor an actual determination by the Company (including
its board of directors, any committee or subgroup of the board of directors or
an independent legal counsel) that indemnification is not proper and/or that the
Indemnitee has not met the applicable standard of conduct, shall create a
presumption that indemnification or advances are proper or not or that the
Indemnitee has or has not met the applicable standard of conduct. The
termination of any action or Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, (i) adversely affect the rights of the Indemnitee to indemnification
under this Agreement, (ii) create a presumption that the Indemnitee did not act
in good faith, (iii) create a presumption that the Indemnitee did not act in a
manner which the Indemnitee reasonably believed to be in the best interests of
the Company, or (iv) create a presumption that, with respect to any criminal
Proceeding, the Indemnitee had reasonable cause to believe that the Indemnitee’s
conduct was unlawful.
8.3.2 In
the event that any action is instituted or any mediation is commenced by the
Indemnitee to enforce or interpret any of the terms of this Agreement, the
Indemnitee shall be entitled to be paid all Expenses, including, without
limitation, attorneys’ fees, actually and reasonably incurred by the Indemnitee
with respect to such action or mediation, unless a court of competent
jurisdiction or mediator finally determines that each of the material assertions
made by the Indemnitee as a basis for such action or mediation was not made in
good faith or was frivolous. In the event of an action instituted or mediation
commenced by or in the name of the Company to enforce or interpret any of the
terms of this Agreement, the Indemnitee shall be entitled to be paid all
Expenses, including, without limitation, attorneys’ fees, actually and
reasonably incurred by the Indemnitee in defense of such action or mediation
(including with respect to the Indemnitee’s counterclaims and cross-claims made
in such action or mediation), unless a court of competent jurisdiction or
mediator finally determines that each of the Indemnitee’s material defenses and
assertions in such action or mediation was made in bad faith or was
frivolous.
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9. The
Right and Obligation of the Company to Assume Defense
9.1 The
Company’s right to assume defense. Subject to Section 9.3 below, with respect to
any Proceeding for which indemnification or advances is requested or is expected
to be required, the Company will be entitled to assume the defense of such
Proceeding, with counsel approved by the Indemnitee, which approval shall not be
unreasonably withheld, upon the delivery to the Indemnitee of written notice of
its election to do so. Upon written election by the Indemnitee, the
Company shall also be obligated to undertake the defense of the Indemnitee with
respect to any such Proceeding, with counsel approved by the Indemnitee, which
approval shall not be unreasonably withheld. After delivery of such
notice by the Company or the Indemnitee, as applicable, approval of such counsel
by the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any Expenses
subsequently incurred by the Indemnitee with respect to the same Proceeding
(other than Expenses related to the Indemnitee’s participation in such
Proceeding). The Indemnitee shall have the right to employ separate
counsel in any such Proceeding at the Indemnitee’s expense; provided that if (i)
the employment of counsel by the Indemnitee has been authorized in writing by
the Company, (ii) the Company shall not, in fact, have employed counsel to
assume the defense of such Proceeding, or (iii) the previously approved counsel
cannot or does not continue defending the Indemnitee in such Proceeding for any
reason which is not under the Indemnitee’s control, including, without
limitation, as the result of a conflict of interest which is determined to
exist, then the Expenses of the Indemnitee’s counsel shall be at the expense of
the Company.
9.2 Settlements.
The Company shall not settle any Proceeding in any manner that would impose any
penalty or limitation on the Indemnitee, or include an admission of wrongdoing
by the Indemnitee, without the Indemnitee's prior written consent. If
the Indemnitee is controlling the defense of any Proceeding, the Indemnitee
shall have the right to settle such Proceeding after obtaining the prior written
consent of the Company, which shall not be unreasonably withheld.
9.3 Limitation
on ability to assume defense. The Company may not assume the defense of the
Indemnitee pursuant to this section in any Proceeding as to which the Indemnitee
or the Company has reasonably and in good faith concluded that there may be a
conflict of interest between the Company and the Indemnitee.
10. Nonexclusivity,
No Duplication of Payments and Subrogation
10.1 Nonexclusivity.
The right to indemnification provided by this Agreement shall not be exclusive
of any other rights to which the Indemnitee may be entitled under the Company’s
articles of incorporation, bylaws, any agreement, any vote of shareholders or
disinterested directors, the General Corporation Law of the State of California,
directors’ and officers’ liability insurance, or otherwise, both as to actions
in the Indemnitee’s official capacity and as to actions in another capacity
while holding such office.
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10.2 No
Duplication of Payments. No payments pursuant to this Agreement shall be made by
the Company to indemnify the Indemnitee for any Expenses or Losses for which
payment is actually made otherwise (under any insurance policy, bylaws, or
otherwise) to the Indemnitee or on behalf of the Indemnitee, except in respect
of any excess beyond the amount paid.
10.3 Subrogation.
In the event of payment under this Agreement, the Company shall be subrogated to
the extent of that payment to all of the rights of recovery of the Indemnitee,
who shall execute all documents required and shall do everything that may be
necessary to secure those rights and to enable the Company effectively to bring
suit to enforce those rights.
11. Limitation
on Indemnification
11.1 Indemnification
subject to the applicable law
11.1.1 Notwithstanding
any other provisions of this Agreement, no indemnification pursuant to this
Agreement shall be made if such indemnification is prohibited by applicable law,
including, without limitation, any indemnification in connection with any acts,
omissions or transactions for which indemnification is expressly prohibited by
California Corporation Code § 204(a)(11), or by a court order.
11.1.2 In
the event of any change, after the date of this Agreement, in any applicable
law, which expands the right of a California corporation to indemnify a
director, such changes shall be automatically, without further action of the
parties, within the purview of the Indemnitee's rights and Company obligations,
under this Agreement.
11.1.3 In
the event of any change in any applicable law, which narrows the right of a
California corporation to indemnify a director, such changes, to the extent not
otherwise required by such applicable law to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder.
11.2 Actions
initiated by the Indemnitee. Except for actions contemplated by
Section 8.3, no payments pursuant to this Agreement shall be made by the Company
with respect to actions initiated or brought voluntarily by the Indemnitee and
not by way of defense. Notwithstanding the foregoing, and excluding
actions contemplated by Section 8.3 (to which this Section 11.2 does not apply),
indemnification or advancement of Expenses or Losses may be provided by the
Company in specific actions initiated or brought voluntarily by the Indemnitee
and not by way of defense if approved by the Company’s board of directors by a
majority vote of a quorum thereof consisting of directors who are not parties to
such action.
11.3 Actions
pursuant to violation of Section 16(b). No indemnification pursuant to this
Agreement shall be made by the Company to indemnify the Indemnitee for any
Expenses, Losses or accounting of profits arising from the purchase or sale by
the Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder or any similar successor
statute.
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12. Binding
Effect
This
Agreement shall be binding on and inure to the benefit of and be enforceable by
the parties to it and their respective successors (including, without
limitation, any direct or indirect successor by purchase, merger, consolidation,
or otherwise to all or substantially all of the Company’s business or assets or
both), assigns, heirs, and personal and legal representatives. The Company shall
require and cause any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all, or substantially all, of the
Company’s business or assets to expressly, by a written agreement, assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken place.
The rights to indemnity under this Agreement shall continue as to an Indemnitee
who has ceased to be a director.
13. Amendments
and Waivers
No
amendment, waiver, modification, termination or cancellation of this Agreement
shall be effective unless in writing and signed by both the Company and the
Indemnitee. No waiver of any provision of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof, whether or not similar,
nor shall any waiver constitute a continuing waiver.
14. Severability
Nothing
in this Agreement is intended to require or shall be construed as requiring the
Company to do or fail to do any act in violation of applicable law. The
Company’s inability, pursuant to court order, to perform its obligations under
this Agreement shall not constitute a breach of the Agreement. If any
term or provision of the Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in whole or in part for any
reason, such illegal, unenforceable, or invalid provision or part thereof shall
be stricken from this Agreement and such provision shall not affect the
legality, enforceability or validity of the remainder of this
Agreement. If any provision or part of this Agreement is stricken in
accordance with the provisions of this Section 14, then such stricken provision
shall be replaced, to the extent possible, with a legal, enforceable and valid
provision that is as similar in tenor to the stricken provision as is legally
possible.
15. Counterparts
This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts has been signed by each party and delivered to the
other.
16. Integration
and Entire Agreement
Subject
to Section 10.1, this Agreement (i) sets forth the entire understanding between
the parties in respect to the subject matter hereof, (ii) supersedes all
previous written or oral negotiations, commitments, understandings, and
agreements relating to the subject matter hereof and (iii) merges all prior and
contemporaneous discussion between the parties.
17. Interpretation
of Agreement
The
Company and the Indemnitee intend this Agreement to be interpreted and enforced
so as to provide indemnification to the Indemnitee to the fullest extent
permitted by applicable law.
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18. Directors’
Liability Insurance
The
Company shall, from time to time, make the good faith determination whether or
not it is practicable for the Company to obtain and maintain a policy or
policies of directors’ liability insurance with one or more reputable insurance
companies. Among other considerations, the Company will weigh the
costs of obtaining such insurance coverage against the protection afforded by
such coverage. The Company hereby covenants and agrees to maintain such
insurance coverage on reasonable terms and in a reasonable
amount. Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain such insurance if the Company determines in
good faith that such insurance is not reasonably available, if the premium costs
for such insurance are disproportionate to the amount of coverage provided, or
if the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit.
19. Right
to Rely
In
performing the duties of a director, the Indemnitee shall be entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by (i) one or more
officers or employees of the Company whom the Indemnitee believes to be reliable
and competent in the matters presented or (ii) counsel, independent accountants
or other persons as to matters which the Indemnitee believes to be within such
person's professional or expert competence.
20. Choice
of Law and Forum
20.1 Governing
Law. This Agreement shall be construed, interpreted and enforced in accordance
with the laws of the State of California, without giving effect to the
principles of conflicts of laws thereunder which would specify the application
of the law of another jurisdiction.
20.2 Any
civil action with respect to this Agreement may be brought only in the United
States District Court for the Central District of California or in any court of
the State of California where jurisdiction and venue may be properly laid. Each
party waives, to the fullest extent permitted by law, any objection which such
party may now or later have to the laying of venue of any legal action or
proceeding arising out of or relating to this Agreement as described in this
Section, and any claim that any action or proceeding brought in any such court
has been brought in an inconvenient forum. Both parties hereby authorize and
accept service of process sufficient for personal jurisdiction in any action
against such party as contemplated by this Section by registered or certified
mail, return receipt requested, postage prepaid, to the party’s address for the
giving of notices as set forth in this Agreement. Any final judgment rendered
against either party in any action or proceeding shall be conclusive as to the
subject of such final judgment and may be enforced in other jurisdictions in any
manner provided by law.
21. Notice
All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed duly given (i) if delivered by hand and
receipted for by the party addressee, on the date of such receipt, or (ii) if
mailed by domestic certified or registered mail with postage prepaid, on the
third business day after the date postmarked. Addresses for notice to either
party are as shown on the signature page of this Agreement, or as subsequently
modified by written notice.
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[signature
page follows]
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COMPANY:
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99¢
Only Stores, a California Corporation
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By:
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Name:
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Title:
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Date:
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INDEMNITEE:
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Name:
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Address:
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Date:
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Schedule of Indemnified
Parties
Xxxx
Xxxxxxxx
Xxxx
Xxxx
Xxxxxx
Xxxx
Xxxx
Xxxxxxxxx
Xxxxxxxx
Xxxxxxxx
Xxxxxx X.
Xxxxx
Xxxxxxxx
Xxxxxx Xxxxxx
Xxxxx
Xxx
