EXHIBIT 3
AGREEMENT
AGREEMENT dated as of June 20, 2003 between Greenlight Capital, L.L.C.
("GREENLIGHT") and the undersigned nominee (the "INDEMNITEE").
WHEREAS, Greenlight has asked and the Indemnitee has agreed to be a
nominee for election to the Board of Trustees of Xxxxxx International Inc. (the
"COMPANY") at the 2003 annual meeting of shareholders of the Company (the
"ANNUAL MEETING"); and
WHEREAS, Greenlight and/or its affiliates may, in appropriate
circumstances, solicit proxies from the shareholders of the Company in support
of the Indemnitee's election as a trustee of the Company at the Annual Meeting;
NOW, THEREFORE, in consideration of the foregoing and with the
understanding on the part of Greenlight that the Indemnitee is relying on this
Agreement in agreeing to be a nominee as aforesaid and for other and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
defined terms have the meanings indicated below:
"CLAIM" means any threatened, pending or completed action, suit or
proceeding (whether civil, criminal, administrative, formal or informal,
investigative or other), whether instituted by Greenlight, any shareholder of
the Company, the Company or any other party (other than by the Indemnitee), or
any inquiry or investigation that the Indemnitee in good faith believes might
lead to the institution of any such action, suit or proceeding.
"EXCLUDED LOSSES" means any Losses (1) arising out of liability under
Section 16(b) of the Securities Exchange Act of 1934 or under federal or state
securities laws for "xxxxxxx xxxxxxx," or (2) to the extent it is ultimately
determined in a final judgment without further right to appeal by a court of
appropriate jurisdiction that (a) the Loss arose as a result of any action or
inaction on the part of the Indemnitee constituting knowingly fraudulent,
dishonest or willful misconduct, or (b) with respect to any Indemnifiable Event
defined in clause (ii) thereof, the Loss arose as a result of any action or
inaction on the part of the Indemnitee that was not in good faith or was based
upon or attributable to improper receipt by the Indemnitee of a personal
benefit. Notwithstanding the foregoing, Excluded Losses shall not include Losses
arising out of any action or inaction on the part of the Indemnitee expressly
approved in advance by Greenlight.
"EXPENSES" means all reasonable attorney's fees and all other
reasonable fees, costs, expenses and obligations paid or incurred in connection
with (i) the election of trustees at the Annual Meeting or related matters,
and/or (ii) if elected, Indemnitee's services as a trustee of the Company while
so serving at the request of Greenlight, including, in the case of both clauses
(i) and (ii) without limitation, investigating, defending or participating (as a
party, witness or otherwise) in (including on appeal), or preparing to defend or
participate in, any Claim relating to any Indemnifiable Event. In the case of
any Claim relating to an Indemnifiable Event occurring while serving as a
trustee at the request of Greenlight, Expenses also include all such reasonable
attorney's fees and all other reasonable fees, costs, expenses and obligations
paid or
incurred in connection with such Claim, even though incurred after the
Indemnitee ceases to so serve at the request of Greenlight.
"INDEMNIFIABLE EVENT" means any event or occurrence relating to or
directly or indirectly arising out of, or any action taken or omitted to be
taken in connection with, (i) election of trustees at the Annual Meeting or
related matters, and/or (ii) if the Indemnitee is so elected, the Indemnitee's
capacity as a trustee of the Company while serving as such at the request of
Greenlight.
"LOSS" means any and all damages, judgments, fines, penalties, amounts
paid or payable in settlement, deficiencies, losses and Expenses (including all
interest, assessments, and other charges paid or payable in connection with or
respect of such Losses).
2. Agreement to Serve as a Nominee.
(a) The Indemnitee hereby consents to being named as a nominee
for election as a trustee of the Company at the Annual Meeting (or any special
meeting of the shareholders of the Company called for that purpose) in any
materials submitted by or on behalf of Greenlight to the Company or filed by or
on behalf of Greenlight or the Company with the Securities and Exchange
Commission, and further consents to serve as a trustee of the Company if elected
at the Annual Meeting (or any special meeting of the shareholders of the Company
called for that purpose). The indemnification provisions of this Agreement will
continue in effect even if the Indemnitee does not serve as a trustee following
the Annual Meeting.
(b) Notwithstanding anything to the contrary contained in
paragraph (a) above, the Indemnitee hereby agrees with Greenlight that the
Indemnitee does not and will not (unless previously approved by Greenlight in
writing) consent to serve as a nominee for election as a trustee of the Company,
or to otherwise stand for election as or become a trustee of the Company, as
part of a slate of nominees proposed by any party other than Greenlight
(including the Board of Trustees of the Company or any nominating committee).
(c) In consideration for the Indemnitee's consent and
agreement to serve as a nominee for election as a trustee of the Company,
Greenlight hereby agrees:
(i) to pay Indemnitee the amount of $75,000.00, which
amount is being paid as compensation to the Indemnitee, and is deemed
to be fully earned upon the execution and delivery of this Agreement,
and is not to be considered to be an advance of or as an offset against
any indemnity payments which may, in the future, become due and owing
under this Agreement;
(ii) to grant, or cause an affiliate of Greenlight,
to grant, an at-the-money option for 100,000 shares of Common Stock of
the Company, with a one-year expiration from the date of this
Agreement, to be negotiated between the parties within 10 days of the
date of this Agreement;
(iii) to grant, or cause an affiliate of Greenlight,
to grant to GWA Investments LLC, an at the money option for 225,000
shares of Common Stock of the Company, which option shall expire upon
the later to occur of (a) 60 days from the date
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of this Agreement or (b) 30 days from the date of the Annual Meeting,
to be negotiated between the parties within 10 days of the date of this
Agreement, and
(iv) to cover the reasonable costs of legal counsel,
experienced in the laws of the State of Washington and reasonably
acceptable to the Indemnitee, to assist and provide advice to the
Indemnitee with respect to the proper exercise of Indemnitee's duties
and obligations as a trustee of the Company; provided, however, that in
no event will Greenlight be required to cover the costs of more than
one legal counsel to represent all of Greenlight's nominees elected to
the Board of Trustees of the Company.
3. Indemnification.
(a) If the Indemnitee in his capacity as a nominee for
election to the Company's Board of Trustees at the Annual Meeting, or if
elected, in his capacity as a trustee of the Company was, is or becomes a party
to or other participant in, or is threatened to be made a party to or other
participant in, a Claim by reason of (or arising or allegedly arising in any
manner out of or relating to in whole or in part) an Indemnifiable Event or
Indemnitee's agreeing to serve at the request of Greenlight and/or any one or
more of its affiliates as a nominee for election to the Company's Board of
Trustees at the Annual Meeting, or, if elected, being a trustee of the Company
at the request of Greenlight, Greenlight to the fullest extent permitted by
applicable law shall indemnify and hold harmless the Indemnitee from and against
any and all Losses suffered, incurred or sustained by the Indemnitee or to which
the Indemnitee becomes subject, resulting from, arising out of or relating to
such Claim (it being understood that except as provided in Section 3(c) with
respect to Expenses, reimbursements of any such Losses shall be made as soon as
practicable but in any event no later than 30 days after written request (a
"CLAIM NOTICE") is made to Greenlight accompanied by supporting documentation);
provided, however, that the Indemnitee shall not be entitled to indemnification
for (i) any Excluded Losses or (ii) any Losses resulting from Claims made with
respect to actions taken or not taken by the Indemnitee in his capacity as a
trustee after receipt of written notice by Indemnitee from Greenlight or by
Greenlight from Indemnitee that Indemnitee is no longer serving as trustee at
the request of Greenlight. The Indemnitee shall give Greenlight written notice
of any Claim (accompanied by such reasonable supporting documentation as may be
in the Indemnitee's possession) as soon as practicable after the Indemnitee
becomes aware thereof; provided that the failure of the Indemnitee to give such
notice shall not relieve Greenlight of its indemnification obligations under
this Agreement, except to the extent that such failure materially prejudices the
rights of Greenlight.
(b) In the case of the commencement of any action against the
Indemnitee in respect of which the Indemnitee may seek indemnification from
Greenlight hereunder, Greenlight will be entitled to participate therein,
including, without limitation, the negotiation and approval of any settlement of
such action and, to the extent that Greenlight may wish to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnitee, and after
notice from Greenlight to the Indemnitee of Greenlight's election so to assume
the defense thereof, together with Greenlight's written acknowledgement and
agreement that it will fully indemnify the Indemnitee under the terms of this
Agreement with regard to such Claim, Greenlight will not be liable to the
Indemnitee under this Agreement for any Expenses subsequently incurred by the
Indemnitee in connection with the defense thereof other than
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reasonable costs of investigation and preparation therefor (including, without
limitation, appearing as a witness and reasonable fees and expenses of legal
counsel in connection therewith). If in any action for which indemnity may be
sought hereunder Greenlight shall not have timely assumed the defense thereof
with counsel reasonably satisfactory to the Indemnitee, or the Indemnitee shall
have been advised by counsel that it would constitute a conflict of interest for
the same counsel to represent both the Indemnitee and Greenlight in such action,
or if the Indemnitee may have separate or additional defenses with regard to
such action, the Indemnitee shall have the right to employ counsel for the
Indemnitee reasonably satisfactory to Greenlight in such action, in which event
Greenlight shall reimburse the Indemnitee for all reasonable legal fees and
expenses incurred by the Indemnitee in connection with the defense thereof.
Greenlight shall in no event be liable for any settlement of any action effected
without its prior written consent, such consent not to be unreasonably withheld
or delayed; provided, however, that no consent need be obtained with respect to
any matter as to which (i) Greenlight has disputed indemnity coverage under this
Agreement (Greenlight's ultimate liability to reimburse Indemnitee for any such
settlement to be determined in connection with the determination of whether the
Claim settled was otherwise subject to indemnity coverage under this Agreement),
and/or (ii) Greenlight has otherwise refused or failed to make the indemnity
payments provided for in this Agreement with respect to such matter. Greenlight
shall not settle any Claim in any manner that would impose any expense, penalty,
obligation or limitation on the Indemnitee, or would contain language other than
a recitation of any amounts to be paid in settlement, the fact of the settlement
or the underlying claim relating to the settlement, that would reasonably be
viewed as an acknowledgement of wrongdoing on the part of the Indemnitee or as
detrimental to the reputation of the Indemnitee, without the Indemnitee's prior
written consent.
(c) The Indemnitee's right to indemnification in Section 3 of
this Agreement shall include the right of the Indemnitee to be advanced by
Greenlight any Expenses incurred in connection with any Indemnifiable Event as
such Expenses are incurred by the Indemnitee; provided, however, that all
amounts advanced in respect of such Expenses shall be repaid to Greenlight by
the Indemnitee if it shall ultimately be determined in a final judgment without
further right to appeal by a court of appropriate jurisdiction that the
Indemnitee is not entitled to be indemnified for such Expenses because such
Expenses are Excluded Losses.
4. Partial Indemnity. If the Indemnitee is entitled under any provision
of this Agreement to indemnification by Greenlight for some or a portion of any
Loss, but not for all of the total amount thereof, Greenlight shall nevertheless
indemnify the Indemnitee for the portion thereof to which the Indemnitee is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that the 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, the Indemnitee shall be indemnified against all Expenses incurred in
connection therewith.
5. No Presumptions. 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 upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that the 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.
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6. Nonexclusivity. The rights of the Indemnitee hereunder shall be in
addition to any other rights the Indemnitee may have under any bylaw, insurance
policy, applicable law or otherwise. The rights provided to the Indemnitee under
this Agreement shall continue as to the Indemnitee after he has ceased serving
as a trustee of the Company at Greenlight's request with respect to any action
or inaction on the part of the Indemnitee while the Indemnitee was so serving as
a trustee of the Company at Greenlight's request.
7. Amendment, etc. 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 hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
8. Subrogation. In the event of any payment under this Agreement,
Greenlight shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, and the Indemnitee shall execute all
papers reasonably required and shall take such action that may be reasonably
necessary to secure such rights, including the execution of such documents
reasonably necessary to enable Greenlight effectively to bring suit to enforce
such rights. Notwithstanding anything herein to the contrary, Greenlight should
not be obligated to provide indemnification or advance Expenses hereunder to the
extent the Indemnitee is in fact indemnified or advanced Expenses as the case
may be, by the Company or any other source.
9. No Duplication of Payments. Greenlight shall not be liable under
this Agreement to make any payment in connection with a Claim made against the
Indemnitee to the extent the Indemnitee has otherwise actually received payment
(under any insurance policy, bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder; provided that, if the Indemnitee for any reason is
required to disgorge any payment actually received, Greenlight shall be
obligated to pay such amount to the Indemnitee in accordance with the other
terms of this Agreement (i.e., disregarding the terms of this Section 9).
10. Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws. Any action brought to enforce or
interpret this Agreement will be brought only in the state or federal court
sitting in the County of Los Angeles, State of California, and the parties
hereby waive any objection to and submit to the personal jurisdiction of such
courts. The parties also hereby wave any claim or forum non conveniens.
11. Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
shall constitute one and the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GREENLIGHT CAPITAL, L.L.C.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: Senior Managing Member
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/s/ Xxx X. Xxxxx
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Name: Xxx X. Xxxxx
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