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Exhibit 10(r)
INDEMNIFICATION AGREEMENT
This Agreement made as of ______________, between Xxxxxx Corporation, a
Delaware corporation (the "Company") and ________________, a director, officer,
employee or agent of the Company (the "Indemnitee");
WHEREAS, the Company and the Indemnitee are each aware of conditions in
the insurance industry that have affected and may continue to affect the
Company's ability to obtain appropriate directors' and officers' liability
insurance on an economically acceptable basis;
WHEREAS, the Company and the Indemnitee are also aware of the exposure
to litigation of officers, directors, employees and agents of corporations as
such persons exercise their duties to the Company;
WHEREAS, the Company desires to continue to benefit from the services
of highly qualified and experienced persons such as the Indemnitee;
WHEREAS, the Indemnitee desires to serve or to continue to serve the
Company as a director, officer, employee or agent, including service at the
request of the Company as a director, officer or trustee of another corporation,
joint venture, trust or other enterprise, for so long as the Company continues
to provide on an acceptable basis indemnification against certain liabilities
and expenses which may be incurred by the Indemnitee.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto agree as follows:
1. INDEMNIFICATION. The Company shall indemnify the Indemnitee with respect to
his activities as a director, officer or employee of the Company or as a person
who is serving or has served at the request of the Company ("agent") as a
director, officer or trustee of another corporation, joint venture, trust or
other enterprise against expenses (including attorneys' fees, judgments, fines,
and amounts paid in settlement) actually and reasonably incurred by him
("Expenses") in connection with any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), to which he was, is, or is threatened to be made a party by
reason of facts which include his being or having been such a director, officer,
employee, or agent, to the extent of the highest and most advantageous to the
Indemnitee, as determined by the Indemnitee, of one or any combination of the
following:
(a) The benefits provided by the Company's Certificate of Incorporation
or By-Laws in effect on the date hereof, a copy of the relevant portions of
which are attached hereto as Exhibit I;
(b) The benefits provided by the Company's Certificate of Incorporation
or By-Laws or their equivalent in effect at the time Expenses are incurred by
Indemnitee;
(c) The benefits allowable under Delaware law in effect at the date
hereof;
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(d) The benefits allowable under the law of the jurisdiction under
which the Company exists at the time Expenses are incurred by the Indemnitee;
(e) The benefits available under liability insurance obtained by the
Company; and
(f) Such other benefits as may be other wise available to Indemnitee
under then existing practices of the Company.
Combination of two or more of the benefits provided by (a) through (f)
shall be available only to the extent that the Applicable Document, as hereafter
defined, does not require that the benefits provided therein must be exclusive
of other benefits. The document or law providing for the benefits listed in
items (a) through (f) above is called the "Applicable Document" in this
Agreement. Company hereby undertakes to assist Indemnitee, in all proper and
legal ways, to obtain the benefits selected by Indemnitee under items (a)
through (f) above.
2. INSURANCE. The Company shall maintain directors' and officers' liability
insurance for so long as Indemnitee's services are covered hereunder, provided
and to the extent that such insurance is available on a commercially reasonable
basis. However, the Company agrees that the provisions hereof shall remain in
effect regardless of whether liability or other insurance coverage is at any
time obtained or retained by the Company; except that any payments made under an
insurance policy shall reduce the obligations of the Company hereunder.
3. PAYMENT OF EXPENSES. At Indemnitee's request, the Company shall pay the
Expenses and when incurred by Indemnitee upon receipt of an undertaking in the
form of Exhibit II attached hereto by or on behalf of Indemnitee to repay such
amounts so paid on his behalf if it shall ultimately be determined under the
Applicable Document that he is not entitled to be indemnified by the Company for
such Expenses. That portion of Expenses which represents attorneys' fees and
other costs incurred in defending any Proceeding shall be paid by the Company
within thirty (30) days of its receipt of such request, together with such
reasonable documentation evidencing the amount and nature of such Expenses as
the Company shall require, subject to its also receiving such undertaking.
4. ESCROW. The Company shall dedicate up to an aggregate of $2 million as
collateral security for the funding of its obligations hereunder and under
similar agreements with other directors, officers, employees and agents by
depositing assets or bank letters of credit in escrow in the dedicated amount
(the "Escrow Reserve"); provided, however, that the terms of any such Escrow
Reserve may provide that the cash, securities or letter of credit available
therefor shall only be utilized for the indemnification or advancement of
expenses provided for herein in the event that there shall have occurred within
the preceding five years a Change in Control of the Company, as defined below.
For purposes of this Agreement, a "Change in Control" of the Company shall have
occurred if at any time during the Term (as hereafter defined) any of the
following events shall occur:
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(a) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act, is or becomes a "beneficial owner"
(as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities eligible to vote for the election
of the Board (the "Company Voting Securities"); PROVIDED, HOWEVER, that the
event described in this paragraph (i) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (a) by the Company or
any subsidiary, (b) by any employee benefit plan sponsored or maintained by the
Company or any subsidiary, (c) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (d) pursuant to a Non-Control
Transaction (as defined in paragraph (iii), or (e) pursuant to any acquisition
by Indemnitee or any group of persons including Indemnitee;
(b) individuals who, on July 1, 1996, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to July 1,
1996, whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors who remain on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without objection to such nomination)
shall also be deemed to be an Incumbent Director; PROVIDED, HOWEVER, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board of Directors shall be deemed to be an
Incumbent Director;
(c) the consummation of a merger, consolidation, share exchange or
similar form of corporate reorganization of the Company or any such type of
transaction involving the Company or any of its Subsidiaries that requires the
approval of the Company's stockholders (whether for such transaction or the
issuance of securities in the transaction or otherwise) (a "Business
Combination"), unless immediately following such Business Combination: (a) more
than 80% of the total voting power of the corporation resulting from such
Business Combination (including, without limitation, any corporation which
directly or indirectly has beneficial ownership of 100% of the Company Voting
Securities eligible to elect directors of such corporation is represented by
shares that were Company Voting Securities immediately prior to such Business
Combination (either by remaining outstanding or being converted), and such
voting power is in substantially the same proportion as the voting power of such
Company Voting Securities immediately prior to the Business Combination, (b) no
person (other than any publicly traded holding company resulting from such
Business Combination, any employee benefit plan sponsored or maintained by the
Company (or the corporation resulting from such Business Combination)) becomes
the beneficial owner, directly or indirectly, of 20% or more of the total voting
power of the outstanding voting securities eligible to elect directors of the
corporation resulting from such Business Combination, and (c) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were Incumbent Directors at the time of the
Board's approval of the execution of the initial agreement providing for such
Business Combination (any Business Combination which satisfies the conditions
specified in (a), (b) and (c) shall be deemed to be a "Non-Control
Transaction"); or
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(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the direct or indirect sale or
other disposition of all or substantially all of the assets of the Company and
its subsidiaries.
Notwithstanding the foregoing, a Change in Control of the
Company shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 20% of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the Company which
reduces the number of Company Voting Securities outstanding; PROVIDED, THAT, if
after such acquisition by the Company such person becomes the beneficial owner
of additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.
5. ADDITIONAL RIGHTS. The indemnification provided in this Agreement shall not
be deemed exclusive of any other indemnification or rights to which Indemnitee
may be entitled and shall continue after Indemnitee has ceased to occupy a
position as an officer, director, employee, or agent as described in Paragraph 1
above with respect to Proceedings relating to or arising out of Indemnitee's
acts or omissions during his service in such position.
6. NOTICE TO COMPANY. Indemnitee shall provide to the Company prompt written
notice of any proceeding brought, threatened, asserted or commenced against
Indemnitee with respect to which Indemnitee may assert a right to
indemnification hereunder. Indemnitee shall not make any admission or effect any
settlement without the Company's written consent unless Indemnitee shall have
determined to undertake his own defense in such matter and has waived the
benefits of this Agreement. The Company shall not settle any Proceeding to which
Indemnitee is a party in any manner which would impose any penalty on Indemnitee
without his written consent. Neither Indemnitee nor the Company will
unreasonably withhold consent to any proposed settlement. Indemnitee shall
cooperate to the extent reasonably possible with the Company and/or its
insurers, in attempts to defend and/or settle such Proceeding.
7. ASSUMPTION OF DEFENSE. Except as otherwise provided below, to the extent that
it may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume Indemnitee's defense in any Proceeding, with
counsel mutually satisfactory to Indemnitee and the Company. After notice from
the Company to Indemnitee of the Company's election so to assume such defense,
the Company will not be liable to Indemnitee under this Agreement for 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 in such Proceeding, but the
fees and expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at Indemnitee's expense unless:
(a) The employment of counsel by Indemnitee has been authorized by
the Company;
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(b) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between Indemnitee and the Company in the conduct of the
defense of such Proceeding; or
(c) The Company shall not in fact have employed counsel to assume the
defense of such Proceeding, in each of which cases the fees and expenses of
counsel shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of Indemnitee in any Proceeding brought by or
on behalf of the Company or as to which Indemnitee shall have made the
conclusion provided for in clause (b) above.
8. ARBITRATION AND ENFORCEMENT. In the event that any dispute or controversy
shall arise between Indemnitee and the Company with respect to whether the
Indemnitee is entitled to indemnification in connection with any Proceeding or
with respect to the amount of Expenses incurred, such dispute or controversy
shall be submitted by the parties to binding arbitration before a single
arbitrator at Melbourne, Florida. If the parties cannot agree on a designated
arbitrator 15 days after arbitration is requested in writing by either of them,
the arbitration shall proceed before an arbitrator appointed by the American
Arbitration Association and under the rules then in effect of that Association.
The award shall be rendered in such form that judgment may be entered thereon in
any court having jurisdiction thereof. The prevailing party shall be entitled to
prompt reimbursement of any costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred in connection with such arbitration.
9. EXCLUSIONS. No indemnification, reimbursement or payment shall be required of
the Company hereunder:
(a) With respect to any claim as to which Indemnitee shall have been
adjudged by a court of competent jurisdiction to have acted with bad faith,
willful misfeasance, or willful disregard of his duties, except to the extent
that such court shall determine upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnify for such expenses as the court shall
deem proper; or
(b) With respect to any obligation of Indemnitee under Section 16(b) of
the Exchange Act.
10. EXTRAORDINARY TRANSACTIONS. The Company covenants and agrees that, in the
event of any merger, consolidation or reorganization in which the Company is not
the surviving entity, any sale of all or substantially all of the assets of the
Company or any liquidation of the Company (each such event is hereinafter
referred to as an "extraordinary transaction"), the Company shall use its best
efforts to:
(a) Obtain insurance in Indemnitee's favor from a reputable insurance
carrier in reasonable amounts (if such insurance is available at commercially
reasonable rates) for a period of not less than one (1) year from the date of
such extraordinary transaction against any liability to which the
indemnification provided in this Agreement relates;
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(b) Have the obligations of the Company under this Agreement expressly
assumed by the survivor, purchaser or successor, as the case may be, in such
extraordinary transaction; or
(c) Otherwise adequately provide for the satisfaction of the Company's
obligations under this Agreement, in a manner acceptable to Indemnitee.
11. NO PERSONAL LIABILITY. Indemnitee agrees that neither the Directors, nor any
officer, employee, representative or agent of the Company shall be personally
liable for the satisfaction of the Company's obligations under this Agreement,
and Indemnitee shall look solely to the assets of the Company and the escrow
referred to in Section 4 hereof for satisfaction of any claims hereunder.
12. SEVERABILITY. If any provision, phrase, or other portion of this Agreement
should be determined by any court of competent jurisdiction to be invalid,
illegal or unenforceable, in whole or in part, and such determination should
become final, such provision, phrase or other portion shall be deemed to be
severed or limited, but only to the extent required to render the remaining
provisions and portions of the Agreement enforceable, and the Agreement as thus
amended shall be enforced to give effect to the intention of the parties insofar
as that is possible.
13. GOVERNING LAW. The parties hereto agree that this Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Delaware.
14. NOTICES. All notices, requests, demands and other communications hereunder
shall be in writing and shall be considered to have been duly given if delivered
by hand and receipted for by the party to whom the notice, request, demand or
other communication shall have been directed, or mailed by registered mail with
postage prepaid:
(a) If to the Company, to: Xxxxxx Corporation
0000 Xxxx Xxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attention: Secretary
(b) If to Indemnitee, to:
15. TERMINATION. This Agreement may be terminated by either party upon not less
than sixty (60) days prior written notice delivered to the other party, but such
termination shall not in any way diminish the obligations of Company hereunder
(including the obligation to maintain the escrow referred to in Section 4
hereof) with respect to Indemnitee's activities prior to the effective date of
termination.
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This Agreement is and shall be binding upon and shall inure to the
benefits of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
INDEMNITEE XXXXXX CORPORATION
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Xxxxxxx X. Xxxxxx
Chairman, President and
Chief Executive Officer
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EXHIBIT I
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Each person who is or was a director or officer of the Company or is
or was serving at the request of the Company as a director or officer of another
enterprise (and his heirs, executors and administrators) shall be indemnified by
the Company against reasonable expenses (including attorneys' fees, judgments,
fines and amounts paid in settlement) incurred by him in his capacity as a
director or officer or arising out of his status as such, in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative,
(1) to the extent, and according to the procedures and requirements,
set forth in the General corporation law of Delaware and, in addition,
(2) to the extent authorized upon a determination that such person
acted in good faith and is fairly and reasonably entitled to be indemnified in
view of all the circumstances, such determination, including the authorized
extent of indemnification, to be made (a) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel selected by the Board of Directors of the Company in a written
opinion, or (c) by the stockholders.
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EXHIBIT II
FORM OF UNDERTAKING
THIS UNDERTAKING has been entered into by ______________ (hereinafter
"Indemnitee") pursuant to an Indemnification Agreement dated ______________ (the
"Indemnification Agreement") between Xxxxxx Corporation (hereinafter "Company"),
a Delaware corporation and Indemnitee.
W I T N E S S E T H:
WHEREAS, pursuant to the Indemnification Agreement, Company agreed to
pay Expenses (within the meaning of the Indemnification Agreement) as and when
incurred by Indemnitee in connection with any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative or
investigative, to which Indemnitee was, is, or is threatened to be made a party
by reason of facts which include Indemnitee's being or having been a director,
officer or employee of the Company or a person who is serving or has served at
the request of the Company as a director, officer, or trustee of another
corporation, joint venture, trust or other enterprise;
WHEREAS, a claim has been asserted against the Indemnitee and the
Indemnitee has notified the Company thereof in accordance with the terms of
Section 6 of the Indemnification Agreement (hereinafter the "Proceeding");
WHEREAS, Indemnitee believes that Indemnitee should prevail in this
Proceeding and it is in the interest of both the Indemnitee and Company to
defend against the claim against Indemnitee thereunder.
NOW THEREFORE, Indemnitee hereby agrees that in consideration of
Company's advance payment of Indemnitee's Expenses incurred prior to a final
disposition of the Proceeding, Indemnitee hereby undertakes to reimburse the
Company for any and all legal fees, costs and expenses paid by Company on behalf
of the Indemnitee prior to a final disposition of the Proceeding in the event
that Indemnitee is determined under the Applicable Document (within the meaning
of the Indemnification Agreement) not to be entitled to indemnification. Such
payments or arrangements for payments shall be consummated within ninety (90)
days after a determination that Indemnitee is not entitled to indemnification
and reimbursement pursuant to the Indemnification Agreement and applicable law.
IN WITNESS WHEREOF, the undersigned has set his/her hand this _____
day of __________, 19___.
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