DIRECTOR][OFFICER] INDEMNIFICATION AGREEMENT
Exhibit 10.1
[DIRECTOR][OFFICER]
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT
This [Director][Officer] Indemnification Agreement, dated as of
___, ___(this “Agreement”), is made by and between Xxxxxx Tire & Rubber Company, a
Delaware corporation (the “Company”), and (“Indemnitee”).
RECITALS:
[FOR DIRECTORS][A. Section 141 of the Delaware General Corporation Law provides that the
business and affairs of a corporation shall be managed by or under the direction of its board of
directors.]
[FOR OFFICERS][A. Section 141 of the Delaware General Corporation Law provides that the
business and affairs of a corporation shall be managed by or under the direction of its board of
directors. In addition, pursuant to Sections 141 and 142 of the Delaware General Corporation Law,
significant authority with respect to the management of the Company has been delegated to the
officers of the Company.]
B. By virtue of the managerial prerogatives vested in the [directors][officers] of a Delaware corporation, [directors][officers] act as
fiduciaries of the corporation and its stockholders.
C. Thus, it is critically important to the Company and its stockholders that the Company be
able to attract and retain the most capable persons reasonably available to serve as
[directors][officers] of the Company.
D. In recognition of the need for corporations to be able to induce capable and responsible
persons to accept positions in corporate management, Delaware law authorizes (and in some instances
requires) corporations to indemnify their directors and officers or advance funds for their
defense, and further authorizes corporations to purchase and maintain insurance for the benefit of
their directors and officers.
E. The Delaware courts have recognized that indemnification or advancement by a corporation
serves the dual policies of (1) allowing corporate officials to resist unjustified lawsuits, secure
in the knowledge that, if vindicated, the corporation will bear the expense of litigation and (2)
encouraging capable women and men to serve as corporate directors and
officers, secure in the knowledge that the corporation will absorb the costs of defending
their honesty and integrity.
F. The number of lawsuits challenging the judgment and actions of
[directors][officers] of Delaware corporations, the costs of defending
those lawsuits, and the threat to [directors’][officers’] personal assets
have all materially increased over the past several years, chilling the willingness of capable
women and men to undertake the responsibilities imposed on corporate
[directors][officers].
G. Recent federal legislation and rules adopted by the Securities and Exchange Commission and
the national securities exchanges have imposed additional disclosure and corporate governance
obligations on [directors][officers] of public companies and have exposed
such [directors][officers] to new and substantially broadened civil
liabilities.
H. These legislative and regulatory initiatives have also exposed
[directors][officers] of public companies to a significantly greater risk
of criminal proceedings, with attendant defense costs and potential criminal fines and penalties.
I. Under Delaware law, [a director’s][an officer’s] right to be
reimbursed for the costs of defense of criminal actions, whether such claims are asserted under
state or federal law, does not depend upon the merits of the claims asserted against the
[director][officer] and is separate and distinct from any right to
indemnification the [director][officer] may be able to establish, and
indemnification of the [director][officer] against criminal fines and
penalties is permitted if the [director][officer] satisfies the applicable
standard of conduct.
J. Indemnitee is [a director][an officer] of the Company and his/her
willingness to serve in such capacity is predicated, in substantial part, upon the Company’s
willingness to indemnify him/her in accordance with the principles reflected above, to the fullest
extent permitted by the laws of the state of Delaware, and upon the other undertakings set forth in
this Agreement.
K. Therefore, in recognition of the need to provide Indemnitee with substantial protection
against personal liability, in order to procure Indemnitee’s continued service as [a director][an
officer] of the Company and to enhance Indemnitee’s ability to serve the
Company in an effective manner, and in order to provide such protection pursuant to express
contract rights (intended to be enforceable irrespective of, among other things, any amendment to
the Company’s certificate of incorporation or bylaws (collectively, the “Constituent Documents”),
any change in the composition of the Company’s Board of Directors (the “Board”) or any
change-in-control or business combination transaction relating to the Company), the Company wishes
to provide in this Agreement for the indemnification of and the advancement of Expenses (as defined
in Section 1(e)) to Indemnitee as set forth in this Agreement and for the continued coverage of
Indemnitee under the Company’s directors’ and officers’ liability insurance policies.
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L. In light of the considerations referred to in the preceding recitals, it is the Company’s
intention and desire that the provisions of this Agreement be construed liberally, subject to their
express terms, to maximize the protections to be provided to Indemnitee hereunder.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. Certain Definitions. In addition to terms defined elsewhere herein, the following terms
have the following meanings when used in this Agreement with initial capital letters:
(a) “Change in Control” means the occurrence after the date of this Agreement of
any of the following events:
(i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Company; provided, however, that:
(A) for purposes of this Section 1(a)(i), the following acquisitions shall not constitute a
Change in Control: (1) any acquisition of Voting Stock of the Company directly from the Company
that is approved by a majority of the Incumbent Directors, (2) any acquisition of Voting Stock of
the Company by the Company or any Subsidiary, (3) any acquisition of Voting Stock of the Company by
any employee benefit plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, and (4) any acquisition of Voting Stock of the Company by any Person pursuant to a
Business Combination that complies with clauses (A), (B) and (C) of Section 1(a)(iii) below;
(B) if any Person acquires beneficial ownership of 20% or more of combined voting power of the
then-outstanding Voting Stock of the Company as a result of a transaction described in clause
(A)(1) of Section 1(a)(i) and such Person thereafter becomes the beneficial owner of any additional
shares of Voting Stock of the Company representing 1% or more of the then-outstanding Voting Stock
of the Company, other than in an acquisition directly from the Company that is approved by a
majority of the Incumbent Directors or other than as a result of a stock dividend, stock split or
similar transaction effected by the Company in which all holders of Voting Stock are treated
equally, such subsequent acquisition shall be deemed to constitute a Change in Control;
(C) a Change in Control will not be deemed to have occurred if a Person acquires beneficial
ownership of 20% or more of the Voting Stock of the Company as a result of a reduction in the
number of shares of Voting Stock of the Company outstanding unless and until such Person thereafter
becomes the beneficial owner of any additional shares of Voting
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Stock of the Company representing 1% or more of the then-outstanding Voting Stock of the
Company, other than in an acquisition directly from the Company that is approved by a majority of
the Incumbent Directors or other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Voting Stock are treated equally; and
(D) if at least a majority of the Incumbent Directors determine in good faith that a Person
has acquired beneficial ownership of 20% or more of the Voting Stock of the Company inadvertently,
and such Person divests as promptly as practicable a sufficient number of shares so that such
Person beneficially owns less than 20% of the Voting Stock of the Company, then no Change in
Control shall have occurred as a result of such Person’s acquisition; or
(ii) a majority of the Directors are not Incumbent Directors; or
(iii) the consummation of a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the Company or the acquisition of assets
of another corporation, or other transaction (each, a “Business Combination”), unless, in each
case, immediately following such Business Combination (A) all or substantially all of the
individuals and entities who were the beneficial owners of Voting Stock of the Company immediately
prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the
combined voting power of the then outstanding shares of Voting Stock of the entity resulting from
such Business Combination (including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries), (B) no Person (other than the Company, such entity resulting
from such Business Combination, or any employee benefit plan (or related trust) sponsored or
maintained by the Company, any Subsidiary or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then
outstanding shares of Voting Stock of the entity resulting from such Business Combination, and (C)
at least a majority of the members of the Board of Directors of the entity resulting from such
Business Combination were Incumbent Directors at the time of the execution of the initial agreement
or of the action of the Board providing for such Business Combination; or
(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C)
of Section 1(a)(iii).
(v) For purposes of this Section 1(a) and as used elsewhere in this Agreement, the following
terms shall have the following meanings:
(A) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(B) “Incumbent Directors” means the individuals who, as of the date hereof, are Directors of
the Company and any individual becoming a Director subsequent to the date hereof whose election,
nomination for election by the Company’s stockholders, or appointment, was approved by a vote of at
least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the
proxy statement of the
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Company in which such person is named as a nominee for director, without objection to such
nomination); provided, however, that an individual shall not be an Incumbent Director if such
individual’s election or appointment to the Board occurs as a result of an actual or threatened
election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election
or removal of Directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board.
(C) “Subsidiary” means an entity in which the Company directly or indirectly beneficially owns
50% or more of the outstanding Voting Stock.
(D) “Voting Stock” means securities entitled to vote generally in the election of directors
(or similar governing bodies).
(b) “Claim” means (i) any threatened, asserted, pending or completed claim, demand, action,
suit or proceeding, whether civil, criminal, administrative, arbitrative, investigative or other,
and whether made pursuant to federal, state or other law; and (ii) any threatened, pending or
completed inquiry or investigation, whether made, instituted or conducted by the Company or any
other person, including without limitation any federal, state or other governmental entity, that
Indemnitee determines might lead to the institution of any such claim, demand, action, suit or
proceeding.
(c) “Controlled Affiliate” means any corporation, limited liability company, partnership,
joint venture, trust or other entity or enterprise, whether or not for profit, that is directly or
indirectly controlled by the Company. For purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies of an entity or enterprise, whether through the ownership of voting securities, through
other voting rights, by contract or otherwise; provided that direct or indirect beneficial
ownership of capital stock or other interests in an entity or enterprise entitling the holder to
cast 20% or more of the total number of votes generally entitled to be cast in the election of
directors (or persons performing comparable functions) of such entity or enterprise shall be deemed
to constitute control for purposes of this definition.
(d) “Disinterested Director” means a director of the Company who is not and was not a party to
the Claim in respect of which indemnification is sought by Indemnitee.
(e) “Expenses” means, to the extent reasonably incurred, all attorneys’ and experts’ fees
and expenses and all other costs and expenses paid or payable in connection with investigating,
defending, being a witness in or participating in (including on appeal), or preparing to
investigate, defend, be a witness in or participate in (including on appeal), any Claim.
(f) “Indemnifiable Claim” means any Claim based upon, arising out of or resulting from (i) any
actual, alleged or suspected act or failure to act by Indemnitee in his or her capacity (whether
official or otherwise) as a director, officer, employee or agent of the Company or as a director,
officer, employee, member, manager, trustee, administrator or agent of any other corporation,
limited liability company, partnership, joint venture, trust, employee benefit plan or other entity
or enterprise, whether or not for profit, as to which Indemnitee is or was serving at the request
of the Company as a director, officer, employee, member, manager, trustee, administrator or agent,
(ii) any actual, alleged or suspected act or failure to act by Indemnitee in respect of any
business, transaction, communication, filing, disclosure or other activity of the
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Company or any other entity or enterprise referred to in clause (i) of this sentence, or (iii)
Indemnitee’s status as a current or former director, officer, employee or agent of the Company or
as a current or former director, officer, employee, member, manager, trustee, administrator or
agent of the Company or any other entity or enterprise referred to in clause (i) of this sentence
or any actual, alleged or suspected act or failure to act by Indemnitee in connection with any
obligation or restriction imposed upon Indemnitee by reason of such status. In addition to any
service at the actual request of the Company, for purposes of this Agreement, Indemnitee shall be
deemed to be serving or to have served at the request of the Company as a director, officer,
employee, member, manager, trustee, administrator or agent of another entity or enterprise if
Indemnitee is or was serving as a director, officer, employee, member, manager, trustee,
administrator or agent of such entity or enterprise and (i) such entity or enterprise is or at the
time of such service was a Controlled Affiliate, (ii) such entity or enterprise is or at the time
of such service was an employee benefit plan (or related trust) sponsored or maintained by the
Company or a Controlled Affiliate, or (iii) the Company or a Controlled Affiliate directly or
indirectly caused or authorized Indemnitee to be nominated, elected, appointed, designated,
employed, engaged or selected to serve in such capacity.
(g) “Indemnifiable Losses” means any and all Losses relating to, arising out of or resulting
from any Indemnifiable Claim.
(h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five years has been, retained
to represent: (i) the Company (or any Subsidiary) or Indemnitee in any matter material to either
such party (other than with respect to matters concerning the Indemnitee under this Agreement, or
of other indemnitees under similar indemnification agreements), or (ii) any other named (or, as to
a threatened matter, reasonably likely to be named) party to the Indemnifiable Claim giving rise to
a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee’s rights under this Agreement.
(i) “Losses” means any and all Expenses, damages, losses, liabilities, judgments, fines,
excise taxes pursuant to the Employee Retirement Income Security Act of 1974, penalties (whether
civil, criminal or other) and amounts paid in settlement, including without limitation all
interest, assessments and other charges paid or payable in connection with or in respect of any of
the foregoing.
2. Indemnification Obligation. Subject to Section 7, the Company shall indemnify, defend and
hold harmless Indemnitee, to the fullest extent permitted or required by the laws of the State of
Delaware in effect on the date hereof or as such laws may from time to time hereafter be amended to
increase (and not decrease) the scope of such permitted indemnification, against any and all
Indemnifiable Claims and Indemnifiable Losses; provided, however, that, except as provided in
Sections 4 and 20, Indemnitee shall not be entitled to indemnification pursuant to this Agreement
in connection with any Claim initiated by Indemnitee against the Company or any director or officer
of the Company unless the Company has joined in or consented to the initiation of such Claim.
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3. Advancement of Expenses. Indemnitee shall have the right to advancement by the Company
prior to the final disposition of any Indemnifiable Claim of any and all Expenses relating to,
arising out of or resulting from any Indemnifiable Claim paid or incurred by Indemnitee or which
Indemnitee determines are reasonably likely to be paid or incurred by Indemnitee. Indemnitee’s
right to such advancement is not subject to the satisfaction of any standard of conduct. Without
limiting the generality or effect of the foregoing, within five business days after any request by
Indemnitee, the Company shall, in accordance with such request (but without duplication), (a) pay
such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to
pay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that Indemnitee shall
repay, without interest, any amounts actually advanced to Indemnitee that, at the final disposition
of the Indemnifiable Claim to which the advance related, were in excess of amounts paid or payable
by Indemnitee in respect of Expenses relating to, arising out of or resulting from such
Indemnifiable Claim. In connection with any such payment, advancement or reimbursement, Indemnitee
shall execute and deliver to the Company an undertaking, which need not be secured and shall be
accepted without reference to Indemnitee’s ability to repay the Expenses, by or on behalf of the
Indemnitee, to repay any amounts paid, advanced or reimbursed by the Company in respect of Expenses
relating to, arising out of or resulting from any Indemnifiable Claim in respect of which it shall
have been determined, following the final disposition of such Indemnifiable Claim and in accordance
with Section 7, that Indemnitee is not entitled to indemnification hereunder.
4. Indemnification for Additional Expenses. Without limiting the generality or effect of the
foregoing, to the fullest extent permitted or required by the laws of the State of Delaware in
effect on the date hereof or as such laws may from time to time hereafter be amended to increase
(and not decrease) the scope of such permitted indemnification, the Company shall indemnify and
hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for,
or advance to Indemnitee, within five business days of such request, any and all Expenses paid or
incurred by Indemnitee or which Indemnitee determines are reasonably likely to be paid or incurred
by Indemnitee in connection with any Claim made, instituted or conducted by Indemnitee for (a)
indemnification or reimbursement or advance payment of Expenses by the Company under any provision
of this Agreement, or under any other agreement or provision of the Constituent Documents now or
hereafter in effect relating to Indemnifiable Claims, and/or (b) recovery under any directors’ and
officers’ liability insurance policies maintained by the Company, regardless in each case of
whether Indemnitee ultimately is determined to be entitled to such indemnification, reimbursement,
advance or insurance recovery, as the case may be; provided, however, that Indemnitee shall return,
without interest, any such advance of Expenses (or portion thereof) which remains unspent at the
final disposition of the Claim to which the advance related.
5. Partial Indemnity. If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of any Indemnifiable Loss, but not for all of
the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled.
6. Procedure for Notification. To obtain indemnification under this Agreement in respect of
an Indemnifiable Claim or Indemnifiable Loss, Indemnitee shall submit to the Company a written
request therefor, including a brief description (based upon information then available to
Indemnitee) of such Indemnifiable Claim or Indemnifiable Loss. If, at the time of
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the receipt of such request, the Company has directors’ and officers’ liability insurance in
effect under which coverage for such Indemnifiable Claim or Indemnifiable Loss is potentially
available, the Company shall give prompt written notice of such Indemnifiable Claim or
Indemnifiable Loss to the applicable insurers in accordance with the procedures set forth in the
applicable policies. The Company shall provide to Indemnitee a copy of such notice delivered to
the applicable insurers, and copies of all subsequent correspondence between the Company and such
insurers regarding the Indemnifiable Claim or Indemnifiable Loss, in each case substantially
concurrently with the delivery or receipt thereof by the Company. The failure by Indemnitee to
timely notify the Company of any Indemnifiable Claim or Indemnifiable Loss shall not relieve the
Company from any liability hereunder unless, and only to the extent that, the Company did not
otherwise learn of such Indemnifiable Claim or Indemnifiable Loss and such failure results in
forfeiture by the Company of substantial defenses, rights or insurance coverage.
7. Determination of Right to Indemnification.
(a) To the extent that Indemnitee shall have been successful on the merits or otherwise in
defense of any Indemnifiable Claim or any portion thereof or in defense of any issue or matter
therein, including without limitation dismissal without prejudice, Indemnitee shall be indemnified
against all Indemnifiable Losses relating to, arising out of or resulting from such Indemnifiable
Claim in accordance with Section 2 and no Standard of Conduct Determination (as defined in Section
7(b)) shall be required.
(b) To the extent that the provisions of Section 7(a) are inapplicable to an Indemnifiable
Claim that shall have been finally disposed of, any determination of whether Indemnitee has
satisfied any applicable standard of conduct under Delaware law that is a legally required
condition precedent to indemnification of Indemnitee hereunder against Indemnifiable Losses
relating to, arising out of or resulting from such Indemnifiable Claim (a “Standard of Conduct
Determination”) shall be made as follows: (i) if a Change in Control shall not have occurred, or
if a Change in Control shall have occurred but Indemnitee shall have requested that the Standard of
Conduct Determination be made pursuant to this clause (i), (A) by a majority vote of the
Disinterested Directors, even if less than a quorum of the Board, (B) if such Disinterested
Directors so direct, by a majority vote of a committee of Disinterested Directors designated by a
majority vote of all Disinterested Directors, or (C) if there are no such Disinterested Directors,
by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be
delivered to Indemnitee; and (ii) if a Change in Control shall have occurred and Indemnitee shall
not have requested that the Standard of Conduct Determination be made pursuant to clause (i), by
Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered
to Indemnitee. Indemnitee will cooperate with the person or persons making such Standard of
Conduct Determination, including providing to such person or persons, upon reasonable advance
request, any documentation or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably necessary to such
determination. The Company shall indemnify and hold harmless Indemnitee against and, if requested
by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days
of such request, any and all costs and expenses (including attorneys’ and experts’ fees and
expenses) incurred by Indemnitee in so cooperating with the person or persons making such Standard
of Conduct Determination.
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(c) The Company shall use its reasonable best efforts to cause any Standard of Conduct
Determination required under Section 7(b) to be made as promptly as practicable. If (i) the person
or persons empowered or selected under Section 7 to make the Standard of Conduct Determination
shall not have made a determination within 30 days after the later of (A) receipt by the Company of
written notice from Indemnitee advising the Company of the final disposition of the applicable
Indemnifiable Claim (the date of such receipt being the “Notification Date”) and (B) the selection
of an Independent Counsel, if such determination is to be made by Independent Counsel, that is
permitted under the provisions of Section 7(e) to make such determination and (ii) Indemnitee shall
have fulfilled his/her obligations set forth in the second sentence of Section 7(b), then
Indemnitee shall be deemed to have satisfied the applicable standard of conduct; provided that such
30-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the
person or persons making such determination in good faith requires such additional time for the
obtaining or evaluation or documentation and/or information relating thereto.
(d) If (i) Indemnitee shall be entitled to indemnification hereunder against any Indemnifiable
Losses pursuant to Section 7(a), (ii) no determination of whether Indemnitee has satisfied any
applicable standard of conduct under Delaware law is a legally required condition precedent to
indemnification of Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee has
been determined or deemed pursuant to Section 7(b) or (c) to have satisfied any applicable standard
of conduct under Delaware law which is a legally required condition precedent to indemnification of
Indemnitee hereunder against any Indemnifiable Losses, then the Company shall pay to Indemnitee,
within five business days after the later of (x) the Notification Date in respect of the
Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are related, out of which
such Indemnifiable Losses arose or from which such Indemnifiable Losses resulted and (y) the
earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) above shall
have been satisfied, an amount equal to the amount of such Indemnifiable Losses.
(e) If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to
Section 7(b)(i), the Independent Counsel shall be selected by the Board of Directors, and the
Company shall give written notice to Indemnitee advising him or her of the identity of the
Independent Counsel so selected. If a Standard of Conduct Determination is to be made by
Independent Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected by
Indemnitee, and Indemnitee shall give written notice to the Company advising it of the identity of
the Independent Counsel so selected. In either case, Indemnitee or the Company, as applicable,
may, within five business days after receiving written notice of selection from the other, deliver
to the other a written objection to such selection; provided, however, that such objection may be
asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria
set forth in the definition of “Independent Counsel” in Section 1(h), and the objection shall set
forth with particularity the factual basis of such assertion. Absent a proper and timely
objection, the person or firm so selected shall act as Independent Counsel. If such written
objection is properly and timely made and substantiated, (i) the Independent Counsel so selected
may not serve as Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit and (ii) the non-objecting party may, at its
option, select an alternative Independent Counsel and give written notice to the other party
advising such other party of the identity of the alternative Independent Counsel so selected, in
which case the provisions of the two immediately preceding sentences and clause (i) of this
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sentence shall apply to such subsequent selection and notice. If applicable, the provisions
of clause (ii) of the immediately preceding sentence shall apply to successive alternative
selections. If no Independent Counsel that is permitted under the foregoing provisions of this
Section 7(e) to make the Standard of Conduct Determination shall have been selected within 30 days
after the Company gives its initial notice pursuant to the first sentence of this Section 7(e) or
Indemnitee gives its initial notice pursuant to the second sentence of this Section 7(e), as the
case may be, either the Company or Indemnitee may petition the Court of Chancery of the State of
Delaware for resolution of any objection which shall have been made by the Company or Indemnitee to
the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a
person or firm selected by the Court or by such other person as the Court shall designate, and the
person or firm with respect to whom all objections are so resolved or the person or firm so
appointed will act as Independent Counsel. In all events, the Company shall pay all of the
reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent
Counsel’s determination pursuant to Section 7(b).
8. Presumption of Entitlement. In making any Standard of Conduct Determination, the person or
persons making such determination shall presume that Indemnitee has satisfied the applicable
standard of conduct, and the Company may overcome such presumption only by its adducing clear and
convincing evidence to the contrary. Any Standard of Conduct Determination that is adverse to
Indemnitee may be challenged by the Indemnitee in the Court of Chancery of the State of Delaware.
No determination by the Company (including by its directors or any Independent Counsel) that
Indemnitee has not satisfied any applicable standard of conduct shall be a defense to any Claim by
Indemnitee for indemnification or reimbursement or advance payment of Expenses by the Company
hereunder or create a presumption that Indemnitee has not met any applicable standard of conduct.
9. No Other Presumption. For purposes of this Agreement, the termination of any Claim by
judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea
of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet
any applicable standard of conduct or that indemnification hereunder is otherwise not permitted.
10. Non-Exclusivity. The rights of Indemnitee hereunder will be in addition to any other
rights Indemnitee may have under the Constituent Documents, or the substantive laws of the State of
Delaware, any other contract or otherwise (collectively, “Other Indemnity Provisions”); provided,
however, that (a) to the extent that Indemnitee otherwise would have any greater right to
indemnification under any Other Indemnity Provision, Indemnitee will be deemed to have such greater
right hereunder and (b) to the extent that any change is made to any Other Indemnity Provision
which permits any greater right to indemnification than that provided under this Agreement as of
the date hereof, Indemnitee will be deemed to have such greater right hereunder. The Company will
not adopt any amendment to any of the Constituent Documents the effect of which would be to deny,
diminish or encumber Indemnitee’s right to indemnification under this Agreement or any Other
Indemnity Provision.
11. Liability Insurance and Funding. For the duration of Indemnitee’s service as a director
and/or officer of the Company, and thereafter for so long as Indemnitee shall be subject to any
pending or possible Indemnifiable Claim, the Company shall use commercially reasonable efforts
(taking into account the scope and amount of coverage available relative to the cost
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thereof) to cause to be maintained in effect policies of directors’ and officers’ liability
insurance providing coverage for directors and/or officers of the Company that is at least
substantially comparable in scope and amount to that provided by the Company’s current policies of
directors’ and officers’ liability insurance. The Company shall provide Indemnitee with a copy of
all directors’ and officers’ liability insurance applications, binders, policies, declarations,
endorsements and other related materials, and shall provide Indemnitee with a reasonable
opportunity to review and comment on the same. Without limiting the generality or effect of the
two immediately preceding sentences, the Company shall not discontinue or significantly reduce the
scope or amount of coverage from one policy period to the next (i) without the prior approval
thereof by a majority vote of the Incumbent Directors, even if less than a quorum, or (ii) if at
the time that any such discontinuation or significant reduction in the scope or amount of coverage
is proposed there are no Incumbent Directors, without the prior written consent of Indemnitee
(which consent shall not be unreasonably withheld or delayed). In all policies of directors’ and
officers’ liability insurance obtained by the Company, Indemnitee shall be named as an insured in
such a manner as to provide Indemnitee the same rights and benefits, subject to the same
limitations, as are accorded to the Company’s directors and officers most favorably insured by such
policy. The Company may, but shall not be required to, create a trust fund, grant a security
interest or use other means, including without limitation a letter of credit, to ensure the payment
of such amounts as may be necessary to satisfy its obligations to indemnify and advance expenses
pursuant to this Agreement.
12. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the related rights of recovery of Indemnitee
against other persons or entities (other than Indemnitee’s successors), including any entity or
enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f).
Indemnitee shall execute all papers reasonably required to evidence such rights (all of
Indemnitee’s reasonable Expenses, including attorneys’ fees and charges, related thereto to be
reimbursed by or, at the option of Indemnitee, advanced by the Company).
13. No Duplication of Payments. The Company shall not be liable under this Agreement to make
any payment to Indemnitee in respect of any Indemnifiable Losses to the extent Indemnitee has
otherwise actually received payment (net of Expenses incurred in connection therewith) under any
insurance policy, the Constituent Documents and Other Indemnity Provisions or otherwise (including
from any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim”
in Section 1(f)) in respect of such Indemnifiable Losses otherwise indemnifiable hereunder.
14. Defense of Claims. The Company shall be entitled to participate in the defense of any
Indemnifiable Claim or to assume the defense thereof, with counsel reasonably satisfactory to the
Indemnitee; provided that if Indemnitee believes, after consultation with counsel selected by
Indemnitee, that (a) the use of counsel chosen by the Company to represent Indemnitee would present
such counsel with an actual or potential conflict, (b) the named parties in any such Indemnifiable
Claim (including any impleaded parties) include both the Company and Indemnitee and Indemnitee
shall conclude that there may be one or more legal defenses available to him or her that are
different from or in addition to those available to the Company, or (c) any such representation by
such counsel would be precluded under the applicable standards of professional conduct then
prevailing, then Indemnitee shall be entitled to retain separate counsel (but not more than one law
firm plus, if applicable, local counsel in respect of any particular
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Indemnifiable Claim) at the Company’s expense. The Company shall not be liable to Indemnitee
under this Agreement for any amounts paid in settlement of any threatened or pending Indemnifiable
Claim effected without the Company’s prior written consent. The Company shall not, without the
prior written consent of the Indemnitee, effect any settlement of any threatened or pending
Indemnifiable Claim to which the Indemnitee is, or could have been, a party unless such settlement
solely involves the payment of money and includes a complete and unconditional release of the
Indemnitee from all liability on any claims that are the subject matter of such Indemnifiable
Claim. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed
settlement; provided that Indemnitee may withhold consent to any settlement that does not provide a
complete and unconditional release of Indemnitee.
15. Successors and Binding Agreement. (a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form and substance
satisfactory to Indemnitee and his or her counsel, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be required to perform if no
such succession had taken place. This Agreement shall be binding upon and inure to the benefit of
the Company and any successor to the Company, including without limitation any person acquiring
directly or indirectly all or substantially all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be
deemed the “Company” for purposes of this Agreement), but shall not otherwise be assignable or
delegatable by the Company.
(b) This Agreement shall inure to the benefit of and be enforceable by the Indemnitee’s
personal or legal representatives, executors, administrators, heirs, distributees, legatees and
other successors.
(c) This Agreement is personal in nature and neither of the parties hereto shall, without the
consent of the other, assign or delegate this Agreement or any rights or obligations hereunder
except as expressly provided in Sections 15(a) and 15(b). Without limiting the generality or
effect of the foregoing, Indemnitee’s right to receive payments hereunder shall not be assignable,
whether by pledge, creation of a security interest or otherwise, other than by a transfer by the
Indemnitee’s will or by the laws of descent and distribution, and, in the event of any attempted
assignment or transfer contrary to this Section 15(c), the Company shall have no liability to pay
any amount so attempted to be assigned or transferred.
16. Notices. For all purposes of this Agreement, all communications, including without
limitation notices, consents, requests or approvals, required or permitted to be given hereunder
shall be in writing and shall be deemed to have been duly given when hand delivered or dispatched
by electronic facsimile transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return receipt requested,
postage prepaid or one business day after having been sent for next-day delivery by a nationally
recognized overnight courier service, addressed to the Company (to the attention of the Secretary
of the Company) and to Indemnitee at the applicable address shown on the signature page hereto, or
to such other address as any party may have furnished to the other in writing and in accordance
herewith, except that notices of changes of address will be effective only upon receipt.
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17. Governing Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by and construed in accordance with the substantive laws of the State
of Delaware, without giving effect to the principles of conflict of laws of such State. The
Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the Chancery Court of
the State of Delaware for all purposes in connection with any action or proceeding which arises out
of or relates to this Agreement and agree that any action instituted under this Agreement shall be
brought only in the Chancery Court of the State of Delaware.
18. Validity. If any provision of this Agreement or the application of any provision hereof
to any person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of
this Agreement and the application of such provision to any other person or circumstance shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent, and only to the extent, necessary to make it enforceable, valid or legal.
In the event that any court or other adjudicative body shall decline to reform any provision of
this Agreement held to be invalid, unenforceable or otherwise illegal as contemplated by the
immediately preceding sentence, the parties thereto shall take all such action as may be necessary
or appropriate to replace the provision so held to be invalid, unenforceable or otherwise illegal
with one or more alternative provisions that effectuate the purpose and intent of the original
provisions of this Agreement as fully as possible without being invalid, unenforceable or otherwise
illegal.
19. Miscellaneous. No provision of this Agreement may be waived, modified or discharged
unless such waiver, modification or discharge is agreed to in writing signed by Indemnitee and the
Company. No waiver by either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise, expressed or
implied with respect to the subject matter hereof have been made by either party that are not set
forth expressly in this Agreement. References to Sections are to references to Sections of this
Agreement.
20. Legal Fees and Expenses. It is the intent of the Company that Indemnitee not be required
to incur legal fees and or other Expenses associated with the interpretation, enforcement or
defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and
expense thereof would substantially detract from the benefits intended to be extended to Indemnitee
hereunder. Accordingly, without limiting the generality or effect of any other provision hereof,
if it should appear to Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes or threatens to
take any action to declare this Agreement void or unenforceable, or institutes any litigation or
other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided
or intended to be provided to Indemnitee hereunder, the Company irrevocably authorizes the
Indemnitee from time to time to retain counsel of Indemnitee’s choice, at the expense of the
Company as hereafter provided, to advise and represent Indemnitee in connection with any such
interpretation, enforcement or defense, including without limitation the initiation or defense of
any litigation or other legal action, whether by or against the Company or any director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any
existing or prior attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to
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Indemnitee’s entering into an attorney-client relationship with such counsel, and in that
connection the Company and Indemnitee agree that a confidential relationship shall exist between
Indemnitee and such counsel. Without respect to whether Indemnitee prevails, in whole or in part,
in connection with any of the foregoing, the Company will pay and be solely financially responsible
for any and all attorneys’ and related fees and expenses incurred by Indemnitee in connection with
any of the foregoing.
21. Certain Interpretive Matters. Unless the context of this Agreement otherwise requires,
(a) “it” or “its” or words of any gender include each other gender, (b) words using the singular or
plural number also include the plural or singular number, respectively, (c) the terms “hereof,”
“herein,” “hereby” and derivative or similar words refer to this entire Agreement, (d) the terms
“Article,” “Section,” “Annex” or “Exhibit” refer to the specified Article, Section, Annex or
Exhibit of or to this Agreement, (e) the terms “include,” “includes” and “including” will be deemed
to be followed by the words “without limitation” (whether or not so expressed), and (f) the word
“or” is disjunctive but not exclusive. Whenever this Agreement refers to a number of days, such
number will refer to calendar days unless business days are specified and whenever action must be
taken (including the giving of notice or the delivery of documents) under this Agreement during a
certain period of time or by a particular date that ends or occurs on a non-business day, then such
period or date will be extended until the immediately following business day. As used herein,
“business day” means any day other than Saturday, Sunday or a United States federal holiday.
22. Counterparts. This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original but all of which together shall constitute one and the same
agreement.
[Signatures Appear On Following Page]
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IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly authorized
representative to execute this Agreement as of the date first above written.
| XXXXXX TIRE & RUBBER COMPANY 000 Xxxx Xxxxxx, Xxxxxxx, Xxxx 00000 |
||||||
| By: | ||||||
Title: |
||||||
| [INDEMNITEE] [Address] |
||||||
| [Indemnitee] |
||||||
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