Xxxxx Corporation
2002 Annual Report on Form 10-K
Item 15 (c)
Exhibit 10 (h)
INDEMNIFICATION AGREEMENT
This Agreement, made this ______ day of _____________, 20__, by and between
Xxxxx Corporation, an Ohio corporation (the "Company"), and ___________________,
[title] ("Indemnitee");
WHEREAS, the Company and Indemnitee are each aware of the exposure to
litigation of officers, Directors and representatives of the Company as such
persons exercise their duties to the Company;
WHEREAS, the Company and Indemnitee are also aware of conditions in the
insurance industry that have affected and may affect in the future the Company's
ability to obtain appropriate directors' and officers' liability insurance on an
economically acceptable basis;
WHEREAS, the Company desires to continue to benefit from the services of
highly qualified, experienced and otherwise competent persons such as
Indemnitee; and
WHEREAS, Indemnitee desires to serve or to continue to serve the Company as
an officer of the Company, or, if requested to do so by the Company, as a
director, officer, trustee, employee, representative or agent of another
corporation, joint venture, trust or other enterprise, for so long as the
Company continues to provide on an acceptable basis adequate and reliable
indemnification against certain liabilities and expenses which may be incurred
by Indemnitee;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. INDEMNIFICATION.
(a) The Company shall indemnify Indemnitee to the fullest extent permitted
by law with respect to his activities as an officer of the Company and/or as a
person who is serving or has served at the request of the Company as a director,
officer, trustee, employee, representative or agent of another corporation,
joint venture, trust or other enterprise, domestic or foreign, against expenses
(including, without limitation, attorneys' fees, judgments, fines, and amounts
paid in settlement) actually and reasonably incurred by him ("Expenses") in
connection with any claim against Indemnitee, whether or not such claim is
brought by any party who may be an "insured person" under the Company's
directors' and officers' liability insurance, which is the subject of any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, investigative or otherwise and whether formal or
informal (a "Proceeding"), to which Indemnitee was, is, or is threatened to be
made a party by reason of anything done or not done by Indemnitee in any such
capacity.
(b) The rights of Indemnitee hereunder shall be in addition to any rights
Indemnitee may now or hereafter have to indemnification by the Company or
otherwise. More specifically, the parties hereto intend that Indemnitee shall be
entitled to receive, as determined by Indemnitee, payment to the maximum extent
permitted by one or any combination of the following:
(I) the payments provided by the Company's Amended Regulations in
effect on the date hereof, a copy of the relevant portions of which are
attached hereto as Exhibit I;
(ii) the payments provided by the Articles of Incorporation, Code of
Regulations, or By-laws or their equivalent of the Company in effect at the
time Expenses are incurred by Indemnitee;
(iii) the payments allowable under Ohio law in effect at the date
hereof;
(iv) the payments allowable under the law of the jurisdiction under
which the Company is incorporated at the time Expenses are incurred by
Indemnitee;
(v) the payments available under liability insurance obtained by the
Company; and
(vi) such other payments as are or may be otherwise available to
Indemnitee.
Combination of two or more of the payments provided by (I) through (vi)
shall be available to the extent that the Applicable Document, as hereafter
defined, does not require that the payments provided therein be exclusive of
other payments. The document or law providing for any of the payments listed in
items (I) through (vi) above is referred to in this Agreement as the "Applicable
Document." The Company hereby undertakes to use its best efforts to assist
Indemnitee, in all proper and legal ways, to obtain the payments selected by
Indemnitee under items (I) through (vi) above.
(c) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans for employees of the Company or of any of
its subsidiaries without regard to ownership of such plans; references to
"fines" shall include any excise taxes assessed on Indemnitee with respect to
any employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, trustee, employee,
representative or agent of the Company which imposes duties on, or involves
services by, Indemnitee with respect to an employee benefit plan, its
participants or beneficiaries; references to the masculine shall include the
feminine; references to the singular shall include the plural and vice versa;
and if Indemnitee acted in good faith and in a manner he reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, he shall be deemed to have acted in a manner consistent with the standards
required for indemnification by the Company under the Applicable Documents.
2. INSURANCE.
The Company shall maintain directors' and officers' liability insurance
which is at least as favorable to Indemnitee as the policy in effect on the date
hereof and for so long as Indemnitee's services are covered hereunder, provided
and to the extent that such insurance is available on a reasonable commercial
basis. However, Xxxxxxxxxx shall continue to be entitled to the indemnification
rights provided hereunder regardless of whether liability or other insurance
coverage is at any time obtained or retained by the Company. Any payments in
fact made to Indemnitee under an insurance policy obtained or retained by the
Company shall reduce the obligation of the Company to make payments hereunder by
the amount of the payments made under any such insurance policy. In the event
that insurance becomes unavailable in the amount or scope of coverage of the
policy in effect on the date hereof on a reasonable commercial basis and the
Company foregoes maintenance of all or a portion of such insurance coverage, the
Company shall stand as a self-insurer with respect to the coverage, or portion
thereof, not retained, and shall indemnify Indemnitee against any loss arising
out of the reduction or cancellation of such insurance coverage.
3. PAYMENT OF EXPENSES.
At Indemnitee's request, the Company shall pay the Expenses as and when incurred
by Indemnitee, after receipt of written notice pursuant to Paragraph 6 hereof
and an undertaking in the form of Exhibit II attached hereto by or on behalf of
Indemnitee (I) to repay such amounts so paid on Indemnitee's behalf if it shall
ultimately be determined under the Applicable Document that Indemnitee is
required to repay such Expenses and (ii) to reasonably cooperate with the
Company concerning the Proceeding. 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 notice,
together with reasonable documentation evidencing the amount and nature of such
Expenses.
4. ESCROW RESERVE.
The Company shall dedicate up to an aggregate of ten million dollars
($10,000,000) as collateral security for the initial funding of its obligations
hereunder and under similar agreements with other directors, officers and
representatives by depositing assets or bank letters of credit in escrow or
reserving lines of credit that may be drawn down by an escrow agent in the
dedicated amount (the "Escrow Reserve"); provided, however, that the terms of
any such Escrow Reserve may provide that the cash, securities or letters or
lines 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. The Company shall promptly provide Indemnitee
with a true and complete copy of the agreement relating to the establishment and
operation of the Escrow Reserve, together with such additional documentation or
information with respect to the escrow as Indemnitee may from time to time
reasonably request. The Company shall promptly deliver an executed copy of this
Agreement to the Escrow Reserve agent to evidence to the agent that Indemnitee
is a beneficiary of the Escrow Reserve and shall deliver to Indemnitee the
escrow agent's signed receipt evidencing that delivery. For purposes of this
Agreement, a "Change in Control" of the Company shall have occurred if at any
time any of the following events shall occur: (i) a tender offer shall be made
and consummated for the ownership of securities of the Company representing 25%
or more of the combined voting power of Company's then outstanding voting
securities, (ii) the Company shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than 75% of the
outstanding voting securities of the surviving or resulting corporation shall be
owned in the aggregate by the former shareholders of the Company, other than
affiliates (within the meaning of the Securities Exchange Act of 1934 (the
"Exchange Act")) of any party to such merger or consolidation, as the same shall
have existed immediately prior to such merger or consolidation, (iii) the
Company shall sell substantially all of its assets to another corporation which
is not a wholly-owned subsidiary of the Company, (iv) any person (as such term
is used in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities; or (v) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period. For purposes of this Agreement, ownership of voting securities shall
take into account and include ownership as determined by applying the provisions
of Rule 13d-3(d)(1)(i) of the Exchange Act (as then in effect).
5. ADDITIONAL RIGHTS.
The indemnification provided in this Agreement shall not be exclusive of
any other indemnification or right to which Indemnitee may be entitled and shall
continue after Indemnitee has ceased to occupy a position as an officer,
director or representative 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;
provided that failure to provide such notice shall not in any way limit
Indemnitee's rights under this Agreement.
7. COOPERATION IN DEFENSE AND SETTLEMENT.
Indemnitee shall not make any admission or effect any settlement with
respect to a Proceeding 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 in writing delivered to the Company. The Company
shall not settle any Proceeding to which Indemnitee is a party in any manner
which would impose any Expense on Indemnitee without his written consent.
Neither Indemnitee nor the Company will unreasonably withhold consent to any
proposed settlement. Indemnitee and the Company shall cooperate to the extent
reasonably possible with each other and with the Company's insurers, in attempts
to defend or settle such Proceeding.
8. 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 Xxxxxxxxxx has been authorized by the
Company;
(b) counsel employed by the Company initially is unacceptable or later
becomes unacceptable to Indemnitee and such unacceptability is reasonable
under then existing circumstances;
(c) 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
(d) the Company shall not have employed counsel promptly to assume the
defense of such Proceeding.
In each of the cases set forth in items (a) through (d) above, the fees and
expenses of counsel shall be at the expense of the Company and subject to
payment pursuant to this Agreement. 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 reached either of the conclusions
provided for in clauses (b) or (c) above.
9. ENFORCEMENT.
In the event that any dispute or controversy shall arise under this
Agreement between Indemnitee and the Company with respect to whether Indemnitee
is entitled to indemnification in connection with any Proceeding or with respect
to the amount of Expenses incurred, then with respect to each such dispute or
controversy Indemnitee may seek to enforce this Agreement through legal action
or, at Indemnitee's sole option and request, through arbitration. If arbitration
is requested, such dispute or controversy shall be submitted by the parties to
binding arbitration in the City of Cleveland, State of Ohio, before a single
arbitrator agreeable to both parties. If the parties cannot agree on a
designated arbitrator within fifteen (15) days after arbitration is requested in
writing by either of them, the arbitration shall proceed in the City of
Cleveland, State of Ohio, before an arbitrator appointed by the American
Arbitration Association. In either case, the arbitration proceeding shall
commence promptly under the rules then in effect of that Association and the
arbitrator agreed to by the parties or appointed by that Association shall be an
attorney other than an attorney who has, or is associated with a firm having
associated with it an attorney which has, been retained by or performed services
for the Company or Indemnitee at any item during the five (5) years preceding
the commencement of arbitration. 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 attorney's fees) incurred in
connection with such legal action or arbitration provided that Indemnitee shall
not be obligated to reimburse the Company unless the arbitrator or court which
resolves the dispute determines that Indemnitee acted in bad faith in bringing
such action or arbitration.
10. EXCLUSIONS.
Notwithstanding the scope of indemnification which may be available to
Indemnitees from time to time under any Applicable Document, no indemnification,
reimbursement or payment shall be required of the Company hereunder with respect
to:
(a) any claim or any part thereof as to which Indemnitee shall have
been adjudged by a court of competent jurisdiction from which no appeal is
or can be taken, by clear and convincing evidence, to have acted or failed
to act with deliberate intent to cause injury to the Company or with
reckless disregard for the best interests of the Company;
(b) any claim or any part thereof arising under Section 16(b) of the
Exchange Act pursuant to which Indemnitee shall be obligated to pay any
penalty, fine, settlement or judgment;
(c) any obligation of Indemnitee based upon or attributable to
Indemnitee gaining in fact any personal gain, profit or advantage to which
he was not entitled; or
(d) any Proceeding initiated by Indemnitee without the consent or
authorization of the Board of Directors of the Company, provided that this
exclusion shall not apply with respect to any claims brought by Xxxxxxxxxx
(I) to enforce his rights under this Agreement or (ii) in any Proceeding
initiated by another person or entity whether or not such claims were
brought by Indemnitee against a person or entity who was otherwise a party
to such Proceeding.
Nothing in this Paragraph 10 shall eliminate or diminish the Company's
obligations to advance that portion of Indemnitee's Expenses which represent
attorneys' fees and other costs incurred in defending any Proceeding pursuant to
Paragraph 3 of this Agreement.
11. 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:
(a) 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
(b) Otherwise adequately provide for the satisfaction of the Company's
obligations under this Agreement, in a manner acceptable to Indemnitee.
12. NO PERSONAL LIABILITY.
Xxxxxxxxxx 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 Reserve referred
to in Paragraph 4 hereof for satisfaction of any claims hereunder.
13. PERIOD OF LIMITATIONS.
No legal action shall be brought and no cause of action shall be asserted
by or on behalf of the Company or any affiliate of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal
representatives after the expiration of two (2) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of legal action within such two-year period; provided, however,
that if any shorter period of limitations is otherwise applicable to any such
cause of action such shorter period shall govern.
14. 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 this Agreement enforceable, and this Agreement as thus amended shall
be enforced to give effect to the intention of the parties insofar as that is
possible.
15. SUBROGATION.
In the event of any payment under this Agreement, the Company shall be
subrogated to the extent thereof to all rights to indemnification or
reimbursement against any insurer or other entity or person vested in
Indemnitee, who shall execute all instruments and take all other action as shall
be reasonably necessary for the Company to enforce such rights.
16. 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 Ohio.
17. 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 certified mail, return
receipt requested, with postage prepaid:
(a) If to the Company, to: XXXXX CORPORATION
Eaton Center
Cleveland, Ohio 44114-2584
Attention: General Counsel
(b) If to Indemnitee, to:
________________________
Xxxxx Corporation
Eaton Center
Cleveland, Ohio 44114-2584
or to such other or further address as shall be designated from time to time by
Indemnitee or the Company to the other.
18. 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 the Company
hereunder (including the obligation to maintain the Escrow Reserve referred to
in Paragraph 4 hereof) with respect to Indemnitee's activities prior to the
effective date of the termination.
19. AMENDMENTS.
This Agreement and the rights and duties of Indemnitee and the Company
hereunder may not be amended, modified or terminated except by written
instrument signed and delivered by the parties hereto.
20. BINDING EFFECT.
This Agreement is and shall be binding upon and shall inure to the benefit
of the parties thereto 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 XXXXX CORPORATION
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[Name] By J. R. Xxxxx
Title: Title: Vice President and
General Counsel
And by
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X. X. Xxxxxxxx
Title: Secretary
