XXXXXXX 00 (xxx)x
INDEMNIFICATION AGREEMENT
FOR
DIRECTORS AND OFFICERS OF XXXXXXXXX HOLDINGS, INC.
This Agreement is made effective as of the 1st day of May, 2000, by and
among Xxxxxxxxx Holdings, Inc., a Pennsylvania corporation (the "Corporation"),
Xxxxxxxxx World Industries, Inc., also a Pennsylvania corporation (the
"Subsidiary," and together with the Corporation referred to as the
"Indemnitors") and H. Xxxxx Xxxxxxx (the "Indemnitee").
WHEREAS, it is essential to the Corporation and the Subsidiary that the
Corporation retain and attract as directors and officers the most capable
persons available; and
WHEREAS, Indemnitee is an officer and/or a member of the Board of Directors
of the Corporation and in that capacity is performing a valuable service for the
Corporation, which inures to the benefit of the Subsidiary; and
WHEREAS, the Indemnitors have purchased and maintain policies of Directors
and Officers Liability Insurance ("D & O Insurance") covering certain
liabilities which may be incurred by directors and officers in their performance
of services for the Corporation; and
WHEREAS, there is concern over the continued adequacy and reliability of D
& O Insurance protection available to corporate directors and officers; and
WHEREAS, the Corporation has a bylaw (the "Bylaw") which provides for
indemnification of and advancement of expenses to the officers and directors of
the Corporation unless the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness, and the Bylaw and the applicable indemnification statutes of
the Commonwealth of Pennsylvania provide that they are not exclusive; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to induce and retain Indemnitee's service to
the Corporation, the increasing difficulty in obtaining satisfactory D & O
Insurance coverage, and Indemnitee's reliance on the Bylaw, and in part to
provide Indemnitee with specific contractual assurance that the protection
promised by the Bylaw will be available to Indemnitee (regardless of, among
other things, any amendment to or revocation of the Bylaws or any
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change in the composition of the Corporation's Board of Directors or acquisition
transaction relating to the Corporation), the Indemnitors wish to provide in
this Agreement for the indemnification of and the advancing of expenses to
Indemnitee to the fullest extent (whether partial or complete) permitted by law
and as set forth in this Agreement, and, to the extent insurance is maintained,
for the continued coverage of Indemnitee under the Indemnitors' D & O Insurance
policies.
NOW, THEREFORE, in consideration of the premises and of Indemnitee agreeing
to serve or continuing to serve the Corporation directly or, at its request,
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Indemnity of Indemnitee.
(a) The Indemnitors shall hold harmless and indemnify the Indemnitee
against any and all reasonable expenses, including attorneys' fees, and any and
all liability and loss, including judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement, incurred or paid by
Indemnitee in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter "a proceeding") and whether or not by or in the right of the
Corporation or otherwise, to which the Indemnitee is, was or at any time becomes
a party, or is threatened to be made a party or is involved (as a witness or
otherwise) by reason of the fact that Indemnitee is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as
director, officer, trustee or representative of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity, or in any other capacity while serving,
as a director, officer, trustee or representative, unless the act or failure to
act giving rise to the claim for indemnification is determined by a court to
have constituted willful misconduct or recklessness; provided, however, that the
Indemnitors shall indemnify the Indemnitee in connection with a proceeding (or
part thereof) initiated by the Indemnitee (other than a proceeding to enforce
the Indemnitee's rights to indemnification under this Agreement or otherwise)
prior to a Change of Control, as defined in Section 2(e), only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation.
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(b) Subject to the foregoing limitation concerning certain proceedings
initiated by the Indemnitee prior to a Change of Control, the Indemnitors shall
pay the expenses (including attorneys' fees) incurred by Indemnitee in
connection with any proceeding in advance of the final disposition thereof
promptly after receipt by the Indemnitors of a request therefor stating in
reasonable detail the expenses incurred or to be incurred.
(c) If a claim under paragraph (a) or (b) of this section is not paid in
full by the Indemnitors within forty-five (45) days after a written claim has
been received by the Corporation, the Indemnitee may, at any time thereafter,
bring suit against the Indemnitors to recover the unpaid amount of the claim.
The burden of proving that indemnification or advances are not appropriate shall
be on the Indemnitors. The Indemnitee shall also be entitled to be paid the
expenses of prosecuting such claim to the extent he or she is successful in
whole or in part on the merits or otherwise in establishing his or her right to
indemnification or to the advancement of expenses. The Indemnitors shall pay
such fees and expenses in advance of the final disposition of such action on the
terms and conditions set forth in Section 1(b).
2. Maintenance of Insurance and Funding.
(a) The Indemnitors represent that as of the present date, they have in
force and effect the following policies of D & O Insurance (the "Insurance
Policies"):
Insurer Amount*
------- ------
National Union Fire Insurance Company $25 million
ACE Insurance Company Limited $35 million
*Deductible zero where the insured is not permitted/required to indemnify;
otherwise $2 million.
Subject only to the provisions of Section 2(b) hereof, the Indemnitors
agree that, so long as Indemnitee shall continue to serve as an officer or
director of the Corporation (or shall continue at the request of the Corporation
to serve as a director, officer, trustee or representative of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan) and thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that
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Indemnitee was a director or officer of the Corporation (or served in any of
said other capacities), the Indemnitors shall purchase and maintain in effect
for the benefit of Indemnitee one or more valid, binding and enforceable policy
or policies of D & O Insurance providing coverage at least comparable to that
provided pursuant to the Insurance Policies.
(b) The Corporation shall not be required to maintain said policy or
policies of D & O Insurance in effect if, in the reasonable business judgment of
the then directors of the Corporation (i) the premium cost for such insurance is
substantially disproportionate to the amount of coverage, (ii) the coverage
provided by such insurance is so limited by exclusions that there is
insufficient benefit from such insurance or (iii) said insurance is not
otherwise reasonably available; provided however, that in the event those
directors make such a judgment, the Indemnitors shall purchase and maintain in
force a policy or policies of D & O Insurance in the amount and with such
coverage as such directors determine to be reasonably available. Notwithstanding
the general provisions of this Section 2(b), following a Change of Control, any
decision not to maintain any policy or policies of D & O Insurance or to reduce
the amount or coverage under any such policy or policies shall be effective only
if there are "disinterested directors" (as defined in Section 2(e) hereof) and
shall require the concurrence of a majority of such "disinterested directors."
(c) If and to the extent the Indemnitors, acting under Section 2(b), do not
purchase and maintain in effect the policy or policies of D & O Insurance
described in Section 2(a), the Indemnitors shall indemnify and hold harmless the
Indemnitee to the full extent of the coverage which would otherwise have been
provided by such policies. The rights of the Indemnitee hereunder shall be in
addition to all other rights of Indemnitee under the remaining provisions of
this Agreement.
(d) In the event of a Potential Change of Control or if and to the extent
the Indemnitors are not required to maintain in effect the policy or policies of
D & O Insurance described in Section 2(a) pursuant to the provisions of Section
2(b), the Indemnitors shall, upon written request by Indemnitee, create a
"Trust" for the benefit of Indemnitee and from time to time, upon written
request by Indemnitee, shall fund such Trust in an amount sufficient to pay any
and all expenses, including attorneys' fees, and any and all liability and loss,
including judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be
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paid in settlement actually and reasonably incurred by Indemnitee or on his or
her behalf for which the Indemnitee is entitled to indemnification or with
respect to which indemnification is claimed, reasonably anticipated or proposed
to be paid in accordance with the terms of this Agreement or otherwise; provided
that in no event shall more than $100,000 be required to be deposited in any
Trust created hereunder in excess of the amounts deposited in respect of
reasonably anticipated expenses, including attorneys' fees. The amounts to be
deposited in the Trust pursuant to the foregoing funding obligation shall be
determined by the Reviewing Person whose determination shall be final and
conclusive. The Reviewing Person shall have no liability to the Indemnitee for
his or her decisions hereunder. The terms of the Trust shall provide that upon a
Change of Control (i) the Trust shall not be revoked or the principal thereof
invaded, without the written consent of the Indemnitee, (ii) the Trust shall
advance, within two business days of a request by the Indemnitee, any and all
expenses, including attorneys' fees, to the Indemnitee (and the Indemnitee
hereby agrees to reimburse the Trust under the circumstances under which the
Indemnitee would be required to reimburse the Trustee under Section 5 of this
Agreement), (iii) the Trust shall continue to be funded by the Indemnitors in
accordance with the funding obligation set forth above, (iv) the Trustee shall
promptly pay to the Indemnitee all amounts for which the Indemnitee shall be
entitled to indemnification pursuant to this Agreement or otherwise, and (v) all
unexpended funds in such Trust shall revert to the Indemnitors upon a final
determination by the Reviewing Party or a court of competent jurisdiction, as
the case may be, that the Indemnitee has been fully indemnified under the terms
of this Agreement. The Trustee shall be a bank or trust company or other
individual or entity chosen by the Indemnitee and acceptable to and approved of
by the Indemnitors.
(e) For the purposes of this Agreement:
(i) a "Change of Control" shall occur if and when (A) any person acquires
"beneficial ownership" of more than 28% of the then outstanding "voting stock"
of the Corporation and within five years thereafter, "disinterested directors"
no longer constitute at least a majority of its entire Board of Directors or (B)
there shall occur a "business combination" with an "interested shareholder" not
approved by a majority of the "disinterested directors".
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(ii) a "Potential Change of Control" shall occur if (A) the Corporation
enters into an agreement or arrangement, the consummation of which would result
in the occurrence of a Change in Control; (B) any person publicly announces a
tender offer or comparable action which if consummated would constitute a Change
of Control; (C) any person (other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation acting in such
capacity or a corporation owned, directly or indirectly, by the shareholders of
the Corporation in substantially the same proportions as their ownership of
stock of the Corporation), who is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing 10% or more of the
combined voting stock increases his or her beneficial ownership of such
securities by 5% or more over the percentage so owned by such person on the date
hereof; or (D) the Board of the Corporation adopts a resolution to the effect
that, for the purposes of this Agreement, a Potential Change of Control has
occurred.
(iii) a "Reviewing Person" means any appropriate person or body consisting
of a member or members of the Corporation's Board of Directors or any other
person or body appointed by that Board which, following a Change of Control,
shall require the concurrence of a majority of the "disinterested directors" or
shall be independent legal counsel approved and accepted by the Indemnitee who
is not a party to the particular claim for which Indemnitee is seeking
indemnification.
For purposes of this subsection, the terms "person," "beneficial owner,"
"voting stock," "disinterested director," "business combination," and
"interested shareholder" shall have the meaning given to them in Article 7 of
the Corporation's Articles of Incorporation as in effect on May l, 2000.
3. Continuation of Indemnity.
All agreements and obligations of the Indemnitors contained in this
Agreement shall continue during the period the Indemnitee is a director or
officer of the Corporation (or is or was serving at the request of the
Corporation as a director, officer, trustee or representative of another
corporation, partnership, joint venture, trust or other enterprise, including
any employee benefit plan) and shall continue thereafter so long as the
Indemnitee shall be subject to any possible claim or threatened, pending or
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completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that the Indemnitee was a director or officer of the
Corporation or serving in any other capacity referred to herein.
4. Notification and Defense of Claim.
As soon as practicable after receipt by the Indemnitee of actual knowledge
of any action, suit or proceeding the Indemnitee will notify the Indemnitors
thereof, if a claim in respect thereof may be or is being made by the Indemnitee
against the Indemnitors under this Agreement. With respect to any action, suit
or proceeding as to which the Indemnitee has so notified the Indemnitors:
(a) The Indemnitors will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided below, the Indemnitors may assume the
defense thereof, with counsel reasonably satisfactory to the Indemnitee. After
the Indemnitors notify the Indemnitee of their election to so assume the
defense, the Indemnitors will not be liable to the Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense, other than reasonable costs of
investigation, including an investigation in connection with determining whether
there exists a conflict of interest of the type described in (ii) of this
paragraph, or as otherwise provided in this paragraph. The Indemnitee shall have
the right to employ his or her counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after the Indemnitors notify the
Indemnitee of their assumption of the defense shall be at the expense of the
Indemnitee unless (i) the Indemnitors authorize the Indemnitee's employment of
counsel which, following a "Change of Control", shall be effective if authorized
by a majority of the "disinterested directors" (which terms are defined in
Section 2(e)), although less than a quorum or majority of a quorum of the
directors then in office; (ii) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Indemnitors and the
Indemnitee in the conduct of the defense or (iii) the Indemnitors shall not have
employed counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel shall be at the expense of the Indemnitors. The
Indemnitors shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Indemnitors or as to which the
Indemnitee shall have made the conclusion described in (ii) of this paragraph.
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(c) The Indemnitors shall not be obligated to indemnify the Indemnitee
under this Agreement for any amounts paid in settlement of any action or claim
effected without their written consent. The Indemnitors shall not settle any
action or claim in any manner which would impose any penalty limitation on the
Indemnitee without the Indemnitee's written consent. Neither the Indemnitors nor
the Indemnitee shall unreasonably withhold their consent to any proposed
settlement.
5. Undertaking to Repay Expenses.
In the event it shall ultimately be determined that the Indemnitee is not
entitled to be indemnified for the expenses paid by the Indemnitors pursuant to
Section 1(b) hereof or otherwise or was not entitled to be fully indemnified,
the Indemnitee shall repay to the Indemnitors such amount of the expenses or the
appropriate portion thereof, so paid or advanced.
6. Notice.
Any notice to the Corporation shall be directed to Xxxxxxxxx Holdings,
Inc., 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Secretary
(or such other address as the Corporation shall designate in writing to the
Indemnitee). Notice to the Subsidiary shall be directed to it at that same
address.
7. Enforcement.
In the event the Indemnitee is required to bring any action to enforce
rights or to collect monies due under this Agreement, the Indemnitors shall pay
to the Indemnitee the fees and expenses incurred by the Indemnitee in bringing
and pursuing such action to the extent the Indemnitee is successful, in whole or
in part, on the merits or otherwise, in such action. The Indemnitors shall pay
such fees and expenses in advance of the final disposition of such action on the
terms and conditions set forth in Section 1(b).
8. Severability.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions
of this Agreement (including without limitation, each portion of any Section of
this Agreement containing any such provision held to be
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invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
9. Indemnification Under this Agreement Not Exclusive.
The indemnification provided by this Agreement shall not be deemed
exclusive of any other rights to which the Indemnitee may be entitled under the
Articles of Incorporation of the Corporation or its bylaws, any other agreement,
any vote of stockholders or directors, or otherwise, both as to action in the
Indemnitee's official capacity and as to action in another capacity while
holding such office.
10. Miscellaneous.
(a) This Agreement shall be interpreted and enforced in accordance with the
laws of the Commonwealth of Pennsylvania.
(b) This Agreement shall be binding upon the Indemnitee and upon the
Corporation, the Subsidiary and their respective successors and assigns, and
shall inure to the benefit of the Indemnitee, his or her heirs, executors,
personal representatives and assigns and to the benefit of the Corporation, the
Subsidiary and their respective successors and assigns. If the Corporation shall
merge or consolidate with another corporation or shall sell, lease, transfer or
otherwise dispose of all or substantially all of its assets to one or more
persons or groups (in one transaction or series of transactions), (i) the
Corporation shall cause the successor in the merger or consolidation or the
transferee of the assets that is receiving the greatest portion of the assets or
earning power transferred pursuant to the transfer of the assets, by agreement
in form and substance satisfactory to the Indemnitee, to expressly assume all of
the Indemnitors' obligations under and agree to perform this Agreement, and (ii)
the term "Corporation" whenever used in this Agreement shall mean and include
any such successor or transferee.
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(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both of the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on and as of
the day and year first above written.
XXXXXXXXX HOLDINGS, INC. XXXXXXXXX WORLD INDUSTRIES, INC.
By _________________________________ By _________________________________
Title: Chairman and CEO Title: Chairman and CEO
----------------------------
Indemnitee
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Schedule of Participating Directors and Officers
Directors and Officers entering into such Indemnification Agreement include:
Xxxxxx X. Xxxxx
H. Xxxxx Xxxxxxx
Van X. Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxx X. Xxxx
Xxxxx X. XxXxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxxxxx. III
Xxxxxxx X. Xxxx
