INDEMNIFICATION AGREEMENT
THIS AGREEMENT is entered into as of
December __, 1997
between
PARENT HOLDING CORP.
(the "Corporation"), and
~[Name of Indemnitee]
(the "Indemnitee")
RECITALS
1. The Corporation believes that it is essential to its best interests to
attract and retain highly capable persons to serve as directors, officers, and
agents.
2. Indemnitee is or has been selected to be a director, officer, or agent
of the Corporation.
3. The Corporation and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors, officers, and
other agents of the Corporation.
4. In recognition of Indemnitee's need for substantial protection against
personal liability in order to enhance Indemnitee's service to the Corporation,
and in order to induce Indemnitee to provide or continue to provide services to
the Corporation as a director, officer, or agent, the Corporation wishes to
provide in this Agreement for the indemnification and the advancing of expenses
to Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement and, to the extent applicable, insurance is maintained for the
coverage of Indemnitee under the Corporation's policies of directors' and
officers' liability insurance.
IN CONSIDERATION of the foregoing and of Indemnitee's providing services to the
Corporation directly or, at its request, with another enterprise, the parties
agree as follows:
1. DEFINITIONS.
(a) Board: The board of directors of the Corporation.
(b) Change in Control: A state of affairs that shall be deemed to have
occurred if
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(i) Any person is or becomes the "beneficial owner" (as that term
is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), directly or indirectly, of securities representing twenty
percent (20%) or more of the total voting power of the Corporation's
then-outstanding Voting Securities;
(ii) During any period of two consecutive years, individuals who,
at the beginning of such period constitute the Board, together with any new
director whose election by the Board or nomination for election by the
Corporation's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then in office either who were directors at the beginning of
the two-year period, or whose election or nomination was previously so approved,
cease for any reason to constitute a majority of the Board;
(iii) The shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other Corporation, other than a merger
or consolidation that would result in the Voting Securities of the Corporation
outstanding immediately before such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) at least eighty percent (80%) of the total
voting power represented by the Voting Securities of the Corporation or such
surviving entity outstanding immediately after such merger or consolidation; or
(iv) The shareholders of the Corporation approve a plan of complete
liquidation of the Corporation, or an agreement for the sale or disposition by
the Corporation (whether in one transaction or a series of transactions) of all
or substantially all of the Corporation's assets.
(c) Expenses:
(i) Any expense, liability, or loss, including attorneys' fees,
judgments, fines, ERISA excise taxes and penalties, or amounts paid or to be
paid in settlement;
(ii) Any interest, assessments, or other charges imposed on any of
the items in subparagraph (i) above; and
(iii) Any federal, state, local, or foreign taxes imposed as a
result of the actual or deemed receipt of any payments under this Agreement paid
or incurred in connection with investigating, defending, being a witness in,
participating in (including on appeal), or preparing for any of the foregoing
in, any Proceeding relating to any indemnifiable event.
(d) Indemnifiable Event: Any event or occurrence that takes place either
before or after the execution of this Agreement, related to the fact that
Indemnitee is or was a director or an officer of the Corporation, or while a
director or officer is or was serving at the request of the Corporation as a
director, officer, employee, trustee, agent, or fiduciary of another foreign or
domestic Corporation, partnership, joint venture, employee benefit plan, trust,
or other enterprise, or was a director, officer, employee, or agent of a foreign
or domestic Corporation that was a predecessor Corporation of the Corporation or
another enterprise at the request of such predecessor Corporation, or related to
anything done or not done by Indemnitee in any such
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capacity, whether the basis of the Proceeding is an alleged action in an
official capacity as a director, officer, employee, or agent, or in any other
capacity while serving as a director, officer, employee, or agent of the
Corporation, as described in this paragraph.
(e) Independent Counsel: The person or body appointed in connection with
item 3.
(f) Person: "Person" (as that term is used in Sections 13(d) and 14(d) of
the Exchange Act, 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 shares
of the Corporation at the date of this Agreement.
(g) Participant: A person who is a party to, or witness or Participant
(including on appeal) in, a Proceeding.
(h) Potential Change in Control: A state of affairs that shall be deemed
to exist if:
(i) The Corporation enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) Any person (including the Corporation) announces publicly an
intention to take or to consider taking actions that, if consummated, would
constitute a Change in Control;
(iii) Any person who is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing 10 percent or more of
the combined voting power of the Corporation's then-outstanding Voting
Securities, increases his or her beneficial ownership of such securities by five
percent (5%) or more over the percentage owned by such person on the date of
this Agreement; or
(iv) The Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(i) Proceeding: Any threatened, pending, or completed action, suit, or
proceeding, or any inquiry, hearing or investigation, whether conducted by the
Corporation or any other party, that Indemnitee in good faith believes might
lead to the institution of any such action, suit, or proceeding, whether civil,
criminal, administrative, investigative, or other.
(j) Reviewing Party: The person or body appointed in accordance with
paragraph 3.
(k) Voting Securities: Any securities of the Corporation that have the
right to vote generally in the election of directors.
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2. AGREEMENT TO INDEMNIFY.
(a) General Agreement. In the event Indemnitee was, is, or becomes a
Participant in, or is threatened to be made a Participant in, a Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, the Corporation
shall indemnify the Indemnitee from and against any and all Expenses to the
fullest extent permitted by law, as the same exists or may hereafter be amended
or interpreted (but in the case of any such amendment or interpretation, only to
the extent that such amendment or interpretation permits the Corporation to
provide broader indemnification rights than were permitted before this
Agreement). The parties to this Agreement do not intend indemnification in
excess of that expressly permitted by statute, including, without limitation,
any indemnification provided by the Corporation's certificate of incorporation,
its bylaws, a vote of its shareholders or disinterested directors, or applicable
law.
(b) Initiation of Proceeding. Notwithstanding anything in this Agreement
to the contrary, Indemnitee shall not be entitled to indemnification under this
Agreement in connection with any Proceeding initiated by Indemnitee against the
Corporation or any director or officer of the Corporation unless (i) the
Corporation has joined in or the Board has consented to the initiation of such
Proceeding; (ii) the Proceeding is one to enforce indemnification rights under
paragraph 5; or (iii) the Proceeding is instituted after a Change in Control and
the Independent Counsel has approved its initiation.
(c) Expense Advances. If so requested by Indemnitee, the Corporation
shall within ten business days of such request, advance all Expenses to
Indemnitee (an "Expense Advance"). Notwithstanding the foregoing, to the extent
that the Reviewing Party determines that Indemnitee would not be permitted to be
so indemnified under applicable law, the Corporation shall be entitled to be
reimbursed by Indemnitee for all such amounts, and Indemnitee hereby agrees to
reimburse the Corporation promptly for the same. If Indemnitee has commenced
legal proceedings in a court of competent jurisdiction to secure a determination
that Indemnitee should be indemnified under applicable law as provided in
paragraph 4, any determination made by the Reviewing Party that Indemnitee would
not be permitted to be indemnified under applicable law shall not be binding,
and Indemnitee shall not be required to reimburse the Corporation for any
expense advance until a final judicial determination is made (as to which all
rights of appeal have been exhausted or have lapsed). Indemnitee's obligation
to reimburse the Corporation for expense advances shall be unsecured and no
interest shall be charged thereon.
(d) Mandatory Indemnification. Notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits
in defense of any Proceeding relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter in such Proceeding, Indemnitee shall
be indemnified against all Expenses incurred in connection with such issue,
matter, or event, without the necessity of authorization in the specific case.
(c) Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Corporation for a portion
of Expenses, but not for the total
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amount of Expenses, the Corporation shall indemnify the Indemnitee for the
portion to which Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification under this Agreement
shall be paid by the Corporation on account of any Proceeding in which judgment
is rendered against Indemnitee for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Corporation under the
provisions of Section 16(b) of the Exchange Act or similar provisions of any
federal, state, or local laws.
3. REVIEWING PARTY. Before any Change in Control, the Reviewing Party
shall be any appropriate person or body consisting of a member or members of the
Board or any other person or body appointed by the Board who is not a party to
the Proceeding with respect to which indemnitee is seeking indemnification;
after a Change in Control, the Reviewing Party shall be the Independent Counsel.
With respect to all matters arising after a Change in Control (other than a
Change in Control approved by a majority of the directors of the board who were
directors immediately before the Change in Control) concerning the rights of
Indemnitee to indemnity payments and expense advances under this Agreement or
any other agreement or under applicable law or the Corporation's certificate of
incorporation or bylaws now or hereafter in effect relating to indemnification
for Indemnifiable Events, the Corporation shall seek legal advice only from the
Independent Counsel selected by Indemnitee and approved by the Corporation, the
approval of whom shall not be unreasonably withheld, and who has not otherwise
performed services for the Corporation or Indemnitee (other than in connection
with indemnification matters) within the last five years. The 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 Corporation or Indemnitee in an action to determine
Indemnitee's rights under this Agreement. The counsel, among other things,
shall render a written opinion to the Corporation and Indemnitee as to whether
and to what extent Indemnitee should be permitted to be indemnified under
applicable law. The Corporation agrees to pay the reasonable fees of the
Independent Counsel and to indemnify fully such counsel against any and all
expenses, including attorneys' fees, claims, liabilities, loss, and damages
arising out of or relating to this Agreement or the engagement of the
Independent Counsel under this Agreement.
4. INDEMNIFICATION PROCESS AND APPEAL.
(a) Indemnification Payment. Indemnitee shall receive indemnification of
Expenses from the Corporation in accordance with this Agreement as soon as
practicable after Indemnitee has made written demand on the Corporation for
indemnification, unless the Reviewing Party has given a written opinion to the
Corporation that Indemnitee is not entitled to indemnification under this
Agreement or applicable law.
(b) Suit To Enforce Rights. Regardless of any action by the Reviewing
Party, if Indemnitee has not received full indemnification within 30 days after
making a demand in accordance with subparagraph (a) above, Indemnitee shall have
the right to enforce its
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indemnification rights under this Agreement by commencing litigation in any
court in the State of Delaware seeking an initial determination by the court or
challenging any determination by the Reviewing Party or any aspect of the
Agreement. The Corporation hereby consents to service of process and to appear
in any such Proceeding. Any determination by the Reviewing Party not challenged
by Indemnitee shall be binding on the Corporation and Indemnitee. The remedy
provided in this paragraph shall be in addition to any other remedies available
to Indemnitee in law or equity.
(c) Defense to Indemnification, Burden of Proof, and Presumptions. It
shall be a defense to any action brought by Indemnitee against the Corporation
to enforce this Agreement (other than an action brought to enforce a claim for
Expenses incurred in defending a Proceeding in advance of its final disposition
when the required undertaking has been tendered to the Corporation) that it is
not permissible under this Agreement or applicable law for the Corporation to
indemnify the Indemnitee for the amount claimed. In connection with any such
action or any determination by the Reviewing Party or otherwise as to whether
Indemnitee is entitled to be indemnified under this Agreement, the burden of
proving such a defense or determination shall be on the Corporation. Neither
the failure of the Reviewing Party or the Corporation (including its Board,
independent legal counsel, or its shareholders) to have made a determination
prior to the commencement of such action by Indemnitee that indemnification is
proper under the circumstances because Indemnitee has met the standard of
conduct set forth in applicable law, nor an actual determination by the
Reviewing Party or Corporation (including its Board, independent legal counsel,
or its shareholders) that Indemnitee had not met such applicable standard of
conduct shall be a defense to the action or create a presumption that Indemnitee
has not met the applicable standard of conduct. For purposes of this Agreement,
the termination of any claim, action, suit, or proceeding, by judgment, order,
settlement (whether with or without court approval), conviction, or on a plea of
nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief, or that a court has determined that indemnification is not
permitted by applicable law.
5. INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING RIGHTS. The
Corporation shall indemnify the Indemnitee against any and all Expenses. If
requested by Indemnitee, the Corporation shall, within ten business days of such
request, advance to Indemnitee such Expenses as are incurred by Indemnitee in
connection with any claim asserted against or action brought by Indemnitee for:
(a) Indemnification of Expenses or advances of Expenses by the Corporation
under this Agreement or any other agreement or under applicable law or the
Corporation's certificate of incorporation or bylaws now or hereafter in effect
relating to indemnification for Indemnifiable Events, or
(b) Recovery under directors' and officers' liability insurance policies
maintained by the Corporation for amounts paid in settlement if the Independent
Counsel has approved the settlement.
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The Corporation shall not settle any Proceeding in any manner that would impose
any penalty or limitation on Indemnitee without Indemnitee's written consent.
Neither the Corporation nor Indemnitee will unreasonably withhold its consent to
any proposed settlement. The Corporation shall not be liable to indemnify the
Indemnitee under this Agreement with regard to any judicial award if the
Corporation was not given a reasonable and timely opportunity, at its expense,
to participate in the defense of such action; however, the Corporation's
liability under this Agreement shall not be excused if its participation in the
Proceeding was barred by this Agreement.
6. ESTABLISHMENT OF TRUST. In the event of a Change in Control or a
Potential Change in Control, the Corporation shall, upon written request by
Indemnitee, create a trust for the benefit of the Indemnitee (the "Trust") and
from time to time, upon written request of Indemnitee, shall fund the Trust in
an amount sufficient to satisfy any and all Expenses reasonably anticipated at
the time of each such request to be incurred in connection with investigating,
preparing for, participating in, and/or defending any Proceeding relating to an
Indemnifiable Event. The amount or amounts to be deposited in the Trust under
the foregoing funding obligation shall be determined by the Reviewing Party.
The terms of the Trust shall provide that on a Change in Control, (i) the Trust
shall not be revoked or the principal invaded without the written consent of the
Indemnitee, (ii) the Trustee shall advance, within ten business days of a
request by the Indemnitee, all Expenses to the Indemnitee (provided that the
Indemnitee hereby agrees to reimburse the Trust under the same circumstances for
which the Indemnitee would be required to reimburse the Corporation under
subparagraph 2(c) above), (iii) the Trust shall continue to be funded by the
Corporation in accordance with the funding obligation set forth in this
paragraph, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for
which the Indemnitee shall be entitled to indemnification under this Agreement
or otherwise, and (v) all unexpended funds in the Trust shall revert to the
Corporation on 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 chosen by
the Indemnitee. Nothing in this paragraph shall relieve the Corporation of any
of its obligations under this Agreement. All income earned on the assets held
in the Trust shall be reported as income by the Corporation for federal, state,
local, and foreign tax purposes. The Corporation shall pay all costs of
establishing and maintaining the Trust, and shall indemnify the Trustee against
any and all Expenses (including attorneys' fees), claims, liabilities, loss, and
damages arising out of or relating to this Agreement or the establishment and
maintenance of the Trust.
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7. NONEXCLUSIVITY. The rights of Indemnitee under this Agreement shall
be in addition to any other rights Indemnitee may have under the Corporation's
certificate of incorporation, bylaws, applicable law, or otherwise. To the
extent that a change in applicable law (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Corporation's certificate of incorporation, bylaws, applicable law, or
this Agreement, it is the intent of the parties that Indemnitee enjoy by this
Agreement the greater benefits afforded by such change.
8. LIABILITY INSURANCE. To the extent the Corporation maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage available for any
Corporation director or officer.
9. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause
of action shall be asserted by or on behalf of the Corporation or any affiliate
of the Corporation against Indemnitee, Indemnitee's spouse, heirs, executors, or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, or such longer period as may be
required by state law under the circumstances. Any claim or cause of action of
the Corporation or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, the shorter period shall govern.
10. AMENDMENT OF THIS AGREEMENT. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties to this Agreement. No waiver of any of the provisions of this
Agreement shall operate as a waiver of any other provisions (whether or not
similar), nor shall such waiver constitute a continuing waiver. Except as
specifically provided in this Agreement, no failure to exercise or any delay in
exercising any right or remedy shall constitute a waiver.
11. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Corporation effectively to
bring suit to enforce such rights.
12. NO DUPLICATION OF PAYMENTS. The Corporation shall not be liable under
this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, bylaw, or otherwise) of the amounts otherwise indemnifiable
under this Agreement.
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13. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors (including any direct or indirect successor by purchase, merger,
consolidation, or otherwise to all or substantially all of the business and/or
assets of the Corporation), assigns, spouses, heirs, and personal and legal
representatives. The Corporation shall require and cause any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all,
substantially all, or a substantial part, of the business or assets of the
Corporation or both, by written agreement in form and substance satisfactory to
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
if no such succession had taken place. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity pertaining to an Indemnifiable Event
even though Indemnitee may have ceased to serve in such capacity at the time of
any Proceeding.
14. SEVERABILITY. If any portion of this Agreement shall be held by a
court of competent jurisdiction to be invalid, void, or otherwise unenforceable,
the remaining provisions shall remain enforceable to the fullest extent
permitted by law. Furthermore, to the fullest extent possible, the provisions
of this Agreement (including, without limitation, each portion of this Agreement
containing any provision held to be invalid, void, or otherwise unenforceable,
that is not itself invalid, void, or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, void, or
unenforceable.
15. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in this state without giving effect to the
principles of conflicts of laws.
16. NOTICES. All notices, demands, and other communications required or
permitted under this Agreement shall be made in writing and shall be deemed to
have been duly given if delivered by hand, against receipt, or mailed, postage
prepaid, certified or registered mail, return receipt requested, and addressed
to the Corporation at:
PARENT HOLDING CORP.
000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Lake
Secretary and General Counsel
and to Indemnitee at:
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Attn:
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Notice of change of address shall be effective only when given in accordance
with this agreement. All notices complying with this paragraph shall be deemed
to have been received on the date of delivery or on the third business day after
mailing.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day specified above.
PARENT HOLDING CORP.
By:
------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer and Chairman of the Board
~[NAME OF INDEMNITEE]
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~[Typed name]
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