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Exhibit 10a (CEC)
CENTERIOR ENERGY CORPORATION
Each of the following current Directors and Officers of Centerior Energy
Corporation ("Company") has entered into the attached Indemnity Agreement with
the Company, which Agreement is currently in effect.
Xxxxxxx X. Xxxxxxxx Director
Xxxxxx X. Xxxxxxxxxx Director
Xxxxxx X. Xxxxxx Director
Xxxxxxx X. Xxxxxx Director
Xxxxx X. Xxxxx Director
Xxxxxx X. Xxxxxxx Director, Chairman of the Board
and President
Xxxxxxx X. Xxxxxx Director
Xxxxx X. Xxxxxx Director
Sister Xxxx Xxxxxx Xxxxxxxx Director
Xxxxxx X. Xxxxxx Director
Xxxxxxx X. Xxxxxxxx Director
Xxxxxx X. Xxxxxxx Executive Vice President
Xxxx X. Xxxxx, Xx. Senior Vice President
Xxxx X. Xxxxxxx Senior Vice President
Xxxxxxxx X. Xxxxxxx Senior Vice President, Chief
Financial Officer and General
Counsel
March 26, 1997
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CENTERIOR ENERGY CORPORATION
DIRECTOR OR OFFICER
INDEMNITY AGREEMENT
This Agreement made as of the date stated at the end hereof, between Centerior
Energy Corporation, an Ohio corporation (the "Company") and the Indemnitee whose
name appears above his signature at the end hereof, a director or officer of the
Company (the "Indemnitee");
Whereas, the Company and Indemnitee are each aware of the exposure to litigation
of directors and officers of the Company as such persons exercise their duties
to the Company;
Whereas, the Company and Indemnitee also are aware of conditions in the
insurance industry that have affected and may continue to affect the Company's
ability to obtain appropriate directors' and officers' liability insurance on an
economically acceptable basis;
Whereas, the Company desires to continue to benefit from the services of highly
qualified, experienced and otherwise competent persons such as Indemnitee;
Whereas, Indemnitee desires to serve or to continue to serve the Company as a
director or officer or as a director, officer, employee, agent or trustee of
another corporation, partnership, joint venture, trust or other enterprise in
which the Company has a direct or indirect ownership interest 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
convenants herein contained, the parties hereto agree as follows:
1. Indemnification
Subject to the terms of this Agreement, the Company shall indemnify Indemnitee
with respect to his activities as a director or officer of the Company and/or as
a person who is serving or has served on behalf of the Company as a director,
officer, employee, agent or trustee of another corporation, partnership, joint
venture, trust or other enterprise, domestic or foreign, in which the Company
has a direct or indirect ownership interest (an "affiliated entity") against
expenses and liabilities (including, but not limited to, attorneys' fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by him ("Expenses") in connection with any claim against Indemnitee
which is the subject of any threatened, asserted, 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 facts which include
Xxxxxxxxxx's being or having been such a director, officer, employee, agent or
representative, to the extent of the highest and most advantageous to
Indemnitee, as determined by Indemnitee, of one or any combination of the
following:
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(a) The benefits provided by the Company's Regulations in effect on the
date hereof (or as adopted by the share owners of the Company at the
1987 annual meeting of share owners);
(b) The benefits provided by the Articles of Incorporation, Regulations,
By-laws or their equivalent of the Company in effect at the time
Expenses are incurred by Indemnitee;
(c) The benefits allowable under Ohio law in effect at the date hereof;
(d) The benefits allowable under the law of the jurisdiction under which
the Company exists at the time Expenses are incurred by Indemnitee;
(e) The benefits available under directors' and officers' liability
insurance obtained by the Company and in effect for directors or
officers of the Company at the time a claim for Expenses is made
against Indemnitee or the Company;
(f) The benefits which would be available to Indemnitee if the Directors'
and Officers' Liability Insurance and Reimbursement for Directors and
Officers Liability Policy issued to The Cleveland Electric
Illuminating Company by Harbor Insurance Company and other insurers
which expired on April 29, 1985 and which was designated as policy
number HI 165461 were in effect for directors and officers of the
Company at the time a claim for Expenses is made against Indemnitee
or the Company; and
(g) Such other benefits as are or may be otherwise available to
Indemnitee.
Any combination of two or more of the benefits provided by (a) through (g) shall
be available to the extent that the Applicable Document, as hereafter defined,
does not require that the benefits provided therein be exclusive of other
benefits. The document or law providing for the benefits listed in items (a)
through (g) above for an item of Expense is called the "Applicable Document" in
this Agreement with respect to that item of Expense. The Company hereby
undertakes to use its best efforts to assist Indemnitee, in all proper and legal
ways, to obtain the benefits to which Indemnitee is entitled under this Section
2.
For purposes of this Agreement, references to "other enterprise" shall include
any employee benefit plan for employees of the Company or of any affiliated
entity without regard to ownership of such plan; references to "fines" shall
include any excise taxes assessed against Indemnitee with respect to any
employee benefit plan; references to "is serving or has served on behalf of the
Company" shall include any service as a director, officer, employee or agent of
the Company which imposes duties on, or involves services by, Indemnitee with
respect to any employee benefit plan, its participants or beneficiaries;
references to "Proceeding" shall include any threatened, asserted, pending or
completed Proceeding; 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.
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2. Insurance
The Company shall maintain directors' and officers' liability insurance covering
Indemnitee for so long as Indemnitee's services are covered hereunder, provided
and only to the extent that such insurance is available in amounts and on terms
and conditions determined by the Company to be acceptable. However, the Company
agrees that the provisions hereof shall remain in effect regardless of whether
liability or other insurance coverage is at any time obtained or retained by the
Company; except that any payments made to Indemnitee for an Expense under an
insurance policy obtained or retained by the Company shall reduce the obligation
of the Company to make payments for such Expense hereunder by the amount of the
payments made under any such insurance policy.
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 Section 6 hereof and
an undertaking, in the form 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 amounts and (ii) to reasonably cooperate with the Company concerning such
Proceeding. That portion of Expenses which represents attorneys' fees and other
costs incurred in defending any Proceeding shall be paid by the Company within
30 days of its receipt of such request, together with reasonable documentation
(consistent, in the case of attorney's fees, with Company practice in payment of
legal fees for outside counsel generally) evidencing the amount and nature of
such Expenses, subject to its also having received such a notice and
undertaking.
4. Trust Fund
The Company shall irrevocably deposit into a trust fund (the "Trust") assets
having an aggregate value of $600,000 as collateral security for the initial
funding of its obligations hereunder and under similar agreements with other
directors or officers. The Company shall promptly provide Indemnitee with a true
and complete copy of the agreement relating to the establishment and operation
of the Trust, together with such additional documentation or information with
respect to the Trust as Indemnitee may from time to time reasonably request. The
Company shall promptly deliver an executed copy of this Agreement to the trustee
of the Trust to evidence to the trustee that Indemnitee is a beneficiary of the
Trust and shall deliver to Indemnitee the trustee's signed receipt evidencing
that delivery. The Company shall have the right, but no obligation, to replenish
the Trust for amounts distributed from time to time to the beneficiaries
thereof.
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, employee, agent or trustee as described in Section 1 above with
respect to Proceedings relating to or arising out of Indemnitee's acts or
omissions during his service in such position.
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6. Notice to Company
Indemnitee shall provide to the Company prompt written notice of any Proceeding
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 of any
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. 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 shall
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 and/or settle any 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
shall 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 which cases the fees and expenses of counsel employed by Indemnitee
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 made either of the conclusions provided for in clauses (b)
or (c) above.
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9. Enforcement
In the event any dispute or controversy shall arise under this Agreement between
Indemnitee and the Company with respect to whether the Indemnitee is entitled to
indemnification in connection with any Proceeding or with respect to any amount
of Expenses incurred, then Indemnitee may seek to enforce the Agreement with
respect to such dispute or controversy through legal action or, at Indemnitee's
sole option and written 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 15 days after arbitration is requested in writing
by Indemnitee, 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
time during the five years preceding the commencement of the 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 attorneys' fees) incurred in connection with such legal action or
arbitration; provided that Indemnitee shall not be obligated to reimburse the
Company unless the court or arbitrator 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
Indemnitee 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
determined 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 interest of the Company.
(b) Any claim or any part thereof arising under Section 16(b) of the
Securities Exchange Act of 1934 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 the
Indemnitee gaining 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
Indemnitee (i) to enforce his rights under this Agreement
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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 Section 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 Section 3 of
this Agreement.
11. Extraordinary Transactions
The Company 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
Indemnitee agrees that no director, 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, any insurance referred to in Section 2 hereof and the assets of
the Trust for satisfaction of any claims hereunder.
13. Severability
If any provision, phrase or other portion of this Agreement shall be
determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable, in whole or in part, and such determination shall become final,
then such provision, phrase or other portion shall be deemed to be severed or
limited, but only to the extent required to render the remaining provisions
and portions of the Agreement enforceable, and the Agreement as so modified
shall be enforced to give effect to the intention of the parties insofar as
that is possible.
14. 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 actions as
shall be reasonably necessary for the Company to enforce such rights.
15. Governing Law
This Agreement shall be construed and enforced in accordance with and governed
by the laws of the State of Ohio.
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16. 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:
CENTERIOR ENERGY CORPORATION
0000 Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxx Xxx 00000
Xxxxxxxxxxxx, Xxxx 00000-4661; and
(b) If to Indemnitee, at the address stated below the name of Indemnitee
at the end of this Agreement.
or to such other or further address as shall be designated from time to time by
the Company or Indemnitee to the other.
17. Termination
This Agreement may be terminated by either party upon not less than 60 days
prior written notice delivered to the other party, but such termination shall
not in any way diminish the obligations of Company hereunder (or Indemnitee's
right under the Trust) with respect to Indemnitee's activities prior to the
effective date of termination; provided, that if this Agreement has been entered
into by the Company before it shall have been authorized by the share owners of
the Company at its 1987 annual meeting, it shall terminate automatically and be
void ab initio if the share owners of the Company shall not have ratified this
Agreement at such annual meeting.
18. Amendments and Binding Effect
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. 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.
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In Witness Whereof, the undersigned have executed this Agreement in triplicate
on the _____________ day of ___________________, ____, effective as of the
_____________ day of ___________________, ____.
INDEMNITEE: CENTERIOR ENERGY CORPORATION
------------------------------------
Title: By:
------------------------------ --------------------------------
Signed: Title:
---------------------------- -----------------------------
Address: Signed:
--------------------------- ----------------------------
------------------------------------
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CENTERIOR ENERGY CORPORATION
DIRECTOR OR OFFICER
INDEMNITY AGREEMENT
UNDERTAKING TO REIMBURSE PAYMENT OF EXPENSES
This Undertaking has been entered into by the Indemnitee whose name appears
above his signature below (hereinafter "Indemnitee") pursuant to an Indemnity
Agreement dated the date set forth below (the "Indemnity Agreement") between
Centerior Energy Corporation (hereinafter "Company"), an Ohio corporation and
Indemnitee.
WITNESSETH:
Whereas, pursuant to the Indemnity Agreement, Company agreed to pay Expenses
(within the meaning of the Indemnity Agreement) as and when incurred by
Indemnitee in connection with any claim against Indemnitee which is the subject
of any threatened, asserted, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, to which Indemnitee
was, is or is threatened to be made a party by reason of facts which include
Indemnitee's being or having been a director or officer of the Company and/or as
a person who is serving or has served on behalf of the Company as a director,
officer, employee, agent or trustee of another corporation, partnership, joint
venture, trust or other enterprise, domestic or foreign, in which the Company
has a direct or indirect ownership interest; and
Whereas, such a claim has arisen against Indemnitee (hereinafter the
"Proceeding"), Indemnitee has notified Company of the Proceeding in accordance
with the terms of Section 6 of the Indemnity Agreement and a copy of the
Proceeding and notice are attached hereto as Exhibits A and B, respectively.
Now, Therefore, Indemnitee hereby agrees that in consideration of Company's
advance payment of Indemnitee's Expenses incurred prior to a final disposition
of the Proceeding, Indemnitee hereby undertakes to reimburse Company for any and
all Expenses paid by Company on behalf of Indemnitee prior to a final
disposition of the Proceeding in the event that Indemnitee is determined under
the Applicable Document (within the meaning of the Indemnity Agreement) to be
required to repay such amounts to the Company pursuant to the Indemnity
Agreement and applicable law, provided that if Indemnitee is entitled under the
Applicable Document to indemnification for some or a portion of such Expenses,
Indemnitee's obligation to reimburse Company shall apply only to those Expenses
which Indemnitee is so determined to be required to repay. Such reimbursement or
arrangements for reimbursement by Indemnitee shall be consummated within 90 days
after a determination that Indemnitee is so required to repay such amounts to
the Company pursuant to the Indemnity Agreement and applicable law.
The Indemnitee agrees to reasonably cooperate with the Company concerning such
Proceeding.
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In Witness Whereof, the undersigned has set his hand this _____________ day of
______________________, 19__.
Date of Indemnity Agreement: INDEMNITEE:
-------------------------------- --------------------------------------
Signed: _____________________________
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