INDEMNIFICATION AGREEMENT
THIS
AGREEMENT, made and entered into this __th day of _________, ____ by and
between
CPI Corp., a Delaware corporation (the “
Company”)
and
______________ (the “
Indemnitee”).
WHEREAS,
it is essential to the Company to retain and attract as directors and officers
the most capable persons available;
WHEREAS,
Indemnitee is a director of the Company;
WHEREAS,
both the Company and Indemnitee recognize the increased risk of litigation
and
other claims being asserted against directors and officers of public companies
in today’s environment;
WHEREAS,
in recognition of Indemnitee’s need for substantial protection against personal
liability and to enhance Indemnitee’s continued service to the Company in an
effective manner and in part to provide Indemnitee with specific contractual
assurance that the indemnification protection will be available to Indemnitee
(regardless of, among other things, any changes in the composition of the
Company’s Board of Directors), and to induce Indemnitee to continue to provide
services to the Company as a director, the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the full 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 Company’s directors’ and officers’
liability insurance policies;
NOW,
THEREFORE, in consideration of the premises and of Indemnitee’s continuing to
serve the Company directly or, at its request, another enterprise, and intending
to be legally bound hereby, the parties hereto agree as follows:
| 1. |
Certain
Definitions.
As used herein the following terms shall have the following meanings:
|
(a) Board
of Directors:
the
Board of Directors of the Company.
(b) Change
of Control:
a
change of control of a nature that would be required to be reported in response
to Item 1(a) of the Current Report of Form 8-K, as in effect on the date
hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (“Exchange
Act”)
or
would have been required to be so reported but for the fact that such event
had
been “previously reported” as that term is defined in Rule 12b-2 of Regulation
12B of the Exchange Act unless the transactions that give rise to the change
of
control are approved or ratified by a majority of the individuals who constitute
the Board of Directors on the date hereof (the “Incumbent
Board”)
who
are not employees of the Corporation; provided that, without limitation,
notwithstanding anything herein to the contrary, such a change of control
shall
be deemed to have occurred if, (i) any Person is or becomes the beneficial
owner
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of
securities of the Company representing 40% or more of the combined Voting
Securities, (ii) individuals who constitute the Incumbent Board cease for
any
reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board (either by
a
specific vote or by approval of the proxy statement of the Company in which
such
person is named as a nominee for director, without objection to such nomination)
shall be, for purposes of this clause (ii), considered as though such person
were a member of the Incumbent Board, or (iii) approval by the stockholders
of the Company of a reorganization, merger or consolidation, in each case,
with
respect to which persons who were the stockholders of the Company immediately
prior to such reorganization, merger or consolidation do not, immediately
thereafter, own, directly or indirectly, more than 50% of the combined voting
power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company’s then outstanding voting
securities, or a liquidation or dissolution of the Company or the sale of
all or
substantially all of the assets of the Company.
(c)
Claim:
any
threatened, pending or completed action, suit, proceeding, arbitration or
alternate dispute resolution proceeding, whether civil, criminal,
administrative, investigative, or other, or any inquiry hearing or investigation
(whether conducted by the Company or any other party or authority) that
Indemnitee in good faith believes might lead to the institution of any such
action, suit, proceeding, arbitration or alternate dispute resolution
proceeding.
(d)
Expenses:
include
attorneys’ fees, expenses and charges and all other costs, travel expenses, fees
of experts, transcript costs, filing fees, witness fees, telephone charges,
postage, delivery service fees, expenses and obligations of any nature
whatsoever paid or incurred in connection with investigating, defending,
being a
witness in or participating in (including on appeal), or preparing to defend,
be
a witness in or participate in any Claim relating to any Indemnifiable Event.
(e)
Indemnifiable
Event:
any
event or occurrence related to the fact that Indemnitee is or was a director,
officer, employee, agent or fiduciary of the Company, or is or was serving
at
the request of the Company as a director, officer, employee, trustee, agent
or
fiduciary of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not done
by
Indemnitee in any such capacity.
(f)
Independent
Legal Counsel:
Independent Legal Counsel shall refer to an attorney, selected by the Indemnitee
and approved by the Board of Directors (which approval shall not be unreasonably
withheld), who shall not have otherwise performed services for the Company
or
Indemnitee within the last five years. Independent Legal Counsel shall be
a
member of or of counsel to a firm having no fewer than fifty attorneys as
of the
date such Independent Legal Counsel is designated by the Indemnitee. Independent
Legal Counsel shall not be counsel to the Indemnitee in any Claims arising
in
whole or in part from any Indemnifible Event and shall not be Indemnitee’s
counsel in any proceeding to determine Indemnitee’s rights hereunder.
Independent Legal Counsel shall also not be any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict
of
interest in representing either the Company or Indemnitee in an action to
determine Indemnitee’s rights under this Agreement, nor shall Independent Legal
Counsel be any person who has been sanctioned or censured for ethical violations
of applicable standards of professional conduct. In the event an Independent
Legal Counsel resigns, becomes disabled, dies, or is otherwise unable in
such
counsel’s opinion to serve as Independent Legal Counsel, Indemnitee shall
select, subject to the approval of the Board of Directors (which approval
shall
not be unreasonably withheld) a successor Independent Legal Counsel.
(g)
Person:
any
individual, corporation, partnership, group, association or other “person,” as
such term is used in Section 14(d) of the Exchange Act, other than the Company
or any corporation (or other business entity) controlling, controlled by
or
under common control with the Company or any employee benefit plan(s) sponsored
or maintained by the Company or any corporation (or other business entity)
controlling, controlled by or under common control with the Company.
(h)
Voting
Securities:
all
outstanding shares of capital stock of all classes and series of the Company
entitled to vote generally in the election of directors of the Company, in
each
case hereunder voting together as a single class.
2. Basic
Indemnification Arrangement
(a) In
the
event Indemnitee was, is or becomes a party to or witness or other participant
in, or is threatened to be made a party to or witness or other participant
in, a
Claim by reason of (or arising in whole or in part out of) an Indemnifiable
Event, subject to Sections 2(b), 2(c), and 2(d) hereof the Company shall
indemnify Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than thirty days after the Indemnitee
presents written demand to the Company, against any and all reasonable Expenses
and all judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection
with
or in respect of such Expenses, judgments, fines, penalties or amounts paid
in
settlement) of such Claim and any federal, state, local or foreign taxes
imposed
on the Indemnitee as a result of the actual or deemed receipt of any payments
under this Agreement. The Indemnitee’s written demand shall also specify the
Independent Legal Counsel selected by Indemnitee pursuant to the terms of
this
Agreement.
If so requested by Indemnitee in writing, the Company shall advance (within
ten
business days
of
such request) any and all reasonable Expenses to Indemnitee or
to the
Indemnitee’s counsel (an “Expense
Advance”).
Such
written request shall also specify the Independent Legal Counsel selected
by
Indemnitee if the Indemnitee has not previously specified such Independent
Legal
Counsel.
Notwithstanding anything in this Agreement to the contrary and except as
provided in Section
3, prior to a Change of control, Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with any Claim
initiated by Indemnitee against the Company or any director or officer of
the
Company unless the Company has joined in or consented to the initiation of
such
Claim.
(b) Notwithstanding
the foregoing, (i) the obligations of the Company under Section 2(a) hereof
shall be subject to the condition that within sixty (60) days of the
Indemnitee’s written demand for an indemnification payment Independent Legal
Counsel shall not have determined in a written opinion that Indemnitee would
not
be permitted to be indemnified under applicable law, and the Indemnitee hereby
agrees to repay to the Company all indemnification amounts paid to Indemnitee
by
the Company under Section 2(a) hereof when and to the extent that Independent
Legal Counsel so determines that such payments were not to be permitted under
applicable law, and (ii) the obligation of the Company to make an Expense
Advance pursuant to Section 2(a) shall be subject to the condition that,
within
sixty days of the Indemnitee’s written request for an Expense Advance
Independent Legal Counsel shall not have determined in a written opinion
that
Indemnitee would not be permitted to receive such Expense Advance under
applicable law, and the Indemnitee hereby agrees to repay to the Company
all
Expense Advances paid to the Indemnitee by the Company under Section 2(a)
hereof
when and to the extent Independent Legal Counsel so determines that such
Expense
Advance was not permitted under applicable law; provided, however, that if
in
the case of any indemnification payment or Expense Advance under Section
2(a)
hereof Indemnitee commences legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be indemnified
under applicable law (whether or not commenced prior to or following the
determination of such Independent Legal Counsel) then (i) any determination
made by Independent Legal Counsel that Indemnitee would not be permitted
to be
indemnified under applicable law shall not be binding upon Indemnitee,
(ii) the Company shall be obligated to make such indemnification payments
and Expense Advances as would otherwise be required by Section 2(a) unless
and
until a final judicial determination is made establishing that Indemnitee
is not
entitled to indemnification or Expense Advances under applicable law, and
(iii) Indemnitee shall not be required to reimburse the Company for any
such payment or Expense Advance until a final judicial determination is made
requiring the Indemnitee to make such repayment. (A final judicial
determination, as used in this and other Sections of this Agreement, is a
determination with respect to which all rights of appeal therefrom have been
exhausted or lapsed.) The Indemnitee hereby further agrees to repay to the
Company all indemnification payments and Expense Advances made to Indemnitee
under Section 2(a) hereof when and to the extent any such final judicial
determination determines that such payments or Expenses were not permitted
under
applicable law. The lndemnitee’s obligation to reimburse the Company for
indemnification payments and Expense Advances shall be unsecured and no interest
shall be charged or payable thereon. If Independent Legal Counsel determines
that Indemnitee substantively would not be permitted to be indemnified in
whole
or in part or to receive an Expense Advance under applicable law, Indemnitee
shall have the right to commence litigation in any court sitting in the City
or
County of St. Louis, Missouri, or the State of Delaware having subject matter
jurisdiction thereof and in which venue is properly seeking an initial
determination by the court or challenging any such determination by the
Independent Legal Counsel or any aspect thereof, or the legal or factual
bases
therefore, and the Company hereby consents to service of process and to appear
in any such proceeding. Any determination by Independent Legal Counsel otherwise
and made within the sixty day period provided under this Section 2(b) shall
be
conclusive and binding on the Company and Indemnitee.
(c)
The
Company shall not make any payments to the Indemnitee pursuant to Section
2
hereof on account of any Claim for recovery of profits from the purchase
or sale
by the Indemnitee of securities of the Company that is based upon the provisions
of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto
or similar provisions of any federal, state, or local statutory
law.
(d)
The
Indemnitee hereby agrees to repay to the Company on demand all indemnification
payments and Expense Advances made to Indemnitee under Section 2 hereof that
are
determined in a final judicial determination (as hereinbefore defined) to have
been made with respect to the Indemnitee’s act or conduct that was knowingly
fraudulent or deliberately dishonest or to have constituted willful misconduct.
3.
Indemnification
for Additional Expenses.
The
Company shall indemnify Indemnitee against any and all expenses (including
attorneys’ fees) and, if requested by Indetmnitee, shall (within ten business
days of such request) advance such expenses to Indemnitee, which are incurred
by
Indemnitee in connection with any claim asserted against or in connection
with
any action brought by Indemnitee for (i) indemnification or advance payment
of
reasonable Expenses by the Company under this Agreement or any other agreement,
the Company’s Certificate of Incorporation, or the Bylaws of the Company now or
hereafter in effect relating to Claims for Indemnifiable Events, and/or (ii)
recovery under any directors’ and officers’ liability insurance policies
maintained by the Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense payment
or
insurance recovery, as the case may be.
4.
Partial
Indemnity.
If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not, however, for
all of
the total amount thereof, the Company shall nevertheless indemnify Indemnitee
for the portion thereof to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
or
all Claims relating in whole or in part to an Indemnifiable Event or in defense
of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith. In connection with any determination by Independent Legal Counsel
or
otherwise as to whether Indemnitee is entitled to be indemnified hereunder
the
burden of proof shall be on the Company to establish that Indemnitee is not
so
entitled.
5.
Independent
Legal Counsel Fees.
The
Company agrees to pay from time to time the reasonable fees of the Independent
Legal Counsel and to indemnify fully such Independent Legal Counsel against
any
and all expenses (including attorneys’ fees), claims, causes of action,
liabilities, damages, judgments, penalties and fines arising out of or relating
to this Agreement or the engagement of such Independent Legal Counsel pursuant
hereto.
6.
No
Presumption.
For
purposes of this Agreement, the termination of any claim, action, suit or
proceeding, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon 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.
7.
Non-exclusivity.
The
rights of Indemnitee hereunder shall be in addition to any other rights
Indemnitee may have under any other agreement, the Company’s Certificate of
Incorporation, the Bylaws of the Company, the Delaware General Corporation
Law,
or otherwise. To the extent that a change in the Delaware General Corporation
Law (whether by statute or judicial decision) permits greater indemnification
by
agreement than would by afforded currently under the Company’s Certificate of
Incorporation, the Bylaws of the Company and this Agreement, it is the intent
of
the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
8.
No
Construction as Employment Agreement.
Nothing
contained herein shall be construed as providing the Indemnitee any right
to be
retained in the employ of the Company or any of its subsidiaries or to continue
to serve as a director of the Company or any of its subsidiaries.
9.
Liability
Insurance.
To the
extent the Company maintains an insurance policy or policies providing
directors’ and officers’ liability insurance, Indemnitee shall be covered by
such policy or policies (which shall, if available at reasonable cost to
the
Company, provide coverage to the Indemnitee for at least six (6) years after
the
Indemnitee has ceased to be a director of the Company), in accordance with
its
or their terms, to the maximum extent of the coverage reasonably available
for
any Company director or officer.
10.
Period
of Limitations.
No
legal action shall be brought and no cause of action shall be asserted by
or in
the right of the Company or any affiliate of the Company against Indemnitee,
Indemnitee’s spouse, heirs, executors, administrators or personal or legal
representatives after the expiration of three 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 a legal action within such three-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.
11.
Amendments
and Waiver.
No
supplement, modification or amendment of this Agreement shall be binding
unless
executed in writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver
of any
other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12.
Subrogation.
In the
event of payment to the Indemnitee under this Agreement, the Company shall
be
subrogated to the extent of such payment to all of the rights of recovery
of
Indemnitee, who shall execute all documents, agreements, and instruments
required and shall do everything that may be necessary to secure such rights
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
13.
No
Duplication of Payment.
The
Company 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 actually received payment (under any other agreement, any insurance
policy, the Company’s Certificate of Incorporation, the Bylaws of the Company or
otherwise) of the amounts otherwise indemnifiable hereunder.
14.
Miscellaneous.
This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors, assigns, 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 Company, spouses,
heirs, beneficiaries, and personal and legal representatives. The Company
shall
require and cause any successor or assign (whether direct or indirect by
purchase, merger, consolidation or otherwise) to all, substantially all,
or a
substantial part, of the business and/or assets of the Company, 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 Company would be required to perform if no such succession had taken
place. This Agreement shall continue in effect regardless of whether Indemnitee
continues to serve as a director of the Company or of any other enterprise
at
the Company’s request. Section headings are included herein solely for
convenience of reference and shall not be used in the construction and
application of this Agreement.
15.
Severability.
The
provisions of this Agreement shall be severable in the event that any of
the
provisions hereof (including any provision within a single Section or a
paragraph or sentence thereof) are held by a court of competent jurisdiction
to
be invalid, void or otherwise unenforceable, and the remaining provisions
shall
remain enforceable to the fullest extent permitted by applicable 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, illegal or
unenforceable.
16.
Governing
Law.
This
Agreement and all amendments, modifications and supplements hereof 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 such state
without giving effect to the principles of conflicts of laws.
IN
WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the date first above written.
|
By:
|
/s/ J. Xxxxx Xxxxxxx | |
| J. Xxxxx Xxxxxxx | ||
|
Title:
|
Chairman of the Board and Chief Executive Officer | |
| /s/ | ||
| Indemnitee |
