1
EXHIBIT 10.15
LENNOX INTERNATIONAL INC.
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is entered into as of March 12, 1999
("Agreement"), between Lennox International Inc., a Delaware corporation (the
"Company"), and ________________________ ("Indemnitee").
BACKGROUND STATEMENT AND RECITALS
Highly competent and experienced persons are becoming more
reluctant to serve corporations as directors or in other capacities unless they
are provided with adequate protection through insurance and adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation.
The Board of Directors of the Company (the "Board") has
determined that the inability to attract and retain such persons would be
detrimental to the best interests of the Company and its stockholders and that
the Company should act to assure such persons that there will be increased
certainty of such protection in the future.
The Board has also determined that it is reasonable, prudent
and necessary for the Company, in addition to purchasing and maintaining
directors' and officers' liability insurance (or otherwise providing for
adequate arrangements of self-insurance), contractually to obligate itself to
indemnify such persons to the fullest extent permitted by applicable law so
that they will serve or continue to serve the Company free from undue concern
that they will not be so indemnified.
Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties
hereby agree as follows:
2
ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following words and terms shall have the
following respective meanings:
"Beneficial Owner" means, with reference to any securities,
any Entity if:
1. such Entity is the "beneficial owner" of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement)
such securities; provided, however, that a Entity shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any security
under this subsection (i) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (x) arises solely from a revocable proxy or consent
given in response to a public (i.e., not including a solicitation
exempted by Rule 14a- 2(b)(2) of the General Rules and Regulations
under the Exchange Act) proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act and (y) is not then
reportable by such Entity on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
2. such Entity is a member of a group (as that term
is used in Rule 13d- 5(b) of the General Rules and Regulations under
the Exchange Act) that includes any other Entity that beneficially
owns such securities;
provided, however, that a Entity shall not be deemed the "Beneficial Owner" of,
or to "beneficially own" any security held by a Xxxxxx Family Trust with
respect to which such Entity acts in the capacity of trustee, personal
representative, custodian, administrator, executor or other fiduciary;
provided, further, that nothing in this definition shall cause a Entity engaged
in business as an underwriter of securities to be the Beneficial Owner of, or
to "beneficially own," any securities acquired through such Entity's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition. For purposes
hereof, "voting" a security shall include voting, granting a proxy, consenting
or making a request or demand relating to corporate action (including, without
limitation, a demand for a stockholder list, to call a stockholder meeting or
to inspect corporate books and records) or otherwise giving an authorization
(within the meaning of Section 14(a) of the Exchange Act) in respect of such
security.
The terms "beneficially own" and "beneficially owning" shall
have meanings that are correlative to this definition of the term "Beneficial
Owner."
"Change of Control" means any of the following occurring on
or after the date hereof:
2
3
(i) Any Entity (other than an Exempt Person) shall
become the Beneficial Owner of 35% or more of the shares of Common
Stock then outstanding or 35% or more of the combined voting power of
the Voting Stock of the Company then outstanding; provided, however,
that no Change of Control shall be deemed to occur for purposes of
this subsection (i) if such Entity shall become a Beneficial Owner of
35% or more of the shares of Common Stock or 35% or more of the
combined voting power of the Voting Stock of the Company solely as a
result of (x) an Exempt Transaction or (y) an acquisition by a Entity
pursuant to a reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the conditions described
in clauses (x), (y) and (z) of subsection (iii) of this definition are
satisfied;
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual 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 a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; provided, further,
that there shall be excluded, for this purpose, any such individual
whose initial assumption of office occurs as a result of any actual or
threatened election contest that is subject to the provisions of Rule
14a-11 under the Exchange Act;
(iii) Approval by the shareholders of the Company of
a reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (x) more than
65% of the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the
combined voting power of the then outstanding Voting Stock of such
corporation is beneficially owned, directly or indirectly, by all or
substantially all of the Entities who were the Beneficial Owners of
the outstanding Common Stock immediately prior to such reorganization,
merger or consolidation (ignoring, for purposes of this clause (x),
the first proviso in the definition of "Beneficial Owner" set forth in
this Article I) in substantially the same proportions as their
ownership immediately prior to such reorganization, merger or
consolidation of the outstanding Common Stock, (y) no Entity
(excluding any Exempt Person or any Entity beneficially owning,
immediately prior to such reorganization, merger or consolidation,
directly or indirectly, 35% or more of the Common Stock then
outstanding or 35% or more of the combined voting power of the Voting
Stock of the Company then outstanding) beneficially owns, directly or
indirectly, 35% or more of the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding
Voting Stock of such corporation and (z) at least a majority of the
members of the board of directors of the corporation resulting from
such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement
or initial action by the Board providing for such reorganization,
merger or consolidation; or
3
4
(iv) Approval by the shareholders of the Company of
(x) a complete liquidation or dissolution of the Company, unless such
liquidation or dissolution is approved as part of a plan of
liquidation and dissolution involving a sale or disposition of all or
substantially all of the assets of the Company to a corporation with
respect to which, following such sale or other disposition, all of the
requirements of clauses (y)(A), (B) and (C) of this subsection (iv)
are satisfied, or (y) the sale or other disposition of all or
substantially all of the assets of the Company, other than to a
corporation, with respect to which, following such sale or other
disposition, (A) more than 65% of the then outstanding shares of
common stock of such corporation and the combined voting power of the
Voting Stock of such corporation is then beneficially owned, directly
or indirectly, by all or substantially all of the Entities who were
the Beneficial Owners of the outstanding Common Stock immediately
prior to such sale or other disposition (ignoring, for purposes of
this clause (y)(A), the first proviso in the definition of "Beneficial
Owner" set forth in this Article I) in substantially the same
proportions as their ownership, immediately prior to such sale or
other disposition, of the outstanding Common Stock, (B) no Entity
(excluding any Exempt Person and any Entity beneficially owning,
immediately prior to such sale or other disposition, directly or
indirectly, 35% or more of the Common Stock then outstanding or 35% or
more of the combined voting power of the Voting Stock of the Company
then outstanding) beneficially owns, directly or indirectly, 35% or
more of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
Voting Stock of such corporation and (C) at least a majority of the
members of the board of directors of such corporation were members of
the Incumbent Board at the time of the execution of the initial
agreement or initial action of the Board providing for such sale or
other disposition of assets of the Company.
"Claim" means an actual or threatened claim or request for
relief.
"Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Corporate Status" means the status of a person who is or was
a director, nominee for director, officer, employee, agent or fiduciary of the
Company (including any predecessors to the Company), or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.
"Disinterested Director," with respect to any request by
Indemnitee for indemnification hereunder, means a director of the Company who
neither is nor was a party to the Proceeding or subject to a Claim, issue or
matter in respect of which indemnification is sought by Indemnitee.
"DGCL" means the Delaware General Corporation Law and any
successor statute thereto as either of them may be amended from time to time.
4
5
"Entity" means any individual, firm, corporation,
partnership, association, trust, unincorporated organization or other entity.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exempt Person" means (i) the Company, any subsidiary of the
Company, any employee benefit plan of the Company or any subsidiary of the
Company, and any Entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan and (ii) any Person who is shown
under the caption "Principal and Selling Stockholders" in the Company's
Registration Statement on Form S-1 related to the initial public offering of
the Common Stock as beneficially owning (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act, as in effect on
the date of this Agreement) five percent or more of the Common Stock unless and
until such Person individually becomes the Beneficial Owner, other than as a
result of a distribution from a Xxxxxx Family Trust, of an amount of Common
Stock that is 103% or more of the amount of such Common Stock beneficially
owned by such Person on the date the Registration Statement is declared
effective by the Securities and Exchange Commission.
"Exempt Transaction" means an increase in the percentage of
the outstanding shares of Common Stock or the percentage of the combined voting
power of the outstanding Voting Stock of the Company beneficially owned by any
Entity solely as a result of a reduction in the number of shares of Common
Stock then outstanding due to the repurchase of Common Stock by the Company,
unless and until such time as such Entity shall purchase or otherwise become
the Beneficial Owner of additional shares of Common Stock constituting 3% or
more of the then outstanding shares of Common Stock or additional Voting Stock
representing 3% or more of the combined voting power of the then outstanding
Voting Stock.
"Expenses" means all attorneys' fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or participating in
(including on appeal), a Proceeding.
"Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither
contemporaneously is, nor in the five years theretofore has been, retained to
represent (a) the Company or Indemnitee in any matter material to either such
party, (b) any other party to the Proceeding giving rise to a claim for
indemnification hereunder or (c) the beneficial owner, directly or indirectly,
of securities of the Company representing 20% or more of the combined voting
power of the Company's then outstanding voting securities (other than, in each
such case, with respect to matters concerning the rights of Indemnitee under
this Agreement, or of other indemnitees under similar indemnification
5
6
agreements). Notwithstanding the foregoing, the term "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 Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement.
"Xxxxxx Family Trust" means any trust, estate, custodianship
or other fiduciary arrangement (collectively, a "Family Entity") formed, owned,
held or existing primarily for the benefit of the lineal descendants of X.X.
Xxxxxx, but only if such Family Entity shall not at any time hold Common Stock
or Voting Stock of the Company with the primary purpose of effecting with
respect to the Company (i) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation (ii) a sale or transfer of a material
amount of assets, (iii) any material change in capitalization, (iv) any other
material change in business or corporate structure or operations, (v) changes
in corporate charter or bylaws, or (vi) a change in the composition of the
Board or of the members of senior management.
"person" shall have the meaning ascribed to such term in
Sections 13(d) and 14(d) of the Exchange Act.
"Proceeding" means any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
administrative hearing or any other proceeding, whether civil, criminal,
administrative or investigative and whether or not based upon events occurring,
or actions taken, before the date hereof (except any of the foregoing initiated
by Indemnitee pursuant to Article VI or Section 7.8 to enforce his rights under
this Agreement), and any inquiry or investigation that could lead to, and any
appeal in or related to, any such action, suit, arbitration, alternative
dispute resolution mechanism, hearing or proceeding.
"Voting Stock" means, with respect to a corporation, all
securities of such corporation of any class or series that are entitled to vote
generally in the election of directors of such corporation (excluding any class
or series that would be entitled so to vote by reason of the occurrence of any
contingency, so long as such contingency has not occurred).
ARTICLE II
SERVICES BY INDEMNITEE
Section 2.1 Services. Indemnitee agrees to serve, or continue
to serve, as a director of the Company and, as the Company has requested or may
request from time to time, as a director, officer, employee, agent or fiduciary
of another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise. Indemnitee and Company each acknowledge that they
have entered into this Agreement as a means of inducing Indemnitee to serve, or
continue to serve, the Company in such capacities. Indemnitee may at any time
and for any reason resign from such position or positions (subject to any other
contractual obligation or
6
7
any obligation imposed by operation of law). The Company shall have no
obligation under this Agreement to continue Indemnitee in any such position or
positions.
ARTICLE III
INDEMNIFICATION
Section 3.1 General. The Company shall indemnify, and advance
Expenses to, Indemnitee to the fullest extent permitted by applicable law in
effect on the date hereof and to such greater extent as applicable law may
thereafter from time to time permit. The rights of Indemnitee provided under
the preceding sentence shall include, but shall not be limited to, the right to
be indemnified and to have Expenses advanced in all Proceedings to the fullest
extent permitted by Section 145 of the DGCL. The provisions set forth in this
Agreement are provided in addition to and as a means of furtherance and
implementation of, and not in limitation of, the obligations expressed in this
Article III.
Section 3.2 Proceedings Other Than by or in Right of the
Company. Indemnitee shall be entitled to indemnification pursuant to this
Section 3.2 if, by reason of his Corporate Status, he was, is or is threatened
to be made, a party to any Proceeding, other than a Proceeding by or in the
right of the Company. Pursuant to this Section 3.2, the Company shall indemnify
Indemnitee against Expenses, judgments, penalties, fines and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in connection with any such Expenses, judgments, penalties, fines and
amounts paid in settlement) actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any Claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and with respect to any
criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful. Nothing in this Section 3.2 shall limit the benefits of Section 3.1
or any other Section hereunder.
Section 3.3 Proceedings by or in Right of the Company.
Indemnitee shall be entitled to indemnification pursuant to this Section 3.3
if, by reason of his Corporate Status, he was, is or is threatened to be made,
a party to any Proceeding brought by or in the right of the Company to procure
a judgment in its favor. Pursuant to this Section 3.3, the Company shall
indemnify Indemnitee against Expenses actually and reasonably incurred by him
or on his behalf in connection with such Proceeding or any Claim, issue or
matter therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company.
Notwithstanding the foregoing, no indemnification against such Expenses shall
be made in respect of any Claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company if applicable
law prohibits such indemnification; provided, however, that, if applicable law
so permits, indemnification against such Expenses shall nevertheless be made by
the Company in such event if and only to the extent that the Court of
7
8
Chancery of the State of Delaware or other court of competent jurisdiction (the
"Court"), or the court in which such Proceeding shall have been brought or is
pending, shall so determine. Nothing in this Section 3.3 shall limit the
benefits of Section 3.1 or any other Section hereunder.
ARTICLE IV
EXPENSES
Section 4.1 Expenses of a Party Who Is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement to the
contrary (except as set forth in Section 7.2(c) or 7.6), and without a
requirement for any determination described in Section 5.2, the Company shall
indemnify Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf in connection with any Proceeding to which Indemnitee was
or is a party by reason of his Corporate Status and in which Indemnitee is
successful, on the merits or otherwise. If Indemnitee is not wholly successful,
on the merits or otherwise, in a Proceeding but is successful, on the merits or
otherwise, as to any Claim, issue or matter in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf relating to each successfully resolved Claim,
issue or matter. For purposes of this Section 4.1 and without limitation, the
termination of a Claim, issue or matter in a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as to such Claim,
issue or matter.
Section 4.2 Expenses of a Witness or Non-Party.
Notwithstanding any other provision of this Agreement to the contrary, to the
extent that Indemnitee is, by reason of his Corporate Status, a witness or
otherwise participates in any Proceeding at a time when he is not a party in
the Proceeding, the Company shall indemnify him against all Expenses actually
and reasonably incurred by him or on his behalf in connection therewith.
Section 4.3 Advancement of Expenses. The Company shall pay
all reasonable Expenses incurred by or on behalf of Indemnitee in connection
with any Proceeding, whether brought by or in the right of the Company or
otherwise, in advance of any determination with respect to entitlement to
indemnification pursuant to Article V within 15 days after the receipt by the
Company of a written request from Indemnitee requesting such payment or
payments from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee. Indemnitee hereby undertakes and agrees that he will
reimburse and repay the Company for any Expenses so advanced to the extent that
it shall ultimately be determined (in a final adjudication by a court from
which there is no further right of appeal or in a final adjudication of an
arbitration pursuant to Section 6.1 if Indemnitee elects to seek such
arbitration) that Indemnitee is not entitled to be indemnified by the Company
against such Expenses.
8
9
ARTICLE V
PROCEDURE FOR DETERMINATION OF ENTITLEMENT
TO INDEMNIFICATION
Section 5.1 Request by Indemnitee. To obtain indemnification
under this Agreement, Indemnitee shall submit to the Company a written request,
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The
Secretary or an Assistant Secretary of the Company shall, promptly upon receipt
of such a request for indemnification, advise the members of the Board in
writing that Indemnitee has requested indemnification.
Section 5.2 Determination of Request. Upon written request by
Indemnitee for indemnification pursuant to Section 5.1, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made in the specific case as follows:
(a) If a Change in Control shall have occurred, by
Independent Counsel in a written opinion to the Board, a copy of which
shall be delivered to Indemnitee unless Indemnitee shall request that
such determination be made by the Disinterested Directors, in which
case in the manner provided for in clause (i) or (ii) of paragraph (b)
below;
(b) If a Change in Control shall not have occurred,
(i) by a majority vote of the Disinterested Directors, even though
less than a quorum of the Board, (ii) by a committee of Disinterested
Directors designated by majority vote of the Disinterested Directors,
even though less than a quorum of the Board, (iii) if there are no
Disinterested Directors, or if such Disinterested Directors so direct,
by Independent Counsel in a written opinion to the Board, a copy of
which shall be delivered to the Indemnitee, or (iv) if Indemnitee and
the Company mutually agree, by the stockholders of the Company; or
(c) As provided in Section 5.4(b).
If it is so determined that Indemnitee is entitled to indemnification
hereunder, payment to Indemnitee shall be made within 15 days after such
determination. Indemnitee shall cooperate with the person or persons making
such determination with respect to Indemnitee's entitlement to indemnification,
including providing to such person upon reasonable advance request any
documentation or information that is not privileged or otherwise protected from
disclosure and that is reasonably available to Indemnitee and reasonably
necessary for such determination. Any costs or expenses (including attorneys'
fees and disbursements) incurred by Indemnitee in so cooperating with the
person or persons making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement to
indemnification), and the Company shall indemnify and hold harmless Indemnitee
therefrom.
9
10
Section 5.3 Independent Counsel. If a Change in Control shall
not have occurred and the determination of entitlement to indemnification is to
be made by Independent Counsel, the Independent Counsel shall be selected by
(a) a majority vote of the Disinterested Directors, even though less than a
quorum of the Board or (b) if there are no Disinterested Directors, by a
majority vote of the Board, and the Company shall give written notice to
Indemnitee, within 10 days after receipt by the Company of Indemnitee's request
for indemnification, specifying the identity and address of the Independent
Counsel so selected. If a Change in Control shall have occurred and the
determination of entitlement to indemnification is to be made by Independent
Counsel, the Independent Counsel shall be selected by Indemnitee, and
Indemnitee shall give written notice to the Company, within 10 days after
submission of Indemnitee's request for indemnification, specifying the identity
and address of the Independent Counsel so selected (unless Indemnitee shall
request that such selection be made by the Disinterested Directors, in which
event the Company shall give written notice to Indemnitee, within 10 days after
receipt of Indemnitee's request for the Disinterested Directors to make such
selection, specifying the identity and address of the Independent Counsel so
selected). In either event, (i) such notice to Indemnitee or the Company, as
the case may be, shall be accompanied by a written affirmation of the
Independent Counsel so selected that it satisfies the requirements of the
definition of "Independent Counsel" in Article I and that it agrees to serve in
such capacity and (ii) Indemnitee or the Company, as the case may be, may,
within seven days after such written notice of selection shall have been given,
deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection. Any objection to selection of Independent Counsel
pursuant to this Section 5.3 may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of the
definition of "Independent Counsel" in Article I, and the objection shall set
forth with particularity the factual basis of such assertion. If such written
objection is timely made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until the Court has determined that such
objection is without merit. In the event of a timely written objection to a
choice of Independent Counsel, the party originally selecting the Independent
Counsel shall have seven days to make an alternate selection of Independent
Counsel and to give written notice of such selection to the other party, after
which time such other party shall have five days to make a written objection to
such alternate selection. If, within 30 days after submission of Indemnitee's
request for indemnification pursuant to Section 5.1, no Independent Counsel
shall have been selected and not objected to, either the Company or Indemnitee
may petition the Court for resolution of any objection that shall have been
made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the Court or by such other person as the Court shall designate, and the
person with respect to whom an objection is so resolved or the person so
appointed shall act as Independent Counsel under Section 5.2. The Company shall
pay any and all reasonable fees and expenses incurred by such Independent
Counsel in connection with acting pursuant to Section 5.2, and the Company
shall pay all reasonable fees and expenses incident to the procedures of this
Section 5.3, regardless of the manner in which such Independent Counsel was
selected or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 6.1, Independent
10
11
Counsel shall be discharged and relieved of any further responsibility in such
capacity (subject to the applicable standards of professional conduct then
prevailing).
Section 5.4 Presumptions and Effect of Certain Proceedings.
(a) Indemnitee shall be presumed to be entitled to
indemnification under this Agreement upon submission of a request for
indemnification pursuant to Section 5.1, and the Company shall have
the burden of proof in overcoming that presumption in reaching a
determination contrary to that presumption. Such presumption shall be
used by Independent Counsel (or other person or persons determining
entitlement to indemnification) as a basis for a determination of
entitlement to indemnification unless the Company provides information
sufficient to overcome such presumption by clear and convincing
evidence.
(b) If the person or persons empowered or selected
under this Article V to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within 60 days
after receipt by the Company of Indemnitee's request for
indemnification, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall
be entitled to such indemnification, absent (i) a knowing misstatement
by Indemnitee of a material fact, or knowing omission of a material
fact necessary to make Indemnitee's statement not materially
misleading, in connection with Indemnitee's request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be
extended for a reasonable time, not to exceed an additional 30 days,
if the person making the determination with respect to entitlement to
indemnification in good faith requires such additional time for the
obtaining or evaluating of documentation and/or information relating
to such determination; provided further, that the 60-day limitation
set forth in this Section 5.4(b) shall not apply and such period shall
be extended as necessary (i) if within 30 days after receipt by the
Company of Indemnitee's request for indemnification under Section 5.1
Indemnitee and the Company have agreed, and the Board has resolved, to
submit such determination to the stockholders of the Company pursuant
to Section 5.2(b) for their consideration at an annual meeting of
stockholders to be held within 90 days after such agreement and such
determination is made thereat, or a special meeting of stockholders
for the purpose of making such determination to be held within 60 days
after such agreement and such determination is made thereat, or (ii)
if the determination of entitlement to indemnification is to be made
by Independent Counsel, in which case the applicable period shall be
as set forth in clause (c) of Section 6.1.
(c) The termination of any Proceeding or of any
Claim, issue or matter by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo
contendere or its equivalent, shall not by itself adversely affect the
rights of Indemnitee to indemnification or create a presumption that
Indemnitee did not act
11
12
in good faith or in a manner that he reasonably believed to be in or
not opposed to the best interests of the Company or, with respect to
any criminal Proceeding, that Indemnitee had reasonable cause to
believe that his conduct was unlawful. Indemnitee shall be deemed to
have been found liable in respect of any Claim, issue or matter only
after he shall have been so adjudged by the Court after exhaustion of
all appeals therefrom.
ARTICLE VI
CERTAIN REMEDIES OF INDEMNITEE
Section 6.1 Indemnitee Entitled to Adjudication in an
Appropriate Court. If (a) a determination is made pursuant to Article V that
Indemnitee is not entitled to indemnification under this Agreement, (b) there
has been any failure by the Company to make timely payment or advancement of
any amounts due hereunder, or (c) the determination of entitlement to
indemnification is to be made by Independent Counsel and such determination
shall not have been made and delivered in a written opinion within 90 days
after the latest of (i) such Independent Counsel's being appointed, (ii) the
overruling by the Court of objections to such counsel's selection or (iii)
expiration of all periods for the Company or Indemnitee to object to such
counsel's selection, Indemnitee shall be entitled to commence an action seeking
an adjudication in the Court of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
commercial arbitration rules of the American Arbitration Association.
Indemnitee shall commence such action seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has
the right to commence such action pursuant to this Section 6.1, or such right
shall expire. The Company shall not oppose Indemnitee's right to seek any such
adjudication or award in arbitration.
Section 6.2 Adverse Determination Not to Affect any Judicial
Proceeding. If a determination shall have been made pursuant to Article V that
Indemnitee is not entitled to indemnification under this Agreement, any
judicial proceeding or arbitration commenced pursuant to this Article VI shall
be conducted in all respects as a de novo trial or arbitration on the merits,
and Indemnitee shall not be prejudiced by reason of such initial adverse
determination. In any judicial proceeding or arbitration commenced pursuant to
this Article VI, Indemnitee shall be presumed to be entitled to indemnification
or advancement of Expenses, as the case may be, under this Agreement and the
Company shall have the burden of proof in overcoming such presumption and to
show by clear and convincing evidence that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
Section 6.3 Company Bound by Determination Favorable to
Indemnitee in any Judicial Proceeding or Arbitration. If a determination shall
have been made or deemed to have been made pursuant to Article V that
Indemnitee is entitled to indemnification, the Company shall be irrevocably
bound by such determination in any judicial proceeding or arbitration commenced
12
13
pursuant to this Article VI and shall be precluded from asserting that such
determination has not been made or that the procedure by which such
determination was made is not valid, binding and enforceable, in each such case
absent (a) a knowing misstatement by Indemnitee of a material fact, or a
knowing omission of a material fact necessary to make a statement by Indemnitee
not materially misleading, in connection with Indemnitee's request for
indemnification or (b) a prohibition of such indemnification under applicable
law.
Section 6.4 Company Bound by the Agreement. The Company shall
be precluded from asserting in any judicial proceeding or arbitration commenced
pursuant to this Article VI that the procedures and presumptions of this
Agreement are not valid, binding and enforceable and shall stipulate in any
such court or before any such arbitrator that the Company is bound by all the
provisions of this Agreement.
Section 6.5 Indemnitee Entitled to Expenses of Judicial
Proceeding. If Indemnitee seeks a judicial adjudication of or an award in
arbitration to enforce his rights under, or to recover damages for breach of,
this Agreement, Indemnitee shall be entitled to recover from the Company, and
the Company shall indemnify Indemnitee against, any and all expenses (of the
types described in the definition of Expenses in Article I) actually and
reasonably incurred by him in such judicial adjudication or arbitration but
only if Indemnitee prevails therein. If it shall be determined in such judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not
all of the indemnification or advancement of expenses or other benefit sought,
the expenses incurred by Indemnitee in connection with such judicial
adjudication or arbitration shall be equitably allocated between the Company
and Indemnitee. Notwithstanding the foregoing, if a Change in Control shall
have occurred, Indemnitee shall be entitled to indemnification under this
Section 6.5 regardless of whether Indemnitee ultimately prevails in such
judicial adjudication or arbitration.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Non-Exclusivity. The rights of Indemnitee to
receive indemnification and advancement of Expenses under this Agreement shall
not be deemed exclusive of any other rights to which Indemnitee may at any time
be entitled under applicable law, the Certificate of Incorporation or Bylaws of
the Company, any other agreement, vote of stockholders or a resolution of
directors, or otherwise. No amendment or alteration of the Certificate of
Incorporation or Bylaws of the Company or any provision thereof shall adversely
affect Indemnitee's rights hereunder and such rights shall be in addition to
any rights Indemnitee may have under the Company's Certificate of
Incorporation, Bylaws and the DGCL or otherwise. To the extent that there is a
change in the DGCL or other applicable law (whether by statute or judicial
decision) that allows greater indemnification by agreement than would be
afforded currently under the Company's Certificate of Incorporation or Bylaws
and this Agreement, it is
13
14
the intent of the parties hereto that the Indemnitee shall enjoy by virtue of
this Agreement the greater benefit so afforded by such change.
Section 7.2 Insurance and Subrogation.
(a) To the extent the Company maintains an insurance
policy or policies providing liability insurance for directors,
officers, employees, agents or fiduciaries of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise that such person serves at the request of the
Company, 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 such director, officer, employee, agent or
fiduciary under such policy or policies.
(b) In the event of any payment by the Company 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 papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(c) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that Indemnitee has otherwise actually
received such payment under the Company's Certificate of Incorporation
or Bylaws or any insurance policy, contract, agreement or otherwise.
Section 7.3 Certain Settlement Provisions. The Company shall
have no obligation to indemnify Indemnitee under this Agreement for amounts
paid in settlement of a Proceeding or Claim without the Company's prior written
consent. The Company shall not settle any Proceeding or Claim in any manner
that would impose any fine or other obligation on Indemnitee without
Indemnitee's prior written consent. Neither the Company nor Indemnitee shall
unreasonably withhold their consent to any proposed settlement.
Section 7.4 Duration of Agreement. This Agreement shall
continue for so long as Indemnitee serves as a director, nominee for director,
officer, employee, agent or fiduciary of the Company or, at the request of the
Company, as a director, nominee for director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, and thereafter shall survive until and
terminate upon the latest to occur of (a) the expiration of 10 years after the
latest date that Indemnitee shall have ceased to serve in any such capacity;
(b) the final termination of all pending Proceedings in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Article VI
relating thereto; or (c) the expiration of all statutes of limitation
applicable to possible Claims arising out of Indemnitee's Corporate Status.
14
15
Section 7.5 Notice by Each Party. Indemnitee shall promptly
notify the Company in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document or communication
relating to any Proceeding or Claim for which Indemnitee may be entitled to
indemnification or advancement of Expenses hereunder; provided, however, that
any failure of Indemnitee to so notify the Company shall not adversely affect
Indemnitee's rights under this Agreement except to the extent the Company shall
have been materially prejudiced as a direct result of such failure. The Company
shall notify promptly Indemnitee in writing, as to the pendency of any
Proceeding or Claim that may involve a claim against the Indemnitee for which
Indemnitee may be entitled to indemnification or advancement of Expenses
hereunder.
Section 7.6 Certain Persons Not Entitled to Indemnification.
Notwithstanding any other provision of this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification or advancement of Expenses
hereunder with respect to any Proceeding or any Claim, issue or matter therein,
brought or made by Indemnitee against the Company or any affiliate of the
Company, except as specifically provided in Article V or Article VI.
Section 7.7 Indemnification for Negligence, Gross Negligence,
etc. Without limiting the generality of any other provision hereunder, it is
the express intent of this Agreement that Indemnitee be indemnified and
Expenses be advanced regardless of Indemnitee's acts of negligence, gross
negligence or intentional or willful misconduct to the extent that
indemnification and advancement of Expenses is allowed pursuant to the terms of
this Agreement and under applicable law.
Section 7.8 Enforcement. The Company agrees that its
execution of this Agreement shall constitute a stipulation by which it shall be
irrevocably bound in any court or arbitration in which a proceeding by
Indemnitee for enforcement of his rights hereunder shall have been commenced,
continued or appealed, that its obligations set forth in this Agreement are
unique and special, and that failure of the Company to comply with the
provisions of this Agreement will cause irreparable and irremediable injury to
Indemnitee, for which a remedy at law will be inadequate. As a result, in
addition to any other right or remedy he may have at law or in equity with
respect to breach of this Agreement, Indemnitee shall be entitled to injunctive
or mandatory relief directing specific performance by the Company of its
obligations under this Agreement.
Section 7.9 Successors and Assigns. All of the terms and
provisions of this Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the parties hereto and their respective
successors, assigns, heirs, executors, administrators, legal representatives.
The Company shall require and cause any direct or indirect successor (whether
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by written agreement in form and
substance reasonably satisfactory to Indemnitee, expressly to assume and agree
to perform this Agreement in the same manner and to
15
16
the same extent that the Company would be required to perform if no such
succession had taken place.
Section 7.10 Amendment. This Agreement may not be modified or
amended except by a written instrument executed by or on behalf of each of the
parties hereto.
Section 7.11 Waivers. The observance of any term of this
Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) by the party entitled to enforce such
term only by a writing signed by the party against which such waiver is to be
asserted. Unless otherwise expressly provided herein, no delay on the part of
any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party
hereto of any right, power or privilege hereunder operate as a waiver of any
other right, power or privilege hereunder nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
Section 7.12 Entire Agreement. This Agreement and the
documents expressly referred to herein constitute the entire agreement between
the parties hereto with respect to the matters covered hereby, and any other
prior or contemporaneous oral or written understandings or agreements with
respect to the matters covered hereby are expressly superseded by this
Agreement.
Section 7.13 Severability. If any provision of this Agreement
(including any provision within a single section, paragraph or sentence) or the
application of such provision to any person or circumstance, shall be
judicially declared to be invalid, unenforceable or void, such decision will
not have the effect of invalidating or voiding the remainder of this Agreement
or affect the application of such provision to other persons or circumstances,
it being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to render it
valid, legal and enforceable while preserving its intent, or if such
modification is not possible, by substituting therefor another provision that
is valid, legal and enforceable and that achieves the same objective. Any such
finding of invalidity or unenforceability shall not prevent the enforcement of
such provision in any other jurisdiction to the maximum extent permitted by
applicable law.
Section 7.14 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery
of a standard overnight courier or when delivered by hand or (c) the expiration
of five business days after the date mailed by certified or registered mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other addresses for a party as shall be specified by like
notice):
16
17
If to the Company, to:
Lennox International Inc.
0000 Xxxx Xxxx Xxxx.
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxx, Xx., Secretary
Facsimile: (000) 000-0000
If to Indemnitee, to:
--------------------------
--------------------------
--------------------------
Facsimile:
----------------
Section 7.15 Certain Construction Rules.
(a) The article and section headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. As used in
this Agreement, unless otherwise provided to the contrary, (i) all
references to days shall be deemed references to calendar days and
(ii) any reference to a "Section" or "Article" shall be deemed to
refer to a section or article of this Agreement. The words "hereof,"
"herein" and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." Unless otherwise
specifically provided for herein, the term "or" shall not be deemed to
be exclusive. Whenever the context may require, any pronoun used in
this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall
include the plural and vice versa.
(b) For purposes of this Agreement, references to
"other enterprises" shall include employee benefit plans; references
to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; references to "serving at the
request of the Company" shall include any service as a director,
nominee for director, officer, employee or agent of the Company which
imposes duties on, or involves services by, such director, nominee,
officer, employee or agent with respect to an employee benefit plan,
its participants or beneficiaries; and a person who 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 shall
be deemed to have acted in a manner "not opposed to the best interests
of the Company" as referred to in this Agreement.
17
18
Section 7.16 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
without giving effect to the conflicts of laws principles thereof.
Section 7.17 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument,
notwithstanding that both parties are not signatories to the original or same
counterpart.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered to be effective as of the date first above written.
LENNOX INTERNATIONAL INC.
By:
------------------------------------
Xxxx X. Xxxxxx, Xx.
Chairman of the Board and
Chief Executive Officer
INDEMNITEE
---------------------------------------
Signature
Printed Name:
18
19
SCHEDULE A
List of Executive Officers and Directors
who entered into Indemnification Agreements
with Lennox International Inc., dated April 23, 1999
Xxxx X. Xxxxxx, Xx.
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxx, Xx.
Xxxx X. Major
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx Xxxxx
Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxx
Xxxx X. Xxxxxxx, Xx.
H.E. French
Xxxx X. Xxxxxxx
X. Xxxx Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxx Xxxxxx
