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EXHIBIT 10(a)
FORM
OF
INDEMNITY AGREEMENT
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This Indemnity Agreement (this "Agreement") is made as of this ____
day of ____________ by and between The Xxxxxxx-Xxxxxxxx Company, an Ohio
corporation ("the Company"), and __________ (the "Indemnitee").
W I T N E S S E T H :
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WHEREAS, the Indemnitee has agreed to serve or to continue to serve
in one or more of the following capacities: as a director, officer, employee or
agent (an "Official") of the Company or one or more of its subsidiaries and in
such capacity will render valuable services to the Company;
WHEREAS, the Company has investigated the sufficiency of liability
insurance and Ohio statutory indemnification provisions to provide its Officials
and its subsidiaries' Officials with adequate protection against various legal
risks and potential liabilities to which such individuals are subject due to
their position with the Company or its subsidiaries and has concluded that such
insurance and statutory provisions may provide inadequate and unacceptable
protection;
WHEREAS, the Company has further determined that its prior form of
indemnification agreement entered into with certain of its Officials should be
replaced with a new form of indemnity agreement;
WHEREAS, in order to induce and encourage highly experienced and
capable persons such as the Indemnitee to serve as Officials of the Company or
one or more of its subsidiaries, the Board of Directors has determined, after
due consideration and investigation of the terms and provisions of this
Agreement and the various other options available to the Company and the
Indemnitee in lieu hereof, that this Agreement is not only reasonable and
prudent but necessary to promote and ensure the best interests of the Company,
its subsidiaries and its shareholders;
WHEREAS, the parties agree that it is their intent that the Company
indemnify the Indemnitee to the fullest extent permitted by law and, therefore,
that this Agreement be construed and enforced to effectuate such intent; and
WHEREAS, to the extent that a change in Ohio law or the laws of any
other jurisdiction under which the Company is organized at the time (whether by
statute or judicial decision) permits greater indemnification by agreement than
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would be afforded currently under the Regulations of the Company and this
Agreement, it is the further intent of the parties hereto that Indemnitee enjoy
by this Agreement the greater benefits so afforded by such change.
NOW, THEREFORE, in consideration of the services of the Indemnitee
and in order to induce the Indemnitee to serve or continue to serve as an
Official of the Company or one or more of its subsidiaries and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally binding hereby, the Company and the
Indemnitee do hereby agree as follows:
1. AGREEMENT TO SERVE. The Indemnitee agrees to serve as an
Official of the Company or one or more of its subsidiaries for so long as the
Indemnitee is duly elected or appointed, or until such time as the Indemnitee
tenders the Indemnitee's resignation in writing or is otherwise removed from the
Indemnitee's position, or until Indemnitee's relationship and/or employment with
the Company is terminated.
2 INDEMNIFICATION IN THIRD PARTY ACTIONS. The Company shall
indemnify the Indemnitee in accordance with the provisions of this Section 2 if,
whether prior to, on or after the date of this Agreement, the Indemnitee is or
has been a party to or threatened to be made a party to or otherwise involved in
any Proceeding (other than a Proceeding by or in the right of the Company or a
subsidiary of the Company to procure a judgment in its favor), by reason of or
arising out of the fact that the Indemnitee is or was an Official of the Company
or one or more of its subsidiaries, or is or was serving at the request of the
Company or a subsidiary of the Company as an Official, trustee, member or
manager of another corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or partnership, joint venture, trust, or other
enterprise ("Another Enterprise"), or in relation to any action taken or omitted
by the Indemnitee on behalf of the Company, one or more of its subsidiaries or
Another Enterprise, against all Expenses, judgments, fines, penalties and ERISA
excise taxes actually and reasonably incurred by the Indemnitee in connection
with the defense or settlement (provided that any settlement be approved in
writing by the Company, which approval shall not be unreasonably withheld) of
such Proceeding, to the highest and most advantageous extent to the Indemnitee,
as determined by the Indemnitee, of one or any combination of the following:
(a) The benefits provided by the Company's Regulations, as
amended (the "Regulations") in effect on the date hereof, a copy of the relevant
provisions of which are attached hereto as Exhibit A;
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(b) The benefits provided by the Company's Amended Articles
of Incorporation, as further amended, and the Regulations in effect at the time
the Proceeding is initiated or the Expenses are incurred by the Indemnitee;
(c) The benefits allowable under Ohio law in effect at the
date hereof;
(d) The benefits allowable under the laws of the
jurisdiction under which the Company is organized at the time the Proceeding is
initiated or the Expenses are incurred by the Indemnitee;
(e) The benefits available under any liability insurance
obtained by the Company; and
(f) Such other benefits as are or may be otherwise available
to the Indemnitee.
Combination of two or more of the benefits provided by clauses (a)
through (f) shall be available to the extent that the Applicable Documents, as
hereinafter defined, do not require that the benefits provided therein be
exclusive of other benefits. The document or law providing for the benefits
listed in clauses (a) through (f) above is called the "Applicable Document" in
this Agreement. The Company hereby undertakes to use its best efforts to assist
the Indemnitee, in all proper and legal ways, to obtain the benefits selected by
Indemnitee under clauses (a) through (f) above.
3 INDEMNIFICATION IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.
The Company shall indemnify the Indemnitee in accordance with the provisions of
this Section 3 if, whether prior to, on or after the date of this Agreement, the
Indemnitee is or has been a party to or threatened to be made a party to or
otherwise involved in any Proceeding by or in the right of the Company or a
subsidiary of the Company to procure a judgment in its favor by reason of or
arising out of the fact that Indemnitee was or is an Official of the Company or
one or more of its subsidiaries, or is or was serving at the request of the
Company or a subsidiary of the Company as an Official, trustee, member or
manager of Another Enterprise, or in relation to any action taken or omitted by
the Indemnitee on behalf of the Company, one or more of its subsidiaries or
Another Enterprise, against all Expenses actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such Proceeding, to
the same extent provided in Section 2 above.
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4. CONCLUSIVE PRESUMPTION REGARDING STANDARD OF CONDUCT.
(a) The Indemnitee shall be conclusively presumed to have
met the relevant standards of conduct as defined by the Applicable Documents for
indemnification pursuant to this Agreement, unless a determination is made that
the Indemnitee has not met such standards by (i) the Board of Directors of the
Company by a majority vote of a quorum thereof consisting of Directors who were
not parties, or are not threatened to be made parties, to such Proceeding or any
other Proceeding arising from the same or similar facts ("Disinterested
Directors"), (ii) if such a quorum is not obtainable or if such quorum is
obtainable and a majority of such quorum directs, a written opinion by
Independent Legal Counsel (compensated by the Company), or (iii) if there are no
Disinterested Directors or if a majority of Disinterested Directors (whether or
not a quorum) directs, the shareholders of the Company entitled to vote in the
election of Directors by majority vote; provided, however, that any such
determination to be made after a Change of Control shall be made only pursuant
to clause (ii) if the Indemnitee so elects.
(b) Prior to any decision under clauses (a)(i) or (a)(ii)
above, an Official will be given an opportunity, together with counsel, to be
heard before the Board of Directors if such decision is being made pursuant to
clause (a)(i), or the Independent Legal Counsel if such decision is being made
pursuant to clause (a)(ii).
(c) The determination will be made as promptly as possible.
5. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY. Notwithstanding
any other provision of this Agreement, to the extent that the Indemnitee has
been successful in defense of any Proceeding or in defense of any claim, issue
or matter therein, on the merits or otherwise, including the dismissal of a
Proceeding without prejudice, the Indemnitee shall be indemnified against all
Expenses incurred in connection therewith to the fullest extent permitted by any
Applicable Document.
6. ADVANCES OF EXPENSES. The Expenses incurred by the Indemnitee in
any Proceeding shall be paid by the Company within twenty days of the written
request of the Indemnitee to the fullest extent permitted by any Applicable
Document; provided that the Indemnitee shall undertake in writing, in the form
attached hereto as Exhibit B, to repay such amount to the extent that it is
ultimately determined that the Indemnitee is not entitled to indemnification
under the Applicable Document.
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7. PARTIAL INDEMNIFICATION. 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 or ERISA excise taxes
actually and reasonably incurred by the Indemnitee in the investigation,
defense, appeal or settlement of any Proceeding but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee for the
portion of such Expenses, judgments, fines, penalties or ERISA excise taxes to
which the Indemnitee is entitled.
8. INDEMNIFICATION PROCEDURE; DETERMINATION OF RIGHT TO
INDEMNIFICATION.
(a) Promptly after receipt by the Indemnitee of written
notice of the commencement of any Proceeding, the Indemnitee will, if a claim in
respect thereof is to be made against the Company under this Agreement, notify
the Company in writing of the commencement thereof. The omission so to notify
the Company will relieve it from any liability which it may have to the
Indemnitee under this Agreement only to the extent that the Company is able to
establish that its ability to avoid such liability was materially prejudiced by
such omission. Any such omission, however, will not relieve the Company from any
liability which it may have to the Indemnitee otherwise than under this
Agreement.
(b) If a claim under this Agreement is not paid by the
Company within twenty days of receipt of written notice, the right to
indemnification as provided by this Agreement shall be enforceable by the
Indemnitee in any court of competent jurisdiction. The burden of proving by
clear and convincing evidence that indemnification or advances are not
appropriate shall be on the Company. Neither the failure of the Board of
Directors, the shareholders of the Company or Independent Legal Counsel to have
made a determination prior to the commencement of such action that
indemnification or advances are proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Board of Directors, the shareholders of the Company or
Independent Legal Counsel that the Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action that the Indemnitee has
not met the applicable standard of conduct, nor shall such failure or
determination create a presumption that the Indemnitee has or has not met the
applicable standard.
(c) The Indemnitee's Expenses incurred in connection with
any proceeding concerning the Indemnitee's right to indemnification or
advancement of expenses in whole or in part pursuant to this Agreement shall
also be
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indemnified by the Company regardless of the outcome of such proceeding, unless
a court of competent jurisdiction determines that the material assertions made
by the Indemnitee in such proceeding were not made in good faith or were
frivolous.
(d) With respect to any Proceeding for which indemnification
is requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may wish,
the Company may assume the defense thereof, with counsel reasonably satisfactory
to the Indemnitee. After notice from the Company to the Indemnitee of its
election to assume the defense of a Proceeding, the Company will not be liable
to the Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by the Indemnitee in connection with defense thereof,
other than reasonable costs of investigation or as otherwise provided below. The
Company shall not settle any Proceeding in any manner which would impose any
penalty or limitation on the Indemnitee without the Indemnitee's written
consent. The Indemnitee shall give the Company such cooperation as the Company
may reasonably request and as shall be within the Indemnitee's power. The
Indemnitee shall have the right to employ the Indemnitee's counsel in any
Proceeding but the fees and expenses of such counsel incurred after written
notice from the Company of its assumption of the defense thereof shall be at the
expense of the Indemnitee, unless (i) the employment of counsel by the
Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of a Proceeding, or (iii) the Company
shall not in fact have employed counsel to assume the defense of a proceeding,
in each of which cases the fees and expenses of the Indemnitee's counsel shall
be at the expense of the Company. The Company shall not be entitled to assume or
control the defense of any Proceeding brought by or on behalf of the Company or
as to which the Indemnitee has made the reasonable conclusion that there may be
a conflict of interest between the Company and the Indemnitee.
9. LIMITATIONS ON INDEMNIFICATION. No payments pursuant to this
Agreement shall be made by the Company:
(a) To indemnify or advance Expenses to the Indemnitee with
respect to Proceedings initiated or brought voluntarily by the Indemnitee,
except with respect to Proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law, but such
indemnification or advancement of Expenses may be provided by the Company in
specific cases if the Board of Directors finds it to be appropriate;
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(b) To indemnify the Indemnitee for any Expenses, judgments,
fines, penalties or ERISA excise taxes for which payment is actually made to the
Indemnitee under a valid and collectible insurance policy or under any other
agreement, contract or otherwise, except in respect of any excess beyond the
amount of payment under such insurance or under any such agreement, contract or
otherwise;
(c) To indemnify or advance to the Indemnitee for any
Expenses, judgments, fines or penalties sustained in any Proceeding for an
accounting of profits made from the purchase or sale by Indemnitee of securities
of the Company pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations
promulgated thereunder and amendments thereto or similar provisions of any
federal, state or local statutory law;
(d) To indemnify the Indemnitee for any Expenses, judgments,
fines, penalties or ERISA excise taxes resulting from the Indemnitee's conduct
which is finally adjudged to have been willful misconduct, knowingly fraudulent
or deliberately dishonest; or
(e) If a court of competent jurisdiction shall finally
determine that any indemnification hereunder is unlawful.
10. MAINTENANCE OF LIABILITY INSURANCE. To the extent the Company
maintains an insurance policy or policies providing directors' and officers'
liability insurance ("D&O Insurance"), the Indemnitee shall be named as an
insured under such D&O Insurance in such a manner as to provide the Indemnitee
the same rights and benefits as are accorded to the most favorably insured of
the Company's directors and/or officers, as appropriate, under such D&O
Insurance. Notwithstanding the foregoing, the Company shall have no obligation
to obtain or maintain D&O Insurance.
11. LIMITATION OF ACTIONS AND RELEASE OF CLAIMS. No Proceeding
shall be brought and no cause of action shall be asserted by or on behalf of the
Company or any subsidiary against the Indemnitee, the Indemnitee's spouse,
heirs, estate, executors or administrators after the expiration of two years
from the earlier of (i) the date the Company or any subsidiary of the Company
discovers the facts underlying such cause of action, or (ii) the date the
Company or any subsidiary of the Company could have discovered such facts by the
exercise of reasonable diligence; provided, however, this sentence shall not be
deemed to waive or toll any statute of limitations that otherwise might apply.
Any claim or
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cause of action of the Company or any subsidiary of the Company, including
claims predicated upon the negligent act or omission of the Indemnitee, shall be
extinguished and deemed released unless asserted by filing of a legal action
within such period. This section shall not apply to any cause of action which
has accrued on the date hereof and of which the Indemnitee is aware on the date
hereof, but as to which the Company has no actual knowledge apart from the
Indemnitee's knowledge.
12. CHANGE OF CONTROL. As collateral security for its obligations
hereunder and under similar agreements with other Officials, within the earlier
of (i) five (5) business days after the occurrence of an event that in the
reasonable opinion of the Board of Directors will likely result in a Change of
Control or (ii) the occurrence of an actual Change of Control, the Company shall
dedicate and maintain, for a period of six (6) years or such longer time as is
necessary for the final disposition of any Proceeding existing at the expiration
of such six year period, an escrow account in such aggregate amount as is
reasonably calculated to be sufficient to satisfy any and all Expenses
reasonably anticipated in connection with any and all Proceedings, which in no
event shall be less than Ten Million Dollars ($10,000,000), by depositing assets
or bank letters of credit in escrow that may be drawn down by an escrow agent in
said amount (the "Escrow Reserve"). Promptly following the establishment of the
Escrow Reserve, the Company shall (i) provide the Indemnitee with a true and
complete copy of the Agreement relating to the establishment and operation of
the Escrow Reserve, together with such additional documentation or information
with respect to the Escrow Reserve as the Indemnitee may from time to time
reasonably request, (ii) deliver an executed copy of this Agreement to the
escrow agent for the Escrow Reserve to evidence to such agent that the
Indemnitee is a beneficiary of the Escrow Reserve, and (iii) deliver to the
Indemnitee the agent's signed receipt evidencing delivery of the Agreement to
the agent. Notwithstanding anything to the contrary contained in this Section
12, any assets deposited by the Company in the Escrow Reserve shall at all times
be and remain subject to the claims of the general creditors of the Company. If
prior to the date of a Change of Control, the Board of Directors has actual
knowledge that all third parties have abandoned or terminated their efforts to
effect a Change of Control and a Change of Control at that time is unlikely and
the Board of Directors so advises the escrow agent, the assets and letters of
credit comprising the Escrow Reserve, if any, and any interest earned thereon,
shall be returned to the Company by the escrow agent.
13. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The indemnification
provided by this Agreement shall not be exclusive of, and shall be in addition
to, any other rights to which the Indemnitee may be entitled under the
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Company's or any subsidiary's articles of incorporation, bylaws or regulations,
or any vote of shareholders or disinterested directors or applicable law, both
as to action in the Indemnitee's official capacity and as to action in another
capacity on behalf of the Company or any subsidiary while holding such office or
position.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and shall inure to the benefit of the Indemnitee and the Indemnitee's heirs,
executors, administrators, personal representatives and assigns, and the
Company, its successors (whether direct or indirect, by purchase, merger,
consolidation, operation of law, or otherwise) to all or substantially all of
the business and/or assets of the Company, and its assigns.
15. SEPARABILITY. Each provision of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof. To the extent required, any provision of this
Agreement may be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable law.
16. ENTIRE AGREEMENT. This Agreement, together with all exhibits
hereto, constitutes the entire understanding and agreement of the parties with
respect to the subject matter hereof and supersedes any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
with respect to the subject matter hereof; provided, however, that if this
Agreement, in its entirety, is held to be invalid or unenforceable for any
reason, the indemnification agreement, if any, between the Company and the
Indemnitee which was in effect immediately prior to the execution of this
Agreement shall govern.
17. INTERPRETATION; GOVERNING LAW; VENUE. This Agreement shall be
construed as a whole and in accordance with its fair meaning. Headings are for
convenience only and shall not be used in construing meaning. This Agreement
shall be governed and interpreted in accordance with the laws of the State of
Ohio without regard to principles of conflicts of laws thereof. The party
bringing any action under this Agreement shall only be entitled to choose the
federal or state courts in the State of Ohio as the venue for such action, and
each party consents to the jurisdiction of the court chosen in such manner for
such action.
18. AMENDMENTS. No amendment, waiver, modification, termination or
cancellation of this Agreement shall be effective unless in writing
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signed by the party against whom enforcement is sought. The indemnification
rights afforded to the Indemnitee hereby are contract rights and may not be
diminished, eliminated or otherwise affected by amendments to the Company's or
any subsidiary's charter, bylaws or regulations (or similar constitutive
documents) or by amendments to any agreements other than agreements executed by
the Indemnitee that expressly refer to this Agreement.
19. NO PERSONAL LIABILITY. The Indemnitee agrees that no director,
officer, employee, representative or agent of the Company or any of its
subsidiaries 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 for satisfaction of any claims hereunder.
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other.
21. NOTICES. All notices, demands, requests, or other
communications which may be or are required to be given, served or sent by
either party to the other party pursuant to this Agreement, shall be in writing
and shall be hand delivered, sent by express mail or other overnight delivery
service or mailed by registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telex or telecopy, addressed as
follows:
If to the Company:
The Xxxxxxx-Xxxxxxxx Company
000 Xxxxxxxx Xxxxxx, X.X.
Xxxxxxxxx, Xxxx 00000
Attn: Vice President, General Counsel
and Secretary
Telecopier No.: 000-000-0000
If to the Indemnitee:
To the Indemnitee's last known address
Each party may designate by notice in writing a new address (or
substitute additional persons) to which any notice, demand, request or
communication may thereafter be so given, served or sent. Each notice, demand,
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request, or communication which shall be mailed, sent, delivered, telefaxed or
telexed in the manner described above, or which shall be delivered to a
telegraph company, shall be deemed sufficiently given, served, sent or received
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt or, with respect to a telex or telefax, the
answer back being deemed conclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation.
22. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.
23. NOT EMPLOYMENT CONTRACT. Neither this Agreement nor any action
taken hereunder shall be construed either (i) as a contract of employment or
(ii) as giving Indemnitee any right to be retained in the employ or otherwise as
an Official.
24. DEFINITIONS. As used herein the following terms shall have the
following meanings:
(a) The term "PROCEEDING" shall include any threatened,
pending or completed action, suit or proceeding, whether brought in the name of
the Company or one or more of its subsidiaries, or otherwise, and whether of a
civil, criminal or administrative or investigative nature, or otherwise, and
whether formal or informal, by reason of or arising out of the fact that the
Indemnitee is or was an Official of the Company or one or more of its
subsidiaries, or is or was serving at the request of the Company or a subsidiary
of the Company as an Official, trustee, member or manager of Another Enterprise,
or relating in any way to any actions taken or omitted by the Indemnitee on
behalf of the Company, one or more of its subsidiaries or Another Enterprise, in
all cases whether or not the Indemnitee is serving in such capacity at the time
any liability or Expenses are incurred for which indemnification or
reimbursement is to be provided under this Agreement. For purposes of this
Agreement, references to "Another Enterprise" shall include, without limitation,
employee benefit plans for employees of the Company or its subsidiaries without
regard to ownership of such plans.
(b) The term "EXPENSES" shall include, without limitation,
attorneys' fees, disbursements and retainers, accounting and witness fees,
travel
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and deposition costs, expenses of investigations, judicial or administrative
proceedings or appeals, amounts paid in settlement (provided that any settlement
be approved in writing by the Company, which approval shall not be unreasonably
withheld) by or on behalf of the Indemnitee, and any expenses of establishing a
right to indemnification, pursuant to this Agreement or otherwise.
(c) The term "INDEPENDENT LEGAL COUNSEL" shall mean legal
counsel retained jointly by, and mutually acceptable to, the Company and the
Indemnitee. The Indemnitee and the Company each may submit no more than three
(3) candidates for the position of Independent Legal Counsel. All candidates
shall disclose to the Indemnitee and the Company any circumstances likely to
affect his or her impartiality, including, without limitation, bias, interest in
the resolution of the Proceeding, and past or present relations with the
Indemnitee, the employer of the Indemnitee or the Company. Under no
circumstances shall the Independent Legal Counsel be (or have been during the
six (6) year period prior to the date of such appointment) a relative, employee,
officer, director or shareholder of either the Indemnitee, the employer of the
Indemnitee or the Company, or an Affiliate of the employer of the Indemnitee or
the Company. Each party may reject a candidate for good cause, such as
reasonable concern regarding that candidate's independence, impartiality, access
to confidential information or failure to meet agreed upon qualifications. Once
Independent Legal Counsel has been selected and jointly retained by the parties,
the Company shall pay all costs and expenses of such counsel. Independent Legal
Counsel may retain such additional experts as he or she determines are necessary
or useful for the rendering of his or her advice, provided that he or she in
good faith determines, after notifying the Company and the Indemnitee of the
selection of such expert and soliciting any objections either party might have,
that such expert does not appear to have a conflict of interest. Circumstances
that might cause doubt regarding the expert's independence or impartiality
include bias, interest in the result of any Proceeding, and past or present
relations with the Indemnitee, the employer of the Indemnitee (including an
Affiliate of such employer), the Company (including an Affiliate of the Company)
or their respective counsels. Under no circumstances shall any such expert be
(or have been during the six (6) year period prior to the selection of the
Independent Legal Counsel) a relative, employee, officer, director or
shareholder of the Indemnitee, the employer of the Indemnitee or an Affiliate of
such employer, the Company or an Affiliate of the Company, or an individual
otherwise providing material services to the Indemnitee, the employer of the
Indemnitee or the Company, or an Affiliate of the employer of the Indemnitee or
the Company.
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(d) A person (as such term is used in Section 13(d) and
14(d)(2) of the Exchange Act shall be deemed the "BENEFICIAL OWNER" of and shall
be deemed to "beneficially own" any securities:
(i) which such person or any of such person's
"Affiliates" or "Associates" (as such terms are defined in Rule 12b-2, as in
effect on April 23, 1997, of the General Rules and Regulations under the
Exchange Act) is considered to be a "beneficial owner" under Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, as in effect on April 23,
1997;
(ii) which such person or any of such person's
Affiliates or Associates, directly or indirectly, has or shares the right to
acquire, hold, vote (except pursuant to a revocable proxy as described in the
proviso to this Section 24(d)) or dispose of such securities (whether any such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing), or upon
the exercise of conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a person shall not be deemed to be the
Beneficial Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such person or any of such
person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or
(iii) which are beneficially owned, directly or
indirectly, by any other person (or any Affiliate or Associate of such other
person) with which such person (or any of such person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or not in
writing), with respect to acquiring, holding, voting (except as described in the
proviso to this Section 24(d)) or disposing of any securities of the Company;
provided, however, that a person shall not be deemed the Beneficial Owner of,
nor to beneficially own, any security if such person has the right to vote such
security pursuant to an agreement, arrangement or understanding which (A) arises
solely from a revocable proxy given to such person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations under the Exchange Act, and (B) is not also then
reportable on Schedule 13D (or any comparable or successor report) under the
Exchange Act; and provided, further, that nothing, in this Section 24(d) shall
cause a person engaged in business as an underwriter of securities to be the
Beneficial Owner of, or to beneficially own, any securities acquired through
such person's participation in good faith in a firm commitment underwriting
until the expiration of forty (40)
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days after the date of such acquisition or such later date as the Board of
Directors may determine in any specific case.
(e) A "CHANGE OF CONTROL" shall be deemed to have occurred if:
(i) Any person (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) who or that, together with all Affiliates and
Associates of such person, is the Beneficial Owner of ten percent (10%) or more
of the shares of Common Stock of the Company then outstanding, except:
(A) the Company;
(B) any of the Company's subsidiaries in which a
majority of the voting power of the equity securities or
equity interests of such subsidiary is owned, directly or
indirectly, by the Company;
(C) any employee benefit or stock ownership plan of
the Company or any trustee or fiduciary with respect to such
a plan acting in such capacity; or
(D) any such person who has reported or may, pursuant
to Rule 13d-1(b)(1) of the General Rules and Regulations
under the Exchange Act, report such ownership (but only as
long as such person is the Beneficial Owner of less than
fifteen percent (15%) of the shares of Common Stock then
outstanding) on Schedule 13G (or any comparable or successor
report) under the Exchange Act.
Notwithstanding the foregoing, (1) no person shall become
the Beneficial Owner of ten percent (10%) or more (fifteen percent (15%) or more
in the case of any person identified in clause (D) above) solely as the result
of an acquisition of Common Stock by the Company that, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such person to ten percent (10%) or more (fifteen percent (15%) or more
in the case of any person identified in clause (D) above) of the shares of
Common Stock then outstanding; provided, however, that if a person becomes the
Beneficial Owner of ten percent (10%) or more (fifteen percent (15%) or more in
the case of any person identified in clause (D) above) of the shares of Common
Stock solely by reason of purchases of Common Stock by the Company and shall,
after such purchases by the Company, become the Beneficial Owner of any
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15
additional shares of Common Stock which have the effect of increasing such
person's percentage ownership of the then-outstanding shares of Common Stock by
any means whatsoever, then such person shall be deemed to have triggered a
Change of Control, and (2) if the Board of Directors determines that a person
who would otherwise be the Beneficial Owner of ten percent (10%) or more
(fifteen percent (15%) or more in the case of any person identified in clause
(D) above) of the shares of Common Stock has become such inadvertently
(including, without limitation, because (a) such person was unaware that it
Beneficially Owned ten percent (10%) or more (fifteen percent (15%) or more in
the case of any person identified in clause (D) above) of the shares of Common
Stock or (b) such person was aware of the extent of such beneficial ownership
but such person acquired beneficial ownership of such shares of Common Stock
without the intention to change or influence the control of the Company) and
such person divests itself as promptly as practicable of a sufficient number of
shares of Common Stock so that such person would no longer be the Beneficial
Owner of ten percent (10%) or more (fifteen percent (15%) or more in the case of
any person identified in clause (D) above), then such person shall not be deemed
to be, or have been, the Beneficial Owner of ten percent (10%) or more (fifteen
percent (15%) or more in the case of any person identified in clause (D) above)
of the shares of Common Stock, and no Change of Control shall be deemed to have
occurred.
(ii) During any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company and any new director (other than a director initially elected or
nominated as a director as a result of an actual or threatened election contest
with respect to directors or any other actual or threatened solicitation of
proxies by or on behalf of such director) whose election by the Board of
Directors or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof.
(iii) There shall be consummated any consolidation, merger
or other combination of the Company with any other person or entity other than:
(A) a consolidation, merger or other combination
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than fifty-one percent
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16
(51%) of the combined voting power of the voting securities
of the Company or such surviving entity outstanding
immediately after such consolidation, merger or other
combination; or
(B) a consolidation, merger or other combination
effected to implement a recapitalization and/or
reorganization of the Company (or similar transaction), or
any other consolidation, merger or other combination of the
Company, which results in no person (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act), together
with all Affiliates and Associates of such person, becoming
the Beneficial Owner of ten percent (10%) or more (fifteen
percent (15%) or more in the case of any person identified
in Section 24(e)(i)(D)) of the combined voting power of the
Company's then outstanding securities.
(iv) There shall be consummated any sale, lease, assignment,
exchange, transfer or other disposition (in one transaction or a series of
related transactions) of fifty percent (50%) or more of the assets or earning
power of the Company (including, without limitation, any such sale, lease,
assignment, exchange, transfer or other disposition effected to implement a
recapitalization and/or reorganization of the Company (or similar transaction))
which results in any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act), together with all Affiliates and Associates of such
person, owning a proportionate share of such assets or earning power greater
than the proportionate share of the voting power of the Company that such
person, together with all Affiliates and Associates of such person, owned
immediately prior to any such sale, lease, assignment, exchange, transfer or
other disposition.
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17
(v) The shareholders of the Company approve a plan of
complete liquidation of the Company.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first written above.
INDEMNITEE
/S/
------------------------------------------
Signature
THE XXXXXXX-XXXXXXXX COMPANY
By: /S/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
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