INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT
(this “Agreement”) is made and entered into as of the 5th day of
November, 2009, by and between YTB INTERNATIONAL, INC., a
Delaware corporation, by and on behalf of itself and its affiliates and
subsidiaries (collectively, the “Corporation”), and XXXXXX X. XXXXXXXXXX
(“Indemnitee”), a member of the board of directors of the
Corporation.
WHEREAS,
the substantial risks of litigation against corporations and their
directors and officers subjects directors and officers of the
Corporation to the possible necessity of incurring extraordinary expenses out of
their personal funds either while liability insurance may be unavailable to them
or because the expenditure is not covered by insurance policies then in effect;
and
WHEREAS,
it is the policy of the Corporation to indemnify its directors and officers so
as to provide them with the maximum possible protection permitted by law;
and
WHEREAS,
Indemnitee does not regard the protection available under the Corporation’s
organizational documents and insurance policies as adequate in the present
circumstances; and
WHEREAS,
the Corporation, in recognition of Indemnitee’s past service to the Corporation
and in consideration of Indemnitee’s willingness to resign as a director, agrees
to provide adequate indemnification protection to Indemnitee.
NOW,
THEREFORE, in consideration of the foregoing, and the other promises and
covenants herein contained, the Corporation and Indemnitee intending to be
legally bound hereby agree as follows:
1. Definitions. As
used in this Agreement:
(a) ‘Proceeding”
shall include, without limitation, any threatened, pending, or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed
proceeding, including any appeals related thereto, whether brought by or in the
right of the Corporation or otherwise, and whether of a civil, criminal,
administrative, or investigative nature, and whether formal or informal in any
case, in which Indemnitee is or was a party or is threatened to be made a party
by reason of the fact that: (i) Indemnitee is or was a director and/or officer
of the Corporation (or of any predecessor or subsidiary of the Corporation or
any successor to the Corporation by merger), including actions taken by
Indemnitee in such capacity; or (ii) Indemnitee is or was serving at the request
of the Corporation as a director, officer, employee, agent, or fiduciary of any
other corporation, partnership, joint venture, trust, or other enterprise
(including but not limited to a subsidiary), including actions taken by
Indemnitee in such capacity, and in any such case described above, whether or
not Indemnitee was serving in any such capacity at the time any liability or
expense is incurred for which indemnification, reimbursement or advancement of
expenses may be provided under this Agreement. Such request by the
Corporation shall be presumed to exist in the case of a subsidiary or other
entity in which the Corporation has an investment or contractual
interest. “Proceeding” also includes an action by Indemnitee,
including without limitation any mediation or arbitration, to establish or
enforce a right of Indemnitee under this Agreement.
(b) “Expenses”
shall include, all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all expenses of investigation, costs of judicial
or administrative proceedings or appeals, amounts paid in settlement by or on
behalf of Indemnitee attorneys’ fees and disbursements, costs of
meals, lodging and travel reasonably and necessarily incurred by Indemnitee to
attend any Proceeding or event related to the Proceeding including but not
limited to depositions and mediation sessions, and any other defense costs),
incurred by Indemnitee in connection with any Proceeding or establishing or
enforcing a right to indemnification under this Agreement, but shall not include
any judgments, fines or penalties finally assessed against
Indemnitee.
2. Indemnity in Third-Party
Proceedings. The
Corporation shall indemnify Indemnitee against all Expenses, judgments, fines,
and penalties actually and reasonably incurred by Indemnitee in connection with
the defense or settlement of any Proceeding (other than a Proceeding by or in
the right of the Corporation to procure a judgment in its favor, and other than
a Proceeding brought or initiated voluntarily by Indemnitee), but only if
Indemnitee acted in good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
in the case of a criminal proceeding, had no reasonable cause to believe that
Indemnitee’s conduct was unlawful. The termination of any such
Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation or,
with respect to any criminal proceeding, that Indemnitee had reasonable cause to
believe that Indemnitee’s conduct was unlawful.
3. Indemnity in Proceedings By
or In the Right of the Corporation. The
Corporation shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by Indemnitee in connection with the defense or settlement
of any Proceeding by or in the right of the Corporation to procure a judgment in
its favor, but only if Indemnitee acted in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation and, in the case of a criminal proceeding, had no reasonable
cause to believe that Indemnitee’s conduct was unlawful.
4. Indemnification of Expenses
of Successful Party. Notwithstanding
any other provision of this Agreement,
(a) To
the extent that Indemnitee has been successful on the merits or otherwise,
including by a settlement, in defense of any Proceeding, or in defense of any
one or more claims, issues or matters included therein, including the dismissal
of any action without prejudice, the Corporation shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by Indemnitee in
connection therewith; and
(b) Indemnitee’s
Expenses actually and reasonably incurred in connection with successfully
establishing or enforcing, in whole or in part, Indemnitee’s right to
indemnification or advancement of Expenses under this Agreement or otherwise,
shall also be indemnified by the Corporation.
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5. Advances of
Expenses. At
the written request of Indemnitee, the Expenses reasonably incurred by
Indemnitee in any Proceeding, including Expenses billed but not yet paid, shall
be paid directly (or if already paid by Indemnitee, shall be reimbursed to
Indemnitee) by the Corporation within thirty (30) days after the receipt of the
Corporation of such request, including reasonable supporting documentation
evidencing such Expenses, in advance of the final disposition of such
Proceeding, provided that Indemnitee shall undertake in writing to repay the
amounts advanced if and to the extent that it is ultimately determined that
Indemnitee is not entitled to indemnification. If the Corporation
makes an advance of Expenses pursuant to this section, the Corporation shall be
subrogated to every right of recovery Indemnitee may have against any insurance
carrier from whom the Corporation has purchased insurance for such
purpose.
6. Right of Indemnitee to
Indemnification Upon Application; Procedure Upon Application.
(a) Any
indemnification or advancement of Expenses under this Agreement shall be paid by
the Corporation no later than thirty (30) days after receipt of the written
request of Indemnitee.
(b) Indemnitee’s
right to indemnification or advancement of Expenses as provided by this
Agreement shall be enforceable by Indemnitee in any court of competent
jurisdiction. The burden of proving that such indemnification or
advancement is not appropriate shall be on the Corporation. Neither
the failure of the Corporation (including the board of directors, independent
legal counsel, or the stockholders) to have made a determination prior to the
commencement of such action that Indemnitee has met the applicable standard of
conduct nor an actual determination by the Corporation (including the board of
directors, independent legal counsel or the stockholders) that Indemnitee has
not met such standard shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct.
(c) With
respect to any Proceeding for which indemnification or advancement of Expenses
is requested, the Corporation will be entitled to participate therein, to the
extent permissible in such Proceeding, at its own expense and, except as
otherwise provided below, the Corporation may assume the defense thereof with
counsel reasonably satisfactory to Indemnitee. After notice from the
Corporation to Indemnitee of its election to assume the defense of a Proceeding,
the Corporation will not be liable to Indemnitee under this Agreement for any
Expenses subsequently incurred by Indemnitee in connection with the defense
thereof, other than as provided below. The Corporation shall not
settle any Proceeding in any manner which would impose any penalty or limitation
on Indemnitee without Indemnitee’s written consent. Indemnitee shall
have the right to employ counsel in any Proceeding but the fees and expenses of
such counsel incurred after notice from the Corporation of its assumption of the
defense of the Proceeding shall be at the expense of Indemnitee and shall not be
advanced or indemnified by the Corporation, unless:
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(i) The
employment of counsel by Indemnitee has been authorized by the Corporation,
or
(ii) Indemnitee
shall have reasonably concluded, in writing sent to the Corporation, that there
may be a conflict of interest between the Corporation and Indemnitee in the
conduct of the defense of a Proceeding, or
(iii) The
Corporation shall not in fact have employed counsel to assume the defense of a
Proceeding, or
(iv) Such
Expenses of counsel are actually and reasonably incurred in connection with
successfully establishing, in whole or in part, Indemnitee’s right to
indemnification or advancement of Expenses under this Agreement or
otherwise,
in each
of which cases the fees and expenses of Indemnitee’s counsel shall be advanced
by the Corporation.
Notwithstanding
the foregoing, the Corporation shall not be entitled to assume the defense of
any Proceeding brought by or in the right of the Corporation.
7. Limitation on
Indemnification. The
Corporation shall not be obligated:
(i) To
indemnify or advance funds to Indemnitee for Expenses with respect to
Proceedings initiated or brought voluntarily by Indemnitee and not by way of
defense, except: (i) with respect to Proceedings brought to establish or enforce
a right to indemnification or advancement of expenses under this Agreement, or
(ii) with respect to any other Proceeding initiated by Indemnitee that is either
approved by the Board of Directors or in which Indemnitee’s participation is
required by applicable law;
(ii) To
indemnify Indemnitee for any Expenses, judgments, fines, or penalties sustained
in any Proceeding for which payment is actually made to Indemnitee under a valid
and collectible insurance policy, except in respect of any deductible or
retention amount, or any excess beyond the amount of payment under such
insurance;
(iii) To
indemnify Indemnitee with respect to any Expenses, judgments, fines or penalties
sustained in any Proceeding or final judgments for an accounting of profits made
from the purchase or sale by Indemnitee of securities of the Corporation
pursuant to the provisions of § 16(b) of the Securities Exchange Act of 1934,
the rules and regulations promulgated thereunder and amendments thereto or
similar provisions of any federal, state, or local statutory law;
(iv) To
indemnify Indemnitee for any Expenses, judgments, fines or penalties resulting
from Indemnitee’s conduct which is finally adjudged to have been willful
misconduct, knowingly fraudulent, or deliberately dishonest; or
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(v) If
a court of competent jurisdiction finally determines that such payment is
unlawful.
8. Nonexclusivity and Survival
of Rights.
(a) The
indemnification and advancement of Expenses provided by this Agreement shall not
be deemed exclusive of any other rights to which Indemnitee may be entitled
under the organizational documents of the Corporation, any other agreement, any
vote of stockholders or disinterested directors, any state law, or otherwise,
both as to action in Indemnitee’s official capacity and as to action in another
capacity while holding such directorship and/or office. The
Corporation shall use good faith, commercially reasonable efforts to require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the
Corporation, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
if no such succession had taken place.
(b) No
right or remedy herein conferred is intended to be exclusive of any other right
or remedy, and every other right and remedy shall be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, by Indemnitee shall not prevent the
concurrent assertion or employment of any other right or remedy by
Indemnitee.
9. Partial
Indemnification. If
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Corporation for a portion of the Expenses, judgments, fines, or penalties
actually and reasonably incurred by him or her in any Proceeding but not,
however, for the total amount thereof, the Corporation shall nevertheless
indemnify Indemnitee for the portion of such Expenses, judgments, fines, or
penalties to which Indemnitee is entitled.
10. Selection of Independent
Legal Counsel. If
an opinion of independent legal counsel shall be required for any purpose under
this Agreement, such counsel shall be selected and appointed by or in a manner
determined by the board of directors. Such selection and appointment shall also
be subject to the consent of Indemnitee, which consent shall not be unreasonably
withheld. Nothing herein shall prohibit the board of directors from
selecting Indemnitee’s defense counsel for this purpose if it is determined to
be in the best interest of the Corporation as an appropriate way to determine
the potential liability of Indemnitee.
11. Settlement of
Proceedings. In
the case of a Proceeding by Indemnitee to establish or enforce a right of
Indemnitee under this Agreement, the Corporation shall have the right at any
time during such Proceeding to make the determination that it is in the best
interests of the Corporation to settle the Proceeding, and to pay all or part of
the indemnity sought as a part of such settlement.
12. Arbitration. If
the Corporation makes a determination that Indemnitee is not entitled
to
indemnity in connection with a Proceeding, Indemnitee, in addition to all other
rights and remedies available to him, shall have the right to de novo review of such
determination before a panel of arbitrators chosen in accordance with the
commercial arbitration rules of the American Arbitration
Association.
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13. Maintenance of Liability
Insurance.
(a) The
Corporation hereby covenants and agrees that, as long as Indemnitee continues to
serve as a director and/or officer of the Corporation and thereafter as long as
Indemnitee may be subject to any Proceeding, the Corporation, subject to
subsection (c) of this section, shall maintain in full force and effect
directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable
amounts from established and reputable insurers. If, at the time of
the receipt of a notice of a claim pursuant to the terms hereof, the Corporation
has D&O Insurance in effect, the Corporation shall give prompt notice of the
commencement of such Proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Corporation
shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of Indemnitee, all amounts payable as a result of such
Proceeding in accordance with the terms of such policies.
(b) In
all D&O Insurance policies, Indemnitee shall be named as an insured in such
a manner as to provide the Indemnitee the same rights and benefits as are
accorded to the most favorably insured of the Corporation’s directors and
officers. Further, in all policies of D&O Insurance, coverage for
Indemnitee shall include but not be limited to the following:
(i) Claims
asserted by the Corporation’s present or past
shareholders, directors, employees, lenders, customers, suppliers,
competitors and regulators, as well as claims in connection with class actions,
claims arising out of mergers and acquisitions and antitrust claims asserted by
governmental or private parties; but the policy may exclude claims by one
insured against another insured, except for employment claims;
(ii) No
exclusion for Indemnitee’s negligence;
(iii) No
exclusion for fraud or deliberate dishonesty, except if there has been a final
adjudication of fraud or dishonesty by a court of competent
jurisdiction;
(iv) Punitive
and exemplary damages as well as the multiplied portion of any damage award;
and
(v) Any
and all Expenses, judgments, fines and penalties not indemnifiable pursuant to
this Agreement, the Corporation’s organizational documents, or the laws, rules
or regulations of any other jurisdiction or state or federal agency whose laws,
rules or regulations may be applicable.
(c) Notwithstanding the foregoing, the
Corporation shall have no obligation to obtain or maintain D&O Insurance if
and to the extent that the Corporation determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, the coverage provided by
such insurance is so limited by exclusions that it provides an insufficient
benefit, or Indemnitee is covered by similar insurance maintained by a
subsidiary of the Corporation; provided, however, that Corporation covenants and
agrees to provide D&O Insurance for the benefit of Indemnitee
at levels no less favorable than that provided to any currently
serving director or officer of the Corporation so long as such D&O Insurance
coverage is in place.
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14. Miscellaneous.
(a)
Savings
Clause. If this Agreement or any portion hereof is invalidated
on any ground by any court of competent jurisdiction, the Corporation shall
nevertheless indemnify Indemnitee to the extent permitted by any applicable
portion of this Agreement that has not been invalidated or by any other
applicable law.
(b)
Notice. Indemnitee
shall, as a condition precedent to his right to be indemnified under this
Agreement, give to the Corporation notice in writing as soon as practicable of
any Proceeding for which indemnity will or could be sought under this Agreement.
Notice to the Corporation shall be directed to YTB International, Inc., 0000
Xxxx Xxxxxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxxx, 00000, Attention: Xxxxxx X. Xxx
Xxxxxx, or such other address as is then its corporate headquarters, or such
other address as the Corporation shall have designated in writing to Indemnitee
at his last known residence or office address. Notice shall be deemed
received three days after the date postmarked if sent by prepaid mail, properly
addressed. In addition, Indemnitee shall give the Corporation such
information and cooperation as it may reasonably require and as shall be
reasonably within Indemnitee’s power.
(c)
Counterparts. This
Agreement may be executed in any number of counterparts, all of which shall be
deemed to constitute one and the same instrument.
(d)
Applicable
Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of Delaware.
(e)
Successors and
Assigns. This Agreement shall be binding upon the Corporation
and its successors and assigns and upon Indemnitee and his personal
representatives, heirs, legatees and assigns.
(f)
Amendments. No
amendment, waiver, modification, termination, or cancellation of this Agreement
shall be effective unless in writing signed by both parties hereto. The
indemnification rights afforded to Indemnitee hereby are contract rights and may
not be diminished, eliminated, or otherwise affected by amendments to the
organizational documents of the Corporation or by other agreements without the
express written agreement of the parties expressly referring to and consenting
to the provision by which such rights will be diminished, eliminated or
otherwise affected.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and signed as of the day and year first above written.
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By:
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/s/
Xxxxxx X. Xxx Xxxxxx
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Name:
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Xxxxxx X. Xxx
Xxxxxx
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Title:
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CEO
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Indemnitee:
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/s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx
X.
Xxxxxxxxxx
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