INDEMNIFICATION AGREEMENT
THIS
INDEMNIFICATION AGREEMENT (this “Agreement”) is made and
entered into as of June 14, 2010, between Xxxxxxxx-Alco Stores, Inc., a
Kansas corporation (the “Company”), and Xxxxx X. Xxxxxx (“Indemnitee”).
BACKGROUND
Highly
competent persons have become more reluctant to serve corporations as directors
or officers or in other capacities unless they are provided with adequate
protection through insurance or 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,
in order to attract and retain qualified individuals, the Company will, unless
certain conditions described below are met, maintain on an ongoing basis, at its
sole expense, liability insurance to protect certain persons serving the Company
and its subsidiaries from certain liabilities. Although the
furnishing of such insurance has been a customary and widespread practice among
United States-based corporations and other business enterprises, the Company
believes that, given current market conditions and trends, such insurance may be
available to it in the future only at higher premiums and with more
exclusions.
Directors,
officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself.
The
Restated Certificate of Incorporation (the “Certificate”) and the Amended
and Restated Bylaws of the Company (the “Bylaws”) require
indemnification of the officers and directors of the Company to the full extent
permissible under applicable law. Indemnitee may also be entitled to
indemnification pursuant to the Kansas General Corporation Code (“KGCC”). The
Certificate, the Bylaws, and the KGCC expressly provide that the indemnification
provisions set forth therein are not exclusive, and thereby contemplate that
contracts may be entered into between the Company and members of the Board,
officers, and other persons with respect to indemnification.
The
uncertainties relating to insurance and to indemnification have increased the
difficulty of attracting and retaining persons to serve. The Board
has determined that the increased difficulty in attracting and retaining such
persons is detrimental to the best interests of the Company’s stockholders and
that the Company should act to assure such persons that there will be increased
certainty of such protection in the future.
It is
reasonable, prudent, and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, 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.
This
Agreement is a supplement to and in furtherance of the Certificate and Bylaws
and any resolutions adopted by the Board, and will not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder.
Indemnitee
does not regard the protection available under the Company’s Certificate and
Bylaws and insurance as adequate in the present circumstances; may not be
willing to serve as an officer or director without adequate protection; and the
Company desires Indemnitee to serve in such capacity. 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 or she be so
indemnified.
THEREFORE,
in consideration of the foregoing and of Indemnitee’s agreement to serve as an
officer or director or both after the date of this Agreement, the parties to
this Agreement agree as follows:
1. Indemnification of
Indemnitee. The Company hereby agrees to defend, hold
harmless, and indemnify Indemnitee to the fullest extent permitted by law, as
such may be amended from time to time. In furtherance of the
foregoing indemnification, and without limiting the generality
thereof:
(a) Proceedings Other Than
Proceedings by or in the Right of the Company. Indemnitee will
be entitled to the rights of indemnification provided in this Section 1(a) if, by
reason of his or her Corporate Status, the Indemnitee is, or is threatened to be
made, a party to or participant in any Proceeding other than a Proceeding by or
in the right of the Company. Pursuant to this Section 1(a), the
Company will indemnify, defend, and hold Indemnitee harmless to the fullest
extent permitted by applicable law, as such may be amended from time to time
(but in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than permitted
prior to such amendment), against all Expenses, judgments, fines, and amounts
paid in settlement actually and reasonably incurred by him or her, or on his or
her behalf, in connection with such Proceeding or any claim, issue, or matter in
any such Proceeding.
(b) Proceedings by or in the
Right of the Company. Indemnitee will be entitled to the
rights of indemnification provided in this Section 1(b) if, by
reason of his or her Corporate Status, Indemnitee is, or is threatened to be
made, a party to or participant in any Proceeding brought by or in the right of
the Company. Pursuant to this Section 1(b), the
Company will indemnify, defend, and hold Indemnitee harmless to the fullest
extent permitted by applicable law, as such may be amended from time to time
(but in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than permitted
prior to such amendment), against all Expenses actually and reasonably incurred
by the Indemnitee, or on the Indemnitee’s behalf, in connection with such
Proceeding; provided, however, if applicable law so provides, no indemnification
against such Expenses will be made in respect of any claim, issue or matter in
such Proceeding as to which Indemnitee has been finally adjudged to be liable to
the Company unless and to the extent that the court in which such action or suit
was brought determines that such indemnification may be made.
(c) Indemnification for Expenses
of a Party Who is Wholly or Partly Successful. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his or her Corporate Status, a party to and is wholly successful, on
the merits or otherwise, in any Proceeding, he or she will be indemnified by the
Company to the fullest extent permitted by law, as such may be amended from time
to time (but in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
permitted prior to such amendment), against all Expenses actually and reasonably
incurred by him or her or on his or her behalf in connection with such
Proceeding. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues, or matters in such Proceeding, the Company will indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or her
or on his or her behalf in connection with each successfully resolved claim,
issue, or matter. For purposes of this Section 1(c) and
without limitation, the termination of any claim, issue, or matter in such a
Proceeding by dismissal, with or without prejudice, will be deemed to be a
successful result as to such claim, issue, or matter.
2. Additional
Indemnity. In addition to, and without regard to any
limitations on, the indemnification provided for in Section 1 of this
Agreement, the Company will and hereby does indemnify, defend, and hold harmless
Indemnitee against all Expenses, judgments, penalties, fines, and amounts paid
in settlement actually and reasonably incurred by him or her or on his or her
behalf if, by reason of his or her Corporate Status, he or she is, or is
threatened to be made, a party to or participant in any Proceeding (including a
Proceeding by or in the right of the Company), including, without limitation, all
liability arising out of the sole, contributory, comparative or other
negligence, or active or passive wrongdoing of
Indemnitee. Except as provided in this Section 2 or in Section 9, the only
limitation that will exist upon the Company’s obligations pursuant to this
Agreement will be that the Company will not be obligated to make any payment to
Indemnitee that is finally adjudged (under the procedures, and subject to the
presumptions, set forth in Sections 6 and
7) to be prohibited by applicable law.
3. Contribution.
(a) Regardless
of whether the indemnification provided in Sections 1 and 2 is
available, in respect of any threatened, pending, or completed Proceeding in
which the Company is jointly liable with Indemnitee (or would be if joined in
such Proceeding), the Company will pay, in the first instance, the entire amount
of any judgment or settlement of such Proceeding without requiring Indemnitee to
contribute to such payment, and the Company hereby waives and relinquishes any
right of contribution it may have against Indemnitee. The Company
will not, without prior written consent of Indemnitee, enter into any settlement
of any Proceeding in which the Company is jointly liable with Indemnitee (or
would be if joined in such Proceeding) unless such settlement solely involves
the payment of money and includes a full, unconditional and final release of all
claims that are or were asserted against Indemnitee in such
Proceeding. In addition, the Company will not, without prior written
consent of Indemnitee, seek or agree to a bar order that extinguishes
Indemnitee’s rights to indemnification or advancement of Expenses, whether under
this Agreement or otherwise.
(b) Without
diminishing or impairing the obligations of the Company set forth in Section 3(a),
if, for any reason, Indemnitee elects or is required to pay all or any portion
of any judgment or settlement in any Proceeding in which the Company is jointly
liable with Indemnitee (or would be if joined in such Proceeding), the Company
will contribute to the amount of Expenses, judgments, fines, and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee in
proportion to the relative benefits received from the transaction that gave rise
to such Proceeding by (i) the Company and all officers, directors, or employees
of the Company, other than Indemnitee, who are jointly liable with Indemnitee
(or would be if joined in such Proceeding), on the one hand; and (ii)
Indemnitee, on the other hand; provided, however, that the proportion determined
on the basis of relative benefit may, to the extent necessary to conform to law,
be further adjusted by reference to the relative fault of the Company and all
officers, directors, or employees of the Company other than Indemnitee who are
jointly liable with Indemnitee (or would be if joined in such Proceeding), on
the one hand, and Indemnitee, on the other hand, in connection with the events
that resulted in such Expenses, judgments, fines, or settlement amounts, as well
as any other equitable considerations that applicable law may require to be
considered. The relative fault of the Company and all officers,
directors, or employees of the Company, other than Indemnitee, who are jointly
liable with Indemnitee (or would be if joined in such Proceeding), on the one
hand, and Indemnitee, on the other hand, will be determined by reference to,
among other things, the degree to which their actions were motivated by intent
to gain personal profit or advantage, the degree to which their liability is
primary or secondary, and the degree to which their conduct is active or
passive.
(c) The
Company hereby agrees to fully indemnify, defend, and hold harmless Indemnitee
from any claims of contribution that may be brought by officers, directors, or
employees of the Company, other than Indemnitee, who may be jointly liable with
Indemnitee.
(d) To the
fullest extent permissible under applicable law, if the indemnification provided
for in this Agreement is unavailable to Indemnitee for any reason whatsoever,
the Company, in lieu of indemnifying Indemnitee, will contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes,
and amounts paid or to be paid in settlement or for Expenses, in connection with
any claim relating to an indemnifiable event under this Agreement, in such
proportion as is deemed fair and reasonable in light of all of the circumstances
of such Proceeding in order to reflect (i) the relative benefits received by the
Company and Indemnitee as a result of the event(s) or transaction(s) giving
cause to such Proceeding; and (ii) the relative fault of the Company (and its
directors, officers, employees, and agents) and Indemnitee in connection with
such event(s) or transaction(s).
4. Indemnification for Expenses
of a Witness. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his or her Corporate
Status, a witness or otherwise involved in any Proceeding to which Indemnitee is
not a party, the Company will indemnify, defend, and hold harmless the
Indemnitee against all Expenses actually and reasonably incurred by him or her
or on his or her behalf in connection therewith.
5. Advancement of
Expenses. To the fullest extent permitted by law, as such may
be amended from time to time (but in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader advancement
rights than permitted prior to such amendment), the Company will advance all
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding by reason of Indemnitee’s Corporate Status within 30 days after the
receipt by the Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements will
reasonably evidence the Expenses incurred by Indemnitee and will include or be
preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay
any Expenses advanced if it is ultimately determined that Indemnitee is not
entitled to be indemnified against such Expenses. Any advances and
undertakings to repay pursuant to this Section 5 will be
unsecured and interest-free and any advances will be made without regard to
Indemnitee’s ability to repay the Expenses. Indemnitee will qualify
for and be entitled to receive such advances solely upon execution and delivery
to the Company of the statement or statements and the undertaking referred to in
this Section
5.
6. Procedures and Presumptions
for Determination of Entitlement to Indemnification. It is the
intent of this Agreement to secure for Indemnitee rights of indemnification that
are as favorable as may be permitted under the KGCC and public policy of the
State of Kansas. Accordingly, the parties agree that the following
procedures and presumptions will apply in the event of any question as to
whether Indemnitee is entitled to indemnification under this
Agreement:
(a) To obtain
indemnification under this Agreement, Indemnitee must submit to the Company a
written request, including 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
of the Company will, promptly upon receipt of such a request for
indemnification, advise the Board that Indemnitee has requested
indemnification. Notwithstanding the foregoing, any failure by
Indemnitee to provide such a request to the Company, or to provide such a
request in a timely fashion, shall not relieve the Company of any liability that
it may have to Indemnitee unless, and to the extent that, such failure actually
prejudices the interests of the Company.
(b) If the
Company shall be obligated to pay the Expenses of any Proceeding against
Indemnitee, the Company shall be entitled to assume and control the defense of
such Proceeding (with counsel consented to by Indemnitee, which consent shall
not be unreasonably withheld), upon the delivery to Indemnitee of written notice
of its election so to do. After delivery of such notice, consent to
such counsel by Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same Proceeding,
provided that if (i) the employment of separate counsel by Indemnitee has been
previously authorized by the Company, (ii) Indemnitee or counsel selected by the
Company shall have concluded that there may be a conflict of interest between
the Company and Indemnitee or among Indemnitees jointly represented in the
conduct of any such defense; or (iii) the Company shall not, in fact, have
employed counsel, to which Indemnitee has consented as aforesaid, to assume the
defense of such Proceeding, then the reasonable fees and expenses of
Indemnitee’s counsel shall be at the expense of the
Company. Notwithstanding the foregoing, Indemnitee shall have the
right to employ counsel in any such Proceeding at Indemnitee’s
expense.
(c) The
Company will be entitled to participate in the Proceeding at its own
expense. The Company will not, without prior written consent of
Indemnitee, effect any settlement of a claim against Indemnitee in any
threatened or pending Proceeding unless such settlement solely involves the
payment of money by any Person other than Indemnitee and includes a full,
unconditional and final release of all claims that are or were asserted against
Indemnitee in such Proceeding. In addition, the Company will not,
without prior written consent of Indemnitee, seek or agree to a bar order that
extinguishes Indemnitee’s rights to indemnification or advancement of Expenses,
whether under this Agreement or otherwise.
(d) Upon
written request by Indemnitee for indemnification pursuant to the first sentence
of Section
6(a), a determination, if required by applicable law, with respect to
Indemnitee’s entitlement to indemnification will be made in the specific case:
(i) 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;
or (ii) if a Change in Control shall not have occurred, (A) by a majority vote
of the Disinterested Directors, even though less than a quorum of the Board, (B)
by a committee of Disinterested Directors designated by a majority vote of the
Disinterested Directors, even though less than a quorum of the Board, (C) if
there are no such 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 Indemnitee or (D) if so directed by the Board, by
the stockholders of the Company. Indemnitee will reasonably cooperate
with the Person making the 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 to such
determination. Any Expenses actually and reasonably incurred by
Indemnitee in so cooperating with the Person making such determination will be
borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company hereby indemnifies, defends, and
agrees to hold Indemnitee harmless from any such costs and
Expenses. If it is determined that Indemnitee is entitled to
indemnification requested by Indemnitee in a written application submitted to
the Company pursuant to Section 6,
payment to Indemnitee will be made within 30 days of the written request for
indemnification submitted by Indemnitee.
(e) In the
event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 6(d), the
Independent Counsel will be selected as provided in this Section
6(e). If a Change in Control has not occurred, the Independent
Counsel will be selected by the Board, and the Company will give written notice
to Indemnitee advising him or her of the identity of the Independent Counsel so
selected. If a Change in Control has occurred, the Independent
Counsel will be selected by Indemnitee (unless Indemnitee requests that such
selection be made by the Board, in which event the preceding sentence will
apply), and Indemnitee will give written notice to the Company advising it of
the identity of the Independent Counsel so selected. In either event,
Indemnitee or the Company, as the case may be, may, within ten days after such
written notice of such selection has been received, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of “Independent
Counsel” as defined in this Agreement, and the objection will set forth with
particularity the factual basis of such assertion. Absent a proper
and timely objection, the person so selected will act as Independent
Counsel. If a written objection is made and substantiated, the
Independent Counsel so selected may not serve as Independent Counsel unless and
until such objection is withdrawn or a court of competent jurisdiction has
determined that such objection is without merit. The Company agrees
to pay the reasonable fees and expenses of the Independent Counsel and to fully
indemnify such Independent Counsel against any and all Expenses, claims,
liabilities, and damages arising out of or relating to this Agreement or its
engagement pursuant to this Agreement.
(f) In making
a determination with respect to entitlement to indemnification under this
Agreement, the Person making such determination will presume that Indemnitee is
entitled to indemnification under this Agreement. Anyone seeking to
overcome this presumption will have the burden of proof and the burden of
persuasion by clear and convincing evidence. Neither the failure of
the Company (including the Board, Independent Counsel or its stockholders) to
have made a determination prior to the commencement of any action pursuant to
this Agreement that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct set forth in the
KGCC, nor an actual determination by the Company (including the Board,
Independent Counsel or its stockholders) that Indemnitee has not met such
applicable standard of conduct, will be a defense to the action or create a
presumption that Indemnitee has not met the applicable standard of
conduct.
(g) Indemnitee
will be deemed to have acted in good faith if Indemnitee’s action is based on
the records or books of account of the Enterprise, including financial
statements, or on information supplied to Indemnitee by directors, officers,
employees or agents of the Enterprise in the course of their duties, or on the
advice of legal counsel for the Enterprise or on information or records given or
reports made to the Enterprise by an independent certified public accountant or
by an appraiser or other expert selected by the Enterprise. In
addition, the knowledge or actions, or failure to act, of any director, officer,
agent, or employee of the Enterprise will not be imputed to Indemnitee for
purposes of determining the right to indemnification under this
Agreement. Regardless of whether the foregoing provisions of this
Section 6(g)
are satisfied, it will in any event be presumed that Indemnitee has at all times
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company. Anyone seeking to
overcome this presumption will have the burden of proof and the burden of
persuasion by clear and convincing evidence.
(h) If the
Person empowered or selected under Section 6(d) to
determine whether Indemnitee is entitled to indemnification has not made a
determination within 30 days after receipt by the Company of the request
therefor, the requisite determination of entitlement to indemnification will be
deemed to have been made and Indemnitee will be entitled to such indemnification
absent (i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee’s statement not materially
misleading, in connection with the request for indemnification or (ii) a
prohibition of such indemnification under applicable law.
(i) Indemnitee
will cooperate with the Person 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 to such
determination. Any Independent Counsel, member of the Board, or
stockholder of the Company will act reasonably and in good faith in making a
determination regarding the Indemnitee’s entitlement to indemnification under
this Agreement. Any Expenses actually and reasonably incurred by
Indemnitee in so cooperating with the Person making such determination will be
borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company hereby agrees to indemnify,
defend, and hold Indemnitee harmless therefrom.
(j) The
Company acknowledges that a settlement or other disposition short of final
judgment may be successful if it permits a party to avoid expense, delay,
distraction, disruption, or uncertainty. In the event that any
Proceeding to which Indemnitee is a party is resolved in any manner other than
by adverse judgment against Indemnitee (including, without limitation,
settlement of such Proceeding with or without payment of money or other
consideration), it will be presumed that Indemnitee has been successful on the
merits or otherwise in such Proceeding. Anyone seeking to overcome
this presumption will have the burden of proof and the burden of persuasion by
clear and convincing evidence.
(k) The
termination of any Proceeding or of any claim, issue, or matter therein, by
judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
will not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of Indemnitee to indemnification or create a
presumption that Indemnitee did not act in good faith and in a manner that he or
she 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 or her conduct was unlawful.
7. Remedies of
Indemnitee.
(a) In the
event that (i) a determination is made pursuant to Section 6 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 5 of
this Agreement, (iii) no determination of entitlement to indemnification is made
pursuant to Section
6(d) of this Agreement within 30 days after receipt by the Company of the
request for indemnification or (iv) payment of indemnification is not made
pursuant to this Agreement within 30 days after receipt by the Company of a
written request therefor, Indemnitee may at any time thereafter bring suit
against the Company to enforce Indemnitee’s claim to such indemnification or
payment. The Company will not oppose Indemnitee’s right to bring such
suit.
(b) In the
event that a determination has been made pursuant to Section 6(d) of this
Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding commenced pursuant to this Section 7 will be
conducted in all respects as a de novo trial on the merits,
and Indemnitee will not be prejudiced by reason of the adverse determination
under Section
6(d).
(c) If a
determination has been made pursuant to Section 6(d) of this
Agreement that Indemnitee is entitled to indemnification, the Company will be
bound by such determination in any judicial proceeding commenced pursuant to
this Section 7,
absent (i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee’s misstatement not materially
misleading in connection with the application for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The
Company will indemnify, defend, and hold harmless Indemnitee against any and all
Expenses and, if requested by Indemnitee, will (within 30 days after receipt by
the Company of a written request therefor) advance, to the extent not prohibited
by law, such Expenses to Indemnitee, that are actually and reasonably incurred
by Indemnitee in connection with any action brought by Indemnitee (i) for
indemnification or advancement of Expenses from the Company under this
Agreement, (ii) to recover damages for breach of this Agreement or (iii) related
to any directors’ and officers’ liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advancement of Expenses, or insurance
recovery, as the case may be.
(e) The
Company will be precluded from asserting in any proceeding commenced pursuant to
this Section 7 that
the procedures and presumptions of this Agreement are not valid, binding, and
enforceable and will stipulate in any court of competent jurisdiction that the
Company is bound by all the provisions of this Agreement.
(f) Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement
to indemnification under this Agreement will be required to be made prior to the
final disposition of the Proceeding.
8. Non-Exclusivity; Survival of
Rights; Insurance; Subrogation.
(a) The
rights of indemnification as provided by this Agreement will not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Certificate, the Bylaws, any agreement, a vote of
stockholders, a resolution of directors, or otherwise. No amendment,
alteration, or repeal of this Agreement or of any provision of this Agreement
will limit or restrict any right of Indemnitee under this Agreement in respect
of any action taken or omitted by such Indemnitee in his or her Corporate Status
prior to such amendment, alteration, or repeal. To the extent that a
change in the KGCC, whether by statute or judicial decision, permits greater
indemnification than would be afforded currently under the Certificate, the
Bylaws, or this Agreement, it is the intent of the parties to this Agreement
that Indemnitee will enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy conferred by this Agreement is
intended to be exclusive of any other right or remedy, and every other right and
remedy will be cumulative and in addition to every other right and remedy given
under this Agreement or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy under
this Agreement, or otherwise, will not prevent the concurrent assertion or
employment of any other right or remedy.
(b) The
Company hereby covenants and agrees that, so long as Indemnitee serves in a
Corporate Status and thereafter so long as Indemnitee may be subject to any
possible Proceeding by reason of the fact that Indemnitee served in a Corporate
Status, the Company, subject to Section 8(d),
will maintain in full force and effect liability insurance to protect Indemnitee
from personal liabilities incurred by reason of the fact that Indemnitee is or
was serving in such capacity (“Liability Insurance”) in
reasonable amounts from established and reputable insurers.
(c) In all
applicable policies of Liability Insurance, Indemnitee will be named as an
insured and will be covered by such policies in accordance with their terms to
the maximum extent of the coverage available for any director, officer,
employee, or agent or fiduciary under such policy or policies.
(d) Notwithstanding
the foregoing, the Company will have no obligation to maintain Liability
Insurance if the Company 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
limited by exclusions so as to provide an insufficient benefit, or Indemnitee is
covered by similar insurance maintained by a subsidiary of the Company or by
another Person pursuant to a contractual obligation owed to the
Company. The Company shall provide at least 30 days notice to
Indemnitee prior to ceasing the maintenance of Liability Insurance.
(e) Following
the receipt of a notice of a claim pursuant to the terms of this Agreement, the
Company will give prompt notice of the commencement of such Proceeding to the
insurers in accordance with the procedures set forth in the respective
policies. The Company will thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of the Indemnitee, all amounts
payable as a result of such Proceeding in accordance with the terms of such
policies.
(f) Except as
set forth in Section
8(g) below, in the event of any payment under this Agreement, the Company
will be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who will 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.
(g) The
Company hereby acknowledges that Indemnitee may have rights to indemnification
or advancement of Expenses or insurance provided by the Person or Persons set
forth on Exhibit
A, if any, and affiliates of such Persons (collectively, the “Third Party
Indemnitors”). The Company hereby agrees that (i) it is the
indemnitor of first resort and that the obligations of the Company to Indemnitee
are primary and any obligation of the Third Party Indemnitors to provide
indemnification for or advancement of Expenses incurred by Indemnitee are
secondary, (ii) the Indemnitee’s right to indemnification under this Agreement,
and the Certificate and the Bylaws, including the right to advancement of
Expenses, indemnification, and contribution, shall not be diminished, modified,
qualified, or otherwise affected by any right of Indemnitee against any Third
Party Indemnitor, and (iii) it irrevocably waives, relinquishes, and releases
the Third Party Indemnitors from any and all claims against the Third Party
Indemnitors for contribution, subrogation, or any other recovery of any kind in
respect thereof. The Company further agrees that no advancement or
payment by the Third Party Indemnitors on behalf of the Indemnitee with respect
to any claim for which Indemnitee has sought indemnification from the Company
shall affect the foregoing and the Third Party Indemnitors shall have the right
of contribution and be subrogated to the extent of such advancement or payment
to all of the rights of recovery of Indemnitee against the
Company. The Company and Indemnitee agree that the Third Party
Indemnitors are third party beneficiaries of the terms of this Section
8(g).
9. Exception to Right of
Indemnification. Notwithstanding any provision in this Agreement, the
Company will not be obligated under this Agreement to make any indemnification
in connection with:
(a) any claim
made against Indemnitee for which payment has actually been made to or on behalf
of Indemnitee under any insurance policy held by the Company or other indemnity
provision, except with respect to any excess beyond the amount paid under any
insurance policy or other indemnity provision, provided, that the foregoing
shall not affect the rights of Indemnitee or the Third Party Indemnitors set
forth in Section
8(g) above;
(b) any claim
made against Indemnitee for an accounting of profits made from the purchase and
sale (or sale and purchase) by Indemnitee of securities of the Company within
the meaning of Section 16(b) of the Exchange Act or similar provisions of state
law; or
(c) except as
otherwise provided in Section 7, any
Proceeding (or any part of any Proceeding) initiated by Indemnitee, including
any Proceeding (or any part of any Proceeding) initiated by Indemnitee against
the Company or its directors, officers, employees, or other indemnitees, unless
(i) the Board authorized the Proceeding (or such part of any Proceeding) prior
to its initiation, (ii) such indemnification is expressly required to be made by
applicable law or (iii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable
law.
10. Duration of
Agreement. All agreements and obligations of the Company
contained in this Agreement will continue during the period Indemnitee is an
officer or director of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another Person) and will
continue thereafter so long as Indemnitee is, or may be made, the subject to any
Proceeding (or any proceeding commenced under Section 7) by reason
of his or her Corporate Status, regardless of whether he or she is acting or
serving in any such capacity at the time any liability or Expense is incurred
for which indemnification can be provided under this Agreement. This
Agreement will be binding upon and inure to the benefit of and be enforceable by
the parties and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation, reorganization, or otherwise to
all or a majority of the business, assets or income or revenue generating
capacity of the Company), assigns, spouses, heirs, executors, and personal and
legal representatives.
11. Successors and Binding
Agreement. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization, or
otherwise) to all or a majority of the business, assets, or income or revenue
generating capacity of the Company, by agreement in form and substance
reasonably satisfactory to Indemnitee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This
Agreement shall be binding upon and inure to the benefit of the Company and any
successor to the Company by operation of law or otherwise.
12. Enforcement.
(a) The
Company expressly confirms and agrees that it has entered into this Agreement
and assumes the obligations imposed on it by this Agreement in order to induce
Indemnitee to serve as an officer or director of the Company, and the Company
acknowledges that Indemnitee is relying upon this Agreement in serving as an
officer or director of the Company.
(b) Subject
to Section 8(a)
hereof, this Agreement constitutes the entire agreement between the parties
hereto with respect to the matter hereof and supersedes all prior written and
oral, and contemporaneous oral, agreements, negotiations, and understandings,
express or implied, between the parties with respect to the subject matter
hereof. This Section 12(b)
will not be construed to limit any other rights Indemnitee may have under the
Certificate, the Bylaws, applicable law or otherwise.
13. Period of
Limitations. No legal action may be brought and no cause of
action may be asserted by or in the right of the Company against Indemnitee,
Indemnitee’s estate, spouse, heirs, executors, or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company will be
extinguished and deemed released, unless asserted by the timely filing of a
legal action within such two year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period will govern.
14. Definitions. For
purposes of this Agreement:
(a) “Corporate Status” describes
the status of a person who is or was a director, officer, manager, partner,
trustee, employee, agent, or fiduciary of the Enterprise that such person is or
was serving at the express request of the Company and includes, without
limitation, the status of such person as an advisor to the Enterprise prior to
the commencement of service in any other Corporate Status.
(b) “Change in Control” will be
deemed to occur upon the earliest to occur after the date of this Agreement of
any of the following events:
(i) Any
Acquiring Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing more than 50% of the combined voting
power of the Company’s then outstanding securities;
(ii) During
any period of two consecutive years (not including any period prior to the
execution of this Agreement), individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a Person who has entered into an agreement with the Company to effect a
transaction described in paragraphs (i), (iii) or
(iv) of this definition) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least
two-thirds 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 at least a majority
of the members of the Board;
(iii) The
effective date of a merger or consolidation of the Company with any other
Person, other than a merger or consolidation that would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the surviving Person
outstanding immediately after such merger or consolidation and with the power to
elect at least a majority of the board of directors or other governing body of
such surviving Person;
(iv) The
approval by the stockholders of the Company of a complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or a
majority of the Company’s assets or income or revenue-generating capacity;
or
(v) There
occurs any other event of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any
similar item on any similar schedule or form) promulgated under the Exchange
Act, whether or not the Company is then subject to such reporting
requirement.
For
purposes of the foregoing, the following terms will have the following
meanings:
(A) “Acquiring Person” will mean a
“person” or “group” within the meaning of Sections 13(d) and 14(d) of the
Exchange Act; provided, however, that Acquiring Person will exclude (i) the
Company, (ii) any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, and (iii) any Person owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(B) “Beneficial Owner” will have
the meaning given to such term in Rule 13d-3 under the Exchange Act; provided,
however, that Beneficial Owner will exclude any Person otherwise becoming a
Beneficial Owner by reason of the stockholders of the Company approving a merger
of the Company with another Person.
(c) “Disinterested Director” means
a director of the Company who is not and was not a party to the Proceeding in
respect of which indemnification is sought by Indemnitee.
(d) “Enterprise” means the Company
and any other Person that Indemnitee is or was serving at the express request of
the Company.
(e) “Exchange Act” means the
Securities Exchange Act of 1934, as amended.
(f) “Expenses” include all
reasonable 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,
participating, or being or preparing to be a witness in a Proceeding, including
reasonable compensation for time spent by Indemnitee in connection with the
prosecution, defense, preparation to prosecute or defend, investigation,
participation, preparation or involvement as a witness, or appeal of a
Proceeding or action for indemnification for which Indemnitee is not otherwise
compensated by the Company or any third party. “Expenses” also
include expenses incurred in connection with any appeal resulting from any
Proceeding, including without limitation the premium, security for, and other
costs relating to any cost bond, supersedeas bond, or other appeal bond or its
equivalent. “Expenses,” however, do not include amounts paid in
settlement by Indemnitee or the amount of judgments or fines against
Indemnitee.
(g) “Independent Counsel” means a
law firm, or a member of a law firm, that is experienced in matters of
corporation law and neither presently is, nor in the past five years has been,
retained to represent: (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning
Indemnitee under this Agreement or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving
rise to a claim for indemnification under this
Agreement. Notwithstanding the foregoing, the term “Independent
Counsel” will 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.
(h) “Person” means any individual,
corporation, partnership, limited liability company, trust, benefit plan,
governmental or quasi-governmental agency, and any other entity, public or
private.
(i) “Proceeding” includes any
threatened, pending, or completed action, claim, suit, arbitration, alternate
dispute resolution mechanism, investigation, inquiry, administrative hearing, or
any other actual, threatened, or completed proceeding, whether brought by or in
the right of the Company or otherwise and whether civil, criminal,
administrative, or investigative, in which Indemnitee was, is or will be
involved as a party or otherwise, by reason of the fact that Indemnitee is or
was acting in his or her Corporate Status, by reason of any action taken by him
or her or of any inaction on his or her part while acting in his or her
Corporate Status; in each case whether or not he or she is acting or serving in
any such capacity at the time any liability or expense is incurred for which
indemnification can be provided under this Agreement; including any Proceeding
pending on or before the date of this Agreement, but excluding any Proceeding
initiated by an Indemnitee pursuant to Section 7 of this
Agreement to enforce his or her rights under this Agreement.
15. Severability. The
invalidity or unenforceability of any provision of this Agreement will in no way
affect the validity or enforceability of any other provision. Without
limiting the generality of the foregoing, this Agreement is intended to confer
upon Indemnitee indemnification rights to the fullest extent permitted by
applicable law. In the event any provision of this Agreement
conflicts with any applicable law, such provision will be deemed modified,
consistent with the aforementioned intent, to the extent necessary to resolve
such conflict.
16. Modification and
Waiver. No supplement, modification, termination, or amendment
of this Agreement will be binding unless executed in writing by each of the
parties. No waiver of any of the provisions of this Agreement will be
deemed or will constitute a waiver of any other provisions of this Agreement
(whether or not similar) nor will such waiver constitute a continuing
waiver. This Agreement cannot be modified or amended, or any
provision of this Agreement waived, by course of conduct.
17. Notice by
Indemnitee. Indemnitee agrees promptly to notify the Company
in writing upon being served with or otherwise receiving any summons, citation,
subpoena, complaint, indictment, information, or other document relating to any
Proceeding or matter that may be subject to indemnification covered under this
Agreement. The failure to so notify the Company will not relieve the
Company of any obligation that it may have to Indemnitee under this Agreement
unless and only to the extent that such failure or delay materially prejudices
the Company.
18. Notices. All
notices and other communications given or made pursuant to this Agreement will
be in writing and will be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed electronic mail
or facsimile if sent during normal business hours of the recipient, and if not
so confirmed, then on the next business day, (c) five days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) one day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of
receipt. All communications will be sent:
(a) To
Indemnitee at the address set forth below Indemnitee’s signature
hereto.
(b) To the
Company at:
|
Xxxxxxxx-Alco
Stores, Inc.
000
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxx 00000-0000
Attention: Corporate
Secretary
|
or to
such other address as may have been furnished to Indemnitee by the Company or to
the Company by Indemnitee, as the case may be.
19. Counterparts. This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
Agreement. This Agreement may also be executed and delivered by
facsimile signature or other electronic means and in two or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
20. Rules of
Construction.
(a) The
headings of the paragraphs of this Agreement are inserted for convenience only
and will not be deemed to constitute part of this Agreement or to affect the
construction of this Agreement.
(b) Time is
of the essence with respect to this Agreement.
(c) Unless
the context otherwise requires, references to “Sections” and “Exhibits” are to
Sections of, and Exhibits to, this Agreement.
(d) This
Agreement will be liberally construed in favor of Indemnitee.
(e) Use of
the word “or” will not be exclusive.
(f) Use of
defined terms in the singular will include the plural, and vice versa.
21. Governing Law and Consent to
Jurisdiction. This Agreement and the legal relations among the
parties will be governed by, and construed and enforced in accordance with, the
Federal laws of the United States of America and the laws of the State of
Kansas, without regard to its conflict of laws rules or any other principle that
could result in the application of the laws of any other jurisdiction. The
Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any
action or proceeding arising out of or in connection with this Agreement will be
brought only in the state courts of the State of New York (the “New York Court”), or the federal
courts sitting in the State of New York and not in any other state or Federal
court in the United States of America or any court in any other country, (ii)
consent to submit to the exclusive jurisdiction of the New York Court for
purposes of any action or proceeding arising out of or in connection with this
Agreement, (iii) appoint, to the extent such party is not otherwise subject
to service of process in the State of New York, CT Corporation, as such party’s
agent in the State of New York for acceptance of legal process in connection
with any such action or proceeding against such party with the same legal force
and validity as if served upon such party personally within the State of New
York, (iv) waive any objection to the laying of venue of any such action or
proceeding in the New York Court, and (v) waive, and agree not to plead or to
make, any claim that any such action or proceeding brought in the New York Court
has been brought in an improper or inconvenient forum.
[Signature
page follows.]
85634808.2
IN
WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement
on and as of the day and year first above written.
|
XXXXXXXX-ALCO
STORES, INC.
By:
/s/ Xxxxxxx X.
Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
President and CEO
INDEMNITEE
By:
/s/ Xxxxx X.
Xxxxxx
Name:
Xxxxx X. Xxxxxx
Address:
0000
X. Xxxxxx Xxxx.
Xxxxxxxxxxx,
XX 00000
|
85634808.2
Exhibit
A
Third
Party Indemnitors
85634808.2
