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Exhibit 10.11
TUSCARORA INCORPORATED
INDEMNIFICATION AND INSURANCE AGREEMENT
THIS AGREEMENT made this 15th day of December, 1994, by and
between TUSCARORA INCORPORATED, a Pennsylvania corporation (the "Company"), and
Xxxxxx X. Xxxxxxxxxxx (the "Director").
WHEREAS, the Director is an Authorized Representative of the
Company, as "Authorized Representative" is defined in Section 1 of this
Agreement; and
WHEREAS, the Articles of the Company and the indemnification
provisions of the Pennsylvania Business Corporation Law (the "State Statute")
specifically provide that the rights to indemnification and advancement of
expenses provided by such Articles, the State Statute or any other provision of
law are not exclusive of any other rights to which any person may be entitled
under any by-law, agreement, vote of shareholders or directors or otherwise and
thus contemplate that agreements may be entered into with respect to
indemnification and advancement of expenses; and
WHEREAS, the State Statute permits the Company to purchase and
maintain insurance on behalf of Authorized Representatives against any
reasonable expenses and liability incurred by such persons; and
WHEREAS, developments with respect to the availability of
liability insurance at a reasonable cost and the terms on which liability
insurance may be procured have raised uncertainties concerning the adequacy and
reliability of the protection afforded by such insurance; and
WHEREAS, the Board of Directors of the Company (the "Board")
has concluded that the continuation of present trends in litigation against
Authorized Representatives will make it more difficult for the Company to
attract and retain directors, officers, employees, agents and other
representatives of the highest degree of competence and commitment; and
WHEREAS, the Board deems such consequences to be so
detrimental to the best interests of the Company and its shareholders that it
has concluded that it is reasonable, prudent and necessary for the Company to
act to provide certain of its Authorized Representatives with enhanced
protection against inordinate risks attendant on their positions in order to
assure that the most capable persons otherwise available will be attracted to
such positions; and
WHEREAS, in order to ameliorate the uncertainties and provide
the protection referred to above and to induce the Director to continue to serve
the Company, the Company has
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determined it to be in the best interests of the Company and its shareholders
that the Company enter into this Agreement with the Director;
NOW THEREFORE, in consideration of the continued service of
the Director to the Company after the date of this Agreement, the Company and
the Director, intending to be legally bound by this Agreement, agree as follows:
1. Authorized Representative. For the purpose of this
Agreement, the term "Authorized Representative" means a director or officer of
the Company or a subsidiary of the Company; a person serving at the request of
the Company as a director, officer, employee, fiduciary or other representative
of another corporation, partnership, joint venture, trust, employee benefit plan
or other entity; and any other person designated by the Board as entitled to the
benefit of the indemnification provisions of the Articles of the Company or of
an agreement similar to this Agreement.
2. Indemnification. Except as provided in Section 7 of this
Agreement, the Company shall hold harmless and indemnify the Director against
all Expenses and Liability (as those terms are defined below in this Section 2)
incurred by the Director in connection with any actual or threatened claim,
action, suit or proceeding, whether civil, criminal, administrative,
investigative or other, or whether brought by or against the Director or by or
in the right of the Company or otherwise, in which the Director may be involved
in any manner, as a party, witness or otherwise, or is threatened to be made so
involved, by reason of the fact that the Director was or is an Authorized
Representative, either as to action by the Director in his or her official
capacity as a director or as to action by the Director in another capacity while
holding such official capacity (any such claim, action, suit or proceeding being
hereinafter referred to as an "Action" and any such claim, action, suit or
proceeding brought by the Director against the Company being hereinafter
referred to as a "Director Action"). As used in this Agreement, the term
"Expenses" means all expenses actually and reasonably incurred, including fees
and expenses of counsel selected by the Director, and "Liability" means all
liability incurred, including the amounts of any judgments, excise taxes, fines
or penalties and any amounts paid in settlement.
3. Advancement of Expenses and Liability. The Company shall
pay all Expenses incurred by the Director in defending an Action, or in bringing
and pursuing a Director Action under Section 5 of this Agreement, in advance of
the final disposition of such Action or Director Action, except that no Expenses
shall be advanced in respect of any Director Action brought to obtain payment
for failure to maintain insurance under Section 4(c) of this Agreement. Also, if
the Director shall become obligated or
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required to pay any Expenses or Liability that the Company would be obligated to
pay under this Agreement except for the exclusion in clause (iv) of Section 7 of
this Agreement before payment is reasonably expected to be made to the Director
under an Insurance Policy or a Security Arrangement (as those terms are defined
in clause (iv) of Section 7 of this Agreement), the Company shall advance the
amount of any such Expenses or Liability to the Director. The advances of
Expenses and Liability by the Company under this Section 3 are subject to the
obligations of the Director set forth in Section 10(b) of this Agreement.
4. Maintenance of Insurance and Self Insurance.
(a) The Company represents that it presently has in force and
effect the insurance on behalf of the Director against certain
liabilities asserted against or incurred by the Director as set forth
in Appendix A attached to and made a part of this Agreement. Subject
only to the provisions of Section 4(b) of this Agreement, the Company
agrees that, so long as the Director shall continue as an Authorized
Representative of the Company and thereafter so long as the Director
shall be subject to any actual or threatened Action by reason of the
fact that the Director served as an Authorized Representative of the
Company, the Company shall purchase and maintain in effect for the
benefit of the Director such insurance providing, in all respects,
coverage at least comparable to that presently provided.
(b) The Company shall not be required to maintain the
insurance referred to in Section 4(a) of this Agreement if such
insurance is not available on terms satisfactory to the then Board or
if, in the business judgment of the then Board, either (i) the premium
cost for such insurance is substantially disproportionate to the amount
of coverage or (ii) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such
insurance.
(c) Without limiting the obligations of the Company to provide
indemnification and advancement of Expenses and Liability under
Sections 2 and 3 of this Agreement, respectively, if the Company does
not purchase and maintain in effect the insurance referred to in
Section 4(a) of this Agreement for whatever reason, the Company shall
hold harmless and make payment to the Director to the fullest extent of
the coverage which would otherwise have been provided by such insurance
for the benefit of the Director.
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5. Right of the Director to Payment Upon Request; Suit to Recover.
(a) Any indemnification under Section 2 of this Agreement,
advancement of Expenses or Liability under Section 3 of this Agreement,
payment for failure to maintain insurance under Section 4 of this
Agreement or contribution under Section 8 of this Agreement shall be
made no later than 30 days after receipt by the Company of a written
request from the Director. If payment in full to the Director pursuant
to such a request is not made by the Company within such period, the
Director may at any time thereafter bring a Director Action to recover
the unpaid amount of the claim and, if successful in whole or in part,
the Director shall also be entitled to be paid for the Expenses of the
Director incurred in bringing and pursuing such Director Action; and
the Company hereby empowers the prothonotary or any attorney of any
court of record within the United States or elsewhere to appear for the
Company and to confess judgment as often as necessary against the
Company in favor of the Director, as of any term, for the amount of the
indemnification, advancement of Expenses or Liability, payment for
failure to maintain insurance or contribution so requested by the
Director, together with costs of suit and an attorney's commission of
15%, with release of all errors.
(b) The only defense to a Director Action to recover on a
claim for indemnification under Section 2 of this Agreement shall be
that the Company is not liable for such payment by reason of Section 7
of this Agreement, but the burden of proving such defense shall be on
the Company. Neither the failure of the Company (including its Board of
Directors, independent legal counsel and shareholders) to have made a
determination prior to the commencement of such Director Action that
indemnification of the Director is proper in the circumstances, nor an
actual determination by the Company (including its Board of Directors,
independent legal counsel or shareholders) that the conduct of the
Director was such that indemnification is prohibited by law, shall be a
defense to such Director Action for indemnification or create a
presumption that the conduct of the Director was such that
indemnification is prohibited by law.
6. Changes in the Law; Partial Indemnity.
(a) If any change after the date of this Agreement in any
applicable law, statute or rule expands the power of the Company to
indemnify an Authorized Representative, such change shall be within the
purview of the rights of the Director and the obligations of the
Company under this
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Agreement. If any change in any applicable law, statute or rule narrows
the right of the Company to indemnify an Authorized Representative such
change, to the extent not otherwise required by such law, statute or
rule to be applied to this Agreement, shall have no effect on this
Agreement or the rights and obligations of the Company and the Director
under this Agreement.
(b) If the Director is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of
the Expenses or Liability incurred by the Director in the prosecution,
defense, appeal or settlement of any Action or Director Action but not,
however, for the total amount of such Expenses or Liability, the
Company shall indemnify the Director for the portion of such Expenses
or Liability to which the Director is entitled.
7. Exclusions. The Company shall not be liable under this
Agreement for any of the following payments:
(i) any payment for Expenses or Liability under
Section 2 of this Agreement if it shall be finally adjudicated
that such payment (which may constitute a portion of the total
Expenses or Liability incurred by the Director, as
contemplated by Section 6(b) of this Agreement) is prohibited
by law; or
(ii) any payment for Expenses or Liability on account
of any Action brought under Section 16(b) of the Securities
Exchange Act of 1934, as amended, in which judgment is
rendered against the Director for an accounting for profits
realized from the purchase and sale, or sale and purchase, by
the Director of equity securities of the Company; or
(iii) any payment for Expenses in a Director Action
unless (1) the Director Action is instituted under Section 5
of this Agreement and the Director is successful in whole or
in part in such Director Action, (2) the Director is
successful in whole or in part in another Director Action for
which Expenses are claimed or (3) the indemnification for
Expenses is included in a settlement of, or is awarded by a
court in, such other Director Action; or
(iv) any payment for Expenses or Liability to the
extent payment is actually made to the Director under a valid,
enforceable and collectible insurance policy provided by the
Company (an "Insurance Policy") or by or out of a trust fund
created by the Company, under a letter of credit or from other
sources provided by the Company (a "Security Arrangement").
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8. Contribution. If the full indemnification provided in
Section 2 of this Agreement may not be paid to the Director because of the
exclusion in clause (i) of Section 7 of this Agreement, then in respect of any
actual or threatened Action in which the Company is jointly liable with the
Director (or would be if joined in such Action), the Company shall contribute to
the amount of any Expenses or Liability incurred by the Director for which
indemnification is not available in such proportion as is appropriate to reflect
(i) the relative benefits received by the Company on the one hand and the
Director on the other hand from the transaction from which the Action arose and
(ii) the relative fault of the Company, including its other Authorized
Representatives, employees, agents and other representatives, on the one hand,
and of the Director on the other hand in connection with the events which
resulted in such Expenses or Liability, as well as any other relevant equitable
considerations. The relative fault of the Company, including its other
Authorized Representatives, employees, agents and other representatives, on the
one hand, and of the Director on the other hand shall be determined by reference
to, among other things, the relative intent, knowledge, access to information
and opportunity of the Company and the Director to correct or prevent the
circumstances resulting in such Expenses or Liability. The Company agrees that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation or any other method of allocation which
does not take account of the foregoing equitable considerations.
9. Continuation of Company Obligations. All obligations of the
Company contained in this Agreement shall continue during the period the
Director is an Authorized Representative of the Company and shall continue
thereafter so long as the Director may be subject to any possible Action by
reason of the fact that the Director was an Authorized Representative of the
Company.
10. Obligations of the Director.
(a) Promptly after receipt by the Director of notice of the
commencement of any Action in respect of which the Director may seek
indemnification, advancement of Expenses or Liability or payment for
failure to maintain insurance, the Director shall notify the Company in
writing of the commencement of such Action; but the omission so to
notify the Company shall not relieve the Company from any obligation it
may have to provide indemnification, advance Expenses or Liability or
make payment for failure to maintain insurance to the Director
otherwise than under this Agreement.
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(b) The Director agrees that the Director shall promptly
reimburse the Company for all or an appropriate portion of any Expenses
or Liability advanced by the Company to the Director pursuant to
Section 3 of this Agreement or recovered by the Director pursuant to
Section 5 of this Agreement (i) if it shall be finally adjudicated that
the Director is not entitled to be indemnified, or not entitled to be
fully indemnified, with respect to any such Expenses or Liability for
any of the reasons specified in Section 7 of this Agreement or (ii)
upon receipt by the Director under an Insurance Policy or a Security
Arrangement of the amount of any Expenses or Liability advanced to the
Director by the Company.
11. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be invalidated by
any court of competent jurisdiction, such provision shall be ineffective only to
the extent of such invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
12. Miscellaneous.
(a) This Agreement shall only be applicable to Actions
commenced after the date of this Agreement. Any such Action may,
however, arise from acts or omissions occurring before the date of this
Agreement.
(b) This Agreement shall be deemed to be a contract made under
and shall be governed by and construed and enforced in accordance with
the internal laws of the Commonwealth of Pennsylvania without regard to
principles of conflicts of laws.
(c) This Agreement shall be binding upon the Director and the
heirs and personal representatives of the Director and upon the Company
and its successors. This Agreement shall inure only to the benefit of
the Director and the heirs and personal representatives of the Director
and to the benefit of the Company and its successors and shall not
inure to the benefit of any other party.
(d) No amendment, termination or claimed waiver of any of the
provisions of this Agreement shall be valid unless in writing and
signed by the party or an authorized representative of the party
against whom such amendment, termination or claimed waiver is sought to
be enforced.
(e) The rights to indemnification, advancement of Expenses and
Liability, payment for failure to maintain insurance and contribution
provided by this Agreement shall
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not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which the Director may be entitled under any
other agreement, any provision in the Articles or By-Laws of the
Company, any vote of shareholders or directors, the State Statute, or
otherwise, either as to action by the Director in his or her official
capacity as a director or as to action by the Director in another
capacity while holding such official capacity.
IN WITNESS WHEREOF, the Company and the Director have executed
this Agreement as of the day and year first above written.
TUSCARORA INCORPORATED
By: /s/ Xxxx X. X'Xxxxx, Xx.
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Xxxx X. X'Xxxxx, Xx.
Title:
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President and Chief Executive
Officer
/s/ Xxxxxx X. Xxxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxxx, Director
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