INDEMNIFICATION AGREEMENT
This Agreement is made effective as of September 23, 1997, by and between
Xxxxxxx Radio Corp., a Delaware corporation (the "Company"), and Xxxxxxxx X.
Xxxxxxx ("Employee").
W I T N E S S E T H:
WHEREAS, in order to induce Employee to serve the Company, the Company has
agreed to provide Employee with the benefits contemplated by this Agreement;
NOW, THEREFORE, in consideration of the promises, conditions,
representations, and warranties set forth herein, the Company and Employee
hereby agree as follows:
1. DEFINITIONS. The following terms, as used herein, shall have the
following respective meanings:
"Change in Control" shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Act")), other than
Xxxxxxxx X. Xxxxxx or a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 20% or more of the
total voting power represented by the Company's then outstanding voting
securities, (ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of
the Company and any new director whose election by the Board of Directors
or nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease, for any reason,
to constitute a majority of the Board of Directors, (iii) the stockholders
of the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation that would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least
80% of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger
or consolidation, or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for sale or disposition
by the Company of all or substantially all of the Company's assets.
"Claim" means any threatened, pending, or completed action, suit, or
proceeding, or any inquiry or investigation, whether conducted by or on
behalf of the Company or any other party, that Employee in good faith
believes might lead to the institution of any such action, suit, or
proceeding, whether civil, criminal, administrative, investigative, or
other.
"Covered Act" means any breach of duty, neglect, error, misstatement,
misleading statement, omission, or other act done or wrongfully attempted
by Employee or any of the foregoing alleged by any claimant or any event or
occurrence related to the fact that Employee is or was a director, officer,
employee, agent, or fiduciary of the Company or is or was serving at the
request of the Company as a director, officer, employee, trustee, agent, or
fiduciary of another corporation, partnership, joint venture, trust, or
other entity.
"Determination" means a determination, based on the facts known at the
time, by:
(i) A majority vote of a quorum of disinterested directors;
(ii) Special, independent legal counsel in a written opinion
prepared at the request of a majority of a quorum of disinterested
directors or pursuant to Section 4(a);
(iii) A majority of the disinterested stockholders of
the Company; or
(iv) A final adjudication by a court of competent
jurisdiction.
"Determined" shall have a correlative meaning.
"Excluded Claim" means any Claim:
(i) Based upon or attributable to Employee gaining in fact
any personal profit or advantage to which Employee is not entitled;
(ii) For the return by Employee of any remuneration paid to
Employee without the previous approval of the stockholders of the
Company which is illegal;
(iii) Resulting from Employee's knowingly fraudulent,
dishonest, or willful misconduct; or
(iv) Any claim for which indemnification is prohibited by
applicable law.
"Expenses" means any expense incurred by Employee as a result of a
Claim or Claims made against him for Covered Acts including, without
limitation, attorneys' fees and all other costs, expenses, and obligations
paid or incurred in connection with investigating, defending, being a
witness in, or participating in (including on appeal), or preparing to
defend, be a witness in, or participate in any Claim relating to any
Covered Act, but shall not include Fines.
"Fines" means any fine, penalty or, with respect to an employee
benefit plan, any excise tax or penalty assessed with respect thereto.
"Losses" means any amount that Employee is legally obligated to pay as
a result of a Claim or Claims made against him for Covered Acts including,
without limitation, damages and judgments and sums paid in settlement of a
Claim or Claims, but shall not include Fines.
2. MAINTENANCE OF DIRECTORS' AND OFFICERS' LIABILITY INSURANCE.
(a) The Company hereby covenants and agrees that, subject to the
provisions of the Company's Certificate of Incorporation or Corporate By-
Laws, as may be amended from time-to-time, regarding the Company's power
and authority to purchase insurance or other arrangement for its directors
or officers, so long as Employee shall continue to serve as an employee of
the Company and thereafter so long as Employee shall be subject to any
Claim for any Covered Act, the Company, subject to Section 2(c), shall
purchase or maintain in full force and effect directors' and officers'
liability insurance or other arrangement.
(b) In all policies of directors' and officers' liability insurance
or other arrangement maintained by the Company, Employee shall be named as
an insured (to the extent permitted, if at all, by the Company's directors'
and officers' liability insurance carrier or other arrangement provider) in
such a manner as to provide Employee the same rights and benefits, subject
to the same limitations, as are accorded to the Company's directors or
officers most favorably insured by such policy.
(c) The Company shall have no obligation to maintain directors' and
officers' liability insurance or other arrangement if the Board of
Directors of the Company determines not to purchase and maintain such
insurance or other arrangement as set forth in the Company's Certificate of
Incorporation or Corporate By-Laws, including but not limited to, a
determination in good faith that such insurance is not reasonably
available, the premium costs for such insurance are disproportionate to the
amount of coverage provided, or the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit.
3. INDEMNIFICATION. The Company shall indemnify Employee and hold him
harmless from any and all Losses, Expenses, and Fines to the fullest extent
authorized, permitted, or not prohibited (i) by the General Corporation Law of
the State of Delaware (the "GCL"), or any other applicable law (including
judicial, regulatory, or administrative interpretations or readings thereof),
the Company's Certificate of Incorporation or Bylaws as in effect on the date
hereof, or (ii) by any amendment thereof or other statutory provisions
authorizing or permitting such indemnification that is adopted after the date
hereof, subject to the further provisions of this Agreement. In the event that
after the date hereof the Company provides any greater right of indemnification,
in any respect, to any other person serving as an officer, director or employee
of the Company, then such greater right of indemnification shall inure to the
benefit of and shall be deemed to be incorporated in this Agreement. In the
event the provisions of this Agreement are prohibited by the provisions of the
Company's Corporate By-Laws or Certificate of Incorporation, the Company's
Certificate of Incorporation and Corporate By-Laws shall prevail.
4. EXCLUDED COVERAGE.
(a) The Company shall have no obligation to indemnify Employee for
and hold him harmless from any Loss, Expense, or Fine which has been
Determined to constitute an Excluded Claim, provided that in the event of a
Change in Control, then with respect to all matters thereafter arising
concerning the rights of Employee to indemnity payments and Expense
advances under this Agreement, or any other agreements or bylaws now or
hereafter in effect relating to Claims for Covered Acts, a Determination
with respect to an Excluded Claim shall be made only by a court of
competent jurisdiction or by special, independent legal counsel selected by
Employee and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services for
the Company or Employee. In the event that Employee and the Company are
unable to agree on the selection of the special, independent legal counsel,
such special, independent legal counsel shall be selected by lot from among
at least five law firms designated by Employee, each in the State of
Delaware, Essex and Xxxxxx Counties, New Jersey or Dallas, Texas, having
more than thirty-five (35) attorneys and having a rating of "av" or better
in the then current Xxxxxxxxxx-Xxxxxxx Law Directory. Such selection shall
be made in the presence of Employee (and Employee's legal counsel or either
of them, as Employee may elect). Such special, independent legal counsel,
among other things, shall determine whether and to what extent Employee
would be permitted to be indemnified under applicable law and shall render
its written opinion to the Company and Employee to such effect.
If there has been a Determination that the Company is not obligated to
indemnify Employee as a result of an Excluded Claim (whether by special,
independent legal counsel or otherwise), Employee shall have the right to
commence litigation in any court in the States of Delaware, New Jersey or
Texas having subject matter jurisdiction thereof, and in which venue is
proper, challenging any such Determination; provided that the Company shall
be entitled to be reimbursed by Employee (who hereby agrees to reimburse
the Company) for all such amounts theretofore paid with respect to such
Excluded Claim (only upon a final judicial Determination that Employee is
not entitled to indemnification made with respect thereto as to which all
rights of appeal therefrom have been exhausted or lapsed) and the Company
shall be obligated to indemnify or advance any additional amounts to
Employee attributable to the defense of such Excluded Claim until such a
judicial Determination has been made.
(b) The Company shall use its best efforts to make the Determination
contemplated herein promptly. Upon request by Employee, in connection with
any matter for which indemnification or reimbursement may be sought
hereunder, the Company agrees to promptly make a Determination whether such
matter constitutes an Excluded Claim. In this connection, the Company
agrees:
(i) if the Determination is to be made by a majority of
disinterested directors of the Company or a committee thereof, such
Determination shall be made not later than fifteen (15) days after a
written request for a Determination (a "Request") is delivered to the
Company by Employee;
(ii) if the Determination is to be made by special,
independent legal counsel, such Determination shall be made not later
than ninety (90) days after a Request is delivered to the Company by
Employee; and
(iii) if the Determination is to be made by the
stockholders of the Company, such Determination shall be made not
later than one hundred fifty (150) days after a Request is delivered
to the Company by Employee.
The failure to make a Determination within the above-specified time
periods shall constitute a Determination approving full indemnification or
reimbursement of Employee. All costs of making the Determination shall be
borne solely by the Company.
(c) The Company shall have no obligation to indemnify Employee and
hold him harmless for any Loss, Expense, or Fine to the extent that
Employee is actually and finally reimbursed for such Loss, Expense, or Fine
by the Company pursuant to the Company's Certificate of Incorporation,
Bylaws, or otherwise.
(d) The Company shall have no obligation to indemnify Employee and
hold him harmless for any Fines to the extent that such indemnification is
prohibited by the GCL.
5. INDEMNIFICATION PROCEDURES.
(a) Promptly after receipt by Employee of notice of the commencement
of or the threat of commencement of any Claim, Employee shall, if
indemnification with respect thereto is being sought from the Company under
this Agreement, notify the Company of the commencement thereof, provided
that failure to so notify the Company shall not relieve the Company from
any liability that it may have to Employee under this Agreement unless such
failure materially and adversely affects the rights of the Company
thereunder.
(b) Subject to the provisions of this Agreement if, at the time of
the receipt of such notice, the Company has directors' and officers'
liability insurance or other arrangement in effect, the Company shall give
prompt and proper notice of the commencement of such Claim to the insurer
or other arrangement provider. The Company shall thereafter take all
necessary or desirable action to pay or to cause such insurer to pay, on
behalf of Employee, all Losses, Expenses, and Fines payable as a result of
such Claim in accordance with the terms of such policies.
(c) To the extent the Company does not, at the time of the
commencement of or the threat of commencement of such Claim, have
applicable directors' and officers' liability insurance or other
arrangement provider, or if the full amount of any Expenses arising out of
such action, suit, or Claim will not be payable under such insurance then
in effect, the Company shall be obligated to pay the Expenses relating to
any such Claim in advance of the final disposition thereof and the Company,
if appropriate, shall be entitled to assume the defense of such Claim, with
counsel reasonably satisfactory to Employee, upon the delivery to Employee
of written notice of its election so to do. After delivery of such notice,
the Company will not be liable to Employee under this Agreement for any
legal or other Expenses subsequently incurred by Employee in connection
with such defense other than reasonable costs of investigation, provided
that Employee shall have the right to employ its counsel in any such Claim
but the fees and expenses of such counsel incurred after delivery of notice
from the Company of its assumption of such defense shall be at the
Employee's expense, provided further that if (i) the employment of counsel
by Employee has been previously authorized by the Company, (ii) Employee
shall have reasonably concluded that there may be a conflict of interest
between the Company and Employee in the conduct of any such defense, or
(iii) the Company shall not, in fact, have employed counsel to assume the
defense of such action, the reasonable fees and expenses of counsel shall
be at the expense of the Company.
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made promptly, but in any event
within thirty (30) days of Employee's written request therefor, provided
that all payments on account of the Company's obligations under Paragraph
5(c) of this Agreement prior to the final disposition of any Claim, shall
be made within ten (10) days of Employee's written request therefor.
(e) Employee agrees that he will reimburse the Company for all
Losses, Expenses, and Fines paid by the Company on behalf of Employee in
connection with any Claim against Employee in the event and only to the
extent that a Determination shall have been made by a court in a final
adjudication from which there is no further right of appeal that the
Employee is not entitled to be indemnified by the Company for such amounts
because the Claim is an Excluded Claim or because Employee is otherwise not
entitled to payment under this Agreement.
6. FINAL DETERMINATION; SETTLEMENT. The Company shall pay all Losses or
Fines for which Employee is indemnified hereunder upon final determination
thereof. The Company shall have no obligation to indemnify Employee under this
Agreement for any amounts paid in settlement of any Claim effected without the
Company's prior written consent. The Company shall not settle any claim in any
manner which would impose any Fine or any obligation on Employee without
Employee's written consent. Neither the Company nor Employee shall unreasonably
withhold their consent to any proposed settlement.
7. RIGHTS NOT EXCLUSIVE. The rights provided hereunder shall not be
deemed exclusive of any other rights to which Employee may be entitled under any
charter provision, bylaw, agreement, vote of stockholders or of disinterested
directors or otherwise, both as to action in his official capacity and as to
action in any other capacity by holding such office, and shall continue after
Employee ceases to serve the Company as an employee.
8. ENFORCEMENT.
(a) Employee's right to indemnification shall be enforceable by
Employee only in the state courts of the States of Delaware, New Jersey and
Texas, and shall be enforceable notwithstanding any adverse Determination.
In any such action, if a prior adverse Determination has been made, the
burden of proving that indemnification is required under this Agreement
shall be on Employee. The Company shall have the burden of proving that
indemnification is not required under this Agreement if no prior adverse
Determination shall have been made.
(b) In the event that any action is instituted by Employee under this
Agreement, or to enforce or interpret any of the terms of this Agreement,
Employee shall be entitled to be paid all court costs and expenses,
including reasonable counsel fees, incurred by Employee with respect to
such action, unless the court determines that each of the material
assertions made by Employee as a basis for such action were not made in
good faith or were frivolous.
9. SEVERABILITY. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act which
is in violation of applicable law, such provision shall be limited or modified
in its application to the minimum extent necessary to avoid a violation of law,
and, as so limited or modified, such provision and the balance of this Agreement
shall be enforceable in accordance with its terms.
10. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (AND NOT THE CHOICE OF LAW
PROVISIONS) OF THE STATE OF DELAWARE.
11. CONSENT TO JURISDICTION. The Company and Employee each hereby
irrevocably consent to the jurisdiction of the courts of the States of Delaware
and Texas for all purposes in connection with any action or proceeding that
arises out of or relates to this Agreement and agree that any action instituted
under this Agreement shall be brought only in the state courts of the States of
Delaware and Texas.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be (i) binding upon all
successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law) and (ii) shall be binding on and inure to the benefit of the
heirs, personal representatives, and estate of Employee.
13. AMENDMENT. No amendment, modification, termination, or cancellation
of this Agreement shall be effective unless made in a writing signed by each of
the parties hereto.
14. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Employee, who shall execute all instruments required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents as may be necessary to enable the Company
effectively to bring suit to enforce such rights.
IN WITNESS WHEREOF, the Company and Employee have executed this Agreement
as of the day and year first above written.
XXXXXXX RADIO CORP.
By:
Xxxxxxxx X. Xxxxxx
Chairman of the Board,
Chief Executive Officer and President
Xxxxxxxx X. Xxxxxxx
Employee
