INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of June 6, 1996 between XXXX
CORPORATION, a Delaware corporation (the "Corporation") and Xxxxxx Xxxx (the
"Indemnitee").
W I T N E S S E T H:
WHEREAS, it is essential to the Corporation to attract as directors the
most capable persons available;
WHEREAS, the Corporation has requested that the Indemnitee become a member
of the Board of Directors of the Corporation effective June 6, 1996 (the
"Commencement Time") and the Indemnitee has agreed so to serve in part upon the
basis of the indemnification and other agreements provided for and referred to
in this Agreement, including Section 10 hereof;
WHEREAS, both the Corporation and the Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors of public
companies in today's environment;
WHEREAS, the Corporation's Restated Certificate of Incorporation requires
the Corporation to indemnify its directors as set forth therein and expressly
authorizes the Corporation to enter into agreements with its directors for the
purpose of providing for such indemnification, and the Indemnitee has agreed to
serve as a director of the Corporation in part in reliance on such provisions;
WHEREAS, in recognition of the Indemnitee's need for substantial protection
against personal liability in order to enhance the Indemnitee's commencement and
continued service to the Corporation in an effective manner, the difficulty of
finding adequate director and officer liability insurance coverage and the
Indemnitee's reliance on the aforesaid provisions in the Corporation's Restated
Certificate of Incorporation, and, in part to provide the Indemnitee with
specific contractual assurance that the protection promised by such provisions
will be available to the Indemnitee (regardless of, among other things, any
amendment to or revocation of such provisions of the Certificate of
Incorporation, future financial difficulties of the Corporation, any change in
the composition of the Corporation's board of directors or the occurrence of any
acquisition transaction relating to the Corporation); and
WHEREAS, the Corporation wishes to provide in this Agreement for the
effective indemnification of and the advancing of expenses to the Indemnitee as
set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the Indemnitee
agreeing to serve the Corporation directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. INDEMNIFICATION
a. AGREEMENT TO INDEMNIFY. Subject to Section 3 hereof, the Corporation
shall indemnify the Indemnitee to the full extent permitted by law
against expenses (including attorneys' and other professionals' fees
and other out-of- pocket expenses), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the Indemnitee in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
in nature ("Proceeding") in which the Indemnitee was or is or is
threatened to be made a party or in which the Indemnitee testifies by
reason of (i) the fact that the Indemnitee is or was a director,
officer, employee or agent at any time after the Commencement Time of
the Corporation or is or was at any time after the Commencement Time
serving at the request of the Corporation as a director, officer,
employee, trustee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise and (ii) any
acts or omissions by the Indemnitee in such capacity that occurred
after the Commencement Time, so long as the Indemnitee acted or
omitted to act in good faith and in a manner that the Indemnitee (x)
reasonably believed to be in or not opposed to the best interests of
the Corporation and (y) with respect to any criminal action or
proceeding, had reasonable cause to believe was lawful; PROVIDED,
HOWEVER, that if a court of competent jurisdiction, after exhaustion
of all appeals therefrom, adjudges the Indemnitee to be liable to the
Corporation for any amount or if the Indemnitee pays an amount in
settlement to the Corporation, the Corporation may indemnify the
Indemnitee for such amount only with the approval of such court.
b. EXCLUSIONS. The Corporation shall not be liable under this Agreement
to make any payment to the Indemnitee:
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i. for which payment has previously been actually made to the
Indemnitee under a valid and collectible insurance policy, except
in respect of any excess beyond the amount of payment under such
insurance;
ii. for which payment has previously been actually made to the
Indemnitee by the Corporation other than pursuant to this
Agreement, except in respect of any excess beyond the amount of
such payment; and
iii. for an accounting of profits made from the purchase or sale by
the Indemnitee of securities of the Corporation within the
meaning of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or similar provisions of any state law;
c. STANDARDS OF INDEMNIFICATION. In connection with any determination as
to whether the Indemnitee is entitled to be indemnified or advanced
expenses hereunder, to the maximum extent permitted by law, the burden
of proof shall be on the Corporation to establish that Indemnitee is
not so entitled. In connection with any action by the Indemnitee to
enforce this Agreement, to the maximum extent permitted by law,
neither the failure of the Corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have made
a determination prior to the commencement of any action by the
Indemnitee under Section 5 hereof that indemnification of the claimant
is proper under the circumstances because the Indemnitee has met the
applicable standard of conduct, nor an actual determination by the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that the Indemnitee has not met the applicable
standard of conduct. For purposes of this Agreement, the termination
of any Proceeding by judgment, order, settlement, conviction or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself,
create a presumption that the Indemnitee did not act in good faith and
in a manner which the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Corporation or with respect to
any criminal Proceeding, had reasonable cause to believe that the
conduct of the Indemnitee was unlawful.
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2. INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Agreement, after the
Indemnitee has been successful on the merits or otherwise, including the
dismissal of a Proceeding without prejudice or the settlement of a Proceeding
without admission of liability, in defense of any Proceeding or in defense of
any claim, issue or matter therein, the Corporation, in accordance with Section
145(c) of the General Corporation Law of the State of Delaware, shall indemnify
the Indemnitee against all expenses (including attorneys' and other
professionals' fees and other out-of-pocket expenses) actually and reasonably
incurred by the Indemnitee in connection therewith.
3. DETERMINATION OF RIGHT OF INDEMNIFICATION.
Any indemnification under Section 1 (unless otherwise ordered by a court)
shall be made by the Corporation only following receipt of a written demand by
the Indemnitee and only (x) if, in the specific case there has been no
determination that indemnification of the Indemnitee is not proper in the
circumstances because the Indemnitee has not met the applicable standard of
conduct set forth in Section 1 or (y) if (but only if) required by Delaware law,
upon a determination that indemnification of the Indemnitee is proper in the
circumstances because the Indemnitee has met the applicable standard of conduct
set forth in Section 1. Any such determination shall be made within 30 days
from the date the written request of the Indemnitee is received by the
Corporation either (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who are not or were not parties to such Proceeding, (ii)
if such a quorum is not obtainable or, even if obtainable if a quorum of
disinterested directors so directs, or, if a change in control (as defined
below) has occurred subsequent to the Effective Date of the Plan of
Reorganization, by the written opinion of independent legal counsel selected by
the Board of Directors of the Corporation (or if a change of control has so
occurred, selected by the Indemnitee with the consent of the Corporation, which
consent shall not be unreasonably withheld) or (iii) by the stockholders of the
Corporation.
A "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), other than a Trustee or other fiduciary holding securities
under an employee benefit plan of the Corporation or a corporation owned
directly or indirectly by the stockholders of the Corporation in substantially
the same proportions as their ownership of stock in the Corporation, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under such Act),
directly or indirectly of securities of the Corporation representing 51% or more
of the total voting power represented by the Corporation'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
Corporation and any new
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director whose election by the board of directors or nomination for election
by the Corporation'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 a majority
thereof, or (iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other than a
merger or consolidation which would result in the Voting Securities of the
Corporation 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 Corporation or such surviving entity
outstanding immediately after such merger or consolidation, or the
stockholders of the Corporation approve a plan of complete liquidation and
dissolution of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all the Corporation's assets;
provided, however, that any transaction that would otherwise be a change in
control under clause (iii) hereof which is approved and recommended in
advance by the Corporation's board of directors shall not be deemed a change
in control. For purpose of the definition of change in control, the term
"Voting Securities" shall mean any securities of the Corporation which vote
generally in the election of directors.
The term "independent legal counsel" as used herein, means a law firm, an
attorney or a member of a law firm that is experienced in matters of corporate
law and neither at the time of engagement is, nor at any time during the five
years preceding the date of the engagement by the Indemnitee has been, retained
to represent (i) either the Corporation or the Indemnitee in any matter material
to either party or (ii) any other party to a Proceeding giving rise to a claim
for indemnification hereunder. The term "independent legal counsel" shall not
include any person who, under the applicable standards of professional conduct
prevailing at the time of the representation, would have a conflict of interest
in representing either the Corporation or the Indemnitee in an action to
determine the Indemnitee's rights under the provisions of the Corporation's
Certificate of Incorporation, Bylaws or any agreement upon which the Indemnitee
relies to establish the Indemnitee's right to indemnification or advancement of
expenses.
The Corporation agrees to pay the reasonable fees of the independent legal
counsel and to indemnify fully such independent legal counsel against any and
all expenses (including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or the engagement of such
independent legal counsel pursuant hereto.
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4. ADVANCES OF EXPENSES.
Expenses (including attorneys' fees) incurred by the Indemnitee in
defending any Proceeding shall be paid by the Corporation upon written request
of the Indemnitee in advance of the final disposition of such Proceeding if the
Corporation has received an undertaking by or on behalf of the Indemnitee, in
substantially the form attached hereto as ANNEX A. The obligation of the
Corporation to advance expenses pursuant to this Section 4 shall be subject to
the condition that if, when and to the extent a determination is made as
provided under Section 3 hereof that the Indemnitee would not be permitted to be
indemnified as provided therein, then the Corporation shall be entitled to be
reimbursed by the Indemnitee as provided in ANNEX A for all amounts theretofore
paid in advance; PROVIDED, HOWEVER, that if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction to secure a determination that
the Indemnitee should be indemnified under applicable law, any determination
made pursuant to this Agreement that the Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and the Indemnitee shall
not be required to reimburse the Corporation for any advances hereunder until a
final judicial determination is made with respect thereto (as to which all
appeals therefrom have been exhausted).
In any event, the obligation of the Indemnitee to reimburse the Corporation
for advances shall be unsecured and no interest will be charged thereon.
5. PROCEDURE FOR MAKING DEMAND.
a. Payments for any indemnification to which the Indemnitee is entitled
pursuant to Section 1 hereof shall be made by the Corporation no later
than 30 days after the receipt of a written demand made by the
Indemnitee as provided in Section 3 hereof.
b. Payments of expenses to which the Indemnitee is entitled pursuant to
Section 2 hereof shall be made by the Corporation no later than ten
days after receipt by the Corporation of the written demand for
payment from the Indemnitee.
c. Advancement of expenses to the extent provided by Section 4 hereof
shall be made by the Corporation no later than 30 days after receipt
by the Corporation of the written undertaking referred to in Section 4
hereof.
d. The right to indemnification or advances hereunder shall be
enforceable by each Indemnitee in any court of competent jurisdiction
if the Board of Directors, independent legal counsel or stockholders
improperly denies the
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claim, in whole or in part or if indemnification or advancement of
expenses is not made within the time specified herein. In any such
event, or if there has been no determination under Section 3, the
Indemnitee shall have the right to commence litigation in any such
court in the States of Delaware or New York or the state(s) of
director's residence or employment, having subject matter
jurisdiction thereof, and in which venue is proper, seeking an
initial determination by the court or challenging any such
determination under this Agreement or any aspect thereof, and the
Corporation hereby consents to service of process and to appear in any
such proceeding. Any determination as to the right to
indemnification, including expense reimbursement, hereunder shall
otherwise be conclusive and binding on the Corporation and the
Indemnitee.
e. The Corporation shall indemnify the Indemnitee against any and all
expenses (including attorneys' and other professionals' fees and other
out-of-pocket expenses) and, if requested by the Indemnitee, shall,
within ten days of such request, advance such expenses to Director
which are incurred by the Indemnitee in connection with any claim
asserted against or action brought by the Indemnitee for (i)
indemnification hereunder or advance payment of expenses by the
Corporation under this Agreement (or the Corporation's Certificate of
Incorporation or By-Laws now or hereafter in effect) and/or (ii)
recovery under any director and officer liability insurance policies
maintained by the Corporation, regardless of whether the Indemnitee
ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be.
6. SUBROGATION.
In the event of payment under this Agreement, the Corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the
Indemnitee who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Corporation effectively to bring suit to
enforce such rights.
7. EFFECT OF CHANGES IN LAW OR CORPORATE DOCUMENTS.
No change in the Corporation's Certificate of Incorporation or Bylaws or
the Delaware General Corporation Law subsequent to the date first above written
shall have the effect of limiting or eliminating the indemnification available
under this Agreement as to any act, omission or capacity for which this
Agreement provides indemnification at the
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time of such act, omission or capacity. If any change after the date of this
Agreement in any applicable law, statute or rule expands the power of the
Corporation to indemnify the Indemnitee, such change shall be within the
purview of the Indemnitee's rights and the Corporation's obligations under
this Agreement. If any change in applicable law, statute or rule narrows the
right of the Corporation to indemnify the Indemnitee, such change, except to
the extent otherwise required by law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights or
obligations hereunder.
8. DEFINITION OF "CORPORATION."
For purposes of this Agreement, references to "the Corporation" shall
include, in addition to the resulting or surviving corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers and employees
or agents, so that any person who is or was a director of such constituent
corporation after the Effective Date or is or was serving at the request of such
constituent corporation as a director, officer, employee, trustee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise after the Effective Date, shall stand in the same position
under this Agreement with respect to the resulting or surviving corporation as
he would have with respect to such constituent corporation if its separate
existence had continued.
9. PARTIAL INDEMNITY.
If the Indemnitee is entitled under any provision of this Agreement to
indemnification by the Corporation for some or a portion of the expenses,
judgments, fines and amounts paid in settlement but not, however, for all of the
total amount thereof, the Corporation shall nevertheless indemnify the
Indemnitee for the portion thereof to which the Indemnitee is entitled.
10. SECURITY FOR OBLIGATIONS OF THE CORPORATION; TRUST FUND.
The Corporation and the Indemnitee agree that pursuant to the terms of the
insurance policies obtained by the Corporation with respect to director and
officer liability coverage, it is appropriate that the obligations of the
Corporation pursuant to this Agreement be secured in a manner satisfactory to
the Indemnitee. Consequently, on November 24, 1993, Xxxx Corporation and the
Corporation established a Trust Fund ("Fund") pursuant to a Trust Agreement in
form and substance satisfactory to the Indemnitee, which provides for the
deposit by Zale Delaware, Inc. and the Corporation as the Fund, for the benefit
of the Indemnitee and any other directors from time to time of
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Zale Delaware, Inc. and the Corporation (collectively, the "Beneficiaries"),
of at least $500,000 plus if such amount is less than $1,000,000 an
additional pro rata amount for each of the next ten months thereafter until
the Fund aggregates $1,000,000 (the "Minimum Balance") in the aggregate for
Zale Delaware, Inc. and the Corporation, in cash or cash equivalents or, at
the Corporation's option with the consent of a majority of the Beneficiaries,
a standby letter of credit from The First National Bank of Boston or other
institution acceptable to a majority of the Beneficiaries; provided that the
form of any such standby letter must be satisfactory to each Indemnitee.
Initially, the terms of the Trust Agreement provides, among other things,
that (i) the Trust Fund shall be used, when requested by any Beneficiary, to
satisfy the obligations of the Corporation pursuant to this Agreement and
other like agreements of Zale Delaware, Inc. and the Corporation with
Beneficiaries with respect to any and all payments provided for hereunder or
thereunder; (ii) the Fund shall not be revoked or the principal thereof
invaded for any other purpose without the written consent of the Indemnitee;
(iii) the Fund shall continue to be funded by Zale Delaware, Inc. and the
Corporation, jointly and severally, as necessary to maintain the Minimum
Balance, once established; and (iv) the Trustee under the Trust Agreement
shall be chosen by a majority of the Beneficiaries. Nothing in the Trust
Agreement shall relieve the Corporation of any of its obligations under this
Agreement, and this Agreement shall be amended as necessary to be consistent
with the terms of the Trust Agreement as ultimately executed.
11. SUCCESSORS.
The indemnification and advancement of expenses and other rights granted
and obligations undertaken pursuant to this Agreement shall continue after the
Indemnitee has ceased to be a director, officer, employee or agent as referred
to in clause (i) of Section 1(a) hereof and shall be binding upon the successors
and assigns of the Corporation and shall inure to the benefit of the heirs,
executors, administrators and legal representatives of the Indemnitee and the
Corporation.
12. CONTRACT RIGHTS NOT EXCLUSIVE.
The contract rights conferred by this Agreement shall be in addition to,
but not exclusive of, any other right which the Indemnitee may have or may
hereafter acquire under any statute, the Certificate of Incorporation or Bylaws
of the Corporation, any agreement by the vote of stockholders or disinterested
directors of the Corporation or otherwise, both as to action in the Indemnitee's
official capacity and as to action in another capacity while holding such
office. The rights granted in this Agreement supersede any similar right
granted under any previous Agreement between the Corporation and the Indemnitee
with respect to the subject matter hereof.
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13. THE INDEMNITEE'S OBLIGATIONS.
The Indemnitee shall promptly advise the Corporation in writing of the
institution of any Proceeding which is or may be subject to this Agreement and
keep the Corporation generally informed of and consult with the Corporation with
respect to, the status and defense of any such Proceeding.
14. SEVERABILITY.
If any provision of this Agreement is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent jurisdiction,
such prohibition shall not affect the validity of the remaining provisions of
this Agreement.
15. MODIFICATION AND WAIVER.
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto.
16. HEADINGS.
The descriptive headings of the Sections of this Agreement are inserted for
convenience and shall not control or affect the meaning or construction of any
of the provisions hereof.
17. NOTICES.
Any request, notice, direction, authorization, consent, waiver, demand or
other communication permitted or authorized by this Agreement to be made upon,
given or furnished to or filed with the Corporation or the Indemnitee by the
other party hereto shall be sufficient for every purpose hereunder if in writing
(including telecopy communication) and telecopied or delivered by hand
(including by courier service) as follows:
If to the Corporation, to it at:
Xxxx Corporation
Attn: Xxxx X. Xxxx, Esq.
000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Telecopy No.: (000) 000-0000
or
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If to the Indemnitee, to her at:
Xxxxxx Xxxx
President, Global Marketing
Avon Products
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
or, in either case, such other address as shall have been set forth in a notice
delivered in accordance with this Section. All such communications shall, when
so telecopied or delivered by hand, be effective when telecopied with
confirmation of receipt or received by the addressee, respectively. Any party
that telecopies any communication hereunder to the other party shall, on the
same date as such telecopy is transmitted, also send, by first class mail,
postage prepaid and addressed to such party as specified above, an original copy
of the communication so transmitted.
18. CHOICE OF LAW.
This Agreement will be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts made and to be performed
in such state, without giving effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
XXXX CORPORATION
By: /s/ XXXX X. XXXX
-----------------------------------
Xxxx X. Xxxx
Xx. Vice President - Administration
General Counsel and Secretary
THE INDEMNITEE
By: /s/ XXXXXX XXXX
-----------------------------------
Xxxxxx Xxxx
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ANNEX A
UNDERTAKING AGREEMENT
AGREEMENT dated June 6, 1996 between Xxxx Corporation, a Delaware
corporation (the "Corporation"), and Xxxxxx Xxxx, a member of the Board of
Directors of the Corporation (the "Indemnitee").
WHEREAS, the Indemnitee has become involved in investigations, claims,
actions, suits or proceedings (collectively, "Proceedings") which have arisen as
a result of the Indemnitee's service to the Corporation;
WHEREAS, the Indemnitee desires that the Corporation pay any and all
expenses (including, but not limited to, attorneys' fees and court costs)
actually and reasonably incurred by the Indemnitee or on the Indemnitee's behalf
in defending or investigating any such Proceedings and that such payment be made
in advance of the final disposition of such Proceedings to the extent that the
Indemnitee has not been previously reimbursed by insurance;
WHEREAS, the Corporation is willing to make such payments but, in
accordance with Section 145 of the General Corporation Law of the State of
Delaware, the Corporation may make such payments only if it receives an
undertaking to repay from the Indemnitee; and
WHEREAS, the Indemnitee is willing to give such an undertaking.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, the Corporation and the Indemnitee agree as
follows:
1. In regard to any advance payments made by the Corporation to the
Indemnitee pursuant to the terms of the Indemnification Agreement dated as of
June 6, 1996 between the Corporation and the Indemnitee (the "Indemnification
Agreement") or pursuant to Article Seventh of the Certificate of Incorporation
of the Corporation, the Indemnitee hereby undertakes and agrees to repay to the
Corporation any and all amounts so paid promptly and in any event within 30 days
after the disposition, including exhaustion of all appeals therefrom of any
litigation or threatened litigation on account of which payments were made if it
is determined that the Indemnitee is not entitled to indemnification pursuant to
the Indemnification Agreement, the Certificate of Incorporation or the General
Corporation Law of the State of Delaware.
2. This Agreement shall not affect in any manner the rights which the
Indemnitee may have against the Corporation, any insurer or any other person to
seek indemnification for or reimbursement of any expenses referred to herein or
any judgment which may be rendered in any litigation or proceeding.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
XXXX CORPORATION
---------------------------------------
Xxxx X. Xxxx
Xx. Vice President - Administration
General Counsel and Secretary
THE INDEMNITEE
---------------------------------------
Xxxxxx Xxxx
