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Form of Director and Officer
Indemnity Agreement
AGREEMENT, effective as of July 1, 1986, between
Southwestern Bell Corporation, a Delaware corporation (the
"Company"), and separately with each Director and Officer of the
Company (the "Indemnitee").
WHEREAS, Indemnitee is a director or officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted
against directors and officers of public companies in today's
environment;
WHEREAS, basic protection against undue risk of personal
liability of directors and officers heretofore has, in part, been
provided through insurance coverage providing reasonable protection
at a reasonable cost, and Indemnitee has relied on the availability
of such coverage; but as a result of substantial changes in the
marketplace for such insurance, it has become increasingly more
difficult to obtain such insurance on terms providing reasonable
protection at a reasonable cost;
WHEREAS, the Bylaws of the Company require the Company to
indemnify and advance expenses to its directors and officers to the
full extent permitted by law and the Indemnitee has been serving
and continues to serve as a director or officer of the Company in
part in reliance on such Bylaws;
WHEREAS, Section 145(f) of the Delaware General
Corporation law expressly recognizes that the indemnification
provisions of the Delaware Corporation law are not exclusive of any
other rights to which a person seeking indemnification may be
entitled by bylaw, agreement, vote of stockholders or otherwise,
and this Agreement is being entered into pursuant to such
provision;
WHEREAS, in recognition of Indemnitee's need for
substantial protection against personal liability in order to
assure Indemnitee's continued service to the Company in an
effective manner and Indemnitee's reliance on the aforesaid Bylaws,
and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such Bylaws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such Bylaws or any change in the
composition of the Company's Board of Directors or acquisition of
the Company), the Company wishes to provide in this Agreement for
the indemnification of and the advancing of expenses to Indemnitee
to the full extent (whether partial or complete) permitted by law
and as set forth in this Agreement and, to the extent an outside
insurance policy/policies is/are maintained, for the continued
coverage of Indemnitee under the Company's directors' and officers'
liability insurance policies;
WHEREAS, while this Agreement will be of full force and
effect immediately upon its execution, the Board of Directors
intends to place this Agreement before the Shareowners at the next
Annual Meeting for ratification;
NOW, THEREFORE, in consideration of the foregoing premises
and of Indemnitee continuing to serve the Company directly or, at
its request, with another enterprise, and intending to be legally
bound hereby, the parties hereto agree as follows:
1.0 CERTAIN DEFINITIONS.
(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 Company or a corporation owned
directly or indirectly by the Shareowners 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 said 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, or (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 Shareowners was approved by a vote of at
least two-thirds (⅔) 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
Shareowners of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation which 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 the Shareowners of the Company approve
a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all
the Company's assets.
(b)
Claim: is 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 Indemnitee in good faith believes might lead
to the institution of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or
other.
(c)
Expenses: include
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 Indemnifiable Event.
(d)
Indemnifiable Event: is
any event or occurrence related to the fact that Indemnitee 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 or joint venture.
(e)
Losses: are any judgments, fines and amounts paid
in settlement (including all interest assessments and other charges
paid or payable in connection with or in respect of such judgments,
fines, penalties or amounts paid in settlement) of such action,
suit or proceeding.
(f)
Reviewing Party: shall mean (i) the Board of
Directors (provided that a majority of directors are not parties to
the claim), (ii) a person or body selected by the Board of
Directors and (iii) if there has been a Change in Control, the
special, independent counsel referred to in subsection 3(b)
hereof.
2.0 INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES.
Subject
to the limitations set forth herein and in Section 3 hereof,
the Company hereby agrees to indemnify Indemnitee as
follows:
(a)
Basic Indemnification. The Company shall hold harmless and
indemnify Indemnitee to the fullest extent authorized or permitted
(i) by the General Corporation Law of the State of Delaware, or any
other applicable law, 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 which is adopted after the date
hereof.
(b)
Additional Indemnification. Without limiting the
generality of subsection (a) hereof, in the event Indemnitee was,
is or becomes a Participant in a Claim by reason of (or arising in
part out of) an lndemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law, as soon as
practicable after written demand is presented to the Company,
against any and all Expenses and Losses.
(c)
Advancement of
Expenses. In the event Indemnitee is, was or
becomes a Participant in any Claim by reason of an Indemnifiable
Event, if so requested by Indemnitee, the Company shall advance any
and all such Expenses to Indemnitee.
3.0 GENERAL LIMITATIONS ON
INDEMNIFICATION.
(a)
Determination of
Reviewing Party.
Notwithstanding the foregoing, (i) the obligations of the Company
set forth in Section 2 hereof (except with respect to Expense
advances made prior to any determination by a Reviewing Party
referred to below that Indemnitee substantively would not be
permitted to be indemnified for Claims for Indemnifiable Events
with respect to which such advances are being made) shall be
subject to the condition that the Reviewing Party shall not have
determined (in a written opinion, in any case in which the special,
independent counsel referred to in subsection (b) hereof is
involved) that Indemnitee would not be permitted to be so
indemnified under applicable law, and (ii) if, when and to the
extent that the Reviewing Party determines that Indemnitee would
not be permitte
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