Exhibit 10.1
INDEMNIFICATION
AGREEMENT
THIS AGREEMENT (the
“Agreement”) is executed this
,
200 , to be effective for all purposes as of
,
200 , among Linens Holding Co., a Delaware corporation
(the “Company”), and
(the “Indemnitee”).
WHEREAS, it is essential to the
Company to retain and attract as directors and officers the most
capable persons available;
WHEREAS, both the Company and
Indemnitee recognize the increased risk of litigation and other
claims being asserted against directors and officers of companies
with registered securities in today’s environment;
WHEREAS, Indemnitee is willing to
serve and continue to serve the Company on the condition that he be
indemnified to the fullest extent permitted by law;
WHEREAS, concurrently with the
execution of this Agreement, Indemnitee is agreeing to serve or to
continue to serve as a director or officer of the
Company;
WHEREAS, the By-Laws of the Company
require the Company to indemnify and advance expenses to its
directors and officers to the full extent permitted by law;
and
WHEREAS, in recognition of
Indemnitee’s need for substantial protection against personal
liability in order to enhance Indemnitee’s service to the
Company in an effective manner, the increasing difficulty in
obtaining satisfactory director and officer liability insurance
coverage, and Indemnitee’s reliance on the aforesaid By-Laws,
and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company’s Board of Directors or
acquisition transaction relating to the Company), the Company
wishes to provide in this Agreement for the indemnification of and
the advancing of expenses to Indemnitee to the fullest extent
(whether partial or complete) permitted by law and as set forth in
this Agreement, and, to the extent insurance is maintained, for the
coverage of Indemnitee under the Company’s directors’
and officers’ liability insurance policies;
NOW, THEREFORE, in consideration of
the premises and of Indemnitee serving the Company directly or, at
its request, another enterprise, and intending to be legally bound
hereby, the parties hereto agree as follows:
1.
Certain Definitions :
(a)
Affiliate : as to any person, any other person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified person.
For the purposes of this definition, “control” when
used with respect to any person means the power to direct the
management and policies of such person, directly or indirectly,
whether through the ownership of voting Securities, by contract or
otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the
foregoing.
(b)
Change of Control : the occurrence of any of the
following events:
(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 “Exchange Act”)), other than one or more Permitted
Holders, is or becomes the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that for purposes of
this clause (i) such person shall be deemed to have beneficial
ownership of all shares that such person has the right to acquire,
whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the
total voting power of the then outstanding Voting Securities of the
Company; provided , however , that no Change of
Control shall be deemed to have occurred under this
paragraph (i) if the Permitted Holders either
(a) beneficially own (as defined above), directly or
indirectly, (x) in the aggregate more than 40% of the total
voting power of the then outstanding Voting Securities of the
Company and (y) a greater percentage of the total voting power
of the then outstanding Voting Securities of the Company than any
other person or (b) have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority
of the Company’s Board of Directors;
(ii)
during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Company (together with any new members of the Board of Directors
whose election by such Board of Directors or whose nomination for
election by the equityholders of the Company was approved by a vote
of the majority of the members of the Board of Directors of the
Company then still in office who were either members of the Board
of Directors at the beginning of such period or whose election or
nomination for election was previously so approved including new
members of the Board of Directors designated in or provided for in
an agreement regarding the merger, consolidation or sale, transfer
or other conveyance, of all or substantially all of the assets of
the Company, if such agreement was approved by a vote of such
majority of members of the Board of Directors) cease for any reason
to constitute a majority of the Board of Directors then in
office;
(iii)
the adoption by the holders of Capital Stock of the Company of any
plan or proposal for the liquidation or dissolution of the Company
by way of merger, consolidation or otherwise; or
(iv)
the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or
the sale of all or substantially all the assets of the Company and
its subsidiaries, taken as a whole, to another Person (other than
to a subsidiary of the Company or to one or more Permitted Holders
or any entity controlled by one or more Permitted Holders), in
which, in the case of any such merger, consolidation or sale, the
securities of the Company that are outstanding immediately prior to
such transaction and that represent 100% of the aggregate Voting
Securities of the Company are changed into or exchanged for
cash, securities or property; provided ,
however , that no Change of Control shall be deemed to have
occurred under this paragraph (iv) if pursuant to such
transaction the securities of the Company are changed into or
exchanged for, in addition to any other consideration, securities
of the surviving Person that represent immediately after such
transaction, (a) at least 30% of the aggregate voting power of
the Voting Securities of the surviving Person and (b) a
greater percentage of the Voting Securities of the surviving
Person
2
than the
percentage of such Voting Securities beneficially owned by any
other person (as defined in paragraph (i) above).
(c)
Claim : any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
instituted by 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.
(d)
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.
(e)
Indemnifiable Event : 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,
joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by Indemnitee in any such
capacity.
(f)
Independent Legal Counsel : an attorney or firm of
attorneys, selected in accordance with the provisions of
Section 3, who shall not have otherwise performed services for
the Company or Indemnitee within the last five years (other than
with respect to matters concerning the rights of Indemnitee under
this Agreement, or of other indemnitees under similar indemnity
agreements).
(g)
Permitted Holders : Linens Investors, LLC and its
Affiliates and members.
(h)
Potential Change in Control : shall be deemed to have
occurred if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control; (ii) any person (including the Company) publicly
announces an intention to take or to consider taking actions which
if consummated would constitute a Change in Control; or
(iii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(i)
Reviewing Party : any appropriate person or body
consisting of a member or members of the Company’s Board of
Directors or any other person or body appointed by the Board who is
not a party to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(j)
Voting Securities : any securities of the Company, the
holders of which vote generally in the election of
directors.
2.
Basic Indemnification Arrangement .
(a)
In the event Indemnitee was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or arising
in part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later
3
than thirty days
after written demand is presented to the Company, against any and
all Expenses, judgments, fines, penalties and amounts paid in
settlement (including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of such
Claim. If so requested by Indemnitee, the Company shall
advance to the fullest extent permitted by law (within two business
days of such request) any and all Expenses to Indemnitee (an
“Expense Advance”). Notwithstanding anything in
this Agreement to the contrary, prior to a Change in Control
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by Indemnitee
unless the Board of Directors has authorized or consented to the
initiation of such Claim.
(b)
Notwithstanding the foregoing, (i)
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