Exhibit 10.37
INDEMNIFICATION
AGREEMENT
THIS AGREEMENT
is entered into, effective as of
April 5, 2006, between Saks Incorporated, a Tennessee
corporation (the “Company”), and [NAME OF
INDEMNITEE] (“Indemnitee”).
WHEREAS, it is essential to the Company that it attract
and retain as directors and officers the most capable persons
available;
WHEREAS, Indemnitee serves the Company as a director or
officer, or both;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims currently being
asserted against directors and officers of corporations;
and
WHEREAS, in order to enhance Indemnitee’s continued
and effective service to the Company, and in order to induce
Indemnitee to provide continued services to the Company, the
Company wishes to enter into this Agreement relating to the
indemnification of, and the advancement of expenses to, Indemnitee
as well as to the coverage of Indemnitee under the Company’s
directors’ and officers’ liability insurance policies
(the “D&O Insurance”).
NOW, THEREFORE,
in consideration of the above
premises and of Indemnitee’s continuing to serve the Company
as a director or officer, or both, and intending to be legally
bound hereby, the parties agree as follows:
1. Certain Definitions
:
(a) The term Advance shall
have the meaning assigned to it in Section 2(c).
(b) Board : The Board of
Directors of the Company.
(c) Change in Control
:
(i) Any person or entity, including
a “group” as defined in Section 13(d)(3) of the
1934 Act, other than the Company, a subsidiary of the Company, or
any employee benefit plan of the Company or its subsidiaries,
becomes the beneficial owner of the Company’s securities
having 25 percent or more of the combined voting power of the then
outstanding securities of the Company that may be cast for the
election for directors of the Company (other than as a result of an
issuance of securities initiated by the Company in the ordinary
course of business); or
(ii) As the result of, or in
connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any
combination of the foregoing transactions, less than a majority of
the combined voting power of the then outstanding securities of the
Company or any successor corporation or entity entitled to vote
generally in the election of directors of the Company or such other
corporation or entity after such transaction, are held in the
aggregate by holders of the
Company’s securities entitled
to vote generally in the election of directors of the Company
immediately prior to such transactions; or
(iii) During any period of two
consecutive years, individuals who at the beginning of any such
period constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination
for election by the Company’s shareholders, of each director
of the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the beginning
of any such period.
(d) The term Company shall
have the meaning assigned to it in the first paragraph of this
Agreement.
(e) Disinterested Director :
A director of the Company who is not a party to the Proceeding in
respect of which indemnification or an Advance is sought by
Indemnitee.
(f) The term D&O
Insurance shall have the meaning assigned to it in the
Recitals.
(g) Expenses : Any reasonable
expense, including without limitation, attorneys’ fees,
retainers, court costs, transcript costs, fees and expenses of
experts, including accountants and other advisors, travel expenses,
duplicating costs, postage, delivery service fees, filing fees, and
all other disbursements or expenses of the types typically paid or
incurred in connection with investigating, defending, being a
witness in, or participating (including on appeal), or preparing
for any of the foregoing, in any Proceeding relating to any
Indemnifiable Event, and any expenses of establishing a right to
indemnification under any of Sections 2, 4 or 5 of this Agreement,
in each case, to the extent reasonable.
(h) Indemnifiable Costs : Any
and all Expenses, liability or loss, judgments, fines and amounts
paid in settlement and any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes
imposed as a result of the actual or deemed receipt of any payments
under this Agreement.
(i) Indemnifiable Event : Any
event or occurrence, either prior to or after the execution of this
Agreement, related to the fact that Indemnitee is or was serving
the Company as a director or officer, or both, or while serving in
any such capacity is or was serving at the request of the Company
as a director or officer, or both, of another corporation,
partnership, joint venture, trust or other enterprise or related to
anything done or not done by Indemnitee in any such capacity,
whether or not the basis of the Proceeding is alleged action in an
official capacity with the Company, whether as a director or
officer, or both, or in any other capacity, as described
above.
(j) The term Indemnitee shall
have the meaning assigned to it in the first paragraph of this
Agreement.
(k) Independent Counsel :
means a law firm, or a member of a law firm, selected in the manner
provided in Section 3(a), that is experienced in matters of
corporation law and neither presently is, nor in the past three
years has been, retained to represent: (i) the
2
Company or any of its subsidiaries or
affiliates, (ii) Indemnitee or (iii) any other party to
the Proceeding giving rise to a claim for indemnification or
Advances hereunder, in any matter (other than with respect to
matters relating to indemnification and advancement of expenses).
No law firm or lawyer shall qualify to serve as Independent Counsel
if that person would, under the applicable standards of
professional conduct then prevailing, have a conflict of interest
in representing either the Company or Indemnitee in an action to
determine Indemnitee’s rights under this
Agreement.
(l) The term Other
Indemnitees shall have meaning assigned to it in
Section 8.
(m) The term Other
Indemnification Agreements shall have the meaning assigned to
it in Section 8.
(n) Proceeding : Any
threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, whether
formal or informal, whether threatened, pending or completed prior
to or after the execution of this Agreement, that relates to an
Indemnifiable Event.
(o) Reviewing Party : The
Reviewing Party shall be shall be (i) the Board acting by a
majority vote of a quorum of Disinterested Directors, (ii) if
a quorum of Disinterested Directors cannot be obtained, a committee
designated by the Board (in which designation directors who are not
Disinterested Directors may participate) consisting solely of two
or more Disinterested Directors, which Committee shall act by
majority vote, or (iii) if a quorum of Disinterested Directors
cannot be designated under clause (i) above, and a committee
cannot be designated under clause (ii) above, the Independent
Counsel; provided that in the event of a Change in Control, the
Reviewing Party shall be the Independent Counsel.
(p) The term Subsequent
Determination shall have the meaning assigned to it in
Section 2(d).
(q) The term TBCA shall have
the meaning assigned to it in Section 2(c).
(r) The term Trust shall the
meaning assigned to it in Section 8.
(s) The term Trustee shall
have the meaning assigned to it in Section 8(b).
2. Agreement to Indemnify
.
(a) General Agreement regarding
Indemnification . 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 Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify Indemnitee from and against Indemnifiable
Costs, to the fullest extent permitted by applicable law, as the
same exists or may hereafter be amended or interpreted (but in the
case of any such amendment or interpretation, only to the extent
that such amendment or interpretation permits the Company to
provide broader indemnification rights than were permitted prior
thereto); provided that the Company’s
3
commitment set forth in this Section 2(a)
to indemnify Indemnitee shall be subject to the limitations and
procedural requirements set forth in this Agreement.
(b) Partial Indemnification .
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of
Indemnifiable Costs, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled.
(c) Advancement of Expenses .
Indemnitee may request that the Company advance to Indemnitee any
and all Expenses incurred by Indemnitee (an “Advance”),
prior to final disposition of any Proceeding. The Company shall
make such an Advance to Indemnitee if:
(i) Indemnitee furnishes to the
Company a Request, Affirmation and Undertaking, executed by
Indemnitee, substantially in the form attached hereto as Exhibit
A;
(ii) the Reviewing Party makes a
determination that the facts then known would not preclude
indemnification of Indemnitee under the Tennessee Business
Corporation Act (the “TBCA”); and
(iii) the Advance is authorized by
the Reviewing Party, provided that if the Reviewing Party is the
Independent Counsel, the Advance shall be authorized by those
entitled to select the Independent Counsel pursuant to
Section 3(a).
Advances shall be made without
regard to Indemnitee’s ability to repay the Expenses.
Indemnitee’s obligation to reimburse the Company for Advances
shall be unsecured and no interest shall be charged thereon. The
Reviewing Party shall make a determination with respect to
Indemnitee’s entitlement to an Advance, and a decision shall
be made regarding the authorization of the Advance, pursuant to
this Section 2(c), in each case to the extent practical, not
later than 60 calendar days after receipt by the Company of a
request for such Advance (which request shall include an
itemization, in reasonable detail, of the Expenses for which
advancement is sought). The Company shall notify Indemnitee of the
Reviewing Party’s determination regarding Indemnitee’s
entitlement to an Advance, and the decision regarding the Advance,
no later than two business days after the decision regarding such
authorization has been made. If it is determined that Indemnitee is
not entitled to an Advance, the Company shall specify in its notice
to Indemnitee which of the conditions of this Section 2(c) has
not been satisfied. If it is determined that Indemnitee is entitled
to an Advance and the Advance has been authorized pursuant to this
Section 2(c), the Company shall pay such Advance within 10
business days of such authorization. If Indemnitee has commenced
legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under
applicable law, as provided in Section 4, any determination
made by the Reviewing Party that Indemnitee would not be permitted
to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or have lapsed).
4
(d) Effect of Subsequent
Determination by Reviewing Party . Following an initial
determination pursuant to Section 2(c) that Indemnitee is
entitled to Advances with respect to a Proceeding, and the
authorization of such Advances pursuant to Section 2(c), the
Company shall, subject to this Section 2(d), continue to
provide Advances to Indemnitee with respect to such Proceeding,
provided that any request for such an additional Advance must be
accompanied by an itemization, in reasonable detail, of the
Expenses for which advancement is sought. Any such Advances shall
be paid by the Company within 30 days of a request therefor.
Notwithstanding the foregoing, the Company shall have no further
obligation to make Advances to Indemnitee with respect to a
Proceeding if the Reviewing Party makes a determination on the
basis of additional facts made known to it subsequent to the
initial determination referenced in Section 2(c)(ii), that the
Company would be precluded from indemnifying Indemnitee under the
TBCA in connection with such Proceeding (a “Subsequent
Determination”). If the Reviewing Party is the Board or a
committee of the Board, the Board or such committee may at any time
consider whether a Subsequent Determination is warranted. If the
Reviewing Party is the Independent Counsel, the Board or a
committee of the Board may at any time request that the Independent
Counsel consider whether a Subsequent Determination is
warranted.
(e) Exception to Obligation to
Indemnify and Advance Expenses . Notwithstanding anything in
this Agreement to the contrary, Indemnitee shall not be entitled to
indemnification or advancement pursuant to this Agreement in
connection with any Proceeding initiated by Indemnitee against the
Company or any director or officer of the Company unless
(i) the Board has consented to the initiation of such
Proceeding;
