GSIG » Topics » 7.10 Indemnification.

These excerpts taken from the GSIG 8-K filed Jul 11, 2008.

INDEMNIFICATION

7.1 Indemnification The Parent and the Note Issuer (together, the “Indemnifying Parties”) shall, jointly and severally, indemnify and hold harmless the Purchasers, each other holder of the Securities and all of their respective affiliates, shareholders, partners, members, officers, directors, employees and direct or indirect investors, agents, representatives, controlling persons, successors, heirs and assigns (collectively, the “Indemnified Parties”) and save and hold each of them harmless against and pay on behalf of or reimburse such party as and when incurred for any loss (but not including any diminution in value of the Securities), liability, demand, claim, action, cause of action, cost, damage, deficiency, penalty, fine or expense, whether or not arising out of any claims by or on behalf of the Indemnifying Parties or any of their Subsidiaries or any third party, including interest, penalties, and reasonable attorneys’ fees and expenses of one counsel to the Indemnified Parties (or such additional counsel as may reasonably be required by reason of a conflict of interest among or between Indemnified Parties) and all amounts paid in investigation, defense or settlement of any of the foregoing (collectively, “Losses”) which any such party may suffer, sustain or become subject to, as a result of, in connection with, relating or incidental to or by virtue of (a) any misrepresentation or breach of any of the Indemnifying Parties’ representations or warranties contained in this Agreement; (b) any non-fulfillment or material breach of any of the Indemnifying Parties’ covenants or agreements contained in this Agreement; or (c) any claim arising out of, relating to, resulting from or caused by any transaction, status, event, condition, occurrence or situation relating to, arising out of or in connection with (i) the execution, delivery and performance of any of the Securities Documents, or (ii) any actions taken by or omitted to be taken by any of the Indemnified Parties in connection with any Securities Document; provided, however, that no Indemnified Party shall be entitled to such rights and remedies to the extent that such Losses occur as a result of the willful misconduct, bad faith, the gross negligence or wrongful acts or omissions on the part of any Indemnified Party, as finally determined by a court of competent jurisdiction.

(b) If any action shall be brought against any Indemnified Party in respect of which indemnity may be sought pursuant to this Agreement, such Indemnified Party shall promptly notify the Indemnifying Parties in writing, and the Indemnifying Parties shall have the right to assume the defense thereof with counsel of their own

 

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choosing. Any Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party except to the extent that (i) the employment thereof has been specifically authorized by the Indemnifying Parties in writing, (ii) the Indemnifying Parties have failed after a reasonable period of time following such Indemnified Party’s written request that it do so, to assume such defense and to employ counsel, or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Indemnifying Parties and the position of such Indemnified Party. The failure of an Indemnified Party to deliver written notice to the Indemnifying Parties within a reasonable time of the delivery of notice of any such action, to the extent prejudicial to its ability to defend such action, shall relieve the Indemnifying Parties of any liability to such Indemnified Party under this Section 7.1 with respect to such action, but the omission so to deliver written notice to the Indemnifying Parties will not relieve the Indemnifying Parties of any liability that it may have to such Indemnified Party otherwise than under this Section 7.1 or with respect to any other action unless the failure to provide notice of the first action materially prejudices the Indemnified Parties in the second action. The Indemnifying Parties will not be liable to any Indemnified Party under this Agreement (i) for any settlement by an Indemnified Party effected without the Indemnifying Parties’ prior written consent; or (ii) to the extent that a Loss is attributable to (A) such Indemnified Party’s willful misconduct, bad faith, the gross negligence, wrongful actions or omissions or (B) the breach of any of the representations, warranties, covenants or agreements made by the related Purchaser in this Agreement or in the other Securities Documents.

7.2 Survival of Indemnification; Subsequent Purchasers All indemnification rights hereunder shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless of any investigation, inquiry or examination made for or on behalf of, or any knowledge of the Purchasers, their advisors and/or any of the Indemnified Parties or the acceptance by the Indemnifying Parties of any certificate or opinion, and shall inure to the benefit of any Purchaser in accordance with the terms hereof notwithstanding such Person’s assignment or transfer of its Securities.

7.3 Contribution If for any reason the indemnity provided for in this Article VII is unavailable to any Indemnified Party or is insufficient to hold each such Indemnified Party harmless from all such Losses arising with respect to the transactions contemplated by this Agreement, then the Parent shall contribute to the amount paid or payable for such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Parties and the Indemnified Party as well as any relevant equitable considerations. In addition, the Indemnifying Parties agree to reimburse any Indemnified Party upon demand for all reasonable expenses (including legal counsel fees) incurred by such Indemnified Party in connection with investigating, preparing or defending any such action or claim; provided, however, that such Indemnified Party is determined to be entitled to be indemnified hereunder with respect to such claim. The indemnity, contribution and expenses reimbursement obligations that the Indemnifying Parties have under this Article VII shall be in addition to any liability that the Indemnifying Parties may otherwise have at law or in equity. The Indemnifying Parties further agree that the indemnification and reimbursement commitments set forth in this Agreement shall apply whether or not the Indemnified Party is a formal party to any such lawsuits, claims or other proceedings.

 

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7.10    Indemnification.

(a) Indemnity. From and after the Purchase Time, Parent will and will cause the Company and the Surviving Corporation to indemnify and advance expenses to the Company and its directors, officers, employees and agents (the “Indemnified Parties”) against all claims, losses, liabilities, damages, judgments, inquiries, fines, amounts paid in settlement and reasonable fees, costs and expenses, including reasonable attorneys’ fees and disbursements, incurred in connection with any proceeding, whether civil, criminal, administrative or investigative, arising out of, pertaining to or in connection with the fact that the Indemnified Party is or was an officer, director, employee, fiduciary or agent of the Company, or of another entity if such service was at the request of or for the benefit of the Company, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent the Company or the Surviving Corporation, as applicable, is permitted to do so by Section 145 of the DGCL. The certificate of incorporation of the Surviving Corporation will contain provisions with respect to (i) exculpation that are at least as favorable to the Indemnified Parties as those contained in the certificate of incorporation and bylaws of the Company as in effect on the date hereof and (ii) indemnification and advancement of expenses that indemnify and provide for the advancement of expenses to the Indemnified Parties to the fullest extent permitted by Section 145 of the DGCL, which provisions will not, except as required by Law, be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of Indemnified Parties or any other person who, immediately prior to the Effective Time, was a director, officer, employee or agent of the Company.

(b) Insurance. Parent shall either (i) for a period of six years following the Purchase Time, maintain in effect (A) the Company’s currently existing directors’ and officers’ liability insurance policies with respect to matters existing or occurring at or prior to the Purchase Time (including the transactions contemplated hereby) or (B) directors’ and officers’ liability insurance policies with respect to matters existing , occurring or allegedly occurring at or prior to the Purchase Time (including the transactions contemplated hereby) having terms and conditions at least as favorable to the Indemnified Parties as the Company’s currently existing directors’ and officers’ liability insurance, provided, however, that in order to maintain the Company’s existing policies or provide equivalent coverage, neither Parent nor the Surviving Corporation shall be obligated to pay annual premiums in excess of 200% of the aggregate annual premium paid or payable by the Company for the policies the Company currently has in effect and, provided, further, that if the annual premium required to maintain the Company’s existing policies or provide equivalent coverage exceeds 200% of the annual premium paid or payable by the Company for the policies the Company currently has in effect, the Surviving Corporation or Parent shall be obligated to obtain policies with the greatest coverage available for an annual premium not in

 

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excess of 200% of the aggregate annual premium paid or payable by the Company for the policies the Company currently has in effect or (ii) purchase, or at the request of Parent (which request shall be made no later than two weeks prior to the Purchase Time) the Company shall purchase in a form reasonably acceptable to Parent, by the Purchase Time, and Parent shall cause the Surviving Corporation to maintain, tail policies to the current directors’ and officers’ liability insurance policies maintained on the date of this Agreement by the Company, which tail policies (A) shall not have an aggregate premium in excess of 200% of the aggregate annual premium paid or payable by the Company for the policies the Company currently has in effect (which amount is set forth in Section 7.10(b) of the Disclosure Schedule), (B) shall be effective for a period from at least the Purchase Time through and including the date six years after the Purchase Time with respect to claims arising from facts or events that existed or occurred prior to or at the Purchase Time, and (C) shall contain coverage that is at least as protective to such directors and officers as the coverage provided by such policies of the Company currently in effect (complete and accurate copies of which, or binders therefor have been made available to Parent); provided, however, that, if equivalent coverage under such tail policies cannot be obtained or can be obtained only by paying an aggregate premium in excess of 200% of such amount, Parent or the Company, as the case may be, shall only be required to obtain (and the Surviving Corporation shall only be required to maintain) as much coverage under such tail policies as can be obtained by paying an aggregate premium equal to 200% of such amount.

(c) The provisions of this Section 7.10 are intended to be for the benefit of, and will be enforceable by, each Indemnified Party, his or her heirs and his or her representatives and are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise. In the event that the Surviving Corporation or any of its respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each case, proper provision shall be made so that the successors and assigns of the Surviving Corporation, as the case may be, honor the indemnification and other obligations set forth in this Section 7.10.

(d) The obligation of Parent and the Surviving Corporation under this Section 7.10 shall survive the consummation of the Merger and shall not be terminated or modified in any manner as to adversely affect any Indemnified Party to whom this Section 7.10 applies without the consent of such Indemnified Party (it being expressly agreed that the Indemnified Parties to whom Section 7.10 applies shall be third party beneficiaries of this Section 7.10, each of whom may enforce the provisions of this Section 7.10).

7.11    Section 16 Matters. Prior to the Purchase Time, the Company shall take all such steps as may be required (to the extent permitted under applicable law) to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) resulting from the transactions contemplated by ARTICLE I of this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.

7.12    Compensation Approvals. Prior to the scheduled expiration date of the Offer (as it may be extended hereunder), the Company (acting through its Compensation Committee) will take all such steps as may be required to cause any Compensation Arrangements entered into by the Company or any of its Subsidiaries since January 1, 2007 to be approved or ratified (to the extent not previously so approved or ratified) as “employment compensation, severance or other employee benefit arrangement” by the Compensation Committee comprised solely of Independent Directors of the Company in accordance with Rule 14d-10(d)(2) under the Exchange Act for purposes of satisfying the requirements of the non-exclusive safe-harbor set forth in Rule 14d-10(d) of the Exchange Act. Prior to the Effective Time, neither the Company Board nor the Compensation Committee of the Company shall withdraw, nor permit the withdrawal of, the Company Compensation Approvals. Prior to the expiration date of the Offer, the Company will make available to Parent true and correct copies of all approvals and other actions taken with respect to the Company Compensation Approvals.

 

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7.13    Financing. The Company shall, and shall cause its Subsidiaries to, use its reasonable best efforts to have its and their representatives, including management, personnel, attorneys, financial advisors, accountants and other professionals, cooperate with Parent and its representatives in connection with the arrangements by Parent and Purchaser to obtain the Financing (or any alternative Financing as Parent may obtain) as may be reasonably requested by Parent (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company and its Subsidiaries or unreasonably interfere with or hinder or delay in any material aspect the performance by the Company of its other obligations hereunder), including (i) participation in meetings, drafting sessions and due diligence sessions, (ii) furnishing Parent and Purchaser and their financing sources with financial and other pertinent information regarding the Company as may be reasonably requested by Parent, (iii) assisting Parent and Purchaser and their financing sources in the preparation of (A) an offering document for any debt raised to complete the transactions contemplated by this Agreement and (B) materials for rating agency presentations, (iv) mortgaging or otherwise borrowing money against any Owned Real Property, the proceeds of which the Company will hold as cash in furtherance of the Financing and (v) reasonably facilitating the pledge of the Company’s assets as collateral; provided, however, that none of the Company or its Subsidiaries will be required in connection with the Financing or any alternative financing as Parent may obtain or with respect to clauses (iv) and (v) to pay any commitment or other similar fee (unless such commitment or fee is paid by Parent) or incur any other liability or expense (unless such expense is paid by Parent) that would accrue prior to the Purchase Time or consummate any of the transactions referred to in clauses (iv) and (v) prior to the Purchase Time. Prior to the Purchase Time, the Company shall (X), when requested by Parent, monetize (at then standard commercial terms at not less than 50% of face value) any auction-rate securities held by the Company or its Subsidiaries (Parent and Purchaser hereby acknowledging that the market for such auction-rate securities are illiquid at the present time) or (Y), if the market for such auction-rate securities becomes liquid (whereby such securities may be sold at no less than 100% of face value), monetize (at no less than 100% of face value) any auction-rate securities held by the Company or its Subsidiaries, and in the case of (X) or (Y), the proceeds of such monetization shall be used by the Company solely to first, pay at the Purchase Time amounts due under the Termination Agreements, and thereafter, to the extent of any remaining proceeds, pay the amounts described in item 1 of Section 4.7(f) of the Disclosure Schedule.

EXCERPTS ON THIS PAGE:

8-K (2 sections)
Jul 11, 2008
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