Exhibit 10.6
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement"), dated as of May 24,
2002, is made by and between Pillowtex Corporation, a Delaware corporation (the
"Company"), and ____________________ ("Indemnitee").
RECITALS
A. It is essential to the Company to retain and attract as directors
and officers the most capable persons available.
B. Indemnitee is a director and/or officer of the Company.
C. Both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
companies in today's environment.
D. The Company's certificate of incorporation (the "Certificate")
and bylaws (the "Bylaws") provide that the Company will indemnify its directors
and officers to the fullest extent permitted by law and will advance expenses in
connection therewith, and Indemnitee's willingness to serve as a director and/or
officer of the Company is based in part on Indemnitee's reliance on such
provisions.
E. In recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner, and Indemnitee's reliance on the aforesaid
provisions of the Certificate and Bylaws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such provisions
will be available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such provisions or any change in the composition
of the Company's Board of Directors or any acquisition or business combination
transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancement of expenses to
Indemnitee as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Indemnitee under the Company's
directors' and officers' liability insurance policies.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions.
(a) "Claim" means any threatened, pending or completed action,
suit or proceeding, or inquiry or investigation, whether instituted, made or
conducted by the Company or any other party, whether civil, criminal,
administrative, investigative or other.
(b) "Expenses" includes attorneys' fees, judgment, fines or
penalties, amounts paid in settlement and all other costs, expenses and
obligations reasonably incurred or suffered 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.
(c) "Indemnifiable Event" means any actual or asserted event or
occurrence related to the fact that Indemnitee is or was a director or officer
of the Company or Pillowtex Corporation, a Texas corporation ("PTX"), or
anything done or not done by Indemnitee in any such capacity; provided, however,
Indemnitee will not be indemnified by reason of the fact that he or she is or
was a director or officer of PTX unless Indemnitee served in such capacity as of
or following November 14, 2000.
2. Basic Indemnification Arrangement. 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 whole or in part out of) an Indemnifiable Event, the Company will
indemnify Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 calendar days after written demand
is presented to the Company, against any and all Expenses (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses) of such Claims. Notwithstanding anything in this
Agreement to the contrary, Indemnitee will not be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated by Indemnitee
against the Company or any director or officer of the Company unless the Company
has joined in or consented to the initiation of such Claim; provided, however,
Company consent will not be required with respect to any claim initiated by the
Indemnitee against the Company arising out of, or in connection with, the
enforcement of, or the alleged breach by the Company of, this Agreement. If so
requested by Indemnitee, the Company will advance (within twenty (20) calendar
days of such request) any and all Expenses to Indemnitee; provided, however, if
the Delaware General Corporation Law (the "DGCL") so requires, an advancement of
Expenses incurred by Indemnitee will be made only upon delivery to the Company
of an undertaking (an "Undertaking"), by or on behalf of Indemnitee, to repay
all amounts so advanced if it is ultimately determined by final judicial
decision from which there is no further right to appeal (a "Final Adjudication")
that Indemnitee is not entitled to be indemnified for such expenses under this
Section 2 or otherwise.
3. Indemnification Procedures. The procedures to be followed with
respect to providing indemnification to the Indemnitee under the terms of this
Agreement will be consistent with those procedures set forth in Article VI of
the Bylaws of the Company.
4. No. Presumption. For purposes of this Agreement, the termination
of any claim, action, suit or proceeding upon a plea of nolo contendre or its
equivalent will not create a presumption that the Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
5. Non-Exclusivity, Etc. The rights of Indemnitee hereunder will be
in addition to any other rights Indemnitee may have under the Certificate, the
Bylaws or the DGCL or otherwise; provided, however, that to the extent that
Indemnitee otherwise would have any greater right to indemnification under any
provision of the Certificate or Bylaws as in effect on
2
the date hereof, Indemnitee will be deemed to have such greater right hereunder;
and provided further that to the extent that any change is made to the DGCL
(whether by legislative action or judicial decision), the Certificate and/or the
Bylaws which permits any greater right to indemnification than that provided
under this Agreement as of the date hereof, Indemnitee will be deemed to have
such greater right hereunder. The Company will not adopt any amendment to the
Certificate or the Bylaws the effect of which would be to deny, diminish or
encumber Indemnitee's right to indemnification under the Certificate, the Bylaws
or the DGCL or otherwise as applied to any act or failure to act occurring in
whole or in part prior to the date upon which the amendment was approved by the
Company's Board of Directors and/or its stockholders, as the case may be.
6. Liability Insurance and Funding. To the extent the Company
maintains an insurance policy or policies providing directors' and officers'
liability insurance, Indemnitee will be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer. The Company may, but will not be
required to, create a trust fund, grant a security interest or use other means
(including without limitation a letter of credit) to ensure the payment of such
amounts as may be necessary to satisfy its obligations to indemnify and advance
expenses pursuant to this Agreement.
7. Subrogation. In the event of payment under this Agreement, the
Company will be subrogated to the extent of such payment to all of the related
rights of recovery of Indemnitee against other persons or entities. The
Indemnitee will execute all papers reasonably required and will do everything
that may be reasonably necessary to secure such rights and enable the Company
effectively to bring suit to enforce such rights (all of Indemnitee's reasonable
costs and expenses, including attorneys' fees and disbursements, to be
reimbursed by or, at the option of Indemnitee, advanced by the Company).
8. No Duplication of Payments. The Company will not be liable under
this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Certificate or the Bylaws or otherwise) of the
amounts otherwise indemnifiable hereunder.
9. Joint Defense. Notwithstanding anything to the contrary herein
contained, if (a) Indemnitee elects to retain counsel in connection with any
Claim in respect of which indemnification may be sought by Indemnitee against
the Company pursuant to this Agreement and (b) any other director or officer of
the Company may also be subject to liability arising out of such Claim and in
connection with such Claim may seek indemnification against the Company pursuant
to an agreement similar to this Agreement, Indemnitee, together with such other
persons, will employ counsel to represent jointly Indemnitee and such other
persons unless the employment of separate counsel shall have been authorized in
writing by the Board of Directors of the Company in connection with the defense
of such action or the Indemnitee shall have reasonably concluded and delivered
to the Board of Directors a written request setting forth in reasonable detail
the basis for the determination that such Indemnitee has available to its
defenses which are inconsistent with the defenses available to any other party
seeking indemnification against the Company. In the event the Board of Directors
of the Company fails to act on such request within 30 calendar days after
receipt thereof by the Company, Indemnitee
3
will be deemed to be entitled to be represented by separate counsel in
connection with such Claim.
10. Successors and Binding Agreement.
(a) The Company will require any successor (whether by
purchase, merger, consolidation or reorganization), by agreement expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of the
Company and any successor to the Company, (and such successor will thereafter be
deemed the "Company" for purposes of this Agreement), but will not otherwise be
assignable, transferable or delegatable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Indemnitee's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto will, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 12(a) and 12(b). Without limiting the generality
or effect of the foregoing, Indemnitee's right to receive payments hereunder
will not be assignable, transferable or delegatable, whether by pledge, creation
of a security interest or otherwise, other than by a transfer by the
Indemnitee's will or by the laws of descent and distribution and, in the event
of any attempted assignment or transfer contrary to this Section 12(c), the
Company will have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
11. Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five calendar days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or one business day after having been sent
for next-day delivery by a nationally recognized overnight courier service,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Indemnitee at the Indemnitee's
principal residence as shown in the Company's most current records, or to such
other address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address will be effective
only upon receipt.
12. Governing Law. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State.
13. Validity. If any provision of this Agreement or the application
of any provision hereof to any person or circumstance is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstance will not be
affected, and the provision so held to be invalid, unenforceable or
4
otherwise illegal will be reformed to the extent (and only to the extent)
necessary to make it enforceable, valid or legal.
14. Miscellaneous. No provision of this Agreement may be waived,
modified or discharged unless such waiver, modification or discharge is agreed
to in writing signed by Indemnitee and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same agreement.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PILLOWTEX CORPORATION,
a Delaware corporation
By: ______________________________
Name:
Title:
__________________________________
[name]
6