Document:

Exhibit 10.1

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (“Agreement”) made as of the 15th day of February, 2008 by and among SpectaGuard Holding Corporation, a Delaware corporation (“Holding”), Allied Security Holdings LLC, a Delaware limited liability company (the “Company”), and William C. Whitmore, Jr. (“Executive”).

WHEREAS, the Executive is employed as President and Chief Executive Officer of the Company and Holding pursuant to an employment agreement by and among the Executive, Holding and the Company, dated February 19, 2003 (as amended on August 2, 2004, the “Existing Agreement”); and

WHEREAS, the parties desire to enter into this Agreement, which supersedes and replaces the Existing Agreement and governs the terms of the Executive’s employment with Holding and the Company and its subsidiaries as of the date hereof.

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Effective Date. This Agreement shall become effective as of the date of this Agreement (the “Effective Date”). 

2. Title. During the Term, Executive shall continue to serve as the President and Chief Executive Officer of Holding and of the Company and such subsidiaries of the Company as in effect on the date hereof and from time to time as designated by the Company. In addition, the Executive agrees to serve as a member of the Board of Directors of Holding (the “Board”) and of the Board of Managers of the Company and such other board of directors or board of managers of subsidiaries of the Company from time to time determined by the Company. For purposes of this Agreement, actions required or contemplated to be taken by the Board hereunder shall be taken by the Board with the Executive recusing himself from participation in such action.

3. Duties and Responsibilities. Executive hereby agrees to perform in good faith and with due care all services which may be required of Executive in such position and to be available to render such services at all reasonable times and places in accordance with such reasonable directions and requests as the Board may from time to time reasonably specify. Executive shall, during the Term (as defined below), devote substantially all of his time, ability, energy and skill to the performance of his duties and responsibilities hereunder. The Executive shall be provided an office and secretary and such other assistance and work accommodations as are deemed appropriate by the Board for the performance of Executive’s duties. Executive shall perform his responsibilities from,
and his associated staff shall be located in, the Company’s principal offices currently located in King of Prussia, PA. Executive shall be provided a computer and modem for his use at his home office.

4. Term. The term of this Agreement shall commence as of the Effective Date and shall continue until the fifth anniversary of the Effective Date, or if earlier, until the date the Executive’s employment is terminated for any reason (the “Term”). 

 

 

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5. Compensation.

A. Base Salary. During the Term, Executive shall be paid a base salary. The base salary for the first year of the Term shall be U.S. $675,000 per annum (effective from and after February 19, 2008), and such base salary shall be increased for each subsequent year during the Term as determined by the Compensation Committee of the Board of Managers of the Company, taking into account available information regarding chief executive officers’ salaries of similarly situated companies headquartered in the Philadelphia, Pennsylvania, geographic area, and the Committee shall use 4% as a benchmark for annual salary increases in such determinations (the “Base Salary”).

B. Method of Payment. Executive’s Base Salary shall be paid in accordance with Holding’s standard payroll practices. Holding shall deduct and withhold, or cause to be deducted and withheld, from Executive’s compensation payable hereunder any and all applicable foreign, federal, state and local income and employment withholding taxes and any other amounts required to be deducted or withheld by Holding under applicable statutes, regulations, ordinances or orders governing or requiring the withholding or deduction of amounts otherwise payable as compensation or wages to employees.

C. Vacation. Executive shall be entitled to such number of paid days of vacation as the Company’s vacation policy provides for executive officers and such number of paid days of sick leave as the Company’s sick leave policy provides for executive officers.

D. Bonus. Executive shall be eligible to receive a bonus with respect to each fiscal year ending during the Term (the “Annual Bonus”) commencing with the fiscal year ending December 31, 2008, with a target Annual Bonus of fifty percent (50%) of his Base Salary, which Annual Bonus shall be determined based upon the achievement of Company Adjusted EBITDA targets set with respect to the applicable year by the Board of Managers (or the Compensation Committee thereof) of the Company (“EBITDA Targets”); provided, that in the event actual Adjusted EBITDA is greater or less than the EBITDA Target for a particular year, then the Executive’s Annual Bonus shall be calculated consistent with the Company’s bonus plan then in effect with reference to Executive’s target bonus
level of 50% of Base Salary. Applicable EBITDA Targets will be equitably adjusted by the Board to reflect the pro forma effect of any significant acquisition.

E. Equity Grants; Special Payment.

(1) Class B Units. The Executive acknowledges that as of the date hereof he holds 2,722 Class A Units, 27,894 Class B Units and 36,000 vested and unvested Class C Units (such vested and unvested Class C Units, the “Existing Class C Units”) of the Company and that such units are subject to the terms and conditions set forth in the Operating Agreement of the Company dated as of August 2, 2004.

(2) Incentive Plan. The Executive, Holding and the Company acknowledge and agree that the parties will endeavor to establish a new incentive plan for participating members of management of the Company and the Executive shall participate in such plan in a manner commensurate with his role as President and Chief Executive Officer. The terms of any such plan and awards granted thereunder are subject to good faith negotiations of the parties and any such terms shall be set forth in definitive documentation with respect thereto.

(3) Special Payment. The Executive acknowledges that he will receive the Special Payment (as defined in the Existing Agreement) in full satisfaction of Holding’s obligations thereof under the Existing Agreement in accordance with the term of the Existing Agreement on February 19, 2008. 

 

 

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6. Business Expense Reimbursement. Executive shall be entitled, in accordance with Holding’s written expense reimbursement policies in effect from time to time, to receive reimbursement from Holding for all travel and other reasonable business expenses incurred by Executive in the performance of his duties hereunder, provided Executive furnishes Holding with vouchers, receipts and other details of such expenses in accordance with the Holding’s written expense reimbursement policies. Executive shall be provided with a corporate credit card for his business use, and will be reimbursed within fifteen (15) days of presentation for appropriate business expenses as provided above.

7. Benefits.

A. During the Term, the Company shall provide Executive and his dependents with coverage under the Company’s applicable medical, dental and/or vision plans and other employee benefits as are applicable to senior executives of the Company. 

B. The Executive shall be entitled to participate in the supplemental executive retirement plan of the Company currently in effect. 

C. During the Term, Holding or cause to be paid will pay the premiums on a term life insurance policy providing the Executive with a life insurance benefit for a term of ten (10) years in the amount of five million dollars ($5,000,000). The policy shall permit the Executive to designate the beneficiary and Holding will allow the Executive to maintain the policy, at his expense, following any termination of employment.

8. Restrictive Covenant. 

A. For the purposes of this Section 8, any reference to the “Company” shall mean Holding, the Company and their respective subsidiaries and affiliates. In view of the fact that the Executive’s work for the Company brings the Executive into close contact with many confidential affairs of the Company not readily available to the public, and plans for further developments, the Executive agrees:

(a) That both during the entire term of the Executive’s employment with the Company and thereafter, the Executive will not publish or otherwise disclose to persons other than those employed by the Company, without specific permission from the Company, any Company proprietary or confidential information which the Executive learns or acquires during the course of employment with or as a result of performing services with the Company, and will not use such information in any way which might be detrimental to the interests of the Company. For purposes of this Agreement, proprietary or confidential information includes, but is not limited to: 

(i) All information not generally known to the public or within the federal, state or local government sector(s) or the commercial sector(s) in which the Company offers or provides its services, solutions or products, pertaining to the Company’s marketing, bidding or cost plans, strategies, forecasts or projections; practices, procedures, policies, goals or objectives pertaining to the foregoing; contract proposals, contract bids which have been prepared or submitted or which are proposed to be prepared or submitted, or bidding and pricing techniques; information on the Company’s cost structure; quoting and pricing practices, procedures and policies; customer data including customer list, contracts, contacts, representatives, requirements and needs, specifications, data provided by or about prospective customers; supplier information, including joint venture and subcontractor proposals; employee and consultants’ identities, skills, resumes, records and lists; and the physical embodiments of any of the foregoing information;  

 

 

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(ii) All information concerning or relating to the way the Company conducts its business which is not generally known to the public or within the federal, state or local government sector(s) or the commercial sector(s) in which the Company offers or provides its services, solutions or products (such as Company contracts, internal business procedures, controls, plans, licensing techniques and practices, supplier, subcontractor and prime contractor names and contacts and other vendor information, Company processes, techniques, data, computer system passwords and other computer security controls, financial information, and distributor information) and the physical embodiments of such information (such as check lists, samples, service and operational manuals, contracts, proposals, printouts, correspondence, forms, listings, ledgers, financial statements, financial reports,
financial and operational analyses, financial and operational studies, management reports of every kind, databases, and any other written or machine-readable expression of such information as are filed in any tangible media);

(iii) All information not generally known to the public or within the federal, state or local government domain or the commercial sector(s) in which the Company offers or provides its services, solutions or products concerning development of new products, services or solutions, negotiations for new business ventures or acquisitions, future business or acquisition plans, and similar information and the physical embodiments of such information;

(iv) Information which is not a public record and is not generally known to the public or within the federal, state or local government sector(s) or the commercial sector(s) in which the Company offers or provides its services, solutions or products regarding litigation and potential litigation matters and the physical embodiments of such information; and

(v) Any information which (i) is not generally known to the public or within the federal, state or local government sector(s) or the commercial sector(s) in which the Company offers or provides its services, solutions or products, (ii) gives the Company a significant advantage over its or their competitors, or (iii) has significant economic value or potentially significant economic value to the Company, including the physical embodiments of such information.

(b) That both during the entire term of the Executive’s employment with Company and thereafter through any Severance Period (as defined below), the Executive shall not: 

(i) directly or indirectly, own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected as an officer, employee, consultant, partner, director or otherwise with, or have any financial interest in, or aid or assist anyone else in the conduct of any business which competes with any services, solutions or products conducted, offered or provided by the Company (any such service, solution or product, a “Company Operation”), to any federal, state or local government sector(s) or the commercial sector(s) if such Company Operation is being conducted or developed at any time during the term of Executive’s employment with the Company and at the later time in question;

(ii) directly or indirectly, solicit any customer or any former or prospective customer of the Company with a view to inducing such customer to enter into an agreement, or otherwise do business, involving a Company Operation with any competitor of the Company or attempt to induce any customer to terminate its relationship with the Company or to not enter into a relationship with the Company, as the case may be; or

 

 

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(iii) solicit or attempt to solicit the employment of any employee of the Company, or any person employed by the Company during the prior six (6) month period, or attempt to solicit or induce any such employee or person to leave the employ of the Company.

(c)  That, if the Company terminates the Executive’s employment for Cause or the Executive resigns or departs from the Company without Good Reason, the Executive shall not engage in the conduct set forth in Section 8A(b) for a period of two years from the date of termination of employment and the Executive shall not be entitled to additional consideration from the Company, and that such two year period shall constitute a “Severance Period” for purposes of the duration of the provisions set forth in Section 8A(b) hereof. If the Company terminates the Executive’s employment without Cause or the Executive resigns or departs from the Company with Good Reason, following expiration of the Severance Period, the Company may prohibit the Executive from engaging in the conduct set forth in Section 8A(b) for an additional term of one year (renewable annually at the
Company’s discretion for up to three years total); provided, however, that during each such one year term, the Executive shall be paid an amount equal to one half the Base Salary in effect at the time of termination and such payments shall be made to the Executive in installments, less applicable withholdings, pursuant to the Company’s normal and customary payroll procedures. 

B. In the event any provision of this Section 8 shall be challenged by the Executive or deemed to be unenforceable by a court of competent jurisdiction, the Company’s obligation to make payments under Section 8A(c) or Section 10 shall immediately cease, and the Executive shall reimburse the Company for any payments previously received pursuant to Section 8A(c) or Section 10 hereof.

C. If the Executive commits a breach, or threatens to commit a breach, of any of the provisions of Section 8 hereof, the Company shall have the following rights and remedies:

(1) The right and remedy to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company; and

(2) The right and remedy to require the Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits (collectively, “Benefits”) derived or received by the Executive as the result of any transactions constituting a breach of any of the provisions of this Section 8, and the Executive hereby agrees to account for and pay over such Benefits to the Company.

Each of the rights and remedies enumerated above shall be independent of the other, and shall be severally enforceable, and all of such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity.

D. If any of the covenants contained in Sections 8A, 8B or 8C, or any part thereof, hereafter are construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions.

E. If any of the covenants contained in Sections 8A, 8B or 8C, or any part thereof, are held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and, in its reduced form, said provision shall then be enforceable.

 

 

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F. The parties hereto intend to and hereby confer jurisdiction to enforce the covenants contained in Section 8 upon the courts of any state within the geographical scope of such covenants. In the event that the courts of any one or more of such states shall hold such covenants wholly unenforceable by reason of the breadth of such covenants or otherwise, it is the intention of the parties hereto that such determination not bar or in any way affect the Company’s right to the relief provided above in the courts of any other states within the geographical scope of such covenants as to breaches of such covenants in such other respective jurisdictions, the above covenants as they relate to each state being for this purpose severable into diverse and independent covenants.

9. Inventions; Patents; Intellectual Property. For purposes of this Section 9, any reference to the “Company” shall mean Holding, the Company, and their respective subsidiaries and affiliates.

A. Inventions and Patents. The Executive agrees that all processes, technologies and inventions (collectively, “Inventions”), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made by him during or prior to the Term shall belong to the Company, provided that such Inventions grew out of the Executive’s work with the Company, are related to the business (commercial or experimental) of the Company or are conceived or made on the Company ‘s time or with the use of facilities or materials of the Company. The Executive shall further: (1) promptly disclose such Inventions to the Company; (2) assign to the Company, without additional compensation, all patent and other rights to such Inventions for the United
States and foreign countries; (3) sign all papers necessary to carry out the foregoing; and (4) give testimony in support of the Executive’s inventorship.

(1) If any Invention is described in a patent application or is disclosed to third parties, directly or indirectly, by the Executive within two (2) years after the termination of the Executive’s employment by the Company, it is to be presumed that the Invention was conceived or made during the Term.

(2) The Executive agrees that the Executive will not assert any rights to any Invention as having been made or acquired by the Executive prior to the date of this Agreement or prior to the date of the Existing Agreement, except for Inventions, if any, disclosed to the Company in writing prior to the date hereof.

B. Intellectual Property. The Company shall be the sole owner of all the products and proceeds of the Executive’s services hereunder, including, but not limited to, all materials, ideas, concepts, formats, suggestions, developments, arrangements, packages, programs and other intellectual properties that the Executive may acquire, obtain, develop or create in connection with and during or prior to the Term, free and clear of any claims by the Executive (or anyone claiming under the Executive) of any kind or character whatsoever (other than the Executive’s right to receive payments hereunder). The Executive shall, at the request of the Company, execute such assignments, certificates or other instruments as the Company may from time to time deem necessary or desirable to evidence, establish,
maintain, perfect, protect, enforce or defend its right, title or interest in or to any such properties.

 

 

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10. Termination of Employment.

A. Method of Termination. Executive’s employment pursuant to this Agreement shall terminate upon the first of the following to occur:

(1) The fifth anniversary of the Effective Date;

(2) Executive’s death (“Death”);

(3) the date that written notice is deemed given or made by Holding to the Executive of his inability to perform his services. Such notice may be issued when the Board has reasonably determined that Executive has become unable to substantially perform his services and duties hereunder because of physical or mental illness, injury or disability, that as a result thereof Executive has failed to substantially perform his services and duties hereunder for a period of one hundred and eighty (180) days in any twelve month period and that it is reasonably likely that he will not be able to substantially resume performing his services and duties on substantially the terms and conditions as set forth in this Employment Agreement; such termination of employment by Holding being referred to herein as a termination for “Disability”;

(4) the date that final written notice is deemed given or made by Holding to the Executive of termination for Cause (as defined below). For purposes of this Employment Agreement, “Cause” shall mean the occurrence of any one of the following: 

(a) gross negligence by the Executive in the performance of his duties and responsibilities, (b) any breach by Executive of his fiduciary duties to Holding or the Company or any of their respective affiliates which failure has a material adverse effect on Holding’s or the Company’s or any of their respective affiliates’ operations, prospects, reputation or business, (c) any intentional act or acts or omission or omissions (other than acts or omissions involving business judgment or at the direction of the Board) by Executive that have a material adverse effect on Holding’s or the Company’s or any of their respective affiliates’ operations, prospects, reputation or business, (d) the Executive’s willful failure or refusal to comply with lawful directives of the Board not cured within thirty (30) days after written notice, (e)
the conviction of Executive for a felony involving dishonesty by Executive or (f) fraud or embezzlement involving assets of Holding or any of its affiliates including the Company or other material misappropriation of Holding’s or any of its affiliates’ assets or funds.

(5) Executive’s resignation or voluntary departure as an officer or employee of Holding or the Company, upon not less than sixty (60) days written notice to Holding, without Good Reason (a “Voluntary Resignation”).

(6) Executive’s resignation or voluntary departure as an officer or employee of Holding or the Company for any reason that constitutes Good Reason (as defined below). For purposes of this Agreement, “Good Reason” shall mean the occurrence of either of the following: (a) a reduction in the scope of Executive’s  responsibilities or authority at the Company which is not cured within a period of thirty (30) days after written notice of such material reduction is given by Executive to the Board, (b) relocation of the Executive’s principal place of employment to a location that is more than fifty (50) miles from the Executive’s principal place of employment as of the date hereof, or (c) a reduction in the Executive’s Base Salary; or 

(7) Holding’s or the Company’s termination of Executive’s employment for any reason other than for Cause or Disability upon not less than sixty (60) days written notice to Executive (an “Involuntary Termination”). 

B. Effect of Termination for Cause, Death, Disability or Voluntary Resignation. Upon the termination of Executive’s employment (1) by Holding or the Company for Cause, (2) due to the Executive’s Death or Disability, or (3) by Executive in a Voluntary Resignation, Holding shall pay or cause to be paid to the Executive any accrued and owing Base Salary and Annual Bonus (for years prior to the year in which termination occurs) as of the date of termination of

 

 

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Executive’s employment pursuant to this section (“Accrued Obligations”); provided, however, that if Executive is terminated due to Disability and at any time prior to two years after the date of Executive’s termination Executive ceases to receive disability payments from insurance providers, then Holding shall pay Executive, in equal installments over a two year period commencing on the date the Executive ceases to receive such disability, payments; an amount equal to (x) two (2) times the Executive’s Base Salary at the time of such termination minus (y) all amounts received by Executive from other parties for services rendered during the two (2) year period after the termination and all disability payments received by Executive during such two (2) year period. All of Executive’s unvested Class C Units shall be forfeited and cancelled as of the date of such
termination of employment. Except as otherwise provided herein, the Executive shall not thereafter be entitled to any further payments or benefits, unless otherwise agreements to in writing by the Company and the Executive.

C. Effect of Involuntary Termination or Termination for Good Reason. Upon termination of the Executive’s employment (1) by Holding or the Company as an Involuntary Termination, or (2) by the Executive for Good Reason, so long as Executive is not in breach or default of any of the covenants set forth in Sections 8 or 9 hereof, then Holding shall pay or cause to be paid to the Executive (subject to the execution by the Executive of a release of claims against Holding and its affiliates including the Company in the form attached to this Agreement as Attachment A) (i) the Accrued Obligations, (ii) Base Salary for two years, plus (iii) Executive’s target Annual Bonus for the year in which termination of employment occurs (collectively, the “Severance Payment”). The amounts referenced
in (i) and (iii) above shall be paid as soon as practicable following the execution of the applicable release. The amount referenced in (ii) above shall continue to be paid in accordance with the Company’s standard payroll practices.   The vesting, forfeiture and other terms of any additional Class C Units or other equity or equity-like instruments shall be set forth in an award agreement with respect thereto. The Executive shall also be entitled to receive the medical benefits and life insurance benefits described in Section 7 hereof (offset by any similar benefits received from a subsequent employer) during such two year period. The period used to calculate the amount of Base Salary payable pursuant to this Section 10C shall be referred to as the “Severance Period” hereunder.

11. Successors and Assigns. This Agreement, and the Executive’s rights and obligations hereunder, may not be assigned by the Executive. Holding or the Company may each assign its rights, together with its obligations, hereunder to third parties in connection with any sale, transfer or other disposition of all or substantially all of its business or assets; in any event the obligations of Holding and the Company hereunder shall be binding on each of its successors or assigns, whether by merger, consolidation or acquisition of all or substantially all of its business or assets.

12. Governing Document. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof, including, without limitation, the Existing Agreement between the Company and the Executive, including all Appendices and Amendments thereto, which Existing Agreement is deemed terminated and shall be of no further force or effect; provided that any violation of the Existing Agreement by the Executive shall not be deemed waived by the execution of this Agreement. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or
liable for any alleged representation, promise or inducement not so set forth.

13. Applicable Law. This Agreement shall, in all respects, be governed by the laws of the State of Delaware applicable to agreements executed and to be wholly performed within the State of Delaware.

 

 

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14. Arbitration. Any and all disputes between Executive and (i) Holding or (ii) the Company, or any of their employees or respective affiliates, which arise out of Executive’s employment or under the terms of this Agreement shall be resolved through final and binding arbitration. This shall include, without limitation, disputes relating, to this Agreement, Executive’s employment hereunder or the termination thereof, claims for breach of contract or breach of the covenant of good faith and fair dealing, and any claims of discrimination or other claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, or any other foreign, federal, state or local law or regulation now in existence or
hereinafter enacted and as amended from time to time concerning in any way the subject of the Executive’s employment hereunder or its termination. The only claims not covered by this Agreement are claims for benefits under the workers’ compensation or unemployment insurance laws, which will be resolved pursuant to those laws. Final and binding arbitration will be conducted in Philadelphia, Pennsylvania, in accordance with the rules and regulations of the American Arbitration Association. Each party will pay 50% of the cost of the arbitration filing and hearing fees, and the cost of the arbitrator; each side will bear its own attorneys’ fees, that is, the arbitrator will not have authority to award attorneys’ fees unless a statutory section at issue in the dispute authorizes the award of attorneys’ fees to the prevailing party, in which case the arbitrator has authority to make such award as permitted by the statute in question. Executive understands and agrees
that the arbitration shall be instead of any civil litigation and that this means that he is waiving his right to a jury trial as to such claims. The parties further understand and agree that the arbitrator’s decision shall be final and binding to the fullest extent permitted by law and enforceable by any court having jurisdiction thereof.

15. Counterparts. This Agreement may be executed in more than one counterpart, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above.

 

 

	
                        /s/ William C. Whitmore, Jr.
 	
                         
 	
                        ALLIED SECURITY HOLDINGS LLC
 
	
                        William C. Whitmore, Jr.
 	
                         
 	
      By: 
 	
                        
 /s/ William A. Torzolini
 
	
                         
 	
                         
 	
                        Title:    
 	
                        Chief Financial Officer
 

 

 

	
                         
 	
                         
 	
                        SPECTAGUARD HOLDING CORPORATION
 
	
                          
 	
                         
 	
      By: 
 	
                        
 /s/ Barry F. Schwartz
 
	
                         
 	
                         
 	
                        Title:    
 	
                        Executive Vice Chairman
 

 

 

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Attachment A

WAIVER AGREEMENT AND RELEASE OF CLAIMS

This RELEASE AGREEMENT (the “Release Agreement”) is made by and among SpectaGuard Holding Corporation, a Delaware corporation (the “Holding”), Allied Security Holdings LC, a Delaware limited liability company (the “Company”), and _______ (the “Executive”).

WHEREAS, the Executive entered into an employment agreement with the Company and Holding dated as of ____________ (“Employment Agreement”); and

WHEREAS, the employment of the Executive has been terminated pursuant to Section 10 of the Employment Agreement;

NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, Holding and the Executive hereby agree as follows:

1. The Executive, on his own behalf and on behalf of his agents, representatives, heirs, executors and administrators (whether or not then existing), releases Holding, the Company, their respective subsidiaries and affiliates (whether or not then existing), and the employees, officers, directors, agents, representatives, successors and assigns of any of them, as well as the trustees of any of their executive or employee benefit or welfare plans (except with respect to claims for benefits due under the terms of such plans) from any and all actions, causes of action, suits, debts, claims, complaints, charges, contracts, controversies, agreements, promises, damages, counterclaims, cross-claims, claims for contribution and/or indemnity, claims for costs and/or attorneys’ fees, judgments and demands whatsoever, in law or equity, known or unknown, that the Executive ever had, now
has, or may have in the future based on his employment through the date of this Release Agreement, except that such release shall not cover (i) valid claims to enforce his rights under the Employment Agreement, (ii) valid claims for benefits pursuant to any executive or employee benefit or welfare plan of the Company or any of its subsidiaries in which the Executive participated prior to his termination of employment, and (iii) valid claims for indemnification pursuant to the Company’s indemnification policies and practices applicable to its executive officers (collectively, the “Excluded Claims”). Except for the Excluded Claims, the Executive understands and agrees that this Release Agreement includes, but is not limited to, a complete waiver and release of the following rights or claims:

	
                         
 	
                        (a)
 	
                        any right(s) or claim(s) arising under Title VII of the Civil Rights Act of 1964 (“Title VII”), which prohibits discrimination in employment based on race, color, national origin, religion or sex; the Americans with Disabilities Act (“ADA”), which prohibits discrimination based on disability; and any right(s) or claim(s) arising under any other federal, state or local law regarding discrimination based on age, race, sex, pregnancy, religion, national origin, marital status or disability or any other unlawful basis;
 

	
                         
 	
                        (b)
 	
                        any right(s) or claim(s) for alleged violations of any local, state or federal law, regulation, ordinance, public policy or common-law duty having any bearing whatsoever upon the Executive’s employment with the Company or Holding or the terms and conditions of, and/or the cessation of, the Executive’s employment with the Company or Holding; and
 

	
                         
 	
      (c)
 	
                        any claim(s) for breach of express or implied contract, wrongful discharge, constructive discharge, breach of an implied covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, or any claims under the Executive
Retirement Income Security Act of 1974 (“ERISA”).

 

 

 

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2. The parties agree that this Release Agreement is intended to cover all claims (other than any Excluded Claim) in existence as of the date of the execution of this Release Agreement and all claims that may accrue from such date of execution through the expiration of the Revocation Period (as defined below), including both claims about which the Executive knows and about which the Executive does not know. 

3. The Executive represents and warrants that he has not filed any claims against Holding, the Company and/or any of their respective subsidiaries or affiliates, or any of the individuals covered by this Release Agreement, with any governmental agency or any court, and the Executive agrees that the Executive will not do so at any time hereafter regarding any matter released herein.

4. The Executive acknowledges and agrees that he has been advised to and has been given an opportunity to consult with an attorney of his choice prior to executing this Release Agreement. The Executive further acknowledges that he has 21 days within which to consider whether to execute this Release Agreement (the “Revocation Period”). The Executive acknowledges and agrees that he has 7 calendar days to revoke this Release Agreement after executing it, but if he revokes this Release Agreement after executing it, he must return any installments of the Severance Payment (as defined in the Employment Agreement) tendered by Holding or the Company.

THE PARTIES STATE THAT THEY HAVE READ THIS AGREEMENT, THAT THEY UNDERSTAND EACH OF ITS TERMS, AND THEY INTEND TO BE BOUND THEREBY.

 

	
                        Executive
 	
                         
 	
                        SPECTAGUARD HOLDING CORPORATION      
 
	 	 	 
	
                         
 	
                         
 	
                         
 
	
                        signature
 	
                         
 	
                        Name:
 
	
                         
 	
                         
 	
                        Title:
 
	
                         
 	
                         
 	
                         
 
	
                        print name
 	
                         
 	
                        DATE:
 	
                         
 
	
                         
 	
                         
 	
                         
 
	
                        DATE:___________________________________________
 	
                         
 	
                         
 

 

	
                         
 	
                         
 	
                        ALLIED SECURITY HOLDINGS LLC   
 
	 	 	 
	
                          
 	
                         
 	
                           
 
	
                         
 	
                         
 	
                        Name:
 	
                         
 
	
                         
 	
                         
 	
                        Title:
 	
                         
 
	
                         
 	
                         
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                        DATE:
 	
                         
 

 

 

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EXHIBIT 10.14

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (“Agreement”) is made as of                     , ___by and
between USG Corporation, a Delaware corporation, and                      (“Indemnitee”).

RECITALS

     WHEREAS, highly competent persons have become more reluctant to serve publicly-held
corporations as directors, officers or in other capacities unless they are provided with adequate
protection through insurance or adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities on behalf of the corporation.

     WHEREAS, the Bylaws of the Company provide for indemnification of the officers and directors
of the Company, and Indemnitee may also be entitled to indemnification pursuant to the Delaware
General Corporation Law (“DGCL”).

     WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to
attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis,
at its sole expense, liability insurance to protect persons serving the Company and its
subsidiaries from certain liabilities.

     WHEREAS, in view of uncertainties relating to liability insurance and to indemnification
generally, the Board has determined that attracting and retaining such persons will be materially
enhanced if the Company acts to assure such persons that there will be increased certainty of such
protection in the future.

     WHEREAS, it is reasonable, prudent, necessary and in the best interests of the stockholders of
the Company for the Company contractually to obligate itself to indemnify, and to advance expenses
on behalf of, such persons to the fullest extent permitted by applicable law so that they will
serve or continue to serve the Company free from undue concern that they will not be so
indemnified.

     WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws of the Company and
any resolutions adopted pursuant thereto and any liability insurance, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

     NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:

     1. Definitions. As used in this Agreement

     (a) A “Change in Control” shall be deemed to occur upon the earliest to occur after
the date of this Agreement of any of the following events:

	 	(i)	 	The acquisition by any Person of beneficial
ownership (within the

 

 

	 	 	 	meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (B) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (w) any acquisition directly from the
Company, (x) any acquisition by the Company, (y) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or (z)
any acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (c) of this
definition; or
	 	(ii)	 	Individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
	 
	 	(iii)	 	Consummation of a reorganization, merger,
statutory share exchange or consolidation or similar transaction
involving the Company or any of its subsidiaries, a sale or other
disposition of all or substantially all of the assets of the Company,
or the acquisition of assets or stock of another entity by the Company
or any of its subsidiaries (each, a “Business Combination”), in each
case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all
of the

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	 	 	 	Company’s assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (C) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
	 	(iv)	 	Approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.

Notwithstanding anything in this Agreement to the contrary, a Change in Control shall
not be deemed to have occurred as a result of an acquisition or the holding by Berkshire
Hathaway, Inc. of Voting Stock of the Company permitted by and in accordance with
Section 2(a) of the Shareholder’s Agreement entered into as of January 30, 2006, by and
between the Company and Berkshire Hathaway, Inc,

     (b) “Company” shall mean USG Corporation and its successors, and shall include, in
the case of any merger or consolidation, in addition to the resulting corporation and
surviving corporation, any constituent corporation (including any constituent of a
constituent) absorbed in such consolidation or merger which, if its separate existence
had continued, would have had power and authority to indemnify its directors, officers,
employees, trustees, fiduciaries or agents, so that if Indemnitee is or was a director,
officer, employee, trustee, fiduciary or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director, officer,
employee. trustee, fiduciary or agent of another corporation, partnership, joint
venture, trust employee benefit program or other enterprise, Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the resulting
or surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

     (c) “Corporate Status” describes the status of a person who is or was a director,
officer, employee, agent, trustee or fiduciary of the Company or of any other
corporation, partnership or joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.

-3-

 

     (d) “Disinterested Director” means a director of the Company who is not and was not
a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

     (e) “Enterprise” shall mean the Company and any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is
or was serving at the request of the Company as a director, officer, employee, agent,
trustee or fiduciary.

     (f) “Expenses” shall mean all retainers, court costs, transcript costs, fees of
experts, witness fees, private investigators, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, fax transmission charges,
secretarial services, delivery service fees, reasonable attorneys’ fees, and all other
disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating, being or
preparing to be a witness in, or otherwise participating in, a Proceeding or in
connection with seeking indemnification under this Agreement. Expenses also shall
include Expenses incurred in connection with any appeal resulting from any Proceeding,
including without limitation the premium, security for, and other costs relating to any
cost bond, supersedeas bond, or other appeal bond or its equivalent. “Losses” shall mean
all loss, liability, judgments, damages, amounts paid in settlement, fines, penalties,
interest, assessments, other charges and taxes assessed with respect thereto.

     (g) Reference to “other enterprise” shall include employee benefit plans;
references to “fines” shall include any excise tax or penalties assessed with respect to
any employee benefit plan; references to “serving at the request of the Company” shall
include any service as a director, officer, employee, trustee, fiduciary or agent of the
Company which imposes duties on, or involves services by, such director, officer,
employee, trustee, fiduciary or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the best interests of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner “not opposed to the
best interests of the Company” as referred to under applicable law.

     (h) “Person” means an individual, entity, partnership, limited liability company,
corporation, association, joint stock company, trust, joint venture, unincorporated
organization, and a governmental entity or any department agency or political
subdivision thereof.

     (i) The term “Proceeding” shall include any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed proceeding,
including any and all appeals, whether brought in the right of the Company or otherwise
and whether of a civil, criminal, administrative or investigative nature and whether
formal or informal, in which Indemnitee was, is or will be involved as a party or
otherwise by reason of or relating to the fact that Indemnitee is or was a director,

-4-

 

officer, employee, agent, trustee or fiduciary of the Company, by reason of or
relating to any action taken by him or of any action on his part while acting as
director, officer, employee, agent, trustee or fiduciary of the Company, or by reason of
the fact that he is or was serving at the request of the Company as a director, officer,
employee, agent or fiduciary of another Enterprise, in each case whether or not serving
in such capacity at the time any Loss or Expense is incurred for which indemnification,
reimbursement, or advancement of Expenses can be provided under this Agreement,
including one initiated by a Indemnitee to enforce his rights under this Agreement.

     (j) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of relevant corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Company or Indemnitee in any
matter material to either such party (other than with respect to matters concerning the
Indemnitee under this Agreement, or of other indemnitees under similar indemnification
agreements), or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee’s rights under
this Agreement. The Company agrees to pay the reasonable fees and expenses of the
Independent Counsel referred to above and to fully indemnify such counsel against any
and all Expenses and Losses arising out of or relating to this Agreement or its
engagement pursuant hereto.

     (k) For purposes of Sections 2 and 3, the meaning of the phrase “to the fullest
extent permitted by law” shall include, but not be limited to:

	 	A.	 	to the fullest extent permitted by Section 145 of
the DGCL or any section that replaces or succeeds Section 145 with
respect to such matters of the DGCL, and
	 
	 	B.	 	to the fullest extent authorized or permitted by
any amendments to or replacements of the DGCL adopted after the date of
this Agreement that increase the extent to which a corporation may
indemnify its officers, directors, employees, agents, trustees,
fiduciaries and other persons acting or serving at the Company’s request.

     2. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance
with the provisions of this Section 2 if Indemnitee was or is, or was or is threatened to be made,
a party to or a witness or participant in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this Section 2, Indemnitee
shall be indemnified against all Expenses and Losses to the fullest extent permitted under law.

     3. Indemnity in Proceedings by or in the Right of the Company. The Company

-5-

 

shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee
was or is, or was or is threatened to be made, a party to or a participant in any Proceeding by or
in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3,
Indemnitee shall be indemnified against all Expenses and Losses actually and reasonably incurred or
suffered by him or on his behalf in connection with such Proceeding or any claim, issue or matter
therein to the fullest extent permitted under law. No indemnification for Expenses shall be made
under this Section 3 in respect of any claim, issue or matter as to which Indemnitee shall have
been finally adjudged by a court to be liable to the Company, unless and only to the extent that
the Delaware Court of Chancery, any court in Cook County in the State of Illinois, or any court in
which the Proceeding was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnification.

     4. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding
any other provisions of this Agreement, to the extent that Indemnitee was or is a party to (or a
participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of
any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the
Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or
on his behalf in connection with each successfully resolved claim, issue or matter and any claim,
issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For
purposes of this Section and without limitation, the termination of any claim, issue or matter in
such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.

     5. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is or may potentially be, by reason of his Corporate
Status, a witness or otherwise involved in any Proceeding to which Indemnitee is not a party, he
shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf
in connection therewith.

     6. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be
obligated under this Agreement to make any indemnity payments in connection with any claim made
against Indemnitee:

     (a) for which payment has actually been made to or on behalf of Indemnitee under
any insurance policy or other indemnity provision, except with respect to any excess
beyond the amount paid under any insurance policy or other indemnity provision; or

     (b) for an accounting of profits made from the purchase and sale (or sale and
purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b)
of the Securities Exchange Act of 1934, as amended, or similar provisions of state
statutory law or common law; or

-6-

 

     (c) in connection with any Proceeding (or any part of any Proceeding) initiated or
brought voluntarily by Indemnitee prior to a Change of Control against the Company or
its directors, officers, employees or other indemnitees, unless (i) the Board of
Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior
to its initiation, or (ii) the Company provides indemnification, in its sole discretion,
pursuant to the powers vested in the Company under applicable law.

     7. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary,
the Company shall advance the Expenses incurred by Indemnitee in connection with any Proceeding for
which indemnification is or may be available pursuant to this Agreement within 30 days after the
receipt by the Company of a statement or statements requesting such advances from time to time,
whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and
interest free. Advances shall be made without regard to Indemnitee’s ability to repay the Expenses
and without regard to Indemnitee’s ultimate entitlement to indemnification under the other
provisions of this Agreement. Advances shall include any and all Expenses incurred pursuing an
action to enforce this right of advancement, including Expenses incurred preparing and forwarding
statements to the Company to support the advances claimed. The Indemnitee shall qualify for
advances solely upon the execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that
Indemnitee is not entitled to be indemnified by the Company in respect thereof.

     8. Selection of Counsel. In the event the Company is obligated under Section 7 hereof to pay,
and pays the Expenses of any Proceeding against Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such Proceeding, with counsel approved by Indemnitee, which
approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of
its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to Indemnitee under
this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same
Proceeding, provided that (i) Indemnitee shall have the right to employ his counsel in any such
Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has
been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the conduct of any such
defense, (C) the counsel previously authorized by the Company is representing any other person
indemnified by the Company, Indemnitee shall have reasonably concluded that there may be a conflict
of interest between such other person and the Indemnitee in the conduct of any such defense, (D) a
Change in Control shall have occurred or (E) the Company shall not, in fact, have promptly employed
counsel approved by the Indemnitee to assume the defense of such Proceeding, then the fees and
expenses of Indemnitee’s counsel shall be at the expense of the Company.

     9. Procedure for Notification and Defense of Claim.

     (a) Indemnitee shall, as a condition precedent to his right to be indemnified under
this Agreement, give the Company notice in writing as soon as practicable of any claim
made against Indemnitee for which indemnification will or could be sought

-7-

 

under this Agreement, provided however, that a delay in giving such notice shall
not deprive Indemnitee of any right to be indemnified under this Agreement unless, and
then only to the extent that, such delay is materially prejudicial to the defense of
such claim. The omission to notify the Company will not relieve the Company from any
liability for indemnification which it may have to Indemnitee otherwise than under this
Agreement. The Secretary of the Company shall, promptly upon receipt of such a request
for indemnification, advise the Board in writing that Indemnitee has requested
indemnification.

     (b) The Company will be entitled to participate in any Proceeding at its own
expense.

     10. Procedure Upon Application for Indemnification.

     (a) Upon written request by Indemnitee for indemnification pursuant to the first
sentence of Section 9(a), a determination, if required by applicable law, with respect
to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change
in Control shall have occurred, by Independent Counsel in a written opinion to the Board
of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in
Control shall not have occurred, (A) by a majority vote of the Disinterested Directors,
even though less than a quorum of the Board, (B) by a committee of Disinterested
Directors designated by a majority vote of the Disinterested Directors, even though less
than a quorum of the Board, or (C) if there are no such Disinterested Directors or, if
such Disinterested Directors so direct, by Independent Counsel in a written opinion to
the Board, a copy of which shall be delivered to Indemnitee; and, if it is so determined
that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to Indemnitee’s
entitlement to indemnification, including providing to such person, persons or entity
upon reasonable advance request any documentation or information which is not privileged
or otherwise protected from disclosure and which is reasonably available to Indemnitee
and reasonably necessary to such determination. Any costs or expenses (including
attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee’s entitlement to indemnification)
and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

     (b) In the event the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Section 10(a) hereof, the Independent Counsel shall
be selected as provided in this Section 10(b). If a Change in Control shall not have
occurred, the Independent Counsel shall be selected by the Board of Directors, and the
Company shall give written notice to Indemnitee advising him of the identity of the
Independent Counsel so selected. If a Change in Control shall have occurred, the
Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request
that such selection be made by the Board of Directors, in which event

-8-

 

the preceding sentence shall apply), and Indemnitee shall give written notice to
the Company advising it of the identity of the Independent Counsel so selected. In
either event, Indemnitee or the Company, as the case may be, may, within 10 days after
such written notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of “Independent Counsel”
as defined in Section 1 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel. If such written
objection is so made and substantiated, the Independent Counsel so selected may not
serve as Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit. If, within 20 days after submission by
Indemnitee of a written request for indemnification pursuant to Section 9(a) hereof, no
Independent Counsel shall have been selected and not objected to, either the Company or
Indemnitee may petition a court of competent jurisdiction for resolution of any
objection which shall have been made by the Company or Indemnitee to the other’s
selection of Independent Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court or by such other person as the Court shall designate, and
the person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 10(a) hereof. Upon the due
commencement of any judicial proceeding or arbitration pursuant to Section 12(a) of this
Agreement, Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of professional
conduct then prevailing).

     11. Presumptions and Effect of Certain Proceedings.

     (a) In making a determination with respect to entitlement to indemnification
hereunder, the person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement and the Company shall
have the burden of proof by clear and convincing evidence to overcome that presumption
in connection with the making by any person, persons or entity of any determination
contrary to that presumption. Neither the failure of the Company (including by its
directors or independent legal counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is proper in
the circumstances because Indemnitee has met the applicable standard of conduct, nor an
actual determination by the Company (including by its directors or independent legal
counsel) that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the applicable
standard of conduct.

     (b) If the person, persons or entity empowered or selected under Section 10 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall not have
made a determination within sixty (60) days after receipt by the Company of the request
therefor, the requisite determination of entitlement to indemnification

-9-

 

shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an
omission of a material fact necessary to make Indemnitee’s statement not materially
misleading, in connection with the request for indemnification, or (ii) a prohibition of
such indemnification under applicable law; provided, however, that such 60-day period
may be extended for a reasonable time, not to exceed an additional thirty (30) days, if
the person, persons or entity making the determination with respect to entitlement to
indemnification in good faith requires such additional time for the obtaining or
evaluating of documentation and/or information relating thereto; and provided, further,
that the provisions of the immediately foregoing proviso of this Section 11(b) shall not
apply if the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 10(a) of this Agreement.

     (c) The termination of any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to indemnification
or create a presumption that Indemnitee did not meet any applicable standard of conduct
under applicable law (or did or did not hold any particular state of knowledge referred
to under applicable law).

     (d) For purposes of any determination of good faith, Indemnitee shall be deemed to
have acted in good faith if Indemnitee’s action is based on the records or books of
account of the Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or on the
advice of legal counsel for the Enterprise or on information or records given or reports
made to the Enterprise by an independent certified public accountant or by an appraiser
or other expert selected with the reasonable care by the Enterprise. The provisions of
this Section 11(d) shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed to have met the applicable standard
of conduct set forth in this Agreement.

     (e) The knowledge and/or actions, or failure to act, of any director, officer,
agent, trustee, fiduciary or employee of the Enterprise shall not be imputed to
Indemnitee for purposes of determining the right to indemnification under this
Agreement.

     12. Remedies of Indemnitee.

     (a) In the event that (i) a determination is made pursuant to Section 10 of this
Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 7 of this Agreement,
(iii) no determination of entitlement to indemnification shall have been made pursuant
to Section 11(a) of this Agreement within the time periods specified in Section 11, or
(iv) payment of indemnification is not made pursuant to Sections 2, 3, 4, 5 or the last
sentence of Section 10(a) of this Agreement within ten (10) days after

-10-

 

receipt by the Company of a written request therefor, or, if a determination is
required by law, within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an
adjudication (or, in the case of clause (i), to seek an adjudication) by the Delaware
Court or any court in Cook County in the State of Illinois, of his entitlement to such
indemnification or advancement of Expenses; provided, that nothing contained in this
Section 12 shall be deemed to limit Indemnitee’s rights under Section 11(b).
Alternatively, Indemnitee, at his option, may seek an award in binding arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the
American Arbitration Association. The Company shall not oppose Indemnitee’s right to
seek any such adjudication or award in arbitration.

     (b) In the event that a determination shall have been made pursuant to Section
10(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding or arbitration commenced pursuant to this Section 12 shall be conducted in
all respects as a de novo trial, or arbitration, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. In any
judicial proceeding or arbitration commenced pursuant to this Section 12 the Company
shall have the burden of proving by clear and convincing evidence that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.

     (c) If a determination shall have been made pursuant to Section 10(a) of this
Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by
such determination in any judicial proceeding or arbitration commenced pursuant to this
Section 12, absent (i) a misstatement by Indemnitee of a material fact, or an omission
of a material fact necessary to make Indemnitee’s statement not materially misleading,
in connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law.

     (d) The Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 12 that the procedures and presumptions
of this Agreement are not valid, binding and enforceable and shall stipulate in any such
court or before any such arbitrator that the Company is bound by all the provisions of
this Agreement. The Company shall indemnify Indemnitee against any and all Expenses
and, if requested by Indemnitee, shall (within ten (10) days after receipt by the
Company of a written request therefore) advance such expenses to Indemnitee, which are
incurred by Indemnitee in connection with any action brought by Indemnitee for
indemnification or advance of Expenses from the Company under this Agreement, under the
Company’s certificate of incorporation or bylaws as in effect from time to time or under
any directors’ and officers’ liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of Expenses or insurance recovery, as the case may be.

     13. Non-exclusivity; Survival of Rights; Insurance; Subrogation.

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     (a) The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may at any time be entitled under applicable law, the Company’s Bylaws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration or repeal of this Agreement or of any provision hereof shall limit
or restrict any right of Indemnitee under this Agreement in respect of any action taken
or omitted by such Indemnitee in his Corporate Status prior to such amendment,
alteration or repeal. To the extent that a change in Delaware law, whether by statute
or judicial decision, permits greater indemnification or advancement of Expenses than
would be afforded currently under the Company’s Bylaws and this Agreement, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change. No right or remedy herein conferred is intended to
be exclusive of any other right or remedy, and every other right and remedy shall be
cumulative and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other right or remedy.

     (b) The Company shall use its reasonable best efforts to obtain and maintain a
policy or policies of insurance with reputable insurance companies providing Indemnitee
with coverage for losses from wrongful acts in Indemnitee’s capacity as a director,
officer, employee, trustee, fiduciary and agent of the Company in amounts no less
advantageous than that coverage in effect as of the date hereof or, if such coverage is
not available, the best coverage then available in the insurance industry for the
premiums paid by the Company for its policies as of the date hereof. To the extent that
the Company maintains an insurance policy or policies providing liability insurance for
directors, officers, employees, trustees, fiduciaries and agents of the Company or of
any other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Company, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director, officer, employee, trustee,
fiduciary or agent under such policy or policies. If, at the time of the receipt of a
notice of a claim pursuant to the terms hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the commencement
of such proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable
as a result of such proceeding in accordance with the terms of such policies.

     (c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee,
who shall execute all papers required and take all action necessary to secure such
rights, including execution of such documents as are necessary to enable the Company to
bring suit to enforce such rights.

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     (d) The Company shall not be liable under this Agreement to make any payment of
amounts otherwise indemnifiable (or for which advancement is provided hereunder)
hereunder if and to the extent that Indemnitee has otherwise actually received such
payment under any insurance policy, contract, agreement or otherwise

     (e) The Company’s obligation to indemnify or advance Expenses hereunder to
Indemnitee who is or was serving at the request of the Company as a director, officer,
employee, trustee, fiduciary or agent of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise shall be reduced by any amount
Indemnitee has actually received as indemnification or advancement of expenses from such
other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise.

     14. Settlement. (a) The Company shall have no obligation to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any Proceeding by the Indemnitee
effected without the Company’s prior written consent.

     (b) The Company shall not, without the prior written consent of Indemnitee, consent
to the entry of any judgment against Indemnitee or enter into any settlement or
compromise which (i) includes an admission of fault of Indemnitee, any non-monetary
remedy affecting or obligation of Indemnitee, or monetary Loss for which Indemnitee is
not indemnified hereunder or (ii) with respect to any Proceeding with respect to which
Indemnitee may be or is made a party, witness or participant or may be or is otherwise
entitled to seek indemnification hereunder, does not include, as an unconditional term
thereof, the full release of Indemnitee from all liability in respect of such
Proceeding, which release shall be in form and substance reasonably satisfactory to
Indemnitee.

     (c) Neither the Company nor Indemnitee shall unreasonably withhold their consent to
any proposed settlement.

     15. Duration of Agreement. This Agreement shall continue until and terminate upon the later
of: (a) 10 years after the date that Indemnitee shall have ceased to serve as a director or officer
of the Company or as a director, officer, employee, trustee, fiduciary or agent of any other
corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which
Indemnitee served at the request of the Company; or (b) 1 year after the final termination of any
Proceeding, including any and all appeals, then pending in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by
Indemnitee pursuant to Section 12 of this Agreement relating thereto.

     16. Successors and Assigns. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and
administrators.

     17. Severability. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including without limitation, each

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portion of any Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any
way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by
law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform
to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to
the fullest extent possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.

     18. Enforcement.

     (a) The Company expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director or officer of the Company, and the Company acknowledges that
Indemnitee is relying upon this Agreement in serving as a director or officer of the
Company.

     (b) This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with respect to
the subject matter hereof.

     19. Effectiveness of Agreement. This Agreement shall be effective as of the date set forth
on the first page and will apply to acts or omissions of Indemnitee which occurred prior to such
date if Indemnitee was an officer, director, employee, trustee, fiduciary or other agent of the
Company, or was serving at the request of the Company as a director, officer, employee, trustee,
fiduciary or agent of another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, at the time such act or omission occurred.

     20. Modification and Waiver. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by the parties thereto. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this
Agreement nor shall any waiver constitute a continuing waiver.

     21. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon
being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to the Indemnitee under this
Agreement or otherwise.

     22. Notices. All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (a) if delivered by hand and
receipted for by the party to whom said notice or other communication shall have been directed, or
(b) mailed by certified or registered mail with postage prepaid, on the first business day after
the date on which it is so mailed:

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     (a) If to Indemnitee, at the address indicated on the signature page of this
Agreement, or such other address as Indemnitee shall provide to the Company.

     (b) If to the Company to

USG Corporation

550 West Adams Street

Chicago, Illinois 60661

Attention: General Counsel

or to any other address as may have been furnished to Indemnitee by the Company.

     23. Contribution. To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for Losses and/or for Expenses, in connection with any claim
relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the
relative benefits received by the Company and Indemnitee as a result of the event(s) and/or
transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and
its directors, officers, employees, trustees, fiduciaries and agents) and Indemnitee in connection
with such event(s) and/or transaction(s).

     24. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among
the parties shall be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware, without regard to its conflict of laws rules. Except with respect to any
arbitration or proceeding commenced by Indemnitee pursuant to Section 12(a) of this Agreement, the
Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement may be brought only in the Chancery
Court of the State of Delaware (the “Delaware Court”) or in any court in Cook County in the State
of Illinois, and not in any other state or federal court in the United States of America or any
court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware
Court or any court in Cook County in the State of Illinois for purposes of any action or proceeding
arising out of or in connection with this Agreement, (iii) waive any objection to the laying of
venue of any such action or proceeding in the Delaware Court or any court in Cook County in the
State of Illinois, and (iv) waive, and agree not to plead or to make, any claim that any such
action or proceeding brought in the Delaware Court or any court in Cook County in the State of
Illinois been brought in an improper or inconvenient forum.

     25. Identical Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall for all purposes be deemed to be an original but all of which together shall
constitute one and the same Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this Agreement.

     26. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage

-15-

 

of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof. The term including shall mean including without limitation.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	USG CORPORATION	 	 	 	INDEMNITEE	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	
     
	 	 
	 

	 	Name:
	 	 	 	Name:	 	 
	 

	 	Office:
	 	 	 	Address:	 	 

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