Item 15. Indemnification of Directors and Officers
Delaware Corporations
Under Section 145 of the General Corporation Law of the State of Delaware, as amended from time to time (the
"DGCL") Parent and DIRECTV Financing, DIRECTV Customer Services, Inc. and DIRECTV Merchandising, Inc. (the "Delaware Corporations") are empowered to indemnify its
directors and officers in the circumstances therein provided. Certain portions of Section 145 are summarized below.
Section 145(a)
of the DGCL provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful.
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Section 145(b)
of the DGCL provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 145(c)
of the DGCL provides that to the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.
Section 145(d)
of the DGCL provides that any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because such
person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (4) by the stockholders.
Section 145(e)
of the DGCL provides that expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may
be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it
shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in Section 145. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
Section 145(f)
of the DGCL provides that the indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a
provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the
civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or
omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
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Section 145(g)
of the DGCL provides that a corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would
have the power to indemnify such person against such liability under this section.
Second Amended and Restated Certificate of Incorporation of Parent.
Parent's amended and restated certificate of incorporation provides
that, to the
fullest extent permitted by the DGCL, no director of Parent shall be personally liable to Parent or its stockholders for monetary damages for breach of fiduciary duty as a director.
Amended and Restated Bylaws of Parent.
Article VIII Section 1 of Parent's amended and restated bylaws provide that Parent
shall
indemnify, to the full extent that it shall have power under applicable law to do so and in a manner permitted by such law, any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of Parent) by reason
of the fact that such person is or was a director or officer of Parent, or is or was a director or officer of Parent serving at the request of Parent as a director or officer, employee or agent of
another company, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the
best interests of Parent, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such conduct was unlawful.
In
an action by or in the right of Parent, Article VIII Section 2 of Parent's amended and restated bylaws provide that Parent shall indemnify, to the full extent that it
shall have power under applicable law to do so and in a manner permitted by such law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of Parent to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of Parent, or is or was a director or officer of
Parent serving at the request of Parent as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of Parent; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to Parent unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.
However,
Parent's amended and restated bylaws provide that (except for proceedings to enforce rights to indemnification) Parent shall not be obligated to indemnify any director or
officer in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the board of directors of Parent.
Parent's
amended and restated bylaws also provide that any director or officer may apply to the Delaware Court of Chancery for indemnification to the extent otherwise permissible under
Article VIII Sections 1 and 2 of Parent's amended and restated bylaws. The basis of such indemnification by a court shall be a determination by such court that indemnification of the
director or officer is proper in the
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circumstances
because such person has met the applicable standards of conduct set forth in the preceding two paragraphs, as the case may be. Neither a contrary determination in the specific case nor
the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of
conduct. Notice of any application for indemnification pursuant to this paragraph shall be given to Parent promptly upon the filing of such application. If successful, in whole or in part, the
director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application to the fullest extent permitted by law.
Parent's
amended and restated bylaws also provide that expenses incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or
proceeding to which such director or officer is made or threatened to be made a party by reason of the fact he or she is or was a director or officer of Parent, or is or was a director or officer of
Parent serving at the request of Parent as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall be paid
by Parent in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking, if required by applicable law, by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that such person is not entitled to be indemnified by Parent as authorized in Parent's amended and restated bylaws.
Parent's
amended and restated bylaws also provide that the indemnification and advancement of expenses provided by, or granted pursuant to, the amended and restated bylaws shall, unless
otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a
person. The right to indemnification and advancement of expenses provided by, or granted pursuant to, the amended and restated bylaws, shall vest as to a person when such person first becomes a
director or officer entitled to such rights and regardless of when any claim, action, suit or proceeding naming or implicating such person has been initiated.
Parent's
amended and restated bylaws also provide that the indemnification and advancement of expenses provided by the amended and restated bylaws shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses may be entitled under the amended and restated certificate of incorporation, the amended and restated bylaws, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office.
Parent's
amended and restated bylaws also permit Parent to purchase and maintain insurance on behalf of any person who is or was a director or officer of Parent, or is or was a director,
officer or employee of Parent serving at the request of Parent as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not Parent would have the
power or the obligation to indemnify such person against such liability. Parent has purchased directors' and officers' liability insurance covering many of the possible actions and omissions of
persons acting or failing to act in such capacities.
Parent's
amended and restated bylaws also provide that Parent may, to the extent authorized from time to time by the board of directors of Parent, provide rights to indemnification and
to the advancement of expenses to employees and agents of Parent similar to those conferred in the amended and restated bylaws to directors and officers of Parent.
Parent's
amended and restated bylaws also provide that no amendment, repeal or modification of the indemnification provisions of Parent's bylaws, or adoption of any provision
inconsistent therewith, shall in any way diminish or adversely affect the rights of any present or former director or officer
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entitled
to indemnification or advancement of expenses under the indemnification provisions of Parent's amended and restated bylaws in respect of any occurrence or matter arising, or of any claim,
action, suit or proceeding involving allegations of acts or omissions occurring or arising, prior to any such amendment, repeal or modification (regardless of whether any such claim, action, suit or
proceeding relating to such acts or omissions, or any proceeding relating to such person's right to indemnification or advancement of expenses, is commenced before or after the time of such amendment,
repeal or modification).
Parent
has also entered into indemnification agreements with each of the non-executive members of its board of directors. Under the terms of the indemnification agreements, each
non-executive director is entitled to the right of indemnification, to the fullest extent permitted by the laws of the State of Delaware, in connection with actions, claims, or other proceedings by
reason of the fact that the non-executive director is or was or has agreed to serve at the request of Parent as a director of Parent, or by reason of any action alleged to have been taken or omitted
in such capacity, with certain stated exceptions. The indemnification is for expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred. The indemnification agreement
also provides for the advancement of expenses, establishes the procedure to invoke indemnification, the process for defense of any claim and specific limitations on the indemnification obligations of
Parent.
By-law Provisions on Indemnification of Delaware Corporations.
Article XI of each of the By-laws of the Delaware Corporations sets
forth the
extent to which the directors, officers, and employees of the Delaware Corporations may be indemnified by the Delaware Corporations against liabilities which they may incur while serving in such
capacity. Article XI generally provides that the Delaware Corporations shall indemnify, to the full extent permitted by the law, the directors and officers of the Delaware Corporations (and to
such person's heirs, executors, administrators or other legal representatives) who are or were a party to any threatened, pending, or contemplated action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or was the director or officer of the Delaware Corporations, or is or was serving at the request of the Delaware Corporations
as a director, officer, employee, fiduciary or member of any other corporation,
partnership, joint venture, trust, organization or other enterprise. The Delaware Corporations shall pay the expenses of such directors and officers incurred in defending any proceeding in advance of
its final disposition, provided that the director or officer makes an undertaking to repay all amounts advance if it is ultimately determined that the director or officer is not entitled to be
indemnified.
Article XI
additionally generally provides that the Delaware Corporations may indemnify, to the full extent permitted by the law, every employee who is not a director or officer
of the Delaware Corporations (and to such person's heirs, executors, administrators or other legal representatives) under terms similar to the indemnification of officers and directors described in
the preceding paragraph. The advancement of expenses of an employee who is not an officer or director shall be made in a manner provided for by the Board of Directors.
To
the extent permitted by the law, the Board of Directors may authorize the purchase and maintenance of insurance to indemnify or insure directors, officers and employees against
liability in instances in which they may not otherwise he indemnified by the Delaware Corporations under the provisions of Article XI.
The
rights conferred by Article XI are not exclusive of any other rights which a person may have or acquire under any statute, provision of the certificate of incorporation,
by-laws, agreement, vote of stockholders or disinterested directors or otherwise.
The
above discussion of the Second Amended and Restated Certificate of Incorporation of Parent, Amended and Restated By-Laws of Parent, By-Laws of the Delaware Corporations and of the
DGCL is not intended to be exhaustive and is qualified in its entirety by such Second Amended and Restated Certificate of Incorporation of Parent, Amended and Restated By-Laws of Parent, By-Laws of
the Delaware Corporations and the DGCL.
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Delaware LLCs
DIRECTV Holdings, DIRECTV Enterprises, LLC, and DIRECTV Home Services, LLC (the "Delaware LLCs") are each limited
liability companies organized under the laws of the State of Delaware. Section 18-108 of the Delaware Limited Liability Company Act, or the DLLC Act, provides that a limited liability company
may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever, subject to the standards and
restrictions, if any, set forth in its limited liability company agreement.
Section 18
of the Limited Liability Company Agreement of DIRECTV Holdings and Section 20 of the Limited Liability Company Agreement of DIRECTV Enterprises, LLC and
DIRECTV Home Services, LLC (collectively, the "LLC Agreements") provide that none of the member, any director, any officer or any respective affiliates (each, an "Indemnitee") shall be liable,
in damages or otherwise, to the Delaware LLCs or the member for any act or omission performed or omitted to be performed pursuant to authority granted by the LLC Agreements, except if
such act or omission results from such Indemnitee's own gross negligence, willful misconduct, criminal conduct, or material breach of the LLC Agreements. Additionally, each Indemnitee shall be
entitled to be indemnified and held harmless to the full extent permitted by the law, against all claims, liabilities and expenses of whatever nature
(including reasonable attorneys' fees and disbursements), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which an Indemnitee may be involved, or threatened to be involved, as a party or otherwise, arising out of or incidental to the business of the
Delaware LLCs, regardless of whether an Indemnitee continues to be an Indemnitee at the time any such liability or expense is paid or incurred, if (i) the Indemnitee acted in good faith
and in a manner such Indemnitee reasonably believed to be in, or not opposed to, the interests of the Delaware LLCs, and (ii) the Indemnitee's conduct would entitle him to
indemnification. The Delaware LLCs will pay expenses (including reasonable attorneys' fees and disbursements) incurred in defending a proceeding in advance of the final disposition of the
proceeding upon receipt of an undertaking by the Indemnitee to repay such amount if a court of competent jurisdiction determines the Indemnitee is not entitled to be indemnified by the
Delaware LLCs as authorized in the LLC Agreements. These rights of indemnification are in addition to any rights to which such director or officer may otherwise be entitled by contract
or as a matter of law and shall extend to his successors and assigns. The Delaware LLCs may purchase and maintain insurance on behalf of an Indemnitee and other persons against any liability
which may be asserted against, or expense which may be incurred by, any such person in connection with activities of the Delaware LLCs.
The
above discussion of the LLC Agreements and of the DLLC Act is not intended to be exhaustive and is qualified in its entirety by the LLC Agreements and the DLLC Act.
California LLCs
DIRECTV, LLC and LABC Productions, LLC ("LABC LLC") are limited liability companies organized under the laws of
the State of California.
Section 17155
of the Beverly-Killea Limited Liability Company Act of California ("CLLCA") provides that, except for a breach of duty, the articles of organization or written
operating agreement of a limited liability company may provide for indemnification of any person, including, without limitation, any manager, member, officer, employee or agent of the limited
liability company, against judgments, settlements, penalties, fines or expenses of any kind incurred as a result of acting in that capacity. The CLLCA further provides that a limited liability company
shall have power to purchase and maintain insurance on behalf of any manager, member, officer, employee or agent of the limited liability company against any liability asserted against or incurred by
the person in that capacity or
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arising
out of the person's status as a manager, member, officer, employee or agent of the limited liability company.
Section 18
of the Limited Liability Company Agreement of each of DIRECTV, LLC and LABC LLC (the "LLC Agreements") provides that none of the member, any director, any
officer or any respective affiliates (each, an "Indemnitee") shall be liable, in damages or otherwise, to DIRECTV, LLC or LABC LLC or its respective member for any act or omission
performed or omitted to be performed pursuant to authority granted by the LLC Agreements, except if such act or omission results from such Indemnitee's own gross negligence, willful misconduct,
criminal conduct, or material breach of the LLC Agreements. Additionally, each Indemnitee shall be entitled to be indemnified and held harmless to the full extent permitted by the law, against
all claims, liabilities and expenses of whatever nature (including reasonable attorneys' fees and disbursements), judgments, fines, settlements, and other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which an Indemnitee may be involved, or threatened to be involved, as a party or otherwise, arising
out of or incidental to the business of DIRECTV, LLC or LABC LLC, as the case may be, regardless of whether an Indemnitee continues to be an Indemnitee at the time any such liability or
expense is paid or incurred, if (i) the Indemnitee acted in good faith and in a manner such Indemnitee reasonably believed to be in, or not opposed to, the interests of DIRECTV, LLC or
LABC LLC, as the case may be, and (ii) the Indemnitee's conduct would entitle him to indemnification. DIRECTV, LLC and LABC LLC will pay expenses (including reasonable
attorneys' fees and disbursements) incurred in defending a proceeding in advance of the final disposition of the proceeding upon receipt of an undertaking by the Indemnitee to repay such amount if a
court of competent jurisdiction determines the Indemnitee is not entitled to be indemnified by DIRECTV, LLC or LABC LCC as authorized in the applicable LLC Agreement. These rights of
indemnification are in addition to any rights to which such director or officer may otherwise be entitled by contract or as a matter of law and shall extend to his successors and assigns.
DIRECTV, LLC or LABC LLC, as the case may be, may purchase and maintain insurance on behalf of an Indemnitee and other persons against any liability which may be asserted against, or
expense which may be incurred by, any such person in connection with activities of DIRECTV, LLC or LABC LLC, as the case may be.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrants as disclosed above, the
registrants have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
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