Exhibit 10.1
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of May 12, 2005, between AMERICAN LOCKER GROUP
INCORPORATED, a Delaware corporation (the "Company"), and _____________________
("Indemnitee").
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
public companies at a time when it has become increasingly difficult to obtain
adequate insurance coverage at reasonable costs;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner, the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the full extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors' and officers'
liability insurance policies, regardless of any future change in the Certificate
of Incorporation, Bylaws, composition of the Board of Directors, or structure of
the Company;
NOW, THEREFORE, in consideration of the premises and of Indemnitee's
service to the Company, directly or indirectly, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. In the event Indemnitee was, is, or becomes a party to or a witness or
other participant in, or is threatened to be made a party to or a witness or
other participant in, any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether conducted by the Company or
any other party, that Indemnitee in good faith believes might lead to any such
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise ("Claim") by reason of (or arising in part out of)
the fact that Indemnitee is or was a
director, officer, employee, agent or fiduciary of the Company, or is or was
serving at the request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, or by reason of anything done or not
done by Indemnitee in any such capacity (an "Indemnifiable Event"), the Company
shall indemnify Indemnitee to the full extent permitted by law (the
determination of which shall be made by the Reviewing Party referred to below)
as soon as practicable but in any event no later than thirty days after written
demand is presented to the Company, against any and all expenses (including
attorneys' fees and all other costs, expenses and obligations paid or incurred
in connection with investigating, preparing for and defending or participating
in the defense of (including on appeal) any Claim relating to any Indemnifiable
Event) (collectively "Expenses"), judgments, fines, penalties and amounts paid
in settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such judgments, fines, penalties or
amounts paid in settlement) of such claim and, if so requested by Indemnitee,
the Company shall advance (within two business days of such request) any and all
such Expenses to Indemnitee; provided, however, that (i) the foregoing
obligation of the Company shall not apply to a Claim that was commenced by the
Indemnitee without the prior approval of the Board of Directors of the Company
unless the Claim was commenced after a Change in Control (as defined in Section
5 herein); (ii) the foregoing obligation of the company shall be subject to the
condition that an appropriate person or body (the "Reviewing Party") shall not
have determined (in a written opinion in any case in which the special,
independent counsel referred to in Section 4 hereof is involved) that Indemnitee
would not be permitted to be indemnified for such Expenses under applicable
..law; and (iii) if, when and to the extent that the Reviewing Party determines
that Indemnitee would not be permitted to be indemnified for such Expenses under
applicable law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees to reimburse the Company) for all, such amounts theretofore
paid (unless Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be indemnified
under applicable law, in which event Indemnitee shall not be required to so
reimburse the Company until a final judicial determination requiring such
reimbursement is made with respect thereto as to which all rights of appeal
therefrom have been exhausted or lapsed) and the Company shall not be obligated
to indemnify or advance any additional amounts to Indemnitee under this
Agreement (unless there has been a determination by a court of competent
jurisdiction that the Indemnitee would be permitted to be so
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indemnified or entitled to such expense advances under applicable law).
2. If there has not been a change in Control of the Company (as
hereinafter defined), the Reviewing Party shall be (1) a quorum of the Board of
Directors consisting of directors who are not parties to the action, suit or
proceeding acting by majority vote, or (2) if such a quorum is not obtainable,
or, even if obtainable, a quorum of disinterested directors so directs,
independent legal counsel by the use of a written opinion or (3) the
stockholders. If there has been a Change in Control of the Company, the
Reviewing Party shall be the special, independent counsel referred to in Section
4 hereof.
3. If Indemnitee has not been indemnified by the expiration of the
foregoing thirty-day period or received expense advances or if the Reviewing
Party determines that Indemnitee would not be permitted to be indemnified or be
entitled to receive expense advances within two days of the request therefore in
whole or in part under the applicable law, Indemnitee shall have the right to
commence litigation seeking from the court a finding that Indemnitee is entitled
to indemnification and expense advances or enforcement of Indemnitee's
entitlement to indemnification and expense advances or challenging any
determination by the Reviewing Party or any aspect thereof that Indemnitee is
not entitled to be indemnified or receive expense advances and the burden of
proving that indemnification or advancement of expenses is not appropriate shall
be on the Company; any determination by the Reviewing Party in favor of
Indemnitee shall be conclusive and binding on the Company, unless facts supplied
by Indemnitee which form the basis for the determination are subsequently
determined to have been materially incorrect at the time supplied.
4. The Company agrees that if there is a Change in Control of the Company
(as hereinafter defined), then with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and expense advances
under this Agreement or any other agreement or the Certificate of Incorporation
or the Bylaws now or hereafter in effect relating to Claims for Indemnifiable
Events, the Company shall seek legal advice only from special, independent
counsel selected by Indemnitee who a majority of the disinterested Directors
approves (which approval shall not be unreasonably withheld), and who has not
otherwise performed services for the Company or Indemnitee. Such counsel, among
other things, shall, determine whether and to what
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extent Indemnitee is permitted to be indemnified or is entitled to expense
advances under applicable law and shall render its written opinion to the
Company and Indemnitee to such effect. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto except for willful misconduct or gross
negligence.
5. For purposes of this Agreement, (a) "Change in Control of the Company"
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d)(3) and 14(d) of the Securities Exchange Act of 1934, as amended),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, is or becomes the beneficial owner (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or if the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the company of all or substantially all the Company's assets.
6. To the extent Indemnitee is successful in such proceeding, the Company
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shall indemnify Indemnitee against any and all expenses (including attorneys'
fees) which are incurred by the Indemnitee in connection with any claim asserted
or action brought by Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under this Agreement or any other agreement or Company
Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery 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, advance payment of
Expenses or insurance recovery, as the case may be.
7. If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the Expenses, judgments,
fines, penalties and amounts paid in settlement of any Claim but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in the defense of any
Claim relating in whole or in part to any Indemnifiable Event or in defense of
any issue or matter therein, including dismissal without prejudice, Indemnitee
shall be indemnified against all Expenses incurred in connection therewith.
8. For purposes of this Agreement, the termination of any Claim by
judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
Indemnitee is not entitled to indemnification or expense advance or that
indemnification or expense advance is not permitted by applicable law.
9. The Company represents that it presently has in force and effect
Directors' and officers' Liability Insurance on behalf of Indemnitee against
certain customary liabilities which may be asserted against or incurred by
Indemnitee. The Company hereby agrees that, so long as Indemnitee shall continue
to serve in a capacity referred to in Section 1 hereof, and thereafter so long
as Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil,
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criminal, administrative or investigative, by reason of the fact that Indemnitee
served in any capacity referred to in Section 1 hereof, the Company shall
purchase and maintain in effect for the benefit of Indemnitee such insurance
providing, in all respects, coverage at least comparable to that presently
provided; provided, however, if, in the business judgment of the then Board,
either (a) the premium cost for such insurance is substantially disproportionate
to the amount of coverage, or (b) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such insurance,
then and in that event the Company shall not be required to maintain such
insurance but shall and hereby agrees to the full extent permitted by law to
hold harmless and indemnify Indemnitee to the fullest extent of the coverage
which would otherwise have been provided for the benefit of Indemnitee.
10. (a) In the event of any changes after the date of this Agreement in
any applicable law, statute, or rule which expands the right of the company to
indemnify a person serving in a capacity referred to in Section 1 hereof, such
change shall be within the purview of Indemnitee's rights, and the Company's
obligations, under this Agreement. In the event of any changes in any applicable
law, statute, or rule which narrow the right of the Company to indemnify a
person serving in a capacity referred to in Section 1 hereof, such changes, to
the extent not otherwise required by such law, statute or rule to be applied to
this Agreement, shall have no effect on this Agreement or the parties' rights
and obligations hereunder.
(b) The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested directors, laws and regulations in effect now or
in the future, or otherwise, both as to action in Indemnitee's official capacity
and as to action in another capacity while holding such office.
11. If the indemnification provided in Section 1 is unavailable and may
not be paid to Indemnitee because such indemnification is not permitted by law,
then in respect of any threatened, pending or completed action, suit or
proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such action, suit or proceeding), the Company shall contribute to
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the full extent permitted by law, to the amount of expenses, judgments, fines
(including excise taxes and penalties) and amounts paid in settlement actually
and reasonably incurred and paid or payable by Indemnitee in such proportion as
is appropriate to reflect (i) the relative benefits received by the Company on
the one hand and Indemnitee on the other hand from the transaction from which
such action, suit or proceeding arose, and (ii) the relative fault of the
Company on the one hand and of Indemnitee on the other in connection with the
events which resulted in such expenses, judgments, fines or settlement amounts,
as well as any other relevant equitable considerations. The relative fault of
the Company on the one hand and of Indemnitee on the other shall be determined
by reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such expenses, judgments, fines or settlement amounts. The Company
agrees that it would not be just and equitable if contribution pursuant to this
paragraph were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.
12. All. obligations of the Company contained herein shall continue during
the period Indemnitee serves in a capacity referred to in Section 1 hereof of
the Company and shall continue thereafter so long as Indemnitee shall be subject
to any possible Claim relating to an Indemnifiable Event.
13. (a) Promptly after receipt by Indemnitee of notice of the commencement
of any Claim relating to an Indemnifiable Event or proceeding in which
Indemnitee is made or is threatened to be made a party or a witness, Indemnitee
shall notify the Company of the commencement of such Claim; but the omission so
to notify the Company shall not relieve the Company from any obligation it may
have to indemnify or advance expenses to Indemnitee otherwise than under this
Agreement.
(b) Indemnitee shall not settle any claim or action in any manner
which would impose on the Company any penalty, constraint, or obligation to hold
harmless or indemnify Indemnitee pursuant to this Agreement without the
Company's prior written consent, which consent shall not be reasonably withheld.
14. If any Claim relating to an Indemnifiable Event, commenced against
Indemnitee is also commenced against the Company, the Company shall be entitled
to
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participate therein at its own expense, and, except as otherwise provided
hereinbelow, to the extent that it may wish, the Company shall be entitled to
assume the defense thereof. After notice from the Company to Indemnitee of its
election to assume the defense of any Claim, the Company shall not be obligated
to Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation, travel and lodging expenses arising out of
Indemnitee's participation in such Claim. Indemnitee shall have the right to
employ Indemnitee's own counsel in such Claim, but the fees and expenses of such
counsel incurred after notice from the Company to Indemnitee of its assumption
of the defense thereof shall be at the expense of indemnitee unless (i)
otherwise authorized by the Company, (ii) Indemnitee shall have reasonably
concluded, and so notified the Company, that there may be a conflict of interest
between the Company and Indemnitee in the conduct of the defense of such Claim,
or (iii) the Company shall not in fact have employed counsel to assume the
defense of such Claim, in which cases the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company.. The Company shall not be
entitled to assume the defense of any claim brought by or on behalf of the
Company or its stockholders or as to which Indemnitee shall have made the
conclusion set forth in (ii) of this Section 14.
15. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
16. In the event of 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 shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.
17. The Company shall not be liable under this Agreement to make any
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payment in connection with any claim made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance policy,
Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder.
18. This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or assets of the
Company, spouses, heirs, executors, and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as an officer or director of the Company or of any other enterprise at the
Company's request.
19. The provisions of this Agreement shall be severable in the event that
any of the provisions hereof (including any provision within a single section,
paragraph or sentence) are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the full extent permitted by law.
20. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in such state, but excluding any conflicts-of-law rule or
principle which might refer such governance, construction or enforcement to the
laws of another state or country. The parties hereto agree to bring any
litigation arising under this Agreement, including but not limited to matters
arising under Section 3 of this Agreement, in any court in the states of
Pennsylvania or Delaware having subject matter jurisdiction thereof and in which
venue is proper, and each party hereto hereby consents to service of process and
to appear in any such proceeding.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
AMERICAN LOCKER GROUP
INCORPORATED
By:
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Xxxxxx X. Xxxxxxxxxx
Title: Chairman, President and
Chief Executive Officer
By:
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