EXHIBIT 10viii
HON INDUSTRIES Inc.
INDEMNITY AGREEMENT
This Indemnity Agreement, effective as of ____________,
19__ (this "Agreement"), between HON INDUSTRIES Inc., an Iowa
corporation ("Corporation"), and _____________________
("Indemnitee").
WITNESSETH:
WHEREAS, Indemnitee is or will become a director or an
officer of the Corporation and, as such, is or will be performing
valuable services for or on behalf of the Corporation; and
WHEREAS, Indemnitee is willing to perform or continue
to perform such services, and may from time to time perform
additional services, for or on behalf of the Corporation on the
condition that Indemnitee is indemnified as provided in this
Agreement; and
WHEREAS, it is intended that Indemnitee shall be paid
promptly by the Corporation all amounts necessary to fully
effectuate the indemnity provided in this Agreement; and
WHEREAS, all capitalized terms used in this Agreement
are used herein as defined in Section 15 hereof;
NOW THEREFORE, in order to induce Indemnitee to serve
or continue to serve the Corporation as a director or an officer
and in consideration of the mutual promises set forth herein and
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Corporation and
the Indemnitee hereby agree as follows:
1. Services by Indemnitee. Indemnitee agrees to
serve as a director or an officer of the Corporation for so long
as Indemnitee is duly appointed or elected and qualified in
accordance with the applicable provisions of the Articles of
Incorporation, as amended ("Articles of Incorporation"), and By-
laws, as amended ("By-laws"), of the Corporation or until such
time as Indemnitee resigns or otherwise ceases to be a director
or an officer. Indemnitee may from time to time also perform
other services at the request or for the convenience of the
Corporation. Following the termination of Indemnitee's service
as a director or an officer of the Corporation by reason of
resignation or otherwise, the Corporation shall continue to be
obligated to indemnify Indemnitee under this Agreement for acts
occurring while Indemnitee was serving as a director or an
officer of the Corporation.
2. Indemnification. Subject to the limitations set
forth in this Section 2 and in Section 6 of this Agreement, the
Corporation hereby agrees to indemnify Indemnitee to the fullest
extent permitted by applicable law from and against any and all
Expenses and Liabilities with respect to any Proceeding relating
to or arising out of Indemnitee's being or having been a director
or an officer of the Corporation. The right to indemnification
conferred in this Agreement shall be presumed to have been relied
upon by Indemnitee in Indemnitee's agreeing to serve, or serving,
or continuing to serve, or having served, as a director or an
officer of the Corporation and shall be enforceable as a contract
right. Without in any way limiting the scope of the
indemnification otherwise provided by this Section 2, if and
whenever Indemnitee is or was a party or is threatened to be made
a party to any Proceeding (including without limitation any
Proceeding brought by or in the right of the Corporation) because
Indemnitee is or was a director or an officer of the Corporation
or because of any act or omission by Indemnitee in any such
capacity, the Corporation shall indemnify Indemnitee to the
fullest extent permitted by applicable law against all Expenses
and Liabilities actually and reasonably incurred by or on behalf
of Indemnitee in connection with the investigation, defense,
settlement or appeal of the Proceeding. In addition to the
foregoing, the rights of Indemnitee to indemnification provided
in this Agreement shall include those rights set forth in
Sections 3 and 8 hereof.
3. Advancement of Expenses; Establishment of Trust;
Letter of Credit.
a. Advancement of Expenses. All reasonable Expenses
incurred by or on behalf of Indemnitee shall be advanced to
Indemnitee from time to time by the Corporation to the fullest
extent permitted by applicable law within 20 days after the
receipt by the Corporation of a written request for the
advancement of any such Expenses, whether before or after final
disposition of a Proceeding (except to the extent that there has
been a Final Adverse Determination that Indemnitee is not
entitled to be indemnified for any such Expenses), including
without limitation any Proceeding brought by or in the right of
the Corporation. The written request for an advancement of
Expenses under this Section 3(a) shall contain reasonable details
of the Expenses incurred by or on behalf of Indemnitee for which
advancement is thereby requested. By executing such a request,
Indemnitee shall be deemed to have made such written affirmation
of Indemnitee's good faith belief that Indemnitee has met the
standard of conduct required by law to be met to entitle
Indemnitee to such advancement of Expenses (including, without
limiting the generality of the foregoing, Indemnitee's written
affirmation of Indemnitee's good faith belief that Indemnitee has
met the standard of conduct described in Section 490.851 of the
Iowa Business Corporation Act). If the Iowa Business Corporation
Act so requires, advancement of Expenses by the Corporation in
connection with any Proceeding shall be made only upon delivery
to the Corporation of a written undertaking, executed personally
on Indemnitee's behalf, to repay the advance if it is ultimately
determined that Indemnitee did not meet the standard of conduct
required for indemnification under the Iowa Business Corporation
Act. Such undertaking must be an unlimited general obligation of
Indemnitee that need not be secured and may be accepted without
reference to financial ability to make repayment; provided,
however, that under no circumstances shall Indemnitee be deemed
to have undertaken to repay to the Corporation Expenses for which
Indemnitee has the right to be indemnified under this Agreement
or otherwise.
b. Establishment of Trust. Upon receipt of a
written request from Indemnitee for advancement of Expenses or
indemnification pursuant to this Agreement, the Corporation shall
create a grantor trust (the "Trust"), the trustee of which shall
be chosen by Indemnitee. Upon receipt of any such written
request from Indemnitee, the Corporation shall from time to time
fund the Trust in amounts sufficient to satisfy any and all
Expenses and Liabilities that are reasonably anticipated at the
time of such request and for which the Corporation may indemnify
Indemnitee under this Agreement. The amount or amounts to be
deposited in the Trust pursuant to this funding obligation shall
be determined by mutual agreement of Indemnitee and the
Corporation or, if Indemnitee and the Corporation are unable to
reach such agreement, by Independent Legal Counsel selected by
Indemnitee and shall be used exclusively for the uses and
purposes set forth in the Trust. The terms of the Trust shall
provide that:
(1) the Trust shall not be revoked or the
principal thereof invaded without the consent of Indemnitee and
the Corporation;
(2) Indemnitee shall not have any preferred claim
to, or any beneficial ownership in, any assets of the Trust prior
to the time that such assets are paid to Indemnitee as provided
in the Trust;
(3) within ten days of a request by Indemnitee,
the trustee of the Trust shall advance to Indemnitee amounts
sufficient to satisfy any and all Expenses, provided that
Indemnitee shall have executed and delivered to the Corporation
the written affirmation and the written undertaking required by
Section 3(a) of this Agreement;
(4) the Trust shall continue to be funded by the
Corporation in accordance with the funding obligations set forth
in this Section 3(b);
(5) the trustee of the Trust shall promptly pay
to Indemnitee any amounts to which Indemnitee shall be entitled
pursuant to this Agreement; and
(6) all unexpended funds in the Trust shall
revert to the Corporation on a final determination either by
Independent Legal Counsel selected by Indemnitee or by a court of
competent jurisdiction that Indemnitee has been fully indemnified
with respect to the Proceeding giving rise to the establishment
of the Trust under the terms of this Agreement.
c. Letter of Credit. In order to secure the
obligations of the Corporation to indemnify and advance Expenses
to Indemnitee pursuant to this Agreement, the Corporation shall
obtain at its expense at the time of any Change in Control an
irrevocable standby letter of credit naming Indemnitee as the
sole beneficiary ("Letter of Credit"). The Letter of Credit
shall be in an appropriate amount not less than $1,000,000, shall
be issued by a financial institution having assets in excess of
$100,000,000 and shall contain terms and conditions reasonably
acceptable to Indemnitee. The Letter of Credit shall provide
that Indemnitee may from time to time draw certain amounts
thereunder, upon written certification by Indemnitee to the
issuer of the Letter of Credit that Indemnitee has made written
request to the Corporation for an amount not less than the amount
Indemnitee is drawing under the Letter of Credit, that the
Corporation has failed or refused to provide Indemnitee with such
amount in full within 20 days after receipt of such request, and
that Indemnitee believes that Indemnitee is entitled under the
terms of this Agreement to the amount that Indemnitee is drawing
under the Letter of Credit. The issuance of the Letter of Credit
shall not in any way diminish the obligation of the Corporation
to indemnify Indemnitee against Expenses and Liabilities to the
full extent required by this Agreement or otherwise. Once the
Corporation has obtained the Letter of Credit, the Corporation
shall at its expense maintain and renew the Letter of Credit or a
substitute letter of credit meeting the criteria of this Section
3(c) during the term of this Agreement, so that the Letter of
Credit shall have an initial term of five years, shall be renewed
for successive five-year terms, and shall always have at least
one year of its term remaining after the termination of this
Agreement.
4. Presumptions and Effect of Certain Proceedings.
a. Upon making a request for indemnification,
Indemnitee shall be presumed to be entitled to indemnification
under this Agreement and the Corporation shall have the burden of
proof to overcome such presumption in reaching any contrary
determination. The partial or complete disposition of any
Proceeding by judgment, order, settlement, arbitration award,
conviction, dismissal, or acceptance of a plea of nolo contendere
or its equivalent, shall not affect such presumption and, except
as may be provided in Section 6 of this Agreement, shall not be
determinative that the Indemnitee failed to meet any requisite
standard of conduct and shall not establish a presumption with
regard to any other factual matter relevant to determining the
right of Indemnitee to indemnification under this Agreement or
otherwise.
b. If the person or persons empowered to make a
determination pursuant to Section 5 of this Agreement shall have
failed to make the requested determination within 30 days after
any judgment, order, settlement, arbitration award, conviction,
dismissal, acceptance of a plea of nolo contendere or its
equivalent, or other partial or complete disposition of any
Proceeding or any other event that could enable the Corporation
to determine the right of Indemnitee to be indemnified under this
Agreement or otherwise, the requisite determination that
Indemnitee has the right to such indemnification shall be deemed
to have been made, provided that such thirty-day period may be
extended for a reasonable time (not to exceed an additional 30
days), if the person or persons so empowered to make such a
determination in good faith require such additional time to
obtain or evaluate documentation or information relating thereto,
and provided further that the foregoing provisions of this
Section 4(b) shall not apply if the determination of entitlement
to indemnification is to be made by the shareholders of the
Corporation pursuant to Section 5(b) of this Agreement and (i)
within 15 days after receipt by the Corporation of the request
for such determination, the Board of Directors resolves to submit
such determination to the shareholders for their consideration at
an annual meeting to be held within 75 days after such receipt,
and such determination is made thereat, or (ii) a special meeting
of shareholders is called within 15 days after such receipt for
the purpose of making such determination and is held for such
purpose within 60 days after having been so called, and such
determination is made thereat.
5. Procedure for Determination of Right of Indemnitee
to be Indemnified.
a. Whenever Indemnitee believes that Indemnitee has
a right to indemnification pursuant to this Agreement, Indemnitee
shall submit a written request for indemnification to the
Corporation. Any request for indemnification shall include
sufficient documentation or information reasonably available to
Indemnitee for the determination of the right of Indemnitee to be
indemnified pursuant to this Agreement. In any event, Indemnitee
shall submit such request for indemnification within a reasonable
time, which shall not exceed five years after any judgment,
order, settlement, arbitration award, conviction, dismissal,
acceptance of a plea of nolo contendere or its equivalent, or
other final disposition of any Proceeding. Upon receipt of any
such request for indemnification, the General Counsel or other
appropriate officer of the Corporation shall promptly advise the
Board of Directors in writing that Indemnitee has made such
request. Determination of the right of Indemnitee to
indemnification shall be made not later than 30 days after the
receipt by the Corporation of such written request for
indemnification; provided, however, that any request for
indemnification for Liabilities (other than amounts paid in
settlement) with respect to a particular Proceeding shall be made
only after a determination thereof has been made in that
particular Proceeding. If it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made
within 10 days after such determination.
b. The Corporation shall be entitled to select the
forum in which the right of Indemnitee to indemnification will be
heard; provided, however, if such forum is selected after a
Change in Control of the Corporation, Independent Legal Counsel
shall determine whether Indemnitee has the right to
indemnification. The forum shall be any one of the following:
(1) the shareholders of the Corporation, other
than shareholders who are parties to the Proceeding with respect
to which the Indemnitee has claimed indemnification;
(2) a majority of a quorum of the Board of
Directors consisting of Disinterested Directors;
(3) Independent Legal Counsel, who shall make the
determination in a written opinion; or
(4) a panel of three arbitrators, one selected by
the Corporation, another by Indemnitee and the third by the first
two arbitrators selected or, if for any reason three arbitrators
are not selected within 30 days after the appointment of the
first arbitrator, then selection of additional arbitrators shall
be made by the American Arbitration Association. If any
arbitrator resigns or is unable to serve in such capacity for any
reason, the American Arbitration Association shall select a
replacement. The arbitration shall be conducted pursuant to the
commercial arbitration rules of the American Arbitration
Association then in effect.
6. Specific Limitations on Indemnification.
Notwithstanding anything in this Agreement to the contrary, the
Corporation shall not be obligated under this Agreement to make
any payment to Indemnitee for indemnification with respect to any
Proceeding:
a. to the extent that payment is actually made to
Indemnitee under any insurance policy, or is made to Indemnitee
by the Corporation or an affiliate of the Corporation otherwise
than pursuant to this Agreement; provided, however,
notwithstanding the availability of any such insurance,
Indemnitee also may claim indemnification from the Corporation
pursuant to this Agreement by assigning to the Corporation any
claims under any such insurance to the extent Indemnitee is paid
by the Corporation;
b. if a court in such Proceeding has entered a
judgment or other adjudication that is final and has become
nonappealable and establishes that the claim of Indemnitee for
indemnification arose from (1) a breach by Indemnitee of
Indemnitee's duty of loyalty to the Corporation or its
shareholders, (2) acts or omissions of Indemnitee that were not
in good faith or involved intentional misconduct or knowing
violations of the law, (3) a transaction in which Indemnitee
derived an improper personal benefit, or (4) liability of
Indemnitee to the Corporation pursuant to Section 490.833 of the
Iowa Business Corporation Act (or any successor provision
thereto);
c. prior to the occurrence of a Change in Control,
for Liabilities in connection with any Proceeding settled without
the consent of the Corporation, which shall not be unreasonably
withheld; or
d. for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Corporation
within the meaning of Section 16(b) of the Securities Exchange
Act of 1934, as amended.
7. Fees and Expenses of Independent Legal Counsel.
The Corporation shall pay the reasonable fees and expenses of
Independent Legal Counsel or a panel of three arbitrators, if
Independent Legal Counsel or a panel of arbitrators is retained
to make a determination of the right of Indemnitee to
indemnification pursuant to Section 5(b) of this Agreement, and
to fully indemnify such Independent Legal Counsel or panel of
arbitrators against any and all expenses and losses incurred by
any of them and arising out of or relating to this Agreement or
their engagement pursuant hereto.
8. Remedies of Indemnitee.
a. If a determination is made pursuant to Section 5
of this Agreement that Indemnitee is not entitled to
indemnification, or if advances of Expenses are not made to
Indemnitee pursuant to this Agreement, or if payment is not
timely made following a determination that Indemnitee has a right
to indemnification pursuant to this Agreement, or if Indemnitee
otherwise seeks enforcement of this Agreement, Indemnitee shall
be entitled to a final adjudication in an appropriate court of
the State of Iowa of the remedy sought. Alternatively, unless
the determination was made by a panel of arbitrators pursuant to
Section 5(b)(4) of this Agreement, Indemnitee may elect to seek
an award in arbitration to be conducted by a single arbitrator
pursuant to the commercial arbitration rules of the American
Arbitration Association then in effect, and the decision of such
arbitrator shall be rendered within 90 days following the filing
of the demand for arbitration. The Corporation shall not oppose
the right of Indemnitee to seek any such adjudication or
arbitration award. In any such proceeding or arbitration,
Indemnitee shall be presumed to be entitled to indemnification
under this Agreement and the Corporation shall have the burden of
proof to overcome such presumption.
b. If a determination that Indemnitee is not entitled
to indemnification, in whole or in part, has been made pursuant
to Section 5, the decision in the judicial proceeding or
arbitration provided in Section 8(a) shall be made de novo and
Indemnitee shall not be prejudiced by reason of a determination
that Indemnitee is not entitled to indemnification.
c. If a determination that Indemnitee is entitled to
indemnification has been made pursuant to Section 5 or is deemed
to have been made pursuant to Section 4 or otherwise pursuant to
this Agreement, the Corporation shall be bound by such
determination in the absence of a misrepresentation of a material
fact by Indemnitee.
d. The Corporation shall be precluded from asserting
that the procedures and presumptions of this Agreement are not
valid, binding and enforceable, and the Corporation shall
stipulate in any such court or before any such arbitrator that
the Corporation is bound by all the provisions of this Agreement
and is precluded from making any assertion to the contrary.
e. Expenses reasonably incurred by Indemnitee in
connection with the request of Indemnitee for indemnification
under, seeking enforcement of, or to recover damages for breach
of, this Agreement shall be borne by the Corporation when and as
incurred by Indemnitee irrespective of any Final Adverse
Determination that Indemnitee is not entitled to indemnification.
9. Insurance.
a. Maintenance of Insurance. The Corporation
represents that it presently maintains certain policies of
directors' and officers' liability insurance. Subject only to
the provisions of this Section 9, the Corporation agrees that,
during the Indemnification Period, the Corporation shall use its
best efforts to purchase and maintain in effect for the benefit
of Indemnitee one or more valid, binding and enforceable policies
of directors' and officers' liability insurance providing
coverage that, in scope and amount and all other respects, is no
less favorable than that presently provided. Notwithstanding the
foregoing, prior to the occurrence of a Change in Control, the
Corporation shall not be required to maintain such policies of
directors' and officers' liability insurance if such insurance is
not reasonably available or if it is in good faith determined by
the Board of Directors that:
(1) the premium cost of maintaining such
insurance is substantially disproportionate to the amount of
coverage provided thereunder; or
(2) the protection provided by such insurance is
so limited by exclusions, deductions or otherwise that there is
insufficient benefit to warrant the cost of maintaining such
insurance.
Notwithstanding anything in this Agreement to the
contrary, to the extent that and for so long as the Corporation
shall choose to continue to maintain any policy of directors' and
officers' liability insurance during the Indemnification Period,
the Corporation shall maintain similar and equivalent insurance
for the benefit of Indemnitee during the Indemnification Period
(regardless of whether such similar or equivalent insurance is
more or less favorable to Indemnitee than the existing policy or
policies of such insurance maintained by the Corporation).
b. Additional Indemnification in Lieu of Insurance.
If the Corporation discontinues any policy or policies of
directors' and officers' liability insurance referred to in
Section 9(a) of this Agreement or limits in any way the scope or
amount of the coverages provided thereunder, or such policies or
coverages provided thereunder become unavailable in whole or in
part for any reason, the Corporation agrees to hold harmless and
indemnify Indemnitee for the remainder of the Indemnification
Period to the full extent of the coverage that would otherwise
have been provided for the benefit of Indemnitee if the insurance
specified in Section 9(a) hereof had been maintained.
10. Modification, Waiver, Termination and
Cancellation. No supplement, modification, termination,
cancellation or amendment of this Agreement shall be binding
unless executed in writing by both Indemnitee and the
Corporation. No waiver of any provision of this Agreement shall
constitute or be deemed to be (a) a waiver of any other provision
of this Agreement or (b) a continuing waiver.
11. Subrogation. In the event of payment under this
Agreement, the Corporation shall be subrogated to the extent of
such payment to all of the rights of recovery of Indemnitee, who
shall execute all such papers as may be reasonably required and
shall do all such other things as may be reasonably necessary to
secure such rights, including the execution of such documents as
may be reasonably necessary to enable the Corporation to
effectively bring suit to enforce such rights.
12. Notice by Indemnitee and Defense of Claim.
Indemnitee shall promptly notify the Corporation in writing upon
being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any civil,
criminal, administrative or investigative matter, but the
omission to so notify the Corporation shall not relieve the
Corporation of any liability that it may have to Indemnitee if
such omission does not materially prejudice the rights of the
Corporation. If such omission does materially prejudice the
rights of the Corporation, the Corporation shall be relieved from
liability under this Agreement only to the extent of such
prejudice, and no such omission will relieve the Corporation from
any liability that it may have to Indemnitee otherwise than under
this Agreement. With respect to any Proceeding as to which
Indemnitee notifies the Corporation of the commencement thereof:
a. The Corporation will be entitled to participate
therein at its own expense; and
b. The Corporation, jointly with any other
indemnifying party similarly notified, will be entitled to assume
the defense of Indemnitee therein with counsel reasonably
satisfactory to Indemnitee; provided, however, that the
Corporation shall not be entitled to assume the defense of
Indemnitee in any Proceeding if there has been a Change in
Control or if Indemnitee has reasonably concluded that there may
be a conflict of interest between the Corporation and Indemnitee
with respect to the Proceeding. After notice to Indemnitee from
the Corporation of its election to assume the defense of
Indemnitee therein, the Corporation will not be liable to
Indemnitee under this Agreement for any Expenses subsequently
incurred by Indemnitee in connection with the defense thereof,
other than reasonable costs of investigation or as otherwise
provided below. Indemnitee shall have the right to employ his or
her own counsel in any such Proceeding, but the fees and expenses
of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of
Indemnitee unless:
(1) the employment of counsel by Indemnitee has
been authorized by the Corporation;
(2) indemnitee has reasonably concluded that
counsel employed by the Corporation may not adequately represent
Indemnitee; or
(3) the Corporation has not in fact employed
counsel to assume the defense of Indemnitee in the Proceeding or
has not in fact assumed such defense or is not acting with
reasonable diligence in connection therewith; in each of which
cases, the fees and expenses of such counsel shall be borne by
the Corporation.
c. The Corporation shall not settle any Proceeding in
any manner that would impose any liability, penalty or limitation
on Indemnitee without the written consent of Indemnitee;
provided, however, that Indemnitee will not unreasonably withhold
consent to any proposed settlement.
13. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given if (a) delivered by hand and receipted
for by the party to whom such notice or other communication shall
have been directed or (b) mailed by registered mail with postage
prepaid.
a. If to Indemnitee, to:
b. If to the Corporation, to:
HON INDUSTRIES Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: General Counsel
or to such other address as may be hereafter furnished to
Indemnitee by the Corporation or to the Corporation by
Indemnitee, as the case may be.
14. Nonexclusivity. The rights of Indemnitee under
this Agreement shall not be deemed exclusive of any other rights
to which Indemnitee may be entitled under the Business
Corporation Act of the State of Iowa, the Articles of
Incorporation or By-laws of the Corporation, or any Agreements,
vote of shareholders, resolution of the Board of Directors or
otherwise and, to the extent that during the Indemnification
Period the rights of the then existing directors and officers are
more favorable to such directors or officers than the rights
currently provided to Indemnitee thereunder or under this
Agreement, Indemnitee shall be entitled to the full benefits of
such more favorable rights.
15. Certain Definitions. For the purposes of this
Agreement, the following terms shall have the following meanings:
a. "Change in Control" means:
(1) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the
Corporation (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Corporation entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1), the
following acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Corporation, (ii) any
acquisition by the Corporation, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained
by the Corporation or any corporation controlled by the
Corporation or (iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (i), (ii) and (iii)
of subsection (3) of this Section 15(a); or
(2) individuals who, as of the date hereof, con
stitute the Board (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least
three-quarters 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
(3) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substan
tially all of the assets of the Corporation (a "Business Combina
tion"), in each case, unless, following such Business Combi
nation, (i) 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 50% 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 Corporation or all or
substantially all of the Corporation'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, (ii)
no person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Corporation 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 se
curities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) 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
(4) approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the
Corporation.
b. "Disinterested Director" means a director of the
Corporation who is not or was not a party to the Proceeding with
respect to which indemnification is being sought by Indemnitee.
c. "Expenses" shall include all direct and indirect
costs (including but not limited to attorneys' fees, retainers,
court costs, transcript fees, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage costs, delivery service fees, all
other disbursements or out-of-pocket expenses and reasonable
compensation for time spent by Indemnitee for which Indemnitee is
otherwise not compensated by the Corporation or any third party)
actually and reasonably incurred in connection with the
investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to Indemnification under this
Agreement, applicable law or otherwise; provided, however, that
Expenses shall not include any Liabilities.
d. "Final Adverse Determination" means a
determination that Indemnitee is not entitled to indemnification
pursuant to Section 5 of this Agreement and either (i) a final,
nonappealable adjudication in an Iowa court or decision of an
arbitrator pursuant to Section 8(a) of this Agreement shall have
denied the right of Indemnitee to indemnification under this
Agreement or (ii) Indemnitee shall have failed to file a
complaint in an Iowa court or seek an arbitration award pursuant
to Section 8(a) hereof within 120 days after the determination
made pursuant to Section 5 hereof.
e. "Indemnification Period" means the period of time
during which Indemnitee shall serve as a director or officer of
the Corporation and for so long thereafter as Indemnitee may be
subject to any Proceeding.
f. "Independent Legal Counsel" means special legal
counsel who is selected by the Board of Directors by vote of a
majority of a quorum consisting of Disinterested Directors or, if
such quorum cannot be obtained, by vote of a majority of the full
Board of Directors, including directors who are not Disinterested
Directors, and is approved by Indemnitee (which approval shall
not be unreasonably withheld) or, if there has been a Change in
Control, selected by Indemnitee and approved by the Board of
Directors (which approval shall not be unreasonably withheld),
and who is not presently and has not in the five years preceding
such selection been retained to represent (i) the Corporation or
any of its subsidiaries or affiliates, or Indemnitee or any
corporation or entity as to which Indemnitee is or was a
director, officer, partner or employee, or any subsidiary or
affiliate of such a corporation or entity, in any material matter
or (ii) any other party to the Proceeding giving rise to the
claim for indemnification with respect to which such counsel is
being selected. Notwithstanding the foregoing, Independent Legal
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 Corporation or
Indemnitee in an action to determine the right of Indemnitee to
indemnification under this Agreement.
g. "Liabilities" means liabilities of any type
whatsoever, including but not limited to any judgments, fines,
ERISA excise taxes and penalties, 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),
incurred with respect to any Proceeding.
h. "Proceeding" means any threatened, pending or
completed action, claim, suit, arbitration, alternative dispute
resolution mechanism, investigation, administrative hearing or
any other formal or informal civil, criminal, administrative or
investigative proceeding that is associated with Indemnitee being
or having been a director or officer of the Corporation.
16. Binding Effect; Duration and Scope of Agreement.
This Agreement shall be binding upon and inure to the benefit of
and be enforceable by Indemnitee and the Corporation and their
respective successors and assigns (including any direct or
indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business or assets
of the Corporation), spouses, heirs, executors, personal
representatives and administrators and other legal
representatives. This Agreement shall continue in effect during
the Indemnification Period, regardless of whether Indemnitee
continues to serve as a director or officer of the Corporation.
17. Severability. If any provision or provisions of
this Agreement shall be held to be illegal, invalid or otherwise
unenforceable for any reason whatsoever:
a. the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be
affected or impaired thereby; and
b. the provisions of this Agreement shall be
construed so as to give effect to the fullest extent legally
possible to the intent of any provisions held to be illegal,
invalid or otherwise unenforceable.
18. Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of Iowa.
19. Entire Agreement. This Agreement represents the
entire Agreement between the Corporation and Indemnitee, and
there are no other Agreements, contracts or understandings
between them with respect to the subject matter of this
Agreement, except as specifically referred to herein or as
provided in Section 14 hereof.
IN WITNESS WHEREOF, this Indemnity Agreement is
executed by the Corporation and the Indemnitee as of the date
first written above.
HON INDUSTRIES Inc.
By______________________
Name:
Title:
INDEMNITEE
______________________
Name:
