INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT ("Agreement"), dated as of
February 1, 2006, between Dynasil Corporation of America, a New
Jersey corporation (the "Company"), and Xxxxx Xxxxxxxx
("Indemnitee"), is made with reference to the following facts:
A. It is essential that the Company and its subsidiaries
recruit and retain as directors the most capable persons
available;
B. Indemnitee is currently or is contemplating becoming a
director of the Company or a subsidiary of the Company;
C. Both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against
directors of publicly traded companies;
D. In furtherance of the foregoing, Article 12 of the
Company's Restated Certificate of Incorporation (the "Charter")
provides as follows:
12. A director or officer of the Corporation shall not
be personally liable to the Corporation or its
shareholders for damages for breach of any duty owed to
the Corporation or its shareholders, except that this
Article 12 shall not relieve a director or officer from
liability for any breach of duty based upon an act or
omission (i) in breach of such person's duty of loyalty
to the Corporation or its shareholders, or (ii) not in
good faith or involving a knowing violation of law, or
(iii) resulting in receipt by such person of an
improper personal benefit. If the New Jersey Business
Corporation Act is amended after approval by the
shareholders of this Article 12 to authorize corporate
action further eliminating or limiting the personal
liability of directors or officers, then the liability
of a director and/or officer of the Corporation, as the
case may be, shall, without further corporate action,
be eliminated or limited to the fullest extent
permitted by the New Jersey Business Corporation Act as
so amended. Any repeal or modification of the foregoing
paragraph by the shareholders of the Corporation or
otherwise shall not adversely affect any right or
protection of a director or officer of the Corporation
existing at the time of such repeal or modification.
E. Notwithstanding Article 12 of the Company's Charter, in
recognition of Indemnitee's legitimate desire that all possible
protection against personal liability resulting from or in
connection with Indemnitee's performance of service for the
Company as a director be available for and provided to
Indemnitee (regardless of, among other things, any amendment to
or revocation of the Charter or any change in the composition of
the Company's board of directors (the "Board of Directors") or
any acquisition transaction relating to the Company), the Company
wishes to provide in this Agreement for the indemnification of
and the advancement of expenses to Indemnitee to the fullest
extent 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.
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Definitions.
1.1 "Change in Control" shall be deemed to have occurred if,
(i) any "person" (as such term is used in Section 13(d) 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 or a corporation owned directly or
indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company
representing 15% or more of the total voting power represented by
the Company's then outstanding Voting 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 total
voting power represented by the Voting Securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation, or 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 (in one
transaction or a series of transactions) all or substantially all
of the Company's assets.
1.2 "Claim" means any claim or prayer for relief in any
threatened, pending or completed action, suit or proceeding
(whether civil, criminal, administrative or investigative,
whether instituted by or in the right of the Company, any
subsidiary of the Company or any other party) in which Indemnitee
in good faith reasonably believes he is a participant,
respondent, party or otherwise involved as a result of
Indemnitee's, or a person for whom Indemnitee is the legal
representative, past or present service as a director of the
Company or any subsidiary of the Company, or is or was serving at
the request of the Company or any subsidiary of the Company as a
director, officer, employee or agent of another corporation or of
a partnership, joint venture, trust, enterprise or nonprofit
entity, including service with respect to employee benefit plans.
1.3 "Expenses" include reasonable attorney's fees and all
other costs, expenses and obligations actually and reasonably
incurred by the Indemnitee in connection with investigating,
defending or preparing to defend any Claim.
1.4 "Independent Legal Counsel" means an attorney or firm of
attorneys, selected in accordance with the provisions of Section
3, who shall not have otherwise performed services for the
Company, any subsidiary of the Company or Indemnitee within the
last five years (other than with respect to matters concerning
the rights of Indemnitee under this Agreement, or of other
indemnitees under similar indemnity agreements).
1.5 "Reviewing Party" means (i) a majority of directors who
are not parties to the action, even though less than a quorum,
(ii) a Committee of such directors designated by majority vote of
such directors, even though less than a quorum, (iii) if there
are no such directors, or if such directors so direct,
Independent Legal Counsel, or if the directors are unable to
appoint Independent Legal Counsel, the stockholders.
1.6 "Voting Securities" means any securities which vote
generally in the election of directors.
2. Indemnification.
2.1 In General. In connection with any Claim that relates to
events occurring after the date hereof, the Company shall
indemnify and advance Expenses to Indemnitee as provided in this
Agreement and to the fullest extent permitted or contemplated by
N.J.S.14A:3-5(8); provided, however, that no indemnification
shall be made to or on behalf of Indemnitee if a judgment or
other final adjudication adverse to Indemnitee establishes that
his acts or omissions (a) were in breach of his duty of loyalty
to the corporation or its shareholders, as defined in subsection
(3) of N.J.S.14A:2-7, (b) were not in good faith or involved a
knowing violation of law or (c) resulted in receipt by Indemnitee
of an improper personal benefit..
2.2 Claims Other Than Claims by or in the Right of the
Company or Any Subsidiary of the Company. In the event Indemnitee
was, is or becomes a party to or witness or other participant in,
or is threatened to be made a party to or witness or other
participant in any action, suit or proceeding pursuant to any
Claim, other than a Claim by or in the right of the Company or
any subsidiary of the Company, the Company shall, subject to
Sections 2.5 and 2.6, indemnify Indemnitee against any and all
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
Expenses, judgments, fines, penalties or amounts paid in
settlement) of such Claim.
2.3 Proceedings by or in the right of the Company or Any
Subsidiary of the Company. In the event Indemnitee was, is or
becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant
in any proceeding pursuant to any Claim brought by or in the
right of the Company or any subsidiary of the Company to procure
a judgment in its favor, the Company shall, subject to Sections
2.5 and 2.6, indemnify Indemnitee against any and all Expenses
(including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses) of
such Claim. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any Claim, issue or
matter as to which Indemnitee shall have been finally adjudged to
be liable to the Company or any subsidiary of the Company unless
and only to the extent that the Superior Court or the court in
which such 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 indemnity for such Expenses which the
Superior Court or such other court shall deem proper.
2.4 Payment of Indemnification; Advancement of Expenses.
Subject to Sections 2.5 and 2.6, the Company shall indemnify
Indemnitee as soon as practicable but in any event no later than
30 days after written demand is presented to the Company. If so
requested by Indemnitee, the Company shall advance (within 10
business days of such request) any and all Expenses to Indemnitee
(an "Expense Advance"); provided, however, that the payment of
Expenses incurred by Indemnitee in advance of the final
disposition of the Claim will be made only upon receipt by the
Company of an undertaking by the Indemnitee to repay all amounts
advanced if it should be ultimately determined that the
Indemnitee is not entitled to be indemnified under this Agreement
or otherwise.
2.5 Indemnitee Not Entitled to Indemnification.
Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim (or part thereof)
initiated by the Indemnitee unless the Board of Directors has
authorized or consented to the initiation of such Claim (or part
thereof), other than an action, suit or proceeding commenced by
Indemnitee to secure a determination that Indemnitee is entitled
to indemnification as provided in Section 2.6 which action, suit
or proceeding shall not require such authorization or consent.
2.6 Determination of Entitlement. Notwithstanding anything
in this Agreement to the contrary, (i) the obligations of the
Company under this Section 2 shall be subject to the condition
that the Reviewing Party shall not have determined (in a written
opinion, in any case in which the Independent Legal Counsel is
involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 2.4 shall
be subject to the condition that, if, when and to the extent that
the Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified 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; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any
Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have
been exhausted or lapsed). If there has not been a Change in
Control, the Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control (other
than a Change in Control which has been approved by a majority of
the Company's Board of Directors who were directors immediately
prior to such Change in Control), the Reviewing Party shall be
the Independent Legal Counsel referred to in Section 3. If there
has been no determination by the Reviewing Party within 60 days
after written demand for indemnification made under Section 2.4
or if the Reviewing Party determines that Indemnitee would not be
permitted to be indemnified in whole or in part under applicable
law, Indemnitee shall have the right to commence litigation in
any court in the State of New Jersey having subject matter
jurisdiction thereof and in which venue is proper seeking an
initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor. The Company shall
indemnify Indemnitee for his Expenses relating to any such
proceeding and shall advance such Expenses to Indemnitee, subject
to the Company's receipt of such written undertaking as the
Company shall reasonably request from Indemnitee to repay to the
Company any funds so advanced if the court determines that
Indemnitee is not entitled to indemnification of such Expenses.
The Company hereby consents to service of process and to appear
in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee. Indemnitee may initiate mediation instead of a
judicial determination of Indemnitee's entitlement to
indemnification, in which event Indemnitee will bear twenty
percent (20%) of the costs of such mediation.
3. Change in Control. If there is a Change in Control of the
Company (other than a Change in Control which has been approved
by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control), then with
respect to all matters thereafter arising concerning the rights
of Indemnitee to indemnity payments and Expense Advances under
this Agreement, the Company shall seek legal advice only from
Independent Legal Counsel selected by Indemnitee and approved by
the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written
opinion to the Company and Indemnitee as to whether and to what
extent Indemnitee would be permitted to be indemnified under
applicable law. The Company shall pay the reasonable fees of the
Independent Legal Counsel referred to above and fully indemnify
such counsel against any and all expenses (including reasonable
attorneys' fees), claims, liabilities and damages arising out of
or relating to this Agreement or its engagement pursuant hereto.
4. Indemnification Not Exclusive. Notwithstanding this
Agreement, the Company shall indemnify Indemnitee against any and
all Expenses (including reasonable attorneys' fees) and, if
requested by Indemnitee, shall (within 10 business days of such
request) advance such Expenses to Indemnitee for (i)
indemnification or advance payment of Expenses by the Company
under the Charter or any other agreement, certificate of
incorporation or Company by-law now or hereafter in effect
relating to Claims and/or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company.
Without limiting the generality of the foregoing, to the extent
that a change in the New Jersey Business Corporation Act (whether
by statute or judicial decision) permits greater indemnification
by agreement than would be afforded currently under the Charter
or 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.
5. Partial Indemnity. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for
a portion of the Expenses, judgments, fines, penalties and
amounts paid in settlement of a Claim but not, however, for the
total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is
entitled. Moreover, notwithstanding any other provision of the
Agreement, to the extent that Indemnitee has been successful on
the merits or otherwise in defense of any or all Claims or in
defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. Burden of Proof. In connection with any determination by
the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proof shall
be on the Company to establish that Indemnitee is not so
entitled.
7. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, 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
indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular
standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met
such standard of conduct or did not have such belief, prior to
the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified
under applicable law shall be a defense to Indemnitee's claim or
create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
8. Liability Insurance. The Company will maintain insurance
(i) at not less than the levels in effect as of the date hereof
with respect to Indemnitee until the third anniversary of the
date hereof, or (ii) at the levels in effect as of the date of
the expiration of the term, death, removal, retirement or
resignation of Indemnitee for a period of three years after such
event, whichever level is greater, in either case, with respect
to any Claim, against all liability and loss suffered and
Expenses (including reasonable attorney's fees) reasonably
incurred by Indemnitee at the Company's expense, to protect the
Company and Indemnitee against any such liability, cost, payment,
or Expense.
9. Amendments and Waivers. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by 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.
10. Subrogation. 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 my 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.
11. No Duplication of Payments. The Company shall not be
liable under this Agreement to make any payment in connection
with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance
policy, the Charter or otherwise) of the amounts otherwise
indemnifiable hereunder.
12. Binding Effect. 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 a director
of the Company or in any other capacity for any other enterprise
at the Company's request.
13. Severability. 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) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the
validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in
any way impaired and shall remain enforceable to the fullest
extent permitted by law.
14. Counterparts. This Agreement may be executed in one or
more counterparts for the convenience of the parties hereto, all
of which together will constitute one and the same instrument.
15. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of New Jersey applicable to contracts made and to be performed in
such state without giving effect to the principles of conflicts
of laws.
INTENDING TO BE LEGALLY BOUND, the parties hereto have
executed this Agreement as of the date first above written.
DYNASIL CORPORATION OF AMERICA
By
Xxxxx X. Xxxxxx
President
INDEMNITEE
Xxxxx Xxxxxxxx
