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Exhibit (10)
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the
_________ day of __________, __________, by and between The Xxxxxx-Xxxx Company,
an Ohio corporation (the "Company"), and (the "Indemnitee"), a Director and an
officer of the Company.
RECITALS
A. The Indemnitee is presently serving as a Director and an
officer of the Company and the Company desires the Indemnitee to continue in
those capacities. The Indemnitee is willing, subject to certain conditions,
including, without limitation, the execution and performance of this Agreement
by the Company, to continue in those capacities.
B. In addition to the indemnification to which the Indemnitee
is entitled under the Regulations of the Company, as amended (the
"Regulations"), the Company has obtained, at its sole expense, insurance
protecting the Company and its officers and Directors, including the Indemnitee,
against certain losses arising out of actual or threatened actions, suits or
proceedings to which such persons may be made or threatened to be made parties.
However, as a result of circumstances having no relation to, and beyond the
control of, the Company and the Indemnitee, the scope of that insurance has been
reduced, and there can be no assurance of the continuation or renewal of that
insurance.
Accordingly, and in order to induce the Indemnitee to continue
to serve in his present capacities, the Company and the Indemnitee agree as
follows:
1. CONTINUED SERVICE. The Indemnitee shall continue to serve
at the will of the Company as a Director and an officer of the Company so long
as he is duly elected and qualified in accordance with the Regulations or until
he resigns in writing in accordance with applicable law.
2. INITIAL INDEMNITY. (a) The Company shall indemnify the
Indemnitee if or when he 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 Company), by reason of the fact that he is or was a Director or
officer of the Company or is or was serving at the request of the Company as a
director, trustee, officer, employee or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
any such capacity, against any and all costs, charges, expenses (including,
without limitation, fees and expenses of attorneys and/or others; all such
costs, charges and expenses being herein jointly referred to as "Expenses"),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by the Indemnitee in connection therewith including any appeal of or
from any judgment or decision, unless it is proved by clear and convincing
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the
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Company or undertaken with reckless disregard for the best interests of the
Company. In addition, with respect to any criminal action or proceeding,
indemnification hereunder shall be made only if the Indemnitee had no reasonable
cause to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement or conviction, or upon a plea of
"nolo contendere" or its equivalent, shall not, of itself, create a presumption
that the Indemnitee did not satisfy the foregoing standard of conduct to the
extent applicable thereto.
(b) The Company shall indemnify the Indemnitee if or when he
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that the Indemnitee is or
was a Director or an officer of the Company or is or was serving at the request
of the Company as a director, trustee, officer, employee or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust or other enterprise, against any and all Expenses actually and
reasonably incurred by the Indemnitee in connection with the defense or
settlement thereof or any appeal of or from any judgment or decision, unless it
is proved by clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company, except that no
indemnification shall be made in respect of any action or suit in which the only
liability asserted against the Indemnitee is pursuant to Section 1701.95 of the
Ohio Revised Code (the "ORC").
(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 2(a) or 2(b). Such authorization shall be made (i)
by the Directors of the Company (the "Board") by a majority vote of a quorum
consisting of Directors who were not and are not parties to or threatened with
such action, suit or proceeding, or (ii) if such a quorum of disinterested
Directors is not available or if a majority of such quorum so directs, in a
written opinion by independent legal counsel (designated for such purpose by the
Board) which shall not be an attorney, or a firm having associated with it an
attorney, who has been retained by or who has performed services for the
Company, or any person to be indemnified, within the five years preceding such
determination, or (iii) by the shareholders of the Company (the "Shareholders"),
or (iv) by the court in which such action, suit or proceeding was brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Section 2(a) or 2(b), or in defense of any claim, issue or matter therein,
he shall be indemnified against Expenses actually and reasonably incurred by him
in connection therewith. Expenses actually and reasonably incurred by the
Indemnitee in defending any such action, suit or proceeding shall be paid by the
Company as they are incurred in advance of the final disposition of such action,
suit or proceeding under the procedure set forth in Section 4(b) hereof.
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(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any employee
benefit plan; references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involve services by, the Indemnitee with respect to
an employee benefit plan, its participants or beneficiaries; references to the
masculine shall include the feminine; and references to the singular shall
include the plural and VICE VERSA.
3. ADDITIONAL INDEMNIFICATION. Pursuant to Section
1701.13(E)(6) of the ORC, without limiting any right which the Indemnitee may
have pursuant to Section 2 hereof or any other provision of this Agreement or
the Articles of Incorporation, as amended, of the Company (the "Articles"), the
Regulations, the ORC, any policy of insurance, or otherwise, but subject to any
limitation on the maximum permissible indemnity which may exist under applicable
law at the time of any request for indemnity hereunder and subject to the
following provisions of this Section 3, the Company shall indemnify the
Indemnitee against any amount which he is or becomes obligated to pay relating
to or arising out of any claim made against him because of any act, failure to
act or neglect or breach of duty, including any actual or alleged error,
misstatement or misleading statement, which he commits, suffers, permits or
acquiesces in while acting in his capacity as a Director or an officer of the
Company. The payments which the Company is obligated to make pursuant to this
Section 3 shall include, without limitation, judgments, fines and amounts paid
in settlement and any and all Expenses actually and reasonably incurred by the
Indemnitee in connection therewith including any appeal of or from any judgment
or decision; PROVIDED, HOWEVER, that the Company shall not be obligated under
this Section 3 to make any payment in connection with any claim against the
Indemnitee:
(a) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from
paying which results from a final, nonappealable order; or
(b) to the extent based upon or attributable to the Indemnitee
having actually realized a personal gain or profit to which he was not
legally entitled, including, without limitation, profit from the
purchase and sale by the Indemnitee of equity securities of the Company
which are recoverable by the Company pursuant to Section 16(b) of the
Securities Exchange Act of 1934, or profit arising from transactions in
publicly traded securities of the Company which were effected by the
Indemnitee in violation of Section 10(b) of the Securities Exchange Act
of 1934, or Rule 10b-5 promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with Section
4(a) hereof. Expenses incurred by the Indemnitee in defending any claim to which
this Section 3 applies shall be paid by the Company as they are actually and
reasonably incurred in advance of the final disposition of such claim under the
procedure set forth in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a) For
purposes of pursuing his rights to indemnification under Section 3 hereof, the
Indemnitee shall (i) submit to the Board a sworn statement of request for
indemnification substantially in the
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form of Exhibit 1 attached hereto and made a part hereof (the "Indemnification
Statement") averring that he is entitled to indemnification hereunder; and (ii)
present to the Company reasonable evidence of all amounts for which
indemnification is requested. Submission of an Indemnification Statement to the
Board shall create a presumption that the Indemnitee is entitled to
indemnification hereunder, and the Company shall, within sixty (60) calendar
days after submission of the Indemnification Statement, make the payments
requested in the Indemnification Statement to or for the benefit of the
Indemnitee, unless (i) within such 60-calendar-day period the Board shall
resolve by vote of a majority of the Directors at a meeting at which a quorum is
present that the Indemnitee is not entitled to indemnification under Section 3
hereof, (ii) such vote shall be based upon clear and convincing evidence
(sufficient to rebut the foregoing presumption) and (iii) the Indemnitee shall
have received within such period notice in writing of such vote, which notice
shall disclose with particularity the evidence upon which the vote is based. The
foregoing notice shall be sworn to by all persons who participated in the vote
and voted to deny indemnification. The provisions of this Section 4(a) are
intended to be procedural only and shall not affect the right of the Indemnitee
to indemnification under Section 3 of this Agreement so long as the Indemnitee
follows the prescribed procedure, and any determination by the Board that the
Indemnitee is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be subject to judicial
review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance
of final disposition pursuant to the second sentence of Section 2(d) or the last
sentence of Section 3 hereof, the Indemnitee shall submit to the Company a sworn
request for advancement of Expenses substantially in the form of Exhibit 2
attached hereto and made a part hereof (the "Undertaking"), averring that he has
reasonably incurred actual Expenses in defending an action, suit or proceeding
referred to in Section 2(a) or 2(b) or any claim referred to in Section 3, or
pursuant to Section 7 hereof. Unless at the time of the Indemnitee's act or
omission at issue, the Articles or Regulations of the Company prohibit such
advances by specific reference to ORC Section 1701.13(E)(5)(a) and unless the
only liability asserted against the Indemnitee in the subject action, suit or
proceeding is pursuant to ORC Section 1701.95, the Indemnitee shall be eligible
to execute Part A of the Undertaking by which he undertakes to (a) repay such
amount if it is proved by clear and convincing evidence in a court of competent
jurisdiction that the Indemnitee's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the Company or
undertaken with reckless disregard for the best interests of the Company and (b)
reasonably cooperate with the Company concerning the action, suit, proceeding or
claim. In all cases, the Indemnitee shall be eligible to execute Part B of the
Undertaking by which he undertakes to repay such amount if it ultimately is
determined that he is not entitled to be indemnified by the Company under this
Agreement or otherwise. In the event that the Indemnitee is eligible to and does
execute both Part A and Part B of the Undertaking, the Expenses which are paid
by the Company pursuant thereto shall be required to be repaid by the Indemnitee
only if he is required to do so under the terms of both Part A and Part B of the
Undertaking. Upon receipt of the Undertaking, the Company shall thereafter
promptly pay such Expenses of the Indemnitee as are noticed to the Company in
writing and in reasonable detail arising out of the matter described in the
Undertaking. No security shall be required in connection with any Undertaking.
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5. LIMITATION ON INDEMNITY. Notwithstanding anything contained
herein to the contrary, the Company shall not be required hereby to indemnify
the Indemnitee with respect to any action, suit or proceeding that was initiated
by the Indemnitee unless (i) such action, suit or proceeding was initiated by
the Indemnitee to enforce any rights to indemnification arising hereunder and
such person shall have been formally adjudged to be entitled to indemnity by
reason hereof, (ii) authorized by another agreement to which the Company is a
party whether heretofore or hereafter entered or (iii) otherwise ordered by the
court in which the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) 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 the 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.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against the Indemnitee to the
extent the Indemnitee has actually received payment (under any insurance policy,
the Company's Regulations or otherwise) of the amounts otherwise payable
hereunder.
7. FEES AND EXPENSES OF ENFORCEMENT. It is the intent of the
Company that the Indemnitee not be required to incur the expenses associated
with the enforcement of his rights under this Agreement by litigation or other
legal action because the cost and expense thereof would substantially detract
from the benefits intended to be extended to the Indemnitee hereunder.
Accordingly, if it should appear to the Indemnitee that the Company has failed
to comply with any of its obligations under this Agreement or in the event that
the Company or any other person takes any action to declare this Agreement void
or unenforceable, or institutes any action, suit or proceeding to deny, or to
recover from, the Indemnitee the benefits intended to be provided to the
Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from
time to time to retain counsel of his choice, at the expense of the Company as
hereafter provided, to represent the Indemnitee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all costs,
charges and expenses, including, without limitation, fees and expenses of
attorneys and others, reasonably incurred by the Indemnitee pursuant to this
Section 7.
8. MERGER OR CONSOLIDATION. In the event that the Company
shall be a constituent corporation in a consolidation, merger or other
reorganization, the Company, if it shall not be the surviving, resulting or
acquiring corporation therein, shall require as a condition thereto that the
surviving, resulting or acquiring corporation agree to assume all of the
obligations of the Company hereunder and to indemnify the Indemnitee to the full
extent provided herein. Regardless of whether the Company is the resulting,
surviving or acquiring corporation in any such transaction, the Indemnitee shall
also stand in the same position under this Agreement with respect to the
resulting, surviving or acquiring corporation as he would have with respect to
the Company if its separate existence had continued.
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9. NONEXCLUSIVITY AND SEVERABILITY. (a) The rights to
indemnification provided by this Agreement shall not be exclusive of any other
rights of indemnification to which the Indemnitee may be entitled under the
Articles, the Regulations, the ORC or any other statute, any insurance policy,
agreement or vote of shareholders or directors or otherwise, as to any actions
or failures to act by the Indemnitee, and shall continue after he has ceased to
be a Director, officer, employee or agent of the Company or other entity for
which his service gives rise to a right hereunder, and shall inure to the
benefit of his heirs, executors and administrators.
(b) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.
11. MODIFICATION. This Agreement and rights and duties of the
Indemnitee and the Company hereunder may be modified only by an instrument in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereunto have duly executed
this Agreement as of the date first above written.
THE XXXXXX-XXXX COMPANY
By______________________________
________________________________
("Indemnitee")
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Exhibit 1
INDEMNIFICATION STATEMENT
STATE OF ___________________)
) SS:
COUNTY OF __________________)
I, __________________________________, being first duly sworn,
do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated ______________, ____, between The Xxxxxx-Xxxx
Company, an Ohio corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against costs, charges,
expenses (which may include fees and expenses of attorneys and/or others),
judgments, fines and amounts paid in settlement (collectively, "Liabilities"),
which have been actually and reasonably incurred by me in connection with a
claim referred to in Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am
entitled to be indemnified as herein contemplated pursuant to the aforesaid
Indemnification Agreement.
4. Without limiting any other rights which I have or may have,
I am requesting indemnification against liabilities which have or may arise out
of _____________________________________________________________________________
____________________________.
__________________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this ____ day of _________, ____.
__________________________________
[Seal]
My commission expires the ____ day of _________, ____.
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Exhibit 2
UNDERTAKING
STATE OF ___________________)
) SS:
COUNTY OF __________________)
I, __________________________________, being first duly sworn,
do depose and say as follows:
1. This Undertaking is submitted pursuant to the
Indemnification Agreement, dated ________, ___________, between The Xxxxxx-Xxxx
Company, an Ohio corporation (the "Company"), and the undersigned.
2. I am requesting payment of costs, charges and expenses
which I have reasonably incurred or will reasonably incur in defending an
action, suit or proceeding, referred to in Section 2(a) or 2(b) or any claim
referred to in Section 3, or pursuant to Section 7, of the aforesaid
Indemnification Agreement.
3. The costs, charges and expenses for which payment is
requested are, in general, all expenses related to _____________________________
_______________________________________________________________________________.
4. Part A
I hereby undertake to (a) repay all amounts paid pursuant
hereto if it is proved by clear and convincing evidence in a court of competent
jurisdiction that my action or failure to act which is the subject of the matter
described herein involved an act or omission undertaken with deliberate intent
to cause injury to the Company or undertaken with reckless disregard for the
best interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
__________________________________
(Signature of Indemnitee)
4. Part B
I hereby undertake to repay all amounts paid pursuant hereto
if it ultimately is determined that I am not entitled to be indemnified by the
Company under the aforesaid Indemnification Agreement or otherwise.
__________________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this ____ day of _________, ____.
__________________________________
[Seal]
My commission expires the ____ day of _________, ____.
