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EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
BETWEEN
FLOUR CITY INTERNATIONAL, INC.
AND
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TABLE OF CONTENTS
Page
1. DEFINITIONS ......................................................................1
2. INDEMNIFICATION ...................................................................2
2.1 Indemnification in Third Party Actions ......................................2
2.2 Indemnification in Proceedings By or In the Name of the Company .............2
2.3 Partial Indemnification......................................................2
2.4 Indemnification Hereunder Not Exclusive......................................2
2.5 Indemnification of Indemnified Costs of Successful Party ....................2
2.6 Indemnified Costs Advanced ..................................................3
2.7 Limitations on Indemnification...............................................3
3. PRESUMPTIONS........................................................................3
3.1 Presumption Regarding Standard of Conduct....................................3
3.2 Determination of Right to Indemnification ...................................3
3.2.1 Burden ...............................................................3
3.2.2 Standard .............................................................4
4. OTHER AGREEMENTS....................................................................4
4.1 Change in Control Event......................................................4
4.2 Maintenance of Liability Insurance ..........................................4
4.2.1 Affirmative Covenant of the Company...................................4
4.2.2 Indemnitee Named as Insured...........................................4
4.3 Agreement to Serve...........................................................5
4.4 Effect of this Agreement on Employment Agreement.............................5
4.5 Nature of Rights; Separability ..............................................5
4.6 Savings Clause ..............................................................5
4.7 Repayment of Indemnified Costs ..............................................5
4.8 Repayment ..................................................................5
5. INDEMNIFICATION PROCEDURE...........................................................5
5.1 Notice ......................................................................5
5.2 Company Participation .......................................................5
5.3 Settlement .................................................................6
5.4 Subrogation .................................................................6
6. MISCELLANEOUS PROVISIONS ...........................................................6
6.1 Amendments; Waivers..........................................................6
6.2 Integration..................................................................6
6.3 Interpretation; Governing Law ...............................................6
6.4 Headings.....................................................................6
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TABLE OF CONTENTS
Page
6.5 Counterparts.................................................................6
6.6 Successors and Assigns.......................................................6
6.7 Expenses; Legal Fees.........................................................7
6.8 Representation by Counsel; Interpretation....................................7
6.9 Specific Performance.........................................................7
6.10 Time is of the Essence.......................................................7
6.11 Notices .....................................................................7
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FLOUR CITY INTERNATIONAL, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "AGREEMENT") is made as of
__________, 1997, by and between Flour City International, Inc., a Nevada
corporation (the "COMPANY"), and the individual whose name appears below the
word "Indemnitee" on the signature page of this Agreement (the "INDEMNITEE"). In
consideration of the services of the Indemnitee to the Company, and to induce
the Indemnitee to continue to serve as a director and/or officer, the Company
and the Indemnitee agree as follows:
R E C I T A L S
A. The Indemnitee has agreed to serve as a director and/or officer of
the Company and in such capacity will render valuable services to the Company.
B. The Company has concluded that insurance and statutory indemnity
provisions may provide inadequate protection to individuals requested to serve
as its directors and officers.
C. To induce and encourage the Indemnitee to serve as a director and/or
officer of the Company, the Company's Board of Directors has decided that this
Agreement is not only reasonable and prudent, but necessary, to promote and
ensure the best interests of the Company and its stockholders.
1. DEFINITIONS
As used in this Agreement:
"AGENT" means a director, officer, employee or agent of the Company or
of any other corporation, partnership, joint venture, trust, employee benefit
plan, or other enterprise that the Indemnitee served in any of such capacities
at the request of the Company.
"CHANGE IN CONTROL EVENT" has the same meaning as an "Event" as defined
in the Company's 1997 Amended and Restated Stock Incentive Plan.
"EXPENSES" includes, but is not limited to, attorneys' fees,
disbursements and retainers, accounting and witness fees, travel and deposition
costs, expenses of investigations and amounts paid in settlement by or on behalf
of the Indemnitee, and any expenses of establishing a right to indemnification
pursuant to this Agreement, to the extent actually and reasonably incurred by
the Indemnitee in connection with any Proceeding. "EXPENSES" does not include
the amount of judgments, fines, penalties or ERISA excise taxes actually levied
against the Indemnitee.
"INDEMNIFIED COSTS" means all Expenses, judgments, fines, penalties and
ERISA excise taxes actually and reasonably incurred by the Indemnitee in
connection with the investigation, defense, appeal, or settlement of any
Proceeding.
A "POTENTIAL CHANGE IN CONTROL EVENT" will be deemed to have occurred
if:
(a) the Company enters into an agreement or arrangement that
would constitute a Change in Control Event if consummated;
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(b) any person (including the Company) publicly announces an
intention to take or to consider taking actions that would constitute a Change
in Control Event if consummated; or
(c) the Board of Directors adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control Event has
occurred.
"PROCEEDING" means any threatened, pending or completed action, suit or
proceeding (including appeals thereof), whether brought by or in the name of the
Company or otherwise and whether of a civil, criminal or administrative or
investigative nature, in which the Indemnitee is or will be a party at the time
because the Indemnitee is or was an Agent, whether or not the Indemnitee is
serving in such capacity at the time any liability or Expense is incurred for
which indemnification or reimbursement is to be provided under this Agreement.
2. INDEMNIFICATION
2.1 INDEMNIFICATION IN THIRD PARTY ACTIONS. The Company will indemnify
the Indemnitee if the Indemnitee becomes a party to, is threatened to be made a
party to, is a witness or other participant in, or is otherwise involved in any
Proceeding (other than a Proceeding by or in the name of the Company to procure
a judgment in its favor), because the Indemnitee is or was an Agent, against all
Indemnified Costs, to the fullest extent permitted by applicable law. Any
settlement must be approved in writing by the Company.
2.2 INDEMNIFICATION IN PROCEEDINGS BY OR IN THE NAME OF THE COMPANY. The
Company will indemnify the Indemnitee if the Indemnitee is a party to, is
threatened to be made a party to, is a witness or other participant in, or is
otherwise involved in any Proceeding by or in the name of the Company to procure
a judgment in its favor because the Indemnitee was or is an Agent of the Company
against all Expenses in connection with the defense or settlement of the
Proceeding, to the fullest extent permitted by applicable law.
2.3 PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of, but not the total amount of, the Indemnified Costs, the Company will
nevertheless indemnify the Indemnitee for the portion of the Indemnified Costs
to which the Indemnitee is entitled.
2.4 INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The indemnification
provided by this Agreement is not exclusive of any other rights to which the
Indemnitee may be entitled under the Company's Certificate of Incorporation, the
Bylaws, any agreement, any vote of stockholders or disinterested directors,
applicable law, or otherwise, both as to action in the Indemnitee's official
capacity and as to action in another capacity on behalf of the Company.
2.5 INDEMNIFICATION OF INDEMNIFIED COSTS OF SUCCESSFUL PARTY.
Notwithstanding any other provisions of this Agreement, to the extent that the
Indemnitee has been successful in defense of any Proceeding or in defense of any
claim, issue or matter in the Proceeding, on the merits or otherwise, including,
but not limited to, the dismissal of a Proceeding without prejudice, the
Indemnitee will be indemnified against all Indemnified Costs incurred in
connection therewith to the fullest extent permitted by applicable law.
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2.6 INDEMNIFIED COSTS ADVANCED. The Indemnified Costs incurred by the
Indemnitee in any Proceeding will be paid promptly by the Company in advance of
the final disposition of the Proceeding at the written request of the Indemnitee
to the fullest extent permitted by applicable law. The advances to be made will
be paid by the Company to the Indemnitee within 30 days following delivery of
the written request by Indemnitee to the Company, accompanied by substantiated
documentation.
2.7 LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to the
contrary in this Agreement, the Company is not required to make payments to:
(a) indemnify or advance Indemnified Costs with respect to
Proceedings initiated or brought voluntarily by the Indemnitee and not by way of
defense, except with respect to Proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute or law or
otherwise as required under applicable law;
(b) indemnify the Indemnitee for any Indemnified Costs for which
payment is actually made to the Indemnitee under an insurance policy, except for
any excess beyond the amount of payment under the policy;
(c) indemnify the Indemnitee for any Indemnified Costs sustained in
any Proceeding for an accounting of profits made from the purchase or sale by
the Indemnitee of securities of the Company pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder and amendments thereto or similar provisions of any
federal, state or local law;
(d) the Indemnitee for any Indemnified Costs resulting from
Indemnitee's conduct that is finally adjudged by a court of competent
jurisdiction to have been willful misconduct, knowingly fraudulent or
deliberately dishonest; or
(e) indemnify the Indemnitee if a court of competent jurisdiction
finally determines that such payment is unlawful.
3. PRESUMPTIONS
3.1 PRESUMPTION REGARDING STANDARD OF CONDUCT. The Indemnitee will be
conclusively presumed to have met the relevant standards of conduct as defined
by applicable law for indemnification pursuant to this Agreement unless a
determination that the Indemnitee has not met the relevant standards is made by
(a) the Board of Directors of the Company by a majority vote of a quorum
consisting of directors who are not parties to the Proceeding, (b) the
stockholders of the Company by majority vote, or (c) in a written opinion by
independent legal counsel, selection of whom has been made by the Company's
Board of Directors and approved by the Indemnitee.
3.2 DETERMINATION OF RIGHT TO INDEMNIFICATION.
3.2.1 BURDEN. If a claim under this Agreement is not paid by the
Company within 30 days of receipt of written notice, the right to
indemnification as provided by this Agreement will be enforceable by the
Indemnitee in any court of competent jurisdiction. The burden of proving by
clear and convincing evidence that indemnification or advances are not
appropriate will be on the Company. Neither the failure of the directors,
stockholders, or independent legal counsel to have made a determination prior
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to the commencement of the action that indemnification or advances are proper in
the circumstances because the Indemnitee has met the applicable standard of
conduct, nor an actual determination by the directors, stockholders or
independent legal counsel that the Indemnitee has not met the applicable
standard of conduct, will be a defense to the action or create a presumption
that the Indemnitee has not met the applicable standard of conduct.
3.2.2 STANDARD. The Indemnitee's Expenses incurred in connection
with any Proceeding concerning the Indemnitee's right to indemnification or
advances in whole or in part pursuant to this Agreement will be indemnified by
the Company regardless of the outcome of the Proceeding, unless a court of
competent jurisdiction determines that each of the material assertions made by
the Indemnitee in the Proceeding was not made in good faith or was frivolous.
4. OTHER AGREEMENTS
4.1 CHANGE IN CONTROL EVENT. If there is a Change in Control Event or a
Potential Change in Control Event of the Company (other than a Change in Control
Event or Potential Change in Control Event that has been approved by a majority
of the Company's Board of Directors who were directors immediately prior to the
Change in Control Event or Potential Change in Control Event), then with respect
to all matters thereafter arising concerning the rights of the Indemnitee to be
indemnified for Indemnified Costs, the Company will seek legal advice only from
independent counsel selected by the Indemnitee, and reasonably satisfactory to
the Company, and who has not otherwise performed other services for the Company
or the Indemnitee within the last three years ("SPECIAL INDEPENDENT COUNSEL").
The Special Independent Counsel, among other things, will render its written
opinion to the Company and the Indemnitee as to whether and to what extent the
Indemnitee would be permitted to be indemnified under applicable law. The
Company will pay the reasonable fees and expenses of the Special Independent
Counsel.
4.2 MAINTENANCE OF LIABILITY INSURANCE.
4.2.1 AFFIRMATIVE COVENANT OF THE COMPANY. While the Indemnitee
continues to serve as a director or officer of the Company, and thereafter while
the Indemnitee is subject to any possible Proceeding, the Company will maintain
in full force and effect directors' and officers' liability insurance ("D&O
INSURANCE") in reasonable amounts from reputable insurers. The Company has no
obligation, however, to obtain or maintain D&O Insurance if it determines in
good faith that insurance is not reasonably available, the premium costs for
insurance are disproportionate to the amount of coverage provided, the coverage
provided by insurance is so limited by exclusions that it provides an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company. If the Company has D&O Insurance at
the time it receives a notice that a Proceeding has commenced, the Company will
give prompt notice of such commencement to the insurers as required by the
respective policies. The Company will thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of the Indemnitee, all amounts
payable as a result of such proceeding in accordance with the terms of such
policies.
4.2.2 INDEMNITEE NAMED AS INSURED. In all D&O Insurance policies,
the Indemnitee will be named as an insured in a manner that provides the
Indemnitee the same rights and benefits accorded to the most favorably insured
of the Company's directors and officers.
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4.3 AGREEMENT TO SERVE. Indemnitee will serve or continue to serve as an
Agent of the Company for so long as the Indemnitee is duly elected or appointed
or until the Indemnitee voluntarily resigns. Indemnitee will give notice to the
Company at least thirty (30) days prior to voluntarily resigning.
4.4 EFFECT OF THIS AGREEMENT ON EMPLOYMENT AGREEMENT. Any present or
future employment agreement between the Indemnitee and the Company is not
modified by this Agreement. Nothing contained in this Agreement creates in the
Indemnitee any right of continued employment.
4.5 NATURE OF RIGHTS; SEPARABILITY. The rights afforded to the
Indemnitee by this Agreement are contract rights and may not be diminished,
eliminated or otherwise affected by amendments to the Company's Certificate of
Incorporation, Bylaws or agreements, including D&O Insurance policies. Each
provision of this Agreement, to the extent practicable, is a separate and
distinct agreement and independent of the others, so that if any provision of
this Agreement is held to be invalid or unenforceable for any reason, the
invalidity or unenforceability will not affect the validity or enforceability of
the other provisions. To the extent required, any provision of this Agreement
may be modified by a court of competent jurisdiction to preserve its validity
and to provide the Indemnitee with the broadest possible indemnification
permitted under applicable law.
4.6 SAVINGS CLAUSE. If this Agreement or any portion of it is
invalidated on any ground by any court of competent jurisdiction, then the
Company will nevertheless indemnify the Indemnitee as to Indemnified Costs with
respect to any Proceeding to the full extent permitted by any applicable portion
of this Agreement that is not invalidated, or by any applicable law.
4.7 REPAYMENT OF INDEMNIFIED COSTS. The Indemnitee will reimburse the
Company for all Indemnified Costs paid by the Company in defending any
Proceeding against the Indemnitee if and only to the extent that a court of
competent jurisdiction finally decides that the Indemnitee is not entitled to be
indemnified by the Company for such Indemnified Costs under the provisions of
applicable law, the Company's Bylaws, Certificate of Incorporation, this
Agreement, or otherwise. The Indemnitee will repay such amounts advanced only
if, and to the extent that, it is ultimately determined that Indemnitee is not
entitled to be indemnified for such Indemnified Costs by the Company pursuant to
this Agreement.
4.8 REPAYMENT. The Indemnitee will promptly repay to the Company any
amounts paid to the Indemnitee pursuant to other rights of indemnification or
under any insurance policy, to the extent those payments are duplicative of
payments under this Agreement.
5. INDEMNIFICATION PROCEDURE
5.1 NOTICE. Promptly after receipt of notice that a Proceeding has
commenced, the Indemnitee will, if a claim is to be made under this Agreement,
notify the Company of that fact. The failure to notify the Company will not
relieve it from any liability that it may have to the Indemnitee except to the
extent of the Company's material damage resulting from such failure.
5.2 COMPANY PARTICIPATION. The Company will be entitled to participate
in any Proceeding at its own expense and, except as otherwise provided below, to
the extent that it may wish, the Company may assume the defense of any
Proceeding for which indemnification is sought hereunder, with counsel
reasonably satisfactory to the Indemnitee. After the Company notifies the
Indemnitee of the Company's election to assume the defense of a Proceeding,
during the Company's good faith defense the
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Company will not be liable to the Indemnitee under this Agreement for any legal
or other expenses subsequently incurred by the Indemnitee in connection with the
defense of the Proceeding, other than reasonable costs of investigation or as
otherwise provided below. The Indemnitee will have the right to employ the
Indemnitee's counsel in any Proceeding, but the fees and expenses of the counsel
incurred after the Company assumes the defense of the Proceeding will be at the
expense of the Indemnitee, unless (a) the employment of counsel by the
Indemnitee has been authorized by the Company, (b) the Indemnitee has reasonably
concluded that there is be a conflict of interest between the Company and the
Indemnitee in the conduct of the defense of a Proceeding, or (c) the Company has
not in fact employed counsel to assume the defense of a Proceeding. In each of
the foregoing cases the fees and expenses of the Indemnitee's counsel will be at
the expense of the Company. The Company will not be entitled to assume the
defense of any Proceeding brought by or on behalf of the Company or as to which
the Indemnitee has made the conclusion that there may be a conflict of interest
between the Company and the Indemnitee.
5.3 SETTLEMENT. The Company will not settle or compromise any Proceeding
in any manner that would impose any penalty or limitation on the Indemnitee
without the Indemnitee's consent. The Indemnitee will not settle or compromise
any Proceeding without the Company's consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent or approval under this
Agreement.
5.4 SUBROGATION. If the Company pays Indemnified Costs, the Company will
be subrogated to the extent of such payment to all of the rights of recovery of
the Indemnitee against third parties. The Indemnitee will do all things
reasonably necessary to secure such rights, including the execution of documents
necessary to enable the Company effectively to bring suit to enforce such
rights.
6. MISCELLANEOUS PROVISIONS
6.1 AMENDMENTS; WAIVERS. Amendments, waivers, consents and approvals
under this Agreement must be in writing and designated as such. No failure or
delay in exercising any right will be deemed a waiver of such right.
6.2 INTEGRATION. This Agreement is the entire agreement between the
parties pertaining to its subject matter, and supersedes all prior agreements
and understandings of the parties in connection with such subject matter.
6.3 INTERPRETATION; GOVERNING LAW. This Agreement is to be construed as
a whole and in accordance with its fair meaning. This Agreement is to be
interpreted in accordance with the laws of the State of Delaware relating to
indemnification of Agents.
6.4 HEADINGS. Headings of Sections and subsections are for convenience
only and are not a part of this Agreement.
6.5 COUNTERPARTS. This Agreement may be signed in one or more
counterparts, all of which constitute one agreement.
6.6 SUCCESSORS AND ASSIGNS. This Agreement is binding upon and inures to
the benefit of each party and such party's respective heirs, personal
representatives, successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer any rights or remedies upon any other person.
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6.7 EXPENSES; LEGAL FEES. Each party will pay its own expenses in the
negotiation, preparation and performance of this Agreement. The prevailing party
in any action relating to this Agreement will be entitled to reasonable legal
fees, costs and expenses incurred in such action.
6.8 REPRESENTATION BY COUNSEL; INTERPRETATION. Each party acknowledges
that it has been given an opportunity to be represented by counsel in connection
with this Agreement. Any rule of law, including, but not limited to, Section
1654 of the California Civil Code, or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it, has no application and is expressly waived.
6.9 SPECIFIC PERFORMANCE. The Company acknowledges that in view of the
uniqueness of the matters contemplated by this Agreement, the Indemnitee would
not have an adequate remedy at law for money damages if this Agreement is not
being performed in accordance with its terms. The Company therefore agrees that
the Indemnitee will be entitled to specific enforcement of the terms hereof in
addition to any other remedy to which the Indemnitee may be entitled.
6.10 TIME IS OF THE ESSENCE. Time is of the essence in the performance
of each provision of this Agreement.
6.11 NOTICES. Any notice to be given hereunder must be in writing and
delivered as follows (or to another address designated in writing):
IF TO FLOUR CITY INTERNATIONAL, INC.:
______________________________________
______________________________________
IF TO THE INDEMNITEE:
______________________________________
______________________________________
The parties have signed this Agreement as of the date on page one.
INDEMNITEE
______________________________________________
Print Name:
FLOUR CITY INTERNATIONAL, INC.
________________________________
By: _________________________
Title: _________________________
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