EXHIBIT 10.42
INDEMNIFICATION AGREEMENT
AGREEMENT between OM Group, Inc., a Delaware corporation (the
"Company"), and ___________ (the "Indemnitee") dated __________.
WHEREAS, it is essential to the Company to retain and attract as
directors, officers and representatives the most capable persons available; and
WHEREAS, Indemnitee is a director, officer or representative of the
Company; and
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors, officers and
representatives of public companies in today's environment; and
WHEREAS, in recognition of the Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's continued
service to the Company in an effective manner, the Company wishes to provide in
this Agreement for the indemnification of and the advancing of expenses to
Indemnitee to the full extent (whether partial or complete) permitted by law and
as set forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Indemnitee under the Company's directors' and
officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
(a) Change in Control shall be deemed to have occurred if (i)
any "person" (as such term is used in Sections 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, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding
Voting Securities without the prior approval of the Board of Directors,
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 all or substantially all the Company's
assets.
(b) Claim shall mean any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation, whether
conducted by the Company or any other party, that Indemnitee in good
faith believes might lead to the institution of any such action, suit
or proceeding, whether civil, criminal, administrative, investigative
or other.
(c) Expenses shall mean all costs, expenses (including
attorneys' fees) and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal) or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event (including
all interest, assessments and other charges paid or payable in
connection with or in respect of any of the foregoing).
(d) Judgments shall mean judgments, fines, penalties and
amounts paid in settlement that are paid or payable in connection with
any Claim relating to any Indemnifiable Event (including all interest,
assessments and other charges paid or payable in connection with or in
respect of any of the foregoing).
(e) Indemnifiable Event shall mean any event or occurrence
related to the fact that Indemnitee is or was a director, director
nominee, officer or representative of the Company, or is or was serving
at the request of the Company as a director, trustee, officer,
employee, agent or representative of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by reason of anything done
or not done by Indemnitee in any such capacity.
(f) Reviewing Party shall mean any appropriate person or body
under Section 145 of the Delaware General Corporation Law, including a
body consisting of a member or members of the Company's Board of
Directors or any other person or body appointed by the Board (including
the special, independent counsel referred to in Section 3) who is not a
party to the particular Claim for which Indemnitee is seeking
indemnification.
(g) Voting Securities shall mean any securities of the Company
that vote generally in the election of directors.
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2. Scope of Indemnification.
(a) Indemnification for Judgments and Expenses. 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, a Claim by reason of (or arising in part out of)
an Indemnifiable Event, the Company shall indemnify Indemnitee to the
fullest extent permitted by law against any and all Expenses and
Judgments arising from or relating to such Claim. Except as otherwise
provided in Section 2(b), such indemnification shall be made as soon as
practicable, but in any event not later than thirty (30) days, after
written demand therefor is presented to the Company by or on behalf of
the Indemnitee.
(b) Indemnification and Advance Payment of Expenses. Any and
all Expenses and any and all expenses referred to in Section 2(c) shall
be paid by the Company promptly as they are incurred by Indemnitee (any
such payment of expenses by the Company is hereinafter referred to as
an "Expense Advance"). Indemnitee shall be obligated, and hereby
agrees, to repay the amount of Expenses so paid in the event that
Indemnitee shall have been adjudged to be liable to the Company, unless
and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper. Indemnitee hereby
further agrees to cooperate reasonably with the Company concerning any
Claim.
(c) Indemnification for Additional Expenses. The Company shall
indemnify Indemnitee against any and all expenses (including attorneys'
fees) that are incurred by Indemnitee in connection with any claim
asserted against or action brought by Indemnitee for (i)
indemnification of Expenses or Judgments or advance payment of Expenses
by the Company under this Agreement or under any other agreement, the
Company's Certificate of Incorporation, statute or rule of law now or
hereafter in effect relating to Claims for Indemnifiable Events and
(ii) recovery under any directors' and officers' liability insurance
policy or policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the
case may be.
(d) Partial Indemnity. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some
or a portion of the Judgments and Expenses arising from or relating to
a Claim but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof
to which Indemnitee is entitled.
(e) Indemnification of Successful Defense Expenses.
Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal
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without prejudice, Indemnitee shall be indemnified against all Expenses
incurred in connection therewith.
3. Reviewing Party Determinations.
(a) General Rules. Notwithstanding the provisions of Section
2, the obligations of the Company under Section 2(a) shall be subject
to the condition that the Reviewing Party shall not have determined (in
a written opinion, in any case in which the special, independent
counsel referred to in Section 4 hereof is involved) that Indemnitee
would not be permitted to be indemnified under applicable law;
provided, however, that if Indemnitee has commenced 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
until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed)
and any such determination by the Reviewing Party shall be modified, to
the extent necessary, to conform to such final judicial determination.
(b) Selection of Reviewing Party. If there has not been a
Change in Control, the Reviewing Party shall be selected by the Board
of Directors. If there has been such a Change in Control, the Reviewing
Party shall be the special, independent counsel referred to in Section
4 hereof.
(c) Judicial Review. If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantially 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 Delaware 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, and 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.
(d) Burden of Proof. In connection with any determination by
the Reviewing Party pursuant to Section 3(a), or by a court of
competent jurisdiction pursuant to Section 3(c) or otherwise, as to
whether Indemnitee is entitled to be indemnified hereunder, the burden
of proof shall be on the Company to establish by clear and convincing
evidence that Indemnitee is not so entitled.
4. Change in Control. The Company agrees that if there is a
Change in Control of the Company then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments under this
Agreement or under any other agreement, the Company's Certificate of
Incorporation, statute or rule of law now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal advice only from
special, independent counsel selected by Indemnitee and approved by the Company
(which approval shall
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not be unreasonably withheld), and who has not otherwise performed services for
the Company or Indemnitee within the last five years (other than in connection
with such matters); provided, however, a majority of the Company's Board of
Directors, which majority were directors immediately prior to such Change in
Control, may waive this requirement. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to indemnify
fully such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.
5. No Presumption. 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.
6. Nonexclusivity. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may now or hereafter have to
indemnification by the Company. More specifically, the Parties intend that
Indemnitee shall be entitled to indemnification to the maximum extent permitted
by any or all of the following:
(a) The fullest benefits provided by the Company's Certificate
of Incorporation in effect on the date hereof, a copy of the relevant
portions of which are attached hereto as Exhibit A;
(b) The fullest benefits provided by the Company's Certificate
of Incorporation and Bylaws or their equivalent of the Company in
effect at the time the Indemnifiable Event occurs or at the time
Expenses are incurred by Indemnitee;
(c) The fullest benefits allowable under Delaware law in
effect at the date hereof or as the same may be amended to the extent
that such benefits are increased thereby;
(d) The fullest benefits allowable under the law of the
jurisdiction under which the Company exists at the time the
Indemnifiable Event occurs or at the time Expenses are incurred by the
Indemnitee; and
(e) Such other benefits as are or may be otherwise available
to Indemnitee pursuant to this Agreement, any other agreement or
otherwise.
The parties intend that combination of two or more of the benefits
referred to in (a) through (e) shall be available to Indemnitee to the extent
that the document or law providing for such benefits does not require that the
benefits provided therein be exclusive of other benefits. The Company hereby
undertakes to use its best efforts to assist Indemnitee, in all proper and legal
ways, to obtain all such benefits to which Indemnitee is entitled.
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7. Liability Insurance. The rights of the Indemnitee hereunder
shall also be in addition to any other rights Indemnitee may now or hereafter
have under policies of insurance maintained by the Company or otherwise. To the
extent the Company maintains an insurance policy or policies providing
directors' and officers' liability insurance, Indemnitee shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company director, officer or
representative.
The Company shall maintain such insurance coverage for so long as
Indemnitee's services are covered hereunder, provided and to the extent that
such insurance is available on a basis acceptable to the Company. In the event
that such insurance becomes unavailable in the amount of the present policy
limits or in the present scope of coverage at premium costs and on other terms
acceptable to the Company, then the Company may forego maintenance of all or a
portion of such insurance coverage. However, in the event of any reduction in
(or cancellation of) such insurance coverage (whether voluntary or involuntary),
the Company shall, and hereby agrees to, stand as a self-insurer with respect to
the coverage, or portion thereof, not retained, and shall indemnify the
Indemnitee against any loss arising out of the reduction in or cancellation of
such insurance coverage.
8. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of
action of the Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of legal action within such two-year
period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter period shall
govern.
9. Amendments. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions thereof (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 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.
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, article 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
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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, and personal and legal representatives. This Agreement shall continue in
effect regardless of whether Indemnitee continues to serve as a director,
officer or representative of the Company or 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) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.
14. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.
Executed and effective as of this ____ day of _____, ____.
OM GROUP, INC.
By:
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Name:
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Title:
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INDEMNITEE:
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Name:
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