INDEMNIFICATION AGREEMENT
Exhibit 10.1
This Agreement made this ______day of ____________, 20___by and between Xxxxx Corporation, an
Ohio corporation (the “Company”), and _____________________, a Director of the Company (“Indemnitee”);
WHEREAS, the Company and Indemnitee are each aware of the exposure to litigation of officers,
Directors and representatives of the Company as such persons exercise their duties to the Company;
WHEREAS, the Company and Indemnitee are also aware of conditions in the insurance industry
that have affected and may affect in the future the Company’s ability to obtain appropriate
directors’ and officers’ liability insurance on an economically acceptable basis;
WHEREAS, the Company desires to continue to benefit from the services of highly qualified,
experienced and otherwise competent persons such as Indemnitee; and
WHEREAS, Indemnitee desires to serve or to continue to serve the Company as a Director of the
Company, or, if requested to do so by the Company, as a director, officer, trustee, employee,
representative or agent of another corporation, joint venture, trust or other enterprise, for so
long as the Company continues to provide on an acceptable basis adequate and reliable
indemnification against certain liabilities and expenses which may be incurred by Indemnitee;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, the parties hereto agree as follows:
1. INDEMNIFICATION.
(a) The Company shall indemnify Indemnitee to the fullest extent permitted by law with
respect to Indemnitee’s activities as a Director of the Company and/or as a person who is serving
or has served at the request of the Company as a director, officer, trustee, employee,
representative or agent of another corporation, joint venture, trust or other enterprise, domestic
or foreign, against expenses (including, without limitation, attorneys’ fees), judgments, fines,
and amounts paid in settlement, actually and reasonably incurred by Indemnitee (“Expenses”) in
connection with any claim against Indemnitee, whether or not such claim is brought by any party who
may be an “insured person” under the Company’s directors’ and officers’ liability insurance, which
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is the subject of any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, investigative or otherwise and whether formal or informal (a
“Proceeding”), to which Indemnitee was, is, or is threatened to be made a party by reason of
anything done or not done by Indemnitee in any such capacity.
(b) The rights of Indemnitee hereunder shall be in addition to any rights Indemnitee may now
or hereafter have to indemnification by the Company or otherwise. More specifically, the parties
hereto intend that Indemnitee shall be entitled to receive, as determined by Indemnitee, payment to
the maximum extent permitted by one or any combination of the following:
(i) the payments provided by the Company’s Amended Regulations in effect on the date
hereof, a copy of the relevant portions of which are attached hereto as Exhibit I;
(ii) the payments provided by the Articles of Incorporation, Code of Regulations, or
By-laws or their equivalent of the Company in effect at the time Expenses are incurred by
Indemnitee;
(iii) the payments allowable under Ohio law in effect at the date hereof;
(iv) the payments allowable under the law of the jurisdiction under which the Company
is incorporated at the time Expenses are incurred by Indemnitee;
(v) the payments available under liability insurance obtained by the Company; and
(vi) such other payments as are or may be otherwise available to Indemnitee.
Combination of two or more of the payments provided by (I) through (vi) shall be available to
the extent that the Applicable Document, as hereafter defined, does not require that the payments
provided therein be exclusive of other payments. The document or law providing for any of the
payments listed in items (i) through (vi) above is referred to in this Agreement as the “Applicable
Document.” The Company hereby undertakes to use its best efforts to assist Indemnitee, in all
proper and legal ways, to obtain the payments selected by Indemnitee under items (i) through (vi)
above.
(c) For purposes of this Agreement, references to “other enterprises” shall include employee
benefit plans for employees of the Company or of any of its subsidiaries without regard to
ownership of such plans; references to “fines” shall include any excise taxes assessed on
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, trustee, employee, representative or
agent of the Company which imposes duties on, or involves services by, Indemnitee with respect to
an employee
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benefit plan, its participants or beneficiaries; references to the masculine shall include the
feminine; references to the singular shall include the plural and vice versa; and if Indemnitee
acted in good faith and in a manner that Indemnitee reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have
acted in a manner consistent with the standards required for indemnification by the Company under
the Applicable Documents.
2. INSURANCE.
The Company shall maintain directors’ and officers’ liability insurance which is at least as
favorable to Indemnitee as the policy in effect on the date hereof and for so long as Indemnitee’s
services are covered hereunder, provided and to the extent that such insurance is available on a
reasonable commercial basis. However, Indemnitee shall continue to be entitled to the
indemnification rights provided hereunder regardless of whether liability or other insurance
coverage is at any time obtained or retained by the Company. Any payments in fact made to
Indemnitee under an insurance policy obtained or retained by the Company shall reduce the
obligation of the Company to make payments hereunder by the amount of the payments made under any
such insurance policy. In the event that insurance becomes unavailable in the amount or scope of
coverage of the policy in effect on the date hereof on a reasonable commercial basis and the
Company foregoes maintenance of all or a portion of such insurance coverage, the Company shall
stand as a self-insurer with respect to the coverage, or portion thereof, not retained, and shall
indemnify Indemnitee against any loss arising out of the reduction or cancellation of such
insurance coverage.
3. PAYMENT OF EXPENSES.
At Indemnitee’s request, the Company shall pay the Expenses as and when incurred by
Indemnitee, after receipt of written notice pursuant to Paragraph 6 hereof and an undertaking in
the form of Exhibit II attached hereto by or on behalf of Indemnitee (I) to repay such amounts so
paid on Indemnitee’s behalf if it shall ultimately be determined under the Applicable Document that
Indemnitee is required to repay such Expenses and (ii) to reasonably cooperate with the Company
concerning the Proceeding. That portion of Expenses which represents attorneys’ fees and other
costs incurred in defending any Proceeding shall be paid by the Company within thirty (30) days of
its receipt of such notice, together with reasonable documentation evidencing the amount and nature
of such Expenses.
4. ESCROW RESERVE.
The Company shall dedicate up to an aggregate of ten million dollars ($10,000,000) as
collateral security for the initial funding of its obligations hereunder and under similar
agreements with other directors, officers and representatives by
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depositing assets or bank letters of credit in escrow or reserving lines of credit that may be
drawn down by an escrow agent in the dedicated amount (the “Escrow Reserve”); provided, however,
that the terms of any such Escrow Reserve may provide that the cash, securities or letters or lines
of credit available therefor shall be utilized for the indemnification or advancement of expenses
provided for herein only in the event that there shall have occurred within the preceding five
years a Change in Control of the Company, as defined below. The Company shall promptly provide
Indemnitee with a true and complete copy of the agreement relating to the establishment and
operation of the Escrow Reserve, together with such additional documentation or information with
respect to the escrow as Indemnitee may from time to time reasonably request. The Company shall
promptly deliver an executed copy of this Agreement to the Escrow Reserve agent to evidence to the
agent that Indemnitee is a beneficiary of the Escrow Reserve and shall deliver to Indemnitee the
escrow agent’s signed receipt evidencing that delivery. For purposes of this Agreement, a “Change
in Control” of the Company shall have occurred if at any time any of the following events shall
occur:
(i) a tender offer shall be made and consummated for the ownership of securities of the
Company representing 25% or more of the combined voting power of Company’s then outstanding
voting securities, (ii) the Company shall be merged or consolidated with another corporation
and as a result of such merger or consolidation less than 75% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the aggregate by the
former shareholders of the Company, other than affiliates (within the meaning of the
Securities Exchange Act of 1934 (the “Exchange Act”)) of any party to such merger or
consolidation, as the same shall have existed immediately prior to such merger or
consolidation, (iii) the Company shall sell substantially all of its assets to another
corporation which is not a wholly-owned subsidiary of the Company, (iv) any person (as such
term is used in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company’s then outstanding securities; or (v)
during any period of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company cease for any reason to constitute at least
a majority thereof unless the election, or the nomination for election by the Company’s
shareholders, of each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the period. For
purposes of this Agreement, ownership of voting securities shall take into account and
include ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) of the
Exchange Act (as then in effect).
5. ADDITIONAL RIGHTS.
The indemnification provided in this Agreement shall not be exclusive of any other
indemnification or right to which Indemnitee may be entitled and shall continue
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after Indemnitee has ceased to occupy a position as an officer, director or representative as
described in Paragraph 1 above with respect to Proceedings relating to or arising out of
Indemnitee’s acts or omissions during Indemnitee’s service in such position.
6. NOTICE TO COMPANY.
Indemnitee shall provide to the Company prompt written notice of any Proceeding brought,
threatened, asserted or commenced against Indemnitee with respect to which Indemnitee may assert a
right to indemnification hereunder; provided that failure to provide such notice shall not in any
way limit Indemnitee’s rights under this Agreement.
7. COOPERATION IN DEFENSE AND SETTLEMENT.
Indemnitee shall not make any admission or effect any settlement with respect to a Proceeding
without the Company’s written consent unless Indemnitee shall have determined to undertake his or
her own defense in such matter and has waived the benefits of this Agreement in writing delivered
to the Company. The Company shall not settle any Proceeding to which Indemnitee is a party in any
manner which would impose any Expense on Indemnitee without his or her written consent. Neither
Indemnitee nor the Company will unreasonably withhold consent to any proposed settlement.
Indemnitee and the Company shall cooperate to the extent reasonably possible with each other and
with the Company’s insurers, in attempts to defend or settle such Proceeding.
8. ASSUMPTION OF DEFENSE.
Except as otherwise provided below, to the extent that it may wish, the Company jointly with
any other indemnifying party similarly notified will be entitled to assume Indemnitee’s defense in
any Proceeding, with counsel mutually satisfactory to Indemnitee and the Company. After notice
from the Company to Indemnitee of the Company’s election so to assume such defense, the Company
will not be liable to Indemnitee under this Agreement for 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 counsel in such Proceeding,
but the fees and expenses of such counsel incurred after notice from the Company of its assumption
of the defense thereof shall be at Indemnitee’s expense unless:
(a) the employment of counsel by Indemnitee has been authorized by the Company;
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(b) counsel employed by the Company initially is unacceptable or later becomes
unacceptable to Indemnitee and such unacceptability is reasonable under then existing
circumstances;
(c) Indemnitee shall have reasonably concluded that there may be a conflict of interest
between Indemnitee and the Company in the conduct of the defense of such Proceeding; or
(d) the Company shall not have employed counsel promptly to assume the defense of such
Proceeding.
In each of the cases set forth in items (a) through (d) above, the fees and expenses of counsel
shall be at the expense of the Company and subject to payment pursuant to this Agreement. The
Company shall not be entitled to assume the defense of Indemnitee in any Proceeding brought by or
on behalf of the Company or as to which Indemnitee shall have reached either of the conclusions
provided for in clauses (b) or (c) above.
9. ENFORCEMENT.
In the event that any dispute or controversy shall arise under this Agreement between
Indemnitee and the Company with respect to whether Indemnitee is entitled to indemnification in
connection with any Proceeding or with respect to the amount of Expenses incurred, then with
respect to each such dispute or controversy Indemnitee may seek to enforce this Agreement through
legal action or, at Indemnitee’s sole option and request, through arbitration. If arbitration is
requested, such dispute or controversy shall be submitted by the parties to binding arbitration in
the City of Cleveland, State of Ohio, before a single arbitrator agreeable to both parties. If the
parties cannot agree on a designated arbitrator within fifteen (15) days after arbitration is
requested in writing by either of them, the arbitration shall proceed in the City of Cleveland,
State of Ohio, before an arbitrator appointed by the American Arbitration Association. In either
case, the arbitration proceeding shall commence promptly under the rules then in effect of that
Association and the arbitrator agreed to by the parties or appointed by that Association shall be
an attorney other than an attorney who has, or is associated with a firm having associated with it
an attorney which has, been retained by or performed services for the Company or Indemnitee at any
item during the five (5) years preceding the commencement of arbitration. The award shall be
rendered in such form that judgment may be entered thereon in any court having jurisdiction
thereof. The prevailing party shall be entitled to prompt reimbursement of any costs and expenses
(including, without limitation, reasonable attorney’s fees) incurred in connection with such legal
action or arbitration provided that Indemnitee shall not be obligated to reimburse the Company
unless the arbitrator or court which resolves the dispute determines that Indemnitee acted in bad
faith in bringing such action or arbitration.
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10. EXCLUSIONS.
Notwithstanding the scope of indemnification which may be available to Indemnitee from time to
time under any Applicable Document, no indemnification, reimbursement or payment shall be required
of the Company hereunder with respect to:
(a) any claim or any part thereof as to which Indemnitee shall have been adjudged by a
court of competent jurisdiction from which no appeal is or can be taken, by clear and
convincing evidence, to have acted or failed to act with deliberate intent to cause injury
to the Company or with reckless disregard for the best interests of the Company;
(b) any claim or any part thereof arising under Section 16(b) of the Exchange Act
pursuant to which Indemnitee shall be obligated to pay any penalty, fine, settlement or
judgment;
(c) any obligation of Indemnitee based upon or attributable to Indemnitee gaining in
fact any personal gain, profit or advantage to which Indemnitee was not entitled; or
(d) any Proceeding initiated by Indemnitee without the consent or authorization of the
Board of Directors of the Company, provided that this exclusion shall not apply with respect
to any claims brought by Indemnitee (i) to enforce Indemnitee’s rights under this Agreement
or (ii) in any Proceeding initiated by another person or entity whether or not such claims
were brought by Indemnitee against a person or entity who was otherwise a party to such
Proceeding.
Nothing in this Paragraph 10 shall eliminate or diminish the Company’s obligations to advance
that portion of Indemnitee’s Expenses which represent attorneys’ fees and other costs incurred in
defending any Proceeding pursuant to Paragraph 3 of this Agreement.
11. EXTRAORDINARY TRANSACTIONS.
The Company covenants and agrees that, in the event of any merger, consolidation or
reorganization in which the Company is not the surviving entity, any sale of all or substantially
all of the assets of the Company or any liquidation of the Company (each such event is hereinafter
referred to as an “extraordinary transaction”), the Company shall:
(a) Have the obligations of the Company under this Agreement expressly assumed by the
survivor, purchaser or successor, as the case may be, in such extraordinary transaction; or
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(b) Otherwise adequately provide for the satisfaction of the Company’s obligations
under this Agreement, in a manner acceptable to Indemnitee.
12. NO PERSONAL LIABILITY.
Indemnitee agrees that neither the Directors nor any officer, employee, representative or
agent of the Company shall be personally liable for the satisfaction of the Company’s obligations
under this Agreement, and Indemnitee shall look solely to the assets of the Company and the Escrow
Reserve referred to in Paragraph 4 hereof for satisfaction of any claims hereunder.
13. 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 (2) 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.
14. SEVERABILITY.
If any provision, phrase, or other portion of this Agreement should be determined by any court
of competent jurisdiction to be invalid, illegal or unenforceable, in whole or in part, and such
determination should become final, such provision, phrase or other portion shall be deemed to be
severed or limited, but only to the extent required to render the remaining provisions and portions
of this Agreement enforceable, and this Agreement as thus amended shall be enforced to give effect
to the intention of the parties insofar as that is possible.
15. SUBROGATION.
In the event of any payment under this Agreement, the Company shall be subrogated to the
extent thereof to all rights to indemnification or reimbursement against any insurer or other
entity or person vested in Indemnitee, who shall execute all instruments and take all other action
as shall be reasonably necessary for the Company to enforce such rights.
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16. GOVERNING LAW.
The parties hereto agree that this Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Ohio.
17. NOTICES.
All notices, requests, demands and other communications hereunder shall be in writing and
shall be considered to have been duly given if delivered by hand and receipted for by the party to
whom the notice, request, demand or other communication shall have been directed, or mailed by
certified mail, return receipt requested, with postage prepaid:
| (a) If to the Company, to: | XXXXX CORPORATION | |||
| Xxxxx Xxxxxx | ||||
| Xxxxxxxxx, Xxxx 00000-0000 | ||||
| Attention: | Vice President and | |||
| General Counsel | ||||
(b) If to Indemnitee, to: |
||||
or to such other or further address as shall be designated from time to time by Indemnitee or the
Company to the other.
18. TERMINATION.
This Agreement may be terminated by either party upon not less than sixty (60) days’ prior
written notice delivered to the other party, but such termination shall not in any way diminish the
obligations of the Company hereunder (including the obligation to maintain the Escrow Reserve
referred to in Paragraph 4 hereof) with respect to Indemnitee’s activities prior to the effective
date of the termination.
19. AMENDMENTS.
This Agreement and the rights and duties of Indemnitee and the Company hereunder may not be
amended, modified or terminated except by written instrument signed and delivered by the parties
hereto.
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20. BINDING EFFECT.
This Agreement is and shall be binding upon and shall inure to the benefit of the parties
thereto and their respective heirs, executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above
written.
| INDEMNITEE | XXXXX CORPORATION |
|||
| By | ||||
Title: Director |
||||
| Title | ||||
| And by | ||||
| Title | ||||
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