EXHIBIT 10.7
FORM OF
INDEMNITY AGREEMENT
This agreement is made and entered into as of the 21st day of May, 1999, by
and among AOA CAPITAL CORP, a Minnesota corporation ("Capital Corp"), AOA
HOLDING LLC, a Minnesota limited liability company ("Holding"), and ____________
("Indemnitee").
WHEREAS, corporate directors, and governors or managers of limited
liability companies (and persons who have consented to become directors,
governors or managers) are faced with the prospects of significant personal
liability arising out of recent court decisions dealing with the activities of
such individuals and the increasing unavailability and high cost of insurance;
WHEREAS, Capital Corp and Holding (jointly the "Indemnitors") realize that,
to attract and retain qualified directors, governors or managers to consent to
act as such, they must provide them with increased protection against personal
liability and the costs of litigation; and
WHEREAS, Capital Corp and Holding have requested that the Indemnitee serve
as a director, governor or manager and the Indemnitee wishes to so serve;
NOW THEREFORE, the parties hereby agree as follows:
1. Agreement to Serve. Indemnitee has consented to serve as a member of the
board of directors of Capital Corp and a governor or manager of Holding. The
Indemnitors expressly confirm and agree that they have entered into this
agreement and assumed the obligations which are imposed on them in order to
induce Indemnitee to serve as a director of Capital Corp and a governor or
manager of Holding and acknowledges that Indemnitee is relying upon this
agreement in serving in such capacity.
2. Maintenance of Insurance. Indemnitors may, but shall not be required to,
put into effect policies of insurance which provide insurance protection for its
directors, officers, governors and managers against liabilities which may be
incurred by them on account of their services to Capital Corp and Holding. If
such insurance is maintained by Capital Corp or Holding, such insurance, to the
extent of the coverage it provides, shall be primary and this agreement of
indemnity shall be effective only to the extent that Indemnitee is not
reimbursed pursuant to such insurance coverage. If such insurance is not
maintained by Capital Corp or Holding, Indemnitee shall be indemnified fully by
the Indemnitors in accordance with the provisions of this agreement.
3. Indemnification. The Indemnitors jointly and severally agree to
indemnify Indemnitee from any liability which may be incurred as a result of the
Indemnitee's consenting to serve (and serving) as a director of Capital Corp and
consenting to serve (and serving) as a governor or manager of Holding in
accordance with, and to the fullest extent authorized by, as the case may be, of
the provisions of the Minnesota Business Corporation Act, or the Minnesota
Limited Liability Company Act, as either of such acts, as it may from time to
time be amended.
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4. Additional Indemnification. In addition to the indemnification provided
in the preceding Section and subject to the exclusions set forth in Section 6
hereof, the Indemnitors agree jointly and severally to hold harmless and to
indemnify Indemnitee against any and all expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative to which the Indemnitee is, was, or at any time becomes a witness
or party or is threatened to be made a witness or party by reason of the fact
that Indemnitee has consented to be, is or was at any time a director, officer,
employee, or agent of the Indemnitors, except with respect to an action
commenced by Indemnitee against either Indemnitor or by Indemnitee as a
derivative action by or in the right of either Indemnitor. With respect to an
action commenced by Indemnitee against either Indemnitor or by Indemnitee as a
derivative action by or in the right of either Indemnitor, Indemnitee shall only
be indemnified as determined by the board of directors of the Indemnitor that is
a party in the specific case.
5. Contribution. If the indemnification provisions provided in Sections 3
and 4 should, under applicable law, be unenforceable or insufficient to hold
Indemnitee harmless in respect of expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Indemnitee by reason of the fact of Indemnitee's consent to serve or service
to or at the request of either Capital Corp or Holding, then the Indemnitors
jointly and severally agree that, for purposes of this Section 5, Capital Corp
and Holding shall be treated as if they were a party who was or was threatened
to be made a party defendant to the threatened, pending or completed action,
suit or proceeding in which Indemnitee was involved and the Indemnitors shall
jointly and severally contribute to the amounts paid or payable by Indemnitee as
a result of such expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Indemnitee in
such proportion as is appropriate to reflect (i) the relative benefits accruing
to the Indemnitors on the one hand and Indemnitee on the other and which arose
out of the action or inaction or alleged action or inaction underlying the
threatened, pending or contemplated suit or proceeding in which Indemnitee was
involved, (ii) the relative fault of the Indemnitors on the one hand and
Indemnitee on the other in connection with such action or inaction, or alleged
action or inaction, and (iii) any other relevant equitable considerations. For
purposes of this Section 5, the relative benefit of the Indemnitors shall be
deemed to be the benefits accruing to either or both of them and to all of the
directors, officers, employees and agents (other than Indemnitee) as a group and
treated as one entity, and the relative benefit of Indemnitee shall be deemed to
be an amount not greater than Indemnitee's director's compensation from the
Capital Corp or Holding during the first year in which the action or inaction,
or alleged action or inaction, forming the basis for the threatened, pending or
contemplated suit or proceeding was alleged to have occurred. The relative fault
shall be determined by reference to, among other things, the fault of the
Indemnitors and all of its directors, officers, employees and agents (other than
Indemnitee) as a group and treated as one entity, and Indemnitee's and such
group's relative intent, knowledge, access to information and opportunity to
have altered or prevented the action or inaction, or alleged action or inaction,
forming the basis for the threatened, pending or contemplated suit or
proceeding. Determinations and authorizations of payments under this Section
shall be made in the manner specified in Section 9, and Indemnitee shall have
the same remedies with regard thereto as set forth
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in Section 10.
6. Limitations on Indemnity and Contribution. No indemnity pursuant to
Section 4 or contribution pursuant to Section 5 shall be paid by the
Indemnitors:
6.1. for which and to the extent that payment is actually made to
Indemnitee under a valid and collectible insurance policy;
6.2. for which and to the extent that Indemnitee is indemnified or
receives a recovery other than pursuant to this agreement;
6.3. with respect to any proceeding by or in the right of either
Indemnitor, except that indemnity or contribution shall be made, to the
extent permitted by law, against reasonable expenses in respect of any
proceeding in which Indemnitee shall not have been adjudged liable to such
Indemnitor;
6.4. with respect to acts or omissions which (in the case of directors
of Capital Corp) are prohibited under the Minnesota Business Corporation
Act, as amended from time to time or, (in the case of Holding) are
prohibited under the Minnesota Limited Liability Company Act, as amended
from time to time;
6.5. if a final decision by a court having jurisdiction in the matter
shall determine that such indemnification or contribution is not lawful.
7. Advancement of Expenses. The Indemnitors shall pay the costs and
expenses reasonably incurred by Indemnitee in investigating, defending, and
appealing any threatened, pending or completed civil or criminal action, suit or
proceeding, administrative or investigative, against Indemnitee in advance of
final determination, upon receipt by the Indemnitors of (i) a written
affirmation by Indemnitee of Indemnitee's good faith belief that Indemnitee has
met the standard of conduct necessary for indemnification or contribution, if
any, and (ii) a written undertaking by or on behalf of Indemnitee to repay any
amounts so advanced if and to the extent it ultimately shall be determined that
Indemnitee is not entitled to indemnification or contribution by the
Indemnitors. Determinations and authorizations of payments under this Section
shall be made in the manner specified in Section 9, and Indemnitee shall have
the same remedies with regard thereto as set forth in Section 10.
8. Notification and Defense of Claim. Promptly after receipt by Indemnitee
of notice of the commencement of any action, suit or proceeding, Indemnitee
shall, if a claim is to be made against the Indemnitors under this agreement,
notify the Indemnitors of the commencement of the action. The omission to notify
the Indemnitors will not relieve the Indemnitors of liability under this
agreement unless the Indemnitors are prejudiced by the omission, and will not
relieve them from any other liability which they may have to Indemnitee. With
respect to any such action, suit or proceeding as to which Indemnitee notifies
the Indemnitors:
8.1. The Indemnitors will be entitled to participate in the defense at
their own
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expense.
8.2. Except as otherwise provided below, the Indemnitors, jointly with
any other indemnifying party similarly notified, will be entitled to assume
the defense with counsel reasonably satisfactory to Indemnitee. After
notice from either Indemnitor to Indemnitee of its election to assume the
defense of a suit, such Indemnitor will not be liable to Indemnitee under
this agreement for any legal or other expenses subsequently incurred by
Indemnitee in connection with the defense, other than as provided below.
Indemnitee shall have the right to employ Indemnitee's own counsel in such
action, suit or proceeding, but the fees and expenses of such counsel
incurred after notice from either Indemnitor of its assumption of the
defense shall be at the expense of Indemnitee unless (i) the employment of
counsel by Indemnitee has been authorized by such Indemnitor, (ii)
Indemnitee shall have concluded reasonably that there may be a conflict of
interest between such Indemnitor and Indemnitee in the conduct of the
defense of such action or (iii) such Indemnitor shall not in fact have
employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel shall be at the expense of such
Indemnitor. The Indemnitors shall not be entitled to assume the defense of
any action, suit or proceeding brought by or in the right of such
Indemnitor or as to which Indemnitee shall have made the conclusion
provided for in (ii) above.
8.3. An Indemnitor shall not be liable to indemnify Indemnitee under
this agreement for any amounts paid in settlement of any action or claim
effected without such Indemnitor's written consent. The Indemnitors shall
not settle any action or claim in any manner which would impose any penalty
or liability on Indemnitee without Indemnitee's prior written consent.
Neither the Indemnitors nor Indemnitee will unreasonably withhold their
consent to any proposed settlement.
9. Determination of Right to Indemnification.
9.1. To obtain indemnification under this agreement, Indemnitee shall
submit to the Indemnitors a written request, including such documentation
and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to
indemnification. In the case of each Indemnitor, the secretary of such
Indemnitor shall, promptly upon receipt of such a request for
indemnification, advise the board of directors or governors of such
Indemnitor in writing that Indemnitee has requested indemnification.
9.2. A determination with respect to Indemnitee's entitlement to
indemnification from an Indemnitor shall be made in the specific case (i)
by the board of directors (or governors) of such Indemnitor by a majority
vote of a quorum consisting of directors or governors not parties to the
proceeding, (ii) by independent legal counsel, (a) selected by the board of
directors or governors of such Indemnitor by vote as set forth in (i), or
(b) if the requisite quorum of the board of directors or governors of such
Indemnitor cannot be obtained, by a majority vote of the full board of
directors or governors, in which vote directors or governors who are
parties may participate, or (iii) by vote of the shareholders of
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such Indemnitor.
9.3. If the determination of entitlement to indemnification is to be
made by independent counsel under Section 9.2 of this agreement, the
Indemnitors shall give written notice to Indemnitee advising Indemnitee of
the identity of the independent counsel as selected. The Indemnitors shall
pay any and all reasonable fees and expenses of independent counsel
incurred by such independent counsel in connection with acting pursuant to
this agreement. Upon the commencement of any adjudication or arbitration
under Section 10 of this agreement, independent counsel shall be discharged
and relieved of any further responsibility in such capacity, subject to the
applicable standards of professional conduct then prevailing.
9.4. Indemnitee shall cooperate with the person, persons or entity
making the determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. All reasonable costs or
expenses, including attorneys' fees and disbursements, incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Indemnitors, irrespective of the
determination as to Indemnitee's entitlement to indemnification.
9.5. In making any determination with respect to entitlement or
indemnification hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification
under this agreement, and the Indemnitors shall have the burden of proof to
overcome the presumption. The termination of any action, suit or proceeding
which is covered by this agreement, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption for the purpose of this agreement that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Indemnitors and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the conduct was unlawful.
9.6. A determination with respect to entitlement to indemnification
shall be made and delivered in a written opinion within 90 days after
receipt by the Indemnitors of the request for indemnification. If it is
determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within 10 days after such determination.
10. Remedies of Indemnitee.
10.1. In the event that (i) a determination is made pursuant to
Section 9 of this agreement that Indemnitee is not entitled to
indemnification under this agreement, (ii) the determination of entitlement
to indemnification pursuant to Section 9 of this agreement shall not have
been made and delivered in a written opinion within 90 days after receipt
by
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the Indemnitors of the request for indemnification, or (iii) any payment is
not made within 10 days after a determination has been made that Indemnitee
is entitled thereto, then Indemnitee shall be entitled to an adjudication
in an appropriate court of the State of California, or in any other court
of competent jurisdiction, of Indemnitee's entitlement to such
indemnification. Alternatively, Indemnitee, at Indemnitee's option, may
seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. Indemnitee
shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first
has the right to commence such proceeding pursuant to this Section. The
Indemnitors shall not oppose Indemnitee's right to seek any such
adjudication or award in arbitration.
10.2. In the event that a determination shall have been made pursuant
to Section 9 of this agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant
to this Section shall be conducted in all respects as a de novo trial or
arbitration, on the merits, and Indemnitee shall not be prejudiced by
reason of that adverse determination.
10.3. If a determination shall have been made pursuant to Section 9 of
this agreement that Indemnitee is entitled to indemnification, the
Indemnitors shall be bound by such determination in any judicial proceeding
or arbitration commenced pursuant to this Section, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of
such indemnification under applicable law.
10.4. The Indemnitors shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section that
the procedures and presumptions of this agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Indemnitors are bound by all the provisions of this
agreement.
10.5. The obligations of the Indemnitors to make the payments required
to be made hereunder, and to perform and observe the other agreements on
their part contained herein, shall not be subject to diminution by set off,
counterclaim, abatement or otherwise; provided, however, that the
Indemnitee shall not be released from any liability or obligation which
Indemnitee may owe either Indemnitor, whether hereunder or otherwise.
10.6. In the event that Indemnitee, pursuant to this Section, seeks a
judicial adjudication or an award in arbitration or enforce rights under,
or to recover damages for breach of, this agreement, Indemnitee shall be
entitled to recover from the Indemnitors, and shall be indemnified by the
Indemnitors against, any and all expense (including attorneys' fees)
actually and reasonably incurred in such judicial adjudication or
arbitration, but only if Indemnitee prevails therein.
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11. Continuation of Indemnity. All agreements and obligations of the
Indemnitors contained in this agreement shall continue during the period
Indemnitee has consented to be or is a director or officer of Capital Corp or a
governor or manager of Holding and shall continue thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that Indemnitee has consented to be or is or was a
director or officer of Capital Corp or a governor or manager of Holding or is or
was serving in any other capacity referred to in this agreement.
12. Other Rights and Remedies. The indemnification, contribution and
advance payment of expenses provided by any provision of this agreement shall
not be deemed exclusive of any other rights to which Indemnitee may be entitled
under any provision of law, the articles of incorporation, any bylaw, other
agreement, vote of shareholders or disinterested directors or governors, or
otherwise, both as to action in Indemnitee's official capacity and as to action
in any other capacity after consenting to serve as a director or while occupying
any of the positions or having any of the relationships referred to in this
agreement.
13. Other.
13.1. All notices, requests, demands, and other communications
relating to this agreement shall be in writing and shall be deemed to be
duly given if or served when personally delivered to any individual party,
or on the first day after the date of deposit with Federal Express for next
day delivery, postage prepaid, or on the third day after deposit in the
United States mail, certified or registered, return receipt requested,
postage prepaid, or on the date of telecopy, fax or similar telephonic
transmission during normal business hours, provided that the recipient has
specifically acknowledged by telephone receipt of such telecopy, fax or
telephonic transmission; addressed, in all cases, to the party at his
address set forth below, or to such other address as such party may
hereafter designate by written notice to the other party.
If to Indemnitee, to:
__________________________
__________________________
__________________________
__________________________
or such other address as may have been furnished to Capital Corp and
Holding by Indemnitee;
If to Capital Corp, to:
AOA Capital Corp
Suite 170, South Wing
0000 Xxxx Xxxxx Xxxxx Xxxx XX
Xxxxxxx, XX 00000
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Attention: Xxx Xxxxxx
and if to Holding, to:
AOA Holding LLC
Suite 170, South Wing
0000 Xxxx Xxxxx Xxxxx Xxxx XX
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxx
in each case with a copy to:
Xxxxxx, Xxxxxxxx and Xxxxxx, P.A.
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
or to such other address as may have been furnished to Indemnitee by
Capital Corp or Holding, as the case may be.
Any notice given by an Indemnitee to Capital Corp or Holding shall
constitute sufficient notice to both Capital Corp and Holding and any
notice received by Indemnitee from either Capital Corp or Holding shall be
deemed to have been given on behalf of both Capital Corp and Holding.
13.2. If any provision or provisions of this agreement shall be held
to be invalid, illegal or unenforceable for any reason whatsoever (i) the
validity, legality and enforceability of the remaining provisions of this
agreement (including without limitation, all portions of any paragraphs of
this agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby, and (ii) to the
fullest extent possible, the provisions of this agreement (including,
without limitation, all portions of any paragraph of this agreement
containing any such provision held to be invalid, illegal or unenforceable,
that are not themselves invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable.
13.3. The headings of the paragraphs of this agreement are inserted
for convenience only and shall not be deemed to constitute part of this
agreement or to affect the construction of it.
13.4. No supplement, modification, or amendment of this agreement
shall be binding unless executed in writing by both parties. No waiver of
any of the provisions of this agreement shall be deemed or shall constitute
a wavier of any other provisions (whether or not similar); nor shall such
waiver constitute a continuing waiver.
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13.5. The parties agree that this agreement shall be construed and
enforced in accordance with and governed by the laws of the state of
California applicable to contracts made and to be performed in that state.
13.6. This agreement shall be binding upon Capital Corp, Holding and
their successors and assigns and shall inure to the benefit of Indemnitee
and Indemnitee's spouse, heirs, executors, personal representatives and
administrators. The obligations of Capital Corp or Holding shall be joint
and several.
Entered into as of the day and year first above written.
AOA CAPITAL CORP
By
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Its
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AOA HOLDING LLC
By
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Its
---------------------------------
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