EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
AGREEMENT between XXXXXXX & XXXXX, INC., an Ohio corporation
(the "Company"), and _____________ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract
as directors the most capable persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted against directors
of public companies in today's environment;
WHEREAS, basic protection against undue risk of personal
liability of directors heretofore has been provided through insurance coverage
providing reasonable protection at reasonable cost, and Indemnitee has relied on
the availability of such coverage; but as a result of substantial changes in the
marketplace for such insurance it has become increasingly more difficult to
obtain such insurance on terms providing reasonable protection at reasonable
cost;
WHEREAS, the Code of Regulations of the Company (the
"Regulations") and the Ohio General Corporation Law each provide that the
indemnification provided therein shall not be exclusive;
WHEREAS, in recognition of 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 permitted by law and as set forth in this
Agreement;
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 Definitions.
(a) CHANGE IN CONTROL: means and shall be deemed to have
occurred on (i) the date of approval by shareholders of the Company of
a definitive agreement providing either for the merger or consolidation
of the Company into or with another corporation, if the Company will
not be surviving corporation or will become a subsidiary of another
corporation, or for the sale of all or substantially all of the assets
of the Company; (ii) the date upon which the Company is provided a copy
of a Schedule 13D (filed pursuant to Section 13(d) of the Securities
Exchange Act of 1934) indicating that a group or person has become the
holder of 20% or more of the outstanding voting shares of the Company
provided such group or person is not controlled by Xxxxxxx X. Xxxxx XX
and/or relatives of his; or (iii) the date of a change in the
composition of the Board of Directors of the Company such that
individuals who were members of the Board of Directors on the date two
years prior to such change (or who were subsequently elected to fill a
vacancy in the
Board, or were subsequently nominated for election by the Company's
shareholders, by the affirmative vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such two year period) no longer constitute a majority of the Board of
Directors of the Company.
(b) CLAIM: 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: include attorney's fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal) or preparing to defend, being 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: include 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: any event or occurrence related to
the fact that Indemnitee is or was a director 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,
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: any appropriate person or 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 4) who is not a party to the
particular Claim for which Indemnitee is seeking indemnification.
(g) VOTING SECURITIES: any securities of the Company which
vote generally in the election of directors.
2. Scope of Indemnification.
(a) BASIC INDEMNIFICATION ARRANGEMENT. 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 as soon as practicable but in any event no later than thirty
days after written demand is presented to the Company against any and
all Judgments arising from or relating to such Claim.
(b) 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
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(any such payment of expenses by the Company is hereinafter referred to
as an "Expense Advance"). Indemnitee hereby agrees to repay the amount
of Expenses so paid if it is proved by clear and convincing evidence in
a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause
injury to the Company or undertaken with reckless disregard for the
best interests of the Company. Indemnitee hereby further agrees to
reasonably cooperate with the Company concerning any Claim.
(c) INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall
indemnify Indemnitee against any and all expenses (including attorney's
fees) which 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 Regulations, statute or rule of law now or hereafter in
effect relating to claims for Indemnifiable Events and/or (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 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 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.
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(b) ELECTION 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
substantively 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 Ohio 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 (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) 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 Regulations,
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 not be unreasonably withheld), and who has not otherwise
performed services for the Company within the last five years (other than in
connection with such matters) or Indemnitee. 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 attorney's
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. NON-EXCLUSIVITY. The rights of 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:
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(a) The fullest benefits provided by the Company's Regulations
in effect on the date hereof, a copy of the relevant portions of which
are attached hereto as Exhibit I;
(b) The fullest benefits provided by the Articles of
Incorporation, Regulations, or By-laws 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 Ohio law in effect at
the date hereof, a copy of the relevant portions of which are attached
hereto as Exhibit II, 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.
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' or 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.
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 a 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. LIABILITY STANDARDS. This Agreement shall be construed on
the basis of the duties owed by Indemnitee as a director of the Company, and the
standards for determining liability in damages for a breach thereof, which apply
to each particular Claim. The parties acknowledge that changes in such duties or
such liability standards may result in an expansion or contraction of the
Company's indemnification exposure hereunder.
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10. AMENDMENTS, ETC. 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 hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
11. 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.
12. 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, the Company's Regulations or otherwise) of
the amounts otherwise indemnifiable hereunder.
13. BINDING EFFECT, ETC. 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 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 of the Company or as a director,
trustee, officer, agent or representative of any other enterprise at the
Company's request.
14. 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.
15. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio
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 ______, _____.
XXXXXXX & XXXXX, INC.
By____________________________ ________________________
Name: Xxxxxx X. Xxxxx Indemnitee
Title: President and Chief
Executive Officer
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