INDEMNIFICATION AGREEMENT
Exhibit 10.1
This Agreement, made and entered into this ___day of March, 1997, (“Agreement”), by and
between Nortek, Inc., a Delaware corporation (the “Company”, which term shall include any one or
more of its subsidiaries where appropriate), and ___(Indemnitee);
WHEREAS, highly competent persons are becoming more reluctant to serve publicly-held
corporations as directors or as executive officers or in other capacities unless they are provided
with adequate protection through insurance or adequate indemnification against inordinate risks of
claims and actions against them arising out of their service to, and activities on behalf of, the
corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance and the uncertainties
relating to indemnification have increased the difficulty of attracting and retaining such persons;
and
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that the
difficulty in attracting and retaining such persons is detrimental to the best interests of the
Company’s stockholders and that the Company should act to assure such persons that there will be
increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they will not be so
indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and/or to take on additional
service for or on behalf of the Company on the condition that he be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:
1. Services by Indemnitee. Indemnitee agrees to serve or continue to serve as a
director or executive officer of the Company. This Agreement shall not impose any obligation on
the Indemnitee or the Company to continue the Indemnitee’s position with the Company beyond any
period otherwise applicable.
2. General. The Company shall indemnify, and shall advance Expenses (as hereinafter
defined) to Indemnitee as provided in this Agreement and to the fullest extent permitted by law.
3. Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of his
Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to any
threatened, pending or completed Proceeding (as hereinafter defined), other than a Proceeding by or
in the right of the Company. Pursuant to this Section 3, Indemnitee shall be indemnified against
Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Company, and with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.
4. Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the
rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is,
or is threatened to be made, a party to any threatened, pending or completed Proceeding brought by
or in the right of the Company to procure a judgment in its favor. Pursuant to this Section,
Indemnitee shall be indemnified against Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company. Notwithstanding the
foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or
matter as to which Indemnitee shall have been adjudged to be liable to the Company if such
indemnification is not permitted by Delaware law; provided, however, that indemnification against
Expenses shall nevertheless be made by the Company in such event to the extent that the Court of
Chancery of the State of Delaware, or the court in which such Proceeding shall have been brought or
is pending, shall determine.
5. Indemnification for Expenses of a Party who is Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or
on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than all claims, issues
or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually
and reasonably incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without limitation, the termination of
any claim, issue or matter in such a Proceeding by dismissal or withdrawal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
6. Advance of Expenses. The Company shall advance all reasonable Expenses incurred by
or on behalf of Indemnitee in connection with any Proceeding within twenty days after the receipt
by the Company of a statement or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of such Proceeding. Such statement
or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be
preceded or accompanied by an undertaking by or on behalf of
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Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee
is not entitled to be indemnified against such Expenses.
7. Procedure for Determination of Entitlement to Indemnification.
(a) to obtain indemnification under this Agreement, Indemnitee shall submit to the
Company a written request, including therein or therewith 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. The Secretary of the Company
shall, promptly upon receipt of such a request for indemnification, advise the Board of
Directors in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to Section 7(a)
hereof, a determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall be made in the specific case: (i) if a Change of Control (as
hereinafter defined) shall have occurred, by Independent Counsel (as hereinafter defined) in
a written opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee (unless Indemnitee shall request that such determination be made by the Board of
Directors or the stockholders, in which case the determination shall be made in the manner
provided below in clauses (ii) or (iii); (ii) if a Change of Control shall not have
occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of
Disinterested Directors (as hereinafter defined), or (B) if a quorum of the Board of
Directors consisting of Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent Counsel in a written
opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C)
by the stockholders of the Company; or (iii) as provided in Section 8(b) of this Agreement;
and, if it is so determined that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall
cooperate with the person, persons or entity making such determination with respect to
Indemnitee’s entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request 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. Any costs or expenses (including
attorney’s fees and disbursements) incurred by Indemnitee in so cooperating shall be borne
by the Company (irrespective of the determination as to Indemnitee’s entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.
(c) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 7(b) of this Agreement, the Independent Counsel
shall be selected as provided in this Section 7(c). If a Change of Control shall not have
occurred, the Independent Counsel shall be selected by the Board of Directors, and the
Company shall give written notice to Indemnitee advising him of the identity of the
Independent Counsel so selected. If a Change of Control shall have occurred, the
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Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request
that such selection be made by the Board of Directors, in which event the preceding sentence
shall apply), and Indemnitee shall give written notice to the Company advising it of the
identity of the Independent Counsel so selected. In either event, Indemnitee or the
Company, as the case may be, may, within 7 days after such written notice of selection shall
have been given, deliver to the Company or to Indemnitee, as the case may be, a written
objection to such selection. Such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of “Independent Counsel” as
defined in Section 13 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is made, the
Independent Counsel so selected may not serve as Independent Counsel unless and until a
court has determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to Section 7(a)
hereof, no Independent Counsel shall have been selected or if selected, shall have been
objected to, in accordance with this Section 7(c), either the Company or Indemnitee may
petition the Court of Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have been made by the Company or
Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person as the Court
shall designate, and the person with respect to whom an objection is favorably resolved or
the person so appointed shall act as Independent Counsel under Section 7(b) hereof. The
Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred
by such Independent Counsel in connection with acting pursuant to Section 7(b) hereof, and
the Company shall pay all reasonable fees and expenses incident to the procedures of this
Section 7(c), regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement of any judicial proceeding or arbitration pursuant to
Section 9(a) (iii) 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).
8. Presumption and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a determination with respect
to entitlement to indemnification hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under this
Agreement if Indemnitee has submitted a request for indemnification in accordance with
Section 7(a) of this Agreement, and the Company shall have the burden of proof to overcome
that presumption in connection with the making by a person, persons or entity of any
determination contrary to that presumption.
(b) If the person, persons or entity empowered or selected under Section 7 of this
Agreement to determine whether Indemnitee is entitled to indemnification shall not have made
such determination within 60 days after receipt by the Company of the request therefor, the
requisite determination of entitlement to indemnification shall be deemed to have been made
and Indemnitee shall be entitled to such indemnification, absent (i) a
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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, of (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional 30 days, if the person, persons or entity
making the determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of documentation and/or
information relating thereto; and provided, further, that the foregoing
provisions of this Section 8(b) shall not apply (i) if the determination of entitlement to
indemnification is to be made by the stockholders pursuant to Section 7(b) of this Agreement
and if (A) within 15 days after receipt by the Company of the request for such determination
the Board of Directors has resolved to submit such determination to the stockholders for
their consideration at an annual meeting thereof to be held with 75 days after such receipt
and such determination is made thereat, or (B) a special meeting of stockholders is called
within 15 days after such receipt for the purpose of making such determination, such meeting
is held for such purpose within 60 days after having been so called and such determination
is made thereat, or (ii) if the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to Section 7(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter therein by
judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of
itself adversely affect the right of Indemnitee to indemnification or create a presumption
that Indemnitee did not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests as of the Company or, with respect to any criminal
Proceeding, that Indemnitee has reasonable cause to believe that his conduct was unlawful.
9. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 7 of this
Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 6 of this Agreement, (iii)
the determination of entitlement to indemnification is to be made by Independent Counsel
pursuant to Section 7(b) of this Agreement and such determination shall not have been made
and delivered in a written opinion within 90 days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made pursuant to Section
5 of this Agreement within ten (10) days after receipt by the Company of a written request
therefore, or (v) payment of indemnification is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to indemnification or such
determination is deemed to have been made pursuant to Section 8 of this Agreement,
Indemnitee shall be entitled to an adjudication in an appropriate court of the State of
Delaware, or in any other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his option, may
seek an award in arbitration to be conducted by a single arbitrator pursuant to
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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 9(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication
or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 7 of
this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding
or arbitration commenced pursuant to this Section 9 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. If a Change of Control shall have
occurred, in any judicial proceeding or arbitration commenced pursuant to this Section 9 the
Company shall have the burden of proving that Indemnitee is not entitled to indemnification
or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made pursuant to
Section 7 or 8 of this Agreement that Indemnitee is entitled to indemnification, the Company
shall be bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 9, 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.
(d) The Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 9 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 Company is bound by all the provisions of this
Agreement.
(e) In the event that Indemnitee, pursuant to this Section 9, seeks a judicial
adjudication of or an award in arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the
Company, and shall be indemnified by the Company against, any and all expenses (of the types
described in the definition of Expenses in Section 13 of this Agreement) actually and
reasonable incurred by him in such judicial adjudication or arbitration, but only if he
prevails therein. If it shall be determined in said judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification or
advancement of expenses sought, the expenses incurred by Indemnitee in connection with such
judicial adjudication of arbitration shall be appropriately prorated.
10. Security. To the extent requested by the Indemnitee and approved by the Board,
the Company may at any time and from time to time provide security to the Indemnitee for the
Company’s obligations hereunder through an irrevocable bank letter of credit, funded trust or other
collateral. Any such security, once provided to the Indemnitee, may not be revoked or released
without the prior written consent of Indemnitee.
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11. Non-Exclusivity; Duration of Agreement; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of Expenses as provided
by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may
at any time be entitled under applicable law, the Company’s certificate of incorporation or
by-laws, any other agreement, a vote of stockholders or a resolution of directors, or
otherwise. This Agreement shall continue until and terminate upon the later of: (a) 10
years after the date that Indemnitee shall have ceased to serve as a director or executive
officer of the Company or fiduciary of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which Indemnitee served at the request of
the Company; or (b) the final termination of all pending Proceedings in respect of which
Indemnitee is granted rights of indemnification or advancement of expenses hereunder and of
any proceeding commenced by Indemnitee pursuant to Section 9 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors and assigns
and shall inure to the benefit of Indemnitee and his heirs, executors and administrators.
(b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors or executive officers of the Company or fiduciaries of any
other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Company, 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 such director or executive officer under such
policy or policies.
(c) In the event of any 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 take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce
such rights.
(d) The Company shall not be liable under this Agreement to make any payment of
amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise
actually received such payment under any insurance policy, contract, agreement or otherwise.
12. Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any Section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that is not itself invalid,
illegal or
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unenforceable) shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
13. Exception to Right of Indemnification or Advancement of Expenses. Notwithstanding
any other provision of this Agreement, Indemnitee shall not be entitled to indemnification or
advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein,
brought or made by him against the Company, except any such Proceeding brought or made by
Indemnitee to enforce his rights under this Agreement.
14. Definitions. For purposes of this Agreement:
(a) “Change of Control” means a change in control of the Company of a nature that
would be required to be reported in response to Item 6(e) on Schedule 14A of Regulation 14A
(or in response to any similar item on any similar schedule or form) promulgated under the
Securities Exchange Act of 1934 (the “Act”), whether or not the Company is then subject to
such reporting requirement; provided, however, that, without limitation, such a
Change of 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 Act) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company’s then outstanding
securities without the prior approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such person attaining such percentage interest;
(ii) the Company is a party to a merger, consolidation, sale or assets or other
reorganization, or a proxy contest, as a consequence of which members of the Board of
Directors in office immediately prior to such transaction or event constitute less than a
majority of the Board of Directors thereafter; or (iii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of Directors
(including for this purpose any new director whose election or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such period) cease for any
reason to constitute at least a majority of the Board of Directors.
(b) “Corporate Status” describes the status of a person who is or was or has agreed to
become a director of the Company, or is or was an executive officer or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise which such person is or was serving at the request of the Company.
(c) “Disinterested Director” means a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(d) “Expenses if shall include all reasonable attorneys’ fees, retainers, court costs,
transcription costs, fees of experts, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, and all other
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disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend or investigating a Proceeding.
(e) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past five
years has been, retained to represent: (i) the Company or Indemnitee in any manner material
to either such party, or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel”
shall not include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee’s rights under this Agreement
(f) “Proceeding” includes any action, suit, arbitration, alternative dispute
resolution mechanism, investigation, administrative hearing or any other proceeding whether
civil, criminal, administrative or investigative, arising on or after the date of this
Agreement (and regardless of when the Indemnitee’s act or failure to act occurred), except
one initiated by an Indemnitee pursuant to Section 9 of this Agreement to enforce his rights
under this Agreement.
15. Headings. 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 thereof.
16. Modification and Waiver. This Agreement may be amended from time to time to
reflect changes in Delaware law or for other reasons. 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 provision hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
17. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing
upon being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder; provided, however that the failure to
give any such notice shall not disqualify the Indemnitee from indemnification hereunder.
18. Notices. All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted
for by the party to whom said notice or other communication shall have been directed, or (ii)
mailed by certified or registered mail with postage prepaid, on the third business day after the
date on which it is so mailed:
| (a) | If to Indemnitee, to: |
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| (b) | If to the Company, to: Nortek, Inc. 00 Xxxxxxx Xxxxx Xxxxxxxxxx, Xxxxx Xxxxxx 00000-0000 |
or to such other address as may have been furnished to Indemnitee by the Company or to the Company
by Indemnitee, as the case may be.
19. Governing Law. The parties agree that this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
above written.
| Attest: | NORTEK, INC. | |||||||||
By:
|
By: | |||||||||
| INDEMNITEE | ||||||||||
| Address: | ||||||||||
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