Exhibit 10.5
INDEMNIFICATION AGREEMENT
XXXXX'X LIQUID GOLD-INC.
This Agreement is made and entered into as of December 23, 1991 between
Xxxxx'x Liquid Gold-Inc., a Colorado corporation (the "Corporation"), and Xxxxxx
Field of Short Hills, New Jersey ("Director").
recitals:
At the request of the Corporation, Director currently serves as a director
of the Corporation (as defined below). As such, Director may be subjected to
claims, suits or proceedings.
Director has indicated that it was and is a condition of Director's
acceptance and continuing in such service that, among other things, the
Corporation agrees to indemnify Director against liabilities, expenses and costs
incurred in connection with any such claims, suits or proceedings, in accordance
with, and to the fullest extent permitted by, the Colorado Corporation Code; and
The Corporation's Articles of Incorporation and the Colorado Corporation
Code contemplate that contracts may be made between the Corporation and members
of its Board of Directors and officers with respect to indemnification.
agreement:
Now, therefore, in consideration of Director's acceptance and continuation
of service as a director after the date of this Agreement, and in consideration
of the mutual covenants stated herein, the parties agree as follows:
Definitions. As used in this Agreement, the following terms have the following
meanings:
Code. The term "Code" means the Colorado Corporation Code as it exists on
the date of this Agreement and as it may be hereafter amended from time to time.
In the case of any amendment of the Colorado Corporation Code after the date of
this Agreement, when used in reference to an act or omission occurring prior to
effectiveness of such amendment, the term "Code" shall include such amendment
only to the extent that the amendment permits the Corporation to provide broader
indemnification rights than the Colorado Corporation Code permitted the
Corporation to provide at the date of this Agreement and prior to the amendment.
Director. As used in reference to a position of Director, the term
"director" means a director of the Corporation and, while a director or officer
of the Corporation, Director's serving at the Corporation's request as a
director, officer, partner, trustee, employee or agent of any corporation,
partnership, joint venture, trust, other enterprise or employee benefit plan.
The term "director" also includes, unless the context otherwise requires, the
estate or personal representative of a director. The term "director" shall also
include any such broader definition as may be provided in the Code with
amendments after the date of this Agreement.
Proceeding. The term "proceeding" means any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative or
investigative, and whether formal or informal.
Agreement to Indemnify. The Corporation shall indemnify, and keep indemnified,
Director in accordance with, and to the fullest extent permitted and/or required
by, the Code from and against any judgments, penalties, fines (including but not
limited to ERISA excise taxes), amounts paid in settlement and reasonable
expenses (including but not limited to expenses of investigation and preparation
and fees and disbursements of Director's counsel, accountants or other experts)
actually incurred by Director in connection with any proceeding in which
Director was or is made a party or was or is involved (for example, as a
witness) because Director is or was a director or is or was an officer of the
Corporation.
Insurance. So long as Director may be subject to any possible proceeding by
reason of the fact that Director is or was a director or officer of the
Corporation, to the extent the Corporation maintains an insurance policy or
policies providing directors' and officers' liability insurance, Director shall
be covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage applicable to any then current director or
officer of the Corporation.
Advances. In the event of any proceeding in which Director is a party or is
involved and which may give rise to a right of indemnification from the
Corporation pursuant to this Agreement, following written request to the
Corporation by Director, the Corporation shall pay to Director, in accordance
with and to the fullest extent permitted and/or required by the Code, amounts to
cover reasonable expenses incurred by Director in such proceeding in advance of
its final disposition upon receipt of (a) a written affirmation by Director of
Director's good faith belief that Director has met any applicable standard of
conduct; (b) a written undertaking executed by or on behalf of Director to repay
the advance if it shall ultimately be determined that Director did not meet such
standard of conduct; and (c) satisfactory evidence as to the amount of such
expenses.
Burden of Proof. If under applicable law, the entitlement of Director to be
indemnified or advanced expenses hereunder depends upon whether a standard of
conduct has been met, the burden of proof of establishing that Director did not
act in accordance with such standard shall rest with the Corporation. Director
shall be presumed to have acted in accordance with such standard and to be
entitled to indemnification or the advancement of expenses (as the case may be)
unless, based upon a preponderance of the evidence, it shall be determined that
Director has not met such standard. Such determination and any evaluation as to
the reasonableness of amounts claimed by Director shall be made by the Board of
Directors of the Corporation or such other body or persons as may be permitted
by the Code. For purposes of this Agreement, unless otherwise expressly stated,
the termination of any 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 Director 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.
Notice to the Corporation. Director shall notify the Secretary of the
Corporation in writing of any matter for which Director intends to seek
indemnification hereunder as soon as reasonably practicable following the
receipt by Director of written notice thereof; provided, however, that delay in
so notifying the Corporation shall not constitute a waiver or release by
Director of rights hereunder.
Counsel for Proceeding. In the event of any proceeding in which Director is a
party or is involved and which may give rise to a right of indemnification
hereunder, the Corporation shall have the right to retain counsel reasonably
satisfactory to Director to represent Director and any others the Corporation
may designate in such proceeding. In any such proceeding, Director shall have
the right to retain Director's own counsel, but the fees and expenses of such
counsel shall be at the expense of Director unless (a) the retention of such
counsel has been specifically authorized by the Corporation; (b) representation
of Director and another party by the same counsel would be inappropriate, in the
reasonable judgment of Director, due to actual or potential differing interests
between them (as might be the case for representation of both the Corporation
and Director in a proceeding by or in the right of the Corporation); (c) the
counsel retained by the Corporation and satisfactory to Director has advised
Director, in writing, that such counsel's representation of Director would be
likely to involve such counsel in representing differing interests which could
adversely affect either the judgment or loyalty of such counsel to Director,
whether it be a conflicting, inconsistent, diverse or other interest; or (d) the
Corporation shall fail to retain counsel for Director in such proceeding.
Notwithstanding the foregoing, if an insurance carrier has supplied directors'
and officers' liability insurance covering a proceeding and is entitled to
retain counsel for the defense of such proceeding, then the insurance carrier
shall retain counsel to conduct the defense of such proceeding unless Director
and the Corporation concur in writing that the insurance carrier's doing so is
undesirable. The Corporation shall not be liable under this Agreement for any
settlement of any proceeding affected without its written consent. The
Corporation shall not settle any proceeding in any manner which would impose any
penalty or limitation on Director without Director's written consent. Consent
to a proposed settlement of any proceeding shall not be unreasonably withheld by
either the Corporation or Director.
Enforcement. The Corporation acknowledges that Director is relying upon this
Agreement in serving as a director, as well as any serving in the future as an
officer of the Corporation. If a claim for indemnification or advancement of
expenses is not paid in full by the Corporation within ninety (90) days after a
written claim has been received from Director by the Corporation, Director may
at any time bring suit against the Corporation to recover the unpaid amount of
the claim. If successful in whole or in part in such suit, Director shall also
be entitled to be paid all reasonable fees and expenses (including without
limitation fees of counsel) in bringing and prosecuting such claim. Whether or
not Director has met any applicable standard of conduct, the Court in such suit
may order indemnification or the advancement of expenses as the Court deems
proper (subject to any express limitation of the Code). Further, the
Corporation shall indemnify Director from and against any and all expenses
(including attorneys' fees) and, if requested by Director, shall (within ten
business days of such request) advance such expenses to Director, which are
incurred by Director in connection with any claim asserted against or suit
brought by Director for recovery under any directors' and officers' liability
insurance policies maintained by the Corporation, regardless of whether Director
is unsuccessful in whole or in part in such claim or suit.
Proceedings by Director. The Corporation shall indemnify Director and advance
expenses to Director in connection with any proceeding (or part thereof)
initiated by Director only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
Nonexclusivity. The rights of Director for indemnification and advancement of
expenses under this Agreement shall not be deemed exclusive of, or in limitation
of, any rights to which Director may be entitled under Colorado law, the
Corporation's Articles of Incorporation or Bylaws, vote of stockholders or
otherwise.
Miscellaneous.
Effectiveness. This Agreement is effective for, and shall apply to,
(i) any claim which is asserted or threatened before, on or after the date of
this Agreement but for which no action, suit or proceeding has actually been
brought prior to the date of this Agreement and (ii) any action, suit or
proceeding which is threatened before, on or after the date of this Agreement
but which is not pending prior to the date of this Agreement. Thus, this
Agreement shall not apply to any action, suit or proceeding which has actually
been brought before the date of this Agreement. So long as the foregoing
standard of effectiveness has been satisfied, this Agreement shall be effective
for and shall be applied to acts or omissions prior to, on or after the date of
this Agreement.
Survival; Continuation. The rights of Director hereunder shall inure to
the benefit of the Director (even after Director ceases to be a director or
officer), Director's personal representative, heirs, executors, administrators
and beneficiaries; and this Agreement shall be binding upon the Corporation, its
successors and assigns. The rights of Director under this Agreement shall
continue so long as Director may be subject to any possible proceeding because
of the fact that Director was a director or was an officer of the Corporation.
If the Corporation sells, leases, exchanges or otherwise disposes of, in a
single transaction or series of related transactions, all or substantially all
of its property and assets, the Corporation shall, as a condition precedent to
such transaction, cause effective provision to be made so that the person or
entity acquiring such property and assets shall become bound by and replace the
Corporation under this Agreement.
Governing Law. This Agreement shall be governed by the laws of the State
of Colorado.
Severability. If any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be deemed
amended to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and all other provisions shall remain in
full force and effect.
Amendment. No amendment, termination or cancellation of this Agreement
shall be effective unless in writing signed by the Corporation and Director.
Other Payments. The Corporation shall not be liable under this Agreement
to make any payment in connection with any proceeding against or involving
Director to the extent Director has otherwise actually received payment (under
any insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable
hereunder. Director shall repay to the Corporation the amount of any payment
the Corporation makes to Director under this Agreement in connection with any
proceeding against or involving Director, to the extent Director has otherwise
actually received payment (under any insurance policy, Bylaw or otherwise) of
such amount.
Subrogation. In the event of payment under this Agreement the Corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of Director, 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 Corporation effectively to bring suit
to enforce such rights.
Headings. The headings in this Agreement are for convenience only and are
not to be considered in construing this Agreement.
Counterparts. This Agreement may be executed in counterparts, both of
which shall be deemed an original, and together shall constitute one document.
The parties have executed this Agreement as of the day and year first above
stated.
XXXXX'X LIQUID GOLD-INC. DIRECTOR
By:
Xxxx X. Xxxxxxxxx, President Xxxxxx Field
AMENDMENT TO INDEMNIFICATION AGREEMENT
THIS AMENDMENT TO INDEMNIFICATION AGREEMENT ("Amendment") is made and
entered into as of January 17, 1992, by and between Xxxxx'x Liquid Gold-Inc.
(the "Company") and Xxxxxxx X. Xxxxxx (the "Indemnitee").
RECITALS
The Board of Directors of the Company has established a Special Committee
to evaluate a stockholder derivative suit, and to make a determination as to
whether the Company should pursue the claims alleged in the litigation. Service
on the Special Committee may expose the members thereof to special legal risks
in excess of those to which they are otherwise exposed as directors of the
Company.
The actions of the Special Committee must, to the maximum extent possible,
be independent of the influences of the Company's Board of Directors.
Indemnitee is a party to an Indemnification Agreement with the Company
dated October 2, 1990 (which as it may be amended from time to time is called
the "Indemnification Agreement") which provides for indemnification by the
Company to Indemnitee. Because of the special legal risks incident to service
on the Special Committee and the desire to emphasize the independence of the
Special Committee, Indemnitee desires to amend the Indemnification Agreement to
provide certain procedural protections in respect of litigation arising out of
its activities on the Special Committee, which supplemental indemnification will
further support the independence of the Special Committee from the Company, and
the Company agrees to provide this indemnification on the terms set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the covenants, terms
and conditions hereinafter set forth, the Company and Indemnitee hereby agree as
follows:
Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
"Disinterested Director" means a director of the Company who neither
is or was not a party to (i) the Proceeding in respect of which indemnification
is sought by Indemnitee or (ii) the shareholders derivative suit that is the
subject of the Special Committee investigation.
"Dispute" has the meaning set forth in Section 4 of this Agreement.
"Expenses" includes all direct and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys' fees and
related disbursements and other out-of-pocket costs actually and reasonably
incurred by the Indemnitee either in connection with the investigation, defense,
adjudication, settlement or appeal of a Proceeding or in connection with
establishing or enforcing a right to indemnification or advancement of Expenses
under this Agreement, the Articles of Incorporation or Bylaws of the Company,
applicable law or otherwise; provided, however, that Expenses shall not include
judgments, fines, penalties or amounts paid in settlement of a Proceeding.
"Good Faith" means in good faith and (i) with respect to actions taken
in the capacity of a director of the Company, in a manner Indemnitee reasonably
believed to be in the best interests of the Company, (ii) with respect to all
other actions, in a manner Indemnitee reasonably believed to be not opposed to
the best interests of the Company, and (iii) with respect to any criminal
Proceeding, with no reasonable cause to believe Indemnitee's conduct was
unlawful. A director of the Company shall be deemed not to have acted in Good
Faith with respect to a Proceeding charging improper personal benefit to the
director if he is finally adjudged in such Proceeding to be liable on the basis
that personal benefit was improperly received by him.
"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 three years has been, retained to represent (i) the Company or
Indemnitee in any matter material to either such party, or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder. Notwith
standing 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.
"Proceeding" means any threatened, pending or completed action, suit
or other proceeding, whether civil, criminal, administrative, investigative or
of any other type whatsoever to which Indemnitee is made a party by reason, in
whole or in part, of his activities on the Special Committee.
Indemnification. In connection with any Proceeding, the Company shall
indemnify and advance Expenses to Indemnitee to the fullest extent not pro
hibited by applicable law in effect on the date hereof and to such greater
extent as applicable law may thereafter from time to time permit. Without
limiting the generality of the foregoing, the Company shall indemnify and
advance Expenses to Indemnitee as provided in this Agreement.
Procedures for Determination of Good Faith.
Method of Determination. When, in connection with any Proceeding, an
Expense, judgment, penalty, fine or amount paid in settlement has been incurred
by Indemnitee or on Indemnitee's behalf, and where a determination would be
required by Paragraph 5 of the Indemnification Agreement (as required by
Colorado Revised Statutes Section 7-3-101.5(5) or any successor statute), a
determination with respect to Indemnitee's Good Faith and the amount of indem
nification and expense reimbursement shall be made as follows:
Unless Indemnitee shall request in writing that such
determination be made in accordance with clause (ii) of this Section 3(a),
the determination shall be made by Independent Counsel in a written opinion
to the Board, a copy of which shall be delivered to Indemnitee.
If so requested by Indemnitee as provided in clause (i) above,
the determination shall be made by the Board by a majority vote of
Disinterested Directors. In the event that one or more Disinterested
Directors is not obtainable or such Disinterested Director or Directors so
directs, the determination shall be made by Independent Counsel in a writ
ten opinion to the Board, a copy of which shall be delivered to Indemnitee.
Selection and Payment of Independent Counsel. In the event that the
determination of Good Faith is to be made by Independent Counsel pursuant to
Section 3(a), the Independent Counsel shall be selected by the Disinterested
Directors and Indemnitee, acting together (unless Indemnitee shall request that
such selection be made by the Board), and Indemnitee and the Disinterested
Directors shall give written notice to the Company advising it of the identity
of the Independent Counsel so selected. If the Disinterested Directors and
Indemnitee are unable to agree on the selection of Independent Counsel within 30
days of the date on which Indemnitee presents its choice to the Disinterested
Directors, the selection of Independent Counsel shall be adjudicated in
accordance with Section 4 of this Agreement. The issue for determination by the
court shall be limited to determining whether the Independent Counsel selected
by Indemnitee meets the criteria for independence included in the definition in
Section 1(e) hereof, and the Disinterested Directors may object to such
Independent Counsel so identified by Indemnitee solely on the grounds that such
person does not meet such requirements. The Independent Counsel selected by
Indemnitee shall be presumed to satisfy such requirements, and the Disinterested
Directors bear the burden of proving, by a preponderance of the evidence, that
such requirements are not satisfied. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel acting pursuant to this Agreement, and the Company shall pay all
reasonable fees and expenses incident to the selection of Independent Counsel
pursuant to this Section 3(b).
Authorization of Indemnification. In the event that a determination
is made by Independent Counsel that Indemnitee acted in Good Faith, the
Disinterested Directors (or the Board of Directors, if the provisions of
Section 3(a)(ii) are applicable) shall, within thirty (30) days after receipt of
such determination, determine the indemnification to which Indemnitee is
entitled and evaluate the reasonableness of the Expenses as to which
indemnification is sought, and shall authorize payment of such Expenses and of
all other amounts as to which indemnification is sought. The determination as
to authorized indemnification and evaluation of Expenses shall be made in the
Disinterested Director's (or the Board of Director's) reasonable good faith
judgment, and shall be subject to de novo review pursuant to Section 4(c).
Remedies of Indemnitee.
Application. This Section 4 shall apply in the event of a Dispute.
For purposes of this Section 4, "Dispute" shall mean any of the following
events:
a determination is made pursuant to Section 3 of this Agreement
(either by the Board of Directors or by Independent Counsel that Indemnitee
is not entitled to indemnification under this Agreement and Indemnitee
disagrees with such determination;
a determination is made by Independent Counsel pursuant to
Section 3 of this Agreement that Indemnitee is entitled to indemnification
under this Agreement and the Board of Directors of the Company disagrees
with such determination; or
any other dispute arising under this Agreement.
Adjudication. In the event of a Dispute, Indemnitee (or the Company
in the case of a Dispute arising under Section 4(a)(ii)), shall be entitled to
an adjudication in an appropriate court of the State of Colorado.
De Novo Review. Any judicial proceeding commenced pursuant to this
Section 4 shall be conducted in all respects as a de novo trial on the merits,
and Indemnitee shall not be prejudiced by reason of any prior action of the
Board. In any such proceeding, the Company shall have the burden of proving
that Indemnitee is not entitled to indemnification or advancement of Expenses.
Procedures Valid. The Company shall be precluded from asserting in
any judicial proceeding commenced pursuant to this Section 4 that the procedures
and presumptions of this Agreement are not valid, binding and enforceable and
shall stipulate in any such court that the Company is contractually bound by the
provisions of this Agreement.
Interpretation. The parties hereto intend for this Amendment and the
Indemnification Agreement to be interpreted and enforced so as to provide
indemnification and advancement of Expenses to Indemnitee to the fullest extent
which is now or hereafter not prohibited by applicable law and, in the event
that the validity, legality or enforceability of any provision of this Agreement
is in question, such provision shall be interpreted in a manner such that the
provision will be valid, legal and enforceable to the greatest extent possible.
Burden of Proof. In the event of any Dispute under this Agreement
involving the obligations of the Company to indemnify or advance Expenses to
Indemnitee, the Company shall have the burden of proving by clear and convincing
evidence that the Company is not so obligated to indemnify or advance Expenses
to Indemnitee.
Indemnification Agreement in Effect. Except as specifically amended
herein, the Indemnification Agreement shall be and remain in full force and
effect in all respects and shall apply to any indemnification and advancement of
expenses in connection with any Proceeding.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement
as of the date first set forth above.
XXXXX'X LIQUID GOLD-INC.
By
Name: Xxxx X. Xxxxxxxxx
Title: President
INDEMNITEE:
Name: Xxxxxxx X. Xxxxxx
Amendment to Indemnification Agreement
THIS AMENDMENT TO INDEMNIFICATION AGREEMENT ("Amendment") is made and
entered into as of January 17, 1992, by and between Xxxxx'x Liquid Gold-Inc.
(the "Company") and Xxxxxx X. Field (the "Indemnitee").
RECITALS
The Board of Directors of the Company has established a Special Committee
to evaluate a stockholder derivative suit, and to make a determination as to
whether the Company should pursue the claims alleged in the litigation. Service
on the Special Committee may expose the members thereof to special legal risks
in excess of those to which they are otherwise exposed as directors of the
Company.
The actions of the Special Committee must, to the maximum extent possible,
be independent of the influences of the Company's Board of Directors.
Indemnitee is a party to an Indemnification Agreement with the Company
dated December 23, 1991 (which as it may be amended from time to time is called
the "Indemnification Agreement") which provides for indemnification by the
Company to Indemnitee. Because of the special legal risks incident to service
on the Special Committee and the desire to emphasize the independence of the
Special Committee, Indemnitee desires to amend the Indemnification Agreement to
provide certain procedural protections in respect of litigation arising out of
its activities on the Special Committee, which supplemental indemnification will
further support the independence of the Special Committee from the Company, and
the Company agrees to provide this indemnification on the terms set forth
herein.
Agreement
NOW, THEREFORE, in consideration of the foregoing and the covenants, terms
and conditions hereinafter set forth, the Company and Indemnitee hereby agree as
follows:
Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
"Disinterested Director" means a director of the Company who neither
is or was not a party to (i) the Proceeding in respect of which indemnification
is sought by Indemnitee or (ii) the shareholders derivative suit that is the
subject of the Special Committee investigation.
"Dispute" has the meaning set forth in Section 4 of this Agreement.
"Expenses" includes all indirect and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys' fees and
related disbursements and other out-of-pocket costs actually and reasonably
incurred by the Indemnitee either in connection with the investigation, defense,
adjudication, settlement or appeal of a Proceeding or in connection with
establishing or enforcing a right to indemnification or advancement of Expenses
under this Agreement, the Articles of Incorporation or Bylaws of the Company,
applicable law or otherwise; provided, however, that Expenses shall not include
judgments, fines, penalties or amounts paid in settlement of a Proceeding.
"Good Faith" means in good faith and (i) with respect to actions taken
in the capacity of a director of the Company, in a manner Indemnitee reasonably
believed to be the best interests of the Company, (ii) with respect to all other
actions, in a manner Indemnitee reasonably believed to be not opposed to the
best interests of the Company, and (iii) with respect to any criminal
Proceeding, with no reasonable cause to believe Indemnitee's conduct was
unlawful. A director of the Company shall be deemed not to have aced in Good
Faith with respect to a Proceeding charging improper personal benefit to the
director if he is finally adjudged in such Proceeding to be liable on the basis
that personal benefit was improperly received by him.
"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 three years has been, retained to represent (i) the Company or
Indemnitee in any matter 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.
"Proceeding" means any threatened, pending or completed action, suit
or other proceeding, whether civil, criminal, administrative, investigative or
of any other type whatsoever to which Indemnitee is made a party by reason, in
whole or in part, of his activities on the Special Committee.
Indemnification. In connection with any Proceeding, the Company shall
indemnify and advance Expenses to Indemnitee to the fullest extent not
prohibited by applicable law in effect on the date hereof and to such greater
extent as applicable law may thereafter from time to time permit. Without
limiting the generality of the foregoing, the Company shall indemnify and
advance Expenses to Indemnitee as provided in this Agreement.
Procedures for Determination of Good Faith.
Method of Determination. When, in connection with any Proceeding, an
Expense, judgment, penalty, fine or amount paid in settlement has been incurred
by Indemnitee or on Indemnitee's behalf, and where a determination would be
required by Paragraph 5 of the Indemnification Agreement (as required by
Colorado Revised Statutes Section 7-3-101.5(5) or any successor statute), a
determination with respect to Indemnitee's Good Faith and the amount of
indemnification and expense reimbursement shall be made as follows:
Unless Indemnitee shall request in writing that such
determination be made in accordance with clause (ii) of this
Section 3(a), the determination shall be made by Independent Counsel
in a written opinion to the Board, a copy of which shall be delivered
to Indemnitee.
If so requested by Indemnitee as provided in clause (i) above,
the determination shall be made by the Board by a majority vote of
Disinterested Directors. In the event that one or more Disinterested
Directors is not obtainable or such Disinterested Director or
Directors so directs, the determination shall be made by Independent
Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee.
Selection and Payment of Independent Counsel. In the event that the
determination of Good Faith is to be made by Independent Counsel pursuant to
Section 3(a), the Independent Counsel shall be selected by the Disinterested
Directors and Indemnitee, acting together (unless Indemnitee shall request that
such selection be made by the Board), and Indemnitee and the Disinterested
Directors shall give written notice to the Company advising it of the identity
of the Independent Counsel so selected. If the Disinterested Directors and
Indemnitee are unable to agree on the selection of Independent Counsel within 30
days of the date on which Indemnitee presents its choice to the Disinterested
Directors, the selection of Independent Counsel shall be adjudicated in
accordance with Section 4 of this Agreement. The issue for determination by the
court shall be limited to determining whether the Independent Counsel selected
by Indemnitee meets the criteria for independence included in the definition in
Section 1(e) hereof, and the Disinterested Directors may object to such
Independent Counsel so identified by Indemnitee solely on the grounds that such
person does not meet such requirements. The Independent Counsel selected by
Indemnitee shall be presumed to satisfy such requirements, and the Disinterested
Directors bear the burden of proving, by a preponderance of the evidence, that
such requirements are not satisfied. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel acting pursuant to this Agreement, and the Company shall pay all
reasonable fees and expenses incident to the selection of Independent Counsel
pursuant to this Section 3(b).
Authorization of Indemnification. In the event that a determination
is made by Independent Counsel that Indemnitee acted in Good Faith, the
Disinterested Directors (or the Board of Directors, if the provisions of
Section 3(a)(ii) are applicable) shall, within thirty (30) days after receipt of
such determination, determine the indemnification to which Indemnitee is
entitled and evaluate the reasonableness of the Expenses as to which
indemnification is sought, and shall authorize payment of such Expenses and of
all other amounts as to which indemnification is sought. The determination as
to authorized indemnification and evaluation of Expenses shall be made in the
Disinterested Director's (or the Board of Director's) reasonable good faith
judgment, and shall be subject to de novo review pursuant to Section 4(c).
Remedies of Indemnitee.
Application. This Section 4 shall apply in the event of a Dispute.
For purposes of this Section 4, "Dispute" shall mean any of the following
events:
a determination is made pursuant to Section 3 of this Agreement
(either by the Board of Directors or by Independent Counsel) that
Indemnitee is not entitled to indemnification under this Agreement and
Indemnitee disagrees with such determination;
a determination is made by Independent Counsel pursuant to
Section 3 of this Agreement that Indemnitee is entitled to
indemnification under this Agreement and the Board of Directors of the
Company disagrees with such determination; or
any other dispute arising under this Agreement.
Adjudication. In the event of a Dispute, Indemnitee (or the Company
in the case of a Dispute arising under Section 4(a)(ii)), shall be entitled to
an adjudication in an appropriate court of the State of Colorado.
De Novo Review. Any judicial proceeding commenced pursuant to this
Section 4 shall be conducted in all respects as a de novo trial on the merits,
and Indemnitee shall not be prejudiced by reason of any prior action of the
Board. In any such proceeding, the Company shall have the burden of proving
that Indemnitee is not entitled to indemnification or advancement of Expenses.
Procedures Valid. The Company shall be precluded from asserting in
any judicial proceeding commenced pursuant to this Section 4 that the procedures
and presumptions of this Agreement are not valid, binding and enforceable and
shall stipulate in any such court that the Company is contractually bound by the
provisions of this Agreement.
Interpretation. The parties hereto intend for this Amendment and the
Indemnification Agreement to be interpreted and enforced so as to provide
indemnification and advancement of Expenses to Indemnitee to the fullest extent
which is now or hereafter not prohibited by applicable law and, in the event
that the validity, legality or enforceability of any provision of this Agreement
is in question, such provision shall be interpreted in a manner such that the
provision will be valid, legal and enforceable to the greatest extent possible.
Burden of Proof. In the event of any Dispute under this Agreement
involving the obligations of the Company to indemnify or advance Expenses to
Indemnitee, the Company shall have the burden of proving by clear and convincing
evidence that the Company is not so obligated to indemnify or advance Expenses
to Indemnitee.
Indemnification Agreement in Effect. Except as specifically amended
herein, the Indemnification Agreement shall be and remain in full force and
effect in all respects and shall apply to any indemnification and advancement of
expenses in connection with any Proceeding.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement
as of the date first set forth above.
XXXXX'X LIQUID GOLD-INC.
By
Name: Xxxx X. Xxxxxxxxx
Title: President
INDEMNITEE:
Name: Xxxxxx X. Field
