Exhibit 10.1
ENGLOBAL CORPORATION
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of June 19,
2008, by and between ENGlobal Corporation, a Nevada corporation (the "Company"),
and _________________ ("Indemnitee").
R E C I T A L S
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited; and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.
NOW, THEREFORE, in consideration for Indemnitee's services as an officer or
director of the Company, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify Indemnitee if
Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or any alternative
dispute resolution mechanism, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that Indemnitee is or was a director, officer, employee or agent of
the Company, or any subsidiary of the Company, or by reason of the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including reasonable attorneys'
fees), judgments, fines and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably
withheld) actually and reasonably incurred by Indemnitee in connection with such
action, suit or proceeding if Indemnitee is not liable pursuant to Nevada
Revised Statutes ("NRS") ss. 78.138, or if Indemnitee acted in good faith and in
a manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
does not, of itself, create a presumption that Indemnitee is liable pursuant to
NRS ss. 78.138 or 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
Company, or that, with respect to any criminal action or proceeding, Indemnitee
had reasonable cause to believe that Indemnitee's conduct was unlawful.
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(b) Proceedings By or in the Right of the Company. The Company shall
indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Company or any subsidiary of the Company to procure a judgment in
its favor by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, or by reason
of the fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including amounts paid in
settlement and reasonable attorneys' fees) actually and reasonably incurred by
Indemnitee in connection with the defense or settlement of such action or suit
if Indemnitee is not liable pursuant to NRS ss. 78.138 or Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, except that no indemnification
shall be made for any claim, issue or matter as to which Indemnitee has been
adjudged by a court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable to the Company or for amounts paid in settlement to the
Company, unless and only to the extent that the court in which such action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1(a) and 1(b), or in defense of any claim,
issue or matter therein, Indemnitee shall be indemnified against expenses
(including reasonable attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.
2. Agreement to Serve. In consideration of the protection afforded by this
Agreement, if Indemnitee is a director of the Company he agrees to serve at
least for the 90 days after the effective date of this Agreement as a director
and not to resign voluntarily during such period without the written consent of
a majority of the Board of Directors. If Indemnitee is an officer of the Company
not serving under an employment contract, he agrees to serve in such capacity at
least for the 90 days after the effective date of this Agreement and not to
resign voluntarily during such period without the written consent of a majority
of the Board of Directors. Following the applicable period set forth above,
Indemnitee agrees to continue to serve in such capacity at the will of the
Company (or under separate agreement, if such agreement exists) so long as he is
duly appointed or elected and qualified in accordance with the applicable
provisions of the Bylaws of the Company or any subsidiary of the Company or
until such time as he tenders his resignation in writing. Nothing contained in
this Agreement is intended to create in Indemnitee any right to continued
employment.
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referenced in
Section 1(a) or 1(b) (but not amounts actually paid in settlement of any such
action, suit or proceeding). Indemnitee hereby undertakes to repay such amounts
advanced only if, and to the extent that, it is ultimately determined by a court
of competent jurisdiction that Indemnitee is not entitled to be indemnified by
the Company as authorized hereby.
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(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
precedent to his right to be indemnified under this Agreement, give the Company
written notice as soon as practicable of any claim for which Indemnitee will or
could seek indemnification under this Agreement. In addition, Indemnitee shall
give the Company such information and cooperation as it may reasonably require
and as shall be within Indemnitee's power.
(c) Procedure. Any indemnification and advances provided for in
Section 1 and this Section 3 shall be made no later than 30 days after receipt
of the written request of Indemnitee, provided that a determination is made
within such 30-day period that, as to Indemnitee's specific case,
indemnification of Indemnitee is proper in the circumstances. Such determination
shall be made: (a) by the Company's stockholders; (b) by the Company's Board of
Directors by majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding; (c) if a majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding
so orders, by independent legal counsel in a written opinion; or (d) if a quorum
consisting of directors who were not parties to the action, suit or proceeding
cannot be obtained, by independent legal counsel in a written opinion. If a
claim under this Agreement, under any statute, or under any provision of the
Company's Articles of Incorporation or Bylaws providing for indemnification, is
not paid in full by the Company within 30 days after a written request for
payment thereof has first been received by the Company, Indemnitee may, but need
not, at any time thereafter bring an action against the Company to recover the
unpaid amount of the claim and, subject to Sections 8 and 9(g) of this
Agreement, Indemnitee shall also be entitled to be paid for the expenses
(including reasonable attorneys' fees) of bringing such action. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in connection with any action, suit or proceeding in advance
of its final disposition) that Indemnitee has not met the standards of conduct
which make it permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed. However, Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties' intention that if the Company
contests Indemnitee's right to indemnification, the question of Indemnitee's
right to indemnification shall be for a court of competent jurisdiction to
decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including it Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice of
a claim pursuant to Section 3(b), the Company has director and officer liability
insurance in effect, the Company shall give prompt notice of the commencement of
such proceeding to the insurers in accordance with the procedures set forth in
the respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.
(e) Selection of Counsel. In the event the Company shall be obligated
under Section 3(a) to advance the expenses of any proceeding against Indemnitee,
the Company, if appropriate, shall be entitled to assume the defense of such
proceeding, with counsel approved by Indemnitee (which approval shall not be
unreasonably withheld), upon the delivery to Indemnitee of written notice of its
election to do so. After delivery of such notice, approval of such counsel by
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Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same proceeding,
provided that (i) Indemnitee shall have the right to employ his counsel in any
such proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement, the
Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by
the NRS, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Articles of
Incorporation, the Company's Bylaws or by statute. In the event of any change,
after the date of this Agreement, in any applicable law, statute, or rule which
expands the right of a Nevada corporation to indemnify a member of its board of
directors or an officer, such changes shall be, ipso facto, within the purview
of Indemnitee's rights and Company's obligations, under this Agreement. In the
event of any change in any applicable law, statute or rule which narrows the
right of a Nevada corporation to indemnify a member of its board of directors or
an officer, such changes, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement shall have no effect on this
Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested directors, the NRS, or otherwise, for
either an action in Indemnitee's official capacity or action in another capacity
while holding such office, except that indemnification, unless ordered by a
court pursuant to NRS ss. 78.7502 or for the advancement of expenses made
pursuant to Section 3, may not be made to or on behalf of Indemnitee if a final
adjudication establishes that Indemnitee's acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was material
to the cause of action. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving in an
indemnified capacity even though he may have ceased to serve in such capacity at
the time of any action, suit or other covered proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually and reasonably incurred by him
in the investigation, defense, appeal or settlement of any civil or criminal
action, suit or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that
in certain instances, federal law or applicable public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
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7. Officer and Director Liability Insurance. The Company shall, from time
to time, make the good faith determination whether or not it is practicable for
the Company to obtain a policy greater in value than the Company's current
Director and Officer Liability Insurance Policy with Great American Insurance
Company, Policy # DOL5593151 (the "Current D&O Policy"), or to maintain the
Current D&O Policy providing the officers and directors of the Company with
coverage for losses from wrongful acts, or to ensure the Company's performance
of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining or maintaining
such insurance coverage against the protection afforded by such coverage. In all
policies of director and officer liability insurance, Indemnitee shall be named
as an insured in such a manner as to provide Indemnitee the same rights and
benefits as are accorded to the most favorably insured of the Company's
directors, if Indemnitee is a director; or of the Company's officers, if
Indemnitee is not a director of the Company but is an officer. Notwithstanding
the foregoing, the Company shall have no obligation to maintain such insurance
if the Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company. The Company agrees to provide Indemnitee with a copy of the Current D&O
Policy, and to notify Indemnitee, or to cause the insurance company to notify
Indemnitee, of cancellation of or changes to the Current D&O Policy.
8. Exceptions. Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under ss.
78.7502 of the NRS, but such indemnification or advancement of expenses may be
provided by the Company in specific cases if the Board of Directors has approved
the initiation or bringing of such suit; or
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
proceeding was not made in good faith or was frivolous; or
(c) No Duplicative Payments. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the
extent that Indemnitee has otherwise actually received payment (under any
insurance policy, provision of the Company's certificate of incorporation,
bylaws, or otherwise) of the amounts otherwise payable hereunder; or
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(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
9. Miscellaneous.
(a) Choice of Law. This Agreement and all disputes related hereto,
whether in contract or tort, in law or in equity, or otherwise, shall be
governed by and its provisions construed in accordance with the laws of the
State of Nevada, as applied to contracts between Nevada residents entered into
and to be performed entirely within Nevada without regard to the conflict of law
principles thereof.
(b) Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Nevada for
all purposes in connection with any action or proceeding which arises out of or
relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Nevada.
(c) Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing and
signed by 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.
(d) Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and supersedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto.
(e) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's heirs, executors and administrators.
(f) Severability. If and to the extent that any provision of this
Agreement is held by final judgment of a court of competent jurisdiction to be
invalid, illegal or unenforceable, then to such extent the invalid, illegal or
unenforceable provision shall be severed from the remainder of this Agreement,
and the remainder of this Agreement shall be enforced. In addition, the invalid,
illegal or unenforceable provision shall be deemed to be automatically modified,
and, as so modified, to be included in this Agreement, such modification being
made to the minimum extent necessary to render the provision valid, legal and
enforceable. Notwithstanding the foregoing, however, if the severed or modified
provision concerns all or a portion of the essential consideration to be
delivered under this Agreement by one party to the other, the remaining
provisions of this Agreement shall also be modified to the extent necessary to
equitably adjust the parties' respective rights and obligations hereunder.
(g) Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
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action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including reasonable attorneys' fees,
incurred by Indemnitee in defense of such action (including with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that each of Indemnitee's material
defenses to such action were made in bad faith or were frivolous.
(h) Notice. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
delivered personally by hand or by courier, mailed by United States first-class
mail, postage prepaid, sent by facsimile or sent by electronic mail directed to
the party to be notified at the address, facsimile number or electronic mail
address indicated for such person on the signature page hereof, or at such other
address, facsimile number or electronic mail address as such party may designate
by 10 days' advance written notice to the other party hereto. All such notices
and other communications shall be deemed given upon personal delivery, on the
date of mailing, upon confirmation of facsimile transfer or when directed to the
electronic mail address set forth on the signature page hereof.
(i) Construction. Whenever used in this Agreement, the singular number
will include the plural, and the plural number will include the singular, and
pronouns in the masculine, feminine, or neuter gender will include each other
gender. Headings are used for convenience only, and are not to be given
substantive effect. All references to section numbers and exhibits in this
Agreement are references to sections and exhibits in this Agreement, unless
otherwise specifically indicated. All exhibits and schedules are incorporated in
this Agreement as if set forth herein in full. Recitals are part of this
Agreement and shall be considered in its interpretation.
(j) Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, 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 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.
(k) 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 documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
(l) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
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EXECUTED as of the date first above written.
ENGLOBAL CORPORATION
By:
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Xxxxxxx X. Xxxxxx, P.E.
Chief Executive Officer
Address:
000 X. Xxx Xxxxxxx Xxxxxxx E., Ste. 400
Xxxxxxx, Xxxxx 00000
AGREED TO AND ACCEPTED:
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"Indemnitee"
--------------------------------
Address:
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