INDEMNITY AGREEMENT
Exhibit 10.1
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT
(“Agreement”) is made and entered into as of this ___day of ______
20___, by and between Xxxxxxx Controls, Inc., a Wisconsin corporation (the “Company”) and
_______________, a Director and/or Officer of the Company (the “Executive”). Capitalized
terms used in this Agreement and not otherwise defined in the text of this Agreement, or in
Paragraph 17 hereof, shall have the respective meanings ascribed to them in Section 180.0850 of the
Wisconsin Business Corporation Law (the “Statute”).
W I T N E S S E T H:
WHEREAS, Section 180.0858 of the Statute provides that Directors and Officers can, subject to
certain limitations, be granted indemnification rights in addition to those provided in the Statute
pursuant to a written agreement between a Director or Officer and the Company.
WHEREAS, in order to provide the Executive with the most comprehensive personal liability
protection presently allowed under Wisconsin law, the Company has deemed it appropriate to enter
into this Agreement with the Executive.
WHEREAS, the Executive desires to continue to serve as a Director or Officer of the Company;
provided, however, that the Executive is furnished with the personal liability protections set
forth hereinafter.
WHEREAS, the Executive agrees that, as a condition to the Company entering into this
Agreement, the Executive shall terminate and return any existing indemnity agreement with the
Company to which the Executive is currently a party.
NOW, THEREFORE, in consideration of the promises, mutual covenants and agreements of the
Company and the Executive contained in this Agreement and the mutual benefits to be derived
herefrom, the Company and the Executive, intending to be legally bound, hereby covenant and agree
as follows:
1. Agreement to Serve. The Executive agrees to continue to serve the Company as a
Director or Officer in consideration of the personal liability protections granted by the Company
to the Executive herein; provided, however, that nothing contained in this Agreement shall
constitute a contract of employment or designation of directorship between the Company and the
Executive.
2. Mandatory Indemnification. The Company shall indemnify the Executive, to the
fullest extent permitted or required by the Statute, against all Liabilities incurred by the
Executive in a Proceeding in which the Executive is a Party because the Executive is or was a
Director or Officer.
3. Procedural Requirements.
(a)
If the Executive seeks indemnification under Paragraph 2, the Executive shall make a
written request therefor to the Company. Subject to Paragraphs 3(b) and 3(e), within sixty days of
the Company’s receipt of such request, the Company shall pay or reimburse the Executive for the
entire amount of Liabilities incurred thereby in connection with the subject Proceeding (net of any
Expenses previously advanced pursuant to Paragraph 5).
(b) No indemnification shall be required to be paid by the Company pursuant to Paragraph 2
if, within such sixty-day period, (i) a Disinterested Quorum, by a majority vote thereof,
determines that the Executive engaged in misconduct constituting a Breach of Duty; or (ii) a
Disinterested Quorum cannot be obtained.
(c) In either case of nonpayment pursuant to Paragraph 3(b), the Board shall immediately
authorize by resolution that an Authority, as provided in Paragraph 4, determine whether the
Executive’s conduct constituted a Breach of Duty and, therefore, whether indemnification should be
denied hereunder.
(d) If the Board does not authorize an Authority to determine the Executive’s right to
indemnification hereunder within such sixty-day period and/or if indemnification of the requested
amount of Liabilities is paid by the Company, then it shall be conclusively presumed for all
purposes that a Disinterested Quorum has determined that the Executive did not engage in misconduct
constituting a Breach of Duty.
(e) If a Change in Control shall have occurred, the sixty-day period referenced in Paragraph
3(b) and Paragraph 3(d) shall become a ten-day period.
4. Determination of Indemnification.
(a) If the Board authorizes an Authority to determine the Executive’s right to
indemnification pursuant to Paragraph 3, then the Executive shall have the absolute discretionary
authority to select one of the following as such Authority:
(i) An Independent Legal Counsel mutually selected by the Executive and by a majority
vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a
majority vote of the Board; provided that if a Change of Control shall have occurred, such
counsel shall be selected solely by the Executive;
(ii) A panel of three arbitrators selected from the panels of arbitrators of the
American Arbitration Association in Milwaukee, Wisconsin; provided, that (A) the first
arbitrator shall be selected by the Executive, the second arbitrator shall be selected by a
majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained,
then by a majority vote of the Board, and the third arbitrator shall be selected by the two
previously selected arbitrators; and (B) in all other respects, such panel shall be governed
by the American Arbitration Association’s then existing Commercial Arbitration Rules; or
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(iii) A court pursuant to and in accordance with Sections 180.0854 and 180.0855 of the
Statute.
(b) In any determination by the selected Authority, there shall exist a rebuttable
presumption that the Executive’s conduct did not constitute a Breach of Duty and that
indemnification against the requested amount of Liabilities is required. The burden of rebutting
such a presumption by clear and convincing evidence shall be on the Company or such other party
asserting that such indemnification should not be allowed.
(c) The Authority shall make a determination within sixty days of being selected and shall
submit a written opinion of its conclusion simultaneously to both the Company and the Executive.
If the Authority shall not have made a determination within such sixty-day period, then it shall be
conclusively presumed for all purposes that the Authority has determined that the Executive has a
right to indemnification pursuant to Paragraph 3 and the Executive shall be entitled to such
indemnification, absent (1) a misstatement by the Executive of a material fact, or an omission of a
material fact necessary to make the Executive’s statement not materially misleading, in connection
with the request for indemnification, or (ii) an express prohibition under applicable law against
determining the Executive’s entitlement to indemnification in this manner; provided, however, that
such sixty-day period may be extended for a reasonable time, not to exceed an additional thirty
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.
(d) If the Authority determines (or is deemed to have determined) that indemnification is
required hereunder, the Company shall pay the entire requested amount of Liabilities (net of any
Expenses previously advanced pursuant to Paragraph 5), including interest thereon at a reasonable
rate, as determined by the Authority, within ten days of receipt of the Authority’s opinion;
provided, that, if it is determined by the Authority that the Executive is entitled to
indemnification as to some claims, issues or matters, but not as to other claims, issues or
matters, involved in the subject Proceeding, the Company shall be required to pay (as set forth
above) only the amount of such requested amount of Liabilities as the Authority shall deem
appropriate in light of all of the circumstances of such Proceeding.
(e) The determination by the Authority that indemnification of the Executive is required
hereunder shall be binding upon the Company regardless of any prior determination that the
Executive engaged in a Breach of Duty.
(f) All Expenses incurred in the determination process under this Paragraph 4 by either the
Company or the Executive, including, without limitation, all Expenses of the selected Authority,
shall be paid by the Company.
5. Mandatory Allowance of Expenses.
(a) The Company shall pay or reimburse, within ten days after the receipt of the Executive’s
written request therefor, the reasonable Expenses of the Executive as such Expenses are incurred,
provided the following conditions are satisfied:
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(i) The Executive furnishes to the Company an executed written certificate affirming
the Executive’s good faith belief that the Executive has not engaged in misconduct which
constitutes a Breach of Duty; and
(ii) The Executive furnishes to the Company an unsecured executed written agreement to
repay any advances made under this Paragraph 5 if it is ultimately determined by an
Authority that the Executive is not entitled to be indemnified by the Company for such
Expenses pursuant to Paragraph 4.
(b)
If the Executive must repay any previously advanced Expenses pursuant to this Paragraph 5,
the Executive shall not be required to pay interest on such amounts.
6. Insurance. The Company may purchase and maintain insurance on behalf of the
Executive against any Liability asserted against or incurred by the Executive because the Executive
is a Director or Officer, regardless of whether the Company is required or permitted to indemnify
against Liabilities or allow Expenses to the Executive hereunder.
7. Remedies. The Company shall indemnify and hold harmless the Executive to the
fullest extent permitted by law against all reasonable expenses, and if requested by the Executive
shall, within ten (10) days after the Company’s receipt of such written request, advance such
reasonable expenses to the Executive, which are incurred by the Executive in connection with any
judicial proceeding or arbitration brought by the Executive (i) to enforce his rights under, or to
recover damages for breach of, this Agreement or any other indemnification or advancement agreement
or provision of the Articles of Incorporation or Bylaws of the Company now or hereafter in effect;
or (ii) for recovery or advances under any insurance policy maintained by any person for the
benefit of the Executive, regardless of whether the Executive ultimately is determined to be
entitled to such indemnification, advance or insurance recovery, as the case may be.
8. Notice to the Company. The Executive shall promptly notify the Company in
writing when the Executive has actual knowledge of a Proceeding which may result in a claim of
indemnification or allowance of Expenses hereunder, but the failure to do so shall not relieve the
Company of any liability to the Executive under this Agreement unless the Company shall have been
irreparably prejudiced by such failure (as determined by an Authority).
9. Severability. If any provision of this Agreement shall be deemed invalid or
inoperative, or if a court of competent jurisdiction determines that any of the provisions of this
Agreement contravene public policy, this Agreement shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy shall be deemed,
without further action or deed by or on behalf of the Company or the Executive, to be modified,
amended and/or limited, but only to the extent necessary to render the same valid and enforceable.
10. Nonexclusivity of Agreement. The rights of the Executive granted hereunder
shall not be deemed exclusive of any other rights to indemnification against Liabilities or to the
allowance of Expenses to which the Executive may be entitled under any charter or bylaw
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provision,
written agreement, Board resolution, vote of shareholders of the Company or otherwise, including,
without limitation, under the Statute.
11. Continuation of Rights and Obligations. The terms and provisions of this
Agreement shall continue in full force and effect subsequent to the time when the Executive ceases
to be a Director or Officer. All obligations of the Company to indemnify against Liabilities and
allow Expenses to the Executive hereunder shall continue in full force and effect despite any
subsequent amendment or modification of the Company’s Articles of Incorporation or bylaws and such
obligations shall not be adversely affected or in any way limited by any such amendment or
modification, any Board resolution, vote of shareholders of the Company or by any other corporate
action, other than as set forth herein.
12. Assignment; Amendment; Subrogation.
(a) This Agreement shall not be assigned by the Company or the Executive without the written
consent of the other and any attempt at assignment without such written consent shall be null and
void; provided, however, that the Company may freely assign its obligations under this Agreement to
any Affiliate for whom the Executive is serving as a Director or Officer thereof, but such
assignment shall not release the Company from its obligations hereunder.
(b) Except as set forth in Paragraph 8, this Agreement may only be amended, modified or
supplemented by the written agreement of the Company and the Executive.
(c) To the extent the Company indemnifies against Liabilities or advances Expenses to the
Executive which were incurred because the Executive is a Director or Officer of an entity other
than the Company, the Company shall be subrogated to all rights against such other entity for
reimbursement of such amounts.
13. Governing Law. This Agreement shall be construed and interpreted according to
the internal laws of the State of Wisconsin.
14. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.
15. Headings. The headings used in this Agreement are inserted for convenience
only and shall not constitute a part of this Agreement.
16. Notices. All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered
by hand or when mailed by United States certified or registered mail with postage prepaid addressed
as follows:
(a) If to the Executive, to the address set forth by the Executive on the signature page of
this Agreement or to such other person or address which the Executive shall furnish to the Company
in writing pursuant to the above.
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(b) If to the Company, to the attention of the officer signing this Agreement on behalf of
the Company at the address set forth on the signature page of this Agreement (with a copy to Xxxxx
& Xxxxxxx LLP, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxxx, Xx.) or to such other person or address as the Company shall furnish to the Executive in
writing pursuant to the above.
17. Certain Definitions. The following terms (including any plural forms thereof)
as used in this Agreement shall be defined as follows:
(a) “Affiliate” shall include, without limitation, any corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise that directly or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control with, the Company.
(b) “Authority” shall mean the entity selected by the Executive to determine the Executive’s
right to indemnification pursuant to Paragraph 4.
(c) “Board” shall mean the entire then elected and serving board of directors of the
Company, including all members thereof who are Parties to the subject Proceeding or any related
Proceeding.
(d) “Breach of Duty” shall mean the Executive breached or failed to perform the Executive’s
duties to the Company and such breach of or failure to perform those duties is determined, in
accordance with Paragraph 4, to constitute misconduct under Section 180.0851(2)(a) 1, 2, 3 or 4 of
the Statute.
(e) “Change of Control” shall mean:
(i) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either
| (A) | the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or | ||
| (B) | the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); |
provided, however, that the following acquisitions shall not constitute a Change of Control:
(1) any acquisition directly from the Company, (2) any acquisition by the Company or any of
its subsidiaries, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or (4) any acquisition by
any corporation with respect to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then beneficially owned,
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directly or
indirectly, by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such acquisition in substantially the same proportions as
their ownership, immediately prior to such acquisition, of the Outstanding Company Common
Stock and Outstanding Company voting Securities, as the case may be; or
(ii) Individuals who, as of the date hereof, constitute the Company’s Board of
Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of
the Company’s Board of Directors; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule l4a-11 of Regulation 14A promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents; or
(iii) Consummation of a reorganization, merger or consolidation, in each case, with
respect to which all or substantially all of the individuals, and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or consolidation
do not, following such reorganization, merger or consolidation, beneficially own, directly
or indirectly, more than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting
from such reorganization, merger or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may
be; or
(iv) Consummation of (i) a complete liquidation or dissolution of the Company or (ii)
the sale or other disposition of all or substantially all, of the assets of the Company,
other than to a corporation, with respect to which following such sale or other disposition,
more than 50% of, respectively, the then outstanding shares of common stock of such
Corporation and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be.
(f) “Corporation,” as defined in the Statute and incorporated by reference into the
definitions of certain of the capitalized terms used in this Agreement, shall mean the Company and
the term “Company,” as previously defined herein, shall include, without limitation,
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any successor
corporation or entity to the Company by way of merger, consolidation or acquisition of all or
substantially all of the capital stock or assets of the Company.
(g) “Director or Officer” shall have the meaning set forth in the Statute and shall
specifically include, without limitation, service as a director, officer, trustee, partner, member
of any governing or decision-making committee, employee or agent of any (i) charitable
organization, non-profit corporation or similar entity or (ii) corporation, partnership, joint
venture or other enterprise in which the Company beneficially owns an equity, partnership, voting
or investment interest, but which is not otherwise an Affiliate, which in any case above is
requested, authorized or approved in writing by the Company’s President; provided, that, for
purposes of this Agreement, it shall be conclusively presumed that if the Executive serves as a
director, officer, partner, trustee, member of any governing or decision-making committee, employee
or agent of an Affiliate, the Executive shall be so serving at the request of the Company.
(h) “Disinterested Quorum” shall mean a quorum of the Board who are not Parties to the
subject Proceeding or any related Proceeding.
(i) “Liability” shall have the meaning set forth in the Statute and shall specifically
include, without limitation, any liabilities that may arise for violations of any responsibilities,
obligations or duties imposed upon fiduciaries by the Employee Retirement Income Security Act of
1974, as amended, or any similar provisions of state statutory law or common law.
(j) “Independent Legal Counsel” shall mean a law firm, or a member of a law firm, or an
independent practitioner that is experienced in matters of relevant corporation law and neither
presently is, nor in the past three years has been, retained to represent (i) the Company or the
Executive in any matter material to either such party (other than with respect to matters
concerning the Executive under this Agreement), or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Legal 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 the Executive in an action to determine the Executive’s rights.
(k) “Party” shall have the meaning set forth in the Statute; provided, that, for purposes of
this Agreement, the term “Party” shall also include the Executive if the Executive is or was a
witness in a Proceeding at a time when the Executive has not otherwise been formally named a Party
thereto.
(l) “Proceeding” shall have the meaning set forth in the Statute; provided, that, for
purposes of this Agreement, the term “Proceeding” shall also include all Proceedings (i) brought
under (in whole or in part) the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, their respective state counterparts, and/or any rule or regulation promulgated
under any of the foregoing; (ii) brought before an Authority or otherwise to enforce rights
hereunder; (iii) involving any appeal from a Proceeding; and (iv) in which the Executive is a
plaintiff or petitioner because the Executive is a Director or Officer; provided, however, that any
such Proceeding under this clause (iv) must be authorized by a majority vote of a Disinterested
Quorum.
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(m) “Statute” shall mean Sections 180.0850 through 180.0859, inclusive, of the Wisconsin
Business Corporation Law, Chapter 180 of the Wisconsin Statutes, as the same shall then be in
effect, including any amendments thereto, but, in the case of any such amendment, only to the
extent such amendment permits or requires the Company to provide broader indemnification rights
than the Statute permitted or required the Company to provide prior to such amendment.
[signatures are on next page]
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IN WITNESS WHEREOF, the Company and the Executive have caused this Agreement to be duly
executed as of the day and year first above written.
| XXXXXXX CONTROLS, INC. (the “Company”) X.X. Xxx 000 Xxxxxxxxx, Xxxxxxxxx 00000 |
||||
| By: | ||||
| Title: | ||||
| Signature: | ||||
| (“Executive”) | ||||
| Address | ||||
| City, State | ||||
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