EXHIBIT 10.7
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is entered into this day of , 19 by and
between (the "Officer") and CTS CORPORATION, an Indiana corporation (the
"Company").
WHEREAS, the Officer is an officer of the Company; and
WHEREAS, to induce the Officer to continue to serve as an officer, the
Company has provided for indemnification in Article XIX of its bylaws, a copy of
which is attached hereto as Exhibit A ("Bylaw Indemnity"), and has maintained
insurance and has a policy of continuing to maintain insurance for such persons
against liabilities or losses incurred by the Officer as a consequence of his
service in such capacity ("O & D Insurance"), to the extent available on terms
acceptable to the Company; and
WHEREAS, the Company has determined that O & D Insurance may not be
available to it on acceptable terms in the future; and
WHEREAS, in order to induce the Officer to serve as an Officer, the Company
is willing to provide the indemnification provided herein;
NOW, THEREFORE, in consideration of the premises and the Officer's continued
service as an officer, the parties hereto agree as follows:
Section 1. INDEMNIFICATION. The Company shall, to the fullest extent to
which it is empowered to do so under the Indiana Business Corporation Law, or
other applicable laws, as from time to time in effect, indemnify the Officer in
the event that he was or is made a party, or is threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative and whether formal or informal,
by reason of the fact that he is or was an officer, director, employee or agent
of the Company, or who, while serving as such officer, director, employee or
agent of the Company, is or was serving at the request of the Company as an
officer, director, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including counsel fees), judgments, settlements, penalties and
fines (including excise taxes assessed with respect to employee benefit plans)
("Indemnifiable Expenses") actually or reasonably incurred by him in accordance
with such action, suit or proceeding (net of any related insurance proceeds
received by him or paid on his behalf), if the Officer (a) was wholly
successful, on the merits or otherwise, in the defense of any such action, suit
or proceeding or (b) acted in good faith and if he reasonably believed, in the
case of conduct in his official capacity, that his conduct was not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, he either had reasonable cause to believe his conduct was lawful or
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Officer did not meet the prescribed standard of conduct.
For purposes of any determination under this Section 1, a person shall be
deemed to have acted in good faith and to have otherwise met the applicable
standard of conduct set forth in Section 1 if his action is based on
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by (1) one or more officers
or employees of the corporation or another enterprise whom he reasonably
believes to be reliable and competent in the matters presented; (2) legal
counsel, public accountants, appraisers or other persons as to matters he
reasonably believes are within the person's professional or expert competence;
or (3) a committee of the Board of Directors of the corporation or another
enterprise of which the person is not a member if he reasonably believes the
committee merits confidence. The term "another enterprise" as used in this
Section 3 shall mean any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise of which such person is or was
serving at the request of the corporation as a director, officer, partner,
trustee,
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employee or agent. The provisions of this paragraph shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standards of conduct set forth in this Section
1.
Section 2. METHOD OF INDEMNIFICATION. If the Officer is wholly successful,
on the merits or otherwise, in the defense of any action, suit or proceeding,
the Officer shall be entitled to receive from the Company, and the Company
hereby covenants and agrees to provide the Officer, within ten business days of
the Company's receipt of a written request of the Officer, accompanied by the
supporting documentation set forth below, reimbursement in cash for the total
amount of his Indemnifiable Expenses with respect thereto which shall not have
been previously reimbursed by the Company. In making a written request for such
reimbursement of Indemnifiable Expenses, the Officer shall submit to the Company
a schedule setting forth in reasonable detail his Indemnifiable Expenses and the
dollar amount expended for each such Indemnifiable Expense. Such schedule shall
be accompanied by a copy of the xxxx, agreement, judgment or other documentation
relating to each Indemnifiable Expense listed therein.
If the Officer is unsuccessful on the merits in the defense of any action,
suit or proceeding, the Officer shall be similarly entitled to receive from the
Company, and the Company covenants and agrees to provide the Officer,
reimbursement in cash for the total amount of his Indemnifiable Expenses with
respect thereto which shall not have been previously reimbursed by the Company,
within three business days after a determination has been made that the Officer
has met the applicable standards of conduct set forth in Section 1. Such
determination shall be made in good faith (1) by the Board by a majority vote of
a quorum consisting of directors who were not at the time parties to such
action, suit or proceeding; or (2) if a quorum cannot be obtained under
subdivision (1), by majority vote of a committee duly designated by the Board
(in which designation directors who are parties may participate), consisting
solely of two or more directors not at the time parties to such action, suit or
proceeding; or (3) by special legal counsel: (A) selected by the Board or its
committee in the manner prescribed in subdivision (1) or (2), or (B) if a quorum
of the Board cannot be obtained under subdivision (1) and a committee cannot be
designated under subdivision (2), selected by a majority vote of the full Board
(in which selection directors who are parties may participate); or (4) by the
shareholders, but stock owned by or voted under the control of directors who are
at the time parties to such action, suit or proceeding may not be voted on the
determination. The foregoing determination shall be made within ten business
days of the Company's receipt of a written request of the Officer, accompanied
by the supporting documentation described above, unless the determination is to
be made by the shareholders, in which case the Company covenants and agrees to
call a special meeting of the shareholders within ten business days of such
receipt. The evaluation of the reasonableness of expenses shall be made at the
same time and in the same manner; provided that if the determination that
indemnification is permissible is to be made by special legal counsel, the
evaluation as to the reasonableness of expenses shall be made by those entitled
to select such counsel.
Section 3. PAYMENT OF EXPENSES IN ADVANCE. Expenses previously incurred by
the Officer or reasonably expected by the Officer to be incurred in connection
with any action, suit or proceeding shall be paid for or reimbursed by the
Company in advance of the final disposition of such action, suit or proceeding,
within ten business days of the Company's receipt of a written request of the
Officer accompanied by a written affirmation of the Officer's good faith belief
that he has met the standards of conduct described in Section 1 of this
Agreement, and a schedule setting forth in reasonable detail the amount incurred
or reasonably expected to be incurred for any expenses, but only upon a
determination made in the manner and by any of the persons described in the
second paragraph of Section 2 of this Agreement that the facts then known to
them would not preclude indemnification hereunder because the Officer failed to
meet the applicable standards of conduct described in Section 1 of this
Agreement. The Officer hereby covenants and agrees with the Company to repay
such amount if it is ultimately determined that the Officer did not meet the
standards of conduct described in Section 1 of this Agreement. The Officer may
make as many requests for advances under this Section 3 as he deems reasonably
necessary to cover his actual or reasonably expected expenses.
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Section 4. PROVISIONS NOT EXCLUSIVE. The indemnification provided by this
Agreement shall not be deemed exclusive of any other right to be indemnified or
insured by the Company or any other person or entity to which the Officer may be
entitled under any statute, agreement, policy of insurance or surety, the
Articles of Incorporation or bylaws of the Company, any resolution of the Board
of Directors or shareholders, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue after the Officer has ceased to be an officer, employee or agent
of the Company, and shall inure to the benefit of his heirs, executors and
administrators.
Section 5. DEFINITIONS. For purposes of this Agreement, serving an employee
benefit plan at the request of the Company shall include any service as a
director, officer, employee or agent of the Company which imposes duties on, or
involves services by the Officer with respect to an employee benefit plan, its
participants, or beneficiaries. If the Officer acted in good faith and in a
manner he reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan, he shall be deemed to have acted
in a manner "not opposed to the best interests of the Company" referred to in
Section 1 of this Agreement.
For purposes of this Agreement, "party" includes any individual who is or
was a plaintiff, defendant or respondent in any action, suit or proceeding, or
who is threatened to be made a named defendant or respondent in any action, suit
or proceeding.
For purposes of this Agreement, "Official capacity," when used with respect
to the Officer, shall mean the office of director of the Company and any office
of the Company held by the Officer or other employment or agency relationship
undertaken by the Officer on behalf of the Company. "Official capacity" does not
include service for any other foreign or domestic corporation or any
partnership, joint venture, trust, employee benefit plan, or other enterprise,
whether for profit or not.
Section 6. GOOD FAITH. The Company agrees to perform its obligations under
this Agreement in good faith; and in any litigation brought by the Officer to
enforce any such obligations, the Company shall have the burden of establishing
by a preponderance of the evidence that it (and the Board or a committee
thereof, if applicable) so performed such obligations, and in the absence of
fulfilling such burden, the Company hereby consents to the entry of the
judgment, decree and other relief sought by the Officer in such litigation and
further agrees not to appeal or otherwise resist the enforcement thereof.
Section 7. NOTICE. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered in person or mailed by United States registered mail, return receipt
requested, postage prepaid, as follows:
If to the Officer:
__________________________
__________________________
__________________________
If to the Company:
CTS Corporation
000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xx 00000
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
Section 8. MISCELLANEOUS.
(a) This Agreement shall be binding on the successors and assigns of the
Company.
(b) This Agreement contains the entire agreement of the parties with respect
to the matters covered herein, and may not be amended except by a written
instrument executed by the parties hereto.
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(c) This Agreement shall be governed by and construed in accordance with the
substantive laws of the State of Indiana.
(d) The invalidity or unenforceability in any respect of any provision of
this Agreement shall not affect the validity or enforceability of such provision
in any other respect or of any other provision of this Agreement, all of which
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THE OFFICER THE COMPANY
Xxxxxxxx X. Xxxxx
Vice President, General
Counsel and Secretary
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