EXHIBIT 10.20
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement") is made as of ________________,
2007 by and between GENERAL EMPLOYMENT ENTERPRISES, INC., an Illinois
corporation (the "Company"), and [NAME OF DIRECTOR OR OFFICER]
("Indemnitee").
RECITALS
WHEREAS, highly competent persons have become more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of
their service to and activities on behalf of the corporation.
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions. At the same time, directors,
officers and other persons in service to corporations or business
enterprises are being increasingly subjected to expensive and time-consuming
litigation relating to, among other things, matters that traditionally would
have been brought only against the Company or business enterprise itself. The
Articles of Incorporation (the "Charter") and the Bylaws of the Company require
indemnification of the officers and directors of the Company. Indemnitee may
also be entitled to indemnification pursuant to applicable provisions of the
Illinois Business Corporation Act of 1983 ("IBCA"). The Charter, the Bylaws
and the IBCA expressly provide that the indemnification provisions set forth
therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the board of directors,
officers and other persons with respect to indemnification.
WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining such
persons.
WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company's stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the
future.
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify, and to advance expenses on
behalf of, such persons to the fullest extent permitted by applicable law
so that they will serve or continue to serve the Company free from undue
concern that they will not be so indemnified.
WHEREAS, this Agreement is a supplement to and in furtherance of the
Charter, the Bylaws of the Company and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of Indemnitee thereunder.
WHEREAS, Indemnitee does not regard the protection available under the
Company's Charter, Bylaws and insurance as adequate in the present
circumstances, and may not be willing to serve as an officer or director
without adequate protection, and the Company desires Indemnitee to serve in
such capacity. Indemnitee is willing to serve, continue to serve and to
take on additional service for or on behalf of the Company on the condition
that he be so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Services to the Company. Indemnitee will serve or continue to
serve as an officer, director or key employee of the Company for so long as
Indemnitee is duly elected or appointed or until Indemnitee's earlier death,
removal or resignation. Indemnitee may at any time and for any reason resign
from such position (subject to any other contractual obligation or
any obligation imposed by operation of law), in which event the Company shall
have no obligation under this Agreement to continue Indemnitee in such
position. This Agreement shall not be deemed an employment contract between
the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.
Indemnitee specifically acknowledges that Indemnitee's employment with the
Company (or any of its subsidiaries or any Enterprise), if any, is at will,
and the Indemnitee may be discharged at any time for any reason, with or
without cause, except as may be otherwise provided in any written employment
contract between Indemnitee and the Company (or any of its subsidiaries or
any Enterprise), other applicable formal severance policies duly adopted by
the Board, or, with respect to service as a director or officer of the
Company, by the Company's Charter, the Company's Bylaws, and the IBCA. The
foregoing notwithstanding, this Agreement shall continue in force after
Indemnitee has ceased to serve as an officer, director or key employee of the
Company.
2. Definitions. As used in this Agreement:
(a) References to "agent" shall mean any person who is or was a
director, officer, or employee of the Company or a subsidiary of the Company or
other person authorized by the Company to act for the Company, to include such
person serving in such capacity as a director, officer, employee, fiduciary or
other official of another corporation, partnership, limited liability company,
joint venture, trust or other enterprise at the request of, for the convenience
of, or to represent the interests of the Company or a subsidiary of the
Company.
(b) The terms "Beneficial Owner" and "Beneficial Ownership"
shall have the meanings set forth in Rule 13d-3 promulgated under the
Exchange Act (as defined below) as in effect on the date hereof.
(c) A "Change in Control" shall be deemed to occur upon the
earliest to occur after the date of this Agreement of any of the following
events:
(i) Change in Board of Directors. Individuals who, as of
the date hereof, constitute the Board (the "Incumbent Directors") cease for
any reason to constitute at
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least a majority of the Board, other than any such cessation that occurs
directly or indirectly as a result of or in connection with the issuance of
equity securities of the Company in exchange for a reduction in the Company's
indebtedness (which resulting change in the Board shall not constitute or
cause a Change in Control hereunder), provided that any person becoming a
director after the date hereof and whose election or nomination for election
was approved by a vote of at least a majority of the Incumbent Directors
then on the Board shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contests with respect to the
election or removal of directors (an "Election Contest") or other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board (a "Proxy Contest"), including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest,
shall be deemed an Incumbent Director;
(ii) Acquisition of Stock by Third Party. Any Person is or
becomes a Beneficial Owner, directly or indirectly, of either (x) 35% or more
of the then-outstanding shares of common stock of the Company ("Company Common
Stock"), or (y) securities of the Company representing 35% or more of the
combined voting power of the Company's then-outstanding securities eligible to
vote for the election of directors ("Company Voting Securities"), other than
any person becoming a beneficial owner of Company Common Stock or
Company Voting Securities in connection with the issuance of the equity
securities of the Company in exchange for a reduction in the Company's
indebtedness (which situation shall not constitute or cause a Change in Control
hereunder); provided, however, that for purposes of this paragraph (ii), the
following acquisitions of Company Common Stock or Company Voting
Securities shall not constitute a Change in Control: (A) an acquisition
directly from the Company; or (B) an acquisition pursuant to a Non-Qualifying
Transaction (as defined in paragraph (iii) below;
(iii) Corporate Transactions. The consummation of a
recapitalization, reorganization, merger, consolidation, statutory share
exchange or similar form of transaction involving the Company or a subsidiary
of the Company (a "Reorganization") other than in connection with a
Reorganization directly or indirectly involving the issuance of equity
securities of the Company in exchange for a reduction in the Company's
indebtedness (which Reorganization shall not be considered a Change in Control
hereunder), or the sale or other disposition of all or substantially all of the
Company's assets (a "Sale") or the acquisition of assets or stock of another
entity (an "Acquisition"), unless immediately following such Reorganization,
Sale or Acquisition: (A) 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, Sale or Acquisition are the Beneficial Owners,
directly or indirectly, more than 55% 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 entity resulting from or surviving
such Reorganization, Sale or Acquisition (including, without limitation, an
entity which as a result of such transaction owns the Company or all or
substantially all of the Company's assets or stock either directly or
through one or more subsidiary entities, the "Surviving Entity") in
substantially the same proportions as their ownership, immediately prior to
such Reorganization, Sale or Acquisition, of the outstanding Company Common
Stock and the outstanding Company Voting Securities, as the case may be;
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(B) no Person (other than a Surviving Entity, its ultimate parent entity, or
any employee benefit plan or related trust sponsored or maintained by either
of the foregoing) is the Beneficial Owner, directly or indirectly, of 35% or
more of the total common stock or 35% of the total voting power of the
outstanding voting securities eligible to elect directors of the Surviving
Entity; and (C) at least a majority of the members of the board of directors
of the Surviving Entity were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such
Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition
which satisfies all of the criteria specified in (A), (B) and (C) above shall
be deemed to be a "Non-Qualifying Transaction"); or
(iv) Liquidation. The approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company.
(d) "Corporate Status" describes the status of a person who is or
was a director, officer, trustee, general partner, managing member, fiduciary,
employee or agent of the Company or of any other Enterprise which such person
is or was serving at the request of the Company.
(e) "Illinois Court" shall mean the Circuit Court of the
Eighteenth Judicial District of the State of Illinois or another federal or
state court of competent jurisdiction.
(f) "Disinterested Director" shall mean a director of the
Company who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(g) "Enterprise" shall mean the Company and any other
corporation, constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which the Company (or any
of its wholly owned subsidiaries) is a party, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the request of the Company as a director,
officer, trustee, general partner, managing member, fiduciary, employee or
agent.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(i) "Expenses" shall include attorneys' fees and costs,
retainers,court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding. Expenses also shall include Expenses incurred
in connection with any appeal resulting from any Proceeding, including without
limitation the premium, security for, and other costs relating to any cost
bond, supersedeas bond, or other appeal bond or its equivalent. Expenses,
however, shall not include amounts paid in settlement by Indemnitee or the
amount of judgments or fines against Indemnitee.
(j) "Independent Counsel" shall mean a law firm or a member of a
law firm that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent:
(i) the Company or Indemnitee in any matter material to
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either such party (other than with respect to matters concerning the Indemnitee
under this Agreement, or of other indemnitees under similar indemnification
agreements); 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.
(k) References to "fines" shall include any excise tax assessed
on Indemnitee with respect to any employee benefit plan; references to
"serving at the request of the Company" shall include any service as a
director, officer, employee, agent or fiduciary of the Company
which imposes duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit plan, its
participants or beneficiaries; and if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.
(l) The term "Person" shall have the meaning as set forth in
Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof;
provided, however, that "Person" shall exclude: (i) the Company; (ii) any
Subsidiaries of the Company; (iii) any employment benefit plan of the Company
or of a Subsidiary of the Company or of any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company; and (iv) any
trustee or other fiduciary holding securities under an employee benefit plan
of the Company or of a Subsidiary of the Company or of a corporation owned
directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company.
(m) A "Potential Change in Control" shall be deemed to have
occurred if: (i) the Company enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) any Person or the Company publicly announces an intention to take or
consider taking actions which if consummated would constitute a Change in
Control; (iii) any Person who becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 5% or more of the
combined voting power of the Company's then outstanding securities entitled to
vote generally in the election of directors increases his Beneficial Ownership
of such securities by 5% or more over the percentage so owned by such
Person on the date hereof; or (iv) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(n) The term "Proceeding" shall include any threatened, pending
or completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil (including intentional or unintentional tort
claims), criminal, administrative or investigative nature, in which Indemnitee
was, is or will be involved as a party or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of any
action (or failure to act) taken by him or of any action (or failure to act) on
his part while acting as a director or officer of the Company, or by reason of
the fact that he is or was serving at the request of the Company as a director,
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officer, trustee, general partner, managing member, fiduciary, employee or
agent of any other Enterprise, in each case whether or not serving in such
capacity at the time any liability or expense is incurred for which
indemnification, reimbursement, or advancement of expenses can be provided
under this Agreement.
(o) The term "Subsidiary," with respect to any Person, shall mean
any corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by that Person.
3. Indemnity in Third-Party Proceedings. The Company shall indemnify
and hold harmless Indemnitee in accordance with the provisions of this
Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a
participant (as a witness or otherwise) in any Proceeding, other than a
Proceeding by or in the right of the Company to procure a judgment in
its favor. Pursuant to this Section 3, Indemnitee shall be indemnified against
all Expenses, judgments, liabilities, fines, penalties and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses, judgments, fines,
penalties and amounts paid in settlement) actually and reasonably incurred by
Indemnitee or on his behalf in connection with such Proceeding or any claim,
issue or matter therein, if Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company and, in the case of a criminal Proceeding, had no reasonable cause to
believe that his conduct was unlawful.
4. Indemnity in Proceedings by or in the Right of the Company. The
Company shall indemnify and hold harmless Indemnitee in accordance with the
provisions of this Section 4 if Indemnitee was, is, or is threatened to be
made, a party to or a participant (as a witness or otherwise) in any Proceeding
by or in the right of the Company to procure a judgment in its favor. Pursuant
to this Section 4, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by him or on his behalf in connection with
such Proceeding or any claim, issue or matter therein, if Indemnitee acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company. No indemnification for Expenses shall be
made under this Section 4 in respect of any claim, issue or matter as to which
Indemnitee shall have been finally adjudged by a court to be liable to the
Company, unless and only to the extent that any court in which the Proceeding
was brought or an Illinois Court shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification.
5. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this Agreement, to the
extent that Indemnitee is a party to (or a participant in) and is successful,
on the merits or otherwise, in any Proceeding or in defense of any claim, issue
or matter therein, in whole or in part, the Company shall indemnify and hold
harmless Indemnitee against all Expenses actually and reasonably incurred by
him in connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify and hold harmless Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. If the Indemnitee is not wholly
successful in such Proceeding, the Company also shall indemnify and hold
harmless Indemnitee against all Expenses reasonably incurred in connection
with a claim, issue or matter related to any claim,
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issue, or matter on which the Indemnitee was successful. For purposes of this
Section and without limitation, the termination of any claim, issue or matter
in such a Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such claim, issue or matter.
6. Indemnification For Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which
Indemnitee is not a party, he shall be indemnified and held harmless against
all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith.
7. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4, or 5, the
Company shall indemnify and hold harmless Indemnitee if Indemnitee is a party
to or threatened to be made a party to any Proceeding (including a Proceeding
by or in the right of the Company to procure a judgment in its favor) against
all Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties and
amounts paid in settlement) actually and reasonably incurred by Indemnitee in
connection with the Proceeding. No indemnity shall be made under this Section
7(a) on account of Indemnitee's conduct which constitutes a breach of
Indemnitee's duty of loyalty to the Company or its stockholders or is an
act or omission not in good faith or which involves intentional misconduct or a
knowing violation of the law.
(b) Notwithstanding any limitation in Sections 3, 4, 5 or 7(a),
the Company shall indemnify and hold harmless Indemnitee if Indemnitee is a
party to or threatened to be made a party to any Proceeding (including a
Proceeding by or in the right of the Company to procure a judgment in its
favor) against all Expenses, judgments, fines, penalties and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses, judgments, fines,
penalties and amounts paid in settlement) actually and reasonably incurred by
Indemnitee in connection with the Proceeding.
8. Contribution in the Event of Joint Liability.
(a) To the fullest extent permissible under applicable law, if
the indemnification and hold harmless rights provided for in this Agreement
are unavailable to Indemnitee in whole or in part for any reason whatsoever,
the Company, in lieu of indemnifying and holding harmless Indemnitee, shall
pay, in the first instance, the entire amount incurred by Indemnitee, whether
for judgments, liabilities, fines, penalties, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any Proceeding without
requiring Indemnitee to contribute to such payment, and the Company hereby
waives and relinquishes any right of contribution it may have at any time
against Indemnitee.
(b) The Company shall not enter into any settlement of any
Proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such Proceeding) unless such settlement provides for a full and
final release of all claims asserted against Indemnitee.
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(c) The Company hereby agrees to fully indemnify and hold
harmless Indemnitee from any claims for contribution which may be brought by
officers, directors or employees of the Company other than Indemnitee who may
be jointly liable with Indemnitee.
9. Exclusions. Notwithstanding any provision in this Agreement, the
Company shall not be obligated under this Agreement to make any indemnity in
connection with any claim made against Indemnitee:
(a) for which payment has actually been received by or on behalf
of Indemnitee under any insurance policy or other indemnity provision, except
with respect to any excess beyond the amount actually received under any
insurance policy, contract, agreement, other indemnity provision or otherwise;
(b) for an accounting of profits made from the purchase and sale
(or sale and purchase) by Indemnitee of securities of the Company within the
meaning of Section 16(b) of the Exchange Act or similar provisions of state
statutory law or common law; or
(c) except as otherwise provided in Sections 14(e)-(f) hereof,
prior to a Change in Control, in connection with any Proceeding (or any part
of any Proceeding) initiated by Indemnitee, including any Proceeding (or any
part of any Proceeding) initiated by Indemnitee against the Company or its
directors, officers, employees or other indemnitees, unless (i) the
Board authorized the Proceeding (or any part of any Proceeding) prior to its
initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law.
10. Advances of Expenses; Defense of Claim.
(a) Notwithstanding any provision of this Agreement to the
contrary, and to the fullest extent permitted by applicable law, the Company
shall advance the Expenses incurred by Indemnitee (or reasonably expected by
Indemnitee to be incurred by Indemnitee within three months) in connection with
any Proceeding within ten (10) days after the receipt by the Company of a
statement or statements requesting such advances from time to time,
whether prior to or after final disposition of any Proceeding. Advances shall
be unsecured and interest free. Advances shall be made without regard to
Indemnitee's ability to repay the Expenses and without regard to Indemnitee's
ultimate entitlement to indemnification under the other provisions
of this Agreement. Advances shall include any and all reasonable Expenses
incurred pursuing a Proceeding to enforce this right of advancement, including
Expenses incurred preparing and forwarding statements to the Company to support
the advances claimed. The Indemnitee shall qualify for advances, to the
fullest extent permitted by applicable law, solely upon the execution
and delivery to the Company of an undertaking providing that the Indemnitee
undertakes to repay the advance to the extent that it is ultimately determined
that Indemnitee is not entitled to be indemnified by the Company under the
provisions of this Agreement, the Charter, the Bylaws of the Company,
applicable law or otherwise. This Section 10(a) shall not apply to any claim
made by Indemnitee for which indemnity is excluded pursuant to Section 9.
(b) The Company will be entitled to participate in the Proceeding
at its own expense.
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(c) The Company shall not settle any action, claim or Proceeding
(in whole or in part) which would impose any Expense, judgment, fine, penalty
or limitation on the Indemnitee without the Indemnitee's prior written consent.
11. Procedure for Notification and Application for Indemnification.
(a) Indemnitee agrees to notify promptly the Company in writing
upon being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any Proceeding or matter which may be
subject to indemnification or advancement of Expenses covered hereunder. The
failure of Indemnitee to so notify the Company shall not relieve the Company of
any obligation which it may have to the Indemnitee under this Agreement, or
otherwise.
(b) Indemnitee may deliver to the Company a written application
to indemnify and hold harmless Indemnitee in accordance with this Agreement.
Such application(s) may be delivered from time to time and at such time(s) as
Indemnitee deems appropriate in his or her sole discretion. Following such a
written application for indemnification by Indemnitee, the Indemnitee's
entitlement to indemnification shall be determined according to Section 12(a)
of this Agreement.
12. Procedure Upon Application for Indemnification.
(a) A determination, if required by applicable law, with respect
to Indemnitee's entitlement to indemnification shall be made in the specific
case by one of the following methods, which shall be at the election of
Indemnitee: (i) by a majority vote of the Disinterested Directors, even though
less than a quorum of the Board or (ii) by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee. The
Company promptly will advise Indemnitee in writing with respect to any
determination that Indemnitee is or is not entitled to indemnification,
including a description of any reason or basis for which indemnification has
been denied. If it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall reasonably cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which
is not privileged or otherwise protected from disclosure and which is
reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or Expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the person,
persons or entity making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(b) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 12(a)
hereof, the Independent Counsel shall be selected as provided in this Section
12(b). The Independent Counsel shall be selected by Indemnitee (unless
Indemnitee shall request that such selection be made by the Board), and
Indemnitee shall give written notice to the Company advising it of the
identity of the Independent Counsel so selected and certifying that the
Independent Counsel so selected meets the requirements of "Independent
Counsel" as defined in Section 2 of this Agreement. If the
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Independent Counsel is selected by the Board, the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected and certifying that the Independent Counsel so selected meets the
requirements of "Independent Counsel" as defined in Section 2 of this
Agreement. In either event, Indemnitee or the Company, as the case may be,
may, within ten (10) days after such written notice of selection shall have
been received, deliver to the Company or to Indemnitee, as the case may be,
a written objection to such selection; provided, however, that such objection
may be asserted only on the ground that the Independent Counsel so selected
does not meet the requirements of "Independent Counsel" as defined in Section 2
of this Agreement, and the objection shall set forth with particularity the
factual basis of such assertion. Absent a proper and timely objection, the
person so selected shall act as Independent Counsel. If such written objection
is so made and substantiated, the Independent Counsel so selected may not serve
as Independent Counsel unless and until such objection is withdrawn or a court
of competent jurisdiction has determined that such objection is without merit.
If, within twenty (20) days after submission by Indemnitee of a written request
for indemnification pursuant to Section 11(a) hereof, no Independent Counsel
shall have been selected and not objected to, either the Company or Indemnitee
may petition an Illinois Court for resolution of any objection which shall have
been made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by an Illinois Court, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel under
Section 12(a) hereof. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
(c) The Company agrees to pay the reasonable fees and expenses of
Independent Counsel and to fully indemnify and hold harmless such Independent
Counsel against any and all Expenses, claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.
13. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person, persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 11(b) of this Agreement,
and the Company shall have the burden of proof to overcome that presumption
in connection with the making by any person, persons or entity of any
determination contrary to that presumption. Neither the failure of the
Company (including by its directors or Independent Counsel) to have
made a determination prior to the commencement of any action pursuant to this
Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or
Independent Counsel) that Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct.
(b) If the person, persons or entity empowered or selected under
Section 12 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have
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made a determination within thirty (30) days after receipt by the Company of
the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a final judicial determination that any or
all such indemnification is expressly prohibited under applicable law;
provided, however, that such 30-day period may be extended for a reasonable
time, not to exceed an additional fifteen (15) days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time to obtain or evaluate
documentation and/or information relating thereto.
(c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee
shall be deemed to have acted in good faith if Indemnitee's action is based on
the records or books of account of the Enterprise, including financial
statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for
the Enterprise or on information or records given or reports made to the
Enterprise by an independent certified public accountant or by an appraiser or
other expert selected by the Enterprise. The provisions of this Section 13(d)
shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed or found to have
met the applicable standard of conduct set forth in this Agreement.
(e) The knowledge and/or actions, or failure to act, of any
other director, officer, trustee, partner, managing member, fiduciary,
agent or employee of the Enterprise shall not be imputed to Indemnitee
for purposes of determining the right to indemnification under this
Agreement.
14. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to
Section 12 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses, to the fullest extent
permitted by applicable law, is not timely made pursuant to Section 10 of this
Agreement, (iii) no determination of entitlement to indemnification shall have
been made pursuant to Section 12(a) of this Agreement within thirty (30) days
after receipt by the Company of the request for indemnification, (iv) payment
of indemnification is not made pursuant to Section 5, 6, 7 or the last
sentence of Section 12(a) of this Agreement within ten (10) days after receipt
by the Company of a written request therefor, (v) a contribution payment is not
made in a timely manner pursuant to Section 8 of this Agreement, or (vi)
payment of indemnification pursuant to Section 3 or 4 of this Agreement is not
made within ten (10) days after a determination has been made that Indemnitee
is entitled to indemnification, Indemnitee shall be entitled to an adjudication
by an Illinois Court to such indemnification, contribution or
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advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration Association. Except
as set forth herein, the provisions of Illinois law (without regard to its
conflict of laws rules) shall apply to any such arbitration. The Company
shall not oppose Indemnitee's right to seek any such adjudication or award in
arbitration.
(b) In the event that a determination shall have been made
pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 14 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any judicial proceeding or arbitration
commenced pursuant to this Section 14, Indemnitee shall be presumed to be
entitled to indemnification under this Agreement and the Company shall have
the burden of proving Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be, and the Company may not refer to
or introduce into evidence any determination pursuant to Section 12(a) of this
Agreement adverse to Indemnitee for any purpose. If Indemnitee commences a
judicial proceeding or arbitration pursuant to this Section 14, Indemnitee
shall not be required to reimburse the Company for any advances pursuant to
Section 10 until a final determination is made with respect to Indemnitee's
entitlement to indemnification (as to which all rights of appeal have been
exhausted or lapsed).
(c) If a determination shall have been made pursuant to Section
12(a) of this Agreement that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 14, absent (i) a misstatement
by Indemnitee of a material fact, or an omission of a material fact necessary
to make Indemnitee's statement not materially misleading, in connection with
the request for indemnification, or (ii) a prohibition of such indemnification
under applicable law.
(d) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 14 that
the procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.
(e) The Company shall indemnify and hold harmless Indemnitee to
the fullest extent permitted by law against all Expenses and, if requested by
Indemnitee, shall (within ten (10) days after the Company's receipt of such
written request) advance to Indemnitee, to the fullest extent permitted by
applicable law, such Expenses which are incurred by Indemnitee in connection
with any judicial proceeding or arbitration brought by Indemnitee (i) to
enforce his rights under, or to recover damages for breach of, this Agreement
or any other indemnification, advancement or contribution agreement or
provision of the Charter, or the Company's Bylaws now or hereafter in effect;
or (ii) for recovery or advances under any insurance policy maintained by any
person for the benefit of Indemnitee, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advance,
contribution or insurance recovery, as the case may be.
(f) Interest shall be paid by the Company to Indemnitee at the
legal rate under Illinois law for amounts which the Company indemnifies or is
obliged to indemnify for the period commencing with the date on which
Indemnitee requests indemnification, contribution,
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reimbursement or advancement of any Expenses and ending with the date on which
such payment is made to Indemnitee by the Company.
15. Establishment of Trust. In the event of a Potential Change in
Control, the Company shall, upon written request by Indemnitee, create a
"Trust" for the benefit of Indemnitee and from time to time upon written
request of Indemnitee shall fund such Trust in an amount sufficient to
satisfy any and all Expenses reasonably anticipated at the time of each such
request to be incurred in connection with investigating, preparing for,
participating in or defending any Proceedings, and any and all judgments,
fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such judgments, fines penalties and amounts paid in settlement) in
connection with any and all Proceedings from time to time actually paid or
claimed, reasonably anticipated or proposed to be paid. The trustee of the
Trust (the "Trustee") shall be a bank or trust company or other individual or
entity chosen by the Indemnitee and reasonably acceptable to the Company.
Nothing in this Section 15 shall relieve the Company of any of its obligations
under this Agreement. The amount or amounts to be deposited in the Trust
pursuant to the foregoing funding obligation shall be determined by mutual
agreement of the Indemnitee and the Company or, if the Company and the
Indemnitee are unable to reach such an agreement, by Independent Counsel
selected in accordance with Section 12(b) of this Agreement. The terms of the
Trust shall provide that, except upon the consent of both the Indemnitee and
the Company, upon a Change in Control: (a) the Trust shall not be revoked or
the principal thereof invaded, without the written consent of the Indemnitee;
(b) the Trustee shall advance, to the fullest extent permitted by applicable
law, within two (2) business days of a request by the Indemnitee and upon the
execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is
ultimately determined that Indemnitee is not entitled to be indemnified by
the Company, any and all Expenses to the Indemnitee; (c) the Trust shall
continue to be funded by the Company in accordance with the funding
obligations set forth above; (d) the Trustee shall promptly pay to the
Indemnitee all amounts for which the Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise; and (e) all
unexpended funds in such Trust shall revert to the Company upon mutual
agreement by the Indemnitee and the Company or, if the Indemnitee and the
Company are unable to reach such an agreement, by Independent Counsel
selected in accordance with Section 12(b) of this Agreement, that the
Indemnitee has been fully indemnified under the terms of this Agreement.
The Trust shall be governed by Illinois law (without regard to its
conflicts of laws rules) and the Trustee shall consent to the jurisdiction
of the Illinois Courts in accordance with Section 23 of this Agreement.
16. Security. Notwithstanding anything herein to the contrary, to the
extent requested by the Indemnitee and approved by the Board, the Company may
at any time and from time to time provide security to the Indemnitee for the
Company's obligations hereunder through an irrevocable bank line of credit,
funded trust or other collateral. Any such security, once provided to the
Indemnitee, may not be revoked or released without the prior written consent
of the Indemnitee.
17. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which
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Indemnitee may at any time be entitled under applicable law, the Charter, the
Company's Bylaws, any agreement, a vote of stockholders or a resolution of
directors, or otherwise. No amendment, alteration or repeal of this
Agreement or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any action taken or omitted
by such Indemnitee in his Corporate Status prior to such amendment,
alteration or repeal. To the extent that a change in applicable law,
whether by statute or judicial decision, permits greater
indemnification or advancement of Expenses than would be afforded currently
under the Charter, the Company's Bylaws or this Agreement, it is the intent
of the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change. No right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every other
right and remedy shall be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.
(b) The IBCA, the Charter and the Company's Bylaws permit the
Company to purchase and maintain insurance or furnish similar protection or
make other arrangements including, but not limited to, providing a trust fund,
letter of credit, or surety bond ("Indemnification Arrangements") on behalf of
Indemnitee against any liability asserted against him or incurred by or on
behalf of him or in such capacity as a director, officer, employee or
agent of the Company, or arising out of his status as such, whether or not the
Company would have the power to indemnify him against such liability under the
provisions of this Agreement or under the IBCA, as it may then be in effect.
The purchase, establishment, and maintenance of any such Indemnification
Arrangement shall not in any way limit or affect the rights and obligations of
the Company or of the Indemnitee under this Agreement except as expressly
provided herein, and the execution and delivery of this Agreement by the
Company and the Indemnitee shall not in any way limit or affect the rights and
obligations of the Company or the other party or parties thereto under any such
Indemnification Arrangement.
(c) To the extent that the Company maintains an insurance policy
or policies providing liability insurance for directors, officers, trustees,
partners, managing members, fiduciaries, employees, or agents of the Company or
of any other Enterprise which such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance with its
or their terms to the maximum extent of the coverage available for any such
director, officer, trustee, partner, managing member, fiduciary, employee or
agent under such policy or policies. If, at the time the Company receives
notice from any source of a Proceeding as to which Indemnitee is a party or a
participant (as a witness or otherwise), the Company has director and officer
liability insurance in effect, the Company shall give prompt notice 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 the Indemnitee,
all amounts payable as a result of such Proceeding in accordance with the
terms of such policies.
(d) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including
-14-
execution of such documents as are necessary to enable the Company to bring
suit to enforce such rights.
(e) The Company's obligation to indemnify or advance Expenses
hereunder to Indemnitee who is or was serving at the request of the Company as
a director, officer, trustee, partner, managing member, fiduciary, employee or
agent of any other Enterprise shall be reduced by any amount Indemnitee has
actually received as indemnification or advancement of expenses from such
Enterprise.
18. Duration of Agreement. All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee serves
as a director or officer of the Company or as a director, officer, trustee,
partner, managing member, fiduciary, employee or agent of any other
corporation, partnership, joint venture, trust, employee benefit plan or
other Enterprise which Indemnitee serves at the request of the Company and
shall continue thereafter so long as Indemnitee shall be subject to any
possible Proceeding (including any rights of appeal thereto and any
Proceeding commenced by Indemnitee pursuant to Section 14 of this
Agreement) by reason of his Corporate Status, whether or not he is acting
in any such capacity at the time any liability or expense is incurred for
which indemnification can be provided under this Agreement.
19. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each
portion of any Section, paragraph or sentence of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not
itself invalid, illegal or unenforceable) shall not in any way be affected or
impaired thereby and shall remain enforceable to the fullest extent permitted
by law; (b) such provision or provisions shall be deemed reformed to the
extent necessary to conform to applicable law and to give the maximum effect
to the intent of the parties hereto; and (c) to the fullest extent possible,
the provisions of this Agreement (including, without limitation, each portion
of any Section, paragraph or sentence of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.
20. Enforcement and Binding Effect.
(a) The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on it hereby in order
to induce Indemnitee to serve as a director, officer or key employee of the
Company, and the Company acknowledges that Indemnitee is relying upon this
Agreement in serving as a director, officer or key employee of the Company.
(b) Without limiting any of the rights of Indemnitee under the
Charter or Bylaws of the Company as they may be amended from time to time,
this Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof.
-15-
(c) The indemnification and advancement of expenses provided by
or granted pursuant to this Agreement shall be binding upon and be enforceable
by the parties hereto and their respective successors and assigns (including
any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business or assets of the
Company), shall continue as to an Indemnitee who has ceased to be a director,
officer, employee or agent of the Company or of any other Enterprise at the
Company's request, and shall inure to the benefit of Indemnitee and his or her
spouse, assigns, heirs, devisees, executors and administrators and other legal
representatives.
(d) The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to the
Indemnitee, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform if no such succession had taken place.
(e) The Company and Indemnitee agree herein that a monetary
remedy for breach of this Agreement, at some later date, may be inadequate,
impracticable and difficult of proof, and further agree that such breach
may cause Indemnitee irreparable harm. Accordingly, the parties hereto
agree that Indemnitee may enforce this Agreement by seeking injunctive relief
and/or specific performance hereof, without any necessity of showing actual
damage or irreparable harm and that by seeking injunctive relief and/or
specific performance, Indemnitee shall not be precluded from seeking or
obtaining any other relief to which he may be entitled. The Company and
Indemnitee further agree that Indemnitee shall be entitled to such specific
performance and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, without the necessity of
posting bonds or other undertaking in connection therewith. The Company
acknowledges that in the absence of a waiver, a bond or undertaking may be
required of Indemnitee by the Court, and the Company hereby waives any such
requirement of such a bond or undertaking.
21. Modification and Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing 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 of this Agreement nor
shall any waiver constitute a continuing waiver.
22. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (i) if delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third (3rd)
business day after the date on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the signature
page of this Agreement, or such other address as Indemnitee shall provide in
writing to the Company.
(b) If to the Company, to:
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General Employment Enterprises, Inc.
Xxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: [ ]
or to any other address as may have been furnished to Indemnitee in writing by
the Company.
23. Applicable Law and Consent to Jurisdiction. This Agreement and the
legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Illinois, without regard
to its conflict of laws rules. Except with respect to any arbitration
commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the
Company and Indemnitee hereby irrevocably and unconditionally: (a) agree that
any action or proceeding arising out of or in connection with this Agreement
shall be brought only in an Illinois Court; (b) consent to submit to the
jurisdiction of an Illinois Court for purposes of any action or proceeding
arising out of or in connection with this Agreement; (c) waive any objection
to the laying of venue of any such action or proceeding in an Illinois Court;
and (d) waive, and agree not to plead or to make, any claim that any such
action or proceeding brought in an Illinois Court has been brought in an
improper or inconvenient forum, or is subject (in whole or in part)
to a jury trial.
24. Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
25. Miscellaneous. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate. The headings of the
paragraphs of this Agreement are inserted for convenience only and shall not
be deemed to constitute part of this Agreement or to affect the construction
thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
as of the day and year first above written.
GENERAL EMPLOYMENT
ENTERPRISES, INC. INDEMNITEE
By:
Name: Name:
Title: Address:
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