Exhibit 10.1

 

 

 

 

This Indemnification Agreement (this “Agreement”) dated the [•] day of [•], 20[•], by and between MDU Resources Group, Inc., a Delaware corporation (the “Company”), and [•], an individual (the “Indemnitee”).

 

 

WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available; and

 

WHEREAS, the Indemnitee is a director and/or officer of the Company and may be a director and/or officer of one or more Affiliates (as defined below) thereof; and

 

 

WHEREAS, the Company is authorized by Section 145 of the Delaware General Corporation Law (the “DGCL”) to indemnify its officers, directors, employees and agents by agreement and to indemnify persons who serve, at the request of the Company, as the directors, officers, employees or agents of other corporations or enterprises, and DGCL Section 145 expressly provides that the indemnification provided, or granted pursuant to, that section is not exclusive; and

 

WHEREAS, Section 7.07 of the Company’s Bylaws (the “Bylaws”) (i) provides for indemnification of, and advancement of expenses by the Company to, its directors and officers to the fullest extent permitted under applicable law, (ii) expressly provides that the indemnification provisions set forth therein are not exclusive and (iii) contemplates that contracts may be entered into between the Company and its directors and officers with respect to indemnification; and

 

WHEREAS, Article SEVENTEENTH of the Company's Restated Certificate of Incorporation, as amended (the “Certificate”), provides that no director of the Company shall be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit; and

 

WHEREAS, in recognition of the Indemnitee’s desire for (i) substantial protection against personal liability, (ii) specific contractual assurance that indemnification will be available to the Indemnitee, regardless of any amendment or revocation of the Bylaws, any change in the composition of the Company’s Board of Directors (the “Board”) or any Change in Control (as

 

 

 

defined below) and (iii) an inducement to provide services to the Company or any of its Affiliates as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of, and the advancement of expenses to, the Indemnitee to the fullest extent permitted under applicable law and as set forth in this Agreement, and, to the extent directors’ and officers’ liability insurance is maintained by the Company, for the continued coverage of the Indemnitee under such insurance policies.

 

NOW, THEREFORE, in consideration of the premises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Indemnitee hereby agree as follows:

 

ARTICLE 1

 

 

Capitalized terms used in this Agreement have the meanings set forth below:

 

“Affiliate” means any Enterprise directly or indirectly controlling or controlled by or under direct or indirect common control with the Company.  For purposes of this definition, “control” when used with respect to any Enterprise means the power to direct the management and policies of such Enterprise, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Board” has the meaning ascribed to that term in the Recitals.

 

“Bylaws” has the meaning ascribed to that term in the Recitals.

 

“Certificate” has the meaning ascribed to that term in the Recitals.

 

“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:

 

(a)                 the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) 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 for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this definition or

 

 

(b)                 individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, 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 occu rs as a result of an actual or threatened election contest with respect to the election or removal of directors or the actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board or

 

(c)                 consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) 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 Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securitie s entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such c orporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination or

 

(d)                 approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

 

For the avoidance of doubt, unless otherwise determined by the Board, the sale of a subsidiary, operating entity or business unit of the Company shall not constitute a Change in Control for purposes of this Agreement.

 

“Corporate Status” means the status of a person who is or was a director or officer or employee or agent of the Company or a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of an Enterprise at which such person is or was serving at the request

 

 

 

of the Company.  The Indemnitee will be deemed, for purposes of this Agreement, to be serving or to have served “at the request of the Company” as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of an Enterprise if the Indemnitee is or was serving as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of such Enterprise and (a) such Enterprise is or at the time of such service was an Affiliate, (b) such Enterprise is or at the time of such service was an employee benefit plan or related trust sponsored or maintained by the Company or an Affiliate or (c) the Company or an Affiliate directly or indirectly caused the Indemnitee to be nominated, elected, appointe d, designated, employed, engaged or selected to serve in such capacity.  References to “serving at the request of the Company” include any service as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of the Company which imposes duties on, or involves services by, such director, officer, employee, partner, member, manager, trustee, fiduciary or agent with respect to any employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner the person reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan will be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to under applicable law or in this Agreement.

 

“DGCL” has the meaning ascribed to that term in the Recitals.

 

“Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee.

 

“D&O Insurance Policies” has the meaning ascribed to that term in Section 6.1.

 

“Enterprise” means an entity other than the Company that is a corporation, partnership, limited liability company, joint stock company, association, joint venture, business trust, employee benefit plan, trust, incorporated association or any other legal entity or enterprise of whatever nature.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Expense Advance” has the meaning ascribed to that term in Section 3.1.

 

“Expenses” shall be broadly construed and shall include all attorneys’ fees, disbursements and retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, food and lodging expenses, duplicating costs, printing and binding costs, telephone charges, postage, fax transmission charges, secretarial services, delivery service fees and all other disbursements or expenses actually and reasonably incurred 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, or in connection with seeking indemnification under this Agreement.  Expenses also include Expenses actually and reasonably incurred in con nection with any appeal resulting from any Proceeding, including the premium, security for, and other costs relating to any appeal bond or its equivalent.  Expenses will also include any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payment, whether in respect of an Expense or a Loss, under this

 

 

 

Agreement.  Expenses, however, shall not include amounts paid in settlement by the Indemnitee or the amount of judgments or fines against the Indemnitee.

 

“Final Disposition” means the final, binding and non-appealable full or partial conclusion of a Proceeding by, including, but not limited to, (i) final judicial decision by a court of competent jurisdiction from which there is no further right to appeal, (ii) settlement or (iii) other determination.  In addition, and without limiting the foregoing, a Final Disposition shall also occur when the party commencing the Proceeding has abandoned the claims asserted or otherwise fails to prosecute the matter or otherwise does not pursue the Proceeding for a period of twelve (12) months.

 

“Independent Counsel” means an attorney or firm of attorneys that is experienced in matters of corporation law and is not currently, and has not been in the past three years, retained to represent: (a) the Company or the Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement and/or the indemnification provisions of the Certificate or Bylaws, or of other indemnitees under similar indemnification agreements) or (b) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professiona l conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.

 

“Losses” means losses of any type whatsoever, and shall include any liability, judgments, damages, amounts paid in settlement, fines, including excise taxes and penalties assessed with respect to employee benefit plans, penalties (whether civil, criminal or otherwise) and all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with a Proceeding.

 

[“Prior Agreement” has the meaning ascribed to that term in the Recitals.] [Insert this definition if the Indemnitee has prior indemnification agreement.]

 

“Proceeding” shall be broadly construed and shall include any threatened, pending or completed action, suit, claim, defamation claim, counterclaim, cross-claim, demand, arbitration, alternative dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether formal or informal, including any and all affirmative defenses and appeals, whether brought by or in the right of, or conducted by, the Company or otherwise, whether civil, criminal, administrative or investigative, and in each case whether or not commenced prior to the date of this Agreement, in which the Indemnitee was, is or will be involved as a party or otherwise, such as to provide testimony, by reason of or relatin g to the Indemnitee’s Corporate Status and by reason of or relating to either (i) any action or alleged action taken by the Indemnitee, or failure or alleged failure to act, or any action or alleged action, or failure or alleged failure to act, on the Indemnitee’s part, while acting in the Indemnitee’s Corporate Status or (ii) the fact of the Indemnitee’s Corporate Status, whether or not serving in such capacity at the time any Loss or Expense is incurred for which indemnification or advancement of Expenses can be provided under this Agreement, except one initiated by the Indemnitee to enforce the Indemnitee’s rights under this Agreement pursuant to

 

 

 

Article 7.  For purposes of this definition, the term “threatened” will be deemed to include the Indemnitee’s good faith belief that a claim or other assertion may lead to institution of a Proceeding.

 

“Sarbanes-Oxley Act” has the meaning ascribed to that term in Section 2.4(b).

 

“Spouse” means the person with whom the Indemnitee has entered into a lawful marriage, civil union or domestic partnership agreement.

 

“To the fullest extent permitted by applicable law” means to the fullest extent permitted by Section 145 of the DGCL or any provision that replaces or succeeds Section 145 of the DGCL with respect to such matters.  The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, but not to the extent prohibited by law.

 

“Voting Stock” means securities entitled to vote generally in the election of directors.

 

ARTICLE 2

 

 

2.1.                        Company Indemnification.  Except as otherwise provided in Section 2.4, the Company will hold harmless and indemnify the Indemnitee to the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, interpreted or replaced.  In furtherance of the foregoing indemnification, and without limiting the generality thereof:

 

(a)      If, by reason of the Indemnitee’s Corporate Status, the Indemnitee was, is or becomes a party to, or was, is or is threatened to be made a party to, or was or is otherwise involved in, any Proceeding other than Proceedings by or in the right of the Company, the Indemnitee shall be indemnified against any and all Expenses and Losses incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe that the Indemnitee’s conduct was unlawful.

 

(b)      If, by reason of the Indemnitee’s Corporate Status, the Indemnitee was, is or becomes a party to, or was, is or is threatened to be made a party to, or was or is otherwise involved in, any Proceeding by or in the right of the Company, the Indemnitee shall be indemnified against all Expenses incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which the Indemnitee shall have been adjudged to be liable to th e Company unless and to the extent that the Court of Chancery of the State of Delaware or the court in which such Proceeding was brought shall determine that such indemnification may be made.

 

 

 

(c)      Notwithstanding any other provision of this Agreement, other than Section 2.4, to the extent that the Indemnitee has been successful on the merits or otherwise in defense of any Proceeding or any part thereof, the Company will indemnify the Indemnitee against all Expenses incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection therewith to the fullest extent permitted by applicable law.  If the Indemnitee is not wholly successful in such Proceeding, but is successful on the merits or otherwise as to one or more, but fewer than all claims, issues or matters in such Proceeding, the Company will indemnify and hold harmless the Indemnitee against all Expenses incurred by the Indemnitee, or on the Indem nitee’s behalf, in connection with each successfully resolved claim, issue or matter on which the Indemnitee was successful.  For purposes of this Section 2.1(c), the termination of any Proceeding, or any claim, issue or matter in such Proceeding by dismissal with or without prejudice will be deemed to be a successful result as to such Proceeding, claim, issue or matter.

 

2.2.                      Additional Indemnity.  In addition to, and without regard to any limitations on, the indemnification provided for in Section 2.1, the Company will indemnify and hold harmless the Indemnitee against all Expenses and Losses incurred by the Indemnitee or on the Indemnitee’s behalf if, by reason of the Indemnitee’s Corporate Status, the Indemnitee was, is or becomes a party to, or was, is or is threatened to be made a party to or was otherwise involved in any Proceeding, including a Proceeding by or in the right of the Company.  The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to the Indemnitee (i) that is finally determined under the procedures, and subject to the presumptions, set forth in Articles 5 and 7 hereof to be unlawful or (ii) in connection with any of the matters for which indemnity is excluded pursuant to Section 2.4 hereof.

 

2.3.                      Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee is, by reason of the Indemnitee’s Corporate Status, a witness, or is made to or asked to respond to discovery requests, in any Proceeding to which the Indemnitee is not a party, including, without limitation, any internal investigation by or on behalf of the Company, the Company will indemnify the Indemnitee against all Expenses incurred by the Indemnitee or on the Indemnitee’s behalf in connection therewith.

 

2.4.                      Exclusions.  Notwithstanding any other provision of this Agreement, the Company will not be obligated under this Agreement to provide indemnification in connection with the following:

 

(a)      any Proceeding or part of any Proceeding initiated or brought voluntarily by the Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board has authorized or consented to the initiation of the Proceeding or such part of any Proceeding or (ii) the Proceeding was commenced following a Change in Control; provided, however, that nothing in this Section 2.4(a) shall limit the right of the Indemnitee to be indemnified under Section 7.4; or

 

(b)      any Proceeding with respect to which final judgment is rendered against Indemnitee for (i) conduct determined to be knowingly fraudulent or deliberately dishonest or to constitute willful misconduct, (ii) payment or an accounting of profits

 

 

 

made from the purchase and sale, or sale and purchase, by the 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 (iii) any reimbursement of, or payment to, the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) or any formal policy of the Company adopted by the Board, or from the purchase or sale by the Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act.

 

2.5.                      Scope.  For the avoidance of doubt, any indemnification under this Agreement shall apply with respect to any Proceeding that relates to matters that occurred in connection with the Indemnitee’s Corporate Status, whether or not the facts underlying any claim made in such Proceeding occurred prior to, on or after the date of this Agreement.

 

2.6.                      Partial Indemnification.  If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses and/or Losses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.

 

2.7.                      Spousal Indemnification.  The Company shall indemnify the Indemnitee’s Spouse at any time the Indemnitee is covered under the indemnification provided in this Agreement (even if the Indemnitee did not remain married to her or him during the entire period of coverage) against any pending or threatened Proceeding for the same period, to the same extent and subject to the same standards, limitations, obligations and conditions under which the Indemnitee is provided indemnification under this Agreement, if the Indemnitee’ s Spouse (or former Spouse) becomes involved in a pending or threatened Proceeding solely by reason of her or his status as the Indemnitee’s Spouse, including, without limitation, any pending or threatened Proceeding that seeks damages recoverable from marital community property, jointly-owned property or property purported to have been transferred from the Indemnitee to his/her Spouse (or former Spouse).  The Indemnitee’s Spouse (or former Spouse) also shall be entitled to advancement of Expenses to the same extent and subject to the same standards, limitations, obligations and conditions under which the Indemnitee is entitled to advancement of Expenses under this Agreement.  Any request by the Indemnitee’s Spouse (or former Spouse) for the advancement of Expenses shall include or be preceded or accompanied by an undertaking by or on behalf of the Indemnitee’s Spouse to repay any Expenses advanced if it shall ultimately be determined that the Indemnitee’s Sp ouse (or former Spouse) is not entitled to be indemnified against such Expenses.  The Indemnitee’s Spouse (or former Spouse) is intended to be a third-party beneficiary under this Agreement.

 

ARTICLE 3

 

 

3.1.                      Expense Advances; Repayment.  Except as set forth in Section 3.2, the Company will, if requested by the Indemnitee, advance to the Indemnitee (hereinafter an “Expense Advance”) any and all Expenses incurred by the Indemnitee, or on the Indemnitee’s

 

 

 

behalf, in connection with any Proceeding.  The Indemnitee’s right to each Expense Advance will not be subject to the satisfaction of any standard of conduct and will be made without regard to the Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement, or under provisions of the Certificate or Bylaws or otherwise.  Each Expense Advance will be unsecured and interest free and will be made by the Company without regard to the Indemnitee’s ability to repay the Expense Advance.  The Indemnitee shall qualify for Expense Advances upon the execution and delivery to the Company of this Agreement, which shall constitute the Indemnitee’s undertaking to repay such Expense Advance if it is ultimately determined, by final decision by a court from which the re is no further right to appeal, that the Indemnitee is not entitled to be indemnified for such Expenses under the Certificate, Bylaws, the DGCL, this Agreement or otherwise.  No other form of undertaking shall be required other than the execution of this Agreement.

 

3.2.                      Exclusions.  The Indemnitee will not be entitled to any Expense Advance in connection with any of the matters for which indemnity is excluded pursuant to Section 2.4.

 

3.3.                      Timing.  An Expense Advance pursuant to Section 3.1 will be made within twenty (20) business days after the receipt by the Company of a written statement or statements from the Indemnitee requesting such Expense Advance (which statement or statements will include, if requested by the Company, reasonable detail underlying the Expenses for which the Expense Advance is requested).

 

ARTICLE 4

 

 

4.1.                      Contribution in the Event of Joint Liability.  If the indemnification provided in Sections 2.1 and 2.2 hereof is not available (but not if prohibited by applicable law or this Agreement), in respect of any Proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the amount of Expenses and/or Losses incurred by Indemnitee in proportion to the relative benefits received b y the Company and all officers, directors or employees of the Company, other than the Indemnitee, who are jointly liable with the Indemnitee, or would be if joined in such Proceeding, on the one hand, and the Indemnitee, on the other hand, from the transaction(s) or event(s) from which such Proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to applicable law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company, other than the Indemnitee, who are jointly liable with the Indemnitee (or would be if joined in such Proceeding) on the one hand, and the Indemnitee, on the other hand, in connection with the transaction(s) or event(s) that resulted in such Expenses and/or Losses, as well as any other equitable considerations which applicable law may require to be considered.  The relative f ault of the Company and all officers, directors and employees of the Company, other than the Indemnitee, who are jointly liable with the Indemnitee (or would be if joined in such Proceeding) on the one hand, and the Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

 

 

 

4.2.                      Indemnification for Contribution Claims by Others.  The Company, if not prohibited by applicable law or this Agreement, will fully indemnify and hold the Indemnitee harmless from any claims of contribution which may be brought by other officers, directors or employees of the Company who may be jointly liable with the Indemnitee for any Loss or Expense arising from a Proceeding.

 

ARTICLE 5

 

 

5.1.                      Notification of Claims; Request for Indemnification.  The Indemnitee agrees to notify the Company promptly in writing of any claim made against the Indemnitee for which indemnification will or could be sought under this Agreement; provided, however, that a delay in giving, or a failure to give, such notice will not deprive the Indemnitee of any right to be indemnified under this Agreement unless the Company did not otherwise learn of the Proceeding and such delay or failure is materially prejudicial to the Company’s abilit y to defend such Proceeding, and, if such delay or failure does materially prejudice the Company’s rights, it will relieve the Company from liability only to the extent of such prejudice; and, provided, further, that notice will be deemed to have been given without any action on the part of the Indemnitee in the event the Company is a party to the same Proceeding.  Any delay in giving, or a failure to give, notice to the Company will not relieve the Company from any liability for indemnification which it may have to the Indemnitee otherwise than under this Agreement.  The Indemnitee may deliver to the Company a written request to have the Company indemnify and hold harmless the Indemnitee in accordance with this Agreement.  Subject to Section 5.10, such request may be delivered from time to time and at such time or times as the Indemnitee deems app ropriate in the Indemnitee’s discretion.  Following such a written request for indemnification, the Indemnitee’s entitlement to indemnification shall be determined in accordance with Section 5.2.  The General Counsel of the Company will, promptly upon receipt of such a request for indemnification, advise the Board in writing that the Indemnitee has requested indemnification.  The Company will be entitled to participate in any Proceeding at its own expense.

 

5.2.                      Determination of Right to Indemnification.  Upon written request by the Indemnitee for indemnification pursuant to Section 5.1 with respect to any Proceeding, a determination, if, but only if, required by applicable law, with respect to the Indemnitee’s entitlement thereto will be made upon the Final Disposition of such Proceeding: (a) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee or (b) if a Change in Control shall not have occurred, by any of the following methods, which shall be at the election of the Board or the Disinterested Directors, as the case may be, (i) by a majority vote of all Disinterested Directors, even though less than a quorum of the Board, (ii) by a committee of Disinterested Directors designated by a majority vote of all Disinterested Directors, even though less than a quorum of the Board, (iii) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee, or (iv) if so directed by the Board, by the stockholders of the Company.  The Company will promptly advise the Indemnitee in writing with respect to any determination that

 

 

 

the Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.

 

5.3.                      Selection of Independent Counsel.  If the determination of entitlement to indemnification pursuant to Section 5.2 will be made by Independent Counsel, the Independent Counsel will be selected as provided in this Section 5.3.  The Independent Counsel shall be selected by the Board, and the Company will give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected.  The Indem nitee may, within 10 days after such written notice of selection is given, deliver to the Company 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 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 will act as Independent Counsel.  If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within 30 days after submission by the Indemnitee of a written request for indemnification pursuant to Secti on 5.1, no Independent Counsel has been selected, or the selection of the Independent Counsel remains the subject of a properly made objection thereto, either the Company or the Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for the appointment as Independent Counsel of a person selected or designated by the court or for resolution of any objection which has been made by the Indemnitee to the Company’s selection of Independent Counsel and the person so appointed or the person with respect to whom all objections are so resolved will act as Independent Counsel under Section 5.2.  The Company will pay any and all fees and expenses incurred by such Independent Counsel in connection with acting pursuant to Section 5.2, and the Company will pay all fees and expenses incident to the pro cedures of this Section 5.3, regardless of the manner in which such Independent Counsel was selected or appointed.

 

5.4.                      Burden of Proof.  In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement.  If this Agreement or applicable law should require a determination of the Indemnitee’s good faith or whether the Indemnitee acted in a manner which the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, the person, persons or entity making such determination shall presume that the Indem nitee has at all times acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.  The Indemnitee will be deemed to have acted in good faith if the Indemnitee’s action with respect to the Company or the particular Enterprise is based on the records or books of account of such entity, including financial statements, or on information supplied to the Indemnitee by the officers of such entity in the course of their duties, or on the advice of legal counsel for such entity or on information or records given or reports made to such entity by an independent certified public accountant or by an appraiser or other expert selected by such entity; provided, however, that this sentence will not be deemed to limit in any way the other circumstances in which the Indemnitee may be deemed to have met such standard of conduct.  In addition, the knowledge or actions, or failure to act, of any other director, officer, agent or employee of the Company or such Enterprise

 

 

 

shall not be imputed to the Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

5.5.                      No Presumption in the Absence of a Determination or As Result of an Adverse Determination.  Neither the failure of any person, persons or entity chosen to make a determination as to whether the Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by such person, persons or entity that the Indemnitee has not met such standard of conduct or did not have such belief, prior to or after the commencement of any action, suit or proceeding by the Indemnitee to secure a judicial determination that the Indemnitee should be indemnified u nder this Agreement or under applicable law, will be a defense to the Indemnitee’s claim or create a presumption that the Indemnitee has not met any particular standard of conduct or did not have any particular belief.  In addition, the termination of any Proceeding by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not, of itself, create a presumption that the Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by this Agreement or applicable law.

 

5.6.                      Presumption Regarding Success. In the event that any Proceeding to which the Indemnitee is a party is resolved in any manner other than by final adverse judgment (as to which all rights of appeal therefrom have been exhausted or lapsed) against the Indemnitee (including settlement of such Proceeding with or without payment of money or other consideration), it will be presumed that the Indemnitee has been successful on the merits or otherwise in such Proceeding.

 

5.7.                      Timing of Determination.  The Company will use its reasonable best efforts to cause any determination required to be made pursuant to Section 5.2 to be made as promptly as practicable after the later of the date (i) the Indemnitee has submitted a written request for indemnification pursuant to Section 5.1 and (ii) of the Final Disposition of the Proceeding.  If the person, persons or entity chosen to make a determination does not make su ch determination within 30 days after the latest of the date (a) the Company receives the Indemnitee’s request for indemnification pursuant to Section 5.1, (b) the Company receives notice of the Final Disposition of the Proceeding and (c) on which an Independent Counsel is selected pursuant to Section 5.3, if applicable (and all objections to such person, if any, have been resolved), the requisite determination of entitlement to indemnification will be deemed to have been made and the Indemnitee will be entitled to such indemnification, absent (i) the Indemnitee’s failure to fulfill the Indemnitee’s obligations pursuant to Section 5.9, (ii) a misstatement by the Indemnitee of a material fact, or an omission of a material fact necessary to make the Indemnitee’s sta tement not materially misleading, in connection with the request for indemnification and (iii) a prohibition of such indemnification under applicable law, in the reasonable opinion of the Company based on consultation with outside legal counsel; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional 30 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 of or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 5.7 shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 5.2 and if (A) within 15

 

 

 

days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within 75 days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 days after having been so called and such determination is made thereat; provided, however, that such 75-, 15- and 60-day periods may be extended if required to comply with applicable law, rules and regulations.

 

5.8.                      Timing of Payments.  All payments of Expenses, other than Expense Advances, which are governed by Section 3.3, and other amounts by the Company to the Indemnitee pursuant to this Agreement will be made as soon as practicable after a written request or demand therefor by the Indemnitee is presented to the Company, but in no event later than (i) thirty (30) days after such demand is presented or (ii) as soon as reasonably practicable following such later date as a determination of entitlement to indemnification i s made in accordance with Section 5.7, if applicable.

 

5.9.                      Cooperation.  The Indemnitee will cooperate in all reasonable respects with the person, persons or entity making a determination with respect to the 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 the Indemnitee and reasonably necessary to such determination.  Any Expenses incurred by the Indemnitee, or on the Indemnitee’s behalf, in so cooperating with the person, persons or entity making such determination will be borne by the Company (irrespective of the determination as to the Indemnitee’s entitlement to indemnification) and the Company will indemnify the Indemnitee therefor and will hold the Indemnitee harmless therefrom.

 

5.10.            Time for Submission of Request.  The Indemnitee shall submit any request for indemnification pursuant to this Article 5 within a reasonable time, not to exceed three years, after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent or other Final Disposition of the Proceeding, with the latest date of the occurrence of any such event to be considered the commencement of the three-year period.

 

5.11.           Security.  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 prior written consent of the Indemnitee.

 

ARTICLE 6

 

 

6.1.                      Company Insurance.  The Company currently has in force policies of directors’ and officers’ liability insurance (the “D&O Insurance Policies”).  The Company agrees to furnish to Indemnitee copies of such D&O Insurance Policies (including any directors’ and officer’ liability insurance policies that replace D&O Insurance Policies) upon Indemnitee’s request.