Exhibit (10) (j)
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, effective as of ________________, is by and between The
Xxxxxxxx and Xxxxxxxx Company, an Ohio corporation (the "Company"), and
________________________ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors the most capable persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors of public
companies in today's environment;
WHEREAS, the Code of Regulations of the Company requires the Company to
indemnify and advance expenses to its directors and officers to the full extent
permitted by law and the Indemnitee has been serving and continues to serve as a
director of the Company in part in reliance on such Code of Regulations;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner, and Indemnitee's reliance on the aforesaid
Code of Regulations, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such Code of Regulations be available
to Indemnitee (regardless of, among other things, any amendment to or revocation
of such Code of Regulations or any change in the composition of the Company's
Board of Directors or certain acquisition transactions relating to the Company),
the Company wishes to provide in this Agreement for the indemnification of and
the advancing of expenses to Indemnitee to the fullest extent (whether partial
or complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, another enterprise,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) CHANGE IN CONTROL: shall be deemed to have occurred if: (i)
any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than Xxxxxxx X. Xxxxx, Xx., his
1
children or his grandchildren, the Company, any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any company owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock
of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities, or (ii) during any period of two
consecutive years (not including any period prior to the
execution of this Agreement), individuals who at the beginning
of such period constitute the Board of Directors of the
Company, any new director (other than a director designated by
a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii) or (iv) of
this Section) whose election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the
directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or (iii)
the consummation of a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any
other corporation, other than (a) a merger or consolidation
which would result in the Voting Securities of the Company
outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity
or any parent thereof) more than 50% of the combined voting
power of the Voting Securities of the Company or such
surviving entity or parent thereof outstanding immediately
after such merger or consolidation or (b) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (as
hereinabove defined) is or becomes the beneficial owner,
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person
any securities acquired directly from the Company or its
affiliates other than in connection with the acquisition by
the Company or its affiliates of a business) representing
twenty percent (20%) or more of the combined voting power of
the Company's then outstanding securities; or (iv) the
stockholders of the Company approve a plan of liquidation,
dissolution or winding up of the Company or an agreement for
the sale or other disposition by the Company of all or
substantially all the Company's assets.
(b) CLAIM: any threatened, pending or completed action, suit,
proceeding, alternative dispute resolution, or any inquiry,
hearing or investigation, whether instituted by the Company or
any other party, that Indemnitee in good faith believes might
lead to the institution of any such action, suit, proceeding
or alternative dispute resolution, whether civil, criminal,
administrative, investigative or other.
(c) EXPENSES: means any and all expenses (including attorneys'
fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in
or participating in (including on appeal), or preparing to
defend, be a witness in or participate in, any such action,
suit, proceeding, alternative dispute resolution, hearing,
inquiry or investigation),
2
judgments, fines, penalties and amounts paid in settlement
(if, and only if such settlement is approved by the Company,
which approval shall not be unreasonably withheld) of any
Claim relating to an Indemnifiable Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related to or
arising in part or in whole out of the fact that Indemnitee is
or was or may be deemed to be a director, officer, employee,
agent or fiduciary of the Company or any subsidiary of the
Company, or is or was serving or may be deemed to be serving
at the request of the Company as a director, officer,
employee, trustee, member, manager, agent or fiduciary of
another corporation, partnership, limited liability company,
joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by
Indemnitee in any such capacity.
(e) INDEPENDENT LEGAL COUNSEL: an attorney or firm of attorneys,
selected in accordance with the provisions of Section 4, who
shall not have otherwise performed services for the Company or
indemnitee within the last five years (other than with respect
to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity
agreements).
(f) REVIEWING PARTY: any appropriate person or body consisting of
a member or members of the Company's Board of Directors or any
other person or body appointed by such Board who is not a
party to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(g) VOTING SECURITIES: any securities of the Company which vote
generally in the election of directors.
2. Basic Indemnification Arrangement.
(a) In the event Indemnitee was, is or becomes a party to or
witness or other participant in, or is threatened to be made a
party to or witness or other participant in, a Claim by reason
of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify and hold harmless Indemnitee to the
fullest extent permitted by law as soon as practicable but in
any event no later than thirty days after written demand is
presented to the Company, against any and all Expenses of such
Claim. If so requested by Indemnitee, the Company shall
advance (within two business days of such request) any and all
Expenses to Indemnitee (an "Expense Advance"). Notwithstanding
anything in this Agreement to the contrary and subject to
Section 5 below, prior to a Change in Control, Indemnitee
shall not be entitled to indemnification pursuant to this
Agreement in connection with any action initiated by
Indemnitee, other than a Legal Proceeding described in Section
2(b) which shall be permitted as provided in Section 2(b), (an
"Indemnitee Initiated Action") unless the Board of Directors
has authorized or consented to the initiation of such action.
3
(b) Notwithstanding the foregoing, (i) the obligations of the
Company under Section 2(a) shall be subject to the condition
that the Reviewing Party shall not have determined (in a
written opinion, in any case in which the Independent Legal
Counsel referred to in Section 4 hereof is involved) that
Indemnitee would not be permitted to be indemnified under
applicable law, and (ii) the obligation of the Company to make
an Expense Advance pursuant to Section 2(a) shall be subject
to the condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who
hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Indemnitee has
commenced or thereafter commences legal proceedings in a court
of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law (a
"Legal Proceeding"), any determination made by the Reviewing
Party that Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding, and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with
respect to such Legal Proceeding (as to which all rights of
appeal therefrom have been exhausted or lapsed). If the final
determination made in a Legal Proceeding is that the
Indemnitee is or was entitled to indemnification, the Company
shall indemnify Indemnitee against Expenses incurred by
Indemnitee in connection with such Legal Proceeding.
(c) If there has not been a Change in Control, the Reviewing Party
shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control
which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such
Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section 4 hereof. If
there has been no determination by the Reviewing Party or if
the Reviewing Party determines that Indemnitee substantively
would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of Ohio having
subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or
any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of
process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
3. Contribution. If the indemnification provided for in Section 2(a) above
for any reason is held by a court of competent jurisdiction to be
unavailable to Indemnitee in respect of any Expenses of a Claim, then
the Company, in lieu of indemnifying Indemnitee thereunder, shall
contribute to the amount of Expenses paid or payable by Indemnitee (i)
in such proportion as is appropriate to reflect the relative benefits
received by the Company and Indemnitee, or (ii) if the allocation
provided by clause (i) above is not permitted by
4
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and Indemnitee in connection with the
action or inaction which resulted in such Expenses, as well as any
other relevant equitable considerations. The Company and Indemnitee
agree that it would not be just and equitable if contribution pursuant
to this Section 3 were determined by pro rata or per capita allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
sentence. No person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act of 1933, as
amended) shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation.
4. Change in Control. The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control) then, with
respect to all matters thereafter arising concerning the rights of
Indemnitee to indemnity payments and Expense Advances under this
Agreement or any other agreement or Company Regulation now or hereafter
in effect relating to Claims or Indemnifiable Events, the Company shall
seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render
its written opinion to the Company and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnity such
counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
5. Indemnification for an Indemnitee Initiated Action. The Company shall
indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within two business days of such request) advance
such Expenses to Indemnitee, which are incurred by Indemnitee in
connection with any Indemnitee Initiated Action, regardless of the
ultimate outcome of such Indemnitee Initiated Action.
6. Notice. Indemnitee shall give the Company written notice as soon as
practicable of any Claim made against Indemnitee relating to an
Indemnifiable Event. Notice to the Company shall be directed to the
Company's Chief Executive Officer at the address shown on the signature
page of this Agreement (or such other address as designated by the
Company).
7. Selection of Counsel. In the event the Company shall be obligated
hereunder to pay the Expenses of any Claim, the Company shall be
entitled to assume the defense of such Claim, with counsel reasonably
approved by Indemnitee, upon the delivery to Indemnitee of written
notice of its election to do so. After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee
under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same Claim; provided that, (i)
5
the Indemnitee shall have the right to employ Indemnitee's counsel in
any such Claim at Indemnitee's expense; (ii) Indemnitee shall have the
right to employ its own counsel in connection with any such proceeding,
at the expense of the Company, if such counsel serves in a review,
observer, advice and counseling capacity and does not otherwise
materially control or participate in the defense of such proceeding;
and (iii) if (A) the employment of counsel by Indemnitee has been
previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there is a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the
Company shall not continue to retain such counsel to defend such Claim,
then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
8. Partial Indemnity, Etc. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a
portion of the Expenses relating to a Claim but not, however, for the
entire amount thereof, the Company shall nevertheless indemnity
Indemnitee for the portion thereof to which Indemnitee is entitled.
Moreover, notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful on the merits or otherwise
in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.
9. Burden of Proof. In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the Company to
establish that Indemnitee is not so entitled.
10. No Presumptions. For purposes of this Agreement, the termination of any
Claim, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that 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
applicable law. In addition, neither the failure of the Reviewing Party
to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an
actual determination by the Reviewing Party that Indemnitee has not met
such standard of conduct or did not have such belief, prior to the
commencement of legal proceedings by Indemnitee to secure a judicial
determination that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a presumption
that Indemnitee has not met any particular standard of conduct or did
not have any particular belief.
11. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Company's
Articles of Incorporation, the Company's Code of Regulations or the
Ohio General Corporation Law or otherwise. To the extent that a change
in the Company's Articles of Incorporation, the Company's Code of
Regulations or the Ohio General Corporation Law (whether by statute or
judicial decision) permits greater indemnification by agreement than
would be afforded currently,
6
it is the intent of the parties hereto that Indemnitee shall enjoy by
this Agreement the greater benefits so afforded by such change.
12. Liability Insurance. To the extent the Company maintains an insurance
policy or policies providing directors' liability insurance, 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
Company director or officer.
13. Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal
representatives after the expiration of five years from the date of
accrual of such cause of action, and any claim or cause of action of
the Company shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such five-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action such shorter period
shall govern.
14. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the
parties hereto. Any failure of any of the parties hereto to comply with
any terms or provision of this Agreement may be waived by the party
entitled to the benefits thereof at any time by an instrument in
writing signed by or on behalf of such party, but such waiver or
failure to insist on strict compliance with such terms or provisions
shall not be construed as a waiver of, or estoppel with respect to, any
subsequent or other failure to comply nor shall waiver of any of the
provisions of this Agreement be deemed to constitute a waiver of any
other provisions hereof (whether or not similar).
15. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
16. No Duplication of Payments. The Company shall not be liable under this
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, Regulation or otherwise) of the
amounts otherwise indemnifiable hereunder.
17. Binding Effect, Etc. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company,
spouses, heirs, executors and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Indemnitee
continues to serve as an officer or director of the Company or of any
other enterprise at the Company's request.
7
18. No Construction as Employment Agreement. Nothing contained herein shall
be construed as giving Indemnitee, if an employee of the Company or any
of its related enterprises, any right to be retained in the employ of
the Company or any of its related enterprises.
19. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision
within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable
in any respect, and the validity and enforceability of any such
provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired and shall remain enforceable to the
fullest extent permitted by law.
20. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Ohio applicable to
contracts made and to be performed in such state without giving effect
to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the _____ day of ________________ 2002.
THE XXXXXXXX AND XXXXXXXX COMPANY
By:_______________________________
Xxxxx X. Xxxxxxxxxx, Chairman, Chief
Executive Officer and President
Address: ________________________
_________________________________
_________________________________
_______________________________
[DIRECTOR]
8
