EXHIBIT 10.1
DYNAMIC MATERIALS CORPORATION
FORM OF
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of _______________, is
made by and between Dynamic Materials Corporation, a Colorado
corporation (the "Company"), _______________, a [director, officer,
employee, fiduciary or agent], of the Company (the "Indemnitee").
RECITALS
A. The Company is aware that competent and experienced
persons are increasingly reluctant to enter the employ of corporations
unless they are protected by comprehensive liability insurance and/or
indemnification, due to increased exposure to litigation costs and
risks resulting from their service to such corporations, and due to
the fact that the exposure frequently bears no reasonable relationship
to their compensation;
B. Based upon their experience as business managers, the
Board of Directors of the Company (the "Board") has concluded that, to
retain and attract talented and experienced individuals to serve the
Company, and to encourage such individuals to take the business risks
necessary for the success of the Company, it is necessary for the
Company to contractually indemnify officers and directors [and certain
employees, fiduciaries and agents], and to assume for itself maximum
liability for expenses and damages in connection with claims against
such individuals in connection with their service to the Company.
C. Article 109 of the Colorado Business Corporation Act,
under which the Company is organized ("Article 109"), empowers the
Company to indemnify by agreement its officers, directors, employees,
fiduciaries and agents, and persons who serve, at the request of the
Company, as directors, officers, employees or agents of other
corporations or enterprises, and expressly provides that the
indemnification provided by Article 109 is not exclusive; and
D. The Company desires and has requested the Indemnitee to
serve or continue to serve as a _______________ of the Company free
from undue concern for claims for damages arising out of or related to
such services to the Company.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS.
1.1 Agent. For the purposes of this Agreement,
"agent" of the Company means any person who is or was a director,
officer, [employee, fiduciary or agent] of the Company or a subsidiary
of the Company; or is or was serving at the request of, for the
convenience of, or to represent the interest of the Company or a
subsidiary of the Company as a director or officer of another foreign
or domestic corporation, partnership, joint venture, trust or other
enterprise or an affiliate of the Company; or was a director, officer,
[employee, fiduciary or agent] of a foreign or domestic corporation
which was a predecessor corporation of the Company or a subsidiary of
the Company, or was a director, officer, [employee, fiduciary or
agent] of another enterprise or affiliate of the Company at the
request of, for the convenience of, or to represent the interests of
such predecessor corporation. The term "enterprise" includes any
employee benefit plan of the Company, its subsidiaries, affiliates and
predecessor corporations.
1.2 Expenses. For purposes of this Agreement,
"expenses" includes all direct and indirect costs of any type or
nature whatsoever (including, without limitation, all attorneys' fees
and related disbursements and other out-of-pocket costs) actually and
reasonably incurred by the Indemnitee in connection with the
investigation, defense or appeal of a proceeding or establishing or
enforcing a right to indemnification or advancement of expenses under
this Agreement, Article 109 or otherwise; provided, however, that
expenses shall not include any judgments, fines, ERISA excise taxes or
penalties or amounts paid in settlement of a proceeding.
1.3 Proceeding. For the purposes of this Agreement,
"proceeding" means any threatened, pending, or completed action, suit
or other proceeding, whether civil, criminal, administrative,
investigative or any other type whatsoever.
1.4 Subsidiary. For purposes of this Agreement,
"subsidiary" means any corporation of which more than 50% of the
outstanding voting securities is owned directly or indirectly by the
Company, by the Company and one or more other subsidiaries, or by one
or more other subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve
and/or continue to serve as an agent of the Company, at the will of
the Company (or under separate agreement, if such agreement exists),
in the capacity Indemnitee currently serves as an agent of the
Company, faithfully and to the best of his ability so long as he is
duly appointed or elected and qualified in accordance with the
applicable provisions of the charter documents of the Company or any
subsidiary of the Company; provided, however, that Indemnitee may at
any time and for any reason resign from such position (subject to any
contractual obligation that Indemnitee may have assumed apart from
this Agreement) and that the Company or any subsidiary shall have no
obligation under this Agreement to continue Indemnitee in any such
position.
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[3. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall,
to the extent that the Board determines it to be economically
reasonable, maintain a policy of directors' and officers' liability
insurance ("D&O Insurance"), on such terms and conditions as may be
approved by the Board.] [Use only if agent is officer or director.]
4. MANDATORY INDEMNIFICATION. Subject to Section 9 below,
the Company shall indemnify the Indemnitee:
4.1 Third Party Actions. If the Indemnitee is a
person who was or is a party or is threatened to be made a party to
any proceeding (other than an action by or in the right of the
Company) by reason of the fact that he is or was an agent of the
Company, or by reason of anything done or not done by him in any such
capacity, against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) actually
and reasonably incurred by him in connection with the investigation,
defense, settlement or appeal of such proceeding if he 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, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct
was unlawful; and
4.2 Derivative Actions. If the Indemnitee is a person
who was or is a party or is threatened to be made a party to any
proceeding by or in the right of the Company to procure a judgment in
its favor by reason of the fact that he is or was an agent of the
Company, or by reason of anything done or not done by him in any such
capacity, against any amounts paid in settlement of any such
proceeding and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement, or appeal of
such proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Company; except that no indemnification under this subsection
shall be made in respect of any claim, issue or matter as to which
such person shall have been finally adjudged to be liable to the
Company by a court of competent jurisdiction due to willful misconduct
of a culpable nature in the performance of his duty to the Company,
unless and only to the extent that the court in which such proceeding
was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such amounts which the court shall deem proper; and
4.3 Exception for Amounts Covered by Insurance.
Notwithstanding the foregoing, the Company shall not be obligated to
indemnify the Indemnitee for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) to the
extent such have been paid directly to Indemnitee by [D&O Insurance.]
5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for some or a portion of any expenses or liabilities of any
type whatsoever (including, but not limited to, judgments, fines,
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ERISA excise taxes or penalties, and amounts paid in settlement)
incurred by him in the investigation, defense, settlement or appeal of
a proceeding but not entitled, however, to indemnification for all of
the total amount thereof, the Company shall nevertheless indemnify the
Indemnitee for such total amount except as to the portion thereof to
which the Indemnitee is not entitled to the indemnification.
6. MANDATORY ADVANCEMENT OF EXPENSES.
6.1 Advancement. Subject to Section 9 below, the
Company shall advance all expenses incurred by the Indemnitee in
connection with the investigation, defense, settlement or appeal of
any proceeding to which the Indemnitee is a party or is threatened to
be made a party by reason of the fact that the Indemnitee is or was an
agent of the Company or by reason of anything done or not done by him
in any such capacity. Indemnitee hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall ultimately
be determined that the Indemnitee is not entitled to be indemnified by
the Company under the provisions of this Agreement, the certificate of
incorporation or bylaws of the Company, the Colorado Business
Corporation Act or otherwise. The advances to be made hereunder shall
be paid by the Company to the Indemnitee within thirty (30) days
following delivery of a written request therefor by the Indemnitee to
the Company.
6.2 Exception. Notwithstanding the foregoing
provisions of this Section 6, the Company shall not be obligated to
advance any expenses to Indemnitee to the extent such arise from a
lawsuit filed directly by the Company against the Indemnitee if an
absolute majority of the members of the Board reasonably determines in
good faith, within thirty (30) days of Indemnitee's request to be
advanced expenses, that the facts known to them at the time such
determination is made demonstrate clearly and convincingly that the
Indemnitee acted in bad faith. If such a determination is made,
Indemnitee may have such decision reviewed by another forum, in the
manner set forth in Sections 8.3, 8.4 and 8.5 hereof, with all
references therein to "indemnification" being deemed to refer to
"advancement of expenses," and the burden of proof shall be on the
Company to demonstrate clearly and convincingly that, based on the
facts known at the time, the Indemnitee acted in bad faith. The
Company may not avail itself of this Section 6.2 as to a given lawsuit
if, at any time after the occurrence of the activities or omissions
that are the primary focus of the lawsuit, the Company has undergone a
change in control. For this purpose a change in control shall mean a
given shareholder or group of affiliated shareholders increasing their
beneficial ownership interest in the Company by at least 20 percentage
points without advance Board approval.
7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
7.1 Promptly after receipt by the Indemnitee of notice
of the commencement of or the threat of commencement of any
proceeding, the Indemnitee shall, if the Indemnitee believes that
indemnification with respect thereto may be sought from the Company
under this Agreement, notify the Company of any commencement or threat
of commencement thereof.
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7.2 If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 7.1 hereof, the
Company has [D&O Insurance] in effect, the Company shall give prompt
notice of the commencement 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.
7.3 In the event the Company shall be obligated to
advance the expenses for any proceeding against the Indemnitee, the
Company, if appropriate, shall be entitled to assume the defense of
such proceeding, with counsel approved by the Indemnitee, upon the
delivery to the Indemnitee of written notice of its election to do so.
After delivery of such notice, approval of such counsel by the
Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to the Indemnitee under this Agreement for
any fees of counsel subsequently incurred by the Indemnitee with
respect to the same proceeding, provided that (a) the Indemnitee shall
have the right to employ his own counsel in any such proceeding at the
Indemnitee's expense; (b) the Indemnitee shall have the right to
employ his 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 proceedings and (c) if
(i) the employment of counsel by the Indemnitee has been previously
authorized by the Company, (ii) the Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company
and the Indemnitee in the conduct of any such defense or (iii) the
Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company.
8. DETERMINATION OF RIGHT TO INDEMNIFICATION.
8.1 To the extent the Indemnitee has been successful
on the merits or otherwise in defense of any proceeding referred to in
Section 4.1 or 4.2 of this Agreement or in the defense of any claim,
issue or matter described therein, the Company shall indemnify the
Indemnitee against expenses actually and reasonably incurred by him in
connection with the investigation, defense or appeal of such
proceeding, or such claim, issue or matter, as the case may be.
8.2 In the event that Section 8.1 is inapplicable, or
does not apply to the entire proceeding, the Company shall nonetheless
indemnify the Indemnitee unless the Company shall prove by clear and
convincing evidence to a forum listed in Section 8.3 below that the
Indemnitee has not met the applicable standard of conduct required to
entitle the Indemnitee to such indemnification.
8.3 The Indemnitee shall be entitled to select the
forum in which the validity of the Company's claim under Section 8.2
hereof that the Indemnitee is not entitled to indemnification will be
heard from among the following:
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(a) A quorum of the Board consisting of directors
who are not parties to the proceeding for which indemnification is
being sought;
(b) The shareholders of the Company;
(c) Legal counsel selected by the Indemnitee, and
reasonably approved by the Board, which counsel shall make such
determination in a written opinion; or
(d) A panel of three arbitrators, one of whom is
selected by the Company, another of whom is selected by the
Indemnitee, and the last of whom is selected by the first two
arbitrators so selected.
8.4 As soon as practicable, and in no event later than
thirty (30) days after written notice of the Indemnitee's choice of
forum pursuant to Section 8.3 above, the Company shall, at its own
expense, submit to the selected forum in such manner as the Indemnitee
or the Indemnitee's counsel may reasonably request, its claim that the
Indemnitee is not entitled to indemnification; and the Company shall
act in the utmost good faith to assure the Indemnitee a complete
opportunity to defend against such claim.
8.5 If the forum listed in Section 8.3 hereof selected
by Indemnitee determines that Indemnitee is entitled to
indemnification with respect to a specific proceeding, such
determination shall be final and binding on the Company. If the forum
listed in Section 8.3 hereof selected by Indemnitee determines that
Indemnitee is not entitled to indemnification with respect to a
specific proceeding, the Indemnitee shall have the right to apply to
the court in which the proceeding is or was pending or any other court
of competent jurisdiction, for the purpose of determining whether
Indemnitee is entitled to indemnification and enforcing the
Indemnitee's right to indemnification pursuant to the Agreement.
8.6 Notwithstanding any other provision in this
Agreement to the contrary, the Company shall indemnify the Indemnitee
against all expenses incurred by the Indemnitee in connection with any
hearing or proceeding under this Section 8 involving the Indemnitee
and against all expenses incurred by the Indemnitee in connection with
any other proceeding between the Company and the Indemnitee involving
the interpretation or enforcement of the rights of the Indemnitee
under this Agreement unless a court of competent jurisdiction finds
that each of the material claims and/or defenses of the Indemnitee in
any such proceeding was frivolous or not made in good faith.
9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the
terms of this Agreement:
9.1 Claims Initiated by Indemnitee. To indemnify or
advance expenses to the Indemnitee with respect to proceedings or
claims initiated or brought voluntarily by the Indemnitee and not by
way of defense, except with respect to proceedings specifically
authorized by the Board or brought to establish or enforce a right to
indemnification and/or advancement of expenses under this Agreement,
the charter documents
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of the Company or any subsidiary, or any statute or law or otherwise,
but such indemnification or advancement of expenses may be provided by
the Company in specific cases if the Board finds it to be appropriate;
or
9.2 Unauthorized Settlements. To indemnify the
Indemnitee hereunder for any amounts paid in settlement of a
proceeding unless the Company consents in advance in writing to such
settlement, which consent shall not be unreasonably withheld; or
9.3 Securities Law Actions. To indemnify the
Indemnitee on account of any suit in which judgment is rendered
against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of the Company pursuant to the
provisions of Section 16 of the Securities Exchange Act of 1934, as
amended, and amendments thereto or similar provisions of any federal,
state or local statutory law; or
9.4 Unlawful Indemnification. To indemnify the
Indemnitee if a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful. In
this respect, the Company and the Indemnitee have been advised that
the Securities and Exchange Commission takes the position that
indemnification for liabilities arising under the federal securities
law is against public policy and is, therefore, unenforceable and that
claims for indemnification should be submitted to appropriate courts
for adjudication.
10. NON-EXCLUSIVITY. The provisions for indemnification
and advancement of expenses set forth in this Agreement shall not be
deemed exclusive of any other rights which the Indemnitee may have
under any provision of law, the Company's certificate of incorporation
or bylaws, the vote of the Company's shareholders or disinterested
directors, other agreements, or otherwise, both as to action in
Indemnitee's official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the
Indemnitee's rights hereunder shall continue after the Indemnitee has
ceased acting as an agent of the Company and shall inure to the
benefit of the heirs, executors and administrators of the Indemnitee.
11. GENERAL PROVISIONS.
11.1 Interpretation of Agreement. It is understood
that the parties hereto intend this Agreement to be interpreted and
enforced so as to provide indemnification and advancement of expenses
to the Indemnitee to the fullest extent now or hereafter permitted by
law, except as expressly limited herein.
11.2 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 the Agreement
(including, without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby,
and (b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions of
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any paragraphs of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 11.1 hereof.
11.3 Modification and Waiver. No supplement,
modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto. No waiver of any
of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
11.4 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 documents required and shall do all acts that may be
necessary or desirable to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
11.5 Counterparts. This Agreement may be executed in
one or more counterparts, which shall together constitute one
agreement.
11.6 Successors and Assigns. The terms of this
Agreement shall bind, and shall inure to the benefit of, the
successors and assigns of the parties hereto.
11.7 Notice. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be
deemed duly given if (a) delivered by hand and a receipt for such is
given by the party addressee or (b) mailed by certified or registered
mail with postage prepaid, on the third business day after the mailing
date. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by
written notice.
11.8 Governing Law. This Agreement shall be governed
exclusively by and construed according to the laws of the State of
Colorado without application of its conflicts of law principles.
11.9 Consent to Jurisdiction. The Company and the
Indemnitee each hereby irrevocably consent to the jurisdiction of the
courts of the State of Colorado for all purposes in connection with
any action or proceeding which arises out of or relates to this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
THE COMPANY:
DYNAMIC MATERIALS CORPORATION
By:
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Name:
Title:
Address:
551 Aspen Ridge Drive
Lafayette, Colorado 80026
THE INDEMNITEE:
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Name:
Address:
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