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EXHIBIT 10
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is entered into as of the
[NUMBER] day of [MONTH, YEAR], by and between Illinois Superconductor
Corporation, a Delaware corporation (the "Company"), and [PERSON'S NAME]
("Indemnitee").
RECITALS
Indemnitee has been asked to serve as a director of the Company (service in
such a capacity shall hereafter be described as service as an "Agent").
Section 145 of the General Corporation Law of Delaware ("Section 145")
empowers the Company to indemnify its Agents and expressly provides that the
indemnification that it authorizes is not exclusive.
The Company now maintains Directors' and Officers' Liability Insurance ("D
& O Insurance") covering certain liabilities that may be incurred by certain of
its Agents and others in the performance of their duties for the Company.
Developments with respect to the terms and availability of D & O Insurance,
however, have raised questions concerning the adequacy and reliability of the
protection afforded thereby. The Company is aware that, as a result, competent
and experienced persons have become increasingly reluctant to serve as directors
or officers of corporations.
To induce Indemnitee to serve as an Agent, the Company is prepared to
provide Indemnitee with the protections described in this Agreement.
NOW, THEREFORE, in consideration of the willingness of Indemnitee to serve
as an Agent, the Company hereby agrees as follows:
1. INDEMNIFICATION GENERALLY. The Company agrees to hold harmless and to
indemnify Indemnitee to the fullest extent authorized or permitted by Section
145, or, to the extent that any amendment to Section 145 or to other applicable
law may expand indemnification rights, to the fullest extent authorized or
permitted by Section 145 or such other applicable law as may be in effect.
However, such indemnification shall not apply to expenses that Indemnitee has
incurred in a suit brought by Indemnitee against the Company, except for
expenses that Indemnitee has incurred in an action brought to enforce rights or
to collect sums due under this Agreement in which Indemnitee is the prevailing
party.
2. MAINTENANCE OF LIABILITY INSURANCE.
2.1 The Company agrees that, so long as Indemnitee shall continue to serve
as an Agent and, thereafter, for so long as Indemnitee shall potentially be
subject to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (a "Proceeding"), by
reason of the fact that Indemnitee is or was an Agent of the Company, the
Company, subject to Section 3 of this Agreement, shall maintain in amounts
reasonably available to the Company D & O Insurance from established and
reputable insurers.
2.2 Notwithstanding the Company's agreement in Section 2.1 above, the
Company shall have no obligation to maintain D & O Insurance if the Company
determines in good faith and in its reasonable business judgment that such
insurance is not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, or the coverage
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provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or Indemnitee is covered adequately by similar insurance
maintained by an affiliate of the Company.
3. SELF INSURANCE. If the Company does not maintain D & O Insurance in
accordance with Section 2.1 of this Agreement, or if the coverage provided by
such insurance is less than that provided by the D & O Insurance maintained by
the Company at the time that this Agreement is signed or the D & O Insurance
first procured by the Company after this Agreement is signed, the Company,
subject only to the exclusions contained in Section 5 of this Agreement, agrees
to hold harmless and to indemnify Indemnitee to the fullest extent of the
coverage that otherwise would have been provided to Indemnitee under the D & O
Insurance that the Company currently maintains or ultimately procures.
4. ADDITIONAL INDEMNITY. Subject only to the exclusions set forth in
Section 5 of this Agreement, the Company agrees to hold harmless and to
indemnify Indemnitee against any and all expenses (including attorneys' fees
and expenses), judgments, fines, and amounts paid in settlement that Indemnitee
actually and reasonably has incurred in connection with any Proceeding to which
Indemnitee is or was a party, or at any time either becomes a party or is
threatened to be made a party by reason of the fact that Indemnitee is or was
an Agent, subject to the same exclusion provided in the last sentence of
Section 1 of this Agreement.
5. LIMITATIONS ON SELF INSURANCE AND ADDITIONAL INDEMNITY. The Company
shall not pay any indemnity under Sections 3 or 4 of this Agreement:
5.1 to the extent that Indemnitee is indemnified in full under Sections 1
or 2 of this Agreement or under any D & O Insurance or any other insurance; or
5.2 with respect to (a) remuneration paid to Indemnitee if it shall be
determined by a final adjudication that such remuneration was in violation of
law or (b) expenses (including attorneys' fees) incurred by Indemnitee in
connection with any Proceeding relating to such remuneration, unless Indemnitee
is the prevailing party therein; or
5.3 either (a) on account of any suit in which a final, non-appealable
judgment is rendered against Indemnitee under the provisions of Section 16 of
the Securities Exchange Act of 1934 and amendments thereto or under similar
provisions of any federal or state law or (b) on account of amounts paid in
settlement of any litigation instituted or threatened under Section 16 or such
law as a result of Indemnitee's purchase or sale of securities of the Company
or of any affiliate of the Company; or
5.4 on account of Indemnitee's conduct, which finally and non-appealably
has been adjudged to have been knowingly fraudulent or deliberately dishonest
or to have involved willful misconduct; or
5.5 for expenses or other losses incurred in connection with Indemnitee's
having in fact gained any personal profit or advantage to which Indemnitee was
not legally entitled; or
5.6 if a court having jurisdiction in the matter shall finally and
non-appealably determine that such indemnification would violate public policy
or be otherwise unlawful.
6. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for a portion of any
expenses or liabilities incurred by Indemnitee in the investigation, defense,
settlement, or appeal of a Proceeding, but is not entitled to
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indemnification for the total amount of the expenses or liabilities, the
Company shall indemnify Indemnitee for the portion of such expenses or
liabilities to which Indemnitee is entitled.
7. INDEMNIFICATION PROCEDURES.
7.1 Promptly after the receipt by Indemnitee of notice of the commencement
or the threat of commencement of any Proceeding, Indemnitee shall, if
Indemnitee believes that indemnification with respect to the Proceeding may be
sought from the Company under this Agreement, notify the Company, consistent
with Section 13 of the commencement or the threat of commencement of the
Proceeding, but the failure of the Indemnitee to so notify the Company shall
not relieve the Company from any liability it may have under this Agreement
except to the extent that it has been prejudiced in any material extent by such
failure, or from any liability which it may have otherwise.
7.2 If, at the time that the Company receives notice under Section 7.1 of
this Agreement of the commencement or the threat of commencement of any
Proceeding, the Company has D & O Insurance in effect, the Company shall give
prompt notice of the commencement or the threat of commencement of such
Proceeding to the insurer(s) in accordance with the procedures set forth in its
insurance policy or policies. The Company then shall take all appropriate
action to cause such insurer(s) immediately to pay all amounts payable as a
result of such Proceeding or threatened Proceeding in accordance with the terms
of such policy or policies, provided that the Company shall remain liable to
pay any such amount in the event the insurer(s) fail to pay such amount.
7.3 If the Company is obligated to pay to Indemnitee the expenses of any
Proceeding or threatened Proceeding, the Company, upon the delivery to
Indemnitee of written notice of its election to do so, shall be entitled to
assume Indemnitee's defense. The Company's assumption of Indemnitee's defense
shall be subject to Indemnitee's approval of the counsel who is to conduct the
defense. Counsel shall be approved or disapproved by Indemnitee within seven
(7) days after the Company notifies Indemnitee of counsel's identity and shall
be deemed approved unless Indemnitee provides the Company with notice to the
contrary. After the approval of counsel selected by the Company, the Company
will not be liable to Indemnitee under this Agreement for any attorneys' fees
that Indemnitee subsequently incurs with respect to the same Proceeding,
provided that (a) Indemnitee shall have the right to employ Indemnitee's own
counsel in any such Proceeding at Indemnitee's own expense, and (b) Indemnitee
may retain Indemnitee's own counsel, the fees and expenses of whom shall be
paid by the Company, if (i) Indemnitee shall reasonably have concluded that a
conflict or potential conflict exists between the Company and Indemnitee in the
conduct of any such defense or (ii) the Company shall not, in fact, have
employed counsel to assume the defense of such Proceeding.
8. ADVANCES OF EXPENSES. Prior to a determination that this Agreement in
fact entitles Indemnitee to indemnification, expenses that Indemnitee has
incurred or for which Indemnitee might be entitled to indemnity under this
Agreement shall be advanced to Indemnitee by the Company within fifteen (15)
days after the Company's receipt of Indemnitee's written request for such an
advance, provided that Indemnitee undertakes in writing to repay such
advance(s) to the extent that Indemnitee ultimately is determined not to be
entitled to indemnification under the provisions of Section 145, this
Agreement, or otherwise.
9. NON-EXCLUSIVITY. The provisions for indemnification and advancement of
expenses contained in this Agreement shall not be deemed exclusive of any other
rights that Indemnitee may have under any provision of law, the Company's
Certificate of Incorporation or Bylaws, the vote of the Company's stockholders
or disinterested directors, other agreements, or otherwise. Indemnitee's
rights hereunder shall continue after Indemnitee has ceased acting as an Agent
of the Company and shall inure to the benefit of Indemnitee's heirs, executors,
and administrators.
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10. SEVERABILITY. If any provision or provisions of this Agreement shall
for any reason be held to be invalid, illegal, or unenforceable, (i) the
validity, legality, and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any paragraphs of the
Agreement containing the provision or provisions held to be invalid, illegal, or
unenforceable) shall not in any way be affected or impaired, and (ii) to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, all portions of any paragraph of this Agreement held to be invalid,
illegal, or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision or provisions that have been held to be invalid,
illegal, or unenforceable to the maximum extent permitted by law.
11. 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), and no such waiver shall constitute a continuing waiver.
12. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall bind, and
shall inure to the benefit of, the successors, assigns, heirs, executors, and
administrators of the parties hereto.
13. NOTICE. All notices, consents, requests, approvals, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been properly given if hand delivered or if sent by
a courier freight prepaid (in either case, effective upon receipt or when
refused), in the case of the Company, at the addresses listed below, and in the
case of Indemnitee, at Indemnitee's address of record with the Company, or to
such other addresses of which the parties may notify one another in writing.
To the Company: Illinois Superconductor Corporation
451 Kingston Court
Mount Prospect, IL 60056
with a copy to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, IL 60661-3693
Attn.: Lawrence Levin, Esq.
14. GOVERNING LAW. This Agreement shall be governed exclusively by and
construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
15. THIRD PARTIES. This Agreement is entered into solely for the benefit
of the Company and its successors and assigns, on the one hand, and of
Indemnitee and Indemnitee's heirs, executors, and administrators, on the other
hand, and no third party shall have any rights hereunder.
16. DURATION. This Agreement shall commence and be effective immediately
upon the election of the Indemnitee as a director of the Company pursuant to a
Written Consent dated [DATE] and effective [DATE]. This Agreement shall
terminate upon the expiration of all statutes of limitations that would be
applicable to any cause of action that could arise out of Indemnitee's service
as an Agent.
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IN WITNESS WHEREOF, the parties to this Agreement have entered into this
Indemnification Agreement effective as of the date first above written.
ILLINOIS SUPERCONDUCTOR CORPORATION
By: __________________________
Its:
______________________________
(Signature)
NAME OF BOARD MEMBER
______________________________
______________________________
(Print Address)