EXHIBIT 5
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is made and entered into on April 7, 1997, by
and between Peerless Industrial Group, Inc., a Minnesota corporation (the
"Corporation"), and , an officer and/or member of the
Board of Directors of the Corporation ("Indemnitee").
Whereas, the Corporation desires that Indemnitee oppose and defend against
what Indemnitee may consider to be unjustified investigations, claims,
actions, suits and proceedings which have arisen or may arise in the future as
a result of Indemnitee's service to the Corporation; and
Whereas, the parties believe it appropriate to memorialize and reaffirm the
Corporation's indemnification obligation to Indemnitee and, in addition, set
forth the indemnification agreements contained herein;
Now, Therefore, in consideration of the mutual agreements herein contained,
the parties agree as follows:
1. Indemnification.
(a) Indemnitee shall be indemnified and held harmless by the Corporation
to the fullest extent permitted by its Articles of Incorporation, Bylaws
and the Minnesota Business Corporation Act, as the same exists or may
hereafter be amended, against all reasonable expenses, liability and loss
(including attorneys' fees, judgments, penalties, fines and amounts paid or
to be paid in any settlement approved in advance by the Corporation, such
approval not to be unreasonably withheld) (collectively, "Indemnifiable
Liabilities") actually incurred or suffered by Indemnitee in connection
with any threatened, pending or completed investigation, claim, action,
suit, or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal (collectively, "Indemnifiable
Litigation"), (i) to which Indemnitee is or was a party or is threatened to
be made a party by reason of any action or inaction in Indemnitee's
capacity as a director or officer of the Corporation, or (ii) with respect
to which Indemnitee is otherwise involved by reason of the fact that
Indemnitee is or was serving as a director, officer, employee or agent of
the Corporation, or of any subsidiary or division, or, while a director of
a corporation, is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise.
(b) No change in the Corporation's Articles of Incorporation or Bylaws or
the Minnesota Business Corporation Act subsequent to the date first above
written shall have the effect of limiting or eliminating the
indemnification available under this Agreement as to any act, omission or
capacity for which this Agreement provides indemnification at the time of
act, omission or capacity. If any change after the date of this Agreement
in any applicable law, statute or rule expands the power of the Corporation
to indemnify the Indemnitee, such change shall be within the purview of the
Indemnitee's rights and the Corporation's obligations under this Agreement.
If any change in any applicable law, statute or rule narrows the right of
the Corporation to indemnify the Indemnitee, such change, except to the
extent otherwise required by law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights
and obligations hereunder.
(c) In the event of payment under this Agreement, the Corporation shall
be subrogated to the extent of such payment to all of the rights of
recovery of the 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 Corporation effectively
to bring suit to enforce such rights.
(d) The Corporation shall not be liable under this Agreement to make any
payment for any liability incurred in a proceeding in which the Indemnitee
is adjudged liable to the Corporation or is subjected to injunctive relief
in favor of the Corporation:
(i) for any appropriation, in violation of his or her duties, of any
business opportunity of the Corporation;
(ii) for acts or omissions which involve intentional misconduct or a
knowing violation of law;
(iii) for the types of liability set forth in the Minnesota Business
Corporation Act, as the same exists or may hereafter be amended; or
(iv) for any transaction from which he or she received any improper
personal benefit.
(e) The Corporation shall not be liable under this Agreement to make any
payment in connection with any claim made against the Indemnitee:
(i) for which payment is actually made to the Indemnitee under a
valid and collectible insurance policy, except in respect of any excess
beyond the amount of payment under such insurance;
(ii) for which payment is actually made to the Indemnitee by the
Corporation otherwise than pursuant to this Agreement, except in
respect of any excess beyond the amount of such payment; or
(iii) for an accounting of profits made from the purchase or sale by
the Indemnitee of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provisions of any state statutory law.
2. Interim Expenses. The Corporation agrees to pay for or reimburse all
reasonable expenses (including attorneys' fees and expenses) incurred by
Indemnitee in connection with any Indemnifiable Litigation in advance of the
final disposition thereof ("Indemnifiable Expenses"), provided that the
Corporation has received (a) a written undertaking, executed personally or on
behalf of Indemnitee, substantially in the form attached hereto as Annex I, to
repay the amount so advanced to the extent that it is ultimately determined
that Indemnitee is not entitled to be indemnified by the Corporation under
this Agreement or otherwise and (b) a written affirmation of the Indemnitee's
good faith belief that he or she has met the standard of conduct required
under the Minnesota Business Corporation Act to enable the Corporation to
indemnify the Indemnitee.
3. Procedure for Making Demand.
(a) Indemnifiable Liabilities. Payments of Indemnifiable Liabilities to
which an Indemnitee is entitled pursuant to Section 1 hereof shall be made
promptly but in no event later than thirty (30) days after Indemnitee is
determined, in the manner set forth below, to have met the standard of
conduct required by Section 1 hereof and the Minnesota Business Corporation
Act. Upon receipt of a written demand for payment of Indemnifiable
Liabilities from Indemnitee, the Board of Directors shall promptly initiate
action to ensure that a determination regarding Indemnitee's standard of
conduct is made in the following manner: (i) by the Board of Directors by
majority vote of a quorum consisting of directors not at the time parties
to the proceeding; (ii) if a quorum of the Board of Directors cannot be
obtained, by majority vote of a committee duly designated by the Board of
Directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding; (iii) by special legal counsel selected by the Board of
Directors or its committee in the manner prescribed in subparagraph (i) or
(ii), or if a quorum of the Board of Directors cannot be obtained under
subparagraph (i), and a committee cannot be designated under subparagraph
(ii), selected by majority vote of the full Board of Directors (in which
selection directors who are parties may participate); or (iv) by the
shareholders, but shares owned by or voted under the control of directors
who are at the time parties to the proceeding may not be voted on the
determination. Authorization of indemnification or an obligation to
indemnify and evaluation as to reasonableness of expenses shall be made in
the same manner as the determination that indemnification is permissible,
except that if the determination is made by special legal counsel,
authorization of indemnification and evaluation as to reasonableness of
expenses shall be made by those entitled to select counsel under
subparagraph (iii). Indemnitee may contest the determination that
Indemnitee has not met the relevant standard of indemnification by
petitioning a court to make an independent determination with respect to
rights of indemnification.
(b) Indemnifiable Expenses. Payments of Indemnifiable Expenses to which
the Indemnitee is entitled pursuant to Section 2 hereof shall be made no
later than ten (10) days after receipt by the Corporation of the written
undertaking and affirmation of Indemnitee referred to in Section 2 hereof.
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4. Failure to Indemnify. If a court of competent jurisdiction orders
indemnification or advances for expenses to be made by the Corporation,
Indemnitee shall also be entitled to be paid for expenses (including
attorneys' fees) incurred in connection with the application for the court-
ordered payments.
5. Successors. This Agreement establishes contract rights which shall be
binding upon, and shall inure to the benefit of, the successors, assigns,
heirs and legal representatives of the parties hereto.
6. Contract Rights Not Exclusive. The contract rights conferred by this
Agreement shall be in addition to, but not exclusive of, any other right which
Indemnitee may have or may hereafter acquire under any statute, provision of
the Corporation's Articles of Incorporation or Bylaws, agreement, vote of
stockholders or disinterested directors, or otherwise.
7. Indemnitee's Obligations. The Indemnitee shall promptly advise the
Corporation in writing of the institution of any investigation, claim, action,
suit or proceeding which is or may be subject to this Agreement and keep the
Corporation generally informed of, and consult with the Corporation with
respect to, the status of any such investigation, claim, action, suit or
proceeding. Notices to the Corporation shall be directed to Peerless
Industrial Group, Inc., Attn: Corporate Secretary (or such other address as
the Corporation shall designate in writing to Indemnitee). Notice shall be
deemed received three days after the date postmarked if sent by certified or
registered mail, properly addressed. In addition, Indemnitee shall give the
Corporation such information and cooperation as it may reasonably require and
as shall be within Indemnitee's power.
8. Severability. Should any provision of this Agreement, or any clause
thereof, be held to be invalid, illegal or unenforceable, in whole or in part,
the remaining provisions and clause of this Agreement shall remain fully
enforceable and binding on the parties.
9. 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 provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
10. Choice of Law. The validity, interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of Minnesota.
In Witness Whereof, the parties have executed this Agreement as of the day
and year first written above.
Indemnitee
Peerless Industrial Group, Inc.
________________________________ By: _________________________________
William H. Spell
Its: Chief Executive Officer
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ANNEX 1
AGREEMENT
This Agreement is made and entered into on , 199 , by and
between Peerless Industrial Group, Inc., a Minnesota corporation (the
"Corporation"), and , an officer and/or a member of the
Board of Directors of the Corporation ("Indemnitee").
Whereas, Indemnitee has become involved in investigations, claims, actions,
suits or proceedings which have arisen as a result of Indemnitee's service to
the Corporation; and
Whereas, Indemnitee desires that the Corporation pay or reimburse Indemnitee
for any and all reasonable expenses (including, but not limited to, attorneys'
fees and court costs) actually and reasonably incurred by Indemnitee or on
Indemnitee's behalf in defending or investigating any such suits or claims and
that such payment be made in advance of the final disposition of such
investigations, claims, actions, suits or proceedings to the extent that
Indemnitee has not been previously reimbursed by insurance; and
Whereas, the Corporation is willing to make such payments if it receives an
undertaking from Indemnitee to repay such payments under certain
circumstances; and
Whereas, Indemnitee is willing to give such an undertaking.
Now, Therefore, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
1. In regard to any payments made by the Corporation to Indemnitee
pursuant to the terms of the Indemnification Agreement dated ,
1997, between the Corporation and Indemnitee, Indemnitee hereby undertakes
and agrees to repay to the Corporation, promptly and in any event within
thirty (30) days after the disposition, including any appeals, of any
litigation or threatened litigation on account of which payments were made,
amounts received if it is determined that he or she is not entitled to
indemnification by the Corporation under the Indemnification Agreement and
the Minnesota Business Corporation Act.
2. This Agreement shall not affect in any manner the rights which
Indemnitee may have against the Corporation, any insurer or any other
person to seek indemnification for or reimbursement of any expenses
referred to herein or any judgment which may be rendered in any litigation
or proceeding.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed on the date first above written.
Peerless Industrial Group, Inc.
By: ________________________________
Name: ______________________________
Title: _____________________________
Indemnitee
_____________________________________
Name: ______________________________
Position(s) Held: ___________________
_____________________________________
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