Document:

exhibit_10-1.htm

  

  

  

Exhibit 10.1

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this "Agreement"), dated as of ___________________, between Adams Resources & Energy, Inc., a Delaware corporation (the "Corporation"), and _________________ ("Indemnitee").

W I T N E S S E T H:

WHEREAS, Indemnitee is either a member of the board of directors of the Corporation (the "Board of Directors") or an officer of the Corporation, or both, and in such capacity or capacities, or otherwise as an Agent (as hereinafter defined) of the Corporation, is performing a valuable service for the Corporation; and

WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Corporation on the condition that he or she be indemnified as herein provided; and

WHEREAS, it is intended that Indemnitee shall be paid promptly by the Corporation all amounts necessary to effectuate in full the indemnity and advancement of expenses provided for herein:

NOW, THEREFORE, in consideration of the premises and the covenants in this Agreement, and of Indemnitee continuing to serve the Corporation as an Agent and intending to be legally bound hereby, the parties hereto agree as follows:

Services by Indemnitee.  Indemnitee agrees to serve (a) as a director or an officer of the Corporation, or both, so long as Indemnitee is duly appointed or elected and qualified in accordance with the applicable provisions of the Certificate of Incorporation, as amended, and Bylaws, as amended, of the Corporation, and until such time as Indemnitee resigns or fails to stand for election or is removed from Indemnitee's position, or (b) otherwise as an Agent of the Corporation. Indemnitee may from time to time also perform other services at the request or for the convenience of, or otherwise benefiting the Corporation.  Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or other obligation imposed by operation of law), in which event the Indemnitee shall have no obligation under this Agreement to continue to serve in any such position and the Corporation shall have no obligation under this Agreement to continue Indemnitee in any such position.

 

Indemnification.  Subject to the terms and conditions of this Agreement, the Corporation hereby agrees to indemnify Indemnitee as follows:

 

  

  

  

The Corporation shall, with respect to any Proceeding (as hereinafter defined) associated with Indemnitee's being an Agent (as hereinafter defined), indemnify Indemnitee to the fullest extent permitted by applicable law and the Certificate of Incorporation of the Corporation in effect on the date hereof or as such law or Certificate of Incorporation may from time to time be amended (but, in the case of any such amendment, only to the extent such amendment permits the Corporation to provide broader indemnification rights than the law or Certificate of Incorporation permitted the Corporation to provide before such amendment). The right to indemnification conferred herein and in the Certificate of Incorporation shall be presumed to have been relied upon by Indemnitee in serving or continuing to serve the Corporation as an Agent and shall be enforceable as a contract right. Without in any way limiting or diminishing the scope of the indemnification provided by this Section 2, the Corporation agrees to indemnify Indemnitee to the fullest extent permitted by law if and wherever Indemnitee is or was a party to, or is threatened to be made a party to, any Proceeding, including without limitation any Proceeding brought by or in the right of the Corporation, by reason of the fact that Indemnitee is or was an Agent or by reason of anything done or not done by Indemnitee in such capacity as an Agent, against all Expenses (as hereinafter defined) and Liabilities (as hereinafter defined) actually and reasonably incurred by Indemnitee or on his or her behalf in connection with the investigation, defense, settlement or appeal of such Proceeding. In addition to, and not as a limitation of, the foregoing, the rights of indemnification of Indemnitee provided under this Agreement shall include those rights set forth in Sections 3 and 8 below. Notwithstanding the foregoing, the Corporation shall not be required to indemnify Indemnitee in connection with a Proceeding commenced by Indemnitee unless (i) such Proceeding was commenced by Indemnitee to enforce Indemnitee's rights under this Agreement or (ii) the commencement of such Proceeding was authorized by the Board of Directors.

 

Advancement of Expenses.

 

The Corporation agrees with Indemnitee that all reasonable Expenses incurred by or on behalf of Indemnitee (including costs of enforcement of this Agreement) in connection with a Proceeding shall be advanced from time to time by the Corporation to Indemnitee within thirty (30) days after the receipt by the Corporation of a written request by or on behalf of Indemnitee for an advance of such Expenses, whether prior to, during or after final disposition of a Proceeding (including without limitation any Proceeding brought by or in the right of the Corporation), except to the extent that there has been a Final Adverse Determination (as hereinafter defined) that Indemnitee is not entitled to be indemnified for such Expenses. A written request by an Indemnitee for an advancement of any and all Expenses under this paragraph shall contain reasonable detail of the Expenses incurred by Indemnitee for which the Indemnitee is seeking an advance. In the event that such written request shall be accompanied by an affidavit of counsel to Indemnitee to the effect that such counsel has reviewed such Expenses and that such Expenses are reasonable in such counsel's view, then such expenses shall be deemed reasonable in the absence of clear and convincing evidence to the contrary. By execution of this Agreement, Indemnitee shall be deemed to have made whatever undertaking as may be required by law at the time of any advancement of Expenses with respect to repayment to the Corporation of such advanced Expenses. In the event that the Corporation shall breach its obligation to advance Expenses under this Section 3, the parties hereto agree that Indemnitee's remedies available at law would not be adequate and that Indemnitee would be entitled to the remedies of specific performance and injunctive relief to enforce such obligation of the Corporation.  The Corporation acknowledges that it has agreed to advance Expenses hereunder in order to promote the business interests of the Corporation and the Corporation agrees with Indemnitee that it will not fail to comply with its obligation to advance Expenses to Indemnitee as required under this Agreement on the ground that such advancement violates or would violate Section 13(k) of the Securities Exchange Act of 1934, as amended, unless the Corporation has received an affirmative and unqualified written opinion of Independent Legal Counsel to the effect that such an advance of Expenses would result in a violation of said Section 13(k).

 

  

  

  

Witness Expenses in Certain Proceedings.  Notwithstanding any other provision of this Agreement to the contrary, to the extent that Indemnitee was or is, by reason of the fact that the Indemnitee is or was an Agent, a witness or other non-party participant in any Proceeding to which the Indemnitee is not made a party, the Corporation shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee's behalf solely in connection with the Indemnitee's being a witness or other non-party participant in such Proceeding, and in preparing to be a witness or such other non-party participant in such Proceeding without the need for any determination with respect to the Indemnitee's conduct pursuant to Section 5 of this Agreement.

 

Presumptions and Effect of Certain Proceedings.

 

Upon making a request for indemnification, Indemnitee shall be presumed to be entitled to indemnification under this Agreement and the Corporation shall have the burden of proof to overcome that presumption in reaching any contrary determination.  The termination of any Proceeding by judgment, order, settlement (whether with or without court approval), arbitration award or conviction, or upon a plea of nolo contendere or its equivalent shall not affect this presumption or, except as determined by a judgment or other final adjudication adverse to Indemnitee, establish a presumption with regard to any factual matter relevant to determining Indemnitee's rights to indemnification hereunder. If the forum so empowered to make a determination of Indemnitee's entitlement to indemnification pursuant to Section 5 hereof shall have failed to make the requested determination within sixty (60) days after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or other disposition or partial disposition of any Proceeding or any other event that could enable the Corporation to determine Indemnitee's entitlement to indemnification, the requisite determination that Indemnitee is entitled to indemnification shall be deemed to have been made.

 

For purposes of this Agreement, Indemnitee shall be deemed to have acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal Proceeding, to have had no reasonable cause to believe Indemnitee's conduct was unlawful, if such action was based on any of the following: (a) the records or books of the account of Corporation or other Enterprise, including financial statements; (b) information supplied to Indemnitee by the officers of the Corporation or other Enterprise in the course of his/her duties; (c) the advice of legal counsel for the Corporation or other Enterprise; or (d) information or records given in reports made to the Corporation or other Enterprise by an independent certified public  accountant or by an appraiser or other expert selected with reasonable care by the Corporation or other Enterprise.  The provisions of this Section 4(b) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct.

 

The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Corporation or other Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

  

  

  

Procedure for Determination of Entitlement to Indemnification.

 

Whenever Indemnitee believes that Indemnitee is entitled to indemnification pursuant to this Agreement, Indemnitee shall submit a written request for indemnification to the Corporation. The Corporation's obligation to comply with such request for indemnification is subject to the condition that the matter of the Indemnitee's entitlement to such indemnification under applicable law has been heard before a forum referred to in Section 5(b) below and such forum shall not have determined that the Indemnitee did not meet the required standard of conduct under applicable law; provided, however, that such condition shall not be applicable (and no such hearing or determination shall be required) (i) where indemnification is mandatory under applicable law, (ii) with respect to any request for indemnification by an Indemnitee under Section 3(b) or (iii) in any case in which such determination is, by the express terms of this Agreement (including but not limited to Section 4 hereof), deemed to have been made or is otherwise not required to be made under this Agreement, and in each such case payment of indemnification to which an Indemnitee is entitled under this Agreement shall be made within thirty (30) days after such request is received by the Corporation. Any request for indemnification shall include sufficient documentation or information reasonably available to Indemnitee for the determination of entitlement to indemnification. In any event, Indemnitee shall submit Indemnitee's claim for indemnification within a reasonable time, not to exceed five (5) years after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or final determination, whichever is the later date for which Indemnitee requests indemnification. The Secretary or other appropriate officer of the Corporation shall, promptly upon receipt of Indemnitee's request for indemnification, advise the Board of Directors in writing that Indemnitee has made such request. Determination of Indemnitee's entitlement to indemnification shall be made not later than sixty (60) days after the Corporation's receipt of Indemnitee's written request for such indemnification, provided that any request for indemnification for Liabilities, other than amounts paid in settlement, shall have been made after a determination thereof in a Proceeding.

 

 

 

The Indemnitee shall be entitled to select the forum in which the Indemnitee's entitlement to indemnification will be heard, which selection shall be included in the written request for indemnification referred to in Section 5(a), except that the Indemnitee may not choose to have the stockholders of the Corporation make such determination without the consent of the Board of Directors. Subject to the foregoing, the forum shall be any one of the following:

 

the stockholders of the Corporation (with such approval being sufficient if it is given by stockholders holding a majority of the shares present at a meeting of the stockholders at which a quorum is present);

 

a majority vote of Disinterested Directors (as hereinafter defined), even though less than a quorum;

 

Independent Legal Counsel, whose determination shall be made in a written opinion; or

 

a panel of three arbitrators, one selected by the Corporation, another by Indemnitee and the third by the first two arbitrators; or if for any reason three arbitrators are not selected within thirty (30) days after the appointment of the first arbitrator, then selection of additional arbitrators shall be made by the American Arbitration Association.  If any arbitrator resigns or is unable to serve in such capacity for any reason, the American Arbitration Association shall select such arbitrator's replacement.  The arbitration shall be conducted pursuant to the commercial arbitration rules of the American Arbitration Association now in effect.

 

  

  

  

Payment of indemnification for Liabilities and Expenses as to which Indemnitee is determined entitled pursuant to Section 5 or deemed determined pursuant to Section 4 shall be made as promptly as practicable after such determination or deemed determination and in any event within thirty (30) days thereafter.

 

Specific Limitations on Indemnification.  Notwithstanding anything in this Agreement to the contrary, the Corporation shall not be obligated under this Agreement to make any payment to Indemnitee with respect to any Proceeding:

 

To the extent that such payment is actually made to Indemnitee under any insurance policy, or is made to Indemnitee by the Corporation or an affiliate otherwise than pursuant to this Agreement. Notwithstanding the availability of such insurance, Indemnitee also may claim indemnification from the Corporation pursuant to this Agreement by assigning to the Corporation any claims under such insurance to the extent Indemnitee is paid by the Corporation;

 

Provided there has been no Change in Control, for Liabilities in connection with Proceedings settled by the Indemnitee without the Corporation's consent, which consent, however, shall not be unreasonably withheld or delayed;

 

For an accounting of profits made from the purchase or sale by Indemnitee of securities of the Corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or similar provisions of any state statutory or common law; or

 

To the extent it would be otherwise prohibited by law, if so established by a judgment or other final adjudication adverse to Indemnitee.

 

Fees and Expenses of Forum.  The Corporation agrees to pay all reasonable fees and expenses associated with the determination of the Indemnitee's entitlement to indemnification in accordance with Section 5(b), including, without limitation, fees and expenses in connection with a meeting of the stockholders of the Corporation and the reasonable fees and expenses of Disinterested Directors, Independent Legal Counsel or a panel of three arbitrators should such Disinterested Directors, Independent Legal Counsel or such arbitrators be retained to make a determination of Indemnitee's entitlement to indemnification pursuant to Section 5(b) of this Agreement, and the Corporation shall fully indemnify such Disinterested Directors, Independent Legal Counsel or arbitrators against any and all expenses and losses incurred by any of them arising out of or relating to this Agreement or their engagement pursuant hereto.

 

Remedies of Indemnitee.

 

In the event that (i) a determination pursuant to Section 5 hereof is made that Indemnitee is not entitled to indemnification, (ii) advances of Expenses are not timely made pursuant to this Agreement, (iii) payment of indemnification to Indemnitee has not been timely made pursuant to this Agreement, or (iv) Indemnitee otherwise seeks enforcement of this Agreement, then Indemnitee shall be entitled to a final adjudication in the Court of Chancery of the State of Delaware of the Indemnitee's rights and remedies under this Agreement (which remedies may include, without limitation, an order compelling enforcement of the Corporation's obligations under this Agreement through the remedy of specific performance or injunctive relief). Alternatively, unless (i) the determination of Indemnitee's entitlement to indemnification was made by a panel of arbitrators pursuant to Section 5(b)(iv) hereof, or (ii) court approval is required by law for the indemnification sought by Indemnitee, Indemnitee at Indemnitee's option may seek an award in arbitration to be conducted by a single arbitrator pursuant to the commercial arbitration rules of the American Arbitration Association now in effect, which award is to be made within ninety (90) days following the filing of the demand for arbitration. The Corporation shall not oppose Indemnitee's right to seek any such adjudication or arbitration award. In any such proceeding or arbitration Indemnitee shall be presumed to be entitled to indemnification and advancement of Expenses under this Agreement and the Corporation shall have the burden of proof to overcome that presumption.

 

  

  

  

 

In the event that a determination that Indemnitee is not entitled to indemnification, in whole or in part, has been made pursuant to Section 5 hereof, the decision in the judicial proceeding or arbitration provided in paragraph (a) of this Section 8 shall be made de novo on the merits and Indemnitee shall not be prejudiced by reason of such prior determination that Indemnitee is not entitled to indemnification.

 

If a determination that Indemnitee is entitled to indemnification has been made pursuant to Section 5 hereof, or is deemed to have been made pursuant to Section 4 hereof or otherwise pursuant to the terms of this Agreement, then the Corporation shall be bound by such determination or deemed determination in the absence of an intentional misrepresentation or omission of a material fact by Indemnitee in connection with such determination.

 

The Corporation shall be precluded from asserting that the procedures and presumptions of this Agreement are not valid, binding and enforceable. The Corporation shall stipulate in any such court or before any such arbitrator that the Corporation is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

 

Expenses reasonably incurred by Indemnitee in connection with Indemnitee's request for indemnification under this Agreement, seeking enforcement of this Agreement or to recover damages for breach of this Agreement shall be borne by the Corporation when and as incurred by Indemnitee irrespective of any Final Adverse Determination that Indemnitee is not entitled to indemnification.

 

Contribution.  If the Indemnitee is not entitled to the indemnification provided in Section 2 for any reason other than the statutory limitations set forth in the Delaware General Corporation Law, then the Corporation, in lieu of indemnifying Indemnitee, shall contribute to the amount of Expenses and Liabilities actually and reasonably incurred and paid or to be paid by Indemnitee in such proportion as is deemed fair and reasonable in light of all the circumstances of the relevant Proceeding to reflect (i) the relative benefits received by the Corporation on the one hand and the Indemnitee on the other hand from the transaction from which such Proceeding arose and (ii) the relative fault of the Corporation on the one hand and of Indemnitee on the other hand in connection with the events which resulted in such Expenses and Liabilities, as well as any other relevant equitable considerations. The relative fault of the Corporation on the one hand and of Indemnitee on the other hand shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent the circumstances resulting in such Expenses and Liabilities. The Corporation agrees that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations.

 

Partial Indemnification.  If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for some or a portion of any Expenses or Liabilities of any type whatsoever, but the Indemnitee is not entitled, however, to indemnification for the total amount thereof, then the Corporation shall nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.

 

  

  

  

Spousal Indemnification. The Corporation will indemnify Indemnitee's spouse to whom Indemnitee is legally married at any time Indemnitee is covered under the indemnification provided in this Agreement (even if Indemnitee did not remain married to him or her during the entire period of coverage) against any Proceeding for the same period, to the same extent and subject to the same standards, limitations, obligations and conditions under which Indemnitee is provided indemnification herein, if Indemnitee's spouse (or former spouse) becomes involved in a Proceeding solely by reason of his or her status as Indemnitee's spouse, including, without limitation, any Proceeding that seeks damages recoverable from marital community property, jointly-owned property or property purported to have been transferred from Indemnitee to his/her spouse (or former spouse). Indemnitee's spouse or former spouse also may be entitled to advancement of Expenses to the same extent that Indemnitee is entitled to advancement of Expenses herein. The Corporation may maintain insurance to cover its obligation hereunder with respect to Indemnitee's spouse (or former spouse) or set aside assets in a trust or escrow funds for that purpose.

 

Maintenance of Insurance; Notice.

 

The Corporation represents that it presently has in place certain directors' and officers' liability insurance policies covering its directors and officers. Subject only to the provisions within this Section 12, the Corporation agrees that so long as Indemnitee shall have consented to serve or shall continue to serve as a director or officer of the Corporation, or both, or as an Agent of the Corporation, and thereafter so long as Indemnitee shall be subject to any possible Proceeding (such periods being hereinafter sometimes referred to as the "Indemnification Period"), the Corporation will use all reasonable efforts to maintain in effect for the benefit of Indemnitee one or more valid, binding and enforceable policies of directors' and officers' liability insurance from established and reputable insurers, providing, in all respects, coverage both in scope and amount which is no less favorable than that presently provided. Notwithstanding the foregoing, the Corporation shall not be required to maintain said policies of directors' and officers' liability insurance during any time period if during such period such insurance is not reasonably available or if it is determined in good faith by the then Board of Directors either that:

 

The premium cost of maintaining such insurance is substantially disproportionate to the amount of coverage provided thereunder; or

 

The protection provided by such insurance is so limited by exclusions, deductions or otherwise that there is insufficient benefit to warrant the cost of maintaining such insurance.

 

Anything in this Agreement to the contrary notwithstanding, to the extent that and for so long as the Corporation shall choose to continue to maintain any policies of directors' and officers' liability insurance during the Indemnification Period, the Corporation shall maintain similar and equivalent insurance for the benefit of Indemnitee during the Indemnification Period (unless such insurance shall be less favorable to Indemnitee than the Corporation's existing policies).

 

If, at the time of the receipt of a written request for indemnification pursuant to Section 5(a), the Corporation has directors' and officers' liability insurance in effect, the Corporation shall give prompt notice of the commencement of the Proceeding to which such indemnification request relates to the insurer or insurers providing such directors' and officers' liability insurance in accordance with the procedures set forth in the respective directors' and officers' liability insurance policies. The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable by such insurers as a result of such proceeding in accordance with the terms of such directors' and officers' liability insurance policies.

 

  

  

  

Notwithstanding the foregoing provisions of this Section 12, the Corporation's decision whether or not to adopt and maintain such insurance shall not affect in any way its obligations to indemnify its officers and directors under this Agreement or otherwise. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Corporation's directors, if the Indemnitee is a director; or of the Corporation's officers, if Indemnitee is not a director of the Corporation, but is an officer. The Corporation agrees that the provisions of this Agreement shall remain in effect regardless of whether liability or other insurance coverage is at any time obtained or retained by the Corporation.

 

Modification, Waiver, Termination and Cancellation.  No supplement, modification, termination, cancellation 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.

 

Subrogation.  In the event of a payment to the Indemnitee under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee with respect to the circumstances giving rise to such payment, and such Indemnitee shall execute all papers reasonably required and shall do everything that may be necessary to secure any such subrogation rights, including the execution of such documents reasonably necessary to enable the Corporation effectively to bring suit to enforce such rights.

 

Notice by Indemnitee and Defense of Claim.  Indemnitee shall promptly notify the Corporation in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter, whether civil, criminal, administrative or investigative, but the omission so to notify the Corporation will not relieve it from any liability that it may have to Indemnitee, if such omission does not prejudice the Corporation's rights. If such omission does prejudice the Corporation's rights, the Corporation will be relieved from liability only to the extent of such prejudice. Notwithstanding the foregoing, such omission will not relieve the Corporation from any liability that it may have to Indemnitee otherwise than under this Agreement. With respect to any Proceeding as to which Indemnitee notifies the Corporation of the commencement thereof:

 

The Corporation will be entitled to participate therein at its own expense; and

 

The Corporation jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee; provided, however, that the Corporation shall not be entitled to assume the defense of any Proceeding without the Indemnitee's written consent if there has been a Change in Control or if Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Corporation and Indemnitee with respect to such Proceeding. After notice from the Corporation to Indemnitee of the Corporation's election to assume the defense thereof, the Corporation will not be liable to Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ Indemnitee's own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Indemnitee unless:

 

the employment of counsel by Indemnitee has been authorized by the Corporation;

 

Indemnitee shall have reasonably concluded that counsel engaged by the Corporation may not adequately represent Indemnitee due to, among other things, actual or potential differing interests; or

 

  

  

  

 

the Corporation shall not in fact have employed counsel to assume the defense in such Proceeding or shall not in fact have assumed such defense and be acting in connection therewith with reasonable diligence; in each of which cases the fees and expenses of such counsel shall be at the expense of the Corporation.

 

The Corporation shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee's written consent; provided, however, that Indemnitee will not unreasonably withhold his or her consent to any proposed settlement.

 

Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

 

If to Indemnitee, to:

 

__________________________

__________________________

__________________________

__________________________

If to the Corporation, to:

 

Adams Resources & Energy, Inc.

4400 Post Oak Pkwy Suite 2700

Houston, Texas 77027

Attn: Mr. R. B. Abshire

or to such other address as may have been furnished to Indemnitee by the Corporation or to the Corporation by Indemnitee, as the case may be.

Nonexclusivity.  The rights of Indemnitee hereunder shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under applicable law, the Corporation's Certificate of Incorporation or Bylaws, or any agreements, vote of stockholders, resolution of the Board of Directors or otherwise, and to the extent that during the Indemnification Period the rights of the then existing directors and officers are more favorable to such directors or officers than the rights currently provided to Indemnitee thereunder or under this Agreement, Indemnitee shall be entitled to the full benefits of such more favorable rights.

 

  

  

  

Certain Definitions.

 

"Agent" shall mean any person who: (i) is or was a director or officer of the Corporation or a Subsidiary (as defined below) of the Corporation or serves or served as a member of any committee of the board of directors of the Corporation of any Subsidiary; (ii) is or was serving at the request of, for the convenience of, or to represent the interest of, the Corporation or a Subsidiary of the Corporation as a director or officer of, or member of a committee of the board of directors of (or comparable management body of), another foreign or domestic corporation, partnership, joint venture, limited liability company, trust or other Enterprise or an affiliate of the Corporation; or (iii) is or was a director or officer (or member of a committee of the board of directors) of a foreign or domestic corporation which was a predecessor corporation of the Corporation or a Subsidiary of the Corporation, or is or was a director or officer (or member of a committee of the board of directors) of another enterprise or affiliate of the Corporation at the request of, for the convenience of, or to represent the interests of, such predecessor corporation. The term "ENTERPRISE" includes, without limitation, any employee benefit plan of the Corporation, its Subsidiaries, affiliates and predecessor corporations. The term "SUBSIDIARY" means any corporation of which more than fifty percent (50%) of the outstanding voting securities is owned directly or indirectly by (i) the Corporation, (ii) the Corporation and one or more of its Subsidiaries or (iii) one or more of the Corporation's Subsidiaries.

 

"Change in Control" shall mean the occurrence after the date of this Agreement of any of the following:

 

Both (A) any "person" (as defined below) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing at least 25% of the total voting power represented by the Corporation's then outstanding voting securities; and (B) the beneficial ownership by such person of securities representing such percentage has not been approved by a majority of the "continuing directors" (as defined below);

 

Any "person" is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing at least 50% of the total voting power represented by the Corporation's then outstanding voting securities;

 

A change in the composition of the Board of Directors occurs, as a result of which fewer than two-thirds of the incumbent directors are directors who either (A) had been directors of the Corporation on the "look-back date" (as defined below) (the "Original Directors") or (B) were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority in the aggregate of the Original Directors who were still in office at the time of the election or nomination and directors whose election or nomination was previously so approved (the "continuing directors");

 

The stockholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, if such merger or consolidation would result in the voting securities of the Corporation outstanding immediately prior thereto representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) 55% or less of the total voting power represented by the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation; or

 

The stockholders of the Corporation approve (A) a plan of complete liquidation of the Corporation or (B) an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation's assets.

 

  

  

  

For purposes of Subsection (i) above, the term "person" shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act, but shall exclude (x) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or of a parent or subsidiary of the Corporation or (y) a corporation owned directly or indirectly by the stockholders of the Corporation in substantially the same proportions as their ownership of the common stock of the Corporation.

For purpose of Subsection (i) and (ii) above, the term “person” shall also exclude Mr. K. S. Adams, Jr. and his affiliates.

For purposes of Subsection (iii) above, the term "look-back date" shall mean the later of (x) the date hereof or (y) the date 24 months prior to the date of the event that may constitute a "Change in Control."

Any other provision of this Section 18(b) notwithstanding, the term "Change in Control" shall not include a transaction, if undertaken at the election of the Corporation, the result of which is to sell all or substantially all of the assets of the Corporation to another corporation (the "surviving corporation"); provided that the surviving corporation is owned directly or indirectly by the stockholders of the Corporation immediately following such transaction in substantially the same proportions as their ownership of the Corporation's common stock immediately preceding such transaction; and provided, further, that the surviving corporation expressly assumes this Agreement.

"Disinterested Director" shall mean a director of the Corporation who is not or was not a party to or otherwise involved in the Proceeding in respect of which indemnification is being sought by Indemnitee.

 

"Expenses" shall include all direct and indirect costs (including, without limitation, attorneys' fees, retainers, court costs, transcripts, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, all other disbursements or out-of-pocket expenses and reasonable compensation for time spent by Indemnitee for which Indemnitee is otherwise not compensated by the Corporation or any third party) actually and reasonably incurred in connection with either the investigation, defense, settlement or appeal of a Proceeding or establishing or enforcing a right to indemnification under this Agreement, any similar agreement, the Certificate of Incorporation or Bylaws of the Corporation or any Subsidiary, applicable law or otherwise; provided, however, that "Expenses" shall not include any Liabilities.

 

"Final Adverse Determination" shall mean that a determination that Indemnitee is not entitled to indemnification shall have been made pursuant to Section 5 hereof and either (i) a final adjudication in the Court of Chancery of the State of Delaware or decision of an arbitrator pursuant to Section 8(a) hereof shall have denied Indemnitee's right to indemnification hereunder, or (ii) Indemnitee shall have failed to file a complaint in a Delaware court or seek an arbitrator's award pursuant to Section 8(a) for a period of one hundred eighty (180) days after the determination made pursuant to Section 5 hereof.

 

  

  

  

 

"Independent Legal Counsel" shall mean a law firm or a member of a firm selected by the Corporation and approved by Indemnitee (which approval shall not be unreasonably withheld) or, if there has been a Change in Control, selected by Indemnitee and approved by the Corporation (which approval shall not be unreasonably withheld), that neither is presently nor in the past five (5) years has been retained to represent: (i) the Corporation or any of its Subsidiaries or affiliates, or Indemnitee or any corporation of which Indemnitee was or is a director, officer, employee or agent, or any subsidiary or affiliate of such a corporation, in any material matter, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Legal Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee's right to indemnification under this Agreement.

 

"Liabilities" shall mean liabilities of any type whatsoever including, but not limited to, any judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid in connection with any Proceeding, (including all interest assessments and other charges paid or payable in connection with or in respect of any judgments, fines, penalties or amounts paid in settlement of any Proceeding).

 

"Proceeding" shall mean any threatened, pending or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative, including any appeal therefrom, that is associated with Indemnitee's being an Agent of the Corporation.

 

Binding Effect; Duration and Scope of Agreement.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Corporation), spouses, heirs and personal and legal representatives. This Agreement shall continue in effect during the Indemnification Period, regardless of whether Indemnitee continues to serve as an Agent.

 

Effective Date. The provisions of this Agreement shall cover Proceedings whether now pending or hereafter commenced and shall be retroactive to cover acts or omissions or alleged acts or omissions which heretofore have taken place. The Corporation shall be liable under this Agreement, pursuant to Sections 3 and 8 hereof, for all acts of Indemnitee while serving as a director and/or officer, notwithstanding the termination of Indemnitee's service, if such act was performed or omitted to be performed during the term of Indemnitee's service to the Corporation.

 

Severability.  If any provision or provisions of this Agreement (or any portion thereof) shall be held to be invalid, illegal or unenforceable for any reason whatsoever:

 

the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby; and

 

to the fullest extent legally possible, the provisions of this Agreement shall be construed so as to give effect to the intent of any provision held invalid, illegal or unenforceable.

 

Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within the State of Delaware, without regard to conflict of laws rules.

 

  

  

  

 

Consent to Jurisdiction.  The Corporation and Indemnitee each irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding that arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Delaware.

 

Entire Agreement.  This Agreement represents the entire agreement between the parties hereto, and there are no other agreements, contracts or understandings between the parties hereto with respect to the subject matter of this Agreement.

 

Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.

 

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by a duly authorized officer and Indemnitee has executed this Agreement as of the date first above written.

 

CORPORATION:

ADAMS RESOURCES & ENERGY, INC.

By:                                                                           

Name: Frank T. Webster

Title: Director

INDEMNITEE:

By:                                                                           

Name: __________________________

Title: Directorex10-1.htm

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 10th day of November, 2011, with an effective date of November 2, 2011 (the “Effective Date”), by and between The LGL Group, Inc., a Delaware corporation (the “Company”), and Gregory P. Anderson (“Executive”, and together with the Company, the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, the Company currently employs Executive as its President and Chief Executive Officer pursuant to the terms of that certain employment agreement, dated June 29, 2009, by and between the Company and Executive (the “Original Employment Agreement”); and

 

WHEREAS, the Company desires to employ Executive as its President and Chief Executive Officer for the period provided in this Agreement, and the Parties desire to enter into this Agreement embodying the terms of such employment.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises of the Parties contained herein, the Parties, intending to be legally bound, hereby agree as follows:

 

1. Title and Job Duties.

 

(a) Upon the terms and conditions set forth in this Agreement, commencing on the Effective Date, the Company continues the employment of Executive as its President and Chief Executive Officer.  In this capacity, Executive shall have the duties, authorities and responsibilities as are inherent in such positions and specified in the Company’s By-Laws, and such other duties, authorities and responsibilities as the Board of Directors of the Company (the “Board”) shall designate from time to time that are not inconsistent with Executive’s
positions. Executive shall report directly to the Board and the Chairman of the Board.  All employees of the Company shall report directly to Executive or his designee.

 

(b) Executive accepts such employment and agrees, during the term of his employment, to devote his full business and professional time and energy to the Company.  Executive agrees to carry out and abide by all lawful directions of the Board and the Chairman of the Board that are consistent with his positions.

 

  

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(c) Without limiting the generality of the foregoing, Executive shall not, without the written approval of the Board, render services of a business or commercial nature on his own behalf or on behalf of any other person, firm, or corporation, whether for compensation or otherwise, during his employment hereunder; provided, however, the foregoing shall not prevent Executive from the following, so long as such activities in the aggregate do not materially interfere or conflict with Executive’s duties hereunder or create a potential business or fiduciary conflict: (i) serving on the boards of directors of
non-profit organizations and, with the prior written approval of the Board, other for profit companies; (ii) participating in charitable, civic, educational, professional, community or industry affairs; and (iii) managing Executive’s passive personal investments.

 

(d) Executive may own passive investments (including, but not limited to, indirect investments through mutual funds) in the securities of Competing Businesses (as defined below), provided such securities are publicly traded and Executive does not own or control more than 1.0% of the outstanding voting rights or equity of the Competing Business.  “Competing Business” means any corporation, partnership, limited liability company, university, government agency or other entity or person (other than the Company) that is engaged in the development, manufacture, marketing, distribution or sale of,
or research directed to electronic components used to control the frequency or timing of signals in electronic circuits.

 

(e) Throughout the Term, Executive shall maintain his Department of Defense Secret Clearance.

 

2. Salary and Additional Compensation.

 

(a) Base Salary.  The Company shall pay to Executive an annual base salary of $200,000, less applicable withholdings and deductions, in accordance with the Company’s normal payroll procedures.  The Board may increase Executive’s annual base salary from time to time in its sole and absolute discretion.

 

(b) Bonus.  Executive shall be eligible for an annual bonus based upon the achievement of certain management objectives to be determined by the Compensation Committee of the Board each year.

 

               (c) Future Equity Awards.  Executive shall be eligible to participate in future grants pursuant to the Company’s 2011 Incentive Plan, as adopted by the Board (the “2011 Incentive Plan”), and any other performance incentive plans extended to senior executives of the Company generally, at
levels commensurate with Executive’s positions.

 

  

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(d) Ownership of Stock.  During the Term, and in addition to any other requirements imposed by applicable securities laws, Executive shall not make sales of shares of the Company’s stock if, after giving effect to such sales, he would own stock with a market value (determined with reference to the price of such stock on the principal stock exchange or interdealer quotation system on which such stock is traded) that is less than Executive’s then base salary.

 

3. Expenses.  In accordance with Company standard expense reimbursement policy, the Company shall reimburse Executive for all reasonable business expenses properly and reasonably incurred and paid by Executive in the performance of his duties under this Agreement upon his presentment of detailed receipts in the form required by the Company’s standard expense reimbursement policy.

 

4. Benefits.

 

(a) Vacation.  Executive shall be entitled to vacation in accordance with the Company’s standard vacation policy extended to senior executives of the Company generally, at a level commensurate with Executive’s positions.

 

(b) Health Insurance and Other Plans.  Executive shall be eligible to participate in the Company’s medical, dental, long term incentive plan, and other employee benefit programs, if any, that are provided by the Company for its employees generally, at levels commensurate with Executive’s positions, in accordance with the provisions of any such plans, as the same may be in effect from time to time.

 

(c) Term Life Insurance.  The Company shall obtain and maintain during the Term (paying all applicable premiums) term life insurance on the life of Executive, providing for the payment upon the death of Executive of the sum of $2 million.  Executive shall submit to such medical or other exams as the insurer under such policy shall reasonably require.  Upon the termination of Executive’s employment by the Company, if Executive shall so request of the Company in a written notice given within 30 days after such
termination, the Company shall use its reasonable commercial efforts to cause such policy to be assigned to Executive, whereupon Executive shall be responsible for the payment of all premiums and other charges thereunder.

 

(d) Disability Insurance.  The Company shall obtain and maintain during the Term (paying all applicable premiums) disability insurance on behalf of Executive, at a level mutually agreeable to Executive and the Company, providing for payments to Executive in the event of his termination by the Company as a result of his Disability (as defined below).  Executive shall submit to such medical or other exams as the insurer under such policy shall reasonably require.  Upon the termination of Executive’s employment by
the Company, if Executive shall so request of the Company in a written notice given within 30 days after such termination, the Company shall use its reasonable commercial efforts to cause such policy to be assigned to Executive, whereupon Executive shall be responsible for the payment of all premiums and other charges thereunder.

 

  

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5. Term.  The terms set forth in this Agreement shall commence on the Effective Date and remain in effect for two years (the “Term”), except as otherwise provided herein.

 

6. Termination.

 

(a) Termination at the Company’s Election.

 

(i) For Cause.  At the election of the Company, Executive’s employment may be terminated for Cause (as defined below) upon written notice to Executive.  For purposes of this Agreement, “Cause” shall mean that Executive: (A) pleads “guilty” or “no contest” to, or is indicted or convicted for, a felony under federal or state law or a crime under federal or state law that involves fraud or dishonesty; (B) in carrying out his duties, engages in conduct that constitutes gross negligence or
willful misconduct; (C) engages in misconduct that causes material harm to the reputation of the Company; (D) materially fails to meet individual and/or Company performance goals set forth in any performance incentive plan adopted by the Board and applicable to Executive; or (E) materially breaches any term of this Agreement or written policy of the Company, provided that if the breach reasonably may be cured, the Company has given Executive prior written notice of such breach and at least 30 days after such notice is given to cure such breach in the reasonable judgment of the Board.

 

(ii) Upon Disability or Death.  At the election of the Company, Executive’s employment may be terminated should Executive become physically or mentally unable to perform his duties for the Company hereunder and such incapacity has continued for a total of 90 consecutive days or any 180 days in a period of 365 consecutive days (a “Disability”).  Executive’s employment shall be terminated automatically upon Executive’s death.

 

(iii) Without Cause.  At the election of the Company, Executive’s employment may be terminated for any reason or no reason upon written notice to Executive.

 

  

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(b) Termination at Executive’s Election.

 

(i) For Good Reason.  At Executive’s election, Executive’s employment may be terminated for Good Reason (as defined below) upon 30 days’ written notice to the Company.  For purposes of this Agreement, “Good Reason” shall mean that one or more of the following actions occurred without Executive’s consent: (A) a material diminution in Executive’s base salary and/or a material adverse change in the terms of his participation in the Company’s performance incentive plans viewed in the
aggregate; (B) a material diminution in Executive’s authority, duties or responsibilities under this Agreement, provided this will not apply if there is a substantial change in what constitutes the core of the Company’s operating business and Executive is employed in substantially equivalent positions of a substantially equivalent company (publicly or privately held); or (C) any other action or inaction that constitutes a material breach of the terms of this Agreement by the Company.  In the event any of the occurrences in (A), (B) or (C) above have occurred, Executive may give written notice to the Company of Executive’s intention to terminate his employment in accordance with this Section 6(b)(i), such notice to state in detail the particular acts or failures to act that constitute the grounds on which the proposed termination for Good Reason is based and
to be given within 60 days after the first occurrence of such acts or failures to act, whereupon the Company shall have 30 days following receipt of such notice to cure such acts or failures to act in all material respects.  If the Company has not cured such acts or failures to act in all material respects within the 30-day cure period, then Executive’s employment shall be terminated immediately for Good Reason.  Following a Change in Control, if Executive is offered continued employment, Executive shall have ten (10) days to choose whether to accept the offer of continued employment.  Should Executive decline the offer of continued employment within ten (10) days of a Change in Control, and agrees to continue his employment with the Company or the Company’s successor for a period of up to nine (9) months following the Change in Control (the
“Transition Period”), his employment shall terminate at the end of the Transition Period, such termination shall be deemed a termination for Good Reason and Executive shall be eligible for the applicable payments and benefits set forth in Section 7(c) at such time.  Should Executive accept the offer, and should the offer of continued employment contain terms that result in the occurrence of (A) or (B) above, Executive shall, by his acceptance of such offer, waive his right to terminate his employment for Good Reason based upon the terms of the offer.

 

(ii) Voluntary Resignation.  At Executive’s election, notwithstanding anything contained elsewhere in this Agreement to the contrary, Executive may terminate his employment hereunder at any time and for any reason whatsoever or for no reason at all in Executive’s sole discretion upon 30 days’ written notice to the Company.

 

 

  

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7. Payments Upon Termination of Employment.

 

(a) Termination by the Company for Cause or by Executive Without Good Reason.  If, prior to the expiration of the Term, Executive’s employment is terminated by the Company for Cause in accordance with Section 6(a)(i) or by Executive in accordance with Section 6(b)(ii), Executive shall be entitled to the following amounts only: (A) payment of his base salary accrued up to and including the date of termination, to be paid within 30 days following the date of termination, (B) payment in lieu of any accrued but unused vacation time, in
accordance with the Company’s vacation policy, to be paid within 30 days following the date of termination, and (C) payment of any unreimbursed expenses in accordance with the Company’s business reimbursement policy (collectively, the “Accrued Obligations”).

 

(b) Termination upon Disability or Death.  If Executive’s employment is terminated upon Executive’s Disability or death in accordance with Section 6(a)(ii), Executive or his heirs, executors, and assigns, as applicable, shall be entitled to the Accrued Obligations and any annual bonus earned but unpaid with respect to the fiscal year ending on or preceding the date of termination, to be paid in accordance with the terms of the such annual bonus as determined by the Compensation Committee of the Board.

 

(c) Termination Without Cause or for Good Reason, or Expiration of the Term.  If Executive’s employment is terminated by the Company in accordance with Section 6(a)(iii) or by Executive for Good Reason in accordance with Section 6(b)(i), or if Executive’s employment terminates upon the expiration of the Term, Executive shall be entitled to receive the Accrued Obligations, to be paid in the same manner and at the same times as set forth in Section 7(a), and the following severance payments and benefits: (i) subject to Section
19, the sum of $100,000, of which $50,000 shall be payable in three equal monthly installments during the first three months after termination of employment and the remaining $50,000 shall be payable six months after the date of termination (the “Severance Payments”); (ii) the vesting of any shares of the Company’s common stock held by Executive that are unvested as of the date of termination (the “Restricted Shares”) such that half of the Restricted Shares shall vest six months after the date of termination and the remaining Restricted Shares shall vest one year after the date of termination; and (iii) the partial vesting (as hereinafter provided) of any options granted under the 2011 Incentive Plan or any other performance incentive plan that the Compensation Committee of the Board determines were earned by Executive prior to the date of termination or
expiration of the Term, such determination to be made as soon as reasonably practicable following the third anniversary of the grant date of such options in accordance with the terms of the 2011 Incentive Plan or other performance incentive plan, as applicable, and such options to expire on the fifth anniversary of the grant date.  For purposes of clause (iii) above, the portion of the option determined to have been earned shall be multiplied by a fraction, the numerator of which is the number of whole months in the Term prior to the termination of Executive’s employment or the expiration of the Term, as applicable, and the denominator of which is 36. Notwithstanding the foregoing, the payments and other benefits provided under clauses (i) through (iii) above shall be subject to Executive’s execution and delivery of an agreement and release (that is no longer
subject to revocation under applicable law) of the Company, its parents, subsidiaries and affiliates and each of their officers, directors, employees, agents, successors and assigns, in the form attached hereto as Exhibit A (the “General Release”) and the Company shall begin to make the payments above within sixty (60) days following the termination of Executive’s employment, but if the sixty (60) day period begins in one calendar year and ends in the second calendar year, payment will be made on the first day in the second calendar year.

 

  

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(d) Change in Control.  For purposes of this Agreement, “Change in Control” shall mean (i) the merger or consolidation of the Company with or into another entity, whether or not the Company is the surviving entity, unless the stockholders of the Company immediately prior to such merger or consolidation own, directly or indirectly, more than 50% of the total combined voting power of the surviving entity’s outstanding securities having a right to vote in the
election of directors immediately after such merger or consolidation, (ii) the sale, transfer or other disposition of all or substantially all of the Company’s assets, (iii) the acquisition, directly or indirectly, by any person or related group of persons of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of securities having more than 50% of the total combined voting power of the Company’s outstanding securities having a right to vote in the election of directors, or (iv) a change in the composition of the Board over a period of 12 consecutive months or less such that members of the Board at the beginning of such period (the “Existing Directors”) cease, for any reason, to constitute a majority of the Board members immediately preceding such election, provided that if the election or
nomination for election of any new director was approved by a vote of at least 50% of the Existing Directors, such new director shall be considered an Existing Director.

 

(e) No Mitigation; No Set-Off.  The Company’s obligation to pay Executive the amounts provided and to make the arrangements provided hereunder shall not be subject to set-off, counterclaim or recoupment of amounts owed by Executive to the Company or its affiliates.  Executive shall not be required to mitigate the amount of any payment provided for pursuant to this Agreement by seeking other employment, and no amounts otherwise earned shall be set-off against the amounts due hereunder.

 

8. Confidentiality Agreement and Assignment of Intellectual Property.

 

(a) Executive understands that during the Term, he may have access to unpublished and otherwise confidential information both of a technical and non-technical nature, relating to the business of the Company and any of its parents, subsidiaries, divisions, affiliates (collectively, “Affiliated Entities”), or clients, including without limitation any of their actual or anticipated business, research or development, any of their technology or the implementation or exploitation thereof, including without limitation information Executive and others have collected, obtained or created, information
pertaining to clients, accounts, vendors, prices, costs, materials, processes, codes, material results, technology, system designs, system specifications, materials of construction, trade secrets and equipment designs, including information disclosed to the Company by others under agreements to hold such information confidential (collectively, the “Confidential Information”).  The Company’s success is dependent on the development and protection of its intellectual property, including but not limited to the Confidential Information. Executive understands and acknowledges the importance of maintaining the confidentiality of the Confidential Information to the Company’s continued success.  Executive agrees to observe all Company policies and procedures concerning such Confidential Information.  Executive further agrees not to disclose
or use, either during his employment or at any time thereafter, any Confidential Information for any purpose, including without limitation any competitive purpose, unless authorized to do so by the Company in writing, except that he may disclose and use such information in the good faith performance of his duties for the Company.  Executive’s obligations under this Agreement will continue with respect to Confidential Information, whether or not his employment is terminated, until such information becomes generally available from public sources through no fault of Executive or any representative of Executive.  Notwithstanding the foregoing, however, Executive shall be permitted to disclose Confidential Information as may be required by a subpoena or other governmental order, provided that he first notifies the Company of such subpoena, order or other requirement
and such that the Company has the opportunity to obtain a protective order or other appropriate remedy.

 

  

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(b) During Executive’s employment, upon the Company’s request, or upon the termination of his employment for any reason, Executive will promptly deliver to the Company all documents, records, files, notebooks, manuals, letters, notes, reports, customer and supplier lists, cost and profit data, e-mail, apparatus, computers, blackberries or other PDAs, hardware, software, drawings, blueprints, and any other material of the Company or any of its Affiliated Entities or clients, including all materials pertaining to Confidential Information developed by Executive or others, and all copies of such
materials, whether of a technical, business or fiscal nature, whether on the hard drive of a laptop or desktop computer, in hard copy, disk or any other format, that are in his possession, custody or control.  Executive may retain Executive’s rolodex and similar address books, provided, that such items only include contact information.

 

(c) Executive will promptly disclose to the Company any idea, invention, discovery or improvement, whether patentable or not (“Creations”), conceived or made by him alone or with others at any time during his employment.  Executive agrees that the Company owns any such Creations, conceived or made by Executive alone or with others at any time during his employment, and Executive hereby assigns and agrees to assign to the Company all rights he has or may acquire therein and agrees to execute any and all applications, assignments and other instruments relating thereto which the Company deems
necessary or desirable.  These obligations shall continue beyond the termination of his employment with respect to Creations and derivatives of such Creations conceived or made during his employment with the Company.  The Company and Executive understand that the obligation to assign Creations to the Company shall not apply to any Creation that is developed entirely on his own time without using any of the Company’s equipment, supplies, facilities, and/or Confidential Information, unless such Creation (i) relates in any way to the business or to the current or anticipated research or development of the Company or any of its Affiliated Entities or (ii) results in any way from Executive’s work at the Company.

 

  

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(d) Executive will not assert any rights to any invention, discovery, idea or improvement relating to the business of the Company or any of its Affiliated Entities or to his duties hereunder as having been made or acquired by Executive prior to his work for the Company, except for the matters, if any, described in Exhibit B to this Agreement.

 

(e) During the Term, if Executive incorporates into a product or process of the Company or any of its Affiliated Entities anything listed or described in Exhibit B, the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license (with the right to grant and authorize sublicenses) to make, have made, modify, use, sell, offer to sell, import, reproduce, distribute, publish, prepare derivative works of, display, perform publicly and by means
of digital audio transmission and otherwise exploit as part of or in connection with any product, process or machine.

 

(f) Executive agrees to cooperate fully with the Company, both during and after his employment with the Company, with respect to the procurement, maintenance and enforcement of copyrights, patents, trademarks and other intellectual property rights (both in the United States and foreign countries) relating to such Creations.  Executive shall sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights and powers of attorney, that the Company may deem necessary or desirable in order to protect its
rights and interests in any Creations.  Executive further agrees that if the Company is unable, after reasonable effort, to secure Executive’s signature on any such papers, any officer of the Company shall be entitled to execute such papers as his agent and attorney-in-fact and Executive hereby irrevocably designates and appoints each officer of the Company as his agent and attorney-in-fact to execute any such papers on his behalf and to take any and all actions as the Company may deem necessary or desirable in order to protect its rights and interests in any Creations, under the conditions described in this Section 8.

 

9. Restrictive Covenants.

 

(a) During the Term and, in the event that Executive’s employment is terminated for any reason (including for the purposes of this Section 9 the expiration of the Term in accordance with Section 5), during the 12-month period following such termination, Executive will not directly or indirectly (as a director, officer, executive employee, manager, consultant, independent contractor, advisor or otherwise) engage in competition with, or own any interest in, perform any services for, participate in or be connected with any Competing Business; provided, however, that the provisions of this Section 9(a) shall
not be deemed to prohibit Executive’s ownership of not more than 1.0% of the outstanding voting rights or equity of any publicly held company.

 

  

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(b) In the event that Executive’s employment is terminated for any reason (including for the purposes of this Section 9 the expiration of the Term in accordance with Section 5), during the 12-month period following such termination, Executive will not directly or indirectly hire, solicit, retain, compensate or otherwise induce or attempt to induce any individual who is or was at any time during the six months prior to Executive’s termination an employee of any of the Affiliated Entities to leave the employ of the Affiliated Entities or in any way interfere with the relationship between any of the
Affiliated Entities and any employee thereof.

 

(c) During the Term and, in the event that Executive’s employment is terminated for any reason (including for the purposes of this Section 9 the expiration of the Term in accordance with Section 5), during the 12-month period following such termination, Executive will not directly or indirectly solicit, hire, engage, send any work to, place orders with, or in any manner be associated with any customer, supplier, contractor, subcontractor or other business relation of any of the Affiliated Entities if such action by Executive would have a material adverse effect on the business, assets or financial
condition of any of the Affiliated Entities, or materially interfere with the relationship between any such person or entity and any of the Affiliated Entities.

 

10. Legitimate Business Interests of the Company.

 

(a) The parties hereto acknowledge and agree that the matters set forth above in Sections 8 and 9 constitute the “legitimate business interests” of the Company within the meaning of Florida Statutes 542.335 and are hereby conclusively agreed to be legally sufficient to support such covenants.  Such “legitimate business interests” include but are not necessarily limited to trade secrets; valuable confidential business or professional information that does not legally qualify as trade secrets; substantial relationships with specific prospective or existing customers or clients;
customer or client good will associated with an ongoing business in a specific geographic location and a specific marketing area; and extraordinary or specialized training.  It is further acknowledged and agreed that all such restrictive covenants set forth above are reasonably necessary to protect the legitimate business interests of the Company and are not overbroad or unreasonable.  It is acknowledged and agreed that the Company is specifically relying upon the foregoing statements in entering into this Agreement.

 

(b) Executive acknowledges that a remedy at law for any breach or threatened breach of the provisions of Sections 8 or 9 would be inadequate, that the Company would be irreparably injured by such breach and that, therefore, the Company shall be entitled to injunctive relief in addition to any other available rights and remedies in case of any such breach or threatened breach

 

11. Representation and Warranty.  Executive represents and warrants to the Company that he is not subject to any agreement restricting his ability to enter into this Agreement and fully carry out his duties and responsibilities hereunder.

 

  

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12. Notice.  Any notice or other communication required or permitted to be given to the Parties shall be deemed to have been given if personally delivered, if sent by nationally recognized overnight courier or if mailed by certified or registered mail, return receipt requested, first class postage prepaid, and addressed as follows:

 

If to Executive, to:

the address shown on the records of the Company.

 

If to the Company, to:

 

The LGL Group, Inc.

2525 Shader Rd.

Orlando, Florida 32804

Attention: Chairman of the Board

with a copy to:

 

Olshan Grundman Frome Rosenzweig & Wolosky LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

Attention: Robert H. Friedman, Esq.

 

13. Severability.  If any provision of this Agreement is declared void or unenforceable by a court of competent jurisdiction, all other provisions shall nonetheless remain in full force and effect.

 

14. Governing Law and Consent to Jurisdiction.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida, without regard to the conflict of laws provisions thereof.  Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of the Florida state court, or the United States District Court, Middle District of Florida, in each case sitting in Orange County, Florida, over any action or proceeding arising out of or relating to this Agreement and each
of the parties hereto hereby irrevocably agrees that all claims in respect of such action or proceeding shall be heard and determined in such Florida state or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent legally possible, the defense of an inconvenient forum to the maintenance of such action or proceeding.

 

15. Indemnification and Liability Insurance.  The Company shall indemnify Executive pursuant to the terms of that certain indemnification agreement, dated March 14, 2011, by and between the Company and Executive, and shall provide Executive with liability insurance to the extent extended to senior executives of the Company generally.

 

  

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16. Waiver.  The waiver by either Party of a breach of any provision of this Agreement shall not be, or be construed as, a waiver of any subsequent breach.  The failure of a Party to insist upon strict adherence to any provision of this Agreement on one or more occasions shall not be considered a waiver or deprive that Party of the right thereafter to insist upon strict adherence to that provision or any other provision of this Agreement.  Any waiver must be in writing.

 

17. Assignment.  This Agreement is a personal contract and Executive may not sell, transfer, assign, pledge or hypothecate his rights, interests and obligations hereunder.  Except as otherwise herein expressly provided, this Agreement shall be binding upon and shall inure to the benefit of Executive and his personal representatives and shall inure to the benefit of and be binding upon the Company and its successors and assigns, including without limitation, any corporation or other entity into which the Company is merged or that
acquires all or substantially all of the assets of the Company.

 

18. Entire Agreement.  This Agreement (together with the Exhibits attached hereto) embodies all of the representations, warranties, and agreements between the Parties relating to Executive’s employment with the Company.  Except for the Original Employment Agreement, no other representations, warranties, covenants, understandings, or agreements exist between the Parties relating to Executive’s employment.  On the Execution Date, this Agreement shall supersede the Original Employment Agreement and any other
prior agreements, written or oral, relating to Executive’s employment.  This Agreement may not be amended or modified except by a writing signed by the Parties.

 

19. Section 409A Compliance.

 

(a) The intent of the parties is that payments and benefits under this Agreement comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and guidance promulgated thereunder (collectively, “Section 409A”), and accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  If Executive notifies the Company (with specificity as to the reason therefor) that Executive believes that as a result of subsequent published guidance issued by the Internal Revenue
Service upon which taxpayers generally rely, any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Executive to incur any additional tax or interest under Section 409A and the Company concurs with such belief or the Company independently makes such determination, the Company shall, after consulting with Executive, reform such provision to try to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A, and to the extent applicable, Internal Revenue Service Notice 2010-6.  To the extent that any provision hereof is modified in order to comply with Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible without violating the provisions of Section 409A, maintain the original intent
and economic benefit to Executive and the Company and is tax neutral to the Company.

 

  

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(b) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment that are considered “nonqualified deferred compensation” under Section 409A unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination”, “termination of employment” or like terms shall mean “separation from
service”.  If Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then with regard to any payment that is considered non-qualified deferred compensation under Section 409A payable on account of a “separation from service”, such payment or benefit shall be made or provided at the date that is the earlier of (A) the expiration of the six-month period measured from the date of such “separation from service” of Executive, and (B) 30 days from the date of Executive’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 19 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or
reimbursed to Executive in a lump sum with interest at the prime rate as published in The Wall Street Journal on the first business day of the Delay Period, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

(c) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that this clause shall not be violated without regard to expenses reimbursed under any arrangement covered
by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect, and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.  Any tax gross-up payment as provided herein shall be made in any event no later than the end of the calendar year immediately following the calendar year in which Executive remits the related taxes, and any reimbursement of expenses incurred due to a tax audit or litigation shall be made no later than the end of the calendar year immediately following the calendar year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or, if no taxes are to be remitted, the end of the calendar year following the calendar year in which the audit or
litigation is completed.

 

(d) For purposes of Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “within 30 days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

  

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20. Limitation on Benefits.  Notwithstanding anything to the contrary contained in this Agreement, to the extent that any of the payments and benefits provided for under this Agreement or any other agreement or arrangement between the Company and Executive, or any arrangement or agreement with any person whose actions result in a change of ownership of effective control or a change in ownership of a substantial portion of the assets of the Company covered by Section 280G(b)(2) of the Code (collectively, the “Payments”)
constitute a “parachute payment” within the meaning of Section 280G of the Code and but for this Section 20, would be subject to the excise tax imposed by Section 4999 of the Code, then the Payments shall be payable either (a) in full or (b) as to such lesser amount that would result in no portion of such Payments being subject to the excise tax under Section 4999 of the Code; whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes, payroll taxes and the excise tax imposed by Section 4999, results in Executive’s receipt on an after-tax basis, of the greater amount of payment and benefits. Any reduction under clause (b) of the preceding sentence shall be done first by reducing any cash severance payments with the last payment reduced first; next any equity or equity derivatives that are included at full value rather
than accelerated value shall be reduced with the highest value reduced first; and next any equity or equity derivatives based on acceleration value shall be reduced with the highest value reduced first.  Notwithstanding the foregoing, to the extent that the Company and Executive agree that it would not violate Section 409A or impact the ability of the parties to reduce the amounts receivable, Executive may prescribe a different order of reduction.  Unless Executive and the Company otherwise agree in writing, any determination required under this Section 20 shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required by this Section 20, the Accountants may
make reasonable assumptions and approximations concerning applicable taxes and may rely in reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code.  The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 20.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 20.  If the limitation set forth in this Section 20 is applied to reduce an amount payable to Executive, and the Internal Revenue Service successfully asserts that, despite the reduction, Executive has nonetheless received payments that are in excess of the maximum amount that could have been paid to Executive without being subjected to any excise
tax, then, unless it would be unlawful for the Company to make such a loan or similar extension of credit to Executive, Executive may repay such excess amount to the Company as though such amount constitutes a loan to Executive made at the date of payment of such excess amount, bearing interest at 120% of the applicable federal rate (as determined under Section 1274(d) of the Code in respect of such loan), provided that if the recalculation of the higher amount was then redone based on the Internal Revenue Service position and Executive would net more if no reduction took place, such reduction shall be  cancelled and the full amount paid to Executive in a lump sum within 30 days of the Internal Revenue Service assessment becoming final, unless this proviso would negate the ability to use the reduction if this was not implemented or caused a violation of Section 409A, in which
case this proviso shall be null and void.

 

 

[Signature Page Follows]

 

  

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[Signature Page to Anderson Employment Agreement]

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered on the date above.

 

 

	  	
THE LGL GROUP, INC.

	  	  
	  	  
	  	  
	  	
By:

	

/s/ R. LaDuane Clifton

	  	
Name:

	
LaDuane Clifton

	  	
Title:

	
Chief Accounting Officer

	  	  
	
Agreed to and Accepted:

	  
	  	  
	  	  
	

/s/ Gregory P. Anderson

	  
	
GREGORY P. ANDERSON

	  

  

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