Document:

Exhibit 10.4

 

MEMBERSHIP UNIT PURCHASE AGREEMENT

 

THIS MEMBERSHIP UNIT PURCHASE AGREEMENT (“Agreement”) is entered into by and between TWIN CITIES POWER, L.L.C., TWIN CITIES ENERGY, L.L.C. and CYGNUS PARTNERS, L.L.C., all Minnesota Limited Liability Companies (the “PURCHASERS”), and M. J. TUFTE (the “SELLER”) dated the 30th day of December 2011 and for accounting purposes this Agreement shall be determined to be effective January 1st, 2012. The PURCHASERS and SELLER are jointly referred to as PARTIES (“PARTIES”).

 

WHEREAS, SELLER desires to sell, convey and issue, and PURCHASERS desire to purchase and redeem, a total of fifteen hundred forty (1,540) membership units from each of the PURCHASER companies (the “Purchased Units”) for the consideration and on the terms set forth in this Agreement. The Purchased Units are represented by Exhibits “A,” “B” and “C” attached hereto and incorporated herein by this reference.

 

WHEREAS, SELLER desires to assign, and PURCHASERS desire to accept such assignment of Financial Rights associated with the SELLER’s interests as of January 1st, 2012 and to retain all Governance Rights, pursuant to the terms and conditions of this Agreement subject to FERC approval to convey such Governance Rights to the PURCHASERS.

 

NOW, THEREFORE, in consideration of the covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the SELLER and PURCHASERS, intending to be legally bound, hereby agree as follows:

 

1.                                       UNIT PURCHASE

 

1.1           INITIAL UNIT PURCHASE

 

Subject to the terms and conditions of this Agreement, SELLER hereby agrees to sell, issue and convey the Financial Rights to the Purchased Units, and PURCHASERS agree to purchase and redeem the Financial Rights to the Purchased Units from SELLER in accordance with the terms hereof. The Purchased Units shall include all Financial Rights associated with the Purchased Units of the Company being purchased and redeemed. The SELLER shall execute Assignments Separate from Certificates for the Purchased Units represented by Exhibits “D,” “E” and “F” which are attached hereto and incorporated herein by this reference.

 

1.2           PURCHASE PRICE

 

The purchase price to be paid by PURCHASERS to SELLER for the Purchased Units shall be Six Hundred Sixty Thousand and no/l00 Dollars ($660,000.00) (the “Purchase Price”). The Purchase Price shall be paid by PURCHASERS to SELLER in cash, certified check or wire transfer as follows, namely:

 

(a)          One Hundred Thousand and no/100 Dollars ($100,000.00) shall be paid by the PURCHASERS to SELLER (the “Initial Payment”) on December 15th, 2011;

 

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(b)         Five Hundred Sixty Thousand and no/100 Dollars ($560,000.00) shall be paid by the PURCHASERS to the SELLER in accordance with the terms of the Promissory Note attached hereto, incorporated herein and marked as Exhibit “G,” and in accordance with Paragraph 1.3 below.

 

1.3           PROMISSORY NOTE SUBORDINATION

 

The Promissory Note attached hereto, incorporated herein and marked as Exhibit “G” shall be subordinated to the Promissory Note dated October 1, 2011 in the amount of Five Million Eight Hundred Twenty Nine Thousand Seventeen and no/100 Dollars ($5,829,017.00) held by HTS Capital, LLC, Robert O. Schachter and Clearwaters Capital, LLC (the “HTS Note”).

 

1.4           UNIT ISSUANCE

 

Effective upon payment to SELLER of the Initial Payment, execution of the Promissory Note and execution of the Agreement, SELLER shall convey to PURCHASERS the Financial Rights to the Purchased Units subject to Federal Energy Regulatory Commission (“FERC”) approval at which time the SELLER will convey the Governance Rights to the PURCHASERS. Said issuance shall be promptly reflected in the required records of the Company upon FERC approval.

 

1.5           FURTHER TRANSFERS

 

SELLER agrees to transfer to PURCHASERS, free and clear of all liens and encumbrances, the entire rights in SELLER Interests not transferred pursuant to this Agreement as such time as FERC approval is obtained.

 

1.6           DISTRIBUTIONS SELLER

 

SELLER shall be entitled to any and all pro rata distributions from the PURCHASER companies through December 31, 2011 as a member of the PURCHASER companies, including, but not limited to, any future distributions to members of the PURCHASER companies for liabilities incurred, including, but not limited to tax liabilities, prior to December 31, 2011.

 

2.                                       REPRESENTATIONS AND WARRANTIES OF SELLER

 

SELLER represents and warrants to PURCHASERS as follows:

 

2.1           AUTHORITY; NO CONFLICT

 

(a)          This Agreement constitutes the legal, valid, and binding obligation of SELLER, enforceable in accordance with its terms;

 

(b)         SELLER has the full legal capacity, power and authority to enter into this Agreement and perform SELLER’s obligations hereunder;

 

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(c)          Neither the execution and delivery of this Agreement nor the consummation or performance of SELLER’s obligations under this Agreement will conflict with, or result in a violation of any laws, regulations, ordinances, or any contract or agreement to which SELLER is a party or by which SELLER is bound; and

 

(d)         SELLER does not require the approval of third parties to consummate and perform SELLER’s obligations under this Agreement.

 

2.2           NO ENCUMBRANCES

 

The Purchased Units are, and shall be issued and conveyed to PURCHASERS, free and clear of all encumbrances, liens, or claims of other parties of any kind.

 

2.3           LITIGATION, ADVERSE CLAIMS AND RELATED MATTERS

 

There is no current, pending, or to the best of SELLER’s knowledge, threatened litigation proceeding, or investigation relating to the Purchased Units nor is there any judgment, order or decree which would prevent, impede, or make illegal the consummation of the transactions contemplated in this Agreement. Notwithstanding the foregoing, SELLER acknowledges the existence of the HTS Note and corresponding covenants in favor of the HTS Parties associated with the HTS Note.

 

2.4           LAWS AND REGULATIONS

 

To the best of SELLER’s knowledge, PURCHASERS have complied, and are in compliance, with all applicable laws, statutes, orders, rules, regulations and requirements promulgated by governmental or other authorities relating to the PURCHASERS business.

 

2.5           NO REPRESENTATIONS

 

SELLER acknowledges that neither PURCHASERS, nor any officer, director, representative or agent of the PURCHASERS, has made any representation, warranty, or agreement with SELLER to induce SELLER to convey the Purchased Units as herein contemplated, except as specifically set forth in this Agreement. SELLER has determined that the Purchase Price herein specified represents fair consideration for the Purchased Units and has not relied on any representation by PURCHASERS in that regard.

 

2.6           CONSULTATION

 

SELLER acknowledges that SELLER has had the opportunity to consult with and to obtain advice from such legal, tax, and other advisers as SELLER has deemed appropriate and that the Agreement to convey the Purchased Units to PURCHASERS constitutes SELLER’s free and informed decision.

 

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2.7           RESIGNATION

 

Seller shall execute a Resignation as manager/officer and Board of Governor member of each of the Purchased Companies as set forth on the attached Notice of Resignation which are attached hereto and incorporated herein and marked as Exhibits “H,” “I” and “J.”

 

2.8           INCOME, GAIN, LOSS OR DEDUCTION ALLOCATION

 

The SELLER agrees that the PURCHASERS shall not allocate any income, gain, loss or deduction to the SELLER after December 31st, 2011, except as may be necessary for any member distributions made to SELLER after December 31, 2011 for tax liabilities for any time period prior to December 30, 2011. Rather all such allocations shall be made for the account of the PURCHASERS with respect to the SELLER’S Purchased Units.

 

3.                                       REPRESENTATIONS AND WARRANTIES OF PURCHASERS

 

PURCHASERS represent and warrant to the SELLER as follows:

 

3.1           AUTHORITY; NO CONFLICT

 

(a)          This Agreement constitutes the legal, valid, and binding obligation of the PURCHASERS, enforceable in accordance with its terms.

 

(b)         PURCHASERS have the full legal capacity, power and authority to enter into this Agreement and perform PURCHASERS obligations hereunder.

 

(c)          Neither the execution and delivery of this Agreement nor the consummation or performance of PURCHASERS obligations under this Agreement will conflict with, or result in a violation of any laws, regulations, ordinances, or any contract or agreement to which PURCHASERS are a party or by which PURCHASERS are bound.

 

(d)         PURCHASERS have received all necessary approvals of it members or other third parties to consummate and perform PURCHASERS obligations under this Agreement.

 

3.2           NO REPRESENTATIONS

 

PURCHASERS acknowledge that the SELLER has made no representation, warranty, or agreement with PURCHASERS to induce PURCHASERS to purchase and redeem the Purchased Units as herein contemplated, except as specifically set forth in this Agreement. PURCHASERS have determined that the Purchase Price represents fair consideration for the Purchased Units and has not relied on any representation by SELLER in that regard.

 

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3.3           CONSULTATION

 

PURCHASERS acknowledge that they have had the opportunity to consult with and to obtain advice from such legal, tax, and other advisers as PURCHASERS HAVE deemed appropriate and that their decision to purchase the Purchased Units constitutes their free and informed decision.

 

4.                                       DEFAULT AND TERMINATION

 

4.1           DEFAULT

 

A party shall be in default under the terms of the Agreement in the event such party fails to perform or comply with any material term, condition, obligation or covenant contained herein and such default shall continue for a period of thirty (30) days after written notice from the non-defaulting party.

 

4.2           REMEDIES

 

In the event of default, the non-defaulting party may elect to terminate this Agreement or to seek enforcement of the obligations of the defaulting party hereunder, damages and/or such other rights and remedies as are available at law or in equity. In addition, a party shall have the unilateral right to terminate this Agreement immediately in the event that the other party: (a) initiates any voluntary proceeding in bankruptcy; (b) is the subject of an involuntary proceeding in bankruptcy that is not dismissed within 60 days after initiation; (c) makes any general assignment for the benefit of its creditors; (d) makes any proposal to its creditors to take or attempt to take the benefit of any legislation relating to insolvency or bankruptcy; or (e) has a receiver, trustee, or liquidator appointed for all or a substantial portion of its property.

 

5.                                       SURVIVAL AND INDEMNIFICATION

 

5.1           SURVIVAL OF REPRESENTATIONS AND WARRANTIES

 

Each of the representations and warranties of the PARTIES contained in this Agreement shall survive the closing of the transactions contemplated hereby for a period of thirty-six (36) months, after which time no claim for an incorrect statement or representation, or for other breach of any warranty under this Agreement may be brought, and no litigation with respect thereto may be commenced, and no party shall have any liability or obligation with respect thereto, unless the indemnified party gave written notice to the indemnifying party specifying with particularity the incorrect statement or representation or breach of warranty claimed on or before the expiration of such period.

 

5.2           INDEMNIFICATION BY SELLER

 

Subject to Section 5.1, SELLER covenants and agrees to indemnify, defend and hold PURCHASERS, and its officers, directors, representatives and agents, harmless from, against and in respect to any and all losses, costs, expenses (including, without limitation, reasonable attorneys’ fees and disbursements of counsel) liabilities, damages, fines,

 

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penalties, charges, assessments, judgments, settlements, claims, causes of action and other obligations of any nature whatsoever that any of them may at any time, directly or indirectly, suffer, sustain, incur or become subject to, arising out of, based upon or resulting from or on account of each or all of the following:

 

(a)          The breach or falsity of any representation or warranty made by SELLER in this Agreement; or

 

(b)         The breach of any covenant or agreement made by SELLER in this Agreement, including the documents, instruments and agreements to be executed and/or delivered by SELLER pursuant hereto or thereto.

 

5.3           INDEMNIFICATION BY PURCHASERS

 

Subject to Section 5.1, PURCHASERS covenant and agree to indemnify, defend and hold SELLER harmless from, against and in respect of any and all losses, costs, expenses (including, without limitation, reasonable attorneys’ fees and disbursements of counsel) liabilities, damages, fines, penalties, charges, assessments, judgments, settlements, claims, causes of action and other obligations of any nature whatsoever that any of them may at any time, directly or indirectly, suffer, sustain, incur or become subject to, arising out of, based upon or resulting from or on account of each or all of the following:

 

(a)          The breach or falsity of any representation or warranty made by PURCHASERS in this Agreement; or

 

(b)         The breach of any covenant or agreement made by PURCHASERS in this Agreement, including the documents, instrument and agreements to be executed and/or delivered by PURCHASERS pursuant hereto or thereto.

 

6.                                       GENERAL PROVISIONS

 

6.1           EXPENSES

 

Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement.

 

6.2           FURTHER ASSURANCES

 

The PARTIES agree (a) to execute and deliver to each other such other documents, and (b) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement.

 

6.3           ENTIRE AGREEMENT AND MODIFICATION

 

This Agreement constitutes the entire Agreement by and between the PARTIES, and supersedes any other verbal or written representations, promises, agreements or understandings between the PARTIES and their respective agents or representatives. No

 

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representations, warranties, undertakings, or promises, whether written or oral, expressed or implied, have been made by SELLER or PURCHASERS, unless expressly stated in this Agreement or unless agreed upon in writing by the PARTIES hereto. This Agreement may be amended or modified only by a writing signed by the PARTIES.

 

6.4           TIME OF ESSENCE

 

Time is of the essence with respect to all obligations of SELLER and PURCHASERS under this Agreement. If any date designated in this Agreement falls on a Saturday, Sunday or legal holiday, such date shall automatically be extended until the next following business day.

 

6.5           CUMULATIVE RIGHTS AND WAIVER

 

The rights and remedies of the PARTIES to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege.

 

6.6           NOTICES

 

Under this Agreement if any party is required to give notice to another party, such notice shall be deemed given if delivered by a recognized overnight delivery service, or mailed first class, postage prepaid, and addressed as follows (or as subsequently noticed to the other party):

 

	
If to SELLER:
    
	
 
    
	
M. J. TUFTE
    
	
1216 Cedar Lake Road
    
	
Minneapolis, Minnesota 55416
    
	
 
    
	
If to PURCHASERS:
    
	
 
    
	
TWIN CITIES POWER, L.L.C.
    
	
16233 Kenyon Avenue, Suite 210
    
	
Lakeville, Minnesota 55044
    
	
 
    
	
TWIN CITIES ENERGY, L.L.C.
    
	
16233 Kenyon Avenue, Suite 210
    
	
Lakeville, Minnesota 55044
    
	
 
    
	
CYGNUS PARTNERS, L.L.C.
    
	
16233 Kenyon Avenue, Suite 210
    
	
Lakeville, Minnesota   55044.
    

 

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Attn: Tim Krieger, President

 

Notices delivered by overnight delivery shall be deemed received upon the date of deposit with the delivery service, if such date is a business day. Otherwise, the effective date for such notice shall be the first business day following deposit with the delivery service. Notices sent by mail shall be deemed received on the earlier of actual receipt or three business days after deposit in the U.S. mail as provided above.

 

6.7           APPLICABLE LAW

 

This Agreement shall be construed and enforced in any State or Federal court in Minnesota in accordance with the laws of the State of Minnesota, irrespective of the domiciles of the PARTIES, the state in which the Agreement was executed, or any other factors affecting choice of law. If any portion of this Agreement is unenforceable under Minnesota law, the balance of the Agreement shall remain in full force and effect if enforcement of the remainder of the Agreement is reasonably practicable.

 

6.8           BINDING EFFECT; ASSIGNMENT RESTRICTED

 

This Agreement shall be binding upon and inure to the benefit of the PARTIES hereto and their respective successors, permitted assigns, and representatives. Neither party shall assign, transfer or convey any interest in this Agreement or, nor agree to do so, without the prior written consent of the other party.

 

6.9           INTERPRETATION

 

The rule of strict construction against the drafting party shall not apply to this Agreement. SELLER and PURCHASERS acknowledge that this Agreement is the product of all of both of their respective efforts, that it expresses their agreement, and that it should not be interpreted in favor of or against either party merely because of their efforts in preparing it. Therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. The invalidity of any or the provisions of this Agreement shall not affect or impair the validity or enforceability of the remainder or this Agreement.

 

6.10         COUNTERPARTS

 

This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument.

 

IN WITNESS WHEREOF, the PARTIES have executed and delivered this Agreement effective as of the date first written above.

 

	
SELLER:
    	
 
    	
PURCHASERS:
    
	
 
    	
 
    	
 
    
	
/s/ Michael Tufte
    	
 
    	
TWIN   CITIES POWER, L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Timothy S. Krieger
    

 

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By:   TIM KRIEGER
    
	
 
    	
Its:   President/Chief Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TWIN   CITIES ENERGY, L.L.C.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Timothy S. Krieger
    
	
 
    	
By:   Tim Krieger
    
	
 
    	
Its:   President/Chief Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CYGNUS   PARTNERS, L.L.C.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Timothy S. Krieger
    
	
 
    	
By:   TIM KRIEGER
    
	
 
    	
Its:   President/Chief Manager
    

 

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January 6, 2012

 

Mr. Michael Tufte

Twin Cities Power Holdings, LLC

16233 Kenyon Avenue

Lakeville, MN 55044

 

Dear Michael:

 

This letter agreement clarifies and amends the Membership Unit Purchase Agreement, dated December 30, 2011, among you and the Purchasers named therein (the “Agreement”).

 

The parties recognize that, as of December 31, 2011, a reorganization took place whereby the Purchasers became subsidiaries of Twin Cities Power Holdings, LLC (“TCPH”) and your membership interests in the Purchasers were converted into a membership interest in TCPH.

 

Accordingly, we agree that references in the Agreement to your membership interests, Financial Rights and Governance Rights in the Purchasers shall be deemed to be references to your membership interest, Financial Rights and Governance Rights, respectively, in TCPH and references to the Purchasers shall be deemed to be references to TCPH.

 

TCPH shall replace the Purchasers as a party to the Agreement and all the obligations of the Purchasers are hereby assumed by TCPH.  TCPH shall issue a replacement promissory note to replace the note issued pursuant to Section 1.2(b) of the Agreement.

 

The Assignments you executed shall be collectively deemed to be an assignment of your Financial Rights in TCPH.

 

If TCPH determines that FERC approval is not necessary for the transfer and assignment of your Governance Rights, your Governance Rights shall be automatically assigned to TCPH without any further action on your part.  TCPH will notify you of such transfer and assignment.  If FERC approval is required, your Governance Rights shall be automatically assigned to TCPH without any further action on your part once TCPH receives notice of such approval.

 

In all other respects, the Agreement shall remain in full force and effect.

 

 

If the foregoing accurately sets forth our mutual understanding and agreement, please execute this letter in the space provided below.

 

	
Twin Cities Power Holdings, LLC
    	
 
    	
Twin   Cities Power, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By
    	
/s/   Timothy Krieger
    	
 
    	
By
    	
/s/   Timothy Krieger
    
	
 
    	
Tim   Krieger, President
    	
 
    	
 
    	
Tim   Krieger, President
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Twin Cities Energy, LLC
    	
 
    	
Cygnus   Partners, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By
    	
/s/   Keith Sperbeck
    	
 
    	
By
    	
/s/   Timothy Krieger
    
	
 
    	
Keith   Sperbeck, President
    	
 
    	
 
    	
Tim   Krieger, President
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Agreed to and Accepted:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
/s/ Michael J. Tufte
    	
 
    	
 
    	
 
    
	
Michael J. TufteExhibit 10.5

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of February       , 2012 between Twin Cities Power Holdings, LLC, a Minnesota limited liability company (the “Company”), and                   (“Indemnitee”).

 

WITNESSETH THAT:

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining governors and officers is detrimental to the best interests of the Company’s members and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, governors to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 

WHEREAS, this Agreement is intended to clarify Indemnitee’s entitlement to the maximum indemnity afforded governors and officers under the Minnesota Limited Liability Company Act (“MLLCA”) and is a supplement to and in furtherance of the provision calling for indemnification of governors and officers contained in the By-laws or Member Control Agreement  (collectively, the  “Charter Documents”) of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

 

WHEREAS, Indemnitee is a governors and/or officer of Twin Cities Power Holdings, LLC;

 

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a governor and/or officer from and after the date hereof, the parties hereto agree as follows:

 

1.             Indemnity of Indemnitee.  The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time.  In furtherance of the foregoing indemnification, and without limiting the generality thereof:

 

(a)           Proceedings Other Than Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of his or her Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company.  Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee, or on his or her behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

 

 

(b)           Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his or her Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company.  Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the a Minnesota court of competent jurisdiction shall determine that such indemnification may be made.

 

(c)           Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

2.             Additional Indemnity.  In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf if, by reason of his or her Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.  The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.

 

3.             Contribution.

 

(a)           Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee.  The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such

 

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action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

 

(b)           Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, governorsor employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, governors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the Law may require to be considered.  The relative fault of the Company and all officers, governors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

 

(c)           The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, governors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

 

(d)           To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its governors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

4.             Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness, or is made (or asked to) respond to discovery requests, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

 

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5.             Advancement of Expenses.  Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.  Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

 

6.             Procedures and Presumptions for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the MLLCA and the public policy of the State of Minnesota.  Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

 

(a)           To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Governors in writing that Indemnitee has requested indemnification.  Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

 

(b)           Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the board:  (1) by a majority vote of the disinterested governors, even though less than a quorum, (2) by a committee of disinterested governors designated by a majority vote of the disinterested governors, even though less than a quorum, (3) if there are no disinterested governors or if the disinterested governors so direct, by independent legal counsel in a written opinion to the Board of Governors, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board of Governors, by the members of the Company.  For purposes hereof, disinterested governors are those members of the board of governors of the Company who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee.

 

(c)           If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c).  The Independent Counsel shall be selected by the Board of Governors and Indemnitee shall be promptly notified of such selection.  Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the

 

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requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction of the State of Minnesota or other court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof.  The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.

 

(d)           In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Neither the failure of the Company (including by its governors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its governors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(e)           Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise (as hereinafter defined) in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge and/or actions, or failure to act, of any governors, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(f)            If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the

 

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requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the members pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board of Governors or the Disinterested Governors, if appropriate, resolve to submit such determination to the members for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of members is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

 

(g)           Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any Independent Counsel, member of the Board of Governors or member of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement.  Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(h)           The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(i)            The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal

 

6

 

Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

 

7.             Remedies of Indemnitee.

 

(a)           In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Minnesota, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification.  Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a).  The Company shall not oppose Indemnitee’s right to seek any such adjudication.

 

(b)           In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).

 

(c)           If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)           In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of Indemnitee’s rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on Indemnitee’s behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by Indemnitee in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

 

(e)           The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.  The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall within ten (10) days after receipt by the Company of a written request therefore advance, to the extent not

 

7

 

prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

 

(f)            Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

 

8.             Non-Exclusivity;  Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.

 

(a)           The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter Documents, any agreement, a vote of members, a resolution of governors or otherwise, of the Company.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in the MLLCA, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Member Control Agreement, By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)           To the extent that the Company maintains an insurance policy or policies providing liability insurance for governors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any governor, officer, employee, agent or fiduciary under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

9.             Exception to Right of Indemnification.  Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

 

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(a)           for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing shall not affect the rights of Indemnitee or the Sponsor Indemnitors set forth in Section 8(c) above; or

 

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

 

(c)           except with respect to a Proceeding relating to enforcement of, or to indemnity under this Agreement, or under the Charter Documents, the MLLCA or any insurance policy relating to Indemnitee’s Corporate Status, in connection with any Proceeding or any part of any Proceeding initiated by Indemnitee, including any Proceeding or any part of any Proceeding initiated by Indemnitee against the Company or its governors, officers, employees or other indemnitees, unless (i) the Board of Governors of the Company authorized the Proceeding or any part of any Proceeding prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

10.           Duration of Agreement.  The agreements and obligations of the Company contained herein shall apply to the any Proceeding (or any proceeding under Section 7 hereof) commenced after the date hereof and shall continue so long as Indemnitee could be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement and regardless of any subsequent amendment to the Charter Documents, the MLLCA or any other agreement relating to indemnification of Indemnitee.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company, assigns, spouses, heirs, executors and personal and legal representatives.

 

11.           Security.  To the extent requested by Indemnitee and approved by the Board of Governors of the Company, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

 

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12.           Enforcement.

 

(a)           The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.

 

(b)           This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

13.           Definitions.  For purposes of this Agreement:

 

(a)           “Corporate Status” describes the status of a person who is or was a governor of the Company in his or her official capacity as such or as agent of fiduciary of the Company related to such status as a governor or officer, or as a governor, agent or fiduciary of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

 

(b)           “Disinterested Governor” means a governor of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(c)           “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a governor, officer, employee, agent or fiduciary.

 

(d)           “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, fees of witnesses retained for the benefit of Indemnitee, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent.

 

(e)           “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party, other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding

 

10

 

the foregoing, the term “Independent 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 Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(f)            “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or governor of the Company, by reason of any action taken by Indemnitee or of any inaction on Indemnitee’s part while acting as an officer or governor of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a governor, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce Indemnitee’s rights under this Agreement.

 

14.           Severability.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.  Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws and to ensure that indemnification rights provided by the Sponsor are secondary to the primary obligation of the Company to indemnify Indemnitee as provided in this Agreement.  In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

 

15.           Modification and Waiver.  No supplement, modification, termination 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.

 

16.           Notice By Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder.  The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

 

17.           Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given:  (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if

 

11

 

sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent:

 

(a)           To Indemnitee at the address set forth below Indemnitee signature hereto.

 

(b)                                 To the Company at:

 

Twin Cities Power Holdings, LLC

16233 Kenyon Ave

Suite 210

Lakeville, MN 55044

 

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

 

18.           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.  This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

19.           Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

20.           Governing Law and Consent to Jurisdiction.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Minnesota, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the state courts of Minnesota (the “Minnesota Court”) and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Minnesota Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Minnesota Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Minnesota Court has been brought in an improper or inconvenient forum.

 

SIGNATURE PAGE TO FOLLOW

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

 

 

COMPANY

 

 

	
By:
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    

 

INDEMNITEE

 

 

	
 
    	
 
    
	
Name:

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