Exhibit 10.1
EXHIBIT B
INDEMNIFICATION
AGREEMENT
This Agreement, made and entered
into (“Agreement”), by and between Lydall, Inc., a
Delaware corporation (“Company”), and David Freeman
(“Indemnitee”):
WHEREAS, highly competent persons
are becoming more reluctant to serve publicly-held corporations as
directors or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising
out of their service to and activities on behalf of the
corporation; and
WHEREAS, the current
impracticability of obtaining adequate insurance and the
uncertainties relating to indemnification have increased the
difficulty of attracting and retaining such persons;
WHEREAS, the Board of Directors of
the Company has determined that the inability to attract and retain
such persons is detrimental to the best interests of the
Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of such
protection in the future; and
WHEREAS, it is reasonable, prudent
and necessary for the Company contractually to obligate itself to
indemnify such persons 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; and
WHEREAS, Indemnitee is willing to
serve, continue to serve and to take on additional service for or
on behalf of the Company on the condition that he be so
indemnified;
NOW, THEREFORE, in consideration of
the premises and the covenants contained herein, the Company and
Indemnitee do hereby covenant and agree as follows:
Section 1. Services by
Indemnitee. Indemnitee agrees to serve (as a director, officer,
employee, agent of the Company) (at the request of the Company, as
a director, officer, employee, agent, fiduciary of another
corporation, partnership, joint venture, trust employee benefit
plan or other enterprise. Indemnitee may at any time and for any
reason resign from such position (subject to any other contractual
obligation or any obligation imposed by operation of law), in which
event the Company shall have no obligation under this Agreement to
continue Indemnitee in such position.
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Section 2. Indemnification -
General. The Company shall indemnify, and advance Expenses (as
hereinafter defined) to, Indemnitee (a) as provided in this
Agreement and (b) to the fullest extent permitted by
applicable law in effect on the date hereof and as amended from
time to time. The rights of Indemnitee provided under the preceding
sentence shall include, but shall not be limited to, the rights set
forth in the other Sections of this Agreement.
Section 3. 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 3 if, by reason of his Corporate Status (as
hereinafter defined), he is, or is threatened to be made, a party
to any threatened, pending, or completed Proceeding (as hereinafter
defined), other than a Proceeding by or in the right of the
Company. Pursuant to this Section 3, Indemnitee shall be
indemnified against all expenses, judgements, penalties, fines, and
amounts paid in settlement actually and reasonably incurred by him
or on his behalf in connection with such Proceeding or any claim,
issue or matter therein, if he acted in good faith and in a manner
be 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 his conduct was
unlawful.
Section 4. Proceedings by or
in the Right of the Company. Indemnitee shall be entitled to
the rights of indemnification provided in this Section 4 if,
by reason of his Corporate Status, he is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding
brought by or in the right of the Company to procure a judgment in
its favor. Pursuant to this Section, Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred
by him or on his behalf in connection with such Proceeding if he
acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company; provided,
however, that 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 Court of Chancery of the State of Delaware, or the court in
which such Proceeding shall have been brought or is pending, shall
determine that such indemnification may be made.
Section 5. 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 Corporate Status, a
party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified against all Expenses actually
and reasonably incurred by him or on his 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 him or on his 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.
Section 6. Indemnification
for Expenses of a Witness. Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee is, by reason of
his Corporate Status, a witness in any Proceeding to which
Indemnitee is not a party, he shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf
in connection therewith.
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Section 7. Advancement of
Expenses. The Company shall advance all reasonable Expenses
incurred by or on behalf of Indemnitee in connection with any
Proceeding within ten 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 an 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.
Section 8. Procedures for
Determination of Entitlement to Indemnification.
(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 Directors in writing that
Indemnitee has requested indemnification.
(b) Upon written request by
Indemnitee for indemnification pursuant to the first sentence of
Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee’s entitlement
thereto shall be made in the specific case; (i)if a Change in
Control (as hereinafter defined) shall be made in the Independent
Counsel (as hereinafter defined) in a written opinion to the Board
of Directors, a copy of which shall be delivered to Indemnitee; or
(ii) if a Change of Control shall not have occurred,
(A) by the Board of Directors by a majority vote of a quorum
consisting of Disinterested Directors (as hereinafter defined), or
(B) if a quorum of the Board of Directors consisting of
Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent
Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee or (C) if so directed
by the Board of Directors, by the stockholders of the Company; and,
if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten
(10) days after such determination. 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 costs or expenses (including
attorneys’ fees and disbursements) incurred by Indemnitee in
so cooperating with this 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.
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(c) In the event the determination
of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 8(b) hereof, the Independent
Counsel shall be selected as provided in this Section 8(c). If
a Change of Control shall not have occurred, the Independent
Counsel shall be selected by the Board of Directors, and the
Company shall give written notice to Indemnitee advising him of the
identity of the Independent Counsel so selected. If a Change of
Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board of Directors, in which event the
preceding sentence shall apply), and Indemnitee shall give written
notice to the Company advising it of the identity of the
Independent Counsel so selected. In either event, Indemnitee or the
Company, as the case may be, may, within 10 days after such written
notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the case may be, 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 requirements of “Independent
Counsel” as defined in Section 17 of this Agreement, and
the objection shall set forth with particularity the factual basis
of such assertion. If such written objection is so made and
substantiated, the Independent Counsel so 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 8(a) hereof, no
Independent Counsel shall have been selected and not objected to,
either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction
for resolution of any objection which shall have been made the
Company or Indemnitee to the other’s selection of Independent
Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court of 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 appreciated shall act as
Independent Counsel under Section 8(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 8(b) hereof, and the Company shall
pay all reasonable fees and expenses incident to the procedures of
this Section 8(c), regardless of the manner in which such
Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to
Section 10(a)(iii) of this Agreement, Independent Counsel
shall be discharged and relieved of any further responsibility in
such capacity (subject to the applicable standards of professional
conduct then prevailing).
Section 9. Presumptions and
Effect of Certain Proceedings .
(a) If a Change of Control shall
have occurred, 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 if Indemnitee has
submitted a request for indemnification in accordance with
Section 8(a) of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with the
making by any person, persons or entity of any determination
contrary to that presumption.
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(b) The termination of any
Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement of 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 he
reasonably believed to be in or not opposed to the best interests
of the Company or, with respect to any criminal Proceeding, that
Indemnitee had reasonable cause to believe that his conduct was
unlawful.
Section 10. Remedies of
Indemnitee .
(a) In the event that (i) a
determination is made pursuant to Section 8 of this Agreement
that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made
pursuant to Section 7 of this Agreement, (iii) no
determination of entitlement to indemnification shall have been
made pursuant to Section 8(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
Section 5 or 6 of 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 10
(10) days after a determination has been made that Indemnitee
is entitled to indemnification, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or
in a
