Exhibit 10.1
INDEMNIFICATION
AGREEMENT
This Agreement, made and entered into
effective as of the ____day of ______, 200_
(“Agreement”), by and between American Community
Newspapers Inc., a Delaware corporation
(“Corporation”), and ____________________
(“Indemnitee”):
WHEREAS, highly competent persons
recently have become more reluctant to serve as directors,
officers, or in other capacities of publicly held corporations and
other corporations that have non-employee investors among their
stockholders or conduct operations in regulated industries unless
they are provided with better protection from the risk of claims
and actions against them arising out of their services to and
activities on behalf of such corporation; and
WHEREAS, the recent adoption of The
Sarbanes-Oxley Act of 2002 and other laws, rules and regulations
being promulgated have increased the potential for liability of
officers and directors; and
WHEREAS, the Corporation has
determined that the inability to attract and retain such persons is
detrimental to the best interests of the Corporation’s
stockholders and that such persons should be assured that they will
have better protection in the future; and
WHEREAS, it is reasonable, prudent and
necessary for the Corporation to obligate itself contractually to
indemnify such persons to the fullest extent permitted by
applicable law so that such persons will serve or continue to serve
the Corporation free from undue concern that they will not be
adequately indemnified; and
WHEREAS, this Agreement is a
supplement to and in furtherance of Article VII of the By-laws of
the Corporation, and Article EIGHTH of the Amended and Restated
Certificate of Incorporation of the Corporation, and any
resolutions adopted pursuant thereto and shall neither be deemed to
be a substitute therefor nor diminish or abrogate any rights of
Indemnitee thereunder; and
WHEREAS, Indemnitee is willing to
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 according to the terms of this Agreement;
NOW, THEREFORE, in consideration of
the promises and the covenants contained herein, the Corporation
and Indemnitee do hereby covenant and agree as follows:
1. Definitions . For purposes of this Agreement:
1.1 “Change in Control”
means a change in control of the Corporation occurring after the
date hereof of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934, as amended
(“Act”), whether or not the Corporation is then subject
to such reporting requirement, provided, however, that, without
limitation, such a Change in Control shall be deemed to have
occurred if after the date hereof (i) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Act), other
than a person who is an officer or director of the Corporation on
_______ ___, 200_ (and any of such person’s affiliates), is
or becomes “beneficial owner” (as defined in Rule 13d-3
under the Act) directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power
of the then outstanding securities of the Corporation without the
prior approval of at least two-thirds of the members of the Board
in office immediately prior to such person attaining such
percentage interest; (ii) the Corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board of
Directors (“Board”) in office immediately prior to such
transaction or event constitute less than a majority of the Board
thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Board (including for this purpose any new director whose election
or nomination for election by the Corporation’s stockholders
was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period)
cease for any reason to constitute at least a majority of the
Board.
1.2 “Corporate Status”
means the status of a person who is or was a director, officer,
employee, agent or fiduciary of the Corporation or of any
subsidiary of the Corporation or any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of
the Corporation.
1.3 “Disinterested
Director” means a director of the Corporation who is not and
was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
1.4 “Expenses” means all
reasonable attorneys’ fees, retainers, court costs (including
trial and appeals), transcript costs, fees of experts, witness
fees, 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, appealing, preparing to appeal, investigating, or being
or preparing to be a witness in a Proceeding. Should any payments
by the Corporation to Indemnitee under this Agreement be determined
to be subject to any federal, state or local income tax,
“Expenses” shall also include such amounts as are
necessary to place Indemnitee in the same after-tax position he
would have been in had no such tax been determined to apply to
those payments.
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1.5 “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
Corporation or Indemnitee in any other matter material to either
such party, or (ii) any other party to the Proceeding giving rise
to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term “Independent Counsel” does 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 rights under this Agreement.
Except as provided in the first sentence of Section 9.3 hereof,
Independent Counsel shall be selected by (a) the Disinterested
Directors or (b) a committee of the Board consisting of two or more
Disinterested Directors or if (a) and (b) above are not possible,
then by a majority of the full Board.
1.6 “Proceeding” means any
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding,
whether civil, criminal, administrative or investigative, except
one initiated by an Indemnitee pursuant to Section 11 of this
Agreement to enforce his rights under this Agreement.
2. Services by Indemnitee .
Indemnitee agrees to continue to serve
as a director, officer or employee of the Corporation or one or
more of its subsidiaries. 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).
3. Indemnification - General .
The Corporation shall indemnify, and
advance Expenses to, Indemnitee as provided in this Agreement to
the fullest extent permitted by applicable law in effect on the
date hereof and to such greater extent as applicable law may
thereafter from time to time permit. The rights of Indemnitee
provided under the preceding sentence shall include, but not be
limited to, the rights set forth in the other Sections of this
Agreement.
4. Proceedings Other Than Proceedings by or in the
Right of the Corporation .
Indemnitee shall be entitled to the
rights of indemnification provided in this Section if, by reason of
his Corporate Status, he is, was or is threatened to be made, a
party to any threatened, pending or completed Proceeding, other
than a Proceeding by or in the right of the Corporation. Pursuant
to this Section, Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by him or on his behalf in connection with
any such Proceeding or any claim, issue or matter therein, 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 Corporation, and, with
respect to any criminal Proceeding, had no reasonable cause to
believe his conduct was unlawful.
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5. Proceedings by or in the Right of the
Corporation .
Indemnitee shall be entitled to the
rights of indemnification provided in this Section if, by reason of
his Corporate Status, he is, was or is threatened to be made, a
party to any threatened, pending or completed Proceeding brought by
or in the right of the Corporation to procure a judgment in its
favor. Pursuant to this Section, Indemnitee shall be indemnified
against Expenses and amounts paid in settlement (such settlement
amounts not to exceed, in the judgment of the Board, the estimated
expense of litigating the Proceeding to conclusion) actually and
reasonably incurred by him or on his behalf in connection with any
such Proceeding if he or she acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the Corporation. Notwithstanding the foregoing, no
indemnification against such Expenses or amounts paid in settlement
shall be made in respect of any claim, issue or matter in any such
Proceeding as to which Indemnitee has been adjudged to be liable to
the Corporation if applicable law prohibits such indemnification
unless the court in which such Proceeding shall have been brought,
was brought or is pending, shall determine that indemnification
against Expenses or amounts paid in settlement may nevertheless be
made by the Corporation.
6. Indemnification for Expenses of 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 or she shall be indemnified
against all Expenses (and, when eligible hereunder, amounts paid in
settlement) 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 Corporation shall indemnify
Indemnitee against all Expenses (and, when eligible hereunder,
amounts paid in settlement) 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, the term
“successful, on the merits or otherwise,” includes, but
is not limited to, (i) any termination, withdrawal, or dismissal
(with or without prejudice) of any Proceeding against the
Indemnitee without any express finding of liability or guilt
against him, and (ii) the expiration of 90 days after the making of
any claim or threat of a Proceeding without the institution of the
same and without any promise or payment made to induce a
settlement.
7. Indemnification for Expenses as 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, he shall be
indemnified against all Expenses actually and reasonably incurred
by him on his behalf in connection therewith.
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8. Advancement of Expenses and Other
Amounts .
The Corporation shall advance all
Expenses, judgments, penalties, fines and, when eligible hereunder,
amounts paid in settlement, incurred by or on behalf of Indemnitee
in connection with any Proceeding within thirty (30) days after the
receipt by the Corporation 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, judgments, penalties, fines and amounts paid in
settlement, incurred by Indemnitee and shall include or be preceded
or accompanied by an agreement by or on behalf of Indemnitee to
repay any Expenses, judgments, penalties, fines and amounts paid in
settlement advanced if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified against such Expenses,
judgments, penalties, fines and, when eligible hereunder, amounts
paid in settlement. Advances shall be unsecured and interest free.
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9. Procedure for Determination of Entitlement to
Indemnification .
9.1 To obtain indemnification under
this Agreement in connection with any Proceeding, and for the
duration thereof, Indemnitee shall submit to the Corporation 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
Corporation shall, promptly upon receipt of any such request for
indemnification, advise the Board in writing that Indemnitee has
requested indemnification.
9.2 Upon written request by Indemnitee
for indemnification pursuant to Section 9.1 hereof, a
determination, if required by applicable law, with respect to
Indemnitee’s entitlement thereto shall be made in such case:
(i) if a Change in Control shall have occurred, by Independent
Counsel (unless Indemnitee shall request that such determination be
made by the Board or the stockholders, in which case in the manner
provided for in clauses (ii) or (iii) of this Section 9.2) in a
written opinion to the Board, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred,
(A) by the Board by a majority vote of a quorum consisting of
Disinterested Directors, or (B) if a quorum of the Board consisting
of Disinterested Directors is not obtainable, by a majority of a
committee of the Board consisting of two or more Disinterested
Directors, or (C) by Independent Counsel in a written opinion to
the Board, a copy of which shall be delivered to Indemnitee, or (D)
by the stockholders of the Corporation, by a majority vote of a
quorum consisting of stockholders who are not parties to the
proceeding, or if no such quorum is obtainable, by a majority vote
of stockholders who are not parties to such proceeding; or (iii) as
provided in Section 10.2 of this Agreement. 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
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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 the person, persons or entity
making such determination shall be borne by the Corporation
(irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Corporation hereby
indemnifies and agrees to hold Indemnitee harmless
therefrom.
9.3 If a Change of Control shall have
occurred, Independent Counsel shall be selected by Indemnitee
(unless Indemnitee shall request that such selection be made by the
Board), and Indemnitee shall give written notice to the Corporation
advising it of the identity of Independent Counsel so selected. In
either event, Indemnitee or the Corporation, as the case may be,
may, within seven days after such written notice of selection shall
have been given, deliver to the Corporation or to Indemnitee, as
the case may be, a written objection to such selection. Such
objection may be asserted only on the ground that Independent
Counsel so selected does not meet the requirements of
“Independent Counsel” as defined in Section 1 of this
Agreement, and the objection shall set forth with
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