Exhibit 10.1
[FORM
OF]
INDEMNIFICATION
AGREEMENT
THIS
INDEMNIFICATION AGREEMENT (this “ Agreement ”)
is made and entered into as of
,
by and between Farmer Bros. Co., a Delaware corporation (the
“ Company ”), and
(“ Indemnitee ”).
RECITALS
WHEREAS, highly
competent persons have become more reluctant to serve publicly-held
corporations as directors, officers 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;
WHEREAS, the Board
of Directors of the Company (the “ Board ”) has
determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing
basis, at its sole expense, liability insurance to protect persons
serving the Company and its subsidiaries from certain liabilities.
Although the furnishing of such insurance has been a customary and
widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given
current market conditions and trends, such insurance may be
available to it in the future only at higher premiums and with more
exclusions. At the same time, directors, officers and other persons
in service to corporations or business enterprises are being
increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would
have been brought only against the Company or business enterprise
itself. The Certificate of Incorporation (the “
Charter ”) and the Bylaws of the Company require
indemnification of the officers and directors of the Company.
Indemnitee may also be entitled to indemnification pursuant to
applicable provisions of the Delaware General Corporation Law (the
“ DGCL ”). The Charter, the Bylaws and the DGCL
expressly provide that the indemnification provisions set forth
therein are not exclusive, and thereby contemplate that contracts
may be entered into between the Company and members of the board of
directors, officers and other persons with respect to
indemnification;
WHEREAS, the
uncertainties relating to such insurance and to indemnification
have increased the difficulty of attracting and retaining such
persons;
WHEREAS, the Board
has determined that the increased difficulty in attracting and
retaining 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;
WHEREAS, it is
reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify, and to advance expenses on behalf of,
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;
WHEREAS, this
Agreement is a supplement to and in furtherance of the Charter, the
Bylaws of the Company and any resolutions adopted pursuant thereto,
and shall not be deemed a substitute therefor, nor diminish or
abrogate any rights of Indemnitee thereunder; and
WHEREAS,
Indemnitee does not regard the protection available under the
Company’s Charter, Bylaws and insurance as adequate in the
present circumstances, and may not be willing to serve as an
officer or director without adequate protection, and the Company
desires Indemnitee to serve in such capacity. 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 or she be so
indemnified;
NOW, THEREFORE, in
consideration of the premises and the covenants contained herein
and Indemnitee’s agreement to serve as a director or officer
after the date hereof, the Company and Indemnitee do hereby
covenant and agree as follows:
1.
Definitions . As used in this Agreement:
(a)
References to “ agent ” shall mean any person
who is or was a director, officer, or employee of the Company or a
Subsidiary of the Company or other person authorized by the Company
to act for the Company, to include such person serving in such
capacity as a director, officer, employee, fiduciary or other
official of another corporation, partnership, limited liability
company, joint venture, trust or other enterprise at the request
of, for the convenience of, or to represent the interests of the
Company or a Subsidiary of the Company.
(b)
The terms “ Beneficial Owner ” and “
Beneficial Ownership ” shall have the meanings set
forth in Rule 13d-3 promulgated under the Exchange Act as in effect
on the date hereof.
(c)
A “ Change in Control ” shall be deemed to occur
upon the earliest to occur after the date of this Agreement of any
of the following events:
(i)
Acquisition of Stock by Third Party . Any Person is or
becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing fifteen percent (15%) or more of the
combined voting power of the Company’s then outstanding
securities entitled to vote generally in the election of directors,
unless (1) the change in the relative Beneficial Ownership of the
Company’s securities by any Person results solely from a
reduction in the aggregate number of outstanding shares of
securities entitled to vote generally in the election of directors,
or (2) such acquisition was approved in advance by the Continuing
Directors and such acquisition would not constitute a Change in
Control under part (iii) of this definition;
(ii)
Change in Board of Directors . Individuals who, as of the
date hereof, constitute the Board, and any new director whose
election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two
thirds of the directors then still in office who were directors on
the date hereof or whose election for nomination for election was
previously so approved (collectively, the “ Continuing
Directors ”), cease for any reason to constitute at least
a majority of the members of the Board;
(iii)
Corporate Transactions . The effective date of a
reorganization, merger or consolidation of the Company (a “
Business Combination ”), in each case, unless,
following such Business Combination: (1) all or substantially all
of the individuals and entities who were the Beneficial Owners of
securities entitled to vote generally in the election of directors
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 51% of the combined voting power
of the then outstanding securities of the Company entitled to vote
generally in the election of directors resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or
through one or more Subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination, of the securities entitled to vote generally in the
election of directors; (2) no Person (excluding any corporation
resulting from such Business Combination) is the Beneficial Owner,
directly or indirectly, of 15% or more of the combined voting power
of the then outstanding securities entitled to vote generally in
the election of directors of such corporation except to the extent
that such ownership existed prior to the Business Combination; and
(3) at least a majority of the Board of Directors of the
corporation resulting from such Business Combination were
Continuing Directors at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing
for such Business Combination;
(iv)
Liquidation . The approval by the stockholders of the
Company of a complete liquidation of the Company or an agreement or
series of agreements for the sale or disposition by the Company of
all or substantially all of the Company’s assets (or, if such
approval is not required, the decision by the Board to proceed with
such a liquidation, sale, or disposition in one transaction or a
series of related transactions); or
(v)
Other Events . There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or a response to any
similar item on any similar schedule or form) promulgated under the
Exchange Act, whether or not the Company is then subject to such
reporting requirement.
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(d)
“ Corporate Status ” describes the status of a
person who is or was a director, officer, trustee, general partner,
managing member, fiduciary, employee or agent of the Company or of
any other Enterprise which such person is or was serving at the
request of the Company.
(e)
“ Delaware Court ” shall mean the Court of
Chancery of the State of Delaware.
(f)
“ Disinterested Director ” shall mean a director
of the Company who is not and was not a party to the Proceeding in
respect of which indemnification is sought by Indemnitee.
(g)
“ Enterprise ” shall mean the Company and any
other corporation, constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
to which the Company (or any of its wholly owned subsidiaries) is a
party, limited liability company, partnership, joint venture,
trust, employee benefit plan or other enterprise of which
Indemnitee is or was serving at the request of the Company as a
director, officer, trustee, general partner, managing member,
fiduciary, employee or agent.
(h)
“ Exchange Act ” shall mean the Securities
Exchange Act of 1934, as amended.
(i)
“ Expenses ” shall include all direct and
indirect costs, fees and expenses of any type or nature whatsoever,
including, without limitation, attorneys’ fees and costs,
retainers, court costs, transcript costs, fees and disbursements of
experts, witness fees, fees and disbursements of private
investigators and professional advisors, travel expenses,
duplicating costs, printing and binding costs, telephone and fax
transmission charges, postage, delivery service fees, secretarial
services, reasonable compensation for time spent by Indemnitee for
which he is not otherwise compensated for by the Company or any
third party, and all other disbursements or expenses in connection
with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding or enforcing a right to
indemnification under this Agreement. Expenses also shall include
Expenses incurred in connection with any appeal resulting from any
Proceeding, including without limitation the premium, security for,
and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent. Expenses, however, shall not
include amounts paid in settlement by Indemnitee or the amount of
judgments or fines against Indemnitee.
(j)
“ Independent Counsel ” shall mean 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 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.
(k)
References to “ fines ” shall include any excise
tax assessed on Indemnitee with respect to any employee benefit
plan; references to “ serving at the request of the
Company ” shall include any service as a director,
officer, employee, agent or fiduciary of the Company which imposes
duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit
plan, its participants or beneficiaries; and if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in
the best interests of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in
a manner “ not opposed to the best interests of the
Company ” as referred to in this Agreement.
(l)
The term “ Person ” shall have the meaning as
set forth in Sections 13(d) and 14(d) of the Exchange Act as in
effect on the date hereof; provided, however, that “
Person ” shall exclude: (i) the Company; (ii) any
Subsidiary of the Company; (iii) any employee benefit plan of the
Company including, without limitation, the Company’s Employee
Stock Ownership Plan, or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan; (iv) a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their
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ownership of stock of
the Company; and (v) Roy F. Farmer, deceased, his widow Emily
Farmer and their descendants (collectively, “ Farmer
Family Members” ), the estates of Farmer Family Members
and the personal representatives thereof, and trusts, partnerships
and other entities created by or for the benefit of Farmer Family
Members and the trustees, partners and members thereof.
(m)
A “ Potential Change in Control ” shall be
deemed to have occurred if: (i) the Company enters into an
agreement or arrangement, the consummation of which would result in
the occurrence of a Change in Control; (ii) any Person or the
Company publicly announces an intention to take or consider taking
actions which if consummated would constitute a Change in Control;
(iii) any Person who becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 5% or more of
the combined voting power of the Company’s then outstanding
securities entitled to vote generally in the election of directors
increases its Beneficial Ownership of such securities by 5% or more
over the percentage so owned by such Person on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(n)
The term “ Proceeding ” shall include 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 in the right of the Company or
otherwise and whether of a civil (including intentional or
unintentional tort claims), criminal, administrative or
investigative nature, in which Indemnitee was, is or will be
involved as a party or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Company, by
reason of any action (or failure to act) taken by him or of any
action (or failure to act) on his part while acting as a director
or officer of the Company, or by reason of the fact that he is or
was serving at the request of the Company as a director, officer,
trustee, general partner, managing member, fiduciary, employee or
agent of any other Enterprise, in each case whether or not serving
in such capacity at the time any liability or expense is incurred
for which indemnification, reimbursement, or advancement of
expenses can be provided under this Agreement.
(o)
The term “ Subsidiary ,” with respect to any
Person, shall mean any corporation or other entity of which a
majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by that
Person.
2.
Agreement To Serve . Indemnitee agrees to serve and/or
continue to serve as an agent of the Company, at its will (or under
separate agreement, if such agreement exists), in the capacity
Indemnitee currently serves as an agent of the Company; provided,
however, that nothing contained in this Agreement is intended to or
shall (i) restrict the ability of Indemnitee to resign at any time
and for any reason from any current or future position or
positions, (ii) create any right to continued employment of
Indemnitee in any current or future position or positions, or (iii)
restrict the ability of the Company to terminate the employment or
agency of Indemnitee at any time and for any reason (subject to
compliance with the terms of any employment or other applicable
agreement to which the Company (or any of its Subsidiaries) and
Indemnitee are parties).
3.
Indemnification in Third-Party Proceedings . The Company
shall indemnify and hold harmless Indemnitee in accordance with the
provisions of this Section 3 if, by reason of his Corporate Status,
Indemnitee was, is, or is threatened to be made, a party to or a
participant (as a witness or otherwise) in any Proceeding, other
than a Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 3, Indemnitee shall
be indemnified against all Expenses, judgments, penalties, fines
and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect
of such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee or on
his behalf in connection with such Proceeding or any claim, issue
or matter therein, if Indemnitee acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Company and, in the case of a criminal Proceeding,
had no reasonable cause to believe that his conduct was
unlawful.
4.
Indemnification in Proceedings by or in the Right of the
Company . The Company shall indemnify and hold harmless
Indemnitee in accordance with the provisions of this Section 4 if,
by reason of his Corporate Status, Indemnitee was, is, or is
threatened to be made, a party to or a participant (as a witness or
otherwise) in any Proceeding brought by or in the right of the
Company to procure a judgment in its favor. Pursuant to this
Section 4, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by Indemnitee or on his
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behalf in connection
with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company. Notwithstanding the foregoing, no indemnification shall be
made under this Section 4 in respect of any claim, issue or matter
as to which Indemnitee shall have been finally adjudged by a court
to be liable to the Company, unless and only to the extent that any
court in which the Proceeding was brought or the Delaware Court
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification for
such Expenses as the court shall deem proper.
5.
Indemnification for Expenses of a Party Who is Wholly or Partly
Successful . Notwithstanding any other provisions of this
Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a party to (or a participant in) and is
successful, on the merits or otherwise, in any Proceeding or in
defense of any claim, issue or matter therein, in whole or in part,
the Company shall indemnify and hold harmless Indemnitee 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 and hold
harmless Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. If Indemnitee is not
wholly successful in such Proceeding, the Company also shall
indemnify and hold harmless Indemnitee against all Expenses
reasonably incurred in connection with a claim, issue or matter
related to any claim, issue or matter on which Indemnitee was
successful. 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.
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 and held harmless against all Expenses actually and
reasonably incurred by him or on his behalf in connection
therewith.
7.
Additional Indemnification
(a)
Notwithstanding any limitation in Sections 3, 4 or 5, the Company
shall indemnify and hold harmless Indemnitee if, by reason of his
Corporate Status, Indemnitee is a party to or threatened to be made
a party to or participant in any Proceeding (including a Proceeding
by or in the right of the Company to procure a judgment in its
favor) against all Expenses, judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and
other charges paid or payable in connection with or in respect of
such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in
connection with the Proceeding. No indemnity shall be made under
this Section 7(a) on account of Indemnitee’s conduct which
constitutes a breach of Indemnitee’s duty of loyalty to the
Company or its stockholders or is an act or omission not in good
faith or which involves intentional misconduct or a knowing
violation of the law.
(b)
Notwithstanding any limitation in Sections 3, 4, 5 or 7(a), the
Company shall indemnify and hold harmless Indemnitee if Indemnitee
is a party to or threatened to be made a party to any Proceeding
(including a Proceeding by or in the right of the Company to
procure a judgment in its favor) against all Expenses, judgments,
fines, penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines,
penalties and amounts paid in settlement) actually and reasonably
incurred by Indemnitee in connection with the Proceeding.
8.
Contribution
(a)
Whether or not the indemnification provided in Sections 3, 4, 5 and
7 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 action, suit or
proceeding) unless such settlement provides for a full and final
release of all claims asserted against Indemnitee.
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(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
(including attorneys’ fees), 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, directors 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,
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 exte
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