INDEMNIFICATION
AGREEMENT
This
INDEMNIFICATION AGREEMENT (this “ Agreement
”) is made and entered into this ___ day of ______, 2008, by
and between Lawson Products, Inc., a Delaware corporation (the
“ Company ”), and _________ (“
Indemnitee ”).
WHEREAS ,
Indemnitee now serves or will serve as a member of the Board of
Directors or as an officer of, or in another similar position with,
the Company; and
WHEREAS ,
the Company will derive substantial benefits from
Indemnitee’s undertaking of the responsibilities of such
position, and the protection afforded by this Agreement will
enhance Indemnitee’s ability to discharge and carry out such
responsibilities.
NOW,
THEREFORE , in consideration of the premises, mutual covenants
and agreements contained herein and Indemnitee’s service as a
director or an officer of, or in another similar position with, the
Company, the parties hereto agree as follows:
(a) General. The Company shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by law if
Indemnitee was or is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness
or other participant in, any threatened, pending or completed
action, suit, arbitration, alternative dispute resolution
proceeding, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or
investigative and whether instituted by or on behalf of the Company
or any other party, or any inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such
action, suit or proceeding, whether civil (including intentional
and unintentional tort claims), criminal, administrative,
investigative or other (hereinafter a “ Claim ”)
by reason of (or arising in part out of) any event or occurrence
(i) related to the fact that Indemnitee is or was or may be
deemed a director, officer, employee, controlling person, agent or
fiduciary of the Company or any subsidiary of the Company,
(ii) related to the fact that Indemnitee is or was or may be
deemed to be serving at the request of the Company as a director,
officer, employee, controlling person, trustee, agent or fiduciary
of another corporation, partnership, limited liability company,
joint venture, trust or other enterprise, or (iii) by reason
of any action or inaction on the part of Indemnitee while serving
in any such capacity from and against any and all expenses
(including reasonable and documented attorneys’ fees,
retainers, court costs, transcript costs, fees of experts, witness
fees, travel charges, postage and delivery services fees, and all
other costs, expenses and obligations) incurred in connection with
investigating, defending, being a witness in or participating in
(including an appeal), or preparing to defend, be a witness in or
participate in, any such Claim (collectively, hereinafter “
Expenses ”), losses, liabilities, judgments, fines,
penalties and amounts paid in settlement arising under or resulting
from any such Claim and any federal, state, local or foreign taxes
payable by Indemnitee as a result of the actual or deemed receipt
of any payments under this Agreement, including all interest,
assessments and other charges paid or payable in connection with or
in respect of such Expenses, losses, liabilities, judgments, fines,
penalties and amounts paid in settlement; provided that
Indemnitee acted in good faith and in a manner Indemnitee
reasonably
believed to be
in, or not opposed to, the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful.
(i)
Notwithstanding the foregoing, (A) the indemnification
obligations of the Company under Section 1(a) shall be
subject to the condition that it shall not have been determined in
accordance with Section 1(b)(ii) below that Indemnitee
would not be permitted to be indemnified under applicable law, and
(B) the obligation of the Company to make an advance payment
of Expenses to Indemnitee pursuant to Section 2(a) (an
“ Expense Advance ”) shall be subject to the
condition that if, when and to the extent that it is determined in
accordance with Section 1(b)(ii) below that Indemnitee
is not permitted to be indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who
hereby agrees to reimburse the Company) for all Expense Advances
theretofore paid; provided, however , that if Indemnitee has
commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that he or she
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any
Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have
been exhausted or lapsed).
(ii)
The Reviewing Party shall determine whether or not the Indemnitee
would be permitted to be indemnified under applicable law and any
such determination shall be made in writing, specifying in
reasonable detail the reasons therefore, and delivered to
Indemnitee. The Reviewing Party shall be selected by the Board of
Directors, unless Indemnitee shall have requested that the
Reviewing Party shall be Independent Legal Counsel, in which case
the Reviewing Party shall be Independent Legal Counsel, reasonably
acceptable to Indemnitee, to be engaged by the Company. Indemnitee
shall be presumed in all cases to be entitled to indemnification
and, unless the Company shall deliver to Indemnitee a written
notice that Indemnitee is not entitled to indemnification within
30 days after the Company’s receipt of
Indemnitee’s initial written request for indemnification,
Indemnitee’s right to indemnification shall conclusively be
deemed to have been made in favor of the Company’s provision
of indemnification, and the Company hereby agrees not to assert
otherwise. Any determination by the Reviewing Party that Indemnitee
is entitled to indemnification shall be conclusive and binding on
the Company and Indemnitee.
(c) Contribution. If the indemnification provided for
in Section 1(a) above for any reason is held by a court
of competent jurisdiction to be unavailable to Indemnitee in
respect of any Expenses, losses, liabilities, judgments, fines,
penalties and amounts paid in settlement of a Claim referred to
therein, then the Company, in lieu of indemnifying Indemnitee
thereunder, shall, to the extent permitted by applicable law,
contribute to the amount paid or payable by Indemnitee as a result
of such Expenses, losses, liabilities, judgments, fines, penalties
and
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amounts paid in
settlement (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and Indemnitee, or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and
Indemnitee in connection with the action or inaction which resulted
in such Expenses, losses, liabilities, judgments, fines, penalties
and amounts paid in settlement, as well as any other relevant
equitable considerations. The Company and Indemnitee agree that it
would not be just and equitable if contribution pursuant to this
Section 1(c) were determined by pro rata or per capita
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the
immediately preceding sentence.
(d) Survival Regardless of Investigation. The
indemnification and contribution provided for in this
Section 1 as well as the advancement of expenses
provided for in Section 2(a) below will remain in full force
and effect regardless of any investigation made by or on behalf of
Indemnitee.
(e) Mandatory Payment of Expenses. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee
has been successful on the merits or otherwise in the defense of
any Claim, or any issue or matter therein (as to which all rights
of appeal therefrom have been exhausted or lapsed), Indemnitee
shall be indemnified against all Expenses incurred by Indemnitee in
connection therewith. For purposes of this Agreement and without
limitation of the foregoing, the term “successful on the
merits or otherwise” shall include, but not be limited to,
(i) any termination, withdrawal or dismissal (with or without
prejudice) of any Claim against Indemnitee without a conviction or
an express finding of liability against Indemnitee and in
connection therewith Indemnitee shall not have paid more than
$10,000 in settlement of the applicable Claim or (ii) the
expiration of 180 days after the occurrence of a Claim without
the institution of an action, suit, arbitration, alternative
dispute resolution proceeding, administrative hearing or other
proceeding with respect to such Claim and without any promise of
payment or payment made to induce a settlement of such
Claim.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Subject to
Section 1(a) , Section 1(b) and
Section 9 , the Company shall pay in advance of the
final disposition of a Claim all Expenses that, by reason of
Indemnitee’s indemnified capacity, were incurred by
Indemnitee in connection with such Claim. The advances to be made
hereunder shall be paid by the Company to Indemnitee as soon as
reasonably practicable but in no event later than thirty
(30) days after written demand by Indemnitee therefor to the
Company, which demand shall be accompanied by vouchers, invoices or
similar evidence documenting the Expenses incurred or to be
incurred by Indemnitee.
(b) Notice and Cooperation by Indemnitee. Indemnitee
shall give the Company written notice as soon as reasonably
practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement;
provided , that the failure to give or delay in giving such
notice shall not affect Indemnitee’s right to indemnification
or advancement of Expenses hereunder unless, and then only to the
extent that, the Company is actually materially prejudiced thereby.
Indemnitee agrees to cooperate in all reasonable
respects
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with the
Company in responding to any Claim, providing all required
information and documents and being available for testimony, in
each case as reasonably requested by the Company. The failure to
cooperate with the Company will not relieve the Company from any
liability for indemnification or advancement of Expenses which it
may have to Indemnitee unless, and then only to the extent that,
the Company is actually materially prejudiced thereby.
(c) No
Presumptions; Burden of Proof. For purposes of this Agreement,
the termination of any Claim by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a
presumption that Indemnitee did not meet any particular standard of
conduct or have any parti
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