Exhibit 10.28
[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 extent
necessary to conform to law, be further adjust
