INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (the “ Agreement ”) is
made as of February 2nd, 2006, by and between American
Reprographics Company, a Delaware corporation (the “
Company ”), and Dewitt Kerry McCluggage (the “
Indemnitee ”).
The Company and
Indemnitee recognize the increasing difficulty in obtaining
liability insurance for directors, officers and key employees, the
significant increases in the cost of such insurance and the general
reductions in the coverage of such insurance. The Company and
Indemnitee further recognize the substantial increase in corporate
litigation in general, subjecting directors, officers and key
employees to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely
limited. Indemnitee does not regard the current protection
available as adequate under the present circumstances, and
Indemnitee and agents of the Company may not be willing to continue
to serve as agents of the Company without additional protection.
The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, and to indemnify its
directors, officers and key employees so as to provide them with
the maximum protection permitted by law.
In consideration
of the mutual promises made in this Agreement, and for other good
and valuable consideration, receipt of which is hereby
acknowledged, the Company and Indemnitee hereby agree as
follows:
(a) Third Party Proceedings . The Company shall
indemnify Indemnitee if Indemnitee is or was a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction on
the part of Indemnitee while an officer or director or by reason of
the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be
unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding if
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 Indemnitee’s
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that Indemnitee did not act in good faith and
in a manner which Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, or, with
respect
to any criminal
action or proceeding, that Indemnitee had reasonable cause to
believe that Indemnitee’s conduct was unlawful.
(b) Proceedings By or in the Right of the Company .
The Company shall indemnify Indemnitee if Indemnitee was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or proceeding by or in the right of the
Company or any subsidiary of the Company to procure a judgment in
its favor by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction on
the part of Indemnitee while an officer or director or by reason of
the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys’ fees) and, to the
fullest extent permitted by law, amounts paid in settlement (if
such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld), in each case to the
extent actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if 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
its stockholders, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall
have been finally adjudicated by court order or judgment to be
liable to the Company in the performance of Indemnitee’s duty
to the Company and its stockholders unless and only to the extent
that the court in which such action or proceeding is or was pending
shall determine upon application that, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem
proper.
(c) Mandatory Payment of Expenses . To the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section
1(a) or Section 1(b) or the defense of any claim, issue or matter
therein, Indemnitee shall be indemnified against expenses
(including attorneys’ fees) actually and reasonably incurred
by Indemnitee in connection therewith.
2. No
Employment Rights . Nothing contained in this Agreement is
intended to create in Indemnitee any right to continued
employment.
3.
Expenses; Indemnification Procedure .
(a) Advancement of Expenses . The Company shall
advance all expenses incurred by Indemnitee in connection with the
investigation, defense, settlement or appeal of any civil or
criminal action, suit or proceeding referred to in Section l(a) or
Section 1(b) hereof (including amounts actually paid in settlement
of any such action, suit or proceeding). Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the
extent that, it shall ultimately be determined that Indemnitee is
not entitled to be indemnified by the Company as authorized
hereby.
(b) Notice/Cooperation by Indemnitee . Indemnitee
shall, as a condition precedent to his or her right to be
indemnified under this Agreement, give the Company notice in
writing as soon as practicable of any claim made against Indemnitee
for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to
the
2
Chief Executive
Officer of the Company and shall be given in accordance with the
provisions of Section 12(d) below. In addition, Indemnitee shall
give the Company such information and cooperation as it may
reasonably require and as shall be within Indemnitee’s
power.
(c)
Procedure . Any indemnification and advances provided
for in Section 1 and this Section 3 shall be made no
later than twenty (20) days after receipt of the written
request of Indemnitee. If a claim under this Agreement, under any
statute, or under any provision of the Company’s Certificate
of Incorporation or Bylaws providing for indemnification, is not
paid in full by the Company within twenty (20) days after a
written request for payment thereof has first been received by the
Company, Indemnitee may, but need not, at any time thereafter bring
an action against the Company to recover the unpaid amount of the
claim and, subject to Section 11 of this Agreement, Indemnitee
shall also be entitled to be paid for the expenses (including
attorneys’ fees) of bringing such action. It shall be a
defense to any such action (other than an action brought to enforce
a claim for expenses incurred in connection with any action, suit
or proceeding in advance of its final disposition) that Indemnitee
has not met the standards of conduct which make it permissible
under applicable law for the Company to indemnify Indemnitee for
the amount claimed, but the burden of proving such defense shall be
on the Company and Indemnitee shall be entitled to receive interim
payments of expenses pursuant to Section 3(a) unless and until such
defense may be finally adjudicated by court order or judgment from
which no further right of appeal exists. It is the parties’
intention that if the Company contests Indemnitee’s right to
indemnification, the question of Indemnitee’s right to
indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal
counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct
required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has
or has not met the applicable standard of conduct.
(d)
Notice to Insurers . If, at the time of the receipt of a
notice of a claim pursuant to Section 3(b) hereof, the Company has
director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to
the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on
behalf of the Indemnitee, all
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