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EXHIBIT 10.20
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement") is made as of
________________,
2007 by and between GENERAL EMPLOYMENT ENTERPRISES, INC., an
Illinois
corporation (the "Company"), and [NAME OF DIRECTOR OR
OFFICER]
("Indemnitee").
RECITALS
WHEREAS, highly competent persons have become more reluctant to
serve
publicly-held corporations as directors 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
Articles 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
Illinois Business Corporation Act of 1983 ("IBCA"). The Charter,
the Bylaws
and the IBCA 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 to
diminish or
abrogate any rights of Indemnitee thereunder.
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 be so indemnified.
NOW, THEREFORE, in consideration of the premises and the
covenants
contained herein, the Company and Indemnitee do hereby covenant
and agree as
follows:
1. Services to the Company. Indemnitee will serve or continue
to
serve as an officer, director or key employee of the Company for
so long as
Indemnitee is duly elected or appointed or until Indemnitee's
earlier death,
removal or resignation. 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), in which event the
Company shall
have no obligation under this Agreement to continue Indemnitee
in such
position. This Agreement shall not be deemed an employment
contract between
the Company (or any of its subsidiaries or any Enterprise) and
Indemnitee.
Indemnitee specifically acknowledges that Indemnitee's
employment with the
Company (or any of its subsidiaries or any Enterprise), if any,
is at will,
and the Indemnitee may be discharged at any time for any reason,
with or
without cause, except as may be otherwise provided in any
written employment
contract between Indemnitee and the Company (or any of its
subsidiaries or
any Enterprise), other applicable formal severance policies duly
adopted by
the Board, or, with respect to service as a director or officer
of the
Company, by the Company's Charter, the Company's Bylaws, and the
IBCA. The
foregoing notwithstanding, this Agreement shall continue in
force after
Indemnitee has ceased to serve as an officer, director or key
employee of the
Company.
2. 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 defined below) 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) Change in Board of Directors. Individuals who, as of
the date hereof, constitute the Board (the "Incumbent
Directors") cease for
any reason to constitute at
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least a majority of the Board, other than any such cessation
that occurs
directly or indirectly as a result of or in connection with the
issuance of
equity securities of the Company in exchange for a reduction in
the Company's
indebtedness (which resulting change in the Board shall not
constitute or
cause a Change in Control hereunder), provided that any person
becoming a
director after the date hereof and whose election or nomination
for election
was approved by a vote of at least a majority of the Incumbent
Directors
then on the Board shall be an Incumbent Director; provided,
however, that no
individual initially elected or nominated as a director of the
Company as a
result of an actual or threatened election contests with respect
to the
election or removal of directors (an "Election Contest") or
other actual or
threatened solicitation of proxies or consents by or on behalf
of any Person
other than the Board (a "Proxy Contest"), including by reason of
any
agreement intended to avoid or settle any Election Contest or
Proxy Contest,
shall be deemed an Incumbent Director;
(ii) Acquisition of Stock by Third Party. Any Person is or
becomes a Beneficial Owner, directly or indirectly, of either
(x) 35% or more
of the then-outstanding shares of common stock of the Company
("Company Common
Stock"), or (y) securities of the Company representing 35% or
more of the
combined voting power of the Company's then-outstanding
securities eligible to
vote for the election of directors ("Company Voting
Securities"), other than
any person becoming a beneficial owner of Company Common Stock
or
Company Voting Securities in connection with the issuance of the
equity
securities of the Company in exchange for a reduction in the
Company's
indebtedness (which situation shall not constitute or cause a
Change in Control
hereunder); provided, however, that for purposes of this
paragraph (ii), the
following acquisitions of Company Common Stock or Company
Voting
Securities shall not constitute a Change in Control: (A) an
acquisition
directly from the Company; or (B) an acquisition pursuant to a
Non-Qualifying
Transaction (as defined in paragraph (iii) below;
(iii) Corporate Transactions. The consummation of a
recapitalization, reorganization, merger, consolidation,
statutory share
exchange or similar form of transaction involving the Company or
a subsidiary
of the Company (a "Reorganization") other than in connection
with a
Reorganization directly or indirectly involving the issuance of
equity
securities of the Company in exchange for a reduction in the
Company's
indebtedness (which Reorganization shall not be considered a
Change in Control
hereunder), or the sale or other disposition of all or
substantially all of the
Company's assets (a "Sale") or the acquisition of assets or
stock of another
entity (an "Acquisition"), unless immediately following such
Reorganization,
Sale or Acquisition: (A) all or substantially all of the
individuals and
entities who were the Beneficial Owners, respectively, of the
outstanding
Company Common Stock and outstanding Company Voting Securities
immediately
prior to such Reorganization, Sale or Acquisition are the
Beneficial Owners,
directly or indirectly, more than 55% of, respectively, the
then-outstanding shares of common stock and the combined voting
power of the
then-outstanding voting securities entitled to vote generally in
the election
of directors, as the case may be, of the entity resulting from
or surviving
such Reorganization, Sale or Acquisition (including, without
limitation, an
entity which as a result of such transaction owns the Company or
all or
substantially all of the Company's assets or stock either
directly or
through one or more subsidiary entities, the "Surviving Entity")
in
substantially the same proportions as their ownership,
immediately prior to
such Reorganization, Sale or Acquisition, of the outstanding
Company Common
Stock and the outstanding Company Voting Securities, as the case
may be;
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(B) no Person (other than a Surviving Entity, its ultimate
parent entity, or
any employee benefit plan or related trust sponsored or
maintained by either
of the foregoing) is the Beneficial Owner, directly or
indirectly, of 35% or
more of the total common stock or 35% of the total voting power
of the
outstanding voting securities eligible to elect directors of the
Surviving
Entity; and (C) at least a majority of the members of the board
of directors
of the Surviving Entity were Incumbent Directors at the time of
the Board's
approval of the execution of the initial agreement providing for
such
Reorganization, Sale or Acquisition (any Reorganization, Sale or
Acquisition
which satisfies all of the criteria specified in (A), (B) and
(C) above shall
be deemed to be a "Non-Qualifying Transaction"); or
(iv) Liquidation. The approval by the stockholders of the
Company of a complete liquidation or dissolution of the
Company.
(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) "Illinois Court" shall mean the Circuit Court of the
Eighteenth Judicial District of the State of Illinois or another
federal or
state court of competent jurisdiction.
(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 attorneys' fees and costs,
retainers,court costs, 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 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. 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
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either such party (other than with respect to matters concerning
the 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.
(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
Subsidiaries of the Company; (iii) any employment benefit plan
of the Company
or of a Subsidiary of the Company or of any corporation owned,
directly or
indirectly, by the stockholders of the Company in substantially
the
same proportions as their ownership of stock of the Company; and
(iv) any
trustee or other fiduciary holding securities under an employee
benefit plan
of the Company or of a Subsidiary of the Company or of a
corporation owned
directly or indirectly by the stockholders of the Company in
substantially
the same proportions as their ownership of stock of the
Company.
(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 his
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,
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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.
3. Indemnity in Third-Party Proceedings. The Company shall
indemnify
and hold harmless Indemnitee in accordance with the provisions
of this
Section 3 if 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, liabilities, 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 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. Indemnity 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 Indemnitee was, is, or is
threatened to be
made, a party to or a participant (as a witness or otherwise) in
any Proceeding
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 him 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. No indemnification for
Expenses 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 an Illinois 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.
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 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 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 the 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,
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issue, or matter on which the 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
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. 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. Contr
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