INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of __________________ by and
between Xxxxxx Vineyards Inc., a Delaware corporation (the "COMPANY"), and the
director and/or officer of the Company whose name appears on the signature page
of this Agreement ("INDEMNITEE").
RECITALS
A. Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or officers or in other capacities
unless they are provided with reasonable protection through insurance or
indemnification against risks of claims and actions against them arising out of
their service to and activities on behalf of the corporations.
B. The Board of Directors of the Company (the "BOARD") has determined
that the Company should act to assure its directors and officers that there will
be increased certainty of such protection in the future.
C. It is reasonable, prudent and necessary for the Company contractually
to obligate itself to indemnify 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.
D. Indemnitee is willing to serve, to continue to serve and to take on
additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.
AGREEMENT
In consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "AFFILIATE" shall mean any corporation, partnership, joint
venture, trust or other enterprise in respect of which the Indemnitee is or was
serving as a director, officer, advisory director or Board Committee member at
the request of the Company, and including, but not limited to, any employee
benefit plan of the Company or any of the foregoing.
(b) "DISINTERESTED DIRECTOR" shall mean a director of the
Company who is not or was not a party to the Proceeding in respect of which
indemnification is being sought by Indemnitee.
(c) "EXPENSES" shall include all 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 incurred
in connection with asserting or defending claims.
(d) "INDEPENDENT COUNSEL" shall mean a law firm or lawyer that
neither is presently nor in the past five (5) years has been retained to
represent: (i) the Company or Indemnitee in any matter material to any such
party 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 firm or 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 right to indemnification under this Agreement. All
Expenses of the Independent Counsel incurred in connection with acting pursuant
to this Agreement shall be borne by the Company.
(e) "LOSSES" shall mean all losses, claims, liabilities,
judgments, fines and amounts paid in settlement in connection with any
Proceeding.
(f) "PROCEEDING" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or
any other proceeding whether civil, criminal, administrative or investigative;
PROVIDED, HOWEVER, that the term "PROCEEDING" shall include any action
instituted by an Indemnitee (other than an action to enforce indemnification
rights under this Agreement) only if such action is authorized by the Board of
Directors.
2. SERVICE BY INDEMNITEE. Indemnitee agrees to begin or continue to
serve the Company or other corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise affiliated with the Company (all of
which are collectively referred to as an "AFFILIATE") as a director and/or
officer. Notwithstanding anything contained herein, this Agreement shall not
create a contract of employment between the Company and Indemnitee, and the
termination of Indemnitee's relationship with the Company or an Affiliate by
either party hereto shall not be restricted by this Agreement.
3. INDEMNIFICATION. The Company agrees to indemnify Indemnitee for,
and hold Indemnitee harmless from and against, any Losses or Expenses at any
time incurred by or assessed against Indemnitee arising out of or in connection
with the service of Indemnitee as a director, advisory director, Board Committee
member or officer of the Company or of an Affiliate (collectively referred to as
an "OFFICER OR DIRECTOR OF THE COMPANY") to the fullest extent permitted by the
laws of the State of Delaware in effect on the date hereof or as such laws may
from time to time hereafter be amended to increase the scope of such permitted
indemnification. Without diminishing the scope of the indemnification provided
by this SECTION 3, the rights of indemnification of Indemnitee provided
hereunder shall include but shall not be limited to those rights set forth
hereinafter.
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4. ACTION OR PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT OF
THE COMPANY. Indemnitee shall be entitled to the indemnification rights
provided herein if Indemnitee is a person who was or is made a party or is
threatened to be made a party to any contemplated, pending or completed
Proceeding, other than an action by or in the right of the Company by reason of
(a) the fact that Indemnitee is or was an Officer or Director of the Company or
any other entity which Indemnitee is or was serving at the request of the
Company, as the case may be, or (b) anything done or not done by Indemnitee in
any such capacity. Pursuant to this SECTION 4, Indemnitee shall be indemnified
against Losses or Expenses incurred by Indemnitee or on Indemnitee's behalf in
connection with any 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, as the case may be, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
5. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be
entitled to the indemnification rights provided herein if Indemnitee is a person
who was or is made a party or is threatened to be made a party to any pending,
completed or threatened Proceeding brought by or in the right of the Company to
procure a judgment in its favor by reason of (a) the fact that Indemnitee is or
was an Officer or Director of the Company or any other entity which Indemnitee
is or was serving at the request of the Company, as the case may be, or (b)
anything done or not done by Indemnitee in any such capacity. Pursuant to this
SECTION 5, Indemnitee shall be indemnified against Losses or Expenses incurred
by Indemnitee or on Indemnitee's behalf in connection with any 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. Notwithstanding the
foregoing provisions of this SECTION 5, no such indemnification shall be made in
respect of any claim, issue or matter as to which Delaware law expressly
prohibits such indemnification by reason of an adjudication of liability of
Indemnitee to the Company; PROVIDED, HOWEVER, that in such event such
indemnification shall nevertheless be made by the Company, or both, to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine equitable under the
circumstances.
6. INDEMNIFICATION FOR LOSSES AND EXPENSES OF PARTY WHO IS WHOLLY OR
PARTLY SUCCESSFUL. Notwithstanding any provision of this Agreement, to the
extent that Indemnitee has been wholly successful on the merits or otherwise
absolved in any Proceeding on any claim, issue or matter, Indemnitee shall be
indemnified against all Losses or Expenses incurred by Indemnitee or on
Indemnitee's 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 agrees to indemnify Indemnitee to the maximum extent permitted by
law, against all Losses and Expenses incurred by Indemnitee in connection with
each successfully resolved claim, issue or matter. In any review or Proceeding
to determine the extent of indemnification, the Company shall bear the burden of
proving any lack of success and which amounts sought in indemnity are allocable
to claims, issues or matters which were not successfully resolved. For purposes
of this SECTION 6
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and without limitation, the termination of any such claim, issue or matter by
dismissal with or without prejudice shall be deemed to be a successful
resolution as to such claim, issue or matter.
7. PAYMENT FOR EXPENSES OF A WITNESS. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of the
fact that Indemnitee is or was an Officer or Director of the Company or any
other entity which Indemnitee is or was serving at the request of the Company,
as the case may be, a witness in any Proceeding, the Company agrees to pay to
Indemnitee all Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee's behalf in connection therewith.
8. ADVANCEMENT OF EXPENSES AND COSTS. All Expenses incurred by or
on behalf of Indemnitee (or reasonably expected by Indemnitee to be incurred by
Indemnitee within three (3) months) in connection with any Proceeding shall be
paid by the Company in advance of the final disposition of such Proceeding
within twenty (20) days after the receipt by the Company of a statement or
statements from Indemnitee requesting from time to time such advance or
advances, whether or not a determination to indemnify has been made under
SECTION 9. Indemnitee's entitlement to such advancement of Expenses shall
include those incurred in connection with any Proceeding by Indemnitee seeking
an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall evidence such expenses incurred (or reasonably
expected to be incurred) by Indemnitee in connection therewith and shall include
or be accompanied by a written undertaking by or on behalf of Indemnitee to
repay such amount if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified therefor pursuant to the terms of this Agreement. The
financial ability of an Indemnitee to repay an advance shall not be a
prerequisite to the making of such an advance.
9. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) When seeking indemnification under this Agreement (which
shall not include in any case the right of Indemnitee to receive payments
pursuant to SECTION 7 and SECTION 8 hereof, which shall not be subject to this
SECTION 9), Indemnitee shall submit a written request for indemnification to the
Company. Such request shall include documentation or information which is
reasonably necessary for the Company to make a determination of Indemnitee's
entitlement to indemnification hereunder and which is reasonably available to
Indemnitee. Determination of Indemnitee's entitlement to indemnification shall
be made promptly, but in no event later than thirty (30) days after receipt by
the Company of Indemnitee's written request for indemnification. The Secretary
of the Company shall, promptly upon receipt of Indemnitee's request for
indemnification, advise the Board that Indemnitee has made such request for
indemnification.
(b) The entitlement of Indemnitee to indemnification under this
Agreement shall be determined in the specific case (i) by a majority vote of the
Disinterested Directors, even though less than a quorum, or (ii) if there are no
Disinterested Directors, of if such Disinterested Directors so direct, by
Independent Counsel in a written opinion, or (iii) by the stockholders.
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(c) In the event the determination of entitlement is to be made
by Independent Counsel, such Independent Counsel shall be selected by the Board
and approved by Indemnitee. Upon failure of the Board to so select such
Independent Counsel or upon failure of Indemnitee to so approve, such
Independent Counsel shall be selected by the American Arbitration Association in
Los Angeles, California or such other person as such Association shall designate
to make such selection.
(d) If the determination made pursuant to SECTION 9(b) is that
Indemnitee is not entitled to indemnification to the full extent of Indemnitee's
request, Indemnitee shall have the right to seek entitlement to indemnification
in accordance with the procedures set forth in SECTION 10 hereof.
(e) If the person or persons empowered pursuant to SECTION 9(b)
hereof to make a determination with respect to entitlement to indemnification
shall have failed to make the requested determination within ninety (90) days
after receipt by the Company of such request, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be absolutely entitled to such indemnification, absent (i)
misrepresentation by Indemnitee of a material fact in the request for
indemnification or (ii) a final judicial determination that all or any part of
such indemnification is expressly prohibited by law.
(f) The termination of any Proceeding by judgment, order,
settlement or conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, adversely affect the rights of Indemnitee to
indemnification hereunder except as may be specifically provided herein, or
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, as the case may be, or create a presumption that (with
respect to any criminal action or proceeding) Indemnitee had reasonable cause to
believe that Indemnitee's conduct was unlawful.
(g) For purposes of any determination of good faith hereunder,
Indemnitee shall be deemed to have acted in good faith if in taking such action
Indemnitee relied on the records or books of account of the Company or an
Affiliate, including financial statements, or on information supplied to
Indemnitee by the officers of the Company or an Affiliate in the course of their
duties, or on the advice of legal counsel for the Company or an Affiliate or on
information or records given or reports made to the Company or an Affiliate by
an independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Company or an Affiliate. The Company shall
have the burden of establishing the absence of good faith. The provisions of
this SECTION 9(g) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which the Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
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(h) The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Company or an Affiliate shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.
10. REMEDIES IN CASES OF DETERMINATION NOT TO INDEMNIFY OR TO ADVANCE
EXPENSES.
(a) In the event that (i) a determination is made that
Indemnitee is not entitled to indemnification hereunder, (ii) advances are not
made pursuant to SECTION 8 hereof or (iii) payment has not been timely made
following a determination of entitlement to indemnification pursuant to
SECTION 9 hereof, Indemnitee shall be entitled to seek a final adjudication in
an appropriate court of the State of Delaware or any other court of competent
jurisdiction of Indemnitee's entitlement to such indemnification or advance.
(b) In the event a determination has been made in accordance
with the procedures set forth in SECTION 9 hereof, in whole or in part, that
Indemnitee is not entitled to indemnification, any such judicial proceeding
shall be made DE NOVO and Indemnitee shall not be prejudiced by reason of any
such prior determination that Indemnitee is not entitled to indemnification, and
the Company shall bear the burdens of proof specified in SECTIONS 6 AND 9 hereof
in such proceeding.
(c) If a determination is made or deemed to have been made
pursuant to the terms of SECTION 9 OR 10 hereof that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration in the absence of (i) a misrepresentation of
a material fact by Indemnitee or (ii) a final judicial determination that all or
any part of such indemnification is expressly prohibited by law.
(d) The Company and Indemnitee agree that they shall be
precluded from asserting that the procedures and presumptions of this Agreement
are not valid, binding and enforceable. The Company and Indemnitee further
agree to stipulate in any such court that the Company and Indemnitee are bound
by all of the provisions of this Agreement and are precluded from making any
assertion to the contrary.
(e) To the extent deemed appropriate by the court, interest
shall be paid by the Company to Indemnitee at a reasonable interest rate for
amounts which the Company, indemnifies or is obliged to indemnify the Indemnitee
for the period commencing with the date on which Indemnitee requested
indemnification (or reimbursement or advance of an Expense) and ending with the
date on which such payment is made to Indemnitee by the Company.
11. EXPENSES INCURRED BY INDEMNITEE TO ENFORCE THIS AGREEMENT. All
Expenses incurred by Indemnitee in connection with the preparation and
submission of Indemnitee's request for indemnification hereunder shall be borne
by the Company. In the event that Indemnitee is a party to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication to enforce Indemnitee's rights under, or
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to recover damages for breach of, this Agreement, Indemnitee, if Indemnitee
prevails in whole in such action, shall be entitled to recover from the Company,
and shall be indemnified by the Company against, any Expenses incurred by
Indemnitee. If it is determined that Indemnitee is entitled to indemnification
for part (but not all) of the indemnification so requested, Expenses incurred in
seeking enforcement of such partial indemnification shall be reasonably prorated
among the claims, issues or matters for which the Indemnitee is entitled to
indemnification and for claims, issues or matters for which the Indemnitee is
not so entitled.
12. NON-EXCLUSIVITY. The rights of indemnification and to receive
advances as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, a certificate of incorporation, by-laws, any agreement, a vote of
stockholders or a resolution of directors or otherwise. No amendment,
alteration, rescission or replacement of this Agreement or any provision hereof
shall be effective as to Indemnitee with respect to any action taken or omitted
by such Indemnitee in Indemnitee's position with the Company or an Affiliate or
any other entity which Indemnitee is or was serving at the request of the
Company prior to such amendment, alteration, rescission or replacement.
13. DURATION OF AGREEMENT. This Agreement shall apply to any claim
asserted and any Expenses incurred in connection with any claim asserted on or
after the effective date of this Agreement and shall continue until and
terminate upon the later of: (a) ten (10) years after Indemnitee has ceased to
occupy any of the positions or have any of the relationships described in
SECTIONS 3, 4 OR 5 of this Agreement; or (b) one (1) year after the final
termination of all pending or threatened Proceedings of the kind described
herein with respect to Indemnitee. This Agreement shall be binding upon the
Company and its respective successors and assigns and shall inure to the benefit
of Indemnitee and Indemnitee's spouse, assigns, heirs, devisee, executors,
administrators or other legal representatives.
14. MAINTENANCE OF D&O INSURANCE.
(a) The Company hereby covenants and agrees with Indemnitee
that, so long as Indemnitee shall continue to serve as an Officer or Director of
the Company and thereafter so long as Indemnitee shall be subject to any
possible claim or threatened, pending or completed Proceeding, whether civil,
criminal or investigative, by reason of the fact that Indemnitee was an Officer
or Director of the Company or any other entity which Indemnitee was serving at
the request of the Company, the Company shall maintain in full force and effect
(i) the directors' and officers' liability insurance issued by the insurer and
having the policy amount and deductible as currently in effect with respect to
directors and officers of the Company or any of its subsidiaries and (ii) any
replacement or substitute policies issued by one (1) or more reputable insurers
providing in all respects coverage at least comparable to and in the same amount
as that currently provided under such existing policy (collectively, "D&O
INSURANCE").
(b) In all policies of D&O Insurance, Indemnitee shall be named
as an insured in such a manner as to provide Indemnitee the same rights and
benefits, subject to the
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same limitations, as are accorded to the Company's directors or officers most
favorably insured by such policy.
(c) Notwithstanding anything to the contrary set forth in (a)
above, the Company shall have no obligation to maintain D&O Insurance if the
Company determines in good faith that such insurance is not reasonably
available, the premium costs for such insurance is disproportionate to the
amount of coverage provided or the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit.
15. SEVERABILITY. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby, and the illegal or unenforceable portions of the Agreement
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions of this Agreement intact.
16. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
17. HEADINGS. Section headings are for convenience only and do not
control or affect meaning or interpretation of any terms or provisions of this
Agreement.
18. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by each
of the parties hereto.
19. NO DUPLICATIVE PAYMENT. The Company shall not be liable under
this Agreement to make any payment of amounts otherwise indemnifiable hereunder
if and to the extent that Indemnitee has otherwise actually received such
payment (net of expenses incurred in collecting such payment) under this
Agreement, any insurance policy, contract, agreement or otherwise.
20. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed
in a registered or certified postpaid envelope in any general or branch office
of the United States Postal Service, or sent by Federal Express or other similar
overnight courier service, addressed to the address of the parties stated below
or to such changed address as such party may have fixed by notice or, if given
by telecopier, when such telecopy is transmitted and the appropriate answerback
is received.
(a) If to Indemnitee, to the address appearing on the signature
page hereof.
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(b) If to the Company to:
Xxxxxx Vineyards Inc.
00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Chief Executive Officer
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: V. Xxxxxx Xxxxxx, Esq.
21. GOVERNING LAW. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws of
the State of Delaware without giving effect to the conflicts of laws principles
thereof.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties and supersedes all proposals, commitments,
writings, negotiations and understandings, oral and written, and all other
communications between the parties relating to the subject matter of this
Agreement. This Agreement may not be amended or otherwise modified except in
writing duly executed by all of the parties. A waiver by any party of any
breach or violation of this Agreement shall not be deemed or construed as a
waiver of any subsequent breach or violation thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXXXXX VINEYARDS INC.
By
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Name:
Title:
INDEMNITEE:
By
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Name:
Address:
