Exhibit 10.5
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made this 23rd day of
April, 1999 between Foilmark, Inc., a Delaware corporation having its principal
office located in Newburyport, Massachusetts ("Indemnitor"), and Xxxxxxx Xxxxxx
("Indemnitee").
RECITALS
A. Indemnitee is now serving, or is considering serving, Indemnitor
as a director or officer, or both, and the parties hereto acknowledge that
Indemnitee's service to Indemnitor may expose Indemnitee to claims, lawsuits and
risk of liability.
B. The parties further recognize that the compensation or fees
payable to Indemnitee for the performance of such services may not be
commensurate with the potential risk involved and Indemnitor is now, or may in
the future be, unable adequately to provide insurance at a reasonable cost to
cover such risk.
C. Accordingly, as an inducement to Indemnitee to serve or to
continue to serve Indemnitor, Indemnitor and Indemnitee desire to enter into
this Agreement pursuant to which Indemnitor undertakes to indemnify Indemnitee
against such risk to the fullest extent permitted to do so by Delaware law.
NOW, THEREFORE, Indemnitor and Indemnitee hereby agree as follows:
1. INDEMNIFICATION
1.1. Subject to Section 1.3 hereof, Indemnitor shall hold harmless
and indemnify Indemnitee of and from all claims and all
threatened, pending or completed actions, suits or proceedings,
whether civil, criminal, administrative or investigative,
involving Indemnitee by reason of the fact that he is or was a
director or officer, or both, of Indemnitor (or by reason of the
fact that he is or was serving at the request of Indemnitor as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) including
all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, to the broadest and maximum extent
permitted by Delaware law.
1.2. Without limiting the generality of Section 1.1 hereof, the
indemnification provided for by Section 1.1 shall:
1.2.1. extend to and fully cover any Loss (as hereinafter
defined) arising from any Claim (as hereinafter
defined), whether such Claim is made against Indemnitee,
individually or jointly with others, by reason of any
Wrongful Act (as hereinafter defined) made in
Indemnitee's capacity as a director, officer, employee
and/or agent;
1.2.2. include all rights of indemnification provided to
Indemnitee under the existing provisions of the
certificate of incorporation or bylaws of Indemnitor;
and
1.2.3. include all such additional rights of indemnification
that could possibly be provided to Indemnitee under the
certificate of incorporation or bylaws of Indemnitor or
under Delaware law.
1.3. Nothing in this Section 1 shall be deemed to provide any
indemnity by Indemnitor to Indemnitee on account of any matter:
1.3.1. in respect to remuneration paid to Indemnitee but only
to the extent that it shall be determined by a final
judgment or other final adjudication that such
remuneration was in violation of law; or
1.3.2. for an accounting of profits made from the purchase or
sale by Indemnitee of securities of either Indemnitor
within the meaning of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
or
1.3.3. brought about or contributed to by the dishonesty of
Indemnitee but only to the extent that a final judgment
or other final adjudication adverse to Indemnitee
establishes that acts of active and deliberate
dishonesty were committed or attempted by Indemnitee
with actual dishonest purpose and intent and were
material to the adjudication; or
1.3.4. that is based on or attributable to Indemnitee having
gained any personal profit or advantage to which
Indemnitee was not entitled but only to the extent that
a final judgment or other final adjudication adverse to
Indemnitee establishes that Indemnitee in fact gained
such personal profit or other advantage to which
Indemnitee was not entitled; or
1.3.5. in respect of which any final decision by a court having
jurisdiction of the matter shall have determined that
indemnification is not lawful.
1.4. Indemnitor promptly shall pay the expenses (including attorneys'
fees) incurred by Indemnitee in defending any civil or criminal
action, suit or proceeding, as such expenses are incurred and
prior to the final disposition of such action, suit or
proceeding, provided that Indemnitor receives a written
undertaking by or on behalf of Indemnitee to repay such amounts
advanced if it is ultimately determined that he is not entitled
to be indemnified by Indemnitor as authorized under this
Agreement. Indemnitor shall perform its obligation under this
Section 1.4 until such time as it may be determined that
Indemnitee is not entitled to indemnification by virtue of one
or more of the exclusions set forth in Section 1.3 hereof.
-2-
1.5. The reference in Section 1.1 hereof to Delaware law is to
Delaware law as the same exists from time to time, but, in the
case of any amendment to or change in Delaware law, subject to
Section 6, only to the extent that such amendment or change
permits Indemnitor to provide broader or greater rights of
indemnification than is permitted to Indemnitor prior to such
amendment or change.
2. DEFINITIONS
2.1. The term "Loss" shall mean any amount Indemnitee is obligated or
asserted to be obligated to pay in respect of Indemnitee's legal
liability, whether actual or asserted, for a Wrongful Act, and
shall include damages, judgments, settlements and costs,
attorneys' fees, charges and expenses incurred in the defense of
Claims.
2.2. The term "Wrongful Act" shall mean any breach of duty, neglect,
error, misstatement, misleading statement, omission or other act
done or wrongfully attempted by Indemnitee so alleged by any
claimant or any other matter claimed against Indemnitee by
reason of Indemnitee being a director, officer, employee or
agent.
2.3. The term "Subsidiary" shall mean any corporation of which at
least 50% of the equity securities is owned by Indemnitor or by
another Subsidiary.
2.4. The term "Claim" shall mean any suit, action, proceeding,
investigation or claim threatened, whether civil, criminal,
administrative or investigative, made or instituted against or
with respect to Indemnitee or the property of Indemnitee, or
both, either by or in the right of Indemnitor or by or in the
right of a party other than Indemnitor.
3. SCOPE OF INDEMNIFICATION
This Agreement and the indemnification provided herein:
3.1. Shall apply to Indemnitee in Indemnitee's capacity or capacities
as a director, officer, employee or agent, or the like, of (i)
Indemnitor, (ii) any Subsidiary or former Subsidiary, or any
Subsidiary that is hereafter acquired or created by Indemnitor
and (iii) corporations, partnerships, associations and entities
other than Indemnitor and Indemnitor's Subsidiaries where
Indemnitee is directed or requested to serve by Indemnitor;
3.2. Shall be irrevocable and perpetual, and subject to Section 1.3
hereof, shall apply to any Claim arising or Loss incurred after
the date hereof, whether made or incurred prior to or after the
termination of Indemnitee's services to Indemnitor as a
director, officer, employee or agent; and
-3-
3.3. Subject to Section 1.3 hereof, shall cover Losses arising from
any Claims made against the estate, heirs, legal representatives
or assigns of Indemnitee.
4. AGREEMENT TO BE LIBERALLY CONSTRUED
The purpose of this Agreement is to induce Indemnitee either to serve
Indemnitor in one or more of the capacities described in Section 3.1
hereof, or to induce Indemnitee to continue to serve in one or more such
capacities. Indemnitor acknowledges that, but for this Agreement and the
expectation by Indemnitee that Indemnitor will perform each of its
obligations hereunder, Indemnitee may not consent to serve or to
continue to serve Indemnitor in such capacities. Therefore, it is the
intention of Indemnitor and Indemnitee that this Agreement be liberally
construed so as to achieve its purpose of, subject to Section 1 hereof,
protecting Indemnitee from and against Losses arising from Wrongful
Acts. Indemnitor will not do or fail to do any act that would or might
prevent or hinder the performance by Indemnitor of its obligations under
this Agreement.
5. AGREEMENT NOT EXCLUSIVE
The rights and benefits of Indemnitee, and the obligations of
Indemnitor, under this Agreement shall be in addition to, and shall not
supersede or be in lieu of, the provisions (if any) in the certificate
of incorporation or bylaws of Indemnitor relating to the indemnification
of Indemnitee by Indemnitor; the provisions of policies of insurance of
Indemnitor; the provisions of policies of insurance or indemnification
arrangements provided by persons or entities other than Indemnitor; or
applicable law. Notwithstanding anything to the contrary in this
Agreement, Indemnitor shall defend, indemnify and hold harmless
Indemnitee to the full extent permitted from time to time by applicable
law. Indemnitor, however, shall not be liable to Indemnitee to make any
payment with respect to any claim made against Indemnitee for which
payment is actually made to Indemnitee under a valid and collectible
insurance policy, except with respect to any excess beyond the amount of
the payment under such policy.
6. SEVERABILITY
Nothing in this Agreement is intended to require or shall be construed
as requiring Indemnitor to do or fail to do any act in violation of
applicable law. If any provision of this Agreement is finally determined
by a court of competent jurisdiction to require Indemnitor to do or fail
to do such an act, such provision shall be limited or modified in its
application to the extent necessary to avoid a violation of law, and as
so limited or modified such provision and the balance of this Agreement
shall be enforceable in accordance with their terms.
7. CHOICE OF LAW
This Agreement shall be governed by, and its provisions construed in
accordance with, the laws of the State of Delaware without regard to
provisions concerning conflict of laws.
-4-
8. CHOICE OF FORUM
Any action instituted by or on behalf of Indemnitor under this Agreement
or to enforce or interpret any provision of this Agreement shall be
brought only in the state courts of the State of Delaware and in no
other court. If any action is instituted in any court by Indemnitee
under this Agreement or to enforce or interpret any of its terms,
Indemnitor hereby consents, and will at such time consent, to the
exclusive jurisdiction and exclusive venue of such court, and shall
cooperate with any request by Indemnitee to transfer or remove such
action to another court.
9. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon Indemnitor and its successors and
assigns, and shall inure to the benefit of Indemnitee or Indemnitee's
estate, heirs, legal representatives and assigns.
10. MODIFICATION, AMENDMENT OR WAIVER
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both the parties hereto. Any term
or provision of this Agreement may be waived at any time by the party
entitled to the benefit thereof, but only by a written instrument
executed by such party. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provision hereof nor shall such waiver constitute a continuing waiver.
11. ATTORNEYS' FEES
If any action is instituted by Indemnitee under this Agreement to
enforce or interpret any of the terms of this Agreement, Indemnitee
shall be entitled to be paid all court costs and expenses, including
attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action the court determines that each of the
material assertions made by Indemnitee as a part of such action were not
made in good faith or were frivolous. If any action is instituted by or
in the name of the Indemnitor under this Agreement to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be paid all court costs and expenses, including reasonable
attorneys' fees, incurred by Indemnitee in defense of such action
(including with respect to Indemnitee's counterclaims and cross claims
made in such action), unless as a part of such action the court
determines that each of the Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
12. COUNTERPARTS
This Agreement may be signed in any number of counterparts, each of
which will be an original, with the same effect as if the signatures
hereto were upon the same instrument.
-5-
13. CONTENTS OF AGREEMENT
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior agreements
or understandings between the parties regarding such matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FOILMARK, INC.
/s/
By: XXXXX X. XXXXX, XX.
----------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
/s/
--------------------------------------------
Xxxxxxx Xxxxxx
-6-
