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EXHIBIT 10.4
DIRECTOR AND OFFICER INDEMNITY AGREEMENT
AGREEMENT made as of the ______ day of ____________________, 199__, by and
among APPLIED FILMS CORPORATION, a Colorado corporation (the "Corporation"),
and ________________________ (the "Indemnitee") with respect to the following:
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Corporation has recognized that the
present trend in litigation against corporate directors and officers has
created a reluctance in persons to serve in such a capacity and that such
effect is likely to result in less effective direction and supervision of the
Corporation's business affairs;
WHEREAS, the Board of Directors of the Corporation has determined that
such consequences are so detrimental to the best interests of the Corporation
and its shareholders that its directors and officers should be provided with
protection against inordinate risks in order to insure that the most capable
persons available will be attracted to such a position;
WHEREAS, in light of the rising costs of and reduced coverage of director
and officer liability insurance and amendments to Colorado Business Corporation
Act, which permits an increase in the scope of indemnification of directors and
officers, it is reasonable and necessary for the Corporation to contractually
obligate itself to indemnify its directors and officers for certain costs and
expenses; and
WHEREAS, in order to induce Indemnitee to serve or continue to serve the
Corporation, the Corporation has agreed to indemnify Indemnitee for certain
costs and expenses set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:
1. DEFINITIONS. As used herein, the following terms are defined as
follows:
(a) CLAIM. Any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether civil,
criminal, administrative or investigative, by reason of or arising
in whole or in part by reason of the fact that the Indemnitee is
or was a director, officer, employee or agent of the Corporation.
(b) EXPENSES. Attorneys' fees and all other costs, expenses and
obligations paid or incurred in connection with investigating, defending,
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participating or being a witness in, or preparing to defend, participate
or be a witness in any Claim or appeal therefrom.
2. AGREEMENT TO SERVE. Indemnitee will serve and/or continue to serve, at
the will of the Corporation as a director and/or officer of the Corporation to
the best of his ability so long as he is duly elected and qualified or
appointed, as applicable, in accordance with the Articles of Incorporation
and Bylaws of the Corporation.
3. INDEMNIFICATION. Subject to the terms and conditions of this
Agreement, the Corporation hereby agrees to indemnify Indemnitee as follows:
(a) In the event Indemnitee was, is or becomes a party to or
witness or other participant in or is subject to, or is threatened
to be made a party to or witness or other participant in or
subject to a Claim, the Corporation shall indemnify Indemnitee to
the fullest extent permitted by law, pursuant to the authorization
of Sections 0-000-000 et. seq. of the Colorado Business
Corporation Act, against any and all Expenses, judgments, fines,
penalties and amounts paid in settlement of such Claim.
(b) The Corporation shall indemnify Indemnitee as soon as
practicable, but in any event not later than thirty (30) days
after written demand is presented to the Corporation.
4. CONDITION PRECEDENT TO INDEMNIFICATION. Indemnitee, as a condition
precedent to the indemnification under this Agreement, shall tender written
notice to the Corporation as soon as practicable of any Claim made against him
for which indemnification will or likely will be sought under the terms of this
Agreement. Notice to the Corporation shall be directed to Applied Films
Corporation, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attn: President.
In addition, Indemnitee shall give the Corporation such information and
cooperation as may be reasonably necessary and requested by the Corporation.
5. CONSENT OF CORPORATION. No Expenses, judgments, fines, penalties,
amounts paid in settlement or other costs for which indemnity shall be sought
hereunder shall be incurred without the Corporation's written consent, which
consent shall not be unreasonably withheld.
6. LIMITATIONS ON INDEMNITY.
(a) The Corporation shall not be liable under this Agreement
to make any payment in connection with any Claim made against
Indemnitee:
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(1) For which payment is made to Indemnitee under
a valid and collectible insurance policy, except for
any excess beyond the amount of payment under such
insurance policy;
(2) Based upon or attributable to any transaction:
(i) involving intentional misconduct or a knowing
violation of law; (ii) which is in violation of
the Colorado Business Corporation Act; or (iii) from
which Indemnitee derived an improper personal benefit;
(3) For an accounting of profits made from the
purchase or sale by Indemnitee of securities of the
Corporation, within the meaning of Section 16(b) of
the Securities Exchange Act of 1934 and amendments
thereto, or similar provisions of any state law; or
(4) For which payment of indemnification by the
Corporation is otherwise prohibited by applicable law.
(b) Except as provided in Paragraph 8 hereof, the Corporation
shall not be liable under this Agreement to make any payment in
connection with any action initiated by Indemnitee against the
Corporation or any director of the Corporation, unless the
Corporation has joined in or consented to the initiation of such
action.
7. PAYMENT OF COSTS AND EXPENSES IN ADVANCE. If requested by Indemnitee,
the Corporation shall pay (within ten (10) days of such written request) any
and all costs and Expenses incurred by Indemnitee in defending or investigating
any Claim, in advance of the final disposition of such Claim, upon the receipt
of a written undertaking by Indemnitee to repay any such amounts if it is
ultimately determined that Indemnitee is not entitled to indemnification by the
Corporation.
8. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Corporation shall
indemnify Indemnitee against any and all expenses, including attorneys' fees,
incurred by Indemnitee in connection with any action, including expenses of
preparation for such action, brought by Indemnitee for: (a) indemnification or
advance payment of Expenses by the Corporation under this Agreement; or (b)
recovery under any directors' liability insurance policy or policies maintained
by the Corporation; provided, however, that indemnification under this
Paragraph 8 shall be limited to those circumstances where the Indemnitee is
successful in obtaining a recovery of, or a determination that he is entitled
to such indemnification, advance expense payment or insurance recovery.
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9. PARTIAL INDEMNIFICATION. In the event Indemnitee is entitled to
indemnification hereunder for a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement actually and reasonably incurred by
him in the investigation, defense, appeal or settlement of any Claim but not,
however, for all of the total amount thereof, the Corporation shall indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Corporation effectively to
bring suit or enforce such rights.
11. NO PRESUMPTION. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court
has determined that indemnification is not permitted by applicable law.
12. SPECIFIC DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Except to
the extent that the Indemnitee has been successful on the merits or otherwise
in defense of any action, suit, or proceeding referred to in Section 0-000-000
of the Colorado Business Corporation Act, or defense of any claim, issue or
matter therein, any indemnification, other than advances under Section 7 of
this Agreement or unless ordered by a court, shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Section 0-000-000 of the Colorado Business Corporation Act. Such
determination shall be made pursuant to the provisions of Section 7-109-106(2)
of the Colorado Business Corporation Act.
13. LIABILITY INSURANCE. To the extent the Corporation maintains an
insurance policy or policies providing liability insurance for directors,
Indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage extended to any other
director of the Corporation.
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14. SCOPE OF AGREEMENT. The rights of Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under any provision of the
Corporation's Certificate of Incorporation, Bylaws or laws of the State of
Colorado.
15. AMENDMENT, TERMINATION AND WAIVER. This Agreement may be amended,
modified or terminated and any of the terms and conditions herein may be waived
only by the written consent of the parties hereto. The failure of any party at
any time or times to require performance of any provisions contained herein
shall in no event affect the right of such party at any later time to enforce
the same.
16. BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Indemnitee and his personal representatives,
heirs and assigns, and the Corporation and its successors and assigns,
including any direct or indirect successor of the Corporation by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Corporation; provided, however, that no assignment of any
rights or delegation of obligations provided for herein may be made by either
party without the express written consent of the other party. This Agreement
shall continue in effect while Indemnitee is a director of the Corporation and
for the period immediately thereafter, terminating two (2) years subsequent to
the duration of any applicable period of limitations for commencing any Claims
and subsequent to the conclusion of any Claims brought within such period.
17. GOVERNING LAW. The parties hereto acknowledge and agree that this
Agreement shall be governed by, construed and enforced in accordance with the
laws, and in the courts, of the State of Colorado.
18. SEVERABILITY. Any provision of this Agreement which may be prohibited
by law, or otherwise held invalid by a court of competent jurisdiction, shall
be ineffective only to the extent of such prohibition or invalidity and shall
not invalidate or otherwise render ineffective the remaining provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
CORPORATION:
APPLIED FILMS CORPORATION
By:
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Its:
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INDEMNITEE:
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