EXHIBIT 10.16
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT, dated as of January 2, 2003, by and
between THE SAGEMARK COMPANIES LTD., a corporation organized under the laws of
the State of New York (the "Corporation"), with its principal office located at
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and XXXXXXXX X. XXXXXXX,
XXXXXXX X. XXXXXXXX, M.D., XXXXXX X. XXXXXXX, XXXXXX X. XXXXXX, XXXXXXXX X.
XXXXXXXX and XXXXXX X. XXXXXXX, individuals with an address at c/o Premier
P.E.T. Imaging International, Inc., 0000 Xxxxxx Xxxx, Xxxxx 000X, Xxxx Xxxxx,
Xxxxxxx 00000(xxxx an "Indemnitee" and collectively, the "Indemnitees").
WHEREAS, the substantial increase in corporate litigation subjects
directors and officers of corporations and others to expensive litigation risks
at the same time that the availability of competent and qualified directors,
officers, employees, consultants, advisers and agents has been greatly reduced,
and the coverage offered by director's and officer's liability insurance has
been severely limited;
WHEREAS, Indemnitees do not regard the protection available under the
Corporation's Articles of Incorporation, By-Laws and professional liability
insurance as adequate in the present circumstances and are not willing to serve
as officers and/or directors of the Corporation without adequate protection, and
the Corporation desires Indemnitees to serve in such capacities;
WHEREAS, as a condition to the Indemnitees' agreement to continue to
serve as officers and/or directors of the Corporation, each of the Indemnitees
requires that he be indemnified from liability to fullest extent permitted by
law; and
WHEREAS, the Corporation is willing to indemnify each of the
Indemnitees to the fullest extent permitted by law in order to retain the
services of the Indemnitees.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein, the Corporation and the Indemnitees agree as follows:
SECTION 1
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MANDATORY INDEMNIFICATION IN PROCEEDINGS OTHER
THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION
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Subject to Section 5 hereof, the Corporation shall defend, indemnify
and hold harmless each Indemnitee from and against any and all claims, damages,
costs, expenses (including attorneys' fees), judgments, penalties, fines
(including excise taxes assessed with respect to an employee benefit plan),
settlements, and all other obligations or liabilities incurred or paid by him in
connection with the investigation, defense, prosecution, settlement or appeal of
any threatened, pending or completed legal action, suit or proceeding, whether
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civil, criminal, administrative, or investigative (other than a legal action or
proceeding by or in the right of the Corporation) and to which an Indemnitee was
or is a party or is threatened to be made a party by reason of the fact that the
Indemnitee is or was an officer, director, shareholder, employee, consultant,
adviser or agent of the Corporation, or is or was serving at the request of the
Corporation as an officer, director, partner, trustee, employee, adviser or
agent of another corporation (including subsidiaries of the Corporation),
partnership, joint venture, trust, employee benefit plan or other enterprise, or
by reason of anything done or not done by an Indemnitee in any such capacity or
capacities, provided that the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
SECTION 2
---------
MANDATORY INDEMNIFICATION IN PROCEEDINGS
BY OR IN THE RIGHT OF THE CORPORATION
-------------------------------------
Subject to Section 5 hereof, the Corporation shall defend, indemnify
and hold harmless each Indemnitee from and against any and all claims, damages,
costs, expenses (including attorneys' fees), judgments, penalties, fines,
obligations, liabilities and amounts incurred or paid by him in connection with
the investigation, defense, prosecution, settlement or appeal of any threatened,
pending or completed legal action, suit or proceeding by or in the right of the
Corporation to procure a judgment in its favor, whether civil, criminal,
administrative or investigative, and to which the Indemnitee was or is a party
or is threatened to be made party by reason of the fact that the Indemnitee is
or was an officer, director, shareholder, employee, consultant, adviser, or
agent of the Corporation, or is or was serving at the request of the Corporation
as an officer, director, partner, trustee, employee adviser or agent of another
corporation (including subsidiaries of the Corporation), partnership, joint
venture, trust, employee benefit plan or other enterprise, or by reason of
anything done or not done by an Indemnitee in any such capacity or capacities,
provided that (i) the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation and (ii) no indemnification shall be made under this Section 2
in respect of any claim, issue or matter as to which the Indemnitee shall have
been adjudged to be liable to the Corporation for misconduct in the performance
of his duty to the Corporation unless, and only to the extent that, the court in
which such proceeding was brought (or any other court of competent jurisdiction)
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such costs, expenses and other amounts
which such court shall deem proper.
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SECTION 3
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MANDATORY INDEMNIFICATION AGAINST EXPENSES
INCURRED WHILE TESTIFYING
-------------------------
Subject to Section 5 hereof, the Corporation shall indemnify each
Indemnitee against all costs and expenses (including attorneys' fees) incurred
or paid by the Indemnitee as a result of providing testimony in any legal action
or proceeding, whether civil, criminal, administrative or investigative
(including but not limited to any legal action or proceeding by or in the right
of the Corporation to procure judgment in its favor), by reason of the fact that
the Indemnitee is or was an officer, director, shareholder, employee,
consultant, adviser or agent of the Corporation, or is or was serving at the
request of the Corporation as an officer, director, partner, trustee, employee,
adviser or agent of another corporation (including subsidiaries of the
Corporation), partnership, joint venture, trust, employee benefit plan or other
enterprise.
SECTION 4
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REIMBURSEMENT OF EXPENSES FOLLOWING
ADJUDICATION OF NEGLIGENCE
--------------------------
The Corporation shall reimburse each Indemnitee for all costs and
expenses (including attorneys' fees) and amounts incurred or paid by him in
connection with the investigation, defense, settlement or appeal of any legal
action or proceeding described in Section 2 hereof that results in an
adjudication that the Indemnitee was liable for negligence, gross negligence or
recklessness (but not willful misconduct) in the performance of his duty to the
Corporation; provided, however, that the Indemnitee acted in good and in a
manner he believed to be in the best interests of the Corporation.
SECTION 5
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AUTHORIZATION OF INDEMNIFICATION
--------------------------------
5.1. Any indemnification under Sections 1, 2 and 3 hereof (unless
ordered by a court), and any reimbursement made under Section 4 hereof, shall be
made by the Corporation only as authorized in the specific case upon a
determination (the "Determination") that indemnification or reimbursement of the
Indemnitee is proper in the circumstances because the Indemnitee has met the
applicable requirements set forth in Sections 1, 2, 3 and 4 hereof, as the case
may be. Subject to Sections 6.6, 6.7 and 9 of this Agreement, the Determination
shall be made in the following order of preference:
(1) first, by the Corporation's Board of Directors (the
"Board") by majority vote or consent of a quorum
consisting of directors ("Disinterested Directors")
who are not, at the time of the Determination, named
parties to such legal action, suit, or proceeding; or
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(2) next, if such quorum of Disinterested Directors
cannot be obtained, by majority vote or consent of a
committee duly designated by the Board (in which
designation of all directors, whether or not
Disinterested Directors, may participate) consisting
solely of two or more Disinterested Directors; or
(3) next, if such a committee cannot be designated, by
any independent legal counsel (who may be any outside
counsel regularly employed by the Corporation) in a
written opinion; or
(4) next, if such legal counsel determination cannot be
obtained, by vote or consent of the holders of a
majority of the Corporation's common stock.
5.2. No Presumptions. The termination of any legal 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
the Indemnitee did not act in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was not unlawful.
5.3. Benefit Plan Conduct. The Indemnitee's conduct with respect to
an employee benefit plan for a purpose he reasonably believed to be in the
interests of the participants in and beneficiaries of the plan shall be deemed
to be conduct that the Indemnitee reasonably believed to be not opposed to the
best interests of the Corporation.
5.4. Reliance a Safe Harbor. For purposes of any Determination
hereunder, the Indemnitee shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, or, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe his conduct was unlawful, if his action is
based on (i) the records or books of account of the Corporation or another
enterprise, including financial statements, (ii) information supplied to him by
the officers of the Corporation or another enterprise in the course of their
duties, (iii) the advice of legal counsel for the Corporation or another
enterprise, or (iv) information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in this
Section 5.3 shall mean any other corporation (including subsidiaries of the
Corporation) or any partnership, joint venture, trust, employee benefit plan or
other enterprise of which the Indemnitee is or was serving at the request of the
Corporation as an officer, director, partner, trustee, employee, adviser or
agent. The provisions of this Section 5.3 shall not be deemed to be exclusive or
to limit in any way the other circumstances in which an Indemnitee may be deemed
to have met the applicable standard of conduct set forth in Section 1, 2, or 4
hereof, as the case may be.
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5.5. Success on Merits or Otherwise. Notwithstanding any other
provision of this Agreement, to the extent that an Indemnitee has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding described in Section 1 or 2 hereof, or in defense of any claim, issue
or matter therein, he shall be indemnified against all costs and expenses
(including attorneys' fees) incurred by him in connection with the
investigation, defense, settlement or appeal thereof. For purposes of this
Section 5.4, the term "successful on the merits or otherwise" shall include, but
not be limited to, (i) any termination, withdrawal, or dismissal (with or
without prejudice) of any claim, action, suit or proceeding against the
Indemnitee without any express finding of liability or guilt against him, or
(ii) the expiration of 120 days after the making of any claim or threat of an
action, suit or proceeding without the institution of the same and without any
promise or payment made to induce a settlement.
5.6. Partial Indemnification or Reimbursement. If the Indemnitee is
entitled under any provision of this Agreement to indemnification and/or
reimbursement by the Corporation for some or a portion of the claims, damages,
expenses (including attorneys' fees), judgments, penalties, fines or amounts
paid in settlement by the Indemnitee in connection with the investigation of,
defense of, settlement of, appeal of our testimony provided with respect to any
action or proceeding specified in Section 1, 2, or 3 hereof, but not, however,
for the total amount thereof, the Corporation shall nevertheless indemnify
and/or reimburse the Indemnitee for the portion thereof to which the Indemnitee
is entitled. The party or parties making the Determination shall determine the
portion (if less than all) of such claims, damages, expenses (including
attorneys' fees), judgments, penalties, fines or amounts paid in settlement for
which the Indemnitee is entitled to indemnification and/or reimbursement under
this Agreement.
SECTION 6
---------
PROCEDURES FOR DETERMINATION OF WHETHER
STANDARDS HAVE BEEN SATISFIED
-----------------------------
6.1. Costs. All costs of making the Determination required by
Section 5 hereof shall be borne solely by the Corporation, including, but not
limited to, the costs of legal counsel, proxy solicitations and judicial
determinations. The Corporation shall also be solely responsible for paying (i)
all reasonable costs and expenses incurred by the Indemnitee to enforce this
Agreement, including, but not limited to, all costs incurred by the Indemnitee
to obtain court-ordered indemnification pursuant to Section 9 hereof, regardless
of the outcome of any such application or proceeding, and (ii) all costs of
defending any legal actions or proceedings challenging payments to the
Indemnitee under this Agreement.
6.2. Timing of the Determination. The Corporation shall use its
best efforts to make the Determination contemplated by Section 5 hereof promptly
(but in no event later than forty-five (45) days after receipt by the
Corporation of a written request for indemnification). In addition, the
Corporation agrees:
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(a) if the Determination is to be made by the Board or a
committee thereof, such Determination shall be made
not later than 15 days after a written request for a
Determination (a "Request") is delivered to the
Corporation by the Indemnitee;
(b) if the Determination is to be made by independent
legal counsel, such Determination shall be made not
later than 30 days after a Request is delivered to
the Corporation by the Indemnitee; and
(c) if the Determination is to be made by the
shareholders of the Corporation, such Determination
shall be made not later than 90 days after a Request
is delivered to the Corporation by the Indemnitee.
The failure to make a Determination within the
above-specified time period shall constitute a
Determination approving full indemnification or
reimbursement of the Indemnitee. Notwithstanding
anything herein to the contrary, a Determination may
be made in advance of (i) the Indemnitee's payment
(or incurring) of expenses with respect to which
indemnification of reimbursement is sought, and/or
(ii) final disposition of the action, suit or
proceeding with respect to which indemnification or
reimbursement is sought.
6.3. Payment of Indemnified Amount. Immediately following a
Determination that the Indemnitee has met the applicable requirements set forth
in Sections 1, 2, 3, or 4 hereof, as the case may be, or the passage of time
prescribed for making such Determination(s), the Corporation shall pay to the
Indemnitee in cash, the amount which the Indemnitee is entitled to be
indemnified and/or reimbursed, as the case may be, without further authorization
or action by the Board; provided, however, that costs and expenses for which
indemnification or reimbursement is sought have actually been incurred by the
Indemnitee.
6.4. Shareholder Vote on Determination. Notwithstanding the
provisions of applicable law, if the Indemnitee is a shareholder of the
Corporation, the Indemnitee and any other shareholder who is a party to the
legal action or proceeding for which indemnification or reimbursement is sought
shall be entitled to vote on any Determination to be made by the Corporation's
shareholders. In addition, in connection with each meeting at which a
shareholder Determination will be made, the Corporation shall solicit proxies
that expressly include a proposal to indemnify or reimburse the Indemnitee. The
Corporation's proxy statement relating to the proposal to indemnify or reimburse
an Indemnitee shall not include a recommendation against indemnification or
reimbursement.
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6.5. Selection of Independent Legal Counsel. If the Determination
required under Section 5 is to be made by independent legal counsel, such
counsel shall be selected by the Indemnitee with the approval of the Board,
which approval shall not be unreasonably withheld. The fees and expenses
incurred by counsel in making any Determination (including Determinations
pursuant to Section 6.7 hereof) shall be borne solely by the Corporation
regardless of the results of any Determination and, if requested by counsel, the
Corporation shall give counsel an appropriate written agreement with respect to
the payment of their fees and expenses and such other matters as may be
reasonably requested by counsel.
6.6. Right of Indemnitee to Appeal an Adverse Determination by
Board. If a Determination is made by the Board or a committee thereof that the
Indemnitee did not meet the requirements set forth in Section 1, 2, 3, or 4
hereof, upon the written request of the Indemnitee and the Indemnitee's delivery
of $500 to the Corporation, the Corporation shall cause a new Determination to
be made by the Corporation's shareholders at the next regular or special meeting
of shareholders. Subject to Section 9 hereof, such Determination by the
Corporation's shareholders shall be binding and conclusive for all purposes of
this Agreement.
6.7. Right of Indemnitee to Select Forum for Determination. If at
any time subsequent to the date of this Agreement, Continuing Directors (as
defined below) do not constitute a majority of the members of the Board, or
there is otherwise a change in control of the Corporation, then upon the request
of the Indemnitee, the Corporation shall cause the Determination required by
Section 5 hereof to be made by independent counsel selected by the Indemnitee
and approved by the Board (which approval shall not be unreasonably withheld),
which counsel shall be deemed to satisfy the requirements of clause (3) of
Section 5 hereof. If legal counsel selected by the Indemnitee is not willing
and/or able to make the Determination, then the Corporation shall cause the
Determination to be made by a majority vote or consent of a Board committee
consisting solely of Continuing Directors. For purposes of this Agreement, a
"Continuing Director" means either a member of the Board on the date of this
Agreement or a person nominated to serve as a member of the Board by a majority
of the then Continuing Directors.
6.8. Access by Indemnitee to Determination. The Corporation shall
afford to the Indemnitee and his representatives ample opportunity to present
evidence of the facts upon which the Indemnitee relies for indemnification or
reimbursement, together with other information relating to any requested
Determination. The Corporation shall also afford the Indemnitee the reasonable
opportunity to include such evidence and information in any Corporation proxy
statement relating to a shareholder Determination.
6.9. Judicial Determinations in Derivative Suits. In each legal
action or proceeding described in Section 2 hereof, the Corporation shall cause
its counsel to use its best efforts to obtain from the Court in which such
action or proceeding was brought (i) an express adjudication whether the
Indemnitee is liable for negligence or misconduct in the performance of his duty
to the Corporation, and, if the Indemnitee is so liable, (ii) a determination
whether and to what extent, despite the adjudication of liability but in view of
all the circumstances of the case (including this Agreement), the Indemnitee is
fairly and reasonably entitled to indemnification.
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SECTION 7
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SCOPE OF INDEMNITY
------------------
The actions, suits and proceedings described in Section 1 and 2 hereof
shall include, for purposes of this Agreement, any actions that involve,
directly or indirectly, activities of the Indemnitee both in his capacities as a
Corporation director, officer, adviser, or agent and actions taken in another
capacity while serving as a director, officer, adviser, or agent, including, but
not limited to, actions or proceedings involving (i) compensation paid to the
Indemnitee by the Corporation (ii) activities by the Indemnitee on behalf of the
Corporation, including actions in which the Indemnitee is plaintiff, (iii)
actions alleging a misappropriation of a "corporate opportunity", (iv) responses
to a takeover attempt or threatened takeover attempt of the Corporation, (v)
transactions by the Indemnitee in the Corporation's securities, and (vi) the
Indemnitee's preparation for and appearances (or potential appearance) as a
witness in any action or proceeding relating, directly or indirectly, to the
Corporation. In addition, the Corporation agrees that, for purposes of this
Agreement, all services performed by the Indemnitee on behalf of, in connection
with or related to any subsidiary of the Corporation, any employee benefit plan
established for the benefit of employees of the Corporation or any subsidiary,
corporation, partnership or other entity in which the Corporation or any
subsidiary has a 5% or greater ownership interest, or any other affiliate shall
be deemed to be at the request of the Corporation.
SECTION 8
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ADVANCE FOR EXPENSES
--------------------
8.1. Mandatory Advance. All costs and expenses (including
attorneys' fees) incurred by the Indemnitee in investigating, defending,
settling, or appealing any action, suit or proceeding described in Section 1 or
2 hereof shall be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding. The Corporation shall promptly pay the amount
of such costs and expenses to the Indemnitee, but in no event later than 7 days
following the Indemnity's delivery to the Corporation of a written request for
an advance pursuant to this Section 8, together with a reasonable accounting of
such costs and expenses.
8.2. Undertaking to Repay. The Indemnitee hereby undertakes and
agrees to repay to the Corporation any advances made pursuant to this Section 8
if and to the extent that it shall ultimately be found that the Indemnitee is
not entitled to be indemnified by the Corporation for such amounts.
8.3. Miscellaneous. The Corporation shall make the advances
contemplated by this Section 8 regardless of the Indemnitee's financial ability
to make repayment, and regardless of whether indemnification of the Indemnitee
by the Corporation will ultimately be required. Any advances and undertakings to
repay pursuant to this Section 8 shall be unsecured and interest-free.
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SECTION 9
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COURT ORDERED INDEMNIFICATION
-----------------------------
9.1. Application to Court. Regardless of whether the Indemnitee has
met the requirements set forth in Section 1, 2, 3, or 4 hereof, as the case may
be, and notwithstanding the presence or absence of any Determination whether
such standards have been satisfied, the Indemnitee may apply for indemnification
(and/or reimbursement pursuant to Section 4 or 13 hereof) to the court
conducting any action or proceeding to which the Indemnitee is a party or to any
other court of competent jurisdiction. On receipt of an application, the court,
after giving any notice the court considers necessary, may order indemnification
(and/or reimbursement) if it determines the Indemnitee is fairly and reasonably
entitled to indemnification (and/or reimbursement) in view of all the relevant
circumstances (including this Agreement).
9.2. Enforceability. The right to indemnification and advances as
provided by this Agreement shall be enforceable by an Indemnitee in an action in
any court of competent jurisdiction. In such an action, the burden of proving
that indemnification is not required hereunder shall be on the Corporation.
Neither the failure of the Corporation (including its Board and independent
legal counsel) to have made a declaration prior to the commencement of such an
action that indemnification is proper in the circumstances because Indemnitee
has met the applicable standard of conduct, nor an actual Determination by the
Corporation (including its Board and independent legal counsel) that Indemnitee
has not met such applicable standard of conduct, shall be a defense to such an
action or create a presumption that Indemnitee has not met the applicable
standard of conduct. Indemnitee's expenses reasonably incurred in connection
with establishing his right to indemnification, in whole or in part, in
connection with any proceeding shall also be indemnified by the Corporation.
SECTION 10
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NON-DISCLOSURE OF PAYMENTS
--------------------------
Except as expressly required by applicable law, neither the Corporation
nor any Indemnitee shall disclose any payments under this Agreement unless prior
approval of each of the applicable parties is obtained. Any payments to an
Indemnitee that must be disclosed shall, unless otherwise required by law, be
described only in the Corporation's proxy or information statements relating to
special and/or annual meetings of the Corporation's shareholders, and the
Corporation shall afford the Indemnitee the reasonable opportunity to review all
such disclosures and, if requested, to explain in such statement any mitigating
circumstances regarding the events reported.
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SECTION 11
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COVENANT NOT TO XXX, LIMITATION OF ACTIONS AND RELEASE OF CLAIMS
----------------------------------------------------------------
No legal action shall be brought and no cause of action shall be
asserted by or on behalf of the Corporation (or any of its subsidiaries) against
an Indemnitee, his spouse, heirs, executors, personal representatives or
administrators, after the expiration of 2 years from the date the Indemnitee
ceases (for any reason) to serve as either an officer, director, advisor, or
agent of the Corporation, and any claim or cause of action of the Corporation
(or any of its subsidiaries) shall be extinguished and deemed released unless
asserted by filing of a legal action within such 2-year period.
SECTION 12
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INDEMNIFICATION OF INDEMNITEE'S ESTATE
--------------------------------------
Notwithstanding any other provision of this Agreement, if the
Indemnitee is deceased, and indemnification of the Indemnitee would be permitted
and/or required under this Agreement, the Corporation shall defend, indemnify
and hold harmless the Indemnitee's estate, spouse, heirs, administrators,
personal representatives and executors (collectively the "Indemnitee's Estate")
against, and the Corporation shall assume, any and all claims, damages,
liabilities, costs, expenses (including attorney's fees) penalties, judgements,
fines, and amounts paid in settlement actually incurred by the Indemnitee or the
Indemnitee's Estate in connection with the investigation, defense, settlement,
or appeal of any action or proceeding described in Section 1 or 2 hereof.
SECTION 13
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DEFENSE OF CLAIMS
-----------------
13.1. Notification of Indemnification Claim. Promptly after receipt
by Indemnitee of notice of the commencement of any legal action or proceeding
which is the subject of this Agreement, Indemnitee will, if a claim in respect
thereof is to be made against the Corporation under this Agreement, notify the
Corporation in writing of the commencement thereof, but the omission to so
notify the Corporation will not relieve the Corporation from any liability that
it may have to the Indemnitee, unless such omission prejudices the Corporation
with respect thereto.
13.2. Defense of Claim. Notwithstanding any other provision of this
Agreement, with respect to any such legal action or proceeding to which an
Indemnitee gives notice to the Corporation of the commencement thereof: (a) The
Corporation will be entitled to participate therein at its own expense; and (b)
except as otherwise provided in this Section 13.2, to the extent that it wishes,
the Corporation, jointly with any other indemnifying party similarly notified,
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the Indemnitee. After notice from the Corporation to an
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Indemnitee of its election to so assume the defense of any such action or
proceeding, the Corporation shall not be liable to the Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by Indemnitee in
connection with the defense thereof, other than the costs of investigation or as
otherwise provided below, provided that the Indemnitee approves counsel to be
engaged by the Corporation therein. Indemnitee shall have the right to employ
its own counsel in any such legal action or proceeding, however, the fees and
expenses of such counsel following the date of Indemnitee's approval of the
Corporation's counsel therein shall be at the expense of the Indemnitee unless
(i) the employment of counsel by the Indemnitee has been authorized by the
Corporation, (ii) counsel for the Corporation shall reasonably conclude that
there may be a conflict of interest between the Corporation and the Indemnitee
in the conduct of the defense of such action or proceeding, such that under the
applicable code of professional responsibility the same counsel cannot represent
both the Corporation and the Indemnitee, or (iii) the Corporation shall not in
fact have employed counsel approved by Indemnitee to assume the defense of any
such action or proceeding, in each of which cases, all of the fees and expenses
of Indemnitee's counsel shall be at the expense of the Corporation.
13.3. Settlement. The Corporation shall not be liable to indemnify
the Indemnitee under this Agreement for any amounts paid by Indemnitee in
settlement of any legal action or proceeding effected without the Corporation's
written consent, unless the Corporation is in breach of its obligations under
this Agreement. The Corporation shall not settle any such action or proceeding
in any manner that would impose any penalty, limitation or obligation on the
Indemnitee without the Indemnitee's written consent. Neither the Corporation nor
the Indemnitee will unreasonably withhold, condition or delay providing their
consent to any such proposed settlement.
SECTION 14
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TERM
----
This Agreement shall continue until and terminate upon the later of (a)
ten years after the date that Indemnitee ceases to be employed by the
Corporation or any of its subsidiaries (including service as a member of the
Corporation's or any of its subsidiary's Board of Directors), (b) the final
termination of any pending or threatened legal actions or proceedings to which
the Indemnitee may be subject, by reason of the fact that he is or was a
director, officer, employee, agent or fiduciary of the Corporation or is or was
performing services at the request of the Corporation or any subsidiary thereof
as a director, officer, employee, agent or fiduciary of any other entity
including, but not limited to, another corporation, partnership, joint venture
or trust, or by reason of any act or omission by him in such capacity, or (c)
the expiration of all applicable statutes of limitation with respect to all such
actions or potential actions to which the Indemnitee is or could be a party as a
result of his services to the Corporation and/or its subsidiaries.
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SECTION 15
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MISCELLANEOUS
-------------
15.1. Notice Provision. Any notice, demand or communication required
or permitted to be delivered or given by the provisions of this Agreement shall
be deemed to have been effectively delivered or given and received on the date
personally delivered to the respective party to whom it is directed, or within
three (3) days after being sent by registered or certified mail, with postage
prepaid and addressed to the parties at the addresses set forth in the preamble
to this Agreement. Any party may by notice change the address to which notice or
other communications to it are to be delivered or mailed.
15.2. Entire Agreement. Except for the Corporation's Articles of
Incorporation and By-Laws, this Agreement constitutes the entire understanding
of the parties and supercedes all prior understandings, whether written or oral,
between the parties with respect to the subject matter of this Agreement.
15.3. Non-exclusivity. The rights of indemnification and
reimbursement provided for in this Agreement shall be in addition to any other
rights to which the Indemnitee may otherwise be entitled under the Corporation's
Articles of Incorporation or By-Laws or any statute, agreement, vote of
shareholders or otherwise. To the extent that any change in applicable law
(whether by statute or judicial decision) permits greater indemnification by
agreement that would be afforded currently under the Corporation's Certificate
of Incorporation, or otherwise as set forth in this Agreement, it is the intent
of the parties that this Agreement provide Indemnitee with all of the greater
benefits so afforded by such change and the Corporation will, upon request of an
Indemnitee, so amend or modify this Agreement to effectuate the foregoing.
15.4. Severability of Provisions. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of each such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
15.5. Saving Clause. If this Agreement or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify Indemnitee as to all costs, expenses,
liabilities, judgments, fines, and penalties with respect to any legal action or
proceeding to the fullest extent permitted by any applicable portion of this
Agreement that shall not have been invalidated or by any applicable law.
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15.6. Cooperation and Intent. The Corporation shall cooperate in
good faith with the Indemnitee and use its best efforts to ensure that the
Indemnitee is indemnified and/or reimbursed for liabilities described herein to
the fullest extent permitted by law.
15.7. Employment. Nothing in this Agreement shall confer on
Indemnitee the right to continue in the employ or service of the Corporation or
affect the right of the Corporation to terminate an Indemnitee's employment
and/or directorship at any time in the sole discretion of the Corporation, with
or without cause, subject to any contractual or other rights which Indemnitee
may have as a result of, or otherwise with respect to, any such termination.
15.8. Security. To the fullest extent permitted by applicable law,
the Corporation may from time to time, but shall not be required to, provide
such insurance, collateral, letters of credit, or other security devices as its
Board may deem appropriate to support or secure the Corporation's obligations
under this Agreement.
15.9. Applicable Law. This Agreement shall be governed by and
construed under the laws of the State of New York.
15.10. Amendment. No amendment, modification or alteration of the
terms of this Agreement shall be binding unless in writing, dated subsequent to
the date of this Agreement, and executed by the parties to be bound thereby.
15.11. Binding Effect. The obligations of the Corporation to the
Indemnitee hereunder shall survive and continue as to the Indemnitee even if the
Indemnitee ceases to be a director, officer, employee, adviser and/or agent of
the Corporation. Each and all of the covenants, terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the estate, heirs,
executors, administrators and personal representatives of Indemnitee.
15.12. Execution in Counterparts. This Agreement and any amendment
may be executed simultaneously or in counterparts, each of which together shall
constitute on and the same instrument.
15.13. Effective Date. The provisions of this Agreement shall cover
claims, actions, suits and proceedings whether now pending or hereafter
commenced and shall be retroactive to cover all acts or omissions or alleged
acts or omissions which heretofore have taken place.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
THE SAGEMARK COMPANIES LTD.
By: /s/ XXXXXXXX X. XXXXXXX
-------------------------------------
Xxxxxxxx X. Xxxxxxx,
President and Chief Executive Officer
INDEMNITEES:
/s/ XXXXXXX X. XXXXXXXX
------------------------------------------
Xxxxxxx X. Xxxxxxxx, M.D.
/s/ XXXXXXXX X. XXXXXXX
------------------------------------------
Xxxxxxxx X. Xxxxxxx
/s/ XXXXXX X. XXXXXXX
------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ XXXXXX X. XXXXXX
------------------------------------------
Xxxxxx X. Xxxxxx
/s/ XXXXXXXX X. XXXXXXXX
------------------------------------------
Xxxxxxxx X. Xxxxxxxx
/s/ XXXXXX X. XXXXXXX
------------------------------------------
Xxxxxx X. Xxxxxxx
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