Form of
DIRECTORS INDEMNIFICATION AGREEMENT
This DIRECTORS INDEMNIFICATION AGREEMENT made and entered into as of [first
date on the Board] ("Agreement"), by and between COMMEMORATIVE BRANDS, INC., a
Delaware corporation ("Company"), and ___________ ("INDEMNITEE"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance and indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the corporation; and
WHEREAS, the current difficulties of obtaining adequate insurance and
uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons;
WHEREAS, the Board of Directors has determined that the inability to
attract and retain 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; and
WHEREAS, 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; and
WHEREAS, 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:
Section 1. Services by INDEMNITEE. INDEMNITEE agrees to continue to serve
as a director of the Company. This Agreement does not create or otherwise
establish any right on the part of INDEMNITEE to be and continue to be nominated
to be a director of the Company.
Section 2. Indemnification. The Company shall indemnify INDEMNITEE to the
fullest extent permitted by applicable law in effect on the date hereof or as
such laws may from time to time be amended. Without diminishing the scope of the
indemnification provided by this Section 2, the rights of indemnification of
INDEMNITEE provided hereunder shall include but shall not be limited to those
rights set forth hereinafter, except to the extent expressly prohibited by
applicable law.
Section 3. Action or Proceeding Other Than an Action by or in the Right of
the Company. INDEMNITEE shall be entitled to the indemnification rights provided
in this section if he is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, other than an action by or
in the right of the Company, by reason of the fact that he is
-2-
or was a director, agent, or fiduciary of the Company or is or was serving at
the request of the Company as a director, agent, or fiduciary of any other
entity or by reason of anything done or not done by him in any such capacity.
Pursuant to this section INDEMNITEE shall be indemnified against expenses
(including attorneys' fees and disbursements), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding (including, but not limited to, the
investigation, defense or appeal thereof), if he 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, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 4. Actions by or in the Right of the Company. INDEMNITEE shall be
entitled to the indemnification rights provided in this section if he is a
person who was or is made a party or is threatened to be made a party to any
threatened, pending or completed action or suit brought by or in the right of
the Company to procure a judgment in its favor by reason of the fact that he is
or was a director, agent, or fiduciary of the Company or is or was serving at
the request of the Company as a director, agent, or fiduciary of any other
entity by reason of anything done or not done by him in any such capacity.
Pursuant to this Section INDEMNITEE shall be indemnified against expenses
(including attorneys' fees and disbursements) actually and reasonably incurred
by him in connection with such action or suit (including, but not limited to,
the investigation, defense, settlement or appeal thereof) if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company; provided, however, that no such indemnification shall
be made in
-3-
respect of any claim, issue or matter as to which applicable law expressly
prohibits such indemnification by reason of an adjudication of liability of
INDEMNITEE to the Company, unless, and only 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 upon application that, despite such adjudication of
liability but in view of all the circumstances of the case, INDEMNITEE is fairly
and reasonably entitled to indemnification for such expenses as such court shall
deem proper.
Section 5. Indemnification for Expenses of Successful Party.
Notwithstanding the other provisions of this Agreement, to the extent that
INDEMNITEE has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
action, suit or proceeding referred to in Section 4 hereof, or in defense of any
claim, issue or matter therein, he shall be indemnified against all expenses
(including attorneys' fees and disbursements) actually and reasonably incurred
by him or on his behalf in connection therewith.
Section 6. Indemnification for Expenses of a Witness. To the extent that
INDEMNITEE is, by reason of his or her Corporate Status (as hereinafter
defined), a witness in any proceeding, INDEMNITEE shall be indemnified by the
Company against all expenses actually and reasonably incurred by INDEMNITEE or
on INDEMNITEE's behalf in connection therewith.
Section 7. Partial Indemnification. If INDEMNITEE is only partially
successful in the defense, investigation, settlement or appeal of any action,
suit, investigation or proceeding described in Section 4 hereof, and as a result
is not entitled under Section 5
-4-
hereof to indemnification by the Company for the total amount of the expenses
(including attorneys' fees and disbursements), judgments, penalties, fines, and
amounts paid in settlement actually and reasonably incurred by him, the Company
shall nevertheless indemnify INDEMNITEE, as a matter of right pursuant to
Section 5 hereof, to the extent INDEMNITEE has been partially successful.
Section 8. Determination of Entitlement to Indemnification. Upon written
request by INDEMNITEE for indemnification pursuant to Section 3 or 4 hereof, the
entitlement of the INDEMNITEE to indemnification pursuant to the terms of this
Agreement shall be determined by the following person or persons who shall be
empowered to make such determination: (a) the Board of Directors of the Company
by a majority vote of the Disinterested Directors (as hereinafter defined) even
though less than a quorum; or (b) if such vote is not obtainable or, even if
obtainable, if such Disinterested Directors so direct by majority vote, by
Independent Counsel (as hereinafter defined) in a written opinion to the Board
of Directors, a copy of which shall be delivered to INDEMNITEE; or (c) by the
stockholders. Such Independent Counsel shall be selected by the Board of
Directors 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 Chancellor of the State of Delaware
or such other person as the Chancellor shall designate to make such selection.
Such determination of entitlement to indemnification shall be made not later
than 60 days after receipt by the Company of a written request for
indemnification. Such request shall include documentation or information which
is necessary for such determination and which is reasonably available to
INDEMNITEE. Any expenses
-5-
(including attorneys' fees and disbursements) incurred by INDEMNITEE in
connection with his request for indemnification hereunder shall be borne by the
Company. The Company hereby indemnifies and agrees to hold INDEMNITEE harmless
therefrom irrespective of the outcome of the determination of INDEMNITEE's
entitlement to indemnification. If the person making such determination shall
determine that INDEMNITEE is entitled to indemnification as to part (but not
all) of the application for indemnification, such person shall reasonably
prorate such partial indemnification among such claims, issues or matters.
Section 9. Presumptions and Effect of Certain Proceedings. The Secretary of
the Company shall, promptly upon receipt of INDEMNITEE's request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the determination as provided in Section 8 that
INDEMNITEE has made such request for indemnification. Upon making such request
for indemnification, INDEMNITEE shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in the
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 60 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 actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 3 or 4 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that INDEMNITEE did not act in good faith and
in a manner which he reasonably believed to
-6-
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, that INDEMNITEE had reasonable cause to
believe that his conduct was unlawful; or (b) otherwise adversely affect the
rights of INDEMNITEE to indemnification except as may be provided herein.
Section 10. Advancement of Expenses. All reasonable expenses incurred by
INDEMNITEE (including attorneys' fees, retainers and advances of disbursements
required of INDEMNITEE) shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding, whether civil, criminal,
administrative or investigative in nature, at the request of INDEMNITEE within
twenty days after the receipt by the Company of a statement or statements from
INDEMNITEE requesting such advance or advances from time to time. INDEMNITEE's
entitlement to such 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 reasonably
evidence the expenses incurred by him in connection therewith and shall include
or be accompanied by an undertaking by or on behalf of INDEMNITEE to repay such
amount if it is ultimately determined that INDEMNITEE is not entitled to be
indemnified against such expenses and costs by the Company as provided by this
Agreement or otherwise. The Company shall have the burden of proof in any
determination under this Section.
Section 11. Remedies of INDEMNITEE in Cases of Determination not to
Indemnify or to Advance Expenses. In the event that a determination is made that
INDEMNITEE is not entitled to indemnification hereunder or if payment has not
been timely made following a determination of entitlement to indemnification
pursuant to Sections 8 and 9,
-7-
or if expenses are not advanced pursuant to Section 10, INDEMNITEE shall be
entitled to a final adjudication in the Delaware Court of Chancery, first, and
then in any other court of competent jurisdiction of his entitlement to such
indemnification or advance. Alternatively, INDEMNITEE at his option may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association, such award to be made within
sixty days following the filing of the demand for arbitration. The Company shall
not oppose INDEMNITEE's right to seek any such adjudication or award in
arbitration or any other claim. Such judicial proceeding or arbitration shall be
made de novo and INDEMNITEE shall not be prejudiced by reason of a determination
(if so made) that he is not entitled to indemnification. If a determination is
made or deemed to have been made pursuant to the terms of Section 8 or 9 hereof
that INDEMNITEE is entitled to indemnification, the Company shall be bound by
such determination and is precluded from asserting that such determination has
not been made or that the procedure by which such determination was made is not
valid, binding and enforceable. The Company further agrees to stipulate in any
such court or before any such arbitrator that the Company is bound by all the
provisions of this agreement and is precluded from making any assertion to the
contrary. If the court or arbitrator shall determine that INDEMNITEE is entitled
to any indemnification hereunder, the Company shall pay all reasonable expenses
(including attorneys' fees and disbursements) actually incurred by INDEMNITEE in
connection with such adjudication or award in arbitration (including, but not
limited to, any appellate proceedings).
Section 12. Other Rights to Indemnification. The indemnification and
advancement of expenses (including attorneys' fees and disbursements) provided
by this
-8-
Agreement shall not be deemed exclusive of any other rights to which INDEMNITEE
may now or in the future be entitled under any provision of the by-laws,
agreement, provision of the Certificate of Incorporation, vote of stockholders
or disinterested directors, provision of law, or otherwise.
Section 13. Attorneys' Fees and Other Expenses To Enforce Agreement. In the
event that INDEMNITEE is subject to or intervenes in any proceeding in which the
validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce his rights under, or to recover
damages for breach of, this Agreement, INDEMNITEE, if he prevails in whole or in
part in such action, shall be entitled to recover from the Company and shall be
indemnified by the Company against, any actual expenses for attorneys' fees and
disbursements reasonably incurred by him, provided that in bringing the
advancement action, INDEMNITEE acted in good faith.
Section 14. Duration of Agreement. This Agreement shall apply with respect
to INDEMNITEE's occupation of any of the position(s) described in Sections 3 and
4 of this Agreement prior to the date of this agreement and with respect to all
periods of such service after the date of this Agreement, even though the
INDEMNITEE may have ceased to occupy such positions(s). This Agreement shall be
binding upon the Company and its successors and assigns (including any
transferee of all or substantially all of its assets and any successor by merger
of operation of law) and shall inure to the benefit INDEMNITEE and his spouse,
assigns, heirs, devises, executors, administrators or other legal
representatives. This Agreement supercedes any prior indemnification arrangement
between the Company (or its predecessor) and INDEMNITEE.
-9-
Section 15. Severability. If any provision of provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including without limitation, all portions of any paragraphs of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
Section 16. Identical Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
Section 17. Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
Section 18. Definitions. For purposes of this Agreement:
(a) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by INDEMNITEE.
-10-
(b) "Independent Counsel" shall mean a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained to
represent: (i) the Company or INDEMNITEE in any matter material to either such
party, or (ii) any other party to the action, suit, investigation or 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 right to indemnification under this
Agreement.
(c) "Corporate Status" shall mean the status of a person who is or was
a director, officer, employee, agent or fiduciary of the Company or any majority
owned subsidiary or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise that such person is or was serving at
the request of the Company.
Section 19. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 20. Notice by INDEMNITEE. INDEMNITEE agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any matter
which may be subject to indemnification covered hereunder, either civil,
criminal, administrative, investigative or otherwise, provided, however, that
the failure to so notify the Company will
-11-
not relieve the Company from any liability it may have to INDEMNITEE except to
the extent that such failure materially prejudices the Company's ability to
defend such claim. With respect to any such action, suit, proceeding, inquiry or
investigation as to which INDEMNITEE notifies the Company of the commencement
thereof:
(i) The Company will be entitled to participate therein at its
own expense; and
(ii) Except as otherwise provided below, to the extent that it
may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to INDEMNITEE. After notice from the Company to INDEMNITEE of its
election so to assume the defense thereof, the Company will not be liable to
INDEMNITEE under this Agreement for any legal or other expenses subsequently
incurred by INDEMNITEE in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. INDEMNITEE
shall have the right to employ his own counsel in such action, suit, proceeding,
inquiry or investigation, but the fees and expenses of such counsel incurred
after notice from the Company of its assumption of the defense thereof shall be
at the expense of INDEMNITEE and not subject to indemnification hereunder unless
(x) the employment of counsel by INDEMNITEE has been authorized by the Company;
(y) in the reasonable opinion of counsel to INDEMNITEE there is or may be a
conflict of interest between he Company and INDEMNITEE in the conduct of the
defense of such action; or (z) the Company shall not in fact have employed
counsel to assume the defense of such action, in each of which cases the fees
and expenses of counsel shall be at the expense of the Company.
-12-
(b) Neither the Company nor the INDEMNITEE shall settle any Claim
without the prior written consent of the other (which shall not be unreasonably
withheld).
Section 21. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed or if (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to INDEMNITEE, to the address set forth below his signature.
(b) If to the Company to:
Commemorative Brands, Inc.
0000 Xxxxxx X Xxxx
Xxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
or to such other address as may have been furnished to INDEMNITEE by the Company
or to the Company by INDEMNITEE, as the case may be.
Section 22. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware.
-13-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
COMMEMORATIVE BRANDS, INC.
By:_______________________________
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
0000 Xxxxxx X Xxxx
Xxxxxx, Xxxxx 00000
_____________________________________
[Name]
Address:
-14-
