ADVANCE DISPLAY TECHNOLOGIES, INC.
FORM 10-KSB
FOR THE FISCAL YEAR ENDED
JUNE 30, 1997
EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made and entered into
this ______ day of ________________, 199___, by and between Advance Display
Technologies, Inc. (the "Company"), and _________________ (the "Executive").
RECITALS
WHEREAS, the Executive performs a valuable service for the Company in his
capacity as _______________________; and
WHEREAS, the Executive does not consider the existing provisions of the
Articles of Incorporation and Bylaws regarding indemnification to be sufficient
and has requested additional consideration; and
WHEREAS, the Bylaws, by their non-exclusive nature, permit contracts
between the Company and its agents, officers, employees and other agents with
respect to indemnification of such persons; and
WHEREAS, in order to induce Executive to continue serving as a director of
the Company, the Company is willing to indemnify the Exeuctive to the extent set
forth below.
NOW, THEREFORE, in consideration of Executive's service as a director after
the date hereof, the parties hereto agree as follows:
1. Indemnity. The Company will indemnify the Executive, his executors,
administrators or assigns, for any Expenses (as defined below) which the
Executive is or becomes legally obligated to pay in connection with any
Proceeding. As used in this Agreement the term "Proceeding" includes any
threatened, pending or completed claim, action, suit or proceeding, whether
brought by or in the right of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, in which the Executive may be
or may have been involved as a party or otherwise, by reason of the fact that
Executive is or was a director or officer of the Company, by reason of any
actual or alleged error or misstatement or misleading statement made or suffered
by the Executive, by reason of any action taken by him or of any inaction on his
part while acting as such director or officer, or by reason of the fact that he
was serving at the request of the Company as a director, trustee, officer,
fiduciary, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise; provided, that in each such case Executive acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Company, and, in the case of a criminal proceeding,
had no reasonable cause to believe that his conduct was unlawful. As used in
this Agreement, the term "other enterprise" includes (without limitation)
employee benefit plans and administrative committees thereof, and the term
"fines" includes (without limitations) any excise tax assessed with respect to
any employee benefit plan.
2. Expenses. As used in this Agreement, the term "Expenses" includes,
without limitation, damages, judgments, fines, penalties, settlements and costs,
reasonable attorneys' fees and disbursements and costs of attachment or similar
bonds, and investigations in connection with investigating, defending, being a
witness or participating in any Proceeding, and any expenses of establishing a
right to indemnification under this Agreement.
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3. Enforcement. If a claim or request under this Agreement is not paid by
the Company, or on its behalf, within thirty days after a written claim or
request has been received by the Company, the Executive may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, the Executive shall be
entitled to be paid also the Expenses of prosecuting such suit.
4. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Executive, 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 Company effectively to bring suit to
enforce such rights; provided, however, that neither this right of subrogation
nor the exclusion set forth in Section 5(b) below shall apply to any right of
recovery of the Executive or any payment received by the Executive from an
entity that is the primary employer of the Executive or on whose behalf the
Executive serves as a director and/or officer of the Company or an affiliate of
any such entity.
5. Exclusions. The Company shall not be liable under the Agreement to make
any payment in connection with any claim made against the Executive:
(a) to the extent that payment is actually made to the Executive under
a valid, enforceable and collectible insurance policy;
(b) to the extent that the Executive is indemnified and actually paid
otherwise than pursuant to this Agreement, subject to Section 4;
(c) in connection with a judicial action by or in the right of the
Company, in respect of any claim, issue or matter as to which the Executive
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Company unless, and only to the extent that,
any court in which such action was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, the Executive is fairly and reasonably entitled
to indemnity for such expenses as such court shall deem proper;
(d) if it is proved by final judgment in a court of law or other final
adjudication to have been based upon or attributable to the Executive's
having gained any personal profit or advantage to which he was not legally
entitled;
(e) for a disgorgement of profits made from the purchase and sale by
the Executive of securities pursuant to Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
state statutory law or common law;
(f) brought about or contributed to by the dishonesty of the
Executive; provided, however, notwithstanding the foregoing, the Executive
shall be protected under this Agreement as to any claims upon which suit
may be brought against him by reason of any alleged dishonesty on his part,
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unless a judgment or other final adjudication thereof adverse to the
Executive shall establish that he committed (i) acts of active and
deliberate dishonesty, (ii) with actual dishonest purpose and intent, (iii)
which acts were material to the cause of action so adjudicated; or
(g) for any judgment, fine or penalty which the Company is prohibited
by applicable law from paying as indemnity or for any other reason.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of this Agreement, to the extent that the Executive has been
successful on the merits or otherwise in defense of any Proceeding or in defense
of any claim, issue or matter therein, including dismissal without prejudice,
Executive shall be indemnified against any and all Expenses incurred in
connection therewith.
7. Partial Indemnification. If the Executive is entitled under any
provision of this Agreement to indemnification by the Company for a portion of
any Expenses, but not for the total amount thereof, the Company shall indemnify
the Executive for the portion of such Expenses to which the Executive is
entitled.
8. Advance of Expenses. Expenses reasonably and necessarily incurred by the
Executive in connection with any Proceeding, except the amount of any
settlement, shall be paid by the Company in advance upon request of the
Executive that the Company pay such Expenses. The Executive hereby undertakes to
repay to the Company the amount of any Expenses theretofore paid by the Company
to the extent that it is ultimately determined that such Expenses were not
reasonable or that the Executive is not entitled to indemnification in respect
thereof.
Such advances shall be made by the Company unless: (a) the Board of
Directors determines, by a majority vote of a quorum of disinterested directors
based on clear and convincing evidence known to the Board of Directors at the
time such determination is made, that the Executive would not be entitled to
indemnification under applicable law, or (b) if such a quorum is not obtainable
or a quorum of disinterested directors so directs, independent legal counsel
determines, based on clear and convincing evidence known to the counsel at the
time such determination is made, that Executive would not be entitled to
indemnification under applicable law.
9. Notice and Defense of Claim. The Executive, as a condition precedent to
his right to be indemnified under this Agreement, shall give to the Company
notice in writing as soon as practicable of any claim made against him for which
indemnity will or could be sought under this Agreement. Notice to the Company
shall be given at its principal office, shall be directed to the Corporate
Secretary (or such other address as the Company shall designate in writing to
the Executive) and shall be effective only upon actual receipt. In addition, the
Executive shall give the Company such information and cooperation as it may
reasonably require and as shall be within the Executive's power.
With respect to any such Proceeding: (a) the Company will be entitled to
participate therein at its own expense; and (b) 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 Executive. After notice from
the Company to Executive, given within a reasonable time, of its election so to
assume the defense thereof, the Company will not be liable to Executive under
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this Agreement for any legal or other expenses subsequently incurred by
Executive in connection with the defense of such Proceeding except as otherwise
provided below. Executive shall have the right to employ his own counsel in such
Proceeding 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
Executive unless (i) the employment of counsel by Executive has been authorized
by the Company, or (ii) Executive shall have obtained the written opinion of
refutable counsel with expertise in such matters (such counsel to be reasonably
satisfactory to a majority of disinterested directors) that there may be one or
more defenses available to Executive that could reasonably be expected to result
in a conflict of interest between the Company and Executive in the conduct of
the defense of such action, in each of which cases the reasonable fees and
expenses of Executive's counsel shall be at the expense of the Company. The
Company shall not be entitled to assume the defense of any Proceeding- brought
by or on behalf of the Company or that is the subject of the opinion provided by
Executive under clause (ii) above.
The Company shall not be liable to indemnify Executive under this Agreement
for any amounts paid in settlement of any Proceeding effected without its prior
written consent. Executive shall execute and deliver such agreements, releases
and other documents as the Company may reasonably request to effect a settlement
of any Proceeding. Without Executive's consent, the Company shall not enter into
any settlement that provides for any action by Executive other than the payment
of amounts against which Executive is entitled to indemnification hereunder. In
the event that the Company proposes to settle any Proceeding by the payment of
damages against which Executive is entitled to indemnification hereunder and in
an amount that the plaintiff has indicated would be acceptable, and the
Executive refuses to enter into a reasonable settlement agreement, the Company
shall not thereafter be responsible for any costs of defense or the amount by
which any judgement or settlement thereafter paid exceeds the damages that the
Company proposed to pay in settlement. Neither the Company nor Executive will
unreasonably withhold their consent to any proposed settlement.
10. No Employment Agreement. Nothing contained herein shall be deemed to
create a contract of employment between the Company and Executive.
11. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one instrument.
12. Indemnification Hereunder Not Exclusive. Nothing herein shall be deemed
to diminish or otherwise restrict the Executive's right to indemnification under
any provision of the Articles of Incorporation or Bylaws of the Company and
amendments thereto or under law.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with Colorado law without giving effect to the principles of
conflicts of laws.
14. Coverage. The provisions of this Agreement shall apply with respect to
the Executive's service in any of the capacities described in Section I above
prior to as well as after the date of this Agreement. The right of Executive to
be indemnified hereunder shall continue after the termination of Executive's
service as an officer and/or director of the Company with respect to all periods
prior to such termination.
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15. Amendments; Waivers. 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 provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
16. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by both of the parties hereto and their respective
successors, assignees (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company), heirs, executors and personal and legal
representatives.
17. Severability. If any provision of this Agreement (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid. void or otherwise unenforceable in any
respect, the validity and enforceability of any such provision in every other
respect and of the remaining provisions of this Agreement shall not be in any
way impaired and shall remain enforceable to the full extent permitted by law.
18. Notices. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when delivered in person (by express courier
or otherwise), by telecopier or three days after being deposited in the United
States mail, certified mail, return receipt requested, first class postage
prepaid, as follows:
If to the Company: Advance Display Technologies, Inc.
0000 Xxxxx Xxxxx, Xxxx X
Xxxxxx, Xxxxxxxx 00000
If to the Executive:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
COMPANY: EXECUTIVE:
ADVANCE DISPLAY TECHNOLOGIES, INC.
By: By:
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