EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is entered into as of this _____ day of
_________, 1999, by and between Hospitality Design & Supply, Inc., a Delaware
corporation, (the "Company"), and _____________ ("Indemnitee").
RECITALS
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A. The Company is aware that because of the increased exposure to
litigation costs, talented and experienced persons are increasingly reluctant to
serve or continue serving as directors and officers of corporations unless they
are protected by comprehensive liability insurance and indemnification.
B. The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous, or conflicting,
and therefore fail to provide such directors and officers with adequate guidance
regarding the proper course of action.
C. The Company believes that it is fair and proper to protect the
Company's directors and certain of its officers, from the risk and judgments,
settlements and other expenses which may occur as a result of their service to
the Company, even in cases in which such persons received no personal profit or
were not otherwise culpable.
D. The Board of Directors of the Company (the "Board") has concluded
that, to retain and attract talented and experienced individuals to serve as
officers and directors of the Company and to encourage such individuals to take
the business risks necessary for the success of the Company, the Company should
contractually indemnify its officers and directors, in connection with claims
against such officers and directors in connection with their services to the
Company, and has further concluded that the failure to provide such contractual
indemnification could be detrimental to the Company, and its stockholders.
NOW, THEREFORE, the parties, intending to be legally bound, hereby
agree as follows:
1. Definitions:
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(a) Agent. "Agent" means any person who is or was a director,
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officer, fiduciary employee or other agent of the Company; or is
or was serving at the request of, for the convenience of, or to
represent the interests of, the Company as a director, officer,
employee or agent of another entity or enterprise; or was a
director, officer, employee or agent of a predecessor corporation
of the Company, or was a director, officer, employee or Agent of
another enterprise at the request of, for the convenience of, or
to represent the interests of such predecessor corporation.
(b) Expenses. "Expenses" means all direct and indirect costs
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of any type or nature whatsoever including, without limitation:
(i) Any expense, liability, or loss, including
attorneys' fees and costs, judgments, fines, ERISA excise
taxes and penalties, amounts paid or to be paid in
settlement;
(ii) Any interest, assessments, or other charges imposed
on any of the items in part (i) of this subsection (b);
and
(iii) Any federal, state, local, or foreign taxes imposed
as a result of the actual or deemed receipt of any
payments under this Agreement paid or incurred in
connection with investigating, defending, being a witness
in, or participating in (including on appeal), or
preparing for any of the foregoing in, any proceeding
relating to any indemnifiable event; provided, however,
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that in calculating any "taxes imposed" within the meaning
of this subsection (b)(iii), there shall be taken into
account whether and to what extent any Expense for which
indemnification is sought gave, or will give, rise to a
tax benefit, deduction or any other reduction of income in
any, including any future, taxable period.
(c) Proceeding. "Proceeding" means any threatened, pending,
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or completed claim, suit or action, whether civil, criminal,
administrative, investigative or otherwise.
2. Maintenance of Liability Insurance.
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(a) The Company hereby covenants and agrees with Indemnitee
that, subject to Section (b), the Company shall obtain and
maintain in full force and effect directors' and officers'
liability insurance ("D&O Insurance") in reasonable amounts as
the Board of Directors shall determine from established and
reputable insurers, but no less than the amounts in effect upon
initial procurement of the D&O Insurance. In all policies of D&O
Insurance, Indemnitee shall be named as an insured and such
policies shall require (provided that the insurer is willing to
include such requirement without charge or for a commercially
reasonable premium or surcharge) the insurer to provide
Indemnitee with thirty days advance written notice of a policy
change or cancellation.
(b) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company
determines in good faith that the premium costs for such
insurance are (i) disproportionate to the amount of coverage
provided after giving effect to exclusions, and (ii)
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substantially more burdensome to the Company than the premiums
charged to the Company for its initial D&O Insurance.
3. Mandatory Indemnification. The Company shall defend, indemnify
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and hold harmless Indemnitee:
(a) Third Party Actions. If Indemnitee is a person who was or
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is a party or is threatened to be made a party to any proceeding
(other than an action by or in the right of the Company) by
reason of the fact that Indemnitee is or was or is
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claimed to be an Agent, or by reason of anything done or not done
by Indemnitee in any such capacity, or by reason of the fact that
Indemnitee personally guaranteed any obligation of the Company at
any time, against any and all Expenses and liabilities or any
type whatsoever (including, but not limited to, legal fees,
judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) incurred by such person in connection with
the investigation, defense, settlement or appeal of such
proceeding, so long as 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 Company, or, with respect to
any criminal action or Proceeding, had no reasonable cause to
believe such person's conduct was unlawful.
(b) Derivative Actions. If Indemnitee is a person who was or
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is a party or is threatened to be made a party to any Proceeding
by or in the right of the Company by reason of the fact that
Indemnitee is or was an Agent, or by reason of anything done or
not done by Indemnitee in any such capacity, against any amounts
paid in settlement of any such Proceeding, and all other Expenses
incurred by such person in connection with the investigation,
defense, settlement or appeal of such Proceeding so long as 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 Company; except that no indemnification under this
subsection shall be made, and Indemnitee shall repay all amounts
previously advanced by the Company, in respect of any claim,
issue or matter for which such person is judged in a final, non-
appealable decision to be liable to the Company by a court of
competent jurisdiction due to willful misconduct in the
performance of such person's duties to the Company, unless and
only to the extent that the court in which such Proceeding was
brought shall determine that Indemnitee is fairly and reasonably
entitled to indemnity.
(c) Actions Where Indemnitee is Deceased. If Indemnitee is a
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person who was or is a party or is threatened to be made a party
to any Proceeding by reason of the fact that Indemnitee is or was
an Agent, or by reason of anything done or not done by Indemnitee
in any such capacity, and prior to, during the pendency of, or
after completion of, such Proceeding, the Indemnitee shall die,
then the Company shall defend, indemnify and hold harmless the
estate, heirs and legatees of the Indemnitee against any and all
Expenses and liabilities incurred by or for such persons or
entities in connection with the investigation, defense,
settlement or appeal of such Proceeding on the same basis as
provided for the Indemnitee in Sections 3(a) and 3(b) above.
The Expenses and liabilities covered hereby shall be net of any
payments by D&O Insurance carriers or others, but if such payments are revocable
and recouped in whole or in part by the carriers or others, the Expenses and
liabilities covered hereby shall be increased by the amount so recouped.
4. Partial Indemnification. If Indemnitee is found under Section
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3(b), 6 or 9 hereof not to be entitled to indemnification for all of the
Expenses relating to a Proceeding, the
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Company shall indemnify the Indemnitee for any portion of such Expenses not
specifically precluded by the operation of such Section 3(b), 6 or 9.
5. Indemnification Procedures; Mandatory Advancement of Expenses.
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(a) Promptly after receipt by Indemnitee of notice to him or
her of the commencement or threat of any Proceeding covered
hereby, Indemnitee shall notify the Company of the commencement
or threat thereof, provided that any failure to so notify shall
not relieve the Company of any of its obligations hereunder.
(b) If, at the time of the receipt of a notice pursuant to
Section 5(a) above, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the Proceeding or claim to
its insurers in accordance with the procedures set forth in the
applicable policies. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay all
amounts payable as a result of such Proceeding in accordance with
the terms of such policies.
(c) Indemnitee shall be entitled to retain one or more counsel
from time to time selected by him or her in such person's sole
discretion to act as his or her counsel in and for the
investigation, defense, settlement or appeal of each Proceeding.
(d) The Company shall bear all fees and Expenses (including
invoices for advance retainers) of such counsel, and all fees and
Expenses invoiced by other persons or entities, in connection
with the investigation, defense, settlement or appeal of each
such Proceeding. Such fees and Expenses are referred to herein as
"Covered Expenses."
(e) Until a determination to the contrary under Section 6
hereof is made, the Company shall advance all Covered Expenses in
connection with each Proceeding. If required by law, as a
condition to such advances, Indemnitee shall, at the request of
the Company, agree to repay such amounts advanced if it shall
ultimately be determined by a final order of a court that
Indemnitee is not entitled to be indemnified by the Company by
the terms hereof or under applicable law.
(f) Each advance to be made hereunder shall be paid by the
Company to Indemnitee within 10 days following delivery of a
written request therefor by Indemnitee to the Company.
(g) The Company acknowledges the potentially severe damage to
Indemnitee should the Company fail timely to make such advances
to Indemnitee.
6. Determination of Right to Indemnification.
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(a) To the extent Indemnitee has been successful on the merits
or otherwise in defense of any Proceeding, claim, issue or matter
covered hereby, Indemnitee
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need not repay any of the Expenses advanced in connection with
the investigation, defense or appeal of such Proceeding.
(b) If Section 6(a) is inapplicable, the Company shall remain
obligated to indemnify Indemnitee, and Indemnitee need not repay
Expenses previously advanced, unless the Company, by motion
before a court of competent jurisdiction, obtains an order for
preliminary or permanent relief suspending or denying the
obligation to advance or indemnify for Expenses.
(c) Notwithstanding a determination by a court that Indemnitee
is not entitled to indemnification with respect to a specific
Proceeding, Indemnitee shall have the right to apply to the Court
of Chancery of Delaware for the purpose of enforcing Indemnitee's
right to indemnification pursuant to this Agreement.
(d) Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify Indemnitee against all
Expenses incurred by Indemnitee in connection with any Proceeding
under Section 6(b) or 6(c) and against all Expenses incurred by
Indemnitee in connection with any other Proceeding between the
Company and Indemnitee involving the interpretation or
enforcement of the rights of Indemnitee under this Agreement
unless a court of competent jurisdiction finds that the material
claims and/or defenses of Indemnitee in any such Proceeding were
frivolous or made in bad faith.
7. Certificate of Incorporation and By-Laws. The Company agrees
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that the Company's Certificate of Incorporation and Bylaws in effect on the date
hereof shall not be amended to reduce, limit, hinder or delay (i) the rights of
Indemnitee granted hereby, or (ii) the ability of the Company to indemnify
Indemnitee as required hereby. The Company further agrees that it shall exercise
the powers granted to it under its Certificate of Incorporation, its Bylaws and
by applicable law to indemnify Indemnitee to the fullest extent possible as
required hereby.
8. Witness Expenses. The Company agrees to compensate Indemnitee
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for the reasonable value of his or her time spent, and to reimburse Indemnitee
for all Expenses (including attorneys' fees and travel costs) incurred by him or
her, in connection with being a witness, or if Indemnitee is threatened to be
made a witness, with respect to any proceeding, by reason of Indemnitee's
serving or having served as an Agent of the Company.
9. Exceptions. Notwithstanding any other provision hereunder to
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the contrary, the Company shall not be obligated pursuant to the terms of this
Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance
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Expenses to Indemnitee with respect to Proceedings or claims
initiated or brought voluntarily by Indemnitee and not by way of
defense (other than Proceedings brought to establish or enforce a
right to indemnification under this Agreement or the provisions
of the Company's Certificate of Incorporation or Bylaws unless a
court of competent jurisdiction determines that each of the
material assertions made by Indemnitee in such Proceeding were
not made in good faith or were frivolous).
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(b) Unauthorized Settlements. To indemnify Indemnitee under
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under this Agreement for any amounts paid in settlement of any
Proceeding covered hereby without the prior written consent of
the Company to such settlement, which consent shall not be
unreasonably withheld.
10. Additional Indemnification Rights; Nonexclusivity.
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(a) Scope. Notwithstanding any provision of this Agreement,
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in the event of any change, after the date of this Agreement, in
any applicable law, statute or rule which expands the right of a
Delaware corporation to indemnify a member of its board of
directors or an officer, employee or agent, such changes shall
be, ipso facto, within the purview of Indemnitee's rights and
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the Company's obligations, under this Agreement. In the event of
any change in any applicable law, statute or rule which narrows
the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, employee or agent, such
changes, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement shall have no
effect on this Agreement or the parties' rights and obligations
hereunder.
(b) Nonexclusivity. The indemnification by this Agreement
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shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation,
its Bylaws, any agreement, any vote of shareholders or
disinterested directors, the General Corporation Law of the State
of Delaware, or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while
holding such office. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or
not taken while serving in an indemnified capacity even though he
may have ceased to serve in such capacity at the time of any
action or other covered proceeding.
11. Continuation After Term. Indemnitee's rights hereunder shall
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continue after the Indemnitee has ceased acting as a director or Agent of the
Company and the benefits hereof shall inure to the benefit of the heirs,
executors and administrators of Indemnitee.
12. Interpretation of Agreement. This Agreement shall be
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interpreted and enforced so as to provide indemnification to Indemnitee to the
fullest extent now or hereafter permitted by law.
13. Severability. If any provision or provisions of this Agreement
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shall be held to be invalid, illegal or unenforceable, provisions of the
Agreement shall not in any way be affected or impaired thereby, and to the
fullest extent possible, the provisions of this Agreement shall be construed or
altered by the court so as to remain enforceable and to provide Indemnitee with
as many of the benefits contemplated hereby as are permitted under law.
14. Counterparts, Modifications and Waiver. This Agreement may be
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signed in counterparts. This Agreement constitutes a separate Agreement between
the Company and Indemnitee and may be supplemented or amended as to Indemnitee
only by a written instrument
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signed by the Company and Indemnitee, with such amendment binding only the
Company and Indemnitee. All waivers must be in a written document signed by the
party to be charged. No waiver of any of the provisions of this Agreement shall
be imposed by the conduct of the parties. A waiver of any right hereunder shall
not constitute a waiver of any other right hereunder.
15. Notices. All notices, demands, consents, requests, approvals
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and other communications required or permitted hereunder shall be in writing and
shall be deemed to have been properly given if hand delivered (effective upon
receipt or when refused), or if sent by a courier freight prepaid (effective
upon receipt or when refused), in the case of the Company, at the address listed
below, and in the case of Indemnitee, at Indemnitee's address of record at the
office of the Company, or to such other addresses as the parties may notify each
other in writing.
To Company: Hospitality Design & Supply, Inc.
P. O. Xxx 0000
Xxxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Chief Executive Officer
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Howard, Rice, Nemerovski, Canady,
Xxxx & Xxxxxx, A Professional Corporation
Three Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
To Indemnitee: At the Indemnitee's residence address on the records
of the Company from time to time.
With a copy to:
16. Evidence of Coverage. Upon request by Indemnitee, the Company
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shall provide evidence of the liability insurance coverage required by this
Agreement. The Company shall notify Indemnitee thirty days in advance of any
change in the Company's D&O Insurance coverage.
17. Governing Law. This Agreement shall be governed by and
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construed in accordance with the internal laws of the State of Delaware.
18. Attorneys' Fees. In the event that any action is instituted
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by Indemnitee under this Agreement to enforce or interpret any of the terms
hereof, Indemnitee shall be entitled to be paid all court costs and expenses,
including reasonable attorneys' fees, incurred by Indemnitee with respect to
such action, unless as a part of such action, a court of competent jurisdiction
expressly determines that each of the material assertions made by Indemnitee as
a basis for such action was not made in good faith or was frivolous. in the
event of an action instituted by or in the name of the Company under 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 of competent
jurisdiction expressly determines that each of Indemnitee's material defenses to
such action was made in bad faith or was frivolous.
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IN WITNESS WHEREOF, the parties hereto have entered into this
Indemnification Agreement effective as of the date first above written.
HOSPITALITY DESIGN & SUPPLY, INC.
By: ____________________________________
Title: _________________________________
INDEMNITEE:
________________________________________
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