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EXHIBIT 10.7
INDEMNITY AGREEMENT
This Indemnity Agreement is made as of the 19th day of May, 2000, by
CONNECTIVITY TECHNOLOGIES INC. ("CTI"), a Delaware corporation, for the benefit
of ROME GROUP, INC. ("RGI"), a Delaware corporation, and CONNECTIVITY PRODUCTS
INCORPORATED ("CPI" and together with RGI, the "Indemnified Parties"), a
Delaware corporation and a wholly-owned subsidiary of RGI and the surviving
corporation of a merger of RGCP ACQUISITION CORP. ("RGCP"), a Delaware
corporation and a wholly-owned subsidiary of RGI, with and into CTI pursuant to
the terms and conditions of an Agreement and Plan of Merger, dated as of May 19,
2000 among CTI, CPI, RGI and RGCP (the "Merger Agreement").
W I T N E S S E T H :
WHEREAS, it is a condition to the Closing (such terms and other
capitalized terms used and not otherwise defined herein having, as used herein,
the respective meanings provided for in the Merger Agreement) under the Merger
Agreement and the consummation of the transactions contemplated thereby that CTI
provide certain indemnities to CPI and RGI concerning certain claims and causes
of action asserted in an action entitled Xerotex Technologies Corporation v.
Connectivity Products, Inc. and BSCC, Corp., Court File No. XX-00-000000,
Xxxxxxxx Xxxxx, Xxxxxx Xxxxxxxx Xxxxxxxx, Xxxxxx of Hennepin, Minnesota; and
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WHEREAS, to induce RGI and RGCP to consummate transactions contemplated
by the Merger Agreement, CTI has agreed to enter into this Agreement;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and further acknowledging that the Indemnified Parties intend to
rely on the indemnification of CTI hereunder, the parties covenant and agreed as
follows:
1. Indemnification.
(a) As used in this Agreement:
(i) "Judgment Amount" means any amount awarded, adjudged or
decreed to be payable by "Connectivity Products, Inc." or "BSCC, Corp." (or
any successor or substitute therefor, whether jointly or severally), as
defendants, to Xerotex Technologies Corporation (or any successor or
assignee thereof), as plaintiff, whether pre- or post-trial and whether as
damages (including, without limitation, compensatory, consequential and
punitive damages), interest (including pre- and post-judgment interest),
costs, or attorney's fees, in an action entitled Xerotex Technologies
Corporation v. Connectivity Products, Inc. and BSCC, Corp., Court File No.
XX-00-000000, Xxxxxxxx Xxxxx, Xxxxxx Xxxxxxxx Xxxxxxxx, Xxxxxx of Hennepin,
Minnesota (the "Pending Action") or any other action involving claims which
are (or are, under applicable principles of compulsory joinder, required to
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be) asserted in the Pending Action (a "Subsequent Action"), and without
regard to whether such award, judgment or decree is subject to appeal by
defendants as a matter of right or by permission, excluding, however, any
such amounts resulting from a judgment upon default.
(ii) "Settlement Amount" means any amount payable in good faith
by "Connectivity Products, Inc." or "BSCC, Corp." (or any successor or
substitute therefor, whether jointly or severally), as defendants, to
Xerotex Technologies Corporation (or any successor or assignee thereof), as
plaintiff, in connection with a settlement of the Pending Action or any
Subsequent Action and upon receipt of a release from all liability with
respect to all claims which are (or are, under applicable principles of
compulsory joinder, required to be) asserted therein.
(iii) "Covered Costs Amount" means amount, including attorney's
fees, disbursements and court costs reasonably incurred by the Indemnified
Parties (A) in connection with the prosecution of any appeal from any
order, judgment or decree in the Pending Action or any Subsequent Action
taken at the direction of CTI pursuant to Section 1(g), or (B) in
connection with the defense of the Pending Action or any Subsequent Action
after the rejection of any settlement proposal by CTI pursuant to Section
1(g) if such amounts added to any Judgment Amount exceed the relevant
Settlement Amount.
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(b) CTI hereby covenants and agrees to indemnify and hold the
Indemnified Parties harmless from and against any and all Judgment Amounts,
Settlement Amounts and Covered Costs Amounts, in each case if and to the extent
such Amounts exceed in the aggregate $25,000.
(c) In the event any right of indemnification hereunder shall be
asserted in respect of any Judgment Amount, the Indemnified Parties shall
promptly provide CTI with a statement of the amount due and a copy of the
judgment or other court record reflecting such Judgment Amount and evidence of
payment of such Judgment Amount, and upon such statement, documentation and
evidence being presented CTI's liability in respect of such indemnification
shall be discharged by (and solely by) set-off against amounts next becoming due
from RGI to CTI under the Merger Note or any Tax Refund Note. Such set-off shall
be automatic.
(d) In the event any right of indemnification hereunder shall be
asserted in respect of any Settlement Amount, the Indemnified Parties shall
promptly provide CTI with a statement of the amount due and a copy of the
agreement, stipulation or other document effecting the settlement in respect of
which indemnification in respect of a Settlement Amount is claimed, including, a
copy of the related release of claims, and evidence of payment of such
Settlement Amount and upon such statement, documentation and evidence being
presented CTI's liability in respect of such indemnification shall be discharged
by (and solely by) set-off against amounts
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next become due from RGI to CTI under the Merger Note or any Tax Refund Note.
Such set-off shall be automatic.
(e) In the event any right of indemnification hereunder shall be
asserted in respect of any Covered Cost Amount, the Indemnified Parties shall
promptly provide CTI with a statement of the amount due, copies of the invoices
or other documentation reflecting such Covered Cost Amount and evidence of
payment of such Covered Cost Amount, and upon such statement, documentation and
evidence being presented CTI's liability in respect of such indemnification
shall be discharged by (and solely by) set-off against amounts next becoming due
from RGI to CTI under the Merger Note or any Tax Refund Note. Such set-off shall
be automatic
(f) Any provision hereof to the contrary notwithstanding, upon
satisfaction in full of the Merger Note (whether by payment, off-set or
otherwise) all liability of indemnification of CTI pursuant to this Agreement
shall be deemed discharged and this Agreement shall be of no further force or
effect.
(g) CPI shall continue to retain Xxxxxxx, X'Xxxxx. Xxxxxxx, Xxxxxxx &
Xxxx (the "Xxxxxxx Firm") for the defense of the Pending Action and shall
undertake (and cause the Xxxxxxx Firm to undertake) all necessary and
appropriate actions for diligent defense thereof. CPI shall consult with CTI and
obtain CTI's approval (which approval shall not be unreasonably withheld or
delayed) concerning all material matters affecting the Pending Action and any
Subsequent Action, including the retention of any legal counsel in lieu of the
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Xxxxxxx Firm and any settlement proposal. In the event any judgment is entered
against CPI in the Pending Action or any Subsequent Action which would give rise
to any right of indemnification in respect of a Judgment Amount hereunder, CPI
shall promptly notify CTI of the entry of such judgment and the last date for
the filing of any appeal therefrom. If requested by CTI, CPI shall file and
prosecute to completion an appeal from any judgment described in the proceeding
sentence. CPI shall from time to time provide CTI with such information as CTI
shall reasonable request concerning the Pending Action and any Subsequent
Action, provided, however, that the foregoing shall not be deemed to require any
waiver of any attorney-client privilege by CPI.
2. Entire Agreement. This Agreement contains, and is intended as, a
complete statement of all of the terms of the arrangements between the parties
with respect to the matters provided for, supersedes any previous agreements and
understandings between the parties with respect to those matters, and cannot be
changed or terminated orally.
3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed in New York without regard to the principles thereof
regarding the choice of law. Each of the parties hereto hereby irrevocably
submits to the jurisdiction of the courts of the State of New York and the
Federal courts of the United States of America located in the State, City and
County of New York in respect of the interpretation and enforcement of the
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provisions of this Agreement and of the documents referred to in this Agreement,
and hereby waives, and agrees not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by said courts. Each of the parties hereto hereby consents to and
grants any such court jurisdiction over the person of such party and over the
subject matter of any such dispute and agrees that mailing of process or other
papers in connection with any such action or proceeding in the manner provided
in Section 4, or in such other manner as may be permitted by law, shall be valid
and sufficient service thereof.
4. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (c) sent by next-day or overnight mail or
delivery, or (d) sent by telecopy:
(i) if to CTI
Connectivity Technologies Inc.
c/o Highgate Capital LLC
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxx 00000
Att'n: Xxxxxx Xxxxxx
Fax No.: (000) 000-0000
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(ii) if to RGI, RGCP or CTI to:
Rome Group, Inc.
000 Xxxxx Xxxxxx
Xxxx Xxxxxx Xxx 00
Xxxx, Xxx Xxxx 00000-0000
Att'n: Xxxxx X. Xxxxxx
Chairman and Chief Executive Officer
Fax No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx
Xxxxxx Xxxxxxxxx & Xxxxxx
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx x0000
Fax No.: (000) 000-0000
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (A) if by personal delivery on the date of
such delivery, (B) if by certified or registered mail, on the seventh Business
Day after the mailing thereof, (C) if by next-day or overnight mail or delivery,
on the day delivered, (D) if by telecopy, on the next day following the day on
which such telecopy was sent.
5. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
6. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when
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one or more counterparts have been signed by each of the parties hereto and
delivered to each of the other parties hereto.
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IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the date first written above.
CONNECTIVITY TECHNOLOGIES INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
ROME GROUP, INC.
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title: Vice President
Executive Officer
CONNECTIVITY PRODUCTS INCORPORATED
By: /s/ Xxxxx X. Xxxxxxx
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Name:
Title:
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