Exhibit 10.20 1
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INDEMNITY AGREEMENT
Agreement, dated as of September 18, 2002, between Manchester
Technologies, Inc., a New York Corporation (the "Company"), and Xxxx Xxxxx (the
"Indemnitee").
Whereas, the Indemnitee is presently serving as Chief Financial Officer
(the "CFO") of the Company and in such capacity renders valuable services to the
Company, and
Whereas, the Company desires to have Indemnitee to continue to serve as the
CFO of the Company, and
Whereas, the Certificate of Incorporation of the Company requires the
Company to indemnify and advance expenses to its directors and officers whom it
may indemnify pursuant to Article 7 of the New York State Business Corporation
Law to the full extent permitted by said Article 7, and Indemnitee is willing to
continue to serve as the CFO of the Company in part in reliance on such
provision of the Certificate of Incorporation; and
Whereas, the vagaries of "public policy" and interpretations of
statutes, certificates of incorporation and by-laws make uncertain the
indemnification protection so provided; and
Whereas, the Board of Directors has concluded that such uncertainty and the
continuation of present trends in litigation against corporate directors and
officers will inevitably result in less effective direction and supervision of
the Company's business affairs, and the Board deems such consequences to be so
detrimental to the best interests of the Company's shareholders that it is not
only reasonable and prudent but necessary for the Company contractually to
obligate itself to indemnify in a reasonable and adequate manner its directors
and officers and establish procedures and presumptions with respect thereto to
make the process of indemnification more certain; and
Whereas, the New York Business Corporation Law (the "BCL") expressly
recognizes that the indemnification provisions of the BCL are not exclusive of
any other rights to which a person seeking indemnification may be entitled under
the Certificate of Incorporation or By-Laws of the Company, a resolution of
shareholders or directors, an agreement or otherwise, and this Agreement is
being entered into pursuant to and in furtherance of the Certificate of
Incorporation and By-Laws of the Corporation, as permitted by the BCL and as
authorized by the Certificate of Incorporation and the Board of Directors of the
Corporation; and
Whereas, as additional consideration to the Indemnitee to continue to serve
as the CFO of the Company and in order to induce Indemnitee to continue to do
so, and to provide Indemnitee with specific contractual assurance that the
indemnification and related protections afforded by such Certificate of
Incorporation and certain protection otherwise available under New York Law will
be available to Indemnitee on an on-going basis (regardless of, among other
things, any Amendment to such Certificate of Incorporation).
Now, Therefore, the Company and the Indemnitee herein agree as follows:
1. Certain definitions:
(a) Claim: any threatened, pending or completed action, suit or
proceedings, or inquiry or investigation, whether conducted by the
Company or any other party, that Indemnitee in good faith believes
might lead to the institution of any such action, suit or proceeding,
whether civil, criminal, administrative, investigative or otherwise,
or any appeal therefrom.
(b) Expenses: include reasonable attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, preparing for, defending or participating in the
defense of (including on appeal) any Claim relating to any
Indemnifiable Event, but shall not include the amount of judgments or
fines against Indemnitee.
(c) Indemnifiable Event: any event or occurrence related to the fact that
Indemnitee is or was a director or an officer of the Company, or is or
was serving at the request of the Company as a director or an officer
of another corporation, partnership, limited liability company, joint
venture, trust or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity.
(d) Indemnified Amounts: All amounts payable by the Company pursuant to
Article 3 and Article 4 hereof.
(e) Reviewing Party: any appropriate person or body consisting of a member
or members of the Company's Board of Directors or any other person or
body appointed by the Board, other than individuals subject to the
claim, or as otherwise provided under Article 7 of the BCL.
2. Indemnitee will continue to serve, at the will of the Company or under
separate contract, if such exists, the Company as an officer faithfully and
to the best of his ability so long as he is duly elected and qualified in
accordance with the provisions of the By-laws thereof or until such time as
he tenders his resignation in writing.
3. In the event Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or other
participant in a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by law, as soon as practicable, but in any event no later
than thirty (30) days after written demand is presented to the Company,
against any and all Expenses, judgments, fines, penalties and amounts paid
in settlement, other than those paid to the Company (including all
interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, judgments, fines, penalties or amounts paid
in settlement), of such Claim. If so requested in writing by Indemnitee,
the Company, to the fullest extent permitted by law, shall advance (within
thirty [30] days after receipt of such request) any and all Expenses to
Indemnitee, provided such request is accompanied by an undertaking by or on
behalf of Indemnitee to repay such Expenses if it shall ultimately be
determined that he is not entitled to be indemnified by the Company as
provided in this Agreement or if, and to the extent, such Expenses so
advanced by the Company exceed the indemnification to which Indemnitee is
entitled, to repay such excess. In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the Company to
establish that Indemnitee is not so entitled. If within thirty (30) days
after a demand for indemnity has been filed with the Company (or upon
receipt of written notice that such demand has been rejected, if earlier)
there has been no determination of entitlement to indemnification by the
Reviewing Party, or if pursuant to Article 7 of the BCL, the Reviewing
Party determines that Indemnitee would not be permitted to be indemnified
in whole or in part under applicable law, or if pursuant to Article 7 of
the BCL, the Reviewing Party determines that Indemnitee shall repay all or
a portion of the Expenses advanced by the Company, Indemnitee shall have
the right to commence litigation compelling or challenging any such
determination by the Reviewing Party or any aspect thereof, in which event
Indemnitee shall not be required to reimburse the Company any advanced
Expenses until a final judicial determination is made with respect thereto
as to which all rights of appeal therefrom have been exhausted or lapsed.
4. The Company, to the fullest extent permitted by law, shall indemnify
Indemnitee against any and all Expenses and, if requested in writing by
Indemnitee, shall (within thirty [30] days after receipt of such request)
advance such Expenses to him (provided such request is accompanied by an
undertaking by or on behalf of Indemnitee to repay such Expenses if it
shall ultimately be determined that he is not entitled to be indemnified by
the Company as provided in this Agreement), which are incurred by him in
connection with any Claim asserted against or action brought by him for (i)
indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or the Company's Certificate of
Incorporation or By-Laws now or hereafter in effect relating Claims for
Indemnifiable Events, and/or (ii) recovery under any available directors'
and officers' liability insurance policies maintained by the Company,
PROVIDED, HOWEVER, that no indemnification shall be made under this Article
4 if Indemnitee ultimately is determined not to be entitled to such
indemnification, advance Expense payment or insurance recovery, as the case
may be, as provided in this Agreement.
5. If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of a Claim, but not,
however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the
merits or otherwise in defense of any Claim relating in whole or in part to
an Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.
6. For purposes of this Agreement, the termination of any claim, action, suit,
proceeding, inquiry or investigation by judgment, order settlement (whether
with or without Court approval), conviction, or upon a plea of nolo
contendere (literally "No Contest") or its equivalent, shall not, of
itself, create a presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a Court has
determined that indemnification is not permitted by applicable law.
7. (a) Promptly after receipt by Indemnitee of notice of the commencement of
any action, suit, proceeding, inquiry or investigation, Indemnitee will, if
a Claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof. With respect to
any such action, suit, proceeding, inquiry or investigation as to which
Indemnitee requests indemnification:
(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 legal fees and reasonable
costs of investigation incurred prior to such assumption 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 the 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 reasonable fees and
expenses of counsel shall be at the expense of the Company.
(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).
8. The rights of the Indemnitee hereunder shall be in addition to any other
rights he may have against the Company, whether under the Company's
Certificate of Incorporation, Article 7 of the BCL or otherwise. To the
extent that a change in Article 7 of the BCL (whether by statute or
judicial decision), permits greater indemnification by agreement than would
be afforded currently under the Company's Certificate of Incorporation or
this Agreement, the parties hereto agree that Indemnitee shall enjoy by
this Agreement the greater benefits so afforded by such change.
9. To the extent the Company at any time maintains an insurance policy or
policies providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its or
their terms, to the maximum extent of the coverage available for any
Company director or officer. If Indemnitee receives payment from any
insurance carrier or from the plaintiff in any Claim against Indemnitee in
respect of Indemnified Amounts after payments on account of all or part of
such Indemnified Amounts have been made by the Company pursuant hereto,
Indemnitee shall promptly reimburse to the Company the amount, if any, by
which the sum of such payment by such insurance carrier or such plaintiff
and payments by the Company or pursuant to arrangements made by the Company
to Indemnitee exceeds such Indemnified Amounts; provided, however, that
such portions, if any, of such insurance proceeds that are required to be
reimbursed to the insurance carrier under the terms of its insurance
policy, such as deductible or co-insurance payments, shall not be deemed to
be payments to Indemnitee hereunder. In addition, upon payment of
Indemnified Amounts hereunder, the Company shall be subrogated to the
rights of Indemnitee (to the extent of such payments) against any insurance
carrier (to the extent permitted under such insurance policies) or
plaintiff in respect of such Indemnified Amounts and Indemnitee shall
execute and deliver any and all instruments and documents and perform any
and all other acts or deeds which the Company deems necessary or advisable
to secure such rights. Such right of subrogation shall be terminated upon
receipt by the Company of the amount to be reimbursed by Indemnitee
pursuant to the second sentence of this paragraph.
10. In making any written request for Expenses, Indemnitee shall submit to the
Company a schedule setting forth in reasonable detail the dollar amount
expended or incurred and expected to be expended. Each such listing shall
be supported by the xxxx, agreement, or other documentation relating
thereto, each of which shall be appended to the schedule as an exhibit.
11. No payments pursuant to this Agreement shall be made by the Company:
(a) To indemnify or advance Expenses to Indemnitee with respect to
Claims initiated or brought voluntarily by Indemnitee and not by way of
defense, except with respect to Claims brought to establish or enforce a
right to indemnification under this Agreement or any statute or law or
otherwise as required under New York law, but such indemnification or
advancement of Expenses may be provided by the Company in specific cases if
a majority of the Board of Directors finds it to be appropriate;
(b) To indemnify Indemnitee for any Expenses, judgments, fines,
penalties or ERISA excise taxes for which Indemnitee is indemnified by the
Company otherwise than pursuant to this Agreement;
(c) To indemnify Indemnitee under this Agreement for any amounts paid
in settlement of any Claim effected without the Company's written consent;
however, the Company will not unreasonably withhold its consent to any
proposed settlement;
(d) To indemnify Indemnitee for any Expenses, judgments, fines,
penalties or ERISA excise taxes for which payment is actually made to
Indemnitee under a valid and collectible insurance policy, except in
respect of any excess beyond the amount of payment under such insurance;
(e) To indemnify Indemnitee for any Expenses, judgments, fines or
penalties sustained in any Claim for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Company pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, the
rules and regulations promulgated thereunder and amendments thereto or
similar provisions of any federal, state or local statutory law;
(f) To indemnify Indemnitee against any Expenses, judgments, fines,
penalties or ERISA excise taxes based upon or attributable to Indemnitee
having been finally adjudged to have gained any personal profit or
advantage to which he was not legally entitled;
(g) To indemnify Indemnitee for any Expenses, judgments, fines,
penalties or ERISA excise taxes resulting from Indemnitee's conduct which
is finally adjudged to have been willful misconduct, knowingly fraudulent.
deliberately dishonest or in violation of Indemnitee's duty of loyalty to
the Company; or
(h) If a court of competent jurisdiction shall finally determine that
any indemnification hereunder is unlawful.
12. No supplement, modification, amendment, termination or cancellation of this
Agreement shall be binding unless executed in writing by 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.
13. This Agreement (i) shall be binding upon the successors and assigns of the
Company, 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, and (ii) shall be binding upon, inure to the
benefit of and be enforceable by any successors and assigns, spouses,
heirs, and personal and legal representatives of Indemnitee. This Agreement
shall continue after Indemnitee ceases to serve as the CFO of the Company
or of any other enterprise at the Company's request, as to all
Indemnifiable Events occurring prior to such cessation.
14. The provisions of this Agreement shall be severable in the event that any
of the provisions hereof (including any provision within a single section,
paragraph or sentence) are held by a Court of competent jurisdiction to be
invalid, void or otherwise unenforceable, and the remaining provisions
shall remain enforceable to the fullest extent permitted by law.
15. The Company hereby (i) irrevocably submits to the jurisdiction of any New
York State or Federal Court sitting in Nassau or Suffolk County, New York,
in any action or proceeding arising out of or relating to this Agreement,
(ii) waives any defense based on doctrines of venue or forum non conveniens
or similar rules or doctrines, and (iii) irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined in such
New York State or Federal Court.
16. All notices, or other communications required or permitted hereunder shall
be in writing and shall be pursuant to fax transmission or sent by
Certified Mail, Return Receipt Requested, with postage prepaid, and shall
be deemed given when so faxed, or if mailed, five (5) days after the date
of mailing, as follows, or to such other address as the parties shall have
given notice pursuant hereto:
(a) If to the Company, to: Manchester Technologies, Inc.
000 Xxxx Xxxxxx Xxxxxxxxx, XX 00000
Att: Xxxxx X. Xxxxxxxxx, President
Fax Number: (000) 000-0000
with a copy to: Kressel, Rothlein, Xxxxx & Xxxx, LLC
000 Xxxxxxxx
Xxxxxxxxxx, XX 00000
Att: Xxxx Xxxxxxxx, Esq.
Fax Number: (000) 000-0000
(b) If to Indemnitee, to: Xxxx Xxxxx
17. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts
made and to be performed in such State without giving effect to the
principles of conflicts of laws.
18. This Agreement may be executed in multiple counterparts, each of which
shall be an original, but all of which shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
In the Presence of: Manchester Technologies, Inc.
__________________________ By:
Xxxxx X. Xxxxxxxxx, President
_________________________ Xxxx Xxxxx, Indemnitee
