INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "AGREEMENT"), dated as of the 7TH
day of April, 1999, is between Successories, Inc., an Illinois corporation (the
"COMPANY") and Xxxxxx X. Xxxxxxxx (the "INDEMNITEE").
W I T N E S S E T H:
WHEREAS, the Company desires to obtain the services of Indemnitee as a
director of the Company;
WHEREAS, as a condition to Indemnitee's agreement to serve and continue to
serve the Company, Indemnitee requires that he be indemnified from liability to
the fullest extent permitted by law; and
WHEREAS, the Company is willing to indemnify Indemnitee to the fullest
extent permitted by law in order to retain the services of Indemnitee.
NOW, THEREFORE, for and in consideration of the mutual premises and
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Indemnitee hereby agree as follows:
1. CERTAIN DEFINITIONS.
(a) CLAIM: any threatened, pending, or completed action, suit, or
proceeding or any inquiry or investigation (including discovery), whether
conducted by the Company or any other party, that Indemnitee in good faith
believes might lead to the institution of any action, suit, or proceeding,
whether civil, criminal, administrative, investigative, or other.
(b) EXPENSES: all costs, expenses (including attorneys' and expert
witnesses' fees), judgments, fines, penalties, amounts paid in settlement and
obligations (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) paid or incurred in connection with
investigating, defending (including affirmative defenses and counterclaims),
settling, being a witness in, or participating in (including on appeal), or
preparing to defend, be a witness in, or participate in, any Claim relating to
any Indemnifiable Event.
1
(c) INDEMNIFIABLE EVENT: any event or occurrence related to, or
arising out of, the fact that Indemnitee is or was a director, officer,
employee, trustee, or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee, trustee, or agent of another
corporation, partnership, joint venture, employee benefit plan, trust, or other
enterprise, or by reason of any thing done or not done by Indemnitee in any such
capacity.
2. BASIC INDEMNIFICATION AND EXPENSE REIMBURSEMENT ARRANGEMENT.
(a) 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 30
days after written demand is presented to the Company, against any and all
Expenses of or with respect to that Claim.
(b) If so requested by Indemnitee, the Company shall pay any and all
Expenses incurred by Indemnitee (or, if applicable, reimburse Indemnitee for any
and all Expenses incurred by Indemnitee and previously paid by Indemnitee)
within ten days after such request (an "EXPENSE ADVANCE"); PROVIDED, HOWEVER,
such request must contain (i) a statement reasonably detailing the Expenses for
which advancement is requested, and (ii) an undertaking by Indemnitee, or on
Indemnitee's behalf, to repay such advancement of Expenses if it is ultimately
determined by a final judicial decision from which there is no further right to
appeal that Indemnitee is not entitled to be indemnified for such Expenses under
this Agreement or otherwise. The Company shall be obligated to make or pay an
Expense Advance in advance of the final disposition or conclusion of any Claim
in accordance with this Section 2(b). Any dispute as to the reasonableness of
any Expense shall not delay an Expense Advance by the Company, and the Company
agrees that any such dispute shall be resolved only upon the disposition or
conclusion of the underlying Claim against the Indemnitee.
3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall indemnify
Indemnitee against any and all costs and expenses (including attorneys' and
expert witnesses' fees), and, if requested by Indemnitee, shall (within ten
business days of that request) advance or reimburse those costs and expenses to
Indemnitee, that are incurred by Indemnitee in connection with (A) the
negotiation and execution of this Agreement, which shall include, without
limitation, the review of the Company's Articles of Incorporation, Bylaws and
the directors' and officers' liability insurance policies and (B) any claim
asserted against or action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement or provision of the Company's Articles of Incorporation or Bylaws now
or hereafter in effect relating to Claims for Indemnifiable Events or
(ii) recovery under any directors' and officers' liability insurance policies
maintained by the Company; provided, however, that Indemnitee shall repay such
advancement of costs and expenses if it is ultimately determined by a final
judicial decision from which there is no further right to appeal that Indemnitee
is not entitled to be indemnified for such costs or expenses under this
Agreement or otherwise.
2
4. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of the
Expenses 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 or all Claims 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.
5. CONTRIBUTION.
(a) CONTRIBUTION PAYMENT. To the extent the indemnification provided
for under any provision of this Agreement is determined (in the manner
hereinabove provided) not to be permitted under applicable law, then 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, to the
extent contribution with respect to such Indemnifiable Event is permitted under
applicable law, the Company, in lieu of indemnifying Indemnitee, shall
contribute to the amount of any and all Expenses assessed against or incurred or
paid by Indemnitee on account of or with respect to that Claim for which such
contribution is permitted ("CONTRIBUTION AMOUNTS"), in such proportion as is
appropriate to reflect the relative fault with respect to the Indemnifiable
Event giving rise to the Contribution Amounts of Indemnitee, on the one hand,
and of the Company and any and all other parties (including officers and
directors of the Company other than Indemnitee) who may be at fault with respect
to such Indemnifiable Event (collectively, including the Company, the "THIRD
PARTIES") on the other hand.
(b) RELATIVE FAULT. The relative fault of the Third Parties and the
Indemnitee shall be determined (i) by reference to the relative fault of
Indemnitee as determined by the court or other governmental agency assessing the
Contribution Amounts or (ii) to the extent such court or other governmental
agency does not apportion relative fault, by a majority of the disinterested
members of the Company's Board of Directors after giving effect to, among other
things, the relative intent, knowledge, access to information, and opportunity
to prevent or correct the applicable Indemnifiable Event and other relevant
equitable considerations of each party. The Company and Indemnitee agree that
it would not be just and equitable if contribution pursuant to this SECTION 5(b)
were determined by pro rata allocation or by any other method of allocation
which does take account of the equitable considerations referred to in this
SECTION 5(b).
6. PRESUMPTION. Indemnitee shall be presumed to be entitled to
indemnification for any act or omission covered in this Agreement. The burden
of proof of establishing that Indemnitee is not entitled to indemnification
because of the failure to fulfill any legal requirement shall be on the Company.
3
7. NON-EXCLUSIVITY. The rights of Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Company's Bylaws or
Articles of Incorporation or the Illinois Business Corporation Act ("IBCA") or
otherwise. To the extent that a change in the IBCA (whether by statute or
judicial decision) permits greater indemnification by agreement than would be
afforded currently under the Company's Bylaws or Articles of Incorporation and
this Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by that change.
8. LIABILITY INSURANCE. Except as otherwise agreed to by the Company and
Indemnitee in a written agreement, to the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by that policy or those policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
9. MISCELLANEOUS.
(a) NOTICE PROVISION. Any notice, payment, demand or communication
required or permitted to be delivered or given by the provisions of this
Agreement shall be deemed to have been effectively delivered and received (i) if
personally delivered, upon receipt, (ii) if sent via facsimile, upon mechanical
confirmation of successful transmission thereof generated by the sending
telecopy machine only if such notice is also delivered by hand, or deposited in
the United States mail, postage prepaid, registered or certified mail, on or
before two business days after its delivery by facsimile, or (iii) if sent by
registered or certified mail, five days after deposit thereof in the U.S. mail
and addressed to the parties at the addresses set forth above their signatures
to this Agreement.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties and supersedes all prior understandings, whether
written or oral, between the parties with respect to the subject matter of this
Agreement.
(c) SEVERABILITY OF PROVISIONS. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of each such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid, and enforceable.
(d) APPLICABLE LAW. This Agreement shall be governed by and
construed under the laws of the State of Illinois.
4
(e) EXECUTION IN COUNTERPARTS. This Agreement and any amendment may
be executed simultaneously or in two or more counterparts, each of which
together shall constitute one and the same instrument.
(f) COOPERATION AND INTENT. The Company shall cooperate in good
faith with Indemnitee and use its best efforts to ensure that Indemnitee is
indemnified for liabilities described herein to the fullest extent permitted by
law.
(g) AMENDMENT. No amendment, modification or alteration of the terms
of this Agreement shall be binding unless in writing, dated subsequent to the
date of this Agreement, and executed by the parties hereto.
(h) BINDING EFFECT. The obligations of the Company to Indemnitee
hereunder shall survive and continue as to Indemnitee even if Indemnitee ceases
to be a director, officer, employee and/or agent of the Company. Each and all
of the covenants, terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the successors to the Company and to the benefit of
the estate, heirs, executors, administrators and personal representatives of
Indemnitee.
(j) EFFECTIVE DATE. The provisions of this Agreement shall cover
claims, actions, suits and proceedings whether now pending or hereafter
commenced and shall be retroactive to cover acts or omissions or alleged acts or
omissions which heretofore have taken place. By way of example but not of
limitation, this Agreement shall apply to all liabilities, known or unknown,
contingent or otherwise, that presently exist or arise in the future, regardless
whether the liabilities relate to activities of Indemnitee and/or the Company
preceding or subsequent to the date of this Agreement.
[Signature Page to Follow]
5
IN WITNESS WHEREOF, the undersigned have duly executed this Indemnification
Agreement as of the day and year first written above.
THE COMPANY:
SUCCESSORIES, INC.
Address: 0000 Xxxxx Xxxx
------------------------------
Xxxxxx, Xxxxxxxx 00000
------------------------------
------------------------------
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
THE INDEMNITEE:
XXXXXX X. XXXXXXXX
Address: 000 Xxxxxx Xxxx
------------------------------
Xxxxxx, Xxxxxxxx 00000
------------------------------
------------------------------
/s/ Xxxxxx X. Xxxxxxxx
------------------------------
Signature
6