Indemnity Agreement - Media Arts Group Inc.
INDEMNITY AGREEMENT
This Indemnity Agreement (this "Agreement") is made as of _____________
by and between Media Arts Group, Inc., a Delaware corporation ("Company"),
and _________________ ("Indemnitee").
BACKGROUND
WHEREAS, Indemnitee is a director of Company.
WHEREAS, Indemnitee has indicated that he does not regard the
indemnities available under Company's Certificate of Incorporation and Bylaws
(together, the "Charter Documents") as adequate to protect him against the
risks associated with his service to Company.
WHEREAS, Company and Indemnitee now agree that they should enter into
this Agreement in order to provide greater protection to Indemnitee against
such risks of service to Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, Company and Indemnitee agree as follows:
1. Definitions of "Proceeding" and "Expenses". As used in this Agreement:
(a) "Proceeding" includes any threatened, pending or completed claim, action,
suit, arbitration, alternate dispute resolution mechanism or other
proceeding, whether brought in the name of the Company or otherwise and
whether of a civil, criminal, administrative or investigative nature
(including, but not limited to, proceedings brought under or predicated upon
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, their respective state counterparts or any rule or regulation
promulgated thereunder), in which Indemnitee may be or may have been involved
as a party, a witness or otherwise by reason of the fact that Indemnitee is
or was a director and/or officer of Company or that Indemnitee is or was
serving at the request of the Company as director, officer, employee or agent
of another corporation, partnership, joint venture, trust, limited liability
company or other enterprise, whether or not Indemnitee is serving in such
capacity at the time any Expense is incurred. "Other enterprise" as used
herein includes, without limitation, employee benefit plans and
administrative committees thereof.
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(b) "Expenses" include, but shall not be limited to, damages, judgments,
fines (including any excise taxes assessed on Indemnitee with respect to an
employee benefit plan), penalties, charges, assessments, settlements and
costs, costs of investigation, attorneys' fees and disbursements, costs of
attachment or similar bonds and any federal, state, local or foreign taxes
imposed on Indemnitee as a result of the actual or deemed receipt of any
payment under this Agreement.
2. INDEMNITY IN THIRD-PARTY PROCEEDINGS. Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
Indemnitee in connection with any Proceeding (other than a Proceeding by
Company itself to procure a judgment in its favor), PROVIDED that Indemnitee
acted in good faith and in a manner that Indemnitee reasonably believed to be
in or not opposed to the best interests of Company and, in the case of a
criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful.
3. INDEMNITY IN PROCEEDINGS BY OR IN THE NAME OF COMPANY. Company shall
indemnify Indemnitee against all Expenses actually and reasonably incurred by
Indemnitee in connection with any Proceeding by or in the name of Company to
procure a judgment in its favor, but only if Indemnitee acted in good faith
and in a manner that Indemnitee reasonably believed to be in or not opposed
to the best interests of Company and its stockholders; provided, however,
that no indemnification for Expenses shall be made under this Paragraph 3
with respect to any claim, issue or matter as to which Indemnitee shall have
been adjudged to be liable to Company, unless, and only to the extent that,
any court in which such Proceeding is brought shall determine upon
application that, despite the adjudication of liability, but in view of all
the circumstances of the case, Indemnitee is fairly and reasonably entitled
to indemnity for such expenses as such court shall deem proper.
4. EXCLUSIONS. Company shall not be liable under this Agreement to pay
or advance any Expenses:
(a) to the extent that payment is actually made to Indemnitee under a
valid, enforceable and collectible insurance policy;
(b) to the extent that Indemnitee is indemnified and actually paid
otherwise than pursuant to this Agreement;
(c) if it is proved by final judgment in a court of law or other final
adjudication to have been based upon or attributable to Indemnitee's in fact
having gained any personal profit or advantage to which Indemnitee was not
legally entitled;
(d) for a disgorgement of profits made from the purchase and sale by
Indemnitee of securities pursuant to Section 16(b) of the Securities Exchange
Act of
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1934 and amendments thereto or similar provisions of any state statutory law
or common law;
(e) brought about or contributed to by the deliberate dishonesty, fraud
or willful misconduct of Indemnitee; HOWEVER, notwithstanding the foregoing,
Indemnitee shall be protected under this Agreement as to any Proceedings
brought against him by reason of any alleged dishonesty, misconduct or fraud
on his part, unless a judgment or other final adjudication thereof shall be
establish that Indemnitee committed acts that (i) were deliberately dishonest
or knowingly fraudulent or that constituted willful misconduct and (ii) were
material to the cause of action so adjudicated;
(f) in respect of any Proceeding initiated by Indemnitee and not by way
of defense, counterclaim or crossclaim, except (i) with respect to any such
Proceeding that ultimately determines that Indemnitee is entitled to
indemnification under this Agreement, any directors' and officers'
liabilities insurance policy maintained by Company or under Charter Documents
now or hereafter in effect, (ii) in cases where the Board of Directors has
approved the initiation of such Proceeding (or part thereof) or (iii) as
otherwise required by Section 145 of the Delaware General Corporation Law; or
(g) for any judgment, fine or penalty which Company is prohibited by
applicable law from paying as indemnity or for any other reason (and, in this
respect, both Company and Indemnitee have been advised that the Securities
and Exchange Commission believes that indemnification for liabilities arising
under the federal securities laws is against public policy and is, therefore,
unenforceable, and that certain such claims for indemnification may have to
be submitted to appropriate courts for adjudication).
5. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY. Notwithstanding any
other provisions of this Agreement, to the extent that Indemnitee has been
successful on the merits of otherwise in defense of any Proceeding or in
defense of any claim, issue or matter therein, including the dismissal of an
action without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. NOTICES. Indemnitee shall, as a condition precedent to his right to
be indemnified for Expenses under this Agreement or to receive an advance
therefore, give to Company written notice as soon as practicable of any
Proceeding instituted against him for which indemnity will or could be sought
under this Agreement. Notice to Company shall be given at its principal
office and shall be directed to the Corporate Secretary (or at such other
address or to the attention of such other person as Company shall designate
in writing to Indemnitee). In addition, Indemnitee shall give Company such
information and cooperation as it may reasonably require and as shall be
within Indemnitee's power.
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7. ADVANCES OF EXPENSES. Expenses incurred by Indemnitee pursuant to
Paragraphs 2 and 3 in any Proceeding shall be paid by Company in advance of
the determination of such Proceeding at the written request of Indemnitee, if
Indemnitee (a) undertakes to repay such amount to the extent that it is
ultimately determined that Indemnitee is not entitled to indemnification in
such amount, and (b) delivers to Company a certificate affirming that
Indemnitee has met the relevant standards for indemnification set forth in
Paragraphs 2 and 3.
8. RIGHT OF INDEMNITEE TO INDEMNIFICATION UPON APPLICATION. Any
indemnification or advance under Paragraph 2, 3 and 7 shall be made no later
than 30 days after receipt of the written request of Indemnitee therefor,
subject to, in the case of an indemnification, a determination by a majority
of the Board of Directors within said 30 day period that Indemnitee has met
the relevant standards for indemnification set forth in Paragraph 2 and 3;
provided, however that if Indemnitee disagrees with the Board's decision, the
matter shall be referred to independent legal counsel (which shall not
include legal counsel that has previously represented Company or Indemnitee
or their affiliates) mutually selected by the Board and Indemnitee whose
written opinion shall bind the parties. The termination of any Proceeding by
judgment, order of court, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption that
Indemnitee did not act in good faith or in a manner that Indemnitee
reasonably believed to be in or not opposed to the best interests of Company,
and with respect to any criminal proceeding, that such person had reasonable
cause to believe that his conduct was unlawful.
9. BURDEN OF PROOF. Notwithstanding Paragraph 8, the right to
indemnification or advances as provided by this Agreement shall be
enforceable by Indemnitee in any court of competent jurisdiction. Company
shall bear the burden of proving that indemnification or advances are not
appropriate. The failure of the Company to have made a determination that
indemnification or advances are proper in the circumstances shall not be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct. Indemnitee's Expenses incurred in connection
with successfully establishing his right to indemnification or advances, in
whole or in part, in any such Proceeding shall also be indemnified by Company.
10. SELECTION OF COUNSEL. If Company shall be obligated to provided
indemnification or advances for any Expenses in respect of any Proceedings,
Company, if appropriate, shall be entitled to assume the defense of such
Proceeding with counsel approved by Indemnitee (which approval shall not be
unreasonably withheld) upon delivery to Indemnitee of written notice of
Company's election to do so. After the retention of any such counsel by
Company, Company will not be liable to Indemnitee under this Agreement for
any fees or expenses of separate counsel subsequently retained by or on
behalf of Indemnitee with respect to the same Proceeding; provided, however,
that (i) Indemnitee shall have the right to employ his own separate counsel
in any such Proceeding at his expense and (ii) if (A) the
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employment of separate counsel by Indemnitee has been previously authorized
by a majority of the Board of Directors, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between Company and
Indemnitee in the conduct of any such defense or (C) Company shall not
continue to retain such counsel to defend such Proceeding, then the fees and
expenses of Indemnitee's separate counsel shall be Expenses for which
Indemnitee may receive indemnification or advances hereunder.
11. SETTLEMENT OF PROCEEDINGS. Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
Proceeding effected without its prior written consent. Company shall be
permitted to settle any Proceeding except that it shall not settle any
Proceeding in any manner which would impose any penalty, limitation or
admission of Indemnitee's liability on Indemnitee without Indemnitee's
written consent. Neither Company nor Indemnitee will unreasonably withhold
its consent to any proposed settlement.
12. CONTRIBUTION. If the indemnification provided in Paragraphs 2 and 3
is unavailable by reason of a court decision described in clause (g) of
Paragraph 4 based on grounds other than those set forth in clauses (c)
through (f) of such Paragraph 4, then in respect of any threatened, pending
or completed Proceeding in which Company is jointly liable with Indemnitee
(or would be joined in such Proceeding), Company shall contribute to the
amount of Expenses actually and reasonably incurred and paid or payable by
Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by Company on the one hand and Indemnitee on the other hand
from the transaction from which such Proceeding arose, and (ii) the relative
fault of Company on the one hand and of Indemnitee on the other in connection
with the events which resulted in such Expenses as well as any other relevant
equitable considerations. The relative fault of Company on the one hand and
Indemnitee on the other shall be determined with reference to, among other
things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such
Expenses. Company agrees that it would not be just and equitable if
contribution pursuant to this Paragraph 12 were determined by pro rata
allocation or any other method of allocation which does not take account of
the foregoing equitable considerations.
13. NONEXCLUSIVITY.
(a) Notwithstanding any other provision of this Agreement, the Company
shall not indemnify Indemnitee for any act or omission or transaction for
which indemnification is expressly prohibited by Section 145 of the Delaware
General Corporation Law.
(b) The right of indemnification provided by this Agreement shall not be
exclusive of any other rights to which Indemnitee may be entitled under
Company's Charter Documents, any agreement, any vote of stockholders or
disinterested directors, the Delaware General Corporation Law or otherwise,
both as to action in his official
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capacity and as to action in another capacity while holding such office. To
the extent that a change in Delaware General Corporation Law (whether by
statute or judicial decision) permits greater indemnification by agreement
than would be afforded currently under the Charter Documents, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
14. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by Company for a portion of
his Expenses actually and reasonably incurred by him in any Proceeding but
not, however, for the total amount thereof, Company shall nevertheless
indemnify Indemnitee for the portion of such Expenses to which Indemnitee is
entitled.
15. SUBROGATION. In the event Indemnitee shall receive any payment from
any insurance carrier or from the plaintiff in any action against Indemnitee
with respect to indemnified amounts after payment on account of all or part
of such indemnified amounts having been made by Company pursuant to this
Agreement, Indemnitee shall reimburse Company for the amount, if any, by
which the sum of such payment by such insurance carrier or such plaintiff and
payments by 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 shall not be deemed to be payments to Indemnitee hereunder.
In addition, upon payment of indemnified amounts under the terms and
conditions of this Agreement, Company shall be subrogated to all of
Indemnitee's rights of recovery with respect to such indemnified amounts.
Indemnitee 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 Company effectively to bring suit to enforce such rights.
Such rights of subrogation shall be terminated upon receipt by Company of the
amount to be reimbursed by Indemnitee pursuant to the first sentence of this
paragraph.
16. BINDING EFFECT. The indemnification under this Agreement shall
continue as to Indemnitee even though Indemnitee may have ceased to be a
director or officer of the Company. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns (including any direct or indirect successors
by purchase, merger, consolidation or otherwise to all or substantially all
of the business and/or assets of Company), spouses, heirs, executors and
personal and legal representatives.
17. SEVERABILITY. If any provision of this Agreement or the application
of any provision hereof to any person or circumstance is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be revised to the extent (and only the extent) necessary to make
in enforceable, valid and legal.
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18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MEDIA ARTS GROUP, INC.
By:
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Name:
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Title:
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INDEMNITEE
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