EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
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This Indemnification Agreement (this "Agreement") is made as of the
28th day of June 1999, between St. Xxxx Knits, Inc., a California corporation
(the "Company"), and {NAME} ("Indemnitee").
BACKGROUND FACTS
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The Indemnitee currently is serving as a director and/or officer of
the Company and the Company wishes the Indemnitee to continue in such capacity.
In order to induce the Indemnitee to continue to serve as a director and/or
officer for the Company and in consideration of Indemnitee's continued service,
the Company and the Indemnitee hereby agree as follows:
Section 1: Definitions
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As used in this Agreement:
1.1 Proceeding. The term "Proceeding" includes any threatened,
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pending or completed action, suit or proceeding, any appeal therefrom and any
inquiry or investigation, whether conducted by the Company or otherwise, that
the Indemnitee in good faith believes might lead to the institution of any such
action, suit or proceeding, whether brought by or in the right of the Company to
procure a judgment in its favor or brought by any third party or otherwise and
whether civil, criminal, administrative or investigative, in which the
Indemnitee is or may be or may have been involved as a party or otherwise by
reason of any action taken by Indemnitee or of any inaction on Indemnitee's part
while acting as a director or officer of the Company, or while acting at the
request of the Company as a director, officer, employee, partner, trustee or
agent of any other corporation, partnership, joint venture, trust or other
enterprise (as defined in Section 1.3, below), regardless of whether Indemnitee
is acting or serving in any such capacity at the time any Expenses (as defined
in Section 1.2, below) are incurred for which indemnification may be provided
under this Agreement.
1.2 Expenses. The term "Expenses" includes expenses actually and
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reasonably incurred by or on behalf of the Indemnitee in connection with any
Proceeding, including amounts paid in settlement by or on behalf of the
Indemnitee, attorneys' and disbursements, and any expenses actually and
reasonably incurred by or on behalf of the Indemnitee in connection with
establishing a right to indemnification under this Agreement, but shall not
include (i) any judgments and fines and similar penalties against the Indemnitee
or (ii) any expenses, amounts paid in settlement, attorneys' fees or
disbursements, judgments, fines and similar penalties or any other costs
whatsoever incurred in connection with any Proceeding insofar as such Proceeding
is based on a violation by the Indemnitee of Section 16 of the Securities
Exchange Act of 1934, as amended.
1.3 Other Terms. The term "other enterprise" includes employee
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benefit plans; the term "fines" includes any excise tax assessed with respect to
any employee benefit plan; the term "serving at the request of the Company"
includes any service as a director, officer, employee or agent of the Company or
any of its subsidiaries that imposes duties on, or involves services by such
director, officer, employee or agent with respect to an employee benefit plan,
its
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participants or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interests of the
participants and beneficiaries of any employee benefit plan shall be deemed to
have acted in a manner "reasonably believed to be in the best interests" of the
Company or any of its subsidiaries as such term is used in this Agreement.
Section 2: General Right to Indemnification
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The Company shall indemnify the Indemnitee against Expenses,
judgments and fines and other amounts actually and reasonably incurred in
connection with any Proceedings to the full extent permitted by the laws of the
State of California as from time to time in effect. Without limiting the
generality of the foregoing, the Company shall also indemnify the Indemnitee in
accordance with the provisions set forth below.
Section 3: Proceedings Other than by or in the Right of the Company
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If the Indemnitee was or 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
to procure a judgment in its favor), the Company shall indemnify Indemnitee
against all Expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred in connection with such Proceeding if Indemnitee acted
in good faith and in a manner Indemnitee reasonably believed to be in the best
interests of the Company and, in the case of a criminal proceeding, had no
reasonable cause to believe Indemnitee's conduct was unlawful. The termination
of any Proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent shall not, of itself, create a presumption
that the Indemnitee did not act in good faith and in a manner the Indemnitee
reasonably believed to be in the best interests of the Company or that the
Indemnitee had reasonable cause to believe that Indemnitee's conduct was
unlawful.
Section 4: Proceedings by or in the Right of the Company
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If the Indemnitee was or is a party or is threatened to be made a
party to any Proceeding by or in the right of the Company to procure a judgment
in its favor, the Company shall indemnify Indemnitee against all Expenses
relating to the Proceeding if Indemnitee acted in good faith in a manner
Indemnitee reasonably believed to be in the best interests of the Company and
its shareholders; however, no indemnification shall be made with respect to any
claim, issue or matter as to which Indemnitee shall have been adjudged to be
liable to the Company in the performance of Indemnitee's duty to the Company and
its shareholders unless the court in which such Proceeding is or was pending
shall determine upon application that in view of all the circumstances of the
case, Indemnitee is fairly and reasonably entitled to indemnity for Expenses,
and then only to the extent that the court shall determine. In addition, no
indemnification shall be made (i) with respect to amounts paid in settling or
otherwise disposing of a pending action without court approval and (ii) with
respect to Expenses incurred in defending a pending action which is settled or
otherwise disposed of without court approval.
Section 5: Indemnification for Expenses of Successful Party
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Notwithstanding the other provisions of this Agreement, to the
extent that Indemnitee has been successful on the merits in defense of any
Proceeding or of any claim, issue
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or matter forming part of any Proceeding, Indemnitee shall be indemnified
against Expenses actually and reasonably incurred by Indemnitee in connection
therewith.
Section 6: Adverse Determination
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Any indemnification under Sections 3 and 4 hereof shall be paid by
the Company in accordance with Section 8 unless (i) a determination is made that
indemnification is not proper because the Indemnitee has not met the applicable
standard of conduct set forth in Sections 3 and 4, such a determination being
made no later than the end of the sixty-day period set forth in Section 8.2 by
any of the following: (a) a majority vote of a quorum consisting of directors
who are not parties to such Proceeding, (b) if such a quorum of directors is not
obtainable, by independent legal counsel in a written opinion, (c) approval of
the shareholders with the shares owned by the Indemnitee not being entitled to
vote thereon or (d) the court in which such Proceeding is or was pending, if
such is the case, upon application made by the Company or the Indemnitee or the
attorney or other person rendering services in connection with the defense,
whether or not such application by the Indemnitee, attorney or other person is
opposed by the Company; or (ii) with respect to indemnification under Section 4,
the Indemnitee shall have been adjudged to be liable to the Company, and the
court in which such Proceeding is or was pending has determined upon application
that, in view of all the circumstances of the case, the Indemnitee is not
entitled to indemnity.
Section 7: Reliance on Books, Records and Other Information
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The Indemnitee shall be deemed to have acted in good faith and in a
manner 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,
to have had no reasonable cause to believe Indemnitee's conduct was unlawful, if
Indemnitee's action is or was based on the records or books of account of the
Company or of any other enterprise with respect to which the Indemnitee may be
affected by a Proceeding, including financial statements, or on information
supplied to Indemnitee by officers of the Company or of any such other
enterprise in the course of their duties, or on the advice of legal counsel for
the Company or for any such other enterprise or on information or records given
or reports made to the Company or to any such other enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Company or by such other enterprise. The provisions of
this Section shall not be deemed exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed to have met any applicable
standard of conduct.
Section 8: Procedure for Indemnification
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8.1 Advances. Expenses to which an Indemnitee is entitled to
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indemnity under Sections 2, 3 and 4 shall be paid by the Company in advance of
any final disposition of the Proceeding upon receipt by the Company of written
documentation of the Indemnitee's obligation to pay such Expenses. Indemnitee
hereby undertakes to repay all amounts so advanced if it shall be determined
ultimately that the Indemnitee is not entitled to be indemnified pursuant to
this Agreement.
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8.2 Payment Within 60 Days. After the final disposition of any
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Proceeding, the Indemnitee may send to the Company a written request for
indemnification, accompanied by written documentation of the Indemnitee's
obligation to pay the Expenses, judgments and fines and similar penalties for
which indemnification is requested. No later than 60 days following receipt by
the Company of such request, the Company shall pay the Expenses, judgments and
fines and similar penalties or reimburse the Indemnitee therefor (as the case
may be) unless, during such 60-day period (i) the Company determines that the
indemnification request is not permitted by the laws of the State of California
in effect, or (ii) with respect to indemnification under Sections 3 and 4, the
adverse determination described in Section 6 is made.
8.3 Actions to Enforce this Agreement. In any action by the
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Indemnitee to enforce this Agreement, the Company shall bear the burden of
proving that any applicable standard of conduct has not been met by the
Indemnitee. Neither the failure of the Company to have made the determination
required pursuant to Section 6, nor any determination made pursuant to Section 6
shall create a presumption that the Indemnitee has or has not met any applicable
standard of conduct.
Section 9: Other Rights
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The rights of the Indemnitee under this Agreement shall not be
deemed exclusive of any other rights to which Indemnitee may be entitled under
any law (common or statutory), provision of the Company's Articles of
Incorporation or Bylaws, vote of shareholders or Board of Directors of the
Company or otherwise, both as to action in Indemnitee's official capacity and as
to act in another capacity while holding such office or while employed by or
acting as agent for the Company in any capacity.
Section 10: Notice to the Company; Defense of Proceeding
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10.1 Notice. The Indemnitee shall, as a condition precedent to
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Indemnitee's right to indemnification hereunder, provide prompt written notice
to the Company of any Proceeding in connection with which Indemnitee may assert
a right to be indemnified under this Agreement. Such notice shall be deemed to
have been provided if mailed by domestic certified mail, postage prepaid, to St.
Xxxx Knits, Inc., 00000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 (or to such
other address as the Company may specify in writing to the Indemnitee).
Indemnitee shall give the Company such information and cooperation as it may
reasonably require.
10.2 Defense of Proceeding. With respect to any Proceeding:
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(i) the Company shall be entitled to participate in the
Proceeding at its own expense; and
(ii) except as otherwise provided below, the Company shall be
entitled to assume the defense of such Proceeding to the extent that it may
wish. After notice from the Company to the Indemnitee of such assumption,
the Company shall not be liable to the Indemnitee under this Agreement for
any Expenses subsequently incurred by Indemnitee in connection with such
defense. The Indemnitee shall have the right to employ separate counsel in
the Proceeding, but the fees and expenses of such counsel incurred after
such assumption shall be at the expense of the Indemnitee, unless (a) such
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employment has been authorized in writing by the Company, or (b) the
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee in the conduct of the
defense of the Proceeding.
(iii) The Company shall not be required to indemnify the
Indemnitee under this Agreement for any amounts paid in settlement of any
Proceeding effected without its prior written consent. If the Indemnitee
does not promptly offer to settle a Proceeding on a basis that the Board of
Directors has approved, the Company shall not be liable to pay any Expenses
incurred thereafter in connection with that Proceeding.
Section 11: Exceptions
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Any other provision herein to the contrary notwithstanding:
11.1 Claims Initiated by Indemnitee. The Company shall not be
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obligated to indemnify or advance Expenses to Indemnitee with respect to
Proceedings initiated or brought voluntarily by Indemnitee and not by way of
defense, except with respect to Proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute or law or
otherwise as required under Section 317 of the California Corporation Law, but
such indemnification or advancement of Expenses may be provided by the Company
in specific cases if the Board of Directors has approved the initiation or
bringing of such Proceeding.
11.2 Lack of Good Faith. The Company shall not be obligated to
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indemnify Indemnitee for any Expenses incurred by the Indemnitee with respect to
any Proceeding instituted by Indemnitee to enforce or interpret this Agreement
if a court of competent jurisdiction determines that each of the material
assertions made by the Indemnitee in such Proceeding was not made in good faith
or was frivolous.
Section 12: Miscellaneous
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12.1 Amendments. This Agreement may be amended only by means of a
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writing signed by both the Company and the Indemnitee.
12.2 Retroactive Effect. This Agreement covers all Proceedings that
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either now have been or later may be commenced, including any Proceeding
relating to any past act or omission of the Indemnitee that has not yet resulted
in commencement or threat of a Proceeding.
12.3 Savings Clause. Each provision of this Agreement is a separate
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and distinct agreement, independent of all other provisions. If this Agreement
or any such provision shall be deemed invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
shall not be affected or impaired in any way, and the Company shall nevertheless
indemnify the Indemnitee as to Expenses, judgments and fines and similar
penalties with respect to any Proceeding to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated and to
the full extent permitted by applicable law. In the event of any whole or
partial invalidation, illegality or unenforceability of this Agreement, there
shall be added automatically to this Agreement a provision or provisions as
similar to such invalid, illegal or unenforceable provision, both in terms and
effect, as may be possible and be valid, legal and enforceable.
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12.4 Mutual Acknowledgement. Both the Company and Indemnitee
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acknowledge that in certain instances, federal law or applicable public policy
may prohibit the Company from indemnifying Indemnitee under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake to the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
12.5 Successors and Assigns. This Agreement shall be binding on,
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and inure to the benefit of, the successors and assigns of the Company, whether
by operation of law or otherwise, and the estate, heirs and personal
representatives of the Indemnitee.
12.6 Governing Law. This Agreement shall be governed in all
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respects, including validity, interpretation and effect, by the laws of this
State of California.
12.7 Merger Clause. Except for the Company's Articles of
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Incorporation and Bylaws, this Agreement constitutes the entire understanding of
the parties and supersedes all prior understandings and agreements, written or
oral, between the parties with respect to the subject matter of this Agreement.
12.8 No Duplication of Payments. The Company shall not be liable
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under this Agreement to make any payment in connection with any claim made
against the Indemnitee to the extent that the Indemitee has otherwise received
payment (under any insurance policy, Bylaw, or otherwise) of the amounts
otherwise indemnifiable hereunder.
12.9 Subrogation. In the event of payment under this Agreement,
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the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all papers required and
shall do everything that may be necessary or appropriate to enable the Company
effectively to bring suit to enforce such rights.
12.10 Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original, but all of which taken together shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ST XXXX KNITS, INC., a California corporation
By:
______________________________________
Xxxxx Xxxxxxx, Chief Financial Officer
INDEMNITEE
By:
______________________________________
{NAME}
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The following directors and officers of St. Xxxx Knits International,
Incorporated and St. Xxxx Knits, Inc. are parties to the form of Indemnity
Agreement:
Xxxxxx Xxxx
Xxxxx Xxxx
Xxxxx Xxxx
Xxxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxxx
Xxxxxx X'Xxxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxx
