Exhibit 10.21
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as
of the ____ day of August 1999, among St. Xxxx Knits, a California corporation
("St. Xxxx"), St. Xxxx Knits International, Incorporated, a Delaware corporation
("SJKI") and ______________________ ("Indemnitee").
BACKGROUND FACTS
The Indemnitee currently is serving as a director and/or
officer of St. Xxxx and/or of SJKI, and the Company (which term as used herein
shall refer to, jointly and severally, St. Xxxx and SJKI) 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 St. Xxxx and SJKI and in consideration of
Indemnitee's continued service, St. Xxxx and SJKI and the Indemnitee hereby
agree as follows:
SECTION 1: DEFINITIONS
As used in this Agreement:
1.1 PROCEEDING. The term "Proceeding" includes any threatened,
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 any, 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 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' fees 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
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 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
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 Delaware or California, as the case may be, 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
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
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
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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, with respect to the directors and officers of St. Xxxx,
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, in each case, as required by
California law.
SECTION 5: INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY
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 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
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 determination
being made no later than the end of the sixty-day period set forth in Section
8.2 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. For purposes of a determination described in subsection (i) of this
Section 6, (x) with respect to the directors and officers of St. Xxxx, such
determination may be made 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 and (y) with respect to the
directors and officers of SJKI, such a determination shall be made (a) by a
majority vote of the directors who are not parties to such Proceeding, even
though less than a quorum, (b) by a committee of such directors designated by
majority vote of such directors, even though less than a quorum, (c) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion or (d) by the stockholders.
SECTION 7: RELIANCE ON BOOKS, RECORDS AND OTHER INFORMATION
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
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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
8.1 ADVANCES. Expenses to which an Indemnitee is entitled to
indemnity under Sections 2, 3 and 4 shall be paid by 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.
8.2 PAYMENT WITHIN 60 DAYS. After the final disposition of any
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 Delaware or
California in effect as the case may be, 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
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
create a presumption that the Indemnitee has or has not met any applicable
standard of conduct.
SECTION 9: OTHER RIGHTS
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 (or comparable organizational documents), 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.
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SECTION 10: NOTICE TO THE COMPANY; DEFENSE OF PROCEEDING
10.1 NOTICE. The Indemnitee shall, as a condition precedent to
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:
(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 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.
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
Any other provision herein to the contrary notwithstanding:
11.1 CLAIMS INITIATED BY INDEMNITEE. The Company shall not be
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
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or otherwise as required under Section 317 of the California Corporation Law or
Section 145 of the Delaware General 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
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
12.1 AMENDMENTS. This Agreement may be amended only by means
of a writing signed by both the Company and the Indemnitee.
12.2 RETROACTIVE EFFECT. This Agreement covers all Proceedings
that 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 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.
12.4 MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee
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, 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.
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12.6 GOVERNING LAW. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of this
State of California, except as to matters involving the obligation of SJKI or
any other corporation incorporated in Delaware, where it shall be governed in
all respects by the laws of the State of Delaware.
12.7 MERGER CLAUSE. Except for St. John's Articles of
Incorporation and Bylaws and SJKI's Certificate of 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 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, 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, 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:
---------------------------------
ST XXXX KNITS INTERNATIONAL,
INCORPORATED, a Delaware corporation
By:
---------------------------------
INDEMNITEE
By:
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