270 Legal [Sample Agreements]

INDEMNITY AGREEMENT

This AGREEMENT is made and entered into this 31st day of October, 1996, by and between OVERSEAS FILMGROUP, INC., a Delaware corporation (hereinafter called “Overseas”), and Stephen K. Bannon (hereinafter called “Indemnitee”) (sometimes collectively referred to herein as “the Parties hereto”).

WHEREAS, there is a general awareness that competent and experienced persons are becoming more reluctant to serve as directors and officers of a corporation unless they are protected by comprehensive insurance or indemnification, especially since stockholder class and derivative lawsuits against publicly held corporations, their directors and officers for line-of-duty decisions and actions have increased in number in recent years for damages in amounts which are greatly in excess of the amount of compensation received by the directors or officers from the corporations, and

WHEREAS, the vagaries of “public policy” and the interpretations of ambiguous statutes, regulations and bylaws are too uncertain to provide corporate officers and directors with adequate, reliable knowledge of legal risks to which they may be exposed, with these indeterminables multiplied substantially for officers and directors of corporations such as Overseas with operations in many of the states in the United States and many foreign jurisdictions, and

WHEREAS, damages sought by class action plaintiffs in some cases amount to tens of millions of dollars and, whether or not the case is meritorious, the cost of defending them is enormous with few individual directors and officers having the resources to sustain such legal costs, not to mention the risk of a judgment running into millions even in cases where the defendant was neither culpable nor profited personally to the detriment of the corporation, and

WHEREAS, the issues in controversy in such litigation are usually related to the knowledge, motives and intent of the director or officer and such person may be the only witness with first-hand knowledge of the essential facts or of exculpating circumstances, who is qualified to testify in such person’s defense regarding matters of such subjective nature, and the long period of time which normally and usually elapses before such suits can be disposed of can extend beyond the normal time for retirement for a director or officer with the result that such person, after retirement, or in the event of such person’s death, such person’s spouse, heirs, executors or administrators, as the case may be, may be faced with limited ability, undue hardship and an intolerable burden in launching and maintaining a proper and adequate defense of such director or officer or such person’s estate against claims for damages, and

WHEREAS, the Board of Directors, based upon their experience as business managers, have concluded that unless Overseas enters into indemnification agreements with its directors and officers, the continuation of present trends in litigation against corporate directors and officers will inevitably result in less effective direction and supervision of Overseas and its subsidiaries and affiliates, their business affairs and the operation of their facilities and the Board deems such consequences to be so detrimental to the best interests of Overseas’ shareholders that it has concluded that its directors and officers should be provided with maximum protection against inordinate risks in order to insure that the most capable persons otherwise available will be attracted to such positions; therefore, said directors have further concluded that it is not only reasonable and prudent but necessary for Overseas to contractually obligate itself to indemnify in a reasonable and adequate manner its directors and officers and the directors and officers of its affiliates and to assume for itself maximum liability for expenses and damages in connection with claims lodged against them for their line-of-duty decisions and actions, and

WHEREAS, Section 145 of the General Corporation Law of the State of Delaware, under which Overseas is organized, empowers corporations to indemnify persons serving as a director, officer, employee or agent of the corporation or a person who serves at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and further specifies that the indemnification set forth in said section “shall not be deemed exclusive to any other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise”, and said section further empowers a corporation to “purchase and maintain insurance” (on behalf of such persons) “against any liability asserted against him or incurred by him in any such capacity or arising out of status as such whether or not the corporation would have the power to indemnify him against such liability under the provisions of” (said laws), and

WHEREAS, Overseas initiated an investigation to determine the type of insurance available, the nature and extent of the coverage provided and the cost thereof to Overseas to insure the directors and officers of Overseas and of its affiliates against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such persons in connection with any action, suit or proceeding with which any such director or officer is threatened or made a party by reason of such status and/or such person’s line-of-duty decisions or actions, and, upon receiving such information, the directors of Overseas have determined that the coverage available is inadequate for Overseas and its directors, officers and agents and that its shareholders’ best interests would be served by Overseas contracting to indemnify such persons and to thereby effectively self-insure against such potential liabilities not covered by insurance, and

WHEREAS, Overseas desires to have Indemnitee serve or continue to serve as a director and/or officer of Overseas and/or of any other corporation, partnership, joint venture, trust or other enterprise of which he has been or is serving at the request of, for the convenience of, or to represent the interests of Overseas (any such enterprise being hereinafter referred to as an “Affiliate of Overseas”) free from undue concern for unpredictable, inappropriate or unreasonable claims for damages by reason of his being a director, officer, employee and/or agent of Overseas or of an Affiliate of Overseas or by reason of his decisions or actions on their behalf and Indemnitee desires to serve or to continue to serve (provided that he is furnished the indemnity provided for hereinafter), in one or more of such capacities, NOW, THEREFORE,

W I T N E S S E T H

THAT for and in consideration of the premises and the covenants contained herein, Overseas and Indemnitee do hereby covenant and agree as follows:

1. DEFINITIONS.

“Litigation Costs” means all reasonable costs, charges, expenses, including attorneys’, accountants’ and expert witnesses’ fees, and obligations paid or incurred in connection with investigating, defending (including affirmative defenses and counterclaims), obtaining or attempting to obtain a settlement, being a witness in, or participating in or preparing to defend, be a witness in, or participate in, any Proceeding and any appeal therefrom and the cost of appeal, attachment and similar bonds.

“Losses” means the total amount which Indemnitee becomes legally obligated to pay in connection with any Proceeding including, without limitation, Litigation Costs, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Litigation Costs, judgments, fines and amounts paid in settlement) of or with respect to that Proceeding.

“Proceeding” means any threatened, pending or completed action, suit or proceeding (including, without limitation, securities laws actions, suits, and proceedings), or any inquiry or investigation, formal or informal, (including discovery), whether conducted by Overseas 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.

2. AGREEMENT TO SERVICE.

Indemnitee will serve and/or continue to serve, at the will of Overseas or its stockholders or under separate contract, if such exists, Overseas or an Affiliate of Overseas as a director, officer, employee and/or agent faithfully so long as he is duly elected and qualified in accordance with the provisions of the bylaws thereof or until such time as he tenders his resignation in writing or is removed in accordance with applicable law (subject to the terms of any separate contract, if such exists).

3. INDEMNIFICATION. Overseas shall indemnify Indemnitee:

(a) If Indemnitee is a person who was or is a party, or witness in, or is threatened to be made a party to, or witness in, or otherwise becomes involved in, any Proceeding (other than an action by or in the right of Overseas or an Affiliate of Overseas) by reason of (or arising in part out of) the fact that he is or was a director, officer, employee or agent of Overseas or is or was serving at the request of Overseas as a director, officer, employee or agent of an Affiliate of Overseas, or by reason of anything done or not done by him in any such capacity, against Losses actually incurred by him in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful, or
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