EXHIBIT 10.6
INDEMNITY AGREEMENT
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This Agreement is made as of the 25th day of March, 1999, by and between Video
City, Inc., a Delaware corporation (the "Corporation"), and ___________ (the
"Indemnitee"), a director and/or officer of the Corporation.
WHEREAS, it is essential to the Corporation to retain and attract as directors
and officers the most capable persons available; and
WHEREAS, the substantial amount of corporate litigation subjects directors and
officers to expensive litigation risks; and
WHEREAS, it is now and has been the express policy of the Corporation to
indemnify its directors and officers so as to provide them with the maximum
possible protection permitted by law; and
WHEREAS, the Corporation does not regard the protection available to the
Indemnitee as adequate in the present circumstances, and realizes that the
Indemnitee may not be willing to serve as a director or officer without adequate
protection, and the Corporation desires the Indemnitee to serve in such
capacity;
NOW, THEREFORE, in consideration of the Indemnitee's service as a director or
officer after the date hereof, the parties agree as follows:
I. Definitions. As used in this Agreement:
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(a) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought by or in the right of the
Corporation or otherwise and whether of a civil, criminal, administrative or
investigative nature.
(b) The term "Expenses" shall include, but is not limited to, expenses of
investigations, judicial or administrative proceedings or appeals, damages,
judgments, fines, amounts paid in settlement by or on behalf of the Indemnitee,
attorneys fees and disbursements, and any expenses of establishing a right to
indemnification under this Agreement.
(c) The terms "director" and "officer" shall include the Indemnitee's
service at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
1.
other enterprise as well as director or officer of the Corporation.
(d) For purposes of Section 3 and 4, the phrase "decided in a
Proceeding" shall mean a decision by a court, arbitrator, hearing officer or
other judicial agent having the requisite legal authority to make such a
decision has become final and from which no appeal or other review proceeding is
permissible.
2. Indemnification of the Indemnitee. Subject only to the limitations set
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forth in Section 3, the Corporation will pay on behalf of the Indemnitee all
Expenses actually and reasonably incurred by the Indemnitee because of any claim
or claims made against him or her in a Proceeding by reason of the fact that he
or she is or was a director and/or officer.
3. Limitations on Indemnity. The Corporation shall not be obligated under
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this Agreement to make any payment of Expenses to the Indemnitee:
(a) the payment of which is prohibited by applicable law; or
(b) for which and to the extent payment is actually and unqualifiedly
made to the Indemnitee under an insurance policy or otherwise; or
(c) resulting from a claim in a Proceeding decided adversely to the
Indemnitee based upon or attributable to the Indemnitee gaining in fact any
personal profit or advantage to which he or she was not legally entitled.
4. Advance Payment of Costs. Expenses incurred by the Indemnitee in
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defending a claim against him in a Proceeding shall be paid by the Corporation
as incurred and in advance of the final disposition of such Proceeding. The
Indemnitee hereby agrees and undertakes to repay such amounts advanced if it
shall be decided in a Proceeding that he or she is not entitled to be
indemnified by the Corporation pursuant to this Agreement or otherwise.
5. Enforcement. If a claim under this Agreement is not paid by the
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Corporation, or on its behalf, within 30 days after a written claim has been
received by the Corporation, the Indemnitee may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and if
successful in whole or in part, the Indemnitee shall be entitled to be paid also
the Expenses of prosecuting such claim.
2.
6. Subrogation. In the event of payment under this Agreement, the
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Corporation 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 to secure such rights, including the
execution of such documents necessary to enable the Corporation effectively to
bring suit to enforce such rights.
7. Notice. The Indemnitee, as a condition precedent to his right to be
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indemnified under this Agreement, shall give to the Corporation notice in
writing as soon as practicable of any claim made against him or her for which
indemnity will or could be sought under this Agreement. Notice to the
Corporation shall be given at its principal office and shall be directed to the
Corporate Secretary (or such other address as the Corporation shall designate in
writing to the Indemnitee); notice shall be deemed received if sent by prepaid
mail properly addressed, the date of such notice being the date postmarked. In
addition, the Indemnitee shall give Corporation such information and cooperation
as it may reasonably request.
8. Saving Clause. If this Agreement or any portion hereof shall be
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invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify the Indemnitee to the full extent
permitted by any applicable portion of this Agreement that shall not have been
invalidated or by any other applicable law.
9. Indemnification Hereunder Not Exclusive. Nothing herein shall be
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deemed to diminish or otherwise restrict the Indemnitee's right to
indemnification under any provision of the Certificate of Incorporation or
Bylaws of the Corporation or under Delaware law.
10. Applicable Law. This Agreement shall be governed by and construed in
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accordance with Delaware law.
11. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall constitute the original.
12. Successors and Assigns. This Agreement shall be binding upon the
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Corporation and its successors and assigns.
13. Continuation of Indemnification. The indemnification under this
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Agreement shall continue as to the Indemnitee even though he or she may have
ceased to be a director and/or officer and shall inure to the benefit of the
heirs and personal representatives of the Indemnitee.
3.
14. Coverage of Indemnification. The indemnification under this Agreement
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shall cover the Indemnitee's service as a director and/or officer and all of his
or her acts in such capacity, whether prior to or on or after the date of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
VIDEO CITY, INC.
By:___________________________
INDEMNITEE:
______________________________
4.