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Exhibit 10.4
INDEMNIFICATION AGREEMENT
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This Indemnification Agreement, dated as of January 4, 2007
is made by and between Hampshire Group, Limited, a Delaware
corporation (the
"Company"), and Irwin W. Winter (the "Indemnitee").
RECITALS
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A. The Company recognizes that competent and experienced persons
are
increasingly reluctant to serve or to continue to serve as
directors of
corporations unless they are protected by comprehensive liability
insurance or
indemnification, or both, due to increased exposure to litigation
costs and
risks resulting from their service to such corporations, and due to
the fact
that the exposure frequently bears no reasonable relationship to
the
compensation of such directors.
B. The Company's Certificate of Incorporation and Bylaws require
the
Company to indemnify its directors and officers to the fullest
extent permitted
by the Delaware General Corporate Law (the "DGCL"). The Certificate
of
Incorporation expressly provides that the indemnification
provisions set forth
therein are not exclusive, and contemplates that contracts may be
entered into
between the Company and its directors and officers with respect
to
indemnification.
C. Section 145 of the DGCL, under which the Company is organized,
empowers
the Company to indemnify its officers, directors, employees and
agents by
agreement and to indemnify persons who serve, at the request of the
Company, as
the directors, officers, employees or agents of other corporations
or
enterprises, and expressly provides that the indemnification
provided by Section
145 is not exclusive.
D. The Executive Committee of the Board of Directors (the
"Executive
Committee") has determined that contractual indemnification as set
forth herein
is not only reasonable and prudent but also promotes the best
interests of the
Company and its stockholders.
E. In connection with Indemnitee's continued service on the
Executive
Committee, the Company and Indemnitee agree that the Company will
furnish
Indemnitee the indemnity provided for herein.
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements set
forth below, and other good and valuable consideration, the receipt
and adequacy
of which are hereby acknowledged, the parties hereto, intending to
be legally
bound, hereby agree as follows:
Section 1. Generally.
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To the fullest extent permitted by the laws of the State of
Delaware:
<PAGE>
(a) The Company shall indemnify Indemnitee if Indemnitee was or is
a party
or is threatened to be made a party to any threatened, pending or
completed
action, suit or proceeding, whether civil, criminal, administrative
or
investigative, by reason of the fact that Indemnitee is or was or
has agreed to
serve at the request of the Company as a director, officer,
employee or agent of
the Company or, while serving as a director or officer of the
Company, is or was
serving or has agreed to serve at the request of the Company as a
director,
officer, trustee, employee or agent of or in any other capacity
with another
corporation, partnership, joint venture, trust, employee benefit
plan or other
enterprise, or by reason of any action alleged to have been taken
or omitted in
such capacity, or with respect to any action involving any of the
individuals
that are subjects of the Company's investigation (the
"Investigation") described
in the Form 8-K filed by the Company on June 22, 2006. For the
avoidance of
doubt, the foregoing indemnification obligation includes, without
limitation,
(i) claims related to the Investigation (including any subsequent
lawsuits, SEC
examinations or investigations, federal or state tax examinations
related to
matters discovered, identified or reviewed in the Investigation, or
any other
examinations or investigations associated with matters discovered,
identified or
reviewed in the Investigation), (ii) claims for monetary damages
against
Indemnitee in respect of an alleged breach of fiduciary duties, to
the fullest
extent permitted under Section 102(b)(7) of the DGCL as in
existence on the date
hereof, and (iii) the shareholder derivative action on behalf of
the Company,
filed by Mary Hazelton as Plaintiff, in the United States District
Court for the
District of South Carolina against the Company, Ludwig Kuttner,
Joel Goldberg,
Michael C. Jackson, Harvey L. Sperry, Roger Clark and Irwin W.
Winter, as
Defendants (Case No.: 8:06-2063-ORA)) (the "Derivative Suit"), or
any similar
action or proceeding.
(b) The indemnification provided by this Section 1 shall be from
and
against expenses (including attorneys' fees), judgments, fines and
amounts paid
in settlement actually and reasonably incurred by Indemnitee or on
Indemnitee's
behalf in connection with such action, suit or proceeding and any
appeal
therefrom, but shall only be provided if Indemnitee acted in good
faith and in a
manner Indemnitee reasonably believed to be in or not opposed to
the best
interests of the Company, and, with respect to any criminal action,
suit or
proceeding, had no reasonable cause to believe Indemnitee's conduct
was
unlawful.
(c) Notwithstanding the foregoing provisions of this Section 1, in
the case
of any threatened, pending or completed action or suit by or in the
right of the
Company to procure a judgment in its favor by reason of the fact
that Indemnitee
is or was a director, officer, employee or agent of the Company, or
while
serving as a director or officer of the Company, is or was serving
or has agreed
to serve at the request of the Company as a director, officer,
trustee, employee
or agent of or in any other capacity with another corporation,
partnership,
joint venture, trust, employee benefit plan or other enterprise
(including,
without limitation, the Derivative Suit), no indemnification shall
be made in
respect of any claim, issue or matter as to which Indemnitee shall
have been
adjudged to be liable to the Company unless, and only to the extent
that, the
Delaware Court of Chancery or the court in which such action or
suit was 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 which the
Delaware Court of
Chancery or such other court shall deem proper.
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<PAGE>
(d) The termination of any action, suit or proceeding by judgment,
order,
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 and in a manner which Indemnitee reasonably believed to be in
or not
opposed to the best interests of the Company, and, with respect to
any criminal
action or proceeding, had reasonable cause to believe that
Indemnitee's conduct
was unlawful.
Section 2. Successful Defense; Partial Indemnification. To the
extent that
Indemnitee has been successful on the merits or otherwise in
defense of any
action, suit or proceeding referred to in Section 1 hereof or in
defense of any
claim, issue or matter therein, Indemnitee shall be indemnified
against expenses
(including attorneys' fees) actually and reasonably incurred in
connection
therewith. For purposes of this Agreement and without limiting the
foregoing, if
any action, suit or proceeding is disposed of, on the merits or
otherwise
(including a disposition without prejudice), without (i) the
disposition being
adverse to Indemnitee, (ii) an adjudication that Indemnitee was
liable to the
Company, (iii) a plea of guilty or nolo contendere by Indemnitee,
(iv) an
adjudication that Indemnitee did not act in good faith and in a
manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of
the Company, or (v) with respect to any criminal proceeding, an
adjudication
that Indemnitee had reasonable cause to believe Indemnitee's
conduct was
unlawful, Indemnitee shall be considered for the purposes hereof to
have been
wholly successful with respect thereto.
If Indemnitee is entitled under any provision of this Agreement
to
indemnification by the Company for some or a portion of the
expenses (including
attorneys' fees), judgments, fines or amounts paid in settlement
actually and
reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with
any action, suit, proceeding or investigation, or in defense of any
claim, issue
or matter therein, and any appeal therefrom but not, however, for
the total
amount thereof, the Company shall nevertheless indemnify Indemnitee
for the
portion of such expenses (including attorneys' fees), judgments,
fines or
amounts paid in settlement to which Indemnitee is entitled.
Section 3. Determination That Indemnification Is Proper. Any
indemnification hereunder shall (unless otherwise ordered by a
court) be made by
the Company unless a determination is made that indemnification of
such person
is not proper in the circumstances because he or she has not met
the applicable
standard of conduct set forth in Section 1(b) hereof. Any such
determination
shall be made by one of the following methods, at the election of
Indemnitee:
(i) by a majority vote of the directors who are not parties to the
action, suit
or proceeding in question ("disinterested directors"), even if less
than a
quorum, (ii) by a majority vote of a committee of disinterested
directors
designated by majority vote of disinterested directors, even if
less than a
quorum, (iii) by a majority vote of a quorum of the outstanding
shares of stock
of all classes entitled to vote on the matter, voting as a single
class, which
quorum shall consist of stockholders who are not at that time
parties to the
action, suit or proceeding in question, (iv) by independent legal
counsel
mutually agreed upon by the Company and Indemnitee in a written
opinion
addressed to the Board of Directors, a copy of which shall be
delivered to
Indemnitee, or (v) by a court of competent jurisdiction. Indemnitee
shall
cooperate with reasonable requests of the persons making such
standard of
conduct determination, including providing to such persons
documentation or
information which is not
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<PAGE>
privileged or otherwise protected from disclosure and which is
reasonably
available to Indemnitee and reasonably necessary to such
determination without
incurring any unreimbursed cost in connection therewith. The
Company shall
indemnify and hold harmless Indemnitee against and, if requested by
Indemnitee,
shall reimburse Indemnitee for, or advance to Indemnitee, within
five business
days of such request accompanied by supporting documentation for
specific costs
and expenses to be reimbursed or advanced, any and all costs and
expenses
(including attorneys' and experts' fees and expenses) incurred by
Indemnitee in
connection with making this standard of conduct determination.
Section 4. Advance Payment of Expenses; Notification and Defense of
Claim.
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(a) Expenses (including attorneys' fees) incurred by Indemnitee
in
defending a threatened or pending civil, criminal, administrative
or
investigative action, suit or proceeding, or in connection with an
enforcement
action pursuant to Section 5(b), shall be paid by the Company in
advance of the
final disposition of such action, suit or proceeding within five
business days
after receipt by the Company of (i) a statement or statements from
Indemnitee
requesting such advance or advances from time to time, and (ii) an
undertaking
by or on behalf of Indemnitee to repay such amount or amounts, only
if, and to
the extent that, it shall ultimately be determined that Indemnitee
is not
entitled to be indemnified by the Company as authorized by this
Agreement or
otherwise. Such undertaking shall be accepted without reference to
the financial
ability of Indemnitee to make such repayment. Advances shall be
unsecured and
interest-free. Without limiting the generality or effect of the
foregoing, the
Company shall indemnify and hold harmless Indemnitee against and,
if requested
by Indemnitee, shall reimburse Indemnitee for, or advance to
Indemnitee, within
five business days of such request accompanied by supporting
documentation for
specific expenses to be reimbursed or advanced, any and all
expenses paid or
incurred by Indemnitee or which Indemnitee determines in good faith
are
reasonably likely to be paid or incurred by Indemnitee in
connection with any
claim made, instituted or conducted by Indemnitee for (x)
indemnification or
reimbursement or advance payment of expenses by the Company under
any provision
of this Agreement, the Certificate of Incorporation, or the Bylaws,
and (y)
recovery under any directors' and officers' liability insurance
policies
maintained by the Company, regardless in each case of whether
Indemnitee
ultimately is determined to be entitled to such indemnification,
reimbursement,
advance or insurance recovery, as the case may be; provided,
however, that
Indemnitee shall return, without interest, any such advance of
expenses (or
portion thereof) which remains unspent at the final disposition of
the claim to
which the advance related.
(b) Promptly, and in any event within twenty business days, after
receipt
by Indemnitee of notice of the commencement of any action, suit or
proceeding,
Indemnitee shall, if a claim thereof is to be made against the
Company
hereunder, notify the Company of the commencement thereof. The
failure to notify
the Company promptly and in any event within twenty business days
of the
commencement of the action, suit or proceeding, or Indemnitee's
request for
indemnification, will not relieve the Company from any liability
that it may
have to Indemnitee hereunder, except to the extent the Company is
prejudiced in
its defense of such action, suit or proceeding as a result of such
failure.
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<PAGE>
(c) In the event the Company shall be obligated to pay the expenses
of
Indemnitee with respect to an action, suit or proceeding, as
provided in this
Agreement, the Company, if appropriate, shall be entitled to assume
the defense
of such action, suit or proceeding, with counsel reasonably
acceptable to
Indemnitee, upon the delivery to Indemnitee of written notice of
its election to
do so within twenty business days after the Company's receipt of
the notice of
the commencement of an action, suit or proceeding provided by
Indemnitee to the
Company pursuant to Section 4(b) above. After delivery of such
notice, approval
of such counsel by Indemnitee (which approval will not be
unreasonably withheld)
and the retention of such counsel by the Company, the Company will
not be liable
to Indemnitee under this Agreement for any fees of counsel
subsequently incurred
by Indemnitee with respect to the same action, suit or proceeding,
provided that
(1) Indemnitee shall have the right to employ Indemnitee's own
counsel in such
action, suit or proceeding at Indemnitee's expense and (2) if (i)
the employment
of counsel by Indemnitee has been previously authorized in writing
by the
Company or counsel has been employed by Indemnitee to advise and
assist
Indemnitee in connection with preparation for or participation in
any SEC
interviews or depositions, (ii) counsel to the Company or
Indemnitee shall have
reasonably concluded that there may be a conflict of interest or
position, or
reasonably believes that a conflict is likely to arise, on any
significant issue
between the Company and Indemnitee in the conduct of any such
defense or (iii)
the Company shall not, in fact, have employed counsel to assume the
defense of
such action, suit or proceeding (or fails to diligently conduct
such defense),
then the fees and expenses of Indemnitee's counsel shall be at the
expense of
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