INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (“Agreement”) is
effective as of this 19th day of November 2007, by and between
Innovative Card Technologies, Inc., a Delaware corporation
(the “Company”), and ________________
(“Indemnitee”).
WHEREAS,
the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for its directors, officers,
employees, agents and fiduciaries, the significant increases
in the cost of such insurance and the general reductions in
the coverage of such insurance;
WHEREAS,
the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting
directors, officers, employees, agents and fiduciaries to
expensive litigation risks at the same time as the
availability and coverage of liability insurance has been
severely limited;
WHEREAS,
Indemnitee does not regard the current protection available as
adequate under the present circumstances, and the Indemnitee
and other directors, officers, employees, agents and
fiduciaries of the Company may not be willing to continue to
serve in such capacities without additional protection;
and
WHEREAS,
the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the
Company and, in part, in order to induce Indemnitee to
continue to provide services to the Company, wishes to provide
for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by
law.
NOW,
THEREFORE, the Company and Indemnitee hereby agree as
follows:
1.
Indemnification .
(a)
Indemnification of Expenses .
The Company shall indemnify Indemnitee
to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant
in, any pending or filed action, suit, proceeding or alternative
dispute resolution mechanism, or any hearing, inquiry or
investigation presided over by a federal or state government agency
or body that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or alternative
dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a
“Claim”) by reason of (or arising in part out of) any
event or occurrence related to the fact that Indemnitee is or was a
director, officer, employee, consultant, agent or fiduciary of the
Company; or any subsidiary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any action or inaction
on the part of Indemnitee while serving in such capacity
(hereinafter an “Indemnifiable Event”) against any and
all expenses (including attorneys’ fees and all other costs,
expenses and obligations incurred in connection with investigating,
defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in,
any such action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), judgments, fines,
penalties and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be
unreasonably withheld) of such Claim and any federal, state, local
or foreign taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement
(collectively, hereinafter “Expenses”), including all
interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses. Such payment of
Expenses shall be made by the Company as soon as practicable but in
any event no later than five (5) business days after written demand
by Indemnitee therefor is presented to the Company. However,
Indemnitee acknowledges and agrees that no indemnification of
expenses shall be required with respect to: (a) any settlement by
Indemnitee effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; (b)
Indemnitee’s breach of any of the representations,
warranties, covenants or agreements made by Indemnitee in any
agreement with the Company; and (c) any conduct by Indemnitee which
constitutes fraud, gross negligence, willful misconduct or
malfeasance.
(b)
Reviewing Party .
Notwithstanding the foregoing, (i) the obligations
of the Company under Section 1(a) shall be subject to the condition
that the Reviewing Party (as described in Section 10(e) hereof)
shall not have determined (in a written opinion, in any case in
which the Independent Legal Counsel referred to in Section 1(c)
hereof is involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the
Company to make an advance payment of Expenses to Indemnitee
pursuant to Section 2(a) (an “Expense Advance”) shall
be subject to the condition that, if, when and to the extent that
the Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Indemnitee (who hereby agrees
to reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Indemnitee has commenced or thereafter
commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemnified under
applicable law, any determination made by the Reviewing Party that
Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense Advance until a
final judicial determination is made with respect thereto (as to
which all rights of appeal therefrom have been exhausted or
lapsed). Indemnitee’s obligation to reimburse the Company for
any Expense Advance shall be unsecured and no interest shall be
charged thereon. If there has not been a Change in Control (as
defined in Section 10(c) hereof), the Reviewing Party shall be
selected by the Board of Directors, and if there has been such a
Change in Control (other than a Change in Control which has been
approved by a majority of the Company’s Board of Directors
who were directors immediately prior to such Change in Control),
the Reviewing Party shall be the Independent Legal Counsel referred
to in Section 1(c) hereof. If there has been no determination by
the Reviewing Party or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified
in whole or in part under applicable law, Indemnitee shall have the
right to commence litigation seeking an initial determination by
the court or challenging any such determination by the Reviewing
Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and
to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the
Company and Indemnitee.
(c)
Change in Control .
The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has
been approved by a majority of the Company’s Board of
Directors who were directors immediately prior to such Change in
Control) then with respect to all matters thereafter arising
concerning the rights of Indemnitee to payments of Expenses and
Expense Advances under this Agreement or any other agreement or
under the Company’s Certificate of Incorporation or Bylaws as
now or hereafter in effect, Independent Legal Counsel (as defined
in Section 10(d) hereof) shall be selected by the Indemnitee and
approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to
what extent Indemnitee would have permitted to be indemnified under
applicable law and the Company agrees to abide by such opinion. The
Company agrees to pay the reasonable fees of the Independent Legal
Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys’ fees),
claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
(d)
Mandatory Payment of Expenses .
Notwithstanding any other provision
of this Agreement other than Section 9 hereof, to the extent that
Indemnitee has prevailed on the merits or otherwise, including,
without limitation, the dismissal of an action without prejudice,
in defense of any action, suit, proceeding, inquiry or
investigation referred to in Section (1) (a) hereof or in the
defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred by the Indemnitee in
connection therewith.
2.
Expenses; Indemnification Procedure .
(a)
Advancement of Expenses .
The Company shall advance all Expenses
incurred by the Indemnitee. The advances to be made hereunder shall
be paid by the Company to Indemnitee as soon as practicable but in
any event no later than five days after written demand by
Indemnitee therefor to the Company.
(b)
Notice/Cooperation by Indemnitee .
Indemnitee shall, as a condition
precedent to Indemnitee’s right to be indemnified under this
Agreement, give the Company notice in writing as soon as
practicable of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement.
Notice to the Company shall be directed to the Chairman of the
Board of Directors of the Company at the address shown on the
signature page of this Agreement (or such other address as the
Company shall designate in writing to the Indemnitee). In addition,
Indemnitee shall give the Company such information and cooperation
as it may reasonably require and as shall be within
Indemnitee’s power.
(c)
No Presumptions; Burden of Proof .
For purposes of this Agreement,
the termination of any Claim by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a
plea of
nolo contendere ,
or its equivalent, shall not create of presumption that Indemnitee
did not meet any particular standard of conduct or have any
particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular
standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met
such standard of conduct or did not have such belief, prior to the
commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under
applicable law, shall be a defense to Indemnitee’s claim or
create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief. In
connection with any determination by the Reviewing Party or
otherwise as to whether the Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company
to establish that Indemnitee is not so entitled.
(d)
Notice to Insurers .
If, at the time of the receipt by the Company of
a notice of a Claim pursuant to Section 2(b) hereof, the Company
has liability insurance in effect which may cover such Claim, the
Company shall give prompt notice of the commencement of such Claim
to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on
behalf of the Indemnitee, all amounts payable as a result of such
action, suit, proceeding, inquiry or investigation in accordance
with the terms of such policies.
(e)
Selection of Counsel .
In the event the Company shall be obligated
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