Constantine Petropoulos, Esq., Senior Vice President and General Counsel of the Company, has passed upon the legality of the securities registered hereby. Mr. Petropoulos is eligible to participate in the Plan and owns, or has the right to acquire, a number of shares of the Company’s Common Stock that represents less than 1% of the total outstanding Common Stock of the Company.
Item 6. Indemnification of Directors and Officers.
The New York Business Corporation Law (“BCL”), Article 7, Sections 721-726 provide for the indemnification and advancement of expenses to officers and directors. Section 721 provides that indemnification and advancement pursuant to the BCL are not exclusive of any other rights an officer or director may be entitled to, provided that no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that the director personally gained a financial profit or other advantage to which he or she was not legally entitled.
Section 722 of the BCL provides that a corporation may indemnify an officer or director, in the case of third party actions, against judgments, fines, amounts paid in settlement and reasonable expenses and, in the case of derivative actions, against amounts paid in settlement and reasonable expenses, provided that the director or officer acted in good faith, for a purpose which he or she reasonably believed to be in the best interests of the corporation and, in the case of criminal actions, had no reasonable cause to believe his conduct was unlawful. In addition, statutory indemnification may not be provided in derivative actions (i) which are settled or otherwise disposed of or (ii) in which the director or officer is adjudged liable to the corporation, unless and only to the extent a court determines that the person is fairly and reasonably entitled to indemnity.
Section 723 of the BCL provides that statutory indemnification is mandatory where the director or officer has been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding. Section 723 also provides that expenses of defending a civil or criminal action or proceeding may be advanced by the corporation upon receipt of an undertaking to repay them if and to the extent the recipient is ultimately found not to be entitled to indemnification. Section 725 provides for repayment of such expenses when the recipient is ultimately found not to be entitled to indemnification. Section 726 provides that a corporation may obtain indemnification insurance indemnifying itself and its directors and officers.
Section 402(b) of the BCL provides that a corporation may include in its certificate of incorporation a provision limiting or eliminating, with certain exceptions, the personal liability of directors to a corporation or its shareholders for damages for any breach of duty in such capacity.
Article XI of the Company’s Restated Certificate of Incorporation, dated March 28, 1989, as amended, provides that the Company shall indemnify any person made a party to any action, suit or proceeding, by reason of the fact that he or she is or was a director, officer or employee of the Company, or of any firm, corporation, or association which he or she served an such at the request of the Company, against the reasonable expenses (including attorney's fees and, to the extent permitted by law, any amount paid in a court approved settlement) actually and necessarily incurred by him or her in connection with the defense of such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his or her duties.
Article X, Section 2 of the Company’s By-Laws provides that the Company shall indemnify any person who was or is a party, or threatened to be made a party, to any threatened, pending or completed legal action, lawsuit or proceeding by reason of the fact that such person is or was, or has agreed to become, a director or officer of the Company, unless expressly prohibited by Section 721 of the BCL or unless the action was initiated by the officer or director without the authorization of the Company’s Board of Directors. Indemnification will extend to all amounts actually paid by or on behalf of the indemnitee on account of judgments, fines and penalties incurred in connection with an action or in settlement of an action and all expenses actually and reasonably incurred by or on behalf of the indemnitee in connection with an action, whether or not the indemnitee is successful on the merits. Expenses may be advanced by the Company as long as the indemnitee undertakes to repay such advances to the extent a court determines that the indemnitee was not entitled to such indemnification. Article X, Section 3 of the Company’s By-Laws establishes procedures to obtain such indemnification whereby indemnification or advancement of expenses generally must occur within 45 days after the request for such indemnification is made by the indemnitee.
The above is a general summary of certain provisions of the Company’s Restated Certificate of Incorporation, By-Laws and the BCL and is subject in all respects to the specific and detailed provisions of Company’s Restated Certificate of Incorporation, By-Laws and the BCL.
As permitted by the By-Laws of the Company, the Company has purchased a policy of directors’ and officers’ insurance that insures both the Company and its officers and directors against expenses and liabilities of the type normally insured against under such policies, including the expenses of the indemnification described above.