Exhibit 10.2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the
20th day of April, 1998, by and between X.X. Xxxxxx, Inc., a Delaware
corporation (the "Company"), and W. Xxxxxx Xxxxxxx, a director and officer of
the Company (the "Indemnitee").
RECITALS
A. The Indemnitee has been elected as a director and officer
of the Company and the Company desires the Indemnitee to serve in such
capacities. The Indemnitee is willing, subject to certain conditions including
without limitation the execution and performance of this Agreement by the
Company, to serve in such capacities.
B. In addition to the indemnification to which the Indemnitee
is entitled under the certificate of incorporation of the Company (the
"Certificate"), the Company may in its discretion obtain at its sole expense
insurance protecting its officers and directors including the Indemnitee against
certain losses arising out of actual or threatened actions, suits or proceedings
to which such persons may be made or threatened to be made parties. If such
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insurance is obtained, there can be no assurance that such insurance will not be
cancelled by the insurer or that the Company will elect not to continue or renew
such insurance.
Accordingly, and in order to induce the Indemnitee to serve in
his present capacities, the Company and Indemnitee agree as follows:
1. Continued Service: The Indemnitee will serve as a director
of the Company so long as he is duly elected and qualified in accordance with
the bylaws of the Company (the "Bylaws") or until he resigns in writing in
accordance with applicable law and will continue to serve as an officer of the
Company at the pleasure of its Board of Directors (the "Board") so long as he is
duly appointed or elected by the Board or until he resigns in writing in
accordance with applicable law.
2. Initial Indemnity. (a) The Company shall indemnify the
Indemnitee when he was or is a party or is threatened to be made a party to any
pending, threatened or completed action, suit or proceeding, whether civil,
administrative, investigative or criminal (other than an action by or in the
name of the Company), by reason of the fact that he is or was or had agreed to
become a director or officer of the Company, or is or was serving or had agreed
to serve at the written request of the Company as a director, officer, employee
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or agent of another corporation, partnership, joint venture, trust or other
enterprise, in any such case owned or controlled by the Company, or by reason of
any action alleged to have been taken or omitted in such capacity, against any
and all costs, charges and expenses, including without limitation, attorneys'
and others' fees and expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection therewith and
any appeal therefrom if the Indemnitee acted in good faith and in a manner he
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 no
reasonable cause to believe his conduct was unlawful. 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 the Indemnitee did not satisfy the foregoing standard of
conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee when he was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Company to
procure a judgment in its favor by reason of the fact that he is or was or had
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agreed to become a director or officer of the Company, or is or was serving or
had agreed to serve at the written request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, in any such case owned or controlled by the Company,
against costs, charges and expenses (including attorneys' and others' fees and
expenses) actually and reasonably incurred by him in connection with the defense
or settlement thereof or any appeal therefrom 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 Company and except that no indemnification shall be made in respect of any
claim, issue or matter as to which the Indemnitee shall have been adjudged to be
liable to the Company unless and only to the extent that the Court of Chancery
or the court in which such action, suit or proceeding was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
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(c) To the extent that the Indemnitee has been successful on
the merits or otherwise, including without limitation the dismissal of an action
without prejudice, in defense of any action, suit or proceeding referred to in
Sections 2(a) or 2(b) hereof or in defense of any claim, issue or matter
therein, he shall be indemnified against costs, charges and expenses (including
attorneys' and others' fees and expenses) actually and reasonably incurred by
him in connection therewith.
(d) Any indemnification under Sections 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination in accordance with Section 4 hereof or any
applicable provision of the Certificate, Bylaws, other agreement, resolution or
otherwise. Such determination shall be made (i) by the Board, by a majority vote
of a quorum consisting of directors who were not parties to such action, suit or
proceeding or (ii) if such a quorum of disinterested directors is not available
or so directs, by independent legal counsel (designated in the manner provided
below in this subsection (d)) in a written opinion or (iii) by the stockholders
of the Company (the "Stockholders"). Independent legal counsel shall be
designated by vote of a majority of the disinterested directors; provided,
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however, that if the Board is unable or fails to so designate, such designation
shall be made by the Indemnitee subject to the approval of the Company (which
approval shall not be unreasonably withheld). Independent legal counsel shall
not be any person or firm who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or the Indemnitee in an action to determine the Indemnitee's
rights under this Agreement. The Company agrees to pay the reasonable fees and
expenses of such independent legal counsel and to indemnify fully such counsel
against costs, charges and expenses (including attorneys' and others' fees and
expenses) actually and reasonably incurred by such counsel in connection with
this Agreement or the opinion of such counsel pursuant hereto.
(e) All expenses (including attorneys' and others' fees and
expenses) incurred by the Indemnitee in his capacity as a director or officer of
the Company in defending a civil or criminal action, suit or proceeding shall be
paid by the Company in advance of the final disposition of such action, suit or
proceeding in the manner prescribed by Section 4(b) hereof.
(f) The Company shall not adopt any amendment to the
Certificate or Bylaws the effect of which would be to deny, diminish or encumber
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the Indemnitee's rights to indemnity pursuant to the Certificate, Bylaws, the
General Corporation Law of the State of Delaware (the "DGCL") or any other
applicable law as applied to any act or failure to act occurring in whole or in
part prior to the date (the "Effective Date") upon which the amendment was
approved by the Board or the Stockholders, as the case may be. In the event that
the Company shall adopt any amendment to the Certificate or Bylaws the effect of
which is to so deny, diminish or encumber the Indemnitee's rights to indemnity,
such amendment shall apply only to acts or failures to act occurring entirely
after the Effective Date thereof unless the Indemnitee shall have voted in favor
of such adoption as a director or holder of record of the Company's voting
stock, as the case may be.
3. Additional Indemnification. (a) Pursuant to Section 145(f)
of the DGCL, without limiting any right which the Indemnitee may have pursuant
to Section 2 hereof, the Certificate, the Bylaws, the DGCL, any policy of
insurance or otherwise, but subject to the limitations on the maximum
permissible indemnity which may exist under applicable law at the time of any
request for indemnity hereunder determined as contemplated by Section 3(a)
hereof, the Company shall indemnify the Indemnitee against any amount which he
is or becomes legally obligated to pay relating to or arising out of any claim
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made against him because of any act, failure to act or neglect or breach of
duty, including any actual or alleged error, misstatement or misleading
statement, which he commits, suffers, permits or acquiesces in while acting in
his capacity as a director of the Company, or, at the written request of the
Company, as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, in any such case owned or
controlled by the Company. The payments which the Company is obligated to make
pursuant to this Section 3 shall include without limitation damages, judgments,
settlements and charges, costs, expenses, expenses of investigation and expenses
of defense of legal actions, suits, proceedings or claims and appeals therefrom,
and expenses of appeal, attachment or similar bonds; provided, however, that the
Company shall not be obligated under this Section 3(a) to make any payment in
connection with any claim against the Indemnitee:
(i) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law
from paying which results in a final, nonappealable order; or
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(ii) to the extent based upon or attributable to the
Indemnitee gaining in fact a personal profit to which he was
not legally entitled, including without limitation profits
made from the purchase and sale by the Indemnitee of equity
securities of the Company which are recoverable by the Company
pursuant to Section 16(b) of the Securities Exchange Act of
1934, and profits arising from transactions in publicly traded
securities of the Company which were effected by the
Indemnitee in violation of Section 10(b) of the Securities
Exchange Act of 1934, including Rule l0b-5 promulgated
thereunder.
The determination of whether the Indemnitee shall be entitled to indemnification
under this Section 3(a) may be, but shall not be required to, be made in
accordance with Section 4(a) hereof. If that determination is so made, it shall
be binding upon the Company and the Indemnitee for all purposes.
(b) Expenses (including without limitation attorneys' and
others' fees and expenses) incurred by Indemnitee in defending any actual or
threatened civil or criminal action, suit, proceeding or claim shall be paid by
the Company in advance of the final disposition thereof as authorized in
accordance with Section 4(b) hereof.
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4. Certain Procedures Relating to Indemnification and
Advancement of Expenses. (a) Except as otherwise permitted or required by the
DGCL, for purposes of pursuing his rights to indemnification under Sections
2(a), 2(b) or 3(a) hereof, as the case may be, the Indemnitee may, but shall not
be required to, (i) submit to the Board a sworn statement of request for
indemnification substantially in the form of Exhibit 1 attached hereto and made
a part hereof (the "Indemnification Statement") averring that he is entitled to
indemnification hereunder; and (ii) present to the Company reasonable evidence
of all indemnification amounts for which payment is requested. Submission of an
Indemnification Statement to the Board shall create a presumption that the
Indemnitee is entitled to indemnification under Sections 2(a), 2(b) or 3(a)
hereof, as the case may be, and the Board shall be deemed to have determined
that the Indemnitee is entitled to such indemnification unless within 30
calendar days after submission of the Indemnification Statement the Board shall
determine by vote of a majority of the directors at a meeting at which a quorum
is present, based upon clear and convincing evidence (sufficient to rebut the
foregoing presumption) and the Indemnitee shall have received notice within such
period in writing of such determination that the Indemnitee is not so entitled
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to indemnification, which notice shall disclose with particularity the evidence
in support of the Board's determination. The foregoing notice shall be sworn to
by all persons who participated in the determination and voted to deny
indemnification. The provisions of this Section 4(a) are intended to be
procedural only and shall not affect the right of the Indemnitee to
indemnification under this Agreement and any determination by the Board that the
Indemnitee is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be subject to judicial
review as provided in Section 6 hereof.
(b) For purposes of determining whether to authorize
advancement of expenses pursuant to Section 2(e) hereof, the Indemnitee shall
submit to the Board a sworn statement of request for advancement of expenses
substantially in the form of Exhibit 2 attached hereto and made a part hereof
(the "Undertaking"), averring that (i) he has reasonably incurred or will
reasonably incur actual expenses in defending an actual civil or criminal
action, suit, proceeding or claim and (ii) he undertakes to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Company under this Agreement or otherwise. For purposes of requesting
advancement of expenses pursuant to Section 3(b) hereof, the Indemnitee may, but
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shall not be required to, submit an Undertaking or such other form of request as
he determines to be appropriate (an "Expense Request"). Upon receipt of an
Undertaking or Expense Request, as the case may be, the Board shall within 10
calendar days authorize immediate payment of the expenses stated in the
Undertaking or Expense Request, as the case may be, whereupon such payments
shall immediately be made by the Company. No security shall be required in
connection with any Undertaking or Expense Request and any Undertaking or
Expense Request shall be accepted without reference to the Indemnitee's ability
to make repayment.
5. Subrogation; Duplication of Payments. (a) In the event of
payment under this Agreement, the Company 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 Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against the Indemnitee to the
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extent the Indemnitee has actually received payment (under any insurance policy,
the Certificate, the Bylaws or otherwise) of the amounts otherwise payable
hereunder.
6. Enforcement. (a) If a claim for indemnification made to the
Company pursuant to Section 4 hereof is not paid in full by the Company within
30 calendar days after a written claim has been received by the Company, the
Indemnitee may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim.
(b) In any action brought under Section 6(a) hereof, it shall
be a defense to a claim for indemnification pursuant to Sections 2(a) or 2(b)
hereof (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
Undertaking, if any is required, has been tendered to the Company) that the
Indemnitee has not met the standards of conduct which make it permissible under
the DGCL for the Company to indemnify the Indemnitee for the amount claimed, but
the burden of proving such defense shall be on the Company. Neither the failure
of the Company (including the Board, independent legal counsel or the
Stockholders) to have made a determination prior to commencement of such action
that indemnification of the Indemnitee is proper in the circumstances because he
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has met the applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Company (including the Board, independent legal counsel or
the Stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.
(c) It is the intent of the Company that the Indemnitee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under the Agreement or in the event that the Company or any other person takes
any action to declare the Agreement void or unenforceable, or institutes any
action, suit or proceeding designed (or having the effect of being designed) to
deny, or to recover from, the Indemnitee the benefits intended to be provided to
the Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from
time to time to retain counsel of his choice, at the expense of the Company as
hereafter provided, to represent the Indemnitee in connection with the
initiation or defense of any litigation or other legal action, whether by or
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against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all costs,
charges and expenses, including without limitation attorneys' and others' fees
and expenses, reasonably incurred by the Indemnitee (i) as a result of the
Company's failure to perform this Agreement or any provision thereof or (ii) as
a result of the Company or any person contesting the validity or enforceability
of this Agreement or any provision thereof as aforesaid.
7. Merger or Consolidation. In the event that the Company
shall be a constituent corporation in a consolidation, merger or other
reorganization, the Company, if it shall not be the surviving, resulting or
other corporation therein, shall require as a condition thereto the surviving,
resulting or acquiring corporation to agree to indemnify the Indemnitee to the
full extent provided in Section 3 hereof. Whether or not the Company is the
resulting, surviving or acquiring corporation in any such transaction, the
Indemnitee shall also stand in the same position under this Agreement with
respect to the resulting, surviving or acquiring corporation as he would have
with respect to the Company if its separate existence had continued.
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8. Nonexclusivity and Severability. (a) The right to
indemnification provided by this Agreement shall not be exclusive of any other
rights to which the Indemnitee may be entitled under the Certificate, Bylaws,
the DGCL, any other statute, insurance policy, agreement, vote of Stockholders
or of directors or otherwise, both as to actions in his official capacity and as
to actions in another capacity while holding such office, and shall continue
after the Indemnitee has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his heirs, executors and administrators.
(b) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof.
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10. Modification; Survival. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof. This Agreement
may be modified only by an instrument in writing signed by both parties hereto.
The provisions of this Agreement shall survive the death, disability, or
incapacity of the Indemnitee or the termination of the Indemnitee's service as a
director of the Company and shall inure to the benefit of the Indemnitee's
heirs, executors and administrators.
11. Certain Terms. For purposes of this Agreement, references
to "other enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on Indemnitee with respect to
any employee benefit plan; and references to "serving at the request of the
Company" shall include any service as a director, officer, employee or agent of
the Company which imposes duties on, or involves services by, the Indemnitee
with respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; references to the
singular shall include the plural and vice versa; and if the Indemnitee acted in
good faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan he shall be deemed to
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have acted in a manner "not opposed to the best interests of the Company" as
referred to herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
X.X. XXXXXX, INC.
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
President
/s/ W. Xxxxxx Xxxxxxx
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W. Xxxxxx Xxxxxxx
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Exhibit 1
INDEMNIFICATION STATEMENT
STATE OF TEXAS ss.
ss. SS.
COUNTY OF TARRANT ss.
I, ______________________________, being first duly sworn, do
depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated as of ____________________, 199__, between X.X.
Xxxxxx, Inc., a Delaware corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against charges, costs,
expenses (including attorneys' and others' fees and expenses), judgments, fines
and amounts paid in settlement, all of which (collectively, "Liabilities") have
been or will be incurred by me in connection with an actual or threatened
action, suit, proceeding or claim to which I am a party or am threatened to be
made a party.
3. With respect to all matters related to any such action,
suit, proceeding or claim, I am entitled to be indemnified as herein
contemplated pursuant to the aforesaid Indemnification Agreement.
4. Without limiting any other rights which I have or may have,
I am requesting indemnification against Liabilities which
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have or may arise out of
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Name:
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this _____ day of _________________, 19___.
--------------------------------
[Seal]
My commission expires the ______ day of _____________________,
19___.
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Exhibit 2
UNDERTAKING
STATE OF TEXAS ss.
ss. SS
COUNTY OF TARRANT ss.
I, ___________________________, being first duly sworn do
depose and say as follows:
1. This Undertaking is submitted pursuant to the
Indemnification Agreement, dated as of ____________________, 199___, between
X.X. Xxxxxx, Inc., a Delaware corporation (the
"Company"), and the undersigned.
2. I am requesting advancement of certain costs, charges and
expenses which I have incurred or will incur in defending an actual or pending
civil or criminal action, suit, proceeding or claim.
3. I hereby undertake to repay this advancement of expenses if
it shall ultimately be determined that I am not entitled to be indemnified by
the Company under the aforesaid Indemnification Agreement or otherwise.
4. The costs, charges and expenses for which advancement is
requested are, in general, all expenses related to
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Name:
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ______ day of ___________________, 19___.
--------------------------------
[Seal]
My commission expires the _______ day of __________________, 19___.
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