EXHIBIT 10.5
FORM OF INDEMNIFICATION AGREEMENT
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INDEMNIFICATION AGREEMENT, dated as of June , 1999, by and between
PRINCETON ECOM CORPORATION, a Delaware corporation (the "Company"), and the
director and/or officer of the Company whose name appears on the signature page
of this Agreement (the "Indemnitee").
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors, officers, or in similar capacities
unless they are provided with reasonable protection through insurance or
indemnification against risks of claims and actions against them arising out of
their service to and activities on behalf of the corporations; and
WHEREAS, the current impracticability of obtaining adequate insurance
and the uncertainties related to indemnification have increased the difficulty
of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the ability to attract and retain such persons is in the best
interests of the Company's stockholders and that the Company should act to
assure such persons that there will be increased certainty of such protection in
the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company to
oblige itself contractually to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, this Agreement is a supplement to and in furtherance of the
indemnification contemplated by the Company's Certificate of Incorporation, as
amended, and rights granted under the Certificate of Incorporation, as amended,
and any resolutions adopted pursuant thereto, and shall not be deemed to be a
substitute therefor nor to diminish or abrogate any rights of Indemnitee
thereunder; and
WHEREAS, Indemnitee is willing to serve, continue to serve, and to
take on additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Definitions. For purposes of this Agreement:
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(a) "Corporate Status" means the status of a person who is or was a
director, officer, employee, agent or fiduciary of the Company or any majority
owned subsidiary or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person is or was serving at
the request of the Company.
(b) "Disinterested Director" means a director of the Company who is
not or was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
(c) "Expenses" means all reasonable attorneys' fees and costs,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.
(d) "Independent Counsel" means a law firm or a member of a law firm
that is experienced in matters of corporate law and neither is presently nor in
the past five years has been retained to represent: (i) the Company or
Indemnitee in any matter material to either such party or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any firm or person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee's right to
indemnification under this Agreement. All fees and expenses of the Independent
Counsel incurred in connection with acting pursuant to this Agreement shall be
borne by the Company.
(e) "Proceeding" means any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative; provided,
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however, that the term "Proceeding" shall include any action instituted by an
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Indemnitee (other than an action to enforce indemnification rights under this
Agreement) only if such action is authorized by the Board of Directors.
2. Services by Indemnitee. Indemnitee agrees to begin or continue
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to serve the Company or other corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise affiliated with the Company (all of
which are collectively referred to as an "Affiliate") as a director or officer.
Notwithstanding anything contained herein, this Agreement shall not create a
contract of employment between the Company and Indemnitee and the termination of
Indemnitee's relationship with the Company or an Affiliate by either party
hereto shall not be restricted by this Agreement.
3. Indemnification. The Company shall indemnify, and advance
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Expenses to, Indemnitee to the fullest extent permitted by applicable law in
effect on the date hereof or as such laws may from time to time hereafter be
amended to increase the scope of such permitted indemnification. Without
diminishing the scope of the indemnification provided by this Section 3, the
rights of indemnification of Indemnitee provided hereunder shall include, but
shall not be limited to, the rights set forth in other sections of this
Agreement.
4. Action or Proceeding Other Than an Action by or in the Right of
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the Company. Indemnitee shall be entitled to the indemnification rights
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provided in this Section 4 if, by reason of his or her Corporate Status,
Indemnitee is, or is threatened to be made, a party to any pending, completed or
threatened Proceeding, other than a Proceeding by or in the right of
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the Company. Pursuant to this Section 4, Indemnitee shall be indemnified against
Expenses, judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection
with any such Proceeding, 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 Proceeding, had no reasonable
cause to believe his conduct was unlawful.
5. Proceedings by or in the Right of the Company. Indemnitee shall
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be entitled to the indemnification rights provided in this Section 5 if, by
reason of his or her Corporate Status, Indemnitee is, or is threatened to be
made, a party to any pending, completed or threatened Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to
this Section 5, Indemnitee shall be indemnified against Expenses, judgments,
penalties, fines and amounts paid in settlement incurred by Indemnitee or on
Indemnitee's behalf in connection with any such Proceeding 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. Notwithstanding the foregoing
provisions of this Section 5, no such indemnification against such Expenses,
judgments, penalties, fines and amounts paid in settlement shall be made in
respect of any claim, issue or matter in any such Proceeding as to which
Indemnitee shall have been adjudged to be liable for misconduct of his duty to
the Company; provided, however, that in such event such indemnification shall
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nevertheless be made by the Company to the extent that the court in which such
action or suit was brought (or any other court of competent jurisdiction) shall
determine equitable under the circumstances.
6. Indemnification for Costs, Charges and Expenses of Party Who is
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Wholly or Partly Successful. Notwithstanding any other provision of this
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Agreement, to the extent that Indemnitee is, by reason of his or her Corporate
Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee's behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee, to the maximum extent permitted by law, against all Expenses
actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with each successfully resolved claim, issue or matter. For purposes
of this Section 6 and without limiting the foregoing, the termination of any
such claim, issue or matter in any such Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful resolution as to such claim, issue
or matter.
7. Indemnification for Expenses of a Witness. Notwithstanding any
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other provision of this Agreement, to the extent that Indemnitee is, by reason
of his or her Corporate Status, a witness in any Proceeding, Indemnitee shall be
indemnified by the Company against all Expenses actually and reasonably incurred
by Indemnitee or on Indemnitee's behalf in connection therewith.
8. Advancement of Expenses. All Expenses incurred by or on behalf
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of Indemnitee in connection with any Proceeding shall be paid by the Company
within twenty days after the receipt by the Company of a statement or statements
from Indemnitee requesting from time to time such advance or advances, whether
prior to or after the final disposition of such
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Proceeding. Indemnitee's entitlement to such advancement of Expenses shall
include those incurred in connection with any Proceeding by Indemnitee seeking
an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee in connection therewith and shall include or be preceded or
accompanied by a written undertaking by or on behalf of Indemnitee, in form and
substance reasonably acceptable to the Company, to repay any Expenses advanced
if it shall ultimately be determined that Indemnitee is not entitled to be
indemnified against such Expenses pursuant to the terms of this Agreement.
9. Procedure for Determination of Entitlement to Indemnification.
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(a) To obtain indemnification under this Agreement in connection with
any Proceeding, Indemnitee shall submit a written request for indemnification to
the Company. Such request shall include documentation and information which is
reasonably available to Indemnitee and is reasonably necessary for the Company
to determine whether and to what extent Indemnity is entitled to
indemnification. Determination of Indemnitee's entitlement to indemnification
shall be made not later than 30 days after receipt by the Company of
Indemnitee's written request for indemnification. The Secretary of the Company
shall, promptly upon receipt of Indemnitee's request for indemnification, advise
the Board that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
Section 9(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in such case: (i) (A)
by the Board by a majority vote of a quorum consisting of Disinterested
Directors, or (B) if a quorum of the Board consisting of Disinterested Directors
is not obtainable, or even if such quorum is obtainable, if such quorum of
Disinterested Directors so directs, either (x) by Independent Counsel in a
written opinion to the Board, a copy of which shall be delivered to Indemnitee,
or (y) by the stockholders of the Company, as determined by such quorum of
Disinterested Directors, or a quorum of the Board, as the case may be, or (ii)
as provided in Section 10(b) of this Agreement. If it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within 20 days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee's entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) If required, Independent Counsel shall be selected by the Board,
and the Company shall give written notice to Indemnitee advising him or her of
the identity of Independent Counsel so selected. Indemnitee may, within seven
days after such written notice of selection shall have been given, deliver to
the Company a written objection to such selection. Such objection may be
asserted only on the grounds that Independent Counsel so selected does
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not meet the requirements of "Independent Counsel" as defined in Section 1 of
this Agreement and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is made, Independent Counsel
so selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 9(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition a court of competent
jurisdiction for resolution of any objection which shall have been made by the
Company or Indemnitee to the other's selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person selected by such court or by
such other person as such court shall designate, and the person with respect to
whom an objection is so resolved or the person so appointed shall act as
Independent Counsel under Section 9(b) hereof. The Company shall pay any and all
reasonable fees and expenses incurred by such Independent Counsel in connection
with its actions pursuant to this Agreement, and the Company shall pay all
reasonable fees and expenses incident to the procedures of this Section 9(c),
regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement date of any judicial proceeding or
arbitration pursuant to Section 11(a)(iii) of this Agreement, Independent
Counsel shall be discharged and relieved of any further responsibility in such
capacity (subject to the applicable standards of professional conduct then
prevailing).
10. Presumption and Effects of Certain Proceedings
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(a) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 9(a) of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with the making by
any person, persons or entity of any determination contrary to that presumption.
(b) If the person, persons or entity empowered or selected under
Section 9 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within 60 days after receipt
by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be extended for a
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reasonable time, not to exceed an additional 30 days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith require(s) such additional time for the obtaining or evaluating of
documentation and/or information relating thereto; and provided, further, that
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the foregoing provisions of this Section 10(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 9(b) of this Agreement and if (A) within 15
days after receipt by the Company of the request for such determination the
Board has resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within 75 days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within 15 days after such receipt for the purpose of
making
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such determination, such meeting is held for such purpose within 60 days after
having been so called and such determination is made thereat, or (ii) if the
determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 9(b) of this Agreement.
11. Remedies in Cases of Determination not to Indemnify or to Advance
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Expenses.
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(a) In the event that (i) a determination is made pursuant to Section
9 of this Agreement, (ii) advances are not made pursuant to Section 8 hereof in
a timely fashion, or (iii) the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 9(b) of this Agreement
and such determination shall not have been made and delivered in a written
opinion within 90 days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section
7 of this Agreement within 10 days after receipt by the Company of a written
request therefor, or (v) payment of indemnification is not made within 10 days
after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 9 or 10 of this Agreement, Indemnitee shall be entitled to an
adjudication in a court of competent jurisdiction, of his or her entitlement to
such indemnification or advancement of Expenses. Alternatively, Indemnitee, at
his or her option, may seek an award in arbitration to be conducted by a single
arbitrator in the State of Delaware. Indemnitee shall commence such proceeding
seeking an adjudication or an award in arbitration within 180 days following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 11(a). The Company shall not oppose Indemnitee's right
to seek any such adjudication or award in arbitration.
(b) In the event a determination has been made in accordance with the
procedures set forth in Section 9 hereof, in whole or in part, that Indemnitee
is not entitled to indemnification, any such judicial proceeding or arbitration
shall be made de novo and Indemnitee shall not be prejudiced by reason of that
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adverse prior determination.
(c) If a determination is made or deemed to have been made pursuant to
Section 9 or 10 hereof that Indemnitee is entitled to indemnification, the
Company shall be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 11, absent (i) a
misrepresentation of a material fact by Indemnitee or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a final judicial
determination that all or any part of such indemnification is expressly
prohibited by law.
(d) In the event that Indemnitee, pursuant to this Section 11, seeks a
judicial adjudication of, or an award in arbitration to enforce, his or her
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the kinds described in the definition
of Expenses) actually and reasonably incurred by Indemnitee in such judicial
adjudication or arbitration, but only if Indemnitee prevails therein. If it
shall be determined in such judicial adjudication or arbitration that Indemnitee
is entitled to receive part but not all of the indemnification or advancement of
expenses sought, the expenses incurred by
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Indemnitee in connection with such judicial adjudication or arbitration shall be
appropriately prorated.
12. Non-Exclusivity.
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(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, an article of incorporation or By-Laws of the Company, any agreement, a
vote of stockholders or a resolution of directors, or otherwise. No amendment,
alteration, rescission or replacement of this Agreement or any provision hereof
shall be effective as to Indemnitee with respect to any action taken or omitted
by such Indemnitee in Indemnitee's Corporate Status prior to such amendment,
alteration, rescission or replacement, except to the extent expressly provided
therein.
(b) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
13. Duration of Agreement. This Agreement shall apply to any claim
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asserted and any Expenses incurred in connection with any claim asserted on or
after the effective date of this Agreement and shall continue until and
terminate upon the later of: (a) 10 years after Indemnitee has ceased to occupy
any of the positions or have any of the relationships described in Sections 3, 4
or 5 of this Agreement; or (b) the final termination of all pending or
threatened Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and any Proceedings
commenced by Indemnitee pursuant to Section 11 hereof (but only in respect of
such Proceedings). This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and
Indemnitee's spouse, assigns, heirs, devises, executors, administrators or other
legal representatives.
14. Severability. Should any part, term or condition hereof be
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declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby, and the illegal or unenforceable portions of the Agreement
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions of this Agreement intact.
15. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
16. Headings. Section headings are for convenience only and do not
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control or affect meaning or interpretation of any terms or provisions of this
Agreement.
17. Modification and Waiver. No supplement, modification or
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amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto.
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18. Notice by Indemnitee. Indemnitee agrees promptly to notify the
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Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
19. No Duplicative Payment. The Company shall not be liable under
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this Agreement to make any payment of amounts otherwise indemnifiable hereunder
if and to the extent that Indemnitee has otherwise actually received such
payment under any insurance policy, contract, agreement or otherwise.
20. Nondisclosure of Payments. Except as expressly required by
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Federal securities laws or Florida corporation law, neither party shall disclose
any payments under this Agreement unless prior approval of the other party is
obtained. Any payments to the Indemnitee that must be disclosed shall, unless
otherwise required by law, be described only in Company proxy or information
statements relating to special and/or annual meetings of the Company's
stockholders, and the Company shall afford the Indemnitee the reasonable
opportunity to review all such disclosures and, if requested, to explain in such
statement any mitigating circumstances regarding the events reported.
21. Indemnification of Director Indemnitee's Estate. Notwithstanding
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any other provision of this Agreement, and regardless whether indemnification of
an Indemnitee, in his capacity as a Director, would be permitted and/or required
under this Agreement, if such Director Indemnitee is deceased, the Company shall
indemnify and hold harmless such Director Indemnitee's estate, spouse, heirs,
administrators, personal representatives and executors (collectively, the
"Director Indemnitee's Estate") against, and the Company shall assume, any and
all claims, damages, Expenses, judgments, penalties, fines and amounts paid in
settlement actually incurred by the Director Indemnitee or the Director
Indemnitee's Estate in connection with the investigation, defense, settlement or
appeal of any action contemplated by this Agreement. Indemnification of the
Director Indemnitee's Estate pursuant to this Section 21 shall be mandatory and
not require a determination or any other finding that the Director Indemnitee's
conduct, as a Director of the Company, satisfied a particular standard of
conduct.
22. Notices. All notices, requests, demands and other communications
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provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed
in any general or branch office of the United States Postal Service, enclosed in
a registered or certified postpaid envelope, or sent by Federal Express or other
similar overnight courier service, addressed to the address of the parties
stated below or to such changed address as such party may have fixed by notice
or, if given by telecopier, when such telecopy is transmitted and the
appropriate answerback is received.
(a) If to Indemnitee, to the address appearing on the signature page
hereof.
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(b) If to the Company to:
Princeton eCom Corporation
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
23. Governing Law. The parties agree that this Agreement shall be
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governed by, and construed and enforced in accordance with, the laws of the
State of Delaware.
24. Entire Agreement. This Agreement constitutes the entire
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understanding between the parties and supersedes all proposals, commitments,
writings, negotiations and understandings, oral and written, and all other
communications between the parties relating to the subject matter of this
Agreement. This Agreement may not be amended or otherwise modified except in
writing duly executed by all of the parties. A waiver by any party of any
breach or violation of this Agreement shall not be deemed or construed as a
waiver or any subsequent breach or violation thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRINCETON ECOM CORPORATION
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Chairman and Chief
Executive Officer
INDEMNITEE
Signature
Print Name
Address
City and State
Telecopier Number
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