EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of December 29, 2000,
between SYNERGY 2000, INC., a Delaware corporation (the "Company"), and the
person listed on the signature page hereto ("Indemnitee").
A. Indemnitee is a director or officer of the Company and in
such capacity is performing valuable services for the Company.
B. The Company and Indemnitee recognize the difficulty in
obtaining directors' and officers' liability insurance, the significant cost of
such insurance and the periodic reduction in the coverage of such insurance.
C. The Company and Indemnitee further recognize the
substantial increase in litigation subjecting directors and officers to
expensive litigation risks at the same time such liability insurance is being
severely limited.
D. The Company has adopted and its stockholders have approved
bylaws (the "Bylaws") providing for the indemnification of the Company's
directors and officers to the full extent permitted by the General Corporation
Law of the State of Delaware (the "Statute").
E. The Bylaws and the Statute specifically provide that they
are not exclusive, and they thereby contemplate that contracts may be entered
into between the Company and its directors and officers with respect to
indemnification of such directors and officers.
F. To induce Indemnitee to serve or continue to serve the
Company, the Company desires to confirm the contract indemnification rights
provided in the Bylaws and agrees to provide Indemnitee with the benefits
contemplated by this Agreement.
The Company and Indemnitee hereby agree as follows:
I. INDEMNITY OF INDEMNITEE
SECTION 1.01. SCOPE. The Company agrees to hold harmless and
indemnify Indemnitee to the full extent permitted by law, notwithstanding that
the basis for such indemnification is not specifically enumerated in this
Agreement, the Company's Articles of Incorporation, as amended, the Bylaws, any
other statute or otherwise. In the event of any change, after the date of this
Agreement, in any applicable law, statute or rule regarding the right of a
Delaware corporation to indemnify a member of its Board of Directors or an
officer, such change, to the extent it would expand Indemnitee's rights
hereunder, shall be included within Indemnitee's rights and the Company's
obligations hereunder, and, to the extent it would narrow Indemnitee's rights or
the Company's obligations hereunder, shall be excluded from this Agreement;
PROVIDED, HOWEVER, that any change required by applicable laws, statutes or
rules to be applied to this Agreement shall be so applied regardless of whether
the effect of such change is to narrow Indemnitee's rights or the Company's
obligations hereunder.
63
SECTION 1.02. NONEXCLUSIVITY. The indemnification provided by
this Agreement shall not be deemed exclusive of any rights to which Indemnitee
may be entitled under the Company's Certificate of Incorporation, as amended,
the Bylaws, any agreement, any vote of stockholders or disinterested directors,
the Statute or otherwise, whether as to action in Indemnitee's official capacity
or otherwise.
SECTION 1.03. INCLUDED COVERAGE. If Indemnitee was or is made
a party, or is threatened to be made a party, to or is otherwise involved
(including, without limitation, as a witness) in any Proceeding (as defined
below), the Company shall hold harmless and indemnify Indemnitee from and
against any and all losses, claims, damages, liabilities or expenses, including,
without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or
penalties, witness fees, amounts paid in settlement and other expenses incurred
in connection with such Proceeding, as well as any federal, state or local taxes
imposed on such Indemnitee as a result of the actual or deemed receipt of any
payments under this Agreement, including all interest, assessments and other
charges paid or payable in connection with such expenses (collectively,
"Damages").
SECTION 1.04. DEFINITION OF PROCEEDING. For purposes of this
Agreement, "Proceeding" shall mean any completed, actual, pending or threatened
action, suit, claim or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Company) and
whether formal or informal, in which Indemnitee is, was or becomes involved by
reason of the fact that Indemnitee is or was a director, officer, employee,
trustee or agent of the Company or that, being or having been such a director,
officer, employee, trustee or agent, Indemnitee is or was serving at the request
of the Company as a director, officer, employee, trustee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
(collectively, a "Related Company"), including service with respect to an
employee benefit plan, whether the basis of such proceeding is alleged action
(or inaction) by Indemnitee in an official capacity as a director, officer,
employee, trustee or agent or in any other capacity while serving as a director,
officer, employee, trustee or agent; provided, however, that, except with
respect to an action to enforce the provisions of this Agreement, "Proceeding"
shall not include any action, suit, claim or proceeding instituted by or at the
direction of Indemnitee, unless such action, suit, claim or proceeding is or was
authorized by the Company's Board of Directors.
SECTION 1.05. DETERMINATION OF ENTITLEMENT. in the event that
a determination of Indemnitee's entitlement to indemnification is required
pursuant to the Statute or a successor statute or pursuant to other applicable
law, the appropriate decision maker shall make such determination; provided,
however, that Indemnitee shall initially be presumed in all cases to be entitled
to indemnification, that Indemnitee may establish a conclusive presumption of
any fact necessary to such a determination by delivering to the Company a
declaration made under penalty of perjury that such fact is true and that,
unless the Company shall deliver to Indemnitee a written notice that Indemnitee
is not entitled to indemnification within 20 days after the Company's receipt of
Indemnitee's initial written request for indemnification, such determination
shall conclusively be deemed to have been made in favor of the Company's
provision of indemnification, and that the Company hereby agrees not to assert
otherwise.
SECTION 1.06. CONTRIBUTION. If the indemnification provided
under Section 1.01 is unavailable by reason of a court decision, based on
grounds other than any of those set forth in paragraphs (b) through (d) of
Section 4.01 hereof, then, in respect of any Proceeding in which the Company is
jointly liable with Indemnitee (or would be if joined in such Proceeding), the
Company shall contribute to the amount of Damages (including attorneys' fees)
actually and reasonably incurred and paid or payable by Indemnitee in such
64
proportion as is appropriate to reflect (i) the relative benefits received by
the Company on the one hand and Indemnitee on the other from the transaction
from which such Proceeding arose and (ii) the relative fault of the Company on
the one hand and of Indemnitee on the other in connection with the events that
resulted in such Damages as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of Indemnitee on the other
shall be determined by reference to, among other things, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
the circumstances resulting in such Damages. The Company agrees that it would
not be just and equitable if contribution pursuant to this Section 1.06 were
determined by pro rata allocation or any other method of allocation that does
not take account of the foregoing equitable considerations.
In connection with the registration of the Company's
securities, the relative benefits received by the Company and the Indemnitee
shall be deemed to be in the same respective proportions that the net proceeds
from the offering (before deducting expenses) received by the Company and the
Indemnitee, in each case as set forth in the table on the cover page of the
applicable prospectus, bear to the aggregate public offering price of the
securities so offered. The relative fault of the Company and the Indemnitee
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Indemnitee and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Indemnitee agree that it would not be just
and equitable if contribution pursuant to this Section 1.06 were determined by
pro rata or per capita allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. In connection with the registration of the Company's
securities, in no event shall Indemnitee be required to contribute any amount
under this Section 1.06 in excess of the lesser of (i) that proportion of the
total of such losses, claims, damages or liabilities indemnified against equal
to the proportion of the total securities sold under such registration statement
that is being sold by such Indemnitee or (ii) the proceeds received by such
Indemnitee from its sale of securities under such registration statement. No
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not found guilty of such fraudulent misrepresentation.
SECTION 1.07. SURVIVAL. The indemnification and contribution
provided under this Agreement shall apply to any and all Proceedings,
notwithstanding that Indemnitee has ceased to serve the Company or a Related
Company, and shall continue so long as Indemnitee shall be subject to any
possible Proceeding, whether civil, criminal or investigative, by reason of the
fact that Indemnitee was a director or officer of the Company or serving in any
other capacity referred to in Section 1.04 of this Agreement. The
indemnification and contribution provided for in this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnitee or any director, officer, controlling person, employee or agent
of Indemnitee.
II. EXPENSE ADVANCES
SECTION 2.01. GENERALLY. The right to indemnification of
Damages conferred by Article I shall include the right to have the Company pay
Indemnitee's expenses in any Proceeding as such expenses are incurred and in
advance of such Proceeding's final disposition (such right, an "Expense
Advance").
65
SECTION 2.02. CONDITIONS TO EXPENSE ADVANCE. The Company's
obligation to provide an Expense Advance is subject to the following conditions:
(a) Undertaking. If the Proceeding arose in connection with
Indemnitee's service as a director or officer of the Company (and not in any
other capacity in which Indemnitee rendered service, including service to any
Related Company), then Indemnitee or Indemnitee's representative shall have
executed and delivered to the Company an undertaking, which need not be secured
and shall be accepted without reference to Indemnitee's financial ability to
make repayment, by or on behalf of Indemnitee, to repay all Expense Advances if
it shall ultimately be determined by a final, unappealable decision rendered by
a court having jurisdiction over the parties that Indemnitee is not entitled to
be indemnified by the Company.
(b) Cooperation. Indemnitee shall give the Company such
information and cooperation as it may reasonably request and as shall be within
Indemnitee's power.
III. PROCEDURES FOR ENFORCEMENT
SECTION 3.01. ENFORCEMENT. In the event that any claim for
indemnity, whether an Expense Advance or otherwise, is made hereunder and is not
paid in full within 60 days after written notice of such claim is delivered to
the Company, Indemnitee may, but need not, at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim (an "Enforcement
Action").
SECTION 3.02. PRESUMPTIONS IN ENFORCEMENT ACTION. In any
Enforcement Action, the following presumptions (and limitation on presumptions)
shall apply:
(a) The Company expressly affirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereunder
to induce Indemnitee to continue as a director or officer of the Company;
(b) Neither (i) the failure of the Company (including the
Company's Board of Directors, independent or special legal counsel or the
Company's stockholders) to have made a determination prior to the commencement
of the Enforcement Action that indemnification of Indemnitee is proper in the
circumstances nor (ii) an actual determination by the Company, its Board of
Directors, independent or special legal counsel or stockholders that Indemnitee
is not entitled to indemnification shall be a defense to the Enforcement Action
or create a presumption that Indemnitee is not entitled to indemnification
hereunder; and
(c) If Indemnitee is or was serving as a director or officer
of a corporation of which a majority of the shares entitled to vote in the
election of its directors is held by the Company or in an Indemnitee or
management capacity in a partnership, joint venture, trust or other enterprise
of which the Company or a wholly owned subsidiary of the Company is a general
partner or has a majority ownership, then such corporation, partnership, joint
venture, trust or other enterprise shall conclusively be deemed a Related
Company and Indemnitee shall conclusively be deemed to be serving such Related
Company at the Company's request.
66
SECTION 3.03. ATTORNEYS' FEES AND EXPENSES FOR ENFORCEMENT
ACTION. In the event Indemnitee is required to bring an Enforcement Action, the
Company shall pay all of Indemnitee's fees and expenses in bringing and pursuing
the Enforcement Action (including attorneys' fees at any stage, including on
appeal); provided, however, that the Company shall not be required to provide
such payment for such attorneys' fees or expenses if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such Enforcement Action was not made in good faith.
IV. LIMITATIONS ON INDEMNITY, MUTUAL ACKNOWLEDGEMENT
SECTION 4.01. LIMITATIONS ON INDEMNITY. The Company shall
provide no indemnity pursuant to this Agreement:
(a) On account of any suit in which a final, unappealable
judgment is rendered against Indemnitee for an accounting of profits made from
the purchase or sale by Indemnitee of securities of the Company in violation of
the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended;
(b) For Damages that have been paid directly to Indemnitee by
an insurance carrier under a policy of directors' and officers' liability
insurance maintained by the Company;
(c) With respect to remuneration paid to Indemnitee if it
shall be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(d) On account of Indemnitee's conduct which is finally
adjudged to have been intentional misconduct, a knowing violation of law, a
violation of Section 174 of the Statute or a transaction from which Indemnitee
derived an improper personal benefit; or
(e) If a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
SECTION 4.02. SEC UNDERTAKING. Indemnitee understands and
acknowledges that the Company may be required in the future to undertake with
the Securities and Exchange Commission (the "SEC") to submit in certain
circumstances the question of indemnification to a court for a determination of
the Company's right under public policy to indemnify Indemnitee.
V. NOTIFICATION OF DEFENSE OF CLAIM
SECTION 5.01. NOTIFICATION. Promptly after receipt by
Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if
a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof; but the omission so
to notify the Company will not, however, relieve the Company from any liability
which it may have to Indemnitee under this Agreement unless and only to the
extent that such omission can be shown to have prejudiced the Company's ability
to defend the Proceeding.
SECTION 5.02. DEFENSE OF CLAIM. With respect to any such
Proceeding as to which Indemnitee notifies the Company of the commencement
thereof:
(a) The Company may participate therein at its own expense;
67
(b) The Company, jointly with any other indemnifying party
similarly notified, may assume the defense thereof, with counsel satisfactory to
Indemnitee. After notice from the Company to Indemnitee of its election so to
assume the defense thereof, the Company shall not be liable to Indemnitee under
this Agreement for any legal or other expenses (other than reasonable costs of
investigation) subsequently incurred by Indemnitee in connection with the
defense thereof unless (i) the employment of counsel by Indemnitee has been
authorized by the Company, (ii) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company (or any other person or
persons included in the joint defense) and Indemnitee in the conduct of the
defense of such action, or (iii) the Company shall not, in fact, have employed
counsel to assume the defense of such action, in each of which cases the fees
and expenses of counsel shall be at the Company's expense. The Company shall not
be entitled to assume the defense of any Proceeding brought by or on behalf of
the Company or as to which Indemnitee shall have reasonably made the conclusion
provided for in (ii) above;
(c) The Company shall not be liable to Indemnitee under this
Agreement for any amounts paid in settlement of any Proceeding effected without
its written consent;
(d) The Company shall not settle any action or claim in any
manner that would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent; and
(e) Neither the Company nor Indemnitee shall unreasonably
withhold its consent to any proposed settlement, provided that Indemnitee may
withhold consent to any settlement that does not provide a complete release of
Indemnitee.
VI. SEVERABILITY
Nothing in this Agreement is intended to require or shall be
construed as requiring the Company to do or to fail to do any act in violation
of applicable law. The Company's inability, pursuant to court order, to perform
its obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable, as provided in
this Article VI, and if this Agreement or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, the Company
shall nevertheless indemnify or make contribution to Indemnitee to the full
extent permitted by any applicable portion of this Agreement that shall not have
been invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.
VII. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of Delaware.
(b) This Agreement shall be binding on Indemnitee and on the
Company and its successors and assigns (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and shall inure to the benefit of Indemnitee and Indemnitee's
heirs, personal representatives and assigns and to the benefit of the Company
and its successors and assigns. The Company shall not effect any sale of
substantially all of its assets, merger, consolidation or other reorganization
in which it is not the surviving entity, unless the surviving entity agrees in
writing to assume all such obligations of the Company under this Agreement.
68
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by both parties
hereto.
VIII. NOTICES
All notices, claims and other communications hereunder shall be in
writing and made by hand delivery, registered or certified mail (postage
prepaid, return receipt requested), facsimile or overnight air courier
guaranteeing next-day delivery:
(a) If to the Company, to:
Synergy 2000, Inc.
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: President
(b) If to Indemnitee, to the address specified on the last
page of this Agreement or to such other address as either party may from time to
time furnish to the other party by a notice given in accordance with the
provisions of this Section 8. All such notices, claims and communications shall
be deemed to have been duly given if (i) personally delivered, at the time
delivered, (ii) mailed, five days after dispatched, (iii) sent by facsimile
transmission, upon confirmation of receipt, and (iv) sent by any other means,
upon receipt.
69
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
SYNERGY 2000, INC.,
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------
Xxxxxxxx X. Xxxxx
Title: Executive Vice President
INDEMNITEE:
/s/ Xxx Xxxxxx, Xx.
-------------------
Xxx Xxxxxx, Xx.
Address:
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
-----------------------------------------
With a copy to:
-----------------------------------------
-----------------------------------------
-----------------------------------------
70
