INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of
__________________, 1997, is by the between COMPU-XXXX, INC., a Delaware
corporation (the "Company"), and _______________________ (the "Indemnitee").
W I T N E S S E T H
WHEREAS, the Indemnitee currently serves as a director and/or an
officer of the Company and in such capacity is performing a valuable service to
the Company; and
WHEREAS, the Company's Certificate of Incorporation, as amended (the
"Certificate") and Bylaws (the "Bylaws") provide for the indemnification of the
directors and officers of the Company; and
WHEREAS, the Certificate provides that the Company shall indemnify the
directors and officers of the Company to the fullest extent permitted by any
applicable law, including, without limitation, the Delaware General Law, as
amended to date and as may be amended from time to time (the "Law"); and
WHEREAS, the Law specifically provides that indemnification and
advancement of expenses provided in such statute shall not be deemed exclusive
of any other rights under any agreement, and thereby contemplates that
agreements may be entered into between the Company and directors and officers of
the Company with respect to the indemnification of such directors and officers;
and
WHEREAS, in accordance with the authorization provided in the Law, the
Company may purchase one or more policies of directors' and officers' liability
insurance (the "Insurance") covering certain liabilities which may be incurred
by the Company's directors and officers in the performance of their services to
the Company; and
WHEREAS, applicability, amendment and enforcement of statutory and
bylaw indemnification provisions have raised questions concerning the adequacy
and reliability of the protection afforded thereby; and
WHEREAS, in order to resolve such questions and to induce the
Indemnitee to continue to serve as a director or an officer of the Company for
the remainder of his term and for any subsequent terms to which the Indemnitee
is elected by the shareholders and/or the directors of the Company, the Company
has deemed it to be in its best interests to enter into this Agreement;
NOW, THEREFORE, in consideration of the Indemnitee's agreement to serve
as a director and/or an officer of the Company after the date hereof, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
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(a) Change in Control. A "Change in Control" shall be
deemed to have occurred if (i) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") is or becomes, through one or a series of related
transactions or through one or more intermediaries, the
"beneficial owner" (as such term is defined in Rule 13(d)
under the Exchange Act), directly or indirectly, of securities
of the Company representing 25% or more of the combined voting
power of the outstanding securities of the Company, other than
a person who is such a beneficial owner on the effective date
of this Agreement of an affiliate of such person on such date;
(ii) as a result of, or in connection with, any tender offer
or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the
foregoing transactions (a "Transaction"), the individuals who
were Directors of the Company before the Transaction cease for
any reason to constitute a majority of the Board of Directors
of the Company or any successor to the Company; (iii) the
Company is merged or consolidated with any other entity and as
a result of such merger or consolidation less than 40% of the
outstanding voting securities of the surviving corporation
shall then be owned in the aggregate by the former
shareholders of the Company, other than (x) any party to such
merger or consolidation, or (y) any affiliates of any such
party; (iv) a tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing 25% or more of the combined voting power of the
Company's then outstanding voting securities; or (v) the
Company transfers more than 50% of its assets, or the last of
a series of transfers results in the transfer of more than 50%
of the assets of the Company, to another corporation that is
not a wholly owned subsidiary of the Company. For purposes of
this subsection 1(a), the determination of what constitutes
more than 50% of the assets of the Company shall be determined
based on the sum of the values attributed to the net book
value of all assets of the Company, each taken as of the date
of the Transaction involved. Notwithstanding the foregoing,
events otherwise constituting a Change in Control if such
events are solicited by the Company and are approved,
recommended or supported by the Board of Directors of the
Company (the "Board") in actions taken prior to, and with
respect to, such events.
(b) Reviewing Party. A "Reviewing Party" means (i) the Board
of Directors of the Company, provided, that a determination by
the Board under this Agreement shall require a majority vote
of a quorum of directors of the Board of the Company who are
not or were not parties to the action, suit or proceeding or
(ii) independent legal counsel selected by the Board.
2. Indemnification of Indemnitee. The Company hereby agrees that it
shall hold harmless and indemnify the Indemnitee to the fullest extent
authorized and permitted by the provisions of the Certificate and Bylaws and the
provisions authorizing or permitting such indemnification which are adopted
after the date hereof. Subject to the exclusions and provisions set forth in
this Agreement, the Law, the Certificate and the Bylaws, the Company hereby
agrees that it shall hold harmless and indemnify the Indemnitee against any and
all judgments, penalties
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(including excise and similar taxes), fines, settlements and reasonable
expenses, including attorneys' fees and court costs, actually and reasonably
incurred by the Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such action, suit or proceeding, and
any inquiry or investigation that could lead to such an action, suit or
proceeding (a "Proceeding"), including, without limitation, an action by or on
behalf of the shareholders of the Company or by or in the right of the Company
(collectively, "Derivative Suits") to which the Indemnitee is, was or at any
time becomes a party, or is threatened to be made a party, or was or is a
witness without being named a party, by reason of the fact that the Indemnitee
is or was a director or an officer of the Company, or, while a director, officer
of the Company, or, while a director, officer, partner, venturer, proprietor,
trustee, employee, agent of similar functionary of another corporation,
partnership, joint venture, sole proprietorship, trust, nonprofit entity,
employee benefit plan, or other enterprise.
3. Requirements for Indemnification. Unless otherwise provided by the
Law, the indemnification provided for in this Agreement shall be paid by the
Company if the Reviewing Party determines that the Indemnitee (i) acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Company, and (ii) with respect to any Proceeding which
is a criminal action, that he or she had no reasonable cause to believe his or
her conduct was unlawful; provided, however, that with respect to any Proceeding
pursuant to a Derivative Suit, no indemnification shall be made in respect of
any claim, issue or matter as to which such person has been adjudged to be
liable to the Company.
4. Insurance
(a) So long as the Indemnitee may be subject to any Proceeding
by reason of the fact that the Indemnitee is or was a director
or an officer of the Company, to the extent that the Company
maintains one or more insurance policies providing directors'
and officers' liability insurance, the Indemnitee shall be
covered by such policy or policies in accordance with its or
their terms, to the maximum extent of the coverage applicable
to any director or officer then serving the Company.
(b) The Company shall not be required to maintain directors'
and officers' liability insurance or any policy or policies of
comparable insurance if such insurance is not reasonably
available or if, in the reasonable business judgment of the
Board, or any appropriate committee thereof, which shall be
conclusively established by such determination by the Board,
or such appropriate committee thereof, either (i) the premium
cost for such insurance is significantly disproportionate to
the amount of coverage thereunder or (ii) the coverage
provided by such insurance is so limited by exclusions that
there is insufficient benefit from such insurance.
5. Advancement of Expenses. In the event of any Proceeding in which the
Indemnitee is a party or is involve and which may give rise to a right of
indemnification under this Agreement, following written request to the Company
by the Indemnitee, the Company shall promptly pay to the Indemnitee amounts to
cover expenses incurred by the Indemnitee in such Proceeding in advance of its
final disposition upon the receipt by the Company of (i) a written affirmation
by the
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Indemnitee of his good faith belief that he has met the standard of conduct
necessary for indemnification cation under Section 3 of this Agreement (the
"Standard of Conduct"), (ii) a written undertaking executed by or on behalf of
the Indemnitee to repay the advance if it shall ultimately be determined by the
Reviewing Party that the Indemnitee is not entitled to be indemnified by the
Company for such expenses as provided in this Agreement, the Law or the
Certificate and Bylaws and (iii) satisfactory evidence as to the amount of such
expenses.
6. Repayment of Expenses. Indemnitee shall reimburse the Company for
all reasonable expenses paid by the Company in defending any Proceeding against
the Indemnitee in the event and only to the extent that it shall be determined
by the Reviewing Party that the Indemnitee is not entitled to be indemnified by
the Company for such expenses under the Certificate, the Bylaws, this Agreement,
the provisions of the Law or any other applicable law.
7. Determination of Indemnification: Burden of Proof. With respect to
all matters concerning the rights of the Indemnitee to indemnification and
payment of expenses under this Agreement, the Law or under the provisions of the
Certificate and Bylaws now or hereafter in effect, any determination by the
Reviewing Party shall be conclusive and binding on the Company. If the
entitlement of the Indemnitee to be indemnified under this Agreement depends on
whether the Standard of Conduct has been met, the burden of proof of
establishing that the Indemnitee did not act in accordance with such Standard of
Conduct shall rest with the Company. The Indemnitee shall be presumed to have
acted in accordance with such Standard of Conduct and shall be entitled to
indemnification or advancement of expenses hereunder, as the case may be, unless
it shall be determined by the Reviewing party that the Indemnitee did not meet
such Standard of Conduct, which determination shall be final. For purposes of
this Agreement, unless otherwise expressly stated herein, the termination of any
Proceeding by judgment, order, settlement, whether with or without court
approval, or conviction, or upon a plea of nolo contendre or its equivalent
shall not create a presumption that the Indemnitee did not meet the Standard of
Conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
8. Effect of Change of Control. If there has not been a Change of
Control after the date of this Agreement, the determination of (i) the rights of
the Indemnitee to indemnification and payment of expenses under the Agreement or
under the provisions of the Certificate and the Bylaws, (ii) whether the
Standard of Conduct has been met and (iii) the reasonableness of amounts claimed
by the Indemnitee, shall be made by the Reviewing Party or such other body or
persons as may be permitted by the Law. If there has been a Change of Control
after the date of this Agreement, such determination and evaluation shall be
made by a special, independent counsel who is selected by the indemnitee and
approved by the Company, which approval shall not be unreasonably withheld, and
who has not otherwise performed services for the Indemnitee or the Company.
9. Continuation of Indemnification. All agreements and obligations of
the Company contained herein shall continue during the period that the
Indemnitee is a director or an officer of the Company, or, while a director or
officer of the Company, is or was serving at the request of the Company as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, nonprofit entity, employee benefit plan, or other
enterprise, and shall continue following the period that the
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Indemnitee served in such capacities during any period that the Indemnitee shall
be subject to any Proceeding, any appeal in any such Proceeding, or any inquiry
or investigation that could lead to any such proceeding, by reason of the fact
that the Indemnitee was a director or an officer of the Company or served in any
other capacity referred to herein.
10. Notification and Defense of Claim. Subject to the provisions of the
Certificate and the Bylaws, within 30 calendar days after receipt by the
Indemnitee of notice of the commencement of any Proceeding, the Indemnitee
shall, if a claim in respect hereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof. With respect to any
such Proceeding as to which the Indemnitee notifies the Company of the
commencement thereof:
(a) The Company shall be entitled to participate therein at
its own expense:
(b) Except as otherwise provided below, to the extent that it
may wish, the Company, jointly with any other indemnifying
party similarly notified, shall be entitled to assume the
defense thereof and to employ counsel reasonably satisfactory
to the Indemnitee. After notice from the Company to the
indemnitee of its election to so assume the defense thereof,
the Company shall not be liable to the Indemnitee under this
Agreement for any legal or other expenses subsequently
incurred by the Indemnitee in connection with the defense
thereof other than reasonable costs of investigation or as
otherwise provided below. The Indemnitee shall have the right
to employ counsel of his own choosing in such Proceeding but
the fees and expenses of such counsel incurred after notice
from the Company of assumption by the Company of the defense
thereof shall be at the expense of the Indemnitee unless (i)
the employment of counsel by the indemnitee has been
specifically authorized by the Company, such authorization to
be conclusively established by action by disinterested members
of the Board though less than quorum; (ii) representation by
the same counsel of both the Indemnitee and the Company,
would, in the reasonable judgment of the Indemnitee and the
Company, be inappropriate due to an actual or potential
conflict of interest between the Company and the Indemnitee in
the conduct of the defense of such Proceeding, such conflict
of interest to be conclusively established by an opinion of
counsel to the Company to such effect; (iii) the counsel
employed by the Company and reasonably satisfactory to the
indemnitee has advised the Indemnitee in writing that such
counsel's representation of the Indemnitee would likely
involve such counsel in representing differing interests which
could adversely affect the judgment or loyalty of such counsel
to the indemnitee, whether it be a conflicting, inconsistent,
diverse or other interest; or (iv) 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 paid, as provided herein, by the Company. 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 a conflict of interest has been established as provided
in subsection (ii) hereof; and
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(c) The Company shall not be liable to indemnify the
Indemnitee under this Agreement for any amounts paid in
settlement of any Proceeding affected without its written
consent. The Company shall not settle any Proceeding in any
manner which would impose any liability or penalty on the
Indemnitee without the Indemnitee's written consent. Neither
the Company nor the Indemnitee shall unreasonably withhold
consent to any proposed settlement.
11. Enforcement.
(A) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations
imposed on the Company hereby in order to induce the
Indemnitee to serve as director and/or officer of the Company
and acknowledges that the Indemnitee is relying upon this
Agreement in serving in such capacity.
(b) Absent a determination by the Reviewing Party that the
Indemnitee is not entitled to indemnification hereunder, if a
claim for indemnification or advancement of expenses is not
paid in full by the Company within thirty (30) days after a
written claim by the Indemnitee has been received by the
Company, the Indemnitee may at any time bring suit against the
Company to recover the unpaid amount of the claim. In the
event the Indemnitee is required to bring any action to
enforce or to collect monies due under this Agreement and is
successful in such action, the Company shall reimburse the
Indemnitee for all of the Indemnitee's reasonable attorneys'
fees and expenses in bringing and pursuing such action.
12. Effectiveness. This Agreement is effective for, and shall apply to
(i) any claim which is asserted or threatened before, on or after the date of
this Agreement but for which no Proceeding has been brought prior to the date
hereof and (ii) any Proceeding which is threatened before, on or after the date
of this Agreement but which is not pending prior to the date hereof. This
Agreement shall not apply to any Proceeding which was brought before the date of
this Agreement. So long as the foregoing is satisfied, this Agreement shall be
effective for, and be applicable to, acts or omissions occurring prior to, on or
after the date hereof.
13. Nonexclusivity. The rights of the Indemnitee under this Agreement
shall not be deemed exclusive, or in limitation of, any rights to which the
Indemnitee may be entitled under any applicable common or statutory law, or
pursuant to the Certificate, the Bylaws, vote of shareholders or otherwise.
14. Other Payments. The Company shall not be liable to make any payment
under this Agreement in connection with any Proceeding against the indemnitee to
the extent the Indemnitee has otherwise received payments of the amounts
otherwise payable by the Company hereunder from a third party.
15. Subrogation. In the event the Company makes any payment under
this Agreement, the Company shall be subrogated, to the extent of such payment,
to all rights of recovery of the Indemnitee with respect thereto, and the
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Indemnitee with respect thereto, and the indemnitee shall execute all
agreements, instruments, certificates or other documents and do or cause to be
done all things necessary or appropriate to secure such recovery rights to the
Company including, without limitation, executing such documents as shall enable
the Company to bring an action or suit to enforce such recovery rights.
16. Survival: Continuation. The rights of the Indemnitee under this
Agreement shall inure to the benefit of the Indemnitee, his heirs, executors,
administrators and personal representatives, and this Agreement, shall be
binding upon the Company, its successors and assigns. The rights of the
indemnitee under this Agreement shall continue as provided in Section 9, hereof.
17. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless made in writing and
signed by both parties hereto.
18. Headings. Section headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
19. Choice of Law. This Agreement shall be governed and construed in
accordance with the internal laws of the State of Delaware without giving effect
to the princi
ples of conflicts of laws
thereof.
20. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed by certified mail (return receipt requested) or sent by overnight
delivery service, cable, telegram, facsimile transmission or telex to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice.
(a) If the Company, to:
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
(b) If the Indemnitee, to:
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Notice so give shall, in the case of notice so given by mail, be deemed to be
given and received on the fourth calendar day after posting, in the case of
notice so given by overnight delivery service, on the date of actual delivery
and, in the case of notice so given by cable, telegram, facsimile transmission,
telex or personal delivery, on the date of actual transmission or, as the case
may be, personal delivery,
21. Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent necessary to
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render it legal, valid and enforceable, and if no such modification shall render
it legal, valid and enforceable, then this Agreement shall be construed as if
not containing the provision held to be invalid, and the rights and obligations
of the parties shall be construed and enforced accordingly,
22. Complete Agreement. This Agreement and those documents expressly
referred to herein embody the complete agreement and understanding among the
parties hereto and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
23. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
COMPU-XXXX, INC.
By:_________________
President
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INDEMNITEE
INDEMN
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