Exhibit 10.19
FORM OF
INDEMNIFICATION AGREEMENT
This Indemnification Agreement, dated as of ____________ ___,
1999, is made by and between Xxxxxxxxxxx.xxx, Inc. a Delaware corporation (the
"Company"), and ____________________ (the "Indemnitee"), an "agent" (as
hereinafter defined) of the Company.
RECITALS
A. The Company recognizes that competent and experienced
persons are increasingly reluctant to serve as directors or executive officers
of corporations unless they are protected by comprehensive liability insurance
or indemnification, or both, due to increased exposure to litigation costs and
risks resulting from their service to such corporations, and due to the fact
that the exposure frequently bears no reasonable relationship to the
compensation of such directors and executive officers;
B. The statutes and judicial decisions regarding the duties of
directors and executive officers are often difficult to apply, ambiguous or
conflicting, and therefore fail to provide such directors and executive officers
with adequate, reliable knowledge of legal risks to which they are exposed or
information regarding the proper course of action to take;
C. The Company and the Indemnitee recognize that plaintiffs
often seek damages in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense and/or
settlement of such litigation is often beyond the personal resources of
directors and executive officers;
D. The Company believes that it is unfair for its directors
and executive officers to assume the risk of huge judgments and other expenses
which may occur in cases in which the director or executive officer received no
personal profit and in cases where the director or executive officer was not
culpable;
E. The Company, after reasonable investigation, has determined
that the liability insurance coverage presently available to the Company is
inadequate to cover all possible exposure for which the Indemnitee should be
protected. The Company believes that the interests of the Company and its
stockholders would best be served by a combination of such insurance and the
indemnification by the Company of the directors and executive officers of the
Company,
F. Section 145 of the General Corporation Law of Delaware
("Section 145"), under which the Company is organized, empowers the Company to
indemnify its directors, officers, employees and agents by agreement and to
indemnify persons who serve, at the request of the Company, as the directors,
officers, employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 145 is not
exclusive;
G. The Board of Directors has determined that contractual
indemnification as set forth herein is not only reasonable and prudent but
necessary to promote the best interests of the Company and its stockholders;
H. The Company desires and has requested the Indemnitee to
serve or continue to serve as a director or executive officer of the Company
free from undue concern for claims for damages arising out of or related to such
services to the Company; and
I. The Indemnitee is willing to serve, or to continue to
serve, the Company, only on the condition that he is furnished the indemnity
provided for herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Agent. For purposes of this Agreement, "agent" of the
Company means any person who is or was a director, officer, employee or other
agent of the Company or a subsidiary of the Company, or is or was serving at the
request of, for the convenience of, or to represent the interest of the Company
or a subsidiary of the Company as a director, officer, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise.
(b) Expenses. For purposes of this Agreement, "expenses"
includes all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all attorneys' fees and related disbursements
and other out-of-pocket costs), actually and reasonably incurred by the
Indemnitee in connection with either the investigation, defense or appeal of a
proceeding or establishing or enforcing a right to indemnification under this
Agreement, Section 145 or otherwise, and amounts paid in settlement by or on
behalf of the Indemnitee, but shall not include any final judgments, fines or
penalties actually levied against the Indemnitee.
(c) Proceedings. For the purposes of this Agreement,
"proceeding" means any threatened, pending or completed action, suit or other
proceeding, whether civil, criminal, administrative or investigative.
(d) Subsidiary. For purposes of this Agreement, "subsidiary"
means any corporation of which more than 50% of the outstanding voting
securities are owned directly or indirectly by the Company, by the Company and
one or more other subsidiaries or by one or more other subsidiaries.
(e) Definitions Relating to Employee Benefit Plans. For
purpose of this Agreement, "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with respect
to any employee benefit plans; references to "serving at the request of the
Company" shall include any service as a director, officer, employee or agent of
2
the Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and any person who acts in good faith and in a
manner he reasonably believes to be in the best interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.
2. Agreement to Serve. The Indemnitee agrees to serve and/or
continue to serve as an agent of the Company, at the will of the Company (or
under separate agreement, if such agreement exists), in the capacity the
Indemnitee currently serves as an agent of the Company, so long as he is duly
appointed or elected and qualified in accordance with the applicable provisions
of the By-Laws of the Company or any subsidiary of the Company or until such
time as he tenders his resignation in writing; provided, however, that nothing
contained in this Agreement is intended to create any right to continued
employment by the Indemnitee in any capacity.
3. Indemnity in Third Party Proceedings. The Company shall
indemnify the Indemnitee if the Indemnitee is a party to or threatened to be
made a party to or otherwise involved in any proceeding (other than a proceeding
by or in the right of the Company) by reason of the fact that the Indemnitee is
or was an agent of the Company, including any proceeding based upon any act or
inaction by the Indemnitee in his capacity as an agent of the Company, against
any and all expenses, judgments, fines and penalties actually and reasonably
incurred by him in connection with such proceeding, but only 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
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any proceeding by judgment, order of court, settlement,
conviction or on plea of nolo contendere, or its equivalent, shall not, of
itself, create a presumption that the Indemnitee did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal proceedings, that
such person had reasonable cause to believe that his conduct was unlawful.
4. Indemnity in Derivative Actions; Indemnification as
Witness.
(a) The Company shall indemnify the Indemnitee if the
Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any proceeding by or in the right of the Company to procure a
judgment in its favor by reason of the fact that the Indemnitee is or was an
agent of the Company, including any proceeding based upon any act or inaction by
the Indemnitee in his capacity as an agent of the Company, against all expenses
actually and reasonably incurred by the Indemnitee in connection with such
proceeding, but only 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, except that no indemnification under this Section 4 shall be made in
respect of any claim, issue or matter as to which the Indemnitee shall have been
finally adjudged to be liable to the Company by a court of competent
jurisdiction for gross negligence or misconduct in the performance of his duty
to the Company, unless and only to the extent that any court in which such
proceeding was brought shall determine upon application that, despite the
3
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as such
court shall deem proper.
(b) Notwithstanding any other provisions of this Agreement,
to the extent the Indemnitee is, by reason of the fact that he is or was an
agent of the Corporation, involved in any investigative proceeding, including
but not limited to testifying as a witness or furnishing documents in response
to a subpoena or otherwise, the Indemnitee shall be indemnified against any and
all expenses actually and reasonably incurred by or for him in connection
therewith.
5. Indemnification of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of any
proceeding or in defense of any claim, issue or matter therein, the Company
shall indemnify the Indemnitee against all expenses actually and reasonably
incurred in connection with such proceeding.
6. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion of any expenses, judgments, fines or penalties, actually and
reasonably incurred by him in a proceeding but is not entitled, however, to
indemnification for the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion thereof to which the Indemnitee is
entitled.
7. Advancement of Expenses. Subject to Section 11(a) hereof,
the Company shall advance all expenses incurred by the Indemnitee in connection
with any proceeding to which the Indemnitee is a party or is threatened to be
made a party by reason of the fact that the Indemnitee is or was an agent of the
Company. The Indemnitee hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Company as authorized by
this Agreement. The advances to be made hereunder shall be paid by the Company
to or on behalf of the Indemnitee within thirty (30) days following delivery of
a written request therefor by the Indemnitee to the Company.
8. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of
the commencement of or the threat of commencement of any proceeding, the
Indemnitee shall, if the Indemnitee believes that indemnification with respect
thereto may be sought from the Company under this Agreement, notify the Company
of the commencement or threat of commencement thereof, provided the failure to
provide such notification shall not diminish the Indemnitee's indemnification
hereunder.
(b) Any indemnification requested by the Indemnitee under
Section 3, 4, 5 or 6 hereof shall be made no later than forty-five (45) days
after receipt of the written request of the Indemnitee unless a determination is
made within said forty-five (45) day period (i) by the Board of Directors of the
Company by a majority vote of a quorum thereof consisting of directors who are
not parties to such proceeding, or (ii) in the event such a quorum is not
obtainable, at the election of the Company, either by independent legal counsel
4
in a written opinion or by a panel of arbitrators (selected in the manner set
forth in Section 8(c) hereof) that the Indemnitee has not met the relevant
standards for indemnification set forth in Section 3, 4, 5 or 6 hereof.
(c) Except as set forth herein, the right of indemnification
under this Agreement and any dispute arising hereunder, including but not
limited to matters of validity, interpretation, application and enforcement,
shall be determined exclusively by and through final and binding arbitration in
St. Louis, Missouri, each party hereto expressly and conclusively waiving his
right to proceed to a judicial determination with respect to such matter. Such
arbitration shall be conducted in accordance with the commercial arbitration
rules then in effect of the American Arbitration Association before a panel of
three arbitrators, one of whom shall be selected by the Company, the second of
whom shall be selected by the Indemnitee and the third of whom shall be selected
by the other two arbitrators. If for any reason arbitration under the
arbitration rules of the American Arbitration Association cannot be initiated,
the necessary arbitrator or arbitrators shall be selected by the presiding judge
of the state court of general jurisdiction in St. Louis, Missouri. Each
arbitrator selected as provided hereto is required to be serving or to have
served as a director or an executive officer of a corporation whose shares of
common stock, during at least one year of such service, were quoted in the
Nasdaq National Market System or listed on the New York Stock Exchange. It is
expressly understood and agreed by the parties that a party may compel
arbitration pursuant to this Section 8(c) through an action for specific
performance and that any award entered by the arbitrators may be enforced,
without further evidence or proceedings, in any court of competent jurisdiction.
(d) The provisions of Section 8(c) hereof shall not apply
if, and to the extent that, they may be inconsistent with an undertaking given
by the Company (including an undertaking given after the date of this Agreement)
to the Securities and Exchange Commission to submit to a court of competent
jurisdiction the question whether indemnification for liabilities under the
Securities Act of 1933, as amended (the "Securities Act"), by the Company is
against public policy as expressed in the Securities Act, and to be governed by
the final adjudication of such issue. In such case, the determination by such
court shall be deemed, for purposes of this Agreement, to be a determination
pursuant to Section 8(c) hereof.
(e) The Company shall reimburse the Indemnitee for the
expenses incurred in prosecuting or defending such arbitration unless the
arbitrator finds that each of the claims and/or defenses of the Indemnitee in
any such proceeding was frivolous or in bad faith.
9. Assumption of Defense. In the event the Company shall be
obligated to pay the expenses of any proceeding against the Indemnitee, the
Company, if appropriate, shall be entitled to assume the defense of such
proceeding, with counsel reasonably acceptable to the Indemnitee, upon the
delivery to the Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by the Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to the
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
the Indemnitee with respect to the same proceeding, provided that (a) the
Indemnitee shall have the right to employ his counsel in such proceeding at the
Indemnitee's expense and (b) if (i) the employment of counsel by the Indemnitee
5
has been previously authorized in writing by the Company, (ii) the Company shall
have reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of any such defense, or (iii) the
Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, the fees and expenses of the Indemnitee's counsel shall be at the
expense of the Company.
10. Insurance. The Company may, but is not obligated to,
obtain directors' and officers' liability insurance ("D&O Insurance") as may be
or become available in reasonable amounts from established and reputable
insurers with respect to which the Indemnitee is named as an insured.
Notwithstanding any other provision of the Agreement, the Company shall not be
obligated to indemnify the Indemnitee for expenses, judgments, fines or
penalties which have been paid directly to the Indemnitee by D&O Insurance. If
the Company has D&O Insurance in effect at the time the Company receives from
the Indemnitee any notice of the commencement of a proceeding, the Company shall
give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the policy. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the lndemnitee, all amounts payable as a result of such proceeding
in accordance with the terms of such policy.
11. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by the Indemnitee. To indemnify or
advance expenses to the Indemnitee with respect to proceedings or claims
initiated or brought voluntarily by the Indemnitee and not by way of defense,
except to the extent set forth in Section 8(e) hereof; provided, however, that
such indemnification or advancement of expenses may be provided by the Company
in specific cases if the Board of Directors finds it to be appropriate; or
(b) Unauthorized Settlements. To indemnify the Indemnitee
under this Agreement for any amounts paid in settlement of a proceeding effected
without the Company's written consent; the Company shall not settle any
proceeding without the Indemnitee's written consent; neither the Company nor the
Indemnitee will unreasonably withhold consent to any proposed settlement; or
(c) Certain Matters. To indemnify the Indemnitee on account
of any proceeding with respect to (i) payments made to the Indemnitee if it is
determined by final judgment or other final adjudication that such payments were
in violation of law or (ii) which it is determined by final judgment or other
final adjudication that the conduct of the Indemnitee constituted bad faith or
active and deliberate dishonesty; or
(d) Section 16. To indemnify the Indemnitee on account of
any claim by or on behalf of the Company for recovery of profits resulting from
the purchase and sale or sale and purchase by the Indemnitee of equity
securities of the Company pursuant to Section 16(b) of the Securities Exchange
Act of 1934, as amended; or
6
(e) Unlawful. To indemnify the Indemnitee to the extent such
indemnification has been determined pursuant to Section 8(c) hereof to be
unlawful.
12. Nonexclusivity. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Certificate of Incorporation or By-Laws, the vote of the
Company's stockholders or disinterested directors, other agreements or
otherwise, both as to action in his official capacity and to action in another
capacity while occupying his position as an agent of the Company, and the
Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.
13. Subrogation. 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.
14. Interpretation of Agreement. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.
15. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (a) the validity, legality and enforceability of the remaining
provisions of the Agreement (including without limitation all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby, and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 14 hereof.
16. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
17. Successors and Assigns. The terms of this Agreement
shall bind, and shall inure to the benefit of, the successors and assigns of the
parties hereto.
18. Notice. All notices, claims, requests, demands and other
communications hereunder shall be in writing and shall be duly given if: (a)
personally delivered or sent via telecopy, (b) sent by certified mail, return
receipt requested, or (c) sent by nationally recognized overnight courier
service (for next business day delivery), shipping prepaid to the addresses
7
shown on the signature page of this Agreement or such other address or addresses
as the person to whom notice is to be given may have previously furnished to the
other party in writing in the manner set forth above. Notices shall be deemed
given at the time of personal delivery or completed telecopy, or, if sent by
certified mail, three (3) business days after such sending, or, if sent by
nationally recognized overnight courier service, one (1) business day after such
sending.
19. Governing Law. This Agreement shall be governed
exclusively by and construed according to the laws of the State of Delaware, as
applied to contracts between Delaware residents entered into and to be performed
entirely within Delaware, without giving effect to conflict of laws principles.
If a court of competent jurisdiction shall make a final determination that the
provisions of the law of any state other than Delaware govern indemnification by
the Company of its directors and executive officers, then the indemnification
provided under this Agreement shall in all instances be enforceable to the
fullest extent permitted under such law, notwithstanding any provision of this
Agreement to the contrary.
The parties hereto have entered into this Indemnity Agreement
effective as of the date first above written.
XXXXXXXXXXX.XXX, INC.
By
-------------------------------------
Xxxx Xxxxxxx
President and Chief Executive Officer
000 Xxxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
INDEMNITEE:
Name:
Address:
-------------------------------
-------------------------------
-------------------------------
8
