EXHIBIT 10.09
FORM OF INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of__________, 1997, is made by and
between Consolidation Capital Corporation, a Delaware corporation (the
"Company"), and ____________ (the "Indemnitee"), an "agent" (as hereinafter
defined) of the Company.
R E C I T A L S
- - - - - - - -
A. The Company recognizes that competent and experienced persons are
increasingly reluctant to serve as directors or 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 officers;
B. The statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous or conflicting, and
therefore fail to provide such directors and 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
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.
A G R E E M E N T
- - - - - - - - -
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.
2
(e) Other Enterprise. 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 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. The indemnification provided pursuant to this
Agreement shall continue in force after the Indemnitee has ceased to serve as an
agent of the Company.
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. 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
3
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
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.
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 in a written
opinion or by a panel of arbitrators
4
(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 or under any indemnification
provision contained in the Company's Bylaws, including but not limited to
matters of validity, interpretation, application and enforcement, shall be
determined exclusively by and through final and binding arbitration in
Washington, DC, 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 Superior Court of the District of Columbia. Each arbitrator selected as
provided herein 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, notwithstanding any provision contained in the Bylaws or right
granted thereunder, 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
5
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
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 shall 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 Indemnitee, 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
6
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
(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. Successor and Assigns. The terms of this Agreement shall bind,
---------------------
and shall inure to the benefit of, the successors and assigns of the parties
hereto.
7
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 telegram (other than
where original payment or other documents must be delivered) for delivery within
24 hours or (c) sent by Federal Express, DHL Worldwide Express or Airborne
Courier (for next business day delivery), shipping prepaid to the addresses
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
telegram, 24 hours after the time sent, or, if sent by Federal Express, DHL
Worldwide Express, or Airborne Courier, 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.
8
The parties hereto have entered into this Indemnity Agreement effective as
of the date first above written.
CONSOLIDATION CAPITAL CORPORATION:
By
---------------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
Address: 0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
INDEMNITEE:
---------------------------------------------
[INSERT NAME]
Address: [INSERT]
9
