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EXHIBIT 10.6
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is made as of ________ __, 1997, by and
between XXXXXX INCORPORATED, a Nevada corporation (the "Company"), and
________________________ (the "Indemnitee").
R E C I T A L S
WHEREAS, Article VIII of the Company's Bylaws provides that the
Company shall indemnify the Indemnitee to the full extent permitted by
the laws of the State of Nevada as from time to time in effect; and
WHEREAS, the General Corporation Law of Nevada (the "Corporation
Law") provides that the indemnification authorized by that Law shall not
be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled by law,
agreement or otherwise; and
WHEREAS, in connection with the Company's obligation to indemnify
to the full extent permitted by Nevada law, the Board of Directors has
considered the following, among other factors: (A) it is essential to
the Company to attract and retain as directors and officers the most
capable persons available; (B) the substantial increase in corporate
litigation that may subject directors and officers to litigation costs
and risks and the recent limitations on the availability of directors
and officers liability insurance have made and will make it increasingly
difficult for the Company to attract and retain such persons; and (C)
when obtainable, insurance policies relating to indemnification are
often subject to retentions by the insured, co-insurance requirements,
exclusions and other limitations on coverage; and
WHEREAS, in view of the foregoing and in recognition of the
Indemnitee's need for substantial protection against personal liability
in order to assure the Indemnitee's continued service to the Company in
an effective manner and the Indemnitee's reliance on the provisions of
the Company's Bylaws, and in part to provide the Indemnitee with
specific contractual assurance that the protection promised by the
Bylaws will be available to the Indemnitee (regardless of, among other
things, any amendment to or revocation of the Bylaws or any change in
the composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), the Company wishes to provide in
this Agreement for the indemnification of and the advancing of expenses
to the Indemnitee to the full extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the extent
insurance is maintained, for the continued coverage of the Indemnitee
under the Company's directors' and officers' liability insurance
policies.
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NOW, THEREFORE, in consideration of Indemnitee's continued service to
the Company, the Company hereby agrees with the Indemnitee as follows:
SECTION 1. DEFINITIONS.
(a) Change in Control: shall be deemed to have occurred if (i) any
"person" (which term as used in this Section 1(a) and in Section 1(c) shall be
as defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended), other than (y) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company acting in such
capacity, or (z) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock and voting power of the Company, is or becomes the beneficial
owner (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 25% or more of the total voting power
represented by the Company's then outstanding Voting Securities, or (ii) there
shall occur a change in the composition of a majority of the Board of Directors
of the Company within a three-year period which change shall not have been
approved by a majority of the persons then serving as directors who were also
directors immediately prior to the commencement of such period, or (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 75% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company (in one
transaction or a series of transactions) of all or substantially all of the
Company's assets.
(b) Claim: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation that the indemnitee in good faith
believes might lead to the institution of any such action, suit or proceeding,
whether civil, criminal, administrative, investigative or other.
(c) Reviewing Party: any appropriate person or body appointed by the
Company's Board of Directors (including a member or members of the Board of
Directors) and, if there has been a Change in Control (other than a Change in
Control which has been approved by a majority of the persons then serving as
directors who were also directors immediately prior to such Change in Control),
the Reviewing Party shall be the special independent counsel referred to in
Section 5 of this Agreement.
(d) Voting Securities: any securities having the right under ordinary
circumstances to vote in an election of the Board of Directors.
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SECTION 2. GENERAL RIGHT TO INDEMNIFICATION. Subject to Sections 3 and
4(d), the Company shall indemnify the Indemnitee in the event that the
Indemnitee was or is a party or is threatened to be made a party to or is
involved or is threatened to be involved (as a witness or otherwise) in or
otherwise requires representation by counsel in connection with any Claim, by
reason of the fact that Indemnitee is or was a director or officer of the
Company or is or was serving at the request of the Company as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, and the basis of such Claim is alleged action or
inaction in an official capacity or in any other capacity while serving as such
a director, trustee, officer, employee or agent, and Indemnitee shall be
indemnified and held harmless by the Company to the full extent permitted by the
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment with reference to events occurring prior to the
effective date thereof, only to the extent that such amendment permits the
Company to provide broader indemnification rights than such law permitted the
Company to provide prior to such amendment), against all costs, charges,
expenses, liabilities and losses (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to the Indemnitee when the Indemnitee has
ceased to be a director or officer (or to serve another entity at the request of
the Company) and shall inure to the benefit of the Indemnitee's heirs, personal
representatives and estate.
SECTION 3. REVIEWING PARTY. Notwithstanding the foregoing, the
obligations of the Company under Section 2 of this Agreement shall be subject to
the condition that the Reviewing Party shall not have determined (in a written
opinion, in any case in which the special, independent counsel referred to in
Section 5 of this Agreement is involved) that the Indemnitee would not be
permitted to be indemnified under applicable law.
SECTION 4. RIGHT OF INDEMNITEE TO BRING SUIT. The rights of the
Indemnitee to bring suit against the Company under this Agreement include the
following:
(a) If there has been no determination by the Reviewing Party or if the
Reviewing Party determines that the Indemnitee substantively would not be
permitted to be indemnified in whole or in part under applicable law, the
Indemnitee shall have the right to bring suit seeking an initial determination
by the court or challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of process and to
appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and the Indemnitee.
(b) If a claim for advances under Section 7 is not paid in full by the
Company within 30 days after a written claim has been received by the Company,
the Indemnitee may at any time thereafter bring suit against the Company to
recover the unpaid amount. If successful in whole or in part, the Indemnitee
shall be entitled to be paid also the expense of prosecuting such claim.
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(c) In any action brought by the Indemnitee to enforce a right to
indemnification hereunder, or by the Company to recover payments by the Company
of expenses incurred by the Indemnitee in connection with a Claim in advance of
its final disposition, the burden of proving that the Indemnitee is not entitled
to be indemnified under this Agreement or otherwise shall be on the Company.
Neither the failure of the Company (including its Board of Directors, special,
independent counsel, other Reviewing Party or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the Indemnitee is proper in the circumstances because the Indemnitee has met the
applicable standard of conduct set forth in the Corporation Law, nor an actual
determination by the Company (including its Board of Directors, special,
independent counsel, other Reviewing Party or its stockholders) that the
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that the Indemnitee has not met the applicable standard of conduct
or, in the case of such an action brought by the Indemnitee, be a defense to the
action.
(d) Prior to a Change in Control, notwithstanding any provisions to the
contrary and except as provided in this Section, the Company shall indemnify the
Indemnitee in connection with a proceeding (or part thereof) initiated by the
Indemnitee against the Company only if such proceeding (or part thereof) was
authorized prior to its initiation by a majority of the disinterested members of
the Board of Directors of the Company or the Indemnitee is successful on the
merits in such proceeding. The rights to indemnification confirmed by this
paragraph shall include the right to be paid by the Company any expenses
incurred in defending such proceeding in advance of its final disposition.
SECTION 5. CHANGE IN CONTROL. The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the persons then serving as directors who were also
directors immediately prior to such Change in Control) then with respect to all
matters thereafter arising concerning the rights of the Indemnitee to indemnity
payments and advances under this Agreement, the Company shall seek legal advice
only from special, independent counsel selected by the Indemnitee and approved
by the Company (which approval shall not be unreasonably withheld), and who has
not otherwise performed services within the last 5 years for the Company or any
"person" referred to in clause (i) of Section 1(a) hereof or "other corporation"
referred to in clause (iii) of that Section (other than in connection with such
matters) or for the Indemnitee. Such counsel, among other things, shall render
its written opinion to the Company and the Indemnitee as to whether and to what
extent the Indemnitee would be permitted to be indemnified under applicable law.
The Company agrees to provide full cooperation to and to pay the reasonable fees
of the special, independent counsel referred to above and to indemnify fully
such counsel against any and all expenses (including attorneys' fees), claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
SECTION 6. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL
PARTY. Notwithstanding the other provisions of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise, including,
without limitation, the dismissal of an action without prejudice, in defense of
any Claim covered by this
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Agreement, or in defense of any claim, issue or matter therein, the Indemnitee
shall be indemnified against all costs, charges and expenses, including
attorneys' fees, actually and reasonably incurred by the Indemnitee or on
Indemnitee's behalf in connection therewith.
SECTION 7. ADVANCES. Expenses incurred by the Indemnitee in defending
any Claim, including attorneys' fees, judgments, fines and amounts paid in
settlements must be paid by the Company in advance of the final disposition of
the Claim upon delivery to the Company of an undertaking, by or on behalf of the
Indemnitee, to repay all amounts so advanced if it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified by the Company
under Nevada law.
SECTION 8. PROCEDURE FOR INDEMNIFICATION. After the final disposition of
any Claim covered by this Agreement, the Indemnitee shall send to the Company a
written request for any indemnification sought under this Agreement. No later
than 30 days following receipt by the Company of such request, the Company shall
deliver such request to an appropriate Reviewing Party for its review pursuant
to this Agreement and shall cause the indemnification provided hereunder to be
authorized and paid, so long as during such 30-day period, the Reviewing Party
has not determined that indemnification would not be permitted under applicable
law. The Indemnitee and Indemnitee's counsel shall be given an opportunity to be
heard and to present evidence on his behalf in connection with consideration by
the Reviewing Party.
SECTION 9. INSURANCE. To the extent the Company maintains an insurance
policy or 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 available for any director
or officer of the Company.
SECTION 10. NOTICE TO COMPANY. The Indemnitee must provide prompt
written notice to the Company of any Claim in connection with which the
Indemnitee may assert a right to be indemnified hereunder; however, failure to
provide such notice shall not be construed as a waiver of any right of the
Indemnitee to an advance or indemnification hereunder.
SECTION 11. OTHER RIGHTS; CONTINUATION OF RIGHT TO INDEMNIFICATION. The
indemnification and advances provided by this Agreement shall not be deemed
exclusive of any other rights to which the Indemnitee seeking indemnification
may be entitled under any law (common or statutory), provision of the Company's
Articles of Incorporation or Bylaws, vote of stockholders or disinterested
directors, or otherwise, both as to action in the Indemnitee's official capacity
and as to action in another capacity while holding office or while employed by
or acting as agent for the Company, and shall continue as to a person who has
ceased to be a director or officer, and shall inure to the benefit of the
estate, heirs, executors and administrators of the Indemnitee.
SECTION 12. 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
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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.
SECTION 13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim made
against the Indemnitee to the extent the Indemnitee has otherwise actually
received payment (under any insurance policy or otherwise) of the amounts
otherwise indemnifiable hereunder.
SECTION 14. AMENDMENTS. This Agreement may not be amended without the
agreement in writing of the Company and the Indemnitee.
SECTION 15. SAVINGS CLAUSE. If this Agreement or any portion hereof
shall be deemed invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby, and the Company shall
nevertheless indemnify the Indemnitee as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any Claim to the full extent permitted by any applicable portion
of this Agreement that shall not have been invalidated and to the full extent
permitted by applicable law.
SECTION 16. SURVIVAL CLAUSE. The Company acknowledges that in continuing
to provide services to the Company, the Indemnitee is relying on this Agreement.
Accordingly, the Company agrees that its obligations hereunder will survive (a)
any actual or purported termination of this Agreement by the Company or its
successors or assigns whether by operation of law or otherwise, and (b)
termination of the Indemnitee's services to the Company, whether such services
were terminated by the Company or the Indemnitee, with respect to any Claim,
whether or not such Claim is made, threatened or commenced before or after the
actual purported termination of this Agreement or the termination of the
Indemnitee's services to the Company.
SECTION 17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by written
agreement in form and substance satisfactory to the Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.
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SECTION 18. GOVERNING LAW. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Nevada (without giving effect to the provisions thereof relating to
conflicts of law).
IN WITNESS WHEREOF, this Agreement has been executed by the parties
thereto, and in the case of the Company, by a duly authorized officer thereof on
its behalf.
XXXXXX INCORPORATED
By:____________________________
Xxxxx X. Xxxxxx, President
Attest:
_________________________
Corporate Secretary
________________________________
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