INDEMNIFICATION AGREEMENT
Exhibit 99.2
X. XXXXXXXX, INC.
This Indemnification Agreement (“Agreement”) is made as of the 17th day of October 2006, by
and between X. Xxxxxxxx, Inc., a Delaware corporation (the “Company”), and Xxxxx X. Xxxxxx (the
“Indemnitee”).
RECITALS
WHEREAS, the Company’s Certificate of Incorporation and By-laws provide for the
indemnification of directors and officers of the Company to the full extent permitted by law;
WHEREAS, the Company recognizes that capable and qualified individuals are becoming
increasingly reluctant to serve as directors and officers of public corporations as a result of the
recent and ongoing enactment of statutes and regulations pertaining to their responsibilities and
the increasing risk of lawsuits against directors and officers in the current corporate climate in
the United States, unless such individuals are provided with more certain and secure protection
against exposure to unreasonable personal risk arising from their service and activities on behalf
of a corporation;
WHEREAS, the Company is aware that individuals recruited to serve as officers and/or on the
boards of public corporations are generally more likely to agree to provide services to
corporations that provide for separate indemnification agreements with their directors and officers
because, unlike indemnification provisions contained in the Company’s Certificate of Incorporation
or By-laws, the indemnification provisions contained in a separate agreement may not be amended or
rescinded without the consent of the director or officer who is party to the agreement;
WHEREAS, the Company recognizes that it is in the best interests of the Company and its
shareholders to attract and retain capable and qualified individuals to serve as officers and/or on
its Board of Directors and to enable such directors and officers to exercise their independent
business judgment in their capacities as directors and officers without being affected by the
threat of exposure to unreasonable personal risk;
WHEREAS, the Company believes that Indemnitee’s service as a director and/or officer of the
Company is important to the Company and that the protection afforded by this Agreement will enhance
Indemnitee’s ability to discharge his or her responsibilities as a director and/or officer of the
Company; and
WHEREAS, in order to induce Indemnitee to serve and/or to continue to serve as a director
and/or officer of the Company, the Company desires Indemnitee to be indemnified and advanced
expenses as set forth herein.
NOW, THEREFORE, for and in consideration of the premises, the mutual promises and covenants
set forth in this Agreement, the parties agree as follows:
1. INDEMNIFICATION
1.1 Proceedings Not By or In Right of Company. Subject only to the limitations set
forth in this Agreement, the Company shall indemnify and hold harmless the Indemnitee to the
greatest extent permitted by Delaware law, including but not limited to the provisions of the
By-laws, as such may be amended from time to time, if Indemnitee was or is made a party to, is
threatened to be made a party to, or is otherwise involved in any manner (including, without
limitation, as a deponent or a witness) or is threatened to be made so involved, in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, formal or informal, any appeals therefrom, and any inquiry or
investigation that could lead to such an action, suit or proceeding (each a “Proceeding”), other
than an action by or in the right of the Company, by reason of the fact that the Indemnitee is or
was or agreed to become a director and/or officer of the Company, or is or was serving or agreed to
serve at the request of the Company as a director, trustee, officer, partner, member, manager,
employee, advisor or agent (each an “Authorized Capacity”) of another corporation, partnership,
limited liability
company, joint venture, trust or other enterprise (including, without limitation, service with
respect to employee benefit plans), or by reason of any action alleged to have been taken or
omitted in such capacity, against any and all costs, charges and expenses (including attorneys’ and
others’ fees), judgments, fines and amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld) (collectively,
“Expenses”) actually and reasonably incurred by Indemnitee in connection with such Proceeding, if
Indemnitee 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, with respect to any criminal Proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
1.2. Proceedings By or In Right of Company. Subject only to the limitations set forth
in this Agreement, the Company shall indemnify and hold harmless the Indemnitee to the greatest
extent permitted by Delaware law, including but not limited to the provisions of the By-laws, as
such may be amended from time to time, if Indemnitee was or is made a party to, is threatened to be
made a party to, or is otherwise involved in any manner (including, without limitation, as a
deponent or a witness) or is threatened to be made so involved, in any Proceeding brought by or in
the right of the Company, by reason of the fact that he or she is or was or agreed to become a
director and/or officer of the Company, or is or was serving or agreed to serve at the request of
the Company in an Authorized Capacity of another corporation, partnership, limited liability
company, joint venture, trust or other enterprise (including, without limitation, service with
respect to employee benefit plans), or by reason of any action alleged to have been taken or
omitted in such capacity, against any and all Expenses actually and reasonably incurred by
Indemnitee in connection with such Proceeding if Indemnitee 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;
provided, however, that, if applicable law so provides, no indemnification against such
Expenses shall be made in respect of any claim, issue or matter as to which the Indemnitee shall
have been adjudged to be liable to the Company unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances of the case, the
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as such court shall
deem proper.
1.3. Mandatory Payment of Expenses. Except as expressly excluded in Section 2 of this
Agreement, to the extent that the Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding referred to in Section 1.1 or 1.2 of this Agreement, or in defense of any
claim, issue or matter therein, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
2. LIMITATIONS ON INDEMNIFICATION OF INDEMNITEE. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to make
any indemnification payment to the Indemnitee:
(a) for which payment is actually made to the Indemnitee under a valid and collectible
insurance policy, except in respect of any excess beyond the amount of payment under such
insurance;
(b) for which payment the Indemnitee is indemnified by the Company otherwise than pursuant to
this Agreement;
(c) if and to the extent that it shall be finally decided in a proceeding that the Company is
prohibited by applicable law from making such indemnification payment or that such indemnification
payment is otherwise unlawful;
(d) on account of Indemnitee’s conduct which is adjudged in a final, unappealable Proceeding
in a court of competent jurisdiction to have been (i) knowingly fraudulent, deliberately dishonest
or willful misconduct, (ii) a violation of Section 174 of the Delaware General Corporation Law or
(iii) a transaction from which the Indemnitee gained in fact any personal profit or advantage to
which he or she was not legally entitled; or
(e) for expenses and the payment of profits arising from the purchase and sale by Indemnitee
of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or
any similar successor statute.
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3. ADVANCEMENT OF EXPENSES.
3.1 The Company shall advance all Expenses incurred by or on behalf of Indemnitee, and, to the
fullest extent permitted by law, amounts paid in settlement by or on behalf of Indemnitee, in
connection with any Proceeding prior to the final disposition of such Proceeding upon receipt of an
undertaking by or on behalf of Indemnitee to repay such amount if it shall ultimately be determined
that Indemnitee is not entitled to be indemnified by the Company in a final, unappealable decision
of a court of competent jurisdiction. Any advances and undertakings to repay pursuant to this
Section 3.1 shall not be secured, shall not bear interest and shall provide that, if Indemnitee has
commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure
a determination that Indemnitee should be indemnified under applicable law with respect to such
Proceeding, Indemnitee shall not be required to reimburse the Company for any advancement of
Expenses in respect of such Proceeding until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or lapsed).
3.2 Any advancement of Expenses pursuant to Section 3.1 hereof shall be made within ten (10)
days after the receipt by the Company of a written statement from Indemnitee requesting such
advancement from time to time and accompanied by or preceded by the undertaking referred to in
Section 3.1 above. Each statement requesting advancement shall reasonably evidence the Expenses
incurred by or on behalf of the Indemnitee in connection with such Proceeding for which advancement
is being sought.
4. NOTIFICATION AND DEFENSE OF PROCEEDING.
4.1 Notice to Company. 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 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. Notice to the Company shall be
directed to the President of the Company at the address shown on the signature page of this
Agreement, or such other address as the Company shall designate in writing to Indemnitee. Notice
shall be deemed received three (3) business days after the date postmarked if sent by domestic
certified or registered mail, properly addressed; otherwise notice shall be deemed received when
such notice shall actually be received by the Company. In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably require and as shall be within
Indemnitee’s power.
4.2 Notice to Insurers. If, at the time of the receipt of a notice of a Proceeding
pursuant to Section 4.1 hereof, the Company has directors’ and officers’ liability insurance in
effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such
policies.
4.3 Selection of Counsel. In the event the Company shall be obligated under this
Agreement to pay the Expenses of any Proceeding against Indemnitee: (i) the Company may participate
therein at its own expense; and (ii) the Company, jointly with any other indemnifying party
similarly notified, may assume the defense thereof, with counsel satisfactory to Indemnitee (whose
approval shall not be unreasonably withheld), upon the delivery to Indemnitee of written notice of
its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company shall not be liable to Indemnitee under
this Agreement for any Expenses in connection with the Proceeding unless (1) the employment of
counsel by Indemnitee has been authorized by the Company, (2) 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 (3) 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.
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4.4 Settlement of Claims. The Company shall not be liable to Indemnitee under this
Agreement for any amounts paid in settlement of any action or claim in any Proceeding effected
without the Company’s written consent. The Company shall not settle any action or claim in any
Proceeding in any manner that would impose any penalty or limitation on Indemnitee without
Indemnitee’s written consent. 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.
5. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
5.1 Request for Indemnification. For purposes of pursuing the Indemnitee’s rights to
indemnification under this Agreement, the Indemnitee shall submit to the Company the notice
required pursuant to Section 4.1 of this Agreement, together with such documents supporting the
request for indemnification as are reasonably available to the Indemnitee and are reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to indemnification
hereunder. Upon receipt of any such request, the Company President (or his or her designee) will
promptly advise the Board of Directors of the Company in writing that the Indemnitee has requested
indemnification.
5.2 Timing of Payments After Indemnitee’s Successful Defense of Proceeding. In
connection with any request for indemnification under this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of any Proceeding or any
defense of any claim, issue or matter in such Proceeding, the Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by the Indemnitee in connection with such
Proceeding. The Company shall make such indemnification payment for such Expenses as soon as
practicable after written demand therefor by Indemnitee is presented to the Company, but in no
event later than sixty (60) days after the request for such payment.
5.3 Entitlement for Indemnification. In connection with any other request for
indemnification under this Agreement, unless ordered by a court of competent jurisdiction, the
Company shall make such indemnification payment only as authorized in a specific case upon a
determination that indemnification of the Indemnitee is proper in the circumstances in accordance
with Sections 1.1 and 1.2 hereof. Such determination may be made only (i) by a majority vote of
directors of the Company who are not parties to any such Proceeding, even though less than a quorum
(the “disinterested directors”), (ii) by a committee of such disinterested directors designated by
majority vote of such disinterested directors, even though less than a quorum, (iii) if there are
no such disinterested directors or if such disinterested directors so direct, in a written opinion
by independent legal counsel or (iv) by the shareholders of the Company. The Indemnitee’s
entitlement to indemnification under this Agreement will be determined in accordance with the
provisions of this Agreement within sixty (60) days after receipt by the Company of a written
request for indemnification.
5.4 Presumptions and Effect of Certain Proceedings. Upon making a request for
indemnification, the Indemnitee shall be presumed to be entitled to indemnification under this
Agreement and the Company shall have the burden of proof in the making of any determination
contrary to such presumption. If no person empowered to make a determination of the Indemnitee’s
entitlement to indemnification shall make such determination within sixty (60) days after receipt
by the Company of such request, the requisite determination of entitlement to indemnification shall
be deemed to have been made in favor of the Indemnitee, and the Indemnitee shall be absolutely
entitled to such indemnification, absent fraud in the request for indemnification. The termination
of any Proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself: (a) create a presumption that the Indemnitee did not act
in good faith and in a manner which he or she reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal Proceeding, that the Indemnitee
had reasonable cause to believe that his or her conduct was unlawful; or (b) otherwise adversely
affect the rights of the Indemnitee to indemnification.
6. REMEDIES OF INDEMNITEE IN CASES OF DETERMINATION NOT TO INDEMNIFY OR TO ADVANCE EXPENSES.
In the event that a determination is made that the Indemnitee is not entitled to indemnification
under this Agreement, or if the indemnification payment sought by the Indemnitee has not been
timely made following a determination (or deemed determination) of entitlement to indemnification
pursuant to Section 5, or if expenses are not timely advanced pursuant to Section 3, the Indemnitee
shall be entitled to a final adjudication in an appropriate court of the State of Delaware or, if
permitted by applicable law, any other court of
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competent jurisdiction of his or her entitlement to such indemnification or advancement of
expenses. Such judicial proceeding shall be made de novo. Neither (i) the failure of the Company
(including any person(s) empowered by Section 5 of this Agreement) 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 any person(s) empowered by Section 5 of this
Agreement 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. If a
determination is made or deemed to have been made pursuant to the terms of Section 5 that the
Indemnitee is entitled to indemnification, the Company shall be bound by such determination and is
precluded from asserting that such determination has not been made or that the procedure by which
such determination was made is not valid, binding and enforceable.
7. ATTORNEYS’ FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the event that the Indemnitee
is subject to or intervenes in any proceeding in which the validity or enforceability of this
Agreement is at issue or commences a proceeding or otherwise seeks an adjudication to enforce his
or her rights under, or to recover damages for breach of, this Agreement, the Indemnitee, if he or
she prevails in whole or in part in such action, shall be entitled to recover from the Company and
shall be indemnified by the Company against any costs, charges and expenses (including, without
limitation, attorneys’ fees) actually and reasonably incurred by him or her in connection with
such proceeding.
8. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
8.1 Scope. Notwithstanding any other provision of this Agreement, the Company hereby
agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that
such indemnification is not specifically authorized by the other provisions of this Agreement, the
Company’s Certificate of Incorporation, the Company’s By-laws, or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute, or rule that expands the
right of a Delaware corporation to indemnify a member of its board of directors or an officer or a
person serving in an Authorized Capacity, such changes shall be, ipso facto, within the purview of
Indemnitee’s rights and Company’s obligations under this Agreement. In the event of any change in
any applicable law, statute, or rule that narrows the right of a Delaware corporation to indemnify
a member of its board of directors or an officer or a person serving in an Authorized Capacity,
such changes, to the extent not otherwise required by law, statute, or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder.
8.2 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, its By-laws, any agreement, any vote of stockholders or disinterested directors,
the General Corporation Law of the State of Delaware, or otherwise, both as to action in the
Indemnitee’s official capacity and as to action in another capacity while holding such office. The
indemnification provided under this Agreement shall continue as to Indemnitee for any action taken
or not taken while Indemnitee is or was serving in an indemnified capacity even though he or she
may have ceased to serve in such capacity at the time of any Proceeding.
9. FEDERAL LAW. Both the Company and the Indemnitee acknowledge and agree that in certain
instances Federal law or applicable public policy may prohibit the Company from indemnifying its
directors, officers and persons serving in an Authorized Capacity under this Agreement or
otherwise, in which event, notwithstanding any other provisions of this Agreement to the contrary,
the indemnification provided by this Agreement shall be limited to such extent as is necessary to
comply with applicable Federal law or public policy. For example, the Company and the Indemnitee
acknowledge and agree that the Securities and Exchange Commission (the “SEC”) has taken the
position that indemnification is not permissible for liabilities arising under certain federal
securities laws, and federal legislation prohibits indemnification for certain violations of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Indemnitee understands and
agrees that the Company may be required to undertake with the SEC to submit the question of
indemnification to a court in certain circumstances for a determination of the Company’s right
under public policy to indemnify Indemnitee.
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10. SEVERABILITY. Nothing in this Agreement is intended to require or shall be construed as
requiring the Company to do or 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 Section 10. If any provision(s) of this Agreement are held to be invalid, illegal
or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the
remaining 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) will not in any way be affected or impaired
thereby and (ii) 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) will be construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable.
11. GOVERNING LAW. This Agreement will be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to the principles of conflict of laws.
12. AMENDMENT AND TERMINATION. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing signed by both parties hereto.
13. BINDING EFFECT. 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 the
Indemnitee and Indemnitee’s heirs, personal representatives and assigns and to the benefit of the
Company and its successors and assigns. Without limiting the generality of the foregoing, the
rights and obligations of the Indemnitee under this Agreement shall continue as to Indemnitee even
though he or she may have ceased to be a director or officer of the Company or a person serving in
an Authorized Capacity.
14. 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 to the Company: | ||
| X. Xxxxxxxx, Inc. Attention: Chief Executive Officer 0000 Xxxx Xxxxxx Xxxxxx Xxxxx, XX 00000 Phone: 000-000-0000 Facsimile: 000-000-0000 |
|||
| (b) | if to the Indemnitee: | ||
Notice so given shall, in the case of notice so given by mail, be deemed to be given and received
on the third calendar day after the date postmarked; 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.
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15. COVERAGE OF INDEMNIFICATION. The indemnification under this Agreement shall cover
Indemnitee’s service as a director and/or officer of the Company and/or the Indemnitee’s service in
any other Authorized Capacity prior to and after the date of the Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first
above written.
| X. XXXXXXXX, INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| INDEMNITEE | ||||
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