EXHIBIT 10.7
INDEMNIFICATION AGREEMENT
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THIS INDEMNIFICATION AGREEMENT ("Agreement") IS MADE AS OF THIS _______________
DAY OF _____________ 1999 BY AND BETWEEN HEALTHEXTRAS, INC., A DELAWARE
CORPORATION (the "Company"), and _______________, ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance.
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other officers and
directors of the Company may not be willing to continue to serve as officers and
directors without additional protection; and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
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(a) Third Party Proceedings. The Company shall indemnify Indemnitee if
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Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of
the Company, by reason of any action or inaction on the part of Indemnitee
while an officer or director or employee or agent of the Company or any
subsidiary of the Company, or by reason of the fact that Indemnitee is or
was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprises against expenses (including attorneys' 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) actually
and reasonably incurred by Indemnitee in connection with such action or
proceeding reasonably believed to be in the best interests of the Company,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe Indemnitee's conduct was unlawful. The termination of any
action or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
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presumption that (i) Indemnitee did not act in good faith and in a manner
which Indemnitee reasonably believed to be in the best interests of the
Company,
or (ii) with respect to any criminal action of proceeding, Indemnitee had
reasonable cause to believe that Indemnitee's conduct was unlawful.
(b) Proceeding By or in the Right of the Company. The Company shall
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indemnify Indemnitee if Indemnitee was or is a party or is threatened to be
made a party to any threatened, pending or completed action or proceeding
by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, by reason of any action or inaction on the part
of Indemnitee while an officer, director, employee or agent of the Company
or any subsidiary of the Company or by reason of the fact that Indemnitee
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees) and, to
the fullest extent permitted by law, amounts paid in settlement, in each
case to the extent actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of such action or proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the best interests of the Company and its shareholders,
except that no indemnification shall be made in respect of any claim, issue
or matter as to which Indemnitee shall have been adjudged to be liable to
the Company and its shareholders unless and only to the extent that the
court in which such action or proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for expenses and
then only to the extent that the court shall determine.
2. Expenses: Indemnification Procedure.
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(a) Advancement of Expenses. The Company shall advance all expenses
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incurred by Indemnitee in connection with the investigation, defense,
settlement or appeal of any civil or criminal action or proceeding
referenced in Section 1(a) or (b) hereof (but not amounts actually paid in
settlement of any such action or proceeding). Indemnitee hereby undertakes
to repay such amounts advanced only if, and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be indemnified
by the Company as authorized hereby. The advances to be made hereunder
shall be paid by the Company to Indemnitee within twenty (20) days
following delivery of a written request therefor by Indemnitee to the
Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
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precedent to his right to be indemnified under this Agreement, give the
Company notice in writing as soon as practicable of any claims made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer 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 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.
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(c) Procedure. Any indemnification provided for in Section 1 shall be
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made no later than forty-five (45) days after receipt of the written
request of Indemnity. If a claim under this Agreement, under any statute,
or under any provision of the Company's Certificate of Incorporation or
Bylaws providing for indemnification, is not paid in full by the Company
within forty-five (45) days after a written request for payment thereof has
first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid
amount of the claim and, subject to Section 13 of this Agreement.
Indemnitee shall also be entitled to be paid for the expenses (including
attorneys' fees) of bringing such action. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses
incurred in connection with any action or preceding in advance of its final
disposition) that Indemnitee has not met the standards of conduct which
make it permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed, but the burden of proving such defense
shall be on the Company, and Indemnitee shall be entitled to receive
interim payments of expenses pursuant to Subsection 2(a) unless and until
which no further right of appeal exists. It is the parties' intention that
if the Company contests Indemnitee's right to indemnification, the question
of Indemnitee's right to indemnification shall be for the court to decide,
and neither the failure of the Company (including its Board of Directors,
counsel or its shareholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met the applicable standard of conduct required by
applicable law, nor an actual determination by the Company (including its
Board of Directors, any committee or subgroup of the Board of Directors,
independent legal counsel or its shareholders) that Indemnitee has not met
such applicable standard of conduct, shall create a presumption that
Indemnitee has or has not met the applicable standard of conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice of a
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claim pursuant to Section 2(b) hereof, the Company has director and officer
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 causes 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 policies.
(e) Selection of Counsel. In the event the Company shall be obligated
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under Section 2(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, which
approval shall not be unreasonably withheld, upon the delivery to
Indemnitee of written notice of its election so to do. After delivery of
such notice, approval of such counsel by Indemnitee and the retention of
such counsel by the Company, the Company will not be liable to Indemnitee
under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that (i)
Indemnitee shall have the right to employ his counsel in any such
proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such
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defense or (C) the Company shall not, in fact, have employed counsel to
assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.
3. Additional Indemnification Rights: Nonexclusivity.
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(a) Scope. Notwithstanding any other provision of this Agreement, the
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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 Bylaws or by statute.
In the event of any change, after the date of this Agreement, in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its Board of Directors or an officer,
such changes shall be, ipso facto, within the purview of Indemnitee's
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rights and Company's obligations, under this Agreement. In the event of
any change in any applicable law, statute or rule which narrows the right
of a Delaware corporation to indemnify a member of its Board of Directors
or an officer, such changes, to the extent not otherwise required by such
law, statute or rule to be applied to this Agreement shall have no effect
on this Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement shall
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not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any
agreement, any vote of shareholders or disinterested directors, the
Delaware General Corporation Law, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. However, the indemnitee shall not be entitled to
receive from all sources of indemnification, amounts in excess of the
amounts of indemnification to which he is entitled. The indemnification
provided under this Agreement shall continue when Indemnitee resigns from
his position for any action taken or not taken while serving in his
capacity as agent of the Company at the time of any action or other covered
proceeding.
4. Partial Indemnification. If Indemnitee is entitled under any provision of
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this Agreement to indemnification by the Company for some or a portion of
the expenses, judgments, fines or penalties actually or reasonably incurred
by him in the investigation, defense, appeal or settlement of any civil or
criminal action or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines or penalties to which Indemnitee
is entitled.
5. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that in
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certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement
or otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the
Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of
the Company's rights under public policy to indemnify Indemnitee.
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6. Directors' and Officers' Liability Insurance. The Company shall, from time
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to time, make a good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance
with reputable insurance companies providing the officers and directors of
the Company with coverage for losses from wrongful acts, or to ensure the
Company's performance of its indemnification obligations under this
Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. In all policies of directors' and officers' liability insurance,
Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's directors, if Indemnitee is a director;
or of the Company's officers, if Indemnitee is not a director of the
Company but is an officer; or of the Company's key employees, if Indemnitee
is not an officer or director but is a key employee. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is
not reasonably available, if the premium costs for such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage
provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of the Company.
7. Severability. Nothing in this Agreement is intended to require or shall be
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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 7. If this Agreement or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify Indemnitee to the full extent
permitted by any applicable portion of this Agreement that shall not have
been invalidated, and the balance of this Agreement not so invalidated
shall be enforceable in accordance with its terms.
8. Exceptions. Any other provision herein to the contrary notwithstanding,
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the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Acts. To indemnify Indemnitee for any act or omissions or
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transactions from which a director may not be relieved of liability under
the Delaware General Corporation Law; or
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses to
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Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification
under this Agreement or any other statute or law or otherwise as required
under the Delaware General Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if
the Board of Directors has approved the initiation or bringing of such
suit; or
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(c) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred
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by the Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous;
or
(d) Insured Claims. To indemnify Indemnitee for expenses or liabilities of
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any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) which have been
paid directly to Indemnitee by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by the Company; or
(e) Claims Under Section 16(b). To indemnify Indemnitee for expenses and
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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.
9. Effectiveness of Agreement. To the extent that the indemnification
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permitted under the terms of certain provisions of this Agreement exceeds
the scope of the indemnification provided for in the Delaware General
Corporation Law, such provisions shall not be effective unless and until
the Company's Certificate of Incorporation authorize such additional rights
of indemnification. In all other respects, the balance of this Agreement
shall be effective as of the date set forth on the first page and may apply
to acts or omissions of Indemnitee which occurred prior to such date if
Indemnitee was an officer, director, employee or other agent of the
Company, or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, at the time such act or omission
occurred.
10. Construction of Certain Phrases.
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(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation of merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
employees or agents, so that if Indemnitee is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit
plan; and references to "serving at the request
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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.
(c) For purposes of this Agreement, "agent" means any person who is or was
a director, officer, employee or other agent of the corporation, or is or
was serving at the request of the corporation as a director, officer,
employee or agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise, or was a director, officer,
employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of the predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes without limitation
attorneys' fees and any expenses of establishing a right to Indemnification
pursuant to the Delaware General Corporation Law.
11. Counterparts. This Agreement may be executed in one or more counterparts,
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each of which shall constitute an original.
12. Successors and Assigns. This Agreement shall be binding upon the Company
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and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and
assigns.
13. Attorneys' Fees. In the event that any action is instituted by Indemnitee
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under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses,
including reasonable attorneys' fees, incurred by Indemnitee with respect
to such action, unless as a part of such action, the court of competent
jurisdiction determines that each of the material assertions made by
Indemnitee as a basis for such action were not made in good faith or were
frivolous. In the event of an action instituted by or in the name of the
Company under this Agreement or to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including attorneys' fees, incurred by Indemnitee in defense of
such action (including with respect to Indemnitee's counterclaims and
cross-claims made in such action), unless as a part of such action the
court determines that each of Indemnitee's material defenses to such action
were made in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications with
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respect to this Agreement shall be in writing and shall be deemed duly
given (i) if delivered by hand and receipted for by the party addressee, on
the date of such receipt, or (ii) if mailed by domestic certified or
registered mail with postage prepaid, on the third business day after the
date postmarked. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written
notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
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irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any
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action instituted under this Agreement shall be brought only in the state
courts of the State of Delaware.
16. Choice of Law. This Agreement shall be governed by and its provisions
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construed in accordance with the laws of the State of Delaware as applied
to contracts between Delaware residents entered into and to be performed
entirely within Delaware.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HEALTHEXTRAS, INC.
By: Xxxxx X. Xxxxx
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Title: Chief Executive Officer
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Address: 0000 Xxxxxxxx Xxxxxxxxx
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Xxxxxxxxx, Xxxxxxxx 00000
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AGREED TO AND ACCEPTED:
Indemnitee:
_________________________________
(type name)
_________________________________
(signature)
_________________________________
_________________________________
(address)
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