EXHIBIT 10.3
FORM OF INDEMNIFICATION AGREEMENT
BETWEEN REGISTRANT AND ITS DIRECTORS
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is executed as of
______________, 1998, by and between Xxxxxxx Research Corporation, a Delaware
Corporation ("Xxxxxxx") and Director, a director, officer or representative (as
hereinafter defined) of Xxxxxxx (the "Indemnitee").
RECITALS:
Xxxxxxx and the Indemnitee are each aware of the exposure to litigation
of officers, directors and representatives of Xxxxxxx as such persons exercise
their duties to Xxxxxxx. Xxxxxxx and the Indemnitee are also aware of conditions
in the insurance industry that have affected and may continue to affect Xxxxxxx'
ability to obtain appropriate directors' and officers' liability insurance on an
economically acceptable basis. Xxxxxxx desires to continue to benefit from the
services of highly qualified, experienced and otherwise competent persons such
as the Indemnitee; the Indemnitee desires to serve or to continue to serve
Xxxxxxx as a director or an officer, or as a director, officer or trustee of
another corporation, joint venture, trust or other enterprise in which Xxxxxxx
has a direct or indirect ownership interest, for so long as Xxxxxxx continues to
provide on an acceptable basis adequate and reliable indemnification against
certain liabilities and expenses that may be incurred by the Indemnitee.
AGREEMENT:
In consideration of the foregoing premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. INDEMNIFICATION. Subject to the terms of this Agreement, Xxxxxxx shall
indemnify the Indemnitee with respect to his activities as a director or officer
of Xxxxxxx and/or as a person who is serving or has served on behalf of Xxxxxxx
("representative") as a director, officer, or trustee of another corporation,
joint venture, trust or other enterprise, domestic or foreign, in which Xxxxxxx
has a direct or indirect ownership interest (an "affiliated entity") against
expenses (including, without limitation, attorneys' fees, judgments, fines, and
amounts paid in settlement) actually and reasonably incurred by him or her
("Expenses") in connection with any claim against Indemnitee which is the
subject of any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, investigative or otherwise and whether
formal or informal (a "Proceeding"), to which Indemnitee was, is, or is
threatened to be made a party by reason of facts which include Indemnitee's
being or having been such a director, officer or representative, to the extent
of the highest and most advantageous to the Indemnitee, as determined by the
Indemnitee, of one or any combination of the following:
(a) The benefits provided by the Certificate of Incorporation, or
Bylaws or their equivalent of Xxxxxxx in effect at the time
Expenses are incurred by Indemnitee;
(b) The benefits allowable under Delaware law in effect at the
date hereof;
(c) The benefits allowable under the law of the jurisdiction under
which Xxxxxxx exists at the time Expenses are incurred by the
Indemnitee;
(d) The benefits available under liability insurance obtained by
Xxxxxxx;
(e) Such other benefits as are or may be otherwise available
to Indemnitee.
Combination of two or more of the benefits provided by (a) through (e) shall be
available to the extent that the Applicable Document, as hereafter defined, does
not require that the benefits provided therein be exclusive of other benefits.
The document or law providing for the benefits listed in items (a) through (e)
is defined as the "Applicable Document". Xxxxxxx hereby undertakes to use its
best efforts to assist Indemnitee, in all proper and legal ways, to obtain the
benefits selected by Indemnitee under items (a) through (g) above.
For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans for employees of Xxxxxxx or of any affiliated
entity without regard to ownership of such plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any employee
benefit plan. References to "serving on behalf of Xxxxxxx" shall include any
service as a director, officer, employee or agent of Xxxxxxx which imposes
duties on, or involves services by, the Indemnitee with respect to an employee
benefit plan, its participants or beneficiaries. References to the masculine
shall include the feminine; references to the singular shall include the plural
and vice versa. If the Indemnitee acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, he shall be deemed to have acted in a manner
consistent with the standards required for indemnification by Xxxxxxx under the
Applicable Documents.
2. INSURANCE. Xxxxxxx shall maintain directors' and officers' liability
insurance for so long as Indemnitee's services are covered hereunder, provided
and only to the extent that such insurance is available in amounts and on terms
and conditions determined by Xxxxxxx to be acceptable. However, Xxxxxxx agrees
that the provisions of this agreement shall remain in effect regardless of
whether liability or other insurance coverage is at any time obtained or
retained by Xxxxxxx, except that any payments in fact made to Indemnitee under
an insurance policy obtained or retained by Xxxxxxx shall reduce the obligation
of Xxxxxxx to make payments hereunder by the amount of the payments made under
any such insurance policy.
3. PAYMENT OF EXPENSES. At Indemnitee's request, Xxxxxxx shall pay the Expenses
as and when incurred by Indemnitee, but only after receipt of written notice
pursuant to Section 5 of this agreement and an undertaking by or on behalf of
Indemnitee to repay such amounts so paid on Indemnitee's behalf if it shall
ultimately be determined under the Applicable Document that Indemnitee is not
entitled to be indemnified by Xxxxxxx for such Expenses. The portion of Expenses
that represents attorneys' fees and other costs incurred in defending any
Proceeding shall be paid by Xxxxxxx within thirty (30) days of Xxxxxxx' receipt
of such request, together with reasonable documentation (consistent, in the case
of attorneys' fees, with Xxxxxxx' practice in payment of legal fees for outside
counsel generally) evidencing the amount and nature of such Expenses, subject to
its having received such a notice and undertaking.
4. ADDITIONAL RIGHTS. The indemnification provided in this Agreement shall not
be exclusive of any other indemnification or right to which Indemnitee may be
entitled and shall continue after Indemnitee has ceased to occupy a position as
an officer, director or representative as described in Section 1 above with
respect to Proceedings relating to or arising out of Indemnitee's acts or
omissions during his service in such position.
5. NOTICE TO XXXXXXX. Indemnitee shall provide to Xxxxxxx prompt written notice
of any Proceeding brought, threatened, asserted or commenced against Indemnitee
with respect to which Indemnitee may assert a right to indemnification
hereunder, provided that failure to provide such notice shall not in any way
limit Indemnitee's rights under this Agreement.
6. COOPERATION IN DEFENSE AND SETTLEMENT. Indemnitee shall not make any
admission or effect any settlement of any Proceeding without Xxxxxxx' written
consent unless Indemnitee shall have determined to undertake his own defense in
such matter and has waived the benefits of this Agreement. Xxxxxxx shall not
settle any Proceeding to which Indemnitee is a party in any manner which would
impose any Expense on Indemnitee without his written consent. Neither Indemnitee
nor Xxxxxxx will unreasonably withhold consent to any proposed settlement.
Indemnitee and Xxxxxxx shall cooperate to the extent reasonably possible with
each other and with Xxxxxxx' insurers, in attempts to defend or settle such
Proceeding.
7. ASSUMPTION OF DEFENSE. Except as otherwise provided below, to the extent that
it may wish, Xxxxxxx jointly with any other indemnifying party similarly
notified will be entitled to assume Indemnitee's defense in any Proceeding, with
counsel mutually satisfactory to Indemnitee and Xxxxxxx. After notice from
Xxxxxxx to Indemnitee of Xxxxxxx' election to assume such defense, Xxxxxxx will
not be liable to Indemnitee under this Agreement for Expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ counsel in such Proceeding, but the fees and
expenses of such counsel incurred after notice from Xxxxxxx of its assumption of
the defense thereof shall be at Indemnitee's expense unless:
(a) The employment of counsel by Indemnitee has been authorized by
Xxxxxxx;
(b) Counsel employed by Xxxxxxx initially is unacceptable or later
becomes unacceptable to Indemnitee and such unacceptability is
reasonable under then existing circumstances;
(c) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between Indemnitee and Xxxxxxx in the
conduct of the defense of such Proceeding; or
(d) Xxxxxxx shall not have employed counsel promptly to assume the
defense of such Proceeding.
In each of these cases the fees and expenses of counsel shall be at the expense
of Xxxxxxx and subject to payment pursuant to this Agreement. Xxxxxxx shall not
be entitled to assume the defense of Indemnitee in any Proceeding brought by or
on behalf of Xxxxxxx or as to which Indemnitee shall have made either of the
conclusions provided for in clauses (b) or (c) above.
8. ENFORCEMENT. In the event that any dispute or controversy shall arise under
this Agreement between Indemnitee and Xxxxxxx with respect to whether the
Indemnitee is entitled to indemnification in connection with any Proceeding or
with respect to the amount of Expenses incurred, then with respect to each such
dispute or controversy Indemnitee may seek to enforce the Agreement through
legal action or, at Indemnitee's sole option and written request, through
arbitration. If arbitration is requested, such dispute or controversy shall be
submitted by the parties to binding arbitration in the City of Huntsville,
Alabama, before a single arbitrator agreeable to both parties. If the parties
cannot agree on a designated arbitrator within 15 days after arbitration is
requested in writing by Indemnitee, the arbitration shall proceed in the City of
Huntsville, Alabama, before an arbitrator appointed by the American Arbitration
Association. In either case, the arbitration proceeding shall commence promptly
under the rules then in effect of that Association. The arbitrator agreed to by
the parties or appointed by that Association shall be an attorney other than an
attorney who has been or is associated with a firm having associated with it an
attorney who has been retained by or performed services for Xxxxxxx or
Indemnitee at any time during the five years preceding the commencement of
arbitration. The award shall be rendered in such form that judgment may be
entered thereon in any court having jurisdiction thereof. The prevailing party
shall be entitled to prompt reimbursement of any costs and expenses (including,
without limitation, reasonable attorneys' fees) incurred in connection with such
legal action or arbitration; provided that Indemnitee shall not be obligated to
reimburse Xxxxxxx unless the arbitrator or court which resolves the dispute
determines that Indemnitee acted in bad faith in bringing such action or
arbitration.
9. EXCLUSIONS. Notwithstanding the scope of indemnification which may be
available to Indemnitee from time to time under any Applicable Document, no
indemnification, reimbursement or payment shall be required of Xxxxxxx hereunder
with respect to:
(a) Any claim or any part thereof as to which Indemnitee shall
have been adjudged by a court of competent jurisdiction from
which no appeal is or can be taken to have acted in willful
misfeasance, or willful disregard of his duties, except to the
extent that such court shall determine upon application that,
despite the adjudication of liability, but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such expenses as the court shall
deem proper;
(b) Any claim or any part thereof arising under Section 16(b) of
the Securities Exchange Act of 1934 pursuant to which
Indemnitee shall be obligated to pay any penalty, fine,
settlement or judgment;
(c) Any obligation of Indemnitee based upon or attributable to the
Indemnitee gaining in fact any personal gain, profit or
advantage to which he was not entitled; or
(d) Any Proceeding initiated by Indemnitee without the consent or
authorization of the Board of Directors of Xxxxxxx, provided
that this exclusion shall not apply with respect to any claims
brought by Indemnitee to enforce his rights under this
Agreement or in any Proceeding initiated by another person or
entity whether or not such claims were brought by Indemnitee
against a person or entity who was otherwise a party to such
Proceeding.
Nothing in this Section 9 shall eliminate or diminish Xxxxxxx' obligations to
advance that portion of Indemnitee's Expenses which represent attorneys' fees
and other costs incurred in defending any Proceeding pursuant to Section 3 of
this Agreement.
10. EXTRAORDINARY TRANSACTIONS. Xxxxxxx' covenants and agrees that, in the event
of any merger, consolidation or reorganization in which Xxxxxxx is not the
surviving entity, any sale of all or substantially all of the assets of Xxxxxxx
or any liquidation of Xxxxxxx(each such event is hereinafter referred to as an
"Extraordinary Transaction"), Xxxxxxx shall:
(a) Have the obligations of Xxxxxxx under this Agreement expressly
assumed by the survivor, purchaser or successor, as the case
may be, in such Extraordinary Transaction; or
(b) Otherwise adequately provide for the satisfaction of the
Company's obligations under this Agreement, in a manner
acceptable to Indemnitee.
11. NO PERSONAL LIABILITY. Indemnitee agrees that neither the directors nor any
officer, employee, representative or agent of Xxxxxxx shall be personally liable
for the satisfaction of Xxxxxxx' obligations under this Agreement, and
Indemnitee shall look solely to the assets of Xxxxxxx for satisfaction of any
claims hereunder.
12. SEVERABILITY. If any provision, phrase, or other portion of this Agreement
should be determined by any court of competent jurisdiction to be invalid,
illegal or unenforceable, in whole or in part, and such determination should
become final, such provision, phrase or other portion shall be deemed to be
severed or limited, but only to the extent required to render the remaining
provisions and portions of the Agreement enforceable, and the Agreement as thus
amended shall be enforced to give effect to the intention of the parties insofar
as that is possible.
13. SUBROGATION. In the event of any payment under this Agreement, Xxxxxxx shall
be subrogated to the extent thereof to all rights to indemnification or
reimbursement against any insurer or other entity or person vested in the
Indemnitee, who shall execute all instruments and take all other actions as
shall be reasonably necessary for Xxxxxxx to enforce such rights.
14. GOVERNING LAW. The parties hereto agree that this Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Alabama.
15. NOTICES. All notices, xxxxxxxx, requests, demands, approvals, consents, and
other communications which are required or may be given under this Agreement
shall be in writing and will be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid to the parties at their respective addresses set forth below:
IF TO XXXXXXX: IF TO INDEMNITEE:
Xxxxx X. Xxxxxx {{Director}}
Xxxxxxx Research Corporation Xxxxxxx Research Corporation
0000 Xxxxx Xxxxxxxx Xxxxxxx 0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
or to such other or further address as shall be designated from time to time by
the Indemnitee or Xxxxxxx to the other.
16. TERMINATION. This Agreement may be terminated by either party upon not less
than ninety (90) days prior written notice delivered to the other party, but
termination shall not in any way diminish the obligations of Xxxxxxx hereunder
with respect to Indemnitee's activities prior to the effective date of
termination.
17. AMENDMENTS AND BINDING EFFECT. This Agreement and the rights and duties of
Indemnitee and Xxxxxxx hereunder may not be amended, modified or terminated
except by written instrument signed and delivered by the parties hereto. This
Agreement is and shall be binding upon and shall inure to the benefits of the
parties thereto and their respective heirs, executors, administrators,
successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Agreement in
triplicate as of the date first above written.
Xxxxxxx Research Corporation
By: ___________________
Xxxxxxx X. Xxxx
Chief Executive Officer
Indemnitee
By: _________________________
Title: Director
