Exhibit 10.2
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this ____ day of ______, 2007 (the "Effective Date") by and between
ENTHRUST FINANCIAL SERVICES, INC., a Delaware corporation (the "Company"), and
_______________ (the "Indemnitee").
WHEREAS, the Company believes it is essential to retain and attract
qualified directors and officers;
WHEREAS, the Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and the Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors and
officers of public companies;
WHEREAS, the Company's Certificate of Incorporation (the "Certificate of
Incorporation") and Bylaws (the "Bylaws") require the Company to indemnify and
advance expenses to its directors and officers to the extent permitted by the
DGCL (as hereinafter defined);
WHEREAS, the Indemnitee has been serving and intends to continue serving
as a director and/or officer of the Company in part in reliance on the
Certificate of Incorporation and Bylaws; and
WHEREAS, in recognition of the Indemnitee's need for (i) substantial
protection against personal liability based on the Indemnitee's reliance on the
Certificate of Incorporation and Bylaws, (ii) specific assurance that the
protection promised by the Certificate of Incorporation and 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 (the "Board") or acquisition transaction relating to the
Company, and (iii) an inducement to continue to provide effective services to
the Company as a director and/or officer thereof, the Company wishes to provide
for the indemnification of the Indemnitee and to advance expenses to the
Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained by the Company, to provide
for the continued coverage of the Indemnitee under the Company's directors' and
officers' liability insurance policies.
NOW, THEREFORE, in consideration of the premises contained herein and of
the Indemnitee continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. CERTAIN DEFINITIONS.
(a) A "Change in Control" shall be deemed to have occurred
if:
(i) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (the "Exchange Act"), other than (a) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company; (b) a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company; or (c) any current beneficial stockholder or group, as defined by
Rule 13d-5 of the Exchange Act, including the heirs, assigns and successors
thereof, of beneficial ownership, within the meaning of Rule 13d-3 of the
Exchange Act, of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities; hereafter becomes the
"beneficial owner," as defined in rule 13d-3 of the Exchange Act, directly or
indirectly, of securities of the Company representing 20% or more of the total
combined voting power represented by the Company's then outstanding Voting
Securities;
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board and any new
director whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; 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 80% 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 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) "DGCL" shall mean the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended or
interpreted; provided, however, that in the case of any such amendment or
interpretation, only to the extent that such amendment or interpretation permits
the Company to provide broader indemnification rights than were permitted prior
thereto.
(c) "Expense" shall mean attorneys' fees and all other
costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing for any of the foregoing, any Proceeding relating to any
Indemnifiable Event.
(d) "Indemnifiable Event" shall mean any event or occurrence
that takes place either prior to or after the execution of this Agreement,
related to the fact that the 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,
officer, employee, or agent of another corporation or of a partnership, joint
venture,
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trust or other enterprise, including service with respect to employee benefit
plans, or by reason of anything done or not done by the Indemnitee in any such
capacity.
(e) "Potential Change in Control" shall be deemed to occur
if (i) the Company enters into an agreement or arrangement, the consummation of
which would result in the occurrence of a Change in Control; (ii) any person
(including the Company) publicly announces an intention to take or to consider
taking actions which, if consummated, would constitute a Change in Control;
(iii) any person (other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company acting in such capacity or a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company)
who is or becomes the beneficial owner, directly or indirectly, of securities of
the Company representing 10% or more of the combined voting power of the
Company's then outstanding Voting Securities, increases his or her beneficial
ownership of such securities by 5% or more over the percentage so owned by such
person on the date hereof; or (iv) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(f) "Proceeding" shall mean any threatened, pending or
completed action, suit, investigation or proceeding, and any appeal thereof,
whether civil, criminal, administrative or investigative and/or any inquiry or
investigation, whether conducted by the Company or any other party, that the
Indemnitee in good faith believes might lead to the institution of any such
action.
(g) "Reviewing Party" shall mean any appropriate person or
body consisting of a member or members of the Company's Board or any other
person or body appointed by the Board (including the special independent counsel
referred to in Section 6) who is not a party to the particular Proceeding with
respect to which the Indemnitee is seeking indemnification.
(h) "Voting Securities" shall mean any securities of the
Company which vote generally in the election of directors.
2. INDEMNIFICATION. In the event the Indemnitee was or is a party
to or is involved (as a party, witness, or otherwise) in any Proceeding by
reason of (or arising in part out of) an Indemnifiable Event, whether the basis
of the Proceeding is the Indemnitee's alleged action in an official capacity as
a director or officer or in any other capacity while serving as a director or
officer, the Company shall indemnify the Indemnitee to the fullest extent
permitted by the DGCL against any and all Expenses, liability, and loss
(including judgments, fines, ERISA excise taxes or penalties, and amounts paid
or to be paid in settlement, and any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed on any
director or officer as a result of the actual or deemed receipt of any payments
under this Agreement) (collectively, "Liabilities") reasonably incurred or
suffered by such person in connection with such Proceeding. The Company shall
provide indemnification pursuant to this Section 2 as soon as practicable, but
in no event later than 30 days after it receives written demand from the
Indemnitee. Notwithstanding anything in this Agreement to the contrary and
except as provided in Section 5 below, the Indemnitee shall not be entitled to
indemnification pursuant to this Agreement (i) in connection with any Proceeding
initiated by the Indemnitee against the
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Company or any director or officer of the Company unless the Company has joined
in or consented to the initiation of such Proceeding or (ii) on account of any
suit in which judgment is rendered against the Indemnitee pursuant to Section
16(b) of the Exchange Act for an accounting of profits made from the purchase or
sale by the Indemnitee of securities of the Company.
3. ADVANCEMENT OF EXPENSES. The Company shall advance Expenses to
the Indemnitee within 30 business days of such request (an "Expense Advance");
provided, however, that if required by applicable corporate laws such Expenses
shall be advanced only upon delivery to the Company of an undertaking by or on
behalf of the Indemnitee to repay such amount if it is ultimately determined
that the Indemnitee is not entitled to be indemnified by the Company; and
provided further, that the Company shall make such advances only to the extent
permitted by law. Expenses incurred by the Indemnitee while not acting in
his/her capacity as a director or officer, including service with respect to
employee benefit plans, may be advanced upon such terms and conditions as the
Board, in its sole discretion, deems appropriate.
4. REVIEW PROCEDURE FOR INDEMNIFICATION. Notwithstanding the
foregoing, (i) the obligations of the Company under Sections 2 and 3 above 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 6 hereof is involved) that the Indemnitee would not be
permitted to be indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 3 above shall be subject
to the condition that, if, when and to the extent that the Reviewing Party
determines that the Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by the Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if the Indemnitee has commenced legal proceedings
in a court of competent jurisdiction pursuant to Section 5 below to secure a
determination that the Indemnitee should be indemnified under applicable law,
any determination made by the Reviewing Party that the Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and the
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto (as to
which all rights of appeal therefrom have been exhausted or have lapsed). The
Indemnitee's obligation to reimburse the Company for Expense Advances pursuant
to this Section 4 shall be unsecured and no interest shall be charged thereon.
The Reviewing Party shall be selected by the Board, unless there has been a
Change in Control, other than a Change in Control which has been approved by a
majority of the Company's Board who were directors immediately prior to such
Change in Control, in which case the Reviewing Party shall be the special
independent counsel referred to in Section 6 hereof.
5. ENFORCEMENT OF INDEMNIFICATION RIGHTS. If the Reviewing Party
determines that the Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, or if the Indemnitee has
not otherwise been paid in full pursuant to Sections 2 and 3 above within 30
days after a written demand has been received by the Company, the Indemnitee
shall have the right to commence litigation in any court in the State of
Delaware having subject matter jurisdiction thereof and in which venue is proper
to recover the unpaid amount of the demand (an "Enforcement Proceeding") and, if
successful in whole or in part, the Indemnitee shall be entitled to be paid any
and all Expenses in connection with such
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Enforcement Proceeding. The Company hereby consents to service of process for
such Enforcement Proceeding and to appear in any such Enforcement Proceeding.
Any determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and the Indemnitee.
6. 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 Company's Board who were 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
Expense Advances under this Agreement or any other agreement or under applicable
law or the Company's Certificate of Incorporation or Bylaws now or hereafter in
effect relating to indemnification for Indemnifiable Events, 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. Such special independent counsel shall not have otherwise performed
services for the Company or the Indemnitee, other than in connection with such
matters, within the last five years. Such independent counsel shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or the Indemnitee in an action to determine the Indemnitee's rights under this
Agreement. 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
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 the engagement of special independent counsel pursuant to this
Agreement.
7. ESTABLISHMENT OF TRUST. In the event of a Potential Change in
Control, the Company shall, upon written request by the Indemnitee, create a
trust (the "Trust") for the benefit of the Indemnitee, and from time to time
upon written request of the Indemnitee shall fund such Trust, to the extent
permitted by law, in any amount sufficient to satisfy any and all Expenses
reasonably anticipated at the time of each such request to be incurred in
connection with investigating, preparing for and defending any proceeding
relating to an Indemnifiable Event, and any and all judgments, fines, penalties
and settlement amounts of any and all Proceedings relating to an Indemnifiable
Event from time to time actually paid or claimed, reasonably anticipated or
proposed to be paid. The amount or amounts to be deposited in the Trust pursuant
to the foregoing funding obligation shall be determined by the Reviewing Party,
in any case in which the special independent counsel referred to in Section 6 is
involved. The terms of the Trust shall provide that upon a Change in Control (i)
the Trust shall not be revoked or the principal thereof invaded, without the
written consent of the Indemnitee, (ii) the trustee of the Trust (the "Trustee")
shall advance, within ten business days of a request by the Indemnitee, any and
all Expenses to the Indemnitee, to the extent permitted by law, (and the
Indemnitee hereby agrees to reimburse the Trust under the circumstances under
which the Indemnitee would be required to reimburse the Company under Section 4
of this Agreement), (iii) the Trust shall continue to be funded by the Company
in accordance with the funding obligation set forth above, (iv) the Trustee
shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall
be entitled to indemnification pursuant to this Agreement or otherwise, and (v)
all unexpended
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funds in the Trust shall revert to the Company upon a final determination by the
Reviewing Party or a court of competent jurisdiction, as the case may be, that
the Indemnitee has been fully indemnified under the terms of this Agreement. The
Trustee shall be a bank or trust company or other individual or entity chosen by
the Indemnitee and acceptable to and approved of by the Company. Nothing in this
Section 7 shall relieve the Company of any of its obligations under this
Agreement. All income earned on the assets held in the Trust shall be reported
as income by the Company for federal, state, local and foreign tax purposes.
8. PARTIAL INDEMNITY. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Liabilities, but not, however, for the entire amount
thereof, the Company shall nevertheless indemnify the Indemnitee for the portion
thereof to which the Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any or all Proceedings
relating in whole or in part to an Indemnifiable Event or in defense of any
issue or matter therein, including dismissal without prejudice, the Indemnitee
shall be indemnified against all Expenses incurred in connection therewith. In
connection with any determination by the Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that the Indemnitee is not so
entitled.
9. NON-EXCLUSIVITY. The rights of the Indemnitee hereunder shall be
in addition to any other rights the Indemnitee may have under any statute,
provision of the Company's Certificate of Incorporation or Bylaws, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. To the extent that a change in the DGCL permits greater indemnification
by agreement than would be afforded currently under the Company's Certificate of
Incorporation and Bylaws and this Agreement, it is the intent of the parties
hereto that the Indemnitee shall enjoy by this Agreement the grater benefits so
afforded by such change.
10. LIABILITY 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.
11. SETTLEMENT OF CLAIMS. The Company shall not be liable to
indemnify the Indemnitee under this Agreement (a) for any amounts paid in
settlement of any action or claim effected without the Company's written
consent, which consent shall not be unreasonably withheld; or (b) for any
judicial award if the Company was not given a reasonable and timely opportunity,
at its expense, to participate in the defense of such action.
12. NO PRESUMPTION. For purposes of this Agreement, to the fullest
extent permitted by law, the termination of any Proceeding, action, suit or
claim, by judgment, order, settlement (whether with or without court approval)
or conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
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13. PERIOD OF LIMITATIONS. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against the Indemnitee, the Indemnitee's spouse, heirs,
executors or personal or legal representatives after the expiration of two years
form the date of accrual of such cause of action, or such longer period as may
be required by state law under the circumstances, and any claim or cause of
action of the Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.
14. CONSENT AND WAIVER BY THIRD PARTIES. The Indemnitee hereby
represents and warrants that he or she has obtained all waivers and/or consents
from third parties which are necessary for his or her employment with the
Company on the terms and conditions set forth herein and to execute and perform
this Agreement without being in conflict with any other agreement, obligation or
understanding with any such third party. The Indemnitee represents that he or
she is not bound by any agreement or any other existing or previous business
relationship which conflicts with, or may conflict with, the performance of his
or her obligations hereunder or prevent the full performance of his or her
duties and obligations hereunder.
15. AMENDMENT OF THIS AGREEMENT. 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 provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver.
Except as specifically provided herein, no failure to exercise or any delay in
exercising any right or remedy hereunder, shall constitute a waiver thereof.
16. 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.
17. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any claim made
against Indemnitee to the extent the Indemnitee has otherwise actually received
payment (under any insurance policy, Bylaw, vote, agreement or otherwise) of the
amounts otherwise indemnifiable hereunder.
18. BINDING EFFECT. 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,
substantially all, or a substantial part, 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
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succession had taken place. This Agreement shall continue in effect regardless
of whether the Indemnitee continues to serve as a director or officer of the
Company or of any other enterprise at the Company's request.
19. SEVERABILITY. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted by
law. Furthermore, to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of this Agreement
containing any provision held to be invalid, void or otherwise unenforceable
that is not itself invalid, void or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
20. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. NOTICES. All notices, demands, and other communications required
or permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and addressed to the
Company at:
1270 Avenue of the Xxxxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, President
and to the Indemnitee at:
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Notice of change of address shall be effective only when done in
accordance with this Section. All notices complying with this Section shall be
deemed to have been received on the date of delivery or on the third business
day after mailing.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day first set forth above.
THE COMPANY:
ENTHRUST FINANCIAL SERVICES, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
INDEMNITEE:
________________________________________
Print Name: ____________________________
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