FORM OF OFFICER AND DIRECTOR INDEMNIFICATION AGREEMENT
This agreement, made and entered into as of the __th day of
___________, 1998 ("Agreement"), by and between CyberShop International, Inc., a
Delaware corporation (the "Corporation"), and ______________ ("Indemnitee"):
RECITALS
WHEREAS, highly competent persons are becoming more reluctant to serve
as directors, officers or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the Corporation; and
WHEREAS, the current difficulty of obtaining adequate insurance and
the uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Corporation has determined that
the inability to attract and retain such persons is detrimental to the best
interests of the Corporation's stockholders and that the Corporation should act
to assure such persons that there will be increased certainty of such protection
in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Corporation
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Corporation free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Corporation on the condition that
Indemnitee be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
ARTICLE I
Definitions
For purposes of this Agreement, the following terms shall have the
meaning given here:
1.01 "Board" means the Board of Directors of the Corporation.
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1.02 "Change in Control" means a change in control of the Corporation
occurring after the Effective Date (as defined herein) of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or
not the Corporation is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall be deemed to
have occurred if after the Effective Date (i) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage interest; (ii) the Corporation is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board in office immediately
prior to such transaction or event constitute less than a majority of the Board
thereafter; or (iii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Corporation's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
1.03 "Corporate Status" describes the status of a person who is or was
a director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
enterprise.
1.04 "Disinterested Director" means a director of the Corporation who
is not a party to, as of any time of determination thereof, the Proceeding (as
defined herein) in respect of which indemnification is sought by the Indemnitee.
1.05 "Effective Date" means the date a registration statement filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, registering securities issued by the Corporation, is
effective.
1.06 "Enterprise" shall mean the Corporation and any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the request of the
Corporation as a director, officer, employee or agent.
1.07 "Expenses" shall include but not be limited to all reasonable
attorneys' fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements
or expenses of the types actually and reasonably incurred by him in connection
with prosecuting, defending, preparing to prosecute or defend, investigating, or
being or preparing to be a witness in a Proceeding.
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1.08 "Good Faith" shall mean Indemnitee having acted in good faith and
in a manner Indemnitee reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal Proceeding,
having had no reasonable cause to believe Indemnitee's conduct was unlawful.
1.09 "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporate law and neither presently is,
nor in the past five years has been, retained to represent: (i) the Corporation
or Indemnitee in any matter material to either such party, or (ii) any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "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
Corporation or Indemnitee in an action to determine Indemnitee's rights under
this Agreement.
1.10 "Proceeding" includes any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other threatened, pending or
completed proceeding whether civil, criminal, administrative or investigative,
other than one initiated by Indemnitee. For purposes of the foregoing sentence,
a "Proceeding" shall not be deemed to have been initiated by Indemnitee where
Indemnitee seeks pursuant to Article VIII of this Agreement to enforce
Indemnitee's rights under this Agreement or his rights to indemnification under
the Certificate of Incorporation or Bylaws of the Corporation or Delaware law,
or were Indemnitee seeks to enforce any rights he may have under any directors'
and officers' liability insurance policy maintained by the Corporation.
ARTICLE II
Term of Agreement
This Agreement shall continue until and terminate upon the later of:
(i) 10 years after the date that Indemnitee shall have ceased to serve as a
director, officer, employee and/or agent of the Enterprise; or (ii) the final
termination of all Proceedings commenced prior to the date referred to in (i)
above in respect of which Indemnitee is granted rights of indemnification or
advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee
pursuant to Article VIII of this Agreement relating thereto.
ARTICLE III
Services by Indemnitee, Notice of Proceedings
3.01 Services. Indemnitee agrees to serve as a director and/or officer
of the Corporation. Indemnitee may at any time and for any reason resign from
such position.
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3.02 Notice of Proceeding. Indemnitee agrees promptly to notify the
Corporation in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
ARTICLE IV
Indemnification
4.01 In General. In connection with any Proceeding, the Corporation
shall indemnify, and advance Expenses to, Indemnitee as provided in this
Agreement and to the fullest extent permitted by applicable law in effect on the
date hereof and to such greater extent as applicable law may thereafter from
time to time permit.
4.02 Proceedings Other Than Proceedings by or in the Right of the
Corporation. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 4.02 if, by reason of Indemnitee's Corporate Status,
Indemnitee was or is, or is threatened to be made, a party to any Proceeding,
other than a Proceeding by or in the right of the Corporation. Indemnitee shall
be indemnified against Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in Good Faith.
4.03 Proceedings by or in the Right of the Corporation. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 4.03
if, by reason of Indemnitee's Corporate Status, Indemnitee was or is, or is
threatened to be made, a party to any Proceeding brought by or in the right of
the Corporation to procure a judgment in its favor. Indemnitee shall be
indemnified against Expenses, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in Good Faith. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any claim, issue or matter in such
Proceeding as to which Indemnitee shall have been adjudged to be liable to the
Corporation, unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such Proceeding shall have been brought
determines that, despite the adjudication of liability but in view of all the
circumstances of the case, the Indemni tee is fairly and reasonably entitled to
indemnity for such portion of the settled amount, Expenses, judgments, and fines
as such court deems proper.
4.04 Indemnification for Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of Indemnitee's Corporate Status, a witness in any Proceeding, Indemnitee shall
be indemnified against all Expenses actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in connection therewith.
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ARTICLE V
Advancement of Expenses
Notwithstanding any provision to the contrary in Article VI, the
Corporation shall advance all reasonable Expenses which, by reason of
Indemnitee's Corporate Status, were charged to or incurred by or on behalf of
Indemnitee in connection with any Proceeding, within twenty days after the
receipt by the Corporation of a statement or statements from Indemnitee
requesting such advance or advances whether prior to or after final disposition
of such Proceeding. Such statement or statements shall reasonably evidence the
Expenses incurred by Indemnitee and shall include or be preceded or accompanied
by an undertaking by or on behalf of Indemnitee to repay any Expenses if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
against such Expenses.
ARTICLE VI
Procedures for Determination of
Entitlement to Indemnification
6.01 Initial Request. To obtain indemnification under this Agreement,
Indemnitee shall submit to the Corporation a written request, including therein
or therewith such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary of the Corporation
shall promptly advise the Board in writing that Indemnitee has requested
indemnification.
6.02 Method of Determination. A determination (if required by
applicable law) with respect to Indemnitee's entitlement to indemnification
shall be made by the Board by a majority vote of the Disinterested Directors
(even though less than a quorum). In the event that there are no Disinterested
Directors, or if a majority of the Disinterested Directors so directs, the
determination shall be made by Independent Counsel in a written opinion to the
Board, a copy of which shall be delivered to Indemnitee, or by the stockholders
of the Corporation, as determined by such quorum of Disinterested Directors or
by a majority of the Board, as the case may be. If a Change in Control has
occurred and Indemnitee so requests, the determination shall be made by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee.
6.03 Selection, Payment, Discharge of Independent Counsel. In the
event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 6.02 of this Agreement, the Independent
Counsel shall be selected, paid, and discharged in the following manner:
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(a) The Independent Counsel shall be selected by the Board, and
the Corporation shall give written notice to Indemnitee
advising Indemnitee of the identity of the Independent
Counsel so selected.
(b) Following the initial selection described in clause (a) of
this Section 6.03, Indemnitee may, within seven days after
such written notice of selection has been given, deliver to
the Corporation a written objection to such selection. Such
objection may be as serted only on the ground that the
Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Section
1.09 of this Agreement, and the objection shall set forth
with particularity the factual basis of such assertion.
Absent a proper and timely objection, the person so selected
shall act as Independent Counsel. If such written objection
is made, the Independent Counsel so selected may not serve
as Independent Counsel unless and until a court has
determined that such objection is without merit or
Indemnitee has delivered a written withdrawal of such
objection to the Corporation.
(c) Either the Corporation or Indemnitee may petition the Court
of Chancery of the State of Delaware or other court of
competent ju risdiction if the parties have been unable to
agree on the selection of Independent Counsel (if
applicable) within 20 days after submission by Indemnitee of
a written request for indemnification pursuant to Section
6.01 of this Agreement. Such petition may request a
determination whether an objection to the party's selection
is without merit and/or seek the appointment as Independent
Counsel of a person selected by the Court or by such other
person as the Court shall designate. A person so appointed
shall act as Independent Counsel under Section 6.02 of this
Agreement.
(d) The Corporation shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to this
Agreement, and the Corporation shall pay all reasonable fees
and expenses incident to the procedures of this Section
6.03, regardless of the manner in which such Independent
Counsel was selected or appointed.
6.04 Cooperation. Indemnitee shall cooperate with the person, persons
or entity making the determination with respect to Indemnitee's entitlement to
indemnification under this Agreement, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected
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from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or expenses (including reasonable
attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be borne by the
Corporation (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Corporation hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
6.05 Payment. If it is determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination.
ARTICLE VII
Presumptions and Effect of Certain Proceedings
7.01 Burden of Proof. In making a determination with respect to
entitlement to indemnification hereunder, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 6.01 of this Agreement, and the Corporation shall
have the burden of proof to overcome that presumption in connection with the
making by any person, persons or entity of any determination contrary to that
presumption.
7.02 Effect of Other Proceedings. The termination of any Proceeding or
of any claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in Good Faith.
7.03 Reliance as Safe Harbor. For purposes of any determination of
Good Faith, Indemnitee shall be deemed to have acted in Good Faith if
Indemnitee's action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Enterprise. The provisions of this Section 7.03 shall not be deemed to be
exclusive or to limit in any way the other circumstances in which the Indemnitee
may be deemed to have met the applicable standard of conduct set forth in this
Agreement.
7.04 Actions of Others. The knowledge and/or actions, or failure to
act, of any director, officer, agent or employee of the Enterprise shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.
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ARTICLE VIII
Remedies of Indemnitee
8.01 Application. This Article VIII shall apply in the event of a
Dispute. For purposes of this Article, "Dispute", shall mean any of the
following events:
(a) a determination is made pursuant to Article VI of this
Agreement that Indemnitee is not entitled to indemnification
under this Agreement;
(b) advancement of Expenses is not timely made pursuant to
Article V of this Agreement;
(c) the determination of entitlement to be made pursuant to
Section 6.02 of this Agreement had not been made within 60
days after re ceipt by the Corporation of the request for
indemnification;
(d) payment of indemnification is not made pursuant to Section
4.05 of this Agreement within ten (10) days after receipt by
the Corporation of written request therefor; or
(e) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is
entitled to indem nification pursuant to Article VI of this
Agreement.
8.02 Adjudication. In the event of a Dispute, Indemnitee shall be
entitled to an adjudication in the Court of Chancery of the State of Delaware or
in any other court of competent jurisdiction, of Indemnitee's entitlement to
such indemnification and advancement of Expenses. Alternatively, Indemnitee, at
Indemnitee's option, may seek an award in arbitration to be con ducted by a
single arbitrator sitting in New York, New York, pursuant to the rules of the
Amer ican Arbitration Association. The Corporation shall not oppose Indemnitee's
right to seek any such adjudication or award in arbitration.
8.03 De Novo Review. In the event that a determination shall have been
made pursuant to Article VI of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Article VIII shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any such proceeding or arbitration, the
Corporation shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
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8.04 Corporation Bound. If a determination shall have been made
pursuant to Article VI of this Agreement that Indemnitee is entitled to
indemnification, the Corporation shall be bound by such determination in any
judicial proceeding or arbitration absent a prohibition of such indemnification
under applicable law.
8.05 Procedures Valid. The Corporation shall be precluded from
asserting in any judicial proceeding or arbitration commenced pursuant to this
Article VIII that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such court or before
any such arbitrator that the Corporation is bound by all the provisions of this
Agreement.
8.06. Expenses of Adjudication. In the event that Indemnitee, pursuant
to this Article VIII, seeks a judicial adjudication of or an award in
arbitration to enforce Indemnitee's rights under, or to recover damages for
breach of, this Agreement, Indemnitee shall be entitled to recover from the
Corporation and shall be indemnified by the Corporation against, any and all
expenses (of the types described in the definition of Expenses in Section 1.07
of this Agreement) actually and reasonably incurred by Indemnitee in such
adjudication or arbitration, but only if Indemnitee prevails therein. If it
shall be determined in such adjudication or arbitration that Indemnitee is
entitled to receive part but not all of the indemnification of advancement or
expenses sought, the expenses incurred by Indemnitee in connection with such
adjudication or arbitration shall be appropriately prorated.
ARTICLE IX
Non-Exclusivity, Insurance, Subrogation
9.01 Non-Exclusivity. The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Certificate of Incorporation, the By-Laws, any
agreement, a vote of stockholders or a resolution of Disinterested Directors, or
otherwise. No amendment, alteration, rescission or replacement of this Agreement
or any provision hereof shall be effective as to Indemnitee with respect to any
action taken or omitted by such Indemnitee in Indemnitee's Corporate Status
prior to such amendment, alteration, rescission or replacement.
9.02 Insurance. The Corporation may maintain an insurance policy or
policies against liability arising out of this Agreement or otherwise.
9.03 Subrogation. In the event of any payment under this Agreement,
the Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and take
all action necessary to secure such
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rights, including execution of such documents as are necessary to enable the
Corporation to bring suit to enforce such rights.
9.04 No Duplicative Payment. The Corporation shall not be liable under
this Agreement to make any payment of amounts otherwise indemnifiable hereunder
if and to the extent that Indemnitee has otherwise actually received such
payment under any insurance policy, contract, agreement or otherwise.
ARTICLE X
General Provisions
10.01 Successors and Assigns. This Agreement shall be binding upon the
Corporation and its successors and assigns and shall inure to the benefit of
Indemnitee and Indemnitee's heirs, executors and administrators.
10.02 Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation,
each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of
any Section of this Agreement containing any such provision
held to be invalid, illegal or unenforceable, that is not
itself invalid, illegal or unenforceable) shall be construed
so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
10.03 No Adequate Remedy. The parties declare that it is impossible to
measure in money the damages which will accrue to either party by reason of a
failure to perform any of the obligations under this Agreement. Therefore, if
either party shall institute any action or proceeding to enforce the provisions
hereof, such party against whom such action or proceeding is brought hereby
waives the claim or defense that such party has an adequate remedy at law, and
such party shall not urge in any such action or proceeding the claim or defense
that the other party has an adequate remedy at law.
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10.04 Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
10.05 Headings. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
10.06 Modification and Waiver. 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.
10.07 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
If to Indemnitee, to:
As shown with Indemnitee's signature below.
If to the Corporation, to:
CyberShop International, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Chairman Of The Board
with a copy to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
or to such other address as may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.
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10.08 Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without application of the conflict of laws principles
thereof.
10.09 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto in reference to all the
matters herein agreed upon. This Agreement replaces in full all prior
indemnification agreements or understandings of the parties hereto, and any and
all such prior agreements or understandings are hereby rescinded by mutual
agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CYBERSHOP INTERNATIONAL, INC.
By
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Its
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INDEMNITEE
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Print name:
Address:
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