Exhibit 10.23
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement") is made as of February 28, 2001
by and between Xxxxx Corporation, a Delaware corporation (the "Company"), and
___________ ("Indemnitee").
RECITALS
WHEREAS, highly competent persons have become more reluctant to serve
publicly-held corporations as directors 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.
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions. At the same time, directors,
officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself. The By-laws of
the Company require indemnification of the officers and directors of the
Company. Indemnitee may also be entitled to indemnification pursuant to the
Delaware General Corporation Law ("DGCL"). The By-laws and the DGCL expressly
provide that the indemnification provisions set forth therein are not exclusive,
and thereby contemplate that contracts may be entered into between the Company
and members of the board of directors, officers and other persons with respect
to indemnification.
WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining such
persons.
WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company's stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the future.
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify, and to advance expenses on behalf
of, such persons to the fullest extent permitted by applicable law so that they
will serve or continue to serve the Company free from undue concern that they
will not be so indemnified.
WHEREAS, this Agreement is a supplement to and in furtherance of the
By-laws of the Company and any resolutions adopted pursuant thereto, and shall
not be deemed a substitute therefor, nor to diminish or abrogate any rights of
Indemnitee thereunder.
WHEREAS, Indemnitee does not regard the protection available under the
Company's By-laws and insurance as adequate in the present circumstances, and
may not be willing to serve as an officer or director without adequate
protection, and the Company desires Indemnitee to serve in such capacity.
Indemnitee is willing to serve, continue to serve and to take on additional
service for or on behalf of the Company on the condition that he be so
indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. SERVICES TO THE COMPANY. Indemnitee will serve or continue to serve, at
the will of the Company, as an officer, director or key employee of the Company
for so long as Indemnitee is duly elected or appointed or until Indemnitee
tenders his or her resignation.
2. DEFINITIONS. As used in this Agreement:
(a) A "Change in Control" shall be deemed to occur upon the earliest to
occur after the date of this Agreement of any of the following events:
(i) Acquisition of Stock by Third Party. Any Person (as defined below)
is or becomes the Beneficial Owner (as defined below), directly or indirectly,
of securities of the Company representing fifteen percent (15%) or more of the
combined voting power of the Company's then outstanding Voting Securities,
except that any change in the relative beneficial ownership of the Company's
securities by any person resulting solely from a reduction in the aggregate
number of outstanding shares of Voting Securities shall be disregarded;
(ii) Change in Board of Directors. During any period of two (2)
consecutive years (not including any period prior to the execution of this
Agreement), 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 still 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 at least a majority
of the members of the Board;
(iii) Corporate Transactions. The effective date of a merger or
consolidation of the Company with any other entity, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 51% of the total voting power of
the voting securities of the surviving entity outstanding immediately after such
merger or consolidation and with the power to elect at
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least a majority of the board of directors or other governing body of such
surviving entity;
(iv) Liquidation. The approval by the stockholders of the Company of a
complete liquidation of the Company or an agreement or series of agreements for
the sale or disposition by the Company of all or substantially all of the
Company's assets; or
(v) Other Events. There occurs any other event of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar item on any similar schedule or
form) promulgated under the Exchange Act (as defined below), whether or not
the Company is then subject to such reporting requirement.
(b) CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
(i) "Agent" shall mean any person who is or was a director,
officer, or employee of the Company or a subsidiary of the Company or other
person authorized by the Company to act for the Company, to include such
person serving in such capacity as a director, officer, employee, fiduciary
or other official of another corporation, partnership, limited liability
company, joint venture, trust or other enterprise at the request of, for the
convenience of, or to represent the interests of the Company or a subsidiary
of the Company.
(ii) "Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act.
(iii) "Corporate Status" describes the status of a person who is or
was a director, officer, trustee, general partner, managing member, fiduciary,
employee or agent of the Company or of any other Enterprise (as defined below)
which such person is or was serving at the request of the Company.
(iv) "Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
(v) "Enterprise" shall mean the Company and any other corporation,
limited liability company, partnership, joint venture, trust, employee benefit
plan or other enterprise of which Indemnitee is or was serving at the request of
the Company as a director, officer, trustee, general partner, managing member,
fiduciary, employee or agent.
(vi) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(vii) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses,
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duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses in connection
with prosecuting, defending, preparing to prosecute or defend, investigating,
being or preparing to be a witness in, or otherwise participating in, a
Proceeding. Expenses also shall include Expenses incurred in connection with any
appeal resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent. Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or fines
against Indemnitee.
(viii) "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent: (i) the Company
or Indemnitee in any matter material to either such party (other than with
respect to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), 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 Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
(ix) References to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with respect
to any employee benefit plan; references to "serving at the request 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; and a person who acted in good faith and in a
manner he reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.
(x) "Person" shall have the meaning as set forth in Sections 13(d) and
14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the
Company, (ii) any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, and (iii) any corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(xi) A "Potential Change in Control" shall be deemed to have occurred
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 consider
taking actions which if consummated would constitute a Change in Control; (iii)
any Person, who is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 5% or more of the combined voting power
of the Company's then
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outstanding Voting Securities increases his 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 of Control has occurred.
(xii) The term "Proceeding" shall include any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil, criminal, administrative or investigative
nature, in which Indemnitee was, is or will be involved as a party or otherwise
by reason of the fact that Indemnitee is or was a director or officer of the
Company, by reason of any action taken by him or of any inaction on his part
while acting as director or officer of the Company, or by reason of the fact
that he is or was serving at the request of the Company as a director, officer,
trustee, general partner, managing member, fiduciary, employee or agent of any
other Enterprise, in each case whether or not serving in such capacity at the
time any liability or expense is incurred for which indemnification,
reimbursement, or advancement of expenses can be provided under this Agreement.
(xiii) "Voting Securities" means any securities of the Company which
vote generally in the election of directors.
3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. The Company shall indemnify and
hold harmless Indemnitee in accordance with the provisions of this Section 3 if
Indemnitee was, is, or is threatened to be made, a party to or a participant (as
a witness or otherwise) in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section 3, Indemnitee shall be indemnified against all Expenses, judgments,
fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses, judgments, fines, penalties and amounts paid in settlement)
actually and reasonably incurred by Indemnitee or on his behalf in connection
with such Proceeding or any claim, issue or matter therein, if Indemnitee acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company and, in the case of a criminal Proceeding had
no reasonable cause to believe that his conduct was unlawful.
4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company
shall indemnify and hold harmless Indemnitee in accordance with the provisions
of this Section 4 if Indemnitee was, is, or is threatened to be made, a party to
or a participant (as a witness or otherwise) in any Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section 4, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
or any claim, issue or matter therein, if Indemnitee acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of the Company. No indemnification for Expenses shall be made under this Section
4 in respect of any claim, issue or matter as to which Indemnitee shall have
been finally adjudged by a court to be liable to the Company, unless and only
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to the extent that any court in which the Proceeding was brought or the Delaware
Court (as defined below) 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 indemnification.
5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provisions of this Agreement, to the
extent that Indemnitee is a party to (or a participant in) and is successful, on
the merits or otherwise, in any Proceeding or in defense of any claim, issue or
matter therein, in whole or in part, the Company shall indemnify and hold
harmless Indemnitee against all Expenses actually and reasonably incurred by him
in connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall
indemnify and hold harmless Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully
resolved claim, issue or matter. If the Indemnitee is not wholly successful in
such Proceeding, the Company also shall indemnify and hold harmless Indemnitee
against all Expenses reasonably incurred in connection with a claim, issue or
matter related to any claim, issue, or matter on which the Indemnitee was
successful. For purposes of this Section and without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee is not a
party, he shall be indemnified and held harmless against all Expenses actually
and reasonably incurred by him or on his behalf in connection therewith.
7. ADDITIONAL INDEMNIFICATION.
(a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company
shall indemnify and hold harmless Indemnitee if Indemnitee is a party to or
threatened to be made a party to any Proceeding (including a Proceeding by or in
the right of the Company to procure a judgment in its favor) against all
Expenses, judgments, fines, penalties and amounts paid in settlement (including
all interest, assessments and other charges paid or payable in connection with
or in respect of such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with
the Proceeding. No indemnity shall be made under this Section 7(a) on account of
Indemnitee's conduct which constitutes a breach of Indemnitee's duty of loyalty
to the Company or its stockholders or is an act or omission not in good faith or
which involves intentional misconduct or a knowing violation of the law.
(b) Notwithstanding any limitation in Sections 3, 4, 5 or 7(a), the
Company shall indemnify and hold harmless Indemnitee if Indemnitee is a party to
or threatened to be made a party to any Proceeding (including a Proceeding by or
in the
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right of the Company to procure a judgment in its favor) against all Expenses,
judgments, fines, penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses, judgments, fines, penalties and amounts paid in
settlement) actually and reasonably incurred by Indemnitee in connection with
the Proceeding.
8. CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.
(a) Whether or not any of the indemnification and hold harmless rights
provided in Sections 3, 4, 5, 7(a) and 7(b) hereof are available in respect of
any Proceeding in which the Company is jointly liable with Indemnitee (or would
be if joined in such Proceeding), the Company shall pay, in the first instance,
the entire amount of any judgment or settlement of such Proceeding without
requiring Indemnitee to contribute to such payment, and the Company hereby
waives and relinquishes any right of contribution it may have against
Indemnitee. The Company shall not enter into any settlement of any Proceeding in
which the Company is jointly liable with Indemnitee (or would be if joined in
such Proceeding) unless such settlement provides for a full and final release of
all claims asserted against Indemnitee.
(b) Without diminishing or impairing the obligations of the Company set
forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect
or be required to pay all or any portion of any judgment or settlement in any
Proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such Proceeding), the Company shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually incurred and paid or payable by Indemnitee in proportion to
the relative benefits received by the Company and all officers, directors or
employees of the Company other than Indemnitee who are jointly liable with
Indemnitee (or would be if joined in such Proceeding), on the one hand, and
Indemnitee, on the other hand, from the transaction from which such Proceeding
arose; provided, however, that the proportion determined on the basis of
relative benefit may, to the extent necessary to conform to law, be further
adjusted by reference to the relative fault of the Company and all officers,
directors or employees of the Company other than Indemnitee who are jointly
liable with Indemnitee (or would be if joined in such Proceeding), on the one
hand, and Indemnitee, on the other hand, in connection with the events that
resulted in such expenses, judgments, fines or amounts paid in settlement, as
well as any other equitable considerations. The relative fault of the Company
and all officers, directors or employees of the Company other than Indemnitee
who are jointly liable with Indemnitee (or would be if joined in such
Proceeding), on the one hand, and Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which their
actions were motivated by intent to gain personal profit or advantage, the
degree to which their liability is primary or secondary, and the degree to which
their conduct is active or passive.
(c) The Company hereby agrees to fully indemnify and hold harmless
Indemnitee from any claims for contribution which may be brought by officers,
directors or employees of the Company other than Indemnitee who may be jointly
liable with Indemnitee.
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9. EXCLUSIONS. Notwithstanding any provision in this Agreement, the Company
shall not be obligated under this Agreement to make any indemnity in connection
with any claim made against Indemnitee:
(a) for which payment has actually been received by or on behalf of
Indemnitee under any insurance policy or other indemnity provision, except with
respect to any excess beyond the amount actually received under any insurance
policy or other indemnity provision; or
(b) for an accounting of profits made from the purchase and sale (or
sale and purchase) by Indemnitee of securities of the Company within the meaning
of Section 16(b) of the Exchange Act or similar provisions of state statutory
law or common law; or
(c) except as otherwise provided in Sections 14(d)-(f) hereof, prior to
a Change in Control, in connection with any Proceeding (or any part of any
Proceeding) initiated by Indemnitee, including any Proceeding (or any part of
any Proceeding) initiated by Indemnitee against the Company or its directors,
officers, employees or other indemnitees, unless (i) the Board of Directors of
the Company authorized the Proceeding (or any part of any Proceeding) prior to
its initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law.
10. ADVANCES OF EXPENSES; DEFENSE OF CLAIM.
(a) Notwithstanding any provision of this Agreement to the contrary, the
Company shall advance the expenses incurred by Indemnitee in connection with any
Proceeding within ten (10) days after the receipt by the Company of a statement
or statements requesting such advances from time to time, whether prior to or
after final disposition of any Proceeding. Advances shall be unsecured and
interest free. Advances shall be made without regard to Indemnitee's ability to
repay the expenses and without regard to Indemnitee's ultimate entitlement to
indemnification under the other provisions of this Agreement. Advances shall
include any and all reasonable Expenses incurred pursuing an action to enforce
this right of advancement, including Expenses incurred preparing and forwarding
statements to the Company to support the advances claimed. The Indemnitee shall
qualify for advances solely upon the execution and delivery to the Company of an
undertaking providing that the Indemnitee undertakes to repay the advance to the
extent that it is ultimately determined that Indemnitee is not entitled to be
indemnified by the Company. This Section 10(a) shall not apply to any claim made
by Indemnitee for which indemnity is excluded pursuant to Section 9.
(b) The Company will be entitled to participate in the Proceeding at its
own expense.
(c) The Company shall not settle any action, claim or Proceeding (in
whole or in part) which would impose any Expense, judgment, fine, penalty or
limitation on the Indemnitee without the Indemnitee's prior written consent.
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11. PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.
(a) Indemnitee agrees promptly to notify the Company 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. The
failure of Indemnitee to so notify the Company shall not relieve the Company of
any obligation which it may have to the Indemnitee under this Agreement or
otherwise.
(b) Indemnitee shall thereafter deliver to the Company a written
application to indemnify and hold harmless Indemnitee in accordance with this
Agreement. Such application(s) may be delivered from time to time and at such
time(s) as Indemnitee deems appropriate in his or her sole discretion. Following
such a written application for indemnification by Indemnitee, the Indemnitee's
entitlement to indemnification shall be determined according to Section 12(a) of
this Agreement.
12. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
(a) Upon written request by Indemnitee for indemnification pursuant to
Section 11(b), a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in the specific case by one of
the following methods, which shall be at the election of Indemnitee: (i) by a
majority vote of the Disinterested Directors, even though less than a quorum of
the Board; or (ii) by Independent Counsel in a written opinion to the Board, a
copy of which shall be delivered to Indemnitee. If it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall reasonably
cooperate with the person, persons or entity making such determination with
respect to Indemnitee's entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any documentation
or information which is not privileged or otherwise protected from disclosure
and which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the person, persons
or entity making such determination shall be borne by the Company (irrespective
of the determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(b) In the event the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 12(a) hereof, the
Independent Counsel shall be selected as provided in this Section 12(b). The
Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall
request that such selection be made by the Board of Directors), and Indemnitee
shall give written notice to the Company advising it of the identity of the
Independent Counsel so selected. If the Independent Counsel is selected by the
Board of Directors, the Company shall give written notice to Indemnitee advising
him of the identity of the Independent Counsel so selected. In either event,
Indemnitee or the Company, as the case may be, may, within 10 days after such
written notice of selection shall have been received, deliver to the
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Company or to Indemnitee, as the case may be, a written objection to such
selection; PROVIDED, HOWEVER, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements
of "Independent Counsel" as defined in Section 2 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 so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court of competent
jurisdiction has determined that such objection is without merit. If, within 20
days after submission by Indemnitee of a written request for indemnification
pursuant to Section 11(a) hereof, no Independent Counsel shall have been
selected and not objected to, either the Company or Indemnitee may petition the
Delaware Court (as defined below) for resolution of any objection which shall
have been made by the Company or Indemnitee to the other's selection of
Independent Counsel and/or for the appointment as Independent Counsel of a
person selected by the Delaware Court, and the person with respect to whom all
objections are so resolved or the person so appointed shall act as Independent
Counsel under Section 12(a) hereof. Upon the due commencement of any judicial
proceeding or arbitration pursuant to Section 14(a) of this Agreement,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
(c) The Company agrees to pay the reasonable fees and expenses of
Independent Counsel and to fully indemnify and hold harmless such Independent
Counsel against any and all Expenses, claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.
13. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) 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 11(b) of this Agreement, and the Company 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.
Neither the failure of the Company (including by its directors or Independent
Counsel) to have made a determination prior to the commencement of any action
pursuant to this Agreement that indemnification is proper in the circumstances
because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or Independent Counsel)
that Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct.
(b) If the person, persons or entity empowered or selected under Section
12 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within thirty (30) days
after receipt by the Company of the request therefor, the requisite
determination of entitlement to
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indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such 30-day period may be extended for a reasonable
time, not to exceed an additional fifteen (15) days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto.
(c) 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 and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
(d) 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 by the Enterprise. The provisions of this Section 13(d)
shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed or found to have met the
applicable standard of conduct set forth in this Agreement.
(e) ACTIONS OF OTHERS. The knowledge and/or actions, or failure to act,
of any other director, officer, trustee, partner, managing member, fiduciary,
agent or employee of the Enterprise shall not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement.
14. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination is made pursuant to Section 12
of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section
10 of this Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 12(a) of this Agreement within thirty
(30) days after receipt by the Company of the request for indemnification, (iv)
payment of indemnification is not made pursuant to Section 5, 6, 7, 8 or the
last sentence of Section 12(a) of this Agreement within ten (10) days after
receipt by the Company of a written request therefor, or (v) payment of
indemnification pursuant to Section 3 or 4 of this Agreement is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
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indemnification, Indemnitee shall be entitled to an adjudication by the Delaware
Court (as defined below) to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. Except as set forth herein, the provisions
of Delaware law (without regard to its conflict of laws rules) shall apply to
any such arbitration. The Company shall not oppose Indemnitee's right to seek
any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 12(a) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 14 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 judicial proceeding or arbitration commenced
pursuant to this Section 14, Indemnitee shall be presumed to be entitled to
indemnification under this Agreement and the Company shall have the burden of
proving Indemnitee is not entitled to indemnification or advancement of
Expenses, as the case may be, and the Company may not refer to or introduce into
evidence any determination pursuant to Section 12(a) of this Agreement adverse
to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding or
arbitration pursuant to this Section 14, Indemnitee shall not be required to
reimburse the Company for any advances pursuant to Section 10 until a final
determination is made with respect to Indemnitee's entitlement to
indemnification (as to which all rights of appeal have been exhausted or
lapsed).
(c) If a determination shall have been made pursuant to Section 12(a) of
this Agreement that Indemnitee is entitled to indemnification, the Company shall
be bound by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee
of a material fact, or an omission of a material fact necessary to make
Indemnitee's statement not materially misleading, in connection with the request
for indemnification, or (ii) a prohibition of such indemnification under
applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 14 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 Company is bound by all the provisions of this Agreement.
(e) The Company shall indemnify and hold harmless Indemnitee to the
fullest extent permitted by law against all Expenses and, if requested by
Indemnitee, shall (within ten (10) days after the Company's receipt of such
written request) advance such Expenses to Indemnitee, which are incurred by
Indemnitee in connection with any judicial proceeding or arbitration brought by
Indemnitee (i) to enforce his rights under, or to recover damages for breach of,
this Agreement or any other indemnification, advancement or contribution
agreement or provision of the Company's Certificate of Incorporation or By-laws
now or hereafter in effect; or (ii) for recovery or advances under any insurance
policy maintained by any person for the benefit of Indemnitee,
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regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance, contribution or insurance recovery, as the case may
be.
15. ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control,
the Company shall, upon written request by Indemnitee, create a "Trust" for the
benefit of Indemnitee and from time to time upon written request of Indemnitee
shall fund such Trust in an 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, participating in or defending any
Proceedings, and any and all judgments, fines, penalties and amounts paid in
settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such judgments, fines, penalties and
amounts paid in settlement) in connection with any and all Proceedings from time
to time actually paid or claimed, reasonably anticipated or proposed to be paid.
The trustee of the Trust (the "Trustee") shall be a bank or trust company or
other individual or entity chosen by the Indemnitee and reasonably acceptable to
the Company. Nothing in this Section 15 shall relieve the Company of any of its
obligations under this Agreement. The amount or amounts to be deposited in the
Trust pursuant to the foregoing funding obligation shall be determined by mutual
agreement of the Indemnitee and the Company or, if the Company and the
Indemnitee are unable to reach such an agreement, by Independent Counsel
selected in accordance with Section 12(b) of this Agreement. The terms of the
Trust shall provide that, except upon the consent of both the Indemnitee and the
Company, 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 shall advance, within two business days of a request by the
Indemnitee and upon the execution and delivery to the Company of an undertaking
providing that the Indemnitee undertakes to repay the advance to the extent that
it is ultimately determined that Indemnitee is not entitled to be indemnified by
the Company, any and all Expenses to the Indemnitee, (iii) the Trust shall
continue to be funded by the Company in accordance with the funding obligations
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 funds in such Trust shall
revert to the Company upon mutual agreement by the Indemnitee and the Company
or, if the Indemnitee and the Company are unable to reach such an agreement, by
Independent Counsel selected in accordance with Section 12(b) of this Agreement,
that the Indemnitee has been fully indemnified under the terms of this
Agreement. The Trust shall be governed by Delaware law (without regard to its
conflicts of laws rules) and the Trustee shall consent to the exclusive
jurisdiction of the Delaware Court in accordance with Section 24 of this
Agreement.
16. SECURITY. Notwithstanding anything herein to the contrary, to the
extent requested by the Indemnitee and approved by the Board of Directors of the
Company, the Company may at any time and from time to time provide security to
the Indemnitee for the Company's obligations hereunder through an irrevocable
bank line of credit, funded trust or other collateral. Any such security, once
provided to the Indemnitee, may not be revoked or released without the prior
written consent of the Indemnitee.
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17. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) 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
Company's Certificate of Incorporation, the Company's By-laws, any agreement, a
vote of stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of Indemnitee under this Agreement in respect of any action
taken or omitted by such Indemnitee in his Corporate Status prior to such
amendment, alteration or repeal. To the extent that a change in Delaware law,
whether by statute or judicial decision, permits greater indemnification or
advancement of Expenses than would be afforded currently under the Company's
By-laws or this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, trustees,
partners, managing members, fiduciaries, employees, or agents of the Company or
of any other Enterprise which such person serves at the request of the Company,
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 such
director, officer, trustee, partner, managing member, fiduciary, employee or
agent under such policy or policies. If, at the time the Company receives notice
from any source of a Proceeding as to which Indemnitee is a party or a
participant (as a witness or otherwise), the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of such
Proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such Proceeding in accordance with the terms of
such policies.
(c) In the event of any payment under this Agreement, the Company 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 rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable (or for which advancement is provided
hereunder) hereunder if and to the extent that Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or
otherwise.
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(e) The Company's obligation to indemnify or advance Expenses hereunder
to Indemnitee who is or was serving at the request of the Company as a director,
officer, trustee, partner, managing member, fiduciary, employee or agent of any
other Enterprise shall be reduced by any amount Indemnitee has actually received
as indemnification or advancement of expenses from such Enterprise.
18. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as a director or officer of the Company or as a
director, officer, trustee, partner, managing member, fiduciary, employee or
agent of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which Indemnitee served at the request of the
Company; or (b) one (1) year after the final termination of any Proceeding
(including any rights of appeal thereto) then pending in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Section 14
of this Agreement relating thereto (including any rights of appeal of any
Section 14 Proceeding).
19. 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, paragraph
or sentence 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 shall remain
enforceable to the fullest extent permitted by law; (b) such provision or
provisions shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the parties
hereto; and (c) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section, paragraph or
sentence 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 thereby.
20. ENFORCEMENT AND BINDING EFFECT.
(a) The Company expressly confirms and agrees that it has entered into
this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as a director or officer of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving
as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral, written and implied, between the parties
hereto with respect to the subject matter hereof.
(c) The indemnification and advancement of expenses provided by, or
granted pursuant to this Agreement shall be binding upon and be enforceable by
the
15
parties hereto and their respective successors and assigns (including any direct
or indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), shall continue as
to an Indemnitee who has ceased to be a director, officer, employee or agent of
the Company or of any other Enterprise at the Company's request, and shall inure
to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees,
executors and administrators and other legal representatives.
(d) 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
succession had taken place.
(e) The Company and Indemnitee agree herein that a monetary remedy for
breach of this Agreement, at some later date, may be inadequate, impracticable
and difficult of proof, and further agree that such breach may cause Indemnitee
irreparable harm. Accordingly, the parties hereto agree that Indemnitee may
enforce this Agreement by seeking injunctive relief and/or specific performance
hereof, without any necessity of showing actual damage or irreparable harm and
that by seeking injunctive relief and/or specific performance, Indemnitee shall
not be precluded from seeking or obtaining any other relief to which he or she
may be entitled. The Company and Indemnitee further agree that Indemnitee shall
be entitled to such specific performance and injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions,
without the necessity of posting bonds or other undertaking in connection
therewith. The Company acknowledges that in the absence of a waiver, a bond or
undertaking may be required of Indemnitee by the Court, and the Company hereby
waives any such requirement of such a bond or undertaking.
21. MODIFICATION AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by 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 of this Agreement nor shall
any waiver constitute a continuing waiver.
22. NOTICES. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
(a) if delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, or (b) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the signature page of
this Agreement, or such other address as Indemnitee shall provide in writing to
the Company.
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(b) If to the Company to:
Xxxxx Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000-0000
Attention: President
With a copy to:
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxx X. Xxxxxx, Esq.
or to any other address as may have been furnished to Indemnitee in writing by
the Company.
23. CONTRIBUTION. To the fullest extent permissible under applicable law,
if the indemnification provided for in this Agreement is unavailable to
Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu
of indemnifying Indemnitee, shall contribute to the amount incurred by
Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid
or to be paid in settlement and/or for Expenses, in connection with any claim
relating to an indemnifiable event under this Agreement, in such proportion as
is deemed fair and reasonable in light of all of the circumstances of such
Proceeding in order to reflect (i) the relative benefits received by the Company
and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to
such Proceeding; and (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such event(s)
and/or transaction(s).
24. APPLICABLE LAW AND CONSENT TO JURISDICTION. This Agreement and the
legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to its conflict of laws rules. Except with respect to any arbitration commenced
by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and
Indemnitee hereby irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement shall be brought
only in the Chancery Court of the State of Delaware (the "Delaware Court"), and
not in any other state or federal court in the United States of America or any
court in any other country, (ii) consent to submit to the exclusive jurisdiction
of the Delaware Court for purposes of any action or proceeding arising out of or
in connection with this Agreement, (iii) appoint, to the extent such party is
not a resident of the State of Delaware, irrevocably RL&F Service Corp., One
Xxxxxx Square, 10th Floor, 10th and King Streets, Wilmington, Delaware 19801 as
its agent in the State of Delaware as such party's agent for acceptance of legal
process in connection with any such action or proceeding against such party with
the same legal force and validity as if served upon such party personally within
the State of Delaware, (iv) waive any objection to the laying of venue of any
such action or proceeding in the Delaware Court, and
17
(v) waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the Delaware Court has been brought in an improper or
inconvenient forum.
25. 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.
26. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate. The headings of the paragraphs
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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
as of the day and year first above written.
XXXXX CORPORATION INDEMNITEE
By:
--------------------------------
Name: Name:
-------------------------------- ----------------------------
Its: Address:
-------------------------------- ----------------------------
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