EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
XXXXXXXXXXXX.XXX HOLDINGS CORP. (WASHINGTON)
AGREEMENT, effective as of April ___, 2000 between xxxxxxxxxxxx.xxx
Holdings Corp., a Washington corporation (the "Company"), and _______________
(the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as directors
and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The corporation shall
indemnify and hold harmless any person who is or was a director of this
corporation, and pay expenses in advance of final disposition of a proceeding,
to the full extent to which the corporation is empowered." In addition, "[t]he
corporation may, by action of its Board of Directors from time to time,
indemnify and hold harmless any person who is or was an officer, employee or
agent of the corporation, and pay expenses in advance of final disposition of a
proceeding, to the full extent to which the corporation is empowered, or to any
lesser extent which the Board of Directors may determine."
WHEREAS, this Agreement satisfies the provisions of RCW 23B.08.560 of the
Washington Business Corporation Act (the "BCA"); and
WHEREAS, in recognition of the fact that the Indemnitee continues to serve
as a director or officer of the Company in part in reliance on the aforesaid
By-Laws and Indemnitee's need for substantial protection against personal
liability in order to enhance Indemnitee's continued service to the Company in
an effective manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be available to
Indemnitee (regardless of, among other things, any amendment to or revocation of
such By-Laws or any change in the composition of the Company's Board of
Directors or any acquisition transaction relating to the Company), and due to
the potential inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement for the
indemnification of, and the advancing of expenses to, Indemnitee to the fullest
extent (whether partial or complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of 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) Approved Law Firm: shall mean any law firm (i) located in New York
City and (ii) rated "av" by Xxxxxxxxxx-Xxxxxxx Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the Company.
(c) 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), other than any
stockholder (and/or affiliate of such stockholder) on the date of this
Agreement or a trustee or other fiduciary holding securities under an
employee benefit plan of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly of securities of the Company representing 15
percent or more of the total voting power represented by the Company's
then outstanding Voting Securities (such person being hereinafter
referred to as an "Acquiring Person"), or (ii) during any
24-consecutive-month period, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for
election by the Company's shareholders was approved by a vote of at
least two-thirds (2/3) 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 a majority thereof, or (iii) the shareholders 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 entry)
at least 80 percent 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 (iv) the
shareholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company
of all or substantially all the Company's assets.
(d) Claim: shall mean any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether conducted by the
Company or any other party, that Indemnitee in good faith believes
might lead to the institution of any such action, suit or proceeding,
whether civil, criminal, administrative, investigative or other.
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(e) Expenses: shall include 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 to defend, be a witness in or participate in,
any Claim relating to any Indemnifiable Event, together with interest,
computed at the Company's average cost of funds for short-term
borrowings, accrued from the date of incurrence of such expense to the
date Indemnitee receives reimbursement therefor.
(f) Indemnifiable Event: shall mean any event or occurrence related to the
fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the
Company as a director, officer, employee, trustee, agent or fiduciary
of another corporation of any type or kind, domestic or foreign,
partnership, joint venture, trust, employee benefit plan or other
enterprise, or by reason of anything done or not done by Indemnitee in
such capacity. Without limitation of any indemnification provided
hereunder, an Indemnitee serving (i) another corporation, partnership,
joint venture or trust of which 10 percent or more of the voting power
or residual economic interest is held, directly or indirectly, by the
Company, or (ii) any employee benefit plan of the Company or any
entity referred to in clause (i), in any capacity shall be deemed to
be doing so at the request of the Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by quorum
consisting of directors who are not parties to the particular Claim
with respect to which Indemnitee is seeking indemnification, or (ii),
if such a quorum is not obtainable or, even if obtainable, if a quorum
of disinterested directors so directs, (A) the Board of Directors upon
the opinion in writing of independent legal counsel that
indemnification is proper in the circumstances because the applicable
standard of conduct set forth in Section 2 of this Agreement and in
RCW 23B.08.510 of the BCA has been met by the Indemnitee or (B) the
shareholders upon a finding that the Indemnitee has met the applicable
standard of conduct referred to in clause (ii)(A) of this definition.
(h) Voting Securities: shall mean any securities of the Company which vote
generally in the election of directors.
2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any
time a party to, or witness or other participant in, or is threatened to be
made a party to, or witness or other participant in, a Claim by reason of
(or arising in part out of) an Indemnifiable Event, the Company shall
indemnify Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written demand is
presented to the Company, against any and all Expenses, judgments, fines
(including excise taxes assessed on an Indemnitee with respect to an
employee benefit plan), 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 or
amounts paid in settlement) of such Claim. If so requested by Indemnitee,
the Company shall advance (within two business days of such request)
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any and all Expenses to Indemnitee (an "Expense Advance"), in accordance
with the provisions of RCW 23B.08.530 of the BCA, upon the written
affirmation of the Indemnitee's good faith belief that he has acted in
conformance with the standard of conduct set forth in this Section 2 and in
RCW 23B.08.510 of the BCA. The Indemnitee shall further furnish and execute
a written undertaking, which states that he will repay the Expense Advance
if it is ultimately determined that the Indemnitee did not meet the
applicable standard of conduct. Notwithstanding anything in this Agreement
to the contrary, (i) Indemnitee shall not be entitled to indemnification
pursuant to this Agreement if a judgment or other final adjudication
adverse to the Indemnitee establishes that Indemnitee's acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or that
Indemnitee personally gained in fact a financial profit or other advantage
to which Indemnitee was not legally entitled and (ii) prior to a Change in
Control Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by Indemnitee against
the Company or any director or officer of the Company unless the Company
has joined in or consented to the initiation of such Claim.
3. Payment. Notwithstanding the provisions of Section 2, the obligations of
the Company under Section 2 (which shall in no event be deemed to preclude
any right to indemnification to which Indemnitee may be entitled under RCW
23B.08.520 of the BCA) shall be subject to the condition that the Reviewing
Party shall have authorized such indemnification in the specific case by
having determined that Indemnitee is permitted to be indemnified under the
applicable standard of conduct set forth in Section 2 and applicable law.
The Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate a
prompt determination by the Reviewing Party with respect to the Claim.
Indemnitee shall be afforded the opportunity to make submissions to the
Reviewing Party with respect to the Claim. The obligation of the Company to
make an Expense Advance pursuant to Section 2 shall be subject to the
condition that, if, when and to the extent that the Reviewing Party
determines that Indemnitee would not be permitted to be so indemnified
under Section 2 and applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees and undertakes to reimburse the
Company to the full extent required by RCW 23B.08.530(1)(b) of the BCA if
it is determined that the Indemnitee did not meet the required standard of
conduct) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing
Party that Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and 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 lapsed). If there has been no
determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in
whole or in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having subject
matter jurisdiction thereof and in which venue is proper seeking an initial
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determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any determination
by the Reviewing Party otherwise shall be conclusive and binding on the
Company and Indemnitee.
4. Change in Control. 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 Board
of Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the first
sentence of Section 3 hereof and RCW 23B.08.550(2) of the BCA shall be made
pursuant to subparagraphs (a), (b) or (c) of such RCW 23B.08.550(2) and
(ii) with respect to all matters thereafter arising concerning the rights
of Indemnitee to indemnity payments and Expense Advances under this
Agreement or any other agreement or By-law of the Company now or
hereinafter in effect relating to Claims for Indemnifiable Events
(including, but not limited to, any opinion to be rendered pursuant to
subparagraph (2)(c) of RCW 23B.08.550 of the BCA) the Company (including
the Board of Directors) shall seek legal advice from (and only from)
special, independent counsel selected by Indemnitee and approved by the
Company (which approval shall not be unreasonably withheld), and who has
not otherwise performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of such
Acquiring Person) within the last five years (other than in connection with
such matters) or Indemnitee. Unless Indemnitee has theretofore selected
counsel pursuant to this Section 4 and such counsel has been approved by
the Company, any Approved Law Firm shall be deemed to satisfy the
requirements set forth above. Such counsel, among other things, shall
render its written opinion to the Company, the Board of Directors and
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 fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto. As used in
this Section 4, the terms "affiliate" and "associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended
and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses. The Company shall indemnify
Indemnitee against any and all expenses (including attorneys' fees) and, if
requested by Indemnitee, shall (within two business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or By-law of the Company now or hereafter
in effect relating to Claims for Indemnifiable Events and/or (ii) recovery
under any directors' and officers' liability insurance policies maintained
by the Company, regardless of whether Indemnitee ultimately is determined
to be entitled to such indemnification, advance expenses payment or
insurance recovery, as the case may be.
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6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of
the Expenses, judgments, fines, penalties and amounts paid in settlement of
a Claim but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the
merits or otherwise in defense of any or all Claims relating in whole or in
part to an Indemnifiable Event or in defense of any issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses incurred
in connection with such Indemnifiable Event. In connection with any
determination by the Reviewing Party or otherwise as to whether Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall, to the
extent permitted by law, be on the Company to establish that Indemnitee is
not so entitled.
7. No Presumption. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, whether civil or criminal, 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 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.
8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the By-laws of the
Company, the BCA or otherwise. To the extent that a change in the BCA
(whether by statue or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the By-laws of the Company
and 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.
9. Liability Insurance. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability insurance,
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.
10. 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 Indemnitee, Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two years from
the date of accrual of such cause of action, 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
two-year period; provided, however, that if any shorter period of
limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
11. Amendments, Etc. 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
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provisions hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
12. 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 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.
13. 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 Indemnitee has otherwise actually received payment
(under any insurance policy, By-law or otherwise) of the amounts otherwise
indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any provision of this
Agreement is violated by the Company, Indemnitee may be without an adequate
remedy at law. Accordingly, in the event of any such violation, the
Indemnitee shall be entitled, if Indemnitee so elects, to institute
proceedings, either at law or in equity, to obtain damages, to enforce
specific performance, to enjoin such violation, or to obtain any relief or
any combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties hereto and their respective
successors (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), assigns, spouses, heirs, and personal and
legal representatives. This Agreement shall continue in effect regardless
of whether Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be severable if any of
the provisions hereof (including any provision within a single section,
paragraph or sentence) are 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.
17. Governing Law. This Agreement shall be governed by, and be construed and
enforced in accordance with, the laws of the State of New York applicable
to contracts made and to be performed in such state without giving effect
to the principles of conflicts of laws.
Executed this day of .
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XXXXXXXXXXXXX.XXX HOLDINGS CORP.
By:
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Name:
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Title:
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