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EXHIBIT 4.2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") dated as of ______ __,
1997, by and between Omtool, Ltd., a Delaware corporation (the "Company"), and
___________, a director [and/or officer] of the Company (the "Indemnitee"):
WITNESSETH:
WHEREAS, the Indemnitee is presently serving as a director [and/or
officer] of the Company, and the Company desires the Indemnitee to continue in
such capacity; and
WHEREAS, the Indemnitee is willing, subject to certain conditions
(including the execution and performance of this Agreement by the Company), to
continue in that capacity;
NOW, THEREFORE, to induce the Indemnitee to continue to serve in his
present capacity and in consideration of these premises and the mutual
agreements set forth in this Agreement, the Company and the Indemnitee agree as
follows:
1. Continued Service. The Indemnitee will continue to serve as a
director [and/or officer] of the Company so long as he is duly elected and
qualified in accordance with the Company's restated by-laws (the "By-Laws") or
until he resigns in writing or is removed from office in accordance with
applicable law.
2. Initial Indemnity. (a) The Company shall indemnify the Indemnitee
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding (including any proceeding before
any administrative or legislative body or agency) (other than an action by or in
the right of the Company), by reason of the fact that he is or was or had agreed
to become a director and officer of the Company, or is or was serving or had
agreed to serve at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
such capacity, against any and all costs, expenses (including attorneys' fees),
judgments, liabilities and/or amounts paid in settlement actually and reasonably
incurred by or imposed upon the Indemnitee in connection therewith and any
appeal therefrom if the 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, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, or unless such
indemnification is prohibited by the General Corporation Law of the State of
Delaware ("DGCL"). The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendre or its
equivalent shall not, of itself, create a presumption that the Indemnitee did
not satisfy the foregoing standard of conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding
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by or in the right of the Company to procure a judgment in its favor by reason
of the fact that he is or was or had agreed to become a director of the Company,
or is or was serving or had agreed to serve at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against costs, expenses (including attorneys'
fees), judgments, liabilities and/or amounts paid in settlement actually and
reasonably incurred by or imposed upon him in connection with the defense or
settlement thereof or any appeal therefrom if he 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 except that no indemnification shall be made if such
indemnification is prohibited by the DGCL or in respect of any claim, issue or
matter as to which the Indemnitee shall have been adjudged to be liable to the
Company unless and only to the extent that the court in which such action, suit
or proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, the
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
(c) To the extent that the Indemnitee has been successful on the
merits or otherwise, including without limitation the dismissal of an action
without prejudice, in defense of any action, suit or proceeding referred to in
Sections 2(a) or 2(b) hereof or in defense of any claim, issue or matter
therein, he shall be indemnified against costs, expenses (including attorneys'
fees), judgments, liabilities and/or amounts paid in settlement actually and
reasonably incurred by or imposed upon him in connection therewith.
(d) Any indemnification under Sections 2(a) or 2(b) hereof (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination in accordance with Section 4 hereof or any
applicable provision of the Restated Certificate of Incorporation of the Company
(the "Charter"), By-Laws, other agreement, resolution or otherwise. Such
determination shall be made (i) by the Board of Directors of the Company (the
"Board") by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, (ii) if such a quorum of
disinterested directors is not available or so directs, by independent legal
counsel (designated in the manner provided below in this subsection (d)) in a
written opinion or (iii) by the stockholders of the Company (the
"Stockholders"). Independent legal counsel shall be designated by vote of a
majority of the disinterested directors; provided, however, that if the Board is
unable or fails to so designate, such designation shall be made by the
Indemnitee subject to the approval of the Company (which approval shall not be
unreasonably withheld). Independent legal counsel shall not be any person or
firm who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or the Indemnitee in an action to determine the Indemnitee's rights under this
Agreement. The Company agrees to pay the reasonable fees and expenses of such
independent legal counsel and to indemnify fully such counsel against costs and
expenses (including attorneys' fees) actually and reasonably incurred by such
counsel in connection with this Agreement or the opinion of such counsel
pursuant hereto.
(e) All expenses (including attorneys' fees) including by the
Indemnitee in his capacity as a director or officer of the Company in defending
a civil or criminal action, suit or
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proceeding shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding in the manner prescribed by Section 4(b) hereof.
(f) The Company shall not adopt any amendment to the Charter or
By-Laws the effect of which would be to deny, diminish or encumber the
Indemnitee's rights to indemnity pursuant to the Charter, By-Laws, the DGCL or
any other applicable law as applied to any act or failure to act occurring in
whole or in part prior to the date (the "Effective Date") upon which the
amendment was approved by the Board of Directors or the Stockholders, as the
case may be. In the event that the Company shall adopt any amendment to the
Articles or By-Laws the effect of which is to so deny, diminish or encumber the
Indemnitee's rights to indemnity, such amendment shall apply only to acts or
failures to act occurring entirely after the Effective Date thereof unless the
Indemnitee shall have voted in favor of such adoption as a director or holder of
record of the Company's voting stock, as the case may be.
3. Additional Indemnification. (a) Without limiting any right which
the Indemnitee may have pursuant to Section 2 hereof, the Charter, the By-Laws,
the DGCL, any policy of insurance or otherwise, but subject to the limitations
on the maximum permissible indemnity which may exist under applicable law at the
time of any request for indemnity hereunder determined as contemplated by
Section 3(a) hereof, the Company shall indemnify the Indemnitee against any
amount which he is or becomes legally obligated to pay relating to or arising
out of any claim made against him because of any act, failure to act or neglect
or breach of duty, including any actual or alleged error, misstatement or
misleading statement, which he commits, suffers, permits or acquiesces in while
acting in his capacity as a director and officer of the Company, or, at the
request of the Company, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The payments
which the Company is obligated to make pursuant to this Section 3 shall include
without limitation judgments, liabilities, amounts paid as settlements, costs
and expenses, of legal actions, suits or proceedings and appeals therefrom, and
expenses of appeal, attachment or similar bonds; provided, however, that the
Company shall not be obligated under this Section 3(a) to make any payment in
connection with any claim against the Indemnitee:
(i) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from paying which
results in a final, nonappealable order; or
(ii) to the extent based upon or attributable to the
Indemnitee gaining in fact a personal profit to which he was not legally
entitled, including without limitation profits made from the purchase and sale
by the Indemnitee of equity securities of the Company which are recoverable by
the Company pursuant to Section 16(b) of the Securities Exchange Act of 1934,
and profits arising from transactions in publicly traded securities of the
Company which were effected by the Indemnitee in violation of Section 10(b) of
the Securities Exchange Act of 1934, including Rule 10b-5 promulgated
thereunder.
The determination of whether the Indemnitee shall be entitled to indemnification
under this Section 3(a) may be, but shall not be required to, be made in
accordance with Section 4(a)
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hereof. If that determination is so made, it shall be binding upon the Company
and the Indemnitee for all purposes.
(b) Expenses (including without limitation attorneys' fees)
incurred by Indemnitee in defending any actual or threatened civil or criminal
action, suit or proceeding shall be paid by the Company in advance of the final
disposition thereof as authorized in accordance with Section 4(b) hereof.
4. Certain Procedures Relating to Indemnification and Advancement of
Expenses.
(a) Except as otherwise permitted or required by the Charter,
By-Laws or DGCL, for purposes of pursuing his rights to indemnification under
Sections 2(a), 2(b) or 3(a) hereof, as the case may be, the Indemnitee shall be
required to (i) submit to the Board a sworn statement of request for
indemnification substantially in the form of Exhibit 1 attached hereto and made
a part hereof (the "Indemnification Statement") averring that he is entitled to
indemnification hereunder; and (ii) present to the Company reasonable evidence
of all expenses for which payment is requested. Submission of an Indemnification
Statement to the Board shall create a presumption that the Indemnitee is
entitled to indemnification under Sections 2(a), 2(b) or 3(a) hereof, as the
case may be, and the Board shall be deemed to have determined that the
Indemnitee is entitled to such indemnification unless within 30 calendar days
after submission of the Indemnification Statement the Board shall determine by
vote of a majority of the directors at a meeting at which a quorum is present,
based upon clear and convincing evidence (sufficient to rebut the foregoing
presumption), and the Indemnitee shall have received notice within such period
in writing of such determination, that the Indemnitee is not so entitled to
indemnification, which notice shall disclose with particularity the evidence in
support of the Board's determination. The foregoing notice shall be sworn to by
all persons who participated in the determination and voted to deny
indemnification. The provisions of this Section 4(a) are intended to be
procedural only and shall not affect the right of the Indemnitee to
indemnification under this Agreement, and any determination by the Board that
the Indemnitee is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be subject to judicial
review as provided in Section 7 hereof.
(b) For purposes of determining whether to authorize advancement
of expenses pursuant to Section 2(e) or 3(b) hereof, the Indemnitee shall submit
to the Board a sworn statement of request for advancement of expenses
substantially in the form of Exhibit 2 attached hereto and made a part hereof
(the "Undertaking"), averring that (i) he has reasonably incurred or will
reasonably incur actual expenses in defending an actual civil or criminal
action, suit, proceeding or claim and (ii) he undertakes to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Company under this Agreement or otherwise. Upon receipt of an Undertaking,
the Board shall within 10 calendar days authorize immediate payment of the
expenses stated in the Undertaking, whereupon such payments shall immediately be
made by the Company. No security shall be required in connection with any
Undertaking and any Undertaking shall be accepted without reference to the
Indemnitee's ability to make repayment.
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5. Subrogation; Duplication of Payments. (a) In the event of payment
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of the Indemnitee, who shall execute
all papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to make
any payment in connection with any claim made against the Indemnitee to the
extent the Indemnitee has actually received payment (under any insurance policy,
the Charter, the By-Laws or otherwise) of the amounts otherwise payable
hereunder.
6. Enforcement. (a) If a claim for indemnification made to the
Company pursuant to Section 4 hereof is not paid in full by the Company within
30 calendar days after a written claim has been received by the Company, the
Indemnitee may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim.
(b) In any action brought under Section 5(a) hereof, it shall be a
defense to a claim for indemnification pursuant to Sections 2(a) or 2(b) hereof
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
Undertaking has been tendered to the Company) that the Indemnitee has not met
the standards of conduct which make it permissible under the Charter, By-Laws or
DGCL for the Company to indemnify the Indemnitee for the amount claimed, but the
burden of proving such defense shall be on the Company. Neither the failure of
the Company (including the Board, independent legal counsel or the Stockholders)
to have made a determination prior to commencement of such action that
indemnification of the Indemnitee is proper in the circumstances because he has
met the applicable standard of conduct set forth in the Charter, By-Laws or
DGCL, nor an actual determination by the Company (including the Board,
independent legal counsel or the Stockholders) that the Indemnitee has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the Indemnitee has not met the applicable standard of
conduct.
(c) It is the intent of the Company that the Indemnitee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes
any action to declare this Agreement void or unenforceable, or institutes any
action, suit or proceeding designed (or having the effect of being designed) to
deny, or to recover from, the Indemnitee the benefits intended to be provided to
the Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from
time to time to retain counsel of his choice, at the expense of the Company as
hereinafter provided, to represent the Indemnitee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all costs
and expenses (including
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attorneys' fees ) reasonably incurred by the Indemnitee (i) as a result of the
Company's failure to perform this Agreement or any provision thereof or (ii) as
a result of the Company or any person contesting the validity or enforceability
of this Agreement or any provision thereof as aforesaid.
7. Merger or Consolidation. In the event that the Company shall be a
constituent corporation in a consolidation, merger or other reorganization, the
Company, if it shall not be the surviving, resulting or other corporation
therein, shall require as a condition thereto the surviving, resulting or
acquiring corporation to agree to indemnify the Indemnitee to the full extent
provided in Sections 2 and 3 hereof. Whether or not the Company is the
resulting, surviving or acquiring corporation in any such transaction, the
Indemnitee shall also stand in the same position under this Agreement with
respect to the resulting, surviving or acquiring corporation as he would have
with respect to the Company if its separate existence had continued.
8. Nonexclusivity and Severability. (a) The right to indemnification
provided by this Agreement shall not be exclusive of any other rights to which
the Indemnitee may be entitled under the Charter, By-Laws, the DGCL, any other
statute, insurance policy, agreement, vote of stockholders or directors or
otherwise, both as to actions in his official capacity and as to actions in
another capacity while holding such office, and shall continue after the
Indemnitee has ceased to be a director or officer.
(b) If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid and legal.
9. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
10. Modification; Survival. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof. This Agreement
may be modified only by an instrument in writing signed by both parties hereto.
The provisions of this Agreement shall survive the death, disability, or
incapacity of the Indemnitee or the termination of the Indemnitee's service as a
director and officer of the Company and shall inure to the benefit of the
Indemnitee's executors and administrators.
11. Certain Terms. For purposes of this Agreement, references to
"other enterprises" shall include employee benefit plans; and 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, the Indemnitee with respect to an employee benefit plan,
its participants or beneficiaries; references to the masculine shall include
the feminine; references to the singular shall include the plural and vice
versa; and if the Indemnitee acted in good faith and in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of an
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employee benefit plan he shall be deemed to have acted in a manner "not opposed
to the best interests of the Company" as referenced to herein.
12. Binding Effect; Successors and Assigns. This Agreement shall bind
and inure to the benefit of the successors, heirs, personal and legal
representatives and assigns of the parties hereto, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all,
substantially all or a substantial part of the business or assets of the
Company. The Company shall require and cause any successor (whether direct or
indirect, and whether by purchase, merger, consolidation or otherwise) to all,
substantially all or a substantial part of the business 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.
13. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the non-exclusive jurisdiction of the Court of
Chancery of Delaware for any purpose in connection with any action or proceeding
which arises out of or relates to this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
Omtool, Ltd.
By:___________________________
______________________________
______________________________
Printed Name
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Exhibit 1
INDEMNIFICATION STATEMENT
STATE OF ___________________)
) SS
COUNTY OF __________________)
I, [NAME], being first duly sworn, do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement dated as of ________ __, 1997 between Omtool, Ltd., a
Delaware corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against costs, expenses (including
attorneys' fees), judgments, liabilities and/or amounts paid in settlement, all
of which (collectively, "Liabilities") have been or will be incurred by me in
connection with an actual or threatened action, suit or proceeding to which I am
a party or am threatened to be made a party.
3. With respect to all matters related to any such action, suit or
proceeding, I am entitled to be indemnified as herein contemplated pursuant to
the aforesaid Indemnity Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of
______________________________________
______________________________________
______________________________________.
______________________________
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ______ day of _____________, 199_.
_________________________
[Seal]
My commission expires the _____ day of _______________, 19__.
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Exhibit 2
UNDERTAKING
STATE OF ___________________)
) SS
COUNTY OF __________________)
I, ____________________, being first duly sworn, do depose and say
as follows:
1. This Undertaking is submitted pursuant to the Indemnification
Agreement dated as of ________ __, 1997 between Omtool, Ltd., a Delaware
corporation (the "Company"), and the undersigned.
2. I am requesting advancement of certain costs and expenses which I
have incurred or will incur in defending an actual or pending civil or criminal
action, suit, proceeding or claim.
3. I hereby undertake to repay this advancement of costs and expenses
if it shall ultimately be determined that I am not entitled to be indemnified by
the Company under the aforesaid Indemnity Agreement or otherwise.
4. The costs and expenses for which advancement is requested are, in
general, all expenses related to _____________
_______________________________________________________________
_______________________________________________________________.
______________________________
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ______ day of _____________, 199_.
______________________________
[Seal]
My commission expires the _____ day of ______________, 19__.
