[FORM OF]
INDEMNIFICATION AGREEMENT
This agreement ("Agreement") is made as of this 1st day of January, l994
between Micro Warehouse, Inc., a Delaware corporation (hereinafter referred to
as the "Corporation") and _____________________________ (hereinafter referred to
as "Indemnitee").
W I T N E S S E T H:
WHEREAS, Indemnitee is an officer of Micro Warehouse, Inc., and in such
capacity is performing a valuable service to the Corporation; and
WHEREAS, the Board of Directors of the Corporation has adopted by-laws
providing for the indemnification of the officers, directors, agents (as
hereinafter defined) and employees of the Corporation to the maximum extent
authorized by Section 145 of the Delaware General Corporation Law; and
WHEREAS, Section 145(f) of the Delaware General Corporation Law allows for
the indemnification of officers, directors, agents and employees of the
Corporation by means of indemnification agreements such as contemplated herein;
and
WHEREAS, in order to thereby induce Indemnitee to serve or to continue to
serve the Corporation, the Corporation has determined and agreed to enter into
this Agreement with Indemnitee.
NOW, THEREFORE, in consideration of Indemnitee's service or continued
service as a director or officer of the Corporation after the date hereof, the
parties hereto agree as follows:
1. Definitions.
(a) The term "Agent" means any person who is or was a director,
officer, employee or other agent of the Corporation or a subsidiary of the
Corporation; or is or was serving at the request of, for the convenience of, or
to represent the interests of, the Corporation or a subsidiary of the
Corporation as a director, officer, employee or agent of another entity or
enterprise; or was a director, officer, employee or agent of a predecessor
corporation of the Corporation or a subsidiary (as hereinafter defined) of the
Corporation, or was a director, officer, employee or agent of another enterprise
at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.
(b) The term "Expenses" means all direct and indirect costs of any
type or nature whatsoever (including without limitation, all attorneys' fees,
costs of investigation and related disbursements) incurred by the Indemnitee in
connection with the investigation, settlement, defense or appeal of a claim or
proceeding (as hereinafter defined) covered hereby or establishing or enforcing
a right to indemnification under this Agreement.
(c) The term "Proceeding" means any threatened, pending or completed
claim, suit or action, whether civil, criminal, administrative, investigative or
otherwise.
(d) "Subsidiary" means any corporation of which more than 10% of the
outstanding voting securities is owned directly or indirectly by the
Corporation, and one or more Subsidiaries, taken as a whole.
2. Maintenance of Liability Insurance.
(a) The Corporation hereby covenants and agrees to each Indemnitee
that, so long as such Indemnitee shall continue to serve as an Agent of the
Corporation and thereafter so long as the Indemnitee shall be subject to any
claim or Proceeding by reason of the fact that the Indemnitee was an Agent of
the Corporation or in connection with such Indemnitee's acts as such an Agent,
the Corporation, subject to paragraph 2(b), shall obtain and maintain or cause
to be obtained and maintained in full force and effect directors' and officers'
liability insurance ("D&O Insurance") in reasonable amounts from established and
reputable insurers, but no less than the amounts currently in effect on the date
hereof.
(b) Notwithstanding the foregoing, the Corporation shall have no
obligation to obtain or maintain D&O Insurance if the Corporation determines in
good faith that the premium costs for such insurance are disproportionate to the
amount of coverage provided after giving effect to exclusions.
3. Mandatory Indemnification. The Corporation shall defend, indemnify
and hold harmless each Indemnitee:
(a) Third Party Actions. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any Proceeding (other than an
action by or in the right of the Corporation) by reason of the fact that such
Indemnitee is or was an Agent of the Corporation, or by reason of anything done
or not done by the Indemnitee in any such capacity, against any and all Expenses
and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) incurred by him or her in connection with the investigation,
defense, settlement or appeal of such Proceeding, so long as the Indemnitee
acted in good faith and in a manner he or she reasonably believed to be
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in or not opposed to the best interests of the Corporation, or, with respect to
any criminal action or Proceeding, had reasonable cause to believe his or her
conduct was not unlawful.
(b) Derivative Actions. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any Proceeding by or in the right
of the Corporation by reason of the fact that he or she is or was an Agent of
the Corporation, or by reason of anything done or not done by him or her in any
such capacity, against any amounts paid in settlement of any such Proceeding and
all other Expenses incurred by him or her in connection with the investigation,
defense, settlement or appeal of such Proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation; except that no indemnification under this
subparagraph shall be made, and the Indemnitee shall repay all amounts
previously advanced by the Corporation, in respect of any claim, issue or matter
for which such person is judged to be liable to the Corporation by a court of
competent jurisdiction due to misconduct in the performance of his or her duties
to the Corporation, unless and only to the extent that the court in which such
Proceeding was brought shall determine that such person is fairly and reasonably
entitled to indemnity.
(c) Actions Where Indemnitee is Deceased. If the Indemnitee is a
person who was or is a party or is threatened to be made a party to any
Proceeding by reason of the fact that he or she is or was an Agent of the
Corporation, or by reason of anything done or not done by him or her in any such
capacity, and prior to, during the pendency of, or after completion of, such
Proceeding, the Indemnitee shall die, then the Corporation shall defend,
indemnify and hold harmless the estate, heirs and legatees of the Indemnitee
against any and all Expenses and liabilities incurred by or for such persons or
entities in connection with the investigation, defense, settlement or appeal of
such Proceeding on the same basis as provided for the Indemnitee in paragraphs
3(a) and 3(b) above.
The Expenses and liabilities covered hereby shall be net of any payments by D&O
Insurance carriers or others.
4. Partial Indemnification. If an Indemnitee is found under paragraph
3(b), 7 or 10 hereof not to be entitled to indemnification for all of the
Expenses relating to a Proceeding, the Corporation shall indemnify the
Indemnitee for any portion of such Expenses not specifically precluded by the
operation of such paragraph 3(b), 7 or 10.
5. Mandatory Advancement of Expenses. Until a determination to the
contrary under paragraph 7 hereof is made and unless the provisions of paragraph
10 apply, the Corporation shall advance all Expenses incurred by each Indemnitee
in connection with the investigation, defense, settlement or appeal of any
Proceeding to which the Indemnitee is a party or is threatened to be made a
party covered by the indemnification in paragraph 3 hereof. As a condition to
such advance, each Indemnitee shall, at the request of the Corporation,
undertake in a manner satisfactory to the Corporation to repay such amounts
advanced if it shall ultimately be determined by an order of a court that the
Indemnitee is not entitled to be indemnified by the
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Corporation by the terms hereof or under applicable law. Subject to paragraph 6
hereof, the advances to be made hereunder shall be paid by the Corporation to
the Indemnitee within twenty (20) days following delivery of a written request
by
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the Indemnitee to the Corporation, which request shall be accompanied by
vouchers, invoices and similar evidence documenting the amounts requested.
6. Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement or threat of any Proceeding covered hereby, the Indemnitee shall
notify the Corporation of the commencement or threat thereof, provided that any
failure to so notify shall not relieve the Corporation of any of its obligations
hereunder, except to the extent that such failure or delay increases the
liability of the Corporation hereunder.
(b) If, at the time of the receipt of a notice pursuant to paragraph
6(a) above, the Corporation has D&O Insurance in effect, the Corporation shall
give prompt notice of the Proceeding or claim to its insurers in accordance with
the procedures set forth in the applicable policies. The Corporation shall
thereafter take all necessary or desirable action to cause such insurers to pay
all amounts payable as a result of such Proceeding in accordance with the terms
of such policies and the Indemnitee shall not take any action (by waiver,
settlement or otherwise) which would adversely affect the ability of the
Corporation to obtain payment from its insurers.
(c) If the Corporation shall be obligated to pay the Expenses of any
Indemnitee, the Corporation shall assume the defense of the Proceeding to which
the Expenses relate and shall deliver a notice of assumption to the Indemnitee.
The Corporation will not be liable to the Indemnitee under this Agreement for
any fees of counsel incurred after delivery of such notice with respect to such
Proceeding or any costs of settlement not approved in advance in writing by the
Corporation, provided that (i) the Indemnitee shall have the right to employ his
or her own counsel in any such Proceeding at the Indemnitee's expense, and (ii)
if (1) the employment of counsel by the Indemnitee has been previously
authorized by the Corporation, (2) the Indemnitee shall have provided the
Corporation with an opinion of counsel stating that there is a strong argument
that a conflict of interest exists between the Corporation and the Indemnitee in
the conduct of any such defense, or (3) the Corporation shall not have assumed
the defense of such Proceeding, the fees and Expenses of Indemnitee's counsel
shall be at the expense of the Corporation.
7. Determination of Right to Indemnification.
(a) To the extent an Indemnitee has been successful on the merits or
otherwise in defense of any Proceeding, claim, issue or matter covered hereby,
the Indemnitee need not repay any of the Expenses advanced in connection with
the investigation, defense or appeal of such Proceeding.
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(b) If paragraph 7(a) is inapplicable, the Corporation shall remain
obligated to indemnify the Indemnitee, and the Indemnitee need not repay
Expenses previously advanced, unless the Corporation, by contested motion before
a court of competent jurisdiction, obtains preliminary or permanent relief
suspending or denying the obligation to advance or indemnification for Expenses.
(c) Notwithstanding a determination by a court that the Indemnitee
is not entitled to indemnification with respect to a specific Proceeding, the
Indemnitee shall have the right to apply to the Court of Chancery of Delaware
for the purpose of enforcing the Indemnitee's right to indemnification pursuant
to this Agreement.
(d) Notwithstanding any other provision in this Agreement to the
contrary, the Corporation shall indemnify the Indemnitee against all Expenses
incurred by the Indemnitee in connection with any Proceeding under paragraph
7(b) or 7(c) above and against all Expenses incurred by the Indemnitee in
connection with any other Proceeding between the Corporation and the Indemnitee
involving the interpretation or enforcement of the rights of the Indemnitee
under this Agreement unless a court of competent jurisdiction finds that the
material claims and/or defenses of the Indemnitee in any such Proceeding were
frivolous or made in bad faith.
8. Certificate of Incorporation and By Laws. The Corporation agrees that
the Certificate of Incorporation and By Laws of the Corporation in effect on the
date hereof shall not be amended to reduce, limit, hinder or delay (i) the
rights of the Indemnitee granted hereby or (ii) the ability of the Corporation
to indemnify the Indemnitee as required hereby. The Corporation further agrees
that it shall exercise the powers granted to it under its Certificate of
Incorporation, its By Laws and by applicable law to indemnify any Indemnitee to
the fullest extent possible as required hereby. The Corporation further
covenants and agrees that Articles 9 and 10 of the Corporation's Certificate of
Incorporation shall not be amended in a manner (i) adverse to any Indemnitee or
(ii) inconsistent with the benefits granted to the Indemnitee hereby.
9. Witness Expenses. The Corporation agrees to reimburse each Indemnitee
for all Expenses, including attorneys' fees and travel costs, incurred by such
Indemnitee in connection with being a witness, or if an Indemnitee is threatened
to be made a witness, with respect to any Proceeding, by reason of his serving
or having served as an Agent of the Corporation.
10. Exceptions. Notwithstanding any other provision herein to the
contrary, the Corporation shall not be obligated pursuant to the terms of this
Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
to the Indemnitee with respect to Proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense (other than Proceedings
brought to establish or enforce a right to indemnification under this Agreement
or the provisions of the Corporation's Certificate of Incorporation or By Laws
unless a court of competent jurisdiction determines that each of the material
assertions made by the Indemnitee in such Proceeding was not made in good faith
or was
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frivolous).
(b) Unauthorized Settlements. To indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of a Proceeding covered hereby
without the prior written consent of the Corporation to such settlement.
11. Non-exclusivity. This Agreement is not the exclusive arrangement
between the Corporation and any Indemnitee regarding the subject mater hereof
and shall not diminish or affect any other rights which each Indemnitee may have
under any provision of law, the Corporation's Certificate of Incorporation or By
Laws, under other agreements, or otherwise.
12. Continuation after Term. Each Indemnitee's rights hereunder shall
continue after the Indemnitee has ceased acting as a director or Agent of the
Corporation and the benefits hereof shall inure to the benefit of the heirs,
executors and administrators of each Indemnitee.
13. Interpretation of Agreement. This Agreement shall be interpreted and
enforced so as to provide indemnification to the Indemnitee to the fullest
extent now or hereafter permitted by law.
14. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable, (i) the validity, legality and
enforceability of the remaining provisions of the Agreement shall not in any way
be effected or impaired thereby, and (ii) to the fullest extent possible, the
provisions of this Agreement shall be construed or altered by the court so as to
remain enforceable and to provide the Indemnitee with as many of the benefits
contemplated hereby as are permitted under law.
15. Counterparts, Modification and Waiver. This Agreement may be signed in
counterparts. This Agreement constitutes a separate agreement between the
Corporation and each Indemnitee and may be supplemented or amended as to an
Indemnitee only by a written instrument signed by the Corporation and such
Indemnitee, with such amendment binding only the Corporation and the signing
Indemnitee(s). All waivers must be in a written document signed by the party to
be charged. No waiver of any of the provisions of this Agreement shall be
implied by the conduct of the parties. A waiver of any right hereunder shall not
constitute a waiver of any other right hereunder.
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IN WITNESS WHEREOF, the parties hereby have caused this agreement to be
duly executed as of the day and year first above written.
MICRO WAREHOUSE, INC.
By____________________________
Xxxxx X. Xxx, Its
Executive Vice President
Hereunto Duly Authorized
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