EXHIBIT 10.9
INDEMNITY AGREEMENT
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AGREEMENT, effective as of _____________, 2000 between Netpliance,
Inc., a Delaware 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;
WHEREAS, Indemnitee is a director and/or officer of the Company;
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;
WHEREAS, the Bylaws (the "Bylaws") and Amended and Restated
Certificate of Incorporation (the "Certificate") of the Company require the
Company to indemnify and advance expenses to its directors and officers to the
fullest extent permitted by law, and the Indemnitee has agreed to serve as a
director [and/or] an officer of the Company in part in reliance on such
provisions in the Bylaws and Certificate;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability to enhance Indemnitee's continued service
to the Company in an effective manner and Indemnitee's reliance on the foregoing
provisions in the Bylaws and Certificate, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such provisions
in the Bylaws and Certificate will be available to Indemnitee (regardless of,
among other things, any amendment to or revocation of such provisions in the
Bylaws or Certificate or any change in the composition of the Company's Board of
Directors (the "Board") or acquisition transaction relating to the Company), the
Company wishes to provide in this Agreement for the indemnification of and the
advancing of expenses to Indemnitee to the fullest extent permitted by law and
as set forth in this Agreement, and, to the extent insurance is maintained, for
the continued coverage of Indemnitee under Company 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.
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(a) Change in Control: shall be deemed to have occurred upon any of the
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following events:
(i) The acquisition in or more transactions by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), of
"Beneficial
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Ownership" (within the meaning of Rule 13d-3 promulgated under
the ▇▇▇▇ ▇▇▇) of twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding voting
securities (the "Voting Securities"), provided, however, that for
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purposes of this Section 1(a)(i), the Voting Securities acquired
directly from the Company by any Person, or with the prior
approval of the Board, shall be excluded from the determination
of such Person's Beneficial Ownership of Voting Securities (but
such Voting Securities shall be included in the calculation of
the total number of Voting Securities then outstanding); or
(ii) The individuals who, as of the Effective Date, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute
at least two-thirds of the Board; provided, however, that if the
election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Agreement, be considered as a member of the
Incumbent Board; or
(iii) Approval by stockholders of the Company of (A) a merger or
consolidation involving the Company if the stockholders of the
Company immediately before such merger or consolidation do not
own, directly or indirectly immediately following such merger or
consolidation, more than seventy-five percent (75%) of the
combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the
Voting Securities immediately before such merger or consolidation
or (B) a complete liquidation or dissolution of the Company or an
agreement for the sale or other disposition of all or
substantially all of the assets of the Company.
(iv) Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because twenty-five percent (25%) or more
of the then outstanding Voting Securities is acquired by (i) a
trustee or other fiduciary holding securities under one or more
employee benefit plans maintained by the Company or any of its
subsidiaries or (ii) any corporation that, immediately prior to
such acquisition, is owned directly or indirectly by the
stockholders of the Company in the same proportion as their
ownership of stock in the Company immediately prior to such
acquisition;
(v) Moreover, notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the
"Subject Person") acquired Beneficial Ownership of more than the
permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases
the proportional number of shares Beneficially Owned by the
Subject Person, provided that if a Change in
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Control would occur
(but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(b) Claim: any threatened, pending or completed action, suit or
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proceedings, including any arbitration proceeding, whether civil,
criminal, administrative or investigative or other, including, without
limitation, an action by or in the right of any other corporation of
any type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, whether
predicated on foreign, federal, state or local law and whether formal
or informal.
(c) Expenses: include attorneys' fees and all other costs, charges and
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expenses 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.
(d) Indemnifiable Event: any event or occurrence related to the
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Indemnitee's status as, or agreement to become, a director, officer,
employee, agent or fiduciary of the Company, or is or was serving or
has agreed to serve in any capacity, at the request of the Company, in
any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or not
done by Indemnitee in any such capacity.
(e) Potential Change in Control: shall be deemed to have occurred if: (i)
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the Company enters into an agreement or arrangement, the consummation
of which would result in the occurrence of a Change in Control; or
(ii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred.
(f) Voting Securities: any securities of the Company that vote generally
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in the election of directors.
2. Basic Indemnification Arrangement.
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(a) In the event Indemnitee was, is or becomes 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 applicable law, as soon
as practicable but in no event later than thirty days after written
demand is presented to the Company, against any and all Expenses,
judgments, fines, penalties, excise taxes and amounts paid or to be
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, excise
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taxes or amounts paid or to be paid in settlement) of such Claim. If
Indemnitee makes a request to be indemnified under this Agreement, the
Board of Directors (acting by a quorum consisting of directors who are
not parties to the Claim with respect to an Indemnifiable Event or, if
such a quorum is not obtainable, acting upon an opinion in writing of
independent legal counsel ("Board Action")) shall, as soon as
practicable but in no event later than thirty days after such request,
authorize such indemnification. Notwithstanding anything in the
Certificate, the Bylaws or this Agreement to the contrary, following a
Change in Control, Indemnitee shall be entitled to indemnification
pursuant to this Agreement in connection with any claim initiated by
Indemnitee.
(b) Notwithstanding anything in the Certificate, the Bylaws or this
Agreement to the contrary, if so requested by Indemnitee, the Company
shall advance (within two business days of such request) any and all
Expenses relating to a Claim to Indemnitee (an "Expense Advance"),
upon the receipt of a written undertaking by or on behalf of
Indemnitee to repay such Expense Advance if a judgment or other final
adjudication or determination adverse to Indemnitee establishes that
Indemnitee, with respect to such claim, is not entitled to
indemnification.
(c) If there has been no Board Action or Arbitration (as defined in
Section 3), or if Board Action determines that Indemnitee would not be
permitted to be indemnified, in any respect, in whole or in part, in
accordance with Section 2(a) of this Agreement, Indemnitee shall have
the right to commence litigation in the court that is hearing the
action or proceeding relating to the Claim for which indemnification
is sought or in any court in the State of Texas having subject matter
jurisdiction thereof and in which venue is proper seeking an initial
determination by the court that Indemnitee is entitled to
indemnification hereunder, and the Company hereby consents to service
of process and to appear in any such proceeding. In any such
litigation, the burden of proof will be on the Company to establish
that Indemnitee is not entitled to indemnification hereunder.
Notwithstanding anything in the Certificate, the Bylaws or this
Agreement to the contrary, if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction or Arbitration to
secure a determination that Indemnitee should be indemnified under
this Agreement, the Bylaws of the Company or applicable law, any Board
Action under which Indemnitee would not be permitted to be indemnified
in accordance with Section 2(a) of this Agreement shall not be
conclusive or binding and shall not create any presumption that
Indemnitee is not entitled to indemnification hereunder. Any Board
Action not followed by such litigation or Arbitration shall be
conclusive and binding on the Company and Indemnitee.
3. Change in Control. The Company agrees that if there is a Change
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in Control, Indemnitee, by giving written notice to the Company and the American
Arbitration Association (the "Notice"), may require that any controversy or
claim arising out of or relating to this Agreement, or the breach thereof, shall
be settled by arbitration (the "Arbitration") in Austin, Texas in accordance
with the Rules of the American Arbitration Association (the "Rules"). The
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Arbitration shall be conducted by a panel of three arbitrators selected in
accordance with the Rules within thirty days of delivery of the Notice. The
decision of the panel shall be made as soon as practicable after the panel has
been selected, and the parties agree to use their reasonable efforts to cause
the panel to deliver its decision within ninety days of its selection. The
Company shall pay all fees and expenses of the Arbitration. The Arbitration
shall be conclusive and binding on the Company and Indemnitee, and the Company
or Indemnitee may cause judgment upon the award rendered by the arbitrators to
be entered in any court having jurisdiction thereof.
4. Indemnification For Additional Expenses. The Company shall
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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 by or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under law, 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 expense payment or insurance recovery,
as the case may be.
5. Partial Indemnity, Etc. If Indemnitee is entitled under any
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provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties, excise taxes and amounts
paid or to be 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, without limitation, dismissal without prejudice,
Indemnitee shall be indemnified against any and all Expenses, judgments, fines,
penalties, excise taxes and amounts paid or to be paid in settlement of such
Claim. In connection with any determination by Board Action, Arbitration or a
court of competent jurisdiction that Indemnitee is not entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.
6. No Presumption. For purposes of this Agreement, the termination
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of any claim, action, suit or proceeding, 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 or this Agreement.
7. Contribution. In the event that the indemnification provided for
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in this Agreement is unavailable to Indemnitee 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 deemed fair and reasonable in light of all of the circumstances of
such action by Board Action or Arbitration or by the court before which such
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action was brought 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 action; and/or (ii) the relative fault of the Company (and its
other directors, officers, employees and agents) and Indemnitee in connection
with such event(s) and/or transaction(s). Indemnitee's right to contribution
under this Paragraph 7 shall be determined in accordance with, pursuant to and
in the same manner as, the provisions in Paragraphs 2 and 3 hereof relating to
Indemnitee's right to indemnification under this Agreement.
8. Notice to the Company by Indemnitee. Indemnitee agrees to notify
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the Company promptly in writing upon being served with or having actual
knowledge of any citation, summons, complaint, indictment or any other similar
document relating to any action which may result in a claim of indemnification
or contribution hereunder.
9. Non-exclusive, Etc. The rights of the Indemnitee hereunder shall
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be in addition to any other rights Indemnitee may have under the Company's
Certificate or Bylaws or the Delaware General Corporation Law or otherwise, and
nothing herein shall be deemed to diminish or otherwise restrict Indemnitee's
right to indemnification under any such other provision. To the extent
applicable law or the Certificate of Incorporation or the Bylaws of the Company,
as in effect on the date hereof or at any time in the future, permit greater
indemnification than as provided for in this Agreement, the parties hereto agree
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such law or provision of the Certificate of Incorporation or Bylaws and this
Agreement shall be deemed amended without any further action by the Company or
Indemnitee to grant such greater benefits. Indemnitee may elect to have
Indemnitee's rights hereunder interpreted on the basis of applicable law in
effect at the time of execution of this Agreement, at the time of the occurrence
of the Indemnifiable Event giving rise to a Claim or at the time indemnification
is sought.
10. Liability Insurance.
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(a) To the extent the Company maintains at any time 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 other Company director or officer under such
insurance policy. The purchase and maintenance of such insurance
shall not in any way limit or affect the rights and obligations of the
parties hereto, and the execution and delivery of this Agreement shall
not in any way be construed to limit or affect the rights and
obligations of the Company and/or of the other parties under any such
insurance policy. Indemnitee will provide all such information that
the Company may reasonably request in connection with the purchase and
maintenance of such insurance.
(b) For five years after the Indemnitee no longer serves as a director or
officer of the Company, the Company shall continue to provide
directors' and officers' liability coverage for liabilities of the
Indemnitee occurring during his service with the Company on terms no
less favorable in terms of coverage and amount than such insurance
maintained by the Company at the date of the Indemnitee's separation
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from the Company. In the event such coverage is not available, the
maximum available coverage shall be maintained pursuant to this
covenant.
11. Period of Limitations. No legal action shall be brought and no
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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
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otherwise applicable to any such cause of action such shorter period shall
govern.
12. Amendments, Etc. No supplement, modification or amendment of
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this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
13. Subrogation. In the event of payment under this Agreement, the
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Company shall be subrogated to the extent of such payment to all of the rights
of recovery with respect to such payment 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.
14. No Duplication of Payments. The Company shall not be liable
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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.
15. Binding Effect, Etc. This Agreement shall be binding upon and
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inure to the benefit of and be enforceable against and by the parties hereto and
their respective successors, assigns (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), spouses, heirs and personal and
legal representatives. 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
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. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director and/or officer
of the Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
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severable in the event that any of the provisions thereof (including any
provision within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise
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unenforceable, and the remaining provisions shall remain enforceable to the
fullest extent permitted by law.
17. Notices. All notices, requests, demands and other communications
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required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by certified registered
mail, return receipt requested, with postage prepaid.
A. If to Indemnitee, to:
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or to such other person or address which Indemnitee shall furnish to the Company
in writing pursuant to the above.
B. If to the Company, to: Netpliance, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
or to such person or address as the Company shall furnish to Indemnitee in
writing pursuant to the above.
18. Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the Effective Date.
NETPLIANCE, INC.
By:
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Name:
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Title:
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INDEMNITEE:
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