1
EXHIBIT 10.5
INDEMNITY AGREEMENT
This Indemnity Agreement (this "Agreement") is made and
entered into as of this ____ day of __________, 1997 by and between Advanced
Communication Systems, Inc., a Delaware corporation (the "Company"), and
_________________ ("Indemnitee").
WHEREAS, Indemnitee is currently serving as a director and/or
officer of the Company and/or, at the Company's request, as a director and/or
officer of another corporation, partnership, joint venture, trust or Other
Enterprise, and the Company wishes Indemnitee to continue in such capacity;
WHEREAS, the Amended and Restated Certificate of Incorporation
and Bylaws of the Company (the "Certificate of Incorporation") provide that the
Company shall indemnify, in the manner and to the fullest extent permitted by
the Delaware General Corporation Law (the "DGCL"), certain persons, including
directors and officers of the Company, against specified expenses and losses
arising out of certain threatened, pending or completed actions, suits or
proceedings;
WHEREAS, Indemnitee has indicated that he or she may not be
willing to continue to serve as a director and/or officer of the Company
and/or, at the Company's request, as a director and/or officer of another
corporation, partnership, joint venture, trust or Other Enterprise in the
absence of indemnification in addition to that provided in the Certificate of
Incorporation and Bylaws of the Company;
WHEREAS, Section 145(f) of the DGCL expressly recognizes that
the indemnification provisions of the DGCL are not exclusive of any other
rights to which a person seeking indemnification may be entitled under the
Certificate of Incorporation or Bylaws of the Company, an agreement providing
for indemnification, a resolution of stockholders or directors or otherwise;
WHEREAS, the Company, in order to induce Indemnitee to
continue to serve in such capacity, has agreed to provide Indemnitee with the
benefits contemplated by this Agreement, and, as a result of the provision of
such benefits, Indemnitee has agreed to continue to serve in such capacity;
WHEREAS, the Bylaws of the Company expressly recognize that
the indemnification provisions therein shall not be deemed exclusive of, and
shall not affect, any other rights to which a person seeking indemnification
may be entitled under any agreement; and
WHEREAS, this Agreement is being entered into pursuant to the
Certificate of Incorporation and Bylaws of the Company as permitted by the
DGCL, and as authorized by the stockholders of the Company.
NOW, THEREFORE, in consideration of the promises, conditions
and representations set forth herein, including Indemnitee's continued service
as a director and/or officer of the Company and/or, at the Company's request,
as a director and/or officer of another corporation, partnership, joint
venture, trust or Other Enterprise, the Company and Indemnitee hereby agree as
follows:
2
Section 1. Definitions.
The following terms, as used herein, shall have the following
meanings:
(a) "Covered Claim" shall mean any claim against
Indemnitee based upon or arising out of any past, present or future act,
omission, neglect or breach of duty, including any actual or alleged error,
misstatement or misleading statement, which Indemnitee may commit, omit or
suffer while serving in his or her capacity as a director and/or officer of the
Company and/or, while serving at the request of the Company, as a director
and/or officer of another corporation, partnership, joint venture, trust or
Other Enterprise, provided that such claim:
(i) is not based upon and does not arise out of
Indemnitee gaining in fact any personal profit or advantage to which
Indemnitee is not legally entitled;
(ii) is not for an accounting of profits made from
the purchase or sale by Indemnitee of securities of the Company within
the meaning of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or similar provisions of any state law; and
(iii) is not based upon and does not arise out of
Indemnitee's knowingly fraudulent, deliberately dishonest or willful
misconduct.
(b) "Determination" shall mean a determination, based
upon the facts known at the time, made by:
(i) the Board of Directors of the Company, by the
vote of a majority of the directors who are not parties to the
action, suit or proceeding in question, even though less than a
quorum;
(ii) if there are no such directors, or, if directed
by a majority of such disinterested directors, by independent legal
counsel in a written opinion (the independent legal counsel may be
outside counsel currently or previously employed by the Company,
provided that such counsel (x) has not provided legal services to the
Indemnitee, (y) does not regularly advise the directors or senior
management of the Company with respect to their actions, duties and
responsibilities, and (z) and has not provided legal services to the
Company or the Indemnitee with respect to the transaction or matter
out of which the action, suit or proceeding arose);
(iii) the stockholders of the Company; or
(iv) a court of competent jurisdiction in a final,
nonappealable adjudication.
(c) "Payment" shall mean any and all amounts which
Indemnitee is or becomes legally obligated to pay in connection with a Covered
Claim, including, without limitation, damages, judgments, amounts paid in
settlement, reasonable costs of investigation, reasonable fees and expenses of
attorneys, costs of investigative, judicial or administrative proceedings or
appeals and costs of attachment or similar bonds.
2
3
(d) "Other Enterprises" shall include employee benefit
plans, and civic, non-profit, or charitable organizations, whether or not
incorporated.
(e) "serving at the request of the Company" shall mean
any service at the request or with the express or implied authorization of the
Company, as a director and/or officer of the Company, which imposes duties on,
or involves services by, Indemnitee with respect to a corporation or Other
Enterprise, its participants or beneficiaries; and if Indemnitee acted in good
faith and in a manner he or she reasonably believed to be in the interest of
the participants and beneficiaries of such Other Enterprises, he or she shall
be deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.
Section 2. Indemnification.
(a) The Company shall indemnify and hold harmless
Indemnitee against and from any and all Payments to the extent that:
(i) the Company shall not have indemnified and
held harmless Indemnitee against and from such Payments otherwise than
pursuant to this Agreement;
(ii) Indemnitee shall not already have received
Payment on account of such Payments pursuant to one or more valid and
collectible insurance policies; and
(iii) such indemnification by the Company is not
unlawful.
(b) The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in a settlement of any
action, suit or proceeding effected without the Company's prior written
consent. The Company shall not settle any claim in any manner that would
impose any obligation on Indemnitee without Indemnitee's prior written consent.
Indemnitee shall not unreasonably withhold his or her consent to any proposed
settlement.
Section 3. Indemnification Procedure; Advancements of Costs and Expenses.
(a) Promptly after receipt by Indemnitee of notice of the
commencement or threat of commencement of any action, suit or proceeding,
Indemnitee shall, if indemnification with respect thereto may be sought from
the Company under this Agreement, notify the Company thereof.
(b) If, at the time of receipt of such notice, the
Company has directors' and officers' liability insurance in effect, the Company
shall give prompt notice of the commencement of such action, suit or proceeding
to the insurers in accordance with the procedures set forth in the respective
policies in favor of Indemnitee. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Payments payable as a result of such action, suit or proceeding
in accordance with the terms of such policies.
(c) All costs and expenses, including reasonable fees and
expenses of attorneys, incurred by Indemnitee in defending or investigating
such action, suit or proceeding shall be paid by the Company in advance of the
final disposition of such action,
3
4
suit or proceeding; provided, however, that no such costs or expenses shall be
paid by the Company if, with respect to such action, suit or proceeding, a
Determination is made that:
(i) Indemnitee did not act in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company;
(ii) in the case of any criminal action or
proceeding, Indemnitee had reasonable cause to believe his or her
conduct was unlawful; or
(iii) Indemnitee intentionally breached his or her
duty to the Company or its stockholders.
Indemnitee hereby undertakes to and agrees that he or she will repay the
Company for any costs or expenses advanced by or on behalf of the Company
pursuant to this Section 3(c) if it shall ultimately be determined by a court
of competent jurisdiction in a final, nonappealable adjudication that
Indemnitee is not entitled to indemnification under this Agreement. The costs
or expenses advanced shall be repaid within sixty (60) days of such
adjudication.
(d) If the Company shall advance the costs and expenses
of any such action, suit or proceeding pursuant to Section 3(c) of this
Agreement, it shall be entitled to assume the defense of such action, suit or
proceeding, if appropriate, with counsel reasonably satisfactory to Indemnitee,
upon delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, the Company shall not be liable to Indemnitee under
this Agreement for any costs or expenses subsequently incurred by Indemnitee in
connection with such defense other than reasonable costs and expenses of
investigation; provided, however, that:
(i) Indemnitee shall have the right to employ
separate counsel in any such action, suit or proceeding provided that
the fees and expenses of such counsel incurred after delivery of
notice by the Company of its assumption of such defense shall be at
Indemnitee's own expense; and
(ii) the fees and expenses of counsel employed by
Indemnitee shall be at the expense of the Company if (x) the
employment of counsel by Indemnitee has previously been authorized by
the Company, (y) Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and Indemnitee in
the conduct of any such defense (provided that the Company shall not
be required to pay for more than one counsel to represent two or more
Indemnitees where such Indemnities have reasonably concluded that
there is no conflict of interest among them in the conduct of such
defense), or (z) the Company shall not, in fact, have employed counsel
to assume the defense of such action, suit or proceeding.
(e) All Payments on account of the Company's advancement
obligations under Section 3(c) of this Agreement shall be made within twenty
(20) days of Indemnitee's written request therefor. All other Payments on
account of the Company's obligations under this Agreement shall be made within
sixty (60) days of Indemnitee's written request therefor, unless a
Determination is made that the claims giving rise to Indemnitee's request are
not payable under this Agreement. Each request for Payment hereunder shall be
accompanied by evidence reasonably satisfactory to the Company of the
Indemnitee's incurrence of the costs and expenses for which such Payment is
sought.
4
5
Section 4. Enforcement of Indemnification; Burden of Proof.
If a claim for indemnification or advancement of costs and
expenses under this Agreement is not paid in full by or on behalf of the
Company within the time period specified in Section 3(e) of this Agreement,
Indemnitee may at any time thereafter bring suit against the Company to recover
the unpaid amount of such claim. In any such action, if a prior Determination
has been made that such claim is not payable under this Agreement, the burden
of proving that indemnification is required under this Agreement shall be on
Indemnitee. If no such prior Determination shall have been made, the Company
shall have the burden of proving that indemnification is not required under
this Agreement.
Section 5. Rights Not Exclusive.
The rights to indemnification and advancement of costs and
expenses provided hereunder shall not be deemed exclusive of any other rights
to which Indemnitee may be entitled under any charter document, bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 6. Subrogation.
In the event of Payment under this Agreement by or on behalf
of the Company, 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
that may be required and shall do all things that may be necessary to secure
such rights, including, without limitation, the execution of such documents as
may be necessary to enable the Company effectively to bring suit to enforce
such rights.
Section 7. Choice of Law.
This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Delaware without regard to its
choice of law or conflict of law rules.
Section 8. Jurisdiction.
The Company and Indemnitee hereby irrevocably consent to the
jurisdiction of the Court of Chancery of the State of Delaware for all purposes
in connection with any action, suit or proceeding which arises out of or
relates to this Agreement, and agree that any action instituted under this
Agreement shall be brought only in the Court of Chancery of the State of
Delaware.
Section 9. Attorney's Fees.
If any action, suit or proceeding is commenced in connection
with or related to this Agreement, the prevailing party shall be entitled to
have its costs and expenses, including, without limitation, reasonable fees and
expenses of attorneys and reasonable expenses of investigation, paid by the
losing party.
5
6
Section 10. Severability.
If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, the remainder
of this Agreement and the application of such provision to other persons or
circumstances shall not be affected.
Section 11. Successors and Assigns.
This Agreement shall be binding upon all successors and
assigns of the Company, including any transferee of all or substantially all of
its assets and any successor by merger or otherwise by operation of law, and
shall be binding upon and inure to the benefit of the heirs, executors and
administrators of Indemnitee.
Section 12. Descriptive Headings.
The descriptive headings in this Agreement are included for
the convenience of the parties only and shall not affect the construction of
this Agreement.
Section 13. Counterparts.
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one document.
Section 14. Entire Agreement.
Subject to Section 2(b), this Agreement constitutes the entire
agreement of the parties relating to the subject matter hereof and shall
supersede all other agreements and understandings, if any, between the parties
with respect to the matters contemplated herein.
Section 15. Amendment.
No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing and signed by each of
the parties hereto.
IN WITNESS WHEREOF, the Company and Indemnitee have executed
this Agreement as of the day and year first above written.
THE COMPANY: Advanced Communication Systems, Inc.
By:
-----------------------------
Name:
Title:
INDEMNITEE: -----------------------------
WA970900.134/6+
6
