EXHIBIT 10.9
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made as of the 15th
day of April, 1998, by and between Versatility, Inc., a Delaware corporation
(the "Corporation"), and Xxxxxxx X. Xxxxxx ("Indemnitee").
RECITALS
A. It is essential to the Corporation to retain and attract as
officers of the Corporation the most capable persons available.
B. The substantial increase in corporate litigation subjects
officers to expensive litigation risks at the same time that the availability of
directors' and officers' liability insurance has been severely limited.
C. Pursuant to Article Tenth, Section 9 of the second amended and
restated certificate of incorporation of the Corporation, it is the desire of
the Corporation to indemnify officers of the Corporation so as to provide them
with the maximum possible protection permitted by law.
AGREEMENTS
NOW, THEREFORE, the Corporation and Indemnitee do hereby agree as
follows:
1. Agreement to Serve. Indemnitee agrees to serve or continue to
serve as an officer of the Corporation for so long as he is duly elected or
appointed or until such time as he tenders his resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending
or completed action, suit, investigation or proceeding, and any appeal thereof,
whether brought by or in the right of the Corporation or otherwise and whether
civil, criminal, administrative or investigative, and/or any inquiry or
investigation, in which Indemnitee may be or may have been involved as a party
or otherwise, or that Indemnitee in good faith believes might lead to the
institution of any such Proceeding, by reason of the fact that Indemnitee is or
was an officer of the Corporation, by reason of any action taken by him or of
any inaction on his part while acting as such an officer, or by reason of the
fact that he is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise; in each case whether or not he is acting or serving
in any such capacity at the time any liability or expense is incurred for which
indemnification or reimbursement can be provided under this Agreement.
(b) The term "Expenses" shall include, without limitation,
expenses, costs and obligations, paid or incurred, of investigations, judicial
or administrative proceedings or appeals, amounts paid in settlement by or on
behalf of Indemnitee, attorneys' fees and disbursements and any expenses
reasonably and actually incurred in establishing a right to indemnification
under Sections 9(b) and 18 of this Agreement, including, without limitation,
those incurred in investigating, defending, being a witness in or participating
in (including on appeal), or preparing to defend with respect to any claim,
issue or matter relating thereto or in connection therewith.
(c) A "Change in Control" shall be deemed to have occurred if,
after the date hereof, there is any transaction or series of transactions within
any twelve (12) month period, including, without limitation, a merger,
consolidation or exchange of securities, in which the holders of all of the
Corporation's outstanding voting securities immediately prior to the
consummation of such transaction or the first transaction of such series of
transactions do now own, directly or indirectly, a majority of the combined
voting power of the Corporation's outstanding securities upon consummation of
such transaction or series of such transactions.
(d) The term "Independent Legal Counsel" shall include any
attorney or firm of attorneys, selected in accordance with Section 5 hereof, who
shall not have otherwise performed services for the Corporation or Indemnitee
within the five (5) years prior to the date of selection (other than with
respect to matters concerning the rights of Indemnitee under this Agreement, or
of other Indemnitees under similar indemnification agreements).
(e) References to "other enterprise" shall include employee
benefit plans; references to "fines" shall include any excise tax assessed with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation or any subsidiary which imposes duties on, or
involves services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants or beneficiaries.
3. Indemnification in Third-Party Proceedings. The Corporation
shall indemnify Indemnitee in accordance with the provisions of this Agreement
if Indemnitee is party to or threatened to be made a party to any Proceeding
(other than a Proceeding by or in the right of the Corporation or any subsidiary
of the Corporation to procure a judgment in its favor), against all Expenses,
judgments, fines and penalties actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of such Proceeding, but only if he
acted in good faith and in a manner which he reasonably believed to be (in the
case of conduct in his official capacity) in the best interests of the
Corporation or (in all other cases) not opposed to the best interests of the
Corporation, and, in the case of a criminal Proceeding, in addition, had no
reasonable cause to believe that his conduct was unlawful. The termination of
any such Proceeding by judgment, order of court, settlement, conviction, or upon
a plea of nolo contendere, or its equivalent, shall not, of itself, create a
presumption (i) that Indemnitee did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation or (ii) that Indemnitee did not meet any other particular standard
of conduct or have any other particular belief or (iii) that a court has
determined that indemnification is not permitted by applicable law, and (iv)
with respect to any criminal Proceeding, that Indemnitee had reasonable cause to
believe that his conduct was unlawful.
4. Indemnification in Proceedings by or in the Right of the
Corporation. The Corporation shall indemnify Indemnitee in accordance with the
provisions of this Agreement if Indemnitee is a party to or threatened to be
made a party to any Proceeding by or in the right of the Corporation or any
subsidiary of the Corporation, against all Expenses actually and reasonably
incurred by Indemnitee in connection with the defense or settlement of such
Proceeding, but only if he acted in good faith and in a manner which he
reasonably believed to be (in the case of conduct in his official capacity) in
the best interests of the Corporation or (in all other cases) not opposed to the
best interests of the Corporation, except that no indemnification for Expenses
shall be made under this Section 4, in
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respect of any Proceeding as to which Indemnitee shall have been adjudged to be
liable to the Corporation. Notwithstanding the foregoing, Indemnitee shall have
no right to indemnification for Expenses and the payment of profits arising from
the purchase and sale by Indemnitee of securities in violation of Section 16(b)
of the Securities Exchange Act of 1934, as amended.
5. Change in Control. The Corporation agrees that in the event of a
Change in Control, and with respect to all matters thereafter concerning the
rights of Indemnitee to indemnification and payment of Expenses under this
Agreement or any other agreement to which the Corporation and Indemnitee are
parties or the Bylaws of the Corporation or any subsidiary as hereafter in
effect relating to indemnification of directors and/or officers of the
Corporation or any such subsidiary, the Corporation shall seek legal advice only
from the Independent Legal Counsel selected by Indemnitee and approved by the
Corporation (which approval shall not be unreasonably withheld). Such counsel,
among other things, shall render a written opinion to the Corporation and
Indemnitee as to whether and to what extent Indemnitee would be permitted to be
indemnified under applicable law. The Corporation agrees to pay the reasonable
fees of the Independent Legal Counsel referred to above and to indemnify fully
such counsel against any and all expenses (including attorney's fees), claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
6. Indemnification Prohibited. Notwithstanding the provisions of
Sections 3 and 4, no indemnification shall be made in connection with any
Proceeding charging improper personal benefit to Indemnitee, whether or not
involving action in his official capacity, in which he was adjudged liable on
the basis that personal benefit was improperly received by Indemnitee.
7. Indemnification of Expenses of Successful Party. Notwithstanding
any other provision of this Agreement whatsoever, to the extent that Indemnitee
has been successful on the merits or otherwise (including a settlement) in
defense of any Proceeding or in defense of any claim, issue or matter therein,
including dismissal without prejudice, Indemnitee shall be indemnified against
all Expenses reasonably and actually incurred in connection therewith.
8. Advances of Expenses. Expenses incurred by Indemnitee pursuant
to Sections 3 and 4 in any Proceeding shall be paid by the Corporation in
advance as soon as practicable but not later than three (3) business days after
receipt of the written request of Indemnitee provided that Indemnitee shall (i)
affirm in such written request that he acted in good faith and in a manner which
he reasonably believed to be (in the case of conduct in his official capacity)
in the best interests of the Corporation or (in all other cases) not opposed to
the best interests of the Corporation and (ii) undertake to repay such amount to
the extent that it is determined in such Proceeding or otherwise by a court of
competent jurisdiction and such determination shall have become final that
Indemnitee is not entitled to indemnification, and further provided that the
Corporation has determined that the facts then known would not preclude
indemnification pursuant to the terms of this Agreement.
9. Right of Indemnitee to Indemnification Upon Application;
Procedure Upon Application.
(a) Any indemnification under Sections 3, 4 and 7 shall be made
as soon as practicable but in any event no later than thirty (30) days after
receipt by the Corporation of the written request of Indemnitee. The provisions
of Article Tenth, Section 4 of the second amended and restated certificate of
incorporation, and as amended hereafter, shall not be applicable to
indemnification under this agreement.
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(b) The right to indemnification or advances as provided by
this Agreement shall be enforceable by Indemnitee in an action in any court of
competent jurisdiction. The burden of proving that indemnification or advances
are not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or
stockholders) to have made a determination prior to the commencement of such
action that indemnification or advances are proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or stockholders) that Indemnitee has not met such applicable
standard conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct. Indemnitee's expenses
reasonably incurred in connection with any Proceeding which establishes
Indemnitee's right to indemnification or advances, in whole or in part, in any
such Proceeding shall also be indemnified by the Corporation.
(c) The Corporation 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 Corporation
insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable.
10. Indemnification Hereunder Not Exclusive.
(a) Notwithstanding any other provision of this Agreement, the
Corporation hereby agrees to indemnify Indemnitee to the full extent permitted
by law, whether or not such indemnification is specifically authorized by the
other provisions of this Agreement, the Corporation's Certificate of
Incorporation, the Bylaws, or by statute. In the event of any changes, after the
date of this Agreement, in any applicable law, statute, or rule which expand the
right of a Delaware corporation to indemnify any officer, such changes shall be,
ipso facto, within the purview of Indemnitee's rights, and the Corporation's
obligations, under this Agreement. In the event of any changes in any applicable
law, statute, or rule which narrow the right of a Delaware corporation to
indemnify any officer, such changes, to the extent not otherwise required by
such law, statute or rule to be applied to this Agreement, shall have no effect
on this Agreement or the parties' rights and obligations hereunder.
(b) The indemnification provided by this Agreement shall not be
deemed exclusive of any other rights to which Indemnitee may be entitled under
the Certificate of Incorporation, the Bylaws, any agreement, any vote of
shareholders or disinterested Directors, the laws of the State of Delaware or
otherwise, both as to actions in his official capacity and as to actions in
another capacity while holding such office.
11. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Corporation for some or a
portion of the Expenses, judgments, fines or penalties actually and reasonably
incurred by him in the investigation, defense, appeal or settlement of any
Proceeding but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,
fines or penalties to which Indemnitee is entitled.
12. Effect of Federal Law. Both the Corporation and Indemnitee
acknowledge that in certain instances federal law would override Delaware law
and prohibit the Corporation from indemnifying its officers and Directors. In
such case, the Corporation shall be released from its obligations hereunder to
the extent its performance thereof is prohibited by federal law. For example,
the Corporation and Indemnitee acknowledge that the Securities and Exchange
Commission has taken the
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position that indemnification is not permissible for liabilities arising under
certain federal securities laws, and federal law prohibits indemnification for
certain violations of the Employee Retirement Income Security Act.
13. Liability Insurance.
(a) The Corporation shall from time to time make a good faith
determination whether or not it is practicable for the Corporation to obtain and
maintain a policy or policies of insurance with reputable insurance companies
providing the officers with coverage for losses from wrongful acts, or to ensure
the Corporation's performance of its indemnification obligations under this
Agreement. Among other considerations, the Corporation will weigh the costs of
obtaining such insurance against the protection afforded by such coverage.
(b) Indemnitee hereby releases the Corporation and its respective
authorized representatives from any claims for indemnification hereunder if and
to the extent that Indemnitee receives proceeds from any liability insurance
policy or other third-party source in payment or reimbursement for such claims.
Indemnitee hereby agrees to assign all proceeds Indemnitee receives under any
such insurance policy or third-party agreement to the extent of the amount of
indemnification made to Indemnitee by the Corporation under the terms of this
Agreement.
14. Saving Clause. Nothing in this Agreement is intended to require
or shall be construed as requiring the Corporation to do or fail to do any act
in violation of applicable law. The provisions of this Agreement (including any
provisions within a single section, paragraph or sentence) shall be severable in
accordance with this Section 14. If this Agreement or any portion thereof shall
be invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments,
fines and penalties with respect to any Proceeding to the full extent permitted
by any applicable portion of this Agreement that shall not have been invalidated
or by any other applicable law, and this Agreement shall remain enforceable to
the fullest extent permitted by law.
15. Notice. Indemnitee shall, as a condition precedent to his right
to be indemnified under this Agreement, give to the Corporation notice in
writing as soon as practicable of any claim made against him for which indemnity
will or could be sought under this Agreement. Notice to the Corporation shall be
directed to Versatility Inc., 11781 Xxx Xxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, Attention: President (or such other address as the
Corporation shall designate in writing to Indemnitee). All notices, requests,
demands and other communications shall be deemed received (i) on the date of
delivery if delivered by hand and receipted for by the party to whom such notice
or other communication shall have been directed, or (ii) three (3) days after
the date postmarked if sent by prepaid mail, properly addressed. In addition,
Indemnitee shall give the Corporation such information and cooperation as it may
reasonably require and shall be within Indemnitee's power.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of Delaware without giving
effect to its rules on conflicts of laws.
17. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns (including any direct or indirect successors by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Corporation), spouses, heirs, and personal and legal
representatives.
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The Corporation 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 Corporation, 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 Corporation 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 an officer of the Corporation or of any other
enterprise.
18. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees and disbursements, incurred by Indemnitee with
respect to such action, unless as part of such action, a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
as a basis for such action were not made in good faith or were frivolous. In the
event of an action instituted by or in the name of the Corporation under this
Agreement or to enforce or interpret any of the terms of this Agreement,
Indemnitee shall be entitled to be paid all court costs and expenses, including
attorneys' fees and disbursements, incurred by Indemnitee in defense of such
action (including with respect to Indemnitee's counterclaims and crossclaims
made in such action), unless as part of such action a court determines that each
of Indemnitee's material defenses to such action were made in bad faith or were
frivolous.
19. Subsequent Instruments and Acts. The parties hereto agree that
they will execute any further instrument and perform any acts that may become
necessary from time to time to carry out the terms of this Agreement.
20. Limitations Period. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Corporation or any
affiliate of the Corporation against Indemnitee, Indemnitee's spouses, 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 Corporation or its affiliates shall be extinguished and deemed
released unless asserted by the timely filing of 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 shorter period shall govern.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
duly executed and signed as of the day and year first above written.
VERSATILITY INC.
a Delaware corporation
By: /s/ Xxxx Xxxxxx
_________________________________
President
Chief Operating Officer
INDEMNITEE:
/s/ Xxxxxxx X. Xxxxxx
_____________________________________
Xxxxxxx X. Xxxxxx
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