Form of Indemnification Agreement
Exhibit 10.5
Form of Indemnification Agreement
This Indemnification Agreement (this “Agreement”) is made as of _________, 200___by and
between Xxxxxx Xxxxxx Partners Group, Inc., a Delaware corporation (the “Company”), and
_______________(the “Individual”).
WHEREAS, the Company and the Individual recognize the difficulty in obtaining directors’ and
officers’ liability insurance, the cost of such insurance and the limited scope of coverage of such
insurance;
WHEREAS, the Company and the Individual further recognize the substantial increase in
corporate litigation in general, subjecting officers and directors to expensive litigation risks at
the same time as the availability and coverage of liability insurance has been severely limited;
and
WHEREAS, the Company desires to attract and retain the services of highly qualified
individuals, such as the Individual, to serve as officers and directors of the Company and to
indemnify its officers and directors so as to provide them with the maximum protection permitted by
law.
NOW, THEREFORE, the Company and the Individual hereby agree as follows:
1. Indemnification; Presumptions.
(a) The Company shall defend, indemnify and hold harmless the Individual from any Losses or
Expenses arising from any Claim relating to, or arising in whole or in part out of, any Covered
Event actually and reasonably incurred by the Individual to the fullest extent permitted by
applicable law on the date hereof, or to such greater extent as applicable law may thereafter
permit or authorize.
(b) The termination of any Claim by judgment, order, settlement, conviction or upon a plea of
nolo contendre or its equivalent, shall not, of itself, create a presumption that the Individual
did not act in good faith and in a manner reasonably relied to be in or not opposed to the best
interests of the Company, and with respect to any criminal Claim, that Individual had reason to
believe his or her conduct was unlawful.
2. Definitions.
“Claim” means (a) any threatened, pending or completed action, suit, proceeding or
arbitration or other alternative dispute resolution mechanism, or (b) any inquiry, hearing or
investigation, whether conducted by the Company or any other Person, that Individual in good faith
believes might lead to the institution of any such action, suit, proceeding or arbitration or other
alternative dispute resolution mechanism, in each case whether civil, criminal, administrative or
other (whether or not the claims or allegations therein are groundless, false or fraudulent) and
includes, without limitation,
those brought by or in the name of the Company or any director or officer of the Company.
“Company Agent” means any Person serving as a director, officer, partner, employee,
agent, trustee or fiduciary of the Company, any Subsidiary or any Other Enterprise.
“Covered Event” means any event or occurrence on or after the date of this Agreement
related to the fact that the Individual is or was a Company Agent or related to anything done or
not done by the Individual in any such capacity, and includes, without limitation, any such event
or occurrence (a) arising from performance of the responsibilities, obligations or duties imposed
by ERISA or any similar applicable provisions of state or common law, or (b) arising from any
merger, consolidation or other business combination involving the Company, any Subsidiary or any
Other Enterprise, including without limitation any sale or other transfer of all or substantially
all of the business or assets of the Company, any Subsidiary or any Other Enterprise.
“Expenses” includes attorneys’ fees and all other costs, travel expenses, fees of
experts, transcript costs, filing fees, witness fees, telephone charges, postage, copying costs,
delivery services fees and other expenses and obligations of any nature whatsoever paid or incurred
in connection with investigating, prosecuting or defending, being a witness in or participating in
(including on appeal), or preparing to prosecute or defend, be a witness in or participate in any
Claim, for which the Individual is or becomes legally obligated to pay.
“Loss” means any amount which the Individual is legally obligated to pay as a result
of any Claim, including, without limitation (a) all judgments, penalties and fines, and amounts
paid or to be paid in settlement, and (b) all interest, assessments and other charges paid or
payable in connection therewith.
“Other Enterprise” means any corporation (other than the Company or any Subsidiary),
partnership, joint venture, association, employee benefit plan, trust or other enterprise or
organization for which the Individual acts as a Company Agent at the request of the Company or any
Subsidiary. The Individual shall be deemed to be acting as a Company Agent of an Other Enterprise
at the request of the Company with respect to any Other Enterprise in which the Company or any
Subsidiary has an investment as to which the Individual shall act as a Company Agent from time to
time. The Individual shall be deemed to be acting as a Company Agent of an Other Enterprise at the
request of the Company, if the Individual acts as a Company Agent of an Other Enterprise at the
written or oral request of the Board of Directors of the Company or of any Subsidiary by which the
Individual is employed from time to time, or at the written or oral request of an Executive Officer
of the Company or of any Subsidiary by which the Individual is employed from time to time, or if
the Individual acts as a Company Agent of an Other Enterprise by reason of being requested,
elected, hired or retained to succeed to or assume the responsibilities of a Person who previously
acted as a Company Agent of an Other Enterprise at the request of the Company.
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“Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government (or any subdivision,
department, commission or agency thereof), and includes without limitation any “person”, as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.
“Subsidiary” means any entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other persons performing
similar functions are now or hereafter owned, directly or indirectly, by the Company.
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. Expenses incurred in defending a civil or criminal
action, suit or proceeding by the Individual, if the Individual is determined to be entitled to
indemnification pursuant to Section 1 hereof, shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of
the Individual to repay such amount if it shall ultimately be determined that the Individual is not
entitled to be indemnified by the Company as authorized by this Agreement (the “Undertaking”);
provided, however, that the Company shall not be required to advance expenses to the Individual in
connection with any proceeding (or part thereof) initiated by the Individual unless the proceeding
was authorized in advance by the Board of Directors of the Company; and provided further that no
advance shall be made by the Company to the Individual in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, if a determination is reasonably and promptly
made (i) by a majority vote of disinterested directors or (ii) by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time such determination
is made demonstrate clearly and convincingly that the Individual acted in bad faith or in a manner
that the Individual did not believe to be in or not opposed to the best interests of the Company.
The Individual shall be entitled to receive interim payments of expenses pursuant to this Section
3(a) unless and until such defense may be finally adjudicated by court order or judgment from which
no further right of appeal exists.
(b) Notice/Cooperation by the Individual. The Individual shall, as a condition
precedent to his or her right to be indemnified under this Agreement, give the Company notice in
writing as soon as practicable of any claim made against the Individual for which indemnification
will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at its principal executive offices (or such other address as the
Company shall designate in writing to the Individual). In addition, the Individual shall give the
Company such information and cooperation as it may reasonably require.
(c) Procedure. Any indemnification and advances determined proper in accordance with
this Agreement shall be made no later than 45 days after such determination. If a claim under this
Agreement, under any statute, or under any provision of the Company’s Certificate of Incorporation
or By-laws providing for indemnification,
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is not paid in full by the Company within 45 days after such determination, the Individual
may, but need not, at any time thereafter bring an action against the Company to recover the unpaid
amount of the claim and, subject to Section 14 of this Agreement, the Individual shall also be
entitled to be paid for the expenses (including attorneys’ fees) of bringing such action. It shall
be a defense to any such action (other than an action brought to enforce a claim for expenses
incurred in connection with any action, suit or proceeding in advance of its final disposition)
that the Individual has not met the standards of conduct which make it permissible under applicable
law for the Company to indemnify the Individual for the amount claimed.
(d) Notice to Insurers. If, at the time of the receipt of a notice of a claim
pursuant to Section 3(b) hereof, the Company has directors’ and officers’ liability insurance in
effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The Company shall
thereafter take all reasonable action to cause such insurers to pay, on behalf of the Individual,
all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be obligated under Section
3(a) hereof to pay the expenses of any proceeding against the Individual, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by
the Individual (such approval not to be unreasonably withheld), upon the delivery to the Individual
of written notice of its election so to do. After delivery of such notice, approval of such
counsel by the Individual and the retention of such counsel by the Company, the Company will not be
liable to the Individual under this Agreement for any fees of counsel subsequently incurred by the
Individual with respect to the same proceeding, provided that (i) the Individual shall have the
right to employ his or her counsel in any such proceeding at the Individual’s own expense and (ii)
if (A) the employment of counsel by the Individual has been previously authorized by the Company,
(B) the Individual shall have reasonably concluded that there may be a conflict of interest between
the Company and the Individual in the conduct of any such defense or (C) the Company shall not, in
fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of
the Individual’s counsel shall be at the expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby
agrees to indemnify the Individual to the fullest extent permitted by law, notwithstanding that
such indemnification is not specifically authorized by the other provisions of this Agreement, the
Company’s Certificate of Incorporation, its By-laws or by statute. In the event of any change in
any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify
a member of its board of directors or an 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.
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(b) Nonexclusivity. The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which the Individual may be entitled under the Company’s
Certificate of Incorporation, its By-laws, any agreement, any vote of shareholders or disinterested
directors, the Delaware General Corporation Law, or otherwise, both as to action in the
Individual’s official capacity and as to action in another capacity while holding such office. The
indemnification provided under this Agreement shall continue as to the Individual for any action
taken or not taken while serving in an indemnified capacity even though he or she may have ceased
to serve in such capacity at the time of any action, suit or other covered proceeding.
5. Partial Indemnification. If the Individual is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines
or penalties actually or reasonably incurred by him or her in the investigation, defense, appeal or
settlement of any civil or criminal action, suit or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Individual for the portion of such
expenses, judgments, fines or penalties to which the Individual is entitled.
6. Mutual Acknowledgment. Both the Company and the Individual acknowledge that in
certain instances, Federal law or applicable public policy may prohibit the Company from
indemnifying its directors and officers under this Agreement or otherwise. The Individual
understands and acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of indemnification to
a court in certain circumstances for a determination of the Company’s right under public policy to
indemnify the Individual.
7. Officer and Director Liability Insurance. The Company may, from time to time, make
the good faith determination whether or not it is practicable for the Company to obtain and
maintain a policy or policies of insurance with reputable insurance companies providing the
officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the
Company’s performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance coverage against the
protection afforded by such coverage. In all policies of directors’ and officers’ liability
insurance, the Individual shall be named as an insured in such a manner as to provide the
Individual the same rights and benefits as are accorded to the most favorably insured of the
Company’s directors, if the Individual is a director; or of the Company’s officers, if the
Individual is not a director of the Company, but is an officer; or of the Company’s key employees,
if the Individual is not an officer or director, but is a key employee. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company
determines in good faith that such insurance is not reasonably available, if the premium costs for
such insurance are disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient benefit, or if the
Individual is covered by similar insurance maintained by a Subsidiary or parent of the Company.
However, the Company’s decision whether or not
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to adopt and maintain such insurance shall not affect in any way its obligations to indemnify
the Individual under this Agreement or otherwise.
8. Severability. Nothing in this Agreement is intended to require or shall be
construed as requiring the Company to do or fail to do any act in violation of applicable law. The
Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall
not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as
provided in this Section 8. If this Agreement or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify the
Individual to the fullest extent permitted by any applicable portion of this Agreement that shall
not have been invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.
9. Exceptions. Any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:
(a) Claims Initiated by the Individual. To indemnify or advance expenses to the
Individual with respect to proceedings or claims initiated or brought voluntarily by the Individual
and not by way of defense, except with respect to proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute or law, but such indemnification
or advancement of expenses may be provided by the Company in specific cases if the Board of
Directors of the Company has approved the initiation or bringing of such suit.
(b) Lack of Good Faith. To indemnify the Individual for any expenses incurred by the
Individual with respect to any proceeding instituted by the Individual to enforce or interpret this
Agreement, if a court of competent jurisdiction determines that each of the material assertions
made by the Individual in such proceeding was not made in good faith or was frivolous.
(c) Insured Claims. To indemnify the Individual for expenses or liabilities of any
type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties,
and amounts paid in settlement) which have been paid directly to the Individual by an insurance
carrier under a policy of officers’ and directors’ liability insurance maintained by the Company.
(d) Claims Under Section 16(b). To indemnify the Individual for expenses and the
payment of profits arising from the purchase and sale by the Individual of securities in violation
of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor
statute.
(e) To indemnify the Individual for any amounts paid or to be paid in settlement of any Claim
without the express prior written consent of the Company. Neither the Company nor the Individual
shall unreasonably withhold consent to any proposed settlement.
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10. Construction of Certain Phrases. For purposes of this Agreement, references to
the “Company” shall include any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers, and employees or agents,
so that if the Individual is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, the Individual shall stand in the same position under the provisions of this Agreement
with respect to the resulting or surviving corporation as the Individual would have with respect to
such constituent corporation if its separate existence had continued.
11. Effectiveness. This Agreement shall be deemed to be effective as of the
commencement date of the Individual’s employment as an Officer or Director of the Company.
12. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together constitute one and the same
instrument.
13. Successors and Assigns. This Agreement shall be binding upon the Company and its
successors and assigns, and shall inure to the benefit of the Individual and the Individual’s
estate, heirs, legal representatives and assigns.
14. Attorneys’ Fees. In the event that any action is instituted by the Individual
under this Agreement to enforce or interpret any of the terms hereof, the Individual shall be
entitled to be paid all court costs and expenses, including reasonable attorneys’ fees, incurred by
the Individual with respect to such action, unless as a part of such action, the court of competent
jurisdiction determines that each of the material assertions made by the Individual as a basis for
such action was made in bad faith or was frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement or to enforce or interpret any of the terms of this
Agreement, the Individual shall be entitled to be paid all court costs and expenses, including
attorneys’ fees, incurred by the Individual in defense of such action (including with respect to
the Individual’s counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of the Individual’s material defenses to such action was made
in bad faith or was frivolous.
15. Notice. Any and all notices or other communications or deliveries required or
permitted to be provided pursuant to this Agreement shall be in writing and shall be deemed to have
been effectively given (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed telex or facsimile if sent during normal business hours of the party to be notified or,
if not, then on the next business day, (c) five business days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (d) one business day after deposit
with a nationally recognized overnight courier, specifying next business day delivery, with written
verification of receipt. The address for notices to the Company shall be its principal executive
offices
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and the address for notices to the Individual shall be as shown on the signature page of this
Agreement, or as subsequently modified by written notice.
16. Consent to Jurisdiction. The Company and the Individual each hereby irrevocably
consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection
with any action 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 state courts of the State of
Delaware.
17. Choice of Law. This Agreement shall be governed by and its provisions construed
in accordance with the laws of the State of Delaware.
18. Modification. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. All prior negotiations, agreements and
understandings between the parties with respect thereto are superseded hereby. This Agreement may
not be modified or amended except by an instrument in writing signed by or on behalf of the parties
hereto.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| XXXXXX XXXXXX PARTNERS GROUP, INC. | ||||
| By: | ||||
| Name: Title: |
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AGREED TO AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN: |
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INDIVIDUAL: |
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Name: |
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(Address) |
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