EXHIBIT 10.5
OFFICER AND DIRECTOR
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INDEMNITY AGREEMENT
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This Indemnity Agreement (this "Agreement"), dated as of ________________,
2000, is made by and between Commerx, Inc., a Delaware corporation (the
"Company"), and _________________, a director and/or officer of the Company (the
"Indemnitee").
R E C I T A L S
WHEREAS, the Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance and/or indemnification,
due to increased exposure to litigation costs and risks resulting from their
service to such corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such directors and
officers;
WHEREAS, based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company, and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company contractually to
indemnify officers and directors and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company;
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware, under which the Company is organized ("Section 145"), empowers the
Company to indemnify by agreement its officers, directors, employees and agents,
and persons who serve, at the request of the Company, as directors, officers,
employees or agents of other corporations or enterprises, and expressly provides
that the indemnification provided by Section 145 is not exclusive; and
WHEREAS, the Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
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shall have the meaning set forth herein:
"agent" of the Company means any person who is or was a director or
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officer of the Company or a subsidiary of the Company; or is or was serving at
the request of, for the
convenience of, or to represent the interest of the Company or a subsidiary of
the Company as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or an affiliate of the
Company; or was a director or officer of another enterprise or affiliate of the
Company at the request of, for the convenience of, or to represent the interests
of such predecessor corporation. The term "enterprise" includes any employee
benefit plan of the Company, its subsidiaries, affiliates and predecessor
corporations.
"expenses" includes all direct and indirect costs of any type or
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nature whatsoever (including, without limitation, all attorneys' fees and
related disbursements and other out-of-pocket costs) actually and reasonably
incurred by the Indemnitee in connection with the investigation, defense or
appeal of a proceeding or establishing or enforcing a right to indemnification
or advancement of expenses under this Agreement, Section 145 or otherwise;
provided, however, that expenses shall not include any judgments, fines, ERISA
excise taxes or penalties or amounts paid in settlement of a proceeding.
"proceeding" means any threatened, pending or completed action, suit
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or other proceeding, whether civil, criminal, administrative, investigative or
any other type whatsoever.
"subsidiary" means any corporation of which more than 50% of the
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outstanding voting securities is owned directly or indirectly by the Company, by
the Company and one or more of its subsidiaries or by one or more of the
Company's subsidiaries.
ARTICLE II
AGREEMENT TO SERVE
Section 2.1 Agreement to Serve. The Indemnitee agrees to serve
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and/or continue to serve as an agent of the Company, at the will of the Company
(or under separate agreement, if such agreement exists), in the capacity the
Indemnitee currently serves as an agent of the Company, faithfully and to the
best of his ability, so long as he is duly appointed or elected and qualified in
accordance with the applicable provisions of the charter documents of the
Company or any subsidiary of the Company; provided, however, that the Indemnitee
may at any time and for any reason resign from such position (subject to any
contractual obligation that the Indemnitee may have assumed apart from this
Agreement), and the Company or any subsidiary shall have no obligation under
this Agreement to continue the Indemnitee in any such position.
ARTICLE III
INSURANCE AND INDEMNITY
Section 3.1 Directors' and Officers' Insurance. The Company shall,
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to the extent that the Board determines it to be economically reasonable,
maintain a policy of directors' and officers' liability insurance ("D&O
Insurance"), on such terms and conditions as may be approved by the Board.
Section 3.2 Mandatory Indemnification. Subject to Section 3.7 below,
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the Company shall indemnify the Indemnitee:
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(a) 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 Company) by reason of the fact that he is or was an agent of
the Company, or by reason of anything done or not done by him 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) actually and reasonably incurred by
him in connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; and
(b) 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
Company to procure a judgment in its favor by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, against any amounts paid in settlement of any such proceeding
and all expenses actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company; except that no indemnification under this
subsection shall be made in respect of any claim, issue or matter as to which
such person shall have been finally adjudged to be liable to the Company by a
court of competent jurisdiction due to willful misconduct of a culpable nature
in the performance of his duty to the Company, unless and only to the extent
that the Court of Chancery or the court in which such proceeding was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such amounts which the Court of Chancery or
such other court shall deem proper; and
Notwithstanding the foregoing, the Company shall not be obligated to indemnify
the Indemnitee 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) to the extent such have been paid directly to the
Indemnitee by D&O Insurance.
Section 3.3 Partial Indemnification and Contribution.
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(a) If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any
expenses or 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 in the investigation, defense, settlement or appeal
of a proceeding but is not entitled, however, to indemnification for all of the
total amount thereof, then the Company shall nevertheless indemnify the
Indemnitee for such total amount except as to the portion thereof to which the
Indemnitee is not entitled to indemnification.
(c) If the Indemnitee is not entitled to the indemnification provided
in Section 3.2 for any reason other than the statutory limitations set forth in
the Delaware General Corporation Law, then in respect of any threatened, pending
or completed proceeding in which the Company is jointly liable with the
Indemnitee (or would be if joined in such proceeding), the Company shall
contribute to the amount of expenses (including attorneys' fees), judgments,
fines
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and amounts paid in settlement actually and reasonably incurred and paid or
payable by the Indemnitee in such proportion as is appropriate to reflect (i)
the relative benefits received by the Company on the one hand and the Indemnitee
on the other hand from the transaction from which such proceeding arose and (ii)
the relative fault of the Company on the one hand and of the Indemnitee on the
other hand in connection with the events which resulted in such expenses,
judgments, fines or settlement amounts, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
Indemnitee on the other hand shall be determined by reference to, among other
things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such expenses,
judgments, fines or settlement amounts. The Company agrees that it would not be
just and equitable if contribution pursuant to this Section 3.3 were determined
by pro rata allocation or any other method of allocation which does not take
account of the foregoing equitable considerations.
Section 3.4 Mandatory Advancement of Expenses.
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(a) Subject to Section 3.7 below, the Company shall advance all
expenses incurred by the 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 by reason of the fact that the
Indemnitee is or was an agent of the Company or by reason of anything done or
not done by him in any such capacity. The Indemnitee hereby undertakes to
promptly repay such amounts advanced only if, and to the extent that, it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified
by the Company under the provisions of this Agreement, the Certificate of
Incorporation or Bylaws of the Company, the General Corporation Law of Delaware
or otherwise. The advances to be made hereunder shall be paid by the Company to
the Indemnitee within thirty (30) days following delivery of a written request
therefor by the Indemnitee to the Company.
(b) Notwithstanding the foregoing provisions of this Section 3.4, the
Company shall not be obligated to advance any expenses to the Indemnitee arising
from a lawsuit filed directly by the Company against the Indemnitee if an
absolute majority of the members of the Board reasonably determines in good
faith, within thirty (30) days of the Indemnitee's request to be advanced
expenses, that the facts known to them at the time such determination is made
demonstrate clearly and convincingly that the Indemnitee acted in bad faith. If
such a determination is made, the Indemnitee may have such decision reviewed by
another forum, in the manner set forth in Sections 3.6(c), 3.6(d) and 3.6(e)
hereof, with all references therein to "indemnification" being deemed to refer
to "advancement of expenses," and the burden of proof shall be on the Company to
demonstrate clearly and convincingly that, based on the facts known at the time,
the Indemnitee acted in bad faith. The Company may not avail itself of this
Section 3.4(b) as to a given lawsuit if, at any time after the occurrence of the
activities or omissions that are the primary focus of the lawsuit, the Company
has undergone a change in control. For this purpose, a change in control shall
mean a given person or group of affiliated persons or groups increasing their
beneficial ownership interest in the Company by at least twenty (20) percentage
points without advance Board approval.
Section 3.5 Notice and Procedures.
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(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
(b) If, at the time of the receipt of a notice of the commencement of
a proceeding pursuant to Section 3.5(a) hereof, the Company has D&O 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 necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such D&O Insurance policies.
(c) In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee (which approval shall not be unreasonably withheld),
upon the delivery to the Indemnitee of written notice of its election to do so.
After delivery of such notice, approval of such counsel by the Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
the Indemnitee under this Agreement for any fees of counsel subsequently
incurred by the Indemnitee with respect to the same proceeding, provided that:
(i) the Indemnitee shall have the right to employ his own counsel in any such
proceeding at the Indemnitee's expense; (ii) the Indemnitee shall have the right
to employ his own counsel in connection with any such proceeding, at the expense
of the Company, if such counsel serves in a review, observer, advice and
counseling capacity and does not otherwise materially control or participate in
the defense of such proceeding; and (iii) if (A) the employment of counsel by
the Indemnitee has been previously authorized by the Company, (B) the Indemnitee
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Indemnitee 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 Indemnitee's counsel shall be at
the expense of the Company.
Section 3.6 Determination of Right to Indemnification.
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(a) To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding referred to in Section 3.4(a) or 3.4(b)
of this Agreement or in the defense of any claim, issue or matter described
therein, the Company shall indemnify the Indemnitee against expenses actually
and reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding, or such claim, issue or matter, as the case may be.
(b) In the event that Section 3.6(a) is inapplicable, or does not
apply to the entire proceeding, the Company shall nonetheless indemnify the
Indemnitee unless the Company shall prove by clear and convincing evidence to a
forum listed in Section 3.6(c) below that the Indemnitee has not met the
applicable standard of conduct required to entitle the Indemnitee to such
indemnification.
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(c) The Indemnitee shall be entitled to select the forum in which the
validity of the Company's claim under Section 3.6(b) hereof that the Indemnitee
is not entitled to indemnification will be heard from among the following,
except that the Indemnitee can select a forum consisting of the stockholders of
the Company only with the approval of the Company:
(i) A quorum of the Board consisting of directors who are not
parties to the proceeding for which indemnification is being sought;
(ii) The stockholders of the Company;
(iii) Legal counsel mutually agreed upon by the Indemnitee and
the Board, which counsel shall make such determination in a written
opinion;
(iv) A panel of three arbitrators, one of whom is selected by
the Company, another of whom is selected by the Indemnitee and the last of
whom is selected by the first two arbitrators so selected; or
(v) The Court of Chancery of Delaware or other court having
jurisdiction of subject matter and the parties.
(d) As soon as practicable, and in no event later than thirty (30)
days after the forum has been selected pursuant to Section 3.6(c) above, the
Company shall, at its own expense, submit to the selected forum its claim that
the Indemnitee is not entitled to indemnification, and the Company shall act in
the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such claim.
(e) If the forum selected in accordance with Section 3.c(c) hereof is
not a court, then after the final decision of such forum is rendered, the
Company or the Indemnitee shall have the right to apply to the Court of Chancery
of Delaware, the court in which the proceeding giving rise to the Indemnitee's
claim for indemnification is or was pending or any other court of competent
jurisdiction, for the purpose of appealing the decision of such forum, provided
that such right is executed within sixty (60) days after the final decision of
such forum is rendered. If the forum selected in accordance with Section 3.6
hereof is a court, then the rights of the Company or the Indemnitee to appeal
any decision of such court shall be governed by the applicable laws and rules
governing appeals of the decision of such court.
(f) Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 3 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company 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 each of the material claims and/or defenses of the Indemnitee in any such
proceeding was frivolous or not made in good faith.
Section 3.7 Exceptions. Any other provision herein to the contrary
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notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
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(a) 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, except with respect to proceedings specifically authorized by
the Board or brought to establish or enforce a right to indemnification and/or
advancement of expenses arising under this Agreement, the charter documents of
the Company or any subsidiary or any statute or law or otherwise, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board finds it to be appropriate; or
(b) to indemnify the Indemnitee hereunder for any amounts paid in
settlement of a proceeding unless the Company consents in advance in writing to
such settlement, which consent shall not be unreasonably withheld; or
(c) to indemnify the Indemnitee on account of any suit in which
judgment is rendered against the Indemnitee for an accounting of profits made
from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section l6(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law; or
(d) to indemnify the Indemnitee if a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful. In this respect, the Company and the Indemnitee have been advised that
the Securities and Exchange Commission takes the position that indemnification
for liabilities arising under the federal securities laws is against public
policy and is, therefore, unenforceable and that claims for indemnification
should be submitted to appropriate courts for adjudication.
Section 3.8 Non-Exclusivity. The provisions for indemnification and
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advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Certificate of Incorporation or Bylaws, the vote of the
Company's stockholders or disinterested directors, other agreements or
otherwise, both as to action in the Indemnitee's official capacity and to action
in another capacity while occupying his position as an agent of the Company, and
the Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.
ARTICLE IV
GENERAL PROVISIONS
Section 4.1 Interpretation of Agreement. It is understood that the
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parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification and advancement of expenses to the Indemnitee to the
fullest extent now or hereafter permitted by law, except as expressly limited
herein.
Section 4.2 Severability. If any provision or provisions of this
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Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, then: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, all portions of any
paragraphs of this Agreement containing any such provision held
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to be invalid, illegal or unenforceable that are not themselves invalid, illegal
or unenforceable) shall not in any way be affected or impaired thereby; and (b)
to the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraphs of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 4.1 hereof.
Section 4.3 Modification and Waiver. No supplement, modification or
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amendment of 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 provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver.
Section 4.4 Subrogation. In the event of full payment under this
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Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall execute all documents
required and shall do all acts that may be necessary or desirable to secure such
rights and to enable the Company effectively to bring suit to enforce such
rights.
Section 4.5 Counterparts. This Agreement may be executed in one or more
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counter-parts, which shall together constitute one agreement.
Section 4.6 Successors and Assigns. The terms of this Agreement shall
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bind, and shall inure to the benefit of, the successors and assigns of the
parties hereto.
Section 4.7 Notice. All notices, requests, demands and other
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communications under this Agreement shall be in writing and shall be deemed duly
given: (a) if delivered by hand and receipted for by the party addressee; or (b)
if mailed by certified or registered mail, with postage prepaid, on the third
business day after the mailing date. Addresses for notice to either party are as
shown on the signature page of this Agreement or as subsequently modified by
written notice.
Section 4.8 Governing Law. This Agreement shall be governed exclusively
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by and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
Section 4.9 Consent to Jurisdiction. The Company and the Indemnitee
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each hereby irrevocably consent to the jurisdiction of the courts of the State
of Illinois for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement.
Section 4.10 Attorneys' Fees. In the event Indemnitee is required to bring
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any action to enforce rights under this Agreement (including, without
limitation, the expenses of any Proceeding described in Section 3, the
Indemnitee shall be entitled to all reasonable fees and expenses in bringing and
pursuing such action, unless a court of competent jurisdiction finds each of the
material claims of the Indemnitee in any such action was frivolous and not made
in good faith.
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IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity
Agreement effective as of the date first written above.
COMMERX, INC. INDEMNITEE:
By: ____________________ ____________________
Name: Name: ______________
Title:
Address: Address:
0000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000 ____________________
Xxxxxxx, Xxxxxxxx 00000 ____________________
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