1
EXHIBIT 10.3
XXXXXXX.XXX, INC.
DIRECTOR'S AND OFFICER'S
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of _______________________ 1999, between
xxxxxxx.xxx, inc., a Georgia corporation (the "Corporation"), and the member of
the Board of Directors and/or the officer of the Corporation named on the
signature page hereof (the "Executive").
WHEREAS, the Executive is a member of the Board of Directors and/or an
officer of the Corporation and in such capacity is performing a valuable
service to the Corporation; and
WHEREAS, the Corporation's Bylaws (the "Bylaws") and Sections 14-2-850
through 14-2-859 of the Georgia Business Corporation Code, as amended to date
(the "State Statute") provide for the indemnification of the directors and
officers of the Corporation; and
WHEREAS, the Bylaws and State Statute specifically contemplate that
contracts may be entered into between the Corporation and the members of its
Board of Directors and officers with respect to indemnification of such
directors and officers; and
WHEREAS, in order to provide to the Executive assurances with respect
to the protection provided against liabilities that he may incur in the
performance of his duties to the Corporation, and to thereby induce the
Executive to serve as a member of its Board of Directors and/or as an officer
of the Corporation, the Corporation has determined and agreed to enter into
this contract with the Executive.
NOW, THEREFORE, in consideration of the premises and the Executive's
continued service as a director and/or an officer after the date hereof, the
parties agree as follows:
1. INDEMNIFICATION. Subject only to the exclusions set forth in
Section 2 hereof, and in addition to any other indemnity to which the Executive
may be entitled under the State Statute or any bylaw, resolution or agreement
(but without duplication of payments with respect to indemnified amounts), the
Corporation hereby further agrees to hold harmless and indemnify the Executive,
to the fullest extent permitted by law, including, but not limited to, holding
harmless and indemnifying the Executive against any and all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by the Executive in connection with any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (including an action by or in the right of the
Corporation), to which the Executive is, was, or at any time becomes a party,
or is threatened to be made a party, by reason of the fact that the Executive
is, was, or at any time becomes a director, officer, employee or agent of the
Corporation, or a predecessor corporation, or is or was serving or at any time
serves at the request of the Corporation as a director, officer, partner,
trustee, employee, or agent of another corporation, partnership, employee
benefit plan, joint
2
venture, trust, or other enterprise.
2. LIMITATIONS ON INDEMNITY. No indemnity pursuant to Section 1
hereof shall be paid by the Corporation:
(a) with respect to any proceeding in which the Executive is
adjudged, by final judgment not subject to further appeal, liable
to the Corporation or is subjected to injunctive relief in favor
of the Corporation:
(i) for any appropriation, in violation of his duties, of
any business opportunity of the Corporation;
(ii) for acts or omissions which involve intentional
misconduct or a knowing violation of law;
(iii) for the types of liability set forth in Section
14-2-832 of the Georgia Business Corporation Code; or
(iv) for any transaction from which the Executive received
an improper personal benefit;
(b) with respect to any suit in which final judgment is
rendered against the Executive for an accounting of profits, made
from the purchase or sale by the Executive of securities of the
Corporation, pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 or similar provisions of any
federal, state, or local statutory law, or on account of any
payment by the Executive to the Corporation in respect of any
claim for such an accounting; or
(c) if a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
3. CONTRIBUTION. If the indemnification provided in Section 1 is
unavailable, then in respect of any threatened, pending, or completed action,
suit, or proceeding in which the Corporation is jointly liable with the
Executive (or would be if joined in such action, suit or proceeding), the
Corporation shall contribute, to the extent it is not lawfully prevented from
doing so, to the amount of expenses, judgments, fines, and settlements paid or
payable by the Executive in such proportion as is appropriate to reflect (i)
the relative benefits received by the Corporation on the one hand and the
Executive on the other hand from the transaction from which such action, suit,
or proceeding arose, and (ii) the relative fault of the Corporation on the one
hand and of the Executive on the other 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
Corporation on the one hand and of the Executive on the other 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 Corporation agrees that it would not be just and equitable if
3
contribution pursuant to this Section 3 were determined by pro rata allocation
or any other method of allocation that does not take account of the foregoing
equitable considerations.
4. CONTINUATION OF OBLIGATIONS. All agreements and obligations of the
Corporation contained herein shall continue during the period the Executive is
a director, officer, employee, or agent of the Corporation (or is serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise)
and shall continue thereafter for so long as the Executive shall be subject to
any possible claim or threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, or investigative, by reason of the fact
that the Executive was a director of the Corporation or serving in any other
capacity referred to herein.
5. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by the
Executive of notice of the commencement of any action, suit, or proceeding, the
Executive will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation in writing of the
commencement thereof, but the omission to so notify the Corporation will not
relieve the Corporation from any liability which it may have to the Executive
otherwise than under this Agreement. With respect to any such action, suit, or
proceeding as to which the Executive so notifies the Corporation:
(a) the Corporation will be entitled to participate therein at
its own expense; and
(b) subject to Section 6 hereof, and if the Executive shall
have provided his written affirmation of his good faith belief
that his conduct did not constitute behavior of the kind described
in paragraph 2(a) hereof and that he is entitled to
indemnification hereunder, the Corporation may assume the defense
thereof.
After notice from the Corporation to the Executive of its election so
to assume such defense, the Corporation will not be liable to the Executive
under this Agreement for any legal or other expenses subsequently incurred by
the Executive in connection with the defense thereof, other than reasonable
costs of investigation or as otherwise provided below. The Executive shall have
the right to employ his separate counsel in such action, suit, or proceeding,
but the fees and expenses of such counsel incurred after notice from the
Corporation of its assumption of the defense thereof shall be at the expense of
the Executive unless (i) the employment of counsel by the Executive has been
authorized by the Corporation, (ii) counsel designated by the Corporation to
conduct such defense shall not be reasonably satisfactory to the Executive, or
(iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of such
counsel shall be at the expense of the Corporation. For the purposes of clause
(ii) above, the Executive shall be entitled to determine that counsel
designated by the Corporation is not reasonably satisfactory if, among other
reasons, the Executive shall have been advised by qualified counsel that,
because of actual or potential conflicts of interest in the matter between the
Executive, other officers or directors similarly indemnified by the
Corporation, and/or the Corporation, representation of the Executive by counsel
designated by the Corporation is likely to materially and adversely affect the
Executive's
4
interest or would not be permissible under applicable canons of legal ethics.
The Corporation shall not be liable to indemnify the Executive under
this Agreement for any amounts paid in settlement of any action or claim
effected without the Corporation's written consent. The Corporation shall not
settle any action or claim in any manner which would impose any penalty or
limitation on the Executive without the Executive's written consent. Neither
the Corporation nor the Executive will unreasonably withhold consent to any
proposed settlement.
6. ADVANCEMENT AND REPAYMENT OF EXPENSES. Upon request therefor
accompanied by reasonably itemized evidence of expenses incurred, and by the
Executive's written affirmation of his good faith belief that his conduct met
the standard applicable to indemnification pursuant to Section 1 hereof and did
not constitute behavior of the kind described in Section 2(a) hereof and that
he is entitled to indemnification hereunder, the Corporation shall advance to
the Executive the reasonable expenses (including attorneys' fees and costs of
investigation and defense (including the fees of expert witnesses, other
professional advisors, and private investigators)) incurred by him in defending
any civil or criminal suit, action, or proceeding for which the Executive is
entitled (assuming an applicable standard of conduct is met) to indemnification
pursuant to this Agreement. The Executive agrees to reimburse the Corporation
for all reasonable expenses paid by the Corporation, whether pursuant to this
Section or Section 5 hereof, in defending any action, suit, or proceeding
against the Executive in the event and to the extent that it shall ultimately
be determined that the Executive is not entitled to be indemnified by the
Corporation for such expenses under this Agreement. Any advances and the
Executive's agreement to repay shall be unsecured and interest-free.
7. ENFORCEMENT.
(a) The Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on
it hereby in order to induce the Executive to serve as a director
and/or officer of the Corporation and acknowledges that the
Executive will in the future be relying upon this Agreement in
continuing to serve in such capacity.
(b) In the event the Executive is required to bring any action
to enforce rights or to collect moneys due under this Agreement
and is successful in such action, the Corporation shall reimburse
the Executive for all of the Executive's reasonable fees and
expenses in bringing and pursuing such action.
8. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable in whole or in
part for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions hereof.
5
9. GOVERNING LAW; SUCCESSORS; AMENDMENT AND TERMINATION.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Georgia, without
regard to its conflict of law principles.
(b) This Agreement shall be binding upon the Executive and
the Corporation and its successors and assigns (including any
transferee of all or substantially all of its assets and any
successor by merger or otherwise by operation of law), and
shall inure to the benefit of the Executive, his heirs,
personal representatives, and assigns and to the benefit of
the Corporation and its successors and assigns.
(c) No amendment, modification, termination, or cancellation
of this Agreement shall be effective unless in writing signed
by both parties hereto.
(d) References to the male gender shall include the female
gender, and vice versa.
[Signatures appear on following page.]
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in counterparts or otherwise, as of the day and year first above written.
EXECUTIVE XXXXXXX.XXX, INC.
By:
--------------------------------------- --------------------------------
Name: Name (Print):
---------------------------------- ----------------------
Title:
-----------------------------
