EXHIBIT 10.8
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT, dated as of November 19, 2004, is made by
and between KNOBIAS, INC., a Delaware corporation (the "Company"), and Xxxxxxx
X. Xxxxx (the "Indemnitee").
R E C I T A L S
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors, officers or agents of corporations
unless they are protected by comprehensive liability insurance 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, officers and other agents;
B. The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous or conflicting,
and therefore fail to provide such directors, officers and agents with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take;
C. Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so enormous (whether or not the case is meritorious), that the
defense or settlement of such litigation is often beyond the personal resources
of directors, officers and other agents;
D. The Company believes that it is unfair for its directors, officers
and agents and the directors, officers and agents of its subsidiaries to assume
the risk of huge judgments and other expenses which may occur in cases in which
the director, officer or agent received no personal profit and in cases where
the director, officer or agent was not culpable;
E. The Company recognizes that the issues in controversy in litigation
against a director, officer or agent of a corporation such as the Company or its
subsidiaries are often related to the knowledge, motives and intent of such
director, officer or agent, that he is usually the only witness with knowledge
of the essential facts and exculpating circumstances regarding such matters, and
that the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that the director,
officer or agent can reasonably recall such matters; and may extend beyond the
normal time for retirement for such director, officer or agent with the result
that he, after retirement or in the event of his death, his spouse, heirs,
executors or administrators, may be faced with limited ability and undue
hardship in maintaining an adequate defense, which may discourage such a
director, officer or agent from serving in that position;
F. 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 directors, officers and agents
of the Company and its subsidiaries and to encourage such individuals to take
the business risks necessary for the success of the Company and its
subsidiaries, it is necessary for the Company contractually to indemnify its
directors, officers and agents and the directors, officers and agents of its
subsidiaries, and to assume for itself maximum liability for expenses and
damages in connection with claims against such directors, officers and agents in
connection with their service to the Company and its subsidiaries, and has
further concluded that the failure to provide such contractual indemnification
could result in great harm to the Company and its subsidiaries and the Company's
stockholders;
G. Section 145 of the General Corporation Law of Delaware, under which
the Company is organized ("Section 145"), empowers the Company to indemnify its
directors, officers, employees and agents by agreement and to indemnify persons
who serve, at the request of the Company, as the directors, officers, employees
or agents of other corporations or enterprises, and expressly provides that the
indemnification provided by Section 145 is not exclusive.
H. The Company has requested Indemnitee to serve as a director, officer
or agent of the Company or one or more subsidiaries of the Company, and the
Indemnitee is willing to serve the Company in such capacity, free from undue
concern for claims for damages arising out of or related to such services to the
Company or one or more subsidiaries of the Company, and provided that he is
furnished the indemnity provided for herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
(a) Agent. For the purposes of this Agreement, "agent" of the Company
means any person who is or was a director, officer, employee or other agent 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 interests of the Company or a
subsidiary of the Company as a director, officer, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise, or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Company or a
subsidiary of the Company, or was a director, officer, employee or agent of
another enterprise at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.
(b) Expenses. For purposes of this Agreement, "expenses" include all out
of pocket expenses or costs of any type or nature whatsoever (including, without
limitation, all attorneys' fees and related disbursements), actually and
reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or 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.
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(c) Proceeding. For the purposes of this Agreement, "proceeding" means any
threatened, pending, or completed action, suit or other proceeding, whether
civil, criminal, administrative, or investigative.
(d) Subsidiary. For purposes of this Agreement, "subsidiary" means any
corporation, partnership, limited liability company or other entity of which
more than 50% of the outstanding voting securities is owned directly or
indirectly by the Company, by the Company and one or more other subsidiaries, or
by one or more other subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve as Agent of the
Company, at its will (or under separate agreement, if such agreement exists), in
the capacity Indemnitee currently serves, so long as he is duly appointed or
elected and qualified in accordance with the applicable provisions of the Bylaws
of the Company or any subsidiary of the Company or until such time as he tenders
his resignation in writing; provided, however, that nothing contained in this
Agreement is intended to create any right to continued employment by Indemnitee.
3. LIABILITY INSURANCE.
(a) Maintenance of D&O Insurance. The Company hereby covenants and agrees
that, so long as the Indemnitee shall continue to serve as an Agent of the
Company and thereafter so long as the Indemnitee shall be subject to any
possible proceeding by reason of the fact that the Indemnitee was an Agent of
the Company, the Company, subject to Section 3(c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) Rights and Benefits. In all policies of D&O Insurance, the Indemnitee
shall be named as an insured in such a manner as to provide the Indemnitee the
same rights and benefits as are accorded to the most favorably insured of the
Company's directors, if the Indemnitee is a director; or of the Company's
officers, if the Indemnitee is not a director of the Company but is an officer;
or of the Company's key employees, if the Indemnitee is not a director or
officer but is a key employee.
(c) Limitation on Required Maintenance of D&O Insurance. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain D&O
Insurance if the Company determines in good faith that such insurance is not
reasonably available, the premium costs for such insurance are disproportionate
to the amount of coverage provided, the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or the
Indemnitee is covered by similar insurance maintained by a subsidiary of the
Company.
4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the Company shall
indemnify the Indemnitee as follows:
(a) Successful Defense. To the extent the Indemnitee has been successful
on the merits or otherwise in defense of any proceeding (including, without
limitation, an action by or in the right of the Company) to which the Indemnitee
was a party by reason of the fact that he is or was an Agent of the Company at
any time, against all expenses of any type whatsoever actually and reasonably
incurred by him in connection with the investigation, defense or appeal of such
proceeding.
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(b) Third Party Actions. 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, the Company shall indemnify the Indemnitee against any and
all expenses and liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) imposed by a court or governmental entity or otherwise actually and
reasonably incurred by him in connection with the investigation, defense,
settlement or appeal of such proceeding, provided the Indemnitee 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 its stockholders, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
(c) Derivative Actions. 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 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, the
Company shall indemnify the Indemnitee against all expenses actually and
reasonably incurred by him in connection with the investigation, defense,
settlement, or appeal of such proceeding, provided the Indemnitee 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 its stockholders; except that no indemnification
under this subsection 4(c) shall be made in respect to 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 unless and only to the extent
that 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 shall deem proper.
(d) Actions where Indemnitee is Deceased. If the Indemnitee is a person
who was or is a party or is threatened to be made a party to any proceeding 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, and if prior to, during
the pendency of after completion of such proceeding Indemnitee becomes deceased,
the Company shall indemnify the Indemnitee's heirs, executors and administrators
against any and all expenses and liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes and penalties, and
amounts paid in settlement) actually and reasonably incurred to the extent
Indemnitee would have been entitled to indemnification pursuant to Sections
4(a), 4(b), or 4(c) above were Indemnitee still alive.
(e) Payment Under Policy. 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 and penalties, and amounts paid in settlement) for which payment is
actually made to Indemnitee under a valid and collectible insurance policy of
D&O Insurance, or under another valid and enforceable indemnity clause, by-law
or agreement.
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5. PARTIAL INDEMNIFICATION. 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 and penalties, and amounts paid in
settlement) incurred by him in the investigation, defense, settlement or appeal
of a proceeding, but not entitled, however, to indemnification for all of the
total amount hereof, the Company shall nevertheless indemnify the Indemnitee for
such total amount except as to the portion hereof to which the Indemnitee is not
entitled.
6. MANDATORY ADVANCEMENT OF EXPENSES. Subject to Section 8(a) 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. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall be determined ultimately that the Indemnitee is not entitled to be
indemnified by the Company as authorized hereby. The advances to be made
hereunder shall be paid by the Company to the Indemnitee within twenty (20) days
following delivery of a written request therefor by the Indemnitee to the
Company.
7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
(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 7(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 policies.
(c) In the event the Company shall be obligated to pay the expenses of any
proceeding against the Indemnitee, the Company, except as otherwise provided
below, shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee, upon the delivery to the Indemnitee of written
notice of its election so to do. 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, except as otherwise provided below. The Company shall not settle any
proceeding in any manner which would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. The Indemnitee shall have
the right to employ his counsel in any proceeding but the fees and expenses of
the counsel incurred after notice from the Company of its assumption of the
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defense of the proceeding shall be at the Indemnitee's expense, unless (i) the
employment of counsel by the Indemnitee has been authorized by the Company, (ii)
the Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee in the conduct of the defense of
a proceeding, or (iii) the Company shall not, in fact, have employed counsel to
assume the defense of such proceeding, in each of which cases the fees and
expenses of Indemnitee's counsel, including any fees and expenses incurred in
connection with an investigation to determine whether a conflict of interest
exists, shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of any proceeding brought by or on behalf of the
Company or as to which the Indemnitee has reasonably made the conclusion, based
on written advice of counsel, that there may be a conflict of interest between
the Company and the Indemnitee.
8. 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 Indemnitee. 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, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board, (iii) such indemnification is provided by the Company,
in its sole discretion, pursuant to the powers vested in the Company under the
General Corporation Law of Delaware or (iv) the proceeding is brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Section 145;
(b) Lack of Good Faith. To indemnify the Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by the
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) Unauthorized Settlements. To indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of a proceeding unless the Company
consents to such settlement, which consent shall not be unreasonably withheld or
delayed.
9. NON-EXCLUSIVITY. The provisions for indemnification and 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
his 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.
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10. ENFORCEMENT. Any right to indemnification or advances granted by this
Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee in
any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part by the Company, or (ii) no disposition
of such claim is made within ninety (90) days of request therefor by the
Company. Indemnitee, in such enforcement action, if successful in whole or in
part, shall be entitled to be paid also the expense of prosecuting his claim. It
shall be a defense to any action for which a claim for indemnification is made
under this Agreement (other than an action brought to enforce a claim for
expenses pursuant to Section 6 hereof, provided that the required undertaking
has been tendered to the Company) that Indemnitee is not entitled to
indemnification because of the limitations set forth in Sections 4 and 8 hereof.
Neither the failure of the Company (including its Board of Directors or its
stockholders) to have made a determination prior to the commencement of such
enforcement action that indemnification of Indemnitee is proper in the
circumstances, nor an actual determination by the Company (including its Board
of Directors or its stockholders) that such indemnification is improper, shall
be a defense to the action or create a presumption that Indemnitee is not
entitled to indemnification under this Agreement or otherwise.
11. SUBROGATION. In the event the Company is obligated to make a payment under
this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery under any valid and collectible insurance policy
of D&O Insurance or another indemnity agreement covering the Indemnitee, who
shall execute all documents required and shall do all acts that may be necessary
to secure such rights and to enable the Company effectively to bring suit to
enforce such rights.
12. SURVIVAL OF RIGHTS.
(a) All agreements and obligations of the Company contained herein shall
continue during the period Indemnitee is an Agent of the Company and shall
continue thereafter so long as Indemnitee shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, by reason of the fact
that Indemnitee was serving in the capacity referred to herein.
(b) The Company shall require any successor to the Company (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place.
13. INTERPRETATION OF AGREEMENT. It is understood that the parties hereto
intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent permitted by law
including those circumstances in which indemnification would otherwise be
discretionary.
14. SEVERABILITY. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the
validity, legality and enforceability of the remaining provisions of the
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
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph 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 13 hereof.
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15. SAVINGS CLAUSE. If this Agreement or any portion of it is invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee as to expenses, judgments, fines, penalties or
ERISA excise taxes 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.
16. MODIFICATION AND WAIVER. No supplement, modification or 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 provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
17. NOTICE. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered by
hand and receipted for by the party addressee or (ii) 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.
18. GOVERNING LAW. This Agreement shall be governed exclusively 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.
19. CONSENT TO JURISDICTION. The Company and the Indemnitee each hereby
consent to the jurisdiction of the courts of the State of Delaware with respect
to any action or proceeding which arises out of or relates to this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
COMPANY:
KNOBIAS, INC.
By: /s/ E. KEY XXXXXX
-------------------------------
Its Chief Executive Officer
INDEMNITEE:
/s/ XXXXXXX X. XXXXX
---------------------------------
Xxxxxxx X. Xxxxx
Address: 0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
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