EXHIBIT 10.4
INDEMNIFICATION AGREEMENT
This Agreement is made effective as of ___________, _____, by and
between XxxxxXxxx.xxx, Inc., a Texas corporation (the "Company"), and the
undersigned, a director and/or officer of the Company ("Indemnitee"), with
respect to the following facts.
A. 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 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.
B. The following facts contribute to unfairness to directors and
officers: (i) laws regarding the duties of directors and officers are often
ambiguous; (ii) costs of litigation may be so enormous (whether or not the case
is meritorious) that the defense and/or settlement of such litigation is often
beyond the personal resources of officers and directors; and (iii) delay in
litigation may extend the period of exposure to an officer or director until
after retirement or death, thus forcing spouses, heirs, executors or
administrators to expend funds.
C. The Company has been advised that there can be no assurance that
directors' and officers' liability insurance will be available to the Company
and Indemnitee in the future, and that the cost of such insurance, if available,
may not be acceptable to the Company.
D. Indemnitee questions the adequacy and reliability of the protection
presently afforded by the Texas Business Corporation Laws (the "Corporation
Laws") and the Company's Articles of Incorporation, as amended, and Bylaws, as
amended, in part because certain of the indemnification provisions of the
Corporation Laws are for the most part merely permissive and because the impact
of provisions of the Company's Articles of Incorporation, as amended, and
Bylaws, as amended, is presently uncertain.
E. Indemnitee currently serves or has agreed to serve as a director
and/or officer of the Company and/or any of its subsidiaries. Indemnitee is
concerned about continuing to serve the Company as a director and/or officer
without assurance that indemnities available to him are, and will be, adequate
to protect him against the risks associated with his service to the Company.
F. The Company, in order to induce Indemnitee to continue to serve the
Company as a director and/or officer without assurance that indemnities
available to him are, and will be, adequate to protect him against the risks
associated with his service to the Company, has agreed to provide Indemnitee
with the benefits contemplated by this Agreement, which benefits are intended to
provide Indemnitee with the maximum possible protection permitted by law.
G. As a result of the provision of such benefits and in reliance
thereon Indemnitee is continuing to serve as a director or officer.
NOW, THEREFORE, in consideration of the foregoing and the promises,
conditions, representations and warranties set forth herein, the Company and
Indemnitee hereby agree as follows:
1. DEFINITIONS. The following terms, as used herein, shall have
the following respective meanings:
1.1 "COVERED ACT" means (i) any actual or alleged action taken
or attempted by Indemnitee (including, without limitation, any breach of duty,
neglect, error, misstatement, or misleading statement) (a) in his capacity as,
or otherwise by reason of, or arising out of his being, a director, officer,
employee or other agent of the Company or any of its subsidiaries, or (b) by
reason of the fact he is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise; or (ii) any inaction or omission on
Indemnitee's part while acting in any of the foregoing capacities. For purposes
solely of this Agreement, it shall be conclusively deemed between the parties
that the Indemnitee is serving at the request of the Company whenever such
director serves as an officer, director, employee or other agent of any business
entity controlling, controlled by or under common control with the Company.
1.2 "D & O INSURANCE" means directors' and officers' liability
insurance with coverage sufficient to ensure performance of the indemnification
obligation of the Company hereunder issued by one or more reputable insurers.
1.3 "EXCLUDED CLAIM" means any payment for Losses or Expenses
in connection with any claim: (i) for the return by Indemnitee of any
remuneration which is illegal; or (ii) for an accounting of profits in fact made
from the purchase or sale by Indemnitee of securities of the Company within the
meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provisions of any state law, if the Company is in fact entitled to
recover such profits; or (iii) resulting from Indemnitee's knowingly fraudulent,
deliberately dishonest or intentional misconduct; or (iv) the payment of which
by the Company under this Agreement is not permitted by applicable law; or (v)
initiated or brought voluntarily by Indemnitee and not by way of defense, except
with respect to proceedings brought to establish or enforce a right to
indemnification or advancement of Expenses and Losses or a proceeding initiated
with the approval of a majority of the members of the Board of Directors.
Any facts pertaining to any other director, officer,
employee or agent of the Company shall not be imputed to Indemnitee for the
purpose of determining an Excluded Claim.
1.4 "EXPENSES" means any reasonable expenses incurred by
Indemnitee as a result of a claim or claims whether brought by or in the right
of the Company (e.g.,
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derivatively by stockholders of the Company for the benefit of the Company) or
otherwise and whether of a civil, criminal, administrative or investigative
nature made against him for, or otherwise in respect of, Covered Acts including,
without limitation, counsel fees, costs of bonds, and other costs of proceedings
or appeals.
1.5 "LOSS" means any amount which Indemnitee pays or is
obligated to pay as a result of a claim or claims whether brought by or in the
right of the Company (e.g., derivatively by stockholders of the Company for the
benefit of the Company) or otherwise and whether of a civil, criminal,
administrative or investigative nature made against him or for or otherwise in
respect of Covered Acts including, without limitation, damages, judgments, sums
paid in settlement of such claim or claims, sums paid in respect of any
deductible under any policy of D & O Insurance, and fines and penalties other
than fines and penalties for which indemnification is not permitted by
applicable law.
2. MAINTENANCE OF D & O INSURANCE.
2.1 The Company hereby covenants and agrees that, as long as
Indemnitee shall continue to serve as a director or officer of the Company and
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of his services to the Company, the
Company, subject to Section 2.3 hereof, shall obtain and maintain in full force
and effect D & O Insurance.
2.2 All policies of D & O Insurance shall be written in such a
manner as to provide Indemnitee the same rights and benefits, subject to the
same limitations, as are accorded to the Company's directors or officers most
favorably insured by such policy.
2.3 The Company shall have no obligation to maintain D & O
Insurance (i) at any time prior to the effective date of the Company's
initial public offering, or (ii) if the Board of Directors of 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, or the coverage provided for such insurance is limited by
exclusions so as to provide an insufficient benefit.
3. INDEMNIFICATION.
3.1 The Company, at the request of Indemnitee, shall indemnify
Indemnitee and hold him harmless from any and all Losses and Expenses subject,
in each case, to the further provisions of this Agreement.
3.2 The protection afforded to Indemnitee hereunder is
intended to supplement the other protections to which Indemnitee may be entitled
now or hereafter under statutory law, the Company's Articles of Incorporation,
as amended, or Bylaws, as amended, the D & O Insurance, vote of stockholders or
of directors or otherwise, and all of such protections and the provisions hereof
are intended to be cumulative.
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3.3 Indemnitee may seek such indemnification under statutory
law, the Company's Articles of Incorporation, as amended, or Bylaws, as amended,
the D & O Insurance, the provisions of Section 3.1 of this Agreement, or
otherwise concurrently or in such sequence as Indemnitee may choose, in his sole
discretion.
3.4 The Company shall have no obligation to indemnify
Indemnitee for and hold him harmless from any Loss or Expense which constitutes
an Excluded Claim.
4. INDEMNIFICATION PROCEDURES.
4.1 Promptly after receipt by Indemnitee of notice of the
commencement of or the threat of commencement of any action, suit or proceeding,
Indemnitee shall notify the Company of the commencement or threat thereof; but
the omission so to notify or delay in notifying the Company will not relieve it
from any liability which it may have to Indemnitee except to the extent that the
Company is actually prejudiced by any such omission or delay.
4.2 The Company shall give prompt notice of the commencement
of such action, suit or pending to the insurers on the D & O Insurance, if any,
in accordance with the procedures set forth in the respective policies in favor
of Indemnitee. The Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of Indemnitee, all amounts as a
result of such action, suit or proceeding in accordance with the terms of such
policies.
4.3 If such action, suit or proceeding is other than by or
in the right of the Company, Indemnitee shall, assuming that the D & O
Insurance, if any, then provides for Indemnitee's defense, accept the defense
provided under the D & O Insurance. If it does not so provide for his
defense, or if Indemnitee reasonably determines that the insurers under the D
& O Insurance are unable or unwilling to defend, contest and protect
Indemnitee adequately against any such action, suit or proceeding, or if no D
& O Insurance is maintained pursuant to Section 2.3 hereof, Indemnitee may at
his option, either control the defense thereof himself or require the Company
to defend him; provided, however, that Indemnitee may not control the defense
himself or require the Company to defend him if such decision would
jeopardize the coverage provided by the D & O Insurance, if any, to the
Company and/or the other directors and officers covered thereby. If (a)
Indemnitee requires the Company to defend him, (b) the Company does not
maintain any D & O Insurance pursuant to Section 2.3 hereof or (c) Indemnitee
proceeds under the D & O Insurance but Indemnitee reasonably determines that
the insurers under the D & O Insurance are unable or unwilling to defend,
contest and protect Indemnitee adequately against any such action, suit or
proceeding, then the Company shall promptly undertake to defend any such
action, suit or proceeding, at the Company's sole cost and expense, utilizing
counsel of the Indemnitee's choice who has been approved by the Company. If
appropriate the Company shall have the right to participate in the defense of
such action, suit or proceeding.
4.4 If such action, suit or proceeding is by or in the right
of the Company, Indemnitee may, at his option, either control the defense
thereof himself or accept the defense
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provided under the D & O Insurance, if any; PROVIDED, HOWEVER, that Indemnitee
may not control the defense himself if such decision would jeopardize the
coverage provided by the D & O Insurance, if any, to the Company and/or the
other directors and officers covered thereby.
4.5 If the Company shall fail to defend, contest or otherwise
protect Indemnitee in a timely manner against any such action, suit or
proceeding which is not by or in the right of the Company, Indemnitee shall have
the right to do so, including without limitation, the right to make any
compromise or settlement thereof, and to recover from the Company all attorney's
fees, reimbursements and all amounts paid as a result thereof.
4.6 Expenses and Losses incurred or to be incurred by
Indemnitee from time to time as a result of any actions, suit or proceeding
covered by the indemnity provisions of this Agreement (including, without
limitation, an action, suit or proceeding by or in the right of the Company)
which have not been paid by the insurers under the D & O Insurance, if any,
shall be paid by the Company within 30 days of the written request of the
Indemnitee, unless the Company, after consultation with independent legal
counsel, reasonably determines that such Expenses and Losses are more likely
than not to constitute an Excluded Claim. At the election of Indemnitee,
Indemnitee may from time to time request the Company to advance to him funds
to pay any expenses which would be subject to reimbursement hereunder. The
Company shall provide such advances within five business days after written
request thereof. Indemnitee agrees that he will reimburse the Company for all
Losses and Expenses paid or advanced by the Company in connection with any
such action, suit or proceeding against Indemnitee in the event, and only to
the extent, that a determination shall have been made by an arbitrator that
Indemnitee is not entitled to be indemnified by the Company for such Losses
and Expenses because the claim is an Excluded Claim.
5. SETTLEMENT. Except as otherwise provided in Section 4.5,
hereof, Indemnitee shall not settle any suit, action or proceeding without
the Company's prior written consent. The Company shall not settle any suit,
action or proceeding in any manner which would impose any obligation on
Indemnitee which is not covered by indemnification hereunder without
Indemnitee's written consent. Neither the Company nor Indemnitee shall
unreason ably withhold their consent to any proposed settlement.
6. MISCELLANEOUS.
6.1 NOTICES. Any communication contemplated under this
Agreement shall be in writing and shall be effective upon personal delivery or
five days after deposit in the United States mail, postage prepaid, certified or
registered, return receipt requested, addressed as follows or to such other
address as may be specified in the same manner:
If to Company: XxxxxXxxx.Xxx, Inc.
0000 X. Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
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With copy to: Xxxxxx Xxxxxxxxx, Esq.
Jeffer, Mangels, Xxxxxx & Marmaro
2121 Avenue of the Stars, 00xx Xxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
If to Indemnitee: To the address set forth on the
signature page hereof.
6.2 ENFORCEMENT.
(a) If any action is instituted under this
Agreement, or to enforce or interpret any of the terms of this Agreement, all
court or arbitration costs and expenses, including reasonable counsel fees,
incurred or to be incurred by Indemnitee with respect to such action or
arbitration shall be paid by the Company within 30 days of written request by
the Indemnitee, unless and until an arbitrator 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.
(b) All agreements and obligations of the
Company contained herein shall continue during the period the Indemnitee is a
director, officer, employee or agent of the Company (or is serving at the
request of the Company as a director, officer, employee or agent of another
corporation or other enterprise) 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 or investigative,
by reason of the fact that Indemnitee was a director or officer of the Company
or serving in any other capacity referred to herein.
(c) The Company's indemnity obligations
hereunder shall be applicable to any and all claims made after the date hereof
regardless of when the facts upon which such claims are based occurred,
including times prior to the date hereof.
(d) The Company expressly confirms and agrees
that it has entered into this Agreement and assumed the obligations imposed on
the Company hereby, in order to induce Indemnitee to serve, or continue to
serve, as a director and/or officer of the Company, and acknowledges that
Indemnitee is relying upon this Agreement in agreeing to serve or in continuing
to serve in such capacity.
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6.3 PROVISIONS NOT TO INURE TO BENEFIT OF INSURERS. It is the
intention of the parties in entering into this Agreement that the insurers under
the D & O Insurance, if any, shall be obligated ultimately to pay any claims by
Indemnitee which are covered by the D & O Insurance, and nothing herein shall be
deemed to diminish or otherwise restrict the Company's or Indemnitee's right to
proceed or collect against any insurers under the D & O Insurance or to give
such insurers any rights against the Company under or with respect to this
Agreement, including, without limitation, any right to be subrogated to
Indemnitee's rights hereunder, unless otherwise expressly agreed to by the
Company in writing and the obligation of such insurers to the Company and
Indemnitee shall not be deemed reduced or impaired in any respect by virtue of
the provisions of this Agreement.
6.4 SEVERABILITY. In the event that any provision of this
Agreement is determined by a court to require the Company to do or to fail to do
any act which is in violation of applicable law, such provision shall be limited
or modified in its application to the minimum extent necessary to avoid a
violation of law and, as so limited or modified, such provision and the balance
of this Agreement shall be enforceable in accordance with their terms. Without
limiting the generality of the foregoing, if this Agreement or any portion
thereof shall be invalidated on any ground, the Company shall nevertheless
indemnify Indemnitee to the full extent permitted by any applicable portion of
this Agreement that shall not have been invalidated.
6.5 PARTIAL INDEMNIFICATION. If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Losses but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such Expenses and Losses to which Indemnitee is entitled to indemnification.
6.6 CHOICE OF LAW. The validity, construction, performance,
and enforcement of this Agreement, and each part thereof, shall be governed by
and construed in accordance with the laws of the State of Texas, applicable to
agreements made and to be wholly performed in such state.
6.7 SUCCESSOR AND ASSIGNS. This Agreement shall be (i) binding
upon all successors and assigns of the Company (including any transferee of all
or substantially all of its assets and any successor by merger or otherwise by
operation of law) and (ii) shall be binding on and inure to the benefit of the
heirs, personal representatives and estate of Indemnitee.
6.8 AMENDMENT. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in writing and
signed by each of the parties hereto. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
6.9 GENDER. Whenever the context so requires, the masculine
shall mean the feminine.
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6.10 ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement or any other agreement entered into in
connection herewith, other than matters pertaining to injunctive relief,
including without, limitation, temporary restraining orders, preliminary
injunctions and permanent injunctions, shall, upon the written demand of either
party served upon the other party, be submitted to arbitration. Such arbitration
shall be held in the City of Boca Raton, Florida, and conducted in accordance
with the provisions of the rules of the American Arbitration Association, as
then in effect. The arbitrator's determination of the dispute or controversy
shall be final and binding on the parties. Judgment may be entered on the
arbitrator's award in any court having jurisdiction, and the parties hereby
consent to the jurisdiction of the courts of the State of Florida (including the
federal courts located therein) for this purpose. The parties specifically
confer upon the arbitrator the right to direct each of the parties to produce in
advance of the hearing(s) whatever documents the arbitrator deems appropriate.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the date and year first above written.
"Company" XXXXXXXXX.XXX, INC.
By___________________________________
Name:
Title:
"Indemnitee"
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Name:
Address:
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