INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT is made as of _______________, 2000, and
is entered into by and between MGi2, Inc., a Delaware corporation (the
"Company"), and _______________ ("Indemnitee").
R E C I T A L S:
WHEREAS, the bylaws of the Company provide for the indemnification of
the Company's directors and officers to the maximum extent permitted from time
to time under applicable law and, along with the Delaware General Corporation
Law, contemplate that the Company may enter into agreements with respect to such
indemnification; and
WHEREAS, the Board of Directors of the Company has concluded that it is
reasonable, prudent and in the best interests of the Company's stockholders for
the Company to contractually obligate itself to indemnify certain of its
Authorized Representatives (defined below) so that they will serve or continue
to serve with greater certainty that they will be adequately protected.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Indemnitee hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the following terms
shall have the following respective meanings:
"Authorized Representative" means (i) a director, officer,
employee, agent or fiduciary of the Company or any Subsidiary and (ii)
a person serving at the request of the Company or any Subsidiary as a
director, officer, employee, fiduciary or other representative of
another Enterprise.
"Enterprise" means any corporation, partnership, limited
liability company, association, joint venture, trust, employee benefit
plan or other entity.
"Expenses" means all expenses, including (without limitation)
reasonable fees and expenses of counsel.
"Liabilities" means all liabilities, including (without
limitation) the amounts of any judgments, fines, penalties, excise
taxes and amounts paid in settlement.
"Proceeding" means any threatened, pending or completed claim,
action (including any action by or in the right of the Company), suit
or proceeding (whether formal or informal, or civil, criminal,
administrative, legislative, arbitrative or investigative) in respect
of which Indemnitee is, was or at any time becomes, or is threatened to
be made, a party, witness, subject or target, by reason of the fact
that Indemnitee is or was an Authorized Representative or a prospective
Authorized Representative.
"Subsidiary" means, at any time, (i) any corporation of which
at least a majority of the outstanding voting stock is owned by the
Company at such time, directly or indirectly through subsidiaries, and
(ii) any other Enterprise in which the Company, directly or indirectly,
owns more than a 50% equity interest at such time.
2. INTERPRETATION. (a) In this Agreement, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and VICE
VERSA;
(ii) reference to any gender includes each other gender;
(iii) the words "HEREIN," "HEREOF" and "HEREUNDER" and other
words of similar import refer to this Agreement as a whole and not to
any particular Section or other subdivision;
(iv) unless the context indicates otherwise, reference to any
Section means such Section hereof; and
(v) the words "INCLUDING" (and with correlative meaning
"INCLUDE") means including, without limiting the generality of any
description preceding such term.
(b) The Section headings herein are for convenience only and
shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or
construed against any party solely because that party or its legal
representative drafted such provision.
(d) In the event of any ambiguity, vagueness or other similar
matter involving the interpretation or meaning of this Agreement, this Agreement
shall be liberally construed so as to provide to Indemnitee the full benefits
contemplated hereby.
(e) If the indemnification to which Indemnitee is entitled as
respects any aspect of any claim varies between two or more provisions of this
Agreement, that provision providing the most comprehensive indemnification shall
apply.
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3. LIMITATION ON PERSONAL LIABILITY. To the fullest extent permitted by
applicable law (including the Investment Company Act of 1940, as amended (the
"Investment Company Act")), Indemnitee shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director of the Company, PROVIDED that the foregoing shall not eliminate or
limit the liability of Indemnitee (i) for any breach of Indemnitee's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law relating to
unlawful dividend payments and unlawful stock purchases or redemptions or (iv)
for any transaction from which Indemnitee derived an improper personal benefit.
4. INDEMNITY. (a) Subject to the following provisions of this
Agreement, the Company shall hold harmless and indemnify Indemnitee to the
fullest extent permitted by applicable law existing (now/or hereafter adopted)
against all Expenses and Liabilities actually incurred by Indemnitee in
connection with any Proceeding; PROVIDED, HOWEVER, notwithstanding anything
herein to the contrary, that no indemnity or contribution for Expenses and
Liabilities or advances therefor shall be paid by the Company pursuant to this
Agreement:
(i) for amounts actually paid to Indemnitee pursuant to one or
more policies of directors and officers liability insurance maintained
by the Company or pursuant to a trust fund, letter of credit or other
security or funding arrangement provided by the Company; PROVIDED,
HOWEVER, that if it should subsequently be determined that Indemnitee
is not entitled to retain any such amount, this clause (i) shall no
longer apply to such amount;
(ii) in respect of remuneration paid to Indemnitee if it shall
be determined by a final judgment or other final adjudication that
payment of such remuneration was in violation of applicable law;
(iii) on account of Indemnitee's conduct which is finally
adjudged to constitute willful misconduct or to have been knowingly
fraudulent, deliberately dishonest or from which the Indemnitee derives
an improper personal benefit; or
(iv) on account of any suit in which final judgment is
rendered against Indemnitee for an accounting of profits made from the
sale or purchase by Indemnitee of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934,
as amended.
(v) for amounts which the Indemnitee cannot be indemnified
under the provisions of the Investment Company Act, for so long as the
Company is regulated as a business development company under the
Investment Company Act; or
(vi) for amounts which the Indemnitee cannot be indemnified
under the laws of the State of Delaware.
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(b) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for only a portion (but not, however, for the
total amount) of any Expenses or Liabilities actually incurred by Indemnitee in
connection with any Proceeding, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses and Liabilities to which Indemnitee
is entitled. If the indemnification provided for herein in respect of any
Expenses or Liabilities actually incurred by Indemnitee in connection with any
Proceeding is finally determined by a court of competent jurisdiction to be
prohibited by applicable law, then the Company, in lieu of indemnifying
Indemnitee, shall, subject to the limitations contained in this Agreement,
contribute to the amount paid or payable by Indemnitee as a result of such
Expenses and Liabilities in such proportion as is appropriate to reflect (i) the
relative benefits received by the Company on the one hand and Indemnitee on the
other hand from the events, circumstances, conditions, happenings, actions or
transactions from which such Proceeding arose, (ii) the relative fault of the
Company (including its other Authorized Representatives) on the one hand and of
Indemnitee on the other hand in connection with the events, circumstances and
happenings which resulted in such Expenses and Liabilities, such relative fault
to be determined by reference to, among other things, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
the events, circumstances and/or happenings resulting in such Expenses and
Liabilities, and (iii) any other relevant equitable considerations, it being
agreed that it would not be just and equitable if such contribution were
determined by pro rata or other method of allocation which does not take into
account the foregoing equitable considerations.
(c) The indemnification provided herein shall be applicable only to
Proceedings commenced after the date hereof, regardless, however, of whether
they arise from acts, omissions, facts or circumstances occurring before or
after the date hereof.
(d) The indemnification provided herein shall be applicable whether or
not negligence of Indemnitee is alleged or proved, and regardless of whether
such negligence be contributory or sole if permitted by applicable law.
(e) Amounts paid by the Company to Indemnitee under this Section 4 are
subject to refund by Indemnitee as provided in Section 8.
5. NOTIFICATION AND DEFENSE OF CLAIMS. (a) Promptly after the receipt
by Indemnitee of notice of the commencement of any Proceeding, Indemnitee will,
if a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement of such Proceeding; PROVIDED,
HOWEVER, that the omission to so notify the Company will not relieve the Company
(i) from any liability which it may have to Indemnitee under this Agreement
unless, and then only to the extent that, such omission results in insufficient
time being available to permit the Company or its counsel to effectively defend
against or make timely response to any loss, claim, damage, liability or expense
resulting from such Proceeding or otherwise has a material adverse effect on the
Company's ability to promptly deal with such loss, claim, damage, liability or
expense or (ii) from any liability which it may have to Indemnitee otherwise
than under this Agreement.
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(b) The following provisions shall apply with respect to any such
Proceeding as to which Indemnitee notifies the Company of the commencement
thereof:
(i) The Company shall be entitled to participate therein at
its own expense.
(ii) Except as otherwise provided below, to the extent it may
elect to do so, the Company (jointly with any other indemnifying party
similarly notified) will be entitled to assume the defense thereof,
with counsel of its own selection reasonably satisfactory to
Indemnitee. After notice from the Company to Indemnitee of its election
so to assume the defense thereof, the Company will not be liable to
Indemnitee under this Agreement for any Expenses subsequently incurred
by Indemnitee in connection with the defense of such Proceeding other
than reasonable costs of investigation or as otherwise provided below.
Indemnitee shall have the right to employ separate counsel in such
Proceeding but the fees and expenses of such counsel incurred after
notice from the Company of its assumption of the defense thereof shall
be at the expense of Indemnitee unless (1) the employment of separate
counsel by Indemnitee has been authorized by the Company; (2)
Indemnitee shall have reasonably concluded that there may be a conflict
of interest between the Company and Indemnitee in the conduct of the
defense of such Proceeding; or (3) the Company shall not in fact have
employed counsel to assume the defense of such Proceeding, in each of
which cases the reasonable fees and expenses of Indemnitee's counsel
shall be borne by 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 Indemnitee shall have made the conclusion
provided for in (2) above. Nothing in this subparagraph (ii) shall
affect the obligation of the Company to indemnify Indemnitee against
Expenses and Liabilities paid in settlement for which it is otherwise
obligated hereunder.
(iii) The Company shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any
Proceedings or claims effected without its prior written consent. The
Company shall not settle any Proceeding or claim in any manner which
would impose any penalty or limitation on Indemnitee without
Indemnitee's prior written consent. Neither the Company nor Indemnitee
will unreasonably withhold or delay its consent to any proposed
settlement.
6. ADVANCEMENT OF EXPENSES, ETC. If requested to do so by Indemnitee
with respect to any Proceeding, the Company shall advance to or for the benefit
of Indemnitee, prior to the final disposition of such Proceeding, the Expenses
actually incurred by Indemnitee in investigating, defending or appealing such
Proceeding, except as otherwise provided in Section 4 hereof. Any judgments,
fines or amounts to be paid in settlement of any Proceeding shall also be
advanced by the Company upon request by Indemnitee, except as otherwise provided
in Section 4 hereof. Advances made by the Company under this Section 6 are
subject to refund by Indemnitee as provided in Section 8.
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7. RIGHT OF INDEMNITEE TO BRING SUIT. (a) If a claim for
indemnification or a claim for an advance under this Agreement is not paid in
full by the Company within 30 days after receipt by the Company from Indemnitee
of a written request or demand therefor, Indemnitee may bring suit against the
Company to recover the unpaid amount of the claim. If, in any such action,
Indemnitee makes a prima facie showing of entitlement to indemnification under
this Agreement, the Company shall have the burden of proving that
indemnification is not required under this Agreement. The only defense to any
such action shall be that indemnification is not required by this Agreement or
allowed under applicable law.
(b) In the event that any action is instituted by Indemnitee to enforce
Indemnitee's rights or to collect monies due to Indemnitee under this Agreement
and if Indemnitee is successful in such action, the Company shall reimburse
Indemnitee for all Expenses incurred by Indemnitee with respect to such action.
8. REPAYMENT OBLIGATION OF INDEMNITEE. If the Company advances or pays
any amount to Indemnitee under Section 4, 6 or 7 and if it shall thereafter be
finally adjudicated that Indemnitee was not entitled to be indemnified hereunder
for all or any portion of such amount, Indemnitee shall promptly repay such
amount or such portion thereof, as the case may be, to the Company. If the
Company advances or pays any amount to Indemnitee under Section 4, 6 or 7 and if
Indemnitee shall thereafter receive all or a portion of such amount under one or
more policies of directors and officers liability insurance maintained by the
Company or pursuant to a trust fund, letter of credit or other security or
funding arrangement provided by the Company, Indemnitee shall promptly repay
such amount or such portion thereof, as the case may be, to the Company.
9. LIMITATION FOR DISABLING CONDUCT.
(a) Notwithstanding anything to the contrary in Section 3 or 4 hereof,
the Company may not indemnify any director or officer of the Company against any
liability, nor shall any director or officer of the Company be exculpated from
any liability, to the Company or its stockholders to which such director or
officer might otherwise be subject by reason of "disabling conduct" (as
hereinafter defined). Accordingly, each determination with respect to the
permissibility of indemnification of a director or officer of the Company
because such director or officer has met the applicable standard of conduct
shall include a determination that the liability for which such indemnification
is sought did not arise by reason of such person's disabling conduct. The
determination required by this Section 9(a) may be based on:
(i) a final decision on the merits by a court or other body
before whom the action, suit or proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct; or
(ii) in the absence of such a decision, a reasonable
determination, based on a review of the facts, that the person to be
indemnified was not liable by reason of such person's disabling conduct
by: (A) the vote of a majority of a quorum of directors who are
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"disinterested, non-party directors" (as hereinafter defined); or (B)
an "independent legal counsel" (as hereinafter defined) in a written
opinion. In making such determination, such disinterested, non-party
directors or independent legal counsel, as the case may be, may deem
the dismissal for insufficiency of evidence of any disabling conduct of
either a court action or an administrative proceeding against a person
to be indemnified to provide reasonable assurance that such person was
not liable by reason of disabling conduct.
(b) For the purpose of this Section 9:
(i) "disabling conduct" of a director or officer shall mean
such person's willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office
or any other conduct prohibited under Section 17(h) of the Investment
Company Act or any other applicable securities laws;
(ii) "disinterested, non-party director" shall mean a director
of the Company who is neither an "interested person" of the Company as
defined in Section 2(a)(19) of the Investment Company Act nor a party
to the action, suit or proceeding in connection with which
indemnification is sought;
(iii) "independent legal counsel" shall mean an
attorney-at-law admitted to practice in one or more jurisdictions of
the United States who is not, and for at least two (2) years prior to
his or her engagement to render the opinion in question has not been,
employed or retained by the Company, by any investment adviser to or
principal underwriter for the Company, or by any person affiliated with
any of the foregoing; and
(c) The Company may advance legal fees and other expenses to or for the
benefit of a director or officer of the Company pursuant to Section 6 hereof so
long as, in addition to the other requirements therefor, the Company either:
(i) obtains security for the advance from the Indemnitee;
(ii) has insurance against losses arising by reason of lawful
advances; or
(iii) it shall be determined, pursuant to the means set forth
in Section 9(a)(ii) hereof, that there is reason to believe that the
Indemnitee ultimately will be found entitled to indemnification.
10. CHANGES IN LAW. If any change after the date of this Agreement in
any applicable law, statute or rule expands the power of the Company to
indemnify Authorized Representatives, such change shall be within the purview of
Indemnitee's rights and the Company's obligations under this Agreement. If any
change after the date of this Agreement in any applicable law, statute or rule
narrows the right of the Company to indemnify an Authorized Representative, such
change shall,
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to the fullest extent permitted by applicable law, leave this Agreement and the
parties' rights and obligations hereunder unaffected.
11. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Company hereunder shall continue during the period Indemnitee is an Authorized
Representative, and shall continue after Indemnitee has ceased to occupy such
position or have such relationship so long as Indemnitee shall be subject to any
possible Proceeding.
12. NONEXCLUSIVITY. The indemnification and other rights provided by
any provision of this Agreement shall not be deemed exclusive of any other
rights to which Indemnitee may be entitled under (i) any statutory or common
law, (ii) the Company's certificate of incorporation, (iii) the Company's
bylaws, (iv) any other agreement or (v) any vote of stockholders or
disinterested directors or otherwise, both as to action in Indemnitee's official
capacity and as to action in another capacity while occupying any of the
positions or having any of the relationships referred to in this Agreement.
Nothing in this Agreement shall in any manner affect, impair or compromise any
indemnification Indemnitee has or may have by virtue of any agreement previously
entered into between Indemnitee and the Company.
13. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable (i) the validity, legality or
enforceability of the remaining provisions of this Agreement shall not be in any
way affected or impaired thereby and (ii) to the fullest extent possible, the
provisions of this Agreement shall be construed so as to give effect to the
intent manifested by the provision held invalid, illegal or unenforceable. Each
provision of this Agreement is a separate and independent portion of this
Agreement.
14. MODIFICATION AND WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties. No waiver of any of the provisions of this Agreement shall be binding
unless executed in writing by the person making the waiver nor shall such waiver
constitute a continuing waiver.
15. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be addressed (i) if to the Company, at
its principal office address as shown on the signature page hereof or such other
address as it may have designated by written notice to Indemnitee for purposes
hereof, directed to the attention of the Secretary and (ii) if to Indemnitee, at
Indemnitee's address as shown on the signature page hereof or to such other
address as Indemnitee may have designated by written notice to the Company for
purposes hereof. Each such notice or other communication shall be deemed to have
been duly given if (a) delivered by hand and receipted for by the party to whom
said notice or other communication shall have been directed, (b) transmitted by
facsimile transmission, at the time that receipt of such transmission is
confirmed, or (c) mailed by certified or registered mail with postage prepaid,
on the third business day after the date on which it is so mailed.
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16. GOVERNING LAW. This Agreement shall be deemed to be a contract made
under, and shall be governed by and construed and enforced in accordance with,
the internal laws of the State of Delaware without regard to principles of
conflicts of law.
17. HEIRS, SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding
upon, inure to the benefit of and be enforceable by (i) Indemnitee and
Indemnitee's personal or legal representatives, executors, administrators,
heirs, devisees and legatees and (ii) the Company and its successors and
assigns. This Agreement shall not inure to the benefit of any other person or
Enterprise.
(b) The Company agrees to require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used herein, the term "Company" shall include any successor
to its business and/or assets as aforesaid which executes and delivers the
assumption and agreement provided for in this Section 17 or which otherwise
becomes bound by all terms and provisions of this Agreement by operation of law.
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ENTERED into on the day and year first above written.
THE COMPANY:
MGI2, INC.
By:
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Name: Xxxx X. Xxxxxxxx
Title: Chairman of the Board, Chief Executive
Officer and Chief Financial Officer
Address: 0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopier: 000-000-0000
INDEMNITEE:
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