EXHIBIT 10.16
INDEMNIFICATION AGREEMENT
This Agreement, made and entered into this __day of February 1998
("Agreement"), by and between Applied Intelligence Group, Inc., an Oklahoma
Corporation ("Corporation"), and __________"Indemnitee"):
WHEREAS, recently highly competent persons have become more reluctant to
serve publicly-held corporations as directors, officers, or in other capacities,
unless they are provided with better protection from the risk of claims and
actions against them arising out of their service to and activities on behalf of
such corporations; and
WHEREAS, the current impracticability of obtaining adequate insurance and
uncertainties related to indemnification have increased the difficulty of
attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Corporation (the "Board") has
determined that the inability to attract and retain such persons is detrimental
to the best interests of the Corporation's shareholders and that such persons
should be assured that they will have better protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Corporation to
obligate itself contractually to indemnify such persons to the fullest extent
permitted by applicable law, so that such persons will serve or continue to
serve the Corporation free from undue concern that they will not be adequately
indemnified; and
WHEREAS, this Agreement is a supplement to and in furtherance of Article VI
of the By-laws of the Corporation, any rights granted under the certificate of
incorporation of the Corporation and any resolutions adopted pursuant thereto
shall not be deemed to be a substitute therefor nor to diminish or abrogate any
rights of Indemnitee thereunder; and
WHEREAS Indemnitee is willing to serve, continue to serve and to take on
additional service for or behalf of the Corporation on the condition that he be
indemnified according to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and the convenants
contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
Section 1. Definitions. For purposes of this Agreement:
(a) "Change in Control" means a change in control of the
Corporation of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A-of Regulation 14A (or
in response to any similar item on any similar schedule or
form) promulgated under the Securities Exchange Act of 1934
(the "Act"), whether or not the Corporation is then subject to
such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Act) is or becomes the "beneficial
owner" (as defined in rule 1 3d-3 under the Act), directly or
indirectly, of securities of the Corporation representing 20%
or more of the combined voting power of
the Corporation's then outstanding securities without the prior
approval of at least two-thirds of the members of the Board in
office immediately prior to such person attaining such
percentage interest; (ii) the Corporation is a party to a
merger, consolidation, sale of assets or other reorganization,
or a proxy contest, as a consequence of which members of the
Board in office immediately prior to such transaction or event
constitute less than a majority of the Board thereafter; or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or
nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority
of the Board.
(b) "Corporate Status" means the status of a person who is or was a
director, officer, employee, agent or fiduciary of the
Corporation or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the
Corporation.
(c) "Disinterested Director" means a director of the Corporation
who is not and was not a party to the Proceeding in respect of
which indemnification is sought by Indemnitee.
(d) "Expenses" means all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all
other disbursements or expenses of types customarily incurred
in connection with prosecuting, defer-ding, preparing to
prosecute or defend, investigating, or being or preparing to be
a witness in a Proceeding.
(e) "Independent Counsel" means a law firm, or a member of a law
firm, that is for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in
representing either the Corporation or Indemnitee in an action
to determine Indemnitee's rights under this Agreement.
(f) "Proceeding" means any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any
other proceeding, whether civil, criminal, administrative or
investigative, except one initiated by an Indemnitee pursuant to
Section 11 of this Agreement to enforce his rights under this
Agreement.
Section 2. Services by Indemnitee. Indemnitee agrees to continue to serve
as an officer or director of the Corporation. Indemnitee may at any time and for
any reason resign from such position (subject to any other contractual
obligation or any obligation unposed by operation of law).
Section 3. Indemnification - General. The Corporation shall indemnify, and
advance Expenses to, Indemnitee as provided in this Agreement to the fullest
extent permitted by applicable law in effect on the date hereof and to such
greater extent as applicable law may thereafter from time to time permit. The
rights of Indemnitee provided under the preceding sentence shall include, but
shall not be limited to, the rights set forth in the other Sections of this
Agreement.
Section 4. Proceedings Other Than Proceedings by or in the Right of the
Corporation. Indemnitee shall be entitled to the rights of indemnification
provided in this Section if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to any threatened, pending or completed
Proceeding, other than a Proceeding by or in the right of the Corporation.
Pursuant to this Section, Indemnitee shall be indemnified against Expenses,
judgments, penalities, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with any such
Proceeding or any claim, issue or matter therein, 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 corporation, and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 5. Proceedings by or in the Right of the Corporation. Indemnitee
shall be entitled to the rights of indemnification provided in this Section if,
by reason of his Corporate status, he is, or is threatened to be made a party to
any threatened, pending or completed Proceeding brought by or in the right of
the Corporation to procure a judgment in its favor. Pursuant to this Section,
Indemnitee shall be indemnified against Expenses actually and reasonably
incurred by him or on his behalf in connection with any 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 Corporation. Notwithstanding the foregoing,
no indemnification against such Expenses shall be made in respect of any claim,
issue or matter in any such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Corporation if applicable law prohibits such
indemnification unless the District Court of Oklahoma County of the State of
Oklahoma, or the court in which such Proceeding shall have been brought or is
pending, shall determine that indemnification against Expenses may nevertheless
be made by the Corporation.
Section 6. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Corporation
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue or matter. For the purposes of this Section and without limiting the
foregoing, the termination of any claim, issue or matter in any such Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
Section 7. Indemnification for Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness in any Proceeding, he shall be indemnified
against all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith.
Section 8. Advancement of Expenses. The Corporation shall advance all
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding within twenty days after the receipt by the Corporation of a
statement or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
against such Expenses.
Section 9. Procedure for Determination of Entitlement to Indemnification.
(a) To obtain indemnification under this Agreement in connection with any
Proceeding, and for the duration thereof, Indemnitee shall submit to the
Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and
is reasonably necessary to determine whether and to what extent Indemnitee
is entitled to indemnification. The Secretary of the Corporation shall,
promptly upon receipt of any such request for indemnification, advise the
Board in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
Section 9(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in such case: (i)
if a Change in Control shall have occurred, by Independent Counsel (unless
Indemnitee shall request that such determination be made by the Board or
the shareholders, in which case in the manner provided for in clauses (ii)
or (iii) of this Section 9(b)) in a written opinion to the Board, a copy of
which shall be delivered to Indemnitee; (ii) if a Change in Control shall
not have occurred, (A) by the Board by a majority vote of a quorum
consisting of Disinterested Directors, or (B) if a quorum of the Board
consisting of Disinterested Directors is not obtainable, or even if such
quorum is obtainable, if such quorum of Disinterested Directors so directs,
either (x) by Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee, or ((y)) by the shareholders of
the Corporation as determined by such quorum of Disinterested Directors, or
a quorum of the Board, as the case may be; or (iii) as provided in Section
10(b)) of this Agreement. If it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten
(10) days after such determination. Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification, including providing to such
person, persons or entity upon reasonable advance request any documentation
or information which is not privileged or otherwise protected for
disclosure-and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or expenses (including
attorneys' fees and disbursements) incurred by Indemnitee in so cooperating
with the person, persons or entity making such determination shall be borne
by the Corporation (irrespective of the indemnification) and the
Corporation hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.
(c) If required, Independent Counsel shall be selected as follows: (i) if a
Change in Control shall not have occurred, Independent Counsel shall be
selected by the Board, and the Corporation shall give written notice to
Indemnitee advising him of the identity of Independent Counsel so selected;
or (ii) if a Change in Control shall have occurred, Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board, in which event (I) shall apply), and
Indemnitee shall give written notice to the Corporation advising it of the
identity of Independent Counsel so selected. In either event, Indemnitee or
the Corporation, as the case may be, may, within seven (7) days after such
written notice of selection shall have been given, deliver to the
Corporation or to Indemnitee,, as the case may be, a written objection to
such
selection. Such objection may be asserted only on the ground that
Independent Counsel so selected does not meet the requirements of
"Independent Counsel" as defined in Section 1 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. If such written objection is made, Independent Counsel so
selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant
to Section 9(a) hereof, no Independent Counsel shall have been selected and
not objected to, either the Corporation of Indemnitee may petition the
District Court of Oklahoma County of the State of Oklahoma, or other court
of competent jurisdiction, for resolution of any objection which shall have
been made by the Corporation or Indemnitee to the other's selection of
Independent Counsel and/or for the appointment as Independent Counsel of a
person selected by such court or by such other person a such court shall
designate, and the person with respect to whom an objection is so resolved
or the person so appointed shall act as Independent Counsel under Section
9(b) hereof. The Corporation shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with its action pursuant to this Agreement, and the Corporation
shall pay all reasonable fees~and expenses incident to the procedures of
this Section 9(c), regardless of the manner in which such Independent
Counsel was selected or appointed. Upon the due commencement date of any
judicial proceeding or arbitration pursuant to Section l I (a)(iii) of this
Agreement, Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable
standards of professional conduct then prevailing).
Section 10. Presumptions and Effects of Certain Proceedings.
(a) If a Change in Control shall have occurred, in making a determination
with respect to entitlement to indemnification hereunder, the person or
persons or entity making such determination shall presume that Indemnitee
is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 9(a) of
this Agreement, and the Corporation shall have the burden of proof to
overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption.
(b) If the person, persons or entity empowered or selected under Section 9
of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within sixty (60) days
after receipt by the Corporation of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have
been made and Indemnitee shall be entitled to such indemnification, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii)
prohibition of such indemnification under applicable law; provided,
however, that such sixty-day (60-day) period may be extended for a
reasonable time, not to exceed an additional thirty (30) days, if the
person, persons or entity making the determination with respect to
entitlement to indemnification in good faith require(s) such additional
time for the obtaining or evaluating of documentation and/or information
relating thereto; and provided, further, that the foregoing provisions of
this Section 10(b) shall not apply (i) if the determination of entitlement
to indemnification is to be made by the shareholders pursuant to Section
9(b) of
this Agreement and if (A) within fifteen (15) days after receipt by the
Corporation of the request for such determination the Board has resolved to
submit such determination to the shareholders for their consideration at an
annual meeting thereof to be held within seventy-five (75) days after such
receipt and such determination is-made thereat, or (B) a special meeting of
shareholders is called within fifteen ((15) days after such receipt for the
purpose of making such determination, such meeting is held for such purpose
within sixty (60) days after having been so called and such determination
is made thereat, or (ii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section
9(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation or, with respect to
any criminal Proceeding, that Indemnitee had reasonable cause to believe
that his conduct was unlawful.
Section 11. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 9 of
this Agreement that Indemnitee is not entitled to indemnification under
this Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 8 of this Agreement, (iii) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section
9(b) of this Agreement and such determination shall not have been made and
delivered in a written opinion within ninety (90) days after receipt by the
Corporation of the request for indemnification, (iv) payment of
indemnification is not made pursuant to section 7 of this Agreement within
ten (10) days after receipt by the Corporation of a written request
therefor, or (v) payment of indemnification is not made within ten (10)
days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant
to Section 9 or 10 of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Oklahoma, or in any
other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at
his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association.
Indemnitee shall commence such proceeding seeking an adjudication or an
award in arbitration within one hundred and eighty (180) days following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 1 l(a). The Corporation shall not oppose
Indemnitee's right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 9 of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant
to this Section 11 shall be conducted in all respects as a de novo trial or
arbitration on the merits and Indemnitee shall not be prejudiced by reason
of that adverse determination. If a Change in Control shall have occurred
in any judicial proceeding or arbitration commenced pursuant to this
Section 11, the Corporation shall have the burden of proving that
Indemnitee is not entitled to indemnification or advancement of Expenses,
as the case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 9 or 10 of this Agreement that Indemnitee is entitled
to indemnification, the Corporation shall be bound by such determination in
any judicial proceeding or arbitration commenced pursuant
to this Section 11, absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification, or (ii) prohibition of such indemnification under
applicable law.
(d) The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 11 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such
arbitrator that the Corporation is bound by all the provisions of this
Agreement.
(f) In the event that Indemnitee, pursuant to this Section 11,
seeks judicial adjudication of, or an award in arbitration to
enforce, his rights under, or to recover damages for breach of,
this Agreement, Indemnitee shall be entitled to recover from
the Corporation, and shall be indemnified by the Corporation
against, any and all expenses (of the kinds described in the
definition of Expenses) actually and reasonably incurred by him
in such judicial adjudication or arbitration, but only if he
prevails therein. If it shall be determined in such judicial
adjudication or arbitration that Indemnitee is entitled to
receive part but not all of the indemnification or advancement
of expenses sought, the Expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall
be appropriately prorated.
Section 12. Non-Exclusivity; Survival of Rights: Insurance: Subrogation.
(a) The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other
rights to which Indemnitee may at any time be entitled under applicable
law, the certificate of incorporation or By-laws of the Corporation, any
agreement, a vote of shareholders or a resolution of directors, or
otherwise. No amendment, alteration or repeal of this Agreement or any
provision hereof shall be effective as to any Indemnitee with respect to
any action taken or omitted by such Indemnitee with respect to any action
taken or omitted by such Indemnitee in his Corporate Status prior to such
amendment, alternation or repeal.
(b) To the extent that the Corporation maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Corporation or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Corporation,
Indemnitee shall be covered by such policy or policies in accordance with
its or their terms to the maximum extent of the coverage available for any
such director, officer, employee, agent or fiduciary under such policy or
policies.
(c) In the event of any payment under the Agreement, the Corporation shall
be subrogate to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take
all action necessary to secure such rights, including execution of
such documents as are necessary to enable the Corporation to bring
suit to enforce such rights.
(d) The Corporation shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment
under any insurnace policy, contract, agreement or otherwise.
Section 13. Duration of Agreement. This Agreement shall continue until and
terminate under the later of:
(a) Ten (10) years after the date that Indemnitee shall have ceased to
serve as a director,
officer, employee, agent or fiduciary of the Corporation or of any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which Indemnitee served at the request of the Corporation;
or
(b) (b) the final termination of all pending Proceedings in respect of
which Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder and of any proceeding commenced by Indemnitee pursuant
to Section 11 of this Agreement.
This Agreement shall be binding upon the Corporation and its successors and
assigns and shall inure to the benefit of Indemnitee and his heirs; executors
and administrators.
Section 14. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever:
(a) the validity, legality and enforceability of the remaining provisions
of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself 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, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall
be construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable.
Section 15. Exception to Right of Indemnification or Advancement of
Expenses. Except as provided in Section 1 1 (e), Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any Proceeding, or any claim therein, brought or made by him against
the Corporation.
Section 16. Identical Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
Section 17. Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
Section 18. 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.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the
Corporation in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or-matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
Section 20. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by party to whom such
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
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(b) If to Corporation, to:
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Attn:
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Or to such other address as may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Oklahoma.
Section 22. Miscellaneous. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
ATTEST:
By: By:
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Xxxxxx X. Xxxxx, Corporate Secretary Xxxxxx X. Xxxxxx, President, CEO
and Chairman
INDEMNITEE
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