1
EXHIBIT 10.16
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is effective as of July ____, 1998,
between BindView Development Company, a Texas corporation ("BindView"), and
______________ ("Indemnitee").
WHEREAS, it is essential to BindView to retain and attract as
directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director or officer of BindView;
WHEREAS, both BindView and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers;
WHEREAS, it is crucial to secure the continued service of competent
and experienced people in senior corporate positions and to assure that they
will be able to exercise judgment without fear of personal liability so long as
they fulfill the basic duties of honesty, care and good faith; and
WHEREAS, in order to enhance Indemnitee's continued service to
BindView in an effective manner, and due to the potential inadequacy of
BindView's directors' and officers' liability insurance coverage, BindView
wishes to provide in this Agreement for the indemnification of, and the
advancing of expenses to, Indemnitee to the fullest extent, whether partial or
complete, permitted by law and as set forth in this Agreement, and to the
extent insurance is maintained, for the continued coverage of Indemnitee under
BindView's directors' and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve BindView directly or, at its request, with another
enterprise, and intending to be legally bound thereby, the parties hereto agree
as follows:
1. Certain Definitions.
(a) "Approved Law Firm" shall mean any law firm (i)
located in Houston, Texas and (ii) rated "av" by the
Xxxxxxxxxx-Xxxxxxx Law Directory; provided, however, that such law
firm shall not, for a five year period prior to the Indemnifiable
Event (as hereinafter defined), have been engaged by BindView, an
Acquiring Person (as hereinafter defined) or Indemnitee.
(b) "Board of Directors" shall mean the Board of
Directors of BindView.
(c) "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 Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than a trustee or other fiduciary holding securities
under an employee benefit plan of BindView in substantially the same
proportions as their ownership of stock of BindView, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly of securities of BindView representing 15% or
more of the total
-1-
2
voting power represented by BindView's then outstanding Voting
Securities (as hereinafter defined) (such person being herein referred
to as an "Acquiring Person"), (ii) during any consecutive 24-month
period, individuals who at the beginning of such period constitute the
Board of Directors of BindView and any new director whose election by
the Board of Directors or nomination for election by BindView's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved cease for any reason to constitute a
majority thereof, (iii) the shareholders of BindView approve a merger
or consolidation of BindView with any other entity, other than a
merger or consolidation which would result in the Voting Securities of
BindView outstanding immediately prior thereto continuing to
represent, either by remaining outstanding or by being converted into
Voting Securities of the surviving entity, at least 80% of the total
voting power represented by the Voting Securities of BindView or such
surviving entity outstanding immediately after such merger or
consolidation or (iv) the shareholders of BindView approve a plan of
complete liquidation of BindView or an agreement for the sale or
disposition by BindView of all or substantially all BindView's assets.
(d) "Claim" shall mean any threatened, pending or
completed action, suit or proceeding, or any inquiry or investigation,
either at trial or on appeal, whether conducted by BindView or any
other party, that Indemnitee reasonably believes might lead to the
institution of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise.
(e) "Expenses" shall include attorneys' fees and all
other costs, expenses and obligations paid or incurred in connection
with investigating, defending, being a witness in or participating in,
or preparing to defend, be a witness in or participate in, any Claim
relating to any Indemnifiable Event, together with interest, computed
at BindView's average cost of funds for short-term borrowings, accrued
from the date of incurrence of such expense to that date Indemnitee
receives reimbursement therefor.
(f) "Indemnifiable Event" shall mean any event or
occurrence related to the fact that Indemnitee is or was a director,
officer, employee, agent or fiduciary of BindView, or is or was
serving at the request of BindView as a director, officer, employee,
trustee, agent or fiduciary of another corporation of any type or
kind, foreign or domestic, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or not
done by Indemnitee in such capacity. Without limiting any
indemnification provided hereunder, an Indemnitee serving (i) another
corporation, partnership, joint venture or trust of which 20% or more
of the voting power or residual economic interest is held, directly or
indirectly, by BindView or (ii) any employee benefit plan of BindView
or any entity referred to in clause (i) above, in any capacity shall
be deemed to be doing so at the request of BindView.
-2-
3
(g) "Reviewing Party" shall be (i) the Board of Directors
acting by quorum consisting of directors who are not parties to the
particular Claim with respect to which Indemnitee is seeking
indemnification or (ii) if such a quorum is not obtainable or, even if
obtainable, if a quorum of disinterested directors so directs, (A) the
Board of Directors upon the opinion in writing of independent legal
counsel that indemnification is proper in the circumstances because
the applicable standard of conduct set forth in Section 2 of this
Agreement and in Article 2.02-1 of the Texas Business Corporation Act
(the "TBCA") has been met by the Indemnitee or (B) the shareholders
upon a finding that the Indemnitee has met the applicable standard of
conduct referred to in clause (ii)(A) of this definition.
(h) "Voting Securities" shall mean any securities of
BindView which vote generally in the election of directors.
2. Basic Indemnification Agreement. If Indemnitee was, is or
becomes at any time a party to, or witness or other participant in, or is
threatened to be made a party to, or witness or other participant in, a Claim
by reason of, or arising in part out of, an Indemnifiable Event, BindView shall
indemnify Indemnitee to the fullest extent permitted by law as soon as
practicable, but in any event no later than 30 days after written demand is
presented to BindView, against any and all Expenses, judgments, fines
(including excise taxes assessed on an Indemnitee with respect to an employee
benefit plan), penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with, or
in respect of, such Expenses, judgments, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, BindView shall
advance within ten business days of such request any and all Expenses to
Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement
to the contrary, (i) Indemnitee shall not be entitled to indemnification
pursuant to this Agreement if a judgment or other final adjudication adverse to
the Indemnitee establishes that Indemnitee's acts were committed in bad faith
or were the result of active and deliberate dishonesty and, in either case,
were material to the cause of action so adjudicated, or that Indemnitee
personally gained in fact a financial profit or other advantage to which
Indemnitee was not legally entitled and (ii) prior to a Change in Control
Indemnitee shall not be entitled to indemnification pursuant to this Agreement
in connection with any Claim initiated by Indemnitee against BindView or any
director or officer of BindView unless BindView has joined in or consented to
the initiation of such Claim.
3. Payment. Notwithstanding the provisions of Section 2, the
obligations of BindView under Section 2, which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be entitled under
Article 2.02-1 of the TBCA, shall be subject to the condition that the
Reviewing Party shall have authorized such indemnification in the specific case
by having determined that Indemnitee is permitted to be indemnified under the
applicable standard of conduct set forth in Section 2 and applicable law.
BindView shall promptly call a meeting of the Board of Directors with respect
to a Claim and agrees to use its best efforts to facilitate a prompt
determination by the Reviewing Party with respect to the Claim. Indemnitee
shall be afforded the opportunity to make submissions to the Reviewing Party
with respect to the Claim. The obligation of BindView to make an Expense
Advance pursuant to Section 2 shall be subject to the condition that, if, when
and to the extent that the Reviewing Party determines that Indemnitee would not
be permitted to be so indemnified under Section 2 and applicable law, BindView
shall be entitled to be reimbursed by
-3-
4
Indemnitee (who hereby agrees and undertakes to the full extent required by
Section K of Article 2.02-1 of the TBCA to reimburse BindView) for all such
amounts therefore paid; provided, however, that if Indemnitee has commenced
legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse BindView for any Expense Advance
until a final judicial determination is made with respect thereto (as to which
all rights of appeal therefrom have been exhausted or lapsed). If there has
been no determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall have the
right to commence litigation in any court in the State of Texas having subject
matter jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and BindView hereby consents to service
of process and to appear in any such proceeding. Any determination by the
Reviewing Party otherwise shall be conclusive and binding on BindView and
Indemnitee.
4. Change in Control. If there is a Change in Control of
BindView (other than a Change in Control which has been approved by a majority
of the Board of Directors who were directors immediately prior to such Change
in Control) then (i) all determinations by BindView pursuant to the first
sentence of Section 3 hereof and Article 2.02-1 of the TBCA shall be made
pursuant to subparagraph (F)(1) or (F)(2) of such Article 2.02-1 of the TBCA
and (ii) with respect to all matters thereafter arising concerning the rights
of Indemnitee to indemnity payments and Expense Advances under this Agreement
or any other agreement, provision of the Amended and Restated Articles of
Incorporation (the "Articles") or Bylaws (the "Bylaws") of BindView now or
hereinafter in effect relating to Claims for Indemnifiable Events (including,
but not limited to, any opinion to be rendered pursuant to Article 2.02-1 of
the TBCA), BindView (including the Board of Directors) shall seek legal advice
from, and only from, special, independent counsel selected by Indemnitee and
approved by BindView, which approval shall not be unreasonably withheld, and
who has not otherwise performed services for (A) BindView or any subsidiary of
BindView, (B) the Acquiring Person or any affiliate or associate of such
Acquiring Person within the last five years (other than in connection with such
matters) or (C) Indemnitee. Unless Indemnitee has theretofore selected counsel
pursuant to Section 4 and such counsel has been approved by BindView, any
Approved Law Firm shall be deemed to satisfy the requirements set forth above.
Such counsel, among other things, shall render its written opinion to BindView,
the Board of Directors and Indemnitee as to whether and to what extent the
Indemnitee would be permitted to be indemnified under applicable law. BindView
agrees to pay the reasonable fees of the special, independent counsel referred
to above and to fully indemnify such counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto. As used in this
Section 4, the terms "affiliate" and "associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses. BindView shall
indemnify Indemnitee against any and all expenses (including attorneys' fees)
that are incurred by Indemnitee in connection with any claim asserted or action
brought by Indemnitee for (i) indemnification or advance payment of Expenses by
BindView under this Agreement or any other agreement, provision of the Articles
or
-4-
5
the Bylaws of BindView now or hereafter in effect relating to Claims for
Indemnifiable Events or (ii) recovery under any directors' and officers'
liability insurance policies maintained by BindView, but only if Indemnitee
ultimately is determined to be entitled to such indemnification, advance
expenses payment or insurance recovery, as the case may be.
6. Partial Indemnity, Etc. If Indemnitee is entitled under any
provision of this Agreement to indemnification by BindView for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount thereof,
BindView shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits
or otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified, to the extent
permitted by law, against all Expenses incurred in connection with such
Indemnifiable Event.
7. No Presumption. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, whether civil or
criminal, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder
shall be in addition to any other rights Indemnitee may have under the
Articles, the Bylaws, the TBCA or otherwise. To the extent that a change in
the TBCA (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the
Articles or the Bylaws of BindView and this Agreement, it is the intent of the
parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
9. Insurance. To the extent BindView maintains an insurance
policy or policies providing directors' and officers' liability insurance,
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
director or officer of BindView.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of BindView or any
affiliate of BindView against Indemnitee, Indemnitee's spouse, heirs, executors
or personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, and any claim or cause of action of
BindView or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.
11. Amendments, Etc. 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.
-5-
6
12. Subrogation. In the event of payment under this Agreement,
BindView shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable BindView effectively to bring suit to
enforce such rights.
13. No Duplication of Payments. BindView shall not be liable
under this Agreement to make any payment in connection with any claim made
against Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by BindView, Indemnitee may be without
an adequate remedy at law. Accordingly, in the event of any such violation,
the Indemnitee shall be entitled, if Indemnitee so elects, to institute
proceedings, either in law or at equity, to obtain damages, to enforce specific
performance, to enjoin such violation or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto and their
respective successors (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of BindView), assigns, spouses, heirs and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of BindView or of any
other enterprise at BindView's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of Texas
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.
-6-
7
EXECUTED as of the day first written above.
BINDVIEW DEVELOPMENT CORPORATION
By:
-------------------------------------
Xxxx X. Xxxxxxx
President and Chief Executive Officer
----------------------------------------
[______________]
-7-
