EXHIBIT 10.2
DIRECTOR INDEMNIFICATION AGREEMENT
This Agreement, dated as of __________ ___, 199__ is entered into between
Xxxxxxx Education Group, Inc., a corporation organized under the laws of the
State of Florida (the "Company"), and ______________________ (the "Director").
Recitals
A. Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or as executive officers unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation.
B. The current impracticability of obtaining adequate insurance and the
uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons.
C. The Bylaws of the Company presently provide, among other things, that
the Company shall indemnify its directors and officers to the full extent
permitted by law.
D. The Board has determined that the difficulty in attracting and retaining
highly competent persons is detrimental to the best interests of the Company's
shareholders and that the Company should act to assure such persons that there
will be increased certainty of protection against risks of such claims and
actions against them in the future.
E. It is reasonable, prudent, and necessary for the Company contractually
to obligate itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.
F. The Director is willing to serve or continue to serve as a director of
the Company on the condition that the Director be so indemnified.
AGREEMENT
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings indicated below:
(a) "Related Party" shall refer to (i) any other corporation in which the
Company has an equity interest of at least fifty percent (50%) and (ii) any
other corporation or any limited liability company, partnership, joint venture,
trust, employee benefit plan or any other enterprise or association in which the
Director has served in any Indemnified Position, at the request of the Company
or for the convenience of the Company or to represent the Company's interest.
Any entity or plan described in Section 1(a)(ii) in which the Company has any
interest or which is established in whole or in part for the benefit of the
Company or any other Related Party or the Company or Related Party's employees
shall be presumed to be a Related Party.
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(b) "Indemnified Position" shall refer to any position held by the
Director, or pursuant to which the Director acts, as an officer, director,
employee, partner, trustee, fiduciary, administrator or agent of the Company or
a Related Party.
(c) "Indemnified Event" shall mean any claim asserted against the Director,
whether civil, criminal, administrative or investigative in nature, for monetary
or other relief; or any Proceeding to which the Director is named as a party or
is a subject of or witness in, or with respect to which he or she is threatened
to be named as a party, subject or witness, brought against the Director by
reason of his or her serving or acting in any Indemnified Position or arising or
allegedly arising directly or indirectly out of, or otherwise relating to, any
action, omission, occurrence or event involving the Director in any Indemnified
Position, including any Proceeding, formal or informal or otherwise, conducted
or brought by the Securities and Exchange Commission or other governmental
agency, or The National Association of Securities Dealers, Inc., a national
stock exchange or similar organization.
(d) "Proceeding" shall mean any pending, threatened or completed action,
suit, investigation, inquiry, arbitration, alternative dispute resolution
mechanism or any other proceeding (or any appeals therefrom), whether civil,
criminal, administrative or investigative in nature and whether in a court or
arbitration, or before or involving a governmental, administrative or private
entity (including, but not limited to, an investigation initiated by the
Company, any Related Party or any affiliate thereof, or the board of directors,
fiduciaries or partners of any thereof).
(e) "Indemnification Amount" shall refer to the amount of losses, claims,
demands, costs, damages, liabilities (joint and several), judgments, fines
(including any excise tax assessed with respect to an employee benefit plan),
settlements, and other amounts (including Witness Liabilities), including
interest on any of the foregoing, which the Director is liable to pay or has
paid in connection with an Indemnified Event and amounts proposed to be paid in
settlement by the Director in connection with any Indemnified Event.
(f) "Witness Liabilities" shall mean all expenses incurred by the Director
in connection with his or her preparation to serve or service as a witness in
any Proceeding in any way relating to the Company, any Related Party or any
affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended)
of any of them (a "Securities Act Affiliate"), any associate (as defined in such
Rule 405) of any of them or of any Securities Act Affiliate, or any Indemnified
Event (including, but not limited to, the investigation, defense or appeal in
connection with any such Proceeding).
(g) "Expenses" shall refer to all disbursements, costs or expenses of any
nature reasonably incurred by the Director directly or indirectly in connection
with an Indemnified Event, or Witness Liabilities, including, but not limited
to, fees and disbursements of counsel, accountants or other experts employed by
the Director in connection with any Indemnified Event, including all such
expenses, disbursements and costs of investigation in connection with or prior
to the initiation of any Proceeding relating to an Indemnified Event.
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(h) "Indemnify" or "Indemnification" shall refer to the obligation of the
Company herein to pay Expenses or Indemnification Amounts.
(i) "Change of Control" shall be deemed to have occurred if (A) any
"Person" (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, but excluding the Company and any of its
wholly-owned subsidiaries, is or becomes (except in a transaction approved in
advance by the Board) the beneficial owner (as defined in Rule 13d-3 under such
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities
or (B) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors still in office who were directors at the
beginning of the period, or (C) the shareholders of the Company should approve
any one of the following transactions: (x) any consolidation or merger of the
Company in which the company is not the surviving corporation, other than a
merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the same proportionate ownership of the
surviving corporation immediately after the merger; or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company.
(j) "Final Disposition" shall refer to any judgment, order or award
rendered in any Proceeding after the expiration of all rights of appeal.
2. SERVICES TO THE COMPANY. The Director will serve, and/or continue to
serve, as a director of the Company, so long as he or she is duly elected and
qualified in accordance with the provisions of the Articles of Incorporation and
Bylaws of the Company, or in any other Indemnified Position, at the will of the
Company (or under separate contract, if any); provided that the Director may at
any time and for any reason resign from such Indemnified Position (subject to
any contractual obligations which the Director shall have assumed a part from
this Agreement) but the obligations provided for herein shall continue after
such termination.
3. INDEMNITY. The Company hereby agrees to indemnify the Director and hold
the Director harmless to the full extent permitted or authorized by the
provisions of current Florida legislation (including Sections 607.0850(7) and
(9) of the Florida Business Corporation Act) or future Florida legislation or,
if broader indemnification is available, by current or future judicial or
administrative decisions (but, in the case of any such future legislation or
decisions, only to the extent that it permits the Company to provide broader
indemnification rights than permitted prior to such legislation or decisions),
and such Indemnification shall be made unless prohibited by Florida law. Without
limiting the generality of the foregoing, the Company agrees to indemnify the
Director and hold the Director harmless from and against, and pay any and all,
Expenses and Indemnification Amounts, including Witness Liabilities.
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Except with respect to the indemnification specified in the second and
third sentences of Section 7 or in Section 10 or Section 13(b) of this
Agreement, the Company shall indemnify the Director in connection with a
Proceeding (or part thereof) initiated by the Director (subject to the
limitations provided above) only if authorization for the Proceeding (or part
thereof) was not denied by the Board of Directors of the Company prior to the
earlier of (i) 60 days after receipt of notice thereof from the Director and
(ii) a Change of Control.
4. PAYMENT OF EXPENSES. The Company shall advance all Expenses within
thirty (30) days after the receipt by the Company of a statement or statements
from the Director requesting such advance payment or payments from time to time.
Such statement or statements shall identify the nature and amount of the
Expenses to be advanced with reasonable specificity. The Director agrees to
repay any Expenses advanced if it shall ultimately be determined (which shall
only be made after the Final Disposition of the Proceeding related to an
Indemnified Event, as hereinafter provided) that the Director was not entitled
to reimbursement of Expenses in connection with the Indemnified Event for which
such Expenses were made.
5. INTERVAL PROTECTION. During the interval between the Company's
receipt of the Director's request for indemnification or advances and the latest
to occur of (a) payment in full to the Director of the indemnification or
advances to which he or she is entitled hereunder, or (b) a final adjudication
that the Director is not entitled to indemnification hereunder, the Company
shall provide "Interval Protection" which, for purposes of this Agreement, shall
mean the taking of the necessary steps (whether or not such steps require
expenditures to be made by the Company at that time) to stay, pending a final
determination of the Director's entitlement to indemnification (and, if the
Director is so entitled, the payment thereof), the execution, enforcement or
collection of any Indemnified Amount or Expenses or any other amounts for which
the Director may be liable (and as to which the Director has requested
indemnification hereunder) in order to avoid the Director's being or becoming in
default with respect to any such amounts (such necessary steps to include, but
not be limited to, the procurement of a surety bond to achieve such stay or the
loan to the Director (unsecured and with interest payable at the prime rate) of
amounts necessary to satisfy the Indemnified Amount or Expenses or other amounts
for which the Director may be liable and as to which a stay of execution as
aforesaid cannot be obtained, the Company by executing this Agreement having
made the judgment that, in general, such loan or similar assistance may
reasonably be expected to benefit the Company), within three days after receipt
of the Director's written request therefor, together with a written undertaking
by the Director to repay, no later than 120 days following receipt of a
statement therefor from the Company, amounts (if any) expended by the Company
for such purpose, if it is ultimately determined in a final adjudication that
the Director is not entitled to be indemnified against such Indemnified Amounts
or Expenses or other amounts.
6. INDEMNIFICATION BY COURT. Notwithstanding any other provision of
this Agreement including without limitation the fourth sentence of Section 7,
indemnification and advances shall also be made to the extent a Florida circuit
court, or another court of competent jurisdiction, or the court in which a
Proceeding was brought, shall determine that the Director, in view of all the
circumstances of the case, is fairly and reasonably entitled to indemnification
and/or advances for such Expenses as such court shall deem proper.
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7. INDEMNIFICATION PROCEDURE. Any Indemnification or advance under this
Agreement (other than Interval Protection) shall be made promptly and in any
event within thirty (30) days upon the written request of the Director delivered
to the Company. The right to Indemnification or advances as granted under this
Agreement shall be enforceable by the Director in any court of competent
jurisdiction if the Company denies such request, in whole or in part, or if no
disposition thereof is made within thirty (30) days. The Director's costs and
expenses incurred in connection with successfully establishing his or her right
to indemnification or advances, in whole or in part, in any such action shall
also be indemnified by the Company. It shall be a defense to any such action
that there has been a judgment or other final adjudication adverse to the
Director which established that the Director failed to meet the standard of
conduct, if any, required for indemnification by current legislation including,
without limitation, N.J.S.A. 14A:3-5(8), or, if applicable in accordance with
Section 3 hereof, future legislation or current or future judicial or
administrative decisions, but the burden of proving such defense shall be on the
Company. Neither the failure of the Company (including the Board or any
committee thereof, its independent counsel and its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the Director is proper in the circumstances because he or she has met the
applicable standard of conduct described in the preceding sentence, if any, nor
the fact that there has been an actual determination by the Company (including
the Board or any committee thereof, its independent counsel and its
shareholders) that the Director has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) The Director shall be presumed entitled to Indemnification hereunder
unless clearly not entitled to such Indemnification by clear and convincing
proof that such payment shall be unlawful.
(b) If the Company shall not have responded to the Director's request for
Indemnification pursuant to Section 7 hereof within thirty (30) days after
receipt by the Company of such request therefor, the Director shall be deemed to
be entitled to such Indemnification except as otherwise provided in Section 3
hereof.
(c) The termination of any Proceeding relating to an Indemnified Event 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 of
itself adversely affect the right of the Director to Indemnification or create a
presumption that the Director did not meet any applicable standard of conduct.
(d) Notwithstanding any other provision of this Agreement, the Director
shall in no event be required to repay any Expense payments advanced to the
Director and no defense can or shall be raised by the Company to a request for
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Indemnification pursuant to Section 7 to the extent the Director has been
successful on the merits or otherwise in defense of any Proceeding related to an
Indemnified Event, or in defense of any claim, issue or matter involved in any
Indemnified Event therein, whether as a result of the initial adjudication or on
appeal or the abandonment thereof by a party.
9. NON-EXCLUSIVITY; DURATION OF AGREEMENT; 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 the Director may at any time be entitled under applicable law, the
Articles of Incorporation, the By-Laws, any other agreement, or any vote or
consent of directors or shareholders or otherwise.
(b) This Agreement shall continue until and terminate upon the later of:
(i) ten (10) years after the date that the Director shall have ceased to serve
in any Indemnified Position; or (ii) the Final Disposition of all Indemnified
Events.
(c) This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of the Director and his or her heirs,
devisees, executors, and administrators or other legal representatives.
(d) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors or executive officers of
the Company or for any person serving in any other Indemnified Position, the
Director 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 or executive officer or person serving in such position under such
policy or policies.
10. PROCEEDINGS.
(a) The parties hereto agree that except as otherwise provided for herein,
any disputes arising with respect to the interpretation or enforcement of any
provision hereof shall be submitted, at the sole election of the Director,
either to be submitted, at the sole election of the Director, either to
arbitration or to judicial determination. Any arbitration shall be conducted in
the City of Miami, Florida in accordance with the then existing rules of the
American Arbitration Association ("AAA"). In any arbitration pursuant to this
agreement, the award or decision shall be rendered by a majority of the members
of an arbitration panel consisting of three members chosen in accordance with
the then existing rules of the AAA. The award or decision of the arbitration
panel pursuant to this Section 10 shall be binding and conclusive on the
parties, provided that enforcement of such award or decision may be obtained in
any court having jurisdiction over the party against whom such enforcement is
sought. The Company hereby agrees to bear all fees, costs and expenses imposed
by the AAA, in connection with the arbitration, irrespective of the
determination thereof. The provisions of Section 10(c) shall govern with respect
to the proceedings referred to therein.
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(b) In the event that, for any reason, the Company fails to pay any
Indemnification or advance demanded, or the Company requests repayment of any
Expenses advanced, the Director shall nevertheless be entitled, at his or her
sole option, to a final judicial determination or may seek arbitration of his or
her entitlement to Indemnification hereunder in respect of such claim. In the
event the Director seeks a judicial determination, the Director shall commence
an action in a court of the State of Florida. In the event the Director seeks an
award in arbitration, (i) such arbitration shall be conducted in Miami, Florida
pursuant to Section 10(a), and (ii) the arbitrator shall notify the parties of
his or her decision within sixty (60) days following the initiation of such
arbitration (or such other period proscribed by the rules of AAA). The Company
further agrees that its execution of this Agreement shall constitute a
stipulation by which it shall be bound in any court or arbitration in which such
proceeding shall have been commenced, continued or appealed that (i) it shall
not oppose the Director's right to seek any such adjudication or award in
arbitration or any other claim by reason of any prior determination made by the
Company with respect to the Director's right to Indemnification under this
Agreement on such claim or any other claim, or, except in good faith, raise any
objections not specifically relating to the merits of the Director's claim; and
(ii) for purposes of this Agreement any such adjudication or arbitration shall
be conducted de novo and without prejudice by reason of any prior determination
that the Director is not entitled to Indemnification.
(c) Whether or not the court or arbitrators shall determine that the
Director is entitled to payment of Indemnification Amounts or has to return the
payment of Expenses or otherwise finds against the Director, the Company shall
within thirty (30) days after written request therefor (and submission of
reasonable evidence of the nature and amount thereof), and unless there is a
specific judicial finding that the Director's suit or arbitration was frivolous,
pay all Expenses incurred by the Director in connection with such adjudication
or arbitration (including, but not limited to, any appellate proceedings).
11. 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, paragraph
or clause 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, paragraph or clause of this
Agreement containing any such provisions held to be invalid, illegal, or
unenforceable, that is not itself invalid, illegal, or unenforceable) shall be
deemed revised, and shall be construed, so as to give effect to the intent
manifested by this Agreement (including the provisions held invalid, illegal, or
unenforceable).
12. MERGER OR CONSOLIDATION OF THE COMPANY. In the event that the Company
shall be a constituent corporation in a consolidation or merger, whether or not
the Company is the resulting or surviving corporation, the Director shall stand
in the same position under this Agreement with respect to the Company if its
separate existence had continued.
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13. ENFORCEMENT.
(a) The Company unconditionally and irrevocably stipulates and agrees that
its execution of this Agreement shall also constitute a stipulation by which it
shall be bound in any court or arbitration in which a proceeding by the Director
for enforcement of his or her rights shall have been commenced, continued or
appealed, that the obligations of the Company set forth herein are unique and
special, and that failure of the Company to comply with the provisions of this
Agreement will cause irreparable and irremediable injury to the Director, for
which a remedy at law will be inadequate. As a result, in addition to any other
right or remedy he or she may have at law or in equity with respect to a
violation of this Agreement, the Director shall be entitled to injunctive or
mandatory relief directing specific performance by the Company of its
obligations under this Agreement.
(b) In the event that the Director is subject to or intervenes in any legal
action in which the validity or enforceability of this Agreement is at issue or
institutes any legal action, for specific performance or otherwise, to enforce
his or her rights under, or to recover damages for breach of, this Agreement,
the Director shall, within thirty (30) days after written request to the Company
therefor (and submission of reasonable evidence of the amount thereof), and
unless there is a specific judicial finding that the Director's suit was
frivolous, be indemnified by the Company against all Expenses incurred by him or
her in connection therewith.
14. NOTIFICATION AND DEFENSE OF CLAIM. The Director agrees to promptly
notify the Company in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding involving an Indemnification event; provided, however, that the
failure of the Director to give such notice to the Company shall not adversely
affect the Director's rights under this Agreement except to the extent the
Company shall have been materially prejudiced by such failure. Nothing in this
Agreement shall constitute a waiver of the Company's right to seek
participation, at its own expense, in any Proceeding which may give rise to
Indemnification hereunder.
15. HEADINGS. The headings of the Sections and 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.
16. MODIFICATION AND WAIVER. No supplement, modification, or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
17. 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, or sent via telecopy or facsimile transmission, in each case
receipted for by the party to whom said notice or other communication shall have
been directed or transmitted, or (ii) mailed by certified or registered
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mail with postage prepaid, on the third business day after the date on which it
is so mailed, or (iii) delivered by overnight courier service:
(a) If to the Director, to:
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(b) If to the Company, to:
Xxxxxxx Education Group, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Vice President - Legal Affairs
and General Counsel
or to such other address as may have been furnished to either party by the other
party.
18. ENTIRE AGREEMENT. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement, and this Agreement constitutes the
entire understanding between the parties. This Agreement may not be modified,
amended, changed or discharged except by a writing signed by the parties hereto,
and then only to the extent therein set forth.
19. NONASSIGNMENT. This Agreement may not be assigned by either of the
parties hereto.
20. GOVERNING LAW. This Agreement, including its validity, interpretation
and effect, and the relationship of the parties shall be governed by, and
construed in accordance with, the laws of the State of Florida.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first above written.
XXXXXXX EDUCATION GROUP, INC.
BY:
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XXXXXXX X. XXXXXXXXX, XX.
CHIEF EXECUTIVE OFFICER
DIRECTOR
BY:
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