Exhibit 10.5
INDEMNIFICATION AGREEMENT
This Agreement is made as of the 7th day of October 2002, by and between
Netegrity, Inc., a Delaware corporation (the "Corporation), and Xxxxxxx X. Xxxx
(the "Indemnitee"), a director of the Corporation.
WHEREAS, it is essential to the Corporation to retain and attract as
directors the most capable persons available, and
WHEREAS, the substantial increase in corporate litigation subjects
directors to expensive litigation risks at the same time that the availability
of directors' and officers' liability insurance has been severely limited, and
WHEREAS, it is now and has always been the express policy of the
Corporation to indemnify its directors, and
WHEREAS, the Indemnitee does not regard the protection available under the
Corporation's Certificate of Incorporation, By-laws and insurance as adequate in
the present circumstances, and may not be willing to serve or continue to serve
as a director without adequate protection, and
WHEREAS, the Corporation desires the Indemnitee to serve, or continue to
serve, as a director of the Corporation.
NOW THEREFORE, the Corporation and the Indemnitee do hereby agree as
follows:
1. Agreement to Serve. The Indemnitee agrees to serve or continue to serve
as a director of the Corporation for so long as the Indemnitee is duly elected
or until such time as the Indemnitee tenders a resignation in writing.
2. Third Party Actions. The Corporation shall indemnify the Indemnitee if
the Indemnitee was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (each, a "Proceeding") (other than an
action by or in the right of the Corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the Indemnitee in
connection with such Proceeding.
3. Derivative Actions. The Corporation shall indemnify the Indemnitee if
the Indemnitee was or is a party or is threatened to be made a party to any
Proceeding by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that the Indemnitee is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by the Indemnitee
in connection with the defense or settlement of such Proceeding.
4. Expenses. To the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any Proceeding
referred to in Sections 2 and 3, or in defense of any claim, issue
or matter therein, the Indemnitee shall be indemnified against
expenses (including attorneys' fees) actually and reasonably
incurred by the Indemnitee in connection therewith.
5. Authorization and Request for Indemnification.
(a) Any indemnification requested by the Indemnitee under Section 2
hereof shall be made no later than ten (10) days after receipt of the written
request of the Indemnitee, unless it shall have been adjudicated by a court of
final determination that the Indemnitee did not act 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 action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
(b) Any indemnification requested by the Indemnitee under Section 3
hereof shall be made no later than ten (10) days after receipt of the written
request of the Indemnitee, unless it shall have been adjudicated by a court of
final determination that the Indemnitee did not act in good faith and in a
manner the Indemnitee reasonably believed to be in, or not opposed to, the best
interests of the Corporation, the Indemnitee shall have been finally adjudged to
be liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of the Indemnitee's duty to
the Corporation unless and only to the extent that any court in which such
Proceeding was brought shall determine upon application that despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
such court shall deem proper.
6. Advance Payment of Expenses. Subject to Section 5 above,
the Corporation shall advance all expenses incurred by the
Indemnitee in connection with the investigation, defense, settlement
or appeal of any Proceeding to which the Indemnitee is a party or is
threatened to be made a party by reason of the fact that the
Indemnitee is or was an agent of the Corporation. The Indemnitee
hereby undertakes to repay such amounts advanced only if, and to the
extent that, it shall ultimately be determined that the Indemnitee
is not entitled to be indemnified by the Corporation. The advances
to be made hereunder shall be paid by the Corporation to or on
behalf of the Indemnitee within 30 days following delivery of a
written request therefor by the Indemnitee to the Corporation.
7. Remedies. The right to indemnification or advancement of
expenses as provided by this Agreement shall be enforceable by the
Indemnitee in any court of competent jurisdiction. Unless otherwise
required by law, the burden of proving that indemnification is not
appropriate shall be on the Corporation. The Indemnitee's expenses
reasonably incurred in connection with successfully establishing the
Indemnitee's right to indemnification, in whole or in part, in any
such Proceeding shall also be indemnified by the Corporation.
8. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Corporation for some or a portion of the expenses, judgments, fines,
penalties or amounts paid in settlement actually and reasonably
incurred by or on behalf of the Indemnitee in connection with any
Proceeding but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify the Indemnitee for the
portion of such expenses, judgments, fines, penalties or amounts
paid in settlement to which the Indemnitee is entitled.
9. Subrogation. In the event of any payment under this
Agreement, the Corporation shall be subrogated to the extent of such
payment to all of the rights of recovery of the 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.
10. Term of Agreement. This Agreement shall continue until and
terminate upon the later of (a) six years after the date that the
Indemnitee shall have ceased to serve as a director or officer of
the Corporation or, at the request of the Corporation, as a
director, officer, partner, trustee, member, employee or agent of
another corporation, partnership, joint venture, trust, limited
liability company or other enterprise or (b) the final termination
of all Proceedings pending on the date set forth in clause (a) in
respect of which the Indemnitee is granted rights of indemnification
or advancement of expenses hereunder and of any proceeding commenced
by the Indemnitee pursuant to Paragraph 7 of this Agreement relating
thereto.
11. Indemnification Hereunder Not Exclusive. The
indemnification and advancement of expenses provided by this
Agreement shall not be deemed exclusive of any other rights to which
the Indemnitee may be entitled under the Certification of
Incorporation, the By-Laws, any other agreement, any vote of
stockholders or disinterested directors, the General Corporation Law
of Delaware, any other law (common or statutory), or otherwise, both
as to action in the Indemnitee's official capacity and as to action
in another capacity while holding office for the Corporation.
Nothing contained in this Agreement shall be deemed to prohibit the
Corporation from purchasing and maintaining insurance, at its
expense, to protect itself or the Indemnitee against any expense,
liability or loss incurred by it or the Indemnitee in any such
capacity, or arising out of the Indemnitee's status as such, whether
or not the Indemnitee would be indemnified against such expense,
liability or loss under this Agreement; provided that the
Corporation shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the
extent that the Indemnitee has otherwise actually received such
payment under any insurance policy, contract, agreement or
otherwise.
12. No Special Rights. Nothing herein shall confer upon the
Indemnitee any right to continue to serve as an officer or director
of the Corporation for any period of time or at any particular rate
of compensation.
13. Savings Clause. If this Agreement or any portion thereof
shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify the
Indemnitee as to expenses, judgments, fines, penalties and amounts
paid in settlement with respect to any Proceeding to the full extent
permitted by any applicable portion of this Agreement that shall not
have been invalidated and to the fullest extent permitted by
applicable law.
14. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall constitute the original.
15. Successors and Assigns. This Agreement shall be binding
upon the Corporation and its successors and assigns and shall inure
to the benefit of the estate, heirs, executors, administrators and
personal representatives of the Indemnitee.
16. 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.
17. Modification and Waiver. This Agreement may be amended
from time to time to reflect changes in Delaware law or for other
reasons. 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 provision hereof
nor shall any such waiver constitute a continuing waiver.
18. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to
have been given (i) when delivered by hand or (ii) if mailed by
certified or registered mail with postage prepaid, on the third day
after the date on which it is so mailed:
(a) if to the Indemnitee, to: Xxxxxxx X. Xxxx
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
(b) if to the Corporation, to: Netegrity, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
or to such other address as may have been furnished to the Indemnitee by the
Corporation or to the Corporation by the Indemnitee, as the case may be.
19. Applicable Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
Delaware. The Indemnitee may elect to have the right to indemnification or
reimbursement or advancement of expenses interpreted on the basis of the
applicable law in effect at the time of the occurrence of the event or
events giving rise to the applicable Proceeding, to the extent permitted
by law, or on the basis of the applicable law in effect at the time such
indemnification or reimbursement or advancement of expenses is sought.
Such election shall be made, by a notice in writing to the Corporation, at
the time indemnification or reimbursement or advancement of expenses is
sought; provided, however, that if no such notice is given, and if the
General Corporation Law of Delaware is amended, or other Delaware law is
enacted, to permit further indemnification of the directors and officers,
then the Indemnitee shall be indemnified to the fullest extent permitted
under the General Corporation Law, as so amended, or by such other
Delaware law, as so enacted.
20. Enforcement. The Corporation expressly confirms and agrees that
it has entered into this Agreement in order to induce the Indemnitee to
continue to serve as an officer or director of the Corporation, and
acknowledges that the Indemnitee is relying upon this Agreement in
continuing in such capacity.
21. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein
and supercedes all prior agreements, whether oral or written, by any
officer, employee or representative of any party hereto in respect of the
subject matter contained herein; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby
terminated and cancelled. For avoidance of doubt, the parties confirm that
the foregoing does not apply to or limit the Indemnitee's rights under
Delaware law or the Corporation's Certificate of Incorporation or By-Laws.
22. Consent to Suit. In the case of any dispute under or in
connection with this Agreement, the Indemnitee may only bring suit against
the Corporation in the Court of Chancery of the State of Delaware. The
Indemnitee hereby consents to the exclusive jurisdiction and venue of the
courts of the State of Delaware, and the Indemnitee hereby waives any
claim the Indemnitee may have at any time as to forum non conveniens with
respect to such venue. The Corporation shall have the right to institute
any legal action arising out of or relating to this Agreement in any court
of competent jurisdiction. Any judgment entered against either of the
parties in any proceeding hereunder may be entered and enforced by any
court of competent jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NETEGRITY, INC.
Attest: By: s/ Xxxxxx X.Xxxxxx
By: ____________________ Name: Xxxxxx X. Xxxxxx
Name: ____________________ Title: Chief Financial Officer and Treasurer
INDEMNITEE:
Xxxxxxx X. Xxxx
By: /s/ Xxxxxxx X. Xxxx
