INDEMNIFICATION AGREEMENT
This Agreement, made and entered into as of the 14th day of September, 1998
("Agreement"), by and between Individual Investor Group, Inc., a Delaware
corporation ("Corporation"), and Gregory E. Barton ("Indemnitee"):
WHEREAS, highly competent persons recently 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 corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance and
the uncertainties related to indemnification have increased the difficulty of
attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Corporation ("Board") has determined
that the inability to attract and retain such persons is detrimental to the best
interests of the Corporation's stockholders 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
VIII of the By-laws of the Corporation, and Article VIII of the Amended and
Restated Certificate of Incorporation of the Corporation and any resolutions
adopted pursuant thereto and shall neither be deemed to be a substitute therefor
nor to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee is willing to serve and to take on additional service
for or on 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 covenants
contained herein, the Corporation and Indemnitee do hereby covenant and agree as
follows:
1 Definitions.
For purposes of this Agreement:
1.1 "Change in Control" means a change in control of the Corporation
occurring after the date hereof 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, as amended ("Act"), whether or
not the Corporation is then subject to such reporting requirement provided,
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however, that, without limitation, such a Change in Control shall be deemed
to have occurred if after the date hereof (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Act) is or becomes "beneficial
owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the combined
voting power of the then outstanding securities of the Corporation 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.
1.2 "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.
1.3 "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.
1.4 "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 the types
customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a
witness in a Proceeding.
1.5 "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is,
nor in the past five years has been, retained to represent: (i) the
Corporation or Indemnitee in any other matter material to either such
party, or (ii) any other party to the Proceeding giving rise to a claim 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.
1.6 "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.
2 Services by Indemnitee.
Indemnitee agrees to serve as Vice President of Business and Legal Affairs
and General Counsel 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 imposed by operation of law).
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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.
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, penalties, 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.
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 Court of Chancery of the State of
Delaware, 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.
6 Indemnification for Expenses of 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,
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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.
7 Indemnification for Expenses as 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.
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.
9 Procedure for Determination of Entitlement to Indemnification.
9.1 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.
9.2 Upon written request by Indemnitee for indemnification pursuant to
Section 9.1 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 stockholders, in which case in the manner provided for in clauses (ii)
or (iii) of this Section 9.2) in a written opinion to the Board, a copy of
which shall be delivered to Indemnitee); (ii) if a Change of 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 stockholders 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 10.2 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 from
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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 determination as to Indemnitee's
entitlement to indemnification) and the Corporation hereby indemnifies and
agrees to hold Indemnitee harmless therefrom.
9.3 If required, Independent Counsel shall be selected as follows: (i)
if a Change of 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 of 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 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 9.1 hereof, no Independent Counsel shall have been selected and
not objected to, either the Corporation or Indemnitee may petition the
Court of Chancery of the State of Delaware, 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 as 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
9.2 hereof. The Corporation shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with its actions pursuant to this Agreement, and the Corporation
shall pay all reasonable fees and expenses incident to the procedures of
this Section 9.3, 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 11.1(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).
10 Presumptions and Effects of Certain Proceedings.
10.1 If a Change of 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 9.1 of this Agreement, and the Corporation shall have the burden of
proof to overcome that presumption in connection with the making by any
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person, persons or entity of any determination contrary to that
presumption.
10.2 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 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 60-day period may be extended for a reasonable time, not to
exceed an additional 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 10.2 shall not apply (i) if
the determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 9.2 of this Agreement and if (A) within 15
days after receipt by the Corporation of the request for such determination
the Board has resolved to submit such determination to the stockholders for
their consideration at an annual meeting thereof to be held within 75 days
after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within 15 days after such receipt for the
purpose of making such determination, such meeting is held for such purpose
within 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 9.2 of this
Agreement.
10.3 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.
11 Remedies of Indemnitee.
11.1 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
indemnification is to be made by Independent Counsel pursuant to Section
9.2 of this Agreement and such determination shall not have been made and
delivered in a written opinion within 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 days after receipt by the Corporation of a written request therefor, or
(v) payment of indemnification is not made within ten days after a
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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 Delaware, or in any other court of
competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, the 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 180 days following the date on which Indemnitee first
has the right to commence such proceeding pursuant to this Section 11.1.
The Corporation shall not oppose Indemnitee's right to seek any such
adjudication or award in arbitration.
11.2 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 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.
11.3 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, 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.
11.4 The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 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.
11.5 In the event that Indemnitee, pursuant to this Section, seeks a
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 some but less than 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.
12 Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
12.1 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 stockholders 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 in his
Corporate Status prior to such amendment, alteration or repeal.
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12.2 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.
12.3 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 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.
12.4 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 insurance policy, contract, agreement or otherwise.
13 Duration of Agreement.
This Agreement shall continue until and terminate upon the later of: (a)
ten years after the date that Indemnitee shall have ceased to serve as an
officer of the Corporation, or (b) the final termination of all pending
Proceedings in respect of which Indemnitee is granted rights of indemnification
or advancement of Expenses hereunder and or 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.
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.
15 Exception to Right of Indemnification or Advancement of Expenses.
Except as provided in Section 11.5, 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.
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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.
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.
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.
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 any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.
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 the 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:
If to Indemnitee, to:
Gregory E. Barton
22 East 36th Street, Apartment 3D
New York, New York 10016
If to the Corporation, to:
Individual Investor Group, Inc.
1633 Broadway, 38th Floor
New York, New York 10019
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or to such other address or such other person as Indemnitee or the
Corporation shall designate in writing in accordance with this Section, except
that notices regarding changes in notices shall be effective only upon receipt.
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 Delaware.
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.
INDIVIDUAL INVESTOR GROUP, INC.
By: /s/ Jonathan Steinberg
Jonathan L. Steinberg
Chief Executive Officer
INDEMNITEE
/s/ Gregory Barton
Gregory E. Barton
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