EXHIBIT 10.16
DIRECTOR INDEMNIFICATION AGREEMENT
DIRECTOR INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of March
31, 1999, by and between Be Free, Inc., a Delaware corporation (the "Company")
including, where appropriate, any Entity (as hereinafter defined) controlled
directly or indirectly by the Company), and Dan Nova ("Indemnitee"):
WHEREAS, it is essential to the Company that it be able to retain and
attract as directors the most capable persons available;
WHEREAS, increased corporate litigation has subjected directors to
litigation risks and expenses, and the limitations on the availability of
directors and officers liability insurance have made it increasingly difficult
for the Company to attract and retain such persons;
WHEREAS, the Company's By-laws (the "By-laws") require the Company to
indemnify its directors to the fullest extent permitted by law and permit the
Company to make other indemnification arrangements and agreements;
WHEREAS, the Company desires to provide Indemnitee with specific
contractual assurance of Indemnitee's rights to full indemnification against
litigation risks and expenses (regardless, among other things, of any amendment
to or revocation of the By-laws or any change in the ownership of the Company or
the composition of its Board of Directors), which indemnification is intended to
be greater than that which is afforded by the Company's Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), the By-laws and,
to the extent insurance is available, the coverage of Indemnitee under the
Company's directors and officers liability insurance policies; and
WHEREAS, Indemnitee is relying upon the rights afforded under this
Agreement in continuing in Indemnitee's position as a director of the Company:
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Definitions.
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(a) "Corporate Status" describes the status of a person who is serving or
has served (i) as a director of the, Company, (ii) in any capacity with respect
to any employee benefit plan of the Company, or (iii) as a director, partner,
trustee, officer, employee, or agent of any other Entity at the request of the
Company.
(b) "Entity" shall mean any corporation, partnership, joint venture, trust,
foundation, association, organization or other legal entity and any group or
division of the Company or any of its subsidiaries.
(c) "Expenses" shall mean all reasonable fees, costs and expenses
incurred in connection with any Proceeding (as defined below), including,
without limitation, attorneys' fees, disbursements and retainers (including,
without limitation, any such
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fees, disbursements and retainers incurred by Indemnitee pursuant to Sections 10
and 11(c) of this Agreement), fees and disbursements of expert witnesses,
private investigators and professional advisors (including, without limitation,
accountants and Investment bankers), court costs, transcript costs, fees of
experts, travel expenses, duplicating, printing and binding costs, telephone and
fax transmission charges, postage, delivery services, secretarial services, and
other disbursements and expenses.
(d) "Indemnifiable Expenses," "Indemnifiable Liabilities" and
"Indemnifiable Amounts" shall have the Meanings ascribed to those terms in
Section 3(a) below.
(e) "Liabilities" shall mean judgments* damages, liabilities, losses,
penalties, excise taxes, fines and amounts paid in settlement.
(f) "Proceeding" shall mean any threatened pending or completed claim,
action, suit, arbitration, alternate dispute resolution process, investigations
administrative hearing, appeals or any other proceeding, whether civil,
criminal, administrative, arbitrative or investigative, whether formal or
informal, including a proceeding initiated by Indemnitee pursuant to Section 10
of this Agreement to enforce Indemnitee's rights hereunder.
2. Services of Indemnitee. In consideration of the Company's covenants
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and commitments hereunder, Indemnitee agrees to serve or continue to serve as a
director of the Company. However, this Agreement shall not impose any
obligation on Indemnitee or the Company to continue Indemnitee's service to the
Company beyond any period otherwise required by law or by other agreements or
commitments of the parties, if any.
3. Agreement to Indemnify. The Company agrees to indemnify Indemnitee as
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follows:
(a) Subject to the exceptions contained in Section 4(a) below, if
Indemnitee was or is a party or is threatened to be made a party to any
Proceeding (other than in action by or in the right of the Company) by reason of
Indemnitee's Corporate Status, Indemnitee shall be indemnified by the Company
against all Expenses and Liabilities incurred or paid by Indemnitee in
connection with such Proceeding (referred to herein as "Indemnifiable Expenses"
and "Indemnifiable Liabilities," respectively, and collectively as
"Indemnifiable Amounts").
(b) Subject to the exceptions contained in Section 4(b) below, if
Indemnitee was or is a party or is threatened to be made a party to any
Proceeding by or in the right of the Company to procure a judgment in its favor
by reason of Indemnitee's Corporate Status, Indemnitee shall be indemnified by
the Company against all Indemnifiable Expenses.
4. Exceptions to Indemnification. Indemnitee shall be entitled to
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indemnification under Sections 3(a) and 3(b) above in all circumstances other
than the following:
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(a) If indemnification is requested under Section 3(a) and it has been
adjudicated finally by a court of competent jurisdiction that, in connection
with the subject of the Proceeding out of which the claim for indemnification
has arisen, Indemnitee failed to act in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the Company
with respect to which Indemnitee's Corporate Status has given rise to a claim
against Indemnitee, or, with respect to any criminal action or proceeding,
Indemnitee had reasonable cause to believe that Indemnitee's conduct was
unlawful, Indemnitee shall not be entitled to payment of Indemnifiable Amounts
hereunder.
(b) If indemnification is requested under Section 3(b) and
(i) it has been adjudicated finally by a court of competent jurisdiction
that, in connection with the subject of the Proceeding out of which the claim
for indemnification has arisen, Indemnitee failed to act in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, Indemnitee shall not be entitled to payment of
Indemnifiable Expenses hereunder; or
(ii) it has been adjudicated finally by a court of competent jurisdiction
that Indemnitee is liable to the Company with respect to any claim, issue or
matter involved in the Proceeding out of which the claim for indemnification has
arisen, including, without limitation, a claim that Indemnitee received an
improper personal benefit, no Indemnifiable Expenses shall be paid with respect
to such claim, issue or matter unless the Superior Court or another 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,
Indemnitee is fairly and reasonably entitled to indemnity for such Indemnifiable
Expenses which such court shall deem proper.
5. Procedure for Payment of Indemnifiable Amounts. Indemnitee shall
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submit to the Company a written request specifying the Indemnifiable Amounts for
which Indemnitee seeks payment under Section 3 of this Agreement and the basis
for the claim. The Company shall pay such Indemnifiable Amounts to Indemnitee
within twenty (20) calendar days of receipt of the request. At the request of
the Company, Indemnitee shall furnish such documentation and information as are
reasonably available to Indemnitee and necessary to establish that Indemnitee is
entitled to indemnification hereunder.
6. Indemnification for Expenses of a Party Who is Wholly or Partly
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Successful. Notwithstanding any other provision of this Agreement, and without
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limiting any such provision, to the extent that Indemnitee is, by reason of
Indemnitee's Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, Indemnitee shall be indemnified against all
Expenses reasonably incurred by Indemnitee or on Indemnitee's 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
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matters in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with each successfully resolved claim, issue or matter. For purposes
of this Agreement, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter,
7. Effect of Certain Resolutions. Neither the settlement or termination
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of any Proceeding nor the failure of the Company to award indemnification or to
determine that indemnification is payable shall create an adverse presumption
that Indemnitee is not entitled to indemnification hereunder. In addition, the
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendes or its equivalent shall not create a presumption
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that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal action or proceeding, had reasonable cause to
believe that Indemnitee's action was unlawful.
8. Agreement to Advance Expenses; Conditions. The Company shall pay to
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Indemnitee all Indemnifiable Expenses incurred by Indemnitee in connection with
any Proceeding, including a Proceeding by or in the right of the Company, in
advance of the final disposition of such Proceeding. To the extent required by
Delaware law, Indemnitee hereby undertakes to repay the amount of Indemnifiable
Expenses paid to Indemnitee if it is finally determined by a court of competent
jurisdiction that Indemnitee is not entitled under this Agreement to
Indemnification with respect to such Expenses. This undertaking is an unlimited
general obligation of Indemnitee.
9. Procedure for Advance Payment of Expenses. Indemnitee shall submit to
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the Company a written request specifying the Indemnifiable Expenses for which
Indemnitee seeks an advancement under Section 8 of this Agreement, together with
documentation evidencing that Indemnitee has incurred such Indemnifiable
Expenses. Payment of Indemnifiable Expenses under Section 8 shall be made no
later than twenty (20) calendar days after the Company's receipt of such
request.
10. Remedies of Indemnitee.
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(a) Right to Petition Court. In the event that Indemnitee makes a request
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for payment of Indemnifiable Amounts under Sections 3 and 5 above or a request
for an advancement of Indemnifiable Expenses under Sections 8 and 9 above and
the Company fails to make such payment or advancement in a timely manner
pursuant to the terms of this Agreement, Indemnitee may petition the Superior
Court to enforce the Company's obligations under this Agreement.
(b) Burden of Proof. In any judicial proceeding brought under Section
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10(a) above, the Company shall have the burden of proving that Indemnitee is not
entitled to payment of Indemnifiable Amounts hereunder.
(c) Expenses. The Company agrees to reimburse Indemnitee in full for any
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Expenses incurred by Indemnitee in connection with investigating, preparing for,
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litigating, defending or sealing any action brought by Indemnitee under Section
10(a) above, or in connection with any claim or counterclaim brought by the
Company in connection therewith.
(d) Validity of Agreement. The Company shall be precluded from asserting
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in any Proceeding, including, without limitation, an action under Section 10(a)
above, that the provisions of this Agreement are not valid, binding and
enforceable or that there is insufficient consideration for this Agreement and
shall stipulate in court that the Company is bound by all the provisions of this
Agreement.
(e) Failure to Act Not a Defense. The failure of the Company (including,
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without limitation, its Board of Directors or any committee thereof, independent
legal counsel, or stockholders) to make a determination concerning the
permissibility of the payment of Indemnifiable Amounts or the advancement or
Indemnifiable Expenses under this Agreement shall not be a defense in any action
brought under Section 10(a) above, and shall not create a presumption that such
payment or advancement is not permissible.
11. Defense of the Underlying Proceeding.
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(a) Notice by Indemnitee. Indemnitee agrees to notify the Company promptly
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upon being served with any summons, citation, subpoena, complaint, indictment,
information, or other document relating to any Proceeding which may result in
the payment of Indemnifiable Amounts or the advancement of Indemnifiable
Expenses hereunder; provided, however, that the failure to give any such notice
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shall not disqualify Indemnitee from the right to receive payments of
Indemnifiable Amounts or advancements of Indemnifiable Expenses unless the
Company's ability to defend in such Proceeding is materially and adversely
prejudiced thereby,
(b) Defense of the Company. Subject to the provisions of the last sentence
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of "s Section II (b) and of Section I 1 (c) below, the Company shall have the
right to defend Indemnitee n any Proceeding which may give rise to the payment
of Indemnifiable Amounts hereunder; provided, however, that the Company shall
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notify Indemnitee of any such decision to defend within ten (10) days of receipt
of notice of any such Proceeding under Section I 1(a) above. The Company shall
not, without the prior written consent of Indemnitee, consent to the entry of
any judgment against Indemnitee or enter into any settlement or compromise which
(i) includes an admission of fault of Indemnitee or (H) does not include, as an
unconditional term thereof, the full release of Indemnitee from all liability in
respect of such Proceeding, which release shall be in form and substance
satisfactory to Indemnitee. This Section 1 1 (b) shall not apply to a
Proceeding brought by Indemnitee under Section 10(a) above or pursuant to
Section 19 below.
(c) Indemnitee's Right to Counsel. Notwithstanding the provisions of
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Section 11(b) above, if in a Proceeding to which Indemnitee is a party by reason
of Indemnitee's Corporate Status, Indemnitee reasonably concludes that it may
have
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separate defenses or counterclaims to assert with respect to any issue
which may not be consistent with the position of other defendants in such
Proceeding, or the Company fails to assume the defense of such proceeding in a
tamely manner, Indemnitee shall be entitled to be represented by separate legal
counsel of Indemnitee's choice at the expense of the Company. In addition, If
the Company fails to comply with any of its obligations under this Agreement or
in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any action, suit or
proceeding to deny or to recover from Indemnitee the benefits intended to be
provided to Indemnitee hereunder, Indemnitee shall have the right to retain
legal counsel of Indemnitee's choice, at the expense of the Company, to
represent Indemnitee in connection with any such matter.
12. Representations and Warranties of the Company. The Company hereby
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represents and warrants to Indemnitee as follows:
(a) Authority. The Company has all necessary power and authority to enter
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into, and be bound by the terms of* this Agreement, and the execution, delivery
and performance of the undertakings contemplated by this Agreement have been
duly authorized by the Company.
(b) Enforceability. This Agreement, when executed and delivered by the
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Company in accordance with the provisions hereof, shall be a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with Its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
enforcement of creditors' rights generally.
13. Insurance. The Company shall, from time to time, make the good faith
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determination whether or not it is practicable for the Company to obtain and
maintain a policy or policies of insurance with reputable insurance companies
providing the Indemnitee with coverage for losses from wrongful acts, and to
ensure the Company's performance of its indemnification obligations under this
Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. In all policies of director and officer liability insurance,
Indemnitee shall bo named as an insured in such a manner as to provide
Indemnitee the same rights and benefits as arm, accorded to the most favorably
insured of the Company's officers and directors. Notwithstanding the foregoing,
the Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, or if the coverage provided by such insurance Is
limited by exclusions so as to provide an insufficient benefit. The Company
shall promptly notify Indemnitee of any good faith determination not to provide
such coverage.
14. Contract Right Not Exclusive. The rights to payment of Indemnifiable
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Amounts and advancement of Indemnifiable Expenses provided by this Agreement
shall be in addition to, but not exclusive of, any other rights which Indemnitee
may have at any time
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under applicable law, the Company's By-laws or Certificate of Incorporation or
any other agreement, vote of stockholders or directors (or a committee of
directors), or otherwise, both as to action in Indemnitee's official capacity
and as to action in any other capacity as a result of Indemnitee's serving as a
director of the Company.
15. Successors. This Agreement shall be (a) binding upon all successors
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and assigns of the Company (including any transferee of all or a substantial
portion of the business, stock and/or assets of the Company and any direct or
indirect successor by merger or . consolidation or otherwise by operation of
law) and (b) binding on and shall inure to the benefit of the heirs, personal
representatives, executors and administrators of Indemnitee. This Agreement
shall continue for the benefit of Indemnitee and such heirs, personal
representatives, executors and administrators after Indemnitee has ceased to
have Corporate Status.
16. Subrogation. In the event of any payment of Indemnifiable Amounts
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under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of contribution or recovery of Indemnitee against
other persons, and Indemnitee shall take, at the request of the Company, all
reasonable action necessary to secure such rights, including the execution of
such documents as are necessary to enable the Company to bring suit to enforce
such rights.
17. Change in Law. To the extent that a change in Delaware law (whether
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by statute or judicial decision) shall permit broader Indemnification or
advancement of expenses than is provided under the terms of the By-laws of the
Company and this Agreement, Indemnitee shall be entitled to such broader
indemnification and advancements, and this Agreement shall be deemed to be
amended to such extent.
18. Severability. Whenever possible, each provision of this Agreement
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shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement, or any clause thereof.
shall be determined by a court of competent jurisdiction to be illegal, invalid
or unenforceable, in whole or in part, such provision or clause shall be limited
or modified in its application to the minimum extent necessary to make such
provision or clause valid, legal and enforceable, and the remaining provisions
and clauses of this Agreement shall remain fully enforceable and binding on the
parties.
19. Indemnitee as Plaintiff. Except as provided in Section 10(c) of this
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Agreement and in the next sentence, Indemnitee shall not be entitled to payment
of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect
to any Proceeding brought by Indemnitee against the Company, any Entity which it
controls, any director or officer thereof, or any third party, unless the
Company has consented to the initiation of such Proceeding. This Section shall
not apply to counterclaims or affirmative defenses asserted by Indemnitee in an
action brought against Indemnitee.
20. Modifications and Waiver. Except as provided in Section 17 above with
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respect to changes in Delaware law which broaden the right of Indemnitee to be
indemnified
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by the Company, no supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by each 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 of this Agreement (whether or not similar), nor
shall such waiver constitute a continuing waiver.
21. General Notices. All notices, requests, demands and other
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communications hereunder shall be in writing and shall be deemed to have been
duly given (a) when delivered by hand, (b) when transmitted by facsimile and
receipt is acknowledged, or (c) if mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed:
(i) If to Indemnitee, to the Indemnitee's address or facsimile number
set forth on the signature pages hereto
With a copy to:
Hutchins, Wheeler & Dittmar,
A Professional Corporation
101 Federal Street
Boston, MA 02110
Attention: James Westra
Facsimile: (617) 951-1295
(ii) If to the Company, to:
Be Free, Inc.
154 Crane Meadow Road
Suite 100
Marlboro, MA 01752
Attention: Steven Joseph, CFO
Facsimile: (508) 357-8889
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Jay E. Bothwick
Facsimile: (617) 526-5000
or to such other address as may have been furnished in the same manner by any
party to the others.
22. Governing Law. This Agreement shall be governed by and construed and
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enforced under the laws of the Commonwealth of Massachusetts without giving
effect to the provisions thereof relating to conflicts of law.
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23. Consent to Jurisdiction. The Company hereby irrevocably and
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unconditionally consents to the jurisdiction of the courts of the Commonwealth
of Massachusetts and the United States District Court for the District of
Massachusetts. The Company hereby irrevocably and unconditionally waives any
objection to the laying of venue of any Proceeding arising out of or relating to
this Agreement in the courts of the Commonwealth of Massachusetts or the United
States District Court for the District of Massachusetts, and hereby irrevocably
and unconditionally waives and agrees ' not to plead or claim that any such
Proceeding brought in any such court has been brought in an inconvenient form.
24. Agreement Governs. This Agreement is to be deemed consistent wherever
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possible with relevant provisions of the Company's By-laws and Certificate of
Incorporation; however, in the event of a conflict between this Agreement and
such provisions, the provisions of this Agreement shall control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
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BE FREE, INC.
By:/s/ Stephen M. Joseph
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Name: Stephen M. Joseph
Title: CFO
INDEMNITEE:
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/s/ Dan Nova
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Print Name: Dan Nova
Address: c/o Highland Capital Partners
Two International Place
Boston, MA 02110
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