EXHIBIT 10.1
Indemnitee: Gary S. Margolis
BINDVIEW CORPORATION
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "AGREEMENT") is made between BindView
Corporation, a Texas corporation (the "COMPANY")(1), and the "INDEMNITEE"
identified above. Unless otherwise indicated, all references to Sections are to
Sections in this Agreement. This Agreement is effective the date the Indemnitee
first became (or becomes) an officer or director of the Company ("EFFECTIVE
DATE").
1. BACKGROUND.
1.1 The Indemnitee is (or is about to become) a director or officer of the
Company. The Company regards it as essential to continue to attract
retain, as directors and officers, the most capable persons available.
1.2 The Company and the Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and
officers. Depending on the nature of the litigation or other claim in
question, the Company's directors' and officers' liability insurance
coverage might not provide as much protection as could be desirable in
a given situation.
1.3 The Company regards it as crucial to secure the continued service of
competent and experienced people in senior corporate positions and to
assure that they will be able to exercise judgment without fear of
personal liability so long as they fulfill the basic duties of honesty,
care and good faith. Accordingly, the Company wishes to provide in this
Agreement (a) for the indemnification of, and the advancing of expenses
to, the Indemnitee to the fullest extent, whether partial or complete,
permitted by law and as set forth in this Agreement, and (b) to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies.
2. DEFINITIONS. For purposes of this Agreement, the following terms have
the meanings set forth below.
2.1 ACQUIRING PERSON means a Person referred to in Section 2.8(a) or
Section 2.8(b).
2.2 ACQUISITION REPORT means a report filed by or on behalf of a
stockholder or group of stockholders on Schedule 13D or Schedule 14D-1
or any successor schedule, form or report under the Exchange Act.
2.3 APPROVED LAW FIRM means any law firm that (a) is located in Houston,
Texas, (b) is rated "AV" by the Martindale-Hubbell Law Directory, and
(b) has not, for a five-year period prior to the Indemnifiable Event in
question, been engaged by the Company, by a Person filing an
Acquisition Report, or by the Indemnitee.
2.4 ARTICLE 2.02-1 means Article 2.02-1 of the TBCA.
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(1) "BindView Corporation" is a registered assumed name of BindView
Development Corporation.
INDEMNIFICATION AGREEMENT PAGE 1
2.5 ARTICLES AND BYLAWS means the articles of incorporation of the Company
and/or the bylaws of the Company, in either case as now in effect or as
hereafter amended and/or restated (including any substitute articles of
incorporation and/or bylaws).
2.6 BENEFICIAL OWNER means a Person who is a beneficial owner (as defined
in Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act), directly or indirectly, of Voting Stock, of rights to
acquire Voting Stock, or of securities convertible into Voting Stock,
as applicable. If a Person owns rights to acquire Voting Stock, that
Person's beneficial ownership shall be determined pursuant to paragraph
(d) of Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act.
2.7 BOARD means the Board of Directors of the Company.
2.8 CHANGE IN CONTROL of the Company shall be deemed to have occurred if
any of the following events occurs after the Effective Date:
(a) An Acquisition Report is filed with the Commission disclosing
that any Person is the Beneficial Owner of 20 percent or more
of the outstanding Voting Stock. The previous sentence shall
not apply if such Person is (1) the Company, one of its
subsidiaries, or any employee benefit plan sponsored by
either, or (2) Eric J. Pulaski.
(b) Any Person purchases securities pursuant to a tender offer or
exchange offer to acquire any Voting Stock (or any securities
convertible into Voting Stock) and, immediately after
consummation of that purchase, that Person is the Beneficial
Owner of 20 percent or more of the outstanding Voting Stock.
The previous sentence shall not apply if such Person is (1)
the Company, one of its subsidiaries, or any employee benefit
plan sponsored by either, or (2) Eric J. Pulaski.
(c) The consummation of a Merger Transaction if (a) the Company is
not the surviving entity or (b) as a result of the Merger
Transaction, 50 percent or less of the combined voting power
of the then-outstanding securities of the other party to the
Merger Transaction, immediately after the Change of Control
Date, are held in the aggregate by the holders of Voting Stock
immediately prior to the Change of Control Date.
(d) The consummation of a Sale Transaction if as a result of the
Sale Transaction, 50 percent or less of the combined voting
power of the then-outstanding securities of the other party to
the Sale Transaction, immediately after the Change of Control
Date, are held in the aggregate by the holders of Voting Stock
immediately prior to the Change of Control Date.
(e) The consummation of a transaction, immediately after which any
Person would be the Beneficial Owner, directly or indirectly,
of more than 50 percent of the outstanding Voting Stock.
(f) The stockholders of the Company approve the dissolution of the
Company.
(g) During any period of 12 consecutive months, the individuals
who at the beginning of that period constituted the Board of
Directors shall cease to constitute a majority of the Board of
Directors. The previous sentence will not apply if the
election, or the nomination for
INDEMNIFICATION AGREEMENT PAGE 2
election by the Company's stockholders, of each director of
the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company
then still in office who were directors of the Company at the
beginning of any such period.
2.9 CHANGE OF CONTROL DATE means the date of an event constituting a Change
of Control. In the case of a Merger Transaction or a Sale Transaction
constituting a Change of Control, the Change of Control Date shall be
the effective date of such transaction.
2.10 CLAIM means (a) any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, investigative or
otherwise; (b) any appeal in such an action, suit, or proceeding; and
(c) any inquiry or investigation, whether conducted by the Company or
some other party (either private or governmental), that the Indemnitee
reasonably believes could lead to the institution of any such action,
suit or proceeding.
2.11 COMMISSION means the Securities and Exchange Commission or any
successor agency.
2.12 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended from
time to time, or any successor statute.
2.13 EXPENSE ADVANCE - see Section 5.
2.14 EXPENSES shall include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in, or preparing to
defend, be a witness in or participate in, any Indemnifiable Claim,
together with interest, computed at the Company's average cost of funds
for short-term borrowings, accrued from the date of incurrence of such
expense to that date the Indemnitee receives reimbursement therefor.
2.15 FINAL JUDGMENT means a final judgment or other final adjudication, by a
court of competent jurisdiction, from which no further appeal is taken
or possible.
2.16 INCLUDING (in lower case), unless otherwise specified, means including
but not limited to.
2.17 INDEMNIFIABLE CLAIM means a Claim arising out of (in whole or in part)
or relating to an Indemnifiable Event.
2.18 INDEMNIFIABLE EVENT means any event or occurrence related to:
(a) the fact that the Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company; or
(b) the fact that the Indemnitee is or was serving at the request
of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
foreign or domestic, partnership, joint venture, trust,
employee benefit plan or other enterprise. Without limiting
any indemnification provided hereunder, if the Indemnitee
serves, in any capacity, either (i) another corporation,
partnership, joint venture or trust of which 20% or more of
the voting power or residual economic interest is held,
directly or indirectly, by the Company or (ii) any employee
benefit plan of the Company or any entity referred to in
clause (i) above, such service shall be deemed to be at the
request of the Company; or
INDEMNIFICATION AGREEMENT PAGE 3
(c) anything done or not done by the Indemnitee in any capacity
described in subparagraphs (a) and (b).
2.19 INDEMNITY OBLIGATIONS means the Company's obligations to indemnify the
Indemnitee under this Agreement or any other agreement or any provision
of the Articles and Bylaws relating to Indemnifiable Claims.
2.20 MERGER TRANSACTION means a merger, consolidation or reorganization of
the Company with or into any other person or entity.
2.21 PERSON means a person within the meaning of Section 13(d) or Section
14(d)(2) or any successor rule or regulation promulgated under the
Exchange Act.
2.22 REVIEWING PARTY means:
(a) the Board acting by quorum consisting of directors who are not
parties to the particular Claim with respect to which the
Indemnitee is seeking indemnification, or
(b) if such a quorum is not obtainable (or, even if such a quorum
is obtainable, if a quorum of disinterested directors so
directs):
(1) the Board upon the opinion in writing of independent
legal counsel that indemnification is proper in the
circumstances because the applicable standard of
conduct set forth in Section 3 of this Agreement
and/or in Article 2.02-1 of the TBCA has been met by
the Indemnitee, or
(2) the shareholders upon a finding that the Indemnitee
has met the applicable standard of conduct referred
to in clause (b)(1) of this definition.
2.23 SALE TRANSACTION means a sale, lease, exchange or other transfer of all
or substantially all the assets of the Company and its consolidated
subsidiaries to any other person.
2.24 TBCA means the Texas Business Corporation Act or any successor statute.
A reference to a specific article of the TBCA shall encompass any
corresponding renumbered or amended article or any corresponding
article of any successor statute.
2.25 VOTING STOCK means shares of capital stock of the Company the holders
of which are entitled to vote for the election of directors, but
excluding shares entitled to so vote only upon the occurrence of a
contingency unless that contingency shall have occurred.
3. RIGHT TO INDEMNIFICATION.
3.1 If (a) the Indemnitee was, is, becomes at any time, or is threatened to
be made, (i) a party to, or (ii) a witness in, or (iii) otherwise a
participant in, an Indemnifiable Claim, then (b) subject to a
determination in accordance with Section 4 that the Indemnity is
entitled to indemnification, the Company shall indemnify the
Indemnitee, to the maximum extent permitted by law, against any and all
Expenses, judgments, fines (including excise taxes assessed on an
Indemnitee with respect to an employee benefit plan), penalties, and
amounts paid in settlement (including all interest,
INDEMNIFICATION AGREEMENT PAGE 4
assessments and other charges paid or payable in connection with, or in
respect of, such Expenses, judgments, fines, penalties or amounts paid
in settlement) in respect of such Claim.
3.2 The Indemnitee shall not be entitled to indemnification pursuant to
Section 3.1 if a Final Judgment, adverse to the Indemnitee, establishes
that (a) the Indemnitee's acts were committed in bad faith or were the
result of active and deliberate dishonesty and in either case, were
material to the cause of action adjudicated in the Final Judgment, or
(b) the Indemnitee personally and improperly gained a material
financial profit or other material benefit to which the Indemnitee was
not entitled.
3.3 Prior to a Change of Control, the Indemnitee shall not be entitled to
indemnification pursuant to Section 3.1 in connection with any Claim
initiated by the Indemnitee against the Company or any director or
officer of the Company unless the Company has joined in or consented to
the initiation of such Claim.
3.4 If (a) the Indemnitee asserts a claim or brings an action for (i)
indemnification or advance payment of Expenses by the Company under its
Indemnity Obligations, or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company, then
(b) the Company shall indemnify the Indemnitee against any and all
expenses (including attorneys' fees) that are incurred by the
Indemnitee in connection with such claim or action. The Company's
obligation under this Section 3.4 shall be subject to the Indemnitee's
ultimately being determined to be entitled to such indemnification,
advance expenses payment or insurance recovery, as the case may be.
3.5 If (a) the Indemnitee is entitled under any provision of this Agreement
to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties and amounts paid in settlement of
a Claim but not, however, for all of the total amount thereof, then (b)
the Company shall nevertheless indemnify the Indemnitee for the portion
of such total amount to which the Indemnitee is entitled.
3.6 Without limiting Section 3.5, if (a) one or more Indemnifiable Claims
is made or occurs in respect of multiple Indemnifiable Events, and (b)
as to a particular Indemnifiable Event, the Indemnitee has been
successful on the merits or otherwise in defense of any or all
Indemnifiable Claims relating in whole or in part to such Indemnifiable
Event, or in defense of any issue or matter related thereto, including
dismissal without prejudice, then (c) the Company shall indemnify the
Indemnitee, to the maximum extent permitted by law, against all
Expenses incurred in connection with such defense.
3.7 The Company's indemnification obligations in this Section 3 shall in no
event be deemed to preclude or limit any right to indemnification to
which the Indemnitee may be entitled under Article 2.02-1 or any other
applicable statutory or regulatory provision.
4. DETERMINATIONS OF ENTITLEMENT TO INDEMNITY
4.1 The Company's Indemnity Obligations shall be subject to the condition
that the Reviewing Party shall have authorized such indemnification in
the specific case by having determined that the Indemnitee is permitted
to be indemnified under the applicable standard of conduct set forth in
this Agreement and/or applicable law. The Company shall promptly call a
meeting of the Board concerning such Claim and use its best efforts to
facilitate a prompt determination by the Reviewing
INDEMNIFICATION AGREEMENT PAGE 5
Party with respect to such Claim. The Indemnitee shall be afforded the
opportunity to make submissions to the Reviewing Party with respect to
such Claim.
4.2 To the extent that the Reviewing Party determines that the Indemnitee
substantively is permitted to be indemnified (in whole or in part),
such determination shall be conclusive and binding to that extent on
both the Company and the Indemnitee.
4.3 If (a) there has been no determination by the Reviewing Party pursuant
to Section 4.1, or (b) the Reviewing Party determines pursuant to
Section 4.1 that the Indemnitee would not be permitted to be
indemnified in whole or in part, then (c) the Indemnitee shall have the
right to commence litigation in any court in the State of Texas having
subject matter jurisdiction thereof and in which venue is proper,
seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof. The Company
hereby consents to service of process and to appear in any such
proceeding.
4.4 In the event of a Change of Control of the Company (other than a Change
of Control which has been approved by a majority of the Board who were
directors immediately prior to such Change of Control), then all
determinations pursuant to Section 4.1 and Article 2.02-1 shall be made
pursuant to subparagraph (F)(1), (F)(2), or (F)(3) of Article 2.02-1.
With respect to all matters relating to such determinations, or
concerning the rights of the Indemnitee to indemnity payments and
Expense Advances under the Indemnity Obligations (including any opinion
to be rendered pursuant to Article 2.02-1), the following provisions
shall apply:
(a) The Company (including the Board) shall seek legal advice
from, and only from (and if special legal counsel is selected
under subparagraph (F)(3) of Article 2.02-1, the Board shall
select only), special, independent legal counsel selected by
the Indemnitee and approved by the Company, which approval
shall not be unreasonably withheld.
(b) Such counsel shall not have otherwise performed services for
(A) the Company or any subsidiary of the Company, (B) the
Acquiring Person or any affiliate or associate of such
Acquiring Person within the last five years (other than in
connection with such matters) or (C) the Indemnitee. As used
in this Section 4.4, the terms "affiliate" and "associate"
shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the
Exchange Act and in effect on the date of this Agreement.
(c) Unless the Indemnitee has theretofore selected counsel
pursuant to this Section 4.4 and such counsel has been
approved by the Company, any Approved Law Firm shall be deemed
to satisfy the requirements set forth above.
(d) Such counsel, among other things, shall render its written
opinion to the Company, the Board and the Indemnitee as to
whether and to what extent the Indemnitee would be permitted
to be indemnified under applicable law and/or this Agreement.
(e) The Company agrees to pay the reasonable fees of such counsel
and to fully indemnify such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
INDEMNIFICATION AGREEMENT PAGE 6
5. EXPENSE ADVANCES.
5.1 If so requested by the Indemnitee from time to time, the Company shall
advance within ten business days of such request any and all Expenses
to the Indemnitee (an "EXPENSE ADVANCE").
5.2 If, when and to the extent that the Reviewing Party determines pursuant
to Section 4 that the Indemnitee is not entitled to be indemnified
against the Claim in question, then:
(a) the Company shall be entitled to be reimbursed by the
Indemnitee for all Expense Advances previously paid;
(b) upon request by the Indemnitee, the Company may continue to
make Expense Advances to the Indemnity for up to 30 days
pending the commencement of legal proceedings under Section
5.3; and
(c) the Indemnitee hereby agrees and undertakes to reimburse the
Company for Expense Advances to the full extent required by
Section K of Article 2.02-1.
5.3 If the Indemnitee commences legal proceedings in a court of competent
jurisdiction to secure a determination that the Indemnitee should be
indemnified, then:
(a) any determination under Section 5.2 shall not be binding, and
(b) the Company shall continue to make Expense Advances as
provided in Section 5.1, and the Indemnitee shall not be
required to reimburse the Company for any Expense Advance,
until the occurrence of a Final Judgment that makes a
determination adverse to the Indemnitee concerning such
indemnification.
6. TIMING. The Company shall carry out its Indemnity Obligations as soon
as practicable, but in any event no later than 30 days after written
demand is presented to the Company.
7. NO PRESUMPTION. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, whether civil or criminal, by
judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent, shall
not create a presumption that the Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a
court has determined that indemnification is not permitted by
applicable law.
8. NONEXCLUSIVITY, ETC. The rights of the Indemnitee hereunder shall be in
addition to any other rights the Indemnitee may have under the
Company's Articles and Bylaws, the TBCA, or otherwise. To the extent
that a change in the TBCA (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded
currently under the Articles and Bylaws and this Agreement, it is the
intent of the parties hereto that the Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.
9. INSURANCE. To the extent the Company maintains an insurance policy or
policies providing directors' and officers' liability insurance, the
Indemnitee shall be covered by such policy or policies,
INDEMNIFICATION AGREEMENT PAGE 7
in accordance with its or their terms, to the maximum extent of the
coverage available for any director or officer of the Company.
10. LIMITATION PERIOD. No legal action shall be brought and no cause of
action shall be asserted by or on behalf of the Company or any
affiliate of the Company against the Indemnitee, the Indemnitee's
spouse, heirs, executors or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of
action. Any claim or cause of action of the Company or its affiliate
shall be extinguished and deemed released unless asserted by the timely
filing of a legal action within such two year period. If any shorter
period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.
11. SUBROGATION. In the event of payment under this Agreement, the Company
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 shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
12. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
the Indemnitee to the extent the Indemnitee has otherwise actually
received payment (under any insurance policy, under the Articles and
Bylaws, otherwise) of the amounts otherwise indemnifiable hereunder.
13. SPECIFIC PERFORMANCE. The parties recognize that if any provision of
this Agreement is violated by the Company, the Indemnitee may be
without an adequate remedy at law. Accordingly, in the event of any
such violation, the Indemnitee shall be entitled, if the Indemnitee so
elects, to institute proceedings, either in law or at equity, to obtain
damages, to enforce specific performance, to enjoin such violation or
to obtain any relief or any combination of the foregoing as the
Indemnitee may elect to pursue.
14. OTHER PROVISIONS.
14.1 This Agreement shall inure to the benefit of and be binding upon (i)
the Company and its successors and assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business and/or assets of the Company,
and (ii) the Indemnitee and the Indemnitee's spouse, heirs, and
personal and legal representatives.
14.2 All notices and statements with respect to this Agreement must be in
writing and shall be delivered by certified mail return receipt
requested; hand delivery with written acknowledgment of receipt; FAX
transmission with machine-printed confirmation of delivery; or
overnight courier with delivery-tracking capability. Notices to the
Company shall be addressed to the Company's general counsel at the
Company's then-current principal operating office. Notices to the
Indemnitee may be delivered to the Indemnitee in person or to the
Indemnitee's then-current home address as indicated on the Indemnitee's
pay stubs or, if no address is so indicated, as set forth in the
Company's payroll records.
INDEMNIFICATION AGREEMENT PAGE 8
14.3 This Agreement sets forth the entire agreement of the parties
concerning the subjects covered herein; there are no promises,
understandings, representations, or warranties of any kind concerning
those subjects except as expressly set forth in this Agreement.
14.4 Any modification of this Agreement must be in writing and signed by all
parties; any attempt to modify this Agreement, orally or in writing,
not executed by all parties will be void.
14.5 If any provision of this Agreement, or its application to anyone or
under any circumstances, is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability will not
affect any other provision or application of this Agreement which can
be given effect without the invalid or unenforceable provision or
application and will not invalidate or render unenforceable such
provision or application in any other jurisdiction.
14.6 This Agreement will be governed and interpreted under the laws of the
United States of America and of the State of Texas law as applied to
contracts made and carried out in entirely Texas by residents of that
State.
14.7 No failure on the part of any party to enforce any provisions of this
Agreement will act as a waiver of the right to enforce that provision.
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.
14.8 This Agreement shall continue in effect regardless of whether the
Indemnitee continues to serve as an officer, director, or employee of
the Company (or at the Company's request, of any other enterprise).
14.9 Section headings are for convenience only and shall not define or limit
the provisions of this Agreement.
14.10 This Agreement may be executed in several counterparts, each of which
is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of
the other counterparts. A copy of this Agreement manually signed by one
party and transmitted to the other party by FAX or in image form via
email shall be deemed to have been executed and delivered by the
signing party as though an original. A photocopy of this Agreement
shall be effective as an original for all purposes.
(Signature page follows)
INDEMNIFICATION AGREEMENT PAGE 9
By signing this Agreement, the Indemnitee acknowledges that the Indemnitee (1)
has read and understood the entire Agreement; (2) has received a copy of it (3)
has had the opportunity to ask questions and consult counsel or other advisors
about its terms; and (4) agrees to be bound by it.
BINDVIEW CORPORATION, BY: INDEMNITEE
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Eric J. Pulaski, President Signature
and Chief Executive Officer
INDEMNIFICATION AGREEMENT PAGE 10