INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of ______________, is made by
and between Outsourcing Solutions Inc., a Delaware corporation (the "Company"),
______________ (the "Indemnitee"), an "agent" (as hereinafter defined) of the
Company.
R E C I T A L S
A. The Company recognizes that competent and experienced persons
are increasingly reluctant to serve as directors or officers of corporations
unless they are protected by comprehensive liability insurance or
indemnification, or both, due to increased exposure to litigation costs and
risks resulting from their service to such corporations, and due to the fact
that the exposure frequently bears no reasonable relationship to the
compensation of such directors and officers;
B. The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous, or conflicting,
and therefore fail to provide such directors and officers with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take;
C. The Company and the Indemnitee recognize that plaintiffs often
seek damages in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense and/or
settlement of such litigation is often beyond the personal resources of officers
and directors;
D. The Company believes that it is unfair for its directors and
officers to assume the risk of huge judgments and other expenses which may occur
in cases in which the director or officer received no personal profit and in
cases where the director or officer was not culpable;
E. The Company, after reasonable investigation, has determined
that the liability insurance coverage presently available to the Company is
inadequate to cover all possible exposure for which the Indemnitee should be
protected and/or unreasonably expensive. The Company believes that the interests
of the Company and its shareholders would best be served by a combination of
such insurance (if reasonably available) and the indemnification by the Company
of the directors and officers of the Company;
F. Section 145 of the General Corporation Law of Delaware
("Section 145"), under which the Company is organized, empowers the Company to
indemnify its officers, directors, employees and agents by agreement and to
indemnify persons who serve, at the request of the Company, as the directors,
officers, employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 145 is not
exclusive;
G. The Board of Directors has determined that contractual
indemnification as set forth herein is not only reasonable and prudent but
necessary to promote the best interests of the Company and its shareholders;
H. The Company desires and has requested the Indemnitee to serve
or continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company; and
I. The Indemnitee is willing to serve, or to continue to serve,
the Company, only on the condition that he is furnished the indemnity provided
for herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Agent. For purposes of this Agreement, "agent" of
the Company means any person who is or was a director, officer, employee or
other agent of the Company or a subsidiary of the Company; or is or was serving
at the request of, for the convenience of, or to represent the interest of the
Company or a subsidiary of the Company as a director, officer, employee or agent
of another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise; or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Company, or was
a director, officer, employee or agent of another enterprise at the request of,
for the convenience of, or to represent the interests of such predecessor
corporation.
(b) Expenses. For purposes of this Agreement, "expenses"
includes all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all attorneys' fees and related disbursements,
other out-of-pocket costs and reasonable compensation for time spent by the
Indemnitee for which he is not otherwise compensated by the Company or any third
party, provided that the rate of compensation and estimated time involved is
approved by the Board of Directors), actually and reasonably incurred by the
Indemnitee in connection with either the investigation, defense or appeal of a
proceeding or establishing or enforcing a right to indemnification under this
Agreement, Section 145 or otherwise, and amounts paid in settlement by or on
behalf of Indemnitee, but shall not include any final judgments, fines or
penalties actually levied against the Indemnitee.
(c) Proceedings. For the purposes of this Agreement,
"proceeding" means any threatened, pending, or completed action, suit or other
proceeding, whether civil, criminal, administrative, investigative or any other
type whatsoever.
(d) Subsidiary. For purposes of this Agreement,
"subsidiary" means any corporation,limited liability company, partnership, joint
venture or any similar entity of which more than 40% of the outstanding
securities, interests, or similar ownership instruments are owned directly or
indirectly by the Company, by the Company and one or more other subsidiaries, or
by one or more other subsidiaries.
(e) Other Enterprise. For purposes of this Agreement,
"other enterprise" shall include employee benefit plans; references to "fines"
shall include any excise tax assessed with respect to any employee benefit
plans; references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
any person who acts in good faith and in a manner he reasonably believes to be
in the best interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Company" as referred to in this Agreement.
2. Agreement to Serve. The Indemnitee agrees to serve and/or
continue to serve as an agent of the Company, at its will (or under separate
agreement, if such agreement exists), in the capacity Indemnitee currently
serves as an agent of the Company, so long as he is duly appointed or elected
and qualified in accordance with the applicable provisions of the Bylaws of the
Company or any subsidiary of the Company or until such time as he tenders his
resignation in writing, provided, however, that nothing contained in this
Agreement is intended to create any right to continued employment by Indemnitee
in any capacity.
3. Indemnity in Third Party Proceedings. The Company shall
indemnify the Indemnitee if the Indemnitee is a party to or threatened to be
made a party to or otherwise involved in any proceeding (other than a proceeding
by or in the name of the Company to procure judgment in its favor) by reason of
the fact that the Indemnitee is or was an agent of the Company, or by reason of
any act or inaction by him in any such capacity, against any and all expenses
and liabilities of any type whatsoever (including, but not limited to,
judgments, fines and penalties), actually and reasonably incurred by him in
connection with the investigation, defense, settlement or appeal of such
proceeding, but only if the Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
proceeding by judgment, order of court, settlement, conviction or on plea of
nolo contendere, or its equivalent, shall not, of itself, create a presumption
that Indemnitee did not act in good faith in a manner which he reasonably
believed to be in the best interests of the Company, and with respect to any
criminal proceedings, that such person had reasonable cause to believe that his
conduct was unlawful.
4. Indemnity in Derivative Actions. The Company shall indemnify
the Indemnitee if the Indemnitee is a party to or threatened to be made a party
to or otherwise involved in any proceeding by or in the name of the Company to
procure a judgment in its favor by reason of the fact that the Indemnitee is or
was an agent of the Company, or by reason of any act or inaction by him in any
such capacity, against all expenses actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense, settlement, or appeal
of such proceeding, but only if the Indemnitee acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company, except that no indemnification under this subsection shall be made
in respect of any claim, issue or matter as to which 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 his duty to the Company, 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.
5. Indemnification of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of any
proceeding or in defense of any claim, issue or matter therein, including the
dismissal of an action without prejudice, the Company shall indemnify the
Indemnitee against all expenses actually and reasonably incurred in connection
with the investigation, defense or appeal of such proceeding.
6. Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion of any expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines or penalties), actually and reasonable
incurred by him in the investigation, defense, settlement or appeal of a
proceeding but is not entitled, however, to indemnification for the total amount
thereof, the Company shall nevertheless indemnify the Indemnitee for the portion
thereof to which the Indemnitee is entitled.
7. Advancement of Expenses. Subject to Section 11(a) below, the
Company 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 Company. 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 Company as authorized by this Agreement. The advances to be
made hereunder shall be paid by the Company to or on behalf of the Indemnitee
within thirty (30) days following delivery of a written request therefor by the
Indemnitee to the Company.
8. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of
the commencement of or the threat of commencement of any proceeding, the
Indemnitee shall, if the Indemnitee believes that indemnification with respect
thereto may be sought from the Company under this Agreement, notify the Company
of the commencement or threat of commencement thereof.
(b) Any indemnification requested by the Indemnitee under
Section 3 and/or 4 hereof shall be made no later than forty-five (45) days after
receipt of the written request of Indemnitee unless a determination is made
within said forty-five (45) day period (i) by the Board of Directors of the
Company by a majority vote of a quorum thereof consisting of directors who are
not parties to such proceedings, or (ii) in the event such a quorum is not
obtainable, at the election of the Company, either by independent legal counsel
in a written opinion or by a panel of arbitrators, one of whom is selected by
the Company, another of whom is selected by the Indemnitee and the last of whom
is selected by the first two arbitrators so selected, that the Indemnitee has
not met the relevant standards for indemnification set forth in Section 3 and 4
hereof.
(c) Notwithstanding a determination under Section 8(b)
above that the Indemnitee is not entitled to indemnification with respect to any
specific proceeding, the Indemnitee shall have the right to apply to any court
of competent jurisdiction for the purpose of enforcing the Indemnitee's right to
indemnification pursuant to this Agreement. The burden of proving that the
indemnification or advances are not appropriate shall be on the Company. Neither
the failure of the Company (including its Board of Directors or independent
legal counsel or the panel of arbitrators) to have made a determination prior to
the commencement of such action that indemnification or advances are proper in
the circumstances because the Indemnitee has met the applicable standard of
conduct, nor an actual determination by the Company (including its Board of
Directors or independent legal counsel or the panel of arbitrators) that the
Indemnitee has not met such applicable standard of conduct, shall be a defense
to the action or create any presumption that the Indemnitee has not met the
applicable standard of conduct.
(d) The Company shall indemnify the Indemnitee against all
expenses incurred in connection with any hearing or proceeding under this
Section 8 unless a court of competent jurisdiction finds that each of the claims
and/or defenses of the Indemnitee in any such proceeding was frivolous or in bad
faith.
9. Assumption of Defense. In the event the Company shall be
obligated to pay the expenses of any proceeding against the Indemnitee, the
Company, if appropriate, shall be entitled to assume the defense of such
proceeding, with counsel reasonably acceptable to the Indemnitee, upon the
delivery to the Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by the Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to the
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
the Indemnitee with respect to the same proceeding, provided that (i) the
Indemnitee shall have the right to employ his counsel in such proceeding at the
Indemnitee's expense; and (ii) if (a) the employment of counsel by the
Indemnitee has been previously authorized in writing by the Company, (b) the
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee in the conduct of any such
defense, or (c) the Company shall not, in fact, have employed counsel to assume
the defense of such proceeding, the fees and expenses of the Indemnitee's
counsel shall be at the expense of the Company.
10. Insurance. The Company may, but is not obligated to, obtain
directors' and officers' liability insurance ("D&O Insurance") as may be or
become available in reasonable amounts from established and reputable insurers
with respect to which the Indemnitee is named as an insured. Notwithstanding any
other provision of the Agreement, the Company shall not be obligated to
indemnify the Indemnitee for expenses, judgments, fines or penalties, which have
been paid directly to the Indemnitee by D&O Insurance. If the Company has D&O
Insurance in effect at the time the Company receives from the Indemnitee any
notice of the commencement of a proceeding, the Company shall give prompt notice
of the commencement of such proceeding to the insurers in accordance with the
procedures set forth in the policy. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of the
Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policy.
11. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or
advance expenses to the Indemnitee with respect to proceedings or claims
initiated or brought voluntarily by the Indemnitee and not by way of defense,
except with respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise
as required under Section 145, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the Board of
Directors finds it to be appropriate; or
(b) Action for Indemnification. To indemnify the
Indemnitee for any expenses incurred by the Indemnitee with respect to any
proceeding instituted by the Indemnitee to enforce or interpret this Agreement,
if a court of competent jurisdiction determines that each of the material
assertions made by the Indemnitee in such proceeding was not made in good faith
or was frivolous; or
(c) Unauthorized Settlements. To indemnify the Indemnitee
under this Agreement for any amounts paid in settlement of a proceeding affected
without the Company's written consent. The Company shall not settle any
proceeding without the Indemnitee's written consent. Neither the Company nor
Indemnitee will unreasonably withhold consent to any proposed settlement; or
(d) Certain Matters. To indemnify the Indemnitee on
account of any proceeding with respect to (i) remuneration paid to Indemnitee if
it is determined by final judgment or other final adjudication that such
remuneration was in violation of law, (ii) which final judgment is rendered
against the Indemnitee for an accounting of profits made from the purchase or
sale by Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar
provisions of any federal, state or local statute, or (iii) which it is
determined by final judgment or other final adjudication that the Indemnitee's
conduct was knowingly fraudulent or dishonest.
12. Nonexclusivity. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Certificate of Incorporation or Bylaws, in any court in
which a proceeding is brought, the vote of the Company's shareholders or
disinterested directors, other agreements or otherwise, both as to action in his
official capacity and to action in another capacity while occupying his position
as an agent of the Company, and the Indemnitee's rights hereunder shall continue
after the Indemnitee has ceased acting as an agent of the Company and shall
inure to the benefit of the heirs, executors and administrators of the
Indemnitee.
13. 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.
14. Interpretation of Agreement. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.
15. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (i) the validity, legality and enforceability of the remaining
provisions of the Agreement (including without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby, and (ii) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 14 hereof.
16. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
17. Successor and Assigns. The terms of this Agreement shall
bind, and shall inure to the benefit of, the successors and assigns of the
parties hereto.
18. Notice. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed duly
given (i) if delivered by hand and receipted for by the party addressee or (ii)
if mailed by certified or registered mail with postage prepaid, on the third
business day after the mailing date. Addresses for notice to either party are as
shown on the signature page of this Agreement, or as subsequently modified by
written notice.
19. Governing Law. This Agreement shall be governed exclusively
by and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware. If a court of competent jurisdiction shall make a final
determination that the provisions of the law of any state other than Delaware
govern indemnification by the Company of its officers and directors, then the
indemnification provided under this Agreement shall in all instances be
enforceable to the fullest extent permitted under such law, notwithstanding any
provision of this Agreement to the contrary.
The parties hereto have entered into this Indemnity Agreement
effective as of the date first above written.
OUTSOURCING SOLUTIONS INC.
By
--------------------------------------
Timothy G. Beffa
President, Chief Executive Officer
Address: 390 South Woods Mill Road
Suite 350
St. Louis, MO 63017
Indemnitee:
-------------------------
Address:
-------------------------