INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement (“Agreement”) is made as of
[__________] by and between Highbury Financial Inc., a Delaware
corporation (the “Company”), and [_______]
(“Indemnitee”).
RECITALS
WHEREAS, highly
competent persons have become more reluctant to serve corporations
as independent directors unless they are provided with adequate
protection through insurance or adequate indemnification against
inordinate risks of claims and actions against them arising out of
their service to and activities on behalf of the
corporation;
WHEREAS, the
Company maintains on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its
subsidiaries from certain liabilities, the Certificate of
Incorporation of the Company (the “Certificate”)
requires indemnification of the directors, and Indemnitee may also
be entitled to indemnification pursuant to the Delaware General
Corporation Law, as amended (the “DGCL”);
WHEREAS, the
DGCL expressly provides that the indemnification provisions set
forth therein are not exclusive, and thereby contemplates that
contracts may be entered into between the Company and members of
the Board, and other persons with respect to
indemnification;
WHEREAS, the
Board of Directors of the Company (the “Board”) has
determined that the increased difficulty in attracting and
retaining independent directors, which is a result of the
uncertainties relating to insurance and statutory indemnification,
is detrimental to the best interests of the Company’s
stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the
future;
WHEREAS, it is
reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify, and to advance expenses on behalf of,
the Indemnitee to the fullest extent permitted by applicable law so
that he will serve or continue to serve the Company free from undue
concern that he will not be so indemnified;
WHEREAS, this
Agreement is a supplement to and in furtherance of the Certificate
and any resolutions adopted pursuant thereto, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any
rights of Indemnitee thereunder;
WHEREAS,
Indemnitee may not be willing to continue to serve as a director
without the protection of a contractual obligation on the part of
the Company to indemnify Indemnitee, and the Company desires
Indemnitee to serve in such capacity. Indemnitee is
willing to serve, continue to serve and to take on additional
service for or on behalf of the Company on the condition that he be
indemnified as set forth in this Agreement; and
NOW, THEREFORE,
in consideration of the premises and the covenants contained
herein, the Company and Indemnitee do hereby covenant and agree as
follows:
Section
1.
Services to the Company. Indemnitee agrees to
continue to serve as a director of the
Company. 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), in which
event the Company shall have no obligation under this Agreement to
continue Indemnitee in such position. This Agreement
shall not be deemed an employment contract between the Company (or
any of its subsidiaries or any Enterprise (as defined below)) and
Indemnitee. Indemnitee acknowledges that he may be
removed as a director at any time in accordance with the
Certificate, the Company’s By-laws, and the
DGCL. The foregoing notwithstanding, this Agreement
shall continue in force after Indemnitee has ceased to serve as a
director of the Company.
Section
2.
Definitions . As used in this
Agreement:
(a) A
“Change in Control” shall be deemed to occur upon the
earliest to occur after the date of this Agreement of any of the
following events:
i.
Acquisition of Stock by Third Party . Any Person
(as defined below), is or becomes the Beneficial Owner (as defined
below), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting
power of the Company’s then outstanding
securities;
ii.
Change in Board of Directors . During any period
of two (2) consecutive years (not including any period prior to the
execution of this Agreement), individuals who at the beginning of
such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in Sections
2(a)(i) , 2(a)(iii) or 2(a)(iv) ) whose
nomination for election by the Company’s stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously
so approved, cease for any reason to constitute at least a majority
of the members of the Board;
iii.
Corporate Transactions . The effective date of a
merger or consolidation of the Company with any other entity, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) more than 51% of the combined voting power
of the voting securities of the surviving entity outstanding
immediately after such merger or consolidation and with the power
to elect at least a majority of the board of directors or other
governing body of such surviving entity;
iv.
Liquidation . The approval by the stockholders of
the Company of a complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets; and
v.
Other Events . There occurs any other event of a
nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A (or a response to any
similar item on any similar schedule or form) promulgated under the
Exchange Act (as defined below), whether or not the Company is then
subject to such reporting requirement.
For purposes of
this Section 2(a), the following terms shall have the following
meanings:
(A) “Affiliate”
shall have the meaning given to such term pursuant to Rule 12b-2
promulgated under the Exchange Act (as defined below).
(B) “Beneficial
Owner” shall have the meaning given to such term in Rule
13d-3 under the Exchange Act; provided, however, that Beneficial
Owner shall exclude any Person otherwise becoming a Beneficial
Owner by reason of the stockholders of the Company approving a
merger of the Company with another entity.
(C) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
(D) “Person”
shall have the meaning as set forth in Sections 13(d) and 14(d) of
the Exchange Act; provided, however, that Person shall exclude (i)
the Company, (ii) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, and (iii) any
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company.
(b)
“Corporate Status” describes the status of a person who
is or was a director, employee or agent of the Company or of any
other corporation, limited liability company, partnership or joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the
Company.
(c) “Disinterested
Director” means a director of the Company who is not and was
not a party to, nor an officer, a director or partner of a party
to, the Proceeding in respect of which indemnification is sought by
Indemnitee.
(d) “Enterprise”
shall mean the Company and any other corporation, limited liability
company, partnership, joint venture, trust, employee benefit plan
or other enterprise of which Indemnitee is or was serving at the
request of the Company as a director, employee, agent or
fiduciary.
(e) “Expenses”
shall include 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, being or preparing to be a witness in, or
otherwise participating in, a Proceeding. Expenses also
shall include (i) Expenses incurred in connection with any appeal
resulting from any Proceeding, including without limitation the
premium, security for, and other costs relating to any cost bond,
supersedeas bond, or other appeal bond or its equivalent, (ii) any
federal, state, local or foreign taxes imposed on Indemnitee as a
result of the actual or deemed receipt of any payments under this
Agreement, (iii) all interest, assessments and other charges paid
or payable in connection with or in respect of the Expenses, and
(iv) for purposes of Section 12(d) only, Expenses incurred
by Indemnitee in connection with the interpretation, enforcement or
defense of Indemnitee’s rights under this Agreement, by
litigation or otherwise. Expenses, however, shall not
include amounts paid in settlement by Indemnitee or the amount of
judgments or fines against Indemnitee.
(f) “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 Company or Indemnitee in any matter
material to either such party (other than with respect to matters
concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), 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 Company or Indemnitee in an
action to determine Indemnitee’s rights under this
Agreement. The Company agrees to pay the reasonable fees
and expenses of the Independent Counsel referred to above and to
fully indemnify such counsel against any and all Expenses, claims,
liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
(g) The
term “Proceeding” shall include any threatened, pending
or completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding,
whether brought in the right of the Company or otherwise and
whether of a civil, criminal, administrative or investigative
nature, in which Indemnitee was, is or will be involved as a party
or otherwise by reason of the fact that Indemnitee is or was a
director of the Company, by reason of any action taken by him or of
any action on his part while acting as director of the Company, or
by reason of the fact that he is or was serving at the request of
the Company as a director, employee or agent of another
corporation, limited liability company, partnership, joint venture,
trust or other enterprise, in each case whether or not serving in
such capacity at the time any liability or expense is incurred for
which indemnification, reimbursement, or advancement of expenses
can be provided under this Agreement; except one initiated by an
Indemnitee to enforce his rights under this Agreement.
(h) References
to “other enterprise” shall include employee benefit
plans; references to “fines” shall include any excise
tax assessed with respect to any employee benefit plan; 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; and a person who
acted in good faith and in a manner he reasonably believed to be in
the best interests of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in manner
“not opposed to the best interests of the Company” as
referred to in this Agreement.
Section
3.
Indemnity in Proceedings. The Company shall
indemnify Indemnitee in accordance with the provisions of this
Section 3 if Indemnitee is, or is threatened to be made, a
party to or a participant in any Proceeding. Pursuant to
this Section 3 , Indemnitee shall be indemnified to the
fullest extent permitted by applicable law against all Expenses,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee or on his behalf in connection
with such Proceeding or any claim, issue or matter therein;
provided that it is determined (in accordance with Section
10(a) ) in the specific case that indemnification of such
person is permissible under the circumstances because such person
has met the standard of conduct for indemnification specified in
Section 145 of the DGCL.
Section
4.
Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this
Agreement, to the fullest extent permitted by applicable law and to
the extent that Indemnitee is a party to (or a participant in) and
is successful, on the merits or otherwise, in any Proceeding or in
defense of any claim, issue or matter therein, in whole or in part,
the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him 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 Company 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. If the Indemnitee is not wholly successful in
such Proceeding, the Company also shall indemnify Indemnitee
against all Expenses reasonably incurred in connection with a
claim, issue or matter related to any claim, issue, or matter on
which the Indemnitee was successful. For purposes of
this Section and without limitation, 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.
Section
5.
Indemnification For Expenses of a Witness.
Notwithstanding any other provision of this Agreement,
to the fullest extent permitted by applicable law and to the extent
that Indemnitee is, by reason of his Corporate Status, a witness in
any Proceeding to which Indemnitee is not a party, he shall be
indemnified against all Expenses actually and reasonably incurred
by him or on his behalf in connection therewith.
Section
6.
Additional Indemnification .
(a) Notwithstanding
any limitation in Section 3 or Section 4 , the
Company shall indemnify Indemnitee to the fullest extent permitted
by applicable law if Indemnitee is a party to or threatened to be
made a party to any Proceeding (including a Proceeding by or in the
right of the Company to procure a judgment in its favor) against
all Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with
the Proceeding.
(b) For
purposes of Section 6(a) , the meaning of the phrase
“to the fullest extent permitted by applicable law”
shall include, but not be limited to:
i. to
the fullest extent permitted by the provision of the DGCL that
authorizes or contemplates additional indemnification by agreement,
or the corresponding provision of any amendment to or replacement
of the DGCL, and
ii. to
the fullest extent authorized or permitted by any amendments to or
replacements of the DGCL adopted after the date of this Agreement
that increase the extent to which a corporation may indemnify its
directors.
Section
7.
Exclusions. Notwithstanding any provision
in this Agreement, the Company shall not be obligated under this
Agreement to make any indemnity in connection with any claim made
against Indemnitee:
(a) for
which payment has actually been made to or on behalf of Indemnitee
under any insurance policy or other indemnity provision, except
with respect to any excess beyond the amount paid under any
insurance policy or other indemnity provision; or
(b) for
(i) an accounting of profits made from the purchase and sale (or
sale and purchase) by Indemnitee of securities of the Company
within the meaning of Section 16(b) of the Exchange Act (as defined
in Section 2(a) ), or similar provisions of state statutory
law or common law, or (ii) any reimbursement of the Company by the
Indemnitee of any bonus or other incentive-based or equity-based
compensation or of any profits realized by the Indemnitee from the
sale of securities of the Company, as required in each case under
the Ex
