FORM OF INDEMNIFICATION AGREEMENT
Exhibit
10.31
FORM
OF
THIS
AGREEMENT (the "Agreement") is made and entered into this ___ day of
_________,____ between Fiberstars, Inc., a Delaware corporation (the
"Corporation"), and _____________ ("Indemnitee").
WHEREAS,
Indemnitee, a director, officer, employee or agent of the Corporation (or
serving at the request of the Corporation as a director, officer, employee
or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) (“Agent”), performs a valuable service in such
capacity for the Corporation;
[WHEREAS,
the Indemnitee was formerly a director, officer, employee or agent of the
Corporation (or serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise) of Fiberstars, Inc., a
California corporation which was merged with and into the Corporation
(“Fiberstars California”), and was party to an Indemnification Agreement with
Fiberstars California; and]
WHEREAS,
the Certificate of Incorporation and Bylaws of the Corporation authorize and
permit contracts between the Corporation and its Agents with respect to
indemnification of such Agents;
WHEREAS,
Section 145 (“Section 145”) of the General Corporation Law of Delaware (the
“DCL”) under which the Corporation is organized, empowers the Corporation to
indemnify its directors, officers, employees by agreement and to indemnify
persons who serve, at the request of the Corporation, as the directors,
officers, employees or directors of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 145 is not
exclusive;
WHEREAS,
in accordance with the provisions of the DCL, the Corporation may purchase
and
maintain a policy or policies of Directors and Officers Liability Insurance
("D
& O Insurance"), covering certain liabilities which may be incurred by
Indemnitee in his or her performance as a director or officer of the
Corporation; and
WHEREAS,
as a result of developments affecting the terms, scope and availability of
D
& O Insurance there exists general uncertainty as to the extent of
protection afforded directors and officers by such D & O Insurance and by
statutory and bylaw indemnification provisions,
NOW,
THEREFORE, in consideration of Indemnitee's service as an Agent of the
Corporation, the parties hereto agree as follows:
1.
Indemnity
of Indemnitee.
The
Corporation hereby agrees to hold harmless and indemnify Indemnitee to the
fullest extent authorized by the provisions of the DCL, as it may be amended
from time to time.
2. Additional
Indemnity.
Subject
only to the limitations set forth in Section 3 hereof, the Corporation hereby
further agrees to hold harmless and indemnify Indemnitee:
(a)
against any and all expenses (including attorneys' fees), witness fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by Indemnitee in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the Corporation) to which Indemnitee
is, was, or at any time becomes a party, or is threatened to be made a party,
by
reason of the fact that Indemnitee is, was, or at any time becomes a director,
officer, employee or agent of the Corporation, or is or was serving or at any
time serves at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise; and
(b)
otherwise to the fullest extent as may be provided to Indemnitee by the
Corporation under the Certificate of Incorporation of the Corporation and the
DCL.
3. Limitations
on Additional Indemnity.
(a)
No
indemnity pursuant to Section 2 hereof shall be paid by the Corporation for
any
of the following:
(i)
except to the extent the aggregate of losses to be indemnified thereunder
exceeds the sum of such losses for which the Indemnitee is indemnified pursuant
to Section 1 hereof or pursuant to any D & O Insurance purchased and
maintained by the Corporation;
(ii)
in
respect to remuneration paid to Indemnitee if it shall be determined by a final
judgment or other final adjudication that such remuneration was in violation
of
law;
(iii)
on
account of Indemnitee's acts or omissions that involve intentional misconduct
or
a knowing and culpable violation of law;
(iv)
in
connection with any action, claim or proceeding (or part thereof) initiated
by
Indemnitee, or any action, claim or proceeding by Indemnitee against the
Corporation (other than as permitted by Section 8) or its directors, officers,
employees or other agents, unless (i) such indemnification is expressly required
to be made by law, (ii) the proceeding was authorized by the Board of Directors,
or (iii) such indemnification is provided by the Corporation, in its sole
discretion, pursuant to the powers vested in the Corporation under Section
145;
(v)
on
account of Director's conduct which is the subject of an action, suit or
proceeding described in Section 7(c)(ii) hereof; or
(vi)
if a
final judicial decision having jurisdiction in the matter shall determine that
such indemnification is not lawful (and, in this respect, both the Corporation
and Indemnitee have been advised that the Securities and Exchange Commission
believes that indemnification for liabilities arising under the federal
securities laws is against public policy and is, therefore, unenforceable and
that claims for indemnification should be submitted to appropriate courts for
adjudication).
(b)
In
addition to those limitations set forth above in paragraph (a) of this Section
3, no indemnity pursuant to Section 2 hereof in an action by or in the right
of
the Corporation shall be paid by the Corporation for any of the
following:
(i)
on
account of acts or omissions that Indemnitee believes to be contrary to the
best
interests of the Corporation or its shareholders or that involve the absence
of
good faith on the part of Indemnitee;
(ii)
with
respect to any transaction from which Indemnitee derived an improper personal
benefit;
(iii)
on
account of acts or omissions that show a reckless disregard for Indemnitee’s
duty to the Corporation or its shareholders in circumstances in which Indemnitee
was aware, or should have been aware, in the ordinary course of performing
an
Agent’s duties, of a risk of serious injury to the Corporation or its
shareholders;
(iv)
on
account of acts or omissions that constitute an unexcused pattern of inattention
that amounts to an abdication of Indemnitee’s duty to the Corporation or its
shareholders;
(v)
in
respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Corporation in the performance of Indemnitee’s duty
to the Corporation and its shareholders, unless and only to the extent that
the
court in which such proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, Indemnitee
is
fairly and reasonably entitled to indemnity for expenses and then only to the
extent that the court shall determine;
(vi)
of
amounts paid in settling or otherwise disposing of a pending action without
court approval; or
(vii)
of
expenses incurred in defending a pending action which is settled or otherwise
disposed of without court approval.
4. Contribution.
If the
indemnification provided in Sections 1 and 2 hereof is unavailable by reason
of
a Court decision described in subsection 3(a)(vi) hereof based on grounds other
than any of those set forth in subsections 3(a)(ii) through (v) hereof, then
in
respect of any threatened, pending or completed action, suit or proceeding
in
which the Corporation is jointly liable with Indemnitee (or would be if joined
in such action, suit or proceeding), the Corporation shall contribute to the
amount of expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred and paid or payable by
Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Corporation on the one hand and Indemnitee on the
other
hand from the transaction from which such action, suit or proceeding arose,
and
(ii) the relative fault of the Corporation on the one hand and of Indemnitee
on
the other in connection with the events which resulted in such expenses,
judgments, fines or settlement amounts, as well as any other relevant equitable
considerations. The relative fault of the Corporation on the one hand and of
Indemnitee on the other shall be determined by reference to, among other things,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent the circumstances resulting in such expenses, judgments,
fines or settlement amounts. The Corporation agrees that it would not be just
and equitable if contribution pursuant to this Section 4 were determined by
pro
rata allocation or any other method of allocation which does not take account
of
the foregoing equitable considerations.
5. Continuation
of Obligations.
All
agreements and obligations of the Corporation contained herein shall continue
during the period Indemnitee is a director, officer, employee or agent of the
Corporation (or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Indemnitee was a director,
officer, employee or agent of the Corporation (or serving at the request of
the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise).
6. Notification
and Defense of Claim.
Not
later than thirty (30) days after receipt by Indemnitee of notice of the
commencement of any action, suit or proceeding, Indemnitee will, if a claim
in
respect thereof is to be made against the Corporation under this Agreement,
notify the Corporation of the commencement thereof; but the omission so to
notify the Corporation will not relieve it from any liability which it may
have
to Indemnitee otherwise than under this Agreement. With respect to any such
action, suit or proceeding as to which Indemnitee notifies the Corporation
of
the commencement thereof:
(a)
the
Corporation will be entitled to participate therein at its own
expense;
(b)
except as otherwise provided below, to the extent that it may wish, the
Corporation jointly with any other indemnifying party similarly notified will
be
entitled to assume the defense thereof, with counsel reasonably satisfactory
to
Indemnitee. After notice from the Corporation to Indemnitee of its election
so
as to assume the defense thereof, the Corporation will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ its counsel in such action, suit or proceeding
but the fees and expenses of such counsel incurred after notice from the
Corporation of its assumption of the defense thereof shall be at the expense
of
Indemnitee unless (i) the employment of counsel by Indemnitee has been
authorized by the Corporation, (ii) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Corporation and Indemnitee
in the conduct of the defense of such action or (iii) the Corporation shall
not
in fact have employed counsel to assume the defense of such action, in each
of
which cases the fees and expenses of Indemnitee's separate counsel shall be
at
the expense of the Corporation. The Corporation shall not be entitled to assume
the defense of any action, suit or proceeding brought by or on behalf of the
Corporation or as to which Indemnitee shall have made the conclusion provided
for in (ii) above; and
(c)
the
Corporation shall not be liable to indemnify Indemnitee under this Agreement
for
any amounts paid in settlement of any action or claim effected without its
written consent. The Corporation shall be permitted to settle any action except
that it shall not settle any action or claim in any manner which would impose
any penalty or limitation on Indemnitee without Indemnitee's written consent.
Neither the Corporation nor Indemnitee will unreasonably withhold its consent
to
any proposed settlement.
7. Advancement
and Repayment of Expenses.
(a)
In
the event that Indemnitee employs his own counsel pursuant to Section 6(b)(i)
through (iii) above, the Corporation shall advance to Indemnitee, prior to
any
final disposition of any threatened or pending action, suit or proceeding,
whether civil, criminal, administrative or investigative, any and all reasonable
expenses (including legal fees and expenses) incurred in investigating or
defending any such action, suit or proceeding within ten (10) days after
receiving copies of invoices presented to Indemnitee for such expenses;
and
(b)
Indemnitee agrees that Indemnitee will reimburse the Corporation for all
reasonable expenses paid by the Corporation in defending any civil or criminal
action, suit or proceeding against Indemnitee in the event and only to the
extent it shall be ultimately determined by a final judicial decision (from
which there is no right of appeal) that Indemnitee is not entitled, under
applicable law, the Bylaws, this Agreement or otherwise, to be indemnified
by
the Corporation for such expenses.
(c)
Notwithstanding the foregoing, the Corporation shall not be required to advance
such expenses to Indemnitee if Indemnitee (i) commences any action, suit or
proceeding as a plaintiff unless such advance is specifically approved by a
majority of the Board of Directors or (ii) is a party to an action, suit or
proceeding brought by the Corporation and approved by a majority of the Board
which alleges willful misappropriation of corporate assets by Indemnitee,
disclosure of confidential information in violation of Indemnitee's fiduciary
or
contractual obligations to the Corporation, or any other willful and deliberate
breach in bad faith of Indemnitee's duty to the Corporation or its
shareholders.
8. Enforcement.
In the
event Indemnitee is required to bring any action to enforce rights or to collect
moneys due under this Agreement and is successful in such action, the
Corporation shall reimburse Indemnitee for all of Indemnitee's reasonable fees
and expenses in bringing and pursuing such action.
9.
Subrogation.
In the
event of payment under this Agreement, the Corporation shall be subrogated
to
the extent of such payment to all of the rights of recovery of Indemnitee,
who
shall execute all documents required and shall do all acts that may be necessary
to secure such rights and to enable the Corporation effectively to bring suit
to
enforce such rights.
10. Non-Exclusivity
of Rights.
The
rights conferred on Indemnitee by this Agreement shall not be exclusive of
any
other right which Indemnitee may have or hereafter acquire under any statute,
provision of the Corporation's Certificate of Incorporation or Bylaws,
agreement, vote of stockholders or directors, or otherwise, both as to action
in
his official capacity and as to action in another capacity while holding
office.
11. Survival
of Rights.
The
rights conferred on Indemnitee by this Agreement shall continue after Indemnitee
has ceased to be a director, officer, employee or other agent of the Corporation
and shall inure to the benefit of Indemnitee's heirs, executors and
administrators.
12. Severability.
Each of
the provisions of this Agreement is a separate and distinct agreement and
independent of the others, so that of any provision hereof shall be held to
be
invalid or unenforceable for any reason, such invalidity or unenforceability
shall not affect the validity or enforceability of the other provisions
hereof.
13. Governing
Law.
This
Agreement shall be interpreted and enforced in accordance with the laws of
the
State of Delaware.
14. Binding
Effect.
This
Agreement shall be binding upon Indemnitee and upon the Corporation, its
successors and assigns, and shall inure to the benefit of Indemnitee, his heirs,
personal representatives and assigns and to the benefit of the Corporation,
its
successors and assigns.
15. Amendment
and Termination.
No
amendment, modification, termination or cancellation of this Agreement shall
be
effective unless in writing signed by both parties hereto.
16. No
Affect on Prior Indemnity Agreement.
Nothing
in this Agreement shall in any way alter or diminish the obligations of
Corporation, as successor to Fiberstars California, under any Indemnity
Agreement between Indemnitee and Fiberstars California relating to Indemnitee’s
service as a director, officer, employee or agent of Fiberstars California
(or
serving at the request of the Fiberstars California as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise).
[Signatures
on Following Page]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on and as
of
the day and year first above written.
| FIBERSTARS, INC. | ||
| |
|
|
| By | __________________________________________________ | |
| Name: | __________________________________________________ | |
| Title: | __________________________________________________ | |
| INDEMNITEE | ||
| ______________________________________________________ | ||
| Name: | __________________________________________________ | |
