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EXHIBIT 10.1
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this 27th day of February by and
between XXXXX MANAGEMENT SYSTEMS CORPORATION, a California corporation (the
"Company"), and ("Indemnitee").
RECITALS
WHEREAS, Indemnitee performs a valuable service to the Company in his or
her capacity as a member of the Board of Directors and an Officer of the
Company;
WHEREAS, the shareholders of the Company have adopted provisions in the
Company's Amended and Restated Articles of Incorporation (the "Articles") and
the Company's Amended and Restated Bylaws (the "Bylaws") providing for the
indemnification of the directors, officers, employees and other agents of the
Company, including persons serving at the request of the Company in such
capacities with other corporations or enterprises, as authorized by the
California General Corporation Law, as amended (the "Code");
WHEREAS, the Articles, the Bylaws and the Code, by their non-exclusive
nature, permit contracts between the Company and its directors, officers,
employees and other agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Indemnitee to serve as a member of the Board
of Directors and an Officer of the Company, the Company has determined and
agreed to enter into this Agreement with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued service as a
member of the Board of Directors and an Officer after the date hereof, the
parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE COMPANY. Indemnitee will serve as a member of the
Board of Directors and an Officer of the Company or as a director, officer or
other fiduciary of the Company or an affiliate of the Company (including any
employee benefit plan of the Company) faithfully and to the best of his or her
ability so long as he or she is duly elected and qualified in accordance with
the provisions of the Bylaws or other applicable charter documents of the
Company or such affiliate; provided, however, that Indemnitee may at any time
and for any reason resign from such position (subject to any contractual
obligation that Indemnitee may have assumed apart from this Agreement) and that
the Company or any affiliate shall have no obligation under this Agreement to
continue Indemnitee in any such position.
2. INDEMNITY. Subject to a determination pursuant to Section 8 hereof,
the Company hereby agrees to hold harmless and indemnify Indemnitee:
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(a) against any and all expenses (including attorneys' fees),
witness fees, damages, judgments, fines and amounts paid in settlement and any
other amounts that Indemnitee becomes legally obligated to pay because of any
claim or claims made against or by him or her in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative (including an action
by or in the right of the Company) 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
other agent of the Company, or is or was serving or at any time serves at the
request of the Company as a director, officer, employee or other agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise; and
(b) otherwise to the fullest extent not prohibited by the Articles,
the Bylaws or the Code.
3. LIMITATIONS ON ADDITIONAL INDEMNITY. To the extent that any of the
matters set forth in subsections (a) through (l) of this Section 3 are
successfully established by the Company as defenses in accordance with the
provisions of Section 9 hereof, no indemnity pursuant to Section 2 hereof will
be payable by the Company:
(a) on account of any claim against 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 and amendments thereto or similar provisions of any federal, state
or local statutory law;
(b) on account of Indemnitee's conduct from which Indemnitee derived
an improper personal benefit;
(c) on account of Indemnitee's conduct that he or she believed to be
contrary to the best interests of the Company or its shareholders or that
involved the absence of good faith on the part of Indemnitee;
(d) on account of Indemnitee's conduct that constituted intentional
misconduct or a knowing and culpable violation of law;
(e) on account of Indemnitee's conduct that showed a reckless
disregard for Indemnitee's duty to the Company or its shareholders in
circumstances in which Indemnitee was aware, or should have been aware, in the
ordinary course of performing his or her duties, of a risk of serious injury to
the Company or its shareholders;
(f) on account of Indemnitee's conduct that constituted an unexcused
pattern of inattention that amounted to an abdication of the Indemnitee's duty
to the Company or its shareholders;
(g) on account of Indemnitee's conduct which constituted a violation
of the Indemnitee's duties under Sections 310 or 316 of the Code;
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(h) for which payment is actually made to Indemnitee under a valid
and collectible insurance policy or under a valid and enforceable indemnity
clause, bylaw or agreement, except in respect of any excess beyond payment
under such insurance, clause, bylaw or agreement;
(i) if indemnification is not lawful (and, in this respect, both the
Company and Indemnitee have been advised that the Securities and Exchange
Commission considers indemnification for liabilities arising under the federal
securities laws to be against public policy and is, therefore, unenforceable
and that claims for indemnification should be submitted to appropriate courts
for adjudication);
(j) in connection with any proceeding (or part thereof) initiated by
Indemnitee, or any proceeding by Indemnitee against the Company 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 of the Company, (iii) such indemnification is provided
by the Company, in its sole discretion, pursuant to the powers vested in the
Company under the Code, or (iv) the proceeding is initiated pursuant to Section
9 hereof;
(k) with respect to any action by or in the right of the Company:
(i) if Indemnitee is adjudged to be liable to the Company in
performance of Indemnitee's duty to the Company and its shareholders, unless
and only to the extent that the court in which such action is or was pending
shall determine upon application that, in view of all of 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;
(ii) for expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval; or
(iii) for amounts paid in settling or otherwise disposing of a
pending action without court approval; and
(l) to the extent, and only to the extent, that indemnification with
respect to such action (i) would be inconsistent with the Articles or Bylaws,
or a resolution of the shareholders or agreement of the Company prohibiting or
otherwise limiting such indemnification and in effect at the time of the
accrual of the action or (ii) would be inconsistent with any condition
expressly imposed by a court in approving a settlement, unless Indemnitee has
been successful on the merits or unless the indemnification has been approved
by the shareholders of the Company in accordance with Section 153 of the Code
(with the shares of the Indemnitee not being entitled to vote thereon).
4. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee is a
director, officer, employee or other agent of the Company (or is serving or had
served at the request of the Company as a director, officer, employee or other
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
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proceeding, whether civil, criminal, arbitrational, administrative or
investigative, by reason of the fact that Indemnitee had served in the capacity
referred to herein.
5. PARTIAL INDEMNIFICATION. Indemnitee shall be entitled under this
Agreement to indemnification by the Company for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Indemnitee becomes legally
obligated to pay in connection with any action, suit or proceeding referred to
in Section 2 hereof even if not entitled hereunder to indemnification for the
total amount thereof, and the Company shall indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled.
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 Company under this Agreement, notify the Company of the
commencement thereof; but the omission so to notify the Company 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 Company of the commencement thereof:
(A) the Company will be entitled to participate therein at its own
expense;
(B) except as otherwise provided below, the Company may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. After notice from the Company to
Indemnitee of its election to assume the defense thereof, the Company 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
except for reasonable costs of investigation or otherwise as provided below.
Indemnitee shall have the right to employ separate counsel in such action, suit
or proceeding but the fees and expenses of such counsel incurred after notice
from the Company 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 Company, (ii) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and Indemnitee in
the conduct of the defense of such action or (iii) the Company 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 Company. The Company shall not be entitled to assume the defense
of any action, suit or proceeding brought by or on behalf of the Company or as
to which Indemnitee shall have made the conclusion provided for in clause (ii)
above; and
(c) the Company 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, which shall not be reasonably withheld.
The Company 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, which may be
given or withheld in Indemnitee's sole discretion.
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7. EXPENSES. The Company shall advance, prior to the final disposition
of any proceeding, promptly following request therefor, all expenses incurred
by Indemnitee in connection with such proceeding upon receipt of an undertaking
by or on behalf of Indemnitee to repay said amounts if it shall be determined,
ultimately that Indemnitee is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Articles, the Code or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to Section
10, no advance shall be made by the Company if a determination is reasonably
and promptly made by the Board of Directors by a majority vote of a quorum
consisting of directors who are not parties to the proceeding (or, if no such
quorum exists, by independent legal counsel in a written opinion) that the
facts known to the decision making party at the time such determination is made
demonstrate clearly and convincingly demonstrate that such person acted in bad
faith or in a manner that such person did not believe to be in the best
interests of the Company and its shareholders.
8. DETERMINATION BY THE COMPANY. To the extent required by the Code,
promptly after a receipt of a request for indemnification hereunder made by
Indemnitee (and in any event within 90 days), the Company shall make a
reasonable, good faith determination as to whether indemnification of
Indemnitee is proper under the Code by means of:
(A) A majority vote of a quorum consisting of directors who are not
parties to such proceeding;
(B) If such quorum is not obtainable, by independent legal counsel
in a written opinion;
(C) Approval or ratification by the affirmative vote of a majority
of the shares of the COMPANY represented and voting at a duly held meeting
which a quorum is present (which shares voting affirmatively also constitute at
least a majority of the required quorum) or by written consent of a majority of
the outstanding shares entitled to vote; where in each case the shares owned by
the person to be indemnified shall not be considered entitled to vote thereon.
Such determination shall be reasonably made in good faith by the
decision-making party based upon the facts known to the decision-making party
at the time such determination is made.
9. ENFORCEMENT. Any right to indemnification or advances granted by this
Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee in
the forum in which the proceeding is or was pending, or, if such forum is not
available or a determination is made that such forum is not convenient, in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request therefor. Indemnitee, in such enforcement
action, if successful in whole or in part, shall be entitled to be paid also the
expense of prosecuting his or her claim. The Company shall be entitled to raise
by pleading as an affirmative defense to any action for which a claim for
indemnification is made under Section 2 hereof that Indemnitee is not entitled
to indemnification because of the limitations set forth in Section 3 hereof.
Neither the failure of the Company (including its Board of Directors, its
shareholders or independent legal counsel) to have made a determination prior to
the commencement of such enforcement action that indemnification of Indemnitee
is proper in the circumstances, nor an actual
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determination by the Company (including its Board of Directors, its shareholders
or independent legal counsel) that such indemnification is improper shall be a
defense to the action or create a presumption that Indemnitee is not entitled to
indemnification under this Agreement or otherwise.
10. 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 or
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 Company
effectively to bring suit to enforce such rights.
11. 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 Articles or Bylaws,
agreement, vote of shareholders or directors, or otherwise, both as to action in
his or her official capacity and as to action in another capacity while holding
office.
12. SURVIVAL OF RIGHTS.
(A) 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 Company or to serve at the request of the Company as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise and shall inure
to the benefit of Indemnitee's heirs, executors and administrators.
(B) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had
occurred.
13. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Company shall nevertheless indemnify Indemnitee
to the fullest extent provided by the Articles, the Bylaws, the Code or any
other applicable law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California.
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. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute but one and the same Agreement. Only
one such counterpart need be produced to evidence the existence of this
Agreement.
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17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
(a) If to Indemnitee, at the address indicated below his or her
signature hereunder.
(b) If to the Company, to
XXXXX MANAGEMENT SYSTEMS CORPORATION
0000 Xxxxxxxx, Xxxxx X
Xxxxx, XX 00000
Attention: President
or to such other address as may have been furnished to Indemnitee by the
Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
XXXXX MANAGEMENT SYSTEMS CORPORATION
By:
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Title:
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INDEMNITEE
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Indemnitee Print Name and Address:
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