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EXHIBIT 10.18
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made the XXX day of XXX, 19XX, by
and between INTERVISUAL BOOKS, INC., a California corporation (the "Company")
and XXXXXX ("Indemnitee").
RECITALS
A. Indemnitee is now serving, or is considering serving, the
Company, or a subsidiary of the Company, in the capacity of Director and
Officer;
B. The parties hereto acknowledge that Indemnitee's service to the
Company in the capacity indicated above may expose Indemnitee to claims,
lawsuits and risk of liability;
C. The parties further recognize that the compensation or fees to
Indemnitee for the performance of such services may not be commensurate with the
potential risk involved; and
D. Accordingly, as an inducement to Indemnitee to serve or to
continue to serve the Company in the capacity indicated above, the company and
Indemnitee desire to enter into this Agreement pursuant to which the Company
undertakes to indemnify Indemnitee against such risks, to the extent that it is
permitted to do so under the laws of the State of California.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Definitions
1.1 Agent. The term "Agent" shall mean any person who is or
was a director, officer, employee or agent of the Company, or is or was serving
at the request 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 of
another enterprise at the request of such predecessor corporation.
1.2 Derivative Action. The term "Derivative Action" shall mean
a Proceeding brought by or in the right of the Company to procure a judgment in
favor of the Company.
1.3 Expenses. The term "Expenses" includes without limitation
attorneys' fees and all other costs, costs of investigation and costs of legal
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actions, claims or proceedings and appeals therefrom, and costs of attachment or
similar bonds.
1.4 Proceeding. The term "Proceeding" shall mean any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative.
2. Indemnification
2.1 Direct Actions. Subject to the provisions of Section 2.3
hereof, if Indemnitee was or is a party or is threatened to be made a party to
any Proceeding, other than a Derivative Action, by reason of the fact that
Indemnitee is or was an Agent of the Company, the Company shall indemnify and
hold harmless Indemnitee against Expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with such
Proceeding.
2.2 Derivative Actions. Subject to the provisions of Section
2.3 hereof, if Indemnitee was or is a party or is threatened to be made a party
to any threatened pending or completed Derivative Action by reason of the fact
that Indemnitee is or was an Agent of the Company, the Company shall indemnify
and hold harmless Indemnitee against Expenses, settlements and other amounts
actually and reasonably incurred by Indemnitee in connection with the defendant
or settlement of such action, provided, however, no indemnification shall be
made under this Section 2.2 for any of the following:
(a) In respect to any claim, issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Company in the
performance of his duty to the Company 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 indemnify for expenses and then
only to the extent that the court shall determine;
(b) Amounts paid in settling or otherwise disposing of
a pending action without court approval; and
(c) Expenses incurred in defending a pending action
which is settled or otherwise disposed of without court approval.
2.3 Limitations on Indemnification. Notwithstanding the
provision of Section 2.1 and 2.2 above, Indemnitee shall not be entitled to
indemnification as provided therein under any of the following circumstances:
(a) For acts or omissions that may involve intentional
misconduct or a knowing and culpable violation of law;
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(b) For acts or omissions that Indemnitee believes to
be contrary to the best interests of the Company or its shareholders or that
involve the absence of good faith on the part of Indemnitee;
(c) For any transaction from which Indemnitee derived
an improper personal benefit;
(d) For acts or omissions that show 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 Indemnitee's duties, of a risk or serious injury
to the Company or its shareholders;
(e) For acts or omissions that constitute an excused
pattern of inattention that amounts to an abdication of Indemnitee's duty to the
Company or its shareholders;
(f) Involving liability of a director under Section 310
or Section 316 of the Corporations Code of the State of California;
(g) For any act or omission occurring prior to the date
that the Company amended its Articles of Incorporation to incorporate provisions
permitted by Section 204(a)(11) of the Corporations Code of the State of
California; provided, however, nothing herein shall be construed to limit the
Company's ability to indemnify Indemnitee pursuant to the Company's Articles of
Incorporations, Bylaws or the law of the State of California as in effect prior
to such amendment;
(h) Under other circumstances, if any, in which
indemnity is expressly prohibited by Section 317 of the Corporations Code of the
State of California; and
(i) Under circumstances where it is determined by a
final judgment or other final adjudication that such indemnity is in violation
of law.
3. Advancement of Expenses
3.1 The Company shall pay for and on behalf of Indemnitee all
Expenses which Indemnitee actually and reasonably incurs in defending any
Proceeding prior to the final disposition of such Proceeding; provided that, in
connection with each such Proceeding, Indemnitee shall provide the Company with
an undertaking, in form and substance reasonably satisfactory to the Company, to
repay any such advances if it shall be determined ultimately that Indemnitee is
not entitled to be indemnified hereunder or as otherwise authorized under
California law. The Company shall perform its obligation under this Section 3.1
until such time as it may be determined that Indemnitee is not entitled to
indemnification by virtue of one or more of the exclusions set forth in Section
2.2 or Section 2.3 hereof.
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3.2 Notwithstanding the provisions of Section 3.1 or any other
provision of this agreement, 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 of disinterested directors, or (if such a quorum is
not obtainable or, even if obtainable, a quorum of disinterested directors so
directs) by independent legal counsel, that, based upon the facts known to the
Board or counsel at the time such determination is made, (i) Indemnitee acted in
bad faith or deliberately breached his duty to the Company or its shareholders,
and (ii) as a result of such actions by Indemnitee, it is more likely than not
that it will ultimately be determined that Indemnitee is not entitled to
indemnification under the terms of this Agreement.
4. Agreement - Not Exclusive
This Agreement and the Indemnification provided herein is not
exclusive of and shall not diminish any other rights to which Indemnitee may be
entitled under any provision of the Articles of Incorporation or Bylaws of the
Company, any other indemnification agreement or insurance provided by persons or
entities other than the Company, or under applicable law. Notwithstanding the
foregoing, the Company shall not be liable to Indemnitee to make any payment
with respect to any claim made against Indemnitee for which payment is actually
made to Indemnitee under a valid and collectible insurance policy, except with
respect to any excess beyond the amount of the payment under such policy.
5. Agreement to be Liberally Construed
The purpose of this Agreement is to induce Indemnitee either to
serve the Company, or to continue to serve the Company, in the capacity
indicated in Recital A, above. The Company acknowledges that, but for this
Agreement and the expectation by Indemnitee that the Company will perform each
of its obligations hereunder, Indemnitee may not consent to serve or to continue
to serve the Company in such capacity. Therefore, it is the intention of the
Company and Indemnitee that this Agreement be liberally construed so as to
achieve its purpose of protecting Indemnitee to the maximum extent permitted
under California law. In the case of any amendment to or change in California
law permitting the Company to indemnify Indemnitee in those situations where
indemnification is currently prohibited by law as outlined in Sections 2.2 and
2.3, it is the intention of the parties hereto that the Company provide
Indemnitee such broader or greater rights of indemnification than permitted to
the Company prior to such amendment or change and that this Agreement be
construed accordingly. The Company agrees that it will not do or fail to do any
fact which would or might prevent or hinder the performance by the Company of
its obligations under this Agreement.
6. Notice and Other Indemnification Procedures
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6.1 Notice to Company. 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 in writing of the commencement or threat of
commencement thereof (but the failure to so notify the Company shall not relieve
the Company from any liability which it may have under this Agreement, except to
the extent that the Company has been prejudiced in any material respect by such
failure).
6.2 Choice of Counsel; Conduct of Defense. In the event the
Company shall be obligated to pay the Expenses of any Proceeding against the
Indemnitee, the Company, unless otherwise provided below, shall be entitled to
participate therein, or, upon the delivery to the Indemnitee of written notice
of its election to do so, to assume the defense of such Proceeding, with counsel
approved by the Indemnitee (which approval shall not be unreasonably withheld).
After delivery of such notice, approval of such counsel by 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 or her own counsel in any
proceeding at the Indemnitee's expense; and (ii) if (a) the employment of
counsel by the Indemnitee has been previously authorized 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 within a reasonable period of time, in
fact, have employed counsel to assume the defense of such proceeding, Indemnitee
may employ its own counsel (subject to the Company's approval thereof which
shall not be unreasonably withheld) and the fees and expenses of such counsel
shall be paid by the Company. Notwithstanding any of the provisions of this
Agrement, the Company shall not be liable for any settlement of any claim or
action effected without its written consent which consent shall not be
unreasonably withheld.
7. Severability
This Agreement is intended to comply in all respects with
California law. In the event any provision of this Agreement is finally
determined by a court of competent jurisdiction to require the Company to do or
fail to do any act in violation of applicable law, such provision shall be
limited or modified in its application to the extent necessary to avoid a
violation of law, and as so limited or modified such provision and the balance
of this Agreement shall be enforceable in accordance with their terms.
8. Governing Law
This Agreement shall be governed by and construed in
accordance with California law.
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9. Successors and Assigns
The terms of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and the successors and assigns of the Company
and the Indemnitee's estate, heirs and personal representatives.
10. Modification and Waiver
No supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by both the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any provision hereof nor shall such waiver constitute a
continuing waiver.
11. Attorneys' Fees
In the event that any action is instituted by Indemnitee under
this Agreement or to enforce or interpret any of the terms of this Agreement,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action the court determined that each of the material
assertions made by Indemnitee as a part of such action was not made in good
faith or was frivolous. In the event any action is instituted by or in the name
of the Company under this Agreement or to enforce or interpret any term of this
Agreement, Indemnitee shall be entitled to be paid all court costs and expenses,
including reasonable attorneys' fees, incurred by Indemnitee in defense of such
action (including with respect to Indemnitee's counterclaims and cross-claims
made in such action), unless as a part of such action the court determines that
each of the Indemnitee's material defenses to such action was made in bad faith
or was frivolous.
IN WITNESS WHEREOF, the parties have executed this Indemnification
Agreement as of the date first above written:
"Company"
INTERVISUAL BOOKS, INC.
By:
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Xxxxx X. Xxxx, Chairman of the
Board and Chief Executive Officer
"Indemnitee":
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XXXXX
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