FORM OF INDEMNIFICATION AGREEMENT
Exhibit 10.16
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (“Agreement”) is made as of ___, 2007
by and between lululemon athletica inc., a Delaware corporation (the “Company”), and [Director/Officer] (“Indemnitee”). Capitalized terms used, but not
otherwise defined herein, shall have the meanings set forth in Section 11.
BACKGROUND
Highly competent and qualified persons have become more reluctant to serve corporations as
directors, officers or other capacities unless they are provided with adequate protection through
insurance coverage or adequate indemnification against risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation.
The Board of Directors of the Company (the “Board”) has determined that, in order to
attract and retain competent and qualified individuals, the Company will seek to maintain on an
ongoing basis, at its sole expense, directors and officers’ liability insurance to protect persons
serving the Company and its subsidiaries from certain liabilities. However, as a result of changes
in the marketplace for insurance it has become increasingly difficult to obtain directors and
officers’ liability insurance on terms providing reasonable protection at reasonable cost. The
uncertainties relating to directors and officers’ liability insurance have increased the difficulty
of attracting and retaining such persons.
The Board has determined that the potential inability to attract and retain highly competent
and qualified persons to serve the Company would be detrimental to the best interests of the
Company and its stockholders and that the Company should act to assure such persons that there will
be increased certainty of adequate protection against risks of claims and actions against them
arising out of their service to and activities on behalf of the Company in the future.
The Board has determined that it is reasonable, prudent and necessary for the Company to
contractually obligate themselves to indemnify, and to advance expenses on behalf of, such persons
to the fullest extent permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified.
The Indemnitee has agreed to serve the Company in an officer and/or director capacity provided
that the Indemnitee is provided the protections available under this Agreement, the Company’s
Amended and Restated Certificate of Incorporation (as amended and restated from time to time, the
“Company Charter”), the Company’s Amended and Restated By-laws (as amended and restated
from time to time, the “Company By-laws”) and directors and officers’ liability insurance
coverage that is adequate in the present circumstances.
This Agreement is a supplement to and in furtherance of any protections provided by the
Company Charter, Company By-laws and any resolutions adopted pursuant thereto, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any rights of the Indemnitee thereunder.
In addition, the Indemnitee will be entitled to indemnification pursuant to the Delaware General
Corporation Law.
NOW THEREFORE, in consideration of the foregoing and the covenants, promises and
representations set forth herein, and for other good and valuable consideration, including the
Indemnitee’s agreement to serve as a director and/or officer of the Company after the date hereof,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Services to the Company. The Indemnitee hereby agrees to serve or continue to
serve as a director and/or officer of the Company. The Indemnitee may at any time and for any
reason resign from such positions (subject to any other contractual obligation or any obligation
imposed by operation of law). This Agreement shall not be deemed an employment contract between
the Company or any other Enterprise, on the one hand, and the Indemnitee, on the other.
Notwithstanding the foregoing, this Agreement shall continue in force after the Indemnitee has
ceased to serve as a director or officer of the Company.
2. Indemnity of the Indemnitee. Subject to Section 8, the Company hereby indemnifies
and holds harmless the Indemnitee, to the fullest extent authorized or permitted by applicable law.
In furtherance of the foregoing indemnification, and without limiting the generality thereof, the
Company hereby agrees to indemnify the Indemnitee in the following situations.
(a) Proceedings Other Than Proceedings by or in the Right of the Company. If, by
reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or
participant (as a witness or otherwise) in any Proceeding other than a Proceeding by or in the
right of the Company, the Company shall indemnify and hold harmless the Indemnitee against all
Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably
incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter
therein; provided that the Indemnitee shall have 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 Proceeding, the Indemnitee shall have had no reasonable cause to believe his conduct was
unlawful.
(b) Proceedings by or in the Right of the Company. If, by reason of his Corporate
Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding
brought by or in the right of the Company, the Company shall indemnify and hold harmless the
Indemnitee against all Expenses actually and reasonably incurred by him, or on his behalf, in
connection with such Proceeding; provided that the Indemnitee shall have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of the Company.
Notwithstanding the foregoing, if applicable law so provides, no indemnification against such
Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which the
Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the
Courts of Delaware or the court in which such claim, issue or matter was brought, shall determine
that such indemnification may be made.
(c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding
any other provision of this Agreement, to the extent that the Indemnitee is, by
reason of his Corporate Status, a party to and is successful, on the merits or otherwise, as to one
or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify
and hold harmless the Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or matter. For purposes of
this Section 2(c), the termination of any claim, issue or matter in a Proceeding by dismissal, with
or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
(d) Indemnification for Expenses as a Witness. Notwithstanding any other provision of
this Agreement, to the extent that the Indemnitee is, by reason of his Corporate Status, a witness
in any Proceeding to which the Indemnitee is not a party, the Company hereby indemnifies and holds
harmless the Indemnitee against all Expenses actually and reasonably incurred by him or on his
behalf in connection therewith.
(e) Additional Indemnification. In addition to, and without regard to any limitations
on, the indemnification provided for in Section 2, to the fullest extent permitted by applicable
law, the Company shall indemnify and hold harmless the Indemnitee against all Expenses, judgments,
penalties,
fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf
if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to
or participant in any Proceeding (including a Proceeding by or in the right of the Company),
including all liability arising out of the negligence or active or passive wrongdoing of the
Indemnitee.
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3. Contribution.
(a) Whether or not the indemnification provided in Section 2 is available, in respect of any
Proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in
such Proceeding), the Company shall pay the entire amount of any Expenses, judgments, penalties,
fines or amounts paid or to be paid in settlement of such Proceeding without requiring the
Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right
of contribution it may have against the Indemnitee. The Company shall not enter into any
settlement of any Proceeding in which the Company is jointly liable with the Indemnitee (or would
be if joined in such Proceeding) unless such settlement provides for a full and final release of
all claims asserted against the Indemnitee without any injunction or other equitable relief being
imposed against the Indemnitee.
(b) Without diminishing or impairing the obligations of the Company set forth in the preceding
subparagraph, if, for any reason, the Indemnitee shall elect or be required to pay all or any
portion of any judgment or settlement in any Proceeding in which the Company is jointly liable with
the Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the
amount of Expenses, judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by the Indemnitee in proportion to the relative benefits
received by the Company and all officers, directors or employees of the Company, other than the
Indemnitee, who are jointly liable with the Indemnitee (or would be if joined in such Proceeding),
on the one hand, and the Indemnitee, on the other hand, from the transaction from which such
Proceeding arose; provided, however, that the proportion determined on the basis of relative
benefit may, to the extent necessary to conform to law, be further adjusted by reference to the
relative fault of the Company and all officers, directors or employees of the Company other than
the Indemnitee who are jointly liable with the Indemnitee (or would be if joined in such
Proceeding), on the one hand, and the Indemnitee, on the other hand, in connection with the events
that resulted in such Expenses, judgments, penalties, fines or settlement amounts, as well as any
other equitable considerations which the Delaware General Corporation Law may require to be
considered. The relative fault of the Company and all officers, directors or employees of the
Company, other than the Indemnitee, who are jointly liable with the Indemnitee (or would be if
joined in such Proceeding), on the one hand, and the Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which their actions were motivated by
intent to gain personal profit or advantage, the degree to which their liability is primary or
secondary and the degree to which their conduct is active or passive.
(c) The Company hereby agrees to indemnify and hold harmless the Indemnitee from any claims of
contribution which may be brought by officers, directors or employees of the Company, other than
the Indemnitee, who may be jointly liable with the Indemnitee.
4. Advancement of Expenses. The Company shall advance, to the extent not prohibited
by applicable law, the Expenses incurred by or on behalf of the Indemnitee in connection with any
Proceeding, and such advancement shall be made within thirty (30) days after the receipt by the
Company of a statement or statements requesting such advances (which shall include invoices
received by the Indemnitee in connection with such Expenses but, in the case of invoices in
connection with legal services, any references to legal work performed or to expenditures made that
would cause the Indemnitee to waive any privilege accorded by applicable law shall not be included
with the invoice) from time to time, whether prior to or after final disposition of any Proceeding.
Such statement or statements shall
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reasonably evidence the Expenses incurred by the Indemnitee. Advances shall be unsecured and
interest free. Advances shall be made without regard to the Indemnitee’s ability to repay the
expenses and without regard to the Indemnitee’s ultimate entitlement to indemnification under the
other provisions of this Agreement. Advances shall include any and all reasonable Expenses
incurred pursuing an action to enforce this right of advancement, including Expenses incurred
preparing and forwarding statements to the Company to support the advances claimed. the Indemnitee
shall qualify for advances upon the execution and delivery to the Company of this Agreement,
subject to the condition that if and to the extent that it is ultimately determined by a court of
competent jurisdiction in a final judgment, not subject to appeal, that the Indemnitee is not
entitled to be indemnified by the Company, the Indemnitee shall undertake to the fullest extent
permitted by law to repay the advance. The right to advances under this Section 4 shall in all
events continue until final disposition of any Proceeding, including any appeal thereof.
5. Procedures and Presumptions for Determination of Entitlement to Indemnification. The
following procedures and presumptions shall apply if there is any question as to whether the
Indemnitee is entitled to indemnification under this Agreement.
(a) To obtain indemnification (including advancement of Expenses) under this Agreement, the
Indemnitee shall submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to the Indemnitee and is reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to indemnification.
The Secretary of the Company shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that the Indemnitee has requested indemnification.
(b) Upon written request by the Indemnitee for indemnification pursuant to the first sentence
of Section 5(a), a determination, if required by applicable law, with respect to the Indemnitee’s
entitlement thereto shall be made in the specific case by one of the following four methods, which
shall be at the election of the Board:
(i) by a majority vote of the Disinterested Directors, even though less than a quorum,
(ii) by a committee of Disinterested Directors designated by a majority vote of the
Disinterested Directors, even though less than a quorum,
(iii) if there are no Disinterested Directors or if the Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the
Indemnitee, or
(iv) by the stockholders of the Company.
(c) If the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 5(b)(iii), the Independent Counsel shall be selected as provided in
this Section 5(c). The Independent Counsel shall be selected by the Board. The Indemnitee may,
within ten (10) days after such written notice of selection shall have been given, deliver to the
Company, as the case may be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so selected does not meet
the requirements of “Independent Counsel” as defined in Section 11, and the objection shall set
forth with particularity the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel. If a written objection is made
and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and
until such objection is withdrawn or a court has determined that such objection is without merit.
If, within twenty (20) days after submission by the
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Indemnitee of a written request for indemnification pursuant to Section 5(a), no determination
of the Indemnitee’s entitlement to indemnification has been made pursuant to Section 5(b)(i),
Section 5(b)(ii) or Section 5(b)(iv) and no Independent Counsel shall have been selected and not
objected to, either the Company or the Indemnitee may petition the Court of Delaware or other court
of competent jurisdiction for resolution of any objection which shall have been made by the
Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the court or by such other person as the court shall
designate, and the person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 5(b). The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 5(b), and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 5(c), regardless of the manner in which such
Independent Counsel was selected or appointed.
(d) In making a determination with respect to entitlement to indemnification hereunder, the
person, persons or entity empowered or selected under Section 5 to determine whether the Indemnitee
is entitled to indemnification under this Agreement (the “Determining Authority”) shall
presume that the Indemnitee has at all times met the applicable standard of conduct and is entitled
to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have
the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the
failure of the Company (including by its directors or Independent Counsel) to have made a
determination prior to the commencement of any action pursuant to this Agreement that
indemnification is proper in the circumstances because the Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company (including by its directors or
Independent Counsel) that the Indemnitee has not met such applicable standard of conduct, shall
create a presumption that the Indemnitee has not met the applicable standard of conduct.
(e) The Indemnitee shall be deemed to have acted in good faith if the Indemnitee’s action is
based on the records or books of account of the Enterprise, including financial statements, or on
information supplied to the Indemnitee by the officers of the Enterprise in the course of their
duties, or on the advice of legal counsel for the Enterprise or on information or records given or
reports made to the Enterprise by an independent certified public accountant or by an appraiser or
other expert selected by the Enterprise. In addition, the knowledge and/or actions, or failure to
act, of any director, officer, agent or employee of the Enterprise shall not be imputed to the
Indemnitee for purposes of determining the right to indemnification under this Agreement.
(f) If the Determining Authority shall not have made a determination within sixty (60) days
after receipt by the Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and the Indemnitee shall be entitled to such
indemnification absent (i) a misstatement by the Indemnitee of a material fact, or an omission of a
material fact necessary to make the Indemnitee’s statement not materially misleading, in connection
with the request for indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that (x) such 60-day period may be extended for a reasonable
time, not to exceed an additional thirty (30) days, if the Determining Authority in good faith
requires such additional time to obtain or evaluate documentation and/or information relating
thereto; and (y) that the foregoing provisions of this Section 5(f) shall not apply if the
determination of entitlement to indemnification is to be made by the stockholders pursuant to
Section 5(b) and if (A) within fifteen (15) days after receipt by the Company of the request for
such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit
such determination to the stockholders for their consideration at an annual meeting thereof to be
held within seventy-five (75) days after such receipt and such determination is made thereat, or
(B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the
purpose of making such determination, such meeting is held for such purpose within sixty (60)
days after having been so called and such determination is made thereat.
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(g) The Indemnitee shall cooperate with the Determining Authority with respect to the
Indemnitee’s entitlement to indemnification, including providing the Determining Authority upon
reasonable advance request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to the Indemnitee and reasonably
necessary to such determination. The Determining Authority shall act reasonably and in good faith
in making a determination regarding the Indemnitee’s entitlement to indemnification under this
Agreement. Any costs or expenses (including attorneys’ fees and disbursements) incurred by the
Indemnitee in so cooperating with the Determining Authority shall be borne by the Company
(irrespective of the determination as to the Indemnitee’s entitlement to indemnification) and the
Company hereby agrees to indemnify and hold harmless the Indemnitee therefrom.
(h) The Company acknowledges that a settlement or other disposition short of final judgment
may be successful if it permits a party to avoid expense, delay, distraction, disruption and
uncertainty. In the event that any Proceeding to which the Indemnitee is a party is resolved in
any manner other than by adverse judgment against the Indemnitee (including settlement of such
action, claim or proceeding with or without payment of money or other consideration) it shall be
presumed that the Indemnitee has been successful on the merits or otherwise in such action, suit or
proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion by clear and convincing evidence.
(i) The termination of any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of itself adversely affect the right of
the Indemnitee to indemnification or create a presumption that the Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to the best interests of
the Company or, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause
to believe that his conduct was unlawful.
6. Remedies of the Indemnitee.
(a) If (i) a determination is made pursuant to Section 5 that the Indemnitee is not entitled
to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 4, (iii) no determination of entitlement to indemnification is made pursuant to Section
5(b) within ninety (90) days after receipt by the Company of the request for indemnification, or
(iv) payment of indemnification is not made within ten (10) days after a determination has been
made that the Indemnitee is entitled to indemnification or such determination is deemed to have
been made pursuant to Section 5, the Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his
entitlement to such indemnification. The Indemnitee shall commence such proceeding seeking an
adjudication within one hundred eighty (180) days following the date on which the Indemnitee first
has the right to commence such proceeding pursuant to this Section 6(a). The Company shall not
oppose the Indemnitee’s right to seek any such adjudication.
(b) If a determination shall have been made pursuant to Section 5(b) that the Indemnitee is
not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 5(b)
shall be conducted in all respects as a de novo trial on the merits, and the Indemnitee shall not
be prejudiced by reason of the adverse determination under Section 5(b).
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(c) If a determination shall have been made pursuant to Section 5(b) that the Indemnitee is
entitled to indemnification, the Company shall be bound by such determination in any judicial
proceeding commenced pursuant to this Section 6, absent a prohibition of such indemnification under
applicable law.
(d) If the Indemnitee, pursuant to this Section 6, seeks a judicial adjudication of his rights
under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and
officers’ liability insurance policies maintained by the Company, the Company shall pay on behalf
of the Indemnitee, in advance, any and all Expenses actually and reasonably incurred by him in such
judicial adjudication, regardless of whether the Indemnitee ultimately is determined to be entitled
to such indemnification, advancement of expenses or insurance recovery.
(e) The Company shall be precluded from asserting in any judicial proceeding commenced
pursuant to this Section 6 that the procedures and presumptions of this Agreement are not valid,
binding and enforceable and shall stipulate in any such court that the Company is bound by all the
provisions of this Agreement.
(f) Notwithstanding anything in this Agreement to the contrary, no determination as to
entitlement to indemnification under this Agreement shall be required to be made prior to the final
disposition of the Proceeding.
7. Non-Exclusivity, Survival of Rights; Insurance Subrogation.
(a) The Indemnitee’s rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may at any time be entitled under applicable law, the Company Charter, the Company
By-laws, any other agreement, a vote of stockholders, a resolution of the Board or otherwise. No
amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of the Indemnitee under this Agreement in respect of any action taken or omitted
by the Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the
extent that a change in Delaware law, whether by statute or judicial decision, permits greater
indemnification or advancement of Expenses than would be afforded currently under the Company
Charter, Company By-laws and this Agreement, it is the intent of the parties hereto that the
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right
or remedy herein conferred is intended to be exclusive of any other right or remedy, and every
other right and remedy shall be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents of the Company or of any other
Enterprise, the Indemnitee shall be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies. If, at the time of the receipt of a notice of a
claim pursuant to the terms hereof, the Company has director and officer’s liability insurance in
effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. 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
policies.
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(c) In the event of any 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 take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce such
rights; provided, however, any rights of recovery of the Indemnitee pursuant to any liability
insurance policy separately paid for by the Indemnitee shall not be subject to subrogation under
this Section 7 except that any amounts recovered under such policy shall be subject to Section
8(a)(i).
8. Exception to Right of Indemnification and Contribution.
(a) Notwithstanding any other provision of this Agreement, the Company shall not be obligated
under this Agreement to indemnify and hold harmless the Indemnitee in connection with or
contributed to:
(i) any claim made against the Indemnitee for which payment has actually been made to or on
behalf of the Indemnitee under any insurance policy, other indemnity provision, contract, agreement
or otherwise, except with respect to any excess beyond the amount paid under any insurance policy
or other indemnity provision; or
(ii) any claim made against the Indemnitee for an accounting of profits made from the purchase
and sale (or sale and purchase) by the Indemnitee of securities of the Company within the meaning
of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state
statutory law or common law; or
(iii) any Proceeding initiated by the Indemnitee, including any Proceeding initiated by the
Indemnitee against the Company or its other directors, officers, employees or other indemnitees for
advancement of expenses or otherwise, unless (i) the Board authorized the Proceeding (or any part
of any Proceeding) prior to its initiation; (ii) the Company provides the indemnification, in its
sole discretion, pursuant to the powers vested in the Company under applicable law; or (iii) such
Proceeding is being brought by the Indemnitee to assert, interpret or enforce his rights under this
Agreement.
(b) In addition, the Company shall not be obligated to make any payment to the Indemnitee that
is finally determined (under the procedures, and subject to the presumptions, set forth in Sections
5 and 6) to be unlawful.
9.Notice By the Indemnitee and Defense of Claim. The Indemnitee agrees promptly to
notify the Company in writing upon being served with or otherwise receiving any summons, citation,
subpoena, complaint, indictment, information or other document relating to any Proceeding or matter
which may be subject to indemnification covered hereunder. The failure to so notify the Company
shall not relieve the Company of any obligation which it may have to the Indemnitee under this
Agreement or otherwise unless and only to the extent that such failure or delay materially
prejudices the Company. With respect to any Proceedings as to which the 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, to the extent that it may wish, the Company will be
entitled to assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee.
After notice from the Company to the Indemnitee of its election so to assume the defense thereof,
the Company will not be liable to the Indemnitee under this Agreement for any legal or other
Expenses subsequently incurred by the Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. The Indemnitee shall have the
right to employ its counsel in such Proceeding but the fees and Expenses of such counsel incurred
after notice from the
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Company of its assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by the Company, (ii) the
Indemnitee shall have reasonably concluded that there may be a conflict of interest between the
Company and the Indemnitee in the conduct of the defense of such Proceeding, or (iii) the Company
shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which
cases the fees and Expenses of counsel shall be at the expense of the Company. The Company shall
not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or
as to which the Indemnitee shall have made the conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify the Indemnitee under this Agreement for any
amounts paid in settlement of any Proceeding or claim effected without its written consent. The
Company shall not settle any Proceeding or claim in any manner which would impose any penalty or
limitation on the Indemnitee without the Indemnitee’s written consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent to any proposed settlement.
10. Security. To the extent requested by the the Indemnitee and approved by the
Board, the Company may at any time and from time to time provide security to the Indemnitee for the
Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other
collateral. Any such security, once provided to the Indemnitee, may not be revoked or released
without the prior written consent of the Indemnitee.
11. Definitions. For purposes of this Agreement:
(a) “Corporate Status” describes the status of a person who is or was a director,
officer, employee, agent or fiduciary of the Company or of any other Enterprise that such person is
or was serving at the express written request of the Company.
(b) “Disinterested Director” means a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by the Indemnitee.
(c) “Enterprise” means (i) the Company and (ii) any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise that is an affiliate or wholly or
partially owned subsidiary of the Company and of which the Indemnitee is or was serving as a
director, trustee, general partner, managing member, officer, employee, agent or fiduciary, and
(iii) any other corporation, partnership, limited liability company, joint venture, trust, employee
benefit plan or other enterprise of which the Indemnitee is or was serving at the express written
request of the Company as a director, trustee, general partner, managing member, officer, employee,
agent or fiduciary.
(d) “Expenses” includes 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, participating, or being or preparing to be a witness in a
Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting
from any Proceeding, including the premium, security for, and other costs relating to any cost
bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not
include amounts paid in settlement by the Indemnitee or the amount of judgments or fines against
the Indemnitee.
(e) “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, (ii) the Indemnitee, (iii) any affiliate of the
Company or the Indemnitee, (iv) any member of the Indemnitee’s immediate family, (v) any company of
which the
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Indemnitee is an executive officer, in each case in any matter material to such party (other
than with respect to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (vi) 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 the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.
(f) “Proceeding” includes 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 by or in the right of the
Company or other Enterprise or otherwise and whether civil, criminal, administrative or
investigative, in which the Indemnitee was, is or will be involved as a party or otherwise, by
reason of the fact that the Indemnitee is or was an officer or director of the Company, by reason
of any action taken by him or of any inaction on his part while acting as an officer or 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, officer, employee, agent or fiduciary of another Enterprise; in each case whether or not
he is acting or serving in any such capacity at the time any liability or expense is incurred for
which indemnification can be provided under this Agreement; including one pending on or before the
date of this Agreement, but excluding one initiated by the Indemnitee pursuant to this Agreement to
enforce his rights under this Agreement.
12. Construction.
(a) For purposes of this Agreement, whenever the context requires: the singular number shall
include the plural, and vice versa; the masculine gender shall include the feminine and neuter
genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) Any rule of construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of this Agreement.
(c) The words “include” and “including,” and variations thereof, shall not be deemed to be
terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”
(d) Except as otherwise indicated, all references in this Agreement to “Sections,” are
intended to refer to Sections of this Agreement, as the context may require.
(e) The headings contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
13. Duration of Agreement. All agreements and obligations of the Company contained
herein shall continue and terminate upon the later of:
(a) ten (10) years after the date that the Indemnitee shall have ceased to serve as a director
of the Company or as a director, partner, managing member, officer, employee, agent or trustee of
any other Enterprise; or
(b) one (1) year after the final termination of (i) any Proceeding (including any rights of
appeal) then pending in respect of which the Indemnitee requests indemnification or advancement of
Expenses hereunder and (ii) any judicial proceeding or arbitration pursuant to 6 (including any
rights of appeal) involving the Indemnitee.
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14. Enforcement. The Company expressly confirms and agrees that it has entered into
this Agreement and assumes the obligations imposed on it hereby in order to induce the Indemnitee
to serve as an officer or director of the Company and the Company acknowledges that the Indemnitee
is relying upon this Agreement in serving as an officer or director of the Company, and that the
Indemnitee is entitled to enforce the provisions hereof as a direct beneficiary thereof.
15. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective successors (including any
direct or indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and
personal and legal representatives.
16. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with respect to the subject
matter hereof.
17. Severability. If any provision or provisions of this Agreement shall be held by a
court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any
reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to
the fullest extent permitted by law; and (b) to the fullest extent possible, the provisions of this
Agreement (including each portion of any section of this Agreement containing any such provision
held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested thereby. Without limiting the
generality of the foregoing, this Agreement is intended to confer upon the Indemnitee
indemnification rights to the fullest extent permitted by applicable laws. In the event any
provision hereof conflicts with any applicable law, such provision shall be deemed modified,
consistent with the aforementioned intent, to the extent necessary to resolve such conflict.
18. Modification and Waiver. No supplement, modification, termination 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 provisions hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
19. Notices. All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient, and if not so confirmed, then on the next business day, (c)
five (5) days after having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications shall be
sent:
| (a) | To the Indemnitee at the address set forth below the Indemnitee signature hereto. | ||
| (b) | To the Company at: | ||
| 0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx Xxxxxx, X0X 0X0 |
or to such other address as may have been furnished to the Indemnitee by the Company or to the
Company by the Indemnitee, as the case may be.
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20. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same Agreement. This
Agreement may also be executed and delivered by “portable document format” (“.pdf”) or
facsimile transmission and in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
21. Governing Law and Consent to Jurisdiction. The parties agree that this Agreement
shall be governed by, and construed and enforced in accordance with, the laws of Delaware without
application of the conflict of laws principles thereof. The Company and the Indemnitee hereby
irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in
connection with this Agreement shall be brought only in the Courts of Delaware (the “Delaware
Court”), and not in any other court in the United States of America or any court in any other
country (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of
any action or proceeding arising out of or in connection with this Agreement, (iii) waive any
objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v)
waive, and agree not to plead or to make, any claim that any such action or proceeding brought in
the Delaware Court has been brought in an improper or inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and
year first above written.
| [COMPANY] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| [INDEMNITEE] |
||||
| Name: | ||||
| Address: | ||||
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