EXHITBIT 10.1
INDEMNIFICATION AGREEMENT
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This INDEMNIFICATION AGREEMENT (the "Agreement") is made and entered into
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this th day of May 2000 (the "Effective Date") by and between TurboLinux,
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Inc., a Delaware corporation (the "Company"), and (the
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"Indemnitee").
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WHEREAS, it is essential to the Company to retain and attract as directors
and officers the most capable persons available;
WHEREAS, Indemnitee is a director and officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
public companies in today's environment;
WHEREAS, the Company's Amended and Restated Bylaws (the "Bylaws") require
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the Company to indemnify and advance expenses to its directors and officers to
the extent permitted by the DGCL and the Indemnitee has been serving and
continues to serve as a director and officer of the Company in part in reliance
on the Bylaws; and
WHEREAS, in recognition of Indemnitee's need for (i) substantial protection
against personal liability based on Indemnitee's reliance on the Bylaws, (ii)
specific contractual assurance that the protection promised by the Bylaws will
be available to Indemnitee, regardless of, among other things, any amendment to
or revocation of the Bylaws or any change in the composition of the Company's
Board of Directors or acquisition transaction relating to the Company, and (iii)
an inducement to continue to provide effective services to the Company as a
director and officer thereof, the Company wishes to provide for the
indemnification of Indemnitee and to advance expenses to Indemnitee to the
fullest extent permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, to provide for the continued coverage of
Indemnitee under the Company's directors' and officers' liability insurance
policies.
NOW, THEREFORE, in consideration of the premises contained herein and of
Indemnitee continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Certain Definitions.
(a) "Affiliate" shall mean any corporation that directly, or indirectly
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through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified.
(b) "Change in Control" shall be deemed to have occurred if
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(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended, other
than (a) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (b) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, or (c) any current beneficial stockholder or
group, as defined by Rule 13d-5 of the Exchange Act, including the heirs,
assigns and successors thereof, of beneficial ownership, within the meaning of
Rule 13d-3 of the Exchange Act, of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding
securities, hereafter becomes the "beneficial owner," as defined in Rule 13d-3
under of the Exchange Act, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the total combined voting power
represented by the Company's then outstanding Voting Securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the Company
and any new director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least eighty percent (80%) of the total voting power
represented by the Voting Securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company, in one transaction or a
series of transactions, of all or substantially all of the Company's assets.
(c) "DGCL" shall mean the General Corporation Law of the State of
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Delaware, as the same exists or may hereafter be amended or interpreted;
provided, however, that in the case of any such amendment or interpretation,
only to the extent that such amendment or interpretation permits the Company to
provide broader indemnification rights than were permitted prior thereto.
(d) "Expense" shall mean attorneys' fees and all other costs, expenses
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and obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing for
any of the foregoing, any Proceeding relating to any Indemnifiable Event.
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(e) "Indemnifiable Event" shall mean any event or occurrence that
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takes place either prior to or after the execution of this Agreement, related to
the fact that Indemnitee is or was a director or officer of the Company, or is
or was serving at the request of the Company as a director, officer, employee,
or agent of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans.
(f) "Proceeding" shall mean any threatened, pending or completed
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action, suit or proceeding, whether civil, criminal, administrative, or
investigative.
(g) "Reviewing Party" shall mean any appropriate person or body
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consisting of a member or members of the Company's Board of Directors or any
other person or body appointed by the Board (including the special, independent
counsel referred to in Section 6) who is not a party to the particular
Proceeding with respect to which Indemnitee is seeking Indemnification.
(h) "Voting Securities" shall mean any securities of the
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Company which vote generally in the election of directors.
2. Indemnification. In the event Indemnitee was or is a party to or is
involved (as a party, witness, or otherwise) in any Proceeding by reason of (or
arising in part out of) an Indemnifiable Event, whether the basis of the
Proceeding is Indemnitee's alleged action in an official capacity as a director
or officer or in any other capacity while serving as a director or officer, the
Company shall indemnify Indemnitee to the fullest extent permitted by the DGCL
against any and all Expenses, liability, and loss (including judgments, fines,
ERISA excise taxes or penalties, and amounts paid or to be paid in settlement,
and any interest, assessments, or other charges imposed thereon, and any
federal, state, local, or foreign taxes imposed on any director or officer as a
result of the actual or deemed receipt of any payments under this Agreement)
(collectively, the "Liabilities") reasonably incurred or suffered by such person
in connection with such Proceeding. The Company shall provide indemnification
pursuant to this Section 2 as soon as practicable, but in no event later than
thirty (30) days after it receives written demand from Indemnitee.
Notwithstanding anything in this Agreement to the contrary and except as
provided in Section 5 below, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Proceeding initiated by
Indemnitee against the Company or any director or officer of the Company unless
the Company has joined in or consented to the initiation of such Proceeding.
3. Advancement of Expenses. If so requested by Indemnitee, the Company
shall advance Expenses to Indemnitee within thirty (30) business days of such
request (an "Expense Advance"); provided, however, that if required by the DGCL
such Expenses shall be advanced only upon delivery to the Company of an
undertaking by or on behalf of the Indemnitee to repay such amount if it is
ultimately determined that Indemnitee is not entitled to be indemnified by the
Company. Expenses incurred by Indemnitee while not acting in his capacity as a
director or officer, including service with respect to employee benefit plans,
may be advanced upon such terms and conditions as the Board of Directors of the
Company, in its sole discretion, deems appropriate.
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4. Review Procedure for Indemnification. Notwithstanding the foregoing,
(i) the obligations of the Company under Sections 2 and 3 above shall be subject
to the condition that the Reviewing Party shall not have determined (in a
written opinion, in any case in which the special, independent counsel referred
to in Section 6 hereof is involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the Company to make
an Expense Advance pursuant to Section 3 above shall be subject to the condition
that, if, when and to the extent that the Reviewing Party determines that
Indemnitee would not be permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of competent
jurisdiction pursuant to Section 5 below to secure a determination that
Indemnitee should be indemnified under applicable law, any determination made by
the Reviewing Party that Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding and Indemnitee shall not be required
to reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or have lapsed). Indemnitee's obligation to
reimburse the Company for Expense Advances pursuant to this Section 4 shall be
unsecured and no interest shall be charged thereon. If there has not been a
Change in Control, the Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control, other than a Change
in Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control, the
Reviewing Party shall be the special, independent counsel referred to in Section
6 hereof.
5. Enforcement of Indemnification Rights. If the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, or if Indemnitee has not
otherwise been paid in full pursuant to Sections 2 and 3 above within thirty
(30) days after a written demand has been received by the Company, Indemnitee
shall have the right to commence litigation in any court in the State of
Delaware having subject matter jurisdiction thereof and in which venue is proper
to recover the unpaid amount of the demand ("Enforcement Proceeding") and, if
successful in whole or in part, Indemnitee shall be entitled to be paid any and
all Expenses in connection with such Enforcement Proceeding. The Company hereby
consents to service of process for such Enforcement Proceeding and to appear in
any such Enforcement Proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and Indemnitee.
6. Change in Control. The Company agrees that if there is a Change in
Control of the Company, other than a Change in Control which has been approved
by a majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control, then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under applicable law or
the Company's Certificate of Incorporation or Bylaws now or hereafter in effect
relating to indemnification for Indemnifiable Events, the Company shall seek
legal advice only from special, independent counsel selected by Indemnitee and
approved by the Company,
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which approval shall not be unreasonably withheld. Such special, independent
counsel shall not have otherwise performed services for the Company or the
Indemnitee, other than in connection with such matters, within the last five (5)
years. Such independent counsel shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an
action to determine Indemnitee's rights under this Agreement. Such counsel,
among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent the Indemnitee would be permitted to
be indemnified under applicable law. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to indemnify
fully such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
the engagement of special, independent counsel pursuant hereto.
7. Partial Indemnity. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of the
Expenses and Liabilities, but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion
thereof to which Indemnitee is entitled.
8. Non-exclusivity. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under any statute, provision of
the Company's Certificate of Incorporation or Bylaws, vote of stockholders or
disinterested directors or otherwise, both as to action in an official capacity
and as to action in another capacity while holding such office. To the extent
that a change in the DGCL permits greater indemnification by agreement than
would be afforded currently under the Company's Certificate of Incorporation and
Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change.
9. Liability Insurance. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability insurance,
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 Company
director or officer.
10. Settlement of Claims. The Company shall not be liable to indemnify
Indemnitee under this Agreement (a) for any amounts paid in settlement of any
action or claim effected without the Company's written consent, which consent
shall not be unreasonably withheld; or (b) for any judicial award if the Company
was not given a reasonable and timely opportunity, at its expense, to
participate in the defense of such action.
11. Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or on behalf of the Company or any affiliate of
the Company against Indemnitee, Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, or such longer period as may be
required by state law under the circumstances, and any claim or cause of action
of the Company or its affiliate shall be extinguished and deemed released unless
asserted by the timely
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filing of a legal action within such period; provided, however, that if any
shorter period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.
12. Amendment of this Agreement. No supplement, modification 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. Except as
specifically provided herein, no failure to exercise or any delay in exercising
any right or remedy hereunder shall constitute a waiver thereof.
13. 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
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
14. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaw, vote, agreement or otherwise) of the amounts
otherwise indemnifiable hereunder.
15. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to the
Indemnitee, 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 taken place. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director or officer of
the Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
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17. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. Notices. All notices, demands, and other communications required or
permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and addressed to the
Company at:
TurboLinux, Inc.
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Secretary
and to Indemnitee at:
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Notice of change of address shall be effective only when done in accordance
with this Section. All notices complying with this Section shall be deemed to
have been received on the date of delivery or on the third business day after
mailing.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day first set forth above.
TURBOLINUX, INC.
By:
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Xxxxxx X. Xxxxxx, Chief Executive Officer
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----------, Indemnitee
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