EXHIBIT 10.3
FORM OF INDEMNITY AGREEMENT
WITH DIRECTORS AND EXECUTIVE OFFICERS
This Indemnity Agreement (this "Agreement"), dated as of May 4, 2005,
is made by and between CalAmp Corp., a Delaware corporation (the "Company"),
and [_____________], a/n Director/Officer of the Company (the "Indemnitee").
RECITALS
WHEREAS, the Company is aware that competent and experienced persons
are increasingly reluctant to serve as directors or officers of corporations
unless they are protected by comprehensive liability insurance or
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that
the exposure frequently bears no reasonable relationship to the compensation
of such directors and officers; and
WHEREAS, the statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous, or
conflicting, and therefore fail to provide such directors and officers with
adequate, reliable knowledge of legal risks to which they are exposed or
information regarding the proper course of action to take; and
WHEREAS, the Board of Directors has determined that the inability to
attract and retain qualified persons as directors and officers is detrimental
to the best interests of the Company's stockholders and that the Company
should act to assure such persons that there will be adequate certainty of
protection through insurance and indemnification against risks of claims and
actions against them arising out of their service to and activities on behalf
of the Company; and
WHEREAS, the Company has adopted provisions in its By-laws providing
for indemnification of its officers and directors to the fullest extent
permitted by applicable law, and the Company wishes to clarify and enhance
the rights and obligations of the Company and Indemnitee with respect to
indemnification; and
WHEREAS, in order to induce and encourage highly experienced and
capable persons such as Indemnitee to serve and continue to serve as
directors and officers of the Company and in any other capacity with respect
to the Company, and to otherwise promote the desirable end that such persons
will resist what they consider unjustified lawsuits and claims made against
them in connection with the good faith performance of their duties to the
Company, with the knowledge that certain costs, judgments, penalties, fines,
liabilities and expenses incurred by them in their defense of such litigation
are to be borne by the Company and they will receive the maximum protection
against such risks and liabilities as may be afforded by law, the Board of
Directors of the Company has determined that the following Agreement is
reasonable and prudent to promote and ensure the best interests of the
Company and its stockholders; and
WHEREAS, the Company desires to have Indemnitee continue to serve as a
director or officer of the Company and in such other capacity with respect to
the Company as the Company may request, as the case may be, free from undue
concern for unpredictable, inappropriate or unreasonable legal risks and
personal liabilities by reason of Indemnitee acting in good faith in the
performance of Indemnitee's duty to the Company; and Indemnitee desires to
continue so to serve the Company, provided, and on the express condition,
that he or she is furnished with the indemnity set forth hereinafter;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Covered Person. For purposes of this Agreement, a
"covered person" shall include the Indemnitee and any heir, executor,
administrator or other legal representative of the Indemnitee following the
Indemnitee's death or incapacity.
(b) Expenses. For purposes of this Agreement, "expenses"
includes all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all attorneys' fees and related disbursements
and other out-of-pocket costs) actually and reasonably incurred by the
Indemnitee in connection with either the investigation, defense or appeal of
a proceeding or establishing or enforcing a right to indemnification under
this Agreement, Section 145 of the Delaware General Corporation Law (the
"DGCL") or otherwise.
(c) Proceeding. For the purposes of this Agreement,
"proceeding" means any threatened, pending, or completed action, suit or
other proceeding, whether civil, criminal, administrative, legislative,
investigative or any other type whatsoever, and including any of the
foregoing commenced by or on behalf of the Company, derivatively or
otherwise.
(d) Subsidiary. For purposes of this Agreement, "subsidiary"
means any corporation, partnership, limited liability company, trust or
similar entity of which more than 50% of the outstanding voting securities is
owned directly or indirectly by the Company, and one or more other
subsidiaries, or by one or more other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or
continue to serve the Company and/or its subsidiaries in the Indemnitee's
present capacity, so long as the Indemnitee is duly appointed or elected or
until such time as the Indemnitee tenders a written resignation, provided,
however, that, if Indemnitee is an officer of the Company, nothing contained
in this Agreement is intended to create any right to continued employment by
Indemnitee.
3. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, so long as
the Indemnitee shall continue to serve as an officer or director of the
Company or any of its subsidiaries, and thereafter so long as the Indemnitee
shall be subject to any possible proceeding by reason of such service, the
Company, subject to Section 3(b), shall use reasonable efforts to obtain and
maintain in full force and effect directors' and officers' liability
insurance ("D&O Insurance") in reasonable amounts from established and
reputable insurers.
(b) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in
good faith that such insurance is not reasonably available, the premium costs
for such insurance are disproportionate to the amount of coverage provided,
the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit, or the Indemnitee is covered by similar
insurance maintained by a subsidiary of the Company.
4. Mandatory Indemnification.
(a) Indemnification in Proceedings. In the event a covered
person was or is made a party or is threatened to be made a party to or is
involved in any proceeding, by reason of the fact that the Indemnitee is or
was a director, officer, employee or agent of the Company (including any
subsidiary or affiliate thereof or any constituent corporation or any of the
foregoing absorbed in any merger) or is or was serving at the request of the
Company (including such subsidiary, affiliate or constituent corporation) as
a director, officer, employee, agent or fiduciary of another corporation, or
of a partnership, joint venture, trust or other entity, including service
with respect to employee benefit plans, whether the basis of such proceeding
is alleged action or inaction in an official capacity as a director, officer,
employee, agent or fiduciary, or in any other capacity while serving as a
director, officer, employee, agent or fiduciary, such person shall be
indemnified and held harmless by the Company against all expenses, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise and other
taxes and penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith. Such
indemnification shall continue after the Indemnitee has ceased to serve in
such capacity and shall inure to the benefit of the Indemnitee's heirs,
executors, administrators and legal representatives; provided, however, that
except for a proceeding pursuant to Section 7 hereof, the Company shall
indemnify any such person in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board.
(b) Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, Indemnitee shall be
entitled to indemnification against all expenses actually and reasonably
incurred or suffered by Indemnitee or on Indemnitee's behalf if Indemnitee
appears as a witness or otherwise incurs legal expenses as a result of or
related to Indemnitee's service as a director or officer of the Company, in
any threatened, pending or completed legal, administrative, investigative or
other proceeding or matter to which Indemnitee neither is, nor is threatened
to be made, a party.
(c) Exception for Amounts Covered by Insurance.
Notwithstanding the foregoing, the Company shall not be obligated to
indemnify a covered person for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, forfeitures, attorneys'
fees, ERISA excise taxes or penalties, and amounts paid in settlement) that
have been paid directly to such person by D&O Insurance.
(d) Partial Indemnification. If a covered person is entitled
under any provision of this Agreement to indemnification by the Company for
some or a portion of any expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, forfeitures, attorneys'
fees, ERISA excise taxes or penalties, and amounts paid in settlement)
incurred by the Indemnitee in the investigation, defense, settlement or
appeal of a proceeding but not entitled, however, to indemnification for all
of the total amount thereof, the Company shall nevertheless indemnify such
person for such total amount except as to the portion thereof to which the
Indemnitee is not entitled.
5. Mandatory Advancement of Expenses. The Company shall pay all
expenses incurred by a covered person, or in defending any such proceeding as
such expenses are incurred in advance of final disposition of such
proceeding; provided, however, that if the DGCL so requires, the payment of
such expenses incurred in advance of the final disposition of such proceeding
shall be made upon delivery to the Company of an undertaking, by or on behalf
of such covered person, to repay all amounts so advanced if it should be
determined ultimately that such person is not entitled to the payment of such
expenses by the Company.
6. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by a covered person of notice of
the commencement of or the threat of commencement of any proceeding, such
person shall, if such person believes that indemnification with respect
thereto may be sought from the Company under this Agreement, notify the
Company of the commencement or threat of commencement thereof.
(b) If, at the time of the receipt of a notice of the
commencement of a proceeding, the Company has D&O 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 covered person, all
amounts payable as a result of such proceeding in accordance with the terms
of such policies.
(c) In the event the Company shall be obligated to advance the
expenses for any proceeding against the covered person, the Company shall be
entitled to assume the defense of such proceeding, with counsel approved by
the covered person (such approval not to be unreasonably withheld or
delayed), upon the delivery to the covered person of written notice of its
election so to do. After delivery of such notice, approval of such counsel
by the covered person and the retention of such counsel by the Company, the
Company will not be liable to the covered person under this Agreement for any
fees of counsel subsequently incurred by the covered person with respect to
the same proceeding; provided, however, that (i) the covered person shall
have the right to employ separate counsel in any such proceeding at the
covered person's expense; and (ii) if (A) the employment of counsel by the
covered person has been previously authorized by the Company, (B) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, or (C) it is determined by legal counsel for the Company and the
Indemnitee that a conflict of interest exists requiring the Indemnitee to
retain separate counsel, then the fees and expenses of the covered person's
counsel shall be at the expense of the Company.
7. Right of Indemnitee to Bring Suit. If a claim for
indemnification or advancement of expenses hereunder is not paid in full by
the Company within thirty days after a written claim has been received by the
Company, the covered person may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, the covered person shall be entitled to be paid
also the expense of prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition
where the required undertaking, if any is required, has been tendered to the
Company) that the covered person has not met the standards of conduct that
make it permissible under the DGCL for the Company to indemnify the covered
person for the amount claimed, but the burden of proving such defense shall
be on the Company. Neither (i) the failure of the Company (including the
Board, independent legal counsel or the stockholders) to have made a
determination prior to the commencement of such action that indemnification
of the covered person is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in the DGCL, nor (ii) an
actual determination by the Company (including the Board, independent legal
counsel or its stockholders) that the covered person has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the covered person has not met the applicable standard of
conduct.
8. Limitation of Actions and Release of Claims. No proceeding shall
be brought and no cause of action shall be asserted by or on behalf of the
Company or any subsidiary against the Indemnitee, the Indemnitee's spouse,
heirs, estate, executors or administrators after the expiration of one year
from the act or omission of the Indemnitee upon which such proceeding is
based; provided, however, that in a case where the Indemnitee fraudulently
conceals the facts underlying such cause of action, no proceeding shall be
brought and no cause of action shall be asserted after the expiration of one
year from the earlier of (i) the date the Company or any subsidiary of the
Company discovers such facts, or (ii) the date the Company or any subsidiary
of the Company could have discovered such facts by the exercise of reasonable
diligence. Any claim or cause of action of the Company or any subsidiary of
the Company, including claims predicated upon the negligent act or omission
of the Indemnitee, shall be extinguished and deemed released unless asserted
by filing of a legal action within such period. This Section 8 shall not
apply to any cause of action that has accrued as of the date hereof and of
which the Indemnitee is aware on the date hereof, but as to which the Company
has no actual knowledge apart from the Indemnitee's knowledge.
9. Non-exclusivity. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee or any covered person may
have under any provision of law, the Company's Certificate of Incorporation
or Bylaws, the vote of the Company's stockholders or disinterested directors,
other agreements, or otherwise, both as to action in the Indemnitee's
official capacity and to action in another capacity while occupying the
Indemnitee's position as an officer, director, employee or agent of the
Company, and the Indemnitee's right hereunder shall continue after the
Indemnitee has ceased to so act and shall inure to the benefit of any heir,
executor, administrator or other legal representative of the Indemnitee.
10. Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.
11. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (i) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, all portions of
any paragraphs of this Agreement containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal
or unenforceable) shall not in any way be affected or impaired thereby, and
(ii) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable)
shall be construed so as to give effect to Section 10 hereof.
12. Modification and Waiver. 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 provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
13. Successors and Assigns. The terms of this Agreement shall bind,
and shall inure to the benefit of, the successors and assigns of the parties
hereto.
14. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i)
upon receipt, if delivered by hand, or (ii) on the third business day after
the mailing date, if mailed by certified or registered mail with postage
prepaid. Addresses for notice to either party are as shown on the signature
page of this Agreement, or as subsequently modified by written notice.
15. Governing Law. This Agreement shall be exclusively governed by
and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed
entirely with Delaware.
16. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement.
The parties hereto have entered into this Indemnity Agreement effective as of
the date first above written.
CALAMP CORP.
By: ____________________________
Xxxx Xxxxx
President and Chief Executive Officer
Address: 0000 Xxxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
INDEMNITEE
Address:
