INDEMNITY AGREEMENT
Exhibit 10.1
This Indemnity Agreement (this “Agreement”), dated as of _, 2007, is made by
and between SuccessFactors, Inc., a Delaware corporation (the “Company”), and
, a director and/or officer of the Company (the “Indemnitee”).
RECITALS
A. 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 and/or indemnification, due to increased exposure to litigation costs and risks resulting
from their service to such corporations, and because the exposure frequently bears no reasonable
relationship to the compensation of such directors and officers;
B. Based on their experience as business managers, the Board of Directors of the Company (the
“Board”) has concluded that, to retain and attract talented and experienced individuals to serve as
officers and directors of the Company, and to encourage such individuals to take the business risks
necessary for the success of the Company, it is necessary for the Company contractually to
indemnify officers and directors and to assume for itself maximum liability for expenses and
damages in connection with claims against such officers and directors in connection with their
service to the Company;
C. Section 145 of the General Corporation Law of Delaware, under which the Company is
organized (the “Law”), empowers the Company to indemnify by agreement its officers, directors,
employees and agents, and persons who serve, at the request of the Company, as directors, officers,
employees or agents of other corporations or enterprises, and expressly provides that the
indemnification provided by the Law is not exclusive; and
D. The Company desires and has requested the Indemnitee to serve or continue to serve as a
director or officer of the Company free from undue concern for claims for damages arising out of or
related to such services to the Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions.
1.1 Agent. For the purposes of this Agreement, “agent” of the Company means any
person who is or was a director or officer of the Company or a subsidiary of the Company; or is or
was serving at the request of, for the convenience of, or to represent the interest of the Company
or a subsidiary of the Company as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or an affiliate of the Company; or was a
director or officer of a foreign or domestic corporation which was a predecessor corporation of the
Company, including, without limitation, SuccessFactors, Inc., a California corporation, or was a
director or officer of another enterprise or affiliate of the Company at the request of, for the
convenience of, or to represent the interests of such
predecessor corporation. The term “enterprise” includes any employee benefit plan of the
Company, its subsidiaries, affiliates and predecessor corporations.
1.2 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 the investigation, defense or appeal of a proceeding or establishing
or enforcing a right to indemnification or advancement of expenses under this Agreement, Section 4
or otherwise.
1.3 Proceeding. For the purposes of this Agreement, “proceeding” means any
threatened, pending or completed action, suit or other proceeding, whether civil, criminal,
administrative, investigative or any other type whatsoever.
1.4 Subsidiary. For purposes of this Agreement, “subsidiary” means any corporation of
which more than fifty percent (50%) of the outstanding voting securities is owned directly or
indirectly by the Company, by the Company and one or more of its subsidiaries or by one or more of
the Company’s subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to serve as an
agent of the Company, at the will of the Company (or under separate agreement, if such agreement
exists), in the capacity the Indemnitee currently serves as an agent of the Company, faithfully and
to the best of his ability, so long as he or she is duly appointed or elected and qualified in
accordance with the applicable provisions of the charter documents of the Company or any subsidiary
of the Company; provided, however, that the Indemnitee may at any time and for any
reason resign from such position (subject to any contractual obligation that the Indemnitee may
have assumed apart from this Agreement), and the Company or any subsidiary shall have no obligation
under this Agreement to continue the Indemnitee in any such position.
3. Directors’ and Officers’ Insurance. The Company shall, to the extent that the
Board determines it to be economically reasonable, maintain a policy of directors’ and officers’
liability insurance (“D&O Insurance”), on such terms and conditions as may be approved by the
Board.
4. Mandatory Indemnification. Subject to Section 9 below, the Company shall indemnify
the Indemnitee:
4.1 Third Party Actions. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in the right of the
Company) by reason of the fact that he is or was an agent of the Company, or by reason of anything
done or not done by him in any such capacity, against any and all expenses and liabilities of any
type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he 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 action or proceeding, had no reasonable cause to believe his conduct
was unlawful; and
4.2 Derivative Actions. If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was an agent of the Company, or by reason
of anything done or not done by him in any such capacity, against any amounts paid in settlement of
any such proceeding and all expenses actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of the Company;
except that no indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which such person shall have been finally adjudged to be liable to the
Company by a court of competent jurisdiction due to willful misconduct of a culpable nature in the
performance of his duty to the Company, unless and only to the extent that the Court of Chancery or
the court in which such proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such amounts which the Court of Chancery or such other
court shall deem proper; and
4.3 Exception for Amounts Covered by Insurance. Notwithstanding the foregoing, the
Company shall not be obligated to indemnify the Indemnitee for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) to the extent such have been paid directly to the Indemnitee by D&O
Insurance.
5. Partial Indemnification and Contribution.
5.1 Partial Indemnification. If the Indemnitee 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, ERISA excise
taxes or penalties and amounts paid in settlement) incurred by him or her in the investigation,
defense, settlement or appeal of a proceeding but is not entitled, however, to indemnification for
all of the total amount thereof, then the Company shall nevertheless indemnify the Indemnitee for
such total amount except as to the portion thereof to which the Indemnitee is not entitled to
indemnification.
5.2 Contribution. If the Indemnitee is not entitled to the indemnification provided
in Section 4 for any reason other than the statutory limitations set forth in the Law, then in
respect of any threatened, pending or completed 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 (including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred and paid or payable by the Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the one hand and the
Indemnitee on the other hand from the transaction from which such proceeding arose and (ii) the
relative fault of the Company on the one hand and of the Indemnitee on the other hand in connection
with the events which resulted in such expenses, judgments, fines or settlement amounts, as well as
any other relevant equitable considerations. The relative fault of the Company on the one hand and
of the Indemnitee on the other hand shall be determined by reference to, among other things, the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
the circumstances resulting in such
expenses, judgments, fines or settlement amounts. The Company agrees that it would not be
just and equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or any other method of allocation that does not take account of the foregoing equitable
considerations.
6. Mandatory Advancement of Expenses.
6.1 Advancement. Subject to Section 9 below and except as prohibited by law, the
Company shall advance all expenses incurred by the Indemnitee in connection with the investigation,
defense, settlement or appeal of any proceeding to which the Indemnitee is a party or is threatened
to be made a party by reason of the fact that the Indemnitee is or was an agent of the Company or
by reason of anything done or not done by him in any such capacity. The Indemnitee hereby
undertakes to promptly repay such amounts advanced only if, and to the extent that, it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified by the Company under
the provisions of this Agreement, the Certificate of Incorporation or Bylaws of the Company, the
Law or otherwise. The advances to be made hereunder shall be paid by the Company to the Indemnitee
within thirty (30) days following delivery of a written request therefor by the Indemnitee to the
Company.
6.2 Exception. Notwithstanding the foregoing provisions of this Section 6, the
Company shall not be obligated to advance any expenses to the Indemnitee arising from a lawsuit
filed directly by the Company against the Indemnitee if an absolute majority of the members of the
Board reasonably determines in good faith, within thirty (30) days of the Indemnitee’s request to
be advanced expenses, that the facts known to them at the time such determination is made
demonstrate clearly and convincingly that the Indemnitee acted in bad faith. If such a
determination is made, the Indemnitee may have such decision reviewed by another forum, in the
manner set forth in Sections 8.3, 8.4 and 8.5 hereof, with all references therein to
“indemnification” being deemed to refer to “advancement of expenses,” and the burden of proof shall
be on the Company to demonstrate clearly and convincingly that, based on the facts known at the
time, the Indemnitee acted in bad faith. The Company may not avail itself of this Section 6.2 as
to a given lawsuit if, at any time after the occurrence of the activities or omissions that are the
primary focus of the lawsuit, the Company has undergone a change in control. For this purpose, a
change in control shall mean a given person or group of affiliated persons or groups increasing
their beneficial ownership interest in the Company by at least twenty (20) percentage points
without advance Board approval.
7. Notice and Other Indemnification Procedures.
7.1 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 of the commencement or threat of commencement thereof.
7.2 If, at the time of the receipt of a notice of the commencement of a proceeding pursuant to
Section 7.1 hereof, 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 Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of
such D&O Insurance policies.
7.3 In the event the Company shall be obligated to advance the expenses for any proceeding
against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of
such proceeding, with counsel approved by the Indemnitee (which approval shall not be unreasonably
withheld), upon the delivery to the Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by the 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: (a) the Indemnitee shall have the right to employ his or her own counsel in
any such proceeding at the Indemnitee’s expense; (b) the Indemnitee shall have the right to employ
his or her own counsel in connection with any such proceeding, at the expense of the Company, if
such counsel serves in a review, observer, advice and counseling capacity and does not otherwise
materially control or participate in the defense of such proceeding; and (c) if (i) the employment
of counsel by the Indemnitee has been previously 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 any such defense or (iii) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, then the fees and expenses of the
Indemnitee’s counsel shall be at the expense of the Company.
8. Determination of Right to Indemnification.
8.1 To the extent the Indemnitee has been successful on the merits or otherwise in defense of
any proceeding referred to in Section 4.1 or 4.2 of this Agreement or in the defense of any claim,
issue or matter described therein, the Company shall indemnify the Indemnitee against expenses
actually and reasonably incurred by him or her in connection with the investigation, defense or
appeal of such proceeding, or such claim, issue or matter, as the case may be.
8.2 In the event that Section 8.1 is inapplicable, or does not apply to the entire proceeding,
the Company shall nonetheless indemnify the Indemnitee unless the Company shall prove by clear and
convincing evidence to a forum listed in Section 8.3 below that the Indemnitee has not met the
applicable standard of conduct required to entitle the Indemnitee to such indemnification.
8.3 The Indemnitee shall be entitled to select the forum in which the validity of the
Company’s claim under Section 8.2 hereof that the Indemnitee is not entitled to indemnification
will be heard from among the following, except that the Indemnitee can select a forum
consisting of the stockholders of the Company only with the approval of the Company:
(a) A quorum of the Board consisting of directors who are not parties to the proceeding for
which indemnification is being sought;
(b) The stockholders of the Company;
(c) Legal counsel mutually agreed upon by the Indemnitee and the Board, which counsel shall
make such determination in a written opinion;
(d) A panel of three arbitrators, one of whom is selected by the Company, another of whom is
selected by the Indemnitee and the last of whom is selected by the first two arbitrators so
selected; or
(e) The Court of Chancery of Delaware.
8.4 As soon as practicable, and in no event later than thirty (30) days after the forum has
been selected pursuant to Section 8.3 above, the Company shall, at its own expense, submit to the
selected forum its claim that the Indemnitee is not entitled to indemnification, and the Company
shall act in the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such claim.
8.5 If the forum selected in accordance with Section 8.3 hereof is not a court, then after the
final decision of such forum is rendered, the Company or the Indemnitee shall have the right to
apply to the Court of Chancery of Delaware, for the purpose of appealing the decision of such
forum, provided that such right is executed within sixty (60) days after the final decision
of such forum is rendered. If the forum selected in accordance with Section 8.3 hereof is a court,
then the rights of the Company or the Indemnitee to appeal any decision of such court shall be
governed by the applicable laws and rules governing appeals of the decision of such court.
8.6 Notwithstanding any other provision in this Agreement to the contrary, the Company shall
indemnify the Indemnitee against all expenses incurred by the Indemnitee in connection with any
hearing or proceeding under this Section 8 involving the Indemnitee and against all expenses
incurred by the Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the Indemnitee under this
Agreement unless a court of competent jurisdiction finds that each of the material claims and/or
defenses of the Indemnitee in any such proceeding was frivolous or not made in good faith.
9. Exceptions. Any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:
9.1 Claims Initiated by Indemnitee. To indemnify or advance expenses to the
Indemnitee with respect to proceedings or claims initiated or brought voluntarily by the Indemnitee
and not by way of defense, except with respect to proceedings specifically authorized by
the Board or brought to establish or enforce a right to indemnification and/or advancement of
expenses arising under this Agreement, the charter documents of the Company or any subsidiary or
any statute or law or otherwise, but such indemnification or advancement of expenses may be
provided by the Company in specific cases if the Board finds it to be appropriate; or
9.2 Unauthorized Settlements. To indemnify the Indemnitee hereunder for any amounts
paid in settlement of a proceeding unless the Company consents in advance in writing to such
settlement, which consent shall not be unreasonably withheld; or
9.3 Securities Law Actions. To indemnify the Indemnitee on account of any suit in
which judgment is rendered against the Indemnitee for an accounting of profits made from the
purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions
of any federal, state or local statutory law; or
9.4 Unlawful Indemnification. To indemnify the Indemnitee if a final decision by a
court having jurisdiction in the matter shall determine that such indemnification is not lawful.
In this respect, the Company and the Indemnitee have been advised that the Securities and Exchange
Commission takes the position that indemnification for liabilities arising under the federal
securities laws is against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication.
10. 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
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 his
position as an agent of the Company, and the Indemnitee’s rights hereunder shall continue after the
Indemnitee has ceased acting as an agent of the Company and shall inure to the benefit of the
heirs, executors and administrators of the Indemnitee.
11. General Provisions.
11.1 Interpretation of Agreement. It is understood that the parties hereto intend
this Agreement to be interpreted and enforced so as to provide indemnification and advancement of
expenses to the Indemnitee to the fullest extent now or hereafter permitted by law, except as
expressly limited herein.
11.2 Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever, then: (a) 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 (b) 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 the intent manifested
by the provision held invalid, illegal or unenforceable and to give effect to Section 11.1 hereof.
11.3 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.
11.4 Subrogation. In the event of full 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 documents required and shall do all acts that may be necessary or
desirable to secure such rights and to enable the Company effectively to bring suit to enforce such
rights.
11.5 Counterparts. This Agreement may be executed in one or more counterparts, which
shall together constitute one agreement.
11.6 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.
11.7 Notice. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given: (a) if delivered by hand and signed
for by the party addressee; or (b) if mailed by certified or registered mail, with postage prepaid,
on the third business day after the mailing date. Addresses for notice to either party are as
shown on the signature page of this Agreement or as subsequently modified by written notice.
11.8 Governing Law. This Agreement shall be governed exclusively by and construed
according to the laws of the State of Delaware, without giving effect to that body of laws
pertaining to conflict of laws.
11.9 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 that arises out of or relates to this Agreement.
11.10 Attorneys’ Fees. In the event Indemnitee is required to bring any action to
enforce rights under this Agreement (including, without limitation, the expenses of any Proceeding
described in Section 1.3) the Indemnitee shall be entitled to all reasonable fees and expenses in
bringing and pursuing such action, unless a court of competent jurisdiction finds each of the
material claims of the Indemnitee in any such action was frivolous and not made in good faith.
IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity Agreement effective as
of the date first written above.
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