INDEMNIFICATION AGREEMENT
EXHIBIT
10.15
THIS
INDEMNIFICATION AGREEMENT (this “Agreement”), effective as of ____________, 200_
(the “Effective Date”), is made between Digital Domain, a Delaware corporation
(the “Company”), and _______________
(the
“Indemnitee”).
WHEREAS,
it is essential to the Company to retain and attract as directors and officers
the most capable persons available; and
WHEREAS,
the Indemnitee is a director and/or officer of the Company; and
WHEREAS,
basic protection against undue risk of personal liability of the Company’s
directors and officers heretofore has been provided through insurance coverage
providing reasonable protection at reasonable cost, and the Indemnitee has
heretofore relied on the availability of such coverage, but as a result of
substantial changes in the marketplace for such insurance it has become
increasingly more difficult to obtain such insurance on terms providing
reasonable protection at reasonable cost; and
WHEREAS,
the current Amended and Restated Certificate of Incorporation of the Company
and
Amended and Restated Bylaws of the Company (collectively, the “Charter
Documents”) require the Company to indemnify and advance expenses to its
directors and officers to the fullest extent permitted by law and the Indemnitee
has been serving and continues to serve as a director and/or officer of the
Company in part in reliance on such Charter Documents; and
WHEREAS,
the current difficulty in obtaining adequate directors’ and officers’ liability
insurance coverage at a reasonable cost and uncertainties as to the availability
of indemnification created by recent court decisions have increased the risk
that the Company will be unable to retain and attract as directors and officers
the most capable persons available; and
WHEREAS,
the Board of Directors of the Company (the “Board”) has determined that the
inability of the Company to retain and attract as directors and officers
the
most capable persons available would be detrimental to the interests of the
Company and that the Company therefore should seek to assure such persons
that
adequate indemnification and insurance coverage will be available in the
future;
and
WHEREAS,
in recognition of the Indemnitee’s need for substantial protection against
personal liability in order to enhance and motivate the Indemnitee’s continued
service to the Company in an effective manner, the increasing difficulty
in
obtaining satisfactory directors’ and officers’ liability insurance coverage,
and the Indemnitee’s reliance on the Charter Documents, and in part to provide
the Indemnitee with specific contractual assurance that the protection promised
by such Charter Documents will be available to the Indemnitee (regardless
of,
among other things, any amendment to or revocation of such Charter Documents
or
any change in the composition of the Board, or certain acquisition change
in
control transactions relating to the Company), the Company wishes to provide
in
this Agreement for indemnification of and the advancing of expenses to the
Indemnitee to the fullest extent (whether partial or complete) permitted
by law
and as set forth in this Agreement, and, to the extent such insurance is
maintained, for the continued coverage of the Indemnitee under the Company’s
directors’ and officers’ liability insurance policies;
NOW,
THEREFORE, in consideration of the premises and of the Indemnitee continuing
to
serve the Company directly or, at its request, another enterprise, and intending
to be legally bound hereby, the parties hereto agree as follows:
1.
Basic
Indemnification Arrangement.
(a)
In
accordance with the provisions of the General Corporation Law of the State
of
Delaware, the Company shall, to the fullest extent legally permissible,
indemnify the Indemnitee against any and all expenses (including attorneys’
fees), judgments, fines, penalties and amounts paid in settlement actually
and
reasonably incurred by the Indemnitee in the defense or settlement of any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including any action by or in
the
right of the Company), in which the Indemnitee may be involved or with which
the
Indemnitee was, is or is threatened to be made, while in office or thereafter,
a
defendant or respondent by reason of the Indemnitee being or having been
an
officer or director of the Company, or, at the Company’s request, another
enterprise.
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(b)
If so
requested by the Indemnitee, the Company shall advance (within ten (10) business
days of such request) any and all expenses, including attorneys’ fees or other
costs, actually and reasonably paid or incurred by the Indemnitee in connection
with the defense or settlement of any such action, suit or other proceeding
(“Expenses”), to the Indemnitee (an “Expense Advance”). The Company shall, in
accordance with such request (but without duplication), either (i) pay such
Expenses on behalf of the Indemnitee, or (ii) reimburse the Indemnitee for
such Expenses. The Indemnitee’s right to an Expense Advance upon such request is
absolute and shall not be subject to any prior determination by the Company,
the
Board, or any Reviewing Party (defined below), that the Indemnitee has satisfied
any applicable standard of conduct for indemnification.
(c)
Notwithstanding anything in this Agreement to the contrary, the Indemnitee
shall
not be entitled to indemnification or advancement of Expenses pursuant to
this
Agreement in connection with any threatened, pending or completed action,
suit
or proceeding initiated by the Indemnitee unless (i) the Company has joined
in or the Board has authorized or consented to the initiation of such
threatened, pending or completed action, suit or proceeding, or (ii) the
threatened, pending or completed action, suit or proceeding is one to enforce
the Indemnitee’s rights under this Agreement, or (iii) the action, suit or
proceeding is instituted after a Change in Control (as defined below) (other
than a Change in Control approved by a majority of the directors on the Board
who were directors immediately prior to such Change in Control).
(d)
Notwithstanding the foregoing, (i) the indemnification obligations of the
Company under Section 1(a) shall be subject to the condition that a
Reviewing Party shall not have determined that the Indemnitee would not be
permitted to be so indemnified under applicable law, and (ii) the
obligation of the Company to make an Expense Advance pursuant to
Section 1(b) shall be subject to the condition that, if, when and to the
extent that a Reviewing Party determines that the Indemnitee would not be
permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by the Indemnitee (who hereby agrees to so reimburse
the Company) for all such amounts theretofore paid (it being understood and
agreed that the foregoing agreement by the Indemnitee shall be deemed to
satisfy
any requirement that the Indemnitee provide the Company with an undertaking
to
repay any Expense Advance if it is ultimately determined that the Indemnitee
is
not entitled to indemnification under applicable law); provided,
however,
that if
the Indemnitee has commenced or thereafter commences legal proceedings in
a
court of competent jurisdiction to secure a determination that the Indemnitee
should be indemnified under applicable law, any determination made by such
Reviewing Party that the Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding and the 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 lapsed). The Indemnitee’s undertaking to repay
such Expense Advances shall be unsecured and interest-free. If there has
been no
determination by a Reviewing Party within thirty (30) days after written
demand
is presented to the Company by the Indemnitee or if a Reviewing Party determines
that the Indemnitee would not be permitted to be indemnified in whole or
in part
under applicable law, the Indemnitee shall have the right to commence litigation
in any court in the States of California or Delaware having subject matter
jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to appear
in
any such proceeding. Any determination by a Reviewing Party otherwise shall
be
conclusive and binding on the Company and the Indemnitee for purposes of
this
Agreement. For the purposes of this Agreement, a “Reviewing Party” shall mean
any appropriate person or body consisting of a member or members of the Board
or
any other person or body appointed by the Board who is not a party to the
particular claim for which the Indemnitee is seeking indemnification, which
may
include independent legal counsel.
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(e)
If
there is a Change in Control (as defined below), then the acquiring or successor
Person (as defined below), as the case may be (the "Successor"), shall not
diminish or limit in any manner the indemnification rights available to the
Indemnitee immediately prior to such Change in Control, whether such rights
were
available under this Agreement, or pursuant to any other agreement, any
resolution of the Company’s shareholders or Board, any provision of the Charter
Documents, or any statute or rule of law providing for indemnification, now
or
hereafter in effect. No such Successor shall cancel, limit or in any way
diminish the rights or coverage provided to the Indemnitee pursuant to one
or
more directors' and officers' insurance policies carried by the Company
immediately prior to any such Change in Control. For the purposes of this
Agreement, the term "Change in Control" shall mean (i) the acquisition by
any
person or entity, or any group of persons or entities acting in concert (other
than one or more Investors (as such term is defined in that certain Stockholders
Agreement, dated July 21, 2006, among the Company and the other signatories
thereto) (collectively, a "Person"), of direct or indirect beneficial ownership
of 40% or more of the voting power or voting securities of the Company, (ii)
the
acquisition by any Person of direct or indirect beneficial ownership of 20%
or
more of the voting power or voting securities of the Company and the subsequent
election of a majority of the members of the Board who were not members of
the
Board for the two-year period immediately preceding their election (provided
that any such new member whose election was approved by a vote of at least
2/3
of the directors then still in office who either were directors at the beginning
of such two year period or whose election or nomination for election was
also
previously so approved shall be deemed to have been members of the Board
for
such entire two year period), (iii) a transfer of all or substantially all
of
the Company's assets to another Person who is not a wholly owned subsidiary
of
the Company, (iv) the approval of the stockholders of the Company of a complete
liquidation of the Company, or (v) the merger or consolidation of the Company
with another corporation where, as a result of such merger or consolidation,
less than 60% of the outstanding voting securities of the surviving or resulting
corporation shall then be owned by the stockholders of the Company immediately
prior to such merger or consolidation.
2. Contribution.
If the
indemnification provided for in Section 1 above for any reason is held by
a
court of competent jurisdiction to be unavailable to an Indemnitee in respect
of
any expenses, judgments, fines, penalties or amounts paid in settlement referred
to therein, then the Company, in lieu of indemnifying such Indemnitee
thereunder, shall contribute to the amount paid or payable by such Indemnitee
as
a result of such expenses, judgments, fines, penalties or amounts paid in
settlement (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Indemnitee, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Indemnitee in connection with the action or inaction which resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In connection with the registration of the Company's
securities, the relative benefits received by the Company and the Indemnitee
shall be deemed to be in the same respective proportions that the net proceeds
from the offering (before deducting expenses) received by the Company and
the
Indemnitee, in each case as set forth in the table on the cover page of the
applicable prospectus, bear to the aggregate public offering price of the
securities so offered. The relative fault of the Company and the Indemnitee
shall be determined by reference to, among other things, whether the untrue
or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or
the
Indemnitee and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Indemnitee agree that it would not be just and equitable if contribution
pursuant to this Section 2 were determined by pro rata or per capita allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
In
connection with the registration of the Company's securities, in no event
shall
Indemnitee be required to contribute any amount under this Section 2 in excess
of the lesser of (i) that proportion of the total of such losses, claims,
damages or liabilities indemnified against equal to the proportion of the
total
securities sold under such registration statement which is being sold by
such
Indemnitee or (ii) the proceeds received by such Indemnitee from its sale
of
securities under such registration statement. No person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act of 1933, as amended) shall be entitled to contribution from
any
person who was not found guilty of such fraudulent misrepresentation.
3. Other
Expenses.
The
Company shall be liable to and shall pay the Indemnitee for any and all expenses
(including attorneys’ fees) which are incurred by the Indemnitee in connection
with any action brought by the Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement or Charter Documents now or hereafter in effect relating to
indemnification and/or (ii) recovery under any directors’ and officers’
liability insurance policies maintained by the Company, regardless of whether
the Indemnitee ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be. If requested
by the Indemnitee, the Company shall promptly advance (but in no event more
than
ten (10) business days after receiving such request) any such expenses to
the
Indemnitee.
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4.
Partial
Indemnity.
If the
Indemnitee is entitled under any provision of this Agreement to indemnification
or payment by the Company for some or a portion of the Expenses, judgments,
fines, penalties and amounts paid in settlement of any threatened, pending
or
completed action, suit or proceeding but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify or pay the Indemnitee
for the portion thereof to which the Indemnitee is entitled hereunder.
5.
Burden
of Proof.
In
connection with any determination by a Reviewing Party or court of competent
jurisdiction as to whether the Indemnitee is entitled to be indemnified
hereunder the Reviewing Party or court shall presume that the Indemnitee
has
satisfied the applicable standard of conduct and is entitled to indemnification,
and the burden of proof shall be on the Company to establish, by clear and
convincing evidence, that the Indemnitee is not so entitled.
6.
No
Other Presumptions.
For
purposes of this Agreement, the termination of any claim, action, suit or
proceeding, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo
contendere,
or its
equivalent, shall not create a presumption that the Indemnitee did not meet
any
particular standard of conduct or have any particular belief or that a court
has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of a Reviewing Party to have made a determination as
to
whether the Indemnitee has met any particular standard of conduct or had
any
particular belief, nor an actual determination by a Reviewing Party that
the
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by the Indemnitee to secure
a
judicial determination that the Indemnitee should be indemnified under
applicable law, shall be a defense to the Indemnitee’s claim or create a
presumption that the Indemnitee has not met any particular standard of conduct
or did not have any particular belief.
7.
Nonexclusivity,
Etc.
The
rights of the Indemnitee hereunder shall be in addition to any other rights
the
Indemnitee may have under the Charter Documents or the General Corporation
Law
of the State of Delaware or otherwise. To the extent that a change in applicable
law (whether by statute or judicial decision) permits greater indemnification
by
agreement than would be afforded currently under the Charter Documents or
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.
8.
Liability
Insurance.
To the
extent the Company maintains an insurance policy or policies providing
directors’ and officers’ liability insurance, 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 Company director or officer.
9.
Notification,
Defense and Settlement of Claims.
(a)
Promptly after receipt by the Indemnitee of notice of the threat or commencement
of any action, suit or proceeding, the Indemnitee shall, if a claim in respect
hereof is to be made by the Indemnitee against the Company under this Agreement,
notify the Company of the threat or commencement thereof; provided, however,
that so long as the Company is not prejudiced by any delay in so notifying
the
Company, such delay shall not constitute a waiver or release by the Indemnitee
of rights hereunder.
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(b)
Except as otherwise expressly provided below, to the extent that it may wish,
the Company, jointly with any other indemnifying party similarly notified,
shall
be entitled to assume the defense thereof and to employ counsel reasonably
satisfactory to the Indemnitee. After notice from the Company to the Indemnitee
of its election to so assume the defense thereof, the Company shall 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 as otherwise provided below. The Indemnitee shall have the right
to
employ counsel of his or her own choosing in such action, suit or proceeding,
but the fees and expenses of such counsel incurred after notice from the
Company
of assumption by the Company of the defense thereof shall be at the expense
of
the Indemnitee unless (i) the employment of counsel by the Indemnitee has
been
specifically authorized by the Company, such authorization to be conclusively
established by action by disinterested members of the Board though less than
a
quorum, (ii) representation by the same counsel of both the Indemnitee and
the
Company would, in the reasonable judgment of the Indemnitee and the Company,
be
inappropriate due to an actual or potential conflict of interest between
the
Company and the Indemnitee in the conduct of the defense of such action,
such
conflict of interest to be conclusively established by an opinion of counsel
to
the Company to such effect, (iii) the counsel employed by the Company and
reasonably satisfactory to the Indemnitee has advised the Indemnitee in writing
that such counsel’s representation of the Indemnitee would likely involve such
counsel in representing differing interests which could adversely affect
the
judgment or loyalty of such counsel to the Indemnitee, whether it be a
conflicting, inconsistent, diverse or other interest or (iv) the Company
shall
not in fact have employed counsel to assume the defense of such action, in
each
of which cases the fees and expenses of counsel shall be paid by the Company.
The Company shall not be entitled to assume the defense of any action, suit
or
proceeding brought by or on behalf of the Company or as to which a conflict
of
interest has been established as provided in (ii) above. Notwithstanding
the
foregoing, if an insurance company has supplied directors’ and officers’
liability insurance covering an action, suit or proceeding, then such insurance
company shall employ counsel to conduct the defense of such action, suit
or
proceeding unless the Indemnitee and the Company reasonably concur in writing
that such counsel is unacceptable.
(c)
Notwithstanding any term to the contrary herein, the Company shall not be
liable
to indemnify the Indemnitee under this Agreement for any amounts paid in
settlement of any action or claim effected without the Company’s written
consent. The Company shall not settle any action or claim in any manner which
would impose any liability or penalty on the Indemnitee or include a statement
as to, or an admission of, fault, culpability or a failure to act, by or
on
behalf of the Indemnitee, without the Indemnitee’s prior written consent.
Neither the Company nor the Indemnitee shall unreasonably withhold consent
to
any proposed settlement.
10.
Amendments,
Etc.
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 binding unless in the form of a writing
signed by the party against whom enforcement of the waiver is sought, and
no
such waiver 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.
11.
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 the Indemnitee,
who
shall execute all papers required and shall do everything that may be necessary
or desireable to secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce such
rights.
12.
No
Duplication of Payments.
The
Company shall not be liable under this Agreement to make any payment in
connection with any claim made against the Indemnitee in connection with
any
threatened, pending or completed action, suit or proceeding to the extent
the
Indemnitee has otherwise actually received payment (under any insurance policy,
provision of a Charter Document or otherwise) of the amounts otherwise
indemnifiable hereunder.
13.
Notice.
All
notices, requests, consents or other communications under this Agreement
shall
be delivered by hand or sent by registered or certified mail, return receipt
requested, or by overnight prepaid courier, or by facsimile (receipt confirmed)
to:
|
if to the Company:
|
|
000
Xxxx Xxxxxx
Xxxxxx,
Xxxxxxxxxx 00000
Attention: Xxxxxx
X. Xxxxxxx, Vice President and General Counsel
Facsimile:
(000) 000-0000
|
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|
if to the Indemnitee:
|
|
[Name]
[Address]
[Address]
[Facsimile]
|
All
such
notices, requests, consents and other communications shall be deemed to have
been duly delivered and received three (3) days following the date on which
so mailed, or one (1) day following the date sent if sent by overnight
courier, or on the date on which delivery is made by hand or by facsimile
transmission.
14.
Binding
Effect, Etc. This
Agreement shall be effective as of the Effective Date and 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, legatees, administrators,
executors and personal and legal representatives. This Agreement shall continue
in effect regardless of whether the Indemnitee continues to serve as an officer
or director of the Company or of any other enterprise at the Company’s request.
15.
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) are held by a court of competent jurisdiction to be invalid, void
or
otherwise unenforceable in any respect, and the validity and enforceability
of
any such provision in every other respect and of the remaining provisions
hereof
shall not be in any way impaired and shall remain enforceable to the fullest
extent permitted by law.
16.
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.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
By:
_______________________________________
Name:
Title:
___________________________________________
[Name
of Indemnitee]
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