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EXHIBIT 10.7
INDEMNIFICATION AGREEMENT
This Agreement is made as of November 30, 1995, by and between Pacific
United Group, Inc., a Delaware corporation (the "Company"), and the
undersigned, a director and/or officer of the Company or a company controlled
by or under common control with the Company ("Indemnitee"), with respect to the
following facts.
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 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.
B. The following facts contribute to unfairness to directors and
officers: (i) laws regarding the duties of directors and officers are often
ambiguous; (ii) costs of litigation may be so enormous (whether or not the case
is meritorious) that the defense and/or settlement of such litigation is often
beyond the personal resources of officers and directors; and (iii) delay in
litigation may extend the period of exposure to an officer or director until
after retirement or death, thus forcing spouses, heirs, executors or
administrators to expend funds.
C. The Company has been advised that there can be no assurance
that directors' and officers' liability insurance will be available to the
Company and Indemnitee in the future, and that the cost of such insurance, if
available, may not be acceptable to the Company.
D. Indemnitee questions the adequacy and reliability of the
protection presently afforded by the Delaware General Corporation Law, the
California General Corporation Law (together with the Delaware General
Corporation Law, the "Corporation Laws") and the Company's Certificate of
Incorporation and Bylaws, in part because certain of the indemnification
provisions of the Corporation Laws are for the most part merely permissive and
because the impact of provisions of the Company's Certificate of Incorporation
and Bylaws is presently uncertain. In addition, the Company may be subject to
the provisions of certain other states' laws under statutes relating to
"nominally foreign" or "pseudo-foreign" corporations.
E. Indemnitee currently serves as a director and/or officer of
the Company. Indemnitee is concerned about continuing to serve the Company as
a director and/or officer without assurance that indemnities available to him
are, and will be, adequate to protect him against the risks associated with his
service to the Company.
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F. The Company, in order to induce Indemnitee to continue to
serve the Company as a director and/or officer without assurance that
indemnities available to him are, and will be, adequate to protect him against
the risks associated with his service to the Company, has agreed to provide
Indemnitee with the benefits contemplated by this Agreement, which benefits are
intended to provide Indemnitee with the maximum possible protection permitted
by law.
G. As a result of the provision of such benefits and in reliance
thereon Indemnitee is continuing to serve as a director or officer.
NOW, THEREFORE, in consideration of the foregoing and the promises,
conditions, representations and warranties set forth herein, the Company and
Indemnitee hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have
the following respective meanings:
1.1 "Covered Act" means (i) any actual or alleged action
taken or attempted by Indemnitee (including, without limitation, any breach of
duty, neglect, error, misstatement, or misleading statement) in his capacity
as, or otherwise by reason of, or arising out of his being: (a) a director,
officer, employee or other agent of the Company, or (b) a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans, at
the request of the Company or (c) a director, officer, employee or agent of a
partnership which was a predecessor of the Corporation or of another enterprize
at the request of such predecessor partnership; or (ii) any inaction or
omission on Indemnitee's part while acting in any of the foregoing capacities.
For purposes solely of this Agreement, it shall be conclusively deemed between
the parties that the Indemnitee is serving at the request of the Company
whenever such director serves as an officer, director, employee or other agent
of any business entity controlling, controlled by or under common control with
the Company.
1.2 "D & O Insurance" means directors' and officers'
liability insurance with coverage sufficient to ensure performance of the
indemnification obligation of the Company hereunder issued by one or more
reputable insurers.
1.3 "Excluded Claim" means any payment for Losses or
Expenses in connection with any claim: (i) for the return by Indemnitee of any
remuneration which is illegal; or (ii) for an accounting of profits in fact
made from the purchase or sale by Indemnitee of securities of the Company
within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provisions of any state law, if the Company is in fact
entitled to recover such profits; or (iii) resulting from Indemnitee's
knowingly fraudulent, deliberately dishonest or
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intentional misconduct; or (iv) the payment of which by the Company under this
Agreement is not permitted by applicable law; or (v) initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification or
advancement of Expenses and Losses or a proceeding initiated with the approval
of a majority of the members of the Board of Directors.
Any facts pertaining to any other director, officer,
employee or agent of the Company shall not be imputed to Indemnitee for the
purpose of determining an Excluded Claim.
1.4 "Expenses" means any reasonable expenses incurred by
Indemnitee as a result of a claim or claims whether brought by or in the right
of the Company (e.g., derivatively by stockholders of the Company for the
benefit of the Company) or otherwise and whether of a civil, criminal,
administrative or investigative nature made against him for, or otherwise in
respect of, Covered Acts including, without limitation, counsel fees, costs of
bonds, and other costs of proceedings or appeals.
1.5 "Loss" means any amount which Indemnitee pays or is
obligated to pay as a result of a claim or claims whether brought by or in the
right of the Company (e.g., derivatively by stockholders of the Company for the
benefit of the Company) or otherwise and whether of a civil, criminal,
administrative or investigative nature made against him or for or otherwise in
respect of Covered Acts including, without limitation, damages, judgments, sums
paid in settlement of such claim or claims, sums paid in respect of any
deductible under any policy of D & O Insurance, and fines and penalties other
than fines and penalties for which indemnification is not permitted by
applicable law.
2. Maintenance of D & O Insurance.
2.1 The Company hereby covenants and agrees that, as long
as Indemnitee shall continue to serve as a director or officer of the Company
and thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of his services to the Company, the
Company, subject to Section 2.3 hereof, shall obtain and maintain in full force
and effect D & O Insurance.
2.2 All policies of D & O Insurance shall be written in
such a manner as to provide Indemnitee the same rights and benefits, subject to
the same limitations, as are accorded to the Company's directors or officers
most favorably insured by such policy.
2.3 The Company shall have no obligation to maintain D &
O Insurance if the Board of Directors of the Company determines in good faith
that such insurance is not reasonably available, the premium costs for such
insurance are disproportionate
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to the amount of coverage provided, or the coverage provided for such insurance
is limited by exclusions so as to provide an insufficient benefit.
3. Indemnification.
3.1 The Company, at the request of Indemnitee, shall
indemnify Indemnitee and hold him harmless to the full extent authorized or
permitted by (i) the applicable provisions of the Delaware General Corporation
Law, as the same exists or may hereafter be amended, and (ii) the applicable
provisions of the By-laws or Certificate of Incorporation of the Company.
3.2 In addition, the Company, at the request of
Indemnitee, shall indemnify Indemnitee and hold him harmless from any and all
Losses and Expenses subject, in each case, to the further provisions of this
Agreement.
3.3 If indemnification is sought by Indemnitee under this
Agreement, Indemnitee may seek such indemnification under statutory law, the
Company's Certificate of Incorporation or Bylaws, the D & O Insurance, the
provisions of Section 3.2 of this Agreement, or otherwise concurrently or in
such sequence as Indemnitee may choose, in his sole discretion.
3.4 The Company shall have no obligation to indemnify
Indemnitee for and hold him harmless from any Loss or Expense which constitutes
an Excluded Claim.
4. Indemnification Procedures.
4.1 Promptly after receipt by Indemnitee of notice of the
commencement of or the threat of commencement of any action, suit or
proceeding, Indemnitee shall notify the Company of the commencement or threat
thereof; but the omission so to notify or delay in notifying the Company will
not relieve it from any liability which it may have to Indemnitee except to the
extent that the Company is actually prejudiced by any such omission or delay.
4.2 The Company shall give prompt notice of the
commencement of such action, suit or proceeding to the insurers on the D & O
Insurance, if any, in accordance with the procedures set forth in the
respective policies in favor of Indemnitee. The Company shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such action, suit or proceeding
in accordance with the terms of such policies.
4.3 If such action, suit or proceeding is other than by
or in the right of the Company, Indemnitee may, at his option but only to the
extent such decision would not jeopardize the coverage provided by the D & 0
Insurance, if any, to the other Indemnities and/or the Company, either control
the defense
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thereof himself, require the Company to defend him, or accept the defense
provided under the D & O Insurance. If (a) Indemnitee requires the Company to
defend him, or (b) the Company does not maintain any D & O Insurance pursuant
to Section 2.3 hereof or (c) Indemnitee proceeds under the D & O Insurance but
Indemnitee determines that the insurers under the D & O Insurance are unable or
unwilling to defend, contest and protect Indemnitee adequately against any such
action, suit or proceeding, then the Company shall promptly undertake to defend
any such action, suit or proceeding, at the Company's sole cost and expense,
utilizing counsel of the Indemnitee's choice who has been approved by the
Company. If appropriate the Company shall have the right to participate in the
defense of such action, suit or proceeding.
4.4 If such action, suit or proceeding is by or in the
right of the Company, Indemnitee may, at his option, either control the defense
thereof himself or accept the defense provided under the D & O Insurance, if
any; provided, however, that Indemnitee may not control the defense himself if
such decision would jeopardize the coverage provided by the D & O Insurance, if
any, to the Company and/or the other directors and officers covered thereby.
4.5 If the Company shall fail to defend, contest or
otherwise protect Indemnitee in a timely manner against any such action, suit
or proceeding which is not by or in the right of the Company, Indemnitee shall
have the right to do so, including without limitation, the right to make any
compromise or settlement thereof, and to recover from the Company all
attorney's fees, reimbursements and all amounts paid as a result thereof.
4.6 Expenses and Losses incurred or to be incurred by
Indemnitee from time to time as a result of any actions, suit or proceeding
covered by the indemnity provisions of this Agreement (including, without
limitation, an action, suit or proceeding by or in the right of the Company)
which have not been paid by the insurers under the D & O Insurance, if any,
shall be paid by the Company within 30 days of the written request of the
Indemnitee, whether or not the Company believes that such Expenses and Losses
may constitute an Excluded Claim. At the election of Indemnitee, Indemnitee
may from time to time request the Company to advance to him funds to pay any
expenses which would be subject to reimbursement hereunder. The Company shall
provide such advances within five business days after written request thereof.
Indemnitee agrees that he will reimburse the Company for all Losses and
Expenses paid or advanced by the Company in connection with any such action,
suit or proceeding against Indemnitee in the event, and only to the extent,
that a determination shall have been made by a non appealable court order that
Indemnitee is not entitled to be indemnified by the Company for such Losses and
Expenses because the claim is an Excluded Claim or because Indemnitee is not
otherwise entitled to payment under this Agreement.
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5. Rights Not Exclusive. The protection afforded to Indemnitee
hereunder is intended to supplement the other protections to which Indemnitee
may be entitled now or hereafter under statutory law, the Company's Certificate
of Incorporation or Bylaws, the D & O Insurance, vote of stockholders or of
directors or otherwise, and all of such protections and the provisions hereof
are intended to be cumulative.
6. Settlement. Except as otherwise provided in Section 4.5,
hereof, Indemnitee shall not settle and the Company shall have no obligation to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any suit, action or proceeding without the Company's prior written consent.
The Company shall not settle any suit, action or proceeding in any manner which
would impose any obligation on Indemnitee which is not covered by
indemnification hereunder without Indemnitee's written consent. Neither the
Company nor Indemnitee shall unreasonably withhold their consent to any
proposed settlement.
7. Miscellaneous.
7.1 Notices. Any communication contemplated under this
Agreement shall be in writing and shall be effective upon personal delivery or
five days after deposit in the United States mail, postage prepaid, certified
or registered, return receipt requested, addressed as follows or to such other
address as may be specified in the same manner:
If to Company: Pacific United Group, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: President
If to Indemnitee: To the address set forth on the
signature page hereof.
7.2 Enforcement; Choice of Forum; Consent to Jurisdiction.
(a) Indemnitee's rights under this Agreement
shall be enforceable by Indemnitee only in the state courts of the State of
Delaware. The burden of proving that indemnification is not appropriate shall
be on the Company and any actual determination by the Company (including any
determination made by its Board of Directors or stockholders, or by independent
legal counsel) that Indemnitee is not entitled to indemnification hereunder
shall not be a defense to such action or create a presumption that Indemnitee
has not met the applicable standard for indemnification. If Indemnitee
commences an action to enforce this Agreement, or the Company commences an
action for an adjudication that Indemnitee is not entitled to indemnification
under this Agreement, the Company shall nevertheless be obligated, subject to
Indemnitee's obligation to reimburse the Company contained in Section 4.6
hereof, to pay
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Expenses and Losses from time to time as incurred by Indemnitee until a
determination shall have been made by a final judgment or other final
adjudication of the court that the Indemnitee is not entitled to be indemnified
by the Company for such Losses and Expenses.
(b) If any action is instituted under this
Agreement, or to enforce or interpret any of the terms of this Agreement, all
court costs and expenses, including reasonable counsel fees, incurred or to be
incurred by Indemnitee with respect to such action shall be paid by the Company
within 30 days of written request by the Indemnitee, unless and until a court
of competent jurisdiction determines that each of the material assertions made
by Indemnitee as a basis for such action were not made in good faith or were
frivolous.
(c) All agreements and obligations of the Company
contained herein shall continue during the period the Indemnitee is a director,
officer, employee or agent of the Company (or is serving at the request of the
Company as a director, officer, employee or agent of another corporation or
other enterprise) and shall continue thereafter so long as Indemnitee shall be
subject to any possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal or investigative, by reason of the fact
that Indemnitee was a director or officer of the Company or serving in any
other capacity referred to herein.
(d) The Company's indemnity obligations hereunder
shall be applicable to any and all claims made after the date hereof regardless
of when the facts upon which such claims are based occurred, including times
prior to the date hereof.
(e) The Company expressly confirms and agrees
that it has entered into this Agreement and assumed the obligations imposed on
the Company hereby, in order to induce Indemnitee to serve, or continue to
serve, as a director and/or officer of the Company, and acknowledges that
Indemnitee is relying upon this Agreement in agreeing to serve or in continuing
to serve in such capacity.
(f) The Company agrees that any action instituted
by or on behalf of the Company under this Agreement or to enforce or interpret
any provision of this Agreement on behalf of the Company shall be brought only
in the state courts of the State of Delaware. Indemnitee and the Company each
hereby consent to the jurisdiction of the state 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.
7.3 Provisions Not to Inure to Benefit of Insurers. It
is the intention of the parties in entering into this Agreement that the
insurers under the D & O Insurance, if any, shall be obligated ultimately to
pay any claims by Indemnitee which are covered by the D & O Insurance, and
nothing herein shall be
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deemed to diminish or otherwise restrict the Company's or Indemnitee's right to
proceed or collect against any insurers under the D & O Insurance or to give
such insurers any rights against the Company under or with respect to this
Agreement, including, without limitation, any right to be subrogated to
Indemnitee's rights hereunder, unless otherwise expressly agreed to by the
Company in writing and the obligation of such insurers to the Company and
Indemnitee shall not be deemed reduced or impaired in any respect by virtue of
the provisions of this Agreement.
7.4 Severability. In the event that any provision of
this Agreement is determined by a court to require the Company to do or to fail
to do any act which is in violation of applicable law, such provision shall be
limited or modified in its application to the minimum extent necessary to avoid
a violation of law and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms.
Without limiting the generality of the foregoing, if this Agreement or any
portion thereof shall be invalidated on any ground, the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated.
7.5 Partial Indemnification. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for
some or a portion of the Expenses and Losses but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such Expenses and Losses to which Indemnitee is entitled to
indemnification.
7.6 Choice of Law. The validity, construction,
performance, and enforcement of this Agreement, and each part thereof, shall be
governed by and construed in accordance with the laws of the State of Delaware,
applicable to agreements made and to be wholly performed in such state.
7.7 Successor and Assigns. This Agreement shall be (i)
binding upon all successors and assigns of the Company (including any
transferee of all or substantially all of its assets and any successor by
merger or otherwise by operation of law) and (ii) shall be binding on and inure
to the benefit of the heirs, personal representatives and estate of Indemnitee.
7.8 Amendment. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless made in writing and
signed by each of the parties hereto. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
7.9 Gender. Whenever the context so requires, the
masculine shall mean the feminine.
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IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the date and year first above written.
"Company" PACIFIC UNITED GROUP, INC.
By____________________________
"Indemnitee" ______________________________
XXXX X. XXXXXXX
Address:______________________
______________________
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