INDEMNIFICATION AGREEMENT
Exhibit
10.3
THIS
INDEMNIFICATION AGREEMENT (“Agreement”)
is
made as of the date set forth on the signature page to this Agreement, by and
between Xxxxxxxxxx, a California corporation (“Company”),
and
the individual named on the signature page to this Agreement (“Indemnitee”),
an
officer and/or a director of the Company.
R
E C I T A L S
A. The
Indemnitee is concerned about serving, or continuing to serve, the Company
as an
officer and/or a director 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.
B. The
Company has investigated whether additional protective measures are warranted
to
adequately protect its directors and officers against various legal risks and
potential liabilities to which such individuals are subject due to their
position with the Company and has concluded that additional protective measures
are warranted.
C. In
order
to induce and encourage highly experienced and capable persons such as the
Indemnitee to serve, or to continue to serve, as an officer and/or a director,
the Board of Directors of the Company has determined, after due consideration,
that this Agreement is not only reasonable and prudent, but necessary to promote
and ensure the best interests of the Company and its shareholders.
D. The
Company wishes to provide in this Agreement for the indemnification of and
the
advancing of expenses to the Indemnitee to the fullest extent permitted by
law
and as provided for in this Agreement.
E. The
Company’s execution of this Agreement has been approved by the Board of
Directors of the Company.
F. Indemnitee
has indicated to the Company that but for the Company’s agreement to enter into
this Agreement, Indemnitee would decline to serve, or to continue to serve,
as
an officer and/or a director of the Company.
A
G R E E M E N T
NOW,
THEREFORE, in consideration of the recitals set forth above and the continued
services of the Indemnitee, and as an inducement to the Indemnitee to serve,
or
to continue to serve, as an officer and/or a director of the Company, the
Company and the Indemnitee do hereby agree as follows:
1. Definitions.
As used
in this Agreement, the following terms shall have the meanings set forth
below:
(a) “Proceeding”
shall
mean any threatened, pending or completed action, suit or proceeding, whether
brought in the name of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, by reason of the fact that
the
Indemnitee is or was an officer and/or a director of the Company, or is or
was
serving at the request of the Company as a director, officer, employee or agent
of another enterprise, whether or not he is serving in such capacity at the
time
any liability, Expense (as defined in subparagraph (b) below) or Loss (as
defined in subparagraph (c) below) is incurred for which indemnification or
advancement of Expenses or Losses is to be provided under this
Agreement.
(b) “Expenses”
means
all costs, charges and expenses incurred in connection with a Proceeding,
including, without limitation, attorneys’ fees, disbursements and retainers,
accounting and witness fees, travel and deposition costs, expenses of
investigations, judicial or administrative proceedings or appeals, and any
expenses of establishing a right to indemnification pursuant to this Agreement
or otherwise, including reasonable compensation for time spent by the Indemnitee
in connection with the investigation, defense or appeal of a Proceeding or
action for indemnification for which he is not otherwise compensated by the
Company or any third party; provided,
however,
that
the term “Expenses”
does
not include Losses.
(c) “Losses”
means
any amount which Indemnitee pays or is obligated to pay in connection with
a
Proceeding, including, without limitation, (i) the amount of damages, judgments,
amounts paid in settlement, fines or penalties relating to any Proceeding,
(ii)
sums paid in respect of any deductible under any applicable D&O Insurance
(as defined in Section 12(a))
or
(iii) excise taxes under the Employee Retirement Income Security Act of 1974,
as
amended (“ERISA”),
relating to any Proceeding, either of which are actually levied against the
Indemnitee or paid by or on behalf of the Indemnitee; provided,
however,
that
the term “Losses”
does
not include Expenses.
2. Agreement
to Serve.
The
Indemnitee agrees to continue to serve as an officer and/or a director of the
Company at the will of the Company for so long as Indemnitee is duly elected
or
appointed or until such time as Indemnitee tenders a resignation in writing
or
is terminated as an officer and/or removed as a director by the Company. Nothing
in this Agreement shall be construed to create any right in Indemnitee to
continued employment with the Company or any subsidiary or affiliate of the
Company. Nothing in this Agreement shall affect or alter any of the terms of
any
otherwise valid employment agreement or other agreement between Indemnitee
and
the Company relating to Indemnitee’s conditions and/or terms of employment or
service.
3. Indemnification
in Third Party Actions.
The
Company shall indemnify the Indemnitee in accordance with the provisions of
this
Section 3
if the
Indemnitee is a party to or threatened to be made a party to or is otherwise
involved in any Proceeding (other than a Proceeding by or in the right of the
Company to procure a judgment in its favor), by reason of the fact that the
Indemnitee is or was an officer and/or a director of the Company, or is or
was
serving at the request of the Company as a director, officer, employee or agent
of another enterprise, or by reason of anything done or not done by Indemnitee
in any such capacity, against all Expenses and Losses actually and reasonably
incurred by the Indemnitee in connection with the defense or settlement of
such
Proceeding, to the fullest extent permitted by California law, whether or not
the Indemnitee was the successful party in any such Proceeding; provided,
however,
that
any settlement shall be approved in writing by the Company.
-2-
4. Indemnification
In Proceedings By or In the Right of the Company.
The
Company shall indemnify the Indemnitee in accordance with the provisions of
this
Section 4 if the Indemnitee is a party to or threatened to be made a party
to or is otherwise involved in any Proceeding by or in the right of the Company
to procure a judgment in its favor by reason of the fact that the Indemnitee
is
or was an officer and/or a director of the Company, or is or was serving at
the
request of the Company as a director, officer, employee or agent of another
enterprise, or by reason of anything done or not done by Indemnitee in any
such
capacity, against all Expenses actually and reasonably incurred by Indemnitee
in
connection with the defense or settlement of such Proceeding, to the fullest
extent permitted by California law, whether or not the Indemnitee is the
successful party in any such Proceeding. The Company shall further indemnify
the
Indemnitee for any Losses actually and reasonably incurred by the Indemnitee
in
any such Proceeding described in the immediately preceding sentence, provided
that either (i) the Proceeding is settled with the approval of a court of
competent jurisdiction, or (ii) indemnification of such amounts is otherwise
ordered by a court of competent jurisdiction in connection with such
Proceeding.
5. Conclusive
Presumption Regarding Standard of Conduct.
The
Indemnitee shall be conclusively presumed to have met the relevant standards
of
conduct required by California for indemnification pursuant to this Agreement,
unless a determination is made that the Indemnitee has not met such standards
(i) by the Board of Directors of the Company by a majority vote of a quorum
thereof consisting of directors who were not parties to such Proceeding, (ii)
by
the shareholders of the Company by a majority vote, or (iii) in a written
opinion of the Company’s independent legal counsel. Further, the termination of
any Proceeding by judgment, order, settlement, conviction or upon a plea of
nolo
contendere or its equivalent, shall not, of itself, rebut such presumption
that
the Indemnitee met the relevant standards of conduct required for
indemnification pursuant to this Agreement.
6. Indemnification
of Expenses of Successful Party.
Notwithstanding any other provision of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of any
Proceeding or in defense of any claim, issue or matter therein, the Indemnitee
shall be indemnified against all Expenses incurred in connection therewith
to
the fullest extent permitted by California law. For purposes of this paragraph,
the Indemnitee will be deemed to have been successful on the merits if the
Proceeding is terminated by settlement or is dismissed with
prejudice.
7. Advances
of Expenses.
The
Expenses incurred by the Indemnitee in connection with any Proceeding shall
be
paid by the Company in advance of the final disposition of the Proceeding at
the
written request of the Indemnitee, and within ten (10) business days of such
request, to the fullest extent permitted by California law; provided that the
Indemnitee shall undertake in writing to repay such amount to the extent that
it
is ultimately determined that the Indemnitee is not entitled to indemnification
by the Company.
8. Partial
Indemnification.
If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for some or a portion of the Expenses or Losses actually and
reasonably incurred by Indemnitee in the investigation, defense, appeal or
settlement of any Proceeding but not, however, for the total amount thereof,
the
Company shall nevertheless indemnify the Indemnitee for the portion of such
Expenses and Losses to which the Indemnitee is entitled.
-3-
9. Indemnification
Procedure; Determination of Right to Indemnification.
(a) Promptly
after receipt by the Indemnitee of notice of the commencement of any Proceeding
with respect to which the Indemnitee intends to claim indemnification or
advancement of Expenses or Losses pursuant to this Agreement, the Indemnitee
will notify the Company of the commencement thereof. The omission to so notify
the Company will not relieve the Company from any liability which it may have
to
the Indemnitee under this Agreement or otherwise.
(b) The
Company shall give prompt notice of the commencement of such Proceeding to
the
insurers on the D&O Insurance 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 Proceeding in accordance
with the terms of such policies.
(c) If
a
claim for indemnification or advancement of Expenses or Losses under this
Agreement is not paid by or on behalf of the Company within thirty (30) days
of
receipt of written notice thereof, Indemnitee may at any time thereafter bring
suit in any court of competent jurisdiction against the Company to enforce
the
right to indemnification or advancement of Expenses or Losses provided by this
Agreement. 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 Indemnitee has failed
to
meet the standard of conduct that makes it permissible under California law
for
the Company to indemnify the Indemnitee for the amount claimed. The burden
of
proving by clear and convincing evidence that indemnification or advancement
of
Expenses or Losses is not appropriate shall be on the Company. The failure
of
the directors or shareholders of the Company or independent legal counsel to
have made a determination prior to the commencement of such Proceeding that
indemnification or advancement of Expenses or Losses are proper in the
circumstances because the Indemnitee has met the applicable standard of conduct
shall not be a defense to the action or create a presumption that the Indemnitee
has not met the applicable standard of conduct.
(d) The
Indemnitee’s Expenses incurred in connection with any action concerning
Indemnitee’s right to indemnification or advancement of Expenses or Losses in
whole or in part pursuant to this Agreement shall also be indemnified in
accordance with the terms of this Agreement by the Company regardless of the
outcome of such action, unless a court of competent jurisdiction determines
that
each of the material claims made by the Indemnitee in such action was not made
in good faith or was frivolous.
-4-
(e) With
respect to any Proceeding for which indemnification is requested, the Company
will be entitled to participate therein at its own expense and, except as
otherwise provided below, to the extent that it may wish, the Company may assume
the defense thereof, with counsel satisfactory to the Indemnitee. After notice
from the Company to the Indemnitee of its election to assume the defense of
a
Proceeding, the Company will not be liable to the Indemnitee under this
Agreement for any Expenses subsequently incurred by the Indemnitee in connection
with the defense thereof, other than reasonable costs of investigation or as
otherwise provided below. The Company shall not settle any Proceeding in any
manner that would impose any penalty or limitation on the Indemnitee, or include
an admission of wrongdoing by the Indemnitee, without the Indemnitee’s prior
written consent. The Indemnitee shall have the right to employ counsel in any
such Proceeding, but the Expenses of such counsel incurred after notice from
the
Company of its assumption of the defense thereof and the Indemnitee’s approval
of the Company’s counsel shall be at the expense of the Indemnitee, unless (i)
the employment of counsel by the Indemnitee has been 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 the defense
of a Proceeding, or (iii) the Company shall not in fact have employed counsel
to
assume the defense of a Proceeding, in each of which cases the Expenses of
the
Indemnitee’s counsel shall be at the expense of the Company. Notwithstanding the
foregoing, the Company shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of the Company or as to which the Indemnitee
has concluded that there may be a conflict of interest between the Company
and
the Indemnitee.
(f) With
respect to any Proceeding that is other than by or in the right of the Company,
the Indemnitee may require the Company to defend him. In the event that
Indemnitee requires the Company to defend him, the Company shall promptly
undertake to defend any such Proceeding at the Company’s sole expense, employing
counsel satisfactory to the Indemnitee.
(g) If
the
Company fails timely to defend, contest or otherwise protect the Indemnitee
against any Proceeding which is not by or in the right of the Company, the
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 Expenses and Losses and amounts paid as a result
thereof.
10. Retroactive
Effect.
Notwithstanding anything to the contrary contained in this Agreement, the
Company’s obligation to indemnify the Indemnitee and advance Expenses and Losses
to the Indemnitee shall be deemed to be in effect since the date that the
Indemnitee first commenced serving in any of the capacities covered by this
Agreement.
11. Limitations
on Indemnification.
No
payments pursuant to this Agreement shall be made by the Company:
(a) to
indemnify or advance Expenses to the Indemnitee with respect to actions
initiated or brought voluntarily by the Indemnitee and not by way of defense,
except with respect to actions brought to establish or enforce a right to
indemnification or advancement of Expenses or Losses under this Agreement or
any
other statute or law or otherwise as required under California law, but such
indemnification or advancement of Expenses or Losses may be provided by the
Company in specific cases if approved by the Board of Directors by a majority
vote of a quorum thereof consisting of directors who are not parties to such
action;
-5-
(b) to
indemnify the Indemnitee for any Expenses or Losses for which payment is
actually made to the Indemnitee under a valid and collectible insurance policy,
except in respect of any excess beyond the amount paid under such
insurance;
(c) to
indemnify the Indemnitee for any Expenses or Losses for which the Indemnitee
has
been or is indemnified by the Company or any other party otherwise than pursuant
to this Agreement; or
(d) to
indemnify the Indemnitee for any Expenses or Losses sustained in any Proceeding
for an accounting of profits made from the purchase or sale by Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of
the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder or similar provisions of any federal, state or local statutory
law.
12. Maintenance
of Directors’ and Officers’ Insurance.
(a) Upon
the
Indemnitee’s request, the Company hereby agrees to maintain in full force and
effect, at its sole cost and expense, directors’ and officers’ liability
insurance (“D&O
Insurance”)
by an
insurer, in an amount and with a deductible reasonably acceptable to the
Indemnitee, covering the period during which the Indemnitee is serving in any
of
the capacities covered by this Agreement and for so long thereafter as the
Indemnitee shall be subject to any possible claim or threatened, pending or
completed Proceeding by reason of the fact that the Indemnitee is serving in
any
of the capacities covered by this Agreement. Upon receipt of any D&O
Insurance policy, or any endorsement to any D&O Insurance policy, the
Company shall promptly provide the Indemnitee with a complete copy
thereof.
(b) In
all
policies of D&O Insurance to be maintained pursuant to Section 12(a),
the
Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee with the greatest rights and benefits available under such
policy.
(c) The
Company will, within ten (10) days of request of the Indemnitee and upon each
subsequent renewal date of the D&O Insurance, furnish the Indemnitee with a
certificate of insurance naming the Indemnitee as an insured and otherwise
meeting the requirements of this Section 12
and will
not make any changes to such insurance without the prior consent of the
Indemnitee, which consent will not be unreasonably withheld. Upon receipt by
the
Company of notice, in any form, of cancellation or termination or proposed
cancellation or termination or any restriction or limitation of any D&O
Insurance, the Company shall, within five (5) days of receipt of such notice,
provide like notice to the Indemnitee.
-6-
(d) Any
approval by the Indemnitee of the D&O Insurance will not release the Company
of its obligations under this Agreement.
13. Indemnification
Hereunder Not Exclusive; Term.
The
indemnification and advancement of Expenses and Losses provided by this
Agreement shall not be deemed to limit or preclude any other rights to which
the
Indemnitee may be entitled under the Company’s articles of incorporation or
bylaws, any agreement, any vote of shareholders or disinterested directors
of
the Company, California law, or otherwise. The indemnification under this
Agreement shall continue as to the Indemnitee, even though he may have ceased
to
be an officer and/or a director of the Company, for so long as the Indemnitee
shall be subject to any possible Proceeding.
14. Primary
Indemnity.
The
Company’s obligation to provide indemnification to the Indemnitee under this
Agreement is primary to any other source of indemnification or insurance that
may be available to the Indemnitee for matters covered by the indemnification
under this Agreement. The Company agrees that it shall have no right of
subrogation with respect to any such other right of recovery of the
Indemnitee.
15. Successors
and Assigns.
This
Agreement shall be binding upon, and shall inure to the benefit of (i) the
Indemnitee and Indemnitee’s heirs, devisees, legatees, personal representatives,
executors, administrators and assigns and (ii) the Company and its successors
and assigns, including any transferee of all or substantially all of the
Company’s assets and any successor or assign of the Company by merger or by
operation of law.
16. Severability.
Each
provision of this Agreement is a separate and distinct agreement and independent
of the other, so that if any provision hereof shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not
affect the validity or enforceability of the other provisions hereof. To the
extent required, any provision of this Agreement may be modified by a court
of
competent jurisdiction to preserve its validity and to provide the Indemnitee
with the broadest possible indemnification and advancement of Expenses and
Losses permitted under California law. If this Agreement or any portion thereof
is invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify Indemnitee as to Expenses and Losses with
respect to any Proceeding to the fullest extent permitted by any applicable
portion of this Agreement that shall not have been invalidated or by any
applicable provision of California law or any other applicable law.
17. Headings.
The
headings used herein are for convenience only and shall not be used in
construing or interpreting any provision of the Agreement.
18. Governing
Law.
This
Agreement shall be construed, interpreted and enforced in accordance with the
laws of the State of California, without giving effect to the principles of
conflicts of laws thereunder which would specify the application of the law
of
another jurisdiction.
19. Amendments
and Waivers.
No
amendment, waiver, modification, termination or cancellation of this Agreement
shall be effective unless in writing and signed by the party against whom
enforcement is sought. The indemnification rights afforded to the Indemnitee
hereby are contract rights and may not be diminished, eliminated or otherwise
affected by amendments to the Company’s articles of incorporation, bylaws or
agreements, including any D&O Insurance policies, whether the alleged
actions or conduct giving rise to indemnification hereunder arose before or
after any such amendment. No waiver of any provision of this Agreement shall
be
deemed or shall constitute a waiver of any other provision hereof, whether
or
not similar, nor shall any waiver constitute a continuing waiver.
-7-
20. Counterparts.
This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each party and delivered to the
other.
21. Notices.
All
notices and communications shall be in writing and shall be deemed duly given
on
the date of delivery or on the date of receipt of refusal indicated on the
return receipt if sent by first class mail, postage prepaid, registered or
certified, return receipt requested, to the following addresses, unless notice
of a change of address is duly given by one party to the other, in which case
notices shall be sent to such changed address:
If
to the
Company:
Xxxxxxxxxx
000
Xxxxxxx Xxxx
Xxx
Xxxx
Xxxxxx, XX 00000
Attn:
Xxxxx Xxxxxxxxxx, President
with
a
copy, which shall not constitute notice to the Company, to:
Xxxxx
& Xxxxxx, LLP
000
Xxxxx
Xxxxxxxxx, Xxxxx 0000
Xxxxx
Xxxx, XX 00000
Attn:
Xxxxx X. Xxxxxxx, Esq.
If
to the
Indemnitee, to the address set forth on the signature page to this
Agreement.
22. Subject
Matter and Parties.
The
intended purpose of this Agreement is to provide for indemnification and
advancement of Expenses and Losses, and this Agreement is not intended to affect
any other aspect of any relationship between the Indemnitee and the Company
and
is not intended to and shall not create any rights in any person as a third
party beneficiary hereunder.
(Signature
page follows)
-8-
IN
WITNESS WHEREOF, the parties have executed this Agreement as of ____________,
2007.
|
“Indemnitee”
|
Signature:________________________________
Print Name:_______________________________
Address For
Notices:________________________
________________________________________
________________________________________
|
|
“Company”
|
XXXXXXXXXX,
a
California corporation
By:______________________________________
Name:____________________________________
Its:______________________________________
|
-9-
