Exhibit 10.1
Indemnification Agreement
This indemnification agreement (the "Agreement") is made as of the ____day
of ________, ____, by and between West Marine, Inc., a Delaware corporation (the
"Company), with an address at 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx
00000, and ________________________________(the "Indemnitee"), with an address
at _____________________
W I T N E S S E T H:
WHEREAS, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for the Company's directors, officers, employees,
agents and fiduciaries, that there can be no assurance that directors' and
officers' liability insurance will continue to be available to the Company and
Indemnitee, and that it is possible that the cost of such insurance, if
obtainable, may not be acceptable to the Company; and
WHEREAS, the Company and the Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers, directors,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and the Indemnitee and other
directors, officers, employees, agents and fiduciaries of the Company may not be
willing to serve, or continue to serve, the Company or any of its subsidiaries
as an officer, director, employee, agent or fiduciary without assurances that
adequate liability insurance, indemnification or a combination thereof is, and
will continue to be, provided; and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to serve or to continue to serve the Company or any
of its subsidiaries, the Company has agreed to provide for the indemnification
and advancing of expenses to Indemnitee to the maximum extent permitted by law;
and
WHEREAS, as a result of the provision of such benefits, Indemnitee has
agreed to serve or to continue to serve as an officer, director, employee or
agent of the Company or any of its subsidiaries, and the Company desires that
Indemnitee shall be indemnified by the Company as set forth herein.
NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, the Company and Indemnitee
hereby agree as follows:
1. Definitions/Construction of Phrases. The following terms, as used
herein, shall have the following respective meanings:
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(a) "Company" shall include, in addition to the above named or any
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees, agents or fiduciaries, so that if Indemnitee is
or was a director, officer, employee, agent or fiduciary of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.
(b) "Covered Amount" means Losses and Expenses which, in type or
amount, are not insured under any directors' and officers' liability insurance
maintained by the Company from time to time.
(c) "Covered Act" means any past, present or future breach of duty,
neglect, error, misstatement, misleading statement, omission or other act done
or wrongfully attempted by Indemnitee or any of the foregoing alleged by any
claimant or any claim against Indemnitee by reason of Indemnitee at any time
being a director, officer employee, agent or fiduciary of the Company or any of
its subsidiaries or a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise at the
request of the Company, or if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, any threatened, pending or completed action,
suit, proceeding or alternative dispute resolution mechanism, or any hearing,
inquiry or investigation that Indemnitee in good faith believes might lead to
the institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or
other, by reason of (or arising in part out of) any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company an a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity, provided that a Covered Act shall specifically
exclude any Excluded Claim.
(d) "Determination" means a determination, based on the facts known at
the time, made by:
(i) An award of a neutral arbitrator selected by the parties; or
(ii) A final adjudication by a court of competent jurisdiction.
(e) "Determined" shall have a correlative meaning.
(f) "Excluded Claim" means any payment for Losses or Expenses in
connection with any claim: Based upon or attributable to Indemnitee gaining in
fact any personal profit or advantage to which Indemnitee is not entitled; or
(i) 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 and its amendments or
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similar provisions of any federal, state or local statutory
law; or
(ii) Resulting from Indemnitee's knowingly fraudulent,
deliberately dishonest or willful misconduct unless
Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best
interests of the Company as determined by (A) a majority
vote of the directors of the Company who are not parties to
such action, suit or proceeding for which indemnification is
sought, even though less than a quorum, or (B) by a
committee of such directors designated by a majority vote of
such directors, even though less than a quorum, or (C) if
there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (D) by
a vote of the holders of a majority of the Company's common
stock, excluding the shares held by Indemnitee; or
(iii) The payment of which by the Company under this Agreement is
not permitted by applicable law; or
(iv) Initiated or brought voluntarily by Indemnitee and not by
way of defense, except (A) in specific cases if the Board of
Directors has approved the initiation or bringing of such
claim, or (B) as otherwise required under Section 145 of the
Delaware General Corporation Law, regardless of whether
Indemnitee ultimately is determined to be entitled to
indemnification, advance Expense payment or insurance
recovery, as the case may be; or
(v) In which any Expenses incurred by the Indemnitee with
respect to actions or proceedings brought to establish or
enforce a right to indemnification under this Agreement or
any other agreement or insurance policy or under the
Company's Certificate of Incorporation or Bylaws now or
hereafter in effect relating to claims for Covered Acts, if
a court of competent jurisdiction makes a Determination that
each of the material assertions made by the Indemnitee in
such proceeding was not made in good faith or was frivolous;
or
(vi) Which are not within the Covered Amount, i.e., which are
insured in type and amount under any directors' and
officers' liability insurance maintained by the Company from
time to time.
(g) "Expenses" mean any and all expenses, including attorneys' fees
and all other costs, expenses and obligations incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in, any action,
suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry,
judicial or administrative proceedings (including an action by or in the right
of the Company), whether civil or criminal, or appeals and costs of attachment
or similar bonds or investigation of a claim or claims made or threatened
against Indemnitee for any Covered Act, and any federal, state, local or foreign
taxes imposed on the Indemnitee as a result of the actual or deemed receipt of
any payments under this Agreement, including all interest, assessments and other
charges paid or payable in connection with or in respect of such expenses.
(h) "Loss" means any amount which Indemnitee is legally obligated to
pay as a result of a claim or claims made against him for Covered Acts
including, without limitation, damages, judgments, fines penalties and amounts
paid in settlement (if such settlement is approved in
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advance by the Company, which approval shall not be unreasonably withheld) of a
Covered Act.
2. Indemnification.
(a) The Company shall indemnify, defend Indemnitee and hold Indemnitee
harmless to the fullest extent permitted by law from the Covered Amount of any
and all Losses and Expenses, subject, in each case, to the further provisions of
this Agreement. In the event of any change after the date of this Agreement in
any applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change.
(b) The Company agrees that if there is a change in control of the
Company (other than a change in control which has been approved by a majority of
the Company's Board of Directors who were directors immediately prior to such
change in control) then with respect to all matters thereafter arising
concerning the rights of Indemnitee to payments of Losses and/or Expenses under
this Agreement or any other agreement or under the Company's Certificate of
Incorporation or Bylaws as now or hereafter in effect, independent legal
counsel, among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent Indemnitee would be permitted to be
indemnified under applicable law and the Company agrees to abide by such
opinion. The Company agrees to pay the reasonable fees of the independent legal
counsel referred to above and to fully indemnify such counsel against any and
all expenses (including reasonable attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
(c) Notwithstanding any other provision of this Agreement other than
Paragraph 10 hereof, to the extent that Indemnitee has been successful on the
merits or otherwise including, without limitation, the dismissal of an action
without prejudice, in defense of any action, suit, proceeding, inquiry or
investigation referred to in Paragraph (2) (a) hereof or in the defense of any
claim, issue or matter therein, Indemnitee shall be indemnified against all
Expenses incurred by Indemnitee in connection therewith.
(d) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of a Loss or Expense
incurred in connection with any claim, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such Loss or Expense to which Indemnitee is entitled.
3. Excluded Coverage. The Company shall have no obligation to indemnify
Indemnitee for and defend and hold Indemnitee harmless from any Loss or Expense
which has been Determined to constitute an Excluded Claim.
4. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of the commencement
of or the threat of commencement of any action, suit or proceeding, Indemnitee
shall, if indemnification with respect thereto may be sought from the Company
under this Agreement, notify the Company of the commencement thereof. Notice to
the Company shall be directed to the Chief Executive Officer of the Company at
the address set forth in this Agreement (or such other address as the Company
shall designate in writing to, Indemnitee). In addition, Indemnitee shall give
the Company such information and cooperation as it may reasonably require and as
shall be
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within Indemnitee's power.
(b) If, at the time of the receipt of such notice, the Company has
directors' and officers' liability insurance in effect, the Company shall give
prompt notice of the commencement of such action, suit or proceeding to the
insurers 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
Losses and Expenses payable as a result of such action, suit or proceeding in
accordance with the terms of such policies.
(c) To the extent the Company does not, at the time of the
commencement of or the threat of commencement of such action, suit or
proceeding, have applicable directors' and officers' liability insurance, or if
a Determination is made that any Expenses arising out of such action, suit or
proceeding will not be payable under the directors' and officers' liability
insurance then in effect, the Company shall be obligated to pay the Expenses of
any such action, suit or proceeding in advance of the final disposition thereof;
and the Company, if appropriate, shall be entitled to assume the defense of such
action, suit or proceeding with counsel reasonably satisfactory to Indemnitee,
upon the delivery to Indemnitee of written notice of its election to so do.
After delivery of such notice, the Company will not be liable to Indemnitee
under this Agreement for any legal or other Expenses subsequently incurred by
Indemnitee in connection with such defense other than reasonable Expenses of
investigation, provided that Indemnitee shall have the right to employ its
counsel in any such action, suit or proceeding, but the fees and expenses of
such counsel incurred after delivery of notice from the Company of its
assumption of such defense shall be at Indemnitee's expense, provided further
that if (i) the employment of counsel by Indemnitee has been previously
authorized by the Company, (ii) Indemnitee shall have reasonably concluded,
based upon a written opinion of independent legal counsel, that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense, (iii) the Company shall not, in fact, have employed counsel to
assume the defense of such action, or (iv) Indemnitee necessarily had to consult
with counsel or counsel had to act on Indemnitee's behalf prior to the time that
Company-retained outside counsel was able to act, in each of which cases the
fees and expenses of counsel shall be at the expense of the Company. The Company
will not be entitled to assume the defense of any such action, suit or
proceedings as to which Indemnitee shall have made the conclusion described in
(ii) above.
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made within thirty (30) days of
Indemnitee's written request therefore, unless a Determination is made that the
claims giving rise to Indemnitee's request are Excluded Claims or otherwise not
payable under this Agreement, provided that, all payments on account of the
Company's obligations to pay Expenses under Paragraph 4(c) of this Agreement
prior to the final disposition of an action, suit or proceeding shall be made as
soon as practicable but in no event later than five (5) days after Indemnitee's
written request therefor and such obligation shall not be subject to any such
Determination but shall be subject to Paragraph 4(e) of this Agreement.
(e) Indemnitee agrees that Indemnitee will reimburse the Company for
all Losses and Expenses paid by the Company in connection with any action, suit
or proceeding against Indemnitee in the event and only to the extent that a
Determination shall have been made by a court in a final adjudication or by
final and binding arbitration from which there is no further right of appeal
that the Indemnitee is not entitled to be indemnified by the Company for such
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Expenses because the claim is an Excluded Claim or because Indemnitee is
otherwise not entitled to payment under this Agreement pursuant to the Company's
Bylaws or otherwise, including applicable provisions of the Delaware General
Corporation Law. Indemnitee's obligation to reimburse the Company for any Losses
or Expenses shall be unsecured and no interest shall be charged thereon.
(f) For purposes of this Agreement, the termination of any claim 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 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.
5. Settlement. The Company shall have no obligation to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any action, suit or
proceeding effected without the Company's prior written consent. The Company
shall not settle any claim in any manner which would impose any obligation on
Indemnitee without Indemnitee's written consent. Neither the Company nor
Indemnitee shall unreasonably withhold or delay their consent to any proposed
settlement.
6. Rights Not Exclusive. The rights provided hereunder shall not be deemed
exclusive of any other rights to which the Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any other agreement, any
vote of stockholders or disinterested directors, the Delaware General
Corporation Law or otherwise, both as to action in Indemnitee's official
capacity and as to action in any other capacity by holding such office, and
shall continue after the Indemnitee ceases to serve the Company as an officer,
director, employee or agent.
7. Enforcement.
(a) In any action for indemnification, the burden of proving that
indemnification is not required under this Agreement shall be on the Company.
(b) In the event that any action is instituted by Indemnitee under
this Agreement, or to enforce or interpret any of the terms of this Agreement,
Indemnitee shall be entitled to be paid all Expenses, including all court and
arbitrator's costs and expenses and reasonable counsel fees, incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of such Expenses, unless the court or an arbitrator 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) Indemnitee may elect to submit any action under this Agreement to
final and binding arbitration. Any reference to arbitration herein shall include
the rights of the parties to move to vacate or confirm an arbitrator's award
under California law.
8. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that
in certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
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Company's right under public policy to indemnify Indemnitee.
9. Liability Insurance. To the extent that the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
11. 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 1aw, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.
12. Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
13. Continuation of Indemnification. All agreements and obligations of the
Company contained herein shall continue during the period that Indemnitee is an
officer, director, employee or agent of the Company (or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Indemnitee shall be subject to any possible Loss
or Expense by reason of the fact that Indemnitee was an officer, director,
employee or agent of the Company or serving in any other capacity referred to
above.
14. 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 Indemnitee, who shall execute all documents and take all actions
reasonably requested by the Company to implement such right of subrogation.
15. 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. In the event that the
Company or any of its assets are sold or in the event that Company is merged
with any other entity, the Company shall require and cause any successor
(whether direct or indirect by purchase, merger, consolidation or otherwise) to
all, substantially all, or a substantial part, of the business or assets of the
Company, by written agreement in form and substance satisfactory to
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Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent or fiduciary (as applicable) of the Company or of any other
enterprise at the Company's request.
16. Amendment. No amendment, modification termination or cancellation of
this Agreement shall be effective unless made in writing signed by each 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 provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
18. Notice. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the opening Paragraph of this
Agreement, or as subsequently modified by written notice.
19. Integration and Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and supercedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto.
20. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.
21. Authorization and Approval. The Company confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it under this
Agreement to induce Indemnitee to become and continue as a director, officer,
employee or agent of the Company, and acknowledges that Indemnitee is relying
upon the full enforcement and binding nature of this Agreement in accepting and
continuing in such capacity. The Company represents and warrants to Indemnitee
that all requisite corporate action has or will be taken promptly to authorize
and approve this Agreement.
IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement
as of the day and year first above written.
WEST MARINE, INC.
INDEMNITEE
--------------------------
By: --------------------------
Its: Print Name:
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