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INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made and entered into as to this ___ day of
_______ 2007 ("Agreement'), by and between TERRA SYSTEMS, INC., a Utah
corporation (the "Company"), and ______________, ("Indemnitee").
RECITALS
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law;
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining liability insurance for directors, officers and agents of a
corporation at reasonable cost;
WHEREAS, the Company and Indemnitee recognize that there has been an increase in
litigation against corporate directors, officers and agents;
WHEREAS, the Company's Certificate of Incorporation and Bylaws allow the Company
to indemnify its directors, officers and agents to the maximum extent permitted
under Utah law; and
WHEREAS, in order to induce Indemnitee to continue to serve as an officer or
director of the Company, the Company has determined and agreed to enter into
this agreement with Indemnitee
NOW, THEREFORE, in consideration for Indemnitee's services as an officer or
director of the Company, the Company and Indemnitee hereby agree as follows:
1. Definitions. For purposes of this Agreement:
1.1 "Agent'.' shall mean any person who (a) is or was a
director, officer, employee or agent of the Company or a subsidiary of the
Company whether serving in such capacity or as a director, officer, employee,
agent, fiduciary or other official of another corporation, joint venture, trust
or other enterprise at the request of, for the convenience of, or to represent
the interests of the Company or a subsidiary of the Company or (b) was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the Company or a subsidiary of the Company whether serving in
such capacity or as a director, officer, employee, agent, fiduciary or other
official of another corporation, joint venture, trust or other enterprise at the
request of, for the convenience of, or to represent the interests of such
predecessor corporation or subsidiary.
1.3 "Disinterested Director" shall mean a director of the
Company who is not and was not a party to the Proceeding for which
indemnification is being sought by Indemnitee.
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1.4 "Expenses" shall be broadly construed and shall include,
without limitation, (a) all direct and indirect costs incurred, paid or accrued,
(b) all reasonable attorneys' fees, retainers, court costs, transcripts, fees of
experts, witness fees, travel expenses, food and lodging expenses while
traveling, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service, freight or other transportation fees and expenses,
(c) all other disbursements and out-of-pocket expenses, (d) amounts paid in
settlement, to the extent not prohibited by Utah Law, and (e) reasonable
compensation for time spent by Indemnitee for which Indemnitee is otherwise not
compensated by the Company or any third party, actually and reasonably incurred
in connection with or arising out of a Proceeding, including a Proceeding by
Indemnitee to establish or enforce a right to indemnification under this
Agreement, applicable law or otherwise.
1.5 "Independent Counsef' shall mean a law firm or a member of
a law firm that neither is presently nor in the past five years has been
retained to represent: (a) the Company, an affiliate of the Company or
Indemnitee in any matter material to either party or (b) any other party to the
proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standards of professional conduct then prevailing would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee's right to indemnification under this
Agreement.
1.6 "Liabilities" shall mean liabilities of any type
whatsoever, including, but not limited to, judgments or fines, ERISA or other
excise taxes and penalties, and amounts paid in settlement (including all
interest, assessments or other charges paid or payable in connection with any of
the foregoing) actually and reasonably incurred by Indemnitee in connection with
a Proceeding.
1.7 "Utah Law" means the Utah Corporate Code as amended and in
effect from time to time or any successor or other statutes of Utah having
similar import and effect.
1.8 "Proceeding" shall mean any pending, threatened or
completed action, hearing, suit or any other proceeding, whether civil,
criminal, arbitrative, administrative, investigative or any alternative dispute
resolution mechanism, including without limitation any such Proceeding brought
by or in the right of the Company.
2. Employment Rights and Duties. Subject to any other obligations
imposed on either of the parties by contract or by law, and with the
understanding that this Agreement is not intended to confer employment rights on
either party which they did not possess on the date of its execution, Indemnitee
agrees to serve as a director or officer so long as Indemnitee is duly appointed
or elected and qualified in accordance with the applicable provisions of the
Restated Certificate of Incorporation (the "Certificate") and Bylaws (the
"Bylaws") of the Company or any subsidiary of the Company and until such time as
Indemnitee resigns or fails to stand for election or until Indemnitee's
employment terminates.
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2.1 Directors' and Officers' Insurance.
(a) The Company shall, from time to time, make the good
faith determination whether or not it is practicable for the Company to obtain
and maintain a policy or policies of insurance with reputable insurance
companies providing the officers and directors of the Company with coverage for
losses from wrongful acts, or to ensure the Company's performance of its
indemnification obligations under this Agreement. Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. Notwithstanding the foregoing, the
Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit, or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company.
(b) In all policies of director and officer liability
insurance, Indemnitee shall be named as an insured 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.
3. Indemnification. The Company shall indemnify, defend, and hold
harmless Indemnitee to the fullest extent not prohibited by Utah Law and the
provisions of the Certificate and Bylaws of the Company in effect on the date
hereof and as the Utah Law, the Certificate and Bylaws may from time to time be
amended (but, in the case of any such amendment, only to the extent such
amendment permits the Company to provide broader indemnification rights than
Utah Law, the Certificate and Bylaws permitted the Company to provide before
such amendment). The right to indemnification conferred in the Bylaws shall be
presumed to have been relied upon by Indemnitee in serving or continuing to
serve the Company as a director or officer and shall be enforceable as a
contract right. Without in any way diminishing the scope of the indemnification
provided by the Bylaws and this Section 3, the Company will indemnify Indemnitee
if and whenever Indemnitee is or was a witness, party or is threatened to be
made a witness or a party to any Proceeding, by reason of the fact that
Indemnitee is or was an Agent or by reason of anything done or not done, or
alleged to have been done or not done, by Indemnitee in such capacity, against
all Expenses and Liabilities actually and reasonably incurred by Indemnitee or
on Indemnitee's behalf in connection with the investigation, defense, settlement
or appeal of such Proceeding. In addition to, and not as a limitation of, the
foregoing, the rights of indemnification of Indemnitee provided under this
Agreement shall include those rights set forth in Sections 4,5 and 6 below.
4. Payment of Expenses.
4.1 All Expenses incurred by or on behalf of Indemnitee shall
be advanced by the Company to Indemnitee within 30 days after the receipt by the
Company of a written request for such advance which may be made from time to
time, whether prior to or after final disposition of a Proceeding (unless there
has been a final determination by a court of competent jurisdiction that
Indemnitee is not entitled to be indemnified for such Expenses). Indemnitee's
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entitlement to advancement of Expenses shall include those incurred in
connection with any Proceeding by Indemnitee seeking a determination, an
adjudication or an award in arbitration pursuant to this Agreement. The requests
shall reasonably evidence the Expenses incurred by Indemnitee in connection
therewith. Indemnitee hereby undertakes to repay the amounts advanced if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
pursuant to the terms of this Agreement.
4.2 Notwithstanding any other provision in this Agreement, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense of any Proceeding, Indemnitee shall be indemnified against all Expenses
and Liabilities actually and reasonably incurred by Indemnitee in connection
therewith.
5. Procedure for Determination of Entitlement to Indemnification.
5.1 Whenever Indemnitee believes that Indemnitee IS entitled to
indemnification pursuant to this Agreement, Indemnitee shall submit a written
request for indemnification (the "Indemnification Request") to the Company to
the attention of the President with a copy to the Secretary. This request shall
include documentation or information which is necessary for the determination of
entitlement to indemnification and which is reasonably available to Indemnitee.
Determination of Indemnitee's entitlement to indemnification shall be made no
later than 60 days after receipt of the Indemnification Request. The President
or the Secretary shall, promptly upon receipt of Indemnitee's request for
indemnification, advise the board of directors of the Company (the "Board") in
writing that Indemnitee has made such request for indemnification.
5.2 The Indemnification Request shall set forth Indemnitee's
selection of which of the following forums shall determine whether Indemnitee is
entitled to indemnification:
(a) A majority vote ofa quorum consisting of
Disinterested Directors.
(b) A written opinion of an Independent Counsel.
(c) A majority vote of the stockholders at a meeting at
which a quorum is present, with the shares owned. by the person to be
indemnified not being entitled to vote thereon.
(d) The court In which the Proceeding IS or was pending
upon application by Indemnitee.
The Company agrees to bear any and all costs and expenses
incurred by Indemnitee or the Company in connection with the determination of
Indemnitee's entitlement to indemnification by any of the above forums.
6. Presumptions and Effect of Certain Proceedings. No initial finding
by the Board, its counsel, Independent Counsel, arbitrators or the stockholders
shall be effective to deprive Indemnitee of the protection of this indemnity,
nor shall a court or other forum to which Indemnitee may apply for enforcement
of this indemnity give any weight to any such adverse finding in deciding any
issue before it. Upon making a request for indemnification, Indemnitee shall be
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presumed to be entitled to indemnification under this Agreement and the Company
shall have the burden of proof to overcome that presumption in reaching any
contrary determination. The termination of any Proceeding by judgment, order,
settlement, arbitration award or conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, (a) adversely affect the rights of
Indemnitee to indemnification except as indemnification may be expressly
prohibited under this Agreement, (b) create a presumption that Indemnitee did
not act in good faith and in a manner which Indemnitee reasonably believed to be
in or not opposed to the best interests of the Company or (c) with respect to
any criminal action or proceeding, create a presumption that Indemnitee had
reasonable cause to believe that Indemnitee's conduct was unlawful.
7. Remedies of Indemnitee in Cases of Determination not to Indemnify
or to Advance Expenses.
7.1 In the event that ( a) an initial determination is made
that Indemnitee is not entitled to indemnification, (b) advances for Expenses
are not made when and as required by this Agreement, (c) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to this Agreement or (d) Indemnitee otherwise seeks enforcement of this
Agreement, Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Utah of Indemnitee's entitlement to such
indemnification or advance. Alternatively, Indemnitee at Indemnitee's option may
seek an award in arbitration to be conducted by submitting the dispute to
Judicial Arbitration & Mediation Services, Inc. ("JAMS"). If the parties are
unable to agree on a JAMS arbitrator, the parties shall provide JAMS with a
statement of the nature of the dispute and the desired qualifications of the
arbitrator. JAMS will then provide a list of three available arbitrators. Each
party may strike one of the names on the list, and the remaining person will
serve as the arbitrator. If both parties strike the same person, JAMS will
select the arbitrator from the other two names. The arbitration award shall be
made within 90 days following the demand for arbitration. The Company shall not
oppose Indemnitee's right to seek any such adjudication or arbitration award. In
any such proceeding or arbitration Indemnitee shall be presumed to be entitled
to indemnification under this Agreement and the Company shall have the burden of
proof to overcome that presumption.
7.2 An initial determination, in whole or in part, that
Indemnitee is not entitled to indemnification shall create no presumption in any
judicial proceeding or arbitration that Indemnitee has not met the applicable
standard of conduct for, or is otherwise not entitled to, indemnification.
7.3 If an initial determination is made or deemed to have been
made pursuant to the terms of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in the absence
of (a) a misrepresentation of a material fact by Indemnitee in the request for
indemnification or (b) a specific finding (which has become final) by a court of
competent jurisdiction that all or any part of such indemnification is expressly
prohibited by law.
7.4 The Company and Indemnitee agree herein that a monetary
remedy for breach of this Agreement, at some later date, will be inadequate,
impracticable and difficult of proof, and further agree that such breach would
cause Indemnitee irreparable harm. Accordingly, the Company and Indemnitee agree
that Indemnitee shall be entitled to temporary and permanent injunctive relief
to enforce this Agreement without the necessity of proving actual damages or
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irreparable harm. The Company and Indemnitee further agree that Indemnitee shall
be entitled to such injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, without the necessity of
posting bond or other undertaking in connection therewith. Any such requirement
of bond or undertaking is hereby waived by the Company, and the Company
acknowledges that in the absence of such a waiver, a bond or undertaking may be
required by the court.
7.5 The Company shall be precluded from asserting that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable. The Company shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement and
is precluded from making any assertion to the contrary.
7.6 Expenses incurred by Indemnitee in connection with
Indemnitee's request for indemnification under, seeking enforcement of or to
recover damages for breach of this Agreement shall be borne and advanced by the
Company.
8. Other Rights to Indemnification. Indemnitee's rights of
indemnification and advancement of expenses provided by this Agreement shall not
be deemed exclusive of any other rights to which Indemnitee may now or in the
future be entitled under applicable law, the Certificate, the Bylaws, an
employment agreement, vote of stockholders or Disinterested Directors, insurance
or other financial arrangements or otherwise.
9. Limitations on Indemnification. No indemnification pursuant to
Section 3 shall be paid by the Company nor shall Expenses be advanced pursuant
to Section 3:
9.1 Insurance. To the extent that Indemnitee is reimbursed
pursuant to such insurance as may exist for Indemnitee's benefit.
Notwithstanding the availability of such insurance, Indemnitee also may claim
indemnification from the Company pursuant to this Agreement by assigning to the
Company any claims under such insurance to the extent Indemnitee is paid by the
Company. Indemnitee shall reimburse the Company for any sums Indemnitee receives
as indemnification from other sources to the extent of any amount paid to
Indemnitee for that purpose by the Company;
9.2 Section 16(b). On account and to the extent of any wholly
or partially successful claim against Indemnitee 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) or the Securities Exchange Act of
1934, as amended, and amendments thereto or similar provisions of any federal,
state or local statutory law; or
9.3 Indemnitee's Proceedings. Except as otherwise provided in
this Agreement, in connection with all or any part of a Proceeding which is
initiated or maintained by or on behalf of Indemnitee, or any Proceeding by
Indemnitee against the Company or its directors, officers, employees or other
agents, unless (a) such indemnification is expressly required to be made by Utah
Law, (b) the Proceeding was authorized by a majority of the Disinterested
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Directors or (c) such indemnification is provided by the Company, in its sole
discretion, pursuant to the powers vested in the Company under Utah Law.
10. Duration and Scope of Agreement; Binding Effect. This Agreement
shall continue so long as Indemnitee shall be subject to any possible Proceeding
subject to indemnification by reason of the fact that Indemnitee is or was an
Agent and shall be applicable to Proceedings commenced or continued after
execution of this Agreement, whether arising from acts or omissions occurring
before or after such execution. This Agreement shall be binding upon the Company
and its successors and assigns (including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business or assets of the Company) and shall inure to the benefit of Indemnitee
and Indemnitee's spouse, assigns, heirs, devisees, executors, administrators and
other legal representatives.
11. Notice by Indemnitee and Defense of Claims. Indemnitee agrees
promptly to notify the Company in writing upon being served with any summons,
citation, subpoena, complaint, indictment, information or other document
relating to any matter which may be subject to indemnification hereunder,
whether civil, criminal, arbitrative, administrative or investigative; but the
omission so to notify the Company will not relieve it from any liability which
it may have to Indemnitee if such omission does not actually prejudice the
Company's rights and, if such omission does prejudice the Company's rights, it
will relieve the Company from liability only to the extent of such prejudice;
nor will such omission relieve the Company from any liability which it may have
to Indemnitee otherwise than under this Agreement. With respect to any
Proceeding:
(a) The Company will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it
may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee. After notice from the Company to Indemnitee of its
election so to assume the defense thereof and the assumption of such defense,
the Company will not be liable to Indemnitee under this Agreement for any
attorney fees or costs subsequently incurred by Indemnitee in connection with
Indemnitee's defense except as otherwise provided below. Indemnitee shall have
the right to employ Indemnitee's counsel in such Proceeding but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof and the assumption of such defense shall be at
the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has
been authorized by the Company, (ii) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and Indemnitee in
the conduct of the defense of such action or that the Company's counsel may not
be adequately representing Indemnitee or (iii) 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 at the expense of the Company;
and
(c) The Company shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any action or claim
affected without its written consent. The Company shall not settle any action or
claim in any manner without Indemnitee's written consent. Neither the Company
nor Indemnitee will unreasonably withhold its or Indemnitee's consent to any
proposed settlement.
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11.1 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to
Indemnitee in whole or part, the Company shall, in such an event, after taking
into account, among other things, contributions by other directors and officers
of the Company pursuant to indemnification agreements or otherwise, and, in the
absence of personal enrichment, acts of intentional fraud or dishonesty or
criminal conduct on the part of Indemnitee, contribute to the payment of
Indemnitee's losses to the extent that, after other contributions are taken into
account, such losses exceed: (i) in the case of a director of the Company or any
of its subsidiaries who is not an officer of the Company or any of such
subsidiaries, the amount of fees paid to the director for serving as a director
during the 12 months preceding the commencement of the Proceeding; or (ii) in
the case of a director of the Company or any of its subsidiaries who is also an
officer of the Company or any of such subsidiaries, the amount set forth in
clause (i) plus 5% of the aggregate cash compensation paid to said director for
service in such office(s) during the 12 months preceding the commencement of the
Proceeding; or (iii) in the case of an officer of the Corporation or any of its
subsidiaries, 5% of the aggregate cash compensation paid to such officer for
service in such office(s) during the 12 months preceding the commencement of
such Proceeding.
12. Miscellaneous Provisions.
12.1 Severability: Partial Indemnity. If any provision or
provisions of this Agreement (or any portion thereof) shall be held by a court
of competent jurisdiction to be invalid, illegal or unenforceable for any reason
whatever: (a) such provision shall be limited or modified in its application to
the minimum extent necessary to avoid the invalidity, illegality or
unenforceability of such provision; (b) the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby; and (c) to the fullest extent possible, the
provisions of this Agreement shall be construed so as to give effect to the
intent manifested by the provision (or portion thereof) held invalid, illegal or
unenforceable. If Indemnitee is entitled under any provision of this Agreement
to indemnification by the Company for some or a portion of any Expenses or
Liabilities of any type whatsoever incurred by Indemnitee in the investigation,
defense, settlement or appeal of a Proceeding but not entitled to all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
such total amount except as to the portion thereof for which it has been
determined pursuant to Section 5 hereof that Indemnitee is not entitled.
12.2 Identical Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.
12.3 Interpretation of Agreement. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification to Indemnitee to the fullest extent not now or hereafter
prohibited by law.
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12.4 Headings. The headings of the Sections and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
12.5 Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties to this Agreement. No waiver of any provision of this Agreement
shall be deemed to constitute a waiver of any of the provisions hereof (whether
or not similar) nor shall such waiver constitute a continuing waiver. No waiver
of any provision of this Agreement shall be effective unless executed in
writing.
12.6 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a)
If to the Company to: Terra Systems, Inc.
Attn: Xxxxxxx Xxxxxxx, CEO
0000 X. 000 X, Xxxxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
(b) If to Indemnitee, to the address set forth below
Indemnitee's signature hereto.
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
12.7 Governing Law. The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Utah, as applied to contracts between Utah residents entered into and
to be performed entirely within Utah.
12.8 Consent to Jurisdiction. The Company and Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Utah for all purposes in connection with any action or proceeding which arises
out of or relates to this agreement and agree that any action instituted under
this agreement shall be brought only in the state courts of the State of Utah.
12.9 Entire Agreement. This Agreement represents the entire
agreement between the parties hereto, and there are no other agreements,
contracts or understanding between the parties hereto with respect to the
subject matter of this Agreement, except as provided herein.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
"COMPANY"
TERRA SYSTEMS, INC.
By: ________________________
Name: ________________________
Title: ________________________
"INDEMNITEE"
By: ________________________
Name: ________________________
Address: ________________________
________________________
________________________
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