EXHIBIT 10.1
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DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
This Director and Officer Indemnification Agreement, dated as of
___________, 2007 (this "AGREEMENT"), is made by and between ThinkEngine
Networks, Inc., a Delaware corporation (the "COMPANY"), and ____________
("INDEMNITEE").
RECITALS:
A. Section 141 of the Delaware General Corporation Law provides that
the business and affairs of a corporation will be managed by or under the
direction of its board of directors.
B. Pursuant to Sections 141 and 142 of the Delaware General Corporation
Law, significant authority with respect to the management of the Company has
been delegated to the officers of the Company.
C. By virtue of the managerial prerogatives vested in the directors and
officers of a Delaware corporation, directors and officers act as fiduciaries of
the corporation and its stockholders.
D. Thus, it is critically important to the Company and its stockholders
that the Company be able to attract and retain the most capable persons
reasonably available to serve as directors and officers of the Company.
E. In recognition of the need for corporations to be able to induce
capable and responsible persons to accept positions in corporate management,
Delaware law authorizes (and in some instances requires) corporations to
indemnify their directors and officers and further authorizes corporations to
purchase and maintain insurance for the benefit of their directors and officers.
F. The Delaware courts have recognized that indemnification by a
corporation serves the dual policies of (1) allowing corporate officials to
resist unjustified lawsuits, secure in the knowledge that, if vindicated, the
corporation will bear the expense of litigation and (2) encouraging capable
women and men to serve as corporate directors and officers, secure in the
knowledge that the corporation will absorb the costs of defending their honesty
and integrity.
G. The number of lawsuits challenging the judgment and actions of
directors and officers of Delaware corporations, the costs of defending those
lawsuits and the threat to directors' and officers' personal assets have all
materially increased over the past several years, chilling the willingness of
capable women and men to undertake the responsibilities imposed on corporate
directors and officers.
H. Recent federal legislation and rules adopted by the Securities and
Exchange Commission and the national securities exchanges have imposed
additional disclosure and corporate governance obligations on directors and
officers of public companies and have exposed such directors and officers to new
and substantially broadened civil liabilities.
I. These legislative and regulatory initiatives have also exposed
directors and officers of public companies to a significantly greater risk of
criminal proceedings, with attendant defense costs and potential criminal fines
and penalties.
J. Under Delaware law, the right of a director or officer to be
reimbursed for the costs of defense of criminal actions, whether such claims are
asserted under state or federal law, does not depend upon the merits of the
claims asserted against the director or officer and is separate and distinct
from any right to indemnification the director or officer may be able to
establish, and indemnification of the director or officer against criminal fines
and penalties is permitted if the director or officer satisfies the applicable
standard of conduct.
K. Indemnitee is a director and/or officer of the Company and his/her
willingness to serve in such capacity is predicated, in substantial part, upon
the Company's willingness to indemnify him/her in accordance with the principles
reflected above, to the fullest extent permitted by the laws of the state of
Delaware, and upon the other undertakings set forth in this Agreement.
L. Therefore, (1) in recognition of the need to provide Indemnitee with
substantial protection against personal liability, (2) in order to procure
Indemnitee's continued service as a director and officer of the Company and to
enhance Indemnitee's ability to serve the Company in an effective manner, and
(3) in order to provide such protection pursuant to express contract rights
(intended to be enforceable irrespective of, among other things, any amendment
to the Company's certificate of incorporation or bylaws (collectively, the
"CONSTITUENT DOCUMENTS"), any change in the composition of the Company's Board
of Directors (the "BOARD") or any change-in-control or business combination
transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancement of Expenses (as defined
in Section 1(e)) to Indemnitee as set forth in this Agreement and for the
continued coverage of Indemnitee under the Company's directors' and officers'
liability insurance policies.
M. In light of the considerations referred to in the preceding
recitals, it is the Company's intention and desire that the provisions of this
Agreement be construed liberally, subject to their express terms, to maximize
the protections to be provided to Indemnitee hereunder.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "CHANGE IN CONTROL" means the occurrence after the date of this
Agreement of any of the following events:
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(i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "PERSON") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Company; PROVIDED, HOWEVER, that:
(A) for purposes of this Section 1(a)(i), the following
acquisitions will not constitute a Change in Control: (1) any acquisition of
Voting Stock of the Company directly from the Company that is approved by a
majority of the Incumbent Directors; (2) any acquisition of Voting Stock of the
Company by the Company or any Subsidiary; (3) any acquisition of Voting Stock of
the Company by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary; and (4) any acquisition of Voting
Stock of the Company by any Person pursuant to a Business Combination that
complies with clauses (A), (B) and (C) of Section 1(a)(iii) below;
(B) if any Person acquires beneficial ownership of 20% or
more of combined voting power of the then-outstanding Voting Stock of the
Company as a result of a transaction described in clause (A)(1) of Section
1(a)(i) and such Person thereafter becomes the beneficial owner of any
additional shares of Voting Stock of the Company representing 1% or more of the
then-outstanding Voting Stock of the Company, other than in an acquisition
directly from the Company that is approved by a majority of the Incumbent
Directors or other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Voting Stock are
treated equally, such subsequent acquisition will be deemed to constitute a
Change in Control;
(C) a Change in Control will not be deemed to have
occurred if a Person acquires beneficial ownership of 20% or more of the Voting
Stock of the Company as a result of a reduction in the number of shares of
Voting Stock of the Company outstanding unless and until such Person thereafter
becomes the beneficial owner of any additional shares of Voting Stock of the
Company representing 1% or more of the then-outstanding Voting Stock of the
Company, other than in an acquisition directly from the Company that is approved
by a majority of the Incumbent Directors or other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Voting Stock are treated equally; and
(D) if at least a majority of the Incumbent Directors
determine in good faith that a Person has acquired beneficial ownership of 20%
or more of the Voting Stock of the Company inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares so that such
Person beneficially owns less than 20% of the Voting Stock of the Company, then
no Change in Control will be deemed to have occurred as a result of such
Person's acquisition; or
(ii) a majority of the Directors are not Incumbent Directors; or
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(iii) the consummation of a reorganization, merger or
consolidation, or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another corporation, or
other transaction (each, a "BUSINESS COMBINATION"), unless, in each case,
immediately following such Business Combination (A) all or substantially all of
the individuals and entities who were the beneficial owners of Voting Stock of
the Company immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of the combined voting power of the then
outstanding shares of Voting Stock of the entity resulting from such Business
Combination (including an entity which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries), (B) no Person (other than the Company, such
entity resulting from such Business Combination or any employee benefit plan (or
related trust) sponsored or maintained by the Company, any Subsidiary or such
entity resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of the combined voting power of the then outstanding
shares of Voting Stock of the entity resulting from such Business Combination,
and (C) at least a majority of the members of the Board of Directors of the
entity resulting from such Business Combination were Incumbent Directors at the
time of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section 1(a)(iii).
(v) For purposes of this Section 1(a) and as used elsewhere in
this Agreement, the following terms have the following meanings:
(A) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(B) "INCUMBENT DIRECTORS" means the individuals who, as of
the date hereof, are Directors of the Company and any individual becoming a
Director subsequent to the date hereof whose election, nomination for election
by the Company's stockholders or appointment, was approved by a vote of at least
two-thirds of the then Incumbent Directors (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as
a nominee for director, without objection to such nomination); PROVIDED,
HOWEVER, that an individual will not be an Incumbent Director if such
individual's election or appointment to the Board occurs as a result of an
actual or threatened election contest (as described in Rule 14a-12(c) of the
Exchange Act) with respect to the election or removal of Directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.
(C) "SUBSIDIARY" means an entity in which the Company
directly or indirectly beneficially owns 50% or more of the outstanding Voting
Stock.
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(D) "VOTING STOCK" means securities entitled to vote
generally in the election of directors (or similar governing bodies).
(b) "CLAIM" means (i) any threatened, asserted, pending or
completed claim, demand, action, suit or proceeding, whether civil, criminal,
administrative, arbitrative, investigative or other, and whether made pursuant
to federal, state or other law, and (ii) any threatened, pending or completed
inquiry or investigation, whether made, instituted or conducted by the Company
or any other person, including any federal, state or other governmental entity,
that Indemnitee determines might lead to the institution of any such claim,
demand, action, suit or proceeding.
(c) "CONTROLLED AFFILIATE" means any corporation, limited liability
company, partnership, joint venture, trust or other entity or enterprise,
whether or not for profit, that is directly or indirectly controlled by the
Company. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of an entity or enterprise, whether through the ownership
of voting securities, through other voting rights, by contract or otherwise;
PROVIDED that direct or indirect beneficial ownership of capital stock or other
interests in an entity or enterprise entitling the holder to cast 20% or more of
the total number of votes generally entitled to be cast in the election of
directors (or persons performing comparable functions) of such entity or
enterprise will be deemed to constitute control for purposes of this definition.
(d) "DISINTERESTED DIRECTOR" means a director of the Company who is
not and was not a party to the Claim in respect of which indemnification is
sought by Indemnitee.
(e) "EXPENSES" means attorneys' and experts' fees and expenses and
all other costs and expenses paid or payable in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to investigate, defend, be a witness in or participate in (including
on appeal), any Claim.
(f) "INDEMNIFIABLE CLAIM" means any Claim based upon, arising out
of or resulting from (i) any actual, alleged or suspected act or failure to act
by Indemnitee in his or her capacity as a director, officer, employee or agent
of the Company or as a director, officer, employee, member, manager, trustee or
agent of any other corporation, limited liability company, partnership, joint
venture, trust or other entity or enterprise, whether or not for profit, as to
which Indemnitee is or was serving at the request of the Company as a director,
officer, employee, member, manager, trustee or agent, (ii) any actual, alleged
or suspected act or failure to act by Indemnitee in respect of any business,
transaction, communication, filing, disclosure or other activity of the Company
or any other entity or enterprise referred to in clause (i) of this sentence, or
(iii) Indemnitee's status as a current or former director, officer, employee or
agent of the Company or as a current or former director, officer, employee,
member, manager, trustee or agent of the Company or any other entity or
enterprise referred to in clause (i) of this sentence or any actual, alleged or
suspected act or failure to act by Indemnitee in connection with any obligation
or restriction imposed upon Indemnitee by
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reason of such status. In addition to any service at the actual request of the
Company, for purposes of this Agreement, Indemnitee will be deemed to be serving
or to have served at the request of the Company as a director, officer,
employee, member, manager, trustee or agent of another entity or enterprise if
Indemnitee is or was serving as a director, officer, employee, member, manager,
trustee or agent of such entity or enterprise and (i) such entity or enterprise
is or at the time of such service was a Controlled Affiliate, (ii) such entity
or enterprise is or at the time of such service was an employee benefit plan (or
related trust) sponsored or maintained by the Company or a Controlled Affiliate,
or (iii) the Company or a Controlled Affiliate directly or indirectly caused or
authorized Indemnitee to be nominated, elected, appointed, designated, employed,
engaged or selected to serve in such capacity.
(g) "INDEMNIFIABLE LOSSES" means any and all Losses relating to,
arising out of or resulting from any Indemnifiable Claim.
(h) "INDEPENDENT COUNSEL" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent (i) the Company
(or any Subsidiary) or Indemnitee in any matter material to either such party
(other than with respect to matters concerning the Indemnitee under this
Agreement, or of other indemnitees under similar indemnification agreements), or
(ii) any other named (or, as to a threatened matter, reasonably likely to be
named) party to the Indemnifiable Claim giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" will 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 rights under this Agreement.
(i) "LOSSES" means any and all Expenses, damages, losses,
liabilities, judgments, fines, penalties (whether civil, criminal or other) and
amounts paid in settlement, including all interest, assessments and other
charges paid or payable in connection with or in respect of any of the
foregoing.
2. INDEMNIFICATION OBLIGATION. Subject to Section 7, the Company will
indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted
or required by the laws of the State of Delaware in effect on the date hereof or
as such laws may from time to time hereafter be amended to increase the scope of
such permitted indemnification, against any and all Indemnifiable Claims and
Indemnifiable Losses; PROVIDED, HOWEVER, that, except as provided in Sections 4
and 20, Indemnitee will not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Indemnitee against the
Company or any director or officer of the Company unless the Company has joined
in or consented to the initiation of such Claim.
3. ADVANCEMENT OF EXPENSES. Indemnitee will have the right to
advancement by the Company prior to the final disposition of any Indemnifiable
Claim of any and all Expenses relating to, arising out of or resulting from any
Indemnifiable Claim paid or incurred by Indemnitee or which Indemnitee
determines are reasonably likely to
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be paid or incurred by Indemnitee. Indemnitee's right to such advancement is not
subject to the satisfaction of any standard of conduct. Without limiting the
generality or effect of the foregoing, within five business days after any
request by Indemnitee, the Company will, in accordance with such request (but
without duplication), (a) pay such Expenses on behalf of Indemnitee, (b) advance
to Indemnitee funds in an amount sufficient to pay such Expenses, or (c)
reimburse Indemnitee for such Expenses; PROVIDED that Indemnitee will repay,
without interest, any amounts actually advanced to Indemnitee that, at the final
disposition of the Indemnifiable Claim to which the advance related, were in
excess of amounts paid or payable by Indemnitee in respect of Expenses relating
to, arising out of or resulting from such Indemnifiable Claim. In connection
with any such payment, advancement or reimbursement, Indemnitee will execute and
deliver to the Company an undertaking, which need not be secured and will be
accepted without reference to Indemnitee's ability to repay the Expenses, by or
on behalf of the Indemnitee, to repay any amounts paid, advanced or reimbursed
by the Company in respect of Expenses relating to, arising out of or resulting
from any Indemnifiable Claim in respect of which it is determined, following the
final disposition of such Indemnifiable Claim and in accordance with Section 7,
that Indemnitee is not entitled to indemnification hereunder.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. Without limiting the
generality or effect of the foregoing, the Company will indemnify and hold
harmless Indemnitee against and, if requested by Indemnitee, will reimburse
Indemnitee for, or advance to Indemnitee, within five business days of such
request, any and all Expenses paid or incurred by Indemnitee or which Indemnitee
determines are reasonably likely to be paid or incurred by Indemnitee in
connection with any Claim made, instituted or conducted by Indemnitee for (a)
indemnification or reimbursement or advance payment of Expenses by the Company
under any provision of this Agreement, or under any other agreement or provision
of the Constituent Documents now or hereafter in effect relating to
Indemnifiable Claims, and/or (b) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless in each case
of whether Indemnitee ultimately is determined to be entitled to such
indemnification, reimbursement, advance or insurance recovery, as the case may
be; PROVIDED, HOWEVER, that Indemnitee will return, without interest, any such
advance of Expenses (or portion thereof) which remains unspent at the final
disposition of the Claim to which the advance related.
5. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of any
Indemnifiable Loss, but not for all of the total amount thereof, the Company
will nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
6. PROCEDURE FOR NOTIFICATION. To obtain indemnification under this
Agreement in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee
will submit to the Company a written request therefor, including a brief
description (based upon information then available to Indemnitee) of such
Indemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt of
such request, the Company has
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directors' and officers' liability insurance in effect under which coverage for
such Indemnifiable Claim or Indemnifiable Loss is potentially available, the
Company will give prompt written notice of such Indemnifiable Claim or
Indemnifiable Loss to the applicable insurers in accordance with the procedures
set forth in the applicable policies. The Company will provide to Indemnitee a
copy of such notice delivered to the applicable insurers, and copies of all
subsequent correspondence between the Company and such insurers regarding the
Indemnifiable Claim or Indemnifiable Loss, in each case substantially
concurrently with the delivery or receipt thereof by the Company. The failure by
Indemnitee to timely notify the Company of any Indemnifiable Claim or
Indemnifiable Loss will not relieve the Company from any liability hereunder
unless, and only to the extent that, the Company did not otherwise learn of such
Indemnifiable Claim or Indemnifiable Loss and such failure results in forfeiture
by the Company of substantial defenses, rights or insurance coverage.
7. DETERMINATION OF RIGHT TO INDEMNIFICATION.
(a) To the extent that Indemnitee is successful on the merits or
otherwise in defense of any Indemnifiable Claim or any portion thereof or in
defense of any issue or matter therein, including dismissal without prejudice,
Indemnitee will be indemnified against all Indemnifiable Losses relating to,
arising out of or resulting from such Indemnifiable Claim in accordance with
Section 2 and no Standard of Conduct Determination (as defined in Section 7(b))
will be required.
(b) To the extent that the provisions of Section 7(a) are
inapplicable to an Indemnifiable Claim that is finally disposed of, any
determination of whether Indemnitee has satisfied any applicable standard of
conduct under Delaware law that is a legally required condition precedent to
indemnification of Indemnitee hereunder against Indemnifiable Losses relating
to, arising out of or resulting from such Indemnifiable Claim (a "STANDARD OF
CONDUCT DETERMINATION") will be made as follows: (i) if a Change in Control has
not occurred, or if a Change in Control has occurred but Indemnitee has
requested that the Standard of Conduct Determination be made pursuant to this
clause (i), (A) by a majority vote of the Disinterested Directors, even if less
than a quorum of the Board, (B) if such Disinterested Directors so direct, by a
majority vote of a committee of Disinterested Directors designated by a majority
vote of all Disinterested Directors, or (C) if there are no such Disinterested
Directors, by Independent Counsel in a written opinion addressed to the Board, a
copy of which will be delivered to Indemnitee; and (ii) if a Change in Control
has occurred and Indemnitee has not requested that the Standard of Conduct
Determination be made pursuant to clause (i), by Independent Counsel in a
written opinion addressed to the Board, a copy of which will be delivered to
Indemnitee. Indemnitee will cooperate with the person or persons making such
Standard of Conduct Determination, including providing to such person or
persons, upon reasonable advance request, any documentation or information which
is not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. The
Company will indemnify and hold harmless Indemnitee against and, if requested by
Indemnitee, will reimburse Indemnitee for, or advance to Indemnitee, within five
business days of such request, any and all costs and expenses (including
attorneys'
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and experts' fees and expenses) incurred by Indemnitee in so cooperating with
the person or persons making such Standard of Conduct Determination.
(c) The Company will use its reasonable best efforts to cause any
Standard of Conduct Determination required under Section 7(b) to be made as
promptly as practicable. If (i) the person or persons empowered or selected
under Section 7 to make the Standard of Conduct Determination has not made a
determination within 30 days after the later of (A) receipt by the Company of
written notice from Indemnitee advising the Company of the final disposition of
the applicable Indemnifiable Claim (the date of such receipt being the
"NOTIFICATION DATE") and (B) the selection of an Independent Counsel, if such
determination is to be made by Independent Counsel, that is permitted under the
provisions of Section 7(e) to make such determination and (ii) Indemnitee has
fulfilled his/her obligations set forth in the second sentence of Section 7(b),
then Indemnitee will be deemed to have satisfied the applicable standard of
conduct; PROVIDED that such 30-day period may be extended for a reasonable time,
not to exceed an additional 30 days, if the person or persons making such
determination in good faith requires such additional time for the obtaining or
evaluation or documentation and/or information relating thereto.
(d) If (i) Indemnitee is entitled to indemnification hereunder
against any Indemnifiable Losses pursuant to Section 7(a), (ii) no determination
of whether Indemnitee has satisfied any applicable standard of conduct under
Delaware law is a legally required condition precedent to indemnification of
Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee has
been determined or deemed pursuant to Section 7(b) or (c) to have satisfied any
applicable standard of conduct under Delaware law which is a legally required
condition precedent to indemnification of Indemnitee hereunder against any
Indemnifiable Losses, then the Company will pay to Indemnitee, within five
business days after the later of (x) the Notification Date in respect of the
Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are
related, out of which such Indemnifiable Losses arose or from which such
Indemnifiable Losses resulted and (y) the earliest date on which the applicable
criterion specified in clause (i), (ii) or (iii) above is satisfied, an amount
equal to the amount of such Indemnifiable Losses.
(e) If a Standard of Conduct Determination is to be made by
Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel will be
selected by the Board of Directors, and the Company will give written notice to
Indemnitee advising him or her of the identity of the Independent Counsel so
selected. If a Standard of Conduct Determination is to be made by Independent
Counsel pursuant to Section 7(b)(ii), the Independent Counsel will be selected
by Indemnitee, and Indemnitee will give written notice to the Company advising
it of the identity of the Independent Counsel so selected. In either case,
Indemnitee or the Company, as applicable, may, within five business days after
receiving written notice of selection from the other, deliver to the other a
written objection to such selection; PROVIDED, HOWEVER, that such objection may
be asserted only on the ground that the Independent Counsel so selected does not
satisfy the criteria set forth in the definition of "Independent Counsel" in
Section 1(h), and the objection must set forth with particularity the factual
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basis of such assertion. Absent a proper and timely objection, the person or
firm so selected will act as Independent Counsel. If such written objection is
properly and timely made and substantiated, (i) the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection is
withdrawn or a court has determined that such objection is without merit and
(ii) the non-objecting party may, at its option, select an alternative
Independent Counsel and give written notice to the other party advising such
other party of the identity of the alternative Independent Counsel so selected,
in which case the provisions of the two immediately preceding sentences and
clause (i) of this sentence will apply to such subsequent selection and notice.
If applicable, the provisions of clause (ii) of the immediately preceding
sentence will apply to successive alternative selections. If no Independent
Counsel that is permitted under the foregoing provisions of this Section 7(e) to
make the Standard of Conduct Determination is selected within 30 days after the
Company gives its initial notice pursuant to the first sentence of this Section
7(e) or Indemnitee gives its initial notice pursuant to the second sentence of
this Section 7(e), as the case may be, either the Company or Indemnitee may
petition the Court of Chancery of the State of Delaware for resolution of any
objection which has been made by the Company or Indemnitee to the other's
selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person or firm selected by the Court or by such other person as the
Court designates, and the person or firm with respect to whom all objections are
so resolved or the person or firm so appointed will act as Independent Counsel.
In all events, the Company will pay all of the reasonable fees and expenses of
the Independent Counsel incurred in connection with the Independent Counsel's
determination pursuant to Section 7(b).
8. PRESUMPTION OF ENTITLEMENT. In making any Standard of Conduct
Determination, the person or persons making such determination will presume that
Indemnitee has satisfied the applicable standard of conduct, and the Company may
overcome such presumption only by its adducing clear and convincing evidence to
the contrary. Any Standard of Conduct Determination that is adverse to
Indemnitee may be challenged by the Indemnitee in the Court of Chancery of the
State of Delaware. No determination by the Company (including by its directors
or any Independent Counsel) that Indemnitee has not satisfied any applicable
standard of conduct will be a defense to any Claim by Indemnitee for
indemnification or reimbursement or advance payment of Expenses by the Company
hereunder or create a presumption that Indemnitee has not met any applicable
standard of conduct.
9. NO OTHER PRESUMPTION. 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, will not create a presumption that Indemnitee did not meet any
applicable standard of conduct or that indemnification hereunder is otherwise
not permitted.
10. NON-EXCLUSIVITY. The rights of Indemnitee hereunder will be in
addition to any other rights Indemnitee may have under the Constituent
Documents, or the substantive laws of the Company's jurisdiction of
incorporation, any other contract or otherwise (collectively, "OTHER INDEMNITY
PROVISIONS"); PROVIDED, HOWEVER, that (a) to
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the extent that Indemnitee otherwise would have any greater right to
indemnification under any Other Indemnity Provision, Indemnitee will be deemed
to have such greater right hereunder and (b) to the extent that any change is
made to any Other Indemnity Provision which permits any greater right to
indemnification than that provided under this Agreement as of the date hereof,
Indemnitee will be deemed to have such greater right hereunder. The Company will
not adopt any amendment to any of the Constituent Documents the effect of which
would be to deny, diminish or encumber Indemnitee's right to indemnification
under this Agreement or any Other Indemnity Provision.
11. LIABILITY INSURANCE AND FUNDING. For the duration of Indemnitee's
service as a director and/or officer of the Company, and thereafter for so long
as Indemnitee is subject to any pending or possible Indemnifiable Claim, the
Company will use commercially reasonable efforts (taking into account the scope
and amount of coverage available relative to the cost thereof) to cause to be
maintained in effect policies of directors' and officers' liability insurance
providing coverage for directors and/or officers of the Company that is at least
substantially comparable in scope and amount to that provided by the Company's
current policies of directors' and officers' liability insurance. The Company
will provide Indemnitee with a copy of all directors' and officers' liability
insurance applications, binders, policies, declarations, endorsements and other
related materials and will provide Indemnitee with a reasonable opportunity to
review and comment on the same. Without limiting the generality or effect of the
two immediately preceding sentences, the Company will not discontinue or
significantly reduce the scope or amount of coverage from one policy period to
the next (i) without the prior approval thereof by a majority vote of the
Incumbent Directors, even if less than a quorum, or (ii) if at the time that any
such discontinuation or significant reduction in the scope or amount of coverage
is proposed there are no Incumbent Directors, without the prior written consent
of Indemnitee (which consent will not be unreasonably withheld or delayed). In
all policies of directors' and officers' liability insurance obtained by the
Company, Indemnitee will be named as an insured 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 and officers most favorably insured by such
policy. The Company may, but will not be required to, create a trust fund, grant
a security interest or use other means, including a letter of credit, to ensure
the payment of such amounts as may be necessary to satisfy its obligations to
indemnify and advance expenses pursuant to this Agreement.
12. SUBROGATION. In the event of payment under this Agreement, the
Company will be subrogated to the extent of such payment to all of the related
rights of recovery of Indemnitee against other persons or entities (other than
Indemnitee's successors), including any entity or enterprise referred to in
clause (i) of the definition of "Indemnifiable Claim" in Section 1(f).
Indemnitee will execute all papers reasonably required to evidence such rights
(all of Indemnitee's reasonable Expenses, including attorneys' fees and charges,
related thereto to be reimbursed by or, at the option of Indemnitee, advanced by
the Company).
13. NO DUPLICATION OF PAYMENTS. The Company will not be liable under
this Agreement to make any payment to Indemnitee in respect of any Indemnifiable
Losses
11
to the extent Indemnitee has otherwise actually received payment (net of
Expenses incurred in connection therewith) under any insurance policy, the
Constituent Documents and Other Indemnity Provisions or otherwise (including
from any entity or enterprise referred to in clause (i) of the definition of
"Indemnifiable Claim" in Section 1(f)) in respect of such Indemnifiable Losses
otherwise indemnifiable hereunder.
14. DEFENSE OF CLAIMS. The Company will be entitled to participate in
the defense of any Indemnifiable Claim or to assume the defense thereof, with
counsel reasonably satisfactory to the Indemnitee; PROVIDED that if Indemnitee
believes, after consultation with counsel selected by Indemnitee, that (a) the
use of counsel chosen by the Company to represent Indemnitee would present such
counsel with an actual or potential conflict, (b) the named parties in any such
Indemnifiable Claim (including any impleaded parties) include both the Company
and Indemnitee and Indemnitee concludes that there may be one or more legal
defenses available to him or her that are different from or in addition to those
available to the Company, or (c) any such representation by such counsel would
be precluded under the applicable standards of professional conduct then
prevailing, then Indemnitee will be entitled to retain separate counsel (but not
more than one law firm plus, if applicable, local counsel in respect of any
particular Indemnifiable Claim) at the Company's expense. The Company will not
be liable to Indemnitee under this Agreement for any amounts paid in settlement
of any threatened or pending Indemnifiable Claim effected without the Company's
prior written consent. The Company will not, without the prior written consent
of the Indemnitee, effect any settlement of any threatened or pending
Indemnifiable Claim to which the Indemnitee is, or could have been, a party
unless such settlement solely involves the payment of money and includes a
complete and unconditional release of the Indemnitee from all liability on any
claims that are the subject matter of such Indemnifiable Claim. Neither the
Company nor Indemnitee will unreasonably withhold its consent to any proposed
settlement; PROVIDED that Indemnitee may withhold consent to any settlement that
does not provide a complete and unconditional release of Indemnitee.
15. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to
Indemnitee and his or her counsel, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including any person acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by purchase,
merger, consolidation, reorganization or otherwise (and such successor will
thereafter be deemed the "COMPANY" for purposes of this Agreement), but will not
otherwise be assignable or delegatable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable
by the Indemnitee's personal or legal representatives, executors,
administrators, heirs, distributees, legatees and other successors.
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(c) This Agreement is personal in nature and neither of the parties
hereto may, without the consent of the other, assign or delegate this Agreement
or any rights or obligations hereunder except as expressly provided in Sections
15(a) and 15(b). Without limiting the generality or effect of the foregoing,
Indemnitee's right to receive payments hereunder will not be assignable, whether
by pledge, creation of a security interest or otherwise, other than by a
transfer by the Indemnitee's will or by the laws of descent and distribution,
and, in the event of any attempted assignment or transfer contrary to this
Section 15(c), the Company will have no liability to pay any amount so attempted
to be assigned or transferred.
16. NOTICES. For all purposes of this Agreement, all communications,
including notices, consents, requests or approvals, required or permitted to be
given hereunder will be in writing and will be deemed to have been duly given
when hand delivered or dispatched by electronic facsimile transmission (with
receipt thereof orally confirmed), or five business days after having been
mailed by United States registered or certified mail, return receipt requested,
postage prepaid or one business day after having been sent for next-day delivery
by a nationally recognized overnight courier service, addressed to the Company
(to the attention of the Secretary of the Company) and to Indemnitee at the
applicable address shown on the signature page hereto, or to such other address
as any party may have furnished to the other in writing and in accordance
herewith, except that notices of changes of address will be effective only upon
receipt.
17. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State. The Company and Indemnitee each
hereby irrevocably consent to the jurisdiction of the Chancery Court of the
State of Delaware 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 will be brought only in the Chancery Court of
the State of Delaware.
18. VALIDITY. If any provision of this Agreement or the application of
any provision hereof to any person or circumstance is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstance will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent, and only to the extent, necessary to
make it enforceable, valid or legal. In the event that any court or other
adjudicative body declines to reform any provision of this Agreement held to be
invalid, unenforceable or otherwise illegal as contemplated by the immediately
preceding sentence, the parties thereto will take all such action as may be
necessary or appropriate to replace the provision so held to be invalid,
unenforceable or otherwise illegal with one or more alternative provisions that
effectuate the purpose and intent of the original provisions of this Agreement
as fully as possible without being invalid, unenforceable or otherwise illegal.
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19. MISCELLANEOUS. No provision of this Agreement may be waived,
modified or discharged unless such waiver, modification or discharge is agreed
to in writing signed by Indemnitee and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party that are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
20. LEGAL FEES AND EXPENSES. It is the intent of the Company that
Indemnitee not be required to incur legal fees and or other Expenses associated
with the interpretation, enforcement or defense of Indemnitee's rights under
this Agreement by litigation or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to
Indemnitee hereunder. Accordingly, without limiting the generality or effect of
any other provision hereof, if it should appear to Indemnitee that the Company
has failed to comply with any of its obligations under this Agreement or in the
event that the Company or any other person takes or threatens to take any action
to declare this Agreement void or unenforceable, or institutes any litigation or
other action or proceeding designed to deny, or to recover from, Indemnitee the
benefits provided or intended to be provided to Indemnitee hereunder, the
Company irrevocably authorizes the Indemnitee from time to time to retain
counsel of Indemnitee's choice, at the expense of the Company as hereafter
provided, to advise and represent Indemnitee in connection with any such
interpretation, enforcement or defense, including the initiation or defense of
any litigation or other legal action, whether by or against the Company or any
director, officer, stockholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Indemnitee's entering into an attorney-client relationship with such
counsel, and in that connection the Company and Indemnitee agree that a
confidential relationship will exist between Indemnitee and such counsel.
Without respect to whether Indemnitee prevails, in whole or in part, in
connection with any of the foregoing, the Company will pay and be solely
financially responsible for any and all attorneys' and related fees and expenses
incurred by Indemnitee in connection with any of the foregoing.
21. CERTAIN INTERPRETIVE MATTERS. Unless the context of this Agreement
otherwise requires, (a) "it" or "its" or words of any gender include each other
gender, (b) words using the singular or plural number also include the plural or
singular number, respectively, (c) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement, (d) the terms
"Article," "Section," "Annex" or "Exhibit" refer to the specified Article,
Section, Annex or Exhibit of or to this Agreement, (e) the terms "include,"
"includes" and "including" will be deemed to be followed by the words "without
limitation" (whether or not so expressed), and (f) the word "or" is disjunctive
but not exclusive. Whenever this Agreement refers to a number of days, such
number will refer to calendar days unless business days are specified and
whenever action must be
14
taken (including the giving of notice or the delivery of documents) under this
Agreement during a certain period of time or by a particular date that ends or
occurs on a non-business day, then such period or date will be extended until
the immediately following business day. As used herein, "business day" means any
day other than Saturday, Sunday or a United States federal holiday.
22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
15
IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused
its duly authorized representative to execute this Agreement as of the date
first above written.
THINKENGINE NETWORKS, INC.
000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
By:
---------------------------
Name:
Title:
INDEMNITEE:
-------------------
Address:
------------------------------
(signature)
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