Exhibit 10.7
OVERLAND DATA, INC.
a California corporation
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of __________, 1997,
between OVERLAND DATA, INC., a California corporation ("Company"), and
________________ ("Indemnitee").
RECITALS
WHEREAS, the Company believes that it is essential to its best interest to
attract and retain highly capable persons to serve as directors, officers, and
agents of the Company;
WHEREAS, Indemnitee is or has been selected to be a director, officer,
and/or agent of the Company;
WHEREAS, the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors, officers, and
other agents of corporations;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability, in order to enhance Indemnitee's service to the
Company, and in order to induce Indemnitee to continue to provide services to
the Company as a director, officer, and/or agent, the Company wishes to provide
in this Agreement for the Indemnification of and the advancement of expenses to
Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement, and, to the extent applicable insurance is maintained, for the
coverage of Indemnitee under the Company's policies of directors' and officers'
liability insurance; and
WHEREAS, the Company's Bylaws provide for the indemnification of the
directors, officers, agents and employees of the Company to the maximum extent
authorized by the California Corporations Code;
NOW, THEREFORE, in consideration of the foregoing and of Indemnitee's
continued service to the Company directly or, at its request, with another
enterprise, the parties agree as follows:
SECTION 1. DEFINITIONS.
(a) "Board" means the board of directors of the Company.
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(b) "Change in Control" means a state of affairs that shall be deemed to
have occurred if:
(i) any person is or becomes the "beneficial owner" (as that term
is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
("Exchange Act")). directly or indirectly, of securities representing [50]
percent or more of the total voting power of the Company's then-outstanding
voting securities; or
(ii) during any period of two consecutive years, individuals who, at
the beginning of such period, constitute the board, together with any new
director whose election by the board or nomination for election by the Company's
shareholders was approved by a vote of at least two thirds of the directors then
in office who either were directors at the beginning of the two-year period, or
whose election or nomination was previously so approved, cease for any reason to
constitute a majority of the board; or
(iii) the shareholders of the Company approve a merger or
consolidating of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continued to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80 percent of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company, or an agreement for the sale of disposition by the
Company, or an agreement for the sale or disposition by the Company (whether in
one transaction or a series of transactions) of all or substantially all of the
Company's assets.
(c) "Expenses" means:
(i) Any expenses, liability, or loss, including attorneys' fees,
judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid
in settlement;
(ii) any interest, assessments or other charges imposed on any of
the items in part (i) of this subsection (c); and
(iii) any federal, state, local or foreign taxes imposed as a result
of the actual or deemed receipt of any payments under this Agreement paid or
incurred in connection with investigating, defending, being a witness in, or
participating in (including on appeal), or preparing for any of the foregoing
in, any proceeding relating to any indemnifiable event.
(d) "Indemnifiable Event" means any event or occurrence that takes place
either before or after the execution of this Agreement and that is related to
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(i) the fact that Indemnitee is or was a director or an officer of
the Company, or while a director or officer is or was serving at the request of
the Company as a director, officer, employee, trustee, agent, or fiduciary of
another foreign or domestic corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, or was a director, officer, employee,
or agent of a foreign or domestic corporation that was a predecessor corporation
of the Company or another enterprise at the request of such predecessor
corporation; or
(ii) anything done or not done by Indemnitee in any such capacity,
whether or not the basis of the proceeding is an alleged action in an official
capacity as a director, officer, employee, or agent, or in any other capacity
while serving as a director, officer, employee, or agent of the Company as
described in this subsection (d).
(e) "Independent Counsel" means the person or body appointed in connection
with Section 3.
(f) "Person" means the term "person" as that term is used in sections
13(d) and 14(d) of the Exchange Act, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company acting in such
capacity, or a corporation owned directly or indirectly by the shareholders of
the Company in substantially the same proportions as their ownership of shares
of the Company at the date of this Agreement.
(g) "Participant" means a person who is a party to, or witness or
participant (including an appeal) in, a proceeding.
(h) "Potential Change in Control" means a state of affairs that shall be
deemed to exist if:
(i) the Company enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a change in control; or
(ii) any person (including the Company) announces publicly an
intention to take or to consider taking actions that, if consummated, would
constitute a change in control; or
(iii) any person who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing ten (10) percent or more
of the combined voting power of the Company's then outstanding voting
securities, increases his or her beneficial ownership of such securities by 5
percent or more over the percentage owned by such person on the date of this
Agreement; or,
(iv) the board adopts a resolution into the effect that, for
purposes of this Agreement, a potential change in control has occurred.
(i) "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, or any inquiry, hearing, or investigation, whether conducted by
the
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Company or any other party, that Indemnitee in good faith believes might lead to
the institution of any such action, suit, or proceeding, whether civil,
criminal, administrative, investigative, or other.
(j) "Reviewing Party" means the person or body appointed in accordance
with Section 3.
(k) "Voting Securities" means any securities of the Company that have the
right to vote generally in the election of directors.
SECTION 2. AGREEMENT TO INDEMNIFY
(a) GENERAL AGREEMENT. In the event Indemnitee was, is, or becomes a
participant in, or is threatened to be made a participant in, a proceeding by
reason of (or arising in part out of) an indemnifiable event, the Company shall
indemnify Indemnitee from and against any and all expenses to the fullest extent
permitted by law, as the same exists or may hereafter be amended or interpreted
(but in the case of any such amendment or interpretation, only to the extent
that such amendment or interpretation permits the Company to provide broader
indemnification rights than were permitted prior to that amendment or
interpretation). The parties to this Agreement intend that this Agreement shall
provide for indemnification in excess of that expressly permitted by statute
including, without limitation, any indemnification provided by the Company's
articles of incorporation, its bylaws, a vote of its shareholders or
disinterested directors, or applicable law.
(b) INITIATION OF PROCEEDING. Notwithstanding anything in this Agreement
to the contrary, Indemnitee shall not be entitled to indemnification under this
Agreement in connection with any proceeding initiated by Indemnitee against the
Company or any director or officer of the Company unless:
(i) the Company has joined in or the Board has consented to the
initiation of such proceeding; or
(ii) the proceeding is one to enforce indemnification rights under
Section 5; or
(iii) the proceeding is instituted after a change in control and
independent counsel has approved its initiation.
(c) EXPENSE ADVANCES. If so requested by Indemnitee, the Company shall,
within ten (10) business days of such request advance all expenses to Indemnitee
(an "expense advance"). Notwithstanding the foregoing, to the extent that the
reviewing party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed
by Indemnitee for all such amounts, and Indemnitee hereby agrees to reimburse
the Company promptly for the same. If Indemnitee has commenced legal
proceedings in a court of competent
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jurisdiction to secure a determination that Indemnitee should be indemnified
under applicable law, as provided in Section 4, any determination made by the
reviewing party that Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding on the court for purposes of that judicial
determination, and Indemnitee shall not be required to reimburse the Company for
any expense advance until a final judicial determination is made with respect
thereto and all rights of appeal therefrom have been exhausted or have lapsed.
Indemnitee's obligation to reimburse the Company for expense advances shall be
unsecured and no interest shall be charged thereon.
(d) MANDATORY INDEMNIFICATION. Notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits
in defense of any proceeding relating in whole or in part to an indemnifiable
event or in defense of any issue or matter in such proceeding, Indemnitee shall
be indemnified against all expenses incurred in connection with that proceeding.
(e) PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for a portion of
expenses, but not for the total amount of expenses, the Company shall indemnify
Indemnitee for the portion to which Indemnitee is entitled.
(f) PROHIBITED INDEMNIFICATION. No indemnification under this Agreement
shall be paid by the Company on account of any proceeding in which judgment is
rendered against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of the Company under the provisions of
Section 16(b) of the Exchange Act, or similar provisions of any federal, state,
or local laws.
SECTION 3. REVIEWING PARTY. Before any change in control, the reviewing party
shall be any appropriate person or body consisting of a member or members of the
board or any other person or body appointed by the board who is not a party to
the proceeding for which Indemnitee is seeking indemnification; after a change
in control (other than a change in control approved by a majority of the
directors of the board who were directors immediately before such change in
control) concerning the rights of Indemnitee to indemnity payments and expense
advances under this Agreement, any other agreement, applicable law, or the
Company's articles of incorporation or bylaws now or hereafter in effect
relating to indemnification for indemnifiable events, the Company shall seek
legal advice only from independent counsel selected by Indemnitee and approved
by the Company (which approval shall not be unreasonably withheld), and who has
not otherwise performed services for the Company or the Indemnitee (other than
in connection with indemnification matters) within the previous five years. The
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 rights under this Agreement. Such counsel, among other
things, shall render a written opinion to the Company and Indemnitee on whether
and to what extent the Indemnitee should be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of the
independent counsel.
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SECTION 4. INDEMNIFICATION PROCESS AND APPEAL
(a) INDEMNIFICATION PAYMENT. Indemnitee shall receive indemnification of
expenses from the Company in accordance with this Agreement as soon as
practicable after Indemnitee has made written demand on the Company for
Indemnification, unless the reviewing party has given a written opinion to the
Company that Indemnitee is not entitled to indemnification under this Agreement
or applicable law.
(b) SUIT TO ENFORCE RIGHTS. Regardless of any action by the reviewing
party, if Indemnitee has not received full indemnification within thirty (30)
days after making a demand in accordance with Section 4(a), Indemnitee shall
have the right to enforce its indemnification rights under this Agreement by
commencing litigation in any court in the State of California seeking an initial
determination by the court or challenging any determination by the reviewing
party or any aspect thereof. The Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the reviewing party
not challenged by the Indemnitee shall be binding on the Company and Indemnitee.
The remedy provided for in this Section 4 shall be in addition to any other
remedies available to Indemnitee in law or equity.
(c) DEFENSE TO INDEMNIFICATION, BURDEN OF PROOF, AND PRESUMPTIONS. It
shall be a defense to any action brought by Indemnitee against the Company to
enforce this Agreement (other than an action brought to enforce a claim for
expenses incurred in defending a proceeding in advance of its final disposition
when the required undertaking has been tendered to the Company) that it is not
permissible, under this Agreement or the applicable law, for the Company to
indemnify Indemnitee for the amount claimed. In connection with any such
section or any determination by the reviewing party or otherwise on whether
Indemnitee is entitled to be indemnified under this Agreement, the burden of
proving such a defense or determination shall be on the Company. Neither the
failure of the reviewing party or the Company (including its board, independent
legal counsel, or its shareholders) to have made a determination before the
commencement of such action by Indemnitee that indemnification is proper under
the circumstances because the Indemnitee has met the standard of conduct set
forth in applicable law, nor an actual determination by the reviewing party or
Company (including its board, independent legal counsel, or its shareholders)
that the Indemnitee has not met the applicable standard of conduct, shall be a
defense to the action or create a presumption that the Indemnitee has not met
the applicable standard of conduct. For purposes of this Agreement, the
termination of any claim, action, suit, or proceeding, by judgment, order,
settlement (whether with or without court approval), conviction, or on a plea of
nolo contendere, or its equivalent, shall not create a presumption of conduct or
have any particular belief or that a court has determined that indemnification
is not permitted by applicable law.
SECTION 5. INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING
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RIGHTS. The Company shall indemnify Indemnitee against any and all expenses
incurred by Indemnitee in connection with any claim asserted against or action
brought by Indemnitee for
(a) indemnification of Expenses or advance of Expenses by the Company
under this Agreement, or any other agreement, or under applicable law, or the
Company's articles of incorporation of bylaws now or hereafter in effect
relating to Indemnification for indemnifiable events; and/or
(b) recovery under directors' and officers' liability insurance policies
maintained by the Company, for amounts paid in settlement, if the independent
counsel has approved the settlement.
If requested by Indemnitee, the Company shall, within ten (10) business days of
such request, advance to Indemnitee any expenses to which Indemnitee is entitled
under this Section 5. The Company shall not settle any proceeding in any manner
that would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Neither the Company nor the Indemnitee will unreasonably
withhold its consent to any proposed settlement. The Company shall not be
liable to indemnify the Indemnitee under this Agreement with regard to any
judicial award if the Company was not given a reasonable and timely opportunity,
at its expenses, to participate in the defense of such action; however, the
Company's liability under this Agreement shall not be excused if participation
in the proceeding by the Company was barred by this Agreement.
SECTION 6. ESTABLISHMENT OF TRUST. In the event of a change in control or a
potential change in control, the Company shall, on written request by
Indemnitee, create a trust for the benefit of the Indemnitee ("Trust") and from
time to time on written request of Indemnitee shall fund the Trust in an amount
sufficient to satisfy any and all expenses reasonably anticipated with
investigating, preparing for, participating in, and/or defending any proceeding
relating to any indemnifiable event. The amount or amounts to be deposited in
the Trust under the foregoing funding obligation shall be determined by the
reviewing party. The terms of the trust shall provide that on a change in
control:
(a) The Trust shall not be revoked or the principal invaded without the
written consent of the Indemnitee.
(b) The Trustee shall advance, within ten business days of a request by
the Indemnitee, all expenses to the Indemnitee (provided that the Indemnitee
hereby agrees to reimburse the Trust under the same circumstances for which the
Indemnitee would not be required to reimburse the Company under Section 2(c) of
this Agreement).
(c) The Trust shall continue to be funded by the Company in accordance
with the funding obligation set forth in this Section.
(d) The Trustee shall promptly pay to the Indemnitee all amounts for which
the Indemnitee shall be entitled to indemnification under this Agreement or
otherwise.
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(e) All unexpected funds in the Trust shall revert to the Company on a
final determination by the reviewing party or a court of competent jurisdiction
that the Indemnitee has been fully indemnified under the terms of this
Agreement.
The Trustee shall be chosen by the Indemnitee subject to the approval of the
Reviewing Party. Nothing in this Section 6 shall relieve the Company of any of
its obligations under this Agreement. All income earned on the assets held in
the Trust shall be reported as income by the Company for federal, sales, local,
and foreign tax purposes. The Company shall pay all costs of establishing and
maintaining the Trust and shall indemnify the Trustee against any and all
expenses, including attorneys' fees, claims, liabilities, loss, and damages
arising out of or relating to this Agreement or the establishment and
maintenance of the Trust.
SECTION 7. NONEXCLUSIVITY. The rights of Indemnitee under this Agreement shall
be in addition to any other rights Indemnitee may have under the Company's
articles of incorporation, bylaws, applicable law, or otherwise. To the extent
that a change in applicable law (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Company's articles of incorporation, bylaws, applicable law, or this
Agreement, it is the intent of the parties that Indemnitee enjoy by this
Agreement the greater benefit afforded by such change.
SECTION 8. LIABILITY INSURANCE. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage available for any
Company director or officer.
SECTION 9. AMENDMENT OF THIS AGREEMENT. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties to it. No waiver of any of the provisions of this Agreement
shall operate as a waiver or any other provisions of this Agreement (whether or
not similar), nor shall such waiver constitute a continuing waiver. Except as
specifically provided in this Agreement, no failure to exercise or delay in
exercising any right or remedy under it shall constitute a waiver of the right
or remedy.
SECTION 10. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of that payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of any documents necessary to enable the Company effectively to bring suit
to enforce such rights.
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SECTION 11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, bylaw, or otherwise) of the amounts otherwise indemnifiable
under this Agreement.
SECTION 12. BINDING EFFECT. This Agreement shall be binding on and inure to
the benefit of and be enforceable by the parties to it and their respective
successors (including any direct or indirect successor by purchase, merger,
consolidation, or otherwise to all or substantially all of the Company's
business or assets or both), assigns, spouses, heirs, and personal and legal
representatives. 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 Company's business or assets or
both, by written agreement in form and substance satisfactory to 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. The indemnification provided under this Agreement
shall continue for Indemnitee for any action taken or not taken while serving in
an indemnified capacity pertaining to an indemnifiable event even though
Indemnitee may have ceased to serve in such capacity at the time of any
proceeding.
SECTION 13. SEVERABILITY. If any portion of this Agreement shall be held by a
court of competent jurisdiction to be invalid, void, or otherwise unenforceable,
the remaining provisions shall remain enforceable to the fullest extent
permitted by law. Furthermore, to the fullest extent possible, the provisions
of this Agreement (including, without limitation, each portion of this Agreement
containing any provision held to be invalid, void, or otherwise unenforceable,
that is not itself invalid, void, or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, void, or
unenforceable.
SECTION 14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California applicable
to contracts made and to be performed in such State without giving effect to the
principles to conflicts of laws.
SECTION 15. NOTICES. All notices, demands, and other communications required
or permitted under this Agreement shall be made in writing and shall be deemed
to have been duly given if delivered by hand, against receipt, or mailed, first
class postage prepaid, certified or registered mail, and addressed
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(a) to the Company at: Overland Data, Inc.
0000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
(b) to Indemnitee at:
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. Notice of change of
address shall be effective only when given in accordance with this Section. All
notices complying with this Section shall be deemed to have been received on the
date of delivery or on the third business day after mailing.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day specified above.
INDEMNITEE: OVERLAND DATA, INC.,
a California corporation
By:
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