INDEMNIFICATION AGREEMENT
Exhibit
10.1
THIS
INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of the 3rd day of
November , 2008, between, Southwall Technologies Inc., a Delaware corporation
(the “Company”), and
______________ (“Indemnitee”).
WHEREAS,
Indemnitee is a member of the Board of Directors of the Company (the “Board of
Directors”) and/or an officer or certain agents of the Company and in such
capacity, or capacities, is performing valuable services for the Company;
and
WHEREAS,
the Company’s By-laws, as amended (the “Company By-Laws” and,
together with the Company’s Certificate of Incorporation, as amended, the “Governing
Instruments”) provides for the indemnification of the Company’s
directors, officers, and certain agents to the fullest extent authorized by the
Delaware General Corporation Law (the “DGCL”);
and WHEREAS, Section 145 of the DGCL specifically provides that it
shall not be deemed exclusive of any other rights to indemnification or
advancement of expenses to which directors or officers may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise;
and
WHEREAS,
the number of lawsuits and shareholders’ derivative lawsuits against
corporations, their directors and officers has increased in recent years, such
lawsuits frequently are without merit and seek damages in amounts having no
reasonable relationship to the amount of compensation received by the directors
and officers from the corporation, and such lawsuits whether or not meritorious
are expensive and time-consuming to defend; and
WHEREAS,
adequate directors and officers liability insurance may not be available at a
reasonable cost; and
WHEREAS,
the Company desires that Indemnitee continue to serve as a director and/or an
officer and or agent of the Company free from undue concern for unpredictable or
unreasonable claims for damages by reason of Indemnitee’s status as a director
and/or an officer of the Company, by reason of Indemnitee’s decisions or actions
on the Company’ behalf or by reason of Indemnitee’s decisions or actions in
another capacity for the Company while serving as a director and/or an officer
of the Company; acting in the Indemnitee’s capacity as a director, officer, or
agent and
WHEREAS,
the Board of Directors has determined that the Company’s entry into this
Agreement is not only reasonable and prudent but also promotes the best
interests of the Company and its stockholders; and
WHEREAS,
Indemnitee has agreed to continue to serve as a director and/or an officer or
certain agents of the Company in reliance on the protections afforded to him
under this Agreement;
NOW,
THEREFORE, in consideration of Indemnitee’s continued service as a director
and/or an officer of the Company and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1.
Indemnification.
Subject only to the exclusions set forth in this Agreement, the Company hereby
agrees (i) to hold harmless and indemnify Indemnitee, from time to time, against
any and all Expenses and Liabilities (as such terms are defined in Section 1(h)
below) to the fullest extent authorized or permitted by the DGCL (or any other
applicable law), the Governing Instruments in effect on the date hereof or as
such law or the Governing Instruments 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 such law or Governing
Instruments permitted the Company to provide prior to such amendment) and (ii)
to take all such action as may reasonably be required or requested to carry out
such indemnification. Notwithstanding the foregoing, the Company shall not be
required to indemnify Indemnitee for any Expenses and Liabilities to the extent
that such amounts have been paid directly to Indemnitee pursuant to any
directors and officers liability insurance policy maintained by the
Company. Without limiting the generality of the
foregoing:
(a) Third Party
Proceedings. The Company shall indemnify Indemnitee if Indemnitee was or
is a party or is threatened to be made a party to any Proceeding (as defined in
Section 1(h) below), other than a Proceeding by or in the right of the Company,
by reason of the fact that Indemnitee is or was a director and/or an officer of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, limited liability company,
partnership, joint venture, trust or other enterprise (including, without
limitation, service with respect to employee benefit plans), against any and all
Expenses and Liabilities actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with such Proceeding, and any appeal
therefrom, provided that Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee’s conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that Indemnitee did not satisfy the foregoing standard of conduct to
the extent applicable thereto.
(b) Proceedings By or in the
Right of the Company. The Company shall indemnify Indemnitee if
Indemnitee is or was a party or is threatened to be made a party to any
Proceeding by or in the right of the Company by reason of the fact that
Indemnitee is or was a director and/or an officer of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, limited liability company, partnership, joint venture,
trust or other enterprise (including, without limitation, service with respect
to employee benefit plans), against any and all Expenses and, to the extent
permitted by law, amounts paid in settlement actually and reasonably incurred by
Indemnitee or on Indemnitee’s behalf in connection with the defense or
settlement of such Proceeding, and any appeal therefrom, if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company in the Indemnitee’s capacity as a
director, officer, or agent and except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent that the
Delaware Court of Chancery or the court in which such Proceeding was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such Expenses which the Delaware Court of
Chancery or such other court shall deem proper.
(c) Successful Defense.
To the extent that Indemnitee has been successful on the merits or otherwise in
the defense of any Proceeding referred to in Section 1(a) or 1(b) above, or in
the defense of any claim, issue or matter therein, the Company shall indemnify
Indemnitee against any and all Expenses actually and reasonably incurred by
Indemnitee or on Indemnitee’s behalf in connection therewith. Dismissal of any
Proceeding with prejudice, or a settlement not involving any payment or
assumption of liability, shall be deemed a successful defense.
(d) Partial
Indemnification. If Indemnitee is entitled to indemnification under any
provision of this Agreement for a portion of the Expenses and Liabilities
actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in the
investigation, defense, appeal or settlement of any Proceeding, but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
(e) Advancement of
Expenses. All Expenses incurred by Indemnitee or on Indemnitee’s behalf
in defending a Proceeding, or in enforcing Indemnitee’s rights under any
provisions of this Agreement, shall be paid by the Company in advance of the
final disposition of such Proceeding in the manner prescribed by Section 3
below.
(f) Amendments to
Indemnification Rights. The Company shall not adopt any amendment to its
Governing Instruments, the effect of which would be to deny, diminish or
encumber Indemnitee’s rights to indemnity pursuant to the Governing Instruments,
the DGCL or any other applicable law as applied to any act or failure to act
occurring in whole or in part prior to the date (the “Effective Date”) upon
which the amendment was approved by the Board of Directors. In the event that
the Company shall adopt any amendment to its Governing Instruments the effect of
which is to change Indemnitee’s rights to indemnity under such instruments, such
amendment shall apply only to acts or failures to act occurring entirely after
the Effective Date thereof. The Company shall give written notice to Indemnitee
of any proposal with respect to any such amendment no later than the date such
amendment is first presented to the Board of Directors (or any committee
thereof) for consideration, and shall provide a copy of any such amendment to
Indemnitee promptly after its adoption.
(g) Indemnification for Expenses
as a Witness. To the extent Indemnitee is, by reason of Indemnitee’s
status as a director and/or an officer of the Company, a witness in any
Proceeding, the Company shall indemnify Indemnitee against all Expenses in
connection therewith.
(h) Certain
Definitions. As used in this Agreement:
(i) “Expenses” shall mean
means any and all expenses to the fullest extent permitted by the DGCL (or any
other applicable law), the Governing Instruments in effect on the date hereof or
as such law or Governing Instruments may from time to time be amended (but, in
the case of any such amendment, only to the extent such amendment broadens the
range or amount of expenses that may be paid or reimbursed relative to the range
or amounts permitted before such amendment), including, without limitation, any
and all retainers, court costs, transcript costs, fees of experts, witness fees,
private investigators, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, fax transmission charges, secretarial
services, delivery service fees, attorneys’ fees, and all other costs,
disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating, being
or preparing to be a witness in, or otherwise participating in, a Proceeding or
in connection with seeking indemnification under this Agreement or enforcing
this Agreement in accordance with Section 3(g) below. Expenses also
shall include the foregoing expenses incurred in connection with any appeal
resulting from any action, suit or proceeding, including, without limitation,
the premium, security for, and other costs relating to any cost bond,
supersedeas bond, or other appeal bond or its equivalent.
(ii) “Liabilities” shall
mean any and all obligations, indebtedness and liabilities of any kind
(including, without limitation, any and all claims, judgments, settlements,
fines, ERISA excise taxes, damages, losses, deficiencies, costs, penalties,
interest, expenses, charges, and fees), to the fullest extent permitted by the
DGCL (or any other applicable law), the Governing Instruments in effect on the
date hereof or as such law or Governing Instruments may from time to time be
amended (but, in the case of any such amendment, only to the extent such
amendment broadens the range or amount of liabilities that may be paid,
reimbursed or indemnified to an Indemnitee relative to the range or amounts
permitted before such amendment).
(iii) “Proceeding” shall
mean any and all threatened, pending or completed actions, suits or proceedings,
whether civil, criminal, administrative or investigative and whether formal or
informal.
2.
Limitations on
Indemnification. No indemnity pursuant to Section 1 above shall be paid
by the Company:
(a) on
account of any suit in which judgment in a final, non-appealable decision is
rendered against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of the Company within the meaning of Section
16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
similar provisions of federal or state law;
(b) for
Expenses incurred by or on behalf of Indemnitee, as a plaintiff, in a suit
against the Company or against other directors and/or officers of the Company
(other than a suit brought by Indemnitee to enforce Indemnitee’s rights to
indemnification pursuant to this Agreement or as otherwise provided in Section 6
below), unless such suit is authorized by the Board of Directors or such
indemnification is required by law;
(c) if
a final, non-appealable decision by a court having jurisdiction in the matter
shall determine that such indemnification is not lawful; or
(d) for
amounts paid by Indemnitee in settlement of any Proceeding without the Company’s
written consent, which consent shall not be unreasonably withheld or
delayed.
3.
Indemnification
Procedures.
(a) Notice to the
Company. Promptly after receipt by Indemnitee of notice of the
commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof
is to be made against the Company under this Agreement, notify the Company of
the commencement thereof. Such notice shall set forth in reasonable detail the
events giving rise to such claim and the amount requested, if known. Failure of
Indemnitee to provide such notice shall not relieve the Company of its
obligations under this Agreement except to the extent such failure has a
material and adverse effect on the ability of the Company to meet such
obligations.
(b) Notice to Insurers.
If, at the time of receipt of such notice, the Company has directors and
officers liability insurance in effect, the Company shall give prompt notice of
the commencement of such Proceeding to the insurer or insurers in accordance
with the procedures set forth in the respective policy or policies in favor of
Indemnitee. The Company shall thereafter take all necessary or desirable action
to cause such insurer or insurers to pay, on behalf of Indemnitee, all Expenses
and Liabilities payable as a result of such Proceeding in accordance with the
terms of such policy or policies.
(c) Advancement of
Expenses. Subject to Sections 3(d) and 3(e) below, the Expenses
reasonably incurred by Indemnitee or on Indemnitee’s behalf in investigating,
defending or appealing any Proceeding covered by Section 1 above, or in
enforcing Indemnitee’s rights under any provisions of this Agreement, shall be
paid by the Company within 20 days of Indemnitee’s written request therefor even
if there has been no final disposition of such Proceeding. Indemnitee’s written
request shall state the amount requested and shall be accompanied by copies of
the invoices or other relevant documentation.
(d) Undertaking to Repay
Advances. Indemnitee undertakes and agrees, if and to the extent required
by applicable law, that Indemnitee shall reimburse the Company for all advances
of Expenses paid by the Company to Indemnitee under this Agreement with respect
to any Proceeding in the event and only to the extent that it shall ultimately
be determined that Indemnitee was not entitled to be indemnified under this
Agreement with respect to such Proceeding.
(e) Assumption of Defense by the
Company. Except as otherwise provided below, the Company, jointly with
any other indemnifying party similarly notified, will be entitled to assume the
defense of any Proceeding of which it has been notified by Indemnitee pursuant
to Section 3(a) above, with counsel reasonably satisfactory to Indemnitee; provided, however that, without
the prior written consent of Indemnitee, the Company shall not settle,
compromise or consent to the entry of any judgment in any such Proceeding if and
to the extent the claimant seeks any non-monetary relief from Indemnitee. After
notice from the Company to Indemnitee of its election to assume the defense
thereof, the Company will not be liable to Indemnitee under this Agreement for
any legal or other Expenses subsequently incurred by Indemnitee; provided, however, that
Indemnitee shall have the right to employ Indemnitee’s own counsel in such
Proceeding at the expense of the Company if, at any time after such notice from
the Company, (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 such
defense, or (iii) the Company shall not in fact have employed counsel to assume
the defense of such Proceeding, in each of which cases the Expenses of
Indemnitee’s counsel shall be subject to reimbursement in accordance with the
terms of this Agreement. The Company shall not be entitled to assume
Indemnitee’s defense of any Proceeding brought by the Company or as to which
Indemnitee shall have made the conclusion provided for in clause (ii) of the
preceding sentence.
(f)
Determination of Right to
Entitlement.
(i) In
the event that Indemnitee incurs liability for any Liabilities (or, to the
extent not previously advanced pursuant to Section 3(c) above, Expenses), and
indemnification is sought under this Agreement, the Company shall pay (or
provide for payment if so required by the terms of any judgment or settlement)
such amounts within 20 days of Indemnitee’s written request therefor unless a
determination is made within such 20 day period that the claims giving rise to
such request are excluded or indemnification is otherwise not due under this
Agreement. Such determination, and any determination required by applicable law
as to whether Indemnitee has met the standard of conduct required to qualify and
entitle Indemnitee, partially or fully, to indemnification under Section 1 of
this Agreement, shall be made, at the Company’s discretion, (x) by the Board of
Directors by a majority vote of the directors who were not parties to such
Proceeding even though less than a quorum, or (y) if such a majority is not
obtainable, or even if obtainable a majority of the disinterested directors so
directs, by written opinion of “independent legal counsel” (as defined below)
selected by the Company and reasonably satisfactory to Indemnitee, or (z) by the
Company’s stockholders; provided, however, that if a
“change of control” (as defined below) has occurred such determination shall be
made by written opinion of independent legal counsel selected by Indemnitee or,
if requested by Indemnitee, by the Company.
(A) The
term “change of control” shall mean: (x) the consummation of any transaction
after which any “person” or “group” (as such terms are used in Sections 3(a)(9),
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange
Act”)) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities, or possesses the power to
vote or control the vote of securities, of the Company representing 70% or more
of the combined voting power of either the Common Stock or all outstanding
securities of the Company; or (y) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation or entity,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least a majority of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets.
(B) The
term “independent legal counsel” shall mean for this purpose an attorney or firm
of attorneys experienced in matters of corporation law that is not now nor has
within the previous three years been retained to represent Indemnitee, the
Company or any other party to the Proceeding giving rise to the claim for
indemnification hereunder; provided that “independent legal counsel” shall not
include any person who under applicable standards of professional conduct would
have a conflict of interest in representing Indemnitee or the Company in an
action to determine Indemnitee’s rights under this Agreement.
(ii) Notwithstanding
the foregoing, Indemnitee may within 60 days after a determination adverse to
Indemnitee has been made as provided above, or if no determination has been made
within 20 days of Indemnitee’s written request for payment, petition the Court
of Chancery of the State of Delaware or any other court of competent
jurisdiction, or may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association, which
award shall be deemed final, unappealable and binding, to determine whether
Indemnitee is entitled to indemnification under this Agreement, and such court
or arbitrator, as the case may be, shall thereupon have the exclusive authority
to make such determination unless and until such court or arbitrator dismisses
or otherwise terminates such action without having made a determination. The
court or arbitrator, as the case may be, shall make an independent determination
of entitlement irrespective of any prior determination made by the Board of
Directors, independent legal counsel or stockholders. In any such action before
the court or arbitrator, Indemnitee shall be presumed to be entitled to
indemnification and the Company shall have the burden of proving that
indemnification is not required under this Agreement. All fees and expenses of
any arbitrator pursuant to this provision shall be paid by the
Company.
(g) Enforcement Expenses.
In the event that Indemnitee brings suit or takes any other action to enforce
Indemnitee’s rights or to collect monies due under this Agreement, and if
Indemnitee is successful therein (or if not successful, Indemnitee nevertheless
acted in good faith in bringing such suit or taking such other actions), the
Company shall reimburse (to the extent not previously advanced) Indemnitee for
all of Indemnitee’s reasonable Expenses in any such suit or action.
4.
Continuation of
Indemnification. The Company’s obligations to indemnify Indemnitee
hereunder shall continue throughout the period Indemnitee is a director and/or
an officer of the Company (or is serving at the Company’s request in any one or
more of the capacities described in Sections 1(a) and 1(b) above) and thereafter
so long as Indemnitee shall be subject to any possible claim or Proceeding by
reason of the fact that Indemnitee was a director and/or an officer of the
Company (or was serving in such other capacities).
5.
Successors and
Assigns. This Agreement shall be binding upon the Company, its successors
and assigns (including, without limitation, any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and shall inure to the benefit of Indemnitee and Indemnitee’s
heirs, personal representatives, executors and administrators and shall be
binding upon Indemnitee and Indemnitee’s successors in interest under this
Agreement.
6.
Rights Not
Exclusive. The rights provided hereunder shall not be deemed exclusive of
any other rights to which Indemnitee may be entitled under any provision of law,
the Governing Instruments, other agreement, vote of stockholders or of
disinterested directors or otherwise.
7.
Subrogation. Upon
payment of any amount under this Agreement, the Company shall be subrogated to
the extent of such payment to all of Indemnitee’s rights of recovery therefor
and Indemnitee shall take all reasonable actions requested by the Company to
secure such rights, including, without limitation, execution of all documents
necessary to enable the Company to enforce such rights.
8.
Severability. In the
event that any provision of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason, such provision shall be limited or modified in
its application to the minimum extent necessary to avoid a violation of law,
and, as so limited or modified, such provision and the balance of this Agreement
shall be enforceable in accordance with their terms.
9.
Integration. This
Agreement embodies the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings relating to the subject matter
hereof.
10. Modification. No
amendment, modification, termination or cancellation of this Agreement shall be
effective unless in writing signed by both parties hereto.
11. Notices. All notices
given under this Agreement shall be in writing and delivered either (i)
personally, (ii) by registered or certified mail (postage prepaid, return
receipt requested), (iii) by recognized overnight courier service or (iv) by
telecopy (if promptly followed by a copy delivered as provided in clauses (i),
(ii) or (iii) above), as follows:
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If
to Indemnitee:
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[NAME]
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[ADDRESS]
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If
to the Company:
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[ADDRESS]
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Notices
hereunder given as provided above shall be deemed to be duly given upon delivery
if delivered personally, three business days after mailing if by registered or
certified mail, one business day after mailing if by overnight courier service
and upon confirmation of transmission if by telecopy.
12. Interpretation. Section
references are to this Agreement, unless otherwise specified. The
captions in this Agreement are for convenience only and shall not in any way
affect the meaning or construction of any provisions of this
Agreement.
13. Counterparts. This
Agreement may be executed in counterparts, all of which, taken together, shall
be considered one and the same agreement, it being understood that counterparts
may be delivered by facsimile.
14. Governing Law. This
Agreement shall be interpreted and enforced in accordance with the laws of the
State of Delaware without regard to principles of conflicts of
laws.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of
the day and year first above written.
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SOUTHWALL
TECHNOLOGIES INC.
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By:
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Name:
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Xxxxxx
X. Xxxxxxxxx
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Title:
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Chief
Executive Officer
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[NAME
OF
DIRECTOR/OFFICER]
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