EXHIBIT 10.4
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "AGREEMENT") is made as of this ___
day of _____________, 1998, by and between FUTURE MEDIA PRODUCTIONS, INC., a
California corporation (the "COMPANY"), and ______________, an individual
("INDEMNITEE").
RECITALS
A. The Company and Indemnitee recognize the substantial increase in
corporate litigation in general, subjecting directors, officers, employees, and
agents to expensive litigation risk at the same time that the availability and
coverage of liability insurance has been severely limited.
B. Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other directors,
officers, employers and agents of the Company may not be willing to continue to
serve as directors, officers, employees and agents without additional
protection.
C. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as directors, officers,
employees and agents of the Company and to indemnify its directors, officers,
employees and agents so as to provide them with the maximum protection permitted
by law.
AGREEMENT
The Company and Indemnitee hereby agree as follows:
1. AGREEMENT TO SERVE. Indemnitee agrees to serve and/or continue
to serve the Company, at the Company's will (or under separate written agreement
approved by the Board of Directors of the Company (the "BOARD"), if such
agreement exists), in the capacity Indemnitee currently serves the Company, as
long as Indemnitee is duly appointed or elected and qualified in accordance with
the applicable provisions of the Bylaws of the Company or any subsidiary of the
Company or (subject to any employment agreement between Indemnitee and the
Company) until such time as Indemnitee, in his sole discretion, tenders a
written resignation or is removed in accordance with the Bylaws; PROVIDED,
HOWEVER, that nothing contained in this Agreement is intended to or shall create
any right (express or implied) to continued employment by Indemnitee.
2. INDEMNIFICATION.
a. THIRD PARTY PROCEEDINGS. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company) by reason in whole or in part
of: (i) the fact that Indemnitee is or was a director, officer, employee or
agent of the Company, or any subsidiary of the Company, (ii) any action or
inaction on the part of Indemnitee while a director, officer, employee or
agent, or (iii) the fact that Indemnitee is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against all expenses
(including, without limitation, attorneys' fees, disbursements and retainers,
accounting and witness fees, travel and deposition costs, and expenses of
investigations), judgments, fines and amounts paid in settlement (if such
settlement is approved in advance by the Company which approval shall not be
unreasonably withheld) and other amounts actually incurred by Indemnitee in
connection with such action, suit or proceeding to the fullest extent
permissible under California Law as currently in effect and as may be
expanded in the future. 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
indemnification is unavailable under this Agreement.
b. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Company or any subsidiary of the Company arising in whole or in
part out of (i) the fact that Indemnitee is or was a director, officer, employee
or agent of the Company or any subsidiary of the Company, (ii) any action or
inaction on the part of Indemnitee while a director, officer, employee or agent,
or (iii) the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including, without limitation, attorneys' fees, disbursements and retainers,
accounting and witness fees, travel and deposition costs, and expenses of
investigations) and amounts paid in settlement, in each case to the extent
actually incurred by Indemnitee in connection with such action or suit, to the
fullest extent permissible under California Law as currently in effect and as
may be expanded in the future. For purposes of this Section 2(b),
indemnification shall include, to the extent not prohibited by law,
indemnification against all judgments, fines and amounts paid in settlement
actually incurred by Indemnitee in connection with such action, suit or
proceeding.
c. MANDATORY PAYMENT OF EXPENSES. Notwithstanding any
limitations or conditions upon the Company's indemnification obligations set
forth in Sections 1(a) and (b) above, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 2(a) or (b) or in defense of any claim, issue
or matter therein, Indemnitee shall be indemnified against expenses (including,
without limitation, attorneys' fees, disbursements and retainers, accounting and
witness fees, travel and deposition costs, and expenses of investigations)
actually incurred by Indemnitee in connection therewith.
d. INDEMNIFICATION FOR SERVING AS A WITNESS. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of Indemnitee's status as a director, officer, employee or agent of the
Company, a witness in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, Indemnitee shall be indemnified against
expenses actually incurred by Indemnitee in connection therewith.
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3. EXPENSES; INDEMNIFICATION PROCEDURE.
a. ADVANCEMENT OF EXPENSES. The Company shall advance all
expenses incurred by Indemnitee in connection with the investigation, defense,
settlement or appeal of any civil, criminal, administrative or investigative
action, suit or proceeding referenced in Sections 2(a) or (b) hereof.
Indemnitee hereby undertakes to repay such amounts advanced only if, and to the
extent that, it shall ultimately be determined that Indemnitee is not entitled
to be indemnified by the Company as authorized hereby. The advances to be made
hereunder shall be paid by the Company to Indemnitee within 30 days following
delivery of a written request therefor by Indemnitee to the Company.
b. NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice, in accordance with Section 14 hereof, of any claim made
against Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the principal executive offices of the Company. In
addition, Indemnitee shall give the Company, at the Company's expense, such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power.
c. PROCEDURE. Any indemnification and advances provided for in
Section 2 and this Section 3 shall be made no later than 30 days after receipt
of the written request of Indemnitee. If a claim under this Agreement is not
paid in full by the Company within 30 days after a written request for payment
therefor has first been received by the Company, Indemnitee may, but need not,
at any time thereafter bring an action against the Company to recover the unpaid
amount of the claim and, subject to Section 13 of this Agreement, Indemnitee
shall also be entitled to be paid for the expenses (including attorneys' fees)
of bringing such action. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in connection with
any action, suit or proceeding in advance of its final disposition) that
Indemnitee has not met the standards of conduct which make it permissible under
applicable law for the Company to indemnify Indemnitee, but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the intention of the parties that if the
Company contests Indemnitee's right to indemnification under this Agreement or
applicable law, the question of Indemnitee's right to indemnification shall be
for the court to decide, and neither the failure of the Company (including its
officers, its Board, any committee or subgroup of its Board, independent legal
counsel, or its shareholders) to have made a determination that indemnification
of Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct required by this Agreement or by applicable law,
nor an actual determination by the Company (including its officers, its Board,
any committee or subgroup of its Board, independent legal counsel, or its
shareholders) that Indemnitee has not met such applicable standard of conduct,
shall create a presumption that Indemnitee has not met the applicable standard
of conduct.
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d. NOTICE TO INSURERS. If, at the time of the receipt of a
notice of a claim pursuant to Section 3(b) hereof, the Company has director and
officer liability insurance in effect, the Company shall give prompt notice of
the commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
e. SELECTION OF COUNSEL. In the event the Company shall be
obligated under Section 3(a) hereof to pay the expenses of any proceedings
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do, provided,
however, that (i) the Company shall have no right to assume the defense of any
claim, action or other matter which seeks, in whole or in part, any remedy other
than monetary damages (e.g., injunction, specific performance, criminal
sanctions) or which could, if Indemnitee were not to prevail therein, materially
damage Indemnitee's personal or business reputation, and (ii) the Company shall
have no right to assume the defense of any claim, action or other matter unless
the Company first agrees fully and unconditionally, in writing, that the Company
is obligated to indemnify Indemnitee in full with respect thereto, and waives
any and all defenses, counterclaims or set-offs which might otherwise be
asserted in limitation or mitigation of such indemnification obligation. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that (i) Indemnitee
shall have the right to employ separate counsel in any such proceeding at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
4. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
a. SCOPE. Notwithstanding any other provision of this
Agreement, in the event of any change in any applicable law, statute or rule
which narrows the right of the Company to indemnify Indemnitee, such change, to
the extent not otherwise required by such law, statute or rule to be applied to
this Agreement, shall have no effect on this Agreement or the parties' rights
and obligations hereunder.
b. NONEXCLUSIVITY. The indemnification rights provided to
Indemnitee by this Agreement shall be in addition to, and not in lieu of, any
rights to which Indemnitee may be entitled under the Company's Articles of
Incorporation, its Bylaws, any agreement, any vote of shareholders or
disinterested directors, applicable law or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee with respect to (i) any action taken or not taken
while serving in an indemnified capacity and (ii) any claim,
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action or other matter arising out of or relating to the period prior to the
date upon which Indemnitee ceased to serve in an indemnified capacity, even
though he may have ceased to serve in such capacity at the time of any
action, suit or other covered proceeding.
5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually incurred by him
in the investigation, defense, appeal or settlement of any civil or criminal
action, suit or proceeding, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee
acknowledge that in certain instances, Federal or state law or regulation may
prohibit the Company from indemnifying Indemnitee under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under law to
indemnify Indemnitee. The Company agrees to assert vigorously, in any such
action pertaining to the Company's right to indemnify Indemnitee, the position
that the Company has the full and unfettered right to so indemnify Indemnitee,
and further agrees that Indemnitee may, at any time and in Indemnitee's sole
discretion, assume control of the Company's defense of such right (including
without limitation selection of counsel and determination of strategy), with
such defense nonetheless being conducted at the Company's expense.
7. LIABILITY INSURANCE. The Company shall, from time to time, make
the good faith determination whether or not it is practicable for the Company to
obtain and maintain a policy or policies of insurance with reputable insurance
companies providing the directors, officers, employees and agents of the Company
with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this agreement. Among
other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. In all
such policies of liability insurance, Indemnitee shall be named as an insured in
such a manner as to provide Indemnitee the same rights and benefits as are
accorded to the most favorably insured of the Company's directors, if Indemnitee
is a director; or of the Company's officers, if Indemnitee is not a director of
the Company but is an officer; or of the Company's employees, if Indemnitee is
not a director or officer but is an employee; or of the Company's agents, if
Indemnitee is not a director, officer or employee but is an agent.
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain such insurance if the Company determines in good faith that such
insurance is not reasonably available, if the premium costs for such insurance
are disproportionate to the amount of coverage provided, if the coverage
provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of the Company.
8. SEVERABILITY. Nothing in this Agreement is intended to require
or shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to law,
regulation or court order, to perform its obligations under
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this Agreement shall not constitute a breach of this Agreement. The
provisions of this Agreement shall be severable as provided in this Section
8. If this Agreement or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any
applicable portion of this entire Agreement that shall not have been
invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.
9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
a. CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or otherwise but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board has approved the initiation or bringing of such suit;
b. FRIVOLOUS PROCEEDINGS. To indemnify Indemnitee for any
expenses incurred by Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such proceedings were frivolous;
c. INSURED CLAIMS. To make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise received
payment (under any insurance policy, the Articles of Incorporation or Bylaws of
the Company, contract or otherwise) of the amounts otherwise indemnifiable
hereunder. If the Company makes any indemnification payment to Indemnitee in
connection with any particular expense indemnified hereunder and Indemnitee has
already received or thereafter receives, and is entitled to retain, duplicate
payments in reimbursement of the same particular expense, then Indemnitee shall
reimburse the Company in an amount equal to the lesser of (i) the amount of such
duplicate payment and (ii) the full amount of such indemnification payment made
by the Company;
d. CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute;
e. UNLAWFUL CLAIMS. To indemnify Indemnitee in any manner
which a court of competent jurisdiction has finally determined to be unlawful;
f. FAILURE TO SETTLE PROCEEDING. In the event that Indemnitee
Fails to Pursue a Recommended Settlement of a Qualifying Claim, to indemnify
Indemnitee (i) for amounts paid or payable in settlement of such Qualifying
Claim in excess of the amount of such Recommended Settlement thereof, or (ii)
for any cost and/or expenses directly related to such Qualifying Claim incurred
by Indemnitee following the date upon which Indemnitee Fails To Pursue such
Recommended Settlement. For purposes of this clause, "Qualifying Claim" shall
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mean any claim the defense of which may be assumed by the Company under SECTION
3(e) above (i.e., any claim that (A) is not described in clause (i) of said
SECTION 3(e) and (B) with respect to which the Company has acknowledged its
unconditional duty to indemnify as described in clause (ii) of said
SECTION 3(e)), "Recommended Settlement" shall mean a reasonable written
settlement proposal, in full and final executable form in all material respects,
and "Fails To Pursue" shall mean either (i) Indemnitee's failure to communicate
a Recommended Settlement to the principal adverse party in the subject matter
within 30 days after Indemnitee' receipt thereof from the Company, or
(ii) Indemnitee's failure to agree to any Recommended Settlement that has been
accepted by all adverse parties in the subject matter within 30 days after
receipt thereof, provided the Company has (A) irrevocably deposited all funds
necessary to satisfy all of Indemnitee's obligations under such Recommended
Settlement in an account subject to Indemnitee's or a third party's control and
(B) irrevocably taken all actions and given all instructions necessary or
appropriate to permit such funds to be applied in satisfaction of such
obligations of Indemnitee.
g. BREACH OF EMPLOYMENT AGREEMENT. To indemnify Indemnitee for
any breach by Indemnitee of any employment agreement between Indemnitee and the
Company or any of its subsidiaries.
10. CONSTRUCTION OF CERTAIN PHRASES.
For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees and/or agents, so that
if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.
For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company or any
subsidiary of the Company which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit plan,
its participants, or beneficiaries.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
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13. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were frivolous. In the event of an action instituted by or in the name
of the Company under this Agreement to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including attorneys' fees, incurred by Indemnitee in defense of such
action (including with respect to Indemnitee's counterclaims and cross-claims
made in such action), unless as a part of such action the court determines that
each of Indemnitee's material defenses to such action were frivolous.
14. NOTICE. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered
by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked if
addressed as provided for on the signature page of this Agreement, unless
sooner received, or as subsequently modified by written notice.
15. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of California
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of California,
or in Federal courts located in such State.
16. CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FUTURE MEDIA PRODUCTIONS, INC.
a California corporation, as the Company
By:
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Name:
--------------------------------
Title:
--------------------------------
Notice Address:
Future Media Productions, Inc.
00000 Xxxx Xxxxx
Xxxxxxxx, XX 00000
AGREED TO AND ACCEPTED:
INDEMNITEE:
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Notice Address:
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