INDEMNIFICATION AGREEMENT
Exhibit 10.6
THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of ___,
2007, by and between Vuzix Corporation (the “Company”), and (the “Indemnitee”).
RECITALS:
WHEREAS, the Board of Directors of the Company (the “Board of Directors”) has reviewed and
analyzed the protection from liability available to Directors and Officers of the Company and its
subsidiaries under the Company’s existing corporate documents, applicable law and liability
insurance;
WHEREAS, the Board of Directors has determined that the risks of litigation and possible
liability for Directors and Officers arising out of the performance of their duties have
substantially increased, and that the protection offered by the Company’s existing corporate
documents, applicable law, and liability insurance is not sufficient to fully protect Directors and
Officers from liability;
WHEREAS, the Board of Directors has determined that highly competent persons will be difficult
to attract and retain as Directors and/or Officers unless they are adequately protected against
liabilities incurred in performance of their duties in such capacity;
WHEREAS, the Board of Directors has determined that the use of indemnification agreements will
allow the Company to offer some protection from liability to its Directors and Officers;
WHEREAS, the Indemnitee is a Director and/or Officer of the Company;
WHEREAS, Article Ten of the Company’s Certificate of Incorporation and Article 6 of the
Company’s By-laws provide for indemnification of Directors and Officers acting on behalf of the
Company; and
WHEREAS, Section 145 of the Delaware General Corporation Law (the “Statute”) specifically
provides that the indemnification provided by the Statute is not exclusive;
NOW THEREFORE, in consideration of the Indemnitee’s past and continued services to the
Company, the mutual agreements and covenants contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Indemnification. The Company agree to indemnify the Indemnitee to the fullest extent now or
hereafter permitted by applicable law (including, without limitation, the indemnification permitted
by the Statute) in the event that the Indemnitee was or is
made or is threatened to be made a party to or a witness in any threatened, pending or
completed action, suit, proceeding or appeal, whether civil, criminal, administrative or
investigative, by reason of
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the fact that the Indemnitee was or is a Director and/or Officer of the Company or any of its
subsidiaries, partnerships, joint ventures, trusts, or other enterprises, both as to any action or
inaction in his official capacity and as to any action or inaction by him in another capacity
(including his service as an officer or director of another entity,, where he acts or acted in that
capacity at the Company’s request), against all reasonable expenses (including attorneys’ fees and
disbursements), judgments, fines (including excise taxes and penalties) and amounts paid in
settlement actually and reasonably incurred by the Indemnitee in connection with such action, suit,
proceeding or appeal. This Agreement is intended to cover all actions, suits, proceedings and
appeals arising out of or connected with the Indemnitee’s service as a Director and/or Officer of
the Company and Indemnitee’s service in another capacity at the request or direction of the Company
which are currently pending or threatened or which arise in the future, even if the Indemnitee is
no longer a Director and/or Officer or is no longer serving in such other capacity when such
action, suit, proceeding or appeal arises or is threatened.
2. Advance Payment of Expenses. Expenses incurred by the Indemnitee in connection with any
action, suit, proceeding or appeal, as described herein, shall be paid by the Company in advance of
the final disposition of such action, suit, proceeding or appeal within thirty (30) days of
Company’s receipt of any invoice for reasonable and actual expenses incurred by Indemnitee;
provided however, Indemnitee has within fifteen (15) days after the Company’s request, executed a
written agreement reasonably satisfactory to the Company’s counsel to repay all such amounts it if
is ultimately determined that he is not entitled to be indemnified by the Company under applicable
law.
3. Changes in the Law; Partial Indemnification.
(a) In the event of any changes after the date of this Agreement in any applicable law,
statute or rule (including judicial interpretation thereof) which expand the right of the Company
to indemnify its Directors and Officers, the Indemnitee’s rights and the Company’s obligations
under this Agreement shall be expanded to include such changes in applicable law, statute or rule.
In the event of any changes in any applicable law, statute or rule (including judicial
interpretation thereof) which narrow the right of the Company to indemnify its Directors and
Officers, such changes, 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) The indemnification provided by this Agreement shall not be deemed exclusive of any rights
to which the Indemnitee may be entitled under the Company’s Certificate of Incorporation, its
By-laws, any agreement, any vote of shareholders or Directors, applicable law or otherwise, both as
to action or inaction in the Indemnitee’s official capacity and as to his action or his inaction in
another capacity while holding such directorship or office, where he acts or acted in that capacity
at the Company’s request.
(c) If the 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 or
reasonable incurred by the Indemnitee in the preparation, investigation defense, appeal or
settlement of any civil or criminal action, suit, proceeding or appeal, but not,
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however, for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for
the portion of such expenses, judgments, fines or penalties to which the Indemnitee is entitled.
4. Contribution. If the indemnification provided in Section 1 hereof may not be paid to the
Indemnitee under applicable law, then in any threatened, pending or completed action, suit,
proceeding or appeal in which the Company is jointly liable with the Indemnitee, the Company shall
contribute to the amount of reasonable expenses (including attorneys’ fees and disbursements),
judgments, fines (including expense taxes and penalties) and amounts paid in settlement actually
and reasonably incurred and paid or payable by the Indemnitee in such proportion as is appropriate
to reflect (a) the relative benefits received by the Company on the one hand and the Indemnitee on
the other hand from the transaction from which such action, suit, proceeding or appeal arise, and
(b) the relative fault of the Company on the one hand and of the Indemnitee on the other in
connection with the events which resulted in such expenses, judgments, fines or settlement amounts,
as well as any other relevant equitable considerations. The relative fault of the Company on the
one hand and of the Indemnitee on the other shall be determined by reference to, among other
things, the parties’ relative intent, knowledge, access to information and opportunity to correct
or prevent the circumstances resulting in such expenses, judgments, fines or settlement amounts.
The Company agrees that it would not be just and equitable if contribution pursuant to this Section
4 were determined by pro rata allocation or any other method of allocation which does not take
account of the foregoing equitable considerations.
5. Exclusions.
(a) The Company shall not be liable to make any payment hereunder (whether in the nature of
indemnification or contribution) to the extent payment is actually made to the Indemnitee under an
insurance policy (an “Insurance Policy”) or any other method outside of this Agreement. Before
payment is reasonably expected to be made under an Insurance Policy or such other method, if the
Indemnitee is required to pay any amount that the Company would otherwise be obligated to pay
except for the exclusion in this subparagraph (a), the Company shall promptly advance the amount
the Indemnitee is required to pay for which the Company would otherwise be liable hereunder. In the
event that the Company makes any advance to the Indemnitee under this subparagraph (a), the
Indemnitee shall promptly execute an assignment, in a form reasonably satisfactory to the Company’s
counsel, under which the funds the Indemnitee later receives under such Insurance Policy or such
other method are assigned to the Company in an amount not to exceed the amount which the Company
advanced pursuant to this subparagraph (a).
(b) The Company shall not be liable hereunder for any amounts paid in settlement of a
proceedings effected without its prior written consent, which shall not be unreasonably withheld.
6. Term. All obligations of the Company contained herein shall continue during the period the
Indemnitee is a Director and/or Officer of the Company or any of its subsidiaries, partnerships,
joint ventures, trusts or other enterprises and shall continue thereafter (a) until
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both parties agree in writing to terminate this Agreement, or (b) as long as the Indemnitee remains
subject to any possible claim or threatened, pending or completed action, suit, proceeding or
appeal, whether civil, criminal, administrative or investigative, arising out of the Indemnitee’s
service as a Director or Officer or in any other capacity in which he served at the Company’s
request while a Director or Officer.
7. Enforcement. In the event the Indemnitee is required to bring any action to enforce rights
or to collect funds due under this Agreement and is successful in such action, the Company shall
reimburse the Indemnitee for all of the Indemnitee’s reasonable expenses (including attorneys’ fees
and disbursements) in bringing and pursuing such action. The burden of proving that indemnification
or advancement of expenses are not reasonable shall be on the Company.
8. Obligations of the Indemnitee.
(a) Promptly after receipt by the Indemnitee of notice of the commencement of any action,
suit, proceeding or appeal in which the Indemnitee is made or is threatened to be made a part or a
witness, the Indemnitee shall notify the Company in writing of the commencement of such action,
suit, proceeding or appeal, but the Indemnitee’s failure to notify the Company shall not relieve
the Company from any obligation to indemnify or advance expenses to the Indemnitee under this
Agreement, except to the extent such delay in providing notice has caused actual material damages
to the Company through prejudice to the Company’s rights or its ability to defend the action, suit,
proceeding or appeal.
(b) The Indemnitee shall reimburse the Company for all or an appropriate portion of the
expenses advanced to the Indemnitee pursuant to Section 2 above if it is finally judicially
adjudicated that the Indemnitee is not entitled to be indemnified, or not entitled to be fully
indemnified because of indemnification in the particular circumstances is not permitted under
applicable law.
(c) The Indemnitee shall not settle any claim or action in any manner which would impose on
the Company any penalty, constraint, or obligation to hold harmless or indemnify the Indemnitee
pursuant to this Agreement without the Company’s prior written consent, which shall not be
unreasonably withheld.
9. Defense of Claim.
(a) Except as otherwise provided below, in the case of any action, suit, proceeding or appeal
commenced against the Indemnitee, the Company shall be entitled to participate therein at its own
expense and, to the extent that it may wish, to assume the defense thereof. If the Company wishes
to assume the defense of any action, suit, proceeding or appeal hereunder, the Company must give
written notice to the Indemnitee of such assumption of defense and of its choice of counsel. Such
choice of counsel must be approved in writing by the Indemnitee in his sole discretion, which will
not be unreasonably withheld, before the Company’s assumption of defense hereunder may
proceed. After notice from the Company to Indemnitee of its election to assume the defense of
any action, suit, proceeding or appeal and the Indemnitee’s approval of the
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Company’s choice of counsel, the Company shall not be obligated to the Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof other than reasonable costs of investigation, travel and lodging expenses
arising out of the Indemnitee’s participation in such action, suit, proceeding or appeal, except as
otherwise provided herein. The Indemnitee shall have the right to employ the Indemnitee’s own
counsel in such action, suit, proceeding or appeal, but the fees and expenses of such counsel
incurred after notice from the Company to the Indemnitee of its assumption of the defense thereof
shall be a the Indemnitee’s expense (i) unless the employment of such counsel has been requested by
the Indemnitee and authorized in writing by the Company, or (ii) unless the Company shall have
employed counsel to assume the defense of such action, suit, proceeding or appeal, in which case
the reasonable fees and expenses of the Indemnitee’s counsel shall be at the expense of the
Company, or (iii) unless counsel for the Indemnitee shall have provided a written opinion to
Company in accordance with applicable standards of professional conduct that there may be a
conflict of interest between the Company and the Indemnitee in the defense of such action, suit,
proceeding or appeal; and (iv) except for reasonable costs and expenses for counsel for Indemnitee
to monitor proceedings (provided, however, that such counsel for will not appear as counsel of
record in any such proceeding).
(b) In the event that counsel for the Indemnitee concludes that there may be a conflict of
interest between the Company and the Indemnitee in the defense of an action, suit, proceeding or
appeal, (i) the Company shall not have the right to assume and direct the defense of such action,
suit, proceeding or appeal on behalf of the Indemnitee, and (ii) the Company shall indemnify the
Indemnitee for all reasonable legal fees and other reasonable expenses, but the Company shall not
be liable for any settlement or negotiated disposition of such action, suit, proceeding or appeal
or any part thereof effected without the written consent of the Company, which shall not be
unreasonably withheld.
10. Severability. If any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11. Notices. Any notices or other communications required or desired hereunder shall be
written and shall be given by (a) certified mail, return receipt requested, (b) overnight courier
service, or (c) personal delivery. Such notice or communication shall be deemed to be given upon
receipt or on the date of courier or personal delivery, as applicable, and shall be given at the
following addresses:
the Company: | Vuzix Corporation | ||||
00 Xxxx Xxxxxx Xxxxx | |||||
Xxxxxxxxx, XX 00000 | |||||
Attn: Chief Financial Officer | |||||
Indemnitee: | |||||
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or to such other address as either party may specify by written notice to the other party.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware.
(b) This Agreement shall be binding upon the Indemnitee, his heirs, personal representatives
and permitted assigns, and upon the Company, its successors and assigns. This Agreement shall inure
to the benefit of the Indemnitee, his heirs, personal representatives and permitted assigns, and to
the benefit of the Company, its successors and assigns. No assignment of this Agreement or of any
duty or obligation hereunder shall be made by the Indemnitee without the prior written consent of
the Company, which shall not be unreasonably withheld.
(c) This Agreement supersedes any other oral or written agreements between the Company and the
Indemnitee which would restrict or lessen any of the rights granted to the Indemnitee hereunder.
(d) No amendment, modification, termination or claimed waiver of any of the provisions hereof
shall be valid unless in writing and signed by the party or an authorized representative of the
party against whom such modification is sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement
as of the date first above written.
VUZIX CORPORATION | ||||||
By: | ||||||
Name: | ||||||
Title: | ||||||
INDEMNITEE: | ||||||
Name: |
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