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INDEMNIFICATION AGREEMENT
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AGREEMENT, effective as of March 7, 2000, between SoftQuad Software,
Ltd., a Delaware corporation (the "Company"), and _____________ ("Indemnitee").
WHEREAS, Indemnitee is a director (or officer) of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors and officers of
public companies at a time when it has become increasingly difficult to obtain
adequate insurance coverage at reasonable costs;
WHEREAS, in recognition of Indemnitees need for substantial protection
against personal liability in order to enhance Indemnitees continued service to
the Company in an effective manner, the Company wishes to advancing of expenses
to Indemnitee to the full extent forth in this Agreement, and, to the extent
insurance is er the Company's directors' and officers' liability ertificate of
Incorporation, By-Laws, composition of the
NOW, THEREFORE, in consideration of the premises and of Indemnitee's
service to the Company, directly or indirectly, including to its subsidiaries or
affiliates and intending to be legally bound hereby, the parties hereto agree as
follows:
1. In the event Indemnitee was, is, or becomes a party to or a witness or
other participant in, or is threatened to be made a party to or a
witness or other participant in, any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation, whether
conducted by the Company or any other party, that Indemnitee in good
faith believes might lead to any such action, suit or proceeding,
whether civil, criminal, administrative, investigative or otherwise (a
"Claim") by reason of (or arising in part out of) the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary
of the Company, or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, or by reason of anything done or not done by
Indemnitee in any such capacity (an "Indemnifiable Event"), the Company
shall indemnify Indemnitee to the full extent permitted by law (the
determination of which shall be made by the Reviewing Party referred to
below) as soon as practicable but in any event no later than thirty
days after written demand is presented to the Company, against any and
all expenses (including attorneys' fees and all other costs, expenses,
and obligations paid or incurred in connection with investigating,
preparing for and defending or participating in the defense of
(including on appeal) any Claim relating to any Indemnifiable Event)
(collectively "Expenses"), judgments, fines, penalties and amounts paid
in settlement (including all interest, assessments and other charges
paid or payable in connection with or in respect of such judgments,
fines, penalties or amounts paid in settlement) of such Claim and, if
so requested by Indemnitee, the Company shall advance (within two
business days of such request) any and all such Expenses to Indemnitee;
provided, however, that (i) the foregoing obligation of the Company
shall not apply to a Claim that was commenced by the Indemnitee without
the prior approval of the Board of Directors of the Company unless the
Claim was commenced after a Change in Control (as defined in Section 5
herein); (ii) the foregoing obligation of the Company shall be subject
to the condition that an appropriate person or body (the "Reviewing
Party") shall not have determined (in a written opinion in any case in
which the special, independent counsel referred to in Section 4 hereof
is involved) that Indemnitee would not be permitted to be indemnified
for such Expenses under applicable law; and (iii) if, when and to the
extent that the Reviewing Party determines that Indemnitee would not be
permitted to be indemnified for such Expenses under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to reimburse the Company) for all such amounts theretofore paid
(unless has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, in which event Indemnitee shall not
be required to so reimburse the Company until a final judicial
determination requiring such reimbursement is made with respect thereto
as to in which all rights of appeal therefrom have been exhausted or
lapsed) and the Company shall not be obligated to indemnify or advance
any additional amounts to Indemnitee under this Agreement (unless there
has been a determination by a court of competent jurisdiction that the
Indemnitee would be permitted to be so indemnified or entitled to such
expense advances under applicable law).
2. If there has not been a Change in Control of the Company (as
hereinafter defined), the Reviewing Party shall be (1) quorum of the
Board of Directors consisting of directors who are not parties to the
action, suit or proceeding acting by majority vote, or, (2) if such a
quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, independent legal counsel by the
use of a written opinion or (3) the stockholders. If there has been a
Change in Control of the Company, the Reviewing Party shall be the
special, independent counsel referred to in Section 4 hereof.
3. If Indemnitee has not been indemnified by the expiration of the
foregoing thirty-day period or received expense advances or if the
Reviewing Party determines that Indemnitee would not be permitted to be
indemnified or be entitled to receive expense advances within two days
of the request therefor in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking from the
court a finding that Indemnitee is entitled to indemnification and
expense advances or enforcement of Indemnitee's entitlement to
indemnification and expense advances or challenging any detemination by
the Reviewing Party or any aspect thereof that Indemnitee is not
entitled to be indemnified or receive expense advances and the burden
of proving that indemnification or advancement of expenses is not
appropriate shall be on the Company; any detem-iination by the
Reviewing Party in favor of Indemnitee shall be conclusive and binding
on the Company, unless facts supplied by Indemnitee which form the
basis for the determination are subsequently determined to have been
materially incorrect at the time supplied. Indemnitee agrees to bring
any such litigation in any court in the States of Delaware having
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subject matter jurisdiction thereof and in which venue is proper, and
the Company hereby consents to service of process and to appear in any
such proceeding.
4. The Company agrees that if there is a Change in Control of the Company
(as hereinafter defined), then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments and
expense advances under this Agreement or any other agreement or By-laws
now or hereafter in effect relating to Claims for Indemnifiable Events,
the Company shall seek legal advice only from special, independent
counsel selected by Indemnitee who a majority of the disinterested
Directors approves (which approval shall not be unreasonably withheld),
and who has not otherwise performed services for the Company or
Indemnitee. Such counsel, among other things, shall detemiine whether
and to what extent Indemnitee is permitted to be indemnified or is
entitled to expense advances under applicable law and shall render its
written opinion to the Company and Indemnitee to such effect. The
Company agrees to pay the reasonable fees of the special, independent
counsel referred to above and to fully indemnify such counsel against
any and all expenses (including attorney's fees), claims, liabilities
and damages arising out of or relating to this Agreement or its
engagement pursuant hereto except for willful misconduct or gross
negligence.
5. For purposes of this Agreement, (a) "Change in Control of the Company"
shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d)(3) and 14(d) of the Securities Exchange Act of
1934, as amended), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, is or becomes
the beneficial owner (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 20%
or more of the combined voting power of the Company's then outstanding
securities, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
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 80%
of the combined voting power of the voting securities of the Company of
such surviving entity outstanding- immediately after such merger or
consolidation, or if 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 the Company's
assets.
6. To the extent Indemnitee is successful in such proceeding, the Company
shall indemnify Indemnitee against any and all expenses (including
attorney's fees) which are incurred by the Indemnitee in connection
with any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or Company By-laws now or
hereafter in effect relating to Claims for Indemnifiable Events and/or
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(ii) recovery under any directors' and officers' liability insurance
policies maintained by the Company, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification,
advance payment of Expenses or insurance recovery, as the case may be.
7. 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, penalties and amounts paid in settlement of any Claim
but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on
the merits or otherwise in the defense of any Claim relating in whole
or in part to any Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall
be indemnified against all Expenses incurred in connection therewith.
8. For purposes of this Agreement, the termination of any Claim by
judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contenders, or its equivalent, shall
not create a presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a court has
determined that Indemnitee is not entitled to indemnification or
expense advance or that indemnification or expense advance is not
permitted by applicable law.
9. The Company hereby agrees that, so long as Indemnitee shall continue to
serve in a capacity referred to in Section 1 hereof, and thereafter so
long as lndemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that Indemnitee served in any capacity referred to in Section 1 hereof,
the Company shall maintain in effect for the benefit of Indemnitee any
Directors' and Officers' Liability Insurance presently in force and
effect, providing, in all respects, coverage at least comparable to
that presently provided; provided, however, if, in the business
judgment of the then Board, either (a) the premium cost for such
insurance is substantially disproportionate to the amount of coverage,
or (b) the coverage provided by such insurance is so limited by
exclusions that there is insufficient benefit from such insurance, then
and in that event the Company shall not be required to maintain such
insurance but shall and hereby agrees to the full extent permitted by
law to hold harmless and indemnify Indemnitee to the fullest extent of
the coverage which would otherwise have been provided for the benefit
of Indemnitee.
10. (a) In the event of any changes after the date of this Agreement
in any applicable law, statute, or rule which expands the
right of the Company to indemnify a person serving in a
capacity referred to in Section I hereof, such change shall be
within the purview of Indemnitee's rights, and the Company's
obligations, under this Agreement. In the event of any changes
in any applicable law, statute, or rule which narrow the right
of the Company to indemnify a person serving in a capacity
referred to in Section 1 hereof, such changes, to the extent
not other-wise 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.
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(b) The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which Indemnitee may be
entitled under the Company's Certificate of Incorporation, its
By-laws, any agreement, any vote of stockholders or
disinterested directors, laws and regulations in effect now or
in the future, or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while
holding such office.
11. If the indemnification provided in Section 1 is unavailable and may not
be paid to Indemnitee because such indemnification is not permitted by
law, then in respect of any threatened, pending or completed action,
suit or proceeding in which the Company is jointly liable with
Indemnitee (or would be if joined in such action, suit or proceeding),
the Company shall contribute to the full extent permitted by law, to
the amount of expenses, judgments, fines (including excise taxes and
penalties) and amounts paid in settlement actually and reasonably
incurred and paid or payable by Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the
Company on the one hand and Indemnitee on the other hand from the
transaction from which such action, suit or proceeding arose, and (ii)
the relative fault of the Company on the one hand and of 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 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 paragraph were determined by
pro rata allocation or any other method of allocation which does not
take account of the foregoing equitable considerations.
12. All obligations of the Company contained herein shall continue during
the period Indemnitee serves in a capacity referred to in Section I
hereof of the Company and shall continue thereafter so long as
Indemnitee shall be subject to any possible Claim relating to an
Indemnifiable Event.
13. (a) Promptly after receipt by Indemnitee of notice of the
commencement of any Claim relating to an Indemnfiable Event or
proceeding in which Indemnitee is made or is threatened to be
made a party or a witness, Indemnitee shall notify the Company
of the conunencement of such Claim; but the omission so to
notify the Company shall not relieve the Company from any
obligation it may have to indemnify or advance expenses to
Indemnitee otherwise than under this Agreement.
(b) 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 Indemnitee pursuant
to this Agreement without the Company's prior written consent,
which consent shall not be unreasonably withheld.
14. If any Claim relating to an Indemnifiable Event, commenced against
Indemnitee is also commenced against the Company, the Company shall be
entitled to participate therein at its own expense, and, except as
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otherwise provided hereinbelow, to the extent that it may wish, the
Company shall be entitled to assume the defense thereof. After notice
from the Company to Indemnitee of its election to assume the defense of
any Claim, the Company shall not be obligated to Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation, travel, and lodging expenses arising out of
Indemnitee's participation `in such Claim. Indemnitee shall have the
right to employ Indemnitee's own counsel in such Claim, but the fees
and expenses of such counsel incurred after notice from the Company to
Indemnitee of its assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) otherwise authorized by the Company,
(ii) Indemnitee shall have reasonably concluded, and so notified the
Company, that there may be a conflict of interest between the Company
and Indemnitee in the conduct of the defense of such Clain-4 or (iii)
the Company shall not in fact have employed counsel to assume the
defense of such Claim, in which cases the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company. The
Company shall not be entitled to assume the defense of any Claim
brought by or on behalf of the Company or its stockholders or as to
which Indemnitee shall have made the conclusion set forth in (ii) of
this Section 14.
15. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
16. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such 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 such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
17. 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 actually received payment (under any
insurance policy, By-law or other-wise) of the amounts otherwise
indemnifiable hereunder.
18. This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors,
assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company, spouses, heirs, executors, and
personal and legal representatives. This Agreement shall continue in
effect regardless of whether Indemnitee continues to serve as an
officer or director of the Company or of any other enterprise at the
Company's request.
19. The provisions of this Agreement shall be severable in the event that
any of the provisions hereof (including any provision within a single
section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the full extent
permitted by law.
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20. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to
be performed in such state, but excluding any conflicts-of-law rule or
principle which might refer such governance, construction or
enforcement to the laws of another state or country.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
SOFTQUAD SOFTWARE, LTD.
By:
______________________________________________________________
Xxxxxxx Xxxxxxxxxxx, President
INDEMNITEE
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