EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of
____________ __, 20___ by and between Celebrate Express, Inc. (the "Company"),
and ____________________________ ("Indemnitee").
RECITALS
A. Indemnitee is an officer or director of the Company and in such
capacity is performing valuable services for the Company.
B. The Company and Indemnitee recognize the difficulty in obtaining
directors' and officers' liability insurance, the significant cost of such
insurance and the general reduction in the coverage of such insurance.
C. The Company and Indemnitee further recognize the substantial
increase in litigation subjecting officers and directors to expensive litigation
risks at the same time that such liability insurance has been severely limited.
D. As of the date hereof, the Company has provisions for
indemnification of its directors in Article V of its Amended and Restated
Articles of Incorporation (the "Articles of Incorporation") and Article X of its
Amended and Restated Bylaws (the "Bylaws") which provide for indemnification of
the Company's directors and officers to the fullest extent permitted by the
Washington Business Corporation Act (the "Statute").
E. The Articles of Incorporation, Bylaws and the Statute specifically
provide that they are not exclusive, and thereby contemplate that contracts may
be entered into between the Company and the members of its Board of Directors
and its officers with respect to indemnification of such directors and officers.
F. The Bylaws provide that the Company may maintain, at its expense,
insurance to protect itself and any of its directors and officers against
liability asserted against such persons incurred in such capacity whether or not
the Company has the power to indemnify such persons against the same liability
under Section 23B.08.510 or .520 of the Statute or a successor statute.
G. In order to induce Indemnitee to continue to serve as an officer
and/or director, as the case may be, of the Company, the Company has agreed to
enter into this Agreement with Indemnitee.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals above, the mutual
covenants and agreements herein contained, and Indemnitee's continued service as
an officer and/or director, as the case may be, of the Company after the date
hereof, the parties to this Agreement agree as follows:
1. INDEMNITY OF INDEMNITEE
(a) Scope. The Company agrees to hold harmless and indemnify
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by this Agreement, the Company's
Articles of Incorporation, the Bylaws, the Statute or otherwise. In the
event of any change, after the date of this Agreement, in any applicable law,
statute or rule regarding the right of a Washington corporation to indemnify a
member of its board of directors or an officer, such changes, to the extent that
they would expand Indemnitee's rights hereunder, shall be within the purview of
Indemnitee's rights and the Company's obligations hereunder, and, to the extent
that they would narrow Indemnitee's rights hereunder, shall be excluded from
this Agreement; provided, however, that any change that is required by
applicable laws, statutes or rules to be applied to this Agreement shall be so
applied regardless of whether the effect of such change is to narrow
Indemnitee's rights hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, the Bylaws, any agreement, any
vote of shareholders or disinterested directors, the Statute, or otherwise,
whether as to action in Indemnitee's official capacity or otherwise.
(c) Additional Indemnity. If Indemnitee was or is made a party, or
is threatened to be made a party, to or is otherwise involved (including,
without limitation, as a witness) in any Proceeding (as defined below), the
Company shall hold harmless and indemnify Indemnitee from and against any and
all losses, claims, damages, liabilities, expenses (including attorneys' fees),
judgments, fines, ERISA excise taxes or penalties, amounts paid in settlement
(if such settlement is approved in advance by the Company, which approval shall
not be unreasonably withheld) actually and reasonably incurred by Indemnitee in
connection with such Proceeding 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, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful
(collectively, "Damages").
(d) Definition of Proceeding. For purposes of this Agreement,
"Proceeding" shall mean any actual, pending or threatened action, suit, claim or
proceeding, whether civil, criminal, administrative or investigative (including
actions, suits, or proceedings brought by or in the right of the Company) and
whether formal or informal, in which Indemnitee is, was or becomes involved as a
party or otherwise, by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company or that, being or having been such a
director, officer, employee or agent, Indemnitee is or was serving at the
request of the Company as a director, officer, employee, trustee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise (collectively a "Related Company"), including service with respect to
an employee benefit plan, whether the basis of such proceeding is alleged action
(or inaction) by Indemnitee in an official capacity as a director, officer,
employee, trustee or agent or in any other capacity while serving as a director,
officer, employee, trustee or agent; provided, however, that, except with
respect to an action to enforce the provisions of this Agreement, Proceeding
shall not include any action, suit, claim or proceeding instituted by or at the
direction of Indemnitee unless such action, suit, claim or proceeding is or was
authorized by the Company's Board of Directors.
(e) Determination of Entitlement. In the event that a
determination of Indemnitee's entitlement to indemnification is required
pursuant to Section 23B.08.550 of the Statute or any successor thereto or
pursuant to other applicable law, the appropriate decision-maker shall make such
determination; provided, however, that Indemnitee shall initially be presumed in
all cases to be entitled to indemnification, that Indemnitee may establish a
conclusive presumption of any fact necessary to such a determination by
delivering to the Company a declaration made under penalty of perjury that such
fact is true and that, unless the Company shall deliver to Indemnitee written
notice of a determination that Indemnitee is not entitled to indemnification
within twenty (20) days of the Company's receipt of Indemnitee's initial written
request for indemnification, such determination shall conclusively be deemed
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to have been made in favor of the Company's provision of indemnification and the
Company hereby agrees not to assert otherwise.
(f) Survival. The indemnification provided under this Agreement
shall apply to any and all Proceedings, notwithstanding that Indemnitee has
ceased to be a director, officer, employee, trustee or agent of the Company or a
Related Company.
2. EXPENSE ADVANCES
(a) Generally. The right to indemnification of Damages conferred
by Section 1 shall include the right to have the Company pay Indemnitee's
expenses in any Proceeding as such expenses are incurred and in advance of such
Proceeding's final disposition (such right is referred to hereinafter as an
"Expense Advance"). Any Expense Advance to be made under this Agreement shall be
paid by the Company to Indemnitee within twenty (20) days following delivery of
a written request therefor by Indemnitee to the Company.
(b) Conditions to Expense Advance. The Company's obligation to
provide an Expense Advance is subject to the following conditions:
(i) Undertaking. If the Proceeding arose in connection with
Indemnitee's service as a director or officer of the Company (and not in any
other capacity in which Indemnitee rendered service, including service to any
Related Company), then Indemnitee or his or her representative shall have
executed and delivered to the Company an undertaking, which need not be secured
and shall be accepted without reference to Indemnitee's financial ability to
make repayment, by or on behalf of Indemnitee to repay all Expense Advances if
and to the extent that it shall ultimately be determined by a final,
unappealable decision rendered by a court having jurisdiction over the parties
and the question that Indemnitee is not entitled to be indemnified for such
Expense Advance under this Agreement or otherwise.
(ii) Cooperation. Indemnitee shall give the Company such
information and cooperation as it may reasonably request and as shall be within
Indemnitee's power.
(iii) Affirmation. Indemnitee shall furnish, upon request by
the Company and if required under applicable law, a written affirmation of
Indemnitee's good faith belief that any applicable standards of conduct have
been met by Indemnitee.
3. PROCEDURES FOR ENFORCEMENT
(a) Enforcement. In the event that a claim for indemnity, an
Expense Advance or otherwise is made hereunder and is not paid in full within
sixty days (twenty days for an Expense Advance) after written notice of such
claim is delivered to the Company, Indemnitee may, but need not, at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim (an "Enforcement Action").
(b) Presumptions in Enforcement Action. In any Enforcement Action
the following presumptions (and limitation on presumptions) shall apply:
(i) The Company shall conclusively be presumed to have
entered into this Agreement and assumed the obligations imposed on it hereunder
in order to induce Indemnitee to continue as an officer and/or director, as the
case may be, of the Company;
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(ii) Neither (i) the failure of the Company (including the
Company's Board of Directors, independent or special legal counsel or the
Company's shareholders) to have made a determination prior to the commencement
of the Enforcement Action that indemnification of Indemnitee is proper in the
circumstances nor (ii) an actual determination by the Company, its Board of
Directors, independent or special legal counsel or shareholders that Indemnitee
is not entitled to indemnification shall be a defense to the Enforcement Action
or create a presumption that Indemnitee is not entitled to indemnification
hereunder; and
(iii) If Indemnitee is or was serving as a director, officer,
employee, trustee or agent of a corporation of which a majority of the shares
entitled to vote in the election of its directors is held by the Company or in
an executive or management capacity in a partnership, joint venture, trust or
other enterprise of which the Company or a wholly owned subsidiary of the
Company is a general partner or has a majority ownership, then such corporation,
partnership, joint venture, trust or enterprise shall conclusively be deemed a
Related Company and Indemnitee shall conclusively be deemed to be serving such
Related Company at the request of the Company.
(c) Attorneys' Fees and Expenses for Enforcement Action. In the
event Indemnitee is required to bring an Enforcement Action, the Company shall
indemnify and hold harmless Indemnitee against all of Indemnitee's fees and
expenses in bringing and pursuing the Enforcement Action (including attorneys'
fees at any stage, including on appeal); provided, however, that the Company
shall not be required to provide such indemnity for such attorneys' fees or
expenses if a court of competent jurisdiction determines that each of the
material assertions made by Indemnitee in such Enforcement Action was not made
in good faith or was frivolous.
4. LIMITATIONS ON INDEMNITY; MUTUAL ACKNOWLEDGMENT
(a) Limitation on Indemnity. No indemnity pursuant to this
Agreement shall be provided by the Company:
(i) On account of any suit in which a final, unappealable
judgment is rendered against Indemnitee for an accounting of profits made from
the purchase or sale by Indemnitee of securities of the Company in violation of
the provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto;
(ii) For Damages that have been paid directly to Indemnitee
by an insurance carrier under a policy of officers' and directors' liability
insurance maintained by the Company;
(iii) On account of Indemnitee's conduct which is finally
adjudged to have been intentional misconduct, a knowing violation of law or the
RCW 23B.08.310 or any successor provision of the Statute, or a transaction from
which Indemnitee derived benefit in money, property or services to which
Indemnitee is not legally entitled; or
(iv) If a final decision by a court having jurisdiction in
the matter shall determine that such indemnification is not lawful.
(b) Mutual Acknowledgment. The Company and Indemnitee acknowledge
that, in certain instances, federal law or public policy may override applicable
state law and prohibit the Company from indemnifying Indemnitee under this
Agreement or otherwise. For example, the Company and Indemnitee acknowledge that
the Securities and Exchange Commission (the "SEC") has taken the position that
indemnification is not permissible for liabilities arising under certain federal
securities laws,
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and federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the SEC to submit
the question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
5. NOTIFICATION AND DEFENSE OF CLAIM
(a) Notification. Promptly after receipt by Indemnitee of notice
of the commencement of any Proceeding, Indemnitee will, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company in writing of the commencement thereof; but the omission to notify the
Company will not relieve the Company from any liability which it may have to
Indemnitee under this Agreement unless and only to the extent that such omission
can be shown to have prejudiced the Company's ability to defend the Proceeding.
(b) Defense of Claim. With respect to any such Proceeding as to
which Indemnitee notifies the Company of the commencement thereof:
(i) The Company may participate therein at its own expense;
(ii) The Company, jointly with any other indemnifying party
similarly notified, may assume the defense thereof, with counsel satisfactory to
Indemnitee. After notice from the Company to Indemnitee of its election to
assume the defense thereof, the Company shall not be liable to Indemnitee under
this Agreement for any legal or other expenses (other than reasonable costs of
investigation) subsequently incurred by Indemnitee in connection with the
defense thereof unless (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 the defense of such action, or (iii) the Company shall not in fact
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel shall be at the expense of the Company.
The Company shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or as to which Indemnitee
shall have made the conclusion provided for in (ii) above;
(iii) The Company shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any Proceeding
effected without its written consent;
(iv) The Company shall not settle any action or claim in any
manner which would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent; and
(v) Neither the Company nor Indemnitee will unreasonably
withhold its, his or her consent to any proposed settlement.
(c) Notice to Insurers. If, at the time of the receipt of a notice
of a claim pursuant to Section 5(a) 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.
6. 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
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inability, pursuant to court order, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. The provisions of
this Agreement shall be severable, as provided in this Section 6. 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
Agreement that shall not have been invalidated, and the balance of this
Agreement not so invalidated shall be enforceable in accordance with its terms.
7. NO EMPLOYMENT RIGHTS. Nothing contained in this Agreement is
intended to create in Indemnitee any right to continued employment.
8. OFFICER AND DIRECTOR 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 officers and directors 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 policies of
director and officer 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 key employees, if
Indemnitee is not an officer or director but is a key employee. 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 parent
or subsidiary of the Company.
9. 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 or reasonably
incurred 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.
10. MISCELLANEOUS
(a) Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Washington, without giving effect to principles of conflict of law.
(b) Entire Agreement; Enforcement of Rights. This Agreement sets
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification, amendment or termination of this Agreement, nor any waiver of any
rights under this Agreement, shall be effective unless in writing signed by the
parties to this Agreement. The failure by either party to enforce any rights
under this Agreement shall not be construed as a waiver of any rights of such
party.
(c) Construction. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement
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shall be deemed to be the product of all of the parties hereto, and no ambiguity
shall be construed in favor of or against any one of the parties hereto.
(d) Notices. Any notice, demand or request required or permitted
to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or sent by telegram or forty-eight (48)
hours after being deposited in the U.S. mail, as certified or registered mail,
with postage prepaid, and addressed to the party to be notified at such party's
address as set forth below or as subsequently modified by written notice.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(f) Successors and Assigns. This Agreement shall be binding upon
Indemnitee and upon the Company, its successors and assigns, and shall inure to
the benefit of Indemnitee, Indemnitee's heirs, personal representatives and
assigns and to the benefit of the Company, its successors and assigns.
(g) Subrogation. 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 documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
to effectively bring suit to enforce such rights.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
CELEBRATE EXPRESS, INC.
_______________________________________________
Xxxxxxx Xxxxxx, Chief Executive Officer
AGREED TO AND ACCEPTED:
____________________________
____________________________
Print Name
Address: ___________________
___________________
[SIGNATURE PAGE TO CELEBRATE EXPRESS, INC. INDEMNIFICATION AGREEMENT]
