Exhibit 10.4
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is entered into as of
__________________ by and between ImageWare Software, Inc., a California
corporation ("Company") and _______________________, an individual
("Indemnitee"), with reference to the following facts:
A. The Company and Indemnitee are aware of the substantial growth in
the number of lawsuits filed against corporate directors and officers, and the
substantial costs of defending against such lawsuits.
B. The Company is aware that Indemnitee would not be willing to
continue to serve as an officer of the Company and/or any of the Company's
subsidiaries and/or on the Board of Directors of the Company and/or any of the
Company's subsidiaries if Indemnitee were required to provide his or her own
defense to any lawsuit filed against Indemnitee in his or her capacity as an
officer or director of the Company, or with respect to any other service
provided by Indemnitee for the benefit of the Company.
C. The Company has concluded that it is in the best interests of the
Company and its shareholders to contract with its directors and officers,
including Indemnitee, so as to provide them with indemnity to the fullest extent
permitted by law against personal liability for actions taken in the performance
of their duties to the Company.
D. The Board of Directors of the Company has determined, after due
consideration of this Agreement, that this Agreement is reasonable, prudent and
in the best interests of the Company and its shareholders. This Agreement is
intended to: (i) induce and encourage highly experienced and capable persons,
such as Indemnitee, to serve as directors and officers of the Company; (ii)
encourage such persons to resist what they consider to be unjustifiable suits
and claims made against them in connection with the performance of their duties
to the Company, secure in knowledge that certain expenses, costs, and
liabilities incurred by them in their defense of such litigation will be borne
by the Company and that they will receive the maximum protection against such
risks and liabilities as legally may be made available to them; and (iii)
encourage directors to exercise their best business judgment regarding matters
which come before the Board of Directors without undue concern for the risk that
claims may be made against them on account thereof.
E. The Company desires to have Indemnitee serve as an officer and/or
director of the Company free from concern about unpredictable, inappropriate or
unreasonable legal risks and personal liabilities by reason of his or her
actions or inactions in the performance of his or her duties to the Company and
its shareholders.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
I.
INDEMNIFICATION
1.01 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 any action by or in
the right of the Company) by reason of the fact that Indemnitee is or was a
director and/or officer of the Company or any subsidiary of the Company, by
reason of 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,
liability and loss (including reasonable attorneys' fees), judgments, fines and
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 action, suit or
proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in 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
act in good faith and in a manner which Indemnitee reasonably believed to be in
the best interests of the Company, and with respect to any criminal action or
proceeding, had reasonable cause to believe that Indemnitee's conduct was
unlawful. Notwithstanding the foregoing, no indemnification shall be made in any
criminal proceeding where Indemnitee has been adjudged guilty unless a
disinterested majority of the directors determine that Indemnitee did not
receive, participate in or share in any pecuniary benefit to the detriment of
the Company and, in view of all of the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for expenses or liabilities.
1.02 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 to
procure a judgment in its favor by reason of fact that Indemnitee is or was a
director and/or officer of the Company or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while a director
and/or officer or by reason of 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
expense, liability and loss (including attorneys' fees) and amounts paid in
settlement (if such settlement is court-approved) actually and reasonably
incurred by Indemnitee in connection with the defense or settlement of such
action or suit if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the best interests of the Company and its
shareholders. No indemnification shall be made in respect of any claim, issue or
matter as to which Indemnitee shall
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have been adjudged to be liable to the Company in the performance of
Indemnitee's duties to the Company and its shareholders, unless and only to the
extent that the Court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case, Indemnitee
is fairly and reasonably entitled to indemnity for expenses and then only to the
extent that the court shall determine.
1.03 MANDATORY PAYMENT OF EXPENSES. To the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1.01 or 1.02 or the defense of
any claim, issue or matter therein, Indemnitee shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.
II.
EXPENSES: INDEMNIFICATION PROCEDURE
2.01 ADVANCEMENT OF EXPENSES. The Company shall advance all
expenses reasonably incurred by Indemnitee in connection with the investigation,
defense, settlement or appeal of any civil or criminal action, suit or
proceeding referenced in Section 1.01 or 1.02 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 advance to be made hereunder shall be
paid by the Company to Indemnitee within thirty (30) days following delivery of
a written request therefor by Indemnitee to the Company. Indemnitee shall, in
accordance with the Company's policies, present invoices to the Company for
expenses actually incurred by Indemnitee. Notwithstanding the foregoing, in a
proceeding brought by the Company directly, in its own right (as distinguished
from an action brought derivatively or by any receiver or trustee), the Company
shall not be required to make the advances called for hereby if a majority of
the disinterested directors determine that it does not appear that Indemnitee
has met the standards of conduct which made it permissible under applicable law
to indemnify Indemnitee and the advancement of expenses would not be in the best
interests of the Company and its shareholders.
2.02 DETERMINATION OF CONDUCT. Any indemnification (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of Indemnitee is proper
under the circumstances because Indemnitee has met the applicable standard of
conduct set forth in Section 1.01 or 1.02 of this Agreement. Notwithstanding the
foregoing, (i) the obligations of the Company shall be subject to the condition
that the Board of Directors shall not have determined that Indemnitee would not
be permitted to be indemnified under applicable law, (ii) the obligations of the
Company shall be subject to the condition that the Board of Directors shall have
determined that Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the best interests of the Company, and, in the case
of a criminal proceeding, that Indemnitee had no reason to believe the conduct
of Indemnitee was unlawful. Such
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determination shall be made by any of the following: (1) the Board of Directors
(or by an executive committee thereof) by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, (2) if
such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, (3) by the shareholders, with the shares owned by Indemnitee not being
entitled to vote thereon, or (4) by the court in which such proceeding is or was
pending upon application made by the Company or Indemnitee or the attorney or
other person rendering service in connection with the defense, whether or not
such application by Indemnitee, the attorney or the other person is opposed by
the Company. Unless the Indemnitee shall commence litigation to challenge any
such determination, such determination shall be conclusive and binding on the
Company and Indemnitee.
2.03 NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to his or her right to be indemnified under this Agreement,
give the Company notice in writing as soon as practicable of any claim made
against Indemnitee for which indemnification will or could be sought under this
Agreement. Such notice shall include a description of the nature of the matter
and the facts underlying the matter and be accompanied by copies of any
documents filed with the court in which the matter is pending. Notice to the
Company shall be directed to the address specified in Section 9.03 hereof, or
such other address as the Company shall designate in writing to Indemnitee.
Notice shall be deemed received on the third business day after the date
postmarked if sent by domestic certified or registered mail, properly addressed;
otherwise, notice shall be deemed received when such notices shall actually be
received by the Company. In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power.
2.04 NOTICE TO INSURERS. If at the time of the receipt of a
notice of a claim pursuant to Section 2.03 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 actions 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.
2.05 SELECTION OF COUNSEL. In the event the Company shall be
obligated under Section 2.01 hereof to pay the expenses of any proceeding
against Indemnitee, the Company, shall be entitled to assume the defense of such
proceeding, with counsel reasonably approved by Indemnitee, which approval shall
not be unreasonably withheld, upon the delivery to Indemnitee of written notice
of its election so to do. 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 (a) Indemnitee shall have the right to employ his or her counsel
in any such proceeding at Indemnitee's expense; and (b) if (i) the employment of
counsel by Indemnitee has been previously 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 any such defense,
or (iii) the Company shall not, in fact, have employed counsel
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to assume the defense of such proceeding, then the reasonable fees and expenses
of Indemnitee's counsel shall be at the expense of the Company.
III.
ADDITIONAL INDEMNIFICATION RIGHTS: NON-EXCLUSIVITY
3.01 APPLICATION. The provisions of this Agreement shall be
deemed applicable to all actual or alleged actions or omissions by Indemnitee
during any and all periods of time that Indemnitee was, is, or shall be serving
as a director and/or officer of the Company.
3.02 SCOPE. The Company hereby agrees to indemnify Indemnitee
to the fullest extent permitted by law (except as set forth in Article VIII
hereof), notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Articles of
Incorporation, the Company's Bylaws or by statute. In the event of any changes,
after the date of this Agreement, in any applicable law, statute, or rule which
expands the right of a California corporation to indemnify a member of its board
of directors or an officer, such changes shall be, IPSO FACTO, within the
purview of Indemnitee's rights and the Company's obligations under this
Agreement. In the event of any change in any applicable law, statute, or rule
which narrows the right of a California corporation to indemnify a member of its
board of directors or an officer, 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.
3.03 NON-EXCLUSIVITY. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which an Indemnitee may
be entitled under the Company's Articles of Incorporation, its Bylaws, any
agreement, any vote of shareholders or disinterested directors, the California
General Corporation 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 for an action taken or not taken while serving in an indemnified
capacity even though he or she may have ceased to serve in such capacity at the
time of any action, suit or other covered proceeding.
IV.
PARTIAL INDEMNIFICATION
4.01 If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the
expenses, judgment, fines or penalties actually or reasonably 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.
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V.
MUTUAL ACKNOWLEDGMENT
5.01 Both 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 its directors and officers 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, and federal legislation prohibits indemnification for
certain ERISA violations. 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.
VI.
DIRECTORS' AND OFFICER'S LIABILITY INSURANCE
6.01 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 and officers 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 directors' and officers' 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 director, if Indemnitee is a director, or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer. 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.
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VII.
SEVERABILITY
7.01 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 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 Article VII. 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.
VIII.
EXCEPTIONS
8.01 Any other provision to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement for the
following:
(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,
unless said proceedings or claims were authorized by the board of directors of
the Company.
(b) IMPROPER PERSONAL BENEFIT. To indemnify
Indemnitee against liability for any transactions from which Indemnitee derived
an improper personal benefit, including, but not limited to, self-dealing or
usurpation of a corporate opportunity.
(c) DISHONESTY. To indemnify Indemnitee if a
judgment or other final adjudication adverse to Indemnitee established that
Indemnitee committed acts of active and deliberate dishonesty, with actual
dishonest purpose and intent, which acts were material to the cause of action so
adjudicated.
(d) INSURED CLAIMS. To indemnify Indemnitee for
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) which have been paid directly to or on behalf of Indemnitee by an
insurance carrier under a policy of officers' and directors' liability insurance
maintained by the Company or any other policy of insurance by the Company of
Indemnitee.
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(e) CLAIMS UNDER SECTION 16(B). To indemnify
Indemnitee for expenses or 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.
(f) EXCLUDED ACTS. To indemnify Indemnitee for
any acts or omissions or transactions from which a director or officer may not
be relieved of liability under Section 204 of the California Corporations Code;
or
(g) LACK OF GOOD FAITH. 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 proceeding was not made in good faith or was frivolous.
IX.
MISCELLANEOUS
9.01 CONSTRUCTION OF CERTAIN PHRASES
(a) For purposes of this Agreement, references
to the "Company" shall include any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger 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.
(b) 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 which impose duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have
acted in a manner "reasonably believed to be in the best interests of the
Company and its shareholders" as referred to in this Agreement.
9.02 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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9.03 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 addressed 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 to Indemnitee:
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If to Company: ImageWare Software, Inc.
00000 Xxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
or to such other address as may be furnished in writing to Indemnitee by the
Company or to the Company by Indemnitee, as the case may be.
9.04 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.
9.05 CHOICE OF LAW: This Agreement shall be governed by and
its provisions construed in accordance with the laws of the State of California,
as applied to contracts between California residents entered into and to be
performed entirely within California.
9.06 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
9.07 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 the 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.
9.08 NO DUPLICATION OF PAYMENTS. 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, bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMPANY:
IMAGEWARE SOFTWARE, INC.
a California corporation
By:______________________________________
INDEMNITEE:
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1454807.5
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