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Exhibit 10.1
PACIFIC SOFTWORKS, INC.
OFFICER AND DIRECTOR
INDEMNIFICATION AGREEMENT
PREAMBLE
This Agreement is made on _________________________ between PACIFIC
SOFTWORKS, INC., a California corporation ("the Company"), and
__________________________ ("Indemnitee"). The Company believes that it is in
its best interest to attract and retain capable people to serve as directors,
officers, and agents of the Company, and enters into this Indemnification
Agreement with the belief that the Agreement will help achieve that goal.
Indemnitee is an director and/or officer of the Company.
The Company and Indemnitee are aware of the heightened risk of
litigation and other claims that may be asserted against directors, officers,
and agents of the Company. In recognition of Indemnitee's need for protection
against personal liability, to enhance the value of Indemnitee's services to the
Company, and to induce Indemnitee to provide services to the Company as a
director and/or officer, the Company seeks to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitee to the fullest
extent permitted by law and as set forth in this Agreement and, to the extent
applicable insurance is maintained, for the coverage of Indemnitee under the
Company's policies of directors' and officers' liability insurance.
In consideration of the preceding, and of Indemnitee's agreeing to
provide services to the Company, the parties agree as follows:
AGREEMENT TO INDEMNIFY
1. (a) If Indemnitee was, is, or becomes a participant in, or is
threatened to be made a participant in, a proceeding because of, or arising in
part out of, an indemnifiable event as defined in Paragraph 1(b); below, the
Company will indemnify Indemnitee from and against any and all expenses to the
fullest extent permitted by law, as it now exists or as it may be changed in the
future. The parties intend that this Agreement will provide for indemnification
in excess of that expressly granted by statute, including, but not limited to,
any indemnification provided by the Company's articles of incorporation, its
bylaws, a vote of its stockholders or disinterested directors, or by applicable
law.
(b) The term "indemnifiable event" in Paragraph 1(a), above,
refers to any event or occurrence that takes place before or after execution of
this Agreement, and that is related to:
(1) The fact that Indemnitee is or was a director or
officer of the Company; or
(2) Anything done or not done by Indemnitee in a capacity
specified in Paragraph 1(B)(1), above, whether or not the basis of the
proceeding is an alleged action in an official capacity as a director, officer,
employee, or agent, or in any other capacity while serving as a director,
officer, employee, or agent of the Company.
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(c) Notwithstanding anything in this Agreement to the contrary,
Indemnitee will not be entitled to indemnification under this Agreement in
connection with any proceeding initiated by Indemnitee against the Company or
any director of officer of the Company unless:
(1) The Company has joined in or the Board has consented
to the initiation of the proceeding;
(2) The proceeding is one to enforce indemnification
rights as set forth in Paragraph 4, below; or
(3) The proceeding is instituted after a change in
control, as defined in Paragraph 2(b), below, and independent counsel has
approved its initiation.
(d) If requested by Indemnitee, the Company will, within 10
business days of the request, advance all expenses to Indemnitee (an "expense
advance"). Notwithstanding the preceding, to the extent that the reviewing
party, as defined in Xxxxxxxxx 0, xxxxx, xxxxxxxxxx that Indemnitee would not be
permitted to be indemnified under applicable law, the Company will be entitled
to reimbursement from Indemnitee for these amounts, and Indemnitee agrees to
reimburse the Company in that event. If Indemnitee has commenced legal
proceedings in a court of competent jurisdiction to determine whether Indemnitee
should be indemnified as provided in Paragraph 3, below, a determination made by
the reviewing party that Indemnitee should not be indemnified will not be
binding, and Indemnitee will not be required to reimburse the Company for any
expense advanced until a judicial determination is made and all appeal rights
have been used or have elapsed. Indemnitee's obligation to reimburse the Company
for expense advances will be unsecured, and no interest will be charged on any
expense advance.
(e) Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful on the merits in defending a
proceeding relating to an indemnifiable event or in defending any issue or
matter in such a proceeding, Indemnitee will be indemnified against all expenses
in connection with the proceeding.
(f) If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for partial expenses, rather than
for all expenses, the Company will indemnify Indemnitee for the portion for
which Indemnitee is entitled.
REVIEWING PARTY
2. (a) Before any change in control, as defined in Paragraph 2(b),
below, occurs, the reviewing party will be an appropriate person or body
consisting of a member or members of the board of directors, or any other person
or body appointed by the board, who is not a party to the proceeding for which
Indemnitee is seeking indemnification. After a change in control, the reviewing
party will be independent counsel. On all matters arising after a change in
control (other than a change in control approved by a majority of the directors
of the board who were directors immediately before the change in control)
concerning Indemnitee's right to indemnity payments and expense advances under
this Agreement, any other agreement, applicable law, or the Company's articles
of incorporation or bylaws, the Company will seek legal advice only from
independent counsel selected by Indemnitee and approved by the Company, and who
has not otherwise performed services for the Company or the Indemnitee
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(other than indemnification matters) within the last five years. The independent
counsel will not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement. Among other responsibilities,
independent counsel will render a written opinion to the Company and Indemnitee
in whether and to what extent Indemnitee should be indemnified under applicable
law. The Company agrees to pay the reasonable fees of the independent counsel
and to indemnify counsel against any and all expenses, including attorneys'
fees, claims, liabilities, loss, and damages arising out of or relating to this
Agreement or the engagement of independent counsel under this Agreement.
(b) The term "change in control" used in Paragraph 2(a), above,
refers to a state of affairs that will be deemed to have occurred if:
(1) Any person is or becomes the beneficial owner,
directly or indirectly, of securities representing 20 percent or more of the
voting power of the Company's then-outstanding voting securities;
(2) During any period of two consecutive years,
individuals who, at the beginning of the period, constitute the board, together
with any new director whose election by the board or nomination for election by
the Company's stockholders was approved by a vote of at least two thirds of the
directors then in office who either were directors at the beginning of the
two-year period, or whose election or nomination was previously approved, cease
for any reason to constitute a majority of the board;
(3) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
a consolidation that would result in the voting securities of the Company
outstanding immediately before the merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80 percent of the total voting
power represented by the voting securities of the Company or the surviving
entity outstanding immediately after the merger or consolidation; or
(4) 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 (in one or more transactions) of all or substantially all of the
assets of the Company.
INDEMNIFICATION PROCESS AND APPEAL
3. (a) Indemnitee will receive indemnification of expenses from the
Company in accordance with this Agreement as soon as practicable after
Indemnitee has made written demand on the Company for indemnification, unless
the reviewing party has given a written opinion to the Company that Indemnitee
is not entitled to indemnification under this Agreement or applicable law.
(b) Regardless of any action by the reviewing party, if
Indemnitee has not received full indemnification within 30 days after making a
demand in accordance with Paragraph 3(a), above, Indemnitee will have the right
to enforce his or her indemnification rights under this Agreement by commencing
litigation in the appropriate California court,
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seeking an initial determination by the court or challenging any determination
by the reviewing party. The Company consents to service of process and to appear
in any proceeding. Any determination by the reviewing party not challenged by
Indemnitee will be binding on the parties. This remedy is in addition to any
other remedies Indemnitee may have in law or in equity.
(c) It will be a defense to any action brought by Indemnitee
against the Company to enforce this Agreement (other than an action brought to
enforce a claim for expenses incurred in defending a proceeding in advance of
its final disposition when the required undertaking has been tendered to the
Company) that it is not permissible, under this Agreement or applicable law, for
the Company to indemnify Indemnitee for the amount claimed. In connection with
any action or determination by the reviewing party on whether Indemnitee is
entitled to indemnification under this Agreement, the burden of proving a
defense or determination will be on the Company. Neither the failure of the
reviewing party or the Company to have made a determination before commencement
of action by Indemnitee that indemnification is proper under the circumstances
because Indemnitee has met the standard of conduct set forth in actual law, nor
an actual determination by the reviewing party or the Company that Indemnitee
had not met the applicable standard, will be a defense to the action or create a
presumption that Indemnitee has not met the applicable standard. For purposes of
this Agreement, the termination of any claim, action, suit, or proceeding by
judgment, order, settlement, conviction, or plea of nolo contendre will 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
indemnification is not permitted by applicable law.
INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING RIGHTS
4. (a) The Company will indemnify Indemnitee against any and all
expenses. If requested by Indemnitee, the Company will, within 10 business days
after request, advance Indemnitee expenses that are incurred in connection with
any claim asserted against or action brought by Indemnitee for:
(1) Indemnification of expenses or advances of expenses by
the Company under this Agreement, any other agreement, applicable law, or the
Company's articles of incorporation or bylaws relating to indemnification for
indemnifiable events; and
(2) Recovery under directors' and officers' liability
insurance policies maintained by the Company, for amounts paid in settlement if
the independent counsel has approved the settlement.
(b) The Company will not settle any proceeding in a manner that
would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Neither the Company nor Indemnitee will unreasonably withhold
consent to any proposed settlement. The Company will not be liable to indemnify
Indemnitee under this Agreement for any judicial award if the Company was not
given a reasonable opportunity to participate in the defense of the action. The
Company's liability under this Agreement will not be excused if participation in
the proceeding by the Company was barred by this Agreement.
ESTABLISHMENT OF TRUST
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5. (a) In the event of a change in control or a potential change in
control, as defined in Paragraph 5(b), below, the Company will, on Indemnitee's
written request, create a trust for Indemnitee's benefit ("the Trust"), and from
time to time on Indemnitee's written request will fund the trust in an amount
sufficient to satisfy any and all expenses reasonably anticipated at the time of
each request to be incurred in connection with investigating, preparing for,
participating in, and defending any proceeding relating to an indemnifiable
event. The amount to be deposited will be determined by the reviewing party. The
terms of the Trust will provide that on a change of control:
(1) The Trust will not be revoked or the principal invaded
without the Indemnitee's written consent.
(2) The Trustee will be chosen by Indemnitee subject to
the Company's approval. The Trustee will advance, within 10 days after
Indemnitee's request, all expenses to the Indemnitee, provided that Indemnitee
agrees to reimburse the Trust under the same circumstances for which Indemnitee
would be required to reimburse the Company under Paragraph 1(d), above.
(3) The Trust will continue to be funded by the Company in
accordance with the funding obligation set forth in this Paragraph 5.
(4) The Trustee will promptly pay Indemnitee all amounts
to which Indemnitee is entitled as indemnification under this Agreement or
otherwise.
(5) All unexpended funds in the Trust will revert to the
Company on a final determination by the reviewing party or a court of competent
jurisdiction that Indemnitee has been fully indemnified under the terms of this
Agreement.
(b) The term "potential change in control" used in Paragraph
5(a), above, refers to a state of affairs that will be deemed to have occurred
if:
(1) The Company enters into an agreement or arrangement,
the consummation of which would result in a change of control;
(2) Any person, including the Company, publicly announces
an intention to take or to consider taking action that, if consummated, would
constitute a change in control;
(3) Any person who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 10 percent or
more of the combined voting power of the Company's then-outstanding voting
securities, increases that beneficial ownership of those securities by 5 percent
or more over the percentage owned by that person on the date of this Agreement;
or
(4) The board of directors adopts a resolution to the
effect that, for purposes of this Agreement, a potential change in control has
occurred.
(c) Nothing in this Paragraph 5 relieves the Company of any of
its obligations under this Agreement. All income earned on the assets held in
the Trust will be reported as
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income by the Company for all tax purposes. The Company will pay all costs of
establishing and maintaining the Trust and will indemnify the Trustee against
any and all expenses, including attorneys' fees, claims, liabilities, loss, and
damages arising out of or relating to this Agreement or the establishment and
maintenance of the Trust.
NONEXCLUSIVE RIGHTS
6. Indemnitee's rights under this Agreement are in addition to any other
rights Indemnitee may have under the Company's articles of incorporation or
bylaws, or otherwise. To the extent that change in applicable law permits
greater indemnification by agreement than would be afforded currently under the
Company's articles of incorporation or bylaws, applicable law, or this
Agreement, it is the intent of the parties that Indemnitee enjoy by this
Agreement the greater benefits afforded by the change.
LIABILITY INSURANCE
7. To the extent the Company maintains an insurance policy providing
director's and officers' liability insurance, Indemnitee will be covered by the
policy, in accordance with its terms, to the maximum extent of the coverage
available for a Company director or officer.
PERIOD OF LIMITATIONS
8. No legal action will be brought, and no cause of action will be
asserted, by or on behalf of the Company or its affiliates, against Indemnitee,
Indemnitee's spouse, heirs, executors, assigns, or representatives after two
years from the date of accrual of the cause of action, or longer period as may
be required by state law. Any claim or cause of action of the Company or its
affiliate will be extinguished and deemed released unless asserted by the timely
filing of a legal action within that period. However, if any shorter period of
limitations is applicable to any cause of action, that shorter period will
govern.
SUBROGATION
9. If payment is made under this Agreement, the Company will be
subrogated to the extent of the payment to all the Indemnitee's rights of
recovery, who will execute all papers required and will do everything else
necessary to secure those rights, including executing documents necessary to
enable the Company to effectively bring suit to enforce those rights.
DUPLICATION OF PAYMENT
10. The Company will not be liable under this Agreement to make any
payment in connection with any claim made against Indemnitee to the extent
Indemnitee has otherwise received payment (by insurance policy, bylaw, or
otherwise) of the amounts otherwise indemnifiable under this Agreement.
BINDING EFFECT
11. This Agreement will be binding on and inure to the benefit of, and
be enforceable by, the parties and their successors, assigns, spouses, heirs,
and personal and legal representatives. The Company will require and cause any
successor to all, substantially all,
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or a substantial part of the business or assets of the Company, by written
agreement, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform as
if no such succession had occurred. The indemnification provided under this
Agreement will continue for Indemnitee for any action taken or not taken while
serving an indemnified capacity pertaining to an indemnifiable event even though
Indemnitee may have ceased to serve in that capacity at the time of any
proceeding.
AMENDMENT AND WAIVER
12. No supplement, modification, or amendment of this Agreement will be
binding unless executed in writing by both of the parties to this Agreement.
Waiver of any provision of this Agreement will not operate as a waiver of any
other provision of the Agreement. Waiver of a provision of this Agreement will
not operate as a continuing waiver. Except as specifically provided in this
Agreement, failure to exercise, or delay in exercising, any right or remedy
under this Agreement will not constitute a waiver of the right or remedy.
ENTIRE AGREEMENT
13. This Agreement constitutes the entire agreement between the parties
concerning the Company's indemnification of Indemnitee for services as an
officer or director of the Company. Any agreement or representation not
expressly set forth in this Agreement is of no effect.
SEVERABILITY
14. If any portion of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or otherwise unenforceable, the remaining
portions will remain enforceable to the full extent permitted by law. In
addition, to the fullest extent possible, the provisions of this Agreement will
be construed so as to give effect to the intent manifested by any provision held
invalid, void, or unenforceable.
NOTICES
15. Any notices or other communications required or permitted under this
Agreement must be in writing, and will be deemed to have been properly given if
made by personal delivery, or by mail, registered or certified, postage prepaid,
with return receipt requested. Mailed notice must be addressed to the Company at
000 Xxxxxx Xxxxxx Xxxx., Xxxxxxx Xxxx, XX 00000, and to the Indemnitee at
__________________________________.
GOVERNING LAW
16. This Agreement will be governed by and construed in accordance with
the laws of the State of California.
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Executed at Newbury Park, California, on the date set forth below.
COMPANY
PACIFIC SOFTWORKS, INC., a California
corporation
Dated: By:
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Indemnitee
Dated:
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