Exhibit 10.9
GEMSTONE SYSTEMS, INC.
INDEMNITY AGREEMENT
This Agreement is made as of July 9, 1998, by and between GEMSTONE
SYSTEMS, INC., an Oregon corporation (the "Corporation"), and _________________
(the "Indemnitee"), a director of the Corporation.
WHEREAS, it is essential to the Corporation to retain and attract as
directors of the Corporation the most capable persons available and persons who
have significant experience in business, corporate and financial matters; and
WHEREAS, the Corporation has identified the Indemnitee as a person
possessing the requisite background and abilities and desires him to continue to
serve as a member of its Board of Directors; and
WHEREAS, the substantial increase in corporate litigation may, from
time to time, subject directors to burdensome litigation, the risks of which
frequently far outweigh the advantages of serving in such capacity; and
WHEREAS, in recent times the cost of directors' and officers'
liability insurance has increased and the continued availability of such
insurance cannot be assured; and
WHEREAS, the Corporation and the Indemnitee recognize that serving as
a director of a corporation at times calls for subjective evaluations and
judgments upon which reasonable persons may differ and that, in that context, it
is anticipated and expected that directors of corporations will and do from time
to time commit actual or alleged errors or omissions in the good faith exercise
of their corporate duties and responsibilities; and
WHEREAS, it is now and has always been the express policy of the
Corporation to indemnify its directors and officers to the fullest extent
permitted by law; and
WHEREAS, the Restated Articles of Incorporation, as amended (the
"Articles") and the Bylaws of the Corporation require indemnification of the
directors and officers of the Corporation to the fullest extent permitted by the
Oregon Business Corporation Act (the "Act"); the Articles, the Bylaws and the
Act expressly provide that the indemnification provisions set forth in the
Articles, the Bylaws and in the Act, respectively, are not exclusive, and
thereby contemplate that contracts may be entered into between the Corporation
and directors and/or officers of the Corporation with respect to indemnification
of directors and/or officers; and
WHEREAS, the Corporation and the Indemnitee desire to articulate
clearly in contractual form their respective rights and obligations with regard
to the Indemnitee's service on behalf of the Corporation and with regard to
claims for loss, liability, expense or damage which, directly or indirectly, may
arise out of or relate to such service.
NOW THEREFORE, the Corporation and the Indemnitee agree as follows:
1. AGREEMENT TO SERVE.
The Indemnitee shall serve as a director of the Corporation for so
long as the Indemnitee is duly elected or appointed or until such time as the
Indemnitee tenders a resignation in writing.
2. DEFINITIONS.
As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the right of the
Corporation or otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Indemnitee may be or may have been involved
as a party, witness or otherwise, by reason of the fact that the Indemnitee is
or was a director and/or officer of or advisor to the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, whether or not serving in such capacity at the time any liability or
expense is incurred for which exculpation, indemnification or reimbursement can
be provided under this Agreement.
(b) The term "Expenses" includes, without limitation, expense of
investigations, judicial or administrative proceedings or appeals, amounts paid
in settlement by the Indemnitee, attorney, accountant and other professional
fees and disbursements and any expenses of establishing a right to
indemnification under Section 8 of this Agreement, but shall not include the
amount of judgments or fines against the Indemnitee.
(c) References to "other enterprise" shall include, without
limitation, employee benefit plans; references to "fines" shall include any
excise tax assessed with respect to any employee benefit plan; references to
"serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties on,
or involves services by, such director, advisor, officer, employee or agent with
respect to an employee benefit plan, its participants, or its beneficiaries; and
a person who acted in good faith and in a manner reasonably believed to be in
the interest of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Agreement.
3. LIMITATION OF LIABILITY.
(a) To the fullest extent permitted by law, the Indemnitee shall not
be subjected to loss, liability, expense or damage of any kind or nature
whatsoever in respect of the Indemnitee's errors or omissions (or alleged errors
or omissions) in serving the Corporation or its stockholders so long as (i) the
Indemnitee shall act in good faith and in a manner which he reasonably believes
not
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to be opposed to the best interests of the Corporation and (ii) such errors
or omissions, if any, are not shown by clear and convincing evidence to have
involved:
(i) a breach of the Indemnitee's duty of loyalty;
(ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(iii) any act from which the Indemnitee derives improper personal
benefit; or
(iv) the unlawful payment of dividends or the unlawful
repurchase of stock.
(b) Without limiting the generality of (a) above and to the fullest
extent permitted by law, the Indemnitee shall have no personal liability to the
Corporation, its stockholders or any other person claiming derivatively through
the Corporation, regardless of the theory or principle under which such
liability may be asserted, for:
(i) punitive, exemplary or consequential damages;
(ii) treble or other damages computed based upon any multiple
of damages actually and directly proved to have been
sustained;
(iii) fees of attorneys, accountants, expert witnesses or
professional consultants; or
(iv) civil fines or penalties of any kind or nature whatsoever.
4. INDEMNITY IN THIRD-PARTY PROCEEDINGS.
The Corporation shall indemnify the Indemnitee in accordance with the
provisions of this Section 4 if the Indemnitee is a party to or threatened to be
made a party to any Proceeding (other than a Proceeding by or in the right of
the Corporation to procure a judgment in its favor), against all Expenses,
judgments and fines actually and reasonably incurred by the Indemnitee in
connection with such Proceeding, if the Indemnitee acted in good faith and in a
manner which the Indemnitee reasonably believed to be in or not opposed to the
best interests of the Corporation and, in the case of a criminal proceeding, in
addition, had no reasonable cause to believe that the Indemnitee's conduct was
unlawful. The termination of any such Proceeding by judgment, order of court,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not act in
good faith and in a manner which the Indemnitee reasonably believed to be in the
best interests of the Corporation, and with respect to any criminal proceeding,
that the Indemnitee had reasonable cause to believe that the Indemnitee's
conduct was unlawful.
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5. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION.
The Corporation shall indemnify the Indemnitee in accordance with the
provisions of this Section 5 if the Indemnitee is a party to or threatened to be
made a party to any Proceeding by or in the right of the Corporation to procure
a judgment in its favor, against all Expenses actually and reasonably incurred
by the Indemnitee in connection with the defense or settlement of such
Proceeding, if the Indemnitee acted in good faith and in a manner which the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation. However, no indemnification shall be made under this Section 5
in respect of any claim, issue or matter as to which such person shall have been
finally adjudged by a court to be liable for negligence or misconduct in the
performance of the Indemnitee's duty to the Corporation, unless and only to the
extent that any court in which such Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and reasonably entitled to
indemnity.
6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding any other provisions of this Agreement, to the extent
that the Indemnitee has been successful on the merits or otherwise, in defense
of any Proceeding or in defense of any claim, issue or matter therein, including
the dismissal of an action without prejudice, the Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.
7. ADVANCES OF EXPENSES.
The Expenses incurred by the Indemnitee pursuant to Sections 4, 5 and
9 in any Proceeding shall be paid by the Corporation in advance of the final
disposition of the Proceeding at the written request of the Indemnitee, if the
Indemnitee shall undertake to repay such amount to the extent that it is
ultimately determined by a court that the Indemnitee is not entitled to
indemnification. Such advances shall be made without regard to the Indemnitee's
ability to repay such Expenses. The Corporation is expressly authorized to
establish a trust, escrow account or other secured funding source for the
payment of advances made and to be made pursuant to this Section 7 or of
Expenses incurred by the Indemnitee pursuant to Sections 4, 5 and 9 in any
Proceeding.
8. RIGHT OF THE INDEMNITEE TO INDEMNIFICATION UPON APPLICATION.
Any indemnification or advance under Sections 4, 5, 7 or 9 shall be
made no later than 45 days after receipt of the written request of the
Indemnitee, unless a determination is made within such 45-day period by (a) the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to the applicable Proceeding, or (b) independent legal counsel
in a written opinion (which counsel shall be appointed if such a quorum is not
obtainable), that the Indemnitee has not met the relevant standards for
indemnification set forth in Sections 4, 5 or 9 or that an exclusion set forth
in Section 10 is applicable.
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The right to indemnification or advances as provided by this Agreement
shall be enforceable by the Indemnitee in any court of competent jurisdiction.
The burden of proving by clear and convincing evidence that indemnification or
advances are not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors or independent legal
counsel) to have made a determination prior to the commencement of such action
that indemnification or advances are proper in the circumstances because the
Indemnitee has met the applicable standard of conduct nor an actual
determination by the Corporation (including its Board of Directors or
independent legal counsel) that the Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the Indemnitee has not met the applicable standard of conduct. The
Indemnitee's expenses incurred in connection with successfully establishing the
Indemnitee's right to indemnification or advances, in whole or in part, in any
Proceeding shall also be indemnified by the Corporation.
9. ADDITIONAL INDEMNIFICATION.
(a) Notwithstanding any limitation in Sections 4 or 5, the
Corporation shall indemnify the Indemnitee to the fullest extent permitted by
law in accordance with the provisions of this Section 9(a) if the Indemnitee is
a party to or threatened to be made a party to any Proceeding (including a
Proceeding by or in the right of the Corporation to procure a judgment in its
favor) involving a claim against the Indemnitee for breach of fiduciary duty by
the Indemnitee, against any judgments and all Expenses actually and reasonably
incurred by the Indemnitee in connection with such Proceeding, except that the
Corporation shall not make any indemnity under this Section 9(a):
(i) on account of the Indemnitee's conduct that constitutes a
breach of the Indemnitee's duty of loyalty to the
Corporation or its stockholders;
(ii) on account of the Indemnitee's acts or omissions not in
good faith, intentional misconduct, knowing violations of
law, fraud or deliberately dishonest conduct; or
(iii) if a final decision by a court having jurisdiction in the
matter determines that such indemnification is unlawful.
(b) Notwithstanding any limitation in Sections 4, 5 or 9(a), the
Corporation will indemnify the Indemnitee with respect to any Proceeding against
Expenses, judgments and fines to the fullest extent permitted by the Act,
including the nonexclusivity provision of ORS 60.414 and including any
amendments to the Act adopted after the date hereof that may increase the extent
to which a corporation may indemnify its officers and directors.
(c) The indemnification provided by this Agreement shall not be
deemed exclusive of any other rights to which the Indemnitee may be entitled
under the Articles, the Bylaws, any other agreement, any vote of shareholders or
directors, the Act, or otherwise, both as to action in the Indemnitee's official
capacity and as to action in another capacity while holding such
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office. The indemnification under this Agreement shall continue as to the
Indemnitee even though the Indemnitee may have ceased to be a director or
advisor and shall inure to the benefit of the heirs, executors,
administrators, and personal representatives of the Indemnitee.
10. INDEMNITY EXCLUSIONS.
Notwithstanding any provision in this Agreement other than Section 6,
the Corporation shall not be obligated under this Agreement to make any
indemnification or advances in connection with any claim made against the
Indemnitee:
(a) for which payment is required to be made to or on behalf of the
Indemnitee under any insurance policy, except with respect to any excess amount
to which the Indemnitee is entitled under this Agreement beyond the amount of
payment under such insurance policy; or
(b) with respect to a transaction in which the Indemnitee received an
improper personal benefit; or
(c) for an accounting of profits made from the purchase and sale by
the Indemnitee of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provision of any state statutory law or common law.
11. PARTIAL INDEMNIFICATION.
If the Indemnitee is entitled under any provisions of this Agreement
to indemnification by the Corporation for some or a portion of the Expenses,
judgments and fines actually and reasonably incurred by the Indemnitee in the
investigation, defense, appeal or settlement of any Proceeding, but not,
however, for the total amount thereof, the Corporation shall nevertheless
indemnify the Indemnitee for the portion of such Expenses, judgments or fines to
which the Indemnitee is entitled.
12. SEVERABILITY.
If this Agreement or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify the Indemnitee as to Expenses, judgments and fines with
respect to any Proceeding to the full extent permitted by any applicable portion
of this Agreement that shall not have been invalidated or by any other
applicable law.
13. NOTICE.
The Indemnitee shall, as a condition precedent to the Indemnitee's
right to be indemnified under this Agreement, give to the Corporation notice in
writing as soon as practicable of any claim made against the Indemnitee for
which indemnity will or could be sought under this Agreement. Notice to the
Corporation shall be directed to the Corporation at its principal business
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office or such other address as the Corporation shall designate in writing to
the Indemnitee. Notice shall be deemed received three days after the date
postmarked if sent by prepaid mail, properly addressed. In addition, the
Indemnitee shall give the Corporation such information and cooperation as it may
reasonably require and as shall be within the Indemnitee's power.
14. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with
the internal laws of the state of Oregon without regard to the principles of
conflict of laws.
15. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the Corporation and its
successors and assigns.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be duly executed and signed as of the day and year first above written.
GEMSTONE SYSTEMS, INC.
By ___________________________
Name__________________________
Title_________________________
[Name of Indemnitee]
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