INDEMNIFICATION AGREEMENT
Exhibit
10.9
This
Agreement is made as of the _____ day of _______ 2005, by and between Tier
Technologies, Inc., a Delaware corporation (the “Corporation”), and
_______________ (the “Indemnitee”), an officer or key employee of the
Corporation.
WHEREAS,
it is essential to the Corporation to retain and attract as officers and key
employees the most capable persons available, and
WHEREAS,
the Corporation succeeded to all of the business, properties, assets and
liabilities of its sole stockholder, Tier Technologies, Inc., a California
corporation (“Tier California”), by means of a merger (the “Re-incorporation
Merger”) of Tier California with and into the Corporation, and
WHEREAS,
Tier California and the Indemnitee previously entered into an indemnification
agreement governed by California law (the “California Agreement”),
and
WHEREAS,
as of the effective date of the Re-incorporation Merger, the Corporation and
the
Indemnitee desire that this Agreement shall govern events occurring on or after
the effective date of the Re-incorporation Merger and the California Agreement
shall remain in full force and effect only with respect to events occurring
prior to the effective date of the Re-incorporation Merger, and
WHEREAS,
the Corporation desires the Indemnitee to serve, or continue to serve, as a
director or officer of the Corporation.
NOW
THEREFORE, the Corporation and the Indemnitee do hereby agree as
follows:
1. Agreement
to Serve. The Indemnitee agrees to serve or continue to serve as
a director or officer 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, arbitration, alternative dispute resolution proceeding, administrative
hearing or other proceeding, whether brought by or in the right of the
Corporation or otherwise and whether of a civil, criminal, administrative or
investigative nature, and any appeal therefrom.
(b) The
term “Corporate Status” shall mean the status of a person who is or was a
director or officer of the Corporation, or is or was serving, or has agreed
to
serve, at the request of the Corporation, as a director, officer, partner,
trustee, member, employee or agent of another corporation, partnership, joint
venture, trust, limited liability company or other enterprise.
(c) The
term “Expenses” shall include, without limitation, attorneys’ fees, retainers,
court costs, transcript costs, fees and expenses of experts, travel expenses,
duplicating
(d) References
to “other enterprise” shall include 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, officer,
employee, or agent with respect to an employee benefit plan, its participants,
or beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interests of the participants and
beneficiaries 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. Indemnification
in Third-Party Proceedings. Subject to Paragraph 26 of this
Agreement, the Corporation shall indemnify the Indemnitee in accordance with
the
provisions of this Paragraph 3 if the Indemnitee was or is a party to or
threatened to be made a party to or otherwise involved in any Proceeding (other
than a Proceeding by or in the right of the Corporation to procure a judgment
in
its favor) by reason of the Indemnitee’s Corporate Status or by reason of any
action alleged to have been taken or omitted in connection therewith, against
all Expenses, judgments, fines, penalties and amounts paid in settlement
actually and reasonably incurred by or on behalf of 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, with respect to any criminal Proceeding,
had
no reasonable cause to believe that his or her conduct was
unlawful. The termination of any Proceeding by judgment, order,
settlement, conviction or upon a plea of nolocontendere 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, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal Proceeding, had reasonable cause to believe that his
or
her conduct was unlawful.
4. Indemnification
in Proceedings by or in the Right of the Corporation. Subject to
Paragraph 26 of this Agreement, the Corporation shall indemnify the Indemnitee
in accordance with the provisions of this Paragraph 4 if the Indemnitee was
or is a party to or threatened to be made a party to or otherwise involved
in
any Proceeding by or in the right of the Corporation to procure a judgment
in
its favor by reason of the Indemnitee’s Corporate Status or by reason of any
action alleged to have been taken or omitted in connection therewith, against
all Expenses actually and reasonably incurred and, to the extent permitted
by
law, amounts paid in settlement by or on behalf of 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, except that no indemnification shall be made
under
this Paragraph 4 in respect of any claim, issue, or matter as to which the
Indemnitee shall have been adjudged to be liable to the Corporation, unless,
and
only to the extent, that the Court of Chancery of Delaware or the court in
which
such action or suit was brought shall determine upon application that, despite
the adjudication of such liability but in view of all the circumstances of
2
5. Exceptions
to Right of Indemnification. Notwithstanding anything to the
contrary in this Agreement, except as set forth in Paragraph 10, the
Corporation shall not indemnify the Indemnitee in connection with a Proceeding
(or part thereof) initiated by the Indemnitee unless the initiation thereof
was
approved by the Board of Directors of the
Corporation. Notwithstanding anything to the contrary in this
Agreement, the Corporation shall not indemnify the Indemnitee to the extent
the
Indemnitee is reimbursed from the proceeds of insurance or otherwise receives
payment of any amounts indemnifiable hereunder under any contract, agreement
or
otherwise, and in the event the Corporation makes any indemnification payments
to the Indemnitee and the Indemnitee is subsequently reimbursed from the
proceeds of insurance or otherwise receives payment of any amounts indemnifiable
hereunder under any contract, agreement or otherwise, the Indemnitee shall
promptly refund such indemnification payments to the Corporation to the extent
of such insurance reimbursement or other payments.
6. Indemnification
of Expenses of Successful Party. Subject to Paragraph 26 of this
Agreement, but notwithstanding any other provision 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,
the Indemnitee shall be indemnified against all Expenses incurred by or on
behalf of the Indemnitee in connection therewith. Without limiting
the foregoing, if any Proceeding or any claim, issue or matter therein is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the Indemnitee,
(ii) an adjudication that the Indemnitee was liable to the Corporation,
(iii) a plea of guilty or nolo contendere by the Indemnitee,
(iv) an adjudication that the Indemnitee did not act in good faith and in a
manner the Indemnitee reasonably believed to be in or not opposed to
the best interests of the Corporation, and (v) with respect to any criminal
proceeding, an adjudication that the Indemnitee had reasonable cause to believe
his or her conduct was unlawful, the Indemnitee shall be considered for the
purposes hereof to have been wholly successful with respect
thereto.
7. Notification
and Defense of Claim.
(a) Indemnitee
shall
notify the Corporation promptly upon being served with or receiving any summons,
citation, subpoena, complaint, indictment, information, notice, request or
other
document relating to any Proceeding which may result in the right to
indemnification or the advance of Expenses hereunder; provided, however, that
the failure to give any such notice shall not disqualify Indemnitee from the
right, or otherwise affect in any manner any right of Indemnitee, to
indemnification or the advance of Expenses under this Agreement unless the
Corporation’s ability to defend in such Proceeding or to obtain proceeds under
any insurance policy is materially and adversely prejudiced thereby, and then
only to the extent the Corporation is thereby actually so
prejudiced.
(b) Subject
to the provisions of the last sentence of this Section 7(b) and of Section
7(c)
below, the Corporation shall have the right to defend Indemnitee in any
Proceeding which may give rise to indemnification hereunder; provided, however,
that the Corporation shall notify Indemnitee of any such decision to defend
within 15 calendar days following receipt of notice of any such Proceeding
under
Section 7(a) above. After notice from the Corporation to
3
(c) Notwithstanding
the provisions of Section 7(b) above, if in a Proceeding to which Indemnitee
is
a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably
concludes, based upon advice of counsel approved by the Corporation, which
approval shall not be unreasonably withheld, that he may have separate defenses
or counterclaims to assert with respect to any issue which may not be consistent
with the Corporation in such Proceeding, (ii) Indemnitee reasonably concludes,
based upon advice of counsel approved by the Corporation, which approval shall
not be unreasonably withheld, that an actual or apparent conflict of interest
or
potential conflict of interest exists between Indemnitee and the Corporation,
or
(iii) if the Corporation fails to assume the defense of such Proceeding in
a
timely manner, Indemnitee shall be entitled to be represented by separate legal
counsel of Indemnitee’s choice, subject to the prior approval of the
Corporation, which shall not be unreasonably withheld, at the expense of the
Corporation.
8. Advancement
of Expenses. Subject to the provisions of Paragraphs 9 and
26 of this Agreement, in the event that the Corporation does not assume the
defense pursuant to Paragraph 7 of this Agreement of any Proceeding of
which the Corporation receives notice under this Agreement, any Expenses
incurred by or on behalf of the Indemnitee in defending such Proceeding shall
be
paid by the Corporation in advance of the final disposition of such Proceeding;
provided, however, that notwithstanding anything herein to the
contrary the payment of such Expenses incurred by or on behalf of the Indemnitee
in advance of the final disposition of such Proceeding shall be made only upon
receipt of an undertaking, in substantially the form set forth on Exhibit
A hereto, by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined that the Indemnitee is
not
entitled to be indemnified by the Corporation as authorized in this
Agreement. Such undertaking shall be accepted without reference to
the financial ability of the Indemnitee to make repayment.
9. Procedure
for Indemnification. In order to obtain indemnification or
advancement of Expenses pursuant to Paragraphs 3, 4, 6 or 8 of this Agreement,
the Indemnitee shall submit to the Corporation a written request. Any
such indemnification or advancement of Expenses shall be made promptly, and
in
any event within 30 days after receipt by the Corporation of the written
request of Indemnitee, unless the Corporation, pursuant to the last sentence
of
this Section 9, determines within such 30-day period that Indemnitee did not
meet the applicable standard of conduct set forth in Paragraph 3 or 4, as the
case may be. Such determinations as to indemnification, the
advancement of Expenses and any determination that advanced Expenses must be
repaid to the Corporation, shall be made in each instance (a) by a majority
vote of the directors of the Corporation consisting of persons who are not
at
that time parties to the Proceeding (“disinterested directors”), whether or not
a quorum, (b) by a committee of disinterested directors designated by a
majority vote of disinterested directors, whether or not
4
10. Remedies. The
right to indemnification or advancement of Expenses as provided by this
Agreement shall be enforceable by the Indemnitee in any court of competent
jurisdiction. Unless otherwise required by law, the burden of proving
that indemnification or the advancement of Expenses is not
appropriate shall be on the Corporation. Neither the failure of the
Corporation to have made a determination prior to the commencement of such
action that indemnification is proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation pursuant to Paragraph 9 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 (of the
type described in the definition of “Expenses” in Paragraph 2(c))
reasonably incurred in connection with successfully establishing the
Indemnitee’s right to indemnification, in whole or in part, in any such
Proceeding shall also be indemnified by the Corporation.
11. Partial
Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Corporation for some
or a
portion of the Expenses, judgments, fines, penalties or amounts paid in
settlement actually and reasonably incurred by or on behalf of the Indemnitee
in
connection with any Proceeding but not, however, for the total amount thereof,
the Corporation shall nevertheless indemnify the Indemnitee for the portion
of
such Expenses, judgments, fines, penalties or amounts paid in settlement to
which the Indemnitee is entitled.
12. Subrogation. In
the event of any payment under this Agreement, the Corporation 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 take all action necessary
to secure such rights, including execution of such documents as are necessary
to
enable the Corporation to bring suit to enforce such rights.
13. Term
of Agreement. This Agreement shall commence upon the effective
date of the Re-incorporation Merger, and shall continue until and terminate
upon
the later of (a) six years after the date that the Indemnitee shall have ceased
to serve as a director or officer of the Corporation or, at the request of
the
Corporation, as a director, officer, partner, trustee, member, employee or
agent
of another corporation, partnership, joint venture, trust, limited liability
company or other enterprise or (b) the final termination of all Proceedings
pending on the date set forth in clause (a) in respect of which the Indemnitee
is granted rights of indemnification or advancement of Expenses hereunder and
of
any proceeding commenced by the Indemnitee pursuant to Paragraph 10 of this
Agreement relating thereto.
14. Indemnification
Hereunder Not Exclusive. The indemnification and advancement of
Expenses provided by this Agreement shall not be deemed exclusive of any other
rights to which the Indemnitee may be entitled under the Certification of
Incorporation, the By-Laws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of Delaware, any other
law
(common or statutory), or otherwise, both as to action in the Indemnitee’s
Corporate Status and as to action in another capacity while holding office
for
the
5
15. No
Special Rights. Nothing herein shall confer upon the Indemnitee
any right to continue to serve as an officer or director of the Corporation
for
any period of time or at any particular rate of compensation.
16. Savings
Clause. 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, fines, penalties and amounts paid in settlement with respect to
any
Proceeding to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated and to the fullest extent
permitted by applicable law.
17. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
constitute the original.
18. Successors
and Assigns. This Agreement shall be binding upon the Corporation
and its successors and assigns, and shall inure to the benefit of the estate,
heirs, executors, administrators and personal representatives of the
Indemnitee.
19. Headings. The
headings of the paragraphs of this Agreement are inserted for convenience only
and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.
20. Modification
and Waiver. This Agreement may be amended from time to time to
reflect changes in Delaware law or for other reasons. 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 provision hereof nor shall any such waiver constitute a continuing
waiver.
21. Notices. All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been given (i) when delivered by hand
or (ii) if mailed by certified or registered mail with postage prepaid, on
the third day after the date on which it is so mailed:
(a) if
to the Indemnitee, to:[ ]
(b) if
to the Corporation, to:
Tier
Technologies, Inc
00000
Xxxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxx,
Xxxxxxxx 00000
Attention: General
Counsel
6
Telephone:
000-000-0000
Fax:
000-000-0000
or
to such other address as may have been furnished to the Indemnitee by the
Corporation or to the Corporation by the Indemnitee, as the case may
be.
22. Applicable
Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware. The
Indemnitee may elect to have the right to indemnification or reimbursement
or
advancement of Expenses interpreted on the basis of the applicable law in effect
on the date hereof, at the time of the occurrence of the event or events giving
rise to the applicable Proceeding, to the extent permitted by law, or in effect
at the time such indemnification or reimbursement or advancement of Expenses
is
sought. Such election shall be made, by a notice in writing to the
Corporation, at the time indemnification or reimbursement or advancement of
Expenses is sought; provided, however, that if no such notice is
given, and if the General Corporation Law of Delaware is amended, or other
Delaware law is enacted, to permit further indemnification of the directors
and
officers, then the Indemnitee shall be indemnified to the fullest extent
permitted under the General Corporation Law, as so amended, or by such other
Delaware law, as so enacted.
23. Enforcement. The
Corporation expressly confirms and agrees that it has entered into this
Agreement in order to induce the Indemnitee to continue to serve as an officer
or director of the Corporation, and acknowledges that the Indemnitee is relying
upon this Agreement in continuing in such capacity.
24. Entire
Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supercedes
all prior agreements, whether oral or written, by any officer, employee or
representative of any party hereto in respect of the subject matter contained
herein; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled. For
avoidance of doubt, the parties confirm that the foregoing does not apply to
or
limit the Indemnitee’s rights under Delaware law or the Corporation’s
Certificate of Incorporation or By-Laws.
25. Consent
to Suit. In the case of any dispute under or in connection with
this Agreement, the Indemnitee may only bring suit against the Corporation
in
the Court of Chancery of the State of Delaware. The Indemnitee hereby
consents to the exclusive jurisdiction and venue of the courts of the State
of
Delaware, and the Indemnitee hereby waives any claim the Indemnitee may have
at
any time as to forum non conveniens with respect to such venue. The
Corporation shall have the right to institute any legal action arising out
of or
relating to this Agreement in any court of competent
jurisdiction. Any judgment entered against either of the parties in
any proceeding hereunder may be entered and enforced by any court of competent
jurisdiction.
26. Application
of the California Agreement. Upon the effective date of the
Re-incorporation Merger, the California Agreement shall cease to govern with
respect to the Indemnitee’s Corporate Status or any action alleged to have been
taken or omitted in connection therewith (collectively, the “Indemnifiable
Events”) on or after the effective date of the Re-incorporation Merger and shall
remain in full force and effect only with respect to Indemnifiable Events that
occurred prior to the effective date of the Re-incorporation
Merger. Upon the
7
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
|
Attest:
|
TIER
TECHNOLOGIES, INC.
|
|
By: __________________________
|
By: ________________________
|
|
Name:
__________________________
|
Name: ________________________
|
|
Title: ________________________
|
|
|
INDEMNITEE:
|
|
|
______________________________
Name: ________________________
|
8
EXHIBIT
A
FORM
OF UNDERTAKING TO REPAY EXPENSES ADVANCED
The
Board of Directors of Tier Technologies, Inc.
Re: Undertaking
to Repay Expenses Advanced
Ladies
and Gentlemen:
This
undertaking is being provided pursuant to that certain Indemnification Agreement
dated the ___ day of ______________, 200__, by and between Tier Technologies,
Inc. (the "Company") and the undersigned Indemnitee (the "Indemnification
Agreement"), pursuant to which I am entitled to advance of expenses in
connection with [Description of Proceeding] (the
"Proceeding").
Terms
used herein and not otherwise defined shall have the meanings specified in
the
Indemnification Agreement.
I
am subject to the Proceeding by reason of my Corporate Status or by reason
of
alleged actions or omissions by me in such capacity. In consideration
of the advance of Expenses by the Company in connection with the Proceeding
(the
"Advanced Expenses"), I hereby agree that if, in connection with the Proceeding,
it is ultimately determined that I am not entitled to be indemnified, then
I
shall promptly reimburse the portion of the Advanced Expenses relating to the
claims, issues or matters in the Proceeding as to which the foregoing findings
have been established and which have not been successfully resolved as described
in Section 11 of the Indemnification Agreement. To the extent that
Advanced Expenses do not relate to a specific claim, issue or matter in the
Proceeding, I agree that such Expenses shall be allocated on a reasonable
basis.
IN
WITNESS WHEREOF, I have executed
this Undertaking on this ___ day of ____________________, 200__.
WITNESS:
____________________________ _____________________________(SEAL)
