EXHIBIT 10.01
KEYNOTE SYSTEMS, INC.
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of ___________, is made by and
between Keynote Systems, Inc., a California corporation (the "COMPANY"), and
________________, a director and/or officer of the Company (the "INDEMNITEE").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance and/or indemnification,
due to increased exposure to litigation costs and risks resulting from their
service to such corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such directors and
officers;
B. Based upon their experience as business managers, the Board of
Directors of the Company (the "BOARD") has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company, and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company to contractually
indemnify officers and directors, and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company;
C. Section 317 of the General Corporations Law of California, under
which the Company is organized ("SECTION 317"), empowers the Company to
indemnify by agreement its officers, directors, employees and agents, and
persons who serve, at the request of the Company, as directors, officers,
employees or agents of other corporations or enterprises, and expressly provides
that the indemnification provided by Section 317 is not exclusive; and
D. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS.
1.1 AGENT. For the purposes of this Agreement, "agent" of the
Company means any person who is or was a director or officer of the Company or a
subsidiary of the Company; or is or was serving at the request of, for the
convenience of, or to represent the interest of the Company or a subsidiary of
the Company as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or an affiliate of the
Company; or was a director or officer of a foreign or domestic corporation which
was a predecessor corporation of the Company or a subsidiary of the Company, or
was a director or officer of another enterprise or affiliate of the Company at
the request of, for the convenience of, or to represent the interests of such
predecessor corporation. The term "enterprise" includes any employee benefit
plan of the Company, its subsidiaries, affiliates and predecessor corporations.
1.2 EXPENSES. For purposes of this Agreement, "expenses"
includes all direct and indirect costs of any type or nature whatsoever
(including, without limitation, all attorneys' fees and related disbursements
and other out-of-pocket costs) actually and reasonably incurred by the
Indemnitee in connection with the investigation, defense or appeal of a
proceeding or establishing or enforcing a right to indemnification or
advancement of expenses under this Agreement, Section 317 or otherwise;
provided, however, that expenses shall not include any judgments, fines, ERISA
excise taxes or penalties or amounts paid in settlement of a proceeding.
1.3 PROCEEDING. For the purposes of this Agreement,
"proceeding" means any threatened, pending, or completed action, suit or other
proceeding, whether civil, criminal, administrative, investigative or any other
type whatsoever.
1.4 SUBSIDIARY. For purposes of this Agreement, "subsidiary"
means any corporation of which more than 50% of the outstanding voting
securities is owned directly or in- directly by the Company, by the Company and
one or more other subsidiaries, or by one or more other subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or
continue to serve as an agent of the Company, at the will of the Company (or
under separate agreement, if such agreement exists), in the capacity the
Indemnitee currently serves as an agent of the Company, faithfully and to the
best of his ability so long as he is duly appointed or elected and qualified
in accordance with the applicable provisions of the charter documents of the
Company or any subsidiary of the Company; PROVIDED, HOWEVER, that the
Indemnitee may at any time and for any reason resign from such position
(subject to any contractual obligation that the Indemnitee may have assumed
apart from this Agreement) and that the Company or any subsidiary shall have
no obligation under this Agreement to continue the Indemnitee in any such
position.
3. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall, to
the extent that the Board determines it to be economically reasonable,
maintain a policy of directors' and officers' liability insurance ("D&O
INSURANCE"), on such terms and conditions as may be approved by the Board.
2
4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the
Company shall indemnify the Indemnitee:
4.1 THIRD PARTY ACTIONS. If the Indemnitee is a person who
was or is a party or is threatened to be made a party to any proceeding
(other than an action by or in the right of the Company) by reason of the
fact that he is or was an agent of the Company, or by reason of anything done
or not done by him in any such capacity, against any and all expenses and
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement)
actually and reasonably incurred by him in connection with the investigation,
defense, settlement or appeal of such proceeding if he acted in good faith
and in a manner he 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 his conduct was unlawful; and
4.2 DERIVATIVE ACTIONS. If the Indemnitee is a person who
was or is a party or is threatened to be made a party to any proceeding by or
in the right of the Company to procure a judgment in its favor by reason of
the fact that he is or was an agent of the Company, or by reason of anything
done or not done by him in any such capacity, against any amounts paid in
settlement of any such proceeding and all expenses actually and reasonably
incurred by him in connection with the investigation, defense, settlement, or
appeal of such proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; except that no indemnification under this subsection shall be made
in respect of any claim, issue or matter as to which such person shall have
been finally adjudged to be liable to the Company by a court of competent
jurisdiction due to willful misconduct of a culpable nature in the
performance of his duty to the Company, unless and only to the extent that
the 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, such person is fairly and reasonably entitled
to indemnity for such amounts which the court shall deem proper; and
4.3 EXCEPTION FOR AMOUNTS COVERED BY INSURANCE.
Notwithstanding the foregoing, the Company shall not be obligated to
indemnify the 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) to the extent such have been paid
directly to Indemnitee by D&O Insurance.
5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for
some or a portion of any expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) incurred by him in the
investigation, defense, settlement or appeal of a proceeding but not
entitled, however, to indemnification for all of the total amount thereof,
the Company shall nevertheless indemnify the Indemnitee for such total amount
except as to the portion thereof to which the Indemnitee is not entitled to
the indemnification.
3
6. MANDATORY ADVANCEMENT OF EXPENSES.
6.1 ADVANCEMENT. Subject to Section 9 below, the Company
shall advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the
fact that the Indemnitee is or was an agent of the Company or by reason of
anything done or not done by him in any such capacity. The Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company under the provisions of this Agreement, the
Articles of Incorporation or Bylaws of the Company, the General Corporation
Law of California or otherwise. The advances to be made hereunder shall be
paid by the Company to the Indemnitee within thirty (30) days following
delivery of a written request therefor by the Indemnitee to the Company.
6.2 EXCEPTION. Notwithstanding the foregoing provisions of
this Section 6, the Company shall not be obligated to advance any expenses to
the Indemnitee to the extent such arise from a lawsuit filed directly by the
Company against the Indemnitee if an absolute majority of the members of the
Board of Directors reasonably determines in good faith, within thirty (30)
days of the Indemnitee's request to be advanced expenses, that the facts
known to them at the time such determination is made demonstrate clearly and
convincingly that the Indemnitee acted in bad faith. If such a determination
is made, the Indemnitee may have such decision reviewed by another forum, in
the manner set forth in Sections 8.3, 8.4 and 8.5 hereof, with all references
therein to "indemnification" being deemed to refer to "advancement of
expenses", and the burden of proof shall be on the Company to demonstrate
clearly and convincingly that, based on the facts known at the time, the
Indemnitee acted in bad faith. The Company may not avail itself of this
Section 6.2 as to a given lawsuit if, at any time after the occurrence of the
activities or omissions that are the primary focus of the lawsuit, the
Company has undergone a change in control. For this purpose a change in
control shall mean a given shareholder or group of affiliated shareholders
increasing their beneficial ownership interest in the Company by at least
twenty (20) percentage points without advance Board approval.
7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
7.1 Promptly after receipt by the Indemnitee of notice of
the commencement of or the threat of commencement of any proceeding, the
Indemnitee shall, if the Indemnitee believes that indemnification with
respect thereto may be sought from the Company under this Agreement, notify
the Company of the commencement or threat of commencement thereof.
7.2 If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 7.1 hereof, the Company has
D&O 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.
4
7.3 In the event the Company shall be obligated to advance
the expenses for any proceeding against the Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by the Indemnitee, upon the delivery to the Indemnitee of
written notice of its election to do so. After delivery of such notice,
approval of such counsel by the Indemnitee and the retention of such counsel
by the Company, the Company will not be liable to the Indemnitee under this
Agreement for any fees of counsel subsequently incurred by the Indemnitee
with respect to the same proceeding, provided that (a) the Indemnitee shall
have the right to employ his own counsel in any such proceeding at the
Indemnitee's expense; (b) the Indemnitee shall have the right to employ his
own counsel in connection with any such proceeding, at the expense of the
Company, if such counsel serves in a review, observer, advice and counseling
capacity and does not otherwise materially control or participate in the
defense of such proceeding; and (c) if (i) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (ii) the Indemnitee
shall have reasonably concluded that there may be a conflict of interest
between the Company and the Indemnitee in the conduct of any such defense or
(iii) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company.
8. DETERMINATION OF RIGHT TO INDEMNIFICATION.
8.1 To the extent the Indemnitee has been successful on
the merits or otherwise in defense of any proceeding referred to in Section
4.1 or 4.2 of this Agreement or in the defense of any claim, issue or matter
described therein, the Company shall indemnify the Indemnitee against
expenses actually and reasonably incurred by him in connection with the
investigation, defense or appeal of such proceeding, or such claim, issue or
matter, as the case may be.
8.2 In the event that Section 8.1 is inapplicable, or does
not apply to the entire proceeding, the Company shall nonetheless indemnify
the Indemnitee unless the Company shall prove by clear and convincing
evidence to a forum listed in Section 8.3 below that the Indemnitee has not
met the applicable standard of conduct required to entitle the Indemnitee to
such indemnification.
8.3 The Indemnitee shall be entitled to select the forum
in which the validity of the Company's claim under Section 8.2 hereof that
the Indemnitee is not entitled to indemnification will be heard from among
the following, except that the Indemnitee can select a forum consisting of
the shareholders of the Company only with the approval of the Company:
(a) A quorum of the Board consisting of directors who
are not parties to the proceeding for which indemnification is being sought;
(b) The shareholders of the Company;
(c) Legal counsel selected by the Indemnitee, and
reasonably approved by the Board, which counsel shall make such determination
in a written opinion; or
5
(d) A panel of three arbitrators, one of whom is
selected by the Company, another of whom is selected by the Indemnitee, and
the last of whom is selected by the first two arbitrators so selected.
8.4 As soon as practicable, and in no event later than 30
days after written notice of the Indemnitee's choice of forum pursuant to
Section 8.3 above, the Company shall, at its own expense, submit to the
selected forum in such manner as the Indemnitee or the Indemnitee's counsel
may reasonably request, its claim that the Indemnitee is not entitled to
indemnification; and the Company shall act in the utmost good faith to assure
the Indemnitee a complete opportunity to defend against such claim.
8.5 If the forum listed in Section 8.3 hereof selected by
the Indemnitee determines that the Indemnitee is entitled to indemnification
with respect to a specific proceeding, such determination shall be final and
binding on the Company. If the forum listed in Section 8.3 hereof selected by
the Indemnitee determines that the Indemnitee is not entitled to
indemnification with respect to a specific proceeding, the Indemnitee shall
have the right to apply to the court in which that proceeding is or was
pending or any other court of competent jurisdiction, for the purpose of
determining whether the Indemnitee is entitled to indemnification and
enforcing the Indemnitee's right to indemnification pursuant to the Agreement.
8.6 Notwithstanding any other provision in this Agreement
to the contrary, the Company shall indemnify the Indemnitee against all
expenses incurred by the Indemnitee in connection with any hearing or
proceeding under this Section 8 involving the Indemnitee and against all
expenses incurred by the Indemnitee in connection with any other proceeding
between the Company and the Indemnitee involving the interpretation or
enforcement of the rights of the Indemnitee under this Agreement unless a
court of competent jurisdiction finds that each of the material claims and/or
defenses of the Indemnitee in any such proceeding was frivolous or not made
in good faith.
9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
9.1 CLAIMS INITIATED BY INDEMNITEE. To indemnify or
advance expenses to the Indemnitee with respect to proceedings or claims
initiated or brought voluntarily by the Indemnitee and not by way of defense,
except with respect to proceedings specifically authorized by the Board of
Directors or brought to establish or enforce a right to indemnification
and/or advancement of expenses under this Agreement, the charter documents of
the Company or any subsidiary, or any statute or law or otherwise, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors finds it to be appropriate; or
9.2 UNAUTHORIZED SETTLEMENTS. To indemnify the Indemnitee
hereunder for any amounts paid in settlement of a proceeding unless the
Company consents in advance in writing to such settlement, which consent
shall not be unreasonably withheld; or
6
9.3 SECURITIES LAW ACTIONS. To indemnify the Indemnitee on
account of any suit in which judgment is rendered against the Indemnitee for
an accounting of profits made from the purchase or sale by the Indemnitee of
securities of the Company pursuant to the provisions of 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions
of any federal, state or local statutory law; or
9.4 UNLAWFUL INDEMNIFICATION. To indemnify the Indemnitee
if a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful. In this respect, the
Company and the Indemnitee have been advised that the Securities and Exchange
Commission takes the position that indemnification for liabilities arising
under the federal securities law is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication.
10. NON-EXCLUSIVITY. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any
provision of law, the Company's Articles of Incorporation or Bylaws, the
vote of the Company's shareholders or disinterested directors, other
agreements, or otherwise, both as to action in the Indemnitee's official
capacity and to action in another capacity while occupying his position as an
agent of the Company, and the Indemnitee's rights hereunder shall continue
after the Indemnitee has ceased acting as an agent of the Company and shall
inure to the benefit of the heirs, executors and administrators of the
Indemnitee.
11. GENERAL PROVISIONS
11.1 INTERPRETATION OF AGREEMENT. It is understood that
the parties hereto intend this Agreement to be interpreted and enforced so as
to provide indemnification and advancement of expenses to the Indemnitee to
the fullest extent now or hereafter permitted by law, except as expressly
limited herein.
11.2 SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any
reason whatsoever, (a) the validity, legality and enforceability of the
remaining provisions of the Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision
held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall not in any way be affected or
impaired thereby, and (b) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraphs
of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that are not themselves invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable and to give effect to
Section 11.1 hereof.
11.3 MODIFICATION AND WAIVER. 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 (whether or not similar) nor shall such waiver constitute a continuing
waiver.
7
11.4 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
documents required and shall do all acts that may be necessary or desirable
to secure such rights and to enable the Company effectively to bring suit to
enforce such rights.
11.5 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, which shall together constitute one agreement.
11.6 SUCCESSORS AND ASSIGNS. The terms of this Agreement
shall bind, and shall inure to the benefit of, the successors and assigns of
the parties hereto.
11.7 NOTICE. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
duly given (a) if delivered by hand and receipted for by the party addressee
or (b) if mailed by certified or registered mail with postage prepaid, on the
third business day after the mailing date. Addresses for notice to either
party are as shown on the signature page of this Agreement, or as
subsequently modified by written notice.
11.8 GOVERNING LAW. This Agreement shall be governed
exclusively by and construed according to the laws of the State of
California, as applied to contracts between California residents entered into
and to be performed entirely with California.
11.9 CONSENT TO JURISDICTION. The Company and the
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
The parties hereto have entered into this Indemnity Agreement effective
as of the date first written above.
KEYNOTE SYSTEMS, INC.
Address: 0000 Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
By:
------------------------------
Its:
------------------------------
INDEMNITEE:
------------------------------
Address:
------------------------------
------------------------------
[SIGNATURE PAGE TO KEYNOTE SYSTEMS, INC. INDEMNITY AGREEMENT]
9
