XXXXXXXXX.XXX, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of May __, 1999
is made between XxxxxXxxx.xxx, Inc., a Washington corporation (the "Company"),
and _________________ ("Indemnitee").
RECITALS
A. Indemnitee is an officer or director of the Company and in such
capacity is performing valuable services for the Company.
B. The Company and Indemnitee recognize the difficulty in obtaining
directors' and officers' liability insurance, the significant cost of such
insurance and the general reduction in the coverage of such insurance.
C. The Company and Indemnitee further recognize the substantial increase
in litigation subjecting officers and directors to expensive litigation risks at
the same time that such liability insurance has been severely limited.
D. The Company's articles of incorporation (the "Articles") provide for
indemnification of the officers, directors, agents and employees of the Company
to the full extent permitted by the Washington Business Corporation Act (the
"Act").
E. The Articles and the Act specifically provide that they are not
exclusive, and thereby contemplate that contracts may be entered into between
the Company and the members of its Board of Directors and its officers with
respect to indemnification of such directors and officers.
F. In order to induce Indemnitee to continue to serve as an officer
and/or director, as the case may be, of the Company, the Company has agreed to
enter into this Agreement with Indemnitee.
AGREEMENT
In consideration of the recitals above, the mutual covenants and agreements
herein contained, and Indemnitee's continued service as an officer and/or
director, as the case may be, of the Company after the date hereof, the parties
to this Agreement agree as follows:
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1. INDEMNITY OF INDEMNITEE
1.1 SCOPE
The Company agrees to hold harmless and indemnify Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by this Agreement, the Company's Articles, the Bylaws of
the Company, the Act or otherwise. As of the date of this Agreement, and
notwithstanding the limitations in 23B.08.510 through 23B.08.550 of the Act, the
Company shall indemnify and hold harmless Indemnitee against any and all Damages
(as defined below) except for Damages arising out of:
(a) Indemnitee's acts or omissions finally adjudged to be intentional
misconduct or a knowing violation of law;
(b) Conduct of Indemnitee finally adjudged to be in violation of RCW
23B.08.310; or
(c) Any transaction in which it is finally adjudged that Indemnitee
personally received a benefit in money, property or services to which Indemnitee
was not legally entitled.
Except as provided in Section 3, the Company shall not indemnify Indemnitee
in connection with a Proceeding (as defined below), or part thereof, initiated
by Indemnitee unless such Proceeding, or part thereof, was authorized by the
Board of Directors of the Corporation.
In the event of any change, after the date of this Agreement, in any
applicable law, statute or rule regarding the right of a Washington corporation
to indemnify a member of its board of directors or an officer, such changes, to
the extent that they would expand Indemnitee's rights hereunder, shall be within
the purview of Indemnitee's rights and the Company's obligations hereunder, and,
to the extent that they would narrow Indemnitee's rights hereunder, shall be
excluded from this Agreement; provided, however, that any change that is
required by applicable laws, statutes or rules to be applied to this Agreement
shall be so applied regardless of whether the effect of such change is to narrow
Indemnitee's rights hereunder.
1.2 NONEXCLUSIVITY
The indemnification provided by this Agreement shall not be deemed
exclusive of any rights to which Indemnitee may be entitled under the Articles,
the Company's Bylaws, any agreement, any vote of shareholders or disinterested
directors, the Act, or otherwise, whether as to action in Indemnitee's official
capacity or otherwise.
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1.3 ADDITIONAL INDEMNITY
If Indemnitee was or is made a party, or is threatened to be made a
party, to or is otherwise involved (including, without limitation, as a
witness) in any Proceeding (as defined below), the Company shall hold
harmless and indemnify Indemnitee from and against any and all losses,
claims, damages, liabilities or expenses (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties, amounts paid in settlement
and other expenses incurred in connection with such Proceeding)
(collectively, "Damages").
1.4 DEFINITION OF PROCEEDING
For purposes of this Agreement, "Proceeding" shall mean any actual,
pending or threatened action, suit, claim or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal, in
which Indemnitee is, was or becomes involved by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company or
that, being or having been such a director, officer, employee or agent,
Indemnitee is or was serving at the request of the Company as a director,
officer, employee, trustee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise (collectively a
"Related Company"), including service with respect to an employee benefit
plan, whether the basis of such proceeding is alleged action (or inaction) by
Indemnitee in an official capacity as a director, officer, employee, trustee
or agent or in any other capacity while serving as a director, officer,
employee, trustee or agent; provided, however, that, except with respect to
an action to enforce the provisions of this Agreement, "Proceeding" shall not
include any action, suit, claim or proceeding instituted by or at the
direction of Indemnitee unless such action, suit, claim or proceeding is or
was authorized by the Company's Board of Directors.
1.5 DETERMINATION OF ENTITLEMENT
Indemnitee shall initially be presumed in all cases to be entitled to
indemnification. Indemnitee may establish a conclusive presumption of any
fact necessary to such a determination by delivering to the Company a
declaration made under penalty of perjury that such fact is true and, unless
the Company shall deliver to Indemnitee written notice of a determination
that Indemnitee is not entitled to indemnification within twenty (20) days of
the Company's receipt of Indemnitee's initial written request for
indemnification such determination shall conclusively be deemed to have been
made in favor of the Company's provision of indemnification and the Company
hereby agrees not to assert otherwise.
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1.6 SURVIVAL
The indemnification provided under this Agreement shall apply to any and
all Proceedings, notwithstanding that Indemnitee has ceased to be a director,
officer, employee, trustee or agent of the Company or a Related Company.
2. EXPENSE ADVANCES
2.1 GENERALLY
The right to indemnification of Damages conferred by Section 1 shall
include the right to have the Company pay Indemnitee's expenses in any
Proceeding as such expenses are incurred and in advance of such Proceeding's
final disposition (such right is referred to hereinafter as an "Expense
Advance").
2.2 CONDITIONS TO EXPENSE ADVANCE
The Company's obligation to provide an Expense Advance is subject to the
following conditions:
2.2.1 UNDERTAKING
If the Proceeding arose in connection with Indemnitee's service as a
director or officer of the Company (and not in any other capacity in which
Indemnitee rendered service, including service to any Related Company), then
Indemnitee or his or her representative shall have executed and delivered to the
Company an undertaking, which need not be secured and shall be accepted without
reference to Indemnitee's financial ability to make repayment, by or on behalf
of Indemnitee to repay all Expense Advances if and to the extent that it shall
ultimately be determined by a final, unappealable decision rendered by a court
having jurisdiction over the parties and the question that Indemnitee is not
entitled to be indemnified for such Expense Advance under this Agreement or
otherwise.
2.2.2 COOPERATION
Indemnitee shall give the Company such information and cooperation as it
may reasonably request and as shall be within Indemnitee's power.
2.2.3 AFFIRMATION
Indemnitee shall furnish, upon request by the Company and if required
under applicable law, a written affirmation of Indemnitee's good faith belief
that he did not engage in conduct which falls within one or more of the
exclusions set forth in Section 1.1 above.
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3. PROCEDURES FOR ENFORCEMENT
3.1 ENFORCEMENT
In the event that a claim for indemnity, an Expense Advance or otherwise
is made hereunder and is not paid in full within sixty days (twenty days for
an Expense Advance) after written notice of such claim is delivered to the
Company, Indemnitee may, but need not, at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim (an
"Enforcement Action").
3.2 PRESUMPTIONS IN ENFORCEMENT ACTION
In any Enforcement Action the following presumptions (and limitation on
presumptions) shall apply:
(a) The Company shall conclusively be presumed to have entered
into this Agreement and assumed the obligations imposed on
it hereunder in order to induce indemnitee to continue as
an officer and/or director, as the case may be, of the
Company;
(b) Neither (i) the failure of the Company (including the
Company's Board of Directors, independent or special legal
counsel or the Company's shareholders) to have made a
determination prior to the commencement of the Enforcement
Action that indemnification of Indemnitee is proper in the
circumstances nor (ii) an actual determination by the
Company, its Board of Directors, independent or special
legal counsel or shareholders that Indemnitee is not
entitled to indemnification shall be a defense to the
Enforcement Action or create a presumption that Indemnitee
is not entitled to indemnification hereunder; and
(c) If Indemnitee is or was serving as a director, officer,
employee, trustee or agent of a corporation of which a
majority of the shares entitled to vote in the election of
its directors is held by the Company or in an executive or
management capacity in a partnership, joint venture, trust
or other enterprise of which the Company or a wholly owned
subsidiary of the Company is a general partner or has a
majority ownership, then such corporation, partnership,
joint venture, trust or enterprise shall conclusively be
deemed a Related Company and Indemnitee shall conclusively
be
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deemed to be serving such Related Company at the request of
the Company.
3.3 ATTORNEYS' FEES AND EXPENSES FOR ENFORCEMENT ACTION
In the event Indemnitee is required to bring an Enforcement Action, the
Company shall indemnify and hold harmless Indemnitee against all of Indemnitee's
fees and expenses in bringing and pursuing the Enforcement Action (including
attorneys' fees at any stage, including on appeal); provided, however, that the
Company shall not be required to provide such indemnity for such attorneys' fees
or expenses if a court of competent jurisdiction determines that each of the
material assertions made by Indemnitee in such Enforcement Action was not made
in good faith or was frivolous.
4. LIMITATIONS ON INDEMNITY; MUTUAL ACKNOWLEDGMENT
4.1 LIMITATION ON INDEMNITY
No indemnity pursuant to this Agreement shall be provided by the Company:
(a) On account of any suit in which a final, unappealable
judgment is rendered against Indemnitee for an accounting
of profits made from the purchase or sale by Indemnitee of
securities of the Company in violation of the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto;
(b) For Damages that have been paid directly to Indemnitee by
an insurance carrier under a policy of officers' and
directors' liability insurance maintained by the Company;
(c) On account of Indemnitee's conduct which is finally
adjudged to fall within one or more of the exclusions set
forth in Section 1.1 above; or
(d) If a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not
lawful.
4.2 MUTUAL ACKNOWLEDGMENT
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 Indemnitee 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
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certain federal securities laws, and federal legislation prohibits
indemnification for certain ERISA violations. Furthermore, 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.
5. NOTIFICATION AND DEFENSE OF CLAIM
5.1 NOTIFICATION
Promptly after receipt by Indemnitee of notice of the commencement of
any Proceeding, Indemnitee will, if a claim in respect thereof is to be made
against the Company under this Agreement, notify the Company of the
commencement thereof; but the omission so to notify the Company will not
relieve the Company from any liability which it may have to Indemnitee under
this Agreement unless and only to the extent that such omission can be shown
to have prejudiced the Company's ability to defend the Proceeding.
5.2 DEFENSE OF CLAIM
With respect to any such Proceeding as to which Indemnitee notifies the
Company of the commencement thereof:
(a) The Company may participate therein at its own expense;
(b) The Company, by itself or jointly with any other
indemnifying party similarly notified, may assume the
defense thereof, with counsel satisfactory to Indemnitee.
After notice from the Company to Indemnitee of its election
to assume the defense thereof, the Company shall not be
liable to Indemnitee under this Agreement for any legal or
other expenses (other than reasonable costs of
investigation) subsequently incurred by Indemnitee in
connection with the defense thereof unless (i) the
employment of counsel by Indemnitee has been 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 the defense of
such action, or (iii) the Company shall not in fact have
employed counsel to assume the defense of such action, in
each of which cases the fees and expenses of counsel shall
be at the expense of the Company. The Company shall not be
entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the
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Company or as to which Indemnitee shall have made the conclusion
provided for in (ii) above;
(c) The Company shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of
any Proceeding effected without its written consent;
(d) The Company shall not settle any action or claim in any
manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent; and
(e) Neither the Company nor Indemnitee will unreasonably
withhold its, his or her consent to any proposed
settlement.
6. SEVERABILITY
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 Section 6. 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.
7. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Washington.
(b) This Agreement shall be binding upon Indemnitee and upon
the Company, its successors and assigns, and shall inure to
the benefit of Indemnitee, Indemnitee's heirs, personal
representatives and assigns and to the benefit of the
Company, its successors and assigns.
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed
by both parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement on and as
of the day and year first above written.
XXXXXXXXX.XXX, INC.
____________________________________
INDEMNITEE:
____________________________________
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