EXHIBIT 10.37
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into
as of July 15, 2001, by and between Micrografx, Inc., a Texas corporation (the
"Company"), and _____________________________ (the "Indemnitee").
The Indemnitee is an officer and/or director of the Company. It is
essential to the Company that it retain and attract as officers and/or directors
the most capable persons available. Both the Company and the Indemnitee
recognize the increased risk of litigation and other claims being asserted
against officers and/or directors of companies in today's environment.
The Texas Business Corporation Act, as amended (the "Texas Statute"),
expressly recognizes that the indemnification provisions of the Texas Statute
are not exclusive of any other rights to which a person seeking indemnification
may be entitled under a resolution of the directors, an agreement or as
permitted or required by common law. This Agreement is being entered into as
permitted by the Texas Statute and as authorized by the board of directors of
the Company (the "Board of Directors").
In recognition of the Indemnitee's need for substantial protection against
personal liability in order to enhance the Indemnitee's continued service to the
Company in an effective manner, and in part to provide the Indemnitee with
specific contractual assurance that the protection promised by such provisions
will be available to the Indemnitee (regardless of, among other things, any
amendment to or revocation of such provisions or any change in the composition
of the Board of Directors or any acquisition or business combination transaction
relating to the Company), the Company wishes to provide in this Agreement for
the indemnification of and the advancement of expenses to the Indemnitee as set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Indemnification.
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(a) In accordance with the provisions of Section 1(b), the Company shall
hold harmless and indemnify the Indemnitee against any and all expenses,
liabilities and losses (including, without limitation, investigation expenses
and expert witnesses' and attorneys' fees and expenses, judgments, penalties,
fines, excise taxes under the Employee Retirement Income Security Act of 1974,
as amended, and amounts paid or to be paid in settlement) actually incurred by
the Indemnitee (net of any related insurance proceeds or other amounts received
by the Indemnitee or paid by or on behalf of the Company on the Indemnitee's
behalf), in connection with any action, suit, arbitration or proceeding (or any
inquiry or investigation, whether brought by or in the right of the Company or
otherwise, that the Indemnitee in good faith believes might lead to the
institution of any such action, suit, arbitration or proceeding), whether civil,
criminal, administrative or investigative, or any appeal therefrom, in which the
Indemnitee is a party, is threatened to be made a party, is a witness or is
participating (each, a "Proceeding") based upon, arising from, relating to
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or by reason of the fact that Indemnitee is, was, shall be or shall have been an
officer and/or director of the Company or is or was serving, shall serve, or
shall have served at the request of the Company as an officer and/or director
(an "Affiliate Indemnitee") of another foreign or domestic corporation or non-
profit corporation, cooperative, partnership, joint venture, trust or other
incorporated or unincorporated enterprise.
(b) In providing the foregoing indemnification, the Company shall, with
respect to a Proceeding, hold harmless and indemnify the Indemnitee to the
fullest extent required by the Texas Statute and to the fullest extent permitted
by the Express Permitted Indemnification Provisions (as hereinafter defined) of
the Texas Statute. For purposes of this Agreement, the Express Permitted
Indemnification Provisions of the Texas Statute shall mean indemnification as
permitted by Article 2.02-1 of the Texas Statute or by any amendment thereof or
other statutory provisions expressly permitting such indemnification which is
adopted after the date hereof (but, in the case of any such amendment, only to
the extent that such amendment permits the Company to provide broader
indemnification rights than said law required or permitted the Company to
provide prior to such amendment).
(c) Without limiting the generality of the foregoing, the Indemnitee shall
be entitled to the rights of indemnification provided in this Section 1 for any
expenses actually incurred in any Proceeding initiated by or in the right of the
Company, provided that in the event that the Indemnitee shall have been adjudged
in a final, nonappealable judgment or other final adjudication to be liable to
the Company or shall have been adjudged liable on the basis that personal
benefit was improperly received by the Indemnitee, indemnification (i) shall be
limited to reasonable expenses actually incurred by the Indemnitee in connection
with the Proceeding, and (ii) shall not be made in respect of any Proceeding in
which the Indemnitee shall have been found liable for willful or intentional
misconduct in the performance of his duty to the Company.
(d) If the Indemnitee is entitled under this Agreement to indemnification
by the Company for some or a portion of the Indemnified Amounts (as hereinafter
defined) but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify the Indemnitee for the portion thereof to which the
Indemnitee is entitled.
2. Other Indemnification Arrangements. The Texas Statute permits the
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Company to purchase and maintain insurance or furnish similar protection or make
other arrangements, including, without limitation, securing indemnification
obligations by granting a security interest or other lien on the assets of the
Company and providing self insurance, a letter of credit, guaranty or surety
bond (collectively, the "Indemnity Arrangements") on behalf of the Indemnitee
against any liability asserted against him or incurred by or on behalf of him in
such capacity as an officer and/or director of the Company or as an Affiliate
Indemnitee, or arising out of him status as such, whether or not the Company
would have the power to indemnify him against such liability under the
provisions of this Agreement or under the Texas Statute, as it may then be in
effect. The purchase, establishment and maintenance of any such Indemnity
Arrangement shall not in any way limit or affect the rights and obligations of
the Company or of the Indemnitee under this Agreement except as expressly
provided herein, and the execution and delivery of this Agreement by the Company
and the Indemnitee shall not in any way limit or affect the rights and
obligations of the Company or
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the other party or parties thereto under any such Indemnity Arrangement. All
amounts payable by the Company pursuant to this Section 2 and Section 1 hereof
are herein referred to as "Indemnified Amounts."
3. Advance Payment of Indemnified Amounts.
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(a) The Indemnitee hereby is granted the right to receive in advance of a
final, nonappealable judgment or other final adjudication of a Proceeding (a
"Final Determination") the amount of any and all expenses, including, without
limitation, investigation expenses, expert witness' and attorneys' fees and
other expenses expended or incurred by the Indemnitee in connection with any
Proceeding or otherwise expended or incurred by the Indemnitee (such amounts so
expended or incurred being referred to as "Advanced Amounts").
(b) In making any written request for the Advanced Amounts, the Indemnitee
shall submit to the Company a schedule setting forth in reasonable detail the
dollar amount expended or incurred and expected to be expended. Each such
listing shall be supported by the xxxx, agreement or other documentation
relating thereto, each of which shall be appended to the schedule as an exhibit.
In addition, before the Indemnitee may receive Advanced Amounts from the
Company, the Indemnitee shall provide to the Company (i) a written affirmation
of the Indemnitee's good faith belief that the applicable standard of conduct
required for indemnification by the Company has been satisfied by the
Indemnitee, and (ii) a written undertaking by or on behalf of the Indemnitee to
repay the Advanced Amounts if it shall ultimately be determined that the
Indemnitee has not satisfied any applicable standard of conduct. The written
undertaking required from the Indemnitee shall be an unlimited general
obligation of the Indemnitee, but need not be secured. The Company shall pay to
the Indemnitee all Advanced Amounts within ten business days after receipt by
the Company of all information and documentation required to be provided by the
Indemnitee pursuant to this Section 3(b).
4. Procedure for Payment of Indemnified Amounts.
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(a) To obtain indemnification under this Agreement, the Indemnitee shall
submit to the Company a written request for payment of the appropriate
Indemnified Amounts, including with such request such documentation and
information as are reasonably available to the Indemnitee and reasonably
necessary to determine whether and to what extent the Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon receipt of
such a request for indemnification, advise the Reviewing Party (as defined in
Section (4(f)) in writing that the Indemnitee has requested indemnification.
(b) The Company shall pay the Indemnitee the appropriate Indemnified
Amounts, unless it is established by the Reviewing Party that the Indemnitee has
not met any applicable standard of conduct of the Express Permitted
Indemnification Provisions. For purposes of determining whether the Indemnitee
is entitled to Indemnified Amounts, in order to deny indemnification to the
Indemnitee, the Company shall have the burden of proof in establishing that the
Indemnitee did not meet the applicable standard of conduct. In this regard, a
termination of any Proceeding by judgment, order, settlement, conviction,
pleading of nolo contendere or its equivalent, or an entry of
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an order of probation prior to judgment, shall not create a presumption that the
Indemnitee did not meet the requisite standard of conduct.
(c) Any determination that the Indemnitee has not met the applicable
standard of conduct required to qualify for indemnification shall be made by the
Reviewing Party.
(d) The Reviewing Party will use its best efforts to conclude as soon as
practicable any required determination pursuant to Section 3(c) and will
promptly advise the Indemnitee in writing with respect to any determination that
the Indemnitee is or is not entitled to indemnification, including a description
of any reason or basis for which indemnification has been denied. Payment of
any applicable Indemnified Amounts will be made to the Indemnitee within ten
business days after any determination of the Indemnitee's entitlement to
indemnification.
(e) Notwithstanding the foregoing, the Indemnitee may, at any time after 60
days after a claim for Indemnified Amounts has been filed with the Company (or
upon receipt of written notice that a claim for Indemnified Amounts has been
rejected, if earlier) and prior to the expiration of three years after a claim
for Indemnified Amounts has been filed, petition a court of competent
jurisdiction to determine whether the Indemnitee is entitled to indemnification
under the provisions of this Agreement, and such court shall thereupon have the
exclusive authority to make such determination unless and until such court
dismisses or otherwise terminates such action without having made such
determination. The court shall, as petitioned, make an independent
determination of whether the Indemnitee is entitled to indemnification as
provided under this Agreement, irrespective of any prior determination made by
the Reviewing Party. If the court shall determine that the Indemnitee is
entitled to indemnification as to any claim, issue or matter involved in the
Proceeding with respect to which there has been no prior determination pursuant
to this Agreement or with respect to which there has been a prior determination
that the Indemnitee was not entitled to indemnification hereunder, the Company
shall pay all expenses (including reasonable attorneys' fees) actually incurred
by the Indemnitee in connection with such judicial determination.
(f) If there has not been a Change in Control (as defined in Section 4(g)),
the "Reviewing Party" shall be selected by the Board of Directors, and if there
has been a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), any Reviewing Party with respect
to all matters thereafter arising concerning the rights of Indemnitee to
indemnification under this Agreement or any other agreement or under the
Company's Articles of Incorporation or Bylaws as now or hereafter in effect, or
under any other applicable law, if desired by Indemnitee, shall be independent
legal counsel selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld). Such counsel, among other things, shall
render its written opinion to the Company and Indemnitee as to whether and to
what extent Indemnitee would be entitled to be indemnified hereunder under
applicable law and the Company agrees to abide by such opinion. The Company
agrees to pay the reasonable fees of the independent legal counsel referred to
above and to indemnify fully such counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto. Notwithstanding
any other provision of this Agreement, the Company shall not be required to pay
expenses of more than one independent legal
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Counsel in connection with all matters concerning a single Indemnitee, and such
independent legal counsel shall be the independent legal counsel for any or all
other Indemnitees unless (i) the employment of separate counsel by one or more
Indemnitees has been previously authorized by the Company in writing, or (ii) an
Indemnitee shall have provided to the Company a written statement that such
Indemnitee has reasonably concluded that there may be a conflict of interest
between such Indemnitee and the other Indemnitees with respect to the matters
arising under this Agreement.
(g) "Change in Control" shall mean, and shall be deemed to have occurred
if, on or after the date of this Agreement, (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company, becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than 50% of the total
voting power represented by the Company's then outstanding voting securities,
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or nomination for
election by the Company's shareholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
(iii) the shareholders of the Company approve a merger or consolidation of the
Company with any other corporation other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 80% of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of (in one transaction or a series of related transactions) all
or substantially all of the Company's assets.
5. Agreement Not Exclusive; Subrogation Rights, etc.
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(a) This Agreement shall not be deemed exclusive of and shall not diminish
any other rights that the Indemnitee may have to be indemnified or insured or
otherwise protected against any liability, loss or expense by the Company, any
subsidiary of the Company or any other person or entity under any charter,
bylaws, law, agreement, policy of insurance or similar protection, vote of
shareholders or directors, disinterested or not, or otherwise, whether or not
now in effect, both as to actions in the Indemnitee's official capacity, and as
to actions in another capacity while holding such office. The Company's
obligations to make payments of Indemnified Amounts hereunder shall be satisfied
to the extent that payments with respect to the same Proceeding (or part
thereof) have been made to or for the benefit of the Indemnitee by reason of the
indemnification of the Indemnitee pursuant to any other arrangement made by the
Company for the benefit of the Indemnitee.
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(b) In the event the Indemnitee shall receive payment from any insurance
carrier or from the plaintiff in any Proceeding against the Indemnitee in
respect of Indemnified Amounts after payments on account of all or part of such
Indemnified Amounts have been made by the Company pursuant hereto, the
Indemnitee shall promptly reimburse to the Company the amount, if any, by which
the sum of such payment by such insurance carrier or such plaintiff and payments
by the Company or pursuant to arrangements made by the Company to the Indemnitee
exceeds such Indemnified Amounts; provided, however, that such portions, if any,
of such insurance proceeds that are required to be reimbursed to the insurance
carrier under the terms of its insurance policy, such as deductible or co-
insurance payments, shall not be deemed to be payments to the Indemnitee
hereunder. In addition, upon payment of Indemnified Amounts hereunder, the
Company shall be subrogated to the rights of the Indemnitee receiving such
payments (to the extent thereof) against any insurance carrier (to the extent
permitted under such insurance policies) or plaintiff in respect of such
Indemnified Amounts, and the Indemnitee shall execute and deliver any and all
instruments and documents and perform any and all other acts or deeds which the
Company deems necessary or advisable to secure such rights. Such right of
subrogation shall be terminated upon receipt by the Company of the amount to be
reimbursed by the Indemnitee pursuant to the first sentence of this Section
5(b).
6. Continuation of Indemnity. All agreements and obligations of the
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Company contained herein shall continue during the period the Indemnitee is an
officer and/or director of the Company (or is serving at the request of the
Company as an Affiliate Indemnitee) and shall continue thereafter for a period
of five years from the date the Indemnitee ceases to serve as an officer and/or
director of the Company or ceases to serve as an Affiliate Indemnitee (whichever
is later).
7. Notice and Defense of Claim. The Indemnitee agrees promptly to notify
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the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of expenses
covered hereunder. Notwithstanding any other provision of this Agreement, with
respect to any such Proceeding or matter as to which the Indemnitee notifies the
Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its own expense.
(b) Except as otherwise provided in this Section 7(b), to the extent it
desires, the Company, jointly with any other indemnifying party similarly
notified, shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnitee. After notice from the Company to the
Indemnitee of the Company's election to so assume the defense thereof, the
Company shall not be liable to the Indemnitee under this Agreement for any legal
or other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof other than reasonable costs of investigation or as otherwise
provided below. The Indemnitee shall have the right to employ his own counsel
in such Proceeding or matter, but the fees and expenses of such counsel incurred
after notice from the Company of its assumption of the defense thereof shall be
at the expense of Indemnitee unless (i) the employment of counsel by the
Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have
reasonably concluded that there may be a
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conflict of interest between the Company and the 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 Proceeding or matter, 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 Proceeding or
matter brought by or on behalf of the Company or as to which the Indemnitee
shall have made the conclusion provided for in clause (ii) above.
(c) The Company shall not be liable to indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of any Proceeding or matter
affected without its written consent. The Company shall not settle any
Proceeding or matter in any manner that would impose any penalty or limitation
on the Indemnitee without the Indemnitee's written consent. Neither the Company
nor the Indemnitee will unreasonably withhold its consent to any proposed
settlement.
8. Defense Counsel. The Indemnitee hereby agrees that in any Proceeding
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in which the Indemnitee and other past or present directors or officers of the
Company (or its successor) who are entitled to indemnification from the Company
are named defendants or respondents, the Indemnitee and such other past or
present directors or officers shall collectively select one firm of attorneys in
any jurisdiction to defend all such defendants and respondents in such
Proceeding unless counsel for the Indemnitee concludes in a reasoned opinion
that there are issues which may raise conflicts of interest between the
Indemnitee and such other persons.
9. Indemnification for Negligence. TO THE EXTENT PERMITTED BY THEN
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APPLICABLE LAW AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, THE PARTIES
HERETO RECOGNIZE AND ACKNOWLEDGE THAT THE INDEMNITEE MAY BE INDEMNIFIED IN
ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT IN PROCEEDINGS INVOLVING THE
NEGLIGENCE OF THE INDEMNITEE.
10. Successors; Binding Agreement. This Agreement shall be binding on and
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shall inure to the benefit of and be enforceable by the Company's successors and
assigns and by the Indemnitee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. The
Company shall require any successor or assignee (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by written agreement in form and
substance reasonably satisfactory to the Company and to the Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession or assignment had taken place.
11. Enforcement. The Company has entered into this Agreement and assumed
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the obligations imposed on the Company hereby in order to induce the Indemnitee
to act as an officer and/or director, as the case may be, of the Company, and
acknowledges that the Indemnitee is relying upon this Agreement in continuing in
such capacity. In the event the Indemnitee is required to bring any action to
enforce rights or to collect monies due under this Agreement and is successful
in such action, the Company shall reimburse the Indemnitee for all of the
Indemnitee's reasonable attorneys' fees and expenses in bringing and pursuing
such action. The Indemnitee shall be entitled
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to the advancement of Indemnified Amounts to the full extent contemplated by
Section 3 hereof in connection with such proceeding.
12. Severability. In the event that any provision of this Agreement is
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determined by a court to require the Company to do or to fail to do an act which
is in violation of applicable law, such provision shall be limited or modified
in its application to the minimum extent necessary to avoid a violation of law,
and, as so limited or modified, such provision and the balance of this Agreement
shall be enforceable in accordance with its terms.
13. Entire Agreement. This Agreement contains the entire understanding of
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the parties relating to the subject matter contained herein and supersedes all
prior agreements and understandings, written or oral, relating to the subject
matter hereof.
14. Amendment; Waiver. No provision of this Agreement may be modified,
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waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by the Indemnitee and either the President of the Company or
another officer of the Company specifically designated by the directors. No
waiver by either party at any time of any breach by the other party of, or of
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a wavier of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent times.
15. Notices. For the purposes of this Agreement, notices and all other
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communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or three days after being
deposited by United States certified mail, return receipt requested, postage
prepaid, as follows:
If to the Company:
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Micrografx, Inc.
0000 Xxxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: President or Chief Financial Officer
If to the Indemnitee:
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or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
16. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
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17. Choice of Law. This Agreement shall be governed by and construed and
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enforced in accordance with the laws of the State of Texas (without regards to
principles of conflicts of laws).
18. Titles and Captions. All section titles and captions in this
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Agreement are for convenience only, shall not be deemed part of this Agreement,
and in no way shall define, limit, extend, or describe the scope or intent of
any provisions hereof.
[The next page is the signature page]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
COMPANY:
MICROGRAFX, INC.
By:
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Xxx Xxxxxxx, President
INDEMNITEE:
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