QAD INC.
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT, dated as of , is between QAD INC., a
Delaware corporation (the "Company"), and _________________ ("Indemnitee").
RECITALS
A. Indemnitee is a director or officer 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 periodic reduction in the coverage of such insurance.
C. The Company and Indemnitee further recognize the substantial increase
in litigation subjecting directors and officers to expensive litigation risks at
the same time such liability insurance is being severely limited.
D. The Company has adopted and its stockholders have approved bylaws (the
"Bylaws") providing for the indemnification of the Company's directors and
officers to the full extent permitted by Section 145 of the General Corporation
Law of Delaware (the "Statute").
E. The Bylaws and the Statute specifically provide that they are not
exclusive, and they thereby contemplate that contracts may be entered into
between the Company and its directors and officers with respect to
indemnification of such directors and officers.
F. To induce Indemnitee to serve or continue to serve the Company, the
Company desires to confirm the contract indemnification rights provided in the
Bylaws and agrees to provide Indemnitee with the benefits contemplated by this
Agreement.
AGREEMENTS
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 the basis for such indemnification
is not specifically enumerated in this Agreement, the Company's Certificate of
Incorporation, the Bylaws, any other statute or otherwise. In the event of any
change, after the date of this Agreement, in any applicable law, statute or rule
regarding the right of a Delaware corporation to indemnify a member of its Board
of Directors or an officer, such change, to the extent it would expand
Indemnitee's rights hereunder, shall be included within Indemnitee's rights and
the Company's obligations hereunder, and, to the extent it would narrow
Indemnitee's rights or the Company's obligations hereunder, shall be excluded
from this Agreement; PROVIDED, HOWEVER, that any change 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
or the Company's obligations 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 Company's
Certificate of Incorporation, the Bylaws, any agreement, any vote of
stockholders or disinterested directors, the Statute or otherwise, whether as to
action in Indemnitee's official capacity or otherwise.
1.3. INCLUDED COVERAGE
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, without limitation, attorneys' fees, judgments, fines,
ERISA excise taxes or penalties, witness fees, 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 completed,
actual, pending or threatened action, suit, claim or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Company) 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, trustee or agent of the Company or that, being or
having been such a director, officer, employee, trustee 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
In the event that a determination of Indemnitee's entitlement to
indemnification is required pursuant to Section 145(d) of the Statute or a
successor statute or pursuant to other applicable law, the appropriate decision
maker shall make such determination; PROVIDED, HOWEVER, that Indemnitee shall
initially be presumed in all cases to be entitled to indemnification, that
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 that, unless the Company shall deliver to
Indemnitee a written notice that Indemnitee is not entitled to indemnification
within 20 days after 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 that
the Company hereby agrees not to assert otherwise.
-2-
1.6. CONTRIBUTION
If the indemnification provided under Section 1.1 is unavailable by reason
of a court decision, based on grounds other than any of those set forth in
paragraphs (b) through (d) of Section 4.1, then, in respect of any Proceeding in
which the Company is jointly liable with Indemnitee (or would be if joined in
such Proceeding), the Company shall contribute to the amount of Damages
(including attorneys' fees) actually and reasonably incurred and paid or payable
by Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and Indemnitee on the other
from the transaction from which such Proceeding arose and (ii) the relative
fault of the Company on the one hand and of Indemnitee on the other in
connection with the events that resulted in such Damages as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of Indemnitee on the other shall be determined by reference to, among
other things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such Damages.
The Company agrees that it would not be just and equitable if contribution
pursuant to this Section 1.6 were determined by pro rata allocation or any other
method of allocation that does not take account of the foregoing equitable
considerations.
1.7. SURVIVAL
The indemnification and contribution provided under this Agreement shall
apply to any and all Proceedings, notwithstanding that Indemnitee has ceased to
serve the Company or a Related Company, and shall continue so long as Indemnitee
shall be subject to any possible Proceeding, whether civil, criminal or
investigative, by reason of the fact that Indemnitee was a director or officer
of the Company or serving in any other capacity referred to in Section 1.4 of
this Agreement.
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, 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 Indemnitee's 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 it shall ultimately be
determined by a final, unappealable decision rendered by a court having
jurisdiction over the parties that Indemnitee is not entitled to be indemnified
by the Company.
-3-
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.
3. PROCEDURES FOR ENFORCEMENT
3.1. ENFORCEMENT
In the event that any claim for indemnity, whether an Expense Advance or
otherwise, is made hereunder and is not paid in full within 60 days 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 expressly affirms and agrees that it has entered into
this Agreement and assumed the obligations imposed on it hereunder to induce
Indemnitee to continue as a director or officer 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
stockholders) 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 stockholders 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 or officer 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 Indemnitee 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 other enterprise shall conclusively be deemed a Related Company and
Indemnitee shall conclusively be deemed to be serving such Related Company at
the Company's request.
3.3. ATTORNEYS' FEES AND EXPENSES FOR ENFORCEMENT ACTION
In the event Indemnitee is required to bring an Enforcement Action, the
Company shall pay 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 payment 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.
-4-
4. LIMITATIONS ON INDEMNITY; MUTUAL ACKNOWLEDGMENT
4.1. LIMITATIONS 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, as amended;
(b) For Damages that have been paid directly to Indemnitee by an
insurance carrier under a policy of directors' and officers' liability insurance
maintained by the Company;
(c) With respect to remuneration paid to Indemnitee if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(d) On account of Indemnitee's conduct which is finally adjudged to have
been intentional misconduct, a knowing violation of law, a violation of Section
174 of the Statute or a transaction from which Indemnitee derived an improper
personal benefit; or
(e) If a final decision by a court having jurisdiction in the matter
shall determine that such indemnification is not lawful.
4.2. SEC UNDERTAKING
Indemnitee understands and acknowledges that the Company may be required in
the future to undertake with the Securities and Exchange Commission (the "SEC")
to submit in certain circumstances the question of indemnification to a court
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 shall, 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, however, 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;
-5-
(b) The Company, 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 so 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 (or any other person or
persons included in the joint defense) 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 Company's expense. The Company shall
not be entitled to assume the defense of any Proceeding brought by or on behalf
of the Company or as to which Indemnitee shall have reasonably made the
conclusion provided for in (ii) above;
(c) The Company shall not be liable to 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 that
would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent; and
(e) Neither the Company nor Indemnitee shall unreasonably withhold its
consent to any proposed settlement, provided that Indemnitee may withhold
consent to any settlement that does not provide a complete release of
Indemnitee.
6. SEVERABILITY
Nothing in this Agreement is intended to require or shall be construed as
requiring the Company to do or to 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, and if this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, the Company shall
nevertheless indemnify or make contribution to 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 Delaware.
(b) This Agreement shall be binding on Indemnitee and on the Company and
its successors and assigns (including any transferee of all or substantially all
of its assets and any successor by merger or otherwise by operation of law), and
shall inure to the benefit of Indemnitee and Indemnitee's heirs, personal
representatives and assigns and to the benefit of the Company and its successors
and assigns. The Company shall not effect any sale of substantially all of its
assets, merger, consolidation or other reorganization in which it is not the
surviving entity, unless the surviving entity agrees in writing to assume all
such obligations of the Company under this Agreement.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective
-6-
unless in writing signed by both parties hereto.
8. NOTICES
All notices, claims and other communications hereunder shall be in writing
and made by hand delivery, registered or certified mail (postage prepaid, return
receipt requested), facsimile or overnight air courier guaranteeing next-day
delivery:
(a) If to the Company, to: with a copies to:
QAD Inc. QAD Inc.
6450 Via Real 00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000 Suite 200 East
Attention: Xx. Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
and:
Nida & Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
(b) If to Indemnitee, to the address specified on the last page of this
Agreement or to such other address as either party may from time to time furnish
to the other party by a notice given in accordance with the provisions of this
Section 8. All such notices, claims and communications shall be deemed to have
been duly given if (i) personally delivered, at the time delivered, (ii) mailed,
five days after dispatched, (iii) sent by facsimile transmission, upon
confirmation of receipt, and (iv) sent by any other means, upon receipt.
-7-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
QAD INC.,
a Delaware corporation
By:
-------------------------------
Name:
Title:
INDEMNITEE:
-----------------------------------
Name (Please Print)
-----------------------------------
Signature of indemnitee
Address:
with a copy to:
-8-
