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EXHIBIT 10.4
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of
___________, 19__, is made between BSQUARE CORPORATION, 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 shareholders of the Company have adopted articles of
incorporation (the "Articles") and bylaws (the "Bylaws") providing for
indemnification of the officers, directors, agents and employees of the Company
to the full extent permitted by the Washington Business Corporation Act (the
"Statute").
E. The Articles, Bylaws and the Statute 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. The Company desires to provide Indemnitee with specific contractual
assurance of Indemnitee's rights to full indemnification against litigation
risks and expenses (regardless, among other things, of any amendment to or
revocation of the Company's Articles or Bylaws or any change in the ownership of
the Company or the composition of its Board of Directors), which indemnification
is intended to be greater than that which is afforded by the Company's Articles,
Bylaws and, to the extent insurance is available, the coverage of Indemnitee
under the Company's director and officers liability insurance policies, but in
no event shall such indemnification be greater than that allowed by law.
G. 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 Articles, the Bylaws, the 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 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 Bylaws, any agreement, any vote of shareholders or disinterested directors,
the Statute, or otherwise, whether as to action in Indemnitee's official
capacity or otherwise.
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 reasonable 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, arbitration, alternative dispute resolution
process, 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.
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1.5 DETERMINATION OF ENTITLEMENT
In the event that a determination of Indemnitee's entitlement to
indemnification is required pursuant to Section 23B.08.550 of the Statute or any
successor thereto 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 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 Company hereby agrees not to assert otherwise.
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.
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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 any applicable standards of conduct have been met by Indemnitee.
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
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
reasonable 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.
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4. LIMITATIONS ON INDEMNITY; MUTUAL ACKNOWLEDGEMENT
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 have been intentional misconduct, a knowing
violation of law or the RCW 23B.08310 or any successor provision of the
Statute, or a transaction from which Indemnitee derived benefit in money,
property or services to which Indemnitee is not legally entitled; 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 ACKNOWLEDGEMENT
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 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, 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
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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 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 fall 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. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Indemnitee as follows:
(a) Authority. The Company has all necessary power and authority to
enter into, and be bound by the terms of, this Agreement, and the execution,
delivery and performance of the undertakings contemplated by this Agreement have
been duly authorized by the Company.
(b) Enforceability. This Agreement, when executed and delivered by the
Company in accordance with the provisions hereof, shall be a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
enforcement of creditors' rights generally.
8. 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 hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
COMPANY:
BSQUARE CORPORATION
By ____________________________________
INDEMNITEE:
By ____________________________________
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