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EXHIBIT 10.7
INDEMNITY AGREEMENT
THIS AGREEMENT is made as of the ______ day of November, 1997, between
Oyo Geospace Corporation, a Delaware corporation ("Corporation") and
__________________________ ("Indemnified Party").
W I T N E S S E T H :
WHEREAS, Indemnified Party is, or is about to become, a member of the
Board of Directors or an officer of the Corporation and in such capacity is
performing a valuable service for Corporation;
WHEREAS, Indemnified Party may from time to time serve as a director,
officer, employee or agent of other corporations, partnerships, joint ventures,
trusts or other enterprises, entities or plans at the request of Corporation in
order to pursue Corporation's interests;
WHEREAS, the Bylaws (the "Bylaws") of Corporation provide for the
mandatory indemnification of the officers, directors, agents and employees of
Corporation to the maximum extent authorized by Section 145 of the Delaware
General Corporation Statute, as amended hereafter (the "State Statute");
WHEREAS, such Bylaws and the State Statute specifically provide that
they are not exclusive and thereby contemplate that contracts or other
arrangements not inconsistent with the State Statute may be entered into
between Corporation and the members of its Board of Directors and its officers
with respect to indemnification of such directors and officers;
WHEREAS, in accordance with the authorization provided by the State
Statute, Corporation is purchasing and will maintain a policy of Directors' and
Officers' Liability Insurance ("D&O Insurance"), covering certain liabilities
which may be incurred by its directors and officers in the performance of their
services for Corporation, possibly including certain liabilities for which
indemnification by the Corporation is not authorized or permitted under the
State Statute;
WHEREAS, uncertainties with respect to the terms and availability of
D&O Insurance and with respect to the application, amendment and enforcement of
statutory and by-law indemnification provisions make it desirable to supplement
and enhance the adequacy and reliability of the protection afforded to
directors and officers thereby;
WHEREAS, Corporation is in the process of accomplishing an initial
public offering ("IPO") of its common stock and desires to recruit new
directors and to continue the service of its existing directors to Corporation
as a public company;
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WHEREAS, in order to supplement and enhance the protection afforded
Indemnified Party and to induce Indemnified Party to serve as a member of the
Board of Directors or as an officer of Corporation at and after the IPO (and to
be named as a director or person consenting to be a director in the IPO
documents), Corporation has determined and agreed to enter into this contract
with Indemnified Party, which contract has been approved and adopted by
Corporation's Board and such Board action has been ratified by Corporation's
sole stockholder; and
WHEREAS, this contract has been so approved and ratified but shall not
become effective until the day one day prior to the consummation of the IPO;
NOW, THEREFORE, in consideration of Indemnified Party's continued
service as a director or an officer of Corporation after the date hereof the
parties hereto agree as follows:
1. DEFINITIONS.
"Litigation Costs" means costs, charges, expenses and obligations,
including, without limitation, all bonds, expenses of investigation,
fees and expenses of experts, accountants or other professionals,
travel and lodging expenses, and attorneys' fees and expenses,
reasonably incurred or contracted for in the investigation, defense or
prosecution of or other involvement in any Proceeding and any appeal
therefrom, and all costs of appeal, attachment, supersedeas and other
bonds that may be relevant to any Proceeding.
"Losses" means the total of all amounts which Indemnified Party
becomes, or may become, legally obligated to pay in connection with
any Proceeding, including (without limitation) judgments, penalties,
fines, court or investigative costs, amounts paid in settlement,
amounts lost or ordered forfeited pursuant to injunctive sanctions,
and all Litigation Costs.
"Proceeding" means any threatened, pending or completed action, suit,
proceeding, subpoena compliance, inquiry or investigation, whether
civil, criminal, administrative or investigative (whether external and
involving outside parties or internal to the Corporation, including,
but not limited to, an action by or in the right of the Corporation
and any internal investigation conducted by the Board of Directors or
any committee or other designee thereof or any other person), and
whether formal or informal.
2. INDEMNITY OF INDEMNIFIED PARTY. Corporation hereby agrees to
indemnify Indemnified Party to the fullest extent authorized or
permitted by the provisions of the State Statute, including, but not
limited to, (i) the maximum extent permitted by the provisions of such
Statute which provide that such Statute is not the exclusive basis for
indemnification of directors and officers and (ii) the maximum extent
authorized or permitted by any amendment thereof or other statutory
provision authorizing or permitting such indemnification which is
adopted after the date hereof.
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3. ADDITIONAL INDEMNITY. In addition to and not in substitution for or
diminution of the obligations of indemnification set forth in Section
2 hereof, Corporation hereby further agrees to indemnify Indemnified
Party, to the fullest extent permitted by law, against any and all
Litigation Costs and Losses of Indemnified Party in connection with
any Proceeding to which Indemnified Party is, was or at any time
becomes a party, or is threatened to be made a party or otherwise
becomes involved (other than as plaintiff except where being a
plaintiff or intervenor is necessary to avoid res judicata or
collateral estoppel or other estoppel or other result as to matters
which may adversely impact Indemnified Party) by reason of the fact
that Indemnified Party is, was or at any time becomes a director,
officer, employee or agent of Corporation, or is or was serving or at
any time serves at the request of Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or any benefit plan related to the business
and affairs of Corporation, and specifically including any Proceeding
brought pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 (the "1934 Act") or any other provision under the
1934 Act and the Securities Act of 1933 and the rules and regulations
thereunder.
4. LIMITATIONS ON INDEMNITY. No amounts of Indemnity pursuant to Section
2 or 3 hereof shall be paid by Corporation:
(a) Except to the extent the aggregate of Litigation Costs and
Losses in any Proceeding or group of related Proceedings to be
indemnified thereunder exceeds the amount of Litigation Costs
and Losses for which the Indemnified Party actually receives
indemnification payments or on whose behalf indemnification
payments are made pursuant to any D&O Insurance policy or from
any other source;
(b) On account of any payments required to be paid by an
Indemnified Party as a result of any Proceeding in which a
final, non-appealable judgment is rendered against Indemnified
Party for an accounting or disgorgement of profits made from
the purchase or sale by Indemnified Party of securities of
Corporation pursuant to the provisions of Section 16(b) of the
1934 Act;
(c) On account of Indemnified Party's conduct which is finally
adjudged in any Proceeding to have been knowingly fraudulent,
deliberately dishonest or an act or omission involving willful
misconduct;
(d) If a final non-appealable decision by a court having
jurisdiction over the parties and the subject matter shall
determine that such indemnification is not lawful.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of
Corporation contained herein shall continue during the period
Indemnified Party is a director, officer, employee or agent of
Corporation (or is or was serving at the request of Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or any benefit
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plan related to the business and affairs of Corporation or of any of
its affiliates, subsidiaries, associates or other entities in which it
is interested) and shall continue thereafter so long as Indemnified
Party shall be subject to any possible Litigation Costs or Losses in
any Proceeding by reason of the fact that Indemnified Party was a
director, officer, employee or agent of Corporation (or is or was
serving at the request of Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise or any such benefit plan).
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by
Indemnified Party of notice of the commencement of any Proceeding,
Indemnified Party will, if a claim in respect thereof is to be made
against Corporation under this Agreement, give reasonable notice to
Corporation of the commencement thereof; but the omission so to notify
Corporation will not relieve Corporation from any liability which it
may have to Indemnified Party unless Corporation can demonstrate by
clear and convincing evidence that it was materially prejudiced by the
failure to receive such notice. With respect to any such Proceeding
as to which Indemnified Party becomes involved:
(a) Corporation will be entitled to participate therein at its
own expense; and
(b) Except as otherwise provided below, to the extent that it may
wish, Corporation may, jointly with any other indemnifying
party, assume the defense thereof, with outside counsel which
must be reasonably satisfactory to Indemnified Party. After
notice from Corporation to Indemnified Party of its election
so to assume the defense thereof (and consent of Indemnified
Party as to Corporation's choice of outside counsel, which
consent will not be unreasonably withheld), Corporation will
be liable to Indemnified Party under this Agreement for all
Litigation Costs (subject to Section 4 above and other than as
provided below with respect to attorneys' fees) incurred in
connection therewith. Indemnified Party shall have the right
to employ personal counsel in such Proceeding, but the fees
and expenses of such counsel incurred after notice from
Corporation of its assumption of the defense thereof (and
consent of Indemnified Party as to Corporation's choice of
outside counsel) shall be at the expense of Indemnified Party,
unless (i) the employment of counsel for Indemnified Party has
been authorized by Corporation, (ii) Indemnified Party shall
have concluded in good faith that there may be a conflict of
interest between Corporation and Indemnified Party in the
conduct of the defense (or part of the defense) of such
action, or (iii) Corporation 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 Corporation. Corporation shall not be entitled to assume
the defense of any Proceeding brought by or on behalf of
Corporation or as to which Indemnified Party shall have made
the conclusion provided for in (ii) above; and
(c) Corporation shall not be liable to indemnify Indemnified Party
under this Agreement for any Losses paid in settlement of any
Proceeding or claim
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effected without its written consent. Corporation shall not
settle any Proceeding or claim in any manner which would
impose any penalty, sanction or limitation on Indemnified
Party, or otherwise effectively indicate the existence of any
wrongful act by Indemnified Party, without Indemnified Party's
written consent. Neither Corporation nor Indemnified Party
will unreasonably withhold its consent to any proposed
settlement. Without intending to limit the circumstances in
which it would be unreasonable for Corporation to withhold its
consent to a settlement, the parties hereto agree it would be
unreasonable for Corporation to withhold its consent to a
settlement in an amount that did not exceed, in the business
judgment of the Board of Directors of Corporation, the
estimated amount of Litigation Costs of Indemnified Party to
litigate the Proceeding to conclusion, provided that there is
no other materially adverse consequence to Corporation from
such settlement.
7. NO PRESUMPTIONS. The termination of any Proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption (i) that
Indemnified Party did not act in good faith, (ii) with respect to any
criminal action or proceeding, that Indemnified Party had reasonable
cause to believe that his conduct constituted a criminal violation or
(iii) that Indemnified Party was knowingly fraudulent, deliberately
dishonest or committed an act, or made an omission, involving willful
misconduct.
8. MANDATORY ADVANCEMENT OF EXPENSES. At the request of Indemnified
Party, Litigation Costs incurred or contracted for by him in any
Proceeding shall be paid by Corporation on a continuing and current
basis, in advance of the final disposition of such matter, with the
undertaking which Indemnified Party makes hereby that if it shall be
ultimately determined that Indemnified Party was not entitled to be
indemnified therefor, or was not entitled to be fully indemnified
therefor, Indemnified Party shall repay to Corporation the amount, or
appropriate portion thereof, so advanced. Such advancement and
current payment of Litigation Costs by Corporation shall be made
promptly (but in any event within 10 days) after receipt by
Corporation of Indemnified Party's request therefor.
9. REPAYMENT OF EXPENSES. Indemnified Party agrees that Indemnified
Party will reimburse Corporation for all Litigation Costs paid by
Corporation in connection with any Proceeding in which Indemnified
Party is involved in the event and only to the extent that it shall be
ultimately determined by final non-appealable judgment of a court of
competent jurisdiction that Indemnified Party is not entitled to be
indemnified by Corporation for such Litigation Costs under the
provisions of the State Statute, the Bylaws and this Agreement.
10. PROCEDURE.
(a) Indemnification hereunder shall be made promptly, and in any
event within thirty days of Indemnified Party's written
request therefor, unless
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(i) an affirmative determination is made reasonably and within
such thirty-day period by Corporation in the manner provided
in subsection (b) below, that Indemnified Party is not
entitled to indemnity hereunder for any reason other than as
contemplated by clause (ii) of this Section 10(a), or (ii) an
affirmative determination is required by the State Statute or
other applicable law that the Indemnified Party met an
applicable standard of conduct, in which case the Corporation
will cause such determination to be made within sixty days
from the date of the written request for indemnity.
(b) The determination to be made by Corporation under subsection
(a) above shall be based on the facts known at the time and
shall be made (i) by the Board, by a majority vote of a quorum
consisting of directors who are not parties to the Proceeding
("disinterested directors"), or (ii) if such a quorum is not
obtainable, by independent legal counsel in a written opinion,
or (iii) even if such a quorum is obtainable, by independent
legal counsel in a written opinion if the Board, by a majority
vote of a quorum consisting of disinterested directors, so
directs, or (iv) by the stockholders of Corporation. Any such
determination may be contested by Indemnified Party as
hereinafter contemplated.
(c) A failure to make any required determination within the period
of time specified shall be deemed to be a determination
favorable to the Indemnified Party.
11. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on
Corporation hereby and has obtained the approval of its Board
of Directors and the ratification of such approval by its sole
stockholder in order to induce Indemnified Party to serve as a
director or an officer of Corporation and acknowledges that
Indemnified Party is relying upon this Agreement in agreeing
to serve in such capacity.
(b) In the event Indemnified Party is required to bring any action
to enforce rights or to collect moneys due under this
Agreement, Corporation shall reimburse Indemnified Party, on a
continuing and current basis, for all of Indemnified Party's
reasonable fees and expenses in bringing and pursuing such
action and Indemnified Party shall have no obligation to
reimburse Corporation therefor unless Indemnified Party is not
successful in such action after rendition of a final,
non-appealable judgment by a court of competent jurisdiction.
(c) The right to indemnification hereunder shall be enforceable by
Indemnified Party in any court of competent jurisdiction if
Indemnified Party's claim therefor is denied, in whole or in
part, in the manner provided herein, or if no disposition of
such claim is made within sixty
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days from the receipt by Corporation of Indemnified Party's
request for indemnification hereunder.
12. SEVERABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others so that if any
provision hereof shall be held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions hereof. To the
extent necessary to effectuate this Agreement, should any provision
hereof be held invalid or unenforceable, this Agreement shall be
reformed in such manner as to provide the maximum indemnity
contemplated hereby to Indemnified Party, it being the intention of
the parties hereto that this Agreement be otherwise given its maximum
effect consistent with the laws and, to the extent applicable, public
policies of the State of Delaware.
13. OBLIGATION TO AMEND. Corporation agrees to take all actions necessary
to amend this Agreement in the future to increase or otherwise
maximize the indemnity protections intended to be afforded hereby to
the extent then permitted by law.
14. NOTICE. Any notice, request or other communication hereunder to
Corporation or Indemnified Party shall be in writing and delivered or
sent by postage prepaid first class mail or by hand delivery or
express mail service or by facsimile copy to Corporation's facsimile
phone number as follows: (i) if to Corporation, addressed to Oyo
Geospace Corporation, 0000 Xxxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxx 00000,
and (ii) if to Indemnified Party, to the address shown on the
signature page hereof or at such other address as Indemnified Party
shall designate from time to time to Corporation in writing.
15. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION.
(a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Delaware.
(b) This Agreement shall be binding upon Indemnified Party and
upon Corporation, its successors and assigns, and shall inure
to the benefit of Indemnified Party, his heirs, personal
representatives and assigns and to the benefit of Corporation,
its successors and assigns. Corporation will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or any substantial part of
the business and/or assets of Corporation, by agreement in
form and substance satisfactory to Indemnified Party, to
expressly assume and agree to perform this Indemnification
Agreement in the same manner and to the same extent that
Corporation would be required to perform it if no such
succession had taken place. Failure of Corporation to obtain
such agreement prior to effectiveness of any succession shall
be a breach of this Indemnification Agreement and shall
entitle Indemnified Party to appropriate equitable relief or
monetary damages from Corporation in an amount necessary to
provide Indemnified Party with the protections to which he
would be entitled hereunder. As used in this Indemnification
Agreement, "Corporation" shall mean Corporation as
hereinbefore defined
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and any successor to its business and/or assets as aforesaid
that executes and delivers the agreement provided for in this
Section 14 or that otherwise becomes bound by all the terms
and provisions of this Indemnification Agreement by operation
of law.
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by
both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
OYO GEOSPACE CORPORATION
By
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Authorized Signatory
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Indemnified Party
Address:
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