Exhibit 10.1
XXXXX.XXX, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") dated as of December __,
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1999 is made by and between Xxxxx.xxx, Inc., a Washington corporation formerly
known as XxxxXxxxx.xxx, Inc. (the "Company"), and ________________
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("Indemnitee").
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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 and the significant cost 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 that such liability insurance has been severely limited.
D. The Company has adopted bylaws (the "Bylaws") providing for
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indemnification of the officers, directors, agents and employees of the Company
to the full extent permitted by the Business Corporation Act of Washington (the
"Statute").
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E. The Bylaws and the Statute specifically provide that they are not
exclusive, and 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 as a director or
officer of the Company, the Company desires to confirm the contract
indemnification rights provided in the Bylaws and agrees to provide the
Indemnitee with the benefits contemplated by this Agreement.
AGREEMENT
In consideration of the recitals above, the mutual covenants and agreements
herein contained, and Indemnitee's continued service as a director or officer,
as the case may be, of the Company after the date hereof, the parties to this
Agreement agree as follows:
1. Indemnification of Indemnitee.
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(a) Scope. The Company agrees to hold harmless and indemnify
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Indemnitee to the full extent provided under the provisions of the Company's
Articles of Incorporation, as amended (the "Articles"), and the Bylaws, as
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amended (the "Bylaws"), and to the full extent permitted by law, notwithstanding
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that the basis for such indemnification is not specifically enumerated in this
Agreement, the Company's Articles, Bylaws, any 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 change, to the extent that it would
expand Indemnitee's rights hereunder, shall be included within Indemnitee's
rights and the Company's obligations hereunder, and, to the extent that it would
narrow Indemnitee's rights or the Company's obligations hereunder, shall not
affect or limit the scope of this Agreement; provided, however, that in no event
shall any part of this Agreement be construed so as to require indemnification
when such indemnification is not permitted by then applicable law.
(b) Nonexclusivity. The indemnification provided by this Agreement
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shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles, 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.
(c) Included Coverage. If Indemnitee was or is made a party, or is
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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 (compensatory, exemplary, punitive or otherwise),
liabilities or expenses, including, without limitation, attorneys' fees, costs,
judgments, fines, ERISA excise taxes or penalties, witness fees, amounts paid in
settlement and other expenses incurred in connection with the investigation,
defense, settlement or approval of such Proceeding (collectively, "Damages").
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(d) Definition of Proceeding. For purposes of this Agreement,
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"Proceeding" shall mean any completed, actual, pending or threatened action,
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suit, claim, hearing or proceeding, whether civil, criminal, arbitrative,
administrative, investigative or pursuant to any alternative dispute resolution
mechanism (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 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"),
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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 Enforcement Action (defined
in Section 3(a) below, an action challenging the Company's determination that
Indemnitee is not entitled to indemnification pursuant to Section 1(e), and any
other action to enforce the provisions of this Agreement, "Proceeding" shall not
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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.
(e) Determination Of Entitlement. In the event that a determination
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of Indemnitee's entitlement to indemnification is required pursuant to Section
23B.08.550 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
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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) calendar 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.
(f) Contribution. If the indemnification provided under Section 1(a)
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is unavailable by reason of a court decision, based on grounds other than any of
those set forth in paragraphs (ii) through (iv) of Section 4(a), 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(f) were determined by pro rata
allocation or any other method of allocation that does not take account of the
foregoing equitable considerations.
(g) Survival. The indemnification and contribution provided under
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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(d) of this Agreement.
2. Expense Advances.
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(a) Generally. The right to indemnification of Damages conferred by
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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").
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(b) Conditions to Expense Advance. The Company's obligation to
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provide an Expense Advance is subject to the following conditions:
(i) Undertaking. If the Proceeding arose in connection with
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Indemnitee's service as a director or an 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,
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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 under this Agreement or
otherwise.
(ii) Cooperation. Indemnitee shall give the Company such
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information and cooperation as it may reasonably request and as shall be within
Indemnitee's legal power to so provide.
(iii) Affirmation. Indemnitee shall furnish, upon request by the
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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
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(a) Enforcement. In the event that any claim for indemnification,
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whether an Expense Advance or otherwise, is made hereunder and is not paid in
full within thirty (30) calendar 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").
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(b) Presumptions in Enforcement Action. In any Enforcement Action,
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the following presumptions (and limitation on presumptions) shall apply:
(i) 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, as the case may be,
of the Company;
(ii) Neither (1) 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 (2) 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 create a presumption that Indemnitee is
not entitled to indemnification hereunder; and
(iii) 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 as a partner, trustee or
otherwise 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 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.
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(c) Attorneys' Fees and Expenses for Enforcement Action. In the event
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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. Limitations on Indemnity; Mutual Acknowledgment
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(a) Limitation on Indemnity. No indemnity pursuant to this Agreement
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shall be provided by the Company:
(i) 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;
(ii) For Damages that have been paid directly to Indemnitee by
an insurance carrier under a policy of insurance maintained by the Company;
(iii) 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;
(iv) On account of Indemnitee's conduct which is finally
adjudged by a court having jurisdiction in the matter to have been intentional
misconduct, a knowing violation of law or the RCW 23B.08.310 or any successor
provision of the Statute, or a transaction from which Indemnitee derived an
improper personal benefit; or
(v) If a final decision by a court having jurisdiction in the
matter with no further right of appeal shall determine that such indemnification
is not lawful.
(b) Partial Indemnification. If Indemnitee is entitled under any
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provision of this Agreement to indemnification by the Company for some or a
portion of any Damages in connection with a Proceeding, but not, however, for
the total amount thereof, the Company shall nevertheless indemnify Indemnitee
for the portion of such Damages to which Indemnitee is entitled.
(c) Mutual Acknowledgment. The Company and Indemnitee acknowledge
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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
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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
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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
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(a) Notification. Promptly after receipt by Indemnitee of notice of
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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.
If, at the time of the receipt of a notice of a claim pursuant to
Section 5(a), the Company has director and officer liability insurance in
effect, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall take all necessary or desirable action
to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable
as a result of such Proceeding in accordance with the terms of such policies.
(b) Defense of Claim. With respect to any such Proceeding as to which
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Indemnitee notifies the Company of the commencement thereof:
(i) The Company may participate therein at its own expense;
(ii) 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, (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, or (iv) the Company
is not financially or legally able to perform its indemnification obligations.
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) or (iv) above;
(iii) 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;
(iv) 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
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(v) Neither the Company nor Indemnitee will unreasonably
withhold its, his or her consent to any proposed settlement.
6. Severability
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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. 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 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
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(a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Washington.
(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 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 merger, consolidation, sale of
all or substantially all of its assets or other reorganization in which it is
not the surviving entity, unless the surviving entity agrees in writing to
assure all of the Company's obligations under this Agreement.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
8. Entire Agreement
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This Agreement is the entire agreement of the parties regarding its
subject matter and supersedes all prior written or oral communications or
agreements.
9. Counterparts
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This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
10. Amendments; Waivers
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Neither this Agreement nor any provision may be amended except by
written agreement signed by the parties. No waiver of any breach or default
shall be considered valid
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unless in writing, and no such waiver shall be deemed a waiver of any subsequent
breach or default.
11. Notices
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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 copy to:
Xxxxx.xxx, Inc. Venture Law Group
0000 Xxxxxx Xxx., Xxxxx 000 4750 Carillon Point
Seattle, WA 98104 Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx Attn: Xxxxxxx X. Xxxxxxx
(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 11. 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.
12. Directors' and Officers' Insurance. The Company shall, from time
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to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among
other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. In all
policies of director and officer liability insurance, Indemnitee shall be named
as an insured in such a manner as to provide Indemnitee the same rights and
benefits as are accorded to the most favorably insured of the Company's
directors, if Indemnitee is a director; or of the Company's officers, if
Indemnitee is not a director of the Company but is an officer; or of the
Company's key employees, if Indemnitee is not an officer or director but is a
key employee. Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain such insurance if the Company determines in
good faith that such insurance is not reasonably available, if the premium costs
for such insurance are disproportionate to the amount of coverage provided, if
the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a parent or subsidiary of the Company.
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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: INDEMNITEE:
XXXXX.XXX, INC. _______________________________________
By:_____________________________ Print name:______________________________
Name:___________________________ Address: __________________
(print) __________________
Title:__________________________ __________________
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