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EXHIBIT 10.1
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT is made and entered into as of this
_____ day of ________, 1999 between Crossroads Systems, Inc., a Delaware
corporation (the "Corporation"), and _______________________________
("Indemnitee").
I N T R O D U C T I O N:
A. Indemnitee is an executive officer, director and/or agent
of the Corporation (or a subsidiary of the Corporation), as the case may be from
time to time, and performs a valuable service for the Corporation in such
capacity (or capacities); and
B. The Certificate of Incorporation (the "Certificate") and
the Bylaws (the "Bylaws") of the Corporation contain provisions providing for
the indemnification of the officers, directors and agents of the Corporation to
the maximum extent authorized by Section 145 of the Delaware General Corporation
Law, as amended ("DGCL"); and
C. The Certificate, the Bylaws and the DGCL, by their
non-exclusive nature, permit contracts between the Corporation and the members
of its Board of Directors and officers with respect to indemnification of such
directors and officers; and
D. In accordance with the authorization as provided by the
DGCL, the Corporation has purchased and presently maintains a policy or policies
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 duties as directors or officers of the Corporation; and
E. As a result of developments affecting the terms, scope and
availability of D & O Insurance there exists general uncertainty as to the
extent of protection afforded members of the Board of Directors and executive
officers of the Corporation by such D & O Insurance and by statutory and bylaw
indemnification provisions; and
F. In order to induce Indemnitee to continue to serve as an
executive officer, director or agent of the Corporation, the Corporation has
determined and agreed to enter into this contract with Indemnitee.
A G R E E M E N T:
NOW, THEREFORE, in consideration of Indemnitee's continued
service as an executive officer and a member of the Board of Directors after the
date hereof, the parties hereto agree as follows:
1. INDEMNIFICATION OF INDEMNITEE. The Corporation hereby
agrees to hold harmless and indemnify Indemnitee and any partnership,
corporation, trust or other entity of
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which Indemnitee is or was a partner, shareholder, trustee, director, officer,
employee or agent (Indemnitee and each such partnership, corporation, trust or
other entity being hereinafter referred to collectively as an "Indemnitee") to
the fullest extent authorized or permitted by the provisions of the DGCL, as may
be amended from time to time.
2. ADDITIONAL INDEMNITY. Subject only to the exclusions set
forth in Section 3 hereof, the Corporation hereby further agrees to hold
harmless and indemnify Indemnitee:
(a) against any and all expenses (including attorney's
fees), witness fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action
by or in the right of the Corporation) to which Indemnitee is, was or
at any time becomes a party, or is threatened to be made a party, by
reason of the fact that Indemnitee is, was or at any time becomes a
director, officer, employee or agent of the Corporation or any
subsidiary of the Corporation, or is or was serving or at any time
serves at the request of the Corporation or any subsidiary of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe Indemnitee's conduct
was unlawful; and
(b) otherwise to the fullest extent as may be provided to
Indemnitee by the Corporation under the non-exclusivity provisions of
Article XI of the Corporation's Bylaws (as the same, including such
article, may be amended, modified or restated from time to time) and
the DGCL.
3. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant
to Section 2 hereof shall be paid by the Corporation:
(a) except to the extent the aggregate of losses to be
indemnified thereunder exceeds the sum of such losses for which the
Indemnitee is indemnified pursuant to Section 1 hereof or pursuant to
any D & O Insurance purchased and maintained by the Corporation;
(b) in 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;
(c) on account of any suit in which judgment is rendered
against Indemnitee for an accounting of profits made from the purchase
or sale by Indemnitee of securities of the Corporation pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state or local
statutory law;
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(d) on account of Indemnitee's conduct which is finally
adjudged to have been knowingly fraudulent or deliberately dishonest,
or to constitute willful misconduct;
(e) on account of Indemnitee's conduct which is the subject
of an action, suit or proceeding described in Section 7(c)(ii) hereof;
(f) on account of any action, claim or proceeding (other
than a proceeding referred to in Section 8(b) hereof) initiated by the
Indemnitee unless such action, claim or proceeding was authorized in
the specific case by action of the Board of Directors; and
(g) if a final decision by a Court having jurisdiction in
the matter shall determine that such indemnification is not lawful
(and, in this respect, both the Corporation and Indemnitee have been
advised that the Securities and Exchange Commission believes that
indemnification for liabilities arising under the federal securities
laws is against public policy and is, therefore, unenforceable and that
claims for indemnification should be submitted to appropriate courts
for adjudication).
4. CONTRIBUTION. If the indemnification provided in Sections 1
and 2 hereof is unavailable by reason of a Court decision described in Section
3(g) hereof based on grounds other than any of those set forth in paragraphs (b)
through (f) of Section 3 hereof, then in respect of any threatened, pending or
completed action, suit or proceeding in which the Corporation is jointly liable
with Indemnitee (or would be if joined in such action, suit or proceeding), the
Corporation shall contribute to the amount of expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by Indemnitee in such proportion as is appropriate
to reflect (a) the relative benefits received by the Corporation on the one hand
and Indemnitee on the other hand from the transaction from which such action,
suit or proceeding arose, and (b) the relative fault of the Corporation on the
one hand and of Indemnitee on the other in connection with the events which
resulted in such expenses, judgments, fines or settlement amounts, as well as
any other relevant equitable considerations. The relative fault of the
Corporation 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 expenses, judgments, fines or settlement amounts. The
Corporation agrees that it would not be just and equitable if contribution
pursuant to this Section 4 were determined by pro rata allocation or any other
method of allocation that does not take account of the foregoing equitable
considerations.
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations
of the Corporation contained herein shall continue during the period Indemnitee
is a director, officer or agent of the Corporation or any subsidiary of the
Corporation (or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise) if Indemnitee acted
in good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Corporation unless
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and only to the extent that the Court of Chancery of the State of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery of the State of Delaware
or such other court shall deem proper and shall continue thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that Indemnitee was an officer of the Corporation or
serving in any other capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty
days after receipt by Indemnitee of notice of the commencement of any action,
suit or proceeding, Indemnitee will, if a claim in respect thereof is to be made
against the Corporation under this Agreement, notify the Corporation of the
commencement thereof; but the omission so to notify the Corporation will not
relieve it from any liability which it may have to Indemnitee otherwise than
under this Agreement. With respect to any such action, suit or proceeding as to
which Indemnitee notifies the Corporation of the commencement thereof:
(a) the Corporation will be entitled to participate therein
at its own expense;
(b) except as otherwise provided below, to the extent that
it may wish, the Corporation jointly with any other indemnifying party
similarly notified will be entitled to assume the defense thereof, with
counsel reasonably satisfactory to Indemnitee. After notice from the
Corporation to Indemnitee of its election so as to assume the defense
thereof, the Corporation will not be liable to Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Indemnitee shall
have the right to employ its counsel in such action, suit or proceeding
but the fees and expenses of such counsel incurred after notice from
the Corporation of its assumption of the defense thereof shall be at
the expense of Indemnitee unless (i) the employment of counsel by
Indemnitee has been authorized by the Corporation, (ii) Indemnitee
shall have reasonably concluded that there may be a conflict of
interest between the Corporation and Indemnitee in the conduct of the
defense of such action or (iii) the 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 Indemnitee's separate counsel shall be
at the expense of the Corporation. The Corporation shall not be
entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Corporation or as to which Indemnitee
shall have made the conclusion provided for in (ii) above; and
(c) the Corporation shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The
Corporation shall be permitted to settle any action except that it
shall not settle any action or claim in any manner which would impose
any penalty or limitation on Indemnitee without Indemnitee's written
consent. Neither the Corporation nor Indemnitee will unreasonably
withhold its consent to any proposed settlement.
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7. ADVANCEMENT AND REPAYMENT OF EXPENSES.
(a) In the event that Indemnitee employs his own counsel
pursuant to Section 6(b)(i) through (iii) above, the Corporation shall
advance to Indemnitee, prior to any final disposition of any threatened
or pending action, suit or proceeding, whether civil, criminal,
administrative or investigative, any and all reasonable expenses
(including legal fees and expenses) incurred in investigating or
defending any such action, suit or proceeding within ten days after
receiving copies of invoices presented to Indemnitee for such expenses;
(b) Indemnitee agrees that Indemnitee will reimburse the
Corporation for all reasonable expenses paid by the Corporation in
defending any civil or criminal action, suit or proceeding against
Indemnitee in the event and only to the extent it shall be ultimately
determined by a final judicial decision (from which there is no right
of appeal) that Indemnitee is not entitled, under the provisions of the
DGCL, the Certificate, the Bylaws, this Agreement or otherwise, to be
indemnified by the Corporation for such expenses; and
(c) Notwithstanding the foregoing, the Corporation shall
not be required to advance such expenses to Indemnitee if Indemnitee
(i) commences any action, suit or proceeding as a plaintiff unless such
advance is specifically approved by a majority of the Board of
Directors or (ii) is a party to an action, suit or proceeding brought
by the Corporation and approved by a majority of the Board which
alleges willful misappropriation of corporate assets by Indemnitee,
disclosure of confidential information in violation of Indemnitee's
fiduciary or contractual obligations to the Corporation, or any other
willful and deliberate breach in bad faith of Indemnitee's duty to the
Corporation or its shareholders.
8. PROCEDURE. Any indemnification and advances provided for in
Section 1 and Section 2 shall be made no later than 45 days after receipt of the
written request of Indemnitee. If a claim under this Agreement, under any
statute, or under any provision of the Corporation's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Corporation within 45 days after a written request for payment thereof has
first been received by the Corporation, Indemnitee may, but need not, at any
time thereafter bring an action against the Corporation to recover the unpaid
amount of the claim and, subject to Section 12 of this Agreement, Indemnitee
shall also be entitled to be paid for the expenses (including attorneys' fees)
of bringing such action. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in connection with any
action, suit or proceeding in advance of its final disposition) that Indemnitee
has not met the standards of conduct which make it permissible under applicable
law for the Corporation to indemnify Indemnitee for the amount claimed, but the
burden of proving such defense shall be on the Corporation and Indemnitee shall
be entitled to receive interim payments of expenses pursuant to Subsection 2(a)
unless and until such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is the parties'
intention that if the Corporation contests Indemnitee's right to
indemnification, the question of Indemnitee's right to indemnification shall be
for the court to decide, and neither the failure of the Corporation (including
its Board of Directors, any committee or subgroup of the Board of Directors,
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independent legal counsel, or its stockholders) to have made a determination
that indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met the applicable standard of conduct required by applicable
law, nor an actual determination by the Corporation (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.
9. ENFORCEMENT.
(a) The Corporation expressly confirms and agrees that it
has entered into this Agreement and assumed the obligations imposed on
the Corporation hereby in order to induce Indemnitee to continue as an
executive officer, director or agent of the Corporation, and
acknowledges that Indemnitee is relying upon this Agreement in
continuing in such capacity; and
(b) In the event Indemnitee is required to bring any action
to enforce rights or to collect moneys due under this Agreement and is
successful in such action, the Corporation shall reimburse Indemnitee
for all Indemnitee's reasonable fees and expenses in bringing and
pursuing such action.
10. SUBROGATION. In the event of payment under this agreement,
the Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on
Indemnitee by this Agreement shall not be exclusive of any other right which
Indemnitee may have or hereafter acquire under any statute, provisions of the
Corporation's Certificate of Incorporation or Bylaws, agreement, vote of
stockholders or directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office.
12. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Corporation for some
or a portion of the expenses, judgments, fines or penalties actually or
reasonably incurred by Indemnitee in the investigation, defense, appeal or
settlement of any civil or criminal action, suit or proceeding, but not,
however, for the total amount thereof, the Corporation shall nevertheless
indemnify Indemnitee for the portion of such expenses, judgments, fines or
penalties to which Indemnitee is entitled.
13. SURVIVAL OF RIGHTS. The rights conferred on Indemnitee by
this Agreement shall continue after Indemnitee has ceased to be a director,
officer, employee or other agent of the Corporation and shall inure to the
benefit of Indemnitee's heirs, executors and administrators.
14. SEPARABILITY. Each of the provisions of this Agreement is
a separate and distinct agreement and independent of the others, so that if any
or all of the provisions 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 or the obligation of
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the Corporation to indemnify the Indemnitee to the full extent provided by the
Certificate, Bylaws or the DGCL.
15. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be interpreted and enforced in accordance with the laws of the State of
Delaware. The Corporation and Indemnitee each hereby irrevocably consent to the
jurisdiction of the courts of the State of Delaware for all purposes in
connection with any action or proceeding which arises out of or relates to this
Agreement and agree that any action instituted under this Agreement shall be
brought only in the state courts of the State of Delaware.
16. BINDING EFFECT. This Agreement shall be binding upon
Indemnitee and upon the Corporation, its successors and assigns, and shall inure
to the benefit of Indemnitee, his heirs, personal representatives and assigns
and to the benefit of the Corporation, its successors and assigns.
17. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by both parties hereto.
18. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Indemnity
Agreement on and as of the day and year first above written.
CROSSROADS SYSTEMS, INC.
By:
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Name:
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Title:
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INDEMNITEE
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Print Name:
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[SIGNATURE PAGE TO INDEMNITY AGREEMENT]
