FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT
10.26
FORM
OF INDEMNIFICATION AGREEMENT
This
Indemnification Agreement, dated as of _____________, 2008, is made by and
between Shuffle Master, Inc., a Minnesota corporation (the "Company"), and
[___________] (the "Indemnitee").
WHEREAS,
it is essential to the Company to retain and attract as directors and officers
the most capable persons available;
WHEREAS,
the Indemnitee is a director and/or officer of the Company;
WHEREAS,
the Company and the Indemnitee recognize the increased risk of litigation and
other claims being asserted against directors and officers of companies in
today's environment;
WHEREAS,
basic protection against undue risk of personal liability of directors and
officers heretofore has been provided through insurance coverage providing
reasonable protection at reasonable cost, and the Indemnitee has relied on the
availability of such coverage; but as a result of substantial changes in the
marketplace for such insurance it has become increasingly difficult to obtain
such insurance on terms providing reasonable protection at reasonable
cost;
WHEREAS,
the Company's Bylaws require the Company to indemnify and advance expenses to
its directors and officers to the extent provided therein, and the Indemnitee
serves as a director and/or officer of the Company, in part, in reliance on such
provisions in the Company's Bylaws;
WHEREAS,
the current difficulty in obtaining adequate director and officer liability
insurance coverage at a reasonable cost, and uncertainties as to the
availability of indemnification created by recent court decisions, have
increased the risk that the Company will be unable to retain and attract as
directors and officers the most capable persons available;
WHEREAS,
the Company has determined that its inability to retain and attract as directors
and officers the most capable persons would be detrimental to the interests of
the Company, and that the Company therefore should seek to assure such persons
that indemnification and insurance coverage will be available in the future;
and
WHEREAS,
in recognition of the Indemnitee's need for substantial protection against
personal liability in order to enhance the Indemnitee's continued service to the
Company in an effective manner, the increasing difficulty in obtaining
satisfactory director and officer liability insurance coverage, and the
Indemnitee's reliance on the Company's Bylaws, and in part to provide the
Indemnitee with specific contractual assurance that the protection promised by
the Company's Bylaws will be available to the Indemnitee (regardless of, among
other things, any amendment to or
revocation
of the applicable provisions of the Company's Articles of Incorporation and
Bylaws or any change in the composition of the Company's Board of Directors or
acquisition transaction relating to the Company), the Company wishes to provide
in this Agreement for the indemnification of and the advancing of expenses to
the Indemnitee to the fullest extent (whether partial or complete) permitted by
law and as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of the Indemnitee under the directors'
and officers' liability insurance policy of the Company.
NOW,
THEREFORE, in consideration of the premises and of the Indemnitee continuing to
serve the Company directly or, at its request, as an officer, director, manager,
member, partner, tax matters partner, fiduciary or trustee of, or in any other
capacity with, another Person (as defined below) or any employee benefit plan,
and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Certain
Definitions. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this
Agreement:
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(a)
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Agreement: shall mean this Indemnification
Agreement, as
amended from time to
time hereafter.
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(b)
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Board
of Directors: shall mean the Board of
Directors of the Company including persons deemed to be
directors pursuant to applicable law.
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(c)
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Claim: means, without limitation except as
explicitly set forth elsewhere in this Agreement, any threatened, asserted, pending
or completed civil,
criminal, administrative, investigative or other action, suit or
proceeding of any
kind whatsoever, or
any appeal of any kind thereof, or any inquiry or
investigation, whether instituted by the Company, any governmental agency or any
other party, that the Indemnitee in good faith believes might lead to the
institution of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or other, including any
arbitration or other
alternative dispute
resolution mechanism.
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(d)
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Indemnifiable
Expenses: means, without limitation except as
explicitly set forth elsewhere in this Agreement, (i) all expenses and liabilities,
including judgments,
fines, penalties, interest, amounts paid in settlement with the approval
of the Company, and counsel fees and
disbursements (including, without limitation,
experts' fees, court costs, retainers, transcript fees, duplicating,
printing and binding costs, as well as telecommunications, postage
and courier charges)
paid or incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to
investigate, defend, be a witness in or participate in, (including on appeal),
any Claim
relating to any Indemnifiable
Event and (ii) any liabilities
which an
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Indemnitee incurs as a result of acting on
behalf of the Company (whether as a fiduciary or otherwise) in connection
with the operation, administration or maintenance of an employee benefit
plan or any related
trust or funding mechanism (whether such liabilities are in the form of
excise taxes assessed by the United States Internal Revenue Service,
penalties assessed by the Department of Labor, restitutions to such a plan
or trust or other funding mechanism or to a participant or
beneficiary of such plan, trust or other funding mechanism, or
otherwise).
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(e)
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Indemnifiable
Event: means, without limitation except as
explicitly set forth elsewhere in this Agreement, any act or omission, whether occurring before, on or after the date of
this Agreement, arising from the performance of
the Indemnitee's duties or obligations to the Company or any of its
subsidiaries,
including in connection with any civil, criminal, administrative,
investigative or other action, suit or proceeding to which
the Indemnitee may hereafter be made
a party by reason of being or having
been an officer,
director, manager,
member, partner, tax
matters partner, fiduciary or trustee of, or having served in any other capacity
with,
another Person or any
employee benefit plan
at the request of the Company.
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(f)
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Person: means any individual, corporation,
firm, partnership, joint venture, limited liability company, estate,
trust, business association, organization, governmental entity or other entity.
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2. Basic Indemnification
Arrangement; Advancement of Expenses.
(a) In the event that the Indemnitee was, is
or becomes subject to,
a party to or witness or
other participant in, or is threatened to be made subject to, a party to or witness or other
participant in, a Claim by
reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify the Indemnitee, or
cause such Indemnitee to be indemnified, to the fullest extent permitted by
Minnesota law in effect on the date hereof and as
amended from time to time;
provided, however, that no change in Minnesota law shall have the effect of reducing
the benefits available to the Indemnitee hereunder based on
Minnesota law as in effect on the date hereof or
as such benefits may improve as a result of amendments after the date hereof.
The rights of the Indemnitee provided in this Section 2 shall include, without
limitation, the rights set forth in the other sections of this Agreement.
Payments of Indemnifiable Expenses shall be made as soon as practicable but in any event no later than
thirty (30) days after written demand is presented to the Company.
(b) If so requested by the Indemnitee, the Company shall advance, or cause to be advanced
(within two business days of such request), any and all Indemnifiable Expenses incurred by the Indemnitee (an
"Expense
Advance"). The
Company shall, in accordance with such request
(but without duplication), either (i) pay,
or cause to be paid, such Indemnifiable Expenses on behalf of the Indemnitee, or
(ii) reimburse, or cause the reimbursement of, the
Indemnitee for such Indemnifiable Expenses. The Indemnitee's right to an Expense
Advance is absolute and
shall not be subject to any
condition that the Board of Directors shall not have determined that the Indemnitee is not entitled to be indemnified under
applicable law. However,
the obligation of the Company to make an Expense Advance pursuant to
this Section 2(b) shall be subject to the condition that, if, when and to the
extent that a final judicial determination is made (as to which all rights of
appeal therefrom have been exhausted or lapsed) that the Indemnitee is not
entitled to be so indemnified under applicable law, the Company shall be entitled, without further agreement or
documentation, to be reimbursed by the Indemnitee (who hereby agrees to
reimburse the Company) for all such amounts theretofore
paid (it being understood and agreed that the foregoing agreement by the
Indemnitee shall be deemed to satisfy any requirement that the Indemnitee
provide the Company with an undertaking to repay any
Expense Advance if it is ultimately determined that the Indemnitee is not
entitled to indemnification under applicable law). The Indemnitee's
undertaking to repay such Expense Advances shall be unsecured and
interest-free.
(c) Notwithstanding anything in this
Agreement to the contrary, the Indemnitee shall not be entitled to
indemnification or advancement of Indemnifiable Expenses pursuant to this Agreement in
connection with any Claim initiated by the Indemnitee unless (i) the Company has joined in or the Board of Directors
of the Company has authorized or consented to the
initiation of such Claim or (ii) the Claim is one to enforce the Indemnitee's
rights under this Agreement
(including an action pursued by the Indemnitee to secure a determination that the
Indemnitee should be indemnified under applicable law).
(d) The indemnification obligations of the
Company under Section 2(a) shall not apply only if, at a properly convened
meeting of the Board of Directors, and after prior written notice to the Indemnitee and
the Indemnitee and his counsel having a right to attend such meeting and present
his position to the Board of Directors, upon at least five business days written
notice of the time and place of such meeting, the Board of Directors shall have determined by
written resolution at such meeting (by majority vote of directors who are not
parties to the applicable Claim), with such resolution being adopted after
the Board consults with and receives advice from the Company's counsel, that the indemnification of the
Indemnitee is not proper in the circumstances because the Indemnitee is not
entitled to be indemnified under applicable law; provided, however, that, at the request of the
Indemnitee, the determination as to whether indemnification of the Indemnitee is
not proper in the circumstances because the Indemnitee is not entitled to be
indemnified under applicable law shall be made by independent special legal
counsel selected by the Board of Directors (or an authorized committee of the Board), after reasonable
consultation with the Indemnitee (the "Independent
Counsel"). If the Board of Directors or the Independent Counsel determines that the Indemnitee is not
entitled to be indemnified in whole or in part under applicable law, the Indemnitee shall have the right
to commence litigation in any court in the States of Minnesota or Nevada having subject matter jurisdiction
thereof and in which venue is proper, seeking an initial determination by the
court or challenging any such determination by the Board of
Directors or the Independent Counsel or any aspect thereof, including the
legal or factual bases therefor, and the Company hereby consents to service of
process and to appear in any such proceeding. If the Indemnitee commences legal proceedings in a court of
competent jurisdiction to secure a determination that the Indemnitee should be
indemnified under applicable law, any determination made by the Board of Directors or the Independent Counsel that the Indemnitee is not entitled to be indemnified under applicable law
shall not be binding, the Indemnitee shall continue to be entitled to receive
Expense Advances, and the Indemnitee shall not be required to reimburse the
Company for any Expense Advance, unless and until a final judicial determination is made (as to
which all rights of appeal therefrom have been exhausted or lapsed) that the Indemnitee is not entitled to
be so indemnified under applicable law. Any determination by the
Board of
Directors or the Independent Counsel otherwise shall be conclusive and
binding on the Company and the Indemnitee.
(e) To the extent that the Indemnitee has
been successful on the merits or otherwise in defense of any or all Claims
relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, the Indemnitee shall be indemnified
against all Indemnifiable Expenses actually and reasonably incurred in connection therewith, notwithstanding
an earlier determination by the Board of Directors that the Indemnitee is not
entitled to indemnification under applicable law.
3. Indemnification for
Additional Expenses. The Company shall indemnify, or cause the
indemnification of, the Indemnitee against any and all Indemnifiable Expenses
and, if requested by the Indemnitee, shall advance such Indemnifiable Expenses
to the Indemnitee subject to and in accordance with Sections 2(b) and (d), which
are incurred by the Indemnitee in connection with any action brought by the
Indemnitee for (i) indemnification or an Expense Advance by the Company
under this Agreement and/or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
the Indemnitee ultimately is determined to be entitled to such indemnification,
Expense Advance or insurance recovery, as the case may be.
4. Partial
Indemnity. If the Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
Indemnifiable Expenses in respect of a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify the Indemnitee
for the portion thereof to which the Indemnitee is entitled.
5. Burden of
Proof. In connection with any determination by the Board of
Directors, any court or otherwise as to whether the Indemnitee is entitled to be
indemnified hereunder, the Board of Directors or court shall presume that the
Indemnitee has satisfied the applicable standard of conduct and is entitled to
indemnification, and the burden of proof shall be on the Company or its
representative to establish, by clear and convincing evidence, that the
Indemnitee is not so entitled.
6. Reliance as Safe
Harbor. The Indemnitee shall be entitled to indemnification
for any action or omission to act undertaken (a) in good faith reliance
upon the records of the Company, including its financial statements, or upon
information, opinions, reports or statements furnished to the Indemnitee by the
officers or employees of the Company or any of its subsidiaries in the course of
their duties, or by committees of the Board of Directors, or by any other Person
as to matters the Indemnitee reasonably believes are within such other Person's
professional or expert competence, or (b) on behalf of the Company in
furtherance of the interests of the Company in good faith in reliance upon, and
in accordance with, the advice of legal counsel or accountants, provided such
legal counsel or accountants were selected with reasonable care by or on behalf
of the Company. In addition, the knowledge and/or actions, or
failures to act, of any director, officer, agent or employee of the Company
shall not be imputed to the Indemnitee for purposes of determining the right to
indemnity hereunder.
7. No Other
Presumptions. For purposes of this Agreement, the termination
of any claim, action, suit or proceeding, by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere or its equivalent, shall not create a presumption that the Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law. In addition, neither the failure of the Board of Directors to
have made a determination as to whether the Indemnitee has met any particular
standard of conduct or had any particular belief, nor an actual determination by
the Board of Directors that the Indemnitee has not met such standard of conduct
or did not have such belief, prior to the commencement of legal proceedings by
the Indemnitee to secure a judicial determination that the Indemnitee should be
indemnified under applicable law shall be a defense to the Indemnitee's claim or
create a presumption that the Indemnitee has not met any particular standard of
conduct or did not have any particular belief.
8. Nonexclusivity,
Etc. The rights of the Indemnitee hereunder shall be in
addition to any other rights the Indemnitee may have under the Company's
Articles of Incorporation and Bylaws, the laws of the State of Minnesota, any
other agreement, or otherwise. To the extent that a change in
Minnesota law or the interpretation thereof (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Company's Articles of Incorporation and Bylaws, it is the
intent of the parties hereto that the Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change. No limitation of the
Indemnitee's rights pursuant to this Agreement shall in any way limit, or imply
any limitation of, the Indemnitee's rights under any other
agreement.
9. Liability
Insurance. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability insurance, the
Indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for the
Company's directors or officers.
10. Period of
Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against the
Indemnitee, the
Indemnitee's
spouse, heirs, executors or personal or legal representatives after the
expiration of two years from the date of accrual of such cause of action, and
any claim or cause of action of the Company shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within such
two-year period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action such shorter period shall
govern.
11. Amendments,
Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver. In
the event the Company or any of its subsidiaries enters into an indemnification
agreement with another director, officer, agent, fiduciary or manager of the
Company or any of its subsidiaries containing a term or terms more favorable to
the indemnitee than the terms contained herein (as determined by the
Indemnitee), the Indemnitee shall be afforded the benefit of such more favorable
term or terms and such more favorable term or terms shall be deemed incorporated
by reference herein as if set forth in full herein.
12. Subrogation. In
the event of payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of the Indemnitee,
who shall execute all papers reasonably required and shall do everything that
may be reasonably necessary to secure such rights, including the execution of
such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
13. No Duplication of
Payments. The Company shall not be liable under this Agreement
to make any payment in connection with any Claim made against the Indemnitee to
the extent the Indemnitee has otherwise actually received payment (under any
insurance policy, any provision of the Company's Articles of Incorporation and
Bylaws, or otherwise) of the amounts otherwise indemnifiable
hereunder.
14. Defense of
Claims. The Company shall be entitled to participate in the
defense of any Claim relating to an Indemnifiable Event or to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnitee; provided that if the
Indemnitee believes, after consultation with counsel selected by the Indemnitee,
that (i) the use of counsel chosen by the Company to represent the Indemnitee
would present such counsel with an actual or potential conflict of interest,
(ii) the named parties in any such Claim (including any impleaded parties)
include the Company or any subsidiary of the Company and the Indemnitee, and the
Indemnitee concludes that there may be one or more legal defenses available to
him or her that are different from or in addition to those available to the
Company or any subsidiary of the Company or (iii) any such representation by
such counsel would be precluded under the applicable standards of professional
conduct then prevailing, then the Indemnitee shall be entitled to retain
separate counsel (but not more than one law firm plus, if applicable, local
counsel in respect of any particular Claim) at the Company's
expense. The Company shall not be liable to the Indemnitee under this
Agreement for any amounts paid in settlement of any
Claim
relating to an Indemnifiable Event effected without the Company's prior written
consent. The Company shall not, without the prior written consent of
the Indemnitee, effect any settlement of any Claim relating to an Indemnifiable
Event which the Indemnitee is or could have been a party unless such settlement
solely involves the payment of money and includes a complete and unconditional
release of the Indemnitee from all liability on all claims that are the subject
matter of such Claim. Neither the Company nor the Indemnitee shall
unreasonably withhold its or his or her consent to any proposed settlement;
provided that
the Indemnitee may withhold consent to any settlement that does not provide a
complete and unconditional release of the Indemnitee.
15. Binding Effect,
Etc. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors, (including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business and/or
assets of the Company), assigns, spouses, heirs, executors and personal and
legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation, or
otherwise) to all or a significant portion of the business and/or assets of the
Company and/or its subsidiaries, by written agreement in form and substance
satisfactory to the Indemnitee and his or her counsel, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken
place. This Agreement shall continue in effect regardless of whether
the Indemnitee continues to serve as an officer and/or director of the Company
of any other entity or enterprise at the request of the
Company. Neither this Agreement nor any duties or responsibilities
pursuant hereto may be assigned by the Company to any other person or entity
without the prior written consent of the Indemnitee.
16. Severability. If
any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever, (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall not in any way be affected
or impaired thereby and (b) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable and to give effect to
the terms of this Agreement.
17. Specific Performance,
Etc. The parties recognize that if any provision of this
Agreement is violated by the Company, the Indemnitee may be without an adequate
remedy at law. Accordingly, in the event of any such violation, the
Indemnitee shall be entitled, if the Indemnitee so elects, to institute
proceedings, either in law or at equity, to obtain damages, to enforce specific
performance, to enjoin such violation, or to obtain any relief or any
combination of the foregoing as the Indemnitee may elect to pursue.
18. Notices. All
notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written document delivered in
person or sent by telecopy, nationally recognized overnight courier or personal
delivery, addressed to such party at the address set forth below or such other
address as may hereafter be designated on the signature pages of this Agreement
or in writing by such party to the other parties:
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(a)
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If to the Company, to:
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Shuffle
Master, Inc.
0000
Xxxxx Xxxxxxx Xxxxx
Xxx
Xxxxx, Xxxxxx 00000-0000
Fax: [_________]
Attn: [_________]
with
a copy (which shall not constitute notice) to:
[ ]
[ ]
[ ]
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(b)
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If to the Indemnitee, to the
address set forth on Annex
A
hereto.
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19. Counterparts. This
Agreement may be executed in counterparts, each of which shall for all purposes
be deemed to be an original but all of which together shall constitute one and
the same agreement. Only one such counterpart signed by the party
against whom enforceability is sought needs to be produced to evidence the
existence of this Agreement.
20. Headings. The
headings of the sections and paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction or interpretation thereof.
21. Governing
Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Minnesota applicable to
Minnesota corporations.
[Remainder of Page Intentionally Left
Blank.]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
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SHUFFLE
MASTER, INC.
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By:
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Name:
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Title:
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Annex A
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Name and Business
Address:
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Attn:
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Tel:
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Fax:
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