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INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “Agreement”) is entered into as of [DATE] (the “Effective Date”), by and between [COMPANY NAME], a [STATE OF INCORPORATION] corporation (the “Company”), and [INDEMNITEE NAME] (the “Indemnitee”).
The Company and the Indemnitee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the Indemnitee currently serves as a [director / officer / director and officer] of the Company and, in such capacity, performs a valuable service for the Company;
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals to serve as directors and officers of the Company, it is reasonable, prudent, and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law;
WHEREAS, the Company’s [Certificate of Incorporation / Bylaws] [provide for / require] indemnification of the directors and officers of the Company, and the Indemnitee has been serving and continues to serve as a [director / officer] of the Company in part in reliance on such provisions;
WHEREAS, the Indemnitee may also be serving at the request of the Company as a director, officer, employee, agent, fiduciary, or trustee of another corporation, partnership, joint venture, trust, or other enterprise;
WHEREAS, uncertainties regarding the interpretation and application of statutes, regulations, and court decisions relating to indemnification and advancement of expenses have created a situation in which the protections available to directors and officers may be inadequate; and
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining qualified persons to serve as directors and officers of the Company makes it necessary for the Company to provide its directors and officers with contractual assurances that adequate indemnification and advancement of expenses will be available;
NOW, THEREFORE, in consideration of the Indemnitee’s continued service to the Company as a [director / officer] after the date hereof, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
“Claim” — means any threatened, pending, or completed action, suit, proceeding, inquiry, hearing, or investigation, whether civil, criminal, administrative, investigative, legislative, or otherwise, and whether brought by or in the right of the Company or otherwise, and whether formal or informal, in which the Indemnitee is, was, or may be involved as a party, a witness, or otherwise, by reason of the Indemnitee’s Corporate Status.
“Corporate Status” — means the status of the Indemnitee as a current or former director, officer, employee, agent, fiduciary, or trustee of the Company, or as a current or former director, officer, employee, agent, fiduciary, or trustee of any other corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise that the Indemnitee is or was serving at the request of the Company.
“Disinterested Director” — means a director of the Company who is not and was not a party to the Claim in respect of which indemnification or advancement of Expenses is sought by the Indemnitee.
“Expenses” — means all reasonable and actually incurred attorneys’ fees, retainers, court costs, filing fees, transcript costs, fees of experts, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other costs, disbursements, and expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, participating in (including on appeal), or otherwise responding to any Claim. Expenses shall also include: (a) Expenses incurred in connection with any appeal resulting from any Claim, including the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent; (b) Expenses incurred in connection with recovery under any directors’ and officers’ liability insurance policies maintained by the Company; and (c) any federal, state, local, or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement.
“Losses” — means all judgments, damages, liabilities, losses, penalties, fines (including any excise tax assessed with respect to an employee benefit plan), ERISA excise taxes, and amounts paid in settlement in connection with any Claim.
“Proceeding” — means any threatened, pending, or completed action, suit, proceeding (including arbitration), alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, or any other actual, threatened, or completed proceeding, whether civil, criminal, administrative, investigative, or otherwise.
2. Agreement to Indemnify
2.1 General Indemnification. The Company shall indemnify and hold harmless the Indemnitee, to the fullest extent permitted by applicable law as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than such law permitted the Company to provide prior to such amendment), against all Expenses and Losses actually and reasonably incurred by the Indemnitee in connection with any Claim, whether or not such Claim proceeds to judgment or is settled or otherwise brought to a final disposition.
2.2 Indemnification in Third-Party Proceedings. The Company shall indemnify the Indemnitee in connection with any Claim (other than a Claim by or in the right of the Company) if the Indemnitee acted in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Claim, had no reasonable cause to believe that the Indemnitee’s conduct was unlawful. The termination of any Claim by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal Claim, that the Indemnitee had reasonable cause to believe that the Indemnitee’s conduct was unlawful.
2.3 Indemnification in Derivative Actions. The Company shall indemnify the Indemnitee in connection with any Claim by or in the right of the Company to procure a judgment in its favor if the Indemnitee acted in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that no indemnification shall be made in respect of any Claim as to which the Indemnitee shall have been adjudged to be liable to the Company, unless and only to the extent that the [Court of Chancery of the State of Delaware / applicable court] or the court in which such Claim was brought shall determine upon application that, despite the adjudication of liability, the Indemnitee is fairly and reasonably entitled to indemnification for such Expenses as the court deems proper.
2.4 Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of the Expenses or Losses actually and reasonably incurred by the Indemnitee in connection with a Claim, but not for the total amount thereof, the Company shall indemnify the Indemnitee for the portion of such Expenses or Losses to which the Indemnitee is entitled.
3. Advancement of Expenses
3.1 Advancement. The Company shall advance Expenses incurred by the Indemnitee in connection with any Claim in advance of the final disposition of such Claim, within thirty (30) days after receipt by the Company of a written request for such advance, accompanied by reasonable documentation evidencing or estimating the Expenses incurred. Such advance shall be unsecured and interest-free.
3.2 Undertaking to Repay. The Indemnitee hereby undertakes to repay to the Company any Expenses advanced hereunder if it shall ultimately be determined by a final, non-appealable judicial decision that the Indemnitee is not entitled to be indemnified by the Company for such Expenses under this Agreement, applicable law, or otherwise. The Indemnitee’s obligation to repay such Expenses shall be unsecured and shall not bear interest.
3.3 No Security Required. The Company shall not require the Indemnitee to post any bond, provide any security, or provide any other form of assurance as a condition to the advancement of Expenses under this Section 3, other than the undertaking set forth in Section 3.2.
3.4 Independent Right. The right to advancement of Expenses under this Section 3 shall be enforceable by the Indemnitee in any court of competent jurisdiction, shall not be subject to any prior determination of the Indemnitee’s entitlement to indemnification, and shall be independent of the Indemnitee’s right to indemnification under any other provision of this Agreement.
4. Procedures for Claims
4.1 Notification. The Indemnitee shall promptly notify the Company in writing of any Claim for which the Indemnitee intends to seek indemnification or advancement of Expenses under this Agreement; provided, however, that the failure to provide such notice shall not relieve the Company of its obligations under this Agreement, except to the extent that the Company is materially prejudiced by such failure.
4.2 Determination of Entitlement. Upon written request by the Indemnitee for indemnification under this Agreement, the Company shall determine whether the Indemnitee is entitled to indemnification hereunder. Such determination shall be made: (a) by a majority vote of the Disinterested Directors, even though less than a quorum; (b) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum; (c) if there are no Disinterested Directors, or if the Disinterested Directors so direct, by independent legal counsel in a written opinion addressed to the Board; or (d) by the stockholders of the Company.
4.3 Timing. The Company shall make a determination regarding the Indemnitee’s entitlement to indemnification within sixty (60) days after receipt of the Indemnitee’s written request therefor. If the Company fails to make such determination within such sixty (60) day period, the Indemnitee shall be deemed to be entitled to indemnification hereunder, and the Company shall be obligated to pay the full amount of the Indemnitee’s claim for indemnification.
4.4 Right to Adjudication. If a determination is made that the Indemnitee is not entitled to indemnification under this Agreement, or if the Company fails to make a timely determination, the Indemnitee shall be entitled to commence an action in any court of competent jurisdiction to recover the unpaid amount of the Indemnitee’s claim for indemnification or advancement of Expenses, and the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by the Indemnitee in connection with such action, regardless of the outcome.
5. Presumptions and Burden of Proof
5.1 Presumption of Good Faith. In making any determination regarding the Indemnitee’s entitlement to indemnification under this Agreement, the person, persons, or entity making such determination shall, to the fullest extent not prohibited by law, presume that the Indemnitee is entitled to indemnification under this Agreement. The Company shall have the burden of proof to overcome such presumption by clear and convincing evidence.
5.2 Effect of Other Proceedings. The termination of any Claim by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not meet the applicable standard of conduct required for indemnification hereunder.
5.3 Reliance. For purposes of this Agreement, the Indemnitee shall be deemed to have acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company if the Indemnitee’s action is based on: (a) the records or books of account of the Company or any other enterprise, including financial statements; (b) information supplied to the Indemnitee by the officers of the Company or any other enterprise in the course of their duties; (c) the advice of legal counsel for the Company or any other enterprise; or (d) information or records given or reports made to the Company or any other enterprise by an independent certified public accountant, an appraiser, investment banker, or other expert selected with reasonable care by or on behalf of the Company or such other enterprise.
6. Exclusions
6.1 Excluded Claims. Notwithstanding anything to the contrary in this Agreement, the Company shall not be obligated to indemnify or advance Expenses to the Indemnitee with respect to:
(a) Any Claim initiated or brought voluntarily by the Indemnitee against the Company or any director or officer of the Company (other than a Claim to enforce the Indemnitee’s rights under this Agreement, the Company’s Certificate of Incorporation or Bylaws, applicable law, or any directors’ and officers’ liability insurance policy), unless the Board has authorized or consented to the initiation of such Claim;
(b) Any Claim for an accounting of profits made from the purchase and sale (or sale and purchase) of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar provisions of state statutory law or common law;
(c) Any Claim for which payment has actually been made to or on behalf of the Indemnitee under any insurance policy, indemnification agreement, or other arrangement, except with respect to any excess beyond the amount paid under any such insurance policy, agreement, or arrangement; or
(d) Any Claim for which indemnification is prohibited by applicable law, as finally determined by a court of competent jurisdiction.
7. Directors’ and Officers’ Insurance
7.1 D&O Insurance. The Company shall, to the extent that the Board determines it to be economically reasonable, maintain a policy or policies of directors’ and officers’ liability insurance (“D&O Insurance”) with a reputable insurance company or companies, providing the Indemnitee with coverage for any Claim asserted against, and any Losses incurred by, the Indemnitee in the Indemnitee’s capacity as a director, officer, employee, agent, or fiduciary of the Company or of any other enterprise at the request of the Company.
7.2 Notification of Changes. The Company shall promptly notify the Indemnitee in writing of any material change in, or cancellation or non-renewal of, any D&O Insurance coverage maintained by the Company.
7.3 Coverage Period. If, at the time of the receipt of a notice of a Claim pursuant to the terms hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter 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 Claim in accordance with the terms of such policies.
7.4 Tail Coverage. In the event of a Change of Control (as defined in the Company’s Certificate of Incorporation or, if not defined therein, as reasonably determined by the Board) or the Company’s dissolution, the Company shall use its commercially reasonable efforts to obtain a tail policy of D&O Insurance covering the Indemnitee for a period of not less than six (6) years following such event.
8. Subrogation
In the event of any 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 required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. The Company shall pay or reimburse all Expenses actually and reasonably incurred by the Indemnitee in connection with such subrogation.
9. Duration of Agreement
9.1 Duration. This Agreement shall continue in full force and effect regardless of whether the Indemnitee continues to serve as a director, officer, employee, agent, or fiduciary of the Company or of any other enterprise at the request of the Company. This Agreement shall be binding upon the Company and its successors and assigns (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business or assets of the Company) and shall inure to the benefit of the Indemnitee and the Indemnitee’s heirs, executors, administrators, and personal representatives.
9.2 Survival. All of the Company’s obligations under this Agreement shall survive the termination of the Indemnitee’s service to the Company and shall continue for so long as the Indemnitee may be subject to any possible Claim arising by reason of the Indemnitee’s Corporate Status, regardless of whether such Claim arises before or after the termination of the Indemnitee’s service.
10. Contribution
10.1 Right of Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to the Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying the Indemnitee, shall contribute to the amount incurred by the Indemnitee, whether for Expenses, Losses, or otherwise, in connection with any Claim, in such proportion as is deemed fair and reasonable in light of all of the circumstances in order to reflect (a) the relative benefits received by the Company and the Indemnitee as a result of the events and transactions giving rise to such Claim, and/or (b) the relative fault of the Company (and its other directors, officers, employees, and agents) and the Indemnitee in connection with such events and transactions.
10.2 Limitation. In no event shall the Indemnitee be required to contribute any amount in excess of the total compensation (including any equity-based compensation) received by the Indemnitee from the Company during the two (2) year period preceding the Claim giving rise to such contribution obligation.
11. Non-Exclusivity of Rights
The rights to indemnification and advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation, the Company’s Bylaws, any other agreement, a vote of stockholders, a resolution of the Board, or otherwise. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, or this Agreement, it is the intent of the Parties that the Indemnitee shall enjoy the greater benefits so afforded by such change. No right or remedy conferred by this Agreement is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law, in equity, or otherwise.
12. Governing Law
This Agreement shall be governed by and construed in accordance with the internal laws of the State of [GOVERNING LAW STATE — typically the state of incorporation], without regard to any conflict of laws principles that would require the application of the laws of any other jurisdiction. Each Party hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the [Court of Chancery of the State of Delaware (or, if such court lacks subject matter jurisdiction, the United States District Court for the District of Delaware) / courts of the State of [STATE] and the United States District Court for the [District]] for any litigation arising out of or relating to this Agreement, and each Party waives any objection to the laying of venue of any such litigation in such courts.
13. Severability
If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any provision containing any such provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or otherwise unenforceable.
14. Entire Agreement; Amendment
14.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, both written and oral, between the Parties with respect to such subject matter. This Agreement is supplemental to and in furtherance of the Company’s Certificate of Incorporation, Bylaws, and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of the Indemnitee thereunder.
14.2 Amendment. No amendment, modification, or supplement to this Agreement shall be effective unless set forth in a written instrument signed by both Parties. No waiver of any provision of this Agreement shall be effective unless set forth in a written instrument signed by the Party against whom enforcement of such waiver is sought.
14.3 Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered personally, (b) three (3) business days after being sent by certified or registered mail, return receipt requested, postage prepaid, (c) one (1) business day after being sent by a nationally recognized overnight courier service, or (d) upon transmission if sent by electronic mail with confirmation of receipt, in each case to the applicable Party at the address set forth below or at such other address as such Party may designate by written notice to the other Party:
If to the Company:
[COMPANY NAME]
[COMPANY ADDRESS]
Attention: [TITLE — e.g., General Counsel / Secretary]
Email: [COMPANY EMAIL]
If to the Indemnitee:
[INDEMNITEE NAME]
[INDEMNITEE ADDRESS]
Email: [INDEMNITEE EMAIL]
14.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart by electronic transmission (including PDF) shall be effective as delivery of a manually executed counterpart.
SIGNATURES
IN WITNESS WHEREOF, the Parties have executed this Indemnification Agreement as of the date first written above.
COMPANY:
[COMPANY NAME]
By: ___________________________________
Name: [AUTHORIZED SIGNATORY NAME]
Title: [TITLE]
Date: [DATE]
INDEMNITEE:
___________________________________
Name: [INDEMNITEE NAME]
Date: [DATE]