EXHIBIT 10
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("AGREEMENT") is made as of the
date set forth on the signature page to this Agreement, by and between Emrise
Corporation, a Delaware corporation ("COMPANY"), and the individual named on the
signature page to this Agreement ("INDEMNITEE"), an officer and/or a director of
the Company.
R E C I T A L S
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A. The Indemnitee is currently serving as an officer and/or
director of the Company and in such capacity renders valuable services to the
Company.
B. The Company has investigated whether additional protective
measures are warranted to adequately protect its directors and officers against
various legal risks and potential liabilities to which such individuals are
subject due to their position with the Company and has concluded that additional
protective measures are warranted.
C. In order to induce and encourage highly experienced and
capable persons such as the Indemnitee to continue to serve as an officer and/or
director, the Board of Directors of the Company has determined, after due
consideration, that this Agreement is not only reasonable and prudent, but
necessary to promote and ensure the best interests of the Company and its
stockholders.
D. The Company's execution of this Agreement has been approved
by the Board of Directors of the Company.
E. Indemnitee has indicated to the Company that but for the
Company's agreement to enter into this Agreement, Indemnitee would decline to
continue to serve as an officer and/or a director of the Company.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the recital set forth
above and the continued services of the Indemnitee, and as an inducement to the
Indemnitee to continue to serve as an officer and/or a director of the Company,
the Company and the Indemnitee do hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "PROCEEDING" shall mean any threatened, pending
or completed action, suit or proceeding, whether brought in the name of the
Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, by reason of the fact that the Indemnitee is or was an
officer and/or a director of the Company, or is or was serving at the request of
the Company as a director, officer, employee or agent of another enterprise,
whether or not he is serving in such capacity at the time any liability or
Expense is incurred for which indemnification or advancement of Expenses (as
defined in subparagraph (b) below) is to be provided under this Agreement.
(b) "EXPENSES" means, all costs, charges and expenses
incurred in connection with a Proceeding, including, without limitation,
attorneys' fees, disbursements and retainers, accounting and witness fees,
travel and deposition costs, expenses of investigations, judicial or
administrative proceedings or appeals, and any expenses of establishing a right
to indemnification pursuant to this Agreement or otherwise, including reasonable
compensation for time spent by the Indemnitee in connection with the
investigation, defense or appeal of a Proceeding or action for indemnification
for which he is not otherwise compensated by the Company or any third party;
PROVIDED, HOWEVER, that the term Expenses includes only those costs, charges and
expenses incurred with the Company's prior consent, which consent shall not be
unreasonably withheld; and PROVIDED, FURTHER, that the term "EXPENSES" does not
include (i) the amount of damages, judgments, amounts paid in settlement, fines
or penalties relating to any Proceeding or (ii) excise taxes under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), relating to any
Proceeding, either of which are actually levied against the Indemnitee or paid
by or on behalf of the Indemnitee.
2. AGREEMENT TO SERVE. The Indemnitee agrees to continue to
serve as an officer and/or a director of the Company at the will of the Company
for so long as Indemnitee is duly elected or appointed or until such time as
Indemnitee tenders a resignation in writing or is terminated as an officer
and/or removed as a director by the Company. Nothing in this Agreement shall be
construed to create any right in Indemnitee to continued employment with the
Company or any subsidiary or affiliate of the Company. Nothing in this Agreement
shall affect or alter any of the terms of any otherwise valid employment
agreement or other agreement between Indemnitee and the Company relating to
Indemnitee's conditions and/or terms of employment or service.
3. INDEMNIFICATION IN THIRD PARTY ACTIONS. The Company shall
indemnify the Indemnitee in accordance with the provisions of this Section 3 if
the Indemnitee is a party to or threatened to be made a party to or is otherwise
involved in any Proceeding (other than a Proceeding by or in the right of the
Company to procure a judgment in its favor), by reason of the fact that the
Indemnitee is or was an officer and/or a director of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another enterprise, against all Expenses, damages, judgments, amounts paid in
settlement, fines, penalties and ERISA excise taxes actually and reasonably
incurred by the Indemnitee in connection with the defense or settlement of such
Proceeding, to the fullest extent permitted by the Delaware General Corporation
Law ("DGCL"), whether or not the Indemnitee was the successful party in any such
Proceeding; PROVIDED, HOWEVER, that any settlement shall be approved in writing
by the Company.
4. INDEMNIFICATION IN PROCEEDINGS BY OR IN THE RIGHT OF THE
COMPANY. The Company shall indemnify the Indemnitee in accordance with the
provisions of this Section 4 if the Indemnitee is a party to or threatened to be
made a party to or is otherwise involved in any Proceeding by or in the right of
the Company to procure a judgment in its favor by reason of the fact that the
Indemnitee is or was an officer and/or a director of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another enterprise, against all Expenses actually and reasonably incurred by
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Indemnitee in connection with the defense or settlement of such Proceeding, to
the fullest extent permitted by the DGCL, whether or not the Indemnitee is the
successful party in any such Proceeding. The Company shall further indemnify the
Indemnitee for any damages, judgments, amounts paid in settlement, fines,
penalties and ERISA excise taxes actually and reasonably incurred by the
Indemnitee in any such Proceeding described in the immediately preceding
sentence, provided that either (i) the Proceeding is settled with the approval
of a court of competent jurisdiction, or (ii) indemnification of such amounts is
otherwise ordered by a court of competent jurisdiction in connection with such
Proceeding.
5. CONCLUSIVE PRESUMPTION REGARDING STANDARD OF CONDUCT. The
Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct required by the DGCL for indemnification pursuant to this Agreement,
unless a determination is made that the Indemnitee has not met such standards
(i) by the Board of Directors of the Company by a majority vote of a quorum
thereof consisting of directors who were not parties to such Proceeding, (ii) by
the stockholders of the Company by majority vote, or (iii) in a written opinion
of the Company's independent legal counsel. Further, the termination of any
Proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, rebut such presumption that
the Indemnitee met the relevant standards of conduct required for
indemnification pursuant to this Agreement.
6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding any other provision of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of any
Proceeding or in defense of any claim, issue or matter therein, the Indemnitee
shall be indemnified against all Expenses incurred in connection therewith to
the fullest extent permitted by the DGCL. For purposes of this paragraph, the
Indemnitee will be deemed to have been successful on the merits if the
Proceeding is terminated by settlement or is dismissed with prejudice.
7. ADVANCES OF EXPENSES. The Expenses incurred by the
Indemnitee in connection with any Proceeding shall be paid promptly by the
Company in advance of the final disposition of the Proceeding at the written
request of the Indemnitee to the fullest extent permitted by the DGCL; provided
that the Indemnitee shall undertake in writing to repay such amount to the
extent that it is ultimately determined that the Indemnitee is not entitled to
indemnification by the Company.
8. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion of the Expenses, damages, judgments, amounts paid in settlement,
fines, penalties or ERISA excise taxes actually and reasonably incurred by
Indemnitee in the investigation, defense, appeal or settlement of any Proceeding
but not, however, for the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such Expenses, damages, judgments,
amounts paid in settlement, fines, penalties or ERISA excise taxes to which the
Indemnitee is entitled.
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9. INDEMNIFICATION PROCEDURE; DETERMINATION OF RIGHT TO
INDEMNIFICATION.
(a) Promptly after receipt by the Indemnitee of
notice of the commencement of any Proceeding with respect to which the
Indemnitee intends to claim indemnification or advancement of Expenses pursuant
to this Agreement, the Indemnitee will notify the Company of the commencement
thereof. The omission to so notify the Company will not relieve the Company from
any liability which it may have to the Indemnitee under this Agreement or
otherwise.
(b) If a claim for indemnification or advancement of
Expenses under this Agreement is not paid by or on behalf of the Company within
thirty (30) days of receipt of written notice thereof, Indemnitee may at any
time thereafter bring suit in any court of competent jurisdiction against the
Company to enforce the right to indemnification or advancement of Expenses
provided by this Agreement. It shall be a defense to any such action (other than
an action brought to enforce a claim for Expenses incurred in defending any
Proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Company) that the Indemnitee has
failed to meet the standard of conduct that makes it permissible under the DGCL
for the Company to indemnify the Indemnitee for the amount claimed. The burden
of proving by clear and convincing evidence that indemnification or advancement
of Expenses is not appropriate shall be on the Company. The failure of the
directors or stockholders of the Company or independent legal counsel to have
made a determination prior to the commencement of such Proceeding that
indemnification or advancement of Expenses are proper in the circumstances
because the Indemnitee has met the applicable standard of conduct shall not be a
defense to the action or create a presumption that the Indemnitee has not met
the applicable standard of conduct.
(c) The Indemnitee's Expenses incurred in connection
with any action concerning Indemnitee's right to indemnification or advancement
of Expenses in whole or in part pursuant to this Agreement shall also be
indemnified in accordance with the terms of this Agreement by the Company
regardless of the outcome of such action, unless a court of competent
jurisdiction determines that each of the material claims made by the Indemnitee
in such action was not made in good faith or was frivolous.
(d) With respect to any Proceeding for which
indemnification is requested, the Company will be entitled to participate
therein at its own expense and, except as otherwise provided below, to the
extent that it may wish, the Company may assume the defense thereof, with
counsel satisfactory to the Indemnitee. After notice from the Company to the
Indemnitee of its election to assume the defense of a Proceeding, the Company
will not be liable to the Indemnitee under this Agreement for any Expenses
subsequently incurred by the Indemnitee in connection with the defense thereof,
other than reasonable costs of investigation or as otherwise provided below. The
Company shall not settle any Proceeding in any manner that would impose any
penalty or limitation on the Indemnitee without the Indemnitee's prior written
consent. The Indemnitee shall have the right to employ counsel in any such
Proceeding, but the Expenses of such counsel incurred after notice from the
Company of its assumption of the defense thereof and the Indemnitee's approval
of the Company's counsel shall be at the expense of the Indemnitee, unless (i)
the employment of counsel by the Indemnitee has been authorized by the Company,
(ii) the Indemnitee shall have reasonably concluded that there may be a conflict
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of interest between the Company and the Indemnitee in the conduct of the defense
of a Proceeding, or (iii) the Company shall not in fact have employed counsel to
assume the defense of a Proceeding, in each of which cases the Expenses of the
Indemnitee's counsel shall be at the expense of the Company. Notwithstanding the
foregoing, 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 the Indemnitee
has concluded that there may be a conflict of interest between the Company and
the Indemnitee.
10. RETROACTIVE EFFECT. Notwithstanding anything to the
contrary contained in this Agreement, the Company's obligation to indemnify the
Indemnitee and advance Expenses to the Indemnitee shall be deemed to be in
effect since the date that the Indemnitee first commenced serving in any of the
capacities covered by this Agreement.
11. LIMITATIONS ON INDEMNIFICATION. No payments pursuant to
this Agreement shall be made by the Company:
(a) to indemnify or advance Expenses to the
Indemnitee with respect to actions initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to actions brought to
establish or enforce a right to indemnification or advancement of Expenses under
this Agreement or any other statute or law or otherwise as required under the
DGCL, but such indemnification or advancement of Expenses may be provided by the
Company in specific cases if approved by the Board of Directors by a majority
vote of a quorum thereof consisting of directors who are not parties to such
action;
(b) to indemnify the Indemnitee for any Expenses,
damages, judgments, amounts paid in settlement, fines, penalties or ERISA excise
taxes for which payment is actually made to the Indemnitee under a valid and
collectible insurance policy, except in respect of any excess beyond the amount
paid under such insurance;
(c) to indemnify the Indemnitee for any Expenses,
damages, judgments, amounts paid in settlement, fines, penalties or ERISA excise
taxes for which the Indemnitee has been or is indemnified by the Company or any
other party otherwise than pursuant to this Agreement; or
(d) to indemnify the Indemnitee for any Expenses,
damages, judgments, fines or penalties sustained in any Proceeding for an
accounting of profits made from the purchase or sale by Indemnitee of securities
of the Company pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder or
similar provisions of any federal, state or local statutory law;
12. MAINTENANCE OF DIRECTORS' AND OFFICERS' INSURANCE.
(a) Upon the Indemnitee's request, the Company hereby
agrees to maintain in full force and effect, at its sole cost and expense,
directors' and officers' liability insurance ("D&O INSURANCE") by an insurer, in
an amount and with a deductible reasonably acceptable to the Indemnitee,
covering the period during which the Indemnitee is serving in any one or more of
the capacities covered by this Agreement and for so long thereafter as the
Indemnitee shall be subject to any possible claim or threatened, pending or
completed Proceeding by reason of the fact that the Indemnitee is serving in any
of the capacities covered by this Agreement.
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(b) In all policies of D&O Insurance to be maintained
pursuant to Paragraph 12(a) above, the Indemnitee shall be named as an insured
in such a manner as to provide Indemnitee with the greatest rights and benefits
available under such policy.
(c) Notwithstanding the foregoing, the Company shall
have no obligation to maintain D&O Insurance if the Company determines, in good
faith, that (i) such insurance cannot be obtained on terms which are
commercially reasonable, (ii) the premium costs for such insurance is
significantly disproportionate to the amount of coverage provided, (iii) the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or (iv) the Company, after using best efforts, is
otherwise unable to obtain such insurance.
13. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The
indemnification and advancement of Expenses provided by this Agreement shall not
be deemed to limit or preclude any other rights to which the Indemnitee may be
entitled under the Company's certificate of incorporation or bylaws, any
agreement, any vote of stockholders or disinterested directors of the Company,
the DGCL, or otherwise.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and shall inure to the benefit of (i) the Indemnitee and Indemnitee's
heirs, devisees, legatees, personal representatives, executors, administrators
and assigns and (ii) the Company and its successors and assigns, including any
transferee of all or substantially all of the Company's assets and any successor
or assign of the Company by merger or by operation of law.
15. SEVERABILITY. Each provision of this Agreement is a
separate and distinct agreement and independent of the other, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof. To the extent required, any
provision of this Agreement may be modified by a court of competent jurisdiction
to preserve its validity and to provide the Indemnitee with the broadest
possible indemnification and advancement of Expenses permitted under the DGCL.
If this Agreement or any portion thereof is invalidated on any ground by any
court of competent jurisdiction, then the Company shall nevertheless indemnify
Indemnitee as to Expenses, damages, judgments, amounts paid in settlement,
fines, penalties and ERISA excise taxes with respect to any Proceeding to the
fullest extent permitted by any applicable portion of this Agreement that shall
not have been invalidated or by any applicable provision of the DGCL or any
other applicable law.
16. HEADINGS. The headings used herein are for convenience
only and shall not be used in construing or interpreting any provision of the
Agreement.
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17. GOVERNING LAW. The DGCL shall govern all issues concerning
the relative rights of the Company and the Indemnitee under this Agreement. All
other questions and obligations under this Agreement shall be construed and
enforced in accordance with the internal laws of the State of California,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California. In any action, dispute, litigation or other proceeding concerning
this Agreement (including arbitration), exclusive jurisdiction shall be with the
courts of California, with the County of Orange being the sole venue for the
bringing of the action or proceeding.
18. AMENDMENTS AND WAIVERS. No amendment, waiver,
modification, termination or cancellation of this Agreement shall be effective
unless in writing and signed by the party against whom enforcement is sought.
The indemnification rights afforded to the Indemnitee hereby are contract rights
and may not be diminished, eliminated or otherwise affected by amendments to the
Company's certificate of incorporation, bylaws or agreements, including any D&O
Insurance policies, whether the alleged actions or conduct giving rise to
indemnification hereunder arose before or after any such amendment. No waiver of
any provision of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof, whether or not similar, nor shall any waiver
constitute a continuing waiver.
19. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each party and delivered to the other.
20. NOTICES. All notices and communications shall be in
writing and shall be deemed duly given on the date of delivery or on the date of
receipt of refusal indicated on the return receipt if sent by first class mail,
postage prepaid, registered or certified, return receipt requested, to the
following addresses, unless notice of a change of address is duly given by one
party to the other, in which case notices shall be sent to such changed address:
If to the Company:
Emrise Corporation
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, President
with a copy, which shall not constitute notice to the Company,
to:
Xxxxx & Xxxxxx, LLP
000 Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
If to the Indemnitee, to the address set forth on the
signature page to this Agreement.
21. SUBROGATION. In the event of any payment under this
Agreement to or on behalf of the Indemnitee, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of the Indemnitee
against any person, firm, corporation or other entity (other than the Company)
and the Indemnitee shall execute all papers requested by the Company and shall
do any and all things that may be necessary or desirable to secure such rights
for the Company, including the execution of such documents necessary or
desirable to enable the Company to effectively bring suit to enforce such
rights.
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22. SUBJECT MATTER AND PARTIES. The intended purpose of this
Agreement is to provide for indemnification and advancement of Expenses, and
this Agreement is not intended to affect any other aspect of any relationship
between the Indemnitee and the Company and is not intended to and shall not
create any rights in any person as a third party beneficiary hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of __________________, 2004.
"Indemnitee" Signature:
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Print Name:
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Address For Notices:
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"Company" EMRISE CORPORATION
a Delaware corporation
By:
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Name:
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Its:
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