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EXHIBIT 10.3
QUIKSILVER, INC.
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (the "Agreement") is made as of this
1st day of May 1995, by and between QUIKSILVER, INC., a Delaware corporation
(the "Company"), and MICHAEL H. GRAY (the "Indemnitee"), a director of the
Company.
A. The Indemnitee is currently serving as a 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 protect adequately 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 officers and
directors, the Board of Directors 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.
NOW, THEREFORE, in consideration of the continued services of
the Indemnitee and as an inducement to the Indemnitee to continue to serve as a
director of the Company, the Company and the Indemnitee do hereby agree as
follows:
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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 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 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 consent, which consent shall not be
unreasonably withheld; and provided further, that the term "Expenses" does not
include the amount of damages, judgments, amounts paid in settlement, fines,
penalties or excise taxes under the Employee Retirement Income
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Security Act of 1974, as amended ("ERISA"), 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 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 by
the Company. Nothing in this Agreement shall be construed to create any right
in Indemnitee to continued service as an officer of the Company.
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 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 Delaware law;
provided 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 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
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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 Indemnitee in connection with the defense or
settlement of such Proceeding, to the fullest extent permitted by Delaware law.
5. CONCLUSIVE PRESUMPTION REGARDING STANDARD OF CONDUCT.
The Indemnitee shall be conclusively presumed to have met the relevant
standards of conduct required by Delaware law for indemnification pursuant to
this Agreement, unless a determination is made that the Indemnitee has not met
such standards by (i) 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) the stockholders of the Company by majority vote, or (iii) in
a written opinion of independent legal counsel, the selection of whom has been
approved by the Indemnitee in writing.
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, including the
dismissal of a Proceeding without prejudice, the Indemnitee shall be
indemnified against all Expenses incurred in connection therewith to the
fullest extent permitted by Delaware law.
7. ADVANCES OF EXPENSES. The Expenses incurred by the
Indemnitee in 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 Delaware law; provided that the
Indemnitee shall undertake in writing to repay such amount
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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.
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 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 under this Agreement is not paid
by or on behalf of the Company within 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 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
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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 Delaware law 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 are 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 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
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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 which would impose any penalty or
limitation on the Indemnitee without the Indemnitee's written consent. The
Indemnitee shall have the right to employ counsel in any Proceeding, but the
Expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof 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 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. 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. 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 under this Agreement or any
other statute or law or otherwise as required under Delaware law, 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;
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(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
otherwise than pursuant to this Agreement;
(d) indemnify the Indemnitee for any Expenses,
damages, judgments, amounts paid in settlement, 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, as amended, and the rules and
regulations promulgated thereunder or similar provisions of any federal, state
or local statutory law;
(e) to indemnify the Indemnitee for any Expenses,
damages, judgments, amounts paid in settlement, fines, penalties or ERISA
excise taxes resulting from Indemnitee's conduct which is finally adjudicated
by a court of competent jurisdiction (i) to have been knowingly fraudulent, a
knowing violation of law, deliberately dishonest or in violation of
Indemnitee's duty of loyalty to the Company or (ii) to have involved willful
misconduct on the part of the Indemnitee; or
(f) if a court of competent jurisdiction shall
enter a final order, decree or judgment to the effect that such indemnification
or advancement of Expenses hereunder is unlawful under the circumstances.
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11. 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 Certificate of Incorporation, the Bylaws, any agreement,
any vote of stockholders or disinterested directors, Delaware law, or
otherwise, both as to action in Indemnitee's official capacity and as to action
in any other capacity on behalf of the Company while holding such office.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon, and shall inure to the benefit of (i) the Indemnitee and
Indemnitee's heirs, 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.
13. SEPARABILITY. 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
Delaware law. 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 or ERISA excise taxes with respect to any
Proceeding to the full extent permitted by any applicable portion of this
Agreement that shall
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not have been invalidated or by any applicable provision of Delaware law or the
law of any other jurisdiction.
14. HEADINGS. The Headings used herein are for
convenience only and shall not be used in construing or interpreting any
provision of the Agreement.
15. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
16. 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 directors' and officers' liability 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.
17. 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.
18. NOTICES. All notices and communications shall be in
writing and shall be deemed duly given on the date of delivery if personally
delivered or the date of receipt or refusal indicated on the return receipt if
sent by first class mail, postage prepaid, registered
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or certified, return receipt requested, to the following addresses, unless
notice of a change of address in duly given by one party to the other, in which
case notices shall be sent to such changed address:
If to the Company:
Quiksilver, Inc.
1740 Monrovia
Costa Mesa, CA 92627
Attention: Secretary
If to Indemnitee:
Mr. Michael H. Gray
c/o The Sweet Life
17711 Mitchell North, Suite B
Irvine, CA 92714
19. 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.
20. 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
"INDEMNITEE"
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MICHAEL H. GRAY
"COMPANY"
QUIKSILVER, INC., a Delaware corporation
By:
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Its:
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