Exhibit 10.1
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of ____________________ by and
between Imation Corp., a Delaware corporation (the "Company") and
__________________, a director of the Company (the "Indemnitee").
RECITALS
A. The company is aware that competent and experienced persons are
increasingly reluctant to serve as directors of corporations unless they are
protected by comprehensive liability insurance or indemnification, due to
increased exposure to litigation costs and risks resulting from their service to
such corporations, and due to the fact that the exposure frequently bears no
reasonable relationship to the compensation of such directors;
B. The statutes and judicial decisions regarding the duties of
directors are often difficult to apply, ambiguous, or conflicting, and therefore
fail to provide such directors with adequate, reliable knowledge of legal risks
to which they are exposed or information regarding the proper course of action
to take;
C. Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so enormous (whether or not the case is meritorious), that the
defense and/or settlement of such litigation is often beyond the personal
resources of directors;
D. The Company believes that it is unfair for its directors to assume
the risk of huge judgments and other expenses which may occur in cases in which
the director received no personal profit and in cases where the director was not
culpable;
E. Based upon their experience, the Board of Directors of the Company
(the "Board") has concluded that, to retain and attract talented and experienced
individuals to serve directors of the Company and to encourage such individuals
to take the business risks necessary for the success of the Company and its
subsidiaries, it is necessary for the Company to contractually indemnify its
directors, and to assume for itself maximum liability for expenses and damages
in connection with claims against such directors in connection with their
service to the Company, and has further concluded that the failure to provide
such contractual indemnification could result in harm to the Company and its
shareholders;
F. The Delaware General Corporation Law under which the Company is
organized empowers the Company to indemnify its officers, directors, employees
and agents by agreement and to indemnify persons who serve, at the request of
the Company, as the directors, officers, employees or agents of other
corporations or enterprises, and expressly provides that the indemnification
provided by Section 145 is not exclusive;
G. As a result of circumstances that may have no relation to, or that
may be beyond the control of, the Company or the Indemnitee, there can be no
assurance of the adequacy of, or continuation or renewal of current liability
insurance coverage for its directors. The Company believes, therefore, that the
interests of the Company's shareholder would best be served by a combination of
such insurance and the indemnification by the Company of the directors of the
Company;
H. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director of the Company free from undue concern for
claims for damages arising out of or related to such services to the Company;
and
I. The Indemnitee is willing to serve, or to continue to serve, the
Company, provided that he or she is furnished the Indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Agent. or the purposes of this Agreement, "agent" of the
Company means any person who is or was a director, officer, employee or other
agent of the Company or a subsidiary of the Company; or is or was serving at the
request of, for the convenience of, or to represent the interests of the Company
or a subsidiary of the Company as a director, officer, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise; or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Company or a
subsidiary of the Company, or was a director, officer, employee or agent of
another enterprise at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.
(b) Expenses. For purpose; of this Agreement, "expenses"
includes all direct and indirect costs Of any type or nature whatsoever
(including, without limitation, all attorneys' fees and related disbursements,
other out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with either the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement,
Section 145, or otherwise; provided, however, that expenses shall not include
amounts for which the Company is prohibited by law from providing
indemnification.
(c) Proceeding. For the purpose of this Agreement,
"proceeding" means any threatened, pending, or completed action, suit or other
proceeding, whether civil, criminal, administrative, investigative or any other
type whatsoever.
(d) Subsidiary. For purposes of this Agreement, "subsidiary"
means any corporation of which more than 50% of the outstanding voting
securities is owned directly or indirectly by the Company, by the Company and
one or more other subsidiaries, or by one or more other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue
to serve as a director of the Company, so long as the Indemnitee is duly
appointed or elected and qualified in accordance with the applicable provisions
of the by-laws of the Company or until such time as the Indemnitee tenders his
or her resignation in writing, provided, however, that nothing contained in this
Agreement is intended to create any right to continued employment or Board
membership by Indemnitee.
3. Maintenance of Liability Insurance.
(a) The Company hereby covenants and agrees that, so long as
the Indemnitee shall continue to serve as an agent of the Company and thereafter
so long as the Indemnitee shall be subject to any possible proceeding by reason
of the fact that the Indemnitee was an agent of the Company, the Company,
subject to Section 3(c), shall promptly obtain and maintain in full force and
effect directors' and officers' liability insurance ("D&O Insurance") in
reasonable amounts from established and reputable insurers.
(b) In all policies of D&O Insurance, the Indemnitee shall be
named as an insured in such a manner as to provide the Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company's directors.
(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in good
faith that such insurance is not reasonably available, the premium costs for
such insurance are disproportionate to the amount of coverage provided, the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.
4. Mandatory Indemnification. The Company shall indemnify the
Indemnitee:
(a) Third Party Actions. If the Indemnitee is a person who was
or is a party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the Company) by reason of the fact that the
Indemnitee is or was an agent of the Company, or by reason of anything done or
not done by him or her in any such capacity, against any and all expenses and
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) actually
and reasonably incurred by him or her in connection with the investigation,
defense, settlement or appeal of such proceeding if the Indemnitee acted in good
faith and in a manner the Indemnitee reasonably believed to be in the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful;
and
(b) Derivative Actions. If the Indemnitee is a person who was
or is a party or is threatened to be made a party to 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 agent of the Company, or by reason of anything
done or not done by the Indemnitee in any such capacity, against any and all
expenses actually and reasonably incurred by the Indemnitee in connection with
the investigation, defense, settlement, or appeal of such proceeding if the
Indemnitee acted in good faith and in a manner the Indemnitee reasonably
believed to be in the best interests of the Company; such indemnification shall
also be granted if the Court of Chancery or the court in which such proceeding
was brought shall determine upon application, that, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the Court of Chancery or such other court shall
deem proper; and
(c) Actions where Indemnitee is Deceased. If the Indemnitee died
before his or her right to indemnification is determined or, after
determination, but before indemnification is paid, the Indemnitee's right to
indemnification shall survive and shall be determined and paid as if the
Indemnitee had survived.
5. Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) incurred by the Indemnitee in the investigation, defense,
settlement or appeal of a proceeding but not entitled, however, to
indemnification for all of the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for such total amount except as to the
portion thereof to which the Indemnitee is not entitled.
6. Mandatory Advancement of Expenses. Subject to Section 8(a) below,
the Company shall advance all reasonable expenses incurred by the Indemnitee in
connection with the investigation, defense, settlement or appeal of any
proceeding to which the Indemnitee is a party or is threatened to be made a
party by reason of the fact that the Indemnitee is or was an agent of the
Company. Indemnitee hereby undertakes to repay such amounts advanced only if,
and to the extent that, it shall ultimately be determined pursuant to Section 8
hereof that the Indemnitee is not entitled to be indemnified by the Company as
authorized hereby. The advances to be made hereunder shall be paid by the
Company to the Indemnitee within twenty (20) days following delivery of a
written request therefor by the Indemnitee to the Company. Any such request
shall reasonably evidence the expenses and costs incurred or to be incurred by
Indemnitee hereunder. Any dispute concerning the advancement of expenses may, at
the election of Indemnitee, be resolved by binding arbitration before one
neutral arbitrator in accordance with the Center for Public Resources, New York,
New York ("CPR") Rules for Non-Administered Arbitration of Business Disputes. If
the Company and the Indemnitee encounter difficulty in agreeing on an arbiter,
they will seek assistance or CPR in the selection process. In any dispute
concerning Indemnitee's right to the advancement of expenses, Indemnitee shall
be presumed to be entitled to such advancement and the Company shall bear the
burden to prove by clear and convincing evidence that Indemnitee is not so
entitled.
7. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that Indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof. Indemnitee will be presumed to
have met the standard of conduct entitling him or her to indemnification; the
Company shall be entitled to try to rebut the presumption in accordance with the
procedures set forth in Section 8 below.
(b) If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 7(a) hereof, the Company has
D&O Insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding 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 proceeding in
accordance with the terms of such policies.
(c) If the Company shall be obligated to pay the expenses of
any proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel reasonably
approved by the Indemnitee, upon the delivery to the Indemnitee of written
notice of its election so to do. After delivery of such notice, approval of such
counsel by the Indemnitee and the retention of such counsel by the Indemnitee
and the retention of such counsel by the Company, the Company will not be liable
to the Indemnitee under this Agreement for any fees of counsel subsequently
incurred by the Indemnitee with respect to the same proceeding, provided that
(i) the Indemnitee shall have the right to employ counsel in any such proceeding
at the Indemnitee's expense; and (ii) if (A) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (B) the Indemnitee or
counsel selected by the Company shall have concluded that there may be a
conflict of interest between the Company and the Indemnitee or among Indemnitees
jointly represented in the conduct of any such defense or (C) the Company shall
not, in fact, have employed counsel to assume the defense of such proceeding,
then fees and expenses of Indemnitee's counsel shall be at the expense of the
Company.
8. Determination of Right to Indemnification.
(a) To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding referred to in subsections
4(a), 4(b) or 4(c) of this Agreement or in the defense of any claim, issue or
matter described therein, the Company shall indemnify the Indemnitee against
expenses actually and reasonably incurred by the Indemnitee in connection with
the investigation, defense, or appeal of such proceeding.
(b) To determine Indemnitee's right to indemnification other
than as provided in subsection 8(a), Indemnitee shall be presumed to have met
the standard of care entitling him or her to indemnification. The Company shall
bear the burden to prove that Indemnitee is not entitled to indemnification.
Such determination shall be made by:
(1) A majority vote of a quorum of the Board
consisting of directors who are not parties to the proceeding for which
indemnification is being sought;
(2) The shareholders of the Company;
(3) Legal counsel selected by the board, and
reasonably approved by the Indemnitee, which counsel shall make such
determination in a written opinion; or
(4) One neutral arbitrator who shall be a litigation
or corporate attorney with experience in the area of director or officer
indemnification. The arbitrator shall be selected within 30 days of the demand
for arbitration and shall render his or her decision within 60 days after the
Company and the Indemnitee have completed the submission of their respective
cases, unless good cause be shown as to why a longer time for decision is
necessary. The arbitration shall be conducted in accordance with the CPR Rules
for Non-Administered Arbitration or Business Disputes. If the Company and the
Indemnitee encounter difficulty in agreeing on an arbiter, they will seek
assistance of CPR in the selection process.
(c) Notwithstanding any other provision in this Agreement to
the contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 8 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the
Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the claims and/or defenses of the Indemnitee in any such proceeding
was frivolous or made in bad faith, in which case Indemnitee will repay the
amounts previously paid, and will do so within 20 days following written demand.
The indemnification provided to Indemnitee in this section shall be paid by
Company on a current basis (i.e., no later than 20 days following written
demand).
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement;
(a) Claims Initiated by Indemnitees. To indemnify or advance
expenses to the Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by the Indemnitee and not by way of defense ("defense"
includes contribution or indemnification or proceedings to enforce proportionate
fault rules where applicable), except with respect to proceedings brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the Board of
Directors finds it to be appropriate; or
(b) Lack of Good Faith. To indemnify the Indemnitee for any
expenses incurred by the Indemnitee with respect to any proceeding instituted by
the Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) Unauthorized Settlements. To indemnify the Indemnitee
under this Agreement for any amounts paid in settlement of a proceeding unless
the Company consents to such settlement, which consent shall not be unreasonably
withheld.
10. Non-exclusivity. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's certificate of incorporation or bylaws, the vote of the Company's
shareholders or disinterested directors, other agreements, or otherwise, both as
to action in the Indemnitee's official capacity and to action in another
capacity while occupying his or her position as an agent of the company, and the
Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.
11. Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent now or hereafter
permitted by law.
12. Severability. It any provision or provisions of this Agreement
shall be held to be invalid illegal or unenforceable for any reason whatsoever,
(i) the validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions or any paragraphs 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 (ii) 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, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 12 hereof.
13. Modification and Waiver. 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.
14. Successors and Assigns. The terms of this agreement shall bind, and
shall inure to the benefit of, the successors and assigns of the parties hereto.
15. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
16. Governing Law. This Agreement shall be governed exclusively by and
construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
17. Consent to Jurisdiction. The Company and the Indemnitee each hereto
irrevocably consent to the jurisdiction of the courts of the State of Minnesota
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Minnesota,
or in arbitration as set forth herein.
The parties hereto have entered into this Indemnity Agreement effective
as of date first above written.