EXHIBIT 10.1
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DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
This Director and Officer Indemnification Agreement, dated as
of
___________, 2007 (this "AGREEMENT"), is made by and between
ThinkEngine
Networks, Inc., a Delaware corporation (the "COMPANY"), and
____________
("INDEMNITEE").
RECITALS:
A. Section 141 of the Delaware General Corporation Law provides
that
the business and affairs of a corporation will be managed by or
under the
direction of its board of directors.
B. Pursuant to Sections 141 and 142 of the Delaware General
Corporation
Law, significant authority with respect to the management of the
Company has
been delegated to the officers of the Company.
C. By virtue of the managerial prerogatives vested in the directors
and
officers of a Delaware corporation, directors and officers act as
fiduciaries of
the corporation and its stockholders.
D. Thus, it is critically important to the Company and its
stockholders
that the Company be able to attract and retain the most capable
persons
reasonably available to serve as directors and officers of the
Company.
E. In recognition of the need for corporations to be able to
induce
capable and responsible persons to accept positions in corporate
management,
Delaware law authorizes (and in some instances requires)
corporations to
indemnify their directors and officers and further authorizes
corporations to
purchase and maintain insurance for the benefit of their directors
and officers.
F. The Delaware courts have recognized that indemnification by
a
corporation serves the dual policies of (1) allowing corporate
officials to
resist unjustified lawsuits, secure in the knowledge that, if
vindicated, the
corporation will bear the expense of litigation and (2) encouraging
capable
women and men to serve as corporate directors and officers, secure
in the
knowledge that the corporation will absorb the costs of defending
their honesty
and integrity.
G. The number of lawsuits challenging the judgment and actions
of
directors and officers of Delaware corporations, the costs of
defending those
lawsuits and the threat to directors' and officers' personal assets
have all
materially increased over the past several years, chilling the
willingness of
capable women and men to undertake the responsibilities imposed on
corporate
directors and officers.
H. Recent federal legislation and rules adopted by the Securities
and
Exchange Commission and the national securities exchanges have
imposed
additional disclosure and corporate governance obligations on
directors and
officers of public companies and have exposed such directors and
officers to new
and substantially broadened civil liabilities.
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I. These legislative and regulatory initiatives have also
exposed
directors and officers of public companies to a significantly
greater risk of
criminal proceedings, with attendant defense costs and potential
criminal fines
and penalties.
J. Under Delaware law, the right of a director or officer to be
reimbursed for the costs of defense of criminal actions, whether
such claims are
asserted under state or federal law, does not depend upon the
merits of the
claims asserted against the director or officer and is separate and
distinct
from any right to indemnification the director or officer may be
able to
establish, and indemnification of the director or officer against
criminal fines
and penalties is permitted if the director or officer satisfies the
applicable
standard of conduct.
K. Indemnitee is a director and/or officer of the Company and
his/her
willingness to serve in such capacity is predicated, in substantial
part, upon
the Company's willingness to indemnify him/her in accordance with
the principles
reflected above, to the fullest extent permitted by the laws of the
state of
Delaware, and upon the other undertakings set forth in this
Agreement.
L. Therefore, (1) in recognition of the need to provide Indemnitee
with
substantial protection against personal liability, (2) in order to
procure
Indemnitee's continued service as a director and officer of the
Company and to
enhance Indemnitee's ability to serve the Company in an effective
manner, and
(3) in order to provide such protection pursuant to express
contract rights
(intended to be enforceable irrespective of, among other things,
any amendment
to the Company's certificate of incorporation or bylaws
(collectively, the
"CONSTITUENT DOCUMENTS"), any change in the composition of the
Company's Board
of Directors (the "BOARD") or any change-in-control or business
combination
transaction relating to the Company), the Company wishes to provide
in this
Agreement for the indemnification of and the advancement of
Expenses (as defined
in Section 1(e)) to Indemnitee as set forth in this Agreement and
for the
continued coverage of Indemnitee under the Company's directors' and
officers'
liability insurance policies.
M. In light of the considerations referred to in the preceding
recitals, it is the Company's intention and desire that the
provisions of this
Agreement be construed liberally, subject to their express terms,
to maximize
the protections to be provided to Indemnitee hereunder.
AGREEMENT:
NOW, THEREFORE, the parties hereby 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 with
initial capital letters:
(a) "CHANGE IN CONTROL" means the occurrence after the date of
this
Agreement of any of the following events:
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(i) the acquisition by
any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"PERSON") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the
Exchange Act) of 20% or more of the combined voting power of
the
then-outstanding Voting Stock of the Company; PROVIDED, HOWEVER,
that:
(A) for purposes of this Section 1(a)(i), the following
acquisitions will not constitute a Change in Control: (1) any
acquisition of
Voting Stock of the Company directly from the Company that is
approved by a
majority of the Incumbent Directors; (2) any acquisition of Voting
Stock of the
Company by the Company or any Subsidiary; (3) any acquisition of
Voting Stock of
the Company by any employee benefit plan (or related trust)
sponsored or
maintained by the Company or any Subsidiary; and (4) any
acquisition of Voting
Stock of the Company by any Person pursuant to a Business
Combination that
complies with clauses (A), (B) and (C) of Section 1(a)(iii)
below;
(B) if any Person acquires beneficial ownership of 20% or
more of combined voting power of the then-outstanding Voting Stock
of the
Company as a result of a transaction described in clause (A)(1) of
Section
1(a)(i) and such Person thereafter becomes the beneficial owner of
any
additional shares of Voting Stock of the Company representing 1% or
more of the
then-outstanding Voting Stock of the Company, other than in an
acquisition
directly from the Company that is approved by a majority of the
Incumbent
Directors or other than as a result of a stock dividend, stock
split or similar
transaction effected by the Company in which all holders of Voting
Stock are
treated equally, such subsequent acquisition will be deemed to
constitute a
Change in Control;
(C) a Change in Control will not be deemed to have
occurred if a Person acquires beneficial ownership of 20% or more
of the Voting
Stock of the Company as a result of a reduction in the number of
shares of
Voting Stock of the Company outstanding unless and until such
Person thereafter
becomes the beneficial owner of any additional shares of Voting
Stock of the
Company representing 1% or more of the then-outstanding Voting
Stock of the
Company, other than in an acquisition directly from the Company
that is approved
by a majority of the Incumbent Directors or other than as a result
of a stock
dividend, stock split or similar transaction effected by the
Company in which
all holders of Voting Stock are treated equally; and
(D) if at least a majority of the Incumbent Directors
determine in good faith that a Person has acquired beneficial
ownership of 20%
or more of the Voting Stock of the Company inadvertently, and such
Person
divests as promptly as practicable a sufficient number of shares so
that such
Person beneficially owns less than 20% of the Voting Stock of the
Company, then
no Change in Control will be deemed to have occurred as a result of
such
Person's acquisition; or
(ii) a majority of the Directors are not Incumbent Directors;
or
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(iii) the consummation of a reorganization, merger or
consolidation, or sale or other disposition of all or substantially
all of the
assets of the Company or the acquisition of assets of another
corporation, or
other transaction (each, a "BUSINESS COMBINATION"), unless, in each
case,
immediately following such Business Combination (A) all or
substantially all of
the individuals and entities who were the beneficial owners of
Voting Stock of
the Company immediately prior to such Business Combination
beneficially own,
directly or indirectly, more than 60% of the combined voting power
of the then
outstanding shares of Voting Stock of the entity resulting from
such Business
Combination (including an entity which as a result of such
transaction owns the
Company or all or substantially all of the Company's assets either
directly or
through one or more subsidiaries), (B) no Person (other than the
Company, such
entity resulting from such Business Combination or any employee
benefit plan (or
related trust) sponsored or maintained by the Company, any
Subsidiary or such
entity resulting from such Business Combination) beneficially owns,
directly or
indirectly, 20% or more of the combined voting power of the then
outstanding
shares of Voting Stock of the entity resulting from such Business
Combination,
and (C) at least a majority of the members of the Board of
Directors of the
entity resulting from such Business Combination were Incumbent
Directors at the
time of the execution of the initial agreement or of the action of
the Board
providing for such Business Combination; or
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a
Business
Combination that complies with clauses (A), (B) and (C) of Section
1(a)(iii).
(v) For purposes of
this Section 1(a) and as used elsewhere in
this Agreement, the following terms have the following
meanings:
(A) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(B) "INCUMBENT DIRECTORS" means the individuals who, as of
the date hereof, are Directors of the Company and any individual
becoming a
Director subsequent to the date hereof whose election, nomination
for election
by the Company's stockholders or appointment, was approved by a
vote of at least
two-thirds of the then Incumbent Directors (either by a specific
vote or by
approval of the proxy statement of the Company in which such person
is named as
a nominee for director, without objection to such nomination);
PROVIDED,
HOWEVER, that an individual will not be an Incumbent Director if
such
individual's election or appointment to the Board occurs as a
result of an
actual or threatened election contest (as described in Rule
14a-12(c) of the
Exchange Act) with respect to the election or removal of Directors
or other
actual or threatened solicitation of proxies or consents by or on
behalf of a
Person other than the Board.
(C) "SUBSIDIARY" means an entity in which the Company
directly or indirectly beneficially owns 50% or more of the
outstanding Voting
Stock.
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(D) "VOTING STOCK" means securities entitled to vote
generally in the election of directors (or similar governing
bodies).
(b) "CLAIM" means (i) any threatened, asserted, pending or
completed claim, demand, action, suit or proceeding, whether civil,
criminal,
administrative, arbitrative, investigative or other, and whether
made pursuant
to federal, state or other law, and (ii) any threatened, pending or
completed
inquiry or investigation, whether made, instituted or conducted by
the Company
or any other person, including any federal, state or other
governmental entity,
that Indemnitee determines might lead to the institution of any
such claim,
demand, action, suit or proceeding.
(c) "CONTROLLED AFFILIATE" means any corporation, limited
liability
company, partnership, joint venture, trust or other entity or
enterprise,
whether or not for profit, that is directly or indirectly
controlled by the
Company. For purposes of this definition, "control" means the
possession,
directly or indirectly, of the power to direct or cause the
direction of the
management or policies of an entity or enterprise, whether through
the ownership
of voting securities, through other voting rights, by contract or
otherwise;
PROVIDED that direct or indirect beneficial ownership of capital
stock or other
interests in an entity or enterprise entitling the holder to cast
20% or more of
the total number of votes generally entitled to be cast in the
election of
directors (or persons performing comparable functions) of such
entity or
enterprise will be deemed to constitute control for purposes of
this definition.
(d) "DISINTERESTED DIRECTOR" means a director of the Company who
is
not and was not a party to the Claim in respect of which
indemnification is
sought by Indemnitee.
(e) "EXPENSES" means attorneys' and experts' fees and expenses
and
all other costs and expenses paid or payable 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.
(f) "INDEMNIFIABLE CLAIM" means any Claim based upon, arising
out
of or resulting from (i) any actual, alleged or suspected act or
failure to act
by Indemnitee in his or her capacity as a director, officer,
employee or agent
of the Company or as a director, officer, employee, member,
manager, trustee or
agent of any other corporation, limited liability company,
partnership, joint
venture, trust or other entity or enterprise, whether or not for
profit, as to
which Indemnitee is or was serving at the request of the Company as
a director,
officer, employee, member, manager, trustee or agent, (ii) any
actual, alleged
or suspected act or failure to act by Indemnitee in respect of any
business,
transaction, communication, filing, disclosure or other activity of
the Company
or any other entity or enterprise referred to in clause (i) of this
sentence, or
(iii) Indemnitee's status as a current or former director, officer,
employee or
agent of the Company or as a current or former director, officer,
employee,
member, manager, trustee or agent of the Company or any other
entity or
enterprise referred to in clause (i) of this sentence or any
actual, alleged or
suspected act or failure to act by Indemnitee in connection with
any obligation
or restriction imposed upon Indemnitee by
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reason of such status. In addition to any service at the actual
request of the
Company, for purposes of this Agreement, Indemnitee will be deemed
to be serving
or to have served at the request of the Company as a director,
officer,
employee, member, manager, trustee or agent of another entity or
enterprise if
Indemnitee is or was serving as a director, officer, employee,
member, manager,
trustee or agent of such entity or enterprise and (i) such entity
or enterprise
is or at the time of such service was a Controlled Affiliate, (ii)
such entity
or enterprise is or at the time of such service was an employee
benefit plan (or
related trust) sponsored or maintained by the Company or a
Controlled Affiliate,
or (iii) the Company or a Controlled Affiliate directly or
indirectly caused or
authorized Indemnitee to be nominated, elected, appointed,
designated, employed,
engaged or selected to serve in such capacity.
(g) "INDEMNIFIABLE LOSSES" means any and all Losses relating
to,
arising out of or resulting from any Indemnifiable Claim.
(h) "INDEPENDENT COUNSEL" means a law firm, or a member of a
law
firm, that is experienced in matters of corporation law and neither
presently
is, nor in the past five years has been, retained to represent (i)
the Company
(or any Subsidiary) or Indemnitee in any matter material to either
such party
(other than with respect to matters concerning the Indemnitee under
this
Agreement, or of other indemnitees under similar indemnification
agreements), or
(ii) any other named (or, as to a threatened matter, reasonably
likely to be
named) party to the Indemnifiable Claim giving rise to a claim
for
indemnification hereunder. Notwithstanding the foregoing, the term
"Independent
Counsel" will not include any person who, under the applicable
standards of
professional conduct then prevailing, would have a conflict of
interest in
representing either the Company or Indemnitee in an action to
determine
Indemnitee's rights under this Agreement.
(i) "LOSSES" means any and all Expenses, damages, losses,
liabilities, judgments, fines, penalties (whether civil, criminal
or other) and
amounts paid in settlement, including all interest, assessments and
other
charges paid or payable in connection with or in respect of any of
the
foregoing.
2. INDEMNIFICATION
OBLIGATION. Subject to Section 7, the Company will
indemnify, defend and hold harmless Indemnitee, to the fullest
extent permitted
or required by the laws of the State of Delaware in effect on the
date hereof or
as such laws may from time to time hereafter be amended to increase
the scope of
such permitted indemnification, against any and all Indemnifiable
Claims and
Indemnifiable Losses; PROVIDED, HOWEVER, that, except as provided
in Sections 4
and 20, Indemnitee will not be entitled to indemnification pursuant
to this
Agreement in connection with any Claim initiated by Indemnitee
against the
Company or any director or officer of the Company unless the
Company has joined
in or consented to the initiation of such Claim.
3. ADVANCEMENT OF
EXPENSES. Indemnitee will have the right to
advancement by the Company prior to the final disposition of any
Indemnifiable
Claim of any and all Expenses relating to, arising out of or
resulting from any
Indemnifiable Claim paid or incurred by Indemnitee or which
Indemnitee
determines are reasonably likely to
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be paid or incurred by Indemnitee. Indemnitee's right to such
advancement is not
subject to the satisfaction of any standard of conduct. Without
limiting the
generality or effect of the foregoing, within five business days
after any
request by Indemnitee, the Company will, in accordance with such
request (but
without duplication), (a) pay such Expenses on behalf of
Indemnitee, (b) advance
to Indemnitee funds in an amount sufficient to pay such Expenses,
or (c)
reimburse Indemnitee for such Expenses; PROVIDED that Indemnitee
will repay,
without interest, any amounts actually advanced to Indemnitee that,
at the final
disposition of the Indemnifiable Claim to which the advance
related, were in
excess of amounts paid or payable by Indem
