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DIRECTOR INDEMNIFICATION AGREEMENT
This
Agreement is made as of the 6th day of April, 2005, by and between
Pegasystems Inc., Massachusetts corporation (the
“Corporation”), and
(“Indemnitee”).
WHEREAS,
it is essential to the Corporation to retain and attract as
directors the most capable persons available, and
WHEREAS,
it is the express policy of the Corporation to indemnify its
directors so as to provide them with the maximum possible
protection permitted by law, and
WHEREAS,
Indemnitee does not regard the protection that may be available
under the Corporation’s insurance as adequate in the present
circumstances, and is not willing to remain as a director without
adequate protection, and
WHEREAS,
the Corporation desires Indemnitee to continue to serve as a
director of the Corporation.
NOW,
THEREFORE, the Corporation and Indemnitee do hereby agree as
follows:
1.
Agreement to Serve . Indemnitee agrees to continue to serve
as a director of the Corporation for so long as he is duly elected
or appointed or until such time as he resigns in writing.
2.
Definitions . As used in this Agreement:
(a) The term “Corporate Status” shall mean the
status of a person who is or was a director of the Corporation or
who, while a director of the Corporation, is or was serving at the
request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan, or other entity. A
director is considered to be serving an employee benefit plan at
the Corporation’s request if his duties to the Corporation
also impose duties on, or otherwise involve services by, him to the
plan or to participants in or beneficiaries of the plan.
(b) The term “D&O Insurance” shall mean the
directors’ and officers’ liability insurance issued by
the insurer(s), and having the policy number(s), amount(s) and
deductible(s) set forth on Exhibit A hereto and any
replacement or substitute policies issued by one or more reputable
insurers providing in all respects coverage at least comparable to
and in the same amount as that provided under the policy or
policies identified on Exhibit A .
(c) The term “Disinterested Director” shall mean a
director of the Corporation who, at the time of a vote referred to
in Paragraph 8 of this Agreement, is not (a) a party to
the Proceeding, or (b) an individual having a familial,
financial, professional, or employment relationship with the
Indemnitee, which relationship would, in the circumstances,
reasonably be expected to exert an influence on the
director’s judgment when voting on the decision being
made.
(d) The term “Expenses” shall include, without
limitation, attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage,
delivery service fees and other disbursements or expenses of the
types customarily incurred in connection with a Proceeding.
(e) The term “Liability” shall mean the obligation
to pay a judgment, settlement, penalty, fine including an excise
tax assessed with respect to an employee benefit plan, or
reasonable expenses incurred with respect to a Proceeding.
(f) The term “Proceeding” shall mean any
threatened, pending or completed action, suit, or proceeding,
whether civil, criminal, administrative, arbitrative or
investigative, and whether formal or informal.
3.
Indemnification.
(a) The Corporation shall indemnify the Indemnitee if he was,
is or is threatened to be made a defendant or respondent in a
Proceeding because of his Corporate Status against Liability
incurred in the Proceeding if (1) (i) he conducted himself in
good faith, and (ii) he reasonably believed that his conduct
was in the best interests of the Corporation or that his conduct
was at least not opposed to the best interests of the Corporation,
and (iii) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful, or
(2) he engaged in conduct for which he shall not be liable
under Article VI, Section 4 of the Corporation’s
Articles of Organization.
(b) The Indemnitee’s conduct with respect to an employee
benefit plan for a purpose he reasonably believed to be in the
interests of the participants in, and the beneficiaries of, the
plan is conduct that satisfies the requirement that his conduct was
at least not opposed to the best interests of the Corporation.
(c) The termination of a proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere
or its equivalent, is not, of itself, determinative that the
Indemnitee did not meet the relevant standard of conduct described
in this Paragraph 3.
4.
Exceptions to Right of Indemnification . Notwithstanding
anything to the contrary in this Agreement, except as set forth in
Paragraphs 9 and 10, the Corporation shall not indemnify the
Indemnitee in connection with a Proceeding (or part thereof)
initiated by the Indemnitee unless the initiation thereof was
approved by the Board of Directors of the Corporation.
Notwithstanding anything to the contrary in this Agreement, the
Corporation shall not indemnify the Indemnitee to the extent
Indemnitee is reimbursed from the proceeds of insurance, and in the
event the Corporation makes any indemnification payments to the
Indemnitee and the Indemnitee is subsequently reimbursed from the
proceeds of insurance, the Indemnitee shall promptly refund such
indemnification payments to the Corporation to the extent of such
insurance reimbursements.
5.
Indemnification of Expenses of Successful Party .
Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful, on the merits or
otherwise, in the defense of any Proceeding to which he was a party
because of his Corporate Status, the Indemnitee shall be
indemnified against all reasonable Expenses incurred by him on
behalf in connection therewith. Without limiting the foregoing, if
any Proceeding is disposed of, on the merits or otherwise
(including a disposition without prejudice), without (i) the
disposition being adverse to the Indemnitee, (ii) an
adjudication that the Indemnitee was liable to the Corporation,
(iii) a plea of guilty or nolo contendere by the
Indemnitee, (iv) an adjudication that the Indemnitee did not
act in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation, and
(v) with respect to any criminal proceeding, an adjudication
that the Indemnitee had no reasonable cause to believe his conduct
was unlawful, the Indemnitee shall be considered for the purposes
hereof to have been wholly successful with respect thereto.
6.
Notification and Defense of Claim . As a condition precedent
to his right to be indemnified, the Indemnitee must notify the
Corporation in writing as soon as practicable of any Proceeding for
which indemnity will or could be sought by him and provide the
Corporation with a copy of any summons, citation, subpoena,
complaint, indictment, information or other document relating to
such Proceeding with which he is served. With respect to any
Proceeding of which the Corporation is so notified, the Corporation
will be entitled to participate therein at its own expense and/or
to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from
the Corporation to the Indemnitee of its election so to assume such
defense, the Corporation shall not be liable to the Indemnitee for
any legal expenses subsequently incurred by the Indemnitee in
connection with such claim, other than as provided below in this
Paragraph 6. The Indemnitee shall have the right to employ his
own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation
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 Corporation, (ii) counsel to
the Indemnitee shall have reasonably concluded that there may be a
conflict of interest or position on any significant issue between
the Corporation and the Indemnitee in the conduct of the defense on
such action or (iii) the Corporation shall not in fact have
employed counsel to assume the defense of such action, in each of
which cases fees and expenses of counsel for the Indemnitee shall
be at the expense of the Corporation, except as otherwise expressly
provided by this Agreement. The Corporation shall not be entitled,
without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which
counsel for the Indemnitee shall have reasonably made the
conclusion provided for in clause (ii) above. The Corporation shall
not be required to indemnify the Indemnitee under this
Agreement
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