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
