Exhibit 10.1
DIRECTOR INDEMNIFICATION
AGREEMENT
This Director Indemnification
Agreement, dated as of
, 2009 (this “ Agreement ”), is made by and
between AMERICAN SOFTWARE, INC., a Georgia corporation (the “
Company ”), and
(“ Indemnitee ”).
Indemnitee is a director of the
Company and Indemnitee’s willingness to continue to serve in
such capacity is predicated, in substantial part, upon the
Company’s willingness to indemnify Indemnitee to the fullest
extent permitted by the laws of the state of Georgia, and upon the
other undertakings set forth in this Agreement.
In recognition of the need to
provide Indemnitee with substantial protection against personal
liability, in order to procure Indemnitee’s continued service
as a director of the Company and to enhance Indemnitee’s
ability to serve the Company in an effective manner, and in order
to provide such protection pursuant to express contract rights
(intended to be enforceable irrespective of, among other things,
any amendment to the Constituent Documents (as defined in
Section 4), and change in 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(d)) 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.
Therefore, the parties 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) “ 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 without limitation any federal, state or other
governmental entity, that Indemnitee determines might lead to the
institution of any such claim, demand, action, suit or
proceeding.
(b) “ 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. 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 shall be deemed to constitute control
for purposes of this definition.
(c) “ Disinterested
Director ” means a director of the Company who is not
(i) a party to the Claim or (ii) an individual who is a
party to a Claim having a familial, financial, professional, or
employment relationship with the director whose indemnification or
advance for expenses is the subject of the decision being made with
respect to the Claim, 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) “ 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.
(e) “ Incumbent
Directors ” mean 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 shareholders, 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); except that an
individual shall 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 Securities Exchange Act of 1934, as
amended (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.
(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 Indemnitee’s 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 reason of such status. In addition to
any service at the actual request of the Company, for purposes of
this Agreement, Indemnitee shall 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.
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(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 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 ” shall 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 without limitation all
interest, assessments and other charges paid or payable in
connection with or in respect of any of the foregoing.
(j) “ Subsidiary
” means an entity in which the Company directly or indirectly
beneficially owns 50% or more of the outstanding securities
entitled to vote generally in the election of directors.
2. Indemnification
Obligation. Subject to
Section 7, the Company shall indemnify, defend and hold
harmless Indemnitee, to the fullest extent permitted or required by
the laws of the State of Georgia 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; except that, unless
otherwise provided in Sections 4 and 20, Indemnitee shall 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
shall 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 be paid or incurred
by Indemnitee. Without limiting the generality or effect of the
foregoing, within five business days after any request by
Indemnitee, the Company shall, 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. Notwithstanding the foregoing, Indemnitee shall
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 Indemnitee in respect of Expenses relating to,
arising out of or resulting from such Indemnifiable Claim. In
connection with any such payment, advancement or reimbursement,
Indemnitee shall execute and deliver to the Company an affirmation
and undertaking in the form attached hereto as Exhibit A
(subject to Indemnitee filling in the blanks therein and selecting
from among the bracketed alternatives therein), which need not be
secured and shall be accepted without reference to
Indemnitee’s ability to repay the Expenses. In no event shall
Indemnitee’s right to the payment, advancement or
reimbursement of Expenses pursuant to this Section 3 be
conditioned upon any affirmation and/or undertaking that is less
favorable to Indemnitee than, or that is in addition to, the
affirmation and undertaking set forth in Exhibit A
.
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4. Indemnification for Additional
Expenses. Without
limiting the generality or effect of the foregoing, the Company
shall indemnify and hold harmless Indemnitee against and, if
requested by Indemnitee, shall reimburse Indemnitee for, or advance
to Indemnitee, within five business days of such request, any and
all Expenses paid or incurred by Indemnitee or which Indemnitee
determines are reasonably likely to be paid or incurred by
Indemnitee in connection with any Claim made, instituted or
conducted by Indemnitee for (a) indemnification or payment,
advancement or reimbursement of Expenses by the Company under any
provision of this Agreement, or under any other agreement or
provision of the Company’s articles of incorporation or
bylaws (collectively, the “ Constituent Documents
”) now or hereafter in effect relating to Indemnifiable
Claims, and/or (b) recovery under any directors’ and
officers’ liability insurance policies maintained by the
Company, regardless in each case of whether Indemnitee ultimately
is determined to be entitled to such indemnification,
reimbursement, advance or insurance recovery, as the case may be
(subject to Section 7 below and Indemnitee’s repayment
undertaking in Exhibit A), on the condition that Indemnitee shall
return, without interest, any such advance of Expenses (or portion
thereof) that remains unspent at the final disposition of the Claim
to which the advance related.
5. Partial Indemnity.
If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for
some or a portion of any Indemnifiable Loss, but not for all of the
total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is
entitled.
6. Procedure for
Notification. To obtain
indemnification under this Agreement in respect of an Indemnifiable
Claim or Indemnifiable Loss, Indemnitee shall submit to the Company
a written request therefor, including a brief description (based
upon information then available to Indemnitee) of such
Indemnifiable Claim or Indemnifiable Loss. If, at the time of the
receipt of such request, the Company has directors’ and
officers’ liability insurance in effect under which coverage
for such Indemnifiable Claim or Indemnifiable Loss is potentially
available, the Company shall give prompt written notice of such
Indemnifiable Claim or Indemnifiable Loss to the applicable
insurers in accordance with the procedures set forth in the
applicable policies. The Company shall provide to Indemnitee a copy
of such notice delivered to the applicable insurers, and copies of
all subsequent correspondence between the Company and such insurers
regarding the Indemnifiable Claim or Indemnifiable Loss, in each
case substantially concurrently with the delivery or receipt
thereof by the Company. The failure by Indemnitee to timely notify
the Company of any Indemnifiable Claim or Indemnifiable Loss shall
not relieve the Company from any liability hereunder unless, and
only to the extent that, the Company did not otherwise learn of
such Indemnifiable Claim or Indemnifiable Loss and such failure
results in forfeiture by the Company of substantial defenses,
rights or insurance coverage.
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7. Determination of Right to
Indemnification.
(a) To the extent that Indemnitee
shall have been successful on the merits or otherwise in defense of
any Indemnifiable Claim or any portion thereof or in defense of any
issue or matter therein, including without limitation dismissal
without prejudice, Indemnitee shall be indemnified against all
Indemnifiable Losses relating to, arising out of or resulting from
such Indemnifiable Claim in accordance with Section 2 and no
Standard of Conduct Determination (as defined in Section 7(b))
shall be required.
(b) To the extent that the
provisions of Section 7(a) are inapplicable to an
Indemnifiable Claim that shall have been finally disposed of, any
determination of whether Indemnitee has satisfied any applicable
standard of conduct under Georgia law that is a legally required
condition precedent to indemnification of Indemnitee hereunder
against Indemnifiable Losses relating to, arising out of or
resulting from such Indemnifiable Claim (a “ Standard of
Conduct Determination ”) shall be made, at the option of
the Indemnitee, by one of the following two methods:
(i) if there are two or more
Disinterested Directors, by the Board by a majority vote of all the
Disinterested Directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of a committee
of two or more Disinterested Directors appointed by such a vote;
or
(ii) by Independent Counsel
(a) selected in the manner prescribed in Section 7(b)(i)
or (b) if there are fewer than two Disinterested Directors,
selected by the Board (in which selection directors who
