Exhibit 10.1
FORM OF
DIGITAL MUSIC GROUP,
INC.
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement (
“Agreement” ) is made as of September
, 2005, by and between Digital
Music Group, Inc., a Delaware corporation (the
“Company” ), and
( “Indemnitee” ).
RECITALS
A. The Company and Indemnitee
recognize the significant cost of directors’ and
officers’ liability insurance and the general reductions in
the coverage of such insurance.
B. The Company and Indemnitee
further recognize the substantial increase in corporate litigation
in general, subjecting officers and directors to expensive
litigation risks at the same time as the coverage of liability
insurance has been severely limited.
C. The Company desires to attract
and retain the services of highly qualified individuals, such as
Indemnitee, to serve as officers and directors of the Company and
to indemnify its officers and directors so as to provide them with
the maximum protection permitted by law.
NOW, THEREFORE
, in consideration for
Indemnitee’s services as an officer or director of the
Company, the Company and Indemnitee hereby agree as
follows:
1. Indemnification
.
(a) Third Party Proceedings .
The Company shall indemnify Indemnitee if Indemnitee is or was a
party or is threatened to be made a party to any threatened,
pending or completed action, suit, proceeding or any alternative
dispute resolution mechanism, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, or by reason of the fact that Indemnitee
is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys’ fees), judgments, fines and amounts
paid in settlement (if such settlement is approved in advance by
the Company, which approval shall not be unreasonably withheld)
actually and reasonably incurred by Indemnitee in connection with
such action, suit or proceeding if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe Indemnitee’s conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be
in or not opposed to the best
interests of the Company, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that
Indemnitee’s conduct was unlawful.
(b) Proceedings By or in the
Right of the Company . The Company shall indemnify Indemnitee
if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the
right of the Company or any subsidiary of the Company to procure a
judgment in its favor by reason of the fact that Indemnitee is or
was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, or by reason of the fact that Indemnitee
is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys’ fees) and, to the fullest extent
permitted by law, amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with the defense or
settlement of such action or suit if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, except that no
indemnification shall be made in respect of any claim, issue or
matter as to which Indemnitee shall have been adjudged to be liable
to the Company unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery of the
State of Delaware or such other court shall deem proper.
(c) Mandatory Payment of
Expenses . To the extent that Indemnitee has been successful on
the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this Section
1, or in defense of any claim, issue or matter therein, Indemnitee
shall be indemnified against expenses (including attorneys’
fees) actually and reasonably incurred by Indemnitee in connection
therewith.
2. Expenses; Indemnification
Procedure .
(a) Advancement of Expenses .
The Company shall advance all expenses incurred by Indemnitee in
connection with the investigation, defense, settlement or appeal of
any civil or criminal action, suit or proceeding referenced in
Section 1(a) or (b) hereof (but not amounts actually paid in
settlement of any such action, suit or proceeding). Indemnitee
hereby undertakes to repay such amounts advanced only if, and to
the extent that, it shall ultimately be determined that 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 Indemnitee within thirty (30) days following delivery of
a written request therefor by Indemnitee to the Company.
(b) Notice/Cooperation by
Indemnitee . Indemnitee shall, as a condition precedent to his
right to be indemnified under this Agreement, give the Company
notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under
this Agreement. Notice to the Company shall be directed to the
President of the Company at the address shown on the signature page
of this Agreement (or such other address as the Company shall
designate in writing to Indemnitee). Notice shall be deemed
received three business days after the date postmarked if sent by
domestic certified or registered mail, properly addressed, five
business days if sent by airmail to a country outside of North
America; otherwise
- 2 -
notice shall be deemed received when
such notice shall actually be received by the Company. In addition,
Indemnitee shall give the Company such information and cooperation
as it may reasonably require and as shall be within
Indemnitee’s power.
(c) Procedure . Any
indemnification and advances provided for in Section 1 and this
Section 2 shall be made no later than thirty (30) days after
receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the
Company’s Certificate of Incorporation or Bylaws providing
for indemnification, is not paid in full by the Company within
thirty (30) days after a written request for payment thereof has
first been received by the Company, Indemnitee may, but need not,
at any time thereafter bring an action against the Company to
recover the unpaid amount of the claim and, subject to Section 12
of this Agreement, Indemnitee shall also be entitled to be paid for
the expenses (including attorneys’ fees) of bringing such
action. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in
connection with any action, suit or proceeding in advance of its
final disposition) that Indemnitee has not met the standards of
conduct which make it permissible under applicable law for the
Company to indemnify Indemnitee for the amount claimed. However,
Indemnitee shall be entitled to receive interim payments of
expenses pursuant to Subsection 2(a) unless and until such defense
may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties’ intention
that if the Company contests Indemnitee’s right to
indemnification, the question of Indemnitee’s right to
indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal
counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct
required by applicable law, nor an actual determination by the
Company (including it Board of Directors, any committee or subgroup
of the Board of Directors, independent legal counsel, or its
stockholders) that Indemnitee has not met such applicable standard
of conduct, shall create a presumption that Indemnitee has or has
not met the applicable standard of conduct.
(d) Notice to Insurers . If,
at the time of the receipt of a notice of a claim pursuant to
Section 2(b) hereof, the Company has director and officer liability
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.
(e) Selection of Counsel . In
the event the Company shall be obligated under Section 2(a) hereof
to pay the expenses of any proceeding against Indemnitee, the
Compa
