EXHIBIT
10.1
FORM
OF
INDEMNIFICATION
AGREEMENT
THIS
INDEMNIFICATION AGREEMENT (this
“Agreement ”) is entered into as of the
day of
, 20 , by and between VASCO Data
Security International, Inc., a Delaware corporation (the
“Company ”), and
(“ Indemnitee ”).
RECITALS
A.
The Company recognizes that competent and experienced persons are
increasingly reluctant to serve or to continue to serve as
directors or officers of public companies unless they are protected
by comprehensive liability insurance, indemnification and
advancement of expenses, due to the increased exposure to
litigation costs and risks resulting from their service to such
companies, and due to the fact that the exposure frequently bears
no reasonable relationship to the compensation of such directors
and officers.
B.
The Company and Indemnitee recognize that plaintiffs often seek
damages in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense
and/or settlement of such litigation is often beyond the personal
resources of directors and officers.
C.
The Company believes that it is unfair for its directors and
officers to assume the risk of large judgments and significant
expenses that may occur in cases in which the director or officer
received no personal profit and in cases where the director or
officer was not culpable.
D.
The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the
Company.
E.
Indemnitee is a director of the Company and in such capacity is
performing valuable services for the Company.
F.
In order to induce Indemnitee to continue to provide services to
the Company, the Company wishes to provide for the indemnification
of, and advancement of expenses to, Indemnitee to the maximum
extent permitted by law.
G.
The current By-laws of the Company (the “ By-laws
”) require indemnification of the directors and officers of
the Company, and Indemnitee also may be entitled to indemnification
pursuant to the General Corporation Law of the State of
Delaware;
H.
The By-laws expressly provide that the indemnification provisions
set forth therein are not exclusive, and thereby contemplate that
contracts may be entered into between the Company and members of
the Company’s Board of Directors (the “ Board
”), officers and other persons with respect to
indemnification;
I.
The Board has concluded that, to attract and retain competent and
experienced persons to serve as directors and officers of the
Company, it is not only reasonable and prudent but necessary to
promote the best interests of the Company and its stockholders for
the Company to contractually indemnify its directors and certain of
its officers in the manner set forth herein, and to assume for
itself liability for expenses and damages in connection with claims
against
such directors
and officers in connection with their service to the Company as
provided herein.
J.
This Agreement is a supplement to and in furtherance of the
indemnification provided in the By-laws and any resolutions adopted
pursuant thereto, and shall not be deemed a substitute therefor,
nor to diminish or abrogate any rights of Indemnitee
thereunder.
NOW,
THEREFORE, in
consideration of the foregoing premises and the mutual covenants
and agreements set forth below, the Company and Indemnitee,
intending to be legally bound, hereby agree as follows:
1.
Definitions
. For purposes of this Agreement, the following terms shall have
the corresponding meanings set forth below.
“Claim”
means a claim
or action asserted by a Person in a Proceeding or any other written
demand for relief, in either case in connection with or arising
from an Indemnification Event.
“Company
Action” means a
Proceeding in which a Claim has been brought by or in the name of
the Company to procure a judgment in its favor.
“Corporate
Status” describes the
status of a Person who is, was or may be deemed to be a director,
officer, limited liability company manager, partner, employee,
controlling person, agent or fiduciary of any Covered
Entity.
“Covered
Entity” means
(i) the Company, (ii) any subsidiary of the Company or
(iii) any other Person for which Indemnitee is, was or may be
deemed to be serving at the request of the Company, or at the
request of any subsidiary of the Company, as a director, officer,
employee, controlling person, agent or fiduciary. For purposes of
clarification, “ serving at the request of the Company
” includes any service as a director, officer, limited
liability company manager, partner, employee, controlling person,
fiduciary or agent with respect to an employee benefit plan, its
participants or beneficiaries.
“Disinterested
Director” means, with
respect to any determination contemplated by this Agreement, any
Person who, as of the time of such determination, is a member of
the Board but is not a party to any Proceeding then pending with
respect to any Indemnification Event.
“ERISA”
means the
Employee Retirement Income Security Act of 1974, as amended, or any
similar federal statute then in effect.
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended, or any similar federal
statute then in effect.
“Expenses”
means any and
all direct and indirect fees, costs, retainers, court costs,
transcript costs, expert fees, witness fees, travel expenses,
duplicating costs, printing costs, binding costs, telephone
charges, postage and delivery service fees, and all other
disbursements or expenses of any type or nature whatsoever actually
and reasonably incurred by Indemnitee (including, subject to the
limitations set forth in
2
Section 3(c)
below,
reasonable attorneys’ fees) in connection with or arising
from an Indemnification Event, including:
(i) the
investigation or defense of a Claim;
(ii) being, or
preparing to be, a witness or otherwise participating, or preparing
to participate, in any Proceeding;
(iii)
furnishing, or preparing to furnish, documents in response to a
subpoena or otherwise in connection with any Proceeding;
(iv) any
appeal of any judgment, outcome or determination in any Proceeding
(including any premium, security for and other costs relating to
any cost bond, supersedeas bond or any other appeal bond or
its equivalent);
(v)
establishing or enforcing any right to indemnification or
advancement of expenses under this Agreement (including pursuant to
Section 2(c) below), Delaware law or otherwise,
regardless of whether Indemnitee is ultimately successful in such
action, unless as a part of such action, a court of competent
jurisdiction over such action determines that each of the material
assertions made by Indemnitee as a basis for such action was not
made in good faith or was frivolous;
(vi)
Indemnitee’s defense of any Proceeding instituted by or in
the name of the Company under this Agreement to enforce or
interpret any of the terms of this Agreement (including costs and
expenses incurred with respect to Indemnitee’s counterclaims
and cross-claims made in such action); and
(vii) any
federal, state, local or foreign taxes imposed on Indemnitee as a
result of the actual or deemed receipt of any payments under this
Agreement, including all interest, assessments and other charges
paid or payable with respect to such payments.
For purposes
of clarification, Expenses shall not include Losses.
“Former
Director or Officer” means, with
respect to a determination contemplated by this Agreement, a Person
who was a member of the Board or an executive officer of the
Company but who is no longer serving on the Board or as an
executive officer of the Company as of the time of such
determination.
An
“Indemnification Event” shall be deemed to have
occurred if Indemnitee was, is or becomes, or is threatened to be
made, a party to or witness or other participant in, or was, is or
becomes obligated to furnish or furnishes documents in response to
a subpoena or otherwise in connection with, any Proceeding by
reason of Indemnitee’s Corporate Status, or by reason of any
action or inaction on the part of Indemnitee while serving in any
such capacity (including rendering any written statement that is a
Required Statement or is made to another director, officer, limited
liability company manager, partner, employee, controlling person,
agent or fiduciary of a Covered Entity to support a Required
Statement).
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“Independent
Legal Counsel” means an
attorney or firm of attorneys designated by Indemnitee that is
acceptable, in their reasonable discretion, to a majority of the
Disinterested Directors (or, if there are no Disinterested
Directors, the Board) and that is experienced in matters of
corporate law and neither presently is, nor in the three years
prior to such designation has been, retained to represent
(i) the Company or Indemnitee in any matter material to either
such party (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or other indemnitees
under similar indemnity agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification,
advancement of Expenses or contribution hereunder.
“Losses”
means any and
all losses, claims, damages, liabilities, judgments, fines,
penalties, settlement payments, awards and amounts of any type
whatsoever incurred by Indemnitee in connection with or arising
from an Indemnification Event. For purposes of clarification,
Losses shall not include Expenses.
“Organizational
Documents” means any and
all organizational documents, charters or similar agreements or
governing documents, including (i) with respect to a
corporation, its certificate (or articles) of incorporation and
by-laws, (ii) with respect to a limited liability company, its
certificate of formation and operating agreement, and
(iii) with respect to a limited partnership, its certificate
of partnership and partnership agreement.
“Proceeding”
means any
threatened, pending or completed action, suit, proceeding,
arbitration or alternative dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual,
threatened or completed proceeding, whether brought in the right of
a Covered Entity or otherwise and whether of a civil (including
intentional or unintentional tort claims), criminal, administrative
or investigative nature.
“Person”
means an
individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other enterprise or
any government, agency or political subdivision thereof. For
purposes of clarification, “ any other enterprise
” includes employee benefit plans and their related
trusts.
“
Required Statement ” means a written statement of a
Person that is required to be, and is, filed with the SEC regarding
the design, adequacy or evaluation of a Covered Entity’s
disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) or its
internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), or the
accuracy, sufficiency or completeness of reports or statements
filed by a Covered Entity with the SEC pursuant to federal law
and/or administrative regulations, including the certifications
contemplated by Sections 302 and 906 of the Sarbanes-Oxley Act
of 2002, as amended, or any rule or regulation promulgated pursuant
thereto.
“Reviewing
Party” means, with
respect to any determination contemplated by this Agreement, any
one of the following: (i) a majority of all Disinterested
Directors, even if such Disinterested Directors do not constitute a
quorum of the Board; (ii) a
4
committee
consisting solely of Disinterested Directors, even if such
committee members do not constitute a quorum of the Board, so long
as such committee was designated by a majority of all Disinterested
Directors; (iii) in the absence of any Disinterested Directors
and upon the written consent of Indemnitee, the Company’s
stockholders; (iv) Independent Legal Counsel, in which case
the applicable determination shall be provided in a written opinion
to the Board, with a copy provided to Indemnitee; or (v) if
Indemnitee is a Former Director or Officer of the Company at the
time of such determination, Independent Legal Counsel
“SEC”
means the
Securities and Exchange Commission.
“Securities
Act” means the
Securities Act of 1933, as amended, or any similar federal statute
then in effect.
2.
Indemnification
.
(a)
Indemnification of Losses and Expenses . If an
Indemnification Event has occurred, then, subject to
Section 9 and the other provisions of this Agreement
below, the Company shall indemnify and hold harmless Indemnitee, to
the fullest extent permitted by law, against any and all Losses and
Expenses, but only 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 Proceeding, only if Indemnitee had no reasonable cause to
believe Indemnitee’s conduct was unlawful. The termination of
any Proceeding by judgment, court order, settlement or conviction,
or on plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that Indemnitee (i) 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 or (ii) with respect to any criminal Proceeding, had
reasonable cause to believe that Indemnitee’s conduct was
unlawful. For purposes of clarification, a Person who acted in good
faith and in a manner such Person reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan and/or related trust shall be deemed to have acted in
a manner “not opposed to the best interests of the
Company” as referred to in this paragraph.
(b)
Limitation with Respect to Company Actions . Notwithstanding
any other provision of this Agreement to the contrary, the Company
shall not indemnify and hold harmless Indemnitee with respect to
any Losses (as opposed to Expenses) in connection with or arising
from any Company Action. Furthermore, the Company shall not
indemnify and hold harmless Indemnitee with respect to any Expenses
in connection with or arising from any Company Action as to which
Indemnitee shall have been finally adjudged to be liable to the
Company in a non-appealable judgment by a court of competent
jurisdiction unless, and then only to extent that, any court of
competent jurisdiction in which such Company Action was brought
shall determine upon application that, despite the adjudication of
liability, but in view of all of the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification for
such Expenses as such court shall deem proper.
(c)
Advancement of Expenses . To the extent permitted by
applicable law and until a determination that Indemnitee is not
entitled to be indemnified by the Company under the terms hereof,
the Company shall advance Expenses to or on behalf of Indemnitee as
soon as practicable, but in any event not later than 30 days after
written request therefor by Indemnitee,
5
which request
shall be accompanied by vouchers, invoices or similar evidence
documenting in reasonable detail the Expenses incurred or to be
incurred by Indemnitee. Indemnitee hereby undertakes to repay such
amounts advanced if, and only to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be
indemnified by the Company for such Expenses under this Agreement.
Advances shall be unsecured and interest free. Advances shall be
made without regard to Indemnitee’s ability to repay such
advances.
(d)
Contribution . If, and to the extent, the indemnification of
Indemnitee provided for in Section 2(a) above for any
reason is held by a court of competent jurisdiction not to be
permissible for liabilities arising under federal securities laws
or ERISA, then the Company, in lieu of indemnifying Indemnitee
under this Agreement, shall contribute to the amount paid or
payable by Indemnitee as a result of such Losses or Expenses
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Covered Entities and all
officers, directors, limited liability company managers, partners,
employees, controlling persons, agents or fiduciaries of the
Covered Entities other than Indemnitee who are jointly liable with
Indemnitee (or would be if joined in such Proceeding), on the one
hand, and Indemnitee, on the other hand, or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but
also the relative fault of the Covered Entities and all officers,
directors, limited liability company managers, partners, employees,
controlling persons, agents or fiduciaries of the Covered Entities
other than Indemnitee who are jointly liable with Indemnitee (or
would be if joined in such Proceeding), on the one hand, and
Indemnitee, on the other hand, in connection with the action or
inaction that resulted in such Losses or Expenses, as well as any
other relevant equitable considerations. The relative fault of the
Covered Entities and all officers, directors, limited liability
company managers, partners, employees, controlling persons, agents
or fiduciaries of the Covered Entities other than Indemnitee who
are jointly liable with Indemnitee (or would be if joined in such
Proceeding), on the one hand, and Indemnitee, on the other hand,
shall be determined by reference to, among other things, the degree
to which their actions were motivated by intent to gain personal
profit or advantage, the degree to which their liability is primary
or secondary, and the degree to which their conduct is active or
passive. Notwithstanding the foregoing, no Person found guilty of
fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not found guilty of such
fraudulent misrepresentation.
3.
Indemnification
and Advancement of Expenses Procedures .
(a) Notice
of Indemnification Event . Indemnitee shall give the Company
written notice as soon as practicable of any Indemnification Event
of which Indemnitee becomes aware and of any request for
indemnification or advancement of Expenses hereunder, provided that
any failure to so notify the Company shall not relieve the Company
of any of its obligations under this Agreement, except if, and then
only to the extent that, such failure materially increases the
liability of the Company under this Agreement. The written notice
will include such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to
indemnification and/or advancement of Expenses. Promptly upon
receipt of any such request for indemnification or advancement of
Expenses, the Secretary of the Company shall advise the Board of
Directors in writing that Indemnitee has made such
request.
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(b)
Notice to Insurers . If, at the time the Company receives
n
