INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (“ Agreement ” is
entered into as of this ___ day of _____, 200__, by and between
PRO-DEX, INC. , a Colorado corporation (the “
Company ”) and the Indemnitee identified on the
signature page hereto (the “ Indemnitee ”).
R E C I T A L
S :
A. The Company and
Indemnitee recognize the continued difficulty in obtaining
liability insurance for its directors, officers, employees, agents
and fiduciaries, the significant increases in the cost of such
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 directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same
time as the availability and coverage of liability insurance has
been severely limited.
C. Indemnitee does not
regard the current protection available as adequate under the
present circumstances, and Indemnitee and other directors,
officers, employees, agents and fiduciaries of the Company may not
be willing to continue to serve in such capacities without
additional protection.
D. The Company (i)
desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, to serve the Company and, in part,
in order to induce Indemnitee to continue to provide services to
the Company and (ii) wishes to provide for the indemnification and
advancing of expenses to each Indemnitee to the maximum extent
permitted by law.
E. In view of the
considerations set forth above, the Company desires that Indemnitee
be indemnified by the Company as set forth herein.
NOW, THEREFORE, the Company and Indemnitee hereby agree as
follows:
Indemnification
.
Indemnification of Expenses . The Company shall
indemnify and hold harmless Indemnitee (including its partners,
employees and agents) to the fullest extent permitted by law if
Indemnitee was or is or becomes a party to or witness other
participant in, or is threatened to be made a party to or witness
or other participant in, any threatened, pending or completed
action, suit, proceeding or alternative dispute resolution
mechanism, or any hearing, inquiry or investigation (whether formal
or informal) that Indemnitee in good faith believes might lead to
the institution of any such action, suit, proceeding or alternative
dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a “
Claim ”) by reason of (or arising in part out of) any
event or occurrence related to the fact that Indemnitee is or was a
director, officer, employee, controlling person, agent or fiduciary
of the Company, or any subsidiary of the Company, or is or was
serving at the request of the Company as a director, officer,
employee, controlling person, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise,
or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity including, without limitation, any
and all losses, claims, damages, expenses and liabilities, joint or
several (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of,
any action, suit, proceeding or any claim asserted) under the
Securities Act of 1933, as amended (the “ Securities
Act ”), the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”) or other federal or state
statutory law or regulation, at common law or otherwise, which
relate directly or indirectly to the registration, purchase, sale,
holding or ownership of any securities of the Company or to any
fiduciary obligation owed with respect thereto (hereinafter an
“ Indemnification Event ”) against any and all
expenses (including attorneys’ fees and all other costs,
expenses and obligations incurred in connection with investigating,
defending a witness in or participating in (including on appeal),
or preparing to defend, be a witness in or participate in, any such
action, suit, proceeding, alternative dispute resolution mechanism,
hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably
withheld) of such Claim and 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 (collectively,
hereinafter “ Expenses ”), including all
interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses. Expenses
shall also include reasonable compensation for time spent by
Indemnitee for which he is not compensated by the Company or any
subsidiary or third party for any period during which Indemnitee is
not an agent, in the employment of, or providing services for
compensation to, the Company or any subsidiary; and (ii) if the
rate of compensation and the estimated time involved is approved by
the directors of the Company who are not parties to any action with
respect to when expenses are incurred, for Indemnitee while an
agent of, employed by, or providing services for compensation to
the Company or any subsidiary. Such payment of Expenses shall be
made by the Company as soon as practicable but in any event no
later than five days after written demand by the Indemnitee
therefor is presented to the Company. The parties agree that
for the purposes of any Expense advancement for which Indemnitee
has made written demand to the Company in accordance with this
Agreement, all Expenses , except Indemnitee’s
counsel’s fees and expenses, included in such Expense
advancement that are certified by Indemnitee's counsel as being
reasonable shall be presumed conclusively to be reasonable.
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Contribution . If the indemnification provided for in
Section 1(a) above for any reason is held by a court of
competent jurisdiction to be unavailable to an Indemnitee in
respect of any losses, claims, damages, expenses or liabilities
referred to therein, then the Company, in lieu of indemnifying
Indemnitee thereunder, shall contribute to the amount paid or
payable by Indemnitee as a result of such losses, claims, damages,
expenses or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the
Indemnitee, 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 Company and
the Indemnitee in connection with the action or inaction which
resulted in such losses, claims, damages, expenses or liabilities,
as well as any other relevant equitable considerations. In
connection with the registration of the Company’s securities,
the relative benefits received by the Company and the Indemnitee
shall be deemed to be in the same respective proportions that the
net proceeds from the offering (before deducting expenses) received
by the Company and the Indemnitee, in each case as set forth in the
table on the cover page of the applicable prospectus, bear to the
aggregate public offering price of the securities so offered.
The relative fault of the Company and the Indemnitee shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company or the Indemnitee and the parties’
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company and the Indemnitee agree that it would not be just and
equitable if contribution pursuant to this Section 1(b) were
determined by pro rata or per capita allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. In connection with the registration of the
Company’s securities, in no event shall an Indemnitee be
required to contribute any amount under this Section 1(b) in
excess of the lesser of (i) that proportion of the total of such
losses, claims, damages or liabilities indemnified against equal to
the proportion of the total securities sold under such registration
statement which is being sold by such Indemnitee or (ii) the
proceeds received by Indemnitee from its sale of securities under
such registration statement. 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.
(i) Protection from
Contribution
The Company hereby agrees to fully indemnify and hold harmless
Indemnitee from any claims for contribution for which the
Indemnitee would otherwise be indemnified hereunder which may be
brought by Officers, Directors or employees of the Company (other
than Indemnitee) who may be jointly liable with
Indemnitee
(ii) Protection from
Contribution in Event of Joint Liability
Whether or not the indemnification provided elsewhere in this
agreement is available, in respect of any threatened, pending or
completed action, suit or proceeding in which Company is jointly
liable with Indemnitee, Company shall pay the entire amount of any
judgment or settlement of such action, suit or proceeding without
requiring Indemnitee to contribute to such payment. Company shall
not enter into any settlement of any action, suit or proceeding in
which Company is jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding) unless such settlement
provides for a full and final release of all claims asserted
against Indemnitee.
Survival Regardless of Investigation . The
indemnification and contribution provided for in this Section
1 will remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnitee or any
officer, director, employee, agent or controlling person of the
Indemnitee.
3
Change in Control . The Company agrees that if there
is a Change in Control of the Company (other than a Change in
Control which has been approved by a majority of the
Company’s Board of Directors who were directors immediately
prior to such Change in Control) then, with respect to all matters
thereafter arising concerning the rights of Indemnitee to payments
of Expenses under this Agreement or any other agreement or under
the Company’s Certificate of Incorporation or Bylaws as now
or hereafter in effect, Independent Legal Counsel (as defined in
Section 11(d) hereof) shall be selected by the Indemnitee
and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things,
shall render its written opinion to the Company and Indemnitee as
to whether and to what extent Indemnitee would be permitted to be
indemnified under applicable law. The Company agrees to abide
by such opinion and to pay the reasonable fees of the Independent
Legal Counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys’ fees),
claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
Mandatory Payment of Expenses . Notwithstanding any
other provision of this Agreement other than Section 9
hereof, to the extent that Indemnitee have been successful on the
merits or otherwise, including, without limitation, the dismissal
of an action without prejudice in the defense of any action, suit,
proceeding, inquiry or investigation referred to in Section
(1)(a) hereof or in the defense of any claim, issue or matter
therein, Indemnitee shall be indemnified against all Expenses
incurred by Indemnitee in connection therewith.
Expenses; Indemnification Procedure .
Advancement of Expenses . The Company agrees to pay
all Expenses incurred by Indemnitee in connection with any
Indemnification Event in advance of the final disposition thereof,
provided that the Company has received an undertaking by or on
behalf of Indemnitee, substantially in the form attached hereto as
Exhibit A , to repay the amount so advanced to the extent
that it is ultimately determined that Indemnitee is not entitled to
be indemnified by the Company under this Agreement or
otherwise. The advances to be made hereunder shall be paid by
the Company to Indemnitee within twenty (20) days following
delivery of a written request therefor by Indemnitee to the
Company. The right to advances under this section shall in all
events continue until final disposition of any proceeding,
including any appeal therein.
Notice/Cooperation by Indemnitee . Indemnitee
agrees to notify promptly the Company in writing of any claim made
against Indemnitee for which indemnification will or could be
sought under this Agreement; provided , however ,
that a delay in giving such notice will not deprive Indemnitee of
any right to be indemnified under this Agreement unless, and then
only to the extent that, the Company did not otherwise learn of the
proceeding and such delay is materially prejudicial to the
Company’s ability to defend such proceeding; and,
provided , further , that notice will be deemed to
have been given without any action on the part of Indemnitee in the
event the Company is a party to the same proceeding. The omission
to notify the Company will not relieve the Company from any
liability for indemnification which it may have to Indemnitee
otherwise than under this Agreement.
No Presumptions; Burden of Proof . For purposes of
this Agreement, the termination of any Claim by judgment, order,
settlement (whether with or without court approval) or conviction,
or upon a plea of nolo contenders, or its equivalent, shall not
create a presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a court
has determined that indemnification is not permitted by applicable
law. In connection with any determination as to whether
Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not
so entitled.
4
Notice to Insurers . If, at the time of the receipt by
the Company of a notice of a Claim pursuant to Section 2(b)
hereof, the Company has liability insurance in effect which may
cover such Claim, the Company shall give prompt notice of the
commencement of such Claim 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 Indemnitee, all amounts payable
as a result of such action, suit, proceeding, inquiry or
investigation in accordance with the terms of such policies.
Selection of Counsel . In the event the Company shall
be obligated hereunder to pay the Expenses of any Claim, the
Company shall be entitled to assume the defense of such Claim, with
counsel approved by the Indemnitee, which approval shall not be
unreasonably withheld, upon the delivery to Indemnitee of written
notice of its election to do so. After delivery of such
notice, approval of such counsel by the Indemnitee and the
retention of such counsel by the Company, the Company will not be
liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same Claim;
provided, that (i) the Indemnitee shall have the right to employ
Indemnitee’s counsel in any such Claim at the
Indemnitee’s expense and (ii) if (A) the employment of
counsel by the Indemnitee has been previously authorized by the
Company, (B) Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and Indemnitee in
the conduct of any such defense or Indemnitee shall have any
defense to a Claim which is not available to the Company, (C) the
Company shall not continue to retain such counsel to defend such
Claim, or (D) after a Change in Control, the employment of counsel
by Indemnitee has been approved by counsel mutually acceptable to
both parties then the fees and expenses of the Indemnitee’s
counsel shall be at the expense of the Company. Without
Indemnitee’s prior written consent, the Company shall not
enter into any settlement of any proceeding in which the Company is
jointly liable with Indemnitee (or would be if joined in such
proceeding) unless such settlement provides for a full and final
release of all claims asserted against Indemnitee. The Company
shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any
penalty or limitation on the Indemnitee without Indemnitee’s
written consent, which may be given or withheld in
Indemnitee’s sole discretion.
Additional Indemnification Rights; Nonexclusivity .
Scope . The Company hereby agrees to indemnify
Indemnitee to the fullest extent permitted by law, notwithstanding
that such indemnification is not specifically authorized by the
other provisions of this Agreement, the Company’s Certificate
of Incorporation, the Company’s Bylaws or by statute.
In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a
Colorado corporation to indemnify a member of its Board of
Directors or an officer, employee, agent or fiduciary, it is the
intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In
the event of any change in any applicable law, statute or rule
which narrows the right of a Colorado corporation to indemnify a
member of its Board of Directors or an officer, employee, agent or
fiduciary, such change, to the extent not otherwise required by
such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties’ rights and
obligations hereunder except as set forth in Section 8(a)
hereof.
Nonexclusivity . The indemnification provided by this
Agreement shall be in addition to any rights to which Indemnitee
may be entitled under the Company’s Certificate of
Incorporation, its Bylaws, any agreement, any vote of shareholders
or disinterested directors, the General Corporation Law of the
State of Colorado, or otherwise. The indemnification provided
under this Agreement shall continue as to Indemnitee for any action
Indemnitee took or did not take while serving in an indemnified
capacity even though the Indemnitee may have ceased to serve in
such capacity.
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No Duplication of Payments .
The Company shall not be liable under this Agreement to make any
payment in connection with any Claim made against Indemnitee to the
extent such Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw or
otherwise) of the amounts otherwise indemnifiable hereunder.
Partial Indemnification .
If Indemnitee is entitled under any provision of this Agr
