Exhibit 10.1
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement,
dated as of May 7, 2009, is made by and between NIC Inc., a
Delaware corporation (the “Corporation”), and
(the “Indemnitee”).
RECITALS
A.
The Corporation recognizes that
competent and experienced persons are increasingly reluctant to
serve or to continue to serve as directors or officers of
corporations unless they are protected by comprehensive liability
insurance or indemnification, or both, due to increased exposure to
litigation costs and risks resulting from their service to such
corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such
directors and officers;
B.
The statutes and judicial decisions
regarding the duties of directors and officers are often difficult
to apply, ambiguous, or conflicting, and therefore fail to provide
such directors and officers with adequate, reliable knowledge of
legal risks to which they are exposed or information regarding the
proper course of action to take;
C.
The Corporation 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 and the exposure from such litigation frequently bears no
reasonable relationship to the compensation of such directors and
officers;
D.
The Corporation believes that it is
unfair for its directors and officers to assume the risk of huge
judgments and other expenses which 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;
E.
The Corporation, after reasonable
investigation, has determined that the liability insurance coverage
presently available to the Corporation may be inadequate in certain
circumstances to cover all possible exposure for which Indemnitee
should be protected. The Corporation believes that the
interests of the Corporation and its stockholders would best be
served by a combination of such insurance and the indemnification
by the Corporation of the directors and officers of the
Corporation;
F.
The Corporation’s Bylaws
require the Corporation to indemnify its directors and officers to
the fullest extent permitted by the Delaware General Corporation
Law (the “DGCL”). The Bylaws expressly provide that the
indemnification provisions set forth therein are not exclusive, and
contemplate that contracts may be entered into between the
Corporation and its directors and officers with respect to
indemnification;
G.
Section 145 of the DGCL
(“Section 145”), under which the Corporation is
organized, empowers the Corporation to indemnify its officers,
directors, employees and agents by agreement and to indemnify
persons who serve, at the request of the Corporation, as
the
directors, officers, employees or
agents of other corporations or enterprises, and expressly provides
that the indemnification provided by Section 145 is not
exclusive;
H.
Section 102(b)(7) of the
DGCL allows a corporation to include in its certificate of
incorporation a provision limiting or eliminating the personal
liability of a director for monetary damages in respect of claims
by shareholders and corporations for breach of certain fiduciary
duties, and the Corporation has so provided in its Certificate of
Incorporation that each Director shall be exculpated from such
liability to the maximum extent permitted by law;
I.
The Corporation desires to provide
the Indemnitee with specific contractual assurances of the
Indemnitee’s rights to full indemnification against
litigation risks and reasonable expenses (regardless, among other
things, of any amendment to or revocation of the Certificate of
Incorporation and Bylaws or any change in the ownership of the
Corporation or the composition of its Board of Directors) and, to
the extent insurance is available, the coverage of the Indemnitee
under the Corporation’s directors’ and officers’
liability insurance policies;
J.
The Board of Directors has
determined that contractual indemnification as set forth herein is
not only reasonable and prudent but also promotes the best
interests of the Corporation and its stockholders;
K.
The Corporation desires and has
requested Indemnitee to serve or continue to serve as a director or
officer of the Corporation free from undue concern for unwarranted
claims for damages arising out of or related to such services to
the Corporation; and
L.
Indemnitee is willing to serve,
continue to serve or to provide additional service for or on behalf
of the Corporation on the condition that he is furnished the
indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, in consideration of
the mutual covenants and agreements set forth below, and other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
Section 1.
Certain Definitions
. For purposes of this Agreement,
the following definitions shall apply:
(a)
The term “Proceeding”
shall be broadly construed and shall include, without limitation,
the investigation, preparation, prosecution, defense, settlement,
arbitration and appeal of, and the giving of testimony in, any
threatened, pending or completed claim, action, suit, proceeding,
or arbitration, whether civil, criminal, administrative,
investigative, appellate or arbitral, and whether formal or
informal.
(b)
The phrase “by reason of the
fact that Indemnitee is or was a director or officer of the
Corporation, or is or was serving at the Corporation’s
request as a director, officer, employee or agent of any Other
Enterprise”, or any substantially similar phrase, shall be
broadly construed and shall include, without limitation, any actual
or alleged act or omission to act.
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(c)
The term “Expenses”
shall be broadly and reasonably construed and shall include,
without limitation, all direct and indirect expenses, costs or
charges of any type or nature whatsoever (including, without
limitation, all attorneys’ fees and related disbursements,
appeal bonds, other out-of-pocket costs and reasonable compensation
for time spent by Indemnitee for which Indemnitee is not otherwise
compensated by the Corporation or any third party, provided that
the rate of compensation and estimated time involved is approved by
the Corporation’s Board of Directors, which approval shall
not be unreasonably withheld, conditioned or delayed), actually and
reasonably incurred by Indemnitee in connection with the
investigation, preparation, prosecution, defense, settlement,
arbitration or appeal of, or the giving of testimony in, a
Proceeding or establishing or enforcing a right to indemnification
under this Agreement, the Corporation’s Certificate of
Incorporation or Bylaws, Section 145 of the General
Corporation Law of the State of Delaware or otherwise.
(d)
The terms “judgments, fines
and amounts paid in settlement” shall be broadly construed
and shall include, without limitation, all direct and indirect
payments of any type or nature whatsoever (including, without
limitation, all penalties and amounts required to be forfeited or
reimbursed to the Corporation), as well as any penalties or excise
taxes assessed on a person with respect to an employee benefit
plan.
(e)
The term “Corporation”
shall include, without limitation and in addition to the resulting
corporation, any constituent corporation or any Other Enterprise
(including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person
who is or was a director or officer of such constituent corporation
or Other Enterprise, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent
of any Other Enterprise, shall stand in the same position under the
provisions of this Agreement with respect to the resulting or
surviving corporation as he or she would have with respect to such
constituent corporation or Other Enterprise as if its separate
existence had continued.
(f)
The term “Other
Enterprise” shall include, without limitation, any other
corporation, partnership, joint venture, trust or employee benefit
plan.
(g)
The phrase “serving at the
request of the Corporation”, or any substantially similar
phrase, shall include, without limitation, any service as a
director or officer of the Corporation which involves services as a
director, officer, employee or agent with respect to any Other
Enterprise, including any employee benefit plan.
(h)
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
shall be deemed to have acted in a manner “not opposed to the
best interests of the Corporation” as referred to in this
Agreement.
(i)
The term “defense” shall
include investigations of any Proceeding, appeals of any Proceeding
and defensive assertion of any cross -claim or
counterclaim.
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(j)
The term “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 Corporation or Indemnitee in any matter material to
either such party (other than with respect to matters concerning
Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements), or (ii) any other party
to the Proceeding 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 Corporation or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement. The
Corporation agrees to pay the reasonable fees of the Independent
Counsel arising out of or relating to this Agreement or its
engagement pursuant hereto.
(k)
The term “Change of
Control” means (i) an acquisition by any person (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) of beneficial ownership of twenty percent (20%) or
more of the combined voting power of the Corporation’s then
outstanding voting securities; (ii) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Corporation and any new
director whose election by the Board of Directors or nomination for
election by the Corporation’s stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(iii) the consummation of a merger or consolidation involving
the Corporation if the stockholders of the Corporation, immediately
before such merger or consolidation, do not own, immediately
following such merger or consolidation, more than eighty percent
(80%) of the combined voting power of the outstanding voting
securities of the resulting entity in substantially the same
proportion as their ownership of voting securities immediately
before such merger or consolidation, (iv) the consummation of
the sale or other disposition of all or substantially all of the
assets of the Corporation, (v) approval by the stockholders of
the Corporation of a complete liquidation or dissolution of the
Corporation or (vi) the occurrence of any other event of a
nature that would be required to be reported in response to either
Item 5.01 of Form 8-K or Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar item on any similar
schedule or form promulgated under the Exchange Act), whether or
not the Corporation is then subject to such reporting
requirement. Notwithstanding the foregoing, a Change of
Control shall not be deemed to occur solely because twenty percent
(20%) or more of the then outstanding voting securities is acquired
by (i) a trustee or other fiduciary holding securities under
one or more employee benefit plans maintained by the Corporation or
any of its subsidiaries or (ii) any entity that, immediately
prior to such acquisition, is owned directly or indirectly by the
stockholders of the Corporation in the same proportion as their
ownership of shares in the Corporation immediately prior to such
acquisition.
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Section 2.
Indemnification
.
(a)
Subject to Sections 4, 6 and 8 of
this Agreement, to the fullest extent not prohibited by the laws of
the State of Delaware, as the same now exists or may hereafter be
amended (but only to the extent any such amendment permits the
Corporation to provide broader indemnification rights than such law
permitted the Corporation to provide prior to such amendment), the
Corporation shall indemnify, defend and hold harmless, Indemnitee
if Indemnitee was or is a party or is threatened to be made a party
to, or a witness of, or is otherwise involved in, any Proceeding by
reason of the fact that Indemnitee is or was or has agreed to serve
as a director or officer of the Corporation, or is or was serving
at the Corporation’s request as a director, officer, employee
or agent of any Other Enterprise, or by reason of any action taken
or alleged to have been taken, or omitted to be taken or alleged to
be omitted to be taken, in such capacity.
(b)
The indemnification provided by this
Section 2 shall be from and against Expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by
Indemnitee or on Indemnitee’s behalf in connection with such
Proceeding, but shall only be provided 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 Corporation, and, with
respect to any criminal Proceeding, had no reasonable cause to
believe Indemnitee’s conduct was unlawful.
(c)
Notwithstanding the foregoing
provisions of this Section 2, in the case of any Proceeding by
or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that Indemnitee is or was a director or
officer of the Corporation, or is or was serving at the
Corporation’s request as a director, officer, employee or
agent of any Other Enterprise, 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 Corporation unless, and only
to the extent that, the Delaware Court of Chancery or the court in
which such Proceeding 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 Delaware Court of
Chancery or such other court shall deem proper.
(d)
The termination of any 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 Corporation, and, with respect to any
criminal Proceeding, had reasonable cause to believe that
Indemnitee’s conduct was unlawful.
Section 3.
Successful Defense; Partial
Indemnification . To the
extent that Indemnitee has been successful on the merits or
otherwise in defense of any Proceeding referred to in
Section 2 hereof or in defense of any claim, issue or matter
therein, Indemnitee shall be indemnified against Expenses actually
and reasonably incurred in connection therewith. For purposes
of this Agreement and 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 Indemnitee, (ii) an adjudication that
Indemnitee was liable to the Corporation, (iii) a plea of
guilty or nolo contendere by Indemnitee, (iv) an adjudication
that Indemnitee did not act in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and (v) with respect to any
criminal Proceeding, an
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adjudication that Indemnitee had
reasonable cause to believe Indemnitee’s conduct was
unlawful, Indemnitee shall be considered for the purposes hereof to
have been wholly successful with respect thereto.
If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Corporation
for some or a portion of the Expenses, judgments, fines or amounts
paid in settlement actually and reasonably incurred by Indemnitee
or on Indemnitee’s behalf in connection with any Proceeding,
or in defense of any claim, issue or matter therein, and any appeal
therefrom but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify Indemnitee for the portion
of such Expenses, judgments, fines or amounts paid in settlement to
which Indemnitee is entitled. Any necessary determination
regarding allocation or apportionment of Expenses between
successful and unsuccessful claims, issues or matters shall be made
by the person, persons or entity empowered or selected under
Section 4(a) to determine whether Indemnitee is entitled
to indemnification.
Section 4.
Determination That
Indemnification Is Proper .
(a)
Any indemnification hereunder shall
(unless otherwise ordered by a court) be made by the Corporation
unless a determination is made that indemnification of such person
is not proper in the circumstances because he or she has not met
the applicable standard of conduct set forth in
Section 2(b) hereof. Any such determination shall be made
(i) by a majority vote of the directors who are not parties to
the Proceeding in question (“disinterested directors”),
even if less than a quorum, (ii) by a majority vote of a
committee of disinterested directors designated by majority vote of
disinterested directors, even if less than a quorum, (iii) by
a majority vote of a quorum of the outstanding shares of stock of
all classes entitled to vote on the matter, voting as a single
class, which quorum shall consist of stockholders who are not at
that time parties to the Proceeding in question, (iv) by
Independent Counsel, or (v) by a court of competent
jurisdiction; provided , however , that following a
Change of Control of the Corporation, any determinations, whether
arising out of acts, omissions or events occurring prior to or
after the Change of Control of the Corporation, shall be made by
Independent Counsel selected in the manner described in
Section 4(b). Such Independent Counsel shall determine
as promptly as practicable whether and to what extent Indemnitee
would be permitted to be indemnified under applicable law and shall
render a written opinion to the Corporation and to Indemnitee to
such effect.
(b)
If the determination of entitlement
to indemnification is to be made by Independent Counsel pursuant to
Section 4(a) hereof, the Independent Counsel shall be
selected as provided in this Section 4(b). The
Independent Counsel shall be selected by the Board of
Directors. Indemnitee may, within ten (10) days after
such written notice of selection shall have been given, deliver to
the Corporation, as the case may be, a written objection to such
selection;
