INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement is made as of this 3rd day of June, 2005,
by and between OAKLEY, INC., a Washington corporation (the
“Company”), and COLOMBE M. NICHOLAS (“Indemnified
Party”).
WHEREAS, as of the
date hereof, the Company has provisions for indemnification of its
directors and officers in Article V of its Articles of
Incorporation (the “Articles of Incorporation”) and
Article VII of its Amended and Restated Bylaws (the
“Bylaws”) which provide for indemnification of the
Company’s directors and officers to the fullest extent
permitted by law;
WHEREAS, the
indemnification provisions in the Bylaws provide that the right of
indemnification is a contract right of the covered
parties;
WHEREAS, the
Bylaws provide that the Company may maintain, at its expense,
insurance to protect itself and any of its directors and officers
against liability asserted against such persons incurred in such
capacity whether or not the Company has the power to indemnify such
persons against the same liability under Section 23B.08.510 or
.520 of the Act (as defined below) or a successor
statute;
WHEREAS, the
Company and the Indemnified Party recognize that the officers and
directors of publicly owned companies are frequently joined as
parties to Proceedings (as defined below) against their respective
companies as a result of their serving in such capacity;
and
WHEREAS, in order
to induce Indemnified Party to serve or continue to serve the
Company, the Company wishes to confirm the contract indemnification
rights provided in the Bylaws and agrees to provide Indemnified
Party with the benefits contemplated by this Agreement and to
supplement the provisions of this Agreement with directors’
and officers’ liability insurance maintained by the
Company.
NOW, THEREFORE, in
consideration of the promises, conditions, representations and
warranties set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Indemnified Party hereby agree as
follows:
1.
Definitions . The following terms, as used herein, shall
have the following respective meanings; other capitalized terms
used and not specifically defined in this Section 1 shall have
the meanings provided elsewhere in the Agreement and in the
Bylaws:
(a) “Act”
means the Washington Business Corporation Act RCW Title 23B, as
amended from time to time.
(b) “Adjudication”
shall refer to a final, non-appealable decision by a court of
competent jurisdiction. “Adjudged” shall have a
correlative meaning.
(c) “Covered
Amount” means any Loss, Fine and Expense, to the extent such
Loss, Fine or Expense, in type or amount, is not insured under the
D&O Insurance maintained by the Company from time to
time.
(d) “Covered
Act” means any act or omission of the Indemnified Party in
his or her capacity as a director, officer, employee, agent,
fiduciary or consultant of the Company alleged by any claimant or
any claim against Indemnified Party by reason of him or her serving
in such a capacity, or by reason of Indemnified Party serving, at
the request of the Company, in such capacity with another
corporation, partnership, employee benefit plan, trust or other
enterprise, in all cases, whether such alleged act or omission
occurred before or after the date of this Agreement.
(e) “D&O
Insurance” means the liability insurance which the Company
may purchase on behalf of Indemnified Party against liability
asserted against or incurred by Indemnified Party in connection
with claims arising from Covered Acts, whether or not the Company
would have the power to indemnify the individual against the same
liability under Section 23B.08.510 or 23B.08.520 of the
Act.
(f) “Determination”
means a determination, based on the facts known at the time,
made:
(i) by
the Board of Directors by majority vote of a quorum consisting of
directors not at the time parties to the Proceeding;
(ii) if
a quorum cannot be obtained under clause (i), by majority vote of a
duly designated committee of the Board of Directors, in the manner
provided by Section 23B.08.550(2)(b) of the Act;
(iii) by
special legal counsel, selected in the manner provided by
Section 23B.08.550(2)(c) of the Act, in a written opinion;
or
(iv) by
a majority of the shareholders of the Company, excluding shares
owned or voted under the control of directors who are at the time
parties to the Proceeding.
“Determined”
shall have a correlative meaning.
(g) “Excluded
Claim” means any payment for Losses, Fines or Expenses in
connection with any claim relating to or arising out of:
(i) acts
or omissions of the Indemnified Party Adjudged to be intentional
misconduct or a knowing violation of law;
(ii) conduct
of the Indemnified Party Adjudged to be in violation of
Section 23B.08.310 of the Act; or
2
(iii) any
transaction with respect to which it was Adjudged that such
Indemnified Party personally received a benefit in money, property,
or services to which the Indemnified Party was not legally
entitled.
(h) “Expenses”
means any reasonable expenses incurred by Indemnified Party as a
result of a claim or claims made against Indemnified Party from
Covered Acts, including, without limitation, reasonable counsel
fees and costs of investigative, judicial or administrative
proceedings or appeals.
(i) “Fines”
means any fine or penalty including, with respect to an employee
benefit plan, any excise tax assessed with respect
thereto.
(j) “Losses”
means amounts, as determined by an Adjudication, which the
Indemnified Party is legally obligated to pay as a result of a
claim or claims arising from Covered Acts, including, without
limitation, Fines, damages and judgments and sums paid in
settlement of such claim or claims.
(k) “Proceeding”
means any threatened, pending or completed action, suit, proceeding
or investigation, whether civil, criminal or administrative whether
formal or informal.
2.
Maintenance of D&O Insurance.
(a) The
Company hereby covenants and agrees that, so long as Indemnified
Party shall continue to serve as a director or executive officer of
the Company and thereafter, for so long as Indemnified Party shall
be subject to any possible Proceeding arising from any Covered Act,
the Company, subject to Section 2(c), shall maintain in full
force and effect D&O Insurance.
(b) In
all policies of D&O Insurance, Indemnified Party shall be named
as an insured in such a manner as to provide Indemnified Party the
same rights and benefits, and the same limitations, as are accorded
to the Company’s directors or executive officers most
favorably insured by such policy.
(c) The
Company shall have no obligation to maintain D&O Insurance if
the Company, by majority vote of the Board of Directors, determines
in good faith that such insurance is not reasonably available, the
premium costs for such insurance are disproportionate to the amount
of coverage provided, or the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit;
provided , however , that such decision shall not
adversely affect coverage of D&O Insurance for periods prior to
such decision without the unanimous vote of all
directors.
3.
Indemnification . The Company shall indemnify Indemnified
Party up to the Covered Amount and shall advance any and all
Expenses to Indemnified Party in connection with any Proceeding or
any Covered Act, subject, in each case, to the further
prov
|
