Exhibit 10.1
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement"), dated as of ______________,
is
made by and between LION, Inc., a
Washington Corporation (the "Company), and
_____________ (the "Indemnitee").
RECITALS
A. The Company is aware that competent and experienced persons
are
increasingly reluctant to serve as
directors and officers of corporations unless
they are protected by comprehensive
liability insurance or indemnification, 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 or 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. 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.
D. The Company believes that it is unfair for its directors and
officers and the directors and officers of
its subsidiaries 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 Company recognizes that the issues in controversy in
litigation
against a director or officer of a
corporation such as the Company or its
subsidiaries are often related to the
knowledge, motives, and intent of such
director or officer, that he or she is
usually the only witness with knowledge
of the essential facts and exculpating
circumstances regarding such matters and
that the long period of time which usually
elapses before the trial or other
disposition of such litigation often
extends beyond the time the director or
officer can reasonably recall such matters
and may extend beyond the normal time
for retirement of such director or officer
with the result that he or she, after
retirement (or in the event of death, his
or her spouse, heirs, executors or
administrators), may be faced with limited
ability and undue hardship in
maintaining an adequate defense, which may
discourage such director or officer
from serving in that position.
F. Based upon their experience as business managers, the Board
of
Directors of the Company (the "Board") has
concluded that, to retain and attract
talented and experienced individuals to
serve as directors and officers of the
Company and its subsidiaries and to
encourage such individuals to take the
business risks necessary for the success of
the Company
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and its subsidiaries, it is necessary for
the Company to contractually indemnify
its directors and officers and the
directors and officers of its subsidiaries,
and to assume for itself maximum liability
for expenses and damages in
connection with claims against such
directors and officers in connection with
their service to the Company and its
subsidiaries, and has further concluded
that the failure to provide such
contractual indemnification could result in
great harm to the Company and its
subsidiaries and the Company's shareholders.
G. The Company has adopted Articles of Incorporation (the
"Articles")
providing for indemnification of the
officers, directors, agents and employees
of the Company as contemplated by the
Washington Business Corporation Act (the
"Statute").
H. Section 23B.08.510 and .570 of the Statute, under which the
Company
is organized ("Section 510/570"), empowers
the Company to indemnify persons who
serve, at the request of the Company, as
the directors, officers, employees or
agents of the Company or of other
corporations or enterprises.
I. The Articles specifically provide that the rights provided
thereby
are not exclusive, and Section 510/570
contemplates that contracts may be
entered into between the Company and the
members of the Board and its officers,
employees and agents with respect to
indemnification of such persons.
J. The Company desires and has requested the Indemnitee to serve
or
continue to serve as a director or officer
of the Company and/or one or more
subsidiaries of the Company free from undue
concern for claims for damages
arising out of or related to such services
to the Company and/or one or more
subsidiaries of the Company.
K. Indemnitee is willing to serve, or to continue to serve, the
Company, and/or one or more subsidiaries of
the Company, provided that he or she
is furnished the indemnity provided for
herein.
AGREEMENT
NOW THEREFORE, the parties hereto, intending to be legally
bound,
hereby agree as follows:
1.
DEFINITIONS
As used herein, the following terms shall have the following
meanings:
(a) AGENT. "Agent" of the Company means any person who is or was
a
director, officer, employee or other agent
of the Company or a Subsidiary (as
defined below); or is or was serving at the
request of, for the convenience of,
or to represent the interests of the
Company or a Subsidiary as a director,
officer, employee or agent of another
foreign or domestic corporation,
partnership, joint venture, trust or other
enterprise; or was a director,
officer, employee or agent of a foreign or
domestic corporation which was a
predecessor corporation of the Company or
a
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Subsidiary, or is or was a director,
officer, employee or agent of another
enterprise at the request of, for the
convenience of, or to represent the
interests of such predecessor corporation.
(b) EXPENSES. "Expenses" include all direct and indirect costs of
any
type or nature whatsoever (including,
without limitation, all attorneys' fees
and related disbursements, other
out-of-pocket costs and reasonable compensation
for time spent by the Indemnitee for which
he or she is not otherwise
compensated by the Company or any third
party) actually and reasonably incurred
by the Indemnitee in connection with either
the investigation, defense or appeal
of a Proceeding (as defined below) or
establishing or enforcing a right to
indemnification under this Agreement,
Section 510/570 or otherwise; provided,
however, that expenses shall not include
any judgments, fines, ERISA excise
taxes or penalties or amounts paid in
settlement of a Proceeding.
(c) PROCEEDING. "Proceeding" means any threatened, pending, or
completed action, suit or other proceeding,
whether civil, criminal,
administrative, investigative or any other
type whatsoever.
(d) SUBSIDIARY. "Subsidiary" means any corporation of which more
than
50% of the outstanding voting securities is
owned directly or indirectly by the
Company, by the Company and one or more
other subsidiaries, or by one or more
other subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or
continue
to serve as a director or officer of the
Company, at its will, (or under
separate agreement, if such agreement
exists), in the capacity Indemnitee
currently serves as an agent of the
Company, so long as the Indemnitee is duly
appointed or elected and qualified in
accordance with the applicable provisions
of the bylaws of the Company or any
Subsidiary or until such time as the
Indemnitee tenders his or her resignation
in writing; provided however, that
nothing contained in this Agreement is
intended to create any right to continued
employment by Indemnitee.
3. LIABILITY INSURANCE.
(a) MAINTENANCE OF D&O INSURANCE. The Company hereby covenants
and
agrees that, so long as the Indemnitee
shall continue to serve as a director or
officer of the Company and thereafter so
long as the Indemnitee shall be subject
to any possible proceeding by reason of the
fact that Indemnitee was an Agent of
the Company, the Company, subject to
Section 3(c), shall use its best efforts,
consistent with prudent business practice,
to obtain and maintain in full force
and effect directors' and officers'
liability insurance ("D&O Insurance") of
which the Indemnitee will be an insured, in
reasonable amounts from established
and reputable insurers.
(b) RIGHTS AND BENEFITS. In all policies of D&O Insurance,
the
Indemnitee shall be named as an insured in
such a manner as to provide the
Indemnitee the same rights and benefits as
are accorded to the most favorably
insured of the Company's directors, if the
Indemnitee is a director; or of the
Company's officers, if the Indemnitee is
not a director of the Company but is an
officer; or of the Company's key employees,
if the Indemnitee is not a director
or officer but is a key employee.
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(c) LIMITATION ON REQUIRED MAINTENANCE OF D&O INSURANCE.
Notwithstanding the foregoing, the Company
shall have no obligation to obtain or
maintain D&O Insurance if the Company
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, the coverage provided by
such insurance is limited by exclusions so
as to provide an insufficient
benefit, or the Indemnitee is covered by
similar insurance maintained by a
Subsidiary.
4. MANDATORY INDEMNIFICATION. Subject to Section 9, if the
Indemnitee
is a person who was or is a party or is
threatened to be made a party to any
Proceeding by reason of the fact that the
Indemnitee is or was an Agent of the
Company, or by reason of anything done or
not done by the Indemnitee in any such
capacity, the Company shall indemnify and
hold harmless the Indemnitee to the
fullest extent permitted by applicable law,
as then in effect, without the
requirement of any further approval or
finding by the shareholders, the Board or
independent legal counsel, against all
Expenses, liabilities and losses
(including, but not limited to, judgments,
fines, ERISA excise taxes or
penalties, and amounts paid in settlement)
actually and reasonably incurred by
the Indemnitee in connection with the
investigation, defense, settlement or
appeal of the Proceeding. The Company shall
be obligated to provide such
indemnification even if the Indemnitee
should be deceased prior to, during the
pendency of, or after completion of any
Proceeding to which such indemnification
applies.
5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under
any
provision of this Agreement to
indemnification by the Company for some or a
portion of any Expenses, liabilities or
losses of any type whatsoever
(including, but not limited to, judgments,
fines, ERISA excise taxes or
penalties, and amounts paid in settlement)
actually and reasonably incurred by
the Indemnitee in connection with the
investigation, defense, settlement or
appeal of a Proceeding but not entitled,
however, to indemnification for all of
the total amount thereof, the Company shall
nevertheless indemnify the
Indemnitee for that portion thereof to
which the Indemnitee is entitled.
6. MANDATORY ADVANCEMENT OF EXPENSES. Subject to Section 9(f)
below,
the Company shall advance all reasonable
expenses incurred by the Indemnitee in
connection with the investigation, defense,
settlement or appeal of any
Proceeding to which the Indemnitee is a
party or is threatened to be made a
party by reason of the fact that the
Indemnitee is or was an Agent of the
Company. The Indemnitee hereby undertakes
to repay such amounts advanced only
if, and to the extent that, i
