VOLCAN HOLDINGS,
INC.
FORM OF DIRECTOR AND OFFICER INDEMNIFICATION
AGREEMENT
This
Director and Officer Indemnification Agreement, dated as of
September __, 2008 (this “Agreement” ),
is made by and between Volcan Holdings, Inc., a Delaware
corporation (the “Company” ), and
___________ (the “Indemnitee”
).
RECITALS:
A. Section
141 of the Delaware General Corporation Law provides that the
business and affairs of a corporation shall be managed by or under
the direction of its board of directors.
B. By
virtue of the managerial prerogatives vested in the directors and
officers of a Delaware corporation, directors and officers act as
fiduciaries of the corporation and its stockholders.
C. Thus,
it is critically important to the Company and its stockholders that
the Company be able to attract and retain the most capable persons
reasonably available to serve as directors and officers of the
Company.
D.
In recognition of the need for corporations to be able to induce
capable and responsible persons to accept positions in corporate
management, Delaware law authorizes (and in some instances
requires) corporations to indemnify their directors and officers,
and further authorizes corporations to purchase and maintain
insurance for the benefit of their directors and
officers.
E.
The Delaware courts have recognized that indemnification by a
corporation serves the dual policies of (1) allowing corporate
officials to resist unjustified lawsuits, secure in the knowledge
that, if vindicated, the corporation will bear the expense of
litigation, and (2) encouraging capable women and men to serve as
corporate directors and officers, secure in the knowledge that the
corporation will absorb the costs of defending their honesty and
integrity.
F. The
number of lawsuits challenging the judgment and actions of
directors and officers of Delaware corporations, the costs of
defending those lawsuits and the threat to personal assets have all
materially increased over the past several years, chilling the
willingness of capable women and men to undertake the
responsibilities imposed on corporate directors and
officers.
G. Recent
federal legislation and rules adopted by the Securities and
Exchange Commission and the national securities exchanges have
exposed such directors and officers to new and substantially
broadened civil liabilities.
H. Under
Delaware law, a director’s or officer’s right to be
reimbursed for the costs of defense of criminal actions, whether
such claims are asserted under state or federal law, does not
depend upon the merits of the claims asserted against the director
or officer and is separate and distinct from any right to
indemnification the director may be able to establish.
I.
Indemnitee is, or will be, a director and/or officer of the Company
and his or her willingness to serve in such capacity is predicated,
in substantial part, upon the Company’s willingness to
indemnify him or her in accordance with the principles reflected
above, to the fullest extent permitted by the laws of the State of
Delaware, and upon the other undertakings set forth in this
Agreement.
J. Therefore,
in recognition of the need to provide Indemnitee with substantial
protection against personal liability, in order to procure
Indemnitee’s continued service as a director and/or officer
of the Company and to enhance Indemnitee’s ability to serve
the Company in an effective manner, and in order to provide such
protection pursuant to express contract rights (intended to be
enforceable irrespective of, among other things, any amendment to
the Company’s certificate of incorporation or bylaws
(collectively, the “Constituent
Documents” ), any change in the composition of the
Company’s Board of Directors (the
“Board” ) or any change-in-control or
business combination transaction relating to the Company), the
Company wishes to provide in this Agreement for the indemnification
and advancement of Expenses to Indemnitee on the terms, and subject
to the conditions, set forth in this Agreement.
K.
In light of the considerations referred to in the preceding
recitals, it is the Company’s intention and desire that the
provisions of this Agreement be construed liberally, subject to
their express terms, to maximize the protections to be provided to
Indemnitee hereunder.
AGREEMENT:
NOW,
THEREFORE, the parties hereby agree as follows:
1.
Certain Definitions . In addition to terms defined elsewhere
herein, the following terms have the following meanings when used
in this Agreement with initial capital letters:
“Change in Control” shall have occurred
at such time, if any, as Incumbent Directors cease for any reason
to constitute a majority of Directors. For purposes of this Section
1(a), “Incumbent Directors” means the
individuals who, as of the date hereof, are Directors of the
Company and any individual becoming a Director subsequent to the
date hereof whose election, nomination for election by the
Company’s stockholders, or appointment, was approved by a
vote of at least a majority of the then Incumbent Directors (either
by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director,
without objection to such nomination); provided, however,
that an individual shall not be an Incumbent Director if such
individual’s election or appointment to the Board occurs as a
result of an actual or threatened election contest (as described in
Rule 14a-12(c) of the Securities Exchange Act of 1934, as amended)
with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board.
“Claim” means (i) any threatened,
asserted, pending or completed claim, demand, action, suit or
proceeding, whether civil, criminal, administrative, arbitrative,
investigative or
2
other, and
whether made pursuant to federal, state or other law; and (ii) any
inquiry or investigation, whether made, instituted or conducted by
the Company or any other Person, including, without limitation, any
federal, state or other governmental entity, that Indemnitee
reasonably determines might lead to the institution of any such
claim, demand, action, suit or proceeding. For the avoidance of
doubt, the Company intends indemnity to be provided hereunder in
respect of acts or failure to act prior to, on or after the date
hereof.
“Controlled Affiliate” means any
corporation, limited liability company, partnership, joint venture,
trust or other entity or enterprise, whether or not for profit,
that is directly or indirectly controlled by the Company. For
purposes of this definition, “control”
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of an
entity or enterprise, whether through the ownership of voting
securities, through other voting rights, by contract or otherwise;
provided that direct or indirect beneficial ownership of
capital stock or other interests in an entity or enterprise
entitling the holder to cast 15% or more of the total number of
votes generally entitled to be cast in the election of directors
(or persons performing comparable functions) of such entity or
enterprise shall be deemed to constitute control for purposes of
this definition.
“Disinterested Director” means a director
of the Company who is not and was not a party to the Claim in
respect of which indemnification is sought by
Indemnitee.
“Expenses” means attorneys’ and
experts’ fees and expenses and all other costs and expenses
paid or payable in connection with investigating, defending, being
a witness in or participating in (including on appeal), or
preparing to investigate, defend, be a witness in or participate in
(including on appeal), any Claim.
“Indemnifiable Claim” means any Claim
based upon, arising out of or resulting from (i) any actual,
alleged or suspected act or failure to act by Indemnitee in his or
her capacity as a director, officer, employee or agent of the
Company or as a director, officer, employee, member, manager,
trustee or agent of any other corporation, limited liability
company, partnership, joint venture, trust or other entity or
enterprise, whether or not for profit, as to which Indemnitee is or
was serving at the request of the Company, (ii) any actual, alleged
or suspected act or failure to act by Indemnitee in respect of any
business, transaction, communication, filing, disclosure or other
activity of the Company or any other entity or enterprise referred
to in clause (i) of this sentence, or (iii) Indemnitee’s
status as a current or former director, officer, employee or agent
of the Company or as a current or former director, officer,
employee, member, manager, trustee or agent of the Company or any
other entity or enterprise referred to in clause (i) of this
sentence or any actual, alleged or suspected act or failure to act
by Indemnitee in connection with any obligation or restriction
imposed upon Indemnitee by reason of such status. In addition to
any service at the actual request of the Company, for purposes of
this Agreement, Indemnitee shall be deemed to be serving or to have
served at the request of the Company as a director, officer,
employee, member, manager, trustee or agent of another entity or
enterprise if Indemnitee is or was serving as a director, officer,
employee, member, manager, agent, trustee or other fiduciary of
such entity or enterprise and (i) such entity or enterprise is or
at the time of such service was a Controlled Affiliate, (ii) such
entity or enterprise is or at the time of such service was an
employee benefit plan (or related trust) sponsored or maintained by
the Company or a Controlled Affiliate, or (iii) the Company or a
Controlled Affiliate (by action of the Board,
3
any
committee thereof or the Company’s Chief Executive Officer
(“CEO”) (other than as the CEO him or herself)) caused
or authorized Indemnitee to be nominated, elected, appointed,
designated, employed, engaged or selected to serve in such
capacity.
“Indemnifiable Losses” means any and all
Losses relating to, arising out of or resulting from any
Indemnifiable Claim; provided, however, that Indemnifiable
Losses shall not include Losses incurred by Indemnitee in respect
of any Indemnifiable Claim (or any matter or issue therein) as to
which Indemnitee shall have been adjudged liable to the Company,
unless and only to the extent that the Delaware Court of Chancery
or the court in which such Indemnifiable Claim was brought shall
have determined 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 indemnification for
such Expenses as the court shall deem proper.
“Independent Counsel” means a nationally
recognized law firm, or a member of a nationally recognized law
firm, that is experienced in matters of Delaware corporate law and
neither presently is, nor in the past five years has been, retained
to represent: (i) the Company (or any subsidiary) or Indemnitee in
any matter material to either such party (other than with respect
to matters concerning the Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements) or (ii)
any other named (or, as to a threatened matter, reasonably likely
to be named) party to the Indemnifiable Claim 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 Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.
“Losses” means any and all Expenses,
damages, losses, liabilities, judgments, fines, penalties (whether
civil, criminal or other) and amounts paid or payable in
settlement, including, without limitation, all interest,
assessments and other charges paid or payable in connection with or
in respect of any of the foregoing.
“Person” means any individual, entity or
group, within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended.
“Standard of Conduct” means the standard
for conduct by Indemnitee that is a condition precedent to
indemnification of Indemnitee hereunder against Indemnifiable
Losses relating to, arising out of or resulting from an
Indemnifiable Claim. The Standard of Conduct is (i) good faith and
a reasonable belief by Indemnitee that his action was in or not
opposed to the best interests of the Company and, with respect to
any criminal action or proceeding, that Indemnitee had no
reasonable cause to believe that his conduct was unlawful, or (ii)
any other applicable standard of conduct that may hereafter be
substituted under Section 145(a) or (b) of the Delaware General
Corporation Law or any successor to such provision(s).
2.
Indemnification Obligation . Subject only to Section 7 and
to the proviso in this Section, the Company shall indemnify, defend
and hold harmless Indemnitee, to the fullest extent permitted or
required by the laws of the State of Delaware in effect on the date
hereof or as such laws may from time to time hereafter be amended
to increase the scope of such permitted indemnification, against
any and all Indemnifiable Claims and Indemnifiable Losses;
provided,
4
however, that, except as provided in Section 5,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with (i) any Claim initiated by
Indemnitee against the Company or any director or officer of the
Company unless the Company has joined in or consented to the
initiation of such Claim, or (ii) the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended. The Company
acknowledges that the foregoing obligation may be broader than that
now provided by applicable law and the Company’s Constituent
Documents and intends that it be interpreted consistently with this
Section and the recitals to this Agreement.
3.
Advancement of Expenses . Indemnitee shall have the right to
advancement by the Company prior to the final disposition of any
Indemnifiable Claim of any and all actual and reasonable Expenses
relating to, arising out of or resulting from any Indemnifiable
Claim paid or incurred by Indemnitee. Without limiting the
generality or effect of any other provision hereof,
Indemnitee’s right to such advancement is not subject to the
satisfaction of any Standard of Conduct. Without limiting the
generality or effect of the foregoing, within five business days
after any request by Indemnitee that is accompanied by supporting
documentation for specific reasonable Expenses to be reimbursed or
advanced, the Company shall, in accordance with such request (but
without duplication), (a) pay such Expenses on behalf of
Indemnitee, (b) advance to Indemnitee funds in an amount sufficient
to pay such Expenses, or (c) reimburse Indemnitee for such
Expenses; provided that Indemnitee shall repay, without
interest, any amounts actually advanced to Indemnitee that, at the
final disposition of the Indemnifiable Claim to which the advance
related, were in excess of amounts paid or payable by Indemnitee in
respect of Expenses relating to, arising out of or resulting from
such Indemnifiable Claim. In connection with any such payment,
advancement or reimbursement, at the request of the Company,
Indemnitee shall execute and deliver to the Company an undertaking,
which need not be secured and shall be accepted without reference
to Indemnitee’s ability to repay the Expenses, by or on
behalf of the Indemnitee, to repay any amounts paid, advanced or
reimbursed by the Company in respect of Expenses relating to,
arising out of or resulting from any Indemnifiable Claim in respect
of which it shall have been determined, following the final
disposition of such Indemnifiable Claim and in accordance with
Section 7, that Indemnitee is not entitled to indemnification
hereunder.
4.
Indemnification for Additional Expenses . Without limiting
the generality or effect of the foregoing, the Company shall
indemnify and hold harmless Indemnitee against and, if requested by
Indemnitee, shall reimburse Indemnitee for, or advance to
Indemnitee, within five business days of such request accompanied
by supporting documentation for specific Expenses to be reimbursed
or advanced, any and all actual and reasonable Expenses paid or
incurred by Indemnitee in connection with any Claim made,
instituted or conducted by Indemnitee for (a) indemnification or
reimbursement or advance payment of Expenses by the Company under
any provision of this Agreement, or under any other agreement or
provision of the Constituent Documents now or hereafter in effect
relatin
