Indemnification Agreement - Apple Computer Inc.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of this ____ day of
____, 1997 by and between Apple Computer, Inc., a California corporation (the
"Company"), and _________ ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the difficulty in obtaining
directors' and officers' liability insurance that fully and adequately covers
directors and officers for their acts and omissions on behalf of the Company and
its subsidiaries;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other officers and
directors of the Company may not be willing to continue to serve as officers and
directors without additional protection; and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. INDEMNIFICATION.
(a) THIRD PARTY PROCEEDINGS. The Company shall indemnify Indemnitee
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company) by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company or a Subsidiary (as hereinafter defined), by
reason of any action or inaction on the part of Indemnitee while a director,
officer, employee or agent or by reason of the fact that Indemnitee is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including reasonable attorneys' fees), judgments, fines and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) actually and
reasonably incurred by Indemnitee in connection with such action or proceeding
unless the Company shall establish, in accordance with the procedures described
in subsection 2(c) of this Agreement, that Indemnitee did not act in good faith
and in a manner Indemnitee reasonably believed to be in the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee's conduct was unlawful. The termination
of any action or proceeding by judgment, order, settlement, conviction, or upon
a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption (i) that Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in the best interests of the Company, or
(ii) with respect to any criminal action or proceeding, that Indemnitee had
reasonable cause to believe that Indemnitee's conduct was unlawful.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or proceeding by or in
the right of the Company or any Subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any Subsidiary of the Company, by
reason of
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any action or inaction on the part of Indemnitee while a director, officer,
employee or agent or by reason of the fact that Indemnitee is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including reasonable attorneys' fees) and, to the fullest extent
permitted by law, amounts paid in settlement, in each case to the extent
actually and reasonably incurred by Indemnitee in connection with the defense or
settlement of such action or proceeding unless the Company shall establish, in
accordance with the procedures described in subsection 2(c) of this Agreement,
that Indemnitee did not act in good faith and in a manner Indemnitee reasonably
believed to be in the best interests of the Company and its shareholders, except
that 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 Company in
the performance of Indemnitee's duty to the Company or any Subsidiary of the
Company unless and only to the extent that the court in which such action or
proceeding is or was pending shall determine upon application that, in view of
all the circumstances of the case, Indemnitee is fairly and reasonably entitled
to indemnity for expenses or amounts paid in settlement and then only to the
extent that the court shall determine.
2. EXPENSES; INDEMNIFICATION PROCEDURE.
(a) ADVANCEMENT OF EXPENSES. The Company shall advance all
reasonable expenses incurred by Indemnitee in connection with the investigation,
defense, settlement or appeal of any civil or criminal action or proceeding
referenced in subsection 1(a) or 1(b) of this Agreement (but not amounts
actually paid in settlement of any such action or proceeding). Indemnitee
hereby undertakes to repay such amounts advanced only if, and to the extent
that, it shall ultimately be determined that Indemnitee is not entitled to be
indemnified by the Company as authorized hereby. 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.
(b) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to his right to be indemnified or be advanced expenses under
this Agreement, give the Company notice in writing as soon as practicable of any
claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.
(c) PROCEDURE. Any indemnification provided for in Section 1 of this
Agreement shall be made no later than forty-five (45) days after the resolution
(by judgment, settlement, dismissal or otherwise) of the claim to which
indemnification is sought. If a claim under this Agreement, under any statute,
or under any provision of the Company's Articles of Incorporation or By-laws
providing for indemnification, is not paid in full by the Company within such
period, Indemnitee may, but need not, at any time thereafter bring an action
against the Company to recover the unpaid amount of the claim and, subject to
Section 14 of this Agreement, Indemnitee shall also be entitled to be paid for
the expenses (including reasonable attorneys' fees) of bringing such action. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in connection with any action or proceeding in
advance of its final disposition) that Indemnitee has not met the standards of
conduct which make it permissible under applicable law for the Company to
indemnify Indemnitee for the amount claimed, but the burden of proving such
defense shall be on the Company, and Indemnitee shall be entitled to receive
interim payments of expenses pursuant to subsection 2(a) of this Agreement
unless and until such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is the parties'
intention that if the Company contests Indemnitee's right to indemnification,
the question of Indemnitee's right to indemnification shall be for the court to
decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its shareholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its shareholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.
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(d) NOTICE TO INSURERS. If, at the time of the receipt of a notice
of a claim pursuant to subsection 2(b) of this Agreement, the Company has
director and officer liability insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding 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 the Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies.
(e) RELATIONSHIP TO OTHER SOURCES. Indemnitee shall not be required
to exercise any rights against any other parties (for example, under any
insurance policy purchased by the Company, Indemnitee or any other person or
entity) before Indemnitee enforces this Agreement. However, to the extent the
Company actually indemnifies Indemnitee or advances expenses, the Company shall
be entitled to enforce any such rights which Indemnitee may have against third
parties. Indemnitee shall assist the Company in enforcing those rights if the
Company pays Indemnitee's reasonable costs and expenses of doing so.
(f) SELECTION OF COUNSEL. In the event the Company shall be
obligated under subsection 2(a) of this Agreement to pay the expenses of any
proceeding against Indemnitee, the Company, if appropriate, shall be entitled to
assume the defense of such proceeding, with counsel approved by Indemnitee,
which approval shall not be unreasonably withheld, upon the delivery to
Indemnitee of written notice of its election so to do. After delivery of such
notice, approval of such counsel by 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 proceeding, provided that (i) Indemnitee shall have the
right to employ his counsel in any such proceeding at Indemnitee's expense; and
(ii) if (A) the employment of counsel by 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 (C) the Company shall not, in fact, have employed
counsel to assume the defense of such proceeding, then the reasonable fees and
expenses of Indemnitee's counsel shall be at the expense of the Company.
3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
(a) SCOPE. Notwithstanding any other provision of this Agreement,
the Company hereby agrees to indemnify the 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 Articles of
Incorporation, the Company's By-Laws 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 California corporation to indemnify a member of its or a
Subsidiary's board of directors or an officer, such changes shall be, IPSO
FACTO, within the purview of Indemnitee's rights and the Company's obligations,
under this Agreement. In the event of any change in any applicable law, statute
or rule which narrows the right of a California corporation to indemnify a
member of its or a Subsidiary's Board of Directors or an officer, such changes,
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.
(b) NONEXCLUSIVITY. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, its By-Laws, any agreement, any
vote of shareholders or disinterested directors, the General Corporation Law of
the State of California, or otherwise, both as to action in Indemnitee's
official capacity and as to action or inaction in another capacity while holding
such office. The indemnification provided under this Agreement shall continue
as to Indemnitee for any action taken or not taken while serving in an
indemnified capacity even though he may have ceased to serve in such capacity at
the time of any action or other covered proceeding is commenced.
4. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any civil
or criminal action or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.
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5. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
6. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The Company shall, from
time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among
other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. In all
policies of directors' and officers' liability insurance, Indemnitee shall be
named as an insured in such a manner as to provide Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the Company's
directors, if Indemnitee is a director; or of the Company's officers, if
Indemnitee is not a director of the Company but is an officer. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a
Subsidiary or parent of the Company.
7. SEVERABILITY. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 7. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
8. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) EXCLUDED ACTS. To indemnify Indemnitee for any acts or omissions
or transactions from which a director, officer, employee or agent may not be
relieved of liability under applicable law.
(b) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance expenses
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 317 of the California General Corporation Law, but such indemnification
or advancement of expenses may be provided by the Company in specific cases if
the Board of Directors has approved the initiation or bringing of such suit; or
(c) LACK OF GOOD FAITH. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that the material assertions made by the Indemnitee in
such proceeding was not made in good faith or was frivolous; or
(d) INSURED CLAIMS. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by the Company; or
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(e) CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
9. EFFECTIVENESS OF AGREEMENT; TERM.
(a) This Agreement shall be effective as of the date set forth on the
first page and shall apply to acts or omissions of Indemnitee which occurred
prior to such date if Indemnitee was an officer, director, employee or other
agent of the Company or any Subsidiary, or was serving at the request of the
Company or any Subsidiary as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, at the time
such act or omission occurred.
(b) The Company's obligations under this Agreement shall
continuously, irrevocably and perpetually cover Indemnitee's covered acts and
omissions which occur during the period ending two years after the date of this
Agreement. Thereafter, such coverage shall extend to Indemnitee's acts and
omissions which occur during succeeding 12-month periods, and shall continue
until the end of the 12-month extension period during which the Company gives
Indemnitee written notice of termination of the continuity of such coverage;
provided, however that (a) such notice of termination shall only be effective if
it is received by Indemnitee at least six months prior to the end of the
12-month extension period which is intended by the Company to be the final
12-month extension period, and (b) such coverage shall continue until the end of
such final 12-month extension period. In any event, the Company's obligations
under this Agreement shall continue perpetually with regard to covered acts and
omissions occuring during the period covered by this Agreement (including all of
the 12-month extension periods as set forth above), notwithstanding the giving
of any such notice of termination or any other circumstance whatsoever.
10. CONSTRUCTION OF CERTAIN PHRASES.
(a) For purposes of this Agreement, the term "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(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, employees or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, the term "Subsidiary" shall
include a corporation, company or other entity
(i) 50% or more of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are, or
(ii) which does not have outstanding shares or securities
(as may be the case in a partnership, joint venture or unincorporated
association), but 50% or more of whose ownership interest representing
the right to make decisions for such other entity is,
now or hereafter, owned or controlled, directly or indirectly, by the Company,
or one or more Subsidiaries.
(c) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on Indemnitee with respect to an
employee benefit plan; and references to "serving at the request of the
Company" shall include any service as a director, officer, employee or agent
of the Company which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants, or beneficiaries.
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11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that the material assertions made by Indemnitee as a basis for such action were
not made in good faith or were frivolous. In the event of an action instituted
by or in the name of the Company under this Agreement or to enforce or interpret
any of the terms of this Agreement, Indemnitee shall be entitled to be paid all
court costs and expenses, including reasonable attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that Indemnitee's material defenses to such action
were made in bad faith or were frivolous.
14. NOTICE. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the fifth business day after the date postmarked, or (iii) if sent
by confirmed telex or facsimile, on the date sent. Notices shall be addressed as
follows:
(a) if to the Company:
Apple Computer, Inc.
1 Infinite Loop, Mail Stop 75-8A
Cupertino, California 95014
Telephone: (408) 996-1010
Facsimile: (408) 974-8530
Attention: General Counsel;
(b) if to Indemnitee, to the address of Indemnitee set forth under
Indemnitee's signature below;
or to such other address or attention of such other person as any party shall
advise the other parties in writing.
15. CONSENT TO JURISDICTION; CHOICE OF VENUE. The Company and Indemnitee
each hereby irrevocably consents to the jurisdiction of the courts of the State
of California and the federal courts within the State for all purposes in
connection with any action or proceeding which arises out of or relates to this
Agreement and agree that any action instituted under this Agreement shall be
brought only in the United States District Court for the Northern District of
California and any California State court within that District.
16. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND ITS PROVISIONS
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AS APPLIED TO
CONTRACTS BETWEEN CALIFORNIA RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY
WITHIN CALIFORNIA.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
APPLE COMPUTER, INC.
By:
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Nancy R. Heinen
Sr. Vice President,
General Counsel and
Secretary
AGREED TO AND ACCEPTED:
INDEMNITEE:
-----------------------------
(name)
Address:
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