Exhibit 10.5

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into this
        day of               , 2004, between Iteris Holdings, Inc., a Delaware
corporation (the “Company”), and                                                
(“Indemnitee”).

 

A.                                   Indemnitee, as a member of the Company’s
Board of Directors and/or an officer of the Company, performs valuable services
for the Company;

 

B.                                     The Company and Indemnitee recognize the
continued difficulty in obtaining liability insurance for corporate directors,
officers, employees, controlling persons, agents and fiduciaries, the
significant increases in the cost of such insurance and the general reductions
in the coverage of such insurance.

 

C.                                     The Company and Indemnitee further
recognize the substantial increase in corporate litigation in general,
subjecting directors, officers, employees, controlling persons, agents and
fiduciaries to expensive litigation risks at the same time as the availability
and coverage of liability insurance has been severely limited.

 

D.                                    The stockholders of the Company have
adopted Bylaws (the “Bylaws”) providing for the indemnification of the officers,
directors, agents and employees of the Company to the maximum extent authorized
by Section 145 of the Delaware General Corporation Law, as amended (“DGCL”).

 

E.                                      Indemnitee does not regard the current
protection available for the Company’s directors, officers, employees,
controlling persons, agents and fiduciaries as adequate under the present
circumstances, and Indemnitee and other directors, officers, employees,
controlling persons, agents and fiduciaries of the Company may not be willing to
serve or continue to serve in such capacities without additional protection.

 

F.                                      The Bylaws and the DGCL, by their
non-exclusive nature, permit contracts between the Company and its directors,
officers, employees, controlling persons, agents or fiduciaries with respect to
indemnification of such directors.

 

G.                                     The Company (i) desires to attract and
retain the involvement of highly qualified individuals, such as Indemnitee, to
serve the Company and, in part, in order to induce Indemnitee to be involved
with the Company, and (ii) wishes to provide for the indemnification and
advancing of expenses to Indemnitee to the maximum extent permitted by law.

 

H.                                    In view of the considerations set forth
above, the Company desires that Indemnitee be indemnified by the Company as set
forth herein.

 

NOW, THEREFORE, in consideration of Indemnitee’s service to the Company, the
parties hereto agree as follows:

 

1.                                      Indemnity of Indemnitee.  The Company
hereby agrees to indemnify Indemnitee to the fullest extent permitted by law,
even if such indemnification is not specifically authorized

 

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by the other provisions of this Agreement, the Company’s Certificate of
Incorporation (the “Certificate”), the Company’s Bylaws 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 Delaware corporation to indemnify a
member of its Board of Directors or an officer, employee, controlling person,
agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits afforded by such change. In the
event of any change in any applicable law, statute or rule which narrows the
right of a Delaware corporation to indemnify a member of its Board of Directors
or an officer, employee, agent or fiduciary, such change, 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 except as set forth in Section 9 hereof.

 

2.                                      Additional Indemnity.  The Company
hereby agrees to hold harmless and indemnify the Indemnitee:

 

(A)                                  AGAINST ANY AND ALL EXPENSES INCURRED BY
INDEMNITEE, AS SET FORTH IN SECTION 3(A) BELOW; AND

 

(B)                                 OTHERWISE TO THE FULLEST EXTENT NOT
PROHIBITED BY THE CERTIFICATE, THE BYLAWS OR THE DGCL.

 

3.                                      Indemnification Rights.

 

(A)                                  INDEMNIFICATION OF EXPENSES.  THE COMPANY
SHALL INDEMNIFY AND HOLD HARMLESS INDEMNITEE, TOGETHER WITH INDEMNITEE’S
PARTNERS, AFFILIATES, EMPLOYEES, AGENTS AND SPOUSE AND EACH PERSON WHO CONTROLS
ANY OF THEM OR WHO MAY BE LIABLE WITHIN THE MEANING OF SECTION 15 OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR SECTION 20 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”), TO THE FULLEST
EXTENT PERMITTED BY LAW IF INDEMNITEE WAS OR IS OR BECOMES A PARTY TO OR WITNESS
OR OTHER PARTICIPANT IN, OR IS THREATENED TO BE MADE A PARTY TO OR WITNESS OR
OTHER PARTICIPANT IN, ANY THREATENED, PENDING OR COMPLETED ACTION, SUIT,
PROCEEDING OR ALTERNATIVE DISPUTE RESOLUTION MECHANISM, OR ANY HEARING, INQUIRY
OR INVESTIGATION THAT INDEMNITEE AND THE COMPANY BELIEVE MIGHT LEAD TO THE
INSTITUTION OF ANY SUCH ACTION, SUIT, PROCEEDING OR ALTERNATIVE DISPUTE
RESOLUTION MECHANISM, WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE, INVESTIGATIVE OR
OTHER (HEREINAFTER A “CLAIM”) AGAINST ANY AND ALL EXPENSES (INCLUDING ATTORNEYS’
FEES AND ALL OTHER COSTS, EXPENSES AND OBLIGATIONS INCURRED IN CONNECTION WITH
INVESTIGATING, DEFENDING, BEING A WITNESS IN OR PARTICIPATING IN (INCLUDING ON
APPEAL), OR PREPARING TO DEFEND, BE A WITNESS IN OR PARTICIPATE IN, ANY SUCH
ACTION, SUIT, PROCEEDING, ALTERNATIVE DISPUTE RESOLUTION MECHANISM, HEARING,
INQUIRY OR INVESTIGATION, JUDGMENTS, FINES, PENALTIES AND AMOUNTS PAID IN
SETTLEMENT (IF SUCH SETTLEMENT IS APPROVED IN ADVANCE BY THE COMPANY, WHICH
APPROVAL SHALL NOT BE UNREASONABLY WITHHELD) OF SUCH CLAIM AND ANY FEDERAL,
STATE, LOCAL OR FOREIGN TAXES IMPOSED ON INDEMNITEE AS A RESULT OF THE ACTUAL OR
DEEMED RECEIPT OF ANY PAYMENTS UNDER THIS AGREEMENT (COLLECTIVELY, HEREINAFTER
“EXPENSES”), INCLUDING ALL INTEREST, ASSESSMENTS AND OTHER CHARGES PAID OR
PAYABLE IN CONNECTION WITH OR IN RESPECT OF SUCH EXPENSES, INCURRED BY
INDEMNITEE BY REASON OF (OR ARISING IN PART OUT OF) ANY EVENT OR OCCURRENCE
RELATED TO THE FACT THAT INDEMNITEE IS OR WAS A DIRECTOR, OFFICER, EMPLOYEE,
CONTROLLING PERSON, AGENT OR FIDUCIARY OF THE COMPANY OR ANY SUBSIDIARY OF THE
COMPANY, OR IS OR WAS SERVING AT THE REQUEST OF THE COMPANY AS A DIRECTOR,
OFFICER, EMPLOYEE, CONTROLLING PERSON,

 

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AGENT OR FIDUCIARY OF ANOTHER CORPORATION, PARTNERSHIP, JOINT VENTURE, TRUST OR
OTHER ENTERPRISE, OR BY REASON OF ANY ACTION OR INACTION ON THE PART OF
INDEMNITEE WHILE SERVING IN SUCH CAPACITY INCLUDING, WITHOUT LIMITATION, ANY AND
ALL LOSSES, CLAIMS, DAMAGES, EXPENSES AND LIABILITIES, JOINT OR SEVERAL
(INCLUDING ANY INVESTIGATION, LEGAL AND OTHER EXPENSES INCURRED IN CONNECTION
WITH, AND ANY AMOUNT PAID IN SETTLEMENT OF, ANY ACTION, SUIT, PROCEEDING OR ANY
CLAIM ASSERTED) UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR OTHER FEDERAL OR
STATE STATUTORY LAW OR REGULATION, AT COMMON LAW OR OTHERWISE, WHICH RELATE
DIRECTLY OR INDIRECTLY TO THE REGISTRATION, PURCHASE, SALE OR OWNERSHIP OF ANY
SECURITIES OF THE COMPANY OR TO ANY FIDUCIARY OBLIGATION OWED WITH RESPECT
THERETO (HEREINAFTER AN “INDEMNIFIABLE EVENT”).  SUCH PAYMENT OF EXPENSES SHALL
BE MADE BY THE COMPANY AS SOON AS PRACTICABLE BUT IN ANY EVENT NO LATER THAN
TWENTY-FIVE (25) DAYS AFTER WRITTEN DEMAND BY INDEMNITEE THEREFOR IS PRESENTED
TO THE COMPANY.

 

(B)                                 REVIEWING PARTY.  NOTWITHSTANDING THE
FOREGOING, (I) THE OBLIGATIONS OF THE COMPANY UNDER SECTION 2 SHALL BE SUBJECT
TO THE CONDITION THAT THE REVIEWING PARTY (AS DESCRIBED IN SECTION 11(E) HEREOF)
SHALL NOT HAVE DETERMINED (IN A WRITTEN OPINION, IN ANY CASE IN WHICH THE
INDEPENDENT LEGAL COUNSEL AS DEFINED IN SECTION 11(D) HEREOF IS INVOLVED) THAT
INDEMNITEE WOULD NOT BE PERMITTED TO BE INDEMNIFIED UNDER APPLICABLE LAW, AND
(II) AND INDEMNITEE ACKNOWLEDGES AND AGREES THAT THE OBLIGATION OF THE COMPANY
TO MAKE AN ADVANCE PAYMENT OF EXPENSES TO INDEMNITEE PURSUANT TO SECTION 4(A)
(AN “EXPENSE ADVANCE”) SHALL BE SUBJECT TO THE CONDITION THAT, IF, WHEN AND TO
THE EXTENT THAT THE REVIEWING PARTY DETERMINES THAT INDEMNITEE WOULD NOT BE
PERMITTED TO BE SO INDEMNIFIED UNDER APPLICABLE LAW, THE COMPANY SHALL BE
ENTITLED TO BE REIMBURSED BY INDEMNITEE (WHO HEREBY AGREES TO REIMBURSE THE
COMPANY) FOR ALL SUCH AMOUNTS THERETOFORE PAID; PROVIDED, HOWEVER, THAT IF
INDEMNITEE HAS COMMENCED OR THEREAFTER COMMENCES LEGAL PROCEEDINGS IN A COURT OF
COMPETENT JURISDICTION TO SECURE A DETERMINATION THAT INDEMNITEE SHOULD BE
INDEMNIFIED UNDER APPLICABLE LAW, ANY DETERMINATION MADE BY THE REVIEWING PARTY
THAT INDEMNITEE WOULD NOT BE PERMITTED TO BE INDEMNIFIED UNDER APPLICABLE LAW
SHALL NOT BE BINDING AND INDEMNITEE SHALL NOT BE REQUIRED TO REIMBURSE THE
COMPANY FOR ANY EXPENSE ADVANCE UNTIL A FINAL JUDICIAL DETERMINATION IS MADE
WITH RESPECT THERETO (AS TO WHICH ALL RIGHTS OF APPEAL THEREFROM HAVE BEEN
EXHAUSTED OR LAPSED).  INDEMNITEE’S OBLIGATION TO REIMBURSE THE COMPANY FOR ANY
EXPENSE ADVANCE SHALL BE UNSECURED AND NO INTEREST SHALL BE CHARGED THEREON.  IF
THERE HAS NOT BEEN A CHANGE IN CONTROL (AS DEFINED IN SECTION 11(C) HEREOF), THE
REVIEWING PARTY SHALL BE SELECTED BY THE BOARD OF DIRECTORS, AND IF THERE HAS
BEEN SUCH A CHANGE IN CONTROL (OTHER THAN A CHANGE IN CONTROL WHICH HAS BEEN
APPROVED BY A MAJORITY OF THE COMPANY’S BOARD OF DIRECTORS WHO WERE DIRECTORS
IMMEDIATELY PRIOR TO SUCH CHANGE IN CONTROL), THE REVIEWING PARTY SHALL BE THE
INDEPENDENT LEGAL COUNSEL REFERRED TO IN SECTION 3(E) HEREOF.  IF THERE HAS BEEN
NO DETERMINATION BY THE REVIEWING PARTY OR IF THE REVIEWING PARTY DETERMINES
THAT INDEMNITEE SUBSTANTIVELY WOULD NOT BE PERMITTED TO BE INDEMNIFIED IN WHOLE
OR IN PART UNDER APPLICABLE LAW, INDEMNITEE SHALL HAVE THE RIGHT TO COMMENCE
LITIGATION SEEKING AN INITIAL DETERMINATION BY THE COURT OR CHALLENGING ANY SUCH
DETERMINATION BY THE REVIEWING PARTY OR ANY ASPECT THEREOF, INCLUDING THE LEGAL
OR FACTUAL BASES THEREFOR, AND THE COMPANY HEREBY CONSENTS TO SERVICE OF PROCESS
AND TO APPEAR IN ANY SUCH PROCEEDING.  ANY DETERMINATION BY THE REVIEWING PARTY
OTHERWISE SHALL BE CONCLUSIVE AND BINDING ON THE COMPANY AND INDEMNITEE.

 

(C)                                  CONTRIBUTION.  IF THE INDEMNIFICATION
PROVIDED FOR IN SECTION 3(A) ABOVE FOR ANY REASON IS HELD BY A COURT OF
COMPETENT JURISDICTION TO BE UNAVAILABLE TO AN INDEMNITEE IN RESPECT OF ANY
LOSSES, CLAIMS, DAMAGES, EXPENSES OR LIABILITIES REFERRED TO THEREIN, THEN THE

 

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COMPANY, IN LIEU OF INDEMNIFYING INDEMNITEE THEREUNDER, SHALL CONTRIBUTE TO THE
AMOUNT PAID OR PAYABLE BY INDEMNITEE AS A RESULT OF SUCH LOSSES, CLAIMS,
DAMAGES, EXPENSES OR LIABILITIES (I) IN SUCH PROPORTION AS IS APPROPRIATE TO
REFLECT THE RELATIVE BENEFITS RECEIVED BY THE COMPANY AND INDEMNITEE, OR (II) IF
THE ALLOCATION PROVIDED BY CLAUSE (I) ABOVE IS NOT PERMITTED BY APPLICABLE LAW,
IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT NOT ONLY THE RELATIVE BENEFITS
REFERRED TO IN CLAUSE (I) ABOVE BUT ALSO THE RELATIVE FAULT OF THE COMPANY AND
INDEMNITEE IN CONNECTION WITH THE ACTION OR INACTION WHICH RESULTED IN SUCH
LOSSES, CLAIMS, DAMAGES, EXPENSES OR LIABILITIES, AS WELL AS ANY OTHER RELEVANT
EQUITABLE CONSIDERATIONS.  IN CONNECTION WITH THE REGISTRATION OF THE COMPANY’S
SECURITIES, THE RELATIVE BENEFITS RECEIVED BY THE COMPANY AND INDEMNITEE SHALL
BE DEEMED TO BE IN THE SAME RESPECTIVE PROPORTIONS THAT THE NET PROCEEDS FROM
THE OFFERING (BEFORE DEDUCTING EXPENSES) RECEIVED BY THE COMPANY AND THE
INDEMNITEE, IN EACH CASE AS SET FORTH IN THE TABLE ON THE COVER PAGE OF THE
APPLICABLE PROSPECTUS, BEAR TO THE AGGREGATE PUBLIC OFFERING PRICE OF THE
SECURITIES SO OFFERED.  THE RELATIVE FAULT OF THE COMPANY AND INDEMNITEE SHALL
BE DETERMINED BY REFERENCE TO, AMONG OTHER THINGS, WHETHER THE UNTRUE OR ALLEGED
UNTRUE STATEMENT OF A MATERIAL FACT OR THE OMISSION OR ALLEGED OMISSION TO STATE
A MATERIAL FACT RELATES TO INFORMATION SUPPLIED BY THE COMPANY OR INDEMNITEE AND
THE PARTIES’ RELATIVE INTENT, KNOWLEDGE, ACCESS TO INFORMATION AND OPPORTUNITY
TO CORRECT OR PREVENT SUCH STATEMENT OR OMISSION.

 

The Company and Indemnitee agree that it would not be just and equitable if
contribution pursuant to this Section 3(c) were determined by pro rata or per
capita allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph.  In connection with the registration of the Company’s securities, in
no event shall an Indemnitee be required to contribute any amount under this
Section 3(c) in excess of the lesser of (i) that proportion of the total of such
losses, claims, damages or liabilities indemnified against equal to the
proportion of the total securities sold under such registration statement which
is being sold by Indemnitee or (ii) the proceeds received by Indemnitee from its
sale of securities under such registration statement.  No person found guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any person who was not
found guilty of such fraudulent misrepresentation.

 

(D)                                 SURVIVAL REGARDLESS OF INVESTIGATION.  THE
INDEMNIFICATION AND CONTRIBUTION PROVIDED FOR HEREIN WILL REMAIN IN FULL FORCE
AND EFFECT REGARDLESS OF ANY INVESTIGATION MADE BY OR ON BEHALF OF INDEMNITEE OR
ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT OR CONTROLLING PERSON OF INDEMNITEE.

 

(E)                                  CHANGE IN CONTROL.  AFTER THE DATE HEREOF,
THE COMPANY AGREES THAT IF THERE IS A CHANGE IN CONTROL OF THE COMPANY (OTHER
THAN A CHANGE IN CONTROL WHICH HAS BEEN APPROVED BY A MAJORITY OF THE COMPANY’S
BOARD OF DIRECTORS WHO WERE DIRECTORS IMMEDIATELY PRIOR TO SUCH CHANGE IN
CONTROL) THEN, WITH RESPECT TO ALL MATTERS THEREAFTER ARISING CONCERNING THE
RIGHTS OF INDEMNITEE TO PAYMENTS OF EXPENSES UNDER THIS AGREEMENT OR ANY OTHER
AGREEMENT OR UNDER THE COMPANY’S CERTIFICATE OR BYLAWS AS NOW OR HEREAFTER IN
EFFECT, INDEPENDENT LEGAL COUNSEL (AS DEFINED IN SECTION 11(D) HEREOF) SHALL BE
SELECTED BY INDEMNITEE AND APPROVED BY THE COMPANY (WHICH APPROVAL SHALL NOT BE
UNREASONABLY WITHHELD).  SUCH COUNSEL, AMONG OTHER THINGS, SHALL RENDER ITS
WRITTEN OPINION TO THE COMPANY AND INDEMNITEE AS TO WHETHER AND TO WHAT EXTENT
INDEMNITEE WOULD BE PERMITTED TO BE INDEMNIFIED UNDER APPLICABLE LAW.  THE
COMPANY AGREES TO ABIDE BY SUCH OPINION AND TO PAY THE REASONABLE FEES OF THE
INDEPENDENT LEGAL COUNSEL

 

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REFERRED TO ABOVE AND TO FULLY INDEMNIFY SUCH COUNSEL AGAINST ANY AND ALL
REASONABLE EXPENSES (INCLUDING ATTORNEYS’ FEES), CLAIMS, LIABILITIES AND DAMAGES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ITS ENGAGEMENT PURSUANT HERETO.

 

(F)                                    MANDATORY PAYMENT OF EXPENSES. 
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE EXTENT THAT
INDEMNITEE HAS BEEN SUCCESSFUL ON THE MERITS OR OTHERWISE, INCLUDING, WITHOUT
LIMITATION, THE DISMISSAL OF AN ACTION WITHOUT PREJUDICE, IN THE DEFENSE OF ANY
ACTION, SUIT, PROCEEDING, INQUIRY OR INVESTIGATION REFERRED TO IN SECTION 3(A)
HEREOF OR IN THE DEFENSE OF ANY CLAIM, ISSUE OR MATTER THEREIN, INDEMNITEE SHALL
BE INDEMNIFIED AGAINST ALL EXPENSES INCURRED BY INDEMNITEE IN CONNECTION
HEREWITH.

 

4.                                      Expenses; Indemnification Procedure.

 

(A)                                  ADVANCEMENT OF EXPENSES.  THE COMPANY SHALL
ADVANCE ALL EXPENSES INCURRED BY INDEMNITEE.  THE ADVANCES TO BE MADE HEREUNDER
SHALL BE PAID BY THE COMPANY TO INDEMNITEE AS SOON AS PRACTICABLE BUT IN ANY
EVENT NO LATER THAN TEN (10) BUSINESS DAYS AFTER WRITTEN DEMAND BY INDEMNITEE
THEREFOR TO THE COMPANY.

 

(B)                                 NOTICE/COOPERATION BY INDEMNITEE. 
INDEMNITEE SHALL GIVE THE COMPANY NOTICE IN WRITING IN ACCORDANCE WITH
SECTION 15 OF THIS AGREEMENT AS SOON AS PRACTICABLE OF ANY CLAIM MADE AGAINST
INDEMNITEE FOR WHICH INDEMNIFICATION WILL OR COULD BE SOUGHT UNDER THIS
AGREEMENT.

 

(C)                                  NO PRESUMPTIONS; BURDEN OF PROOF.  FOR
PURPOSES OF THIS AGREEMENT, THE TERMINATION OF ANY CLAIM BY JUDGMENT, ORDER,
SETTLEMENT (WHETHER WITH OR WITHOUT COURT APPROVAL) OR CONVICTION, OR UPON A
PLEA OF NOLO CONTENDERE, OR ITS EQUIVALENT, SHALL NOT CREATE A PRESUMPTION THAT
INDEMNITEE DID NOT MEET ANY PARTICULAR STANDARD OF CONDUCT OR HAVE ANY
PARTICULAR BELIEF OR THAT A COURT HAS DETERMINED THAT INDEMNIFICATION IS NOT
PERMITTED BY APPLICABLE LAW.  IN ADDITION, NEITHER THE FAILURE OF THE REVIEWING
PARTY TO HAVE MADE A DETERMINATION AS TO WHETHER INDEMNITEE HAS MET ANY
PARTICULAR STANDARD OF CONDUCT OR HAD ANY PARTICULAR BELIEF, NOR AN ACTUAL
DETERMINATION BY THE REVIEWING PARTY THAT INDEMNITEE HAS NOT MET SUCH STANDARD
OF CONDUCT OR DID NOT HAVE SUCH BELIEF, PRIOR TO THE COMMENCEMENT OF LEGAL
PROCEEDINGS BY INDEMNITEE TO SECURE A JUDICIAL DETERMINATION THAT INDEMNITEE
SHOULD BE INDEMNIFIED UNDER APPLICABLE LAW, SHALL BE A DEFENSE TO INDEMNITEE’S
CLAIM OR CREATE A PRESUMPTION THAT INDEMNITEE HAS NOT MET ANY PARTICULAR
STANDARD OF CONDUCT OR DID NOT HAVE ANY PARTICULAR BELIEF. IN CONNECTION WITH
ANY DETERMINATION BY THE REVIEWING PARTY OR OTHERWISE AS TO WHETHER INDEMNITEE
IS ENTITLED TO BE INDEMNIFIED HEREUNDER, THE BURDEN OF PROOF SHALL BE ON THE
COMPANY TO ESTABLISH THAT INDEMNITEE IS NOT SO ENTITLED.

 

(D)                                 NOTICE TO INSURERS.  IF, AT THE TIME OF THE
RECEIPT BY THE COMPANY OF A NOTICE OF A CLAIM PURSUANT TO SECTION 4(B) HEREOF,
THE COMPANY HAS LIABILITY INSURANCE IN EFFECT WHICH MAY COVER SUCH CLAIM, THE
COMPANY SHALL GIVE PROMPT NOTICE OF THE COMMENCEMENT OF SUCH CLAIM TO THE
INSURERS IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN EACH OF THE COMPANY’S
POLICIES.  THE COMPANY SHALL THEREAFTER TAKE ALL NECESSARY OR DESIRABLE ACTION
TO CAUSE SUCH INSURERS TO PAY, ON BEHALF OF INDEMNITEE, ALL AMOUNTS PAYABLE AS A
RESULT OF SUCH ACTION, SUIT, PROCEEDING, INQUIRY OR INVESTIGATION IN ACCORDANCE
WITH THE TERMS OF SUCH POLICIES.

 

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(E)                                  SELECTION OF COUNSEL.  IN THE EVENT THE
COMPANY SHALL BE OBLIGATED HEREUNDER TO PAY THE EXPENSES OF ANY CLAIM, THE
COMPANY SHALL BE ENTITLED TO ASSUME THE DEFENSE OF SUCH CLAIM, WITH COUNSEL
APPROVED BY THE INDEMNITEE (WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD)
UPON THE DELIVERY TO INDEMNITEE OF WRITTEN NOTICE OF ITS ELECTION TO DO SO.
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 CLAIM; PROVIDED THAT (I) INDEMNITEE SHALL
HAVE THE RIGHT TO EMPLOY INDEMNITEE’S COUNSEL IN ANY SUCH CLAIM 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 IS A CONFLICT OF INTEREST BETWEEN THE COMPANY AND
INDEMNITEE IN THE CONDUCT OF ANY SUCH DEFENSE, OR (C) THE COMPANY SHALL NOT
CONTINUE TO RETAIN SUCH COUNSEL TO DEFEND SUCH CLAIM, THEN THE FEES AND EXPENSES
OF INDEMNITEE’S COUNSEL SHALL BE AT THE EXPENSE OF THE COMPANY.

 

5.                                      Nonexclusivity.  The indemnification
provided by this Agreement shall be in addition to any rights to which
Indemnitee may be entitled under the Company’s Certificate of Incorporation, its
Bylaws, any agreement, any vote of stockholders or disinterested directors, the
DGCL, or otherwise. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action Indemnitee took or did not take while
serving in an indemnified capacity even though Indemnitee may have ceased to
serve in such capacity.

 

6.                                      No Duplication of Payments.  The Company
shall not be liable under this Agreement to make any payment in connection with
any Claim made against any Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, Certificate of
Incorporation, Bylaw or otherwise) of the amounts otherwise indemnifiable
hereunder.

 

7.                                      Partial Indemnification.  If any
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Company for any portion of Expenses incurred in connection with any
Claim, but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion of such Expenses to which
Indemnitee is entitled.

 

8.                                      Mutual Acknowledgement.  The Company and
Indemnitee acknowledge that in certain instances, Federal law or applicable
public policy may prohibit the Company from indemnifying its directors,
officers, employees, controlling persons, agents or fiduciaries under this
Agreement or otherwise. Each 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 rights
under public policy to indemnify Indemnitee.

 

9.                                      Exceptions.  Any other provision herein
to the contrary notwithstanding, the Company shall not be obligated pursuant to
the terms of this Agreement:

 

(A)                                  CLAIMS INITIATED BY INDEMNITEE.  TO
INDEMNIFY OR ADVANCE EXPENSES TO ANY INDEMNITEE WITH RESPECT TO CLAIMS INITIATED
OR BROUGHT VOLUNTARILY BY INDEMNITEE AND NOT BY WAY OF DEFENSE, EXCEPT (I) WITH
RESPECT TO ACTIONS OR PROCEEDINGS TO ESTABLISH OR ENFORCE A RIGHT TO

 

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INDEMNIFY UNDER THIS AGREEMENT OR ANY OTHER AGREEMENT OR INSURANCE POLICY OR
UNDER THE COMPANY’S CERTIFICATE OF INCORPORATION OR BYLAWS NOW OR HEREAFTER IN
EFFECT RELATING TO CLAIMS FOR INDEMNIFIABLE EVENTS, (II) IN SPECIFIC CASES IF
THE BOARD OF DIRECTORS HAS APPROVED THE INITIATION OR BRINGING OF SUCH CLAIM, OR
(III) AS OTHERWISE REQUIRED UNDER SECTION 145 OF THE DGCL, REGARDLESS OF WHETHER
INDEMNITEE ULTIMATELY IS DETERMINED TO BE ENTITLED TO SUCH INDEMNIFICATION,
ADVANCE EXPENSE PAYMENT OR INSURANCE RECOVERY, AS THE CASE MAY BE; OR

 

(B)                                 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 EXCHANGE
ACT OR ANY SIMILAR SUCCESSOR STATUTE; OR

 

(C)                                  CLAIMS EXCLUDED UNDER SECTION 145 OF THE
DGCL.  TO INDEMNIFY INDEMNITEE IF (I) INDEMNITEE DID NOT ACT IN GOOD FAITH OR IN
A MANNER REASONABLY BELIEVED BY SUCH INDEMNITEE TO BE IN OR NOT OPPOSED TO THE
BEST INTERESTS OF THE COMPANY, OR (II) WITH RESPECT TO ANY CRIMINAL ACTION OR
PROCEEDING, INDEMNITEE HAD REASONABLE CAUSE TO BELIEVE INDEMNITEE’S CONDUCT WAS
UNLAWFUL, OR (III) INDEMNITEE SHALL HAVE BEEN ADJUDGED TO BE LIABLE TO THE
COMPANY UNLESS AND ONLY TO THE EXTENT THE COURT IN WHICH SUCH ACTION WAS BROUGHT
SHALL PERMIT INDEMNIFICATION AS PROVIDED IN SECTION 145(B) OF THE DGCL; OR

 

(D)                                 OTHER EXCLUDED ACTIONS OR OMISSIONS. TO
INDEMNIFY INDEMNITEE FOR ACTS, OMISSIONS OR TRANSACTIONS FOR WHICH INDEMNITEE IS
PROHIBITED FROM RECEIVING INDEMNIFICATION UNDER ANY OTHER APPLICABLE LAW.

 

10.                               Period of Limitations.    No legal action
shall be brought and no cause of action shall be asserted by or in the right of
the Company against any Indemnitee, any Indemnitee’s estate, spouse, heirs,
executors or personal or legal representatives after the expiration of five
years from the date of accrual of such cause of action, and any claim or cause
of action of the Company shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such five-year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.

 

11.                               Construction of Certain Phrases.

 

(A)                                  FOR PURPOSES OF THIS AGREEMENT, REFERENCES
TO THE “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,
AGENTS OR FIDUCIARIES, SO THAT IF INDEMNITEE IS OR WAS A DIRECTOR, OFFICER,
EMPLOYEE, AGENT, CONTROL PERSON, OR FIDUCIARY OF SUCH CONSTITUENT CORPORATION,
OR IS OR WAS SERVING AT THE REQUEST OF SUCH CONSTITUENT CORPORATION AS A
DIRECTOR, OFFICER, EMPLOYEE, CONTROL PERSON, AGENT OR FIDUCIARY OF ANOTHER
CORPORATION, PARTNERSHIP, JOINT VENTURE, EMPLOYEE BENEFIT PLAN, 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, REFERENCES
TO “OTHER ENTERPRISES” SHALL INCLUDE EMPLOYEE BENEFIT PLANS; REFERENCES TO
“FINES” SHALL INCLUDE ANY EXCISE TAXES ASSESSED ON

 

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ANY 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, AGENT OR FIDUCIARY OF THE COMPANY WHICH IMPOSES DUTIES ON, OR
INVOLVES SERVICES BY, SUCH DIRECTOR, OFFICER, EMPLOYEE, AGENT OR FIDUCIARY WITH
RESPECT TO AN EMPLOYEE BENEFIT PLAN, ITS PARTICIPANTS OR ITS BENEFICIARIES; AND
IF ANY INDEMNITEE ACTED IN GOOD FAITH AND IN A MANNER INDEMNITEE REASONABLY
BELIEVED TO BE IN THE INTERESTS OF THE PARTICIPANTS AND BENEFICIARIES OF AN
EMPLOYEE BENEFIT PLAN, INDEMNITEE SHALL BE DEEMED TO HAVE ACTED IN A MANNER “NOT
OPPOSED TO THE BEST INTERESTS OF THE COMPANY” AS REFERRED TO IN THIS AGREEMENT.

 

(C)                                  FOR PURPOSES OF THIS AGREEMENT A “CHANGE IN
CONTROL” SHALL BE DEEMED TO HAVE OCCURRED IF (I) ANY “PERSON” (AS SUCH TERM IS
USED IN SECTIONS 13(D)(3) AND 14(D)(2) OF THE EXCHANGE ACT), OTHER THAN A
TRUSTEE OR OTHER FIDUCIARY HOLDING SECURITIES UNDER AN EMPLOYEE BENEFIT PLAN OF
THE COMPANY OR A CORPORATION OWNED DIRECTLY OR INDIRECTLY BY THE STOCKHOLDERS OF
THE COMPANY IN SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR OWNERSHIP OF STOCK OF
THE COMPANY, (A) WHO IS OR BECOMES THE BENEFICIAL OWNER, DIRECTLY OR INDIRECTLY,
OF SECURITIES OF THE COMPANY REPRESENTING 10% OR MORE OF THE COMBINED VOTING
POWER OF THE COMPANY’S THEN OUTSTANDING VOTING SECURITIES, INCREASES HIS OR HER
BENEFICIAL OWNERSHIP OF SUCH SECURITIES BY 5% OR MORE OVER THE PERCENTAGE SO
OWNED BY SUCH PERSON, OR (B) BECOMES THE “BENEFICIAL OWNER” (AS DEFINED IN RULE
13D-3 UNDER SAID EXCHANGE ACT), DIRECTLY OR INDIRECTLY, OF SECURITIES OF THE
COMPANY REPRESENTING MORE THAN 20% OF THE TOTAL VOTING POWER REPRESENTED BY THE
COMPANY’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 COMPANY AND ANY NEW DIRECTOR WHOSE ELECTION BY THE
BOARD OF DIRECTORS OR NOMINATION FOR ELECTION BY THE COMPANY’S STOCKHOLDERS WAS
APPROVED BY A VOTE OF AT LEAST TWO-THIRDS 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 STOCKHOLDERS OF THE COMPANY APPROVE
A MERGER OR CONSOLIDATION OF THE COMPANY WITH ANY OTHER CORPORATION OTHER THAN A
MERGER OR CONSOLIDATION WHICH WOULD RESULT IN THE VOTING SECURITIES OF THE
COMPANY OUTSTANDING IMMEDIATELY PRIOR THERETO CONTINUING TO REPRESENT (EITHER BY
REMAINING OUTSTANDING OR BY BEING CONVERTED INTO VOTING SECURITIES OF THE
SURVIVING ENTITY) AT LEAST 80% OF THE TOTAL VOTING POWER REPRESENTED BY THE
VOTING SECURITIES OF THE COMPANY OR SUCH SURVIVING ENTITY OUTSTANDING
IMMEDIATELY AFTER SUCH MERGER OR CONSOLIDATION, OR THE STOCKHOLDERS OF THE
COMPANY APPROVE A PLAN OF COMPLETE LIQUIDATION OF THE COMPANY OR AN AGREEMENT
FOR THE SALE OR DISPOSITION BY THE COMPANY OF (IN ONE TRANSACTION OR A SERIES OF
TRANSACTIONS) ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS.

 

(D)                                 FOR PURPOSES OF THIS AGREEMENT, “INDEPENDENT
LEGAL COUNSEL” SHALL MEAN AN ATTORNEY OR FIRM OF ATTORNEYS, SELECTED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3(D) HEREOF, WHO SHALL NOT HAVE
OTHERWISE PERFORMED SERVICES FOR THE COMPANY OR ANY INDEMNITEE WITHIN THE LAST
THREE YEARS (OTHER THAN WITH RESPECT TO MATTERS CONCERNING THE RIGHT OF ANY
INDEMNITEE UNDER THIS AGREEMENT, OR OF OTHER INDEMNITEES UNDER SIMILAR INDEMNITY
AGREEMENTS).

 

(E)                                  FOR PURPOSES OF THIS AGREEMENT, A
“REVIEWING PARTY” SHALL MEAN ANY APPROPRIATE PERSON OR BODY CONSISTING OF A
MEMBER OR MEMBERS OF THE COMPANY’S BOARD OF DIRECTORS OR ANY OTHER PERSON OR
BODY APPOINTED BY THE BOARD OF DIRECTORS WHO IS NOT A PARTY TO THE PARTICULAR
CLAIM FOR WHICH INDEMNITEE ARE SEEKING INDEMNIFICATION, OR INDEPENDENT LEGAL
COUNSEL.

 

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(F)                                    FOR PURPOSES OF THIS AGREEMENT, “VOTING
SECURITIES” SHALL MEAN ANY SECURITIES OF THE COMPANY THAT VOTE GENERALLY IN THE
ELECTION OF DIRECTORS.

 

12.                               Counterparts.  This Agreement may be executed
in one or more counterparts, each of which shall constitute an original.

 

13.                               Binding Effect; Successors and Assigns.  This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors, assigns, including any
direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business and/or assets of the Company, spouses,
heirs, and personal and legal representatives. The Company shall require and
cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business and/or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect with respect to Claims relating to Indemnifiable Events
regardless of whether any Indemnitee continues to serve as a director, officer,
employee, agent, controlling person, or fiduciary of the Company or of any other
enterprise, including subsidiaries of the Company, at the Company’s request.

 

14.                               Attorneys’ Fees.  In the event that any action
is instituted by an Indemnitee under this Agreement or under any liability
insurance policies maintained by the Company to enforce or interpret any of the
terms hereof or thereof, any Indemnitee shall be entitled to be paid all
Expenses incurred by Indemnitee with respect to such action if Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such action 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 to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in defense of such action (including costs and expenses incurred with
respect to Indemnitee counterclaims and cross-claims made in such action), and
shall be entitled to the advancement of Expenses with respect to such action,
unless, as a part of such action, a court having jurisdiction over such action
determines that the Indemnitee’s material defenses to such action were made in
bad faith or were frivolous.

 

15.                               Notice.  All notices and other communications
required or permitted hereunder shall be in writing, shall be effective when
given, and shall in any event be deemed to be given (a) five (5) calendar days
after deposit with the U.S. Postal Service or other applicable postal service,
if delivered by first class mail, postage prepaid, (b) upon delivery, if
delivered by hand, (c) one business day after the business day of deposit with
Federal Express or similar overnight courier, freight prepaid, or (d) one day
after the business day of delivery by facsimile transmission, if deliverable by
facsimile transmission, with copy by first class mail, postage prepaid, and
shall be addressed if to Indemnitee, at Indemnitee’s address as set forth
beneath Indemnitee’s signature to this Agreement and if to the Company at the
address of its principal

 

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corporate offices (attention: Chief Executive Officer) or at such other address
as such party may designate by ten (10) calendar days’ advance written notice to
the other party hereto.

 

16.                               Consent to Jurisdiction.  The Company and
Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of
the State of Delaware 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 commenced, prosecuted and
continued only in the Court of Chancery of the State of Delaware in and for New
Castle County, which shall be the exclusive and only proper forum for
adjudicating such a claim.

 

17.                               Severability.  The provisions of this
Agreement shall be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or sentence) are
held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable to the
fullest extent permitted by law. Furthermore, to the fullest extent possible,
the provisions of this Agreement (including, without limitations, each portion
of this Agreement containing any provision held to be invalid, void or otherwise
unenforceable, that is not itself invalid, void or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.

 

18.                               Choice of Law.  This Agreement shall be
governed by and its provisions construed and enforced in accordance with the
laws of the State of Delaware, as applied to contracts between Delaware
residents, entered into and to be performed entirely within the State of
Delaware, without regard to the conflict of laws principles thereof.

 

19.                               Subrogation.  In the event of payment under
this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee who shall execute all documents
required and shall do all acts that may be necessary to secure such rights and
to enable the Company effectively to bring suit to enforce such rights.

 

20.                               Amendment and Termination.  No amendment,
modification, termination or cancellation of this Agreement shall be effective
unless it is in writing signed by all parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.

 

21.                               Integration and Entire Agreement.  This
Agreement sets forth the entire understanding between the parties hereto and
supersedes and merges all previous written and oral negotiations, commitments,
understandings and agreements relating to the subject matter hereof between the
parties hereto.

 

22.                               No Construction as Employment Agreement. 
Nothing contained in this Agreement shall be construed as giving the Indemnitee
any right to be retained in the employ of the Company or any of its
subsidiaries.

 

23.                               Corporate Authority.  The Board of Directors
of the Company has approved the terms of this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of
the day and year first above written.

 

 

 

COMPANY:

 

 

 

ITERIS HOLDINGS, INC.,
a Delaware corporation

 

 

 

 

 

By:

 

 

 

 

Gregory A. Miner,

 

 

Chief Executive Officer, Chief Financial
Officer and Secretary

 

 

 

Address:

1515 South Manchester Avenue

 

 

Anaheim, California  92802

 

 

 

 

 

INDEMNITEE:

 

 

 

 

 

 

Signature

 

 

 

 

 

 

Print Name

 

 

 

 

 

Address:

 

 

 

 

 

 

 

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