EXHIBIT 10.7

March 6, 2003

 

Mr. Victor A. Cohn

FocalPoint Partners

909 Third Avenue

New York, NY 10022

 

Dear Victor,

 

We are pleased that you have accepted a position on the Board of Directors (the
“Board”) of Verity, Inc. (“Verity” or the “Company”). We are further pleased to
have you join the Audit Committee of the Board. This is an exciting time for the
Company, and we believe that your skills and experience can greatly assist in
moving the Company forward. We would like to provide you with further
information regarding your compensation as a member of the Board.

 

1. Stock Option Grants. Upon your election to the Board, and in consideration of
your services to Verity as a director, you will be granted a non-statutory stock
option to purchase 40,000 shares of Verity’s Common Stock under Verity’s 1995
Outside Directors Stock Option Plan. This option shall vest over four years with
 1/4 of the shares vesting after one year and the remaining  3/4 of the shares
vesting in 36 equal monthly installments thereafter. As a non-employee director,
you will also be granted an option to purchase an additional 40,000 shares at
each annual meeting of Verity’s stockholders starting in October of 2003. This
option shall vest over four years with  1/12 of the shares vesting after 37
months and the remaining  11/12 of the shares vesting in 11 equal monthly
installments thereafter. In addition, upon your election to the Board, you will
also be granted a non-statutory stock option to purchase 60,000 shares of
Verity’s Common Stock under Verity’s 1996 Nonstatutory Stock Option Plan. This
option shall vest in equal monthly installments over 24 months. All such options
shall have an exercise price equal to the fair market value of Verity’s Common
Stock on the date of grant. The options shall be subject to vesting restrictions
and other standard provisions set forth in Verity’s stock option documentation.
Additional details regarding the options are described in Exhibit A to this
letter.

 

2. Reimbursement for Board Duties. As a non-employee director of Verity, you
will receive an annual retainer of $25,000. In addition, you will also be
reimbursed for your expenses in attending Board and committee meetings.

 

3. Indemnity Agreement. Verity enters into a standard form of indemnity
agreement with each of its directors. Such agreements require Verity to
indemnify its directors to the fullest extent permitted by law. A copy of
Verity’s form of indemnity agreement is attached to this letter as Exhibit B.

 

4. Proprietary Information. In your role as a director of the Company, you will
be expected not to use or disclose any confidential information, including trade
secrets, of any former employer or other person to whom you have an obligation
of confidentiality. Additionally, you will receive confidential and proprietary
information belonging to the Company, which you will have a duty of care and a
duty of loyalty to protect.

 

5. Nature of Relationship. Your relationship with the Company will be as a
member of the Board and will not involve an employment or consulting
relationship. This letter, together with the indemnity agreement and documents
relating to your option grant, forms the complete and exclusive statement of our
understanding with respect to your service on the Company’s Board of Directors.
The terms in this letter supersede any other agreements or promises made to you
by anyone, whether oral or written.

 

We are excited to have you join Verity’s Board of Directors and would like to
have you participate at the Company’s next scheduled Board meeting on March 10,
2003.

 

Please sign and date this letter and return it to me to confirm that you wish to
accept membership on the Board under the terms described above.

 

Sincerely,

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Gary J. Sbona

Chairman of the Board of Directors

 

Accepted and agreed to:

 

/s/    VICTOR A. COHN        

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3/6/03        

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Victor A. Cohn       Date

 

Enclosures:   Exhibit A                 Exhibit B            

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EXHIBIT A

 

ADDITIONAL OPTION TERMS AND CONDITIONS

 

Vesting

 

Under the 1995 Outside Directors Stock Option Plan, an option is exercisable as
the shares underlying the option vest, provided the optionee has continuously
served as a director.

 

Under the 1996 Nonstatutory Stock Option Plan, an option is exercisable at such
time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria, and restrictions as shall be determined by the
Board and set forth in the option agreement evidencing such option.

 

Transfer of Control

 

Under the 1995 Outside Directors Stock Option Plan, if a “transfer of control”
of the Company occurs, any unexercisable or unvested portion of the outstanding
options will be immediately exercisable and vested in full ten days before the
date of the transfer of control. In addition, the surviving, continuing,
successor, or purchasing corporation or parent corporation thereof, as the case
may be (the “acquiring corporation”), may either assume the Company’s rights and
obligations under outstanding options or substitute for outstanding options
substantially equivalent options for the acquiring corporation’s stock. Any
options which are not assumed, substituted for or exercised will terminate as of
the transfer of control.

 

Under the 1996 Nonstatutory Stock Option Plan, if a “transfer of control” of the
Company occurs, the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the “acquiring corporation”),
may either assume the Company’s rights and obligations under outstanding options
or substitute for outstanding options substantially equivalent options for the
acquiring corporation’s stock. Any options which are not assumed, substituted
for or exercised will terminate as of the transfer of control.

 

A “transfer of control” under both plans means an “ownership change event” (as
defined below) or a series of related ownership change events (collectively, the
“transaction”) wherein the stockholders of the Company immediately before the
transaction do not retain immediately after the transaction, in substantially
the same proportions as their ownership of shares of the Company’s voting stock
immediately before the transaction, direct or indirect beneficial ownership of
more than 50% of the total combined voting power of the outstanding voting stock
of the Company or the corporation or corporations to which the assets of the
Company were transferred. An “ownership change event” is deemed to have occurred
if any of the following occurs with respect to the Company: (1) the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of more than 50% of the voting stock of the Company; (2) a merger
or consolidation in which the Company is a party; (3) the sale, exchange, or
transfer of all or substantially all of the assets of the Company; or (4) a
liquidation or dissolution of the Company.

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EXHIBIT B

 

FORM OF INDEMNITY AGREEMENT

 

This INDEMNITY AGREEMENT, dated as of March 6, 2003, is made by and between
VERITY, INC., a Delaware corporation (the “Company”), and VICTOR A. COHN (the
“Indemnitee”).

 

RECITALS

 

A. The Company is aware that competent and experienced persons are increasingly
reluctant to serve as directors, officers or agents 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, officers and
other agents.

 

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, officers and agents 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, officers and other agents.

 

D. The Company believes that it is unfair for its directors, officers and agents
and the directors, officers and agents of its subsidiaries to assume the risk of
huge judgments and other expenses which may occur in cases in which the
director, officer or agent received no personal profit and in cases where the
director, officer or agent was not culpable.

 

E. The Company recognizes that the issues in controversy in litigation against a
director, officer or agent of a corporation such as the Company or its
subsidiaries are often related to the knowledge, motives and intent of such
director, officer or agent, that he 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 that the director,
officer or agent can reasonably recall such matters; and may extend beyond the
normal time for retirement for such director, officer or agent with the result
that he, after retirement or in the event of his death, his spouse, heirs,
executors or administrators, may be faced with limited ability and undue
hardship in maintaining an adequate defense, which may discourage such a
director, officer or agent 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, officers and agents of the
Company and its subsidiaries and to encourage such individuals to take the
business risks necessary for the success of the Company and its subsidiaries, it
is necessary for the Company to contractually indemnify its directors, officers
and agents and the directors, officers and agents of its subsidiaries, and to
assume for itself maximum liability for expenses and damages in connection with
claims against such directors, officers and agents 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 stockholders.

 

G. Section 145 of the General Corporation Law of Delaware, under which the
Company is organized (“Section 145”), empowers the Company to indemnify its
directors, officers, employees and agents by agreement and to indemnify persons
who serve, at the request of the Company, as the directors, officers, employees
or agents of other corporations or enterprises, and expressly provides that the
indemnification provided by Section 145 is not exclusive.

 

H. The Company desires and has requested the Indemnitee to serve or continue to
serve as a director, officer or agent 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.

 

I. Indemnitee is willing to serve, or to continue to serve, the Company and/or
one or more subsidiaries of the Company, provided that he is furnished the
indemnity provided for herein.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

 

1. Definitions.

 

(a) Agent. For the purposes of this Agreement, “agent” of the Company means any
person who is or was a director, officer, employee or other agent of the Company
or a subsidiary of the Company; or is or was serving at the request of, for the
convenience of, or to represent the interests of the Company or a subsidiary of
the Company as a director, officer,

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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 subsidiary of the Company, 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. For purposes of this Agreement, “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
actually and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or Section 145 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. For the purposes of this Agreement, “proceeding” means any
threatened, pending, or completed action, suit or other proceeding, whether
civil, criminal, administrative, or investigative.

 

(d) Subsidiary. For purposes of this Agreement, “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 agent 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 he is duly appointed or elected and qualified in
accordance with the applicable provisions of the Bylaws of the Company or any
subsidiary of the Company or until such time as he tenders his 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 an agent of the Company and
thereafter so long as the Indemnitee shall be subject to any possible proceeding
by reason of the fact that the Indemnitee was an agent of the Company, the
Company, subject to Section 3(c), shall promptly obtain and maintain in full
force and effect directors’ and officers’ liability insurance (“D&O Insurance”)
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.

 

(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 of the
Company.

 

4. Mandatory Indemnification. Subject to Section 9 below, the Company shall
indemnify the Indemnitee as follows:

 

(a) Successful Defense. To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding (including, without limitation,
an action by or in the right of the Company) to which the Indemnitee was a party
by reason of the fact that he is or was an Agent of the Company at any time,
against all expenses of any type whatsoever actually and reasonably incurred by
him in connection with the investigation, defense or appeal of such proceeding.

 

(b) Third Party Actions. If the Indemnitee is a person who was or is a party or
is threatened to be made a party to any proceeding (other than an action by or
in the right of the Company) by reason of the fact that he is or was an

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agent of the Company, or by reason of anything done or not done by him in any
such capacity, the Company shall indemnify the Indemnitee against any and all
expenses and liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding, provided the
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company and its stockholders, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.

 

(c) Derivative Actions. 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 he
is or was an agent of the Company, or by reason of anything done or not done by
him in any such capacity, the Company shall indemnify the Indemnitee against any
amounts paid in settlement of any such proceeding and all expenses actually and
reasonably incurred by him in connection with the investigation, defense,
settlement, or appeal of such proceeding, provided the Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and its stockholders. The Company shall indemnify the
Indemnitee against judgments, fines, and ERISA excise taxes and penalties to the
same extent and subject to the same conditions as described in the immediately
preceding sentence. Notwithstanding the foregoing, no indemnification under this
subsection 4(c) shall be made in respect to any claim, issue or matter as to
which such person shall have been finally adjudged to be liable to the Company
by a court of competent jurisdiction unless and only to the extent that the
court in which such proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
amounts which the court shall deem proper.

 

(d) Actions where Indemnitee is Deceased. 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 he is or was an agent of the Company, or by reason of anything
done or not done by him in any such capacity, and if prior to, during the
pendency of after completion of such proceeding Indemnitee becomes deceased, the
Company shall indemnify the Indemnitee’s heirs, executors and administrators
against any and all expenses and liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes and penalties, and
amounts paid in settlement) actually and reasonably incurred to the extent
Indemnitee would have been entitled to indemnification pursuant to Sections
4(a), 4(b), or 4(c) above were Indemnitee still alive.

 

(e) Notwithstanding the foregoing, the Company shall not be obligated to
indemnify the Indemnitee for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes and
penalties, and amounts paid in settlement) for which payment is actually made to
Indemnitee under a valid and collectible insurance policy of D&O Insurance, or
under a valid and enforceable indemnity clause, by-law or agreement.

 

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 or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) incurred by him in the investigation, defense, settlement or appeal
of a proceeding, but not entitled, however, to indemnification for all of the
total amount hereof, the Company shall nevertheless indemnify the Indemnitee for
such total amount except as to the portion hereof to which the Indemnitee is not
entitled.

 

6. Mandatory Advancement of Expenses. Subject to Section 8(a) below, the Company
shall advance all 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. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall be determined ultimately that the 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 the Indemnitee within twenty (20) days
following delivery of a written request therefor by the Indemnitee to the
Company.

 

7. Notice and Other Indemnification Procedures.

 

(a) Promptly after receipt by the Indemnitee of notice of the commencement of or
the threat of commencement of any proceeding, the Indemnitee shall, if the
Indemnitee believes that indemnification with respect thereto may be sought from
the Company under this Agreement, notify the Company of the commencement or
threat of commencement thereof.

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(b) If, at the time of the receipt of a notice of the commencement of a
proceeding pursuant to Section 7(a) hereof, the Company has D&O 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.

 

(c) In the event the Company shall be obligated to pay the expenses of any
proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee, upon the delivery to the Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any fees of
counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that (i) the Indemnitee shall have the right to employ his
counsel in any such proceeding at the Indemnitee’s expense; and (ii) if (A) the
employment of counsel by the Indemnitee has been previously authorized by the
Company, (B) the Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and the 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 fees and expenses of
Indemnitee’s counsel shall be at the expense of the Company.

 

8. 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 the
Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board, (iii) such indemnification is provided by the Company,
in its sole discretion, pursuant to the powers vested in the Company under the
General Corporation Law of Delaware or (iv) the proceeding is brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Section 145.

 

(b) Lack of Good Faith. To indemnify the Indemnitee for any expenses incurred by
the Indemnitee with respect to any proceeding instituted by the Indemnitee to
enforce or interpret this Agreement, if a court of competent jurisdiction
determines that the proceeding was not brought by the Indemnitee in good faith
or was frivolous; or

 

(c) Unauthorized Settlements. To indemnify the Indemnitee under this Agreement
for any amounts paid in settlement of a proceeding unless the Company consents
to such settlement, which consent shall not be unreasonably withheld.

 

9. Non-exclusivity. The provisions for indemnification and advancement of
expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which the Indemnitee may have under any provision of law, the Company’s
Certificate of Incorporation or Bylaws, the vote of the Company’s stockholders
or disinterested directors, other agreements, or otherwise, both as to action in
his official capacity and to action in another capacity while occupying his
position as an agent of the Company, and the Indemnitee’s rights hereunder shall
continue after the Indemnitee has ceased acting as an agent of the Company and
shall inure to the benefit of the heirs, executors and administrators of the
Indemnitee.

 

10. Enforcement. Any right to indemnification or advances granted by this
Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee in
any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim is
made within ninety (90) days of request therefor. Indemnitee, in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. It shall be a defense to any
action for which a claim for indemnification is made under this Agreement (other
than an action brought to enforce a claim for expenses pursuant to Section 6
hereof, provided that the required undertaking has been tendered to the Company)
that Indemnitee is not entitled to indemnification because of the limitations
set forth in Sections 4 and 8 hereof. Neither the failure of the Corporation
(including its Board of Directors or its stockholders) to have made a
determination prior to the commencement of such enforcement action that
indemnification of Indemnitee is proper in the circumstances, nor an actual
determination by the Company (including its Board of Directors or its
stockholders) that such indemnification is improper, shall be a defense to the
action or create a presumption that Indemnitee is not entitled to
indemnification under this Agreement or otherwise.

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11. 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.

 

12. Survival of Rights.

 

(a) All agreements and obligations of the Company contained herein shall
continue during the period Indemnitee is an agent of the Company and shall
continue thereafter so long as Indemnitee shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, by reason of the fact
that Indemnitee was serving in the capacity referred to herein.

 

(b) The Company shall require any successor to the Company (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, 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.

 

13. Interpretation of Agreement. It is understood that the parties hereto intend
this Agreement to be interpreted and enforced so as to provide indemnification
to the Indemnitee to the fullest extent permitted by law including those
circumstances in which indemnification would otherwise be discretionary.

 

14. Severability. If any provision or provisions of this Agreement shall be held
to be invalid, illegal or unenforceable for any reason whatsoever, (i) the
validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 13 hereof.

 

15. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the 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.

 

16. 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 or (ii) if mailed by certified or
registered mail with postage prepaid, on the third business day after the
mailing date. Addresses for notice to either party are as shown on the signature
page of this Agreement, or as subsequently modified by written notice.

 

17. Governing Law. This Agreement shall be governed exclusively by and construed
according to the laws of the State of Delaware as applied to contracts between
Delaware residents entered into and to be performed entirely within Delaware.

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The parties hereto have entered into this Indemnity Agreement effective as of
the date first above written.

 

VERITY, INC.

 

By:

 

/s/    PAUL H. COOK

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Title: Corporate Controller

   

Address: 894 Ross Drive

Sunnyvale, California 94089

 

INDEMNITEE

 

By:

 

/s/    VICTOR A. COHN    

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    Victor A. Cohn