EXHIBIT 10.1

 

PCM, INC.

 

FORM OF INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“Agreement”) is made as of ________________ by
and between PCM, Inc., a Delaware corporation (the “Company”), and ____________
(“Indemnitee”).

 

RECITALS

 

WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company;

 

WHEREAS, in order to induce Indemnitee to continue to provide services to the
Company, the Company wishes to provide for the indemnification of, and
advancement of expenses to, Indemnitee to the maximum extent permitted by law;

 

WHEREAS, the Amended and Restated Bylaws of the Company (the “Bylaws”) require
indemnification of the officers and directors of the Company, and Indemnitee may
also be entitled to indemnification pursuant to the General Corporation Law of
the State of Delaware (the “DGCL”);

 

WHEREAS, the Bylaws and the DGCL expressly provide that the indemnification
provisions set forth therein are not exclusive, and thereby contemplate that
contracts may be entered into between the Company and members of the board of
directors, officers and other persons with respect to indemnification;

 

WHEREAS, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for the Company’s directors, officers, employees,
agents and fiduciaries, the significant and continual increases in the cost of
such insurance and the general trend of insurance companies to reduce the scope
of coverage of such insurance;

 

WHEREAS, the Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and scope of coverage of liability insurance provide increasing
challenges for the Company;

 

WHEREAS, Indemnitee does not regard the protection currently provided by
applicable law, the Company’s governing documents and available insurance as
adequate under the present circumstances, and Indemnitee may not be willing to
continue to serve the Company without additional protection;

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that
the increased difficulty in attracting and retaining highly qualified persons
such as Indemnitee is detrimental to the best interests of the Company’s
stockholders and that the Company should act to assure Indemnitee that there
will be increased certainty of such protection in the future;

 

   

 

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually
to obligate itself to indemnify, and to advance expenses on behalf of, such
persons to the fullest extent permitted by applicable law, regardless of any
amendment or revocation of the Company’s Amended and Restated Certificate of
Incorporation (the “Charter”) or Bylaws, so that they will serve or continue to
serve the Company free from undue concern that they will not be so indemnified;
and

 

WHEREAS, this Agreement is a supplement to and in furtherance of the
indemnification provided in the Bylaws and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of Indemnitee thereunder.

 

NOW, THEREFORE, in consideration of the premises and the covenants contained
herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1. Services to the Company. Indemnitee agrees to serve as a [director]
[officer] [director and officer] of the Company. Indemnitee may at any time and
for any reason resign from such position (subject to any other contractual
obligation or any obligation imposed by law), in which event the Company shall
have no obligation under this Agreement to continue Indemnitee in such position.
This Agreement shall not be deemed an employment contract between the Company
(or any of its subsidiaries or any Enterprise) and Indemnitee. The foregoing
notwithstanding, this Agreement shall continue in force after Indemnitee has
ceased to serve as a [director] [officer] [director and officer] of the Company.

 

Section 2. Definitions.

 

As used in this Agreement:

 

(a) A “Change in Control” shall be deemed to have occurred if: (i) any “person,”
as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (the “Exchange
Act”) (other than (a) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or (b) 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) after the date of this
Agreement becomes the “beneficial owner,” as defined in Rule 13d-3 of the
Exchange Act, directly or indirectly, of securities of the Company representing
20% or more of the total combined 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 and any new
director whose election or appointment by the Board or nomination for election
by the Company’s stockholders was approved by a vote of at least two-thirds of
the directors then in office who either were directors at the beginning of the
period or whose election, appointment 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 voting
securities of 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, in one transaction or a series of transactions, of all or substantially
all of the Company’s assets.

 

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(b) “Corporate Status” describes the status of a person as a current or former
director, officer, employee, agent or trustee of the Company or of any other
Enterprise which such person is or was serving on behalf of the Company.

 

(c) “Eligible Parties” means Indemnitee and any other person who, as of
immediately prior to the Potential Change in Control, is party to an
indemnification agreement with the Company in substantially the form of this
Agreement (which agreement includes, for the avoidance of doubt, a provision
substantially similar to Section 17(c) hereof).

 

(d) “Enforcement Expenses” shall include all reasonable attorneys’ fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees and all other disbursements or expenses of the
types customarily incurred in connection with an action to enforce
indemnification or advancement rights, or any other rights set forth in this
Agreement, or an appeal from such action, including, without limitation, the
premium, security for and other costs relating to any cost bond, supersedeas
bond or other appeal bond or its equivalent, and any federal, state, local or
foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt
of any payments of Enforcement Expenses under this Agreement.

 

(e) “Enterprise” shall mean any corporation (other than the Company),
partnership, joint venture, trust, employee benefit plan or other legal entity
of which Indemnitee is or was serving on behalf of the Company as a director,
officer, employee, agent or trustee.

 

(f) “Expenses” shall include all reasonable attorneys’ fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding or an appeal resulting from a
Proceeding, including, without limitation, the premium, security for and other
costs relating to any cost bond, supersedeas bond or other appeal bond or its
equivalent, 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. Expenses, however, shall not include amounts paid in settlement by
Indemnitee or the amount of judgments or fines against Indemnitee.

 

(g) “Independent Counsel” means a law firm, or a partner (or, if applicable,
member) of such a law firm, that is experienced in matters of Delaware
corporation law and neither presently is, nor in the past five years has been,
retained to represent: (i) the Company, any Enterprise or Indemnitee in any
matter material to any such party (other than with respect to matters concerning
Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the foregoing,
the term “Independent Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an
action to determine Indemnitee’s rights under this Agreement. The Company agrees
to pay the reasonable fees and expenses of the Independent Counsel and to fully
indemnify such counsel against any and all expenses, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.

 

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(h) “Potential Change in Control” shall be deemed to occur if: (i) the Company
enters into an agreement or arrangement, the consummation of which would result
in the occurrence of a Change in Control; (ii) any person (including the
Company) publicly announces an intention to take or to consider taking actions
which, if consummated, would constitute a Change in Control; or (iii) the Board
adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.

 

(i) The term “Proceeding” shall include any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought in the right of the Company or
otherwise and whether of a civil, criminal, administrative or investigative
nature, in which Indemnitee was, is or will be involved as a party or otherwise
by reason of the fact that Indemnitee is or was a director, officer, employee or
agent of the Company or is or was serving on behalf of the Company as a
director, officer, employee, agent or trustee of any Enterprise or by reason of
any action taken by him or her or of any action taken on his or her part while
acting as director, officer, employee or agent of the Company or while serving
on behalf of the Company as a director, officer, employee, agent or trustee of
any Enterprise, in each case whether or not serving in such capacity at the time
any liability or expense is incurred for which indemnification, reimbursement or
advancement of expenses can be provided under this Agreement; provided, however,
that the term “Proceeding” shall not include any action, suit or arbitration, or
part thereof, initiated by Indemnitee to enforce Indemnitee’s rights under this
Agreement as provided for in Section 13(e) of this Agreement.

 

(j) “Requisite Request” means a written request to create a Trust signed by (a)
at least two Eligible Parties and (b) a majority of the Eligible Parties party
to the Proceeding for which the creation of a Trust is requested.

 

(k) “Voting Securities” shall mean any securities of the Company which vote
generally in the election of directors.

 

Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is,
was or is threatened to be made, a party to or a participant in any Proceeding,
other than a Proceeding by or in the right of the Company to procure a judgment
in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified
against all Expenses, judgments, fines and amounts paid in settlement (including
any interest, assessments, or other charges imposed thereon) actually and
reasonably incurred by Indemnitee or on his or her behalf in connection with
such Proceeding or any claim, issue or matter therein, if Indemnitee acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Company and, in the case of a criminal proceeding,
had no reasonable cause to believe that his or her conduct was unlawful.
Notwithstanding anything to the contrary in this Agreement, the Company shall
not be liable to indemnify the Indemnitee under this Agreement (a) for any
amounts paid in settlement of any action or claim effected without the Company’s
written consent, which consent shall not be unreasonably withheld or (b) for any
judicial award if the Company was not given a reasonable and timely opportunity,
at its expense, to participate in the defense of such action.

 

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Section 4. Indemnity in Proceedings by or in the Right of the Company. The
Company shall indemnify Indemnitee in accordance with the provisions of this
Section 4 if Indemnitee is, was or is threatened to be made, a party to or a
participant in any Proceeding by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 4, Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred by him or her
or on his or her behalf in connection with such Proceeding or any claim, issue
or matter therein, if Indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Company. No indemnification for Expenses shall be made under this Section 4 in
respect of any claim, issue or matter as to which Indemnitee shall have been
finally adjudged by a court to be liable to the Company, unless and only to the
extent that the Delaware Court of Chancery (the “Delaware Court”) or any court
in which the Proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnification for
such Expenses as the Delaware Court or such other court shall deem proper.

 

Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provisions of this Agreement and except as
provided in Section 8, to the extent that Indemnitee is or was a party to or a
participant in and is successful, on the merits or otherwise, in any Proceeding
or in defense of any claim, issue or matter therein, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or her
in connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall
indemnify Indemnitee against all Expenses actually and reasonably incurred by
him or her or on his or her behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.

 

Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is or was, by reason
of his or her Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party and is not threatened to be made a party, he or she shall be
indemnified against all Expenses actually and reasonably incurred by him or her
or on his or her behalf in connection therewith.

 

Section 7. Additional Indemnification.

 

(a) Except as provided in Section 8, notwithstanding any limitation in Sections
3, 4 or 5, the Company shall indemnify Indemnitee to the fullest extent
permitted by law if Indemnitee is or was a party to or is or was threatened to
be made a party to any Proceeding (including a Proceeding by or in the right of
the Company to procure a judgment in its favor) against all Expenses, judgments,
fines and amounts paid in settlement (including any interest, assessments, or
other charges imposed thereon) actually and reasonably incurred by Indemnitee in
connection with the Proceeding.

 

 -5- 

 

 

(b) For purposes of Section 7(a), the meaning of the phrase “to the fullest
extent permitted by law” shall include, but not be limited to:

 

(i) to the fullest extent permitted by the provision of the DGCL that authorizes
or contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL or such provision
thereof; and

 

(ii) to the fullest extent authorized or permitted by any amendments to or
replacements of the DGCL adopted after the date of this Agreement that increase
the extent to which a corporation may indemnify its officers and directors.

 

Section 8. Exclusions. Notwithstanding any provision in this Agreement to the
contrary, the Company shall not be obligated under this Agreement:

 

(a) to make any indemnity for amounts otherwise indemnifiable hereunder (or for
which advancement is provided hereunder) if and to the extent that Indemnitee
has otherwise actually received such amounts under any insurance policy,
contract, agreement or otherwise;

 

(b) to make any indemnity for an accounting of profits made from the purchase
and sale (or sale and purchase) by Indemnitee of securities of the Company
within the meaning of Section 16(b) of the Exchange Act or similar provisions of
state statutory law or common law;

 

(c) to make any indemnity or advancement that is prohibited by applicable law;
or

 

(d) to make any indemnity or advancement for claims initiated or brought by
Indemnitee (including Expenses incurred by Indemnitee in defending any
affirmative defenses or counterclaims brought or made in connection with a claim
initiated by Indemnitee), except (i) with respect to proceedings brought to
establish or enforce a right (including to receive Expenses, Enforcement
Expenses or indemnification) under this Agreement or any other agreement or
insurance policy or under the Charter or Bylaws now or hereafter in effect
relating to indemnification or advancement (which shall be governed by Section
13(e) of this Agreement), (ii) if the Board has approved the initiation or
bringing of such claim, or (iii) as otherwise required under Delaware law. For
the avoidance of doubt, Indemnitee shall not be deemed, for purposes of this
subsection, to have initiated or brought any claim by reason of (a) having
asserted any affirmative defenses in connection with a claim not initiated by
Indemnitee or (b) having made any counterclaim (whether permissive or mandatory)
in connection with any claim not initiated by Indemnitee.

 

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Section 9. Advances of Expenses. The Company shall advance, to the extent not
prohibited by law, the Expenses incurred by Indemnitee in connection with any
Proceeding, and such advancement shall be made within twenty (20) days after the
receipt by the Company of a statement or statements requesting such advances
(which shall include invoices received by Indemnitee in connection with such
Expenses but, in the case of invoices in connection with legal services, any
references to legal work performed or to expenditures made that would cause
Indemnitee to waive any privilege accorded by applicable law shall not be
included with the invoice) from time to time, whether prior to or after final
disposition of any Proceeding. Advances shall be unsecured and interest free.
Advances shall be made without regard to Indemnitee’s ability to repay the
expenses and without regard to Indemnitee’s ultimate entitlement to
indemnification under the other provisions of this Agreement. Indemnitee shall
qualify for advances upon the execution and delivery to the Company of this
Agreement which shall constitute an undertaking providing that Indemnitee
undertakes to the fullest extent required by law to repay the advance if and to
the extent that it is ultimately determined by a court of competent jurisdiction
in a final judgment, not subject to appeal, that Indemnitee is not entitled to
be indemnified by the Company. The right to advances under this paragraph shall
in all events continue until final disposition of any Proceeding, including any
appeal therein. Nothing in this Section 9 shall limit Indemnitee’s right to
advancement pursuant to Section 13(e) of this Agreement.

 

Section 10. Procedure for Notification and Defense of Claim.

 

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to
the Company a written request therefor and, if a Change in Control has occurred
and Indemnitee so chooses pursuant to Section 11 of this Agreement, such written
request shall also include a request for Indemnitee to have the right to
indemnification determined by Independent Counsel.

 

(b) The Company will be entitled to participate in the Proceeding at its own
expense.

 

Section 11. Procedure Upon Application for Indemnification.

 

(a) Upon written request by Indemnitee for indemnification pursuant to Section
10(a), a determination, if such determination is required by applicable law,
with respect to Indemnitee’s entitlement thereto shall be made in the specific
case: (i) by Independent Counsel in a written opinion to the Board if Indemnitee
so requests in such written request for indemnification pursuant to Section
10(a) and a Change in Control has occurred or (ii) by the Company in accordance
with applicable law if Indemnitee does not so request such determination be made
by Independent Counsel. In the case that such determination is made by
Independent Counsel, a copy of Independent Counsel’s written opinion shall be
delivered to Indemnitee and, if it is so determined that Indemnitee is entitled
to indemnification, payment to Indemnitee shall be made within ten (10) days
after such determination. Indemnitee shall cooperate with the Independent
Counsel or the Company, as applicable, making such determination with respect to
Indemnitee’s entitlement to indemnification, including providing to such counsel
or the Company, upon reasonable advance request, any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’ fees and
disbursements) incurred by Indemnitee in so cooperating with the Independent
Counsel or the Company shall be borne by the Company (irrespective of the
determination as to Indemnitee’s entitlement to indemnification) and the Company
hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

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(b) In the event that Indemnitee exercises his or her right to have his or her
entitlement to indemnification determined by Independent Counsel pursuant to
Sections 10(a) and 11(a)(i), the Independent Counsel shall be selected by
Indemnitee. The Company may, within ten (10) days after written notice of such
selection, deliver to Indemnitee a written objection to such selection;
provided, however, that such objection may be asserted only on the ground that
the Independent Counsel so selected does not meet the requirements of
“Independent Counsel” as defined in Section 2 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall
act as Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has determined
that such objection is without merit. If, within twenty (20) days after the
later of (i) submission by Indemnitee of a written request for indemnification
and Independent Counsel pursuant to Sections 10(a) and 11(a)(i) hereof,
respectively, and (ii) the final disposition of the Proceeding, including any
appeal therein, no Independent Counsel shall have been selected without
objection, Indemnitee may petition a court of competent jurisdiction for
resolution of any objection which shall have been made by the Company to the
selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the court or by such other person as the court
shall designate. The person with respect to whom all objections are so resolved
or the person so appointed shall act as Independent Counsel under Section 11(a)
hereof. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 13(a) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).

 

Section 12. Presumptions and Effect of Certain Proceedings.

 

(a) In making a determination with respect to entitlement to indemnification
hereunder, it shall be presumed that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 10(a) of this Agreement, and the Company shall have
the burden of proof to overcome that presumption in connection with the making
of any determination contrary to that presumption. Neither (i) the failure of
the Company or of Independent Counsel to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct, nor (ii) an actual determination by the Company or by Independent
Counsel that Indemnitee has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that Indemnitee has not met
the applicable standard of conduct.

 

(b) The termination of any Proceeding or of any claim, issue or matter therein,
by judgment, order, settlement or conviction, or upon a plea of guilty, nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his or her
conduct was unlawful.

 

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(c) The knowledge and/or actions, or failure to act, of any director, officer,
agent, trustee or employee of the Company or any Enterprise shall not be imputed
to Indemnitee for purposes of determining the right to indemnification under
this Agreement.

 

Section 13. Remedies of Indemnitee.

 

(a) Subject to Section 13(f), in the event that (i) a determination is made
pursuant to Section 11 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 9 of this Agreement, (iii) no determination of
entitlement to indemnification shall have been made pursuant to Section 11(a) of
this Agreement within sixty (60) days after receipt by the Company of the
request for indemnification that does not include a request for Independent
Counsel, (iv) payment of indemnification is not made pursuant to Section 5 or 6
or the last sentence of Section 11(a) of this Agreement within ten (10) days
after receipt by the Company of a written request therefor or (v) payment of
indemnification pursuant to Section 3, 4 or 7 of this Agreement is not made
within ten (10) days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication by
a court of his or her entitlement to such indemnification or advancement.
Alternatively, Indemnitee, at his or her option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 13(a); provided, however, that
the foregoing time limitation shall not apply in respect of a proceeding brought
by Indemnitee to enforce his or her rights under Section 5 of this Agreement.
The Company shall not oppose Indemnitee’s right to seek any such adjudication or
award in arbitration.

 

(b) In the event that a determination shall have been made pursuant to Section
11(a) of this Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 13 shall
be conducted in all respects as a de novo trial, or arbitration, on the merits
and Indemnitee shall not be prejudiced by reason of that adverse determination.
In any judicial proceeding or arbitration commenced pursuant to this Section 13,
the Company shall have the burden of proving Indemnitee is not entitled to
indemnification or advancement, as the case may be.

 

(c) If a determination shall have been made pursuant to Section 11(a) of this
Agreement that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 13, absent a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee’s statement
not materially misleading, in connection with the request for indemnification.

 

(d) The Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 13 or pursuant to Section 17(c)
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.

 

 -9- 

 

 

(e) The Company shall indemnify Indemnitee against any and all Enforcement
Expenses and, if requested by Indemnitee, shall (within ten (10) days after
receipt by the Company of a written request therefor) advance, to the extent not
prohibited by law, such Enforcement Expenses to Indemnitee, which are incurred
by Indemnitee in connection with any action brought by Indemnitee for
indemnification or advancement from the Company under this Agreement, the Bylaws
or under any directors’ and officers’ liability insurance policies maintained by
the Company, in the case of advancement of Enforcement Expenses regardless of
whether Indemnitee will ultimately be successful in such action. In addition,
and notwithstanding anything in this Agreement to the contrary, if requested by
a majority of the Trust Beneficiaries, the Company shall indemnify the Trust
Beneficiaries against any and all Enforcement Expenses and, if requested by a
majority of the Trust Beneficiaries, shall (within ten (10) days after receipt
by the Company of a written request therefor) advance, to the extent not
prohibited by law, such Enforcement Expenses to the Trust Beneficiaries, which
are incurred by the Trust Beneficiaries in connection with any action brought by
the Trust Beneficiaries to enforce the provisions of Section 17(c) of this
Agreement, in the case of advancement of Enforcement Expenses regardless of
whether the Trust Beneficiaries will ultimately be successful in such action.

 

(f) Notwithstanding anything in this Agreement to the contrary, no determination
as to entitlement to indemnification under this Agreement shall be required to
be made prior to the final disposition of the Proceeding, including any appeal
therein.

 

Section 14. Non-exclusivity; Survival of Rights; Insurance; Subrogation; Period
of Limitations.

 

(a) The rights of indemnification and to receive advancement as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may at any time be entitled under applicable law, the Charter, the Bylaws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment, alteration or repeal of this Agreement or of any provision hereof
shall limit or restrict any right of Indemnitee under this Agreement in respect
of any action taken or omitted by such Indemnitee in his or her Corporate Status
prior to such amendment, alteration or repeal. To the extent that a change in
Delaware law, whether by statute or judicial decision, permits greater
indemnification or advancement than would be afforded currently under the
Charter, Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.

 

 -10- 

 

 

(b) For the duration of Indemnitee’s service as a [director] [officer] [director
and officer] of the Company, and until the termination of this Agreement in
accordance with its terms, the Company shall use commercially reasonable efforts
(taking into account the scope and amount of coverage available relative to the
cost thereof) to cause to be maintained in effect a policy or policies of
directors’ and officers’ liability insurance providing coverage for directors
and/or officers of the Company that is at least substantially comparable in
scope and amount to that provided by the Company’s policies of directors’ and
officers’ liability insurance in effect as of the date of this Agreement. In the
event of a Change in Control occurring prior to the termination of this
Agreement in accordance with its terms, the Company shall maintain (or cause to
be maintained) for the benefit of Indemnitee, the same policy or policies of
liability insurance for directors, officers, employees, agents or fiduciaries of
the Company or of any other Enterprise that existed for the benefit of
Indemnitee prior to the Change in Control (or a policy or policies no less
favorable to Indemnitee) for a period of six years thereafter. The minimum AM
Best rating for the insurance carrier of such insurance shall not be less than
A-VI. If, at the time of the receipt of a notice of a claim pursuant to the
terms of this Agreement, the Company has directors’ and officers’ 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 Indemnitee, all
amounts payable as a result of such Proceeding in accordance with the terms of
such policies. To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or trustees of the Company or of any other Enterprise, Indemnitee shall
be covered by such policy or policies in accordance with its or their terms to
the maximum extent of the coverage available for any such director, officer,
employee, agent or trustee under such policy or policies.

 

(c) In the event of any 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 papers reasonably required and take all action
reasonably necessary to secure such rights, including execution of such
documents as are reasonably necessary to enable the Company to bring suit to
enforce such rights.

 

(d) The Company’s obligation to provide indemnification or advancement hereunder
to Indemnitee who is or was serving on behalf of the Company as a director,
officer, employee, agent or trustee of any other Enterprise shall be reduced by
any amount Indemnitee has actually received as indemnification or advancement
from such other Enterprise.

 

(e) To the fullest extent permitted by law, no legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company or any
affiliate of the Company against the Indemnitee or the Indemnitee’s spouse,
heirs, executors or personal or legal representatives after the expiration of
two years from the date of accrual of such cause of action, or such longer
period as may be required by state law under the circumstances, and any claim or
cause of action of the Company or its affiliates shall be extinguished and
deemed released unless asserted by the timely filing of a legal action within
such 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- 

 

 

Section 15. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as a [director] [officer] [director and officer] of
the Company or (b) one (1) year after the final termination of any Proceeding,
including any appeal, then pending in respect of which Indemnitee is granted
rights of indemnification or advancement hereunder and of any proceeding,
including any appeal, commenced by Indemnitee pursuant to Section 13 or Section
17(c) of this Agreement relating thereto. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the benefit of
Indemnitee and his or her heirs, executors and administrators. The Company shall
require and cause any successor, and any direct or indirect parent of 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.

 

Section 16. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever: (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, each portion of any section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to give
the maximum effect to the intent of the parties hereto; and (c) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

 

Section 17. Enforcement; Trust.

 

(a) The Company expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on it hereby in order to induce
Indemnitee to serve as a [director] [officer] [director and officer] of the
Company, and the Company acknowledges that Indemnitee is relying upon this
Agreement in serving as a [director] [officer] [director and officer] of the
Company.

 

(b) This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof (including, for the avoidance of doubt, any
prior indemnification agreements entered into between Indemnitee and the
Company); provided, however, that this Agreement is a supplement to and in
furtherance of the Charter, the Bylaws and applicable law, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any rights of
Indemnitee thereunder.

 

 -12- 

 

 

(c) The Company shall, if it receives a Requisite Request within four years of
the occurrence of a Potential Change in Control, create a trust (the “Trust”)
for the benefit of the Indemnitee and the other Eligible Parties who signed the
Requisite Request (the “Trust Beneficiaries”), and from time to time upon
written request of a majority of the Trust Beneficiaries shall fund such Trust,
to the extent permitted by law, in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
by the Trust Beneficiaries in connection with investigating, preparing for and
defending any Proceeding, and any and all judgments, fines, penalties and
settlement amounts of any and all Proceedings from time to time actually and
reasonably paid by the Trust Beneficiaries or reasonably claimed, anticipated or
proposed to be paid by the Trust Beneficiaries. The amount or amounts to be
deposited in the Trust pursuant to the foregoing funding obligation shall be
determined by mutual agreement of a majority of the Trust Beneficiaries and the
Company or, if the Company and a majority of the Trust Beneficiaries are unable
to reach such an agreement, by Independent Counsel chosen by a majority of the
Trust Beneficiaries in the manner set forth in Section 11(b) (provided, that (i)
the provisions of Section 11(b) shall be applied mutatis mutandis, including to
reflect that the Independent Counsel shall be chosen by a majority of the Trust
Beneficiaries, (ii) for this purpose, references in the definition of
“Independent Counsel” and “Enterprise” to “Indemnitee” shall be deemed
references to any of the Trust Beneficiaries and (iii) a majority of the Trust
Beneficiaries may petition a court of competent jurisdiction for resolution of
any objection which shall have been made by the Company to the selection of
Independent Counsel and/or for the appointment as Independent Counsel of a
person selected by the court or by such other person as the court shall
designate if, within the later of 20 days after the submission by a majority of
the Trust Beneficiaries of a written request to fund the Trust and submission of
a proposed Independent Counsel, no Independent Counsel shall have been selected
without objection). In the event that Independent Counsel determines that the
amount or amounts to be deposited in the Trust pursuant to the foregoing funding
obligation should be equal to or greater than the amount requested by a majority
of the Trust Beneficiaries (a “Full Funding Determination”), the Company shall
promptly (and in any event within 2 business days) fund the Trust in the amount
determined by the Independent Counsel, and a majority of the Trust Beneficiaries
shall be entitled to petition a court of competent jurisdiction to enforce the
determination of the Independent Counsel if the Company shall fail to so fund
the Trust (and in such proceeding the Company shall be bound by the Full Funding
Determination, which shall be final and binding). If the Independent Counsel
does not make a Full Funding Determination within 20 days of being identified as
Independent Counsel pursuant to the terms of this Agreement, or if prior to such
time Independent Counsel determines that the amount or amounts to be deposited
in the Trust pursuant to the foregoing funding obligation should be less than
the amount requested by a majority of the Trust Beneficiaries, a majority of the
Trust Beneficiaries may petition a court of competent jurisdiction for a
determination of the amount or amounts to be deposited in the Trust pursuant to
the foregoing funding obligation, such proceeding to be conducted in all
respects as a de novo trial on the merits without prejudice by reason of any
determination by Independent Counsel, and the Company shall have the burden of
proving that the amount or amounts to be deposited in the Trust pursuant to the
foregoing funding obligation should be less than that requested by a majority of
the Trust Beneficiaries. In lieu of commencing an action in a court of competent
jurisdiction, a majority of the Trust Beneficiaries may, at their option, seek
an award in arbitration to be conducted by a single arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration Association; provided
that, to the fullest extent permitted by law, the same presumptions and
procedures that would be applicable in a court proceeding will be applicable to
such arbitration. The terms of the Trust shall provide that upon a Change in
Control (i) the Trust shall not be revoked or the principal thereof invaded,
without the written consent of a majority of the Trust Beneficiaries, (ii) the
trustee of the Trust (the “Trustee”) shall advance, within ten business days of
a request by a majority of the Trust Beneficiaries, any and all Expenses
incurred by the Trust Beneficiaries in connection with investigating, preparing
for and defending any Proceeding, to the extent permitted by law, (and the
Indemnitee hereby agrees to reimburse the Trust under the circumstances under
which the Indemnitee would be required to reimburse the Company under this
Agreement), (iii) the Trust shall continue to be funded by the Company in
accordance with the funding obligation set forth above, (iv) the Trustee shall,
following the request of a majority of the Trust Beneficiaries, promptly pay to
the Trust Beneficiaries all amounts for which the Trust Beneficiaries shall be
entitled to indemnification pursuant to this Agreement or otherwise, and (v) all
unexpended funds in the Trust shall revert to the Company upon the earlier of a
written request of a majority of the Trust Beneficiaries and a determination by
a court of competent jurisdiction in a final judgment, not subject to appeal,
that the Trust Beneficiaries have been fully indemnified under the terms of this
Agreement. The Trustee shall be a bank or trust company or other individual or
entity chosen by a majority of the Trust Beneficiaries and acceptable to and
approved of by the Company. Nothing in this Section 17(c) shall relieve the
Company of any of its obligations under this Agreement. All income earned on the
assets held in the Trust shall be reported as income by the Company for federal,
state, local and foreign tax purposes.

 

 -13- 

 

 

Section 18. Modification and Waiver. No supplement, modification or amendment,
or waiver of any provision, of this Agreement shall be binding unless executed
in writing by the parties thereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
of this Agreement nor shall any waiver constitute a continuing waiver.

 

Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement as provided
hereunder. The failure of Indemnitee to so notify the Company shall not relieve
the Company of any obligation which it may have to Indemnitee under this
Agreement or otherwise.

 

Section 20. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if (a) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, (b) mailed by certified
or registered mail with postage prepaid, on the third business day after the
date on which it is so mailed, (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have
been directed or (d) sent by facsimile transmission, with receipt of oral
confirmation that such transmission has been received:

 

(a) If to Indemnitee, at such address as Indemnitee shall provide to the
Company.

 

(b) If to the Company to:

 

1940 E. Mariposa Avenue

El Segundo, California 90245

[FAX: ]

 

 -14- 

 

 

or to any other address as may have been furnished to Indemnitee by the Company.

 

Section 21. Contribution. To the fullest extent permissible under applicable
law, if the indemnification provided for in this Agreement is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying
Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for
judgments, fines, penalties, excise taxes, amounts paid or to be paid in
settlement (including any interest, assessments, or other charges imposed
thereon) and/or for Expenses, in connection with any Proceeding in such
proportion as is deemed fair and reasonable in light of all of the circumstances
in order to reflect (i) the relative benefits received by the Company and
Indemnitee in connection with the event(s) and/or transaction(s) giving rise to
such Proceeding; and/or (ii) the relative fault of the Company (and its
directors, officers, employees and agents) and Indemnitee in connection with
such event(s) and/or transactions.

 

Section 22. Applicable Law and Consent to Jurisdiction. This Agreement and the
legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to its conflict of laws rules. Except with respect to any arbitration commenced
by Indemnitee pursuant to Section 13(a) of this Agreement, the Company and
Indemnitee hereby irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement shall be brought
only in the Delaware Court, and not in any other state or federal court in the
United States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the Delaware Court for purposes of any
action or proceeding arising out of or in connection with this Agreement, (iii)
consent to service of process at the address set forth in, or provided in
accordance with, Section 20 of this Agreement with the same legal force and
validity as if served upon such party personally within the State of Delaware,
(iv) waive any objection to the laying of venue of any such action or proceeding
in the Delaware Court and (v) waive, and agree not to plead or to make, any
claim that any such action or proceeding brought in the Delaware Court has been
brought in an improper or inconvenient forum.

 

Section 23. Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.

 

Section 24. Miscellaneous. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.

 

 -15- 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the day and year first above written.

 

  PCM, INC.         By:       [Name]     [Office]                 [Indemnitee]  
  [Name]

 

 -16-