Exhibit 10.6
Execution Version
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of December 27, 2010, by and among Irvine Sensors
Corporation, a Delaware corporation (the “Company”) and [_____] (the
“Indemnitee”), a director of the Company.
RECITALS
WHEREAS, although the Certificate of Incorporation (“Certificate”) and the
Bylaws of the Company provide for indemnification of the officers and directors
of the Company and the Indemnitee may also be entitled to indemnification
pursuant to the Delaware General Corporation Law (“DGCL”), the DGCL expressly
contemplates that contracts may be entered into between the Company and members
of the Board of Directors of the Company (the “Board”) with respect to
indemnification of directors; and
WHEREAS, the Indemnitee’s continued service to the Company substantially
benefits the Company; and
WHEREAS, the Board has determined that it is in the best interest of the Company
and that it is reasonably prudent and necessary for the Company contractually to
obligate itself to indemnify, and to advance expenses on behalf of, the
Indemnitee to the fullest extent permitted by applicable law in order to induce
him to serve or continue to serve the Company free from undue concern that he
will not be so indemnified or that any indemnification obligation will not be
met; and
WHEREAS, this Agreement is a supplement to and in furtherance of (a) the
Certificate and Bylaws of the Company, and (b) the certificate and bylaws or
partnership agreement, as the case may be, of any Enterprise (as defined below)
and any resolutions adopted pursuant thereto, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of the Indemnitee
thereunder; and
WHEREAS, the Indemnitee does not regard the protection available under the
Company’s or any other Enterprise’s certificate, bylaws and insurance as
adequate in the present circumstances, and may not be willing to serve as a
director of the Company without adequate protection, and the Company desires the
Indemnitee to serve in such capacity. The Indemnitee is willing to serve,
continue to serve and to take on additional service for or on behalf of the
Company and certain other Enterprises on the condition that he be so
indemnified;
WHEREAS, Indemnitee may have certain rights to indemnification, advancement of
expenses and/or insurance provided by Costa Brava Partnership III LP or The
Griffin Fund LP, as applicable (the “Sponsor Fund”) (or its affiliates), which
Indemnitee, Company and the Sponsor Fund (or its affiliates) intend to be
secondary to the primary obligation of the Company to indemnify Indemnitee as
provided herein, with the Company’s acknowledgement of and agreement to the
foregoing being a material condition to Indemnitee’s willingness to serve as a
director of the Company.

 

 

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NOW, THEREFORE, in consideration of the promises and the covenants contained
herein, the Company and Indemnitee do hereby covenant and agree as follows:
AGREEMENT
1. Services to the Company and Certain Other Enterprises. The Indemnitee will
serve or continue to serve as a director of the Company for so long as the
Indemnitee is duly elected or appointed or until the Indemnitee tenders his
resignation.
2. Definitions. As used in this Agreement:
“Corporate Status” describes the status of a person who is or was a director,
trustee, general partner, managing member, officer, employee, agent or fiduciary
of the Company or of any other Enterprise.
“Disinterested Director” shall mean a director of the Company who is not and was
not a party to the Proceeding in respect of which indemnification is sought by
the Indemnitee.
“Enterprise” shall mean (i) the Company and (ii) any other corporation,
partnership, limited liability company, joint venture, trust, employee benefit
plan or other enterprise which is an affiliate or wholly or partially owned
subsidiary of the Company and of which the Indemnitee is or was serving as a
director, trustee, general partner, managing member, officer, employee, agent or
fiduciary; and (iii) any other corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the request of the Company.
“Expenses” shall include 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. Expenses shall include such fees and expenses, and costs
incurred in connection with any appeal resulting from any 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. Expenses,
however, shall not include amounts paid in settlement by the Indemnitee or the
amount of judgments or fines against the Indemnitee.
“Fines” shall mean any excise tax assessed with respect to any employee benefit
plan; references to “serving at the request of the Company” shall include any
service as a director, trustee, general partner, managing member, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, trustee, general partner, managing member, officer,
employee, agent or fiduciary with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner “not opposed to the best interests of the Company” as referred to in this
Agreement.

 

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“Indemnitee” is defined in the preamble to this Agreement.
“Proceeding” shall include any threatened, pending or completed action, suit,
arbitration, mediation, 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, including without
limitation any such proceeding pending as of the date of this Agreement, in
which the Indemnitee was, is or will be involved as a party or otherwise by
reason of the fact that the Indemnitee is or was a director of the Company, by
reason of any action taken by him or of any action on his part while acting as
director of the Company, or by reason of the fact that he is or was serving as a
director, trustee, general partner, managing member, officer, employee, agent or
fiduciary of any other Enterprise, in each case whether or not serving in such
capacity at the time any Expense, judgment, fine or amount paid in settlement is
incurred for which indemnification, reimbursement, or advancement of Expenses
can be provided under this Agreement.
“Independent Counsel” means, at any time, any law firm, or a member of a law
firm, that (a) is experienced in matters of corporation law and (b) is not, at
such time, or has not been in the five years prior to such time, retained to
represent: (i) the Company or the Indemnitee in any matter material to either
such party (other than with respect to matters concerning the Indemnitee under
this Agreement, or of other indemnities 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 the Indemnitee in an action to
determine the Indemnitee’s rights under this Agreement. The Company agrees to
pay the reasonable fees and expenses of the Independent Counsel referred to
above 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 and to be jointly and severally liable therefor.
3. Indemnity in Third-Party Proceedings. The Company shall be liable to
indemnify the Indemnitee in accordance with the provisions of this Section 3 if
the Indemnitee is, or is threatened to be made, a party to or a participant (as
a witness or otherwise) 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, the Indemnitee shall be indemnified against all Expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by the
Indemnitee or on his behalf in connection with such Proceeding or any claim,
issue or matter therein, if 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, in the case of a criminal Proceeding, had no reasonable cause to
believe that his conduct was unlawful.

 

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4. Indemnity in Proceedings by or in the Right of the Company. The Company shall
be liable to indemnify the Indemnitee in accordance with the provisions of this
Section 4 if the Indemnitee is, or is threatened to be made, a party to or a
participant (as a witness or otherwise) in any Proceeding by or in the right of
the Company to procure a judgment in its favor. Pursuant to this Section 4, the
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection with such Proceeding (or any
claim, issue or matter therein) if 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. No indemnification for Expenses shall be made under this Section 4
in respect of any claim, issue or matter as to which the Indemnitee shall have
been finally adjudged by a court of competent jurisdiction to be liable to the
Company, unless and only to the extent that 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, the Indemnitee is
fairly and reasonably entitled to indemnification.
5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provisions of this Agreement, to the extent that the
Indemnitee is 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, in whole or in part, the Company shall be liable to indemnify the
Indemnitee against all Expenses actually and reasonably incurred by him in
connection therewith. If the 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 be
liable to indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. If the Indemnitee is not wholly successful in such
Proceeding, the Company also shall be liable to indemnify the Indemnitee against
all Expenses reasonably incurred in connection with any claim, issue or matter
that is related to any claim, issue, or matter on which the Indemnitee was
successful. 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.
6. Indemnification For Other Fees and Expenses.
(a) Notwithstanding any other provision of this Agreement, to the extent that
the Indemnitee is, by reason of his Corporate Status, a witness in any
Proceeding to which the Indemnitee is not a party, the Company shall be liable
to indemnify Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
(b) Notwithstanding any other provision of this Agreement, the Company shall be
liable to indemnify Indemnitee against all Expenses actually and reasonably
incurred by or on behalf of the Indemnitee in taking any action to enforce any
provision of this Agreement, including all Expenses incurred in bringing a
claim, counterclaim or cross claim in a legal proceeding, arbitration or
otherwise to enforce this Agreement or any provision of this Agreement.

 

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7. Additional Indemnification
(a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall be
liable to indemnify the Indemnitee to the fullest extent permitted by law if
Indemnitee is a party to or 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 actually and reasonably incurred by Indemnitee in connection with the
Proceeding. No indemnity shall be made under this Section 7(a) on account of the
Indemnitee’s conduct which has been adjudicated to constitute a breach of the
Indemnitee’s duty of loyalty to the Company or its shareholders or to constitute
an act or omission not in good faith or involving intentional misconduct or a
knowing violation of the law.
(b) Notwithstanding any limitation in Sections 3, 4, 5 or 7(a), the Company
shall be liable to indemnify Indemnitee to the fullest extent permitted by law
if Indemnitee is a party to or 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 actually and reasonably incurred by Indemnitee in connection with the
Proceeding.
(c) For purposes of Sections 7(a) and 7(b), the meaning of the phrase “to the
fullest extent permitted by law” shall include, but not be limited to:
(1) 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; and
(2) 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.
8. Exclusions. Notwithstanding any provision in this Agreement, the Company
shall not be obligated under this Agreement to make any indemnity payment in
connection with any claim made against the Indemnitee:
(a) for which payment has actually been received by or on behalf of Indemnitee
under any insurance policy of any Enterprise or other indemnity provision of any
Enterprise, except with respect to any excess beyond the amount actually
received under any insurance policy or other indemnity provision; or
(b) 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 Securities Exchange Act of 1934 or similar provisions of
state statutory law or common law; provided however, that notwithstanding any
limitation on the Company’s obligation to provide indemnification set forth in
this Section 8(b) or elsewhere, Indemnitee shall be entitled to receive
advancement of Expenses hereunder with respect to any such Claim unless and
until a court having jurisdiction over the Claim shall have made a final
judicial determination (as to which all rights of appeal therefrom have been
exhausted or lapsed) that Indemnitee has violated said statute.

 

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9. Advancement of Expenses; Defense of Claim.
(a) Notwithstanding any provision of this Agreement to the contrary, the Company
shall be obligated to advance any and all Expenses incurred by the Indemnitee in
connection with any Proceeding within twenty (20) days after the receipt by the
Company of a statement or statements requesting such advances from time to time,
whether prior to or after final disposition of any Proceeding. Such advances
(i) shall be unsecured and interest free; (ii) shall be made without regard to
the Indemnitee’s ability to repay the advances and without regard to the
Indemnitee’s ultimate entitlement to indemnification under the other provisions
of this Agreement; and (iii) shall include any and all reasonable Expenses
incurred pursuing an action to enforce this right of advancement, including
Expenses incurred preparing and forwarding statements to the Company to support
the advances claimed. The Indemnitee shall qualify for advancement of Expenses
solely upon the execution and delivery to the Company of undertaking providing
that the Indemnitee undertakes to repay the advance to the extent and only to
the extent that it is ultimately determined that the Indemnitee is not entitled
to be indemnified by the Company.
(b) The Company will be entitled to participate reasonably in the Proceeding at
its own expense.
10. Procedure for Notification and Requests for Advancement and Indemnification.
(a) To obtain advancement and/or indemnification under this Agreement, the
Indemnitee shall, not later than sixty (60) days after receipt by the Indemnitee
of notice of the commencement of any Proceeding, except for Proceedings pending
as of the date of this Agreement, submit to the Company written notification of
the Proceeding; with regard to Proceedings pending as of the date of this
Agreement, Indemnitee shall submit to the Company written notification not later
than sixty (60) days after the date of this Agreement. The omission to notify
the Company will relieve the Company of its advancement or indemnification
obligations under this Agreement only to the extent the Company can establish
that such omission to notify resulted in actual prejudice to it, and the
omission to notify the Company will, in any event, not relieve the Company from
any liability which it may have to indemnify the Indemnitee otherwise than under
this Agreement. The Secretary of the Company shall, promptly upon receipt of
notification from the Indemnitee pursuant to this Section 10(a), advise the
Board in writing that the Indemnitee has provided such notification.
(b) To obtain advancement of Expenses under this Agreement, Indemnitee shall
submit to the Company a written request therefor, together with such invoices or
other supporting information as may be reasonably requested by the Company and
reasonably available to Indemnitee, and, only to the extent required by
applicable law which cannot be waived, an unsecured written undertaking to repay
amounts advanced. The Company shall make advance payment of Expenses to
Indemnitee no later than twenty (20) days after receipt of the written request
for advancement (and each subsequent request for advancement) by Indemnitee. If,
at the time of receipt of any such written request for advancement of Expenses,
the Company have director and officer insurance policies in effect, the Company
will promptly notify the relevant insurers in accordance with the procedures and
requirements of such policies. The Company shall thereafter keep such director
and officer insurers informed of the status of the Proceeding or other claim, as
appropriate to secure coverage of Indemnitee for such claim.

 

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(c) In order to obtain indemnification under this Agreement, the Indemnitee
shall, anytime at Indemnitee’s discretion following notification by the
Indemnitee of the commencement of any Proceeding pursuant to Section 10(a) of
this Agreement and consistent with the time period for the duration of this
Agreement as set forth in Section 15 of this Agreement, submit to the Company a
written request for indemnification pursuant to this Section 10(c), including
therein or therewith such documentation and information as is reasonably
available to the Indemnitee and is reasonably necessary to determine whether and
to what extent the Indemnitee is entitled to indemnification. No determination
of the Indemnitee’s entitlement to indemnification shall be made until such
written request for a determination is submitted to the Company pursuant to this
Section 10(c). The failure to submit a written request to the Company will
relieve the Company of its indemnification obligations under this Agreement only
to the extent the Company can establish that such failure to make a written
request resulted in actual prejudice to it, and the failure to make a written
request will not relieve the Company from any liability which it may have to
indemnify the Indemnitee otherwise than under this Agreement. The Secretary of
the Company shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that the Indemnitee has requested indemnification.
Upon submission of a written request for indemnification by the Indemnitee
pursuant to this Section 10(c), the Indemnitee’s entitlement to indemnification
shall be determined according to Section 11 of this Agreement.
11. Procedure Upon Application for Indemnification.
(a) Upon receipt of the Indemnitee’s written request for indemnification
pursuant to Section 10(c), a determination with respect thereto shall be made in
the specific case: (i) by the Disinterested Directors, even though less than a
quorum, so long as the Indemnitee does not request that such determination be
made by Independent Counsel; or (ii) if so requested by the Indemnitee, in his
sole discretion, by Independent Counsel in a written opinion to the Board, a
copy of which shall be delivered to the Indemnitee; and if it is so determined
that the Indemnitee is entitled to indemnification, payment to the Indemnitee
shall be made within ten (10) days after such determination. The Indemnitee
shall reasonably cooperate with the person, persons or entity making such
determination with respect to the Indemnitee’s entitlement to indemnification,
including providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to the Indemnitee
and reasonably necessary to such determination. Any costs or expenses (including
attorneys’ fees and disbursements) incurred by the Indemnitee in so cooperating
with the Disinterested Directors or Independent Counsel, as the case may be,
making such determination shall be advanced and borne by the Company
(irrespective of the determination as to the Indemnitee’s entitlement to
indemnification) and the Company is liable to indemnify and hold the Indemnitee
harmless therefrom.

 

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(b) In the event the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to Section 11(a) hereof, the Independent
Counsel shall be selected as provided in this Section 11(b). The Independent
Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request
that such selection by made by the Board, in which event the Board shall make
such selection on behalf of the Company, subject to the remaining provisions of
this Section 11(b)), and the Indemnitee or the Company, as the case may be,
shall give written notice to the other, advising it or him of the identity of
the Independent Counsel so selected. The Company or the Indemnitee, as the case
may be, may, within 10 days after such written notice of selection shall have
been received, deliver to the Indemnitee or the Company, as the case may be, 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 a 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 of competent
jurisdiction has determined that such objection is without merit. If, within
20 days after submission by the Indemnitee of a written request for
indemnification pursuant to Section 10(c) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or the Indemnitee may
petition a court of competent jurisdiction for resolution of any objection which
shall have been made by the Company or the Indemnitee to the other’s 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, and 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).
12. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification
hereunder, the person or persons or entity making such determination shall
presume that the Indemnitee is entitled to indemnification under this Agreement
if the Indemnitee has submitted a notice and a request for indemnification in
accordance with Section 10 of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with the making by
any person, persons or entity of any determination contrary to that presumption.
Neither the failure of the Company (including by the Board) or of Independent
Counsel to have made a determination prior to the commencement of any judicial
proceeding or arbitration pursuant to this Agreement that indemnification is
proper in the circumstances because the Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company (including by
the Board) or by Independent Counsel that the Indemnitee has not met such
applicable standard of conduct, shall be admissible in evidence against the
Indemnitee or otherwise referred to in any such judicial proceeding or
arbitration for any purpose (including without limitation to rebut the
presumption in favor of indemnification) or create a presumption that the
Indemnitee has not met the applicable standard of conduct.

 

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(b) If the person, persons or entity empowered or selected under Section 11 of
this Agreement to determine whether the Indemnitee is entitled to
indemnification shall not have made a determination within sixty (60) days after
receipt by the Company of the Indemnitee’s written request for indemnification
pursuant to Section 10(c) of this Agreement, the requisite determination of
entitlement to indemnification shall be deemed to have been made and the
Indemnitee shall be entitled to such indemnification, absent (i) a misstatement
by the Indemnitee of a material fact, or an omission of a material fact
necessary to make the Indemnitee’s statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 60-day period
may be extended for a reasonable time, not to exceed an additional thirty
(30) days, if the Independent Counsel making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information relating
thereto.
(c) The termination of any Proceeding or of any claim, issue or matter therein,
by judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of the Indemnitee to
indemnification or create a presumption that the Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that the Indemnitee had reasonable cause to believe that his conduct was
unlawful.
(d) Reliance as Safe Harbor. For purposes of any determination of good faith,
the Indemnitee shall be deemed to have acted in good faith if the Indemnitee’s
action or failure to act is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to the
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected by the Enterprise. The
provisions of this Section 12(d) shall not be deemed to be exclusive or to limit
in any way the other circumstances in which the Indemnitee may be deemed or
found to have met the applicable standard of conduct set forth in this
Agreement.
(e) Actions of Others. The knowledge and/or actions, or failure to act, of any
other director, partner, managing member, officer, agent, employee or trustee of
the Enterprise shall not be imputed to the Indemnitee for purposes of
determining his right to indemnification under this Agreement.
13. Remedies of the Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 11 of this
Agreement that the 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) payment of indemnification is not made pursuant to
Section 5, 6, 7 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
(iv) payment of indemnification pursuant to Section 3 or 4 of this Agreement is
not made within ten (10) days after a determination has been made that the
Indemnitee is entitled to indemnification, or (v) the Indemnitee determines in
its sole discretion that such action is appropriate or desirable, the Indemnitee
shall be entitled to seek an adjudication by a court of competent jurisdiction
as to his entitlement to such indemnification or advancement of Expenses.
Alternatively, the Indemnitee, at his 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. The Company shall not oppose the
Indemnitee’s right to seek any such adjudication or award in arbitration.

 

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(b) In the event that a determination shall have been made pursuant to Section
11(a) of this Agreement that the 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 the 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 the Indemnitee is
not entitled to indemnification or advancement of Expenses, as the case may be,
and the Company may not refer to or introduce into evidence any determination
pursuant to Section 11(a) adverse to the Indemnitee for purposes of satisfying
the Company’s burden of proof or for any other purpose. In any judicial
proceeding or arbitration commenced pursuant to this Section 13, in the event
that the person, persons or entity empowered or selected under Section 11 of
this Agreement to determine whether the Indemnitee is entitled to
indemnification has not made such a determination within the time period
provided for under Section 12(b) of this Agreement, the Company shall stipulate
and may not contest that the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or Proceeding, had no
reasonable cause to believe his conduct was unlawful.
(c) If a determination shall have been made pursuant to Section 11(a) of this
Agreement that the 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 (i) a misstatement by the
Indemnitee of a material fact, or an omission of a material fact necessary to
make the Indemnitee’s statement not materially misleading, in connection with
the request for indemnification, or (ii) a prohibition of such indemnification
under applicable law.
(d) In the event that the Indemnitee is a party to a judicial proceeding or
arbitration pursuant to this Section 13 concerning his rights under, or to
recover damages for breach of, this Agreement, the Indemnitee shall be entitled
to recover from the Company, and shall be indemnified by the Company against,
any and all Expenses actually and reasonably incurred by him in such judicial
adjudication or arbitration. If it shall be determined in said judicial
adjudication or arbitration that the Indemnitee is entitled to receive part but
not all of the indemnification or advancement of Expenses sought, the Indemnitee
shall be entitled to recover from the Company (who shall be liable therefor),
and shall be indemnified by the Company against, any and all Expenses reasonably
incurred by the Indemnitee in connection with such judicial adjudication or
arbitration.
(e) The Company shall be precluded from asserting in any judicial proceeding or
arbitration commenced pursuant to this Section 13 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. The Company shall be liable to
indemnify the Indemnitee against any and all Expenses and, if requested by the
Indemnitee, shall (within ten (10) days after receipt by the Company of a
written request therefore) advance such Expenses to the Indemnitee that are
incurred by Indemnitee in connection with any judicial adjudication or
arbitration involving the Indemnitee for indemnification or advancement of
Expenses from the Company under this Agreement or under any directors’ and
officers’ liability insurance policies maintained by the Company, regardless of
whether the Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of Expenses or insurance recovery, as the case may
be.

 

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14. Non-exclusivity; Survival of Rights; Insurance.
(a) The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which the Indemnitee may at any time be entitled under applicable law, the
Company’s or any other Enterprise’s Articles of Incorporation, the Company’s or
any other Enterprise’s 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
the Indemnitee under this Agreement in respect to any action taken or omitted by
such Indemnitee in his 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 of Expenses
than would be afforded currently under the Company’s or any other Enterprise’s
Bylaws and this Agreement, it is the intent of the parties hereto that the
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.
(b) To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, partners, managing members,
officers, employees, agents or trustees of the Company or of any other
Enterprise, the 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, partner, managing member, officer, employee,
agent or trustee under such policy or policies. If, at the time of the receipt
of a notice of a claim pursuant to Section 10(a) hereof, the Company has
director and officer liability insurance in effect, the Company shall give
prompt notice of the commencement of such Proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of the Indemnitee, all amounts payable as a result of such
Proceeding in accordance with the terms of such policies.
(c) The Company shall not be liable under this Agreement to make any payment of
amounts otherwise indemnifiable (or for which advancement is provided hereunder)
hereunder if and only to the extent that the Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or
otherwise, provided, however, that (i) the Company shall be the indemnitor of
first resort and any obligation of the Sponsor Fund (or any direct or indirect
subsidiary or affiliate thereof, other than the Company), and any obligation of
any insurer providing insurance coverage under any policy purchased or
maintained by the Sponsor Fund (or any direct or indirect subsidiary or
affiliate thereof, other than the Company), or under any personal umbrella
liability insurance policy, to provide advancement or indemnification for the
same Expenses, liabilities, judgments, penalties, fines and

 

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amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses,
liabilities, judgments, penalties, fines and amounts paid in settlement)
incurred by the Indemnitee shall be secondary, and (ii) if Costa (or any direct
or indirect subsidiary or affiliate thereof, other than the Company) pays or
causes to be paid, for any reason, any amounts otherwise indemnifiable hereunder
or under any other indemnification agreement (whether pursuant to contract,
by-laws or charter) with Indemnitee, then (a) the Sponsor Fund (or such direct
or indirect subsidiary or affiliate thereof, as the case may be) shall be fully
subrogated to all rights of Indemnitee with respect to such payment and (b) the
Company shall fully indemnify, reimburse and hold harmless Costa (or such direct
or indirect subsidiary or affiliate thereof, as the case may be) for all such
payments actually made by the Sponsor Fund (or such direct or indirect
subsidiary or affiliate thereof, as the case may be).
(d) The Company’s obligation hereunder to indemnify, or advance Expenses to, the
Indemnitee who was, is or will be serving as a director, partner, managing
member, officer, employee, agent or trustee of any other Enterprise shall be
reduced by any amount the Indemnitee has actually received as indemnification or
advancement of Expenses from such other Enterprise, provided, however, that no
right of advancement or recovery the Indemnitee may have from the Sponsor Fund
(or any direct or indirect subsidiary or affiliate thereof, other than the
Company) or any right to coverage from any insurer providing insurance coverage
under any policy purchased or maintained by the Sponsor Fund (or any direct or
indirect subsidiary or affiliate thereof, other than the Company) shall reduce
or otherwise alter the rights of the Indemnitee or the obligations of the
Company.
(e) The Company hereby unconditionally and irrevocably waives, relinquishes and
releases, and covenants and agrees not to exercise, any rights that the Company
may now have or hereafter acquires against the Sponsor Fund or Indemnitee that
arise from or relate to the existence, payment, performance or enforcement of
the Company’s obligations under this Agreement or under any other
indemnification agreement (whether pursuant to contract, by-laws or charter)
with any person or entity, including, without limitation, any right of
subrogation (whether pursuant to contract or common law), reimbursement,
exoneration, contribution or indemnification, or to be held harmless, and any
right to participate in any claim or remedy of Indemnitee against the Sponsor
Fund or Indemnitee, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law, including, without limitation, the
right to take or receive from the Sponsor Fund or Indemnitee, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right.
15. Third-Party Beneficiary. The Sponsor Fund is an express third party
beneficiary of this Agreement, is entitled to rely upon this Agreement, and may
specifically enforce the Company’s obligations hereunder (including but not
limited to the obligations specified in Section 14 of this Agreement) as though
a party hereunder.

 

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16. Duration of Agreement. This Agreement shall continue until and terminate
upon the later of: (a) 10 years after the date that the Indemnitee shall have
ceased to serve as a director of the Company or as a director, partner, managing
member, officer, employee, agent or trustee of any other Enterprise; or
(b) 1 year after the final termination (i) of any Proceeding (including any
rights of appeal) then pending in respect of which the Indemnitee requests
indemnification or advancement of Expenses hereunder and (ii) of any judicial
proceeding or arbitration pursuant to Section 13 of this Agreement (including
any rights of appeal) involving the Indemnitee. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of the Indemnitee and his heirs, executors and administrators.
17. 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.
18. Enforcement.
(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
the Indemnitee to continue to serve as a director of the Company, and the
Company acknowledges that the Indemnitee is relying upon this Agreement in
serving as a director of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject hereof and supersedes all prior agreements and
understandings, oral, written and implied, between the parties hereto with
respect to the subject matter hereof.
19. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a wavier of any other provisions of this Agreement nor shall any
waiver constitute a continuing waiver.
20. Notice by the Indemnitee. The 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 of Expenses
covered hereunder. The failure of the Indemnitee to so notify the Company shall
not relieve the Company of any obligation which it may have to the Indemnitee
under this Agreement or otherwise.

 

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21. Notices. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (a) if
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (b) mailed by certified or registered
mail with postage prepaid, on the third business day after the date on which it
is so mailed:
(a) If to the Indemnitee, at the address indicated below, or such other address
as the Indemnitee shall provide in writing to the Company,

             
 
      [address]    
 
           
 
  with a copy to:        
 
      Ropes & Gray LLP    
 
      Prudential Tower, 800 Boylston Street    
 
      Boston, MA 02199-3600    
 
      Attn: Jeffrey Katz, Esq.    
 
      Facsimile No.: (617) 235-0617    

(b) If to the Company to:
Irvine Sensors Corporation
3001 Red Hill Avenue,
Costa Mesa, California 92626
Attn: John J. Stuart, Jr.
Facsimile No: (714) 444-8773
with a copy to:
Dorsey & Whitney LLP
38 Technology Drive, Suite 100
Irvine, CA 92618
Attn: Ellen Bancroft, Esq.
Facsimile No. (949) 932-3601
or to any other address as may have been furnished to the Indemnitee in writing
by the Company.
22. Contribution. To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to the Indemnitee
for any reason whatsoever, the Company, in lieu of indemnifying the Indemnitee,
shall contribute to the amount incurred by the Indemnitee, whether for
judgments, fines, penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion in order to reflect
(i) the relative benefits received by the Company and the Indemnitee as a result
of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or
(ii) the relative fault of the Company (and its directors, officer, employees
and agents) and the Indemnitee in connection with such event(s) and/or
transaction(s).
23. 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 the
Indemnitee pursuant to Section 13(a) of this Agreement, the Company and the
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 Chancery Court of the State of Delaware (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) appoint, to the extent such party is
not a resident of the State of Delaware, irrevocably Incorporating Services,
Ltd., 3500 South Dupont Highway, Dover, Delaware 19901 as its agent in the State
of Delaware as such party’s agent for acceptance of legal process in connection
with any such action or proceeding against such party 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.

 

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24. 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.
25. Miscellaneous. Use of the masculine pronoun shall been deemed to include
usage of the feminine pronoun where appropriate. 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.

 

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

            THE COMPANY:

IRVINE SENSORS CORPORATION
      By:   /s/ John C. Carson       Name:   John C. Carson        Title:  
President & CEO   

Indemnification Agreement

 

 

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  THE INDEMNITEE:    
 
       
 
       

Indemnification Agreement