Exhibit 10.2

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of
May 31, 2005, by and between CALLWAVE, INC., a Delaware corporation (the
“Company”), and C. STEPHEN CORDIAL (“Indemnitee”), with reference to the
following facts:

 

RECITALS:

 

A. The Company and Indemnitee acknowledge (i) the increasing difficulty in
obtaining directors’ and officers’ liability insurance, the significant
increases in the cost of such insurance and the limitations on the coverage
provided by such insurance, and (ii) the substantial increase in corporate
litigation in general, subjecting officers and directors to expensive litigation
risks at the same time as the availability and coverage of liability insurance
has been severely limited.

 

B. The Company desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, to serve as officers and directors of the
Company, and in furtherance thereof, the Company and Indemnitee have agreed to
execute this Agreement in order to memorialize the Company’s agreement to
indemnify Indemnitee from claims arising in connection with Indemnitee’s service
as an officer or director of the Company.

 

C. The Certificate of Incorporation and Bylaws of the Company contain provisions
for indemnifying directors and officers of the Company, and the Certificate of
Incorporation, Bylaws, and Delaware law contemplate that separate contracts may
be entered into between the Company and its directors and officers, employees
and other agents with respect to their indemnification by the Company, which
contracts may provide greater protection than is afforded by the Certificate of
Incorporation and Bylaws.

 

D. The Company understands that Indemnitee has reservations about serving or
continuing to serve the Company without adequate protection against personal
liability arising from such service, and that it is also of critical importance
to Indemnitee that adequate provision be made for advancing costs and expenses
of legal defense.

 

E. The Board of Directors of the Company has approved as being in the best
interests of the Company indemnity contracts substantially in the form of this
Agreement for directors and officers of the Company and its subsidiaries and for
certain other employees and agents of the Company designated by the Board of
Directors.

 

AGREEMENTS:

 

NOW, THEREFORE, in order to induce Indemnitee to serve or to continue to serve
as a director and/or officer of the Company, and in consideration of
Indemnitee’s service to the Company, the parties agree as follows:

 

1. INDEMNIFICATION. The Company shall indemnify and hold Indemnitee harmless to
the greatest extent possible under applicable law if Indemnitee is or was a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in right of the Company, by reason of
(a) the fact that Indemnitee is, was or at any time becomes a director, officer,
employee or agent of the Company, or any subsidiary of the Company, (b) any
action or inaction on the part of Indemnitee while an officer or director or (c)
the fact that Indemnitee is or was serving or at any time serves at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (collectively

 

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referred to hereinafter as a “Claim”), against all Expenses (defined below)
actually and reasonably incurred by Indemnitee in connection with such Claims,
whether or not arising prior to the date of this Agreement. The termination of
any proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that (i) Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, or (ii), with respect to any criminal action or proceeding, Indemnitee
had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

2. CONTINUATION OF CONTRACTUAL INDEMNITY. Subject to the termination provisions
of Section 11.11, all agreements and obligations of the Company contained herein
shall continue for so long as Indemnitee shall be subject to any possible
action, suit, proceeding or other assertion of Claim or Claims.

 

3. EXPENSES; INDEMNIFICATION PROCEDURE

 

3.1 ADVANCEMENT OF EXPENSES. The Company shall advance all Expenses incurred by
Indemnitee in connection with the investigation, defense, settlement or appeal
of any civil or criminal action referenced in Section 1 hereof (but not amounts
actually paid in settlement of any such action or proceeding). Indemnitee hereby
undertakes to repay such Expenses advanced only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
by the Company under this Agreement or any other agreement or under the
Company’s Certificate of Incorporation or Bylaws as now or hereafter in effect.
The advances to be made hereunder shall be paid by the Company to Indemnitee
within ten (10) days following receipt by the Company of a written request
therefor from Indemnitee.

 

3.2 NOTICE/COOPERATION BY INDEMNITEE; DEFENSE OF CLAIM. Indemnitee shall give
the Company notice in writing as soon as practicable of any action, suit,
proceeding or other Claim brought against Indemnitee for which indemnification
is or will be sought under this Agreement; provided that any delay or failure of
Indemnitee to deliver notice of any claim shall not limit Indemnitee’s right to
indemnification under this Agreement unless, and only to the extent that, such
delay or failure materially and adversely affects the ability of the Company to
defend against such claim. The Company and any other indemnifying party
similarly notified will be entitled to participate therein at its own expense or
to assume the defense thereof and to employ counsel reasonably satisfactory to
Indemnitee. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other person or address as the Company shall designate in
writing to Indemnitee). Notice shall be deemed received three (3) business days
after the date postmarked if sent by domestic certified or registered mail,
properly addressed; otherwise notice shall be deemed received when such notice
shall actually be received by the Company. In addition, Indemnitee shall give
the Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee’s power.

 

3.3 PROCEDURE. Any indemnification and advances provided for in Section 1 and
this Section 3.3 shall be made no later than [thirty (30) days] after receipt of
the written request of Indemnitee. If a claim or Expense for which Indemnitee is
entitled to indemnification under this Agreement, under any statute, or under
any provision of the Company’s Certificate of Incorporation or Bylaws providing
for indemnification, is not paid in full by the Company within the time allowed,
Indemnitee may, but need not, at any time thereafter bring an action against the
Company to recover the unpaid amount and, subject to Section 11.4 of this
Agreement, Indemnitee shall also be entitled to be paid for the expenses
(including attorneys’ fees) of bringing such action. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in connection with Claim in advance of its final disposition) that
Indemnitee has not met the standards of conduct which make it permissible under
applicable law for the Company to indemnify Indemnitee for the amount claimed,
but the burden of proving such defense shall be on the Company and Indemnitee
shall be entitled to receive interim payments of Expenses pursuant to Section
3.1 hereof unless and

 

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until such defense may be finally adjudicated by court order or judgment from
which no further right of appeal exists. It is the parties’ intention that, if
the Company contests Indemnitee’s right to indemnification, the question of
Indemnitee’s right to indemnification shall be for the court to decide, and
neither the failure of the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) to have made a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct required by applicable law, nor an actual
determination by the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its
stockholders) that Indemnitee has not met such applicable standard of conduct,
shall create a presumption that Indemnitee has or has not met the applicable
standard of conduct.

 

3.4 NOTICE TO INSURERS. If, at the time of the receipt of a notice of a claim
pursuant to Section 3.2 hereof, the Company has director and officer liability
insurance in effect, the Company shall give prompt notice of claim 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 claim and any related Claim in accordance with the terms of such
policies.

 

3.5 SELECTION OF COUNSEL. In the event the Company shall be obligated to pay the
Expenses of any Claim, the Company shall be entitled to assume the defense of
such Claim, with counsel approved by Indemnitee, which approval shall not be
unreasonably withheld, upon the delivery to Indemnitee of written notice of its
election so to do. Notwithstanding the foregoing, the Company shall not be
permitted to settle any claim or Claim on behalf of Indemnitee in any manner
which would require any acknowledgment of wrongdoing on the part of Indemnitee
without Indemnitee’s written consent, which consent shall not be unreasonably
withheld. After delivery of such notice, approval of such counsel by Indemnitee
and the retention of such counsel by the Company, the Company will not be liable
to Indemnitee under this Agreement for any fees of counsel subsequently incurred
by Indemnitee with respect to the same Claim, provided that (i) Indemnitee shall
have the right to employ his counsel in any such proceeding at Indemnitee’s
expense; and (ii) if (a) the employment of counsel by Indemnitee has been
previously authorized by the Company, (b) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (c) the Company shall not, in
fact, have employed counsel to assume the defense of such proceeding, then the
fees and expenses of Indemnitee’s counsel shall be at the expense of the
Company. The Company shall not be liable to indemnify Indemnitee for any amounts
paid in settlement of any Claim effected without the Company’s written consent,
and the Company shall not settle any Claim in a manner which would impose any
penalty or limitation on Indemnitee without Indemnitee’s written consent;
provided, however, that neither the Company nor Indemnitee will unreasonably
withhold its consent to any proposed settlement and, provided further, that if a
claim is settled by the Indemnitee with the Company’s written consent, or if
there be a final judgment or decree for the plaintiff in connection with the
Claim by a court of competent jurisdiction, the Company shall indemnify and hold
harmless Indemnitee from and against any and all losses, costs, expenses and
liabilities incurred by reason of such settlement or judgment.

 

4. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

 

4.1 SCOPE. Notwithstanding any other provision of this Agreement to the
contrary, the Company hereby agrees to indemnify Indemnitee to the fullest
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the Company’s
Certificate of Incorporation, the Company’s Bylaws or by statute. In the event
of any change, after the date of this Agreement, in any applicable law, statute
or rule which expands the right of a Delaware corporation to indemnify a member
of its Board of Directors, an officer or other corporate agent, such changes
shall be ipso

 

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facto included within the scope of Indemnitee’s rights and Company’s
obligations, under this Agreement. In the event of any change in any applicable
law, statute or rule which narrows the right of a Delaware corporation to
indemnify a member of its Board of Directors, an officer or other corporate
agent, such changes, to the extent not otherwise required by such law, statute
or rule to be applied to this Agreement shall have no effect on this Agreement
or the parties’ rights and obligations hereunder.

 

4.2 NONEXCLUSIVITY. The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which Indemnitee may be entitled under the
Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested Directors, the General Corporation Law of the
State of Delaware, or otherwise, both as to action in Indemnitee’s official
capacity and as to action in another capacity while holding such office. The
indemnification provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an indemnified capacity even
though he may have ceased to serve in such capacity at the time of any
proceeding and shall not restrict Indemnitee’s right to contribution as may be
available under applicable law.

 

5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of the
Expenses actually or reasonably incurred by him in the investigation, defense,
appeal or settlement of any civil or criminal action or proceeding, but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

 

6. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge that in
certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company’s right under public
policy to indemnify Indemnitee.

 

7. OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall use its best
efforts to obtain and maintain a policy or policies of insurance with reputable
insurance companies providing the officers and directors of the Company with
coverage for losses from wrongful acts, or to ensure the Company’s performance
of its indemnification obligations under this Agreement. In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company’s directors, if
Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a
director of the Company but is an officer; or of the Company’s key employees, if
Indemnitee is not an officer or director but is a key employee. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a
subsidiary or parent of the Company.

 

8. SEVERABILITY. Nothing in this Agreement is intended to require or shall be
construed as requiring the Company to do or fail to do any act in violation of
applicable law. The Company’s inability, pursuant to court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable as provided in
this Section 8. If this Agreement or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

 

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9. EXCEPTIONS. Notwithstanding any other provision of this Agreement to the
contrary, the Company shall not be obligated pursuant to the terms of this
Agreement:

 

9.1 EXCLUDED ACTS. To indemnify Indemnitee for any acts or omissions or
transactions from which a director may not be relieved of liability under the
Delaware General Corporation Law;

 

9.2 CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance Expenses to
Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought in good faith to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as
required under the Delaware General Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such suit;

 

9.3 LACK OF GOOD FAITH. To indemnify Indemnitee for any Expenses incurred by the
Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or
interpret this Agreement, if a court of competent jurisdiction determines that
each of the material assertions made by the Indemnitee in such proceeding was
not made in good faith or was frivolous or arose from Indemnitee’s fraudulent,
dishonest or willful misconduct, or such indemnity is not permitted under
applicable law;

 

9.4 INSURED CLAIMS. To indemnify Indemnitee for expenses or liabilities of any
type whatsoever (including, but not limited to, judgments, fines, ERISA excise
taxes or penalties, and amounts paid in settlement) to the extent such expenses
or liabilities have been paid directly to Indemnitee by an insurance carrier
under a policy of officers’ and directors’ liability insurance maintained by the
Company, provided that such limitation shall not apply to any expenses incurred
by Indemnitee which, except for this paragraph, would be paid hereunder and
which remain outstanding after all payments are received from an insurance
company;

 

9.5 CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for expenses and the
payment of profits realized, or losses avoided, arising from the purchase and
sale, or sale and purchase, by Indemnitee of securities in violation of Section
16(b) of the Securities Exchange Act of 1934, as amended, or any similar
provisions of any federal, state or local statutory law; and

 

9.6 INSIDER TRADING. On the account of any suit brought against Indemnitee for
misuse or misappropriation of non-public information, or otherwise involving
Indemnitee’s status as an “insider” of the Company, in connection with any
purchase or sale by Indemnitee of securities of the Company.

 

10. CONSTRUCTION OF CERTAIN PHRASES. For purposes of this Agreement:

 

10.1 The term “Company” shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, and employees or agents, so that if Indemnitee is or was a director,
officer, employee or agent of such constituent corporation, or is or was serving
at the request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions of
this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its
separate existence had continued.

 

10.2 The term “Expenses” shall include all judgments, Fines, penalties and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) of any proceeding
and any federal, state, local or foreign taxes imposed on the

 

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Indemnitee as a result of the actual or deemed receipt of any payments under
this Agreement (collectively, “Expenses”), including all interest, assessments
and other charges paid or payable in connection with or in respect of such
Expenses.

 

10.3 The term “Fines” shall include any excise taxes assessed on Indemnitee with
respect to an employee benefit plan.

 

10.4 If Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not
opposed to the best interests of the Company” as referred to in this Agreement.

 

10.5 The phrase “other enterprises” shall include employee benefit plans.

 

10.6 The phrase “serving at the request of the Company” shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries.

 

11. MISCELLANEOUS.

 

11.1 NOTICES. All notices, requests, demands or other communications permitted
or required under this Agreement shall be effective only if in writing, and
shall be deemed to have been given, received and delivered (a) when personally
delivered; (b) on the second (2nd) business day after the date on which mailed
by certified or registered United States mail, return receipt requested, postage
prepaid; (c) on the first (1st) business day after the date on which transmitted
by facsimile or other electronic means generating a receipt evidencing a
successful transmission; or (d) on the first (1st) business day after the
business day on which deposited with a public carrier regulated under United
States laws for the fastest commercially available overnight delivery, with a
return receipt (or equivalent thereof administered by such regulated public
carrier) requested, freight prepaid, addressed to the party for whom intended at
the address set forth on the signature page of this Agreement, or such other
address or facsimile number, notice of which is given in a manner permitted by
this Section 11.1.

 

11.2 COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall constitute an original.

 

11.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company
and its successors and assigns, and shall inure to the benefit of Indemnitee and
Indemnitee’s estate, heirs, legal representatives and assigns.

 

11.4 ATTORNEYS’ FEES. In the event that any action is instituted by Indemnitee
under this Agreement to enforce or interpret any of the terms hereof, Indemnitee
shall be entitled to be paid all costs and expenses, including reasonable
attorneys’ fees, incurred by Indemnitee with respect to such action, unless as a
part of such action, the court of competent jurisdiction determines that each of
the material assertions made by Indemnitee as a basis for such action were not
made in good faith or were frivolous. In the event of an action instituted by or
in the name of the Company under this Agreement or to enforce or interpret any
of the terms of this Agreement, Indemnitee shall be entitled to be paid all
costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee
in defense of such action (including with respect to Indemnitee’s counterclaims
and cross-claims made in such action), unless as a part of such action the court
determines that each of Indemnitee’s material defenses to such action were made
in bad faith or were frivolous.

 

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11.5 CHOICE OF LAW. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of Delaware, as applied to
contracts between California residents entered into and to be performed entirely
within Delaware.

 

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

 

11.7 EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective as of the day
and year first above written and shall apply to all claims against or involving
Indemnitee that are threatened or pending as of such date or are initiated on or
after such date, regardless of whether the underlying facts relating to
Indemnitee occurred before, on or after such date. All agreements and
obligations of the Company contained herein shall continue during the period
that Indemnitee is a director, officer or agent of the Company and shall
continue thereafter so long as Indemnitee shall be subject to any possible claim
or threatened, pending or completed proceeding by reason of the fact that
Indemnitee was serving in the capacity referred to herein.

 

11.8 FURTHER ASSURANCES. The parties will do, execute and deliver, or will cause
to be done, executed and delivered, all such further acts, documents and things
as may be reasonably required for the purpose of giving effect to this Agreement
and the transactions contemplated hereby.

 

11.9 ACKNOWLEDGMENT. The Company expressly acknowledges that it has entered into
this Agreement and assumed the obligations imposed on the Company hereunder in
order to induce Indemnitee to serve or to continue to serve as an agent of the
Company, and acknowledges that Indemnitee is relying on this Agreement in
serving or continuing to serve in such capacity.

 

11.10 BINDING EFFECT. This Agreement shall be binding upon Indemnitee and the
Company, their successors and assigns, and shall inure to the benefit of
Indemnitee, his or her heirs, personal representatives and assigns and to the
benefit of the Company, its successors and assigns.

 

11.11 AMENDMENT AND TERMINATION. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

 

[Signatures appear on the following page.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.

 

“COMPANY:”    “INDEMNITEE:” CallWave, Inc., a Delaware corporation      By  

/s/ David F. Hofstatter

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/s/ C. Stephen Cordial

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    David F. Hofstatter, President    C. Stephen Cordial May 26, 2005    May 26,
2005 Date    Date Address and Facsimile No. for Notices:    Address and
Facsimile No. for Notices:

CallWave, Inc.

Attn: Chief Executive Officer

136 W. Canon Perdido, Suite A

Santa Barbara, California 93101

  

C. Stephen Cordial

31704 Saddletree Drive

Westlake Village, California 91361

Facsimile No.: (805) 690-4202    Facsimile No.: (        )                     

 

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