INDEMNIFICATION AGREEMENT
THIS AGREEMENT is entered into, effective as of February 22, 1999 by and
between MICREL, INCORPORATED, a California corporation (the "Company"), and
Xxxxxx X. Xxxx ("Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as directors and
officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the company and Indemnitee recognize the increased risk of
litigation and other claims currently being asserted against directors and
officers of corporations; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued and
effective service to the Company, and in order to induce Indemnitee to provide
services to the Company as a director and/or officer, the Company wishes to
provide in this Agreement for the indemnification of and the advancing of
expenses to Indemnitee to the fullest extent (whether partial or complete)
permitted by California law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the coverage of Indemnitee under the
Company's directors' and officers' liability insurance policies.
NOW, THEREFORE, in consideration of the above premises and of Indemnitee's
continuing to serve the Company directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties agree as
follows:
1. Certain Definitions:
(a) Board: the Board of Directors of the Company.
(b) 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 (the "Act"), other than a
trustee or other fiduciary holding securities under an employee benefit
plan of the company or a corporation owned directly or indirectly by the
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Act), directly or indirectly,
of securities of the company representing 30% or more of the total
voting power represented by the Company's then outstanding Voting
Securities, or (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 by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
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directors at the beginning of the period of whose election or nomination
for election was previously so approved, cease for any reason to
constitute a majority of the Board, or, or (iii) the shareholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that would result in
the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at least
80% of the total voting power represented by the Voting Securities of
the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (iv) the shareholders 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.
(c) Expenses: any expense, liability, or loss, including attorneys'
fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or
to be paid in settlement, any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed
as a result of the actual or deemed receipt of any payments under this
Agreement, paid or incurred in connection with investigating, defending,
being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence that takes place
either prior to or after the execution of this Agreement, related to the
fact that Indemnitee is or was a director or an officer of the company,
or while a director or officer is or was serving at the request of the
Company as a director, officer, employee, trustee, agent, or fiduciary of
another foreign or domestic corporation, partnership, joint venture,
employee benefit plan, trust, or other enterprise, or was a director,
officer, employee, or agent of a foreign or domestic corporation that was
a predecessor corporation of the Company or of another enterprise at the
request of such predecessor corporation, or related to anything done or
not done by Indemnitee in any such capacity, whether or not the basis of
the Proceeding is alleged action in an official capacity as a director,
officer, employee, or agent or in any other capacity while serving as a
director, officer, employee, or agent of the Company, as described above.
(e) Independent Counsel: the person or body appointed in connection
with Section 3.
(f) Potential Change in Control: shall be deemed to have occurred 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 that, if consummated, would constitute a
Change in Control; (iii) any person (other than a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company acting in such capacity or a corporation owned, substantially the
same proportions as their ownership of stock of the Company), who is or
becomes the
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Beneficial Owner, directly or indirectly, of securities of
the Company representing 10% or more of the combined voting power of the
Company's then outstanding Voting Securities, increase his beneficial
ownership of such securities by 5% or more over the percentage so owned
by such person on the date hereof, or (iv) the board adopts a resolution
to the effect that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(g) Proceeding: (i) any threatened, pending, or completed action, suit,
or proceeding, or whether civil, criminal, administrative, investigative,
or other; (ii) any inquiry, hearing, or investigation, whether conducted
by the Company or any other party, that Indemnitee in good faith believes
might lead to the institution of any such action, suit, or proceeding.
(h) Reviewing Party: the person or body appointed in accordance with
Section 3.
(i) Voting Securities: any securities of the Company that vote
generally in the election of officers.
2. Agreement to Indemnify.
(a) General Agreement. In the event Indemnitee was, is, or becomes a
party to or witness or other participant in, or is threatened to be made
a party to or witness or other participant in, a Proceeding by reason of
(or arising in part out of) an Indemnifiable Event, the company shall
indemnify Indemnitee from and against any and all Expenses to the fullest
extent permitted by law, as the same exits or may hereafter be amended or
interpreted (but in the case of any such amendment or interpretation,
only to the extent that such amendment or interpretation permits the
company to provide broader indemnification rights than were permitted
prior thereto). The parties hereto intend that this Agreement shall
provide for indemnification in excess of that expressly permitted by
statute, including, without limitation, any indemnification provided by
the Company's Articles of Incorporation, its bylaws, vote of its
shareholders or disinterested directors, or applicable law.
(b) Initiation of Proceeding. Notwithstanding anything in this
Agreement to the contrary, Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with any
Proceeding initiated by Indemnitee against the Company or any director or
officer of the Company unless (i) the Company has joined in or the Board
has consented to the initiation of such Proceeding; (ii) the Proceeding
is one to enforce indemnification rights under Section 5; or (iii) the
Proceeding is instituted after a Change in Control and Independent
Counsel has approved its initiation.
(c) Expense Advances. If so requested by Indemnitee, the Company shall
advance (within ten business days of such request) any and all Expenses
to Indemnitee (an "Expense Advance"); proved that, if and to the extent
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that the Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse
the Company) for all such amounts theretofore paid. If Indemnitee has
commenced legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemnified under
applicable law, as provided in Section 4, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding and Indemnitee shall not be
required to reimburse the Company for any Expense Advance unit a final
judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or have lapsed).
Indemnitee's obligation to reimburse the Company for Expense Advances
shall be unsecured and no interest shall be charged thereon.
(d) Mandatory Indemnification. Notwithstanding any other provision of
this Agreement (other than Section 2(f) below), to the extent that
Indemnitee has been successful on the merits in defense or any Proceeding
relating in whole or in part to an Indemnifiable Event or in defense of
any issue or matter therein, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
(e) Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or
a portion of Expense, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof
to which Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification pursuant to this
Agreement shall be paid by the Company on account of any Proceeding in
which judgment is rendered against Indemnitee for an accounting of
profits made from the purchase or sale by Indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the Act or similar
provisions of any federal, state or local laws.
3. Reviewing Party. Prior to any Change in Control, the Reviewing Party
shall be any appropriate person or body consisting of a member or members of
the Board or any other person or body appointed by the board who is not a
party to the particular Proceeding with respect to which Indemnitee is seeking
indemnification; after a Change in Control, the Reviewing Party shall be the
Independent Counsel referred to below. With respect to all matters arising
after a Change in Control (other than a Change in Control approved by a
majority of the directors on the Board who were directors immediately prior to
such Change in Control) concerning the rights of Indemnitee to indemnity
payments and Expense Advances under this Agreement or any other agreement or
under applicable law or the company's Articles of Incorporation of bylaws now
or hereafter in effect relating to indemnification for Indemnifiable Events,
the Company shall seek legal advice only from Independent Counsel selected by
Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services for the
Company or the Indemnitee (other than in connection with indemnification
matters ) within the last five years.
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The 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. Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent the Indemnitee should be permitted to be
indemnified under applicable law. the Company agrees to pay the reasonable
fees of the Independent Counsel and to indemnify fully such counsel against
any and all expenses (including attorney's fees), claims, liabilities, loss,
and damages arising out of or relating to this Agreement or the engagement of
Independent Counsel pursuant hereto.
4. Indemnification Process and Appeal.
(a) Indemnification Payment. Indemnitee shall be entitled to
indemnification of Expenses, and shall receive payment thereof, from the
Company in accordance with this Agreement as soon as practicable after
Indemnitee has made written demand on the company for indemnification,
unless the Reviewing Party has given a written opinion to the company
that Indemnitee is not entitled to indemnification under applicable law.
(b) Suit to Enforce Rights. Regardless of any action by the Reviewing
Party, if Indemnitee has not received full indemnification within thirty
days after making a demand in accordance with Section 4(a), Indemnitee
shall have the right to enforce its indemnification rights under this
Agreement by commencing litigation in any court in the State of
California having subject matter jurisdiction thereof and in which venue
is proper seeking an initial determination by the court or challenging
any determination by the Reviewing Party or any aspect thereof. The
Company hereby consents to service of process and to appear in any such
proceeding. any determination by the Reviewing Party not challenged by
the Indemnitee shall be binding on the company and Indemnitee. The
remedy provided for in this Section 4 shall be in addition to any other
remedies available to Indemnitee in law or equity.
(c) Defense to Indemnification, Burden of Proof, and Presumptions. It
shall be a defense to any action brought by Indemnitee against the
Company to enforce this Agreement (other than an action brought to
enforce a claim for Expenses incurred in defending a Proceeding in
advance of its final disposition where the required undertaking has been
tendered to the Company) that it is not permissible under applicable law
for the company to indemnify Indemnitee for the amount claimed. In
connection with any such action or any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be indemnified
hereunder, the burden of proving such a defense or determination shall be
on the Company. Neither the failure of the Reviewing Party or the
company (including its board, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of
such action by Indemnitee that indemnification of the claimant is proper
under the circumstances because Indemnitee has met the standard of
conduct set forth in applicable law, nor an actual determination by the
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Reviewing Party of Company (including it Board, independent counsel, or
its shareholders) that the Indemnitee had not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of
conduct. For purposes of this Agreement, the termination of any claim,
action, suit, or proceeding, by judgment, order settlement (whether with
or without court approval), conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is
not permitted by applicable law.
5. Indemnification for Expenses Incurred in Enforcing Rights. The Company
shall indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within ten business days of such request), advance such
Expenses to Indemnitee, that are incurred by Indemnitee in connection with any
claim asserted against or action brought by Indemnitee for
(i) Indemnification of Expenses or Expense Advances by the Company under
this Agreement or any other agreement or under applicable law or the
company's Articles of Incorporation or Bylaws now or hereafter in effect
relating to indemnification for Indemnifiable Events, and/or
(ii) Recovery under directors' and officers' liability insurance
policies maintained by the Company, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, Expense
Advances, or insurance recovery, as the case may be.
6. Notification and Defense of Proceeding.
(a) Notice. Promptly after receipt by Indemnitee of notice of the
commencement of any Proceeding, Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify
the Company of the commencement thereof; but the omission so to notify
the Company will not relieve the Company from any liability that it may
have to Indemnitee, except as provided in Section 6(c).
(b) Defense. With respect to any Proceeding as to which Indemnitee
notifies the Company of the commencement thereof, the Company shall be
entitled to participate in the Proceeding at its own expense and except
as otherwise provided below, to the extent the Company so wishes, it may
assume the defense thereof with counsel reasonably satisfactory to
Indemnitee. After notice from the Company to Indemnitee of its election
to assume the defense of any Proceeding, the Company shall not be liable
to Indemnitee under this Agreement or otherwise for any Expenses
subsequently incurred by Indemnitee in connection with the defense of
such Proceeding other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to employ his
or her own legal counsel in such Proceeding, but all Expenses related
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thereto incurred after notice from the Company of its assumption of the
defense shall be at Indemnitee's expense unless: (i) the employment of
legal counsel by Indemnitee has been authorized by the Company, (ii)
Indemnitee has reasonably determined that there may be a conflict of
interest between Indemnitee and the Company in the defense of the
Proceeding, (iii) after a Change in Control, the employment of counsel by
Indemnitee has been approved by the Independent Counsel, or (iv) the
Company shall not in fact have employed counsel to assume the defense of
such Proceeding, in each of which case all Expenses of the Proceeding
shall be borne by the company. The company shall not be entitled to
assume the defense of any Proceeding brought by or on behalf of the
Company or as to which Indemnitee shall have made the determination
provided for in (ii) above.
(c) Settlement of Claims. The Company shall not be liable to indemnify
Indemnitee under this Agreement or otherwise for any amounts paid in
settlement of any Proceeding effected without the Company's written
consent, provided, however, that if a Change in Control has occurred, the
Company shall be liable for indemnification of Indemnitee for amounts
paid in settlement if the Independent counsel has approved the
settlement. The Company shall not settle any Proceeding in any manner
that would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent. Neither the Company nor the Indemnitee
will unreasonably withhold their consent to any proposed settlement. The
Company shall not be liable to indemnify the Indemnitee under this
Agreement with regard to 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; the Company's liability hereunder shall not
be excused if participation in the Proceeding by the Company was barred
by this Agreement.
7. Establishment of Trust. In the event of a Change in Control or a
Potential Change in Control, the Company shall, upon written request by
Indemnitee, create a Trust for the benefit of the Indemnitee and from time to
time upon written request of Indemnitee shall fund the Trust in an amount
sufficient to satisfy any and all Expense reasonably anticipated at the time
of each such request to be incurred in connection with investigating,
preparing for, participating in, and/or defending any Proceeding relating to
an Indemnifiable Event. The amount or amounts to be deposited in the Trust
pursuant to the foregoing funding obligation shall be determined by the
Reviewing Party. 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 the Indemnitee, (ii) the Trustee shall advance,
within ten business days of a request by the Indemnitee, any and all Expenses
to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust
under the same circumstances for which the Indemnitee would be required to
reimburse the Company under Section 2(c) of 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 promptly pay to the
Indemnitee all amounts for which the Indemnitee 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 a final
determination by the Reviewing Party or a court of competent jurisdiction, as
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the case may be, that the Indemnitee has been fully indemnified under the
terms of this Agreement. The Trustee shall be chosen by the Indemnitee.
Nothing in this Section 7 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. The Company shall pay all costs of establishing and maintaining
the Trust and shall indemnify the Trustee against any and all expenses
(including attorneys' fees), claims, liabilities, loss, and damages arising
out of or relating to this Agreement or the establishment and maintenance of
the Trust.
8. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition
to any other rights Indemnitee may have under the Company's Articles of
Incorporation, Bylaws, applicable law, or otherwise. To the extent that a
change in applicable law (whether by statute or judicial decision) permits
greater indemnification by agreement than would be afforded currently under
the Company's Articles of Incorporation, Bylaws, applicable law, or this
Agreement, it is the intent of the parties that Indemnitee enjoy by this
Agreement the greater benefits so afforded by such change.
9. Liability Insurance. To the extent the company maintains an insurance
policy or policies providing directors' and officers' liability insurance,
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
Company director or officer.
10. Period of Limitations. 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 Indemnitee, 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. Any claim or cause of action
of the Company or its affiliate 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 the shorter period shall govern.
11. Amendment of this Agreement. No supplement, modification, or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall
operate as a waiver of any other provisions hereof (whether or not similar),
nor shall such waiver constitute a continuing waiver. Except as specifically
provided herein, no failure to exercise or any delay in exercising any right
or remedy hereunder shall constitute a waiver thereof.
12. Subrogation. In the event of payment under this Agreement, the Company
shall be subjugated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that
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may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suite to
enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise Indemnifiable
hereunder.
14. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors (including any direct or indirect successor by purchase, merger,
consolidation, or otherwise to all or substantially all of the business and/or
assets of the Company), assigns, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation, or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to
Indemnitee, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. The indemnification provided
under this Agreement shall continue as to Indemnitee for any action taken or
not taken while serving in an indemnified capacity pertaining to an
Indemnifiable Event even though he or she may have ceased to serve in such
capacity at the time of any Proceeding.
15. Severability. If any provision (or portion thereof) of this Agreement
shall be held by a court of competent jurisdiction to be invalid, void, or
otherwise unenforceable, the remaining provision shall remain enforceable to
the fullest extent permitted by law. Furthermore, to the fullest extent
possible, the provisions of this Agreement (including, without limitation,
each portion of this Agreement containing any provision held to be invalid,
void, or otherwise unenforceable, that is not itself invalid, void, or
unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, void, or unenforceable.
16. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.
17. Notices. All notices, demands, and other communications required or
permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and addressed to the
Company at:
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Micrel, Incorporated
0000 Xxxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: President
and to Indemnitee at:
Xxxxxx X. Xxxx
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Notice of change of address shall be effective only when given in accordance
with this Section. All notices complying with this Section shall be deemed to
have been received on the date of delivery or on the third business day after
mailing.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day specified above.
MICREL, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Title: Vice President, Secretary
INDEMNITEE:
/s/ Xxxxxx X. Xxxx
---------------------------------
Xxxxxx X. Xxxx
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