January 26, 1998
[Name]
[Address]
Re: Indemnification Agreement
Dear :
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This letter reflects the agreement of EXCEL Communications, Inc., a
Delaware corporation (the "Company"), to indemnify you against expenses and
liabilities to which you may become subject in connection with your services to
the Company. In consideration of your providing your services to the Company,
the Company hereby agrees with you as follows:
1. (a) Subject to Sections 3, 7 and 9 below, to the fullest extent
permitted by law, you shall be indemnified and held harmless by the Company from
and against any and all judgments, fines, excise taxes, amounts paid in
settlement, losses, damages, expenses (including, wherever expenses are referred
to in this agreement, legal fees and disbursements and court costs reasonably
incurred) and other liabilities, whether joint or several, arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative, regulatory or investigative in nature, in which you may be or
become involved, or threatened to be involved, as a party or otherwise, by
reason of (i) your present or former status as an officer, director, employee,
partner, member, agent or trustee of the Company or any Affiliated Person (as
defined below), or (ii) any action actually or allegedly taken or omitted by you
in any such capacity, if with respect to the matter at issue you acted in a
manner reasonably believed to be in good faith and in a manner you reasonably
believed to be in, or not opposed to, the best interests of the Company or such
Affiliated Person, as the case may be, and, with respect to any criminal
proceeding, had no reasonable cause to believe your conduct was unlawful.
However, you shall not be entitled to indemnification with respect to any amount
paid in settlement if the settlement was effected without the Company's prior
written consent, which shall not be unreasonably withheld.
(b) Subject to Sections 7 and 9 below, to the extent that you are
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1(a) hereof, or in defense of any claim, issue
or matter raised therein or resolved thereby, you shall be indemnified by the
Company against expenses reasonably incurred by you in connection therewith.
(c) To the extent you are required to serve or prepare to serve as a
witness in any action, suit or proceeding (whether civil, criminal,
administrative, regulatory or investigative in nature), including any
investigation by any legislative body, by reason of your services as a director,
officer, partner, member, employee, agent or trustee of the Company or any
Affiliated Person, but excluding service as a witness in an action, suit or
proceeding commenced by you, the Company shall indemnify you, subject to
Sections 7 and 9 below, against expenses reasonably incurred by you in
connection therewith on a current basis, upon receipt of statement(s) requesting
such indemnification, averring such service and reasonably evidencing such
expenses.
2. Subject to the last sentence of Section 3 hereof and to Sections 7 and 9
below, to the fullest extent permitted by law, expenses reasonably incurred by
you in investigating, responding to or defending any claim, demand, action, suit
or proceeding in which you may be or become involved, or threatened to be
involved, as a party or otherwise, by reason of your present or former status as
an director, officer, employee, partner, member, agent or trustee of the Company
or any Affiliated Person, or in serving or preparing to serve as a witness in
any action, suit or proceeding referred to in Section 1(b) hereof, shall be
advanced (or promptly reimbursed) by the Company, from time to time, to you as
such expenses are reasonably incurred prior to the final disposition of such
claim, demand, action, suit or proceeding, upon receipt by the Company of an
undertaking by you to repay the amount advanced if it ultimately shall be
determined that you are not entitled to be indemnified against such expenses
hereunder. The Company shall not require any guarantee, surety or other credit
enhancement as a condition to, or as part of, such undertaking on your part.
3. Any indemnification under Section 1(a) above shall be made by the
Company only as authorized in the specific case upon a determination that
indemnification is proper in the circumstances because you have met the
applicable standard of conduct set forth in Section 1(a) above. Such
determination shall be made by the Board of Directors of the Company by a
majority vote of the directors thereof who are not and were not parties to the
action, suit or proceeding (if any) in respect of which you are seeking
indemnity or, if such a quorum is not obtainable or, even if obtainable, a
quorum of directors likewise disinterested directs, by independent legal counsel
in a written opinion or, if the Board of Directors so determines, by the
Company's stockholders (the "Initial Determining Body") and best efforts shall
be used to make any such determination within 10 business days of a request
therefor. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that you did not act in a manner
reasonably believed to be in good faith and in a manner which you reasonably
believed to be in or not opposed to the best interests of the Company or an
Affiliated Person, as the case may be, and, with respect to any criminal action
or proceeding, that you had reasonable cause to believe that your conduct was
unlawful, unless a judicial determination shall have been made in such action,
suit or proceeding specifically to such effect. You shall be conclusively
determined to have met the applicable standard of conduct for entitlement to
indemnification hereunder thirty business days after having made a written
request to the Company for such a determination, unless a negative determination
has been made within such thirty business day period or a determination as to
your compliance with the applicable standard of conduct could not reasonably be
made within such period by reason of the unavailability of information
reasonably required therefor. In the event the Initial Determining Body shall
not be able to timely make a determination as to your entitlement to
indemnification, or if such a determination is made but is negative, you shall
be entitled to a de novo judicial determination thereof by any court of
competent jurisdiction, but the Company shall not be required to advance to you
the expenses incurred by you in connection with any such proceeding and only
shall be required to indemnify you against such expenses reasonably incurred by
you if a court of competent jurisdiction shall have determined that you met the
applicable standard of conduct.
4. The advancement of expenses and indemnification herein provided shall be
in addition to any other rights to which you may be entitled in your capacity as
an officer, director, employee, partner, member, agent or trustee of the Company
or any Affiliated Person or any other person under any provision of the
certificate or articles of incorporation or organization, by-laws, partnership
or trust or operating agreement or other constitutive documents thereof or any
other agreement therewith of which you may be a beneficiary, or as a matter of
law, or otherwise, subject, however, to the provisions of Section 9(b) hereof.
5. You shall be entitled to indemnification as provided in Section 1 hereof
and advancement of expenses as provided in Section 2 hereof with respect to any
liability arising out of any claim, demand, action, suit or proceeding involving
any action actually or allegedly taken or omitted to be taken by you with
respect to any employee benefit plan of the Company or any Affiliated Person, or
any trust thereunder, including any such plan within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended, while you
were serving or acting in any administrative or fiduciary capacity for such plan
or trust, provided that (i) you were requested to so serve or act by the Company
or any Affiliated Person and (ii) in the case of indemnification, you acted with
respect to the matter at issue in a manner reasonably believed to be in good
faith and in a manner you reasonably believed to be in or not opposed to the
best interests of the participants and beneficiaries of such plan.
Notwithstanding any conflict that may exist between the interest of any such
plan (or the participants or beneficiaries thereof) and the Company or any
Affiliated Person in any particular circumstance, any action taken or omitted to
be taken by you in any administrative or fiduciary capacity with respect to any
such plan in a manner you reasonably believed to be in or not opposed to the
best interests of the participants and beneficiaries thereof shall be
conclusively deemed to have been in or not opposed to the best interests of the
Company or such Affiliated Person. Your entitlement to such indemnification in a
specific case shall be determined in accordance with Section 3 hereof.
6. You shall not be denied indemnification or advancement of expenses, in
whole or in part, hereunder solely as a result of any direct or indirect
ownership interest or personal financial interest you have or had in the
Company, any Affiliated Person or any entity directly or indirectly owning any
interest therein which also is involved in the transaction or matter with
respect to which indemnification or advancement of expenses is sought by you
hereunder, unless it shall have been determined that with respect to the matter
at issue you did not act in a manner reasonably believed to be in good faith or
did not act in a manner you reasonably believed to be in or not opposed to the
best interests of the Company or Affiliated Person involved in such matter. No
obligation or liability you may have, or may be asserted to have, to the Company
or any Affiliated Person shall reduce or mitigate the Company's obligation to
make any payment to you hereunder or be offset against any such obligation.
7. Notwithstanding anything contained in this agreement, you shall not be
entitled to the benefits of this agreement with respect to any expense or
liability incurred by you in connection with any action, suit or proceeding that
you at any time commence against the Company or any Affiliated Person or any
officer, director, partner, member, employee, agent or trustee thereof, other
than in respect of any expenses reasonably incurred by you in the successful
enforcement of your rights hereunder against the Company.
8. The rights to indemnification and advancement of expenses provided to
you hereunder is for your benefit and that of your respective heirs,
distributees, executors and administrators and shall not be deemed to create any
right to indemnification or advancement of expenses for the benefit of any other
person. This letter agreement shall be binding upon the successors and assigns
of the Company.
9. (a) The term "Affiliated Person" shall mean (i) each corporation in the
stock or securities of which the Company has directly or indirectly invested,
(ii) each partnership of which the Company is a general or limited partner or in
the partner interests or securities of which the Company has directly or
indirectly invested, (iii) each joint venture of which the Company is a joint
venturer or in the joint venture interests or securities of which the Company
has directly or indirectly invested, (iv) each limited liability company of
which the Company is a member or in the membership interests or securities of
which the Company has directly or indirectly invested, (v) each trust (including
any trust under any employee benefit plan) of which the Company is a beneficiary
(or in the case of a trust under an employee benefit plan of which the Company
is a sponsor) or in the trust interests or securities of which the Company has
directly or indirectly invested or to which the Company has made a loan or the
indebtedness of which the Company has guaranteed, provided, in the case of each
such corporation, partnership, joint venture, limited liability company or
trust, that you served as an officer, director, employee, partner, member, agent
or trustee thereof, or of any corporation, partnership, limited liability
company or trust which is a partner thereof, at the request of or to represent
the interests of the Company or any Affiliated Person thereof (whether or not
you directly or indirectly, had an ownership or personal financial interest
therein). For purposes hereof, the Company shall be deemed to have an investment
in any corporation, partnership, joint venture, limited liability company or
trust in or of which any Affiliated Person has any investment or is a partner,
joint venturer, member or trust beneficiary.
(b) In the event you shall receive a payment from any Affiliated Person, or
from any insurance company that provided coverage with respect to your acts or
omissions on behalf of the Company or any Affiliated Person, or from any other
third party, which payment indemnifies you or holds you harmless from and
against any liability (including expenses) in respect of which you would
otherwise be entitled to indemnity or an advance of expenses hereunder from the
Company, you shall not be entitled hereunder to any duplicative recovery from
the Company to the extent of such payment so received by you. In the event,
after receiving from the Company an indemnity payment or advance of expenses
hereunder in respect of any liability, you shall receive in respect of the same
liability any payment from any Affiliated Person or insurance company or other
third party, which payments from the Company and such Affiliated Person,
insurance company and/or third party total more than the amount of such
liability, you shall promptly refund to the Company, without interest, the
excess amount. For purposes of apportioning the obligation of the Company to
make indemnity payments and to advance expenses to you hereunder in any
circumstance where (i) any Affiliated Person, or any insurance company that
provided coverage with respect to your acts or omissions on behalf of the
Company or any Affiliated Person, or any third party, is at the time also
obligated to indemnify you and hold you harmless from and against any liability
in respect of which you are entitled to indemnity or an advance of expenses
hereunder and (ii) such other party or parties and the Company are at the time
ready, willing and able to make such payment to you (including payment in
respect of part of such liability), the Company shall make payment to you in
accordance with the following priorities (but any such payment shall be subject
to the provisions of the preceding sentences of this Section 9(b)): (A) there
shall first be applied against such liability any payments (if any) then
available from any third party other than an insurance company or Affiliated
Person referred to in clauses (B), (C) or (D) below, (B) there shall then be
applied against any remaining liability any payments (if any) then available
from any insurance company providing coverage with respect to your acts or
omissions on behalf of an Affiliated Person, (C) there shall then be applied
against any remaining liability any payments (if any) then available from any
insurance company providing coverage with respect to your acts or omissions on
behalf of the Company, (D) to the extent such liability arises out of your
activities or capacity in respect of an Affiliated Person, there shall then be
applied against any remaining liability any indemnity payment or advance of
expenses (if any) available from such Affiliated Person and (E) the Company
shall make payment of any remaining liability; provided, however, that (1) a
payment shall not be considered available from any insurance company, Affiliated
Person or third party at any time if such person at such time disputes its
obligation to make such payment to you and such dispute is not promptly (and in
any event within 10 business days of your request for such payment) resolved or
if such person by reason of any insolvency proceeding or judicial or
administrative proceeding or order or any other reason is then unable to make
such payment to you, (2) if there are multiple insurance companies, Affiliated
Persons or third parties who, in addition to the Company, are or may be
obligated to make indemnity payments or advance expenses to you in respect of
the same liability and who are ready, willing and able to make such payments to
you and the foregoing priority provisions do not determine the extent of the
Company's obligation, the relative obligations of all the other parties shall
first be determined in accordance with their relative obligations to you or, if
not so established, as they and you shall agree upon and, if not so established,
as they, you and the Company shall agree upon (in which respect the Company
shall, upon your request, agree to pay a share determined pro rata on the basis
of the value of the Company's assets available for such payment in relation to
the assets of each such other party available for such payment or the limit of
the obligation, as the case may be) and the Company shall be obligated to pay
any remaining liability and (3) notwithstanding the foregoing provisions of this
sentence, the Company, any such Affiliated Person and any such insurance company
may agree to apportion their obligations in any other manner, as long as the
full amount of any such liability to which you may be subject is paid and such
apportionment does not materially prejudice your future rights to indemnity or
advancement of expenses from the Company and all such parties, all as consented
to by you, such consent not to be unreasonably withheld by you.
10. The rights to indemnification and advancement of expenses provided to
you hereunder are in consideration of your past services to the Company and its
Affiliated Persons and as an inducement for you to continue to provide your
services to them.
11. No amendment or waiver of any provision of this letter agreement shall
in any event be effective unless the same shall be in writing and signed by each
of the parties hereto. However, the Company may, by notice to you at any time,
amend this letter agreement to eliminate or limit your right to indemnification
and advancement of expenses hereunder in respect, and only in respect, of your
continued service with the Company or any Affiliated Person, or any action taken
or omitted by you in respect thereof in any capacity, after receipt by you of
such notice.
12. This letter agreement may be executed in two or more counterparts, each
of which when so executed and delivered shall be an original and all of which
shall together constitute one and the same agreement.
13. If any provision of this agreement, or the application of any provision
of this agreement to any particular circumstance, is adjudicated to be unlawful,
invalid or unenforceable, the remaining provisions of this agreement, or the
application of such provision in any other circumstance, shall continue to be
given full force and effect. This letter agreement and the rights and
obligations of the parties hereto shall be construed in accordance with and
governed by the law of the jurisdiction of organization of the Company (without
giving effect to the principles, policies or provisions thereof concerning
choice or conflict of law).
Please acknowledge your acceptance of the above by signing this letter
agreement in the space provided below.
EXCEL COMMUNICATIONS, INC.
By:
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Xxxx X. XxXxxxx
President and Chief Operating Officer
AGREED TO AND ACCEPTED
THIS DAY OF , 1998
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