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EXHIBIT 10.25
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is entered into
effective as of July __, 2000, between Telect, Inc., a Washington corporation
(the "Company"), and ________________, a director and/or officer of the Company
("Indemnitee").
R E C I T A L S
A. Indemnitee is a director and/or officer of the Company and in such
capacity is performing valuable services for the Company.
B. The Amended and Restated Articles of Incorporation of the Company
("Articles") provide for the indemnification of the directors and officers of
the Company to the fullest extent permitted by the Washington Business
Corporation Act (the "Statute").
C. The Articles and the Statute are not exclusive, and thereby contracts
may be entered into between the Company and the members of its Board of
Directors (the "Board") and its officers with respect to indemnification of such
directors and officers.
D. The Articles provide that the Company may purchase and maintain a
policy or policies of insurance on behalf of an individual who is a director or
an officer ("D&O Insurance"), covering certain liabilities which may be incurred
by its officers or directors in the performance of their obligations to the
Company.
E. As a result of recent developments affecting the terms, scope and
availability of D&O Insurance there exists general uncertainty as to the extent
of protection afforded Company officers and directors by such D&O Insurance and
said uncertainty also exists under statutory indemnification provisions.
F. In order to induce Indemnitee to serve or to continue to serve as a
director and/or officer of the Company, the Company has agreed to enter into
this Agreement with Indemnitee.
NOW, THEREFORE, in consideration of the recitals above, the mutual
covenants and agreements set forth in this Agreement, and Indemnitee's service
as a director and/or officer after the date hereof, the Company and Indemnitee
agree as follows:
1. INDEMNIFICATION
1.1 SCOPE. The Company agrees to and shall hold harmless and indemnify
Indemnitee to the full extent permitted by law against any Damages (as defined
in Section 1.5) incurred by Indemnitee with respect to any Proceeding (as
defined in Section 1.6) to which Indemnitee is or is threatened to be made a
party or witness, notwithstanding that such indemnification is not specifically
authorized by this Agreement, the Company's Articles, the Company's Amended and
Restated Bylaws (the "Bylaws"), the Statute or otherwise. Such right to
indemnification shall be without regard to any limitations found in RCW
23B.08.510 through 23B.08.550; PROVIDED, HOWEVER, that Indemnitee shall have no
right to indemnification on account of (a) acts or omissions of Indemnitee
finally adjudged to be intentional misconduct or a knowing violation of law; (b)
conduct of Indemnitee finally adjudged in a final judgment, not
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subject to appeal, by a court of proper jurisdiction to be in violation of RCW
23B.08.310; or (c) any transaction with respect to which it is finally adjudged,
not subject to appeal, by a court of proper jurisdiction that Indemnitee
personally received a benefit in money, property or services to which Indemnitee
was not legally entitled. In the event of any change, after the date of this
Agreement, in any applicable law, statute or rule issued pursuant to such law or
statute regarding the right of a Washington corporation to indemnify a member of
its board of directors or an officer, such changes, to the extent that they
would expand Indemnitee's rights hereunder, shall be within the scope of
Indemnitee's rights and the Company's obligations hereunder, and, to the extent
that they would narrow Indemnitee's rights hereunder, shall be excluded from
this Agreement; PROVIDED, HOWEVER, that any change that is found in a final
judgment, not subject to appeal, by a court of proper jurisdiction to be
required by applicable laws, statutes or rules issued pursuant to such law or
statute to be applied to this Agreement shall be so applied regardless of
whether the effect of such change is to narrow Indemnitee's rights hereunder.
1.2 PROCEEDINGS RELATING TO OFFICER'S FAILURE TO DISCHARGE DUTIES. If
Indemnitee is an officer of the Company, the indemnification and other rights
and benefits provided to Indemnitee by this Agreement shall apply fully with
respect to any Proceeding in which it is claimed or adjudicated that Indemnitee
is liable to the Company by reason of having failed to discharge the duties of
Indemnitee's office, which claims and liabilities are hereby released; PROVIDED,
HOWEVER, that the foregoing indemnification and release obligations of the
Company shall have no application with respect to claims and liabilities by or
to the Company to the extent that they are based upon or arise out of
Indemnitee's actions or omissions described in clauses (a), (b) or (c) of
Section 1.1.
1.3 NONEXCLUSIVITY. The indemnification provided by this Agreement shall
not be deemed exclusive of any rights to which Indemnitee may be entitled (and
any failure to qualify for indemnification under this Agreement shall not be
determinative of any rights) under the Company's Articles or the Company's
Bylaws, any vote of shareholders or disinterested directors, the Statute or
otherwise, whether as to actions or omissions by Indemnitee in Indemnitee's
official capacity or otherwise.
1.4 ADVERSE AMENDMENTS. Subject to applicable law, the Company agrees
that the Articles or Bylaws shall not be amended in a manner that adversely
affects the indemnification rights provided thereunder to the Indemnitee.
1.5 INCLUDED COVERAGE. If Indemnitee is made a party (or is threatened
to be made a party) to, or is otherwise involved (including, but not limited to,
as a witness) in any Proceeding, the Company shall hold harmless and indemnify
Indemnitee from and against any and all losses, claims, damages and liabilities
incurred in connection with such Proceeding, including but not limited to
attorneys' fees, judgments, fines, ERISA excise taxes or penalties, amounts paid
in settlement and other expenses (collectively, "Damages").
1.6 DEFINITION OF PROCEEDING. For purposes of this Agreement,
"Proceeding" shall mean any actual, pending, threatened or completed action,
suit, claim or proceeding (whether civil, criminal, administrative or
investigative and whether formal or informal) in which Indemnitee is, has been
or becomes involved by reason of the fact that Indemnitee is or has been a
director, officer, employee or agent of the Company or that, being or having
been such a
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director, officer, employee or agent, Indemnitee is or was serving at the
request of the Company as a director, officer, employee, trustee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise (collectively, a "Related Company"), including but not limited to
service with respect to any employee benefit plan, whether the basis of such
action, suit, claim or proceeding is alleged action or omission by Indemnitee in
an official capacity as a director, officer, employee, trustee or agent or in
any other capacity while serving as a director, officer, employee, trustee or
agent; PROVIDED, HOWEVER, that, except with respect to an action to enforce this
Agreement, "Proceeding" shall not include any action, suit, claim or proceeding
instituted by or at the direction of Indemnitee unless such action, suit, claim
or proceeding is or was authorized by the Board.
1.7 NOTIFICATION. As promptly as reasonably practicable after receipt by
Indemnitee of notice of the commencement of any Proceeding, Indemnitee will, if
a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof; PROVIDED, HOWEVER,
that failure to so notify the Company will relieve the Company from any
liability that it may otherwise have to Indemnitee under this Agreement only if,
and then solely to the extent that, such failure can be shown to have materially
prejudiced the Company's ability to defend the Proceeding.
1.8 DETERMINATION OF ENTITLEMENT. If a determination of Indemnitee's
entitlement to indemnification is required pursuant to RCW 23B.08.550 or a
successor statute or pursuant to other applicable law, the appropriate decision
maker shall make such determination; PROVIDED, HOWEVER, that (a) Indemnitee
shall initially be presumed in all cases to be entitled to indemnification, and
(b) unless the Company shall deliver to Indemnitee written notice of a
determination that Indemnitee may not be entitled to indemnification within
thirty (30) days after the Company's receipt of Indemnitee's notice pursuant to
Section 1.7, Indemnitee shall conclusively be deemed to be entitled to such
indemnification and the Company hereby agrees not to assert otherwise.
Indemnitee may establish a conclusive presumption of any fact necessary to such
a determination by delivering to the Company a declaration made under penalty of
perjury that such fact is true.
1.9 PRESUMPTION AND EFFECT OF CERTAIN PROCEEDINGS.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with 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.
(b) If the person, persons or entity empowered or selected under
this Agreement to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within 30 days after receipt by the Company
of Indemnitee's request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statements not
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materially misleading, in connection with the request for indemnification, or
(ii) a prohibition of such indemnification under applicable law; provided,
however, that such 30-day period may be extended for a reasonable time, not to
exceed an additional 30 days, if the person, persons or entity 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 and gives notice to Indemnitee thereof; and
provided, further, that the foregoing provisions of this Section 1.9 shall not
apply if (i) the determination of entitlement to indemnification is to be made
by the stockholders pursuant to this Agreement and (A) within 15 days after
receipt by the Company of the request for such determination the Board has
resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within 75 days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within 15 days after such receipt for the purpose of
making such determination, such meeting is held for such purpose within 30 days
after having been so called and such determination is made thereat, or (ii) the
determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to this Agreement.
(c) The settlement or 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
Indemnitee to indemnification or create a presumption that 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, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe that
Indemnitee's conduct was lawful.
(d) "Change in Control" means a change in control of the Company
occurring after the Effective Date of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the Effective Date (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board in office immediately prior to such person attaining such
percentage interest, (ii) the Company is a party to a merger, consolidation,
sale of assets or other reorganization, or a proxy contest, as a consequence of
which members of the Board in office immediately prior to such transaction or
event constitute less than a majority of the Board thereafter, or (iii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board (including for this purpose any new director whose
election or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board.
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1.10 SURVIVAL. The indemnification and release provided under this
Agreement shall apply to any and all Proceedings, notwithstanding that
Indemnitee has ceased to be a director, officer, employee, trustee or agent of
the Company or a Related Company.
2. EXPENSE ADVANCES
2.1 GENERALLY. The right to indemnification conferred by Section 1 shall
include the right to have the Company pay Indemnitee's attorneys' fees and other
expenses in any Proceeding as such expenses are incurred and in advance of such
Proceeding's final disposition (such right is referred to hereinafter as an
"Expense Advance").
2.2 CONDITIONS TO EXPENSE ADVANCE. The Company's obligation to provide
an Expense Advance is subject to the following conditions:
(a) UNDERTAKING. Indemnitee or his representative shall have
executed and delivered to the Company a written undertaking, which need not be
secured and shall be accepted without reference to Indemnitee's financial
ability to make repayment, by or on behalf of Indemnitee, to repay all Expense
Advances if and to the extent that it shall ultimately be determined, by a final
decision not subject to appeal rendered by a court having proper jurisdiction,
that Indemnitee is not entitled to be indemnified for such Expense Advance under
this Agreement or otherwise.
(b) AFFIRMATION. If required under applicable law, Indemnitee
shall furnish a written affirmation of Indemnitee's good faith belief that
Indemnitee has met all applicable standards of conduct.
3. PROCEDURES FOR ENFORCEMENT
3.1 ENFORCEMENT. If a claim for indemnification made by Indemnitee
hereunder is not paid in full within thirty (30) days, or a claim for an Expense
Advance made by Indemnitee hereunder is not paid in full within thirty (30)
days, after written notice of such claim is delivered to the Company, Indemnitee
may, but need not, at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim (an "Enforcement Action").
3.2 PRESUMPTIONS IN ENFORCEMENT ACTION. In any Enforcement Action the
following presumptions (and limitations on presumptions) shall apply:
(a) The Company shall conclusively be presumed to have entered
into this Agreement and assumed the obligations imposed hereunder in order to
induce Indemnitee to serve or to continue to serve as an director and/or officer
of the Company;
(b) The failure of the Company (including but not limited to the
Board, independent or special legal counsel or the Company's shareholders) to
make a determination prior to the commencement of the Enforcement Action that
indemnification of Indemnitee is proper in the circumstances shall not be a
defense to the Enforcement Action or create a presumption that Indemnitee is not
entitled to indemnification hereunder; and
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(c) If Indemnitee is or was serving as a director, officer,
employee, trustee or agent of a corporation of which a majority of the shares
entitled to vote in the election of its directors is held or controlled by the
Company or in which the Company has otherwise made an investment or in an
executive or management capacity in a partnership, joint venture, trust or other
enterprise of which the Company or a wholly-owned subsidiary of the Company is a
general partner or has a majority ownership or control position or in which the
Company has otherwise made an investment, then such corporation, partnership,
joint venture, trust or enterprise shall conclusively be deemed a Related
Company and Indemnitee shall conclusively be deemed to be serving such Related
Company at the request of the Company.
3.3 ATTORNEYS' FEES AND EXPENSES FOR ENFORCEMENT ACTION. If Indemnitee
is required to bring an Enforcement Action, the Company shall hold harmless and
indemnify Indemnitee against all of Indemnitee's attorneys' fees and expenses in
bringing and pursuing the Enforcement Action (including but not limited to
attorneys' fees at any stage, and on appeal).
4. DEFENSE OF CLAIM. With respect to any Proceeding as to which Indemnitee
has provided notice to the Company pursuant to Section 1.7:
4.1 The Company may participate therein at its own expense.
4.2 If the Company agrees, in writing, to hold the Indemnitee harmless
with respect to the proceeding and is able to demonstrate, in Indemnitee's
reasonable judgment, that it is financially capable of holding the Indemnitee
harmless, then the Company, jointly with any other indemnifying party similarly
notified, may assume the defense thereof, with counsel reasonably satisfactory
to Indemnitee. After notice from the Company to Indemnitee of its election to so
assume the defense thereof, the Company shall not be liable to Indemnitee under
this Agreement for any legal fees or other expenses (other than reasonable costs
of investigation) subsequently incurred by Indemnitee in connection with the
defense thereof unless (a) the employment of counsel by Indemnitee or the
incurring of such expenses has been authorized by the Company, (b) Indemnitee
shall have reasonably concluded that there is or may be a conflict of interest
between the Company and Indemnitee in the conduct of the defense of such
Proceeding, or (c) the Company shall not in fact have employed counsel to assume
the defense of such Proceeding, in each of which cases the legal fees and other
expenses of Indemnitee shall be at the expense of the Company. The Company shall
not be entitled to assume the defense of a Proceeding brought by or on behalf of
the Company or as to which Indemnitee shall have reached the conclusion
described in clause (b) above.
4.3 The Company shall not be liable for any amounts paid in settlement
of any Proceeding effected without its written consent, which consent shall not
be unreasonably withheld.
4.4 The Company shall not settle any Proceeding in any manner which
would impose any penalty, costs or Damages on Indemnitee without Indemnitee's
written consent.
5. D&O INSURANCE
5.1 To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees, or
agents or fiduciaries of the
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Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person serves at the request of the
Company, Indemnitee shall be covered by such policy or policies in accordance
with its or their terms to the maximum extent of the coverage available for any
such director, officer, employee or agent under such policy or policies.
5.2 In the event of any payment under this Agreement, the Company shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
5.3 The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
6. LIMITATIONS ON INDEMNIFICATION; MUTUAL ACKNOWLEDGMENT
6.1 LIMITATION ON INDEMNITY. No indemnification pursuant to this
Agreement shall be provided by the Company:
(a) On account of any suit in which a final, unappealable
judgment for which there is no further right of appeal is rendered by a court
having proper jurisdiction against Indemnitee for an accounting of profits made
from the purchase or sale by Indemnitee of securities of the Company in
violation of the provisions of Section 16(b) of the Securities Exchange Act of
1934 and amendments thereto; or
(b) For Damages or Expense Advances that have been paid directly
to Indemnitee by an insurance carrier under a policy of D&O Insurance or other
insurance maintained by the Company.
6.2 MUTUAL ACKNOWLEDGMENT. The Company and Indemnitee acknowledge that,
in certain instances, federal law or public policy may override applicable state
law and prohibit the Company from indemnifying Indemnitee under this Agreement
or otherwise if found by a final, unappealable judgment rendered by a court
having proper jurisdiction.
7. SEVERABILITY. Nothing in this Agreement is intended to require or shall
be construed as requiring the Company to take or fail to take any action in
violation of applicable law. The Company's inability to perform its obligations
under this Agreement pursuant to court order shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable, as provided
in this Section 7. If a court of competent jurisdiction should decline to
enforce any of the provisions of this Agreement, the Company and Indemnitee
agree that such provisions shall be deemed to be reformed to provide Indemnitee
indemnification by the Company to the maximum extent permitted by the other
portions of this Agreement that are not unenforceable, and the remainder of this
Agreement shall not be affected, and this Agreement shall continue in force.
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8. GOVERNING LAW; BINDING EFFECT; ASSUMPTION BY SUCCESSORS; AMENDMENT AND
TERMINATION
8.1 This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Washington.
8.2 This Agreement shall be binding upon Indemnitee and upon the
Company, its successors and assigns, and shall inure to the benefit of
Indemnitee, his or her spouse and marital community Indemnitee's heirs, personal
representatives and assigns and to the benefit of the Company, its successors
and assigns.
8.3 In the event the Company or any successor (i) consolidates with or
merges into any other person or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
liquidates, dissolves or transfers all or substantially all of its assets to any
person or entity, then, and in each case, proper provisions shall be made so
that the successors of the Company assume the obligations set forth in this
Agreement to the maximum extent permitted under the law of such person's or
entity's jurisdiction of incorporation, if such entity is a corporation, or
under other applicable law.
8.4 No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
8.5 No amendment, modification, repeal, termination or replacement of
any part or all of the Company's Bylaws or Articles shall operate in any way to
limit Indemnitee's rights under this Agreement.
8.6 Nothing in this Agreement shall confer upon Indemnitee the right to
continue to serve as a director and\or officer of the Company. If Indemnitee is
an officer of the Company, then, unless otherwise expressly provided in a
written employment agreement between the Company and Indemnitee, the employment
of Indemnitee with the Company shall be terminable at will by either party.
8.7 This Agreement shall remain in full force and effect so long as
Indemnitee is a director or officer of the Company, or is serving at the request
of the Company in any of the capacities specified in Section 1.6. Rights arising
pursuant to that Agreement with respect to any such office or position held
prior to the termination hereof shall survive the termination of such office or
position.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement effective as of the day and year first set forth above.
"Company" TELECT, INC.
By
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Its
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"Indemnitee"
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