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EXHIBIT 10.3
FORM OF
INDEMNIFICATION AGREEMENT
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This Indemnification Agreement ("Agreement") is made and entered into
as of the _____ day of ______________, 1996 between Penril DataComm Networks,
Inc., a Delaware corporation ("Penril"), and Access Beyond, Inc., a Delaware
corporation ("Newsub").
WHEREAS, Penril formed Newsub as a wholly-owned subsidiary and, by
action of its Board of Directors, contributed or will contribute certain assets
(the "Spun-off Assets"), and assigned or will assign certain liabilities (the
"Spun-off Liabilities") to Newsub and Newsub accepted or will accept the
Spun-off Assets and assumed or will assume the Spun-off Liabilities;
WHEREAS, Penril, by action of its Board of Directors, as ratified by
its stockholders, will distribute all of the outstanding capital stock of Newsub
(the "Newsub Stock") to such stockholders in the form of a dividend (the
"Distribution");
WHEREAS, Penril, Bay Networks, Inc., a Delaware corporation ("Buyer"),
and Beta Acquisition Corp., wholly-owned subsidiary of Buyer, have entered into
an Plan and Agreement of Merger dated as of June 16, 1996, and as amended on
August 5, 1996 (the "Merger Agreement"), pursuant to which, following the
Distribution, Penril will become a wholly-owned subsidiary of Buyer and the
stockholders of Penril will receive shares of Buyer stock in exchange for shares
of Penril stock (the "Merger");
WHEREAS, until the Distribution, Penril owns 100% of the issued and
outstanding Newsub Stock;
WHEREAS, as consideration for, and in connection with, Penril making
the aforementioned capital contribution to Newsub, Newsub agrees to indemnify
Penril for claims, costs, damages or liabilities incurred by Penril, and Penril
agrees to indemnify
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Newsub for claims, costs, damages or liabilities incurred by
Newsub, on the terms, and subject to the conditions, as set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:
1. INDEMNIFICATION.
(a) Newsub will indemnify and save harmless Penril and its
directors, officers, employees, agents and/or affiliates (each, a
"Newsub Indemnified Party") from any and all costs, expenses, losses,
damages and liabilities ("Claim(s)") incurred or suffered, directly or
indirectly, (including, without limitation, reasonable legal fees and
expenses) resulting from or attributable to (i) the operation of Newsub
from and after the Distribution; (ii) any claim, suit or other type of
proceeding based upon, arising out of or in connection with the
operation of Penril prior to the Merger other than those based upon,
arising out of or in connection with the Modem Business (as defined in
the Merger Agreement), the Merger, the Merger Agreement, the
solicitation of proxies relating to approval of the Merger and other
transactions related to the Merger, or the tax consequences of the
Distribution, but including, without limitation, any claim, suit or
other type of proceeding based upon, arising out of or in connection
with the sale or transfer prior to the Merger of all or substantially
all of the assets of any of Penril's subsidiaries, including, without
limitation, the sale of the assets of Technipower, Inc. ("Technipower")
pursuant to the Asset Purchase Agreement dated as of July 8, 1996, by
and among Technipower, Penril and Power Designs, Inc. ("PDI") or the
sale of the assets of Constant Power, Inc. ("Constant Power") pursuant
to an Asset Purchase Agreement dated as of July 8, 1996, by and among
Constant Power, Penril and PDI; (iii) any claim, suit or other type of
proceeding relating to the termination of employment of any employees
of Penril other than those set forth on Schedule 2.20 to the Merger
Agreement; and (iv) any claim, suit or other type of proceeding based
upon, arising out of or in connection with any information concerning
Newsub in the Registration Statement (as defined in the Merger
Agreement) that was furnished by Penril and/or Newsub for inclusion in
the Registration Statement or any part thereof. In furtherance thereof,
Newsub acknowledges and agrees that (ii) above includes, but is not
limited to, all suits,
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actions or administrative hearings existing on the date hereof to which
Penril is a party (or which have been assigned by Penril to Newsub and
assumed by Newsub) other than those based upon, arising out of or in
connection with the Modem Business (collectively, the "Newsub Existing
Litigation", as listed on Exhibit A hereto). This Agreement will
constitute notice, in accordance with Paragraph 2 hereof, of Newsub's
election to conduct the defense (or to prosecute, as the case may be)
of all claims in connection with the Newsub Existing Litigation.
Other than certain rights retained pursuant to Paragraph 2 hereof
Penril acknowledges and agrees that Newsub will have all rights to, and
title and interest in any such claim, suit or proceeding for which
Newsub is providing indemnification.
(b) Penril will indemnify and save harmless Newsub and its
directors, officers, employees, agents and/or affiliates (each, a
"Penril Indemnified Party" and, together with each Newsub Indemnified
Party, without distinction, an "Indemnified Party") from any and all
Claims incurred or suffered, directly or indirectly, (including,
without limitation, reasonable legal fees and expenses) resulting from
or attributable to (i) the operation of Penril from and after the
Distribution; (ii) any claim, suit or other type of proceeding based
upon, arising out of or in connection with the operation of the Modem
Business prior to the Merger; and (iii) any claim, suit or other type
of proceeding relating to the Merger, the Merger Agreement, the
solicitation of proxies relating to approval of the Merger and the
other transactions related to the Merger other than those based upon,
arising out of or in connection with the Newsub Registration Statement
on Form S-1 filed with the Securities and
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Exchange Commission to register the Newsub Stock in connection with the
Distribution or any information concerning Newsub in the Registration
Statement that was furnished by Penril and/or Newsub for inclusion in
the Registration Statement. In furtherance thereof, Penril acknowledges
and agrees that (ii) above includes, but is not limited to, all suits,
actions or administrative hearings existing on the date hereof to which
Penril is a party (none of which have been assigned by Penril to Newsub
or assumed by Newsub) which are based upon, arising out of or in
connection with the Modem Business (collectively, the "Penril Retained
Existing Litigation", as listed on Exhibit B hereto, and, together with
the Newsub Existing Litigation, the "Existing Litigation"). This
Agreement will constitute notice, in accordance with Paragraph 2
hereof, of Penril's election to conduct the defense (or to prosecute,
as the case may be) of all claims in connection with the Penril
Retained Existing Litigation. Other than certain rights retained
pursuant to Paragraph 2 hereof Newsub acknowledges and agrees that
Penril will have all rights to, and title and interest in any such
claim, suit or proceeding for which Penril is providing
indemnification.
2. DEFENSE OF CLAIM.
(a) In the event an Indemnified Party receives notice of any
claim asserted or any action or administrative or other proceeding
commenced in respect of a Claim for which indemnity may be properly
sought under this Agreement against Newsub or Penril, as the case may
be (the "Indemnifying Party"), the Indemnified Party shall give notice
in writing to the Indemnifying Party within thirty (30) days of its
receipt of such notice. Within thirty (30) days after the earlier of
(a) receipt by the Indemnifying Party of such notice from the
Indemnified Party, or (b) receipt of actual notice by the Indemnifying
Party from sources other than the Indemnified Party, the Indemnifying
Party may give the Indemnified Party written notice of its election to
conduct the defense of such claim, action or proceeding at its own
expense. If the Indemnifying Party has given the Indemnified Party such
notice of election to conduct the defense, the Indemnifying Party may
conduct the defense at its expense, but the Indemnified Party shall
nevertheless have the right to participate in the defense, provided
such participation is solely at the expense of the Indemnified Party,
without a right of further reimbursement. If the Indemnifying Party
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has not so notified the Indemnified Party in writing within the
time period provided above of its election to conduct the defense of
such Claim, the Indemnified Party may, but need not, conduct, at the
Indemnifying Party's expense, the defense of such claim, action or
proceeding. The Indemnified Party may at any time notify the
Indemnifying Party of its intention to settle, compromise or satisfy
any such claim, action or proceeding (the defense of which the
Indemnifying Party has not previously elected to conduct) and, with
the prior written consent of the Indemnified Party (which consent will
not be unreasonably withheld), may make such settlement, compromise or
satisfaction, at the Indemnifying Party's expense, provided, however,
that the Indemnifying Party may make such settlement, compromise or
satisfaction without the prior written consent of the Indemnified
Party if such settlement, compromise or satisfaction constitutes a
release of the Indemnified Party in respect of such Claim.
(b) Any settlement, compromise or satisfaction, or any final
judgment or decree entered in, any Claim or Existing Litigation
defended in accordance with the provisions of this Paragraph 2 shall be
final and binding on the parties hereto.
(c) The Indemnified Party and the Indemnifying Party shall use
all reasonable efforts to cooperate fully with respect to the defense
of any Claim or Existing Litigation in accordance with the provisions
of this Paragraph 2.
3. NOTICE. All notices and other communications required or permitted
to be given under this Indemnification Agreement shall be dated and in writing
and shall be deemed to have been duly given when (a) personally delivered, (b)
upon delivery of a telephonic facsimile transmission with a confirmed telephonic
transmission answered back, (c) three days after being deposited in the United
States mail, registered or certified, return receipt requested, postage prepaid,
or (d) one day after having been dispatched by a nationally recognized overnight
courier service, addressed to the party or parties to this Agreement to whom it
is directed:
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If to Penril:
Penril DataComm Networks, Inc.
0000 Xxxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: President
Facsimile No.: (000) 000-0000
with a copy to:
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Attn:
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Facsimile No.:
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and to:
Bay Networks, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
If to Newsub:
Access Beyond, Inc.
0000 Xxxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: President
Facsimile No.:
with a copy to:
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Attn:
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Facsimile No.:
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or to such other address as may be designated by a party hereto by notice
delivered to the other parties.
4. COOPERATION. In connection with any Claim that is the subject of
indemnification, each party shall afford to the Indemnifying Party and its
accountants, counsel and other designated representatives reasonable access
during normal business hours to all records, books, contracts, instruments,
computer data and other information insofar as such access is reasonably
required by the indemnifying party in connection with the defense of any Claim
pursuant to Paragraph 2 hereof. In addition, each party shall use reasonable
efforts to make available to the Indemnifying Party, upon written request, its
officers, directors, employees and agents as witnesses to the extent that any
such person may reasonably be required in connection with the defense or
prosecution of any Claim.
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5. WAIVER. The waiver by any party hereto of the breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by any party to exercise any right
or privilege hereunder shall be deemed a waiver of such party's rights or
privileges or shall be deemed a waiver of such party's rights hereunder to
exercise the same at any subsequent time or times.
6. AMENDMENT. This Agreement may be amended, modified or supplemented
only by written instrument executed by the party against whom enforcement is
sought.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
8. SEVERABILITY. The invalidity, illegality or unenforceability of one
or more of the provisions of this Agreement in any jurisdiction shall not affect
the validity, legality or enforceability of the remainder of this Agreement in
such jurisdiction or the validity, legality and enforceability of this
Agreement, including any such provision, in any other jurisdiction, it being
intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and the Indemnified Parties and each
of their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written.
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PENRIL DATACOMM NETWORKS, INC.
By:
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Its:
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NEWSUB:
ACCESS BEYOND, INC.
By:
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Its:
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