INDEMNIFICATION AGREEMENT
THIS AGREEMENT is entered into, effective as of December 29, 1997 by and
between MICREL, INCORPORATED, a California corporation (the "Company"), and
Xxxxxx Xxxxxxx ("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
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in office who either were 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 that the
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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. The Independent
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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
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Expenses related 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
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competent jurisdiction, as 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:
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn:
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/ Xxxxxxx Xxxx
------------------
Title: President & C.E.O.
INDEMNITEE:
/S/ Xxxxxx Xxxxxxx
------------------
Xxxxxx Xxxxxxx
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