EXHIBIT 10.31
INDEMNITY AGREEMENT
This Agreement is made as of August 11, 1998, by and between Merix
Corporation, an Oregon corporation (the "Corporation"), and Xxxxx X. Xxxxx
("Indemnitee"), an officer of the Corporation.
WHEREAS, it is essential to the Corporation to retain and attract as
directors and officers of the Corporation and its subsidiaries the most capable
persons available; and
WHEREAS, corporate litigation subjects directors and officers to
expensive litigation risks at the same time that adequate coverage of directors'
and officers' liability insurance may be unavailable; and
WHEREAS, the Articles of Incorporation of the Corporation require
indemnification of the officers and directors of the Corporation to the fullest
extent permitted by law. The Articles and the Oregon Business Corporation Act
(the "Act") expressly provide that the indemnification provisions set forth in
the Act are not exclusive, and thereby contemplate that contracts may be entered
into between the Corporation and members of the Board of Directors and officers
with respect to indemnification of directors and officers; and
WHEREAS, Indemnitee does not regard the protection available under the
Corporation's Articles of Incorporation, Bylaws and insurance adequate in the
present circumstances, and may not be willing to serve as a director or officer
without adequate protection, and the Corporation desires Indemnitee to serve in
such capacity.
NOW THEREFORE, the Corporation and Indemnitee agree as follows:
1. Agreement to Serve. Indemnitee agrees to serve or continue to serve as a
director and/or officer of the Corporation and/or one or more of its
subsidiaries for so long as Indemnitee is duly elected or appointed or until
such time as Indemnitee tenders a resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the right of the
Corporation or otherwise, whether of a civil, criminal, administrative or
investigative nature, and whether formal or informal, in which Indemnitee may be
or may have been involved as a party or otherwise, by reason of the fact that
Indemnitee is or was a director and/or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, whether or not serving in such capacity at the time any liability or
expense is incurred for which indemnification or reimbursement can be provided
under this Agreement.
(b) The term "Expenses" includes, without limitation thereto, expense
of investigations, judicial or administrative proceedings or appeals, amounts
paid in settlement by Indemnitee, attorneys' fees and disbursements and any
expenses of establishing a right to indemnification under Section 7 of this
Agreement, but shall not include the amount of judgments or fines against
Indemnitee.
(c) References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with respect
to any employee benefit plan; references to "serving at the request of the
corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such
director,
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officer, employee or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner reasonably believed to be in the interest of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this Agreement.
3. Indemnity in Third Party Proceedings. The Corporation shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is
a party to or threatened to be made a party to any Proceeding (other than a
Proceeding by or in the right of the Corporation to procure a judgment in its
favor) against all Expenses, judgments and fines actually and reasonably
incurred by Indemnitee in connection with such Proceeding, but only if
Indemnitee acted in good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation and,
in the case of a criminal proceeding, in addition, had no reasonable cause to
believe that Indemnitee's conduct was unlawful. The termination of any such
Proceeding by judgment, order of court, settlement, conviction or upon a plea of
nolo contendere, or its equivalent, shall not, of itself, create a presumption
that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in the best interest of the Corporation, and with
respect to any criminal proceeding, that such person had reasonable cause to
believe that Indemnitee's conduct was unlawful.
Pursuant to this Agreement, the Corporation specifically will, and
hereby does, indemnify, to the fullest extent permitted by law, Indemnitee
against any and all losses, claims, damages, liabilities and expenses, joint or
several, (or actions or proceedings, whether commenced or threatened, in respect
thereof) to which Indemnitee may become subject, as a result of serving as a
director and/or officer of Merix, under the Securities Act or any other statute
or common law, including any amount paid in settlement of any litigation,
commenced or threatened, and to reimburse them for any legal or other expenses
incurred by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities, expenses or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact regarding Merix, or the omission or alleged
omission to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4. Indemnity in Proceedings By or In the Right of the Corporation. The
Corporation shall indemnify Indemnitee in accordance with the provisions of this
Section 4 if Indemnitee is a party to or threatened to be made a party to any
Proceeding by or in the right of the Corporation to procure a judgment in its
favor against all Expenses actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of such Proceeding, but only if
Indemnitee acted in good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the Corporation,
except that no indemnification for Expenses shall be made under this Section 4
in respect of any claim, issue or matter as to which such person shall have been
finally adjudged by a court to be liable for negligence or misconduct in the
performance of Indemnitee's duty to the Corporation, unless and only to the
extent that any court in which such Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity.
5. Indemnification of Expenses of Successful Party. Notwithstanding any
other provisions of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise, in defense of any Proceeding or in
defense of any claim, issue or matter therein, including the dismissal of an
action without prejudice, Indemnitee shall be indemnified against all Expenses
incurred in connection therewith.
6. Advances of Expenses. The Expenses incurred by Indemnitee pursuant to
Sections 3, 4 and 8 in any Proceeding shall be paid by the Corporation in
advance at the written request of Indemnitee, if Indemnitee shall undertake to
repay such amount to the extent that it is ultimately determined by a court that
Indemnitee is not entitled to be indemnified by the Corporation and shall
furnish the Corporation a written affirmation of the Indemnitee's good faith
belief that Indemnitee is entitled to be indemnified by the
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Corporation under this Agreement. Such advances shall be made without regard to
Indemnitee's ability to repay such expenses.
7. Right of Indemnitee to Indemnification Upon Application; Procedure Upon
Application. Any indemnification or advances under Sections 3, 4, 6 or 8 shall
be made no later than 45 days after receipt of the written request of
Indemnitee, unless a determination is made within such 45 day period by (a) the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such proceeding, or (b) independent legal counsel in a
written opinion (which counsel shall be appointed if such quorum is not
obtainable), that the Indemnitee has not met the relevant standards for
indemnification set forth in Section 3, 4 or 8 or an exclusion set forth in
Section 9 is applicable.
The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnitee in any court of competent jurisdiction. The
burden of proving that indemnification or advances are not appropriate shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors or independent legal counsel) to have made a determination prior to
the commencement of such action that indemnification or advances are proper in
the circumstances because Indemnitee has met the applicable standard of conduct
nor an actual determination by the Corporation (including its Board of Directors
or independent legal counsel) that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct. Indemnitee's
expenses incurred in connection with successfully establishing Indemnitee's
right to indemnification or advances, in whole or in part, in any such
Proceeding shall also be indemnified by the Corporation.
8. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3 or 4, the Corporation
shall indemnify Indemnitee in accordance with the provisions of this Section
8(a) to the fullest extent permitted by law if Indemnitee is party to or
threatened to be made a party to any Proceeding (including a Proceeding by or in
the right of the Corporation to procure a judgment in its favor) involving a
claim against Indemnitee for breach of fiduciary duty by Indemnitee against all
Expenses, judgments and fines actually and reasonably incurred by Indemnitee in
connection with such Proceeding, provided that no indemnity shall be made under
this Section 8(a) on account of Indemnitee's conduct which constitutes a breach
of Indemnitee's duty of loyalty to the Corporation or its stockholders or is an
act or omission not in good faith or which involves intentional misconduct or a
knowing violation of the law or with respect to an unlawful distribution under
ORS 60.367.
(b) Notwithstanding any limitation in Sections 3, 4 or 8(a), the
Corporation shall indemnify Indemnitee if Indemnitee is a party to or threatened
to be made a party to any Proceeding (including a Proceeding by or in the right
of the Corporation to procure a judgment in its favor) against all Expenses,
judgments and fines actually and reasonably incurred by Indemnitee in connection
with such Proceeding to the fullest extent permitted by the Act, including the
nonexclusivity provision of ORS 60.414(1) and any successor provision and
including any amendments to the Act adopted after the date hereof that may
increase the extent to which a corporation may indemnify its officers and
directors.
(c) The indemnification provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under the
Restated Articles of Incorporation, the Bylaws, any other agreement, any vote of
shareholders or directors, the Act, or otherwise, both as to action in
Indemnitee's official capacity or as to action in another capacity while holding
such office. The indemnification under this Agreement shall continue as to
Indemnitee even though Indemnitee may have ceased to be a director or officer
and shall inure to the benefit of the heirs and personal representatives of
Indemnitee.
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9. Exclusions. Notwithstanding any provision in this Agreement, the
Corporation shall not be obligated under this Agreement to make any
indemnification or advances in connection with any claim made against
Indemnitee:
(a) for which payment is required to be made to or on behalf of
Indemnitee under any insurance policy, except with respect to any excess beyond
the amount of required payment under such insurance, unless payment under such
insurance policy is not made after reasonable effort by Indemnitee to obtain
payment. The Corporation shall be subrogated with respect to any other rights of
Indemnitee with respect to any payment made by the Corporation to or on behalf
of the Corporation under this Agreement;
(b) for any transaction from which Indemnitee derived an improper
personal benefit; or
(c) for an accounting of profits made from the purchase and sale by
Indemnitee of securities of the Corporation within the meaning of Section 16(b)
of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any state statutory law or common law.
10. Partial Indemnification. If Indemnitee is entitled under any provisions
of this Agreement to indemnification by the Corporation for some or a portion of
the Expenses, judgments and fines actually and reasonably incurred by Indemnitee
in the investigation, defense, appeal or settlement of any Proceeding but not,
however, for the total amount thereof, the Corporation shall nevertheless
indemnify Indemnitee for the portion of such Expenses, judgments or fines to
which Indemnitee is entitled.
11. Business Transactions. The Corporation agrees that it will not effect
any Business Transaction (as defined in Article XI of the Restated Articles of
Incorporation of the Corporation) which has not been approved by the Continuing
Directors (as defined in Article XI of the Restated Articles of Incorporation of
the Corporation) of the Corporation unless the other party to the transaction
agrees in writing to (a) use its best efforts to maintain for the subsequent two
year period any and all directors' and officers' liability insurance in effect
prior to any discussions or announcement relating to such Business Transaction
and (b) assume all obligations of the Corporation under this Agreement and
indemnify Indemnitee and advance litigation expenses in accordance with this
Agreement.
12. Severability. If this Agreement or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify Indemnitee as to Expenses, judgments
and fines with respect to any Proceeding to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated or by
any other applicable law.
13. Notice. Indemnitee shall, as a condition precedent to Indemnitee's
right to be indemnified under this Agreement, give to the Corporation notice in
writing as soon as practicable of any claim made against Indemnitee for which
indemnity will or could be sought under this Agreement. Notice to the
Corporation shall be directed to Merix Corporation, 0000 Xxxxxx Xxxx, Xxxxxx
Xxxxx, Xxxxxx 00000, Attention: Secretary (or such other address as the
Corporation shall designate in writing to Indemnitee). Notice shall be deemed
received three days after the date postmarked if sent by prepaid mail, properly
addressed. In addition, Indemnitee shall give the Corporation such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute the original.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with Oregon law.
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16. Successors and Assigns. This Agreement shall be binding upon the
Corporation and its successors and assigns.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be duly executed and signed as of the day and year first above written.
MERIX CORPORATION
By /s/ XXXXXXX X. XXXXXXX
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Chair and Chief Executive Officer
INDEMNITEE
/s/ XXXXX X. XXXXX
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