EXHIBIT 10.1
INDEMNITY AGREEMENT
AGREEMENT, as of __________, (the "Agreement"), between CS Wireless
Systems, Inc., a Delaware corporation (the "Company"), and __________ (the
"Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors, officers and employees the most capable persons available;
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors, officers and
employees of public companies in today's environment;
WHEREAS, the Bylaws of the Company require the Company to indemnify its
directors, officers and employees to the fullest extent permitted by law;
WHEREAS, the Bylaws of the Company require the Company to advance
expenses to its directors and officers to the fullest extent permitted by
law, and permit the Company to advance expenses to employees and others by
agreement;
WHEREAS, the Indemnitee has been serving and continues to serve as a
director, officer or employee of the Company in part in reliance on such
Bylaws;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service
to the Company in an effective manner and Indemnitee's reliance on the
aforesaid Bylaws, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such Bylaws will be available to
Indemnitee (regardless of, among other things, any amendment to or revocation
of such Bylaws or any change in the composition of the Company's Board of
Directors or acquisition transaction relating to the Company), the Company
wishes to provide in this Agreement for the indemnification of and the
advancing of expenses to Indemnitee to the fullest extent permitted by law
and as set forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Indemnitee under the Company's
directors' and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. CERTAIN DEFINITIONS:
(a) Change in Control: For purposes of this Agreement, a "Change in
Control" shall mean any of the following events:
(i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person"
[as the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")] immediately after
which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the 0000 Xxx) of fifteen
percent (15%) or more of the combined voting power of the Company's then
outstanding Voting Securities; provided, however, that in determining whether
a Change in Control has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a
trust forming a part thereof) maintained by (x) the Company or (y) any
corporation or other person of which a majority of its voting power or its
equity securities or equity interest is owned directly or indirectly by the
Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any
Person in connection with a "Non-Control Transaction" (as hereinafter
defined).
(ii) The individuals who, as of September 4, 1997, are members of
the Board (the "Incumbent Board") cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or
nomination for election by the Company's stockholders, of any new director
was approved by a vote of at least two-thirds of the Incumbent Board, such
new director shall, for purposes of this Agreement, be considered as a member
of the Incumbent Board; provided further, however, that no individual shall
be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 promulgated under the 0000 Xxx) or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(iii) Approval by stockholders of the Company of:
(A) a merger or consolidation involving the Company unless
(1) the stockholders of the Company, immediately before such merger,
consolidation or reorganization, own, directly or indirectly immediately
following such merger, consolidation or reorganization, at least sixty
percent (60%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before
such merger, consolidation or reorganization, (2) the individuals who were
members of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board of directors of
the Surviving Corporation, and (3) no Person (other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any Subsidiary, or
any Person who, immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifteen percent (15%) or more of
the then outstanding Voting Securities) has Beneficial Ownership of fifteen
percent (15%) or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities. A transaction described in
clauses (1) through (3) shall herein be referred to as a "Non-Control
Transaction;"
(B) A complete liquidation or dissolution of the Company; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because
any Person (the "Subject Person") acquired Beneficial Ownership of more than
the permitted amount of the outstanding Voting Securities as a result of the
acquisition of Voting Securities by the Company which, by reducing the number
of Voting Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that is a Change in
Control would occur (but for the operation of this sentence) as a result of
the acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
(b) Claim: any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative or
other, including, without limitation, an action by or in the right of any
other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, whether predicated on foreign, federal, state or local law and
whether formal or informal.
(c) Expenses: include attorney's fees and all other costs, charges and
expenses paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing
to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence related to the fact
that Indemnitee is or was or has agreed to become a director, officer,
employee, agent or fiduciary of the Company, or is or was serving or has
agreed to serve in any capacity, at the request of the Company, in any other
corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise, or by reason of anything done or not done by Indemnitee in
any such capacity.
(e) Potential Change of 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;
or
(ii) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in control has occurred.
(f) Voting Securities: any securities of the Company which vote
generally in the election of directors.
2. BASIC INDEMNIFICATION ARRANGEMENT:
(a) 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 Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee (without regard
to the negligence or other fault of the Indemnitee) to the fullest extent
permitted by applicable law, as soon as practicable but in no event later
than thirty days after written demand is presented to the Company, against
any and all Expenses, judgments, fines, penalties, excise taxes and amounts
paid or to be paid in settlement (including all interest, assessments and
other charges paid or payable in connection with or in respect of such
Expenses, judgments,
fines, penalties, excise taxes or amounts paid or to be paid in settlement)
of such Claim. If Indemnitee makes a request to be indemnified under this
Agreement, the Board of Directors (i) acting by a majority vote of the
directors who are not parties to the Claim with respect to an Indemnifiable
Event, even if less than a quorum, (ii) acting by a committee of such
directors appointed by a majority vote of such directors, even if less than a
quorum, or (iii) acting upon an opinion in writing of independent legal
counsel, if there are no such directors or if such directors so request
("Board Action") shall, as soon as practicable but in no event later than
thirty days after such request, authorize such indemnification.
Notwithstanding anything in the Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation"), the Bylaws of the Company or
this Agreement to the contrary, following a Change in Control, Indemnitee
shall, unless prohibited by law, be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by Indemnitee.
(b) Notwithstanding anything in the Certificate of Incorporation, the
Bylaws or this Agreement to the contrary, if so requested by Indemnitee,
the Company shall advance (within two business days of such request) any and
all Expenses relating to a Claim to Indemnitee (an "Expense Advance"), upon
the receipt of a written undertaking by or on behalf of Indemnitee to repay
such Expense Advance if a judgment or other final adjudication adverse to
Indemnitee (as to which all rights or appeal therefrom have been exhausted or
lapsed) establishes that Indemnitee, with respect to such Claim, is not
eligible for indemnification.
(c) Notwithstanding anything in the Certificate of Incorporation, the
Bylaws or this Agreement to the contrary, if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction to secure a determination
that Indemnitee should be indemnified under this Agreement, the Bylaws of
the Company or applicable law, any Board Action or Arbitration (as defined
in Section 3) that Indemnitee would not be permitted to be indemnified in
accordance with Section 2(a) of this Agreement shall not be binding. If
there has been no Board Action or Arbitration, or if Board Action or
Arbitration determines that Indemnitee would not be permitted to be
indemnified, in any respect, in whole or in part, in accordance with Section
2(a) of this Agreement, Indemnitee shall have the right to commence
litigation in the court which is hearing the action or proceeding relating to
the Claim for which indemnification is sought or in any court in the States
of Delaware or Texas having subject matter jurisdiction thereof and in which
venue is proper seeking an initial determination by the court or
challenging any such Board Action or Arbitration or any aspect thereof, and
the Company thereby consents to service of process and to appear in any such
proceeding. Any Board Action not followed by Arbitration or such
litigation, and any Arbitration not followed by such litigation, shall be
conclusive and binding on the Company and Indemnitee.
3. CHANGE IN CONTROL.
The Company agrees that if there is a Change in Control, Indemnitee, by
giving written notice to the Company and the American Arbitration Association
(the "Notice"), may require that any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration (the "Arbitration"), in Dallas, Texas, in accordance with the Rules
of the American Arbitration Association (the "Rules"). The Arbitration shall be
conducted by a panel of three arbitrators selected in accordance with the Rules
within thirty days of delivery of the Notice. The decision of the panel shall be
made as soon as practicable after the panel has been selected, and the parties
agree to use their reasonable efforts to cause the panel to deliver its
decision within ninety days of its selection. The Company shall pay all fees
and expenses of the Arbitration. The Arbitration shall be conclusive and
binding on the Company and Indemnitee, and Indemnitee may cause judgment upon
the award rendered by the arbitrators to be entered in any court having
jurisdiction thereof; provided, however, that any Arbitration shall have no
effect on Indemnitee's right to commence litigation pursuant to Section 2(c)
of this Agreement, in which case, such Arbitration shall not be conclusive
and binding on Indemnitee or the Company.
4. ESTABLISHMENT OF TRUST.
In the event of a Potential Change in Control or a Change in Control, the
Company shall, promptly upon written request by Indemnitee, create a Trust
for the benefit of Indemnitee and from time to time, upon written request of
Indemnitee to the Company, shall fund such Trust in an amount, as set forth
in such request, sufficient to satisfy any and all Expenses reasonably
anticipated at the time of each such request to be incurred in connection
with investigating, preparing for and defending any claim relating to an
Indemnifiable Event, and any and all judgments, fines, penalties and
settlement amounts of any and all claims relating to an Indemnifiable Event
from time to time actually paid or claimed, reasonably anticipated or
proposed to be paid. 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 Indemnitee; (ii) the Trustee shall
advance, within two business days of a request by Indemnitee, any and all
Expenses to Indemnitee, not advanced directly by the Company to Indemnitee
(and Indemnitee hereby agrees to reimburse the Trust under the circumstances
under which Indemnitee would be required to reimburse the Company under
Section 2(b) of this Agreement); (iii) the Trust shall continue be to funded
by the Company in accordance with the funding obligation set forth above;
(iv) the Trustee shall promptly pay to Indemnitee all amounts for which
Indemnitee shall be entitled to indemnification pursuant to this Agreement or
otherwise; and (v) all unexpended funds in such Trust shall revert to the
Company upon a final determination by Board Action or Arbitration or a court
of competent jurisdiction, as the case may be, that Indemnitee has been fully
indemnified under the terms of this Agreement. The Trustee shall be chosen
by Indemnitee. Nothing in this Section 4 shall relieve the Company of any of
its obligations under this Agreement.
5. INDEMNIFICATION FOR ADDITIONAL EXPENSES.
The Company shall indemnify Indemnitee against any and all expenses
(including attorney's fees) and, if requested by Indemnitee, shall (within
two business days of such request) advance such expenses to Indemnitee, which
are incurred by Indemnitee in connection with any claim asserted by or action
brought by Indemnitee for (i) indemnification or advance payment of Expenses
by the Company under this Agreement or any other agreement or Company Bylaw
now or hereafter in effect relating to Claims for Indemnifiable Events and/or
(ii) recovery under any directors' and officers' liability insurance policies
maintained by the Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
6. PARTIAL INDEMNITY, ETC.
If Indemnitee is entitled, under any provisions of this Agreement to
indemnification by the Company for some or a portion of the Expenses, judgments,
fines, penalties, excise taxes and
amounts paid or to be paid in settlement of a Claim but not, however, for all
of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
Moreover, notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including, without
limitation, dismissal without prejudice, Indemnitee shall be indemnified
against any and all Expenses, judgments, fines, penalties, excise taxes and
amounts paid or to be paid in settlement of such Claim. In connection with
any determination by Board Action, Arbitration or a court of competent
jurisdiction that Indemnitee is not entitled to be indemnified hereunder, the
burden of proof shall be on the Company to establish that Indemnitee is not
so entitled.
7. NO PRESUMPTION.
For purposes of this Agreement, the termination of any claim, action,
suit or proceeding, by judgment, order, settlement (whether with or without
court approval) or 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 or
this Agreement.
8. CONTRIBUTION.
In the event that the indemnification provided for in this Agreement is
unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of
indemnifying Indemnitee, shall contribute to the amount incurred by
Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts
paid or to be paid in settlement and/or for Expenses, in connection with any
Claim relating to an Indemnifiable Event, in such proportion as is deemed
fair and reasonable in light of all of the circumstances of such action by
Board Action or Arbitration or by the court before which such action was
brought in order to reflect (i) the relative benefits received by the Company
and Indemnitee as a result of the event(s) and/or transactions(s) giving
cause to such action; and/or (ii) the relative fault of the Company (and its
other directors, officers, employees and agents) and Indemnitee in connection
with such event(s) and/or transaction(s). Indemnitee's right to contribution
under this Section 8 shall be determined in accordance with, pursuant to and
in the same manner as, the provisions in Sections 2 and 3 hereof relating to
Indemnitee's right to indemnification under this Agreement.
9. NOTICE TO THE COMPANY BY INDEMNITEE.
Indemnitee agrees to promptly notify the Company in writing upon being
served with or having actual knowledge of any citation, summons, complaint,
indictment or any other similar document relating to any action which may
result in a claim of indemnification or contribution hereunder.
10. NON-EXCLUSIVITY, ETC.
The rights of the Indemnitee hereunder shall be in addition to any other
rights Indemnitee may have under the Company's Certificate of Incorporation
or Bylaws or the Delaware General Corporation Law or otherwise, and nothing
herein shall be deemed to diminish or otherwise restrict Indemnitee's right
to indemnification under any such other provision. To the extent applicable
law or the Certificate of Incorporation or the Bylaws of Company, as in
effect on the date hereof or at any time in the future, permit greater
indemnification than as provided for in this Agreement, the parties hereto
agree that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such law or provision of the Certificate of Incorporation or
Bylaws and this Agreement shall be deemed amended without any further action
by the Company or Indemnitee to grant such greater benefits. Indemnitee may
elect to have Indemnitee's rights hereunder interpreted on the basis of
applicable law in effect at the time of execution of this Agreement, at the
time of the occurrence of the Indemnifiable Event giving rise to a Claim or
at the time indemnification is sought.
11. LIABILITY INSURANCE.
To the extent the Company maintains at any time 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 other Company
director or officer under such insurance policy. The purchase and maintenance
of such insurance shall not in any way limit or affect the rights and
obligations of the parties hereto, and the execution and delivery of this
Agreement shall not in any way be
construed to limit or affect the rights and obligations of the Company and/or
of the other parties under any such insurance policy.
12. 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, and 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 two-year period; provided,
however, that if any shorter period of limitations is otherwise applicable to
any such cause of action such shorter period shall govern.
13. AMENDMENTS, ETC.
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 be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
14. SUBROGATION.
In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery
with respect to such payment of Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
15. 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 actually received payment (under any insurance policy, Bylaw or
otherwise) of the amounts otherwise Indemnifiable hereunder.
16. BINDING EFFECT, ETC.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable against and by the parties hereto and their respective
successors, assigns (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all of substantially all of the
business and/or assets of the Company), 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. This Agreement shall continue
in effect regardless of whether Indemnitee continues to
serve as a director and/or officer of the Company or of any other
enterprise at the Company's request.
17. SEVERABILITY.
The provisions of this Agreement shall be severable in the event that any
of the provisions thereof (including any provision within a single section,
paragraph or sentence) are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the fullest extent permitted by law.
18. NOTICES.
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered by hand or when mailed by certified registered mail,
return receipt requested, with postage prepaid:
A. If to Indemnitee, to: _____________________________________or
to such other person or address which Indemnitee shall furnish to the
Company in writing pursuant to the above.
B. If to the Company, to: CS Wireless Systems, Inc., 000 Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxxx, Xxxxx 00000 Attention: Corporate Secretary or to
such person or address as the Company shall furnish to Indemnitee in
writing pursuant to the above.
19. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the ____________________, 1997.
CS WIRELESS SYSTEMS, INC.
By:
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Name:
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Title:
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INDEMNITEE:
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Name
