HYBRID NETWORKS, INC.
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of _________________, is made by and
between Hybrid Networks, Inc., a Delaware corporation (the "COMPANY"), and
_________________, a director and/or officer of the Company (the
"INDEMNITEE").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations
unless they are protected by comprehensive liability insurance and/or
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that
the exposure frequently bears no reasonable relationship to the compensation
of such directors and officers;
B. Based upon their experience as business managers, the Board of
Directors of the Company (the "BOARD") has concluded that, to retain and
attract talented and experienced individuals to serve as officers and
directors of the Company, and to encourage such individuals to take the
business risks necessary for the success of the Company, it is necessary for
the Company to contractually indemnify officers and directors, and to assume
for itself maximum liability for expenses and damages in connection with
claims against such officers and directors in connection with their service
to the Company;
C. Section 145 of the General Corporation Law of Delaware, under which
the Company is organized ("SECTION 145"), empowers the Company to indemnify
by agreement its officers, directors, employees and agents, and persons who
serve, at the request of the Company, as directors, officers, employees or
agents of other corporations or enterprises, and expressly provides that the
indemnification provided by Section 145 is not exclusive; and
D. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to
the Company.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
1.1 AGENT. For the purposes of this Agreement, "agent" of the
Company means any person who is or was a director or officer of the Company
or a subsidiary of the Company; or is or was serving at the request of, for
the convenience of, or to represent the interest of the Company or a
subsidiary of the Company as a director or officer of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise
or an affiliate of the Company; or was a director or officer of a foreign or
domestic corporation which was a predecessor corporation of the Company or a
subsidiary of the Company, including, without limitation, Premisys
Communications Holdings, Inc., a California corporation and Hybrid Networks,
Inc., a California corporation, or was a director or officer of another
enterprise or affiliate of the Company at the request of, for the convenience
of, or to represent the interests of such predecessor corporation. The term
"enterprise" includes any employee benefit plan of the Company, its
subsidiaries, affiliates and predecessor corporations.
1.2 EXPENSES. For purposes of this Agreement, "expenses" includes
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees and related disbursements and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification or advancement of
expenses under this Agreement, Section 145 or otherwise; provided, however,
that expenses shall not include any judgments, fines, ERISA excise taxes or
penalties or amounts paid in settlement of a proceeding.
1.3 PROCEEDING. For the purposes of this Agreement, "proceeding"
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal, administrative, investigative or any other type
whatsoever.
1.4 SUBSIDIARY. For purposes of this Agreement, "subsidiary" means
any corporation of which more than 50% of the outstanding voting securities
is owned directly or indirectly by the Company, by the Company and one or
more other subsidiaries, or by one or more other subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue
to serve as an agent of the Company, at the will of the Company (or under
separate agreement, if such agreement exists), in the capacity Indemnitee
currently serves as an agent of the Company, faithfully and to the best of
his ability so long as he is duly appointed or elected and qualified in
accordance with the applicable provisions of the charter documents of the
Company or any subsidiary of the Company; provided, however, that Indemnitee
may at any time and for any reason resign from such position (subject to any
contractual obligation that Indemnitee may have assumed apart from this
Agreement) and that the Company or any subsidiary shall have no obligation
under this Agreement to continue Indemnitee in any such position.
3. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall, to the
extent that the Board determines it to be economically reasonable, maintain a
policy of directors' and officers'
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liability insurance ("D&O Insurance"), on such terms and conditions as may be
approved by the Board.
4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the Company
shall indemnify the Indemnitee:
4.1 THIRD PARTY ACTIONS. If the Indemnitee is a person who was or
is a party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the Company) by reason of the fact that he is
or was an agent of the Company, or by reason of anything done or not done by
him in any such capacity, against any and all expenses and liabilities of any
type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) actually and
reasonably incurred by him in connection with the investigation, defense,
settlement or appeal of such proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful; and
4.2 DERIVATIVE ACTIONS. If the Indemnitee is a person who was or
is a party or is threatened to be made a party to any proceeding by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was an agent of the Company, or by reason of anything done or
not done by him in any such capacity, against any amounts paid in settlement
of any such proceeding and all expenses actually and reasonably incurred by
him in connection with the investigation, defense, settlement, or appeal of
such proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company; except
that no indemnification under this subsection shall be made in respect of any
claim, issue or matter as to which such person shall have been finally
adjudged to be liable to the Company by a court of competent jurisdiction due
to willful misconduct of a culpable nature in the performance of his duty to
the Company, unless and only to the extent that the Court of Chancery or the
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, such person is fairly and reasonably entitled to
indemnity for such amounts which the Court of Chancery or such other court
shall deem proper; and
4.3 EXCEPTION FOR AMOUNTS COVERED BY INSURANCE. Notwithstanding
the foregoing, the Company shall not be obligated to indemnify the Indemnitee
for expenses or liabilities of any type whatsoever (including, but not
limited to, judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) to the extent such have been paid directly to Indemnitee
by D&O Insurance.
5. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) incurred by him in the investigation, defense,
settlement or appeal of a proceeding but not entitled, however, to
indemnification for all of the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for such total
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amount except as to the portion thereof to which the Indemnitee is not
entitled to the indemnification.
6. MANDATORY ADVANCEMENT OF EXPENSES.
6.1 ADVANCEMENT. Subject to Section 9 below, the Company shall
advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the
fact that the Indemnitee is or was an agent of the Company or by reason of
anything done or not done by him in any such capacity. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company under the provisions of this Agreement, the
Certificate of Incorporation or Bylaws of the Company, the General
Corporation Law of Delaware or otherwise. The advances to be made hereunder
shall be paid by the Company to the Indemnitee within thirty (30) days
following delivery of a written request therefor by the Indemnitee to the
Company.
6.2 EXCEPTION. Notwithstanding the foregoing provisions of this
Section 6, the Company shall not be obligated to advance any expenses to
Indemnitee to the extent such arise from a lawsuit filed directly by the
Company against the Indemnitee if an absolute majority of the members of the
Board of Directors reasonably determines in good faith, within thirty (30)
days of Indemnitee's request to be advanced expenses, that the facts known to
them at the time such determination is made demonstrate clearly and
convincingly that the Indemnitee acted in bad faith. If such a determination
is made, Indemnitee may have such decision reviewed by another forum, in the
manner set forth in Sections 8.3, 8.4 and 8.5 hereof, with all references
therein to "indemnification" being deemed to refer to "advancement of
expenses", and the burden of proof shall be on the Company to demonstrate
clearly and convincingly that, based on the facts known at the time, the
Indemnitee acted in bad faith. The Company may not avail itself of this
Section 6.2 as to a given lawsuit if, at any time after the occurrence of the
activities or omissions that are the primary focus of the lawsuit, the
Company has undergone a change in control. For this purpose a change in
control shall mean a given shareholder or group of affiliated shareholders
increasing their beneficial ownership interest in the Company by at least 20
percentage points without advance Board approval.
7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
7.1 Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the
Indemnitee shall, if the Indemnitee believes that indemnification with
respect thereto may be sought from the Company under this Agreement, notify
the Company of the commencement or threat of commencement thereof.
7.2 If, at the time of the receipt of a notice of the commencement
of a proceeding pursuant to Section 7.1 hereof, the Company has D&O Insurance
in effect, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter
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take all necessary or desirable action to cause such insurers to pay, on
behalf of the Indemnitee, all amounts payable as a result of such proceeding
in accordance with the terms of such policies.
7.3 In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by the Indemnitee, upon the delivery to the Indemnitee of
written notice of its election to do so. After delivery of such notice,
approval of such counsel by the Indemnitee and the retention of such counsel
by the Company, the Company will not be liable to the Indemnitee under this
Agreement for any fees of counsel subsequently incurred by the Indemnitee
with respect to the same proceeding, provided that (a) the Indemnitee shall
have the right to employ his own counsel in any such proceeding at the
Indemnitee's expense; (b) the Indemnitee shall have the right to employ his
own counsel in connection with any such proceeding, at the expense of the
Company, if such counsel serves in a review, observer, advice and counseling
capacity and does not otherwise materially control or participate in the
defense of such proceeding; and (c) if (i) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (ii) the Indemnitee
shall have reasonably concluded that there may be a conflict of interest
between the Company and the Indemnitee in the conduct of any such defense or
(iii) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company.
8. DETERMINATION OF RIGHT TO INDEMNIFICATION.
8.1 To the extent the Indemnitee has been successful on the merits
or otherwise in defense of any proceeding referred to in Section 4.1 or 4.2
of this Agreement or in the defense of any claim, issue or matter described
therein, the Company shall indemnify the Indemnitee against expenses actually
and reasonably incurred by him in connection with the investigation, defense
or appeal of such proceeding, or such claim, issue or matter, as the case may
be.
8.2 In the event that Section 8.1 is inapplicable, or does not
apply to the entire proceeding, the Company shall nonetheless indemnify the
Indemnitee unless the Company shall prove by clear and convincing evidence to
a forum listed in Section 8.3 below that the Indemnitee has not met the
applicable standard of conduct required to entitle the Indemnitee to such
indemnification.
8.3 The Indemnitee shall be entitled to select the forum in which
the validity of the Company's claim under Section 8.2 hereof that the
Indemnitee is not entitled to indemnification will be heard from among the
following:
(a) A quorum of the Board consisting of directors who are not
parties to the proceeding for which indemnification is being sought;
(b) The stockholders of the Company;
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(c) Legal counsel selected by the Indemnitee, and reasonably
approved by the Board, which counsel shall make such determination in a
written opinion; or
(d) A panel of three arbitrators, one of whom is selected by
the Company, another of whom is selected by the Indemnitee, and the last of
whom is selected by the first two arbitrators so selected.
8.4 As soon as practicable, and in no event later than 30 days
after written notice of the Indemnitee's choice of forum pursuant to Section
8.3 above, the Company shall, at its own expense, submit to the selected
forum in such manner as the Indemnitee or the Indemnitee's counsel may
reasonably request, its claim that the Indemnitee is not entitled to
indemnification; and the Company shall act in the utmost good faith to assure
the Indemnitee a complete opportunity to defend against such claim.
8.5 If the forum listed in Section 8.3 hereof selected by
Indemnitee determines that Indemnitee is entitled to indemnification with
respect to a specific proceeding, such determination shall be final and
binding on the Company. If the forum listed in Section 8.3 hereof selected
by Indemnitee determines that Indemnitee is not entitled to indemnification
with respect to a specific proceeding, the Indemnitee shall have the right to
apply to the Court of Chancery of Delaware, the court in which that
proceeding is or was pending or any other court of competent jurisdiction,
for the purpose of determining whether Indemnitee is entitled to
indemnification and enforcing the Indemnitee's right to indemnification
pursuant to the Agreement.
8.6 Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 8 involving the Indemnitee and against all expenses incurred by
the Indemnitee in connection with any other proceeding between the Company
and the Indemnitee involving the interpretation or enforcement of the rights
of the Indemnitee under this Agreement unless a court of competent
jurisdiction finds that each of the material claims and/or defenses of the
Indemnitee in any such proceeding was frivolous or not made in good faith.
9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
9.1 CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to the Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by the Indemnitee and not by way of defense, except with
respect to proceedings specifically authorized by the Board of Directors or
brought to establish or enforce a right to indemnification and/or advancement
of expenses under this Agreement, the charter documents of the Company or any
subsidiary, or any statute or law or otherwise, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if
the Board of Directors finds it to be appropriate; or
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9.2 UNAUTHORIZED SETTLEMENTS. To indemnify the Indemnitee
hereunder for any amounts paid in settlement of a proceeding unless the
Company consents in advance in writing to such settlement, which consent
shall not be unreasonably withheld; or
9.3 SECURITIES LAW ACTIONS. To indemnify the Indemnitee on account
of any suit 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 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions
of any federal, state or local statutory law; or
9.4 UNLAWFUL INDEMNIFICATION. To indemnify the Indemnitee if a
final decision by a court having jurisdiction in the matter shall determine
that such indemnification is not lawful. In this respect, the Company and
the Indemnitee have been advised that the Securities and Exchange Commission
takes the position that indemnification for liabilities arising under the
federal securities law is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication.
10. NON-EXCLUSIVITY. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's Certificate of Incorporation or Bylaws, the vote of the Company's
stockholders or disinterested directors, other agreements, or otherwise, both
as to action in Indemnitee's official capacity and to action in another
capacity while occupying his position as an agent of the Company, and the
Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the
heirs, executors and administrators of the Indemnitee.
11. GENERAL PROVISIONS
11.1 INTERPRETATION OF AGREEMENT. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification and advancement of expenses to the Indemnitee to the
fullest extent now or hereafter permitted by law, except as expressly limited
herein.
11.2 SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any
reason whatsoever, (a) the validity, legality and enforceability of the
remaining provisions of the Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision
held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall not in any way be affected or
impaired thereby, and (b) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraphs
of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that are not themselves invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable and to give effect to
Section 11.1 hereof.
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11.3 MODIFICATION AND WAIVER. 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 provision
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
11.4 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 of Indemnitee, who shall execute all documents required
and shall do all acts that may be necessary or desirable to secure such
rights and to enable the Company effectively to bring suit to enforce such
rights.
11.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute one agreement.
11.6 SUCCESSORS AND ASSIGNS. The terms of this Agreement shall
bind, and shall inure to the benefit of, the successors and assigns of the
parties hereto.
11.7 NOTICE. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
duly given (a) if delivered by hand and receipted for by the party addressee
or (b) if mailed by certified or registered mail with postage prepaid, on the
third business day after the mailing date. Addresses for notice to either
party are as shown on the signature page of this Agreement, or as
subsequently modified by written notice.
11.8 GOVERNING LAW. This Agreement shall be governed exclusively
by and construed according to the laws of the State of Delaware, as applied
to contracts between Delaware residents entered into and to be performed
entirely with Delaware.
11.9 CONSENT TO JURISDICTION. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement.
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The parties hereto have entered into this Indemnity Agreement effective
as of the date first written above.
HYBRID NETWORKS, INC.
Address: 00000 Xxxx Xxxx
Xxxxxxxxx, XX 00000
By:______________________________
Its:_____________________________
INDEMNITEE:
________________________________
Address: ________________________________
________________________________
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