Exhibit 10.3
FORM OF
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of _________, 1997, by and
among NextLevel Systems, Inc., a Delaware corporation (the "Company"), and
the director and/or officer of the Company whose name appears on the
signature page of this Agreement ("Indemnitee").
RECITALS
A. Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or officers or in other capacities
unless they are provided with reasonable protection through insurance or
indemnification against risks of claims and actions against them arising out of
their service to and activities on behalf of the corporations.
B. The Board of Directors of the Company (the "Board") has determined that
the Company should act to assure its directors and officers that there will be
increased certainty of such protection in the future.
C. It is reasonable, prudent and necessary for the Company contractually
to obligate itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.
D. Indemnitee is willing to serve, to continue to serve and to take
on additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.
E. In consideration of the benefits received and to be received by the
Company in connection with actions taken and to be taken by the Board and by
the officers of the Company, the Company has determined that it is in the
best interest of the Company for the reasons set forth above to be a party to
this Agreement and to provide indemnification to the directors and officers of
the Company in connection with their service to and activities on behalf of the
Company, and its subsidiaries.
F. The Company acknowledges that for purposes of this Agreement the
directors and officers of the Company who enter into this Agreement are serving
in such capacities at the request of the Company.
G. The Company further acknowledges that such directors and officers
are willing to serve, to continue to serve and to take on additional service for
or on behalf of the Company, thereby benefiting the Company and its
subsidiaries, on the condition that the Company enter into, and provide
indemnification pursuant to, this Agreement.
In consideration of the premises and the covenants contained
herein, the Company and Indemnitee do hereby covenant and agree as follows:
1. Definitions.
(a) For purposes of this Agreement:
(i) "Affiliate" shall mean any corporation,
partnership, joint venture, trust or other enterprise in respect of which
Indemnitee is or was or will be serving as a director or officer directly or
indirectly at the request of the Company, and including, but not limited to,
service with respect to an employee benefit plan.
(ii) "Disinterested Director" shall mean a director of
the Company who is not or was not a party to the Proceeding in respect of which
indemnification is being sought by Indemnitee.
(iii) "Expenses" shall include all attorneys' fees and
costs, retainers, court costs, transcripts, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements or expenses
incurred in connection with asserting or defending claims.
(iv) "fines" shall include any excise taxes assessed on
Indemnitee with respect to any employee benefit plan.
(v) "Independent Counsel" shall mean a law firm or
lawyer that neither is presently nor in the past year has been retained to
represent: (i) the Company or Indemnitee in any matter material to any such
party or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder in any matter material to such other party.
Notwithstanding the foregoing, the term "Independent Counsel" shall not
include any firm or person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing any of the Company or Indemnitee in an action to determine
Indemnitee's right to indemnification under this Agreement. All Expenses of
the Independent Counsel incurred in connection with acting pursuant to this
Agreement shall be borne by the Company.
(vi) "Losses" shall mean all expenses, liabilities,
losses and claims (including attorneys' fees, judgments, fines, excise taxes
under the Employee Retirement Income Security Act of 1974, as amended from time
to time, penalties and amounts to be paid in settlement) incurred in connection
with any Proceeding.
(vii) "Proceeding" shall include any threatened, pending
or completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative.
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(b) For purposes of this Agreement, a person who acted in
good faith and in a manner such person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests
of the Company" as referred to in this Agreement; the term "serving at the
request of the Company" shall include any service as a director, officer,
employee or agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries; and references to
the "Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify Indemnitee in its capacity as
a director, officer, or employee or agent, so that Indemnitee shall stand in
the same position under this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.
2. Service by Indemnitee. Indemnitee agrees to begin or continue to
serve the Company or any Affiliate as a director and/or officer. Notwithstanding
anything contained herein, this Agreement shall not create a contract of
employment between the Company and Indemnitee, and the
termination of Indemnitee's relationship with the Company or
an Affiliate by either party hereto shall not be restricted by this Agreement.
3. Indemnification. The Company agrees to indemnify Indemnitee
for, and hold Indemnitee harmless from and against, any Losses or Expenses at
any time incurred by or assessed against Indemnitee arising out of or in
connection with the service of Indemnitee as a director or officer of the
Company or of an Affiliate (collectively referred to as an "Officer or
Director of the Company") to the fullest extent permitted by the laws of the
State of Delaware in effect on the date hereof or as such laws may from time
to time hereafter be amended to increase the scope of such permitted
indemnification. Without diminishing the scope of the indemnification
provided by this Section 3, the rights of indemnification of Indemnitee
provided hereunder shall include but shall not be limited to those rights set
forth hereinafter.
4. Action or Proceeding Other Than an Action by or in the Right
of the Company. Indemnitee shall be entitled to the indemnification rights
provided herein if Indemnitee is a person who was or is made a party or is
threatened to be made a party to or is involved (including, without
limitation, as a witness) in any Proceeding, other than an action by or in
the right of the Company by reason of (a) the fact that Indemnitee is or was
an Officer or Director of the Company or any other entity which Indemnitee is
or was or will be serving at the request of the Company or (b) anything done
or not done by Indemnitee in any such capacity.
5. Actions by or in the Right of the Company. Indemnitee shall be
entitled to the indemnification rights provided herein if Indemnitee is a person
who was or is a party or is threatened to be made a party to or is involved
(including, without limitation, as a witness) in any Proceeding brought by or in
the right of the Company to procure a judgment in its favor by
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reason of (a) the fact that Indemnitee is or was an Officer or Director of
the Company or any Affiliate, or (b) anything done or not done by Indemnitee
in any such capacity. Pursuant to this Section, Indemnitee shall be
indemnified against Losses or Expenses incurred or suffered by Indemnitee or
on Indemnitee's behalf in connection with the defense or settlement of any
Proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company. Notwithstanding the foregoing provisions of this Section, no such
indemnification shall be made in respect of any claim, issue or matter as to
which Delaware law expressly prohibits such indemnification by reason of an
adjudication of liability of Indemnitee to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit 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 for such
Losses and Expenses which the Court of Chancery or such other court shall
deem proper.
6. Indemnification for Losses and Expenses of Party Who is Wholly
or Partly Successful. Notwithstanding any other provision of this Agreement,
to the extent that Indemnitee has been wholly successful on the merits or
otherwise in any Proceeding referred to in Section 3, 4 or 5 hereof on any
claim, issue or matter therein, Indemnitee shall be indemnified against all
Losses and Expenses incurred by Indemnitee or on Indemnitee's behalf in
connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
agrees to indemnify Indemnitee to the maximum extent permitted by law against
all Losses and Expenses incurred by Indemnitee in connection with each
successfully resolved claim, issue or matter. In any review or Proceeding to
determine the extent of indemnification, the Company shall bear the burden of
proving any lack of success and which amounts sought in indemnity are
allocable to claims, issues or matters which were not successfully resolved.
For purposes of this Section and without limitation, the termination of any
such claim, issue or matter by dismissal with or without prejudice shall be
deemed to be a successful resolution as to such claim, issue or matter.
7. Payment for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of
the fact that Indemnitee is or was an Officer or Director of the Company or
any Affiliate, as the case may be, a witness in any Proceeding, the Company
agrees to pay to Indemnitee all Expenses actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in connection therewith.
8. Advancement of Expenses and Costs. All Expenses incurred by or
on behalf of Indemnitee (or reasonably expected by Indemnitee to be incurred
by Indemnitee within three months) in connection with any Proceeding shall be
paid by the Company in advance of the final disposition of such Proceeding
within twenty days after the receipt by the Company of a statement or
statements from Indemnitee requesting from time to time such advance or
advances, whether or not a determination to indemnify has been made under
Section 9. Indemnitee's entitlement to such advancement of Expenses shall
include those
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incurred in connection with any Proceeding by Indemnitee seeking an adjudication
or award in arbitration pursuant to this Agreement. The financial ability of
Indemnitee to repay an advance shall not be a prerequisite to the making of such
advance. Such statement or statements shall reasonably evidence such Expenses
incurred (or reasonably expected to be incurred) by Indemnitee in connection
therewith and shall include or be accompanied by a written undertaking by or on
behalf of Indemnitee to repay such amount if it shall ultimately be determined
that Indemnitee is not entitled to be indemnified therefor pursuant to the terms
of this Agreement.
9. Procedure for Determination of Entitlement to Indemnification.
(a) When seeking indemnification under this Agreement
(which shall not include in any case the right of Indemnitee to receive
payments pursuant to Section 7 and Section 8 hereof, which shall not be
subject to this Section 9), Indemnitee shall submit a written request for
indemnification to the Company. Determination of Indemnitee's entitlement to
indemnification shall be made promptly, but in no event later than 60 days
after receipt by the Company of Indemnitee's written request for
indemnification. The Secretary of the Company shall, promptly upon receipt of
Indemnitee's request for indemnification, advise the Board that Indemnitee
has made such request for indemnification.
(b) The entitlement of Indemnitee to indemnification under
this Agreement shall be determined in the specific case (1) by the Board of
Directors by a majority vote of the Disinterested Directors, even though less
than a quorum, or (2) if there are no Disinterested Directors, or if such
Disinterested Directors so direct, by Independent Counsel, or (3) by the
stockholders.
(c) In the event the determination of entitlement is to be
made by Independent Counsel, such Independent Counsel shall be selected by
the Board and approved by Indemnitee. Upon failure of the Board to so select
such Independent Counsel or upon failure of Indemnitee to so approve, such
Independent Counsel shall be selected by the American Arbitration Association
of New York, New York or such other person as such Association shall
designate to make such selection.
(d) If the determination made pursuant to Section 9(b) is that
Indemnitee is not entitled to indemnification to the full extent of Indemnitee's
request, Indemnitee shall have the right to seek entitlement to indemnification
in accordance with the procedures set forth in Section 10 hereof.
(e) If the person or persons empowered pursuant to Section
9(b) to make a determination with respect to entitlement to indemnification
shall have failed to make the requested determination within 60 days after
receipt by the Company of such request, the requisite determination of
entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be absolutely entitled to such indemnification, absent (i)
misrepresentation by Indemnitee of a material fact in the request for
indemnification or (ii) a
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final judicial determination that all or any part of such indemnification is
expressly prohibited by law.
(f) The termination of any Proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, adversely affect the rights of Indemnitee
to indemnification hereunder except as may be specifically provided herein,
or create a presumption that Indemnitee did not act in good faith and in a
manner which Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company or create a presumption that (with respect to
any criminal action or proceeding) Indemnitee had reasonable cause to believe
that Indemnitee's conduct was unlawful.
(g) For purposes of any determination of good faith hereunder,
Indemnitee shall be deemed to have acted in good faith if in taking such action
Indemnitee relied on the records or books of account of the Company or an
Affiliate, including financial statements, or on information supplied to
Indemnitee by the officers of the Company or an Affiliate in the course of their
duties, or on the advice of legal counsel for the Company or an Affiliate or on
information or records given or reports made to the Company or an Affiliate by
an independent certified public accountant or by an appraiser or other expert
selected with reasonable care to the Company or an Affiliate. The Company shall
have the burden of establishing the absence of good faith. The provisions of
this Section 9(g) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which Indemnitee may be deemed to have met the applicable
standard of conduct set forth in this Agreement.
(h) The knowledge and/or actions, or failure to act, of any
other director, officer, agent or employee of the Company or an Affiliate shall
not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.
10. Remedies in Cases of Determination Not to Indemnify or to
Advance Expenses.
(a) In the event that (i) a determination is made that
Indemnitee is not entitled to indemnification hereunder, (ii) advances are not
made pursuant to Section 8 hereof or (iii) payment has not been timely made
following a determination of entitlement to indemnification pursuant to Section
9 hereof, Indemnitee shall be entitled to seek a final adjudication either
through an arbitration proceeding or in an appropriate court of the State of
Delaware or any other court of competent jurisdiction of Indemnitee's
entitlement to such indemnification or advance.
(b) In the event a determination has been made in accordance
with the procedures set forth in Section 9 hereof, in whole or in part, that
Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration referred to in Section 10(a) shall be de novo and Indemnitee shall
not be prejudiced by reason of any such prior determination that Indemnitee is
not entitled to indemnification, and the Company shall bear the burdens of proof
specified in Sections 6 and 9 hereof in such proceeding.
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(c) If a determination is made or deemed to have been made
pursuant to the terms of Section 9 or 10 hereof that Indemnitee is entitled
to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration in the absence of (i) a misrepresentation
of a material fact by Indemnitee or (ii) a final judicial determination that
all or any part of such indemnification is expressly prohibited by law.
(d) To the extent deemed appropriate by the court, interest
shall be paid by the Company to Indemnitee at a reasonable interest rate for
amounts which the Company indemnifies or is obliged to indemnify Indemnitee
for the period commencing with the date on which Indemnitee requested
indemnification (or reimbursement or advancement of any Expenses) and ending
with the date on which such payment is made to Indemnitee by the Company.
11. Expenses Incurred by Indemnitee to Enforce this Agreement.
All Expenses incurred by Indemnitee in connection with the preparation and
submission of Indemnitee's request for indemnification hereunder shall be
borne by the Company. In the event that Indemnitee is a party to or
intervenes in any proceeding in which the validity or enforceability of this
Agreement is at issue or seeks an adjudication to enforce Indemnitee's rights
under, or to recover damages for breach of, this Agreement, Indemnitee, if
Indemnitee prevails in whole in such action, shall be entitled to recover
from the Company, and shall be indemnified by the Company against, any
Expenses incurred by Indemnitee. If it is determined that Indemnitee is
entitled to indemnification for part (but not all) of the indemnification so
requested, Expenses incurred in seeking enforcement of such partial
indemnification shall be reasonably prorated among the claims, issues or
matters for which Indemnitee is entitled to indemnification and for claims,
issues or matters for which Indemnitee is not so entitled.
12. Non-Exclusivity. The rights of indemnification and to receive
advances as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under any law,
certificate of incorporation, by-law, other agreement, vote of stockholders
or resolution of directors or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while holding such
office. To the extent Indemnitee would be prejudiced thereby, no amendment,
alteration, rescission or replacement of this Agreement or any provision
hereof shall be effective as to Indemnitee with respect to any action taken
or omitted by such Indemnitee in Indemnitee's position with the Company or an
Affiliate or any other entity which Indemnitee is or was serving at the
request of the Company prior to such amendment, alteration, rescission or
replacement.
13. Duration of Agreement. This Agreement shall apply to any claim
asserted and any Losses and Expenses incurred in connection with any claim
asserted on or after the effective date of this Agreement and shall continue
until and terminate upon the later of: (a) ten years after Indemnitee has ceased
to occupy any of the positions or have any of the relationships described in
Section 3, 4 or 5 hereof; or (b) one year after the final termination of all
pending or threatened Proceedings of the kind described herein with respect to
Indemnitee. This Agreement
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shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and
Indemnitee's spouse, assigns, heirs, devisee, executors, administrators or other
legal representatives.
14. Maintenance of D&O Insurance.
(a) The Company hereby covenants and agrees with Indemnitee
that, so long as Indemnitee shall continue to serve as an Officer or Director
of the Company and thereafter so long as Indemnitee shall be subject to any
possible claim or threatened, pending or completed Proceeding, whether civil,
criminal or investigative, by reason of the fact that Indemnitee was an
Officer or Director of the Company or any other entity which Indemnitee was
serving at the request of the Company, the Company shall maintain in full
force and effect (i) the directors' and officers' liability insurance issued
by the insurer and having the policy amount and deductible as currently in
effect with respect to directors and officers of the Company or any of its
subsidiaries and (ii) any replacement or substitute policies issued by one or
more reputable insurers providing in all respects coverage at least
comparable to and in the same amount as that currently provided under such
existing policy (collectively, "D&O Insurance").
(b) In all policies of D&O Insurance, Indemnitee shall be
named as an insured in such a manner as to provide Indemnitee the same rights
and benefits, subject to the same limitations, as are accorded to the Company's
directors or officers most favorably insured by such policy.
(c) Notwithstanding anything to the contrary set forth in
(a) above, the Company shall have no obligation to maintain D&O Insurance if
the Company determines in good faith that such insurance is not reasonably
available, the premium cost for such insurance is disproportionate to the
amount of coverage provided or the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit.
15. Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions hereof shall not be affected
thereby, and the illegal or unenforceable portions hereof shall be and hereby
are redrafted to conform with applicable law, while leaving the remaining
portions hereof intact.
16. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
17. Headings. Section headings are for convenience only and do not
control or affect meaning or interpretation of any terms or provisions hereof.
18. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by each
of the parties hereto.
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19. No Duplicative Payment. The Company shall not be liable under
this Agreement to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that Indemnitee has otherwise actually
received such payment (net of Expenses incurred in collecting such payment)
under any insurance policy, contract, agreement or otherwise.
20. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed,
enclosed in a registered or certified postpaid envelope, in any general or
branch office of the United States Postal Service, or sent by Federal Express or
other similar overnight courier service, addressed to the address of the parties
stated below or to such changed address as such party may have fixed by notice
or, if given by telecopier, when such telecopy is transmitted and the
appropriate answer back is received.
(a) If to Indemnitee, to the address appearing on the signature
page hereof.
(b) If to the Company, to:
NextLevel Systems, Inc.
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
21. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws of
the State of Delaware without regard to its conflicts of law rules.
22. Entire Agreement. Subject to the provisions of Section 12
hereof, this Agreement constitutes the entire understanding between the parties
and supersedes all proposals, commitments, writings, negotiations and
understandings, oral and written, and all other communications between the
parties relating to the subject matter hereof. This Agreement may not be amended
or otherwise modified except in writing duly executed by all of the parties. A
waiver by any party of any breach or violation of this Agreement shall not be
deemed or construed as a waiver of any subsequent breach or violation thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
NEXTLEVEL SYSTEMS, INC.
By:____________________________________
Name:
Title:
INDEMNITEE
Name:___________________________________
Address:________________________________
City and State:_________________________
Telecopier Number:______________________
