INDEMNITY AGREEMENT
Exhibit 10.23
THIS AGREEMENT is made as of , 200___, by and between RadiSys Corporation, an
Oregon corporation (“Company”), and (“Indemnitee”), an officer or director of the
Company.
RECITALS
A. It is essential to the Company to retain and attract as directors and officers the most
capable persons available.
B. It continues to be the express policy of the Company to indemnify its directors and
officers so as to provide them with the maximum possible protection permitted by law from the costs
and expenses of such litigation risks. Each of the Second Restated Articles of Incorporation of
the Company (“Articles”) and the Restated Bylaws of the Company (“Bylaws”) require indemnification
of the directors of the Company to the fullest extent permitted by law. The Articles, Bylaws and
the Oregon Business Corporation Act (“Act”) expressly provide that the indemnification provisions
set forth in the Articles, Bylaws and the Act are not exclusive, and thereby contemplate that
contracts may be entered into between the Company and members of its board of directors and
officers with respect to indemnification of directors and officers.
C. The Company and Indemnitee recognize the substantial increase in corporate litigation in
general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation
risks resulting from their service to the Company, at the same time as the availability and scope
of coverage of directors’ and officers’ liability insurance provide increasing challenges for the
Company.
D. Indemnitee does not regard the protection available under the Articles, Bylaws and
insurance adequate in the present circumstances, and may not be willing to serve or continue to
serve as a director or officer without adequate protection, and the Company wants Indemnitee to
serve in that capacity free from undue concern from claims for damages arising out of or related to
such services to the Company.
E. The Board of Directors of the Company (“Board”) has determined that the increased
difficulty in attracting and retaining highly qualified persons such as Indemnitee is detrimental
to the best interests of the Company’s shareholders and the Company should act to assure such
persons that there will be increased certainty of such protection in the future.
NOW, THEREFORE, in consideration of the respective covenants and agreements provided in this
Agreement and for other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged) the Company and Indemnitee agree as follows:
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1. Services to the Company. Indemnitee will serve or continue to serve, at the will of the
Company, as a director or officer of the Company for so long as Indemnitee is duly elected or
appointed or until Indemnitee tenders a resignation in writing.
2. Definitions. As used in this Agreement:
(a) The term “Proceeding” shall include any actual, threatened, pending or completed
action or suit, investigation, inquiry, hearing or any other actual, threatened, pending or
completed proceeding, whether brought in the right of the Company or otherwise, whether
formal or informal, and whether of a civil, criminal, judicial, administrative, legislative
or investigative nature, 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 or officer of the
Company or is or was serving at the request of the Company as a director, officer, 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, expense of investigations,
whether formal or informal, judicial, legislative or administrative Proceedings or appeals,
attorneys’ fees, expenses customarily incurred in connection with preparing to prosecute,
defend, investigate or being or preparing to be a witness in, or otherwise participating in
a Proceeding, and disbursements and any expenses of establishing a right to indemnification
under Section 11 of this Agreement. Expenses shall also include expenses incurred in
connection with any appeal resulting from any Proceeding, including, without limitation, the
premium, security for, and other costs relating to any cost bond, supersedes bond, other
appeal bond or its equivalent. Expenses, however, shall not include amounts paid in
settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(c) References to “other enterprise” shall include employee benefit plans; references
to “fines” shall include any excise tax assessed with respect to any employee benefit plan;
reference to “serving at the request of the Company” shall include any service as a
director, officer, employee or agent of the Company 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 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 Company” as referred to
in this Agreement.
(d) For purposes of any determination of good faith, Indemnitee shall be deemed to have
acted in good faith if Indemnitee’s action is based on the records or books of account of
the Company or other enterprise, including financial statements, or on information supplied
to Indemnitee by the officers of the Company or other enterprise in the course of their
duties, or on the advice of legal counsel for the Company or legal counsel to the applicable
other enterprise or the Board or counsel selected by any committee of the Board or on
information or records given or reports made to the
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Company or other enterprise by a certified public accountant or by an appraiser,
investment banker, compensation consultant, or other expert selected by the Company, the
other enterprise or the Board or any committee of the Board. The provisions of this Section
2(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in
which the Indemnitee may be deemed to have met the applicable standard of conduct.
3. Indemnity in Third-Party Proceedings. The Company 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 Company to procure a judgment
in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with the 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 Company and, in the case of a criminal proceeding, in addition, had no
reasonable cause to believe that Indemnitee’s conduct was unlawful.
4. Indemnity in Proceedings by or in the Right of the Company. The Company 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 Company to procure a judgment
in its favor against all Expenses actually and reasonably incurred by Indemnitee in connection with
the defense or settlement of the 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
Company. No indemnification for Expenses shall be made under this Section 4 in respect of any
claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be
liable to the Company, unless and only to the extent that any court in which the 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, the Company shall indemnify Indemnitee against all
Expenses incurred in connection therewith.
6. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4 or 5, the Company shall indemnify
Indemnitee to the fullest extent permitted by law 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
Company to procure a judgment in its favor) against all Expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with
the Proceeding. No indemnity shall be made under this Section 6(a) on account of
Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty of loyalty to the
Company or its shareholders or is an act or omission not in good faith or which involves
intentional misconduct or a knowing violation of the law.
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(b) Notwithstanding any limitation in Sections 3, 4, 5 or 6(a), the Company shall
indemnify Indemnitee to the fullest extent permitted by law 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 Company to procure a judgment in its favor) against all Expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection
with the Proceeding.
(c) For purposes of Sections 6(a) and 6(b), the meaning of the phrase “to the fullest
extent permitted by law” shall include, but not be limited to:
(i) to the fullest extent permitted by the provision of the Act that authorizes
or contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the Act, and
(ii) to the fullest extent authorized or permitted by any amendments to or
replacements of the Act adopted after the date of this Agreement that increase the
extent to which a corporation may indemnify its officers and directors.
7. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be
obligated under this Agreement to make any indemnity in connection with any claim made against
Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect to any excess beyond the
amount paid under any insurance policy or other indemnity provision;
(b) for any transaction from which Indemnitee was adjudged liable on the basis that
Indemnitee derived an improper personal benefit;
(c) for an accounting of profits made from the purchase and sale (or sale and purchase)
by Indemnitee of securities of the Company within the meaning of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or
common law;
(d) if a court having jurisdiction in the matter shall finally determine that such
indemnification is not lawful under any applicable statute or public policy; or
(e) in connection with any Proceeding (or part of any Proceeding) initiated by
Indemnitee, or any Proceeding by Indemnitee against the Company or its directors, officers,
employees or other indemnitees, unless (i) the Company is expressly required by law to make
the indemnification, (ii) the Proceeding was authorized by the Board, (iii) the Company
provides the indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law, or (iv) Indemnitee initiated the Proceeding pursuant to
Section 11 of this Agreement and Indemnitee is successful in whole or in part in the
Proceeding.
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8. Advances of Expenses. The Company shall pay all Expenses incurred by Indemnitee in any
Proceeding in advance, prior to the final disposition thereof, at the written request of
Indemnitee, if Indemnitee:
(a) furnishes the Company a written affirmation in the form attached as Exhibit A or
such other form as meets the requirements of ORS 60.397 or successor statutes covering the
same subject matter of the Indemnitee’s good faith belief that Indemnitee is entitled to be
indemnified by the Company under this Agreement; and
(b) furnishes the Company a written undertaking in the form attached as Exhibit A or
such other form as meets the requirements of ORS 60.397 or successor statutes covering the
same subject matter to repay the advance to the extent that it is ultimately determined by a
court of competent jurisdiction that Indemnitee is not entitled to be indemnified by the
Company. Advances shall be made without regard to Indemnitee’s ability to repay the
Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under
the other provisions of this Agreement.
(c) Indemnitee’s right to advancement of Expenses pursuant to this Section 8 is not
subject to the satisfaction of any standard of conduct. Without limiting the generality or
effect of the foregoing, within five business days after any request by Indemnitee, the
Company shall, in accordance with such request (but without duplication), (a) pay such
Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to
pay such Expenses or (c) reimburse Indemnitee for such Expenses.
9. Notification and Defense of Claim. Not later than forty-five (45) days after receipt by
Indemnitee of notice of the commencement of any Proceeding, Indemnitee will, if a claim in respect
of the Proceeding is to be made against the Company under this Agreement, notify the Company of the
commencement of the Proceeding. The omission to notify the Company will not relieve the Company
from any liability which it may have to Indemnitee otherwise than under this Agreement. With
respect to any Proceeding as to which Indemnitee notifies the Company of the commencement:
(a) The Company will be entitled to participate in the Proceeding at its own expense.
(b) Except as otherwise provided below, the Company may, at its option and jointly with
any other indemnifying party similarly notified and electing to assume such defense, assume
the defense of the Proceeding, with legal counsel reasonably satisfactory to the Indemnitee.
Indemnitee shall have the right to use separate legal counsel selected at Indemnitee’s sole
discretion in the Proceeding, but the Company shall not be liable to Indemnitee under this
Agreement, including Section 8 above, for the fees and expenses of separate legal counsel
incurred after notice from the Company of its assumption of the defense, unless (i)
Indemnitee reasonably concludes that there may be a conflict of interest between the Company
and Indemnitee in the conduct of the defense of the Proceeding or (ii) the Company does not
use legal counsel to assume the defense of such Proceeding. The Company shall not be
entitled to assume the defense of any Proceeding
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brought by or on behalf of the Company or as to which Indemnitee shall have made the
conclusion provided for in (i) above.
(c) If two or more persons who may be entitled to indemnification from the Company,
including the Indemnitee, are parties to any Proceeding, the Company may require Indemnitee
to use the same legal counsel as the other parties. Indemnitee shall have the right to use
separate legal counsel in the Proceeding, but the Company shall not be liable to Indemnitee
under this Agreement, including Section 8 above, for the fees and expenses of separate legal
counsel incurred after notice from the Company of the requirement to use the same legal
counsel as the other parties, unless the Indemnitee reasonably concludes that there may be a
conflict of interest between Indemnitee and any of the other parties required by the Company
to be represented by the same legal counsel.
(d) The Company shall not be liable to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of any Proceeding effected without its written consent, which
shall not be unreasonably withheld. Indemnitee shall permit the Company to settle any
Proceeding the defense of which it assumes, except that the Company shall not settle any
action or claim in any manner which would impose any penalty or limitation on Indemnitee
without Indemnitee’s written consent, which may be given or withheld in Indemnitee’s sole
discretion.
10. Procedure Upon Application for Indemnification. Any indemnification under Sections 3, 4,
5 or 6 of this Agreement shall be made no later than 45 days after receipt of the written request
of Indemnitee for indemnification and shall not require that a determination be made in accordance
with the Act by the persons specified in the Act that indemnification is required under this
Agreement. However, unless it is ordered by a court in an enforcement action under Section 11 of
this Agreement, no such indemnification shall be made if a determination is made within such 45-day
period by (a) the Board by a majority vote of a quorum consisting of directors who were not parties
to the Proceeding, or (b)independent legal counsel in a written opinion (which counsel shall be
appointed if a quorum is not obtainable), that the Indemnitee is not entitled to indemnification
under this Agreement.
11. Enforcement.
(a) Any right to indemnification or advances granted by this Agreement to Indemnitee
shall be enforceable by or on behalf of Indemnitee in any court of competent jurisdiction if
(a) the Company denies the claim for indemnification or advances, in whole or in part, or
(b) the Company does not dispose of the claim within 45 days of a written request for
indemnification or advances. Indemnitee, in the enforcement action, if successful in whole
or in part, shall be entitled to be paid also the expense of prosecuting the claim. It
shall be a defense to any such enforcement action (other than an action brought to enforce a
claim for advancement of Expenses pursuant to Section 8 above, if Indemnitee has tendered to
the Company the required affirmation and undertaking) that Indemnitee is not entitled to
indemnification under this Agreement, but the burden of proving this defense shall be on the
Company. Neither a failure of the Company (including its Board or its shareholders) to make
a determination prior to the commencement of the enforcement action that indemnification of
Indemnitee is proper in
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the circumstances, nor an actual determination by the Company (including its Board or
its shareholders) that indemnification is improper shall be a defense to the action or
create a presumption that Indemnitee is not entitled to indemnification under this Agreement
or otherwise. The termination of any 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 is not entitled to indemnification under this Agreement
or otherwise.
(b) In making any determination concerning Indemnitee’s right to indemnification, there
shall be a presumption that Indemnitee has satisfied the applicable standard of conduct, and
the Company may overcome such presumption only by its adducing clear and convincing evidence
to the contrary. Any determination concerning Indemnitee’s right to indemnification that is
adverse to Indemnitee may be challenged by the Indemnitee in the applicable court. No
determination by the Company (including without limitation by its directors or any
independent counsel) that Indemnitee has not satisfied any applicable standard of conduct
shall be a defense to any Claim by Indemnitee for indemnification or reimbursement or
advance payment of Expenses by the Company hereunder or create a presumption that Indemnitee
has not met any applicable standard of conduct.
(c) The knowledge and/or actions, or failure to act, of any director, officer, agent or
employee of the Company or the Company itself shall not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement.
12. Partial Indemnification. If Indemnitee is entitled under any provisions of this Agreement
to indemnification by the Company for some or part of the Expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by Indemnitee in the investigation, defense,
appeal or settlement of any Proceeding but not, however, for the total amount, the Company shall
indemnify Indemnitee for the portion of the Expenses, judgments, fines and amounts paid in
settlement to which Indemnitee is entitled.
13. Nonexclusivity and Continuity of Rights. The indemnification provided by this Agreement
shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under the
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 and as to action in
other capacity while holding office. The indemnification under this Agreement shall continue as to
Indemnitee even though Indemnitee ceases to be a director or officer and shall inure to the benefit
of the heirs and personal representatives of Indemnitee.
14. Maintenance of Liability Insurance. For the duration of Indemnitee’s service as a
director and/or officer of the Company, and thereafter for so long as Indemnitee shall be subject
to any pending or possible claim, the Company shall use commercially reasonable efforts (taking
into account the scope and amount of coverage available relative to the cost thereof) to cause to
be maintained in effect policies of directors’ and officers’ liability insurance providing coverage
for directors and/or officers of the Company that is at least substantially comparable in scope and
amount to that provided by the Company’s current policies of directors’ and officers’
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liability insurance. The minimum AM Best rating for the insurance carriers of such insurance
carrier shall be not less than A- VI. The Company shall provide Indemnitee with a copy of all
directors’ and officers’ liability insurance applications, binders, policies, declarations,
endorsements and other related materials, and shall provide Indemnitee with a reasonable
opportunity to review and comment on the same. Without limiting the generality or effect of the
requirement to use best efforts to obtain insurance and give directors and chance to review the
proposal, the Company shall not discontinue or significantly reduce the scope or amount of coverage
from one policy period to the next without the prior approval thereof by a majority vote of the
directors, even if less than a quorum.
15. Business Combinations. If any person or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) acquires the legal right to elect a majority of the
Board in a transaction or series of transactions that has not received the prior approval of the
Board, (a) the Company or its successor, as the case may be, shall, for a period of two years
following the date that such legal right is acquired (the “Trigger Date”), maintain any and all
directors and officers’ liability insurance in effect prior to the Trigger Date that covers
Indemnitee and (b) this Agreement shall remain in full force and effect and shall be binding on the
Company and any successor in accordance with its terms.
16. Information Sharing. To the extent permitted by applicable law the Company shall promptly
provide to Indemnitee a complete copy of any information, filing, response to discovery request
(whether formal or informal), or other similar delivery of information Company has made to any
third party concerning any investigation, whether formal or informal, relating to Indemnitee.
17. Severability. If this Agreement or any portion of it is invalidated on any ground by any
court of competent jurisdiction, the Company shall indemnify Indemnitee as to Expenses, judgments,
fines and amounts paid in settlement with respect to any Proceeding to the full extent permitted by
any applicable portion of this Agreement that is not invalidated or by any other applicable law.
18. 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.
Indemnitee shall execute all documents required and shall do all acts that may be necessary to
secure such rights and to enable the Company effectively to bring suit to enforce such rights.
19. Modification and Waiver. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by both parties. No waiver of any of the provisions of this
Agreement shall constitute a waiver of any other provisions of this Agreement (whether or not
similar) nor shall any waiver constitute a continuing waiver, unless expressly stated in any
waiver.
20. Notices. All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given (a) upon delivery if delivered by
hand to the party to whom the notice or other communication shall have been directed or (b) if
mailed by certified or registered mail with postage prepaid, on the third business day after the
date on which it is so mailed:
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(i) If to Indemnitee, at the address indicated on the signature page of this
Agreement, or to such other address as may have been furnished to the Company by
Indemnitee.
(ii) If to the Company to
or to any other address as may have been furnished to Indemnitee by the Company.
21. Counterparts. The parties may execute this Agreement in any number of counterparts, each
of which shall constitute the original.
22. Applicable Law. This Agreement shall be governed by and construed in accordance with the
law of the state of Oregon.
23. Successors and Assigns. This Agreement shall be binding upon the Company and its
successors and assigns.
24. Entire Agreement. This Agreement (which term shall include any exhibits and schedules
hereto) constitutes the entire agreement of the parties hereto and supersedes and replaces any and
all prior agreements and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
25. Compliance with Code Section 409A. To the extent that the Board determines that any
indemnification or advances granted by this Agreement are subject to Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), this Agreement shall incorporate the terms and
conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code. To the
extent applicable, this Agreement shall be interpreted and construed in compliance with Section
409A of the Code and Department of Treasury regulations and other interpretive guidance issued
thereunder. Notwithstanding any provision of this Agreement to the contrary, in the event that the
Board determines that any indemnification or advances granted by this Agreement may be subject to
Code Section 409A, the Board may, without the consent of Indemnitee, adopt such supplements,
modifications and amendments to this Agreement or adopt other policies and procedures (including
supplements, modifications, amendments, policies and procedures with retroactive effect), or take
any other actions, that the Board determines are necessary or appropriate to (i) exempt the
indemnification and advances from Code Section 409A or (ii) comply with the requirements of Code
Section 409A and Department of Treasury regulations and other interpretive guidance issued
thereunder, provided that the Board shall provide written notice to Indemnitee within ten (10) days
of the date of any action taken by the Board pursuant to this Section 25, which notice shall
describe in reasonable detail the action taken (including, if applicable, provision of a copy of
any written supplement, modification, amendment, policy or procedure adopted) and the basis for the
determination that such action is necessary or appropriate.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year
first above written.
| RADISYS CORPORATION | INDEMNITEE | |||||||||
By:
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By: | |||||||||
| Name: | Name: | |||||||||
| Title: | ||||||||||
| Address: | ||||||||||
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Exhibit A
Undertaking to Reimburse Advanced Expenses
Undertaking to Reimburse Advanced Expenses
I, , hereby provide this undertaking pursuant to the requirements of ORS
60.391 and my contract of indemnity with RadiSys Corporation.
I am involved in a proceeding covered by my Indemnity Agreement with RadiSys Corporation I
request that RadiSys Corporation pay for the reasonable expenses I incur in advance of the final
disposition of that proceeding, and that RadiSys Corporation reimburse me any reasonable expenses I
advance myself in the course of that proceeding.
In support of my request, I affirm as follows:
1. I believe in good faith that I have met the standard of conduct described in ORS 60.391;
2. I undertake here the general and unlimited obligation to repay advances if it is ultimately
determined by a court that I did not meet the standard of conduct.
This undertaking is intended to meet, and shall be construed to meet, the requirements for an
undertaking under ORS Section 60.397, and shall not be construed as extending beyond those
requirements.
Signed:
|
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Print Name: |
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Date: |
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